Document:

DATED 20TH
  JANUARY 1997

  

	
   
	
  TAYLOR PACKAGING (BISHOP AUCKLAND) LIMITED
	
  (1)

	
   
	
   
	
   

	
   
	
  and
	
   

	
   
	
   
	
   

	
   
	
  NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION
	
  (2)

	
   
	
   
	
   

	
   
	
  

  	
   

	
   
	
   
	
   

	
   
	
  JOINT VENTURE AGREEMENT
	
   

	
   
	
   
	
   

	
   
	
  

  	
   

THIS
JOINT VENTURE AGREEMENT is made the 20th day of January,
1997

BETWEEN:

	
  (1)

  	
  TAYLOR PACKAGING (BISHOP AUCKLAND)
  LIMITED (No 01999397), a company incorporated under the
  laws of England and Wales (“TP”), whose registered office is at Meadowfield
  Avenue, Green Lane Industrial Estate, Spennymoor, Co Durham DLl6 6YJ; and

	
   
	
   

	
  (2)
	
  NORTHERN TECHNOLOGIES INTERNATIONAL
  CORPORATION, a company organised under the laws of the
  State of Delaware, U.S.A. (“NTI”), the principal place of business of which
  is Lino Lakes, Minnesota, U.S.A.

WHEREAS:

TP and NTI desire to form
a Joint Venture in the form of a private company limited by shares incorporated
under the laws of England and Wales to engage in the Company’s Business (as
hereinafter defined).

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

	
  1.
	
  Definitions

	
   
	
  
In this Agreement (unless there be something in the
  subject or context inconsistent therewith), the following expressions shall
  have the following meanings:

	
   
	
  “Ancillary Agreements”:
	
  means:

	
   
	
   
	
   

	
   
	
   
	
  (i)
	
  the Management and Sales Representation Agreement;

	
   
	
   
	
   
	
   

	
   
	
   
	
  (ii)
	
  the License Agreement; and

	
   
	
   
	
   
	
   

	
   
	
   
	
  (iii)
	
  the Technical Assistance and Marketing Support
  Agreement;

	
   
	
   
	
   
	
   

	
   
	
   
	
  and “Ancillary Agreement” shall be construed
  accordingly;

	
   
	
   
	
   

	
   
	
  “Articles of Association”:
	
  means the articles of association from time to time
  of the Company;

1

	
   
	
  “At Cost”:
	
  means 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 prescription “At Cost”);

	
   
	
   
	
   

	
   
	
  “Breach”:
	
  means a breach of any of the provisions of this
  Agreement or of any of the Ancillary Agreements;

	
   
	
   
	
   

	
   
	
  “Change of Control”:
	
  means 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 this Agreement or any of
  the Ancillary Agreements

	
   
	
   
	
   

	
   
	
  “Company”:
	
  means Zerust (UK) Limited (No. 3248266), a dormant
  private company limited by shares incorporated under the laws of England and
  Wales and acquired by TP to conduct the Company’s Business;

	
   
	
   
	
   

	
   
	
  “connected”
	
  has the meaning ascribed to it in S.839 Income and
  Corporation Taxes Act 1988;

	
   
	
   
	
   

	
   
	
  “Company’s Business”:
	
  means the manufacturing, marketing and distribution
  of Product in the Territory;

	
   
	
   
	
   

	
   
	
  “Deed of Adherence”:
	
  means a deed substantially in the form set out in
  Annex 7;

	
   
	
   
	
   

	
   
	
  “Default”:
	
  has in relation to this Agreement the meaning
  ascribed to it in Article 17 and in relation to an Ancillary Agreement the
  meaning ascribed to it in such Ancillary Agreement;

	
   
	
   
	
   

	
   
	
  “Distribution”
	
  has the meaning ascribed to it in S.263(2) Companies
  Act 1985 which shall be read and construed as if the exception therein were
  excluded therefrom;

	
   
	
   
	
   

	
   
	
  “Knowhow”:
	
  means 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 use
  and application of the Process, together with all improvements and
  modifications with respect thereto;

2

	
   
	
  “Licence Agreement”:
	
  means an agreement to be entered into between NTI
  and the Company in the terms set out in Annex 3;

	
   
	
   
	
   

	
   
	
  “Management and Sales Representation Agreement”:
	
   

	
   
	
   
	
   

	
   
	
   
	
  means an agreement to be entered into between TP and
  the Company in the terms set out in Annex 2;

	
   
	
   
	
   

	
   
	
  “Masterbatch”:
	
  means 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 utilising the Process;

	
   
	
   
	
   

	
   
	
  “Materials”:
	
  means 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;

	
   
	
   
	
   

	
   
	
  “Memorandum of Association”:
	
  means the memorandum of association from time to
  time of the Company;

	
   
	
   
	
   

	
   
	
  “Net Sales”:
	
  means the total proceeds from the sale of Product
  within the Territory by the Company in normal, bona fide commercial
  transactions on an arm’s length basis to, by, with, or through an entity
  which is not affiliated to any Party to this Agreement, less the following
  items:

	
   
	
   
	
   

	
   
	
   
	
  (i)
	
  sales discounts (including sales rebates); 

	
   
	
   
	
   

	
   
	
   
	
  (ii)
	
  sales returns; 

3

	
   
	
   
	
  (iii)
	
  shipping and transaction costs, such as Value Added
  Tax, CIF charges and packaging expenses; and 

	
   
	
   
	
   

	
   
	
   
	
  (iv)
	
  sales commissions to third parties;

	
   
	
   
	
   
	
   

	
   
	
  “NTI Affiliates”:
	
  means all entities and/or individuals with which NTI
  has a joint venture relationship, similar in character and style but not
  necessarily identical to the relationship created by this Agreement and the
  Ancillary Agreements, or another form of alliance, for the development,
  manufacture, promotion, marketing, sales and applications engineering of the
  Product, Materials, Knowhow and/or Process anywhere in the world and “NTI
  Affiliate” shall be construed accordingly;

	
   
	
   
	
   

	
   
	
  “NTI Intellectual Property Rights”:
	
  means the Knowhow, Materials, Process, NTI Trade
  Secrets, Product, Masterbatch and Trademark, collectively, as such currently
  exist and shall hereinafter be modified, developed and/or acquired by NTI;

	
   
	
   
	
   

	
   
	
  “NTI Trade Secrets”:
	
  means all information deemed and designated
  confidential, in this Agreement and/or 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 business of
  NTI, the Company and NTI Affiliates both in the Territory and elsewhere;

4

	
   
	
  “Parties”:
	
  means as the context requires the parties to this
  Agreement and/or the Ancillary Agreements, their successors and permitted
  assigns and “Party” shall be construed accordingly;

	
   
	
   
	
   

	
   
	
  “Process”:
	
  means the procedure utilizing Knowhow for the
  manufacture of polyethylene materials 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
  materials, together with future technology, knowledge and product development
  which is useful in the manufacture of the Product;

	
   
	
   
	
   

	
   
	
  “Product”:
	
  means corrosion inhibiting polyethylene film and
  solid material of polyethylene in the form of boxes, tubes and other
  containers manufactured by means of the Process, incorporating the Materials
  and utilising the Trademark;

	
   
	
   
	
   

	
   
	
  “Shareholder”:
	
  means any holder, from time to time, of a Share or
  Shares;

	
   
	
   
	
   

	
   
	
  “Share”:
	
  means any validly issued and outstanding share in
  the capital of the Company;

	
   
	
   
	
   

	
   
	
  “the Technical Assistance and Marketing Support
  Agreement”:

	
   

	
   
	
   
	
  means the agreement to be entered into between NTI
  and the Company in the terms set out in Annex 4;

	
   
	
   
	
   

	
   
	
  “Termination Consideration”
	
  has the meaning ascribed to it in Article 16.8;

	
   
	
   
	
   

	
   
	
  “Territory”:
	
  means the United Kingdom;

	
   
	
   
	
   

	
   
	
  “Trademark”:
	
  means the names and styles “ZERUST”, “THE ZERUST
  PEOPLE” and the colour yellow in relation thereto (which in each case are the
  subject of Community Trade Mark applications) which includes trade
  literature, technical specifications and application instructions, and
  promotional material pertaining thereto;

5

	
   
	
  “Transfer”:
	
  means in relation to any Share any sale, transfer,
  assignment, pledge or disposition in any way, whether in any voluntarily or
  involuntarily, by gift, legal procedure, operation of law, or any other
  means;

	
   
	
   
	
   

	
   
	
  “Transferee”:
	
  means any person who acquires or wishes to acquire a
  Share or Shares, and who if not already a Party hereto thereafter signs a
  Deed of Adherence; and

	
   
	
   
	
   

	
   
	
  “Transferor”:
	
  means a Shareholder who declares an intention or
  wish to transfer any Share or Shares and/or initiates a Transfer.

ARTICLE 2

	
  2.
	
  Mutual
  Representations

	
   
	
   

	
   
	
  2.1
	
  Representations of NTI

	
   
	
   
	
   

	
   
	
   
	
  NTI hereby represents and warrants to TP as follows:

	
   
	
   
	
   
	
   

	
   
	
   
	
  2.1.1
	
  Organisation and Standing.  NTI is a corporation duly organised,
  validly existing and in good standing under the laws of the State of
  Delaware, U.S.A., and is in good standing under the laws of the State of
  Minnesota, where it has its principal place of business.

	
   
	
   
	
   
	
   

	
   
	
   
	
  2.1.2
	
  Due Authorisation.  This Agreement and such of the Ancillary
  Agreements to be executed by it pursuant to this Agreement have been duly
  authorised by appropriate corporate action and the same are or will when
  executed become binding upon NTI in accordance with their respective terms.

	
   
	
   
	
   
	
   

	
   
	
   
	
  2.1.3
	
  No Violation of Other Agreements.  By entering into this Agreement, NTI 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 NTI, threatened against NTI which would have
  a material effect upon NTI’s ability to perform under this Agreement and the
  Ancillary Agreements.

6

	
   
	
  2.2
	
  Representations of TP

	
   
	
   
	
   

	
   
	
   
	
  TP hereby represents and warrants to NTI as follows:

	
   
	
   

	
   
	
   
	
  2.2.1
	
  Organisation and Standing.  TP is a corporation duly incorporated as a
  private company limited by shares under the laws of England and Wales and is
  not in breach of any laws of any jurisdiction in which it carries on
  business.

	
   
	
   
	
   

	
   
	
   
	
  2.2.2
	
  Due Authorisation.  This Agreement and such of the Ancillary
  Agreements to be executed by it pursuant to this Agreement have been duly
  authorised by appropriate corporate action and the same are or will when
  executed become binding upon TP in accordance with their respective terms.

	
   
	
   
	
   
	
   

	
   
	
   
	
  2.2.3
	
  No Violation of Other Agreements.  By entering into this Agreement, TP 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 TP, threatened against TP which would have a
  material effect upon TP’s ability to perform under this Agreement and the
  Ancillary Agreements.

	
   
	
   
	
   
	
   

	
   
	
   
	
  2.2.5
	
  Status of the Company.  The Company has not traded or incurred any
  liabilities.

	
   
	
   
	
   

	
   
	
  2.3
	
  Indemnity by TP

	
   
	
   
	
  TP undertakes to indemnify
  and hold harmless the Company against any and all liabilities incurred by the
  Company or on its behalf prior to the Parties compliance with their
  obligations under Article 4 hereof.

ARTICLE
3

	
  3.

  	
  Purposes of the Joint Venture

  
	
   
	
   

	
   
	
  The purposes of the Company and the rights and
  obligations created by this Agreement and by the Ancillary Agreements are as
  follows:

  
	
   
	
   

	
   
	
  3.1
	
  To conduct the Company’s Business for the benefit of
  the Company and the Parties;

	
   
	
   
	
   

	
   
	
  3.2
	
  To protect and preserve NTI Trade Secrets and NTI
  Intellectual Property Rights in the Territory under the terms of this
  Agreement and the Ancillary Agreements;

	
   
	
   
	
   

	
   
	
  3.3
	
  To manufacture, promote and sell Product in the
  Territory under the terms of this Agreement and of the Ancillary Agreements;

7

	
   
	
  3.4
	
  To provide for the implementation of the Ancillary
  Agreements for the benefit of the Company and the respective Parties.

ARTICLE 4

	
  4.
	
  Completion

	
   
	
   

	
   
	
  Completion shall take place on 20th
  January, 1997 when the events set out below shall take place.

	
   
	
   

	
   
	
  4.1
	
  TP shall procure that:

	
   
	
   
	
   

	
   
	
   
	
  4.1.1
	
  the Company shall change its objects so that they
  are in the form set out in Part 1 of Annex I;

	
   
	
   
	
   
	
   

	
   
	
   
	
  4.1.2
	
  the Company shall adopt articles of association in
  the form set out in Part 2 of Annex I;

	
   
	
   
	
   
	
   

	
   
	
   
	
  4.1.3
	
  the authorized share capital of the Company shall be
  increased to £100,000 divided into 50,000 “A” Ordinary Shares of £1 each and
  50,000 “B” Ordinary Shares of £1 each;

	
   
	
   
	
   
	
   

	
   
	
   
	
  4.1.4
	
  the only directors shall be:

	
   
	
   
	
   
	
   

	
   
	
   
	
   
	
  “A” Directors:
	
  Stephen Cyril Taylor

	
   
	
   
	
   
	
   
	
  Anthony John Wardle

	
   
	
   
	
   
	
   
	
   

	
   
	
   
	
   
	
  “B” Directors:
	
  Philip M Lynch

	
   
	
   
	
   
	
   
	
  Vincent J Graziano

	
   
	
   
	
   
	
   
	
   

	
   
	
   
	
   
	
  and the only secretary shall be Anthony John Wardle;

	
   
	
   
	
   
	
   

	
   
	
   
	
  4.1.5
	
  the address of the Company’s registered office shall
  be Meadowfield Avenue, Green Lane Industrial Estate, Spennymoor, Co Durham
  DLl6 6UJ.

	
   
	
   
	
   
	
   

	
   
	
   
	
  4.1.6
	
  the 2 Ordinary Shares of £1 each currently
  registered in the name of TP shall be paid up in cash at par and converted
  into “A” Ordinary Shares of £1 each;

	
   
	
   
	
   
	
   

	
   
	
  4.2
	
  TP shall subscribe unconditionally for 49,998 “A”
  Shares in cash at par, payment for which shall be made in cleared funds for
  the account of the Company;

	
   
	
   
	
   
	
   

	
   
	
  4.3
	
  NTI shall subscribe unconditionally for 50,000 “B”
  Shares in cash at par, payment for which shall be made in cleared funds for
  the account of the Company;

8

	
   
	
   
	
   

	
   
	
  4.4
	
  the Parties shall procure that the Company allot and
  issue credited as fully paid:

	
   
	
   
	
   

	
   
	
   
	
  49,998 “A” Shares to TP; and

	
   
	
   
	
  50,000 “B” Shares to NTI;

	
   
	
   
	
   

	
   
	
   
	
  and that the names of TP and NTI are entered in the
  register of members of the Company as the respective holders of the Shares
  subscribed by them and that Share Certificates are issued to TP and NTI in
  respect of such Shares;

	
   
	
   
	
   

	
   
	
  4.5
	
  NTI or (as the case may be) TP shall execute and the
  Parties shall procure that the Company executes the Ancillary Agreements.

ARTICLE
5

	
  5.

  	
  Chief Executive Officer

  
	
   
	
   

	
   
	
  One of the Directors designated by TP shall be the
  Chief Executive Officer of the Company, whose authority shall be subject to
  this Agreement, the Ancillary Agreements and the Memorandum of Association
  and the Articles of Association. 
  Designation of the Chief Executive Officer by TP shall, however, be
  subject to the approval of NTI, which approval shall not be unreasonably
  withheld.

  

ARTICLE
6

	
  6.
	
  Responsibilities
  and Duties of the Parties

	
   
	
   

	
   
	
  6.1
	
  Responsibilities of the Parties

	
   
	
   
	
   

	
   
	
   
	
  It shall be the responsibility of all Parties to
  give effect to and perform the purposes of the Company and the rights and
  obligations created by this Agreement and the Ancillary Agreements as set out
  in Article 3 hereof.

	
   
	
   
	
   

	
   
	
  6.2
	
  Specific Responsibilities and Duties of Individual
  Parties

	
   
	
   
	
  Specific responsibilities and duties of the Parties
  are set forth in the Ancillary Agreements.

	
   
	
   
	
   

	
   
	
  6.3
	
  Actions Requiring Consent of All Parties

	
   
	
   
	
   

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

	
   
	
   
	
   

	
   
	
   
	
  6.3.1
	
  establish annual operating budgets for the Company
  (proposals in respect of which the Chief Executive Officer of the Company
  shall prepare and submit to the Board of Directors of the Company no later
  than June 30 of each year for the following accounting reference period);

9

	
   
	
   
	
  6.3.2
	
  determine the amount of funds to be allocated to the
  purchase of Materials, Masterbatch or Product;

	
   
	
   
	
   
	
   

	
   
	
   
	
  6.3.3
	
  sell, assign, transfer, exchange or otherwise
  dispose of any assets of the Company, other than in the ordinary course of
  business;

	
   
	
   
	
   
	
   

	
   
	
   
	
  6.3.4
	
  mortgage, pledge, encumber or hypothecate any of the
  assets of the Company;

	
   
	
   
	
   
	
   

	
   
	
   
	
  6.3.5
	
  change the Company’s auditors after the same have
  been appointed by the mutual consent of the Parties;

	
   
	
   
	
   
	
   

	
   
	
   
	
  6.3.6
	
  change or allow a change in the accounting
  procedures employed in maintaining the Company’s books of account or in
  preparing financial statements with respect to the operations of the Company
  or the Company’s Business;

	
   
	
   
	
   
	
   

	
   
	
   
	
  6.3.7
	
  obligate the Company as a surety, guarantor or
  accommodation party to any obligation, lend funds belonging to the Company to
  any third party, or extend credit to any person, firm or corporation, on
  behalf of the Company, other than in the ordinary course of business;

	
   
	
   
	
   
	
   

	
   
	
   
	
  6.3.8
	
  file material litigation against third parties on
  behalf of the Company outside the ordinary course of the Company’s Business
  or submit to judgment on behalf of the Company;

	
   
	
   
	
   
	
   

	
   
	
   
	
  6.3.9
	
  amend the Memorandum of Association or the Articles
  of Association;

	
   
	
   
	
   
	
   

	
   
	
   
	
  6.3.10
	
  issue, allot, redeem, purchase or grant options over
  any part of its share capital or other securities or reorganise its share
  capital in any way;

	
   
	
   
	
   
	
   

	
   
	
   
	
  6.3.11
	
  borrow any money on terms requiring a mortgage or
  other form of security over the Company’s assets in favour of the lender,
  except that a security interest over the Company’s inventory and receivables
  authorised by the Chief Executive Officer of the Company in the ordinary
  course of business shall be permissible;

	
   
	
   
	
   
	
   

	
   
	
   
	
  6.3.12
	
  sell, transfer, lease, licence or in any other way
  dispose of any of its assets otherwise than in the ordinary course of its
  business or acquire any other corporation or legal entity;

	
   
	
   
	
   
	
   

	
   
	
   
	
  6.3.13
	
  dissolve or liquidate other than in accordance with
  the requirements of this Agreement;

	
   
	
   
	
   
	
   

	
   
	
   
	
  6.3.14
	
  engage in any business activity which is outside the
  scope of the Company’s Business;

	
   
	
   
	
   
	
   

	
   
	
   
	
  6.3.15
	
  form any subsidiary corporation;

10

	
   
	
   
	
  6.3.16
	
  enter into a transaction or business relationship
  with any of the Parties hereto, except as may be expressly provided for by
  this Agreement and/or the Ancillary Agreements, or on an arm’s-length basis,
  and on prices and terms no more favourable to the Party than could have been
  obtained from an independent third party;

	
   
	
   
	
   
	
   

	
   
	
   
	
  6.3.17
	
  establish pricing, discount structures, and terms of
  trade for the Product in the Territory;

	
   
	
   
	
   
	
   

	
   
	
   
	
  6.3.18
	
  sell, licence or otherwise convey the Process,
  Knowhow or NTI Trade Secrets, or any right thereto deriving from this
  Agreement or the Ancillary Agreements to any third party;

	
   
	
   
	
   
	
   

	
   
	
   
	
  6.3.19
	
  engage or dismiss any management staff of the
  Company and/or fix compensation for any management staff, including bonus and
  perquisites;

	
   
	
   
	
   
	
   

	
   
	
   
	
  6.3.20
	
  except in accordance with Article 8, pay any
  emoluments or make any other payments for the provision of services to any
  person employed by or connected with a shareholder or to any person connected
  with any such person;

	
   
	
   
	
   
	
   

	
   
	
   
	
  6.3.21
	
  make any Distributions.

	
   
	
   
	
   
	
   

	
   
	
  6.4
	
  Professional Advisers

	
   
	
   
	
   

	
   
	
   
	
  6.4.1
	
  The Company’s auditors shall be such firm of
  chartered accountants as may from time to time be nominated by the “A”
  Directors with the approval of the “B” Directors (such approval not to be
  unreasonably withheld);

	
   
	
   
	
   
	
   

	
   
	
   
	
  6.4.2
	
  The Company’s solicitors shall be such firm of
  solicitors as shall from time to time be nominated by the “B” Directors with
  the approval of the “A” Directors (such approval not to be unreasonably
  withheld).

ARTICLE
7

	
  7.

  	
  Development of the Company’s Staff

  
	
   
	
   

	
   
	
  7.1

  	
  Development of the Company’s Staff

	
   
	
   
	
   

	
   
	
   
	
  Depending on the development of business and within
  the judgment of the Board of Directors (and subject to Article 6.3), the
  Company 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.

11

	
   
	
  7.2
	
  Human Relations Policies

	
   
	
   
	
  TP shall be responsible to ensure that human
  relations and related policies, including but not limited to matters of
  taxation, appropriate to the Territory are implemented and maintained by the
  Company with respect to all employees and providers of services in whatever
  form to the Company.

ARTICLE
8

	
  8.

  	
  Payments to Related Parties for
  Services

  
	
   
	
   

	
   
	
  8.1

  	
  Payments to Parties for Services Performed in the
  Ordinary Course of Business

	
   
	
   
	
   

	
   
	
   
	
  Payments shall be made to the Parties for services
  performed in the normal course of business from cash generated from Net Sales
  (after deducting the cost of Product, Materials, Masterbatch; and payments
  for supplies, services and other appropriate costs in accordance with this
  Agreement and the Ancillary Agreements). 
  An aggregate amount equal to 30% of Net Sales shall be paid to TP and
  NTI as follows:

	
   
	
   
	
   
	
   

	
   
	
   
	
  8.1.1
	
  TP shall receive 15% of Net Sales as its total
  compensation for services to be rendered to the Company pursuant to the
  Management and Sales Representation Agreement;

	
   
	
   
	
   
	
   

	
   
	
   
	
  8.1.2
	
  NTI shall receive 7.5% of Net Sales as its total
  compensation pursuant to the Licence Agreement; and 

	
   
	
   
	
   
	
   

	
   
	
   
	
  8.1.3
	
  NTI shall receive 7.5% of Net Sales as its total
  compensation for services to be rendered pursuant to the Technical Assistance
  and Marketing Support Agreement.

	
   
	
   
	
   
	
   

	
   
	
   
	
   
	
  Except as otherwise provided in this Agreement and
  the Ancillary Agreements, all financial transactions between the Company and
  the other Parties shall be At Cost.

	
   
	
   
	
   

	
   
	
  8.2
	
  Payments to Parties for Services Related to Special
  Programs for Promotion and Development

	
   
	
   
	
  After the
  payments and distributions referred to in Article 8.1 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 Company. 
  In such event, upon prior unanimous approval by the Parties,
  additional funds may be allocated by the Company for Special Programs to be
  conducted by the Parties, which shall comport joint responsibility in
  accordance with the percentage allocations set forth in Article 8.1 hereof.

12

ARTICLE
9

	
  9.

  	
  Coverage
  Of Shortfalls By The Parties

  
	
   
	
   

	
   
	
  Conversely, in the event that there shall be a
  shortfall in any given accounting reference period, then this shortfall shall
  be borne by TP and NTI in proportion to their respective fees for services to
  be performed pursuant to Article 8 hereof, to be reimbursed in the first
  instance out of the compensation set forth in Article 8.1 hereof for that
  period, and thereafter out of the equity of the Company 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 Company.

  

ARTICLE
10

	
  10.
	
  Financial Books And Records -
  Banking

	
   
	
   

	
   
	
  10.1
	
  Accounting Reference Period

	
   
	
   
	
   

	
   
	
   
	
  The first accounting reference period of the Company
  shall commence on the date the Company is incorporated and end on the next
  August 31 or (in the event that such period is six months or less) August 31
  in the following year.  Thereafter,
  the accounting reference period of the Company shall commence every year on
  September 1 and end on August 31 of the next year.  The books of accounts shall be closed at the end of each
  accounting reference period, and audited statements shall be prepared by the
  Company’s auditors in accordance with all relevant laws and generally
  accepted accounting principles showing a true and fair view of the financial
  condition of the Company and the results of its operations for the accounting
  reference period.  Copies of the audited
  annual statements shall be provided to each of the Parties within 3 months of
  the end of the accounting reference period in respect of which they have been
  prepared.  The Company shall prepare
  unaudited monthly and quarterly management accounts and reports in such
  format as the Parties may agree and shall provide copies thereof to the
  Parties within 4 weeks of the end of the period in respect of which they have
  been prepared.

	
   
	
   
	
   

	
   
	
  10.2
	
  Access to Books and Records

	
   
	
   
	
   

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

	
   
	
   
	
   

	
   
	
  10.3
	
  Bank Accounts

	
   
	
   
	
   

	
   
	
   
	
  All of the Company’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 cheques or other appropriate instruments signed by such
  Directors or other persons as the Board of Directors shall from time to time
  duly designate.

13

ARTICLE
11

	
  11.

  	
  Insurance

  
	
   
	
   

	
   
	
  11.1

  	
  Independent Coverage

	
   
	
   
	
   

	
   
	
   
	
  The Parties shall cause the Company to obtain and to
  maintain adequate property damage, product liability, public liability and
  other liability, casualty, and general insurance for the Company’s
  Business.  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 Company.

	
   
	
   
	
   

	
   
	
  11.2
	
  Inclusion of the Company as a Named Insured under
  the Insurance Coverage of a Party

	
   
	
   
	
   

	
   
	
   
	
  To the extent possible, each Party shall include the
  Company as a named insured under its own insurance coverage.  To effect such coverage:

	
   
	
   
	
   
	
   

	
   
	
   
	
  11.2.1
	
  NTI shall notify its product liability insurance
  carrier that the Company will be importing Materials and Masterbatch from NTI
  to manufacture and sell Product under the Trademark utilising NTI Trade
  Secrets and NTI Intellectual Property Rights in the Territory; and

	
   
	
   
	
   
	
   

	
   
	
   
	
  11.2.2
	
  TP shall notify its insurer of the scope of
  activities and responsibilities it shall carry out for the Company, both
  under this Agreement and under the Management and Sales Representation
  Agreement.

ARTICLE
12

	
  12.

  	
  Protection Of NTI Trade Secrets

  
	
   
	
   

	
   
	
  12.1

  	
  Recognition of NTI Trade Secrets

	
   
	
   
	
   

	
   
	
   
	
  TP acknowledges and agrees that NTI Intellectual
  Property Rights and other information deemed confidential by NTI and
  designated herein and hereafter relating to the business of NTI, of the
  Company, and of NTI Affiliates, both in the Territory and elsewhere,
  including but not limited to applications of NTI Intellectual Property
  Rights, cost data and cost accounting, 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 Trade Secrets set forth in Article 1
  hereof and constitute valuable property rights of NTI and NTI Affiliates.

14

	
   
	
  12.2
	
  Protection of NTI Trade Secrets

	
   
	
   
	
   

	
   
	
   
	
  TP 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 Trade Secrets which it now knows or may
  hereafter come to know as a result of this Agreement and Ancillary Agreements.
  NTI Trade Secrets shall not be disclosed by TP 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 TP
  or (ii) to the public domain by means other than the improper actions of TP
  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 Trade Secret shall be in the public domain as the
  result of an act by TP or any Agent (as hereinafter defined) thereof, then TP
  shall nevertheless continue to keep such NTI Trade Secrets secret and
  inviolate.

	
   
	
   
	
   

	
   
	
  12.3
	
  Protection of NTI Trade Secrets by Agents of TP

	
   
	
   
	
   

	
   
	
   
	
  Neither TP, nor its Agents (as hereinafter defined),
  shall at any time copy, remove from their proper location - be it within the
  Company or elsewhere - or retain without NTI’s prior written consent, the
  originals or copies of any NTI Trade Secrets or of any of the unpublished
  records, books of account, documents, letters, diagrams, computer disks,
  papers or memoranda of NTI or the Company. 
  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 Trade
  Secrets be strictly maintained both as to original documents and copies
  thereof.  Insofar as the officers,
  employees, consultants and other agents of TP and/or the Company, (in this
  Article 12 collectively “Agents”) who come in contact with NTI Trade Secrets
  are concerned, TP shall cause such Agents to enter into Trade Secrecy
  Agreements substantially in the form of Annex 5 to this Agreement.  TP shall exert its best efforts to cause
  such Agents to adhere to and to abide by the provisions, restrictions and
  limitations of such Trade Secrecy Agreements which efforts shall include the
  institution and prosecution of appropriate litigation if such be necessary
  and desirable.

	
   
	
   
	
   

	
   
	
  12.4
	
  Remedies in the Event of a Violation of Article 12
  hereof

	
   
	
   
	
   

	
   
	
   
	
  It is understood and recognised by TP that in the
  event of any violation by TP of the provisions of Article 12 hereof, NTI’s
  remedy at law will be inadequate and NTI will suffer irreparable injury.  Accordingly, TP consents to injunctive and
  other appropriate equitable relief upon the institution of legal proceedings
  therefor by NTI and in any court of competent jurisdiction to protect NTI
  Trade Secrets.  Such relief shall be
  in addition to any other relief to which NTI may be entitled at law or in
  equity, which shall include but not be limited to the right of immediate
  termination of this Agreement.

15

ARTICLE
13

	
  13.

  	
  Protection of TP Trade Secrets

  
	
   
	
   

	
   
	
  13.1

  	
  Identification of TP Trade Secrets

	
   
	
   
	
   

	
   
	
   
	
  The Parties acknowledge that it is not intended that
  TP impart its technology or trade secrets to the Company or, through the
  Company, to NTI and that accordingly no parallel document to the Licence
  Agreement is contemplated hereunder. 
  The Parties recognise, however, that TP may impart information to the
  Company to further the Company’s Business, which TP considers to be proprietary
  in nature and thus wishes to be kept confidential (“TP Trade Secrets”), and
  that such TP Trade Secrets may come to be imparted to NTI through the
  Company.  In order for such
  information to be considered under the category of TP Trade Secrets, TP must
  alert the Company and NTI to the fact that it intends to impart to the
  Company information it considers proprietary, in writing, in advance of
  imparting such information, and clearly identifying such information as a TP
  Trade Secret. 

	
   
	
   
	
   

	
   
	
  13.2
	
  Protection of TP Trade Secrets

	
   
	
   
	
   

	
   
	
   
	
  NTI 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 TP Trade Secrets which it now knows or may
  hereafter come to know as a result of this Agreement and the Ancillary
  Agreements.  TP Trade Secrets shall
  not be disclosed by NTI 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 NTI 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 TP Trade Secret shall be in the public domain as the result of an
  act by NTI or any Agent (as hereinafter defined) thereof, then NTI shall
  nevertheless continue to keep such TP Trade Secrets secret and inviolate. 

	
   
	
   
	
   

	
   
	
  13.3
	
  Protection of TP Trade Secrets by Agents of NTI

	
   
	
   
	
   

	
   
	
   
	
  Neither NTI, nor its Agents (as hereinafter
  defined), shall at any time copy, remove from their proper location - be it
  within the Company or elsewhere; or retain without TP’s prior written
  consent, the originals or copies of any TP 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 TP Trade Secrets be strictly maintained both as to original
  documents and copies thereof.  Insofar
  as the officers, employees, consultants and other agents of NTI (in this
  Article 13 collectively “Agents”) who come in contact with Trade Secrets are
  concerned, NTI shall cause such Agents to enter into Trade Secrecy Agreements
  substantially in the form of Annex 6 to this Agreement.  NTI shall exert its best efforts to cause
  its Agents to adhere to and to abide by the provisions, restrictions and
  limitations of such Trade Secrecy Agreements which efforts shall include the
  institution and prosecution of appropriate litigation if such be necessary
  and desirable. 

16

	
   
	
  13.4
	
  Remedies in the Event of a Violation of Article 13 hereof

	
   
	
   
	
  
It is understood and recognised by NTI that in the
  event of any violation by NTI of the provisions of Article 13 hereof, TP’s
  remedy at law will be inadequate and TP will suffer irreparable injury.  Accordingly, NTI consents to injunctive
  and other appropriate equitable relief upon the institution of legal
  proceedings therefor by TP and in any court of competent jurisdiction to
  protect TP Trade Secrets.  Such relief
  shall be in addition to any other relief to which TP 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

	
  14.
	
  Corporate
  Opportunity

	
   
	
   

	
   
	
  14.1
	
  Doctrine of Corporate Opportunity and Observance
  thereof

	
   
	
   
	
   

	
   
	
   
	
  It is the intent of the Parties to this Agreement
  and to the Ancillary Agreements to deal exclusively with each other with
  respect to the commercial, technical and strategic development of the
  Company’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 on the performance of their
  duties under this Agreement or the Ancillary Agreements in the Territory, or
  (b) have the effect of displacing or substituting the Knowhow, Materials,
  Process, Product or Masterbatch in the Territory; except as agreed to by the
  Parties in furtherance of the Company’s Business.

	
   
	
   
	
   

	
   
	
  14.2
	
  Agreement Not to Divert Resources

	
   
	
   
	
   

	
   
	
   
	
  TP and NTI 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 from the Company except through the
  Company in furtherance of the Company’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 Company.  In the event that this Agreement is
  terminated: (i) because of a Breach by a Party; or (ii) upon the liquidation,
  administrative receivership, administration or other adverse condition of a
  Party as described in Article 16 hereof; or (iii) pursuant to Article 17
  hereof by reason of a Default by a Party, then the Party in such Breach or
  Default or subject to such adverse condition shall continue to be bound by
  the provisions of this Article 14 for a period of two years following the
  date of termination, but shall at no time be permitted to use NTI Trade
  Secrets or TP Trade Secrets, as the case may be, for any activity outside the
  Company.

17

	
   
	
  14.3
	
  Remedies for Breach of Agreement Not to Divert
  Resources

	
   
	
   
	
   

	
   
	
   
	
  It is understood and recognised by the Parties that
  in the event of a violation of the provisions of Article 14 hereof by a
  Party, the remedy at law will be inadequate and the Company and the other
  Parties to this Agreement and the Ancillary Agreements 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 a nonviolating Party.  Such relief shall be in addition to any other relief to which a
  Party may be entitled at law in equity, which shall include but not be
  limited to the right of immediate termination of this Agreement.

ARTICLE
15

	
  15.
	
  Grant of Right and License by TP to
  NTI

	
   
	
   

	
   
	
  15.1
	
  Disclosure of Improvements to NTI by TP

	
   
	
   
	
   

	
   
	
   
	
  TP agrees promptly to disclose to NTI any
  improvements or modifications to NTI Intellectual Property Rights of whatever
  nature or description, which come to be learned by TP or which are made by or
  through its efforts, without any obligation by NTI to make payment therefor.

	
   
	
   
	
   

	
   
	
  15.2
	
  Grant of Right and Licence

	
   
	
   
	
   

	
   
	
   
	
  TP hereby agrees to grant to the Company an
  exclusive, non-transferable, worldwide and fully paid-up right and licence
  under any intellectual property rights, trade secrets and knowhow owned,
  controlled, acquired or which may otherwise be transferred or granted by TP
  during the term of this Agreement to make, have made, use, sell or otherwise
  dispose of products incorporating any or all improvements to NTI Intellectual
  Property Rights together with the Process, Knowhow, Materials, Masterbatch
  and/or Product and to sublicence third parties to do the same.

	
   
	
   
	
   

	
   
	
  15.3
	
  Obligations of TP Concerning the Filing of New
  Patents

	
   
	
   
	
   

	
   
	
   
	
  TP agrees that at NTI’s request and at NTI’s cost it
  will promptly file and diligently prosecute applications for letters patents
  in the Company’s name on any and all patentable improvements to NTI
  Intellectual Property Rights coming into its purview in the Territory.  TP further agrees, upon NTI’s request and
  at NTI’s cost, promptly to file and diligently to prosecute corresponding
  patent applications in the Company’s name in such other countries outside the
  Territory as are designated by NTI.

18

	
   
	
  15.4
	
  Review of Potentially Infringing Technology

	
   
	
   
	
   

	
   
	
   
	
  In the event that TP 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 TP
  will forthwith provide NTI with whatever information it may have with respect
  thereto. NTI and TP will then consult with one another as to:

	
   
	
   
	
   

	
   
	
   
	
  15.4.1
	
  taking appropriate legal action against such third
  party for infringement of NTI’s Trade Secrets or other NTI Intellectual
  Property Rights; and/or

	
   
	
   
	
   
	
   

	
   
	
   
	
  15.4.2
	
  the advisability of purchasing, licensing or
  otherwise acquiring such technology, processes or patents of such third
  parties, in which event such rights as are acquired shall be extended to the
  Company pursuant to Article 15.2 hereof. 
  Based upon their joint decision, TP shall exert its best. efforts to
  carry out whatever the Parties have determined to be in their mutual best
  interest.

						

ARTICLE
16

	
  16.

  	
  Term of Agreement

  
	
   
	
   

	
   
	
  16.1

  	
  Term

	
   
	
   
	
   

	
   
	
   
	
  Subject to Article 4, this Agreement shall come into
  effect on the signing hereof and shall continue in effect indefinitely
  unless:

	
   
	
   
	
   

	
   
	
   
	
  16.1.1
	
  terminated by either Party by reason of a breach of
  Articles 12, 13 and/or 14 hereof; or

	
   
	
   
	
   
	
   

	
   
	
   
	
  16.1.2
	
  terminated by either Party by reason of a Default by
  the other Party which has not been cured or remedied in accordance with
  Article 17 hereof;

	
   
	
   
	
   
	
   

	
   
	
   
	
  16.1.3
	
  terminated in accordance with Article 16.2 or 16.3;
  or

	
   
	
   
	
   
	
   

	
   
	
   
	
  16.1.4
	
  any of the Ancillary Agreements shall be terminated
  by a Party thereto by reason of a material Breach (as therein defined) or
  Default (as therein defined) of any such Ancillary Agreement by another 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.

	
   
	
   
	
   
	
   

	
   
	
  16.2
	
  Termination Upon Change of Control

	
   
	
   
	
   

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

						

19

	
   
	
  16.3
	
  Termination Upon Bankruptcy or Insolvency

	
   
	
   
	
   

	
   
	
   
	
  If:

	
   
	
   
	
   

	
   
	
   
	
  16.3.1
	
  a petition is presented or an order made or a
  resolution passed or analogous proceedings are taken for appointing an
  administrator of or winding-up a Party hereto or if a notice is issued
  convening a meeting for the purpose of passing any such resolution (save for
  the purpose of and followed within four months by an amalgamation or
  reconstruction not involving or arising out of insolvency on terms previously
  approved by the other Party) or to comply with S.142 Companies Act 1985;

	
   
	
   
	
   
	
   

	
   
	
   
	
  16.3.2
	
  an encumbrancer takes possession or exercises or
  attempts to exercise any power of sale or a receiver is appointed of the
  whole or any part of the undertaking, property, assets or revenues of a
  Party;

	
   
	
   
	
   
	
   

	
   
	
   
	
  16.3.3
	
  any final judgment or order made against a Party is
  not complied with within seven days or if an execution, distress,
  sequestration or other process is levied or enforced upon or issued out
  against any part of the undertaking, property, assets or revenues of a Party;

	
   
	
   
	
   
	
   

	
   
	
   
	
  16.3.4
	
  a Party stops payment or agrees to declare a moratorium
  or becomes or is deemed to be insolvent or unable to pay its debts within the
  meaning of S.123 Insolvency Act 1986 or when they fall due or if a notice is
  issued convening a meeting of a Party or a Party proposes or enters into any
  composition or arrangement with its creditors generally or any class of its
  creditors; or

	
   
	
   
	
   
	
   

	
   
	
   
	
  16.3.5
	
  in any country in which a Party carries on business
  or has assets any event occurs which corresponds with or has an effect
  similar to any of the foregoing events or if a Party becomes subject to
  proceedings or an order, appointment or filing under the insolvency laws of
  such country;

	
   
	
   
	
   
	
   

	
   
	
   
	
  the other Party hereto may forthwith terminate this
  Agreement by written notice given to the Party to whom Article 16.3.1 to
  Article 16.3.5 applies provided that if for any reason such as (but not by
  way of limitation) operation of law or the order of any court of competent
  jurisdiction such termination or any consequential termination of any
  Ancillary Agreement shall not be effective the party giving the notice shall
  only be obliged to continue to perform this Agreement or any Ancillary
  Agreement if:

	
   
	
   
	
   

	
   
	
   
	
  (a)
	
  payments due to it thereunder for past services are
  rendered in full;

	
   
	
   
	
   
	
   

	
   
	
   
	
  (b)
	
  payment due to it thereunder for present services
  are rendered pursuant to a payment schedule acceptable to the party giving
  the notice; and

							

20

	
   
	
   
	
  (c)
	
  all other provisions thereof are complied with
  fully.

	
   
	
   
	
   
	
   

	
   
	
  16.4
	
  Payment of Amounts Due

	
   
	
   
	
   

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

	
   
	
   
	
   

	
   
	
  16.5
	
  Co-operation upon Termination

	
   
	
   
	
   

	
   
	
   
	
  Upon termination, TP shall co-operate with NTI in
  transferring NTI Intellectual Property Rights, NTI Trade Secrets, the
  Trademark, Masterbatch and Product to NTI or its designated assignee; and NTI
  shall co-operate with TP in transferring TP Trade Secrets to TP or its
  designated assignee.

	
   
	
   
	
   

	
   
	
  16.6
	
  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 12 and 13, upon
  termination of this Agreement, NTI Trade Secrets and TP Trade Secrets shall
  continue to be kept secret and confidential.

	
   
	
   
	
   

	
   
	
  16.7
	
  Cessation of Rights Upon Termination

	
   
	
   
	
   

	
   
	
   
	
  Upon the termination of this Agreement, for reason
  of Default of this Agreement or of an Ancillary Agreement rights which the
  Party in Default may have under or pursuant to this Agreement shall forthwith
  cease and terminate.  If a dispute as
  to whether a Default exists is submitted to Arbitration under Article 18
  hereof, the Parties shall jointly appoint a trustee to oversee the execution
  of duties hereunder and protection of rights hereunder of the Party allegedly
  in Default.  If the Parties cannot
  agree on a trustee for such purposes, the Arbitration Panel shall forthwith
  appoint same.

	
   
	
   
	
   

	
   
	
  16.8
	
  Compulsory Transfer of Shares upon Termination

	
   
	
   
	
   

	
   
	
   
	
  Upon the termination of this Agreement in anyone or
  more of the circumstances set out in Articles 16.1.1, 16.1.2 and 16.1.4 the
  Party (being a Shareholder) which committed the Breach or Default referred to
  in Articles 16.1.1, 16.1.2 or 16.1.4 shall be bound forthwith upon receipt of
  notice served by the other Party or Parties hereto (being a Shareholder or
  Shareholders) and agreement or certification of the Termination Consideration
  in accordance with this Article 16.8 to transfer full legal and beneficial
  ownership in its Shares to such other Party or Parties (and if more than one
  in proportion to the number of Shares held by them respectively) free and
  clear of any and all liens, encumbrances, equities or restrictions of any
  nature whatsoever for and upon payment of the Termination Consideration and
  in the event of any failure by such Party to make a Transfer or Transfers in
  accordance with the provisions of this Article 16.8 the other Party or
  Parties are hereby authorised jointly and severally to execute such a
  Transfer or Transfers as attorney for the holder thereof and to do all such
  other acts and things as are necessary or desirable to give effect to the
  provisions hereof.  The Termination
  Consideration shall be as agreed between the selling Party and the buying
  Party or Parties or in the event of a failure to agree, one-half of such
  amount as the Company’s Auditors shall upon the application of either the
  selling Party or the buying Party or Parties (or any of them) certify to be
  the value of such Shares, the valuation being made by reference only to a due
  proportion of the net asset value of the Company as at the date of
  termination determined in accordance with Internationally Accepted Accounting
  Standards and without taking account of whether the Shares being sold
  comprise a majority or minority interest or of the fact that transferability
  is restricted by the Company’s Articles of Association or of any other
  considerations or circumstances.  In
  issuing their certificate the Auditors shall act as experts and not as
  arbitrators and their decision shall be final and binding upon the Parties
  and their costs shall be borne by the Company.

						

21

ARTICLE
17

	
  17.

  	
  Default

  	
   

	
   
	
   
	
   

	
   
	
  17.1

  	
  Default

	
   
	
   
	
   

	
   
	
   
	
  A Default shall exist in the event of:

	
   
	
   
	
   

	
   
	
   
	
  17.1.1
	
  non-payment of funds by one Party to another Party
  when due and owing; and/or 

	
   
	
   
	
   
	
   

	
   
	
   
	
  17.1.2
	
  a material breach of any provision of this Agreement
  (other than Articles 12, 13, 14 and/or 23.1) or of any of the Ancillary
  Agreements;

	
   
	
   
	
   
	
   

	
   
	
   
	
  17.1.3
	
  a breach of Articles 12, 13, 14 and/or 23.1 hereof.

	
   
	
   
	
   
	
   

	
   
	
  17.2
	
  Remedies upon Default

	
   
	
   
	
   

	
   
	
   
	
  The remedies available to each Party in an instance
  of Default by another Party shall be as follows:

	
   
	
   
	
   

	
   
	
   
	
  17.2.1
	
  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 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 shall cure such failure
  to pay, and/or such 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 such Breach 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 such Breach proceeds to
  cure such Default with due diligence. 
  A Party’s right of termination shall be in addition to and not in
  limitation of any of his other rights at law or in equity based upon the
  other Party’s Breach or Default.  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.

22

	
   
	
   
	
  17.2.2
	
  Notwithstanding the foregoing, in the event of any
  violation of Articles 12, 13, 14 or 23.1 hereof by a Party hereto, each other
  Party may at its sole discretion terminate this Agreement with immediate
  effect upon giving notice to the other Parties as provided herein.

	
   
	
   
	
   
	
   

	
   
	
  17.3
	
  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
  17.2 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 17.2
  hereof), or on account of any subsequent Breach or Default by a Party.

ARTICLE
18

	
  18.
	
  Arbitration

	
   
	
   

	
   
	
  18.1
	
  Arbitration Mandatory

	
   
	
   
	
   

	
   
	
   
	
  Any of the following disputes which may arise
  between the Parties during the term of this Agreement, after the termination
  thereof, or following the liquidation or dissolution of the Company, upon
  failure by the Parties amicably to resolve same after mutual good faith
  negotiations, shall be exclusively settled by arbitration: 

	
   
	
   
	
   

	
   
	
   
	
  18.1.1
	
  a dispute as to whether a Default exists;

	
   
	
   
	
   
	
   

	
   
	
   
	
  18.1.2
	
  a dispute as to whether a Default entities the
  non-defaulting Party to terminate this Agreement;

	
   
	
   
	
   
	
   

	
   
	
   
	
  18.1.3
	
  a dispute as to the validity of this Article 18;

	
   
	
   
	
   
	
   

	
   
	
   
	
  18.1.4
	
  a dispute relating to the construction, meaning,
  interpretation, application or effect of this Agreement or anything contained
  herein;

23

	
   
	
   
	
  18.1.5
	
  a dispute as to the rights, obligations or
  liabilities of the Parties hereunder.

	
   
	
   
	
   
	
   

	
   
	
   
	
  Such arbitration proceedings shall be conducted in
  English and shall be carried on in the City of Brussels or any other place
  mutually agreeable to the Parties, under the UNCITRAL Arbitration Rules.  In such proceedings, the laws of England
  shall apply. 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.  Notwithstanding
  anything to the contrary set forth in this Agreement, no matter shall be
  referred to or settled by Arbitration which is:

	
   
	
   
	
   

	
   
	
   
	
  (a)
	
  based upon a Party’s violation of the provisions of
  this Agreement relating to NTI Trade Secrets, TP Trade Secrets or Corporate
  Opportunity, the remedies for which are set forth in Articles 12, 13 and 14
  hereof

	
   
	
   
	
   
	
   

	
   
	
   
	
  (b)
	
  expressed in this Agreement to be agreed upon by or
  determined with the consent or approval of both Parties.

	
   
	
   
	
   
	
   

	
   
	
  18.2
	
  Punitive Damages Excluded

	
   
	
   
	
   

	
   
	
   
	
  Notwithstanding the foregoing, 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.

ARTICLE
19

	
  19.

  	
  Proscription of Authority of the
  Parties to Bind Each Other

  
	
   
	
   

	
   
	
  Nothing contained in this Agreement shall be
  construed to constitute the Parties as partners with or 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 utilise the credit of the other, to extend credit in the other
  Party’s name, or to represent that it is authorised 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
20

	
  20.
	
  Reciprocal Indemnification

	
   
	
   

	
   
	
  Each Party shall indemnify and hold the other and
  the Company 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
  (through or by its agents, employees or other representatives) 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 defence the Party to be indemnified shall
  co-operate.  If the indemnifying Party
  fails forthwith upon notice to assume such defence, then the Party to be
  indemnified may proceed with the defence thereof including settlement, in
  which case the indemnifying Party shall bear the costs of defence including
  attorneys’ fees and shall pay the amount of any judgment or settlement.

24

ARTICLE
21

	
  21.

  	
  Transfer of Shares

  
	
   
	
   

	
   
	
  21.1

  	
  Restrictions on Transfer of Shares

	
   
	
   
	
   

	
   
	
   
	
  Following the issue of Shares in the Company
  pursuant to Article 4 hereof, no Shareholder shall Transfer any Share 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 Company, TP and NTI shall be under no obligation to
  recognise as holder of a Share any person to whom any such Share was
  transferred other than in strict compliance with the terms and provisions of
  this Agreement and, unless so complied with, any such person shall have no
  rights as a Shareholder.

	
   
	
   
	
   

	
   
	
  21.2
	
  Right of First Refusal to Acquire Shares

	
   
	
   
	
   

	
   
	
   
	
  Any Shareholder receiving a bona fide offer from a
  proposed Transferee (“Offer”) for the purchase of any of its Shares, and who
  wishes to make a Transfer of such Shares to such proposed Transferee in
  accordance with such Offer shall, prior to making any Transfer, give written
  notice (hereinafter called a “Transfer Notice”) thereof to the Company and to
  the other Shareholders. 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 Transferor
  shall furnish to the Company and to the other Shareholders such additional
  information concerning the proposed Transfer and/or the proposed Transferee
  as any of them may reasonably request. In order that the other Shareholders
  shall be better able to determine the compatibility of the proposed
  Transferee as a Shareholder, the Transferor shall arrange for the other
  Shareholders, if so requested, to be introduced to shall arrange for the
  other Shareholders, 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 Transfer Notice, the other Shareholders shall have the option to
  purchase any or all of the Shares specified in the Transfer Notice at the
  terms set forth therein and, if there is more than one other Shareholder, the
  number of Shares to which each other Shareholder’s option relates shall be in
  proportion to the numbers of Shares held by them respectively.

25

	
   
	
  21.3
	
  Exercise of Right to Acquire Shares

	
   
	
   
	
   

	
   
	
   
	
  The foregoing option shall be exercisable by written
  notice (“Exercise Notice”) to the Transferor within the forty-five (45) day
  period aforesaid and the exercise of said option shall be effective upon
  receipt of the Exercise Notice by said Transferor.  If any of the other Shareholders does not exercise its option,
  the Shares to which that option relates shall be offered to such of the other
  Shareholders as have exercised their option in proportion to the aggregate of
  the number of Shares held by them respectively and the number of Shares in
  respect of which they have already exercised their rights under this Article
  21 and such procedure shall be repeated until in accordance therewith the
  other Shareholders have given notice in respect of as many of the Shares
  comprised in the Transfer Notice as they wish to acquire.  If the other Shareholders’ rights
  hereunder are exercised in respect of all the Shares specified in the
  Transfer Notice, the purchase and sale shall be closed at the offices of the
  Company or at such other place as agreed within ten (10) days after the
  expiration of the last period for exercise thereof on the terms and
  conditions set forth in the Transfer Notice. 
  At the time of sale, the Transferor shall represent and warrant to
  each of the other Shareholders to whom the Shares are being sold that such
  other Shareholder shall be the sole owner of the Shares purchased by it 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.

	
   
	
   
	
   

	
   
	
  21.4
	
  Sale of Shares to a Third Party

	
   
	
   
	
   

	
   
	
   
	
  If the other Shareholders do not serve Exercise
  Notices in respect of all of the Shares specified in the Transfer Notice
  within the time period herein above provided, the Transferor may then for a
  period of sixty (60) days following the expiration of such time period make a
  Transfer to the proposed Transferee of all the Shares specified in the
  Transfer Notice in accordance with the terms and conditions therein set forth
  and upon terms that the Transferee shall be the sole owner of such Shares
  free and clear of any and all liens, encumbrances, equities or restrictions
  of any nature whatsoever; provided that the Transferee shall have joined in
  this Agreement by executing a Deed of Adherence.  The Parties shall procure that if a Transfer of Shares is made
  in accordance with the provisions of this Article 21.4 the Transfer shall be
  approved in accordance with the Articles of Association.

	
   
	
   
	
   

	
   
	
  21.5
	
  Shares Transferred to a Third Party Subject to
  Restrictions

	
   
	
   
	
   

	
   
	
   
	
  Whether or not a Transfer of Shares is made to a
  Transferee within the sixty (60) day period referred to in Article 21.4
  hereof such Shares shall again be subject to all of the terms, conditions and
  restrictions of this Agreement. Unless the other Shareholder or Shareholders
  shall so agree in writing, a Transferor may not make a Transfer of Shares to
  a Transferee if the terms and conditions under which the Transferor intends
  to consummate the Transfer of Shares differ in any material way from the terms and
  conditions set forth in the Transfer Notice.

26

	
   
	
  21.6
	
  Attempted Transfer of Shares in Violation of this
  Agreement

	
   
	
   
	
   

	
   
	
   
	
  In the event of any Transfer of any Share or Shares
  in violation of the terms of this Agreement, the Company shall not approve or
  register the Transfer and until such time as the Transfer has been rescinded,
  the Shareholder or Shareholders (other than the Transferor) shall be entitled
  for their own joint benefit to receive any dividends or distributions in
  respect of the Share or Shares to which the Transfer relates and as attorney
  or attorneys for the Transferor jointly (if more than one) to exercise all
  rights of any kind attaching to such Share or Shares. This Article 21.6 shall
  not be construed as limiting any remedy which any Shareholder may have under
  law upon any Transfer of any Share or Shares subject to this Agreement which
  is made or is attempted to be made in violation of this Agreement.

	
   
	
   
	
   

	
   
	
  21.7
	
  Permitted Transfers of Shares

	
   
	
   
	
   

	
   
	
   
	
  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 21 hereof, to make a
  Transfer of any Share or Shares 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 by the other
  Shareholders provided that the Transferee shall have executed a Deed of
  Adherence.  Where any Share or Shares
  have been transferred in circumstances permitted by this Article 21. 7
  (whether directly or by a series of transfers so permitted) from a body
  corporate (“the First Group Transferor” which expression does not include a
  second or subsequent Transferor in such a series of Transfers) and the
  Transferee (“the Group Transferee”) ceases to be controlled by or to control
  or to be under common control with the First Group Transferor then the Group
  Transferee shall forthwith transfer the said Share or Shares to the First
  Group Transferor and failure to transfer such Share or Shares within 28 days
  of such cessation shall entitle the other Shareholder or Shareholders to the
  rights set out in Article 21.6. 

	
   
	
   
	
   

	
   
	
  21.8
	
  Pledge of Shares Subject to this Agreement

	
   
	
   
	
   

	
   
	
   
	
  For the avoidance of doubt, and without prejudice to
  the generality of the definition of “Transfer” in Article 1, any pledge of
  Shares by a Shareholder for any of its obligations shall be subject to the
  provisions of this Agreement. 

	
   
	
   
	
   

	
   
	
  21.9
	
  Deed of Adherence

	
   
	
   
	
   

	
   
	
   
	
  No Transfer of a Share or Shares may be made to a
  person who is not a Party to this Agreement until that Party has executed and
  delivered a Deed of Adherence to the other Party or Parties hereto. 

27

	
   
	
  21.10
	
  Law Applicable to Transferees

	
   
	
   
	
   

	
   
	
   
	
  Any Transfers permitted by this Article shall be
  made in accordance with the laws of England. 

ARTICLE
22

	
  22.
	
  Articles of Association

	
   
	
   

	
   
	
  22.1
	
  If during the continuance of this Agreement there
  shall be any conflict between the provisions of this Agreement and the
  provisions of the Articles of Association, the provisions of this Agreement
  shall prevail.

	
   
	
   
	
   

	
   
	
  22.2
	
  Each of the Parties, undertakes with each of the
  others fully and promptly to observe and comply with the provisions of the
  Articles of Association to the intent and effect that each and every
  provision thereof shall be enforceable by the Parties inter se.

	
   
	
   
	
   

	
   
	
  22.3
	
  Nothing in this Agreement shall be deemed to be an
  amendment of the Articles of Association or of any previous articles of
  association of the Company.

ARTICLE
23

	
  23.

  	
  General Provisions

  
	
   
	
   

	
   
	
  23.1

  	
  Benefit of Parties

	
   
	
   
	
   

	
   
	
   
	
  All of the terms and provisions of this Agreement
  and of the Ancillary Agreements shall be binding upon the Parties executing
  the 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 responsibility
  hereunder and (ii) the assignee shall expressly assume in writing and agree
  to perform such obligations, liabilities and responsibilities of the
  assignor.  If an assignment has been
  made in circumstances permitted by this Article 23.1 (whether directly or by
  a series of assignments so permitted) from a body corporate (“the first Group
  Assignor” which expression does not include a second or subsequent assignor
  in such a series of assignments) and the assignee (“the Group Transferee”)
  ceases to be controlled by or to control or to be under common control with
  the First Group Assignor then the Group Assignee shall forthwith assign this
  Agreement and all of its rights hereunder relating thereto (or such portion
  thereof as shall have been assigned to it) to the First Group Assignor and
  failure to make such assignment within 28 days of such cessation shall
  constitute a Default.

28

	
   
	
  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
	
  Co-operation

	
   
	
   
	
   

	
   
	
   
	
  During the term of this Agreement, each Party shall
  co-operate with and assist the other Party in taking such acts as may be
  appropriate to enable all Parties to effect compliance with the terms of this
  Agreement and the Ancillary Agreements and to carry out the true intent and
  purpose thereof. 

	
   
	
   
	
   

	
   
	
  23.4
	
  Index and Captions

	
   
	
   
	
   

	
   
	
   
	
  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. 

	
   
	
   
	
   

	
   
	
  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 Parties hereto, and any breach of any of the provisions of this
  Agreement or of the Ancillary Agreements and any Default; provided, however,
  that such waiver shall not affect or impair the waiving Party’s rights in
  respect to any other covenants, condition, breaches or Defaults. 

	
   
	
   
	
   

	
   
	
  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 such an 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 event continues
  to be in effect on the date that such notice is given.

29

	
   
	
  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 “hard copy”, (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 NTI,
  to:
	
  Northern
  Technologies International Corporation 

  6680 North Highway 49

  Lino Lakes, MN 55014

  Attention: President

  Tel:  612-784-1250

  Fax:  612-784-2902

	
   
	
   
	
   

	
   
	
  Copy to:
	
  Philip M.
  Lynch 

  One Commerce Park Square  

  23200 Chagrin Blvd., Suite 107

  Beachwood, OH 44122

  Tel:  216-595-1740

  Fax:  216-595-1741

	
   
	
   
	
   

	
   
	
  If to TP to:
	
  Taylor
  Packaging (Bishop Auckland) Limited 

  Meadowfield Avenue

  Green Lane Industrial Estate

  Spennymoor

  County Durham DLI6 6YJ  

  Attention: Company Secretary  

  Tel:  01388 420 555

  Fax:  01388 420 777

	
   
	
   
	
   

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

	
   
	
  23.8
	
  Entire
  Agreement 

	
   
	
   
	
   

	
   
	
   
	
  This
  Agreement, together with the Ancillary Agreements and any other documents now
  or subsequently referred to herein or attached hereto which form a part of this
  Agreement, contain the entire understanding of the Parties hereto.  Each of the Parties unconditionally waive
  any rights it may have to claim damages against the other or others of them
  on the basis of any statement made by the other or others of them (whether
  made carelessly or not) not set out in this Agreement or in any of the
  Ancillary Agreements (or for any breach of any warranty given by any of them
  not so set out) unless such statement or warranty was made or given
  fraudulently and without prejudice to the generality of the foregoing each of
  the Parties unconditionally waives any right it may have to rescind this
  Agreement or any of the Ancillary Agreements on the basis of any statement
  made by the other or others of them (whether made carelessly or not) whether
  or not such statement is set out or referred to in this Agreement or any of
  the Ancillary Agreements unless such statement was made fraudulently.  

30

	
   
	
  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 

	
   
	
   
	
   

	
   
	
   
	
  TP shall be
  responsible for the preparation and filing of all necessary documents
  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.  NTI shall provide whatever material and information required of
  and available to it in connection with the preparation and filing of such
  documents.  

	
   
	
   
	
   

	
   
	
  23.11
	
  RTPA 

	
   
	
   
	
   

	
   
	
   
	
  No provision
  of this Agreement, or of any arrangement of which it forms part, by virtue of
  which such agreement or arrangement is subject to part, by virtue of which
  such agreement or arrangement is subject to registration under the
  Restrictive Trade Practices Act 1976, shall take effect until the day after
  particulars of such agreement or arrangement have been furnished to the
  Director General of Fair Trading pursuant to that Act.  Particulars shall, if necessary, be
  furnished to the Director General of Fair Trading within three months of the
  date of this Agreement.  

	
   
	
   
	
   

	
   
	
  23.12
	
  Payments 

	
   
	
   
	
   

	
   
	
   
	
  Any payment
  to be made to NTI or TP 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 TP or NTI, as the case may be, TP and NTI shall have
  the right to specify in writing any bank account to which payments due them
  (respectively) shall be made.  

31

	
   
	
  23.13
	
  Enforcement
  of Company’s Rights 

	
   
	
   
	
   

	
   
	
   
	
  If it
  appears that any of the Parties or any person connected with any of the
  Parties (in whatever capacity) is in breach of any obligation which it owes
  to the Company (whether under this Agreement or any of the Ancillary
  Agreements or otherwise), or has misapplied or retained or becomes liable or
  accountable for any money or property of the Company, or has been guilty of
  any misfeasance or breach of any fiduciary duty in relation to the Company,
  or is under any obligation to indemnify the Company against any liability, it
  is agreed that the prosecution of any right of action of the Company in
  respect thereof shall be passed to the Directors of the Company nominated by
  the other Parties who shall have full authority on behalf of the Company to
  negotiate and settle any claim arising thereout and the first mentioned Party
  shall take all steps within its power to give effect to the provisions of
  this Article 24.13.  

	
   
	
   
	
   

	
   
	
  23.14
	
  Further
  Assurance 

	
   
	
   
	
   

	
   
	
   
	
  The Parties
  shall and shall use their respective reasonable endeavours to procure that
  any necessary third parties shall do, execute and perform all such further
  deeds, documents, assurances, acts and things as any of the Parties may
  reasonably require by notice in writing to the others to carry out the
  provisions of this Agreement, the Ancillary Agreements, the Memorandum of
  Association and the Articles of Association with full force and effect.  

	
   
	
   
	
   

	
   
	
  23.15
	
  Publicity 

	
   
	
   
	
   

	
   
	
   
	
  Any
  publicity with respect to this Agreement prior to the formation of the
  Company shall be under the joint control of both parties.  After the formation of the Company,
  publicity shall be under the control of the Company as determined by its
  Board.  

	
   
	
   
	
   

	
   
	
  23.16
	
  Shareholders
  Undertakings 

	
   
	
   
	
   

	
   
	
   
	
  Each of the
  Shareholders undertakes with each of the other Parties that it will use its
  powers in relation to the Company so as to ensure that the Company ratifies
  and approves this Agreement and the Ancillary Agreements and fully and
  promptly observes, performs and complies with the terms hereof as if it were
  a Party hereto.  

	
   
	
   
	
   

	
   
	
  23.17
	
  Exercise of
  Powers 

	
   
	
   
	
   

	
   
	
   
	
  Where any
  Shareholder is required under this Agreement to exercise its powers in
  relation to the Company to procure a particular matter or thing, such
  obligation shall be deemed to include an obligation to exercise its powers
  both as a Shareholder and as a Director (where applicable) of the Company and
  to procure that any Director appointed by it shall procure such matter or
  thing.  

32

	
   
	
  23.18
	
  Brokers 

	
   
	
   
	
   

	
   
	
   
	
  The Parties
  acknowledge that all negotiations relative to this 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 Company for a brokerage commission, finder’s fee
  or any similar payment.  

	
   
	
   
	
   

	
   
	
  23.19
	
  Applicable
  Law 

	
   
	
   
	
   

	
   
	
   
	
  This Agreement
  shall be read and construed in accordance with and be governed by the laws of
  England.

IN WITNESS WHEREOF,
the Parties have executed this Agreement as a Deed the day and year first above
written. 

	
  EXECUTED by 
	
  )
	
   

	
  TAYLOR PACKAGING (BISHOP
	
  )
	
   

	
  AUCKLAND) LIMITED 
	
  )
	
   

	
  acting by: 
	
  )
	
   

	
   
	
   
	
   

	
   
	
   
	
                 /s/
  

	
   
	
   
	
  

  
	
   
	
   
	
  Director 

	
   
	
   
	
   

	
   
	
   
	
                 /s/
  

	
   
	
   
	
  

  
	
   
	
   
	
  Director/Secretary
  

	
   
	
   
	
   

	
  EXECUTED by 
	
  )
	
   

	
  NORTHERN TECHNOLOGIES 
	
  )
	
   

	
  INTERNATIONAL CORPORATION 
	
  )
	
   

	
  acting by: 
	
  )
	
   

	
   
	
   
	
   

	
   
	
   
	
  /s/ Philip
  M. Lynch 

	
   
	
   
	
  

  
	
   
	
   
	
  Director 

	
   
	
   
	
   

	
   
	
   
	
  

  
	
   
	
   
	
  Director/Secretary
  

33

ANNEX 1

PART 1

OBJECTS CLAUSE

	
  (1)

  	
  The objects
  for which the Company is established are to manufacture market and distribute
  polyethylene film and solid material of polyethylene substance in the form of
  boxes, tubes and other containers and to carry on any other business which by
  unanimous agreement of the members it is desirable for the Company to carry
  on in connection with or as ancillary to such objects. 

	
   
	
   

	
  (2)
	
  In
  furtherance of such objects, but not otherwise the Company shall have the
  following powers:  

	
   
	
  (A)
	
  To purchase,
  take on lease or on hire or otherwise acquire, hold, develop, sell, hire out,
  grant leases or licences or otherwise dispose of or deal with real and
  personal property of all and any kinds and any interest, right or privilege
  therein, for such consideration and on such terms as may be considered
  expedient.  

	
   
	
   
	
   

	
   
	
  (B)
	
  To purchase,
  subscribe for or otherwise acquire, and hold and deal with, any shares,
  stocks, debentures, bonds or securities of any other company.  

	
   
	
   
	
   

	
   
	
  (C)
	
  To sell or
  otherwise dispose of the whole or any part of the business and/or undertaking
  of the Company, either together or in portions for such consideration and on
  such terms as may be considered expedient. 
  

	
   
	
   
	
   

	
   
	
  (D)
	
  To purchase
  or otherwise acquire and undertake, and to supervise and manage, all or any
  part of the business, property, assets and liabilities of any person or
  company.  

	
   
	
   
	
   

	
   
	
  (E)
	
  To invest
  and deal with the monies of the Company not immediately required for the
  purpose of its business in or on such investments or securities and in such
  manner as may be considered expedient, and to dispose of or vary any such
  investments or securities.  

	
   
	
   
	
   

	
   
	
  (F)
	
  To enter
  into any partnership or into any arrangement for sharing profits or to
  amalgamate with any person or company carrying on or proposing to carry on
  any business.  

	
   
	
   
	
   

	
   
	
  (G)
	
  To lend or
  advance money or give credit to such persons or companies and on such terms
  as may be considered expedient, and to receive money on deposit or loan from
  any person or company.  

	
   
	
   
	
   

	
   
	
  (H)
	
  To borrow or
  raise money on such terms and on such security as may be considered expedient
  and, in particular, but without limiting the generality of the foregoing, by
  the issue or deposit of debentures, and to secure the repayment of any money
  borrowed, raised or owing by mortgage, charge or lien upon the whole or any
  part of the undertaking, property and assets of the Company both present and
  future, including its uncalled capital. 
  

34

	
   
	
  (I)
	
  To give
  indemnity for, or to guarantee, support or secure the performance of all or
  any of the obligations of any person or company whether by personal covenant
  or by mortgage, charge or lien on the whole or any part of the undertaking, property
  and assets of the Company both present and future, including its uncalled
  capital, or by all or any of such methods; and in particular, but without
  limiting the generality of the foregoing, to give indemnity for, or to
  guarantee, support or secure whether by personal covenant or by any such
  mortgage, charge, or lien, or by all or any of such methods, the performance
  of all or any of the obligations (including the repayment or payment of the
  principal and premium of, and interest on, any’ securities) of any company
  which is for the time being the Company’s holding company or subsidiary or
  another subsidiary of any such holding company.  

	
   
	
   
	
   

	
   
	
  (J)
	
  To pay for
  any property, assets or rights acquired by the Company, and to discharge or
  satisfy any debt, obligation or liability of the Company, either in cash or
  in shares with or without preferred or deferred rights in respect of dividend
  or repayment of capital or otherwise, or by any other securities which the
  Company has power to issue, or partly in one way and partly in another, and
  generally on such terms as may be considered expedient.  

	
   
	
   
	
   

	
   
	
  (K)
	
  To accept
  payment for any property, assets or rights disposed of or dealt with or for
  any services rendered by the Company, or in discharge or satisfaction of any
  debt, obligation or liability to the Company, either in cash or in shares,
  with or without deferred or preferred rights in respect of dividend or
  repayment of capital or otherwise, or in any other securities, or partly in
  one way and partly in another, and generally on such terms as may be
  considered expedient.  

	
   
	
   
	
   

	
   
	
  (L)
	
  To form,
  promote, finance or assist any other company, whether for the purpose of
  acquiring all or any of the undertaking, property and assets of the Company
  or for any other purpose which may be considered expedient.  

	
   
	
   
	
   

	
   
	
  (M)
	
  To issue,
  place, underwrite or guarantee the subscription of, or concur or assist in
  the issuing or placing, underwriting or guaranteeing the subscription of
  shares, stocks, debentures, bonds and other securities of any company on such
  terms as to remuneration and otherwise as may be considered expedient.  

	
   
	
   
	
   

	
   
	
  (N)
	
  To apply
  for, purchase or otherwise acquire and hold, use, develop, sell, licence or
  otherwise dispose of or deal with patents, copyrights, designs, trade marks,
  secret processes, know-how and inventions and any interest therein.  

	
   
	
   
	
   

	
   
	
  (0)
	
  To draw,
  make, accept, endorse, negotiate, discount, execute, and issue promissory
  notes, bills of exchange, scrip warrants and other transferable or negotiable
  instruments.  

35

	
   
	
  (P)
	
  To the
  extent permitted by law, to give financial assistance for the purpose of the
  acquisition of shares of the Company or for the purpose of reducing or
  discharging a liability incurred for the purpose of such an acquisition and
  to give such assistance by means of a gift, loan, guarantee, indemnity, the
  provision of security or otherwise.  

	
   
	
   
	
   

	
   
	
  (Q)
	
  To enter
  into any arrangement with any Government or other authority, supreme,
  municipal, local or otherwise, and to obtain from any such Government or
  authority any rights, concessions, privileges, licences and permits, and to
  promote any legislation, as may be considered expedient.  

	
   
	
   
	
   

	
   
	
  (R)
	
  To
  distribute among the members in specie any property of the Company, or any
  proceeds of sale or disposal of any property of the Company, and for such
  purpose to distinguish and separate capital from profits, but so that no
  distribution amounting to a reduction of capital shall be made except with
  the sanction (if any) for the time being required by law.  

	
   
	
   
	
   

	
   
	
  (S)
	
  To
  remunerate any person or company rendering service to the Company in any
  manner and to pay all costs, charges and expenses incurred or sustained in or
  about the promotion and establishment of the Company and of any other company
  formed, promoted, financed or assisted by the Company, or which the Company
  shall consider to be in the nature of preliminary expenses in relation to the
  Company or any such other company, including the cost of advertising,
  commissions for underwriting, brokerage, printing and stationery, and the
  legal and other expenses of the promoters. 
  

	
   
	
   
	
   

	
   
	
  (T)
	
  To do all or
  any of the above things in any part of the world, either alone or in
  conjunction with others, and either as principals, agents, contractors, trustees
  or otherwise and either by or through agents, contractors, trustees or
  otherwise.  

It is hereby declared (1) that the expressions “subsidiary” and
“holding company” where they appear in this clause shall have the meanings
ascribed to those expressions by Section 736 of the Companies Act 1985; and (2)
that, where the context so admits, the word “company” in this clause shall be
deemed to include any partnership or other body of persons whether or not
incorporated and, if incorporated, whether or not a company within the meaning
of the Companies Act 1985. 

36

PART 2

ARTICLES OF ASSOCIATION

Company No: 3248266 

THE COMPANIES ACT 1985 AND 1989

COMPANY LIMITED BY SHARES

ARTICLES OF ASSOCIATION 

of 

ZERUST (UK) LIMITED

TABLE A

	
  1.
	
  Subject as
  otherwise provided in these Articles, the regulations in Table A prescribed
  under Section 8 of the Companies Act 1985, as in force at the date of
  incorporation of the Company (in these Articles referred to as “Table A”),
  shall apply to the Company. 

	
   
	
   

	
  2.
	
  The following
  provisions of Table A shall not apply to the Company:  

	
   
	
  (i)
	
  in
  regulation 24: the words “which is not fully paid”;  

	
   
	
   
	
   

	
   
	
  (ii)
	
  regulation
  40; 

	
   
	
   
	
   

	
   
	
  (iii)
	
  regulation
  41;  

	
   
	
   
	
   

	
   
	
  (iv)
	
  regulation
  50; 

	
   
	
   
	
   

	
   
	
  (v)
	
  regulation
  54; 

	
   
	
   
	
   

	
   
	
  (vi)
	
  in regulation
  62(a): the words “not less than 48 hours”; 

	
   
	
   
	
   

	
   
	
  (vii) 
	
  in
  regulation 62(b): the words “not less than 24 hours;”

	
   
	
   
	
   

	
   
	
  (viii) 
	
  in
  regulation 66: the last sentence;

37

	
   
	
  (ix)
	
  regulations
  73 to 80 inclusive and all references elsewhere in Table A to retirement by
  rotation shall not apply accordingly; 
  

	
   
	
   
	
   

	
   
	
  (x)
	
  in
  regulation 88: the third and fifth sentences; 

	
   
	
   
	
   

	
   
	
  (xi)
	
  in
  regulation 89: the first sentence; 

	
   
	
   
	
   

	
   
	
  (xii) 
	
  regulations
  94 to 98 inclusive.

INTERPRETATION

	
  3.
	
  In these
  Articles, where the context so admits: 

	
   
	
  “A” Director
	
  means any
  person appointed as a director in accordance with the provisions of Article
  9(1);

	
   
	
   
	
   

	
   
	
  “B” Director
	
  means any
  person appointed as a director in accordance with the provisions of Article
  9(2);

	
   
	
   
	
   

	
   
	
  “A” Shares
	
  means the
  issued” A” ordinary shares of £1 each in the capital of the Company;

	
   
	
   
	
   

	
   
	
  “B” Shares”
	
  means the
  issued “B” ordinary shares of £1 each in the capital of the Company;

	
   
	
   
	
   

	
   
	
  “the “A”
  Shareholders(s)”
	
  means the
  registered holder(s) for the time being of the “A” Shares;

	
   
	
   
	
   

	
   
	
  “the “B”
  Shareholder(s)”
	
  means the
  registered holder(s) for the time being of the “B” Shares;

	
   
	
   
	
   

	
   
	
  “Controlling
  “A” Shareholder(s)”
	
  means the
  registered holder(s) for the time being of a majority of the “A” Shares;

	
   
	
   
	
   

	
   
	
  “Controlling
  “B” Shareholder(s)”
	
  means the
  registered holder(s) for the time being of a majority of the “B” Shares;

	
   
	
   
	
   

	
   
	
  “holding
  company” and “subsidiary”
	
  shall be
  construed in accordance with Section 736 of the Companies Act 1985;

SHARE CAPITAL

	
  4.

  	
  The share
  capital of the Company is £100,000 divided into 50,000 “A” Shares and 50,000
  “B” Shares.  Such shares shall entitle
  the holders thereof to the respective rights and privileges and subject them
  to the respective restrictions and provisions contained in these Articles,
  but save as otherwise provided in these Articles the “A” Shares and the “B”
  Shares shall rank pari passu in all respects. 

38

TRANSFER OF SHARES

	
  5.
	
  All
  transfers of shares shall be effected by instrument in writing in any form
  for the time being authorised by the Stock Transfer Act 1963 (or any
  statutory modification or re-enactment thereof for the time being in force)
  or any other form which the directors may approve.  

PROCEEDINGS AT GENERAL MEETINGS

	
  6.1
	
  No business
  shall be transacted at any general meeting unless a quorum is present at the
  time when the meeting proceeds to business The quorum at a general meeting
  shall consist of one (1) “A” Shareholder and one (1) “B” Shareholder each of
  whom is present in person or by proxy or, in the case of a corporation, by a
  duly authorised representative.  

	
   
	
   

	
  6.2
	
  If a quorum
  is not present within one (1) hour from the time appointed for a general
  meeting, the meeting shall stand adjourned to the same day in the next week
  at the same time and place and if a quorum is then not present it shall stand
  adjourned likewise to the following week; if a quorum is again not present,
  then at such readjourned meeting the member or members present shall form a
  quorum and a resolution shall be valid if passed by a majority vote
  irrespective of which member or members vote in favour of its being passed
  (provided that this shall only be the case for the purposes of the
  transaction of the business specified in the agenda contained in the notice
  of the meeting).  

VOTES OF MEMBERS

	
  7.1

  	
  Subject to
  any rights or restrictions attached to any shares, each member who (being an
  individual) is present in person or by proxy or (being a corporation) is
  present by duly authorised representative shall have one vote for every share
  of which he is the holder.  

	
   
	
   

	
  7.2
	
  The chairman
  shall not have a casting vote in the event of equality. 

NUMBER OF DIRECTORS

	
  8.
	
  The
  directors shall not be more than four (4) in number of whom not more than two
  (2) shall be “A” Directors and not more than two (2) shall be “B”
  Directors.  

APPOINTMENT AND REMOVAL OF DIRECTORS

	
  9.1
	
  The
  Controlling “A” Shareholder(s) shall be entitled at any time and from time to
  time to appoint a total of two (2) directors as “A” Directors and to remove
  or replace any director so appointed. 
  

	
   
	
   

	
  9.2
	
  The
  Controlling “B” Shareholder(s) shall be entitled at any time and from time to
  time to appoint a total of two (2) directors as “B” Directors and to remove
  or replace any director so appointed. 
  

39

	
  9.3

  	
  Every
  appointment and removal of a director under Articles 9.1 and 9.2 shall be
  effected by notice in writing signed by or on behalf of the Controlling “A”
  Shareholder(s) or the Controlling “B” Shareholder(s), as the case may be, and
  shall take effect immediately upon receipt of such notice at the registered
  office of the Company or by the Secretary or as and from such date (if any)
  thereafter as may be specified in such notice.  

ALTERNATE DIRECTORS

	
  10.1
	
  At the end
  of regulation 66 of Table A there shall be added the following sentence: 

	
   
	
   

	
   
	
  “A director
  or any other person may act as alternate director to represent more than one
  director, and an alternate director shall be entitled at meetings of the
  directors or any committee of the directors to one vote for every director
  whom he represents in addition to his own vote (if any) as a director, but he
  shall count as only one for the purpose of determining whether a quorum is
  present.”  

	
   
	
   

	
  10.2
	
  At the end
  of regulation 67 of Table A, there shall be added the following sentence: 

	
   
	
   

	
   
	
  “The
  appointment of an alternate director shall also terminate automatically on
  the happening of any event which if he were a director would cause him to
  vacate his office as director.”  

INTERESTS OF DIRECTORS

	
  11.

  	
  A director
  may vote at any meeting of the directors or a committee of the directors on
  any resolution concerning a transaction or arrangement with the Company or in
  which the Company is interested, or concerning any other matter in which the
  Company is interested, notwithstanding that he is interested in that
  transaction, arrangement or matter or has in relation to it a duty which
  conflicts or may conflict with the interests of the Company.  

PROCEEDINGS OF DIRECTORS

	
  12.
	
  Any director
  may, and the Secretary shall on the requisition of any director, at any time
  summon a meeting of the directors. 
  Unless all the directors shall otherwise agree, at least two (2) weeks
  written notice of every meeting of the directors shall be given and no
  business except that in respect of which the notice has been given shall be
  transacted at that meeting unless all the directors otherwise agree.  A director’s attendance at a meeting of
  directors convened by less than two week’s notice shall constitute a waiver
  of his rights to object to the failure to give such notice.  

	
   
	
   

	
  13.1
	
  The quorum
  for the transaction of the business of the directors shall be one (1) “A”
  Director and one (1) “B” Director each of whom must be present throughout the
  meeting. Questions arising at a meeting shall only be capable of resolution
  if at least one (1) of the “A” Directors and at least one of the “B”
  Directors who are present vote in favour of the resolution.  

40

	
  13.2

  	
  If a quorum
  is not present within one (1) hour from the time appointed for a meeting of
  the directors, the meeting shall stand adjourned to the same day in the next
  week at the same time and place and if a quorum is then not present it shall
  stand adjourned likewise to the following week; if a quorum is again not
  present, then at such re-adjourned meeting any two (2) directors shall form a
  quorum and a resolution will be valid if passed by majority vote irrespective
  of which directors vote in favour of its being passed (provided that this
  shall only be the case for the purpose of the transaction of the business
  specified in the agenda contained in the notice of the meeting).  

	
   
	
   

	
  14.
	
  If and so
  long as the number of the directors is reduced below the quorum prescribed by
  Article 13, the continuing directors may act for the purpose of convening a
  general meeting of the Company but for no other purpose.  

	
   
	
   

	
  15.
	
  Unless the
  Controlling “A” Shareholder(s) and the Controlling “B” Shareholder(s) agree
  otherwise, the directors may appoint one of their number to be the chairman
  of the board of directors and may at any time remove him from that
  office.  The director so appointed
  shall preside at every meeting of directors at which he is present but in the
  absence of such a director, of if such director is unwilling to preside or is
  not present within five minutes after the time appointed for the meeting, the
  directors present may appoint one of their number to be chairman of the
  meeting.  The chairman shall not have
  a second or casting vote.  

	
   
	
   

	
  16.1
	
  A committee
  of directors shall always consist of at least one (1) “A” Director and one
  (1) “B” Director who shall be present throughout any committee meeting.
  Regulation 72 of Table A shall be modified accordingly.  

	
   
	
   

	
  16.2
	
  A committee
  of directors may meet and adjourn as it sees fit. No decision of a committee
  shall be effective unless at least one (1) “A” Director and one (1) “B”
  Director who are present vote in favour. 
  

	
   
	
   

	
  17.
	
  Without
  prejudice to the first sentence of regulation 88 of Table A, a meeting of the
  directors or of a committee of the directors may consist of a conference
  between directors who are not all in one place, but of whom each is able
  (directly or by telephonic communication) to speak to each of the others, and
  to be heard by each of the other simultaneously: and the word “meeting” in
  these Articles and in Table A shall be construed accordingly.  

41

ANNEX 2 

MANAGEMENT AND SALES REPRESENTATION AGREEMENT

42

MANAGEMENT AND SALES
REPRESENTATION AGREEMENT

BY AND BETWEEN

TAYLOR PACKAGING (BISHOP AUCKLAND) LIMITED

AND

ZERUST (UK) LIMITED

DATED AS OF                  DECEMBER 1996

MANAGEMENT AND SALES REPRESENTATION AGREEMENT

THIS AGREEMENT is
made the              day of December
1996 

BETWEEN: 

	
  (1)
	
  TAYLOR PACKAGING (BISHOP AUCKLAND) LIMITED
  of Meadowfield Avenue, Green Lane Industrial Estate, Spennymoor, Co. Durham,
  DLl6 6YJ (hereinafter “TP”); and 

	
   
	
   

	
  (2)
	
  ZERUST (UK) LIMITED of Meadowfield Avenue,
  Green Lane Industrial Estate, Spennymoor, Co. Durham, DLl6 6YJ (hereinafter
  “the Company”).  

ARTICLE 1.

	
  1.
	
  DEFINITIONS 

	
   
	
   

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

	
   
	
   

	
  1.1
	
  Ancillary Agreements. 

	
   
	
   

	
   
	
  The
  following are the Ancillary Agreements and the Parties thereto:

	
   
	
  1.1.1
	
  Management
  and Sales Representation Agreement between TP and the Company (“Management
  Agreement”); 

	
   
	
   
	
   

	
   
	
  1.1.2
	
  License
  Agreement between NTI and the Company (“License Agreement”); and 

	
   
	
   
	
   

	
   
	
  1.1.3
	
  Technical
  Assistance and Marketing Support Agreement between NTI and the Company
  (“Technical Assistance Agreement”) and “Ancillary Agreement” shall be
  construed accordingly. 

	
  1.2
	
  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”). 

	
   
	
   

	
  1.3
	
  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 Joint Venture Agreement or any of the Ancillary
  Agreements.  

	
   
	
   

	
  1.4
	
  Company or Joint Venture. 

	
   
	
   

	
   
	
  Zerust (UK)
  Limited, being that entity created in the Territory by the Parties pursuant
  to the Joint Venture Agreement to conduct the Company’s Business.  

1

	
  1.5

  	
  Company’s Business. 

  
	
   
	
   

	
   
	
  The
  Company’s Business shall be the manufacturing, marketing and distribution of
  Product in the Territory.  

  
	
   
	
   

	
  1.6
	
  Completion. 

	
   
	
   

	
   
	
  Completion
  of the Joint Venture Agreement in accordance with its terms. “Completed”
  shall be construed accordingly.  

	
   
	
   

	
  1.7
	
  Effective Date. 

	
   
	
   

	
   
	
  The date
  upon the Joint Venture Agreement is Completed.  

	
   
	
   

	
  1.8
	
  Joint Venture Agreement or Agreement. 

	
   
	
   

	
   
	
  That certain
  Joint Venture Agreement by and between Northern Technologies International
  Corporation, 6680 North Highway 49, Lino Lakes, Minnesota 55014, (“NTI”) and
  TP, for the formation and governance of a new entity under the laws of
  England in the form of a company which shall be known as Zerust (UK) Limited.
   

	
   
	
   

	
  1.9
	
  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 use and application of the Process, together with all
  improvements and modifications with respect thereto.  

	
   
	
   

	
  1.10 
	
  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.  

	
   
	
   

	
  1.11 
	
  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.  

	
   
	
   

	
  1.12 
	
  Net Sales.

	
   
	
   

	
   
	
  The total
  proceeds from the sale of Product within the Territory by the Company in
  normal, bona fide commercial transactions on an arm’s length basis to, by,
  with, or through an entity which is not affiliated to 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.  

2

	
  1.13

  	
  NTI Affiliates. 

	
   
	
   

	
   
	
  All entities
  and/or individuals with which NTI has a joint venture relationship, similar
  in character and style but not necessarily identical to the relationship
  created by the Joint Venture Agreement and the Ancillary Agreements as
  defined herein, or another form of alliance, for the development,
  manufacture, promotion, marketing, sales and applications engineering of the
  Product, Materials, Knowhow and/or Process anywhere in the world and “NTI
  Affiliate” shall be construed accordingly. 
  

	
   
	
   

	
  1.14 
	
  NTI Intellectual Property Rights. 

	
   
	
   

	
   
	
  The Knowhow,
  Materials, Process, NTI Trade Secrets, Product, Masterbatch and Trademark,
  collectively, as such currently exist and shall hereinafter be modified,
  developed and/or acquired by NTI.  

	
   
	
   

	
  1.15
	
  NTI Trade Secrets. 

	
   
	
   

	
   
	
  All
  information deemed and designated confidential, both in the 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 business of NTI, the Company and NTI
  Affiliates (as hereinafter defined) both in the Territory and elsewhere.  

	
   
	
   

	
  1.16
	
  Parties 

	
   
	
   

	
   
	
  The Parties
  to the Joint Venture Agreement and/or the Ancillary Agreements, their
  successors and permitted assigns and “Party” shall be construed
  accordingly.  

	
   
	
   

	
  1.17
	
  Product. 

	
   
	
   

	
   
	
  Corrosion
  inhibiting polyethylene film and solid material of polyethylene in the form
  of boxes, tubes and other containers manufactured by means of the Process,
  incorporating the Materials and utilizing the Trademark.  

	
   
	
   

	
  1.18
	
  Process. 

	
   
	
   

	
   
	
  The
  procedure utilizing the Knowhow for the manufacture of polyethylene materials
  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 materials, together with future technology,
  knowledge and product development which is useful in the manufacture of the
  Product.  

3

	
  1.19

  	
  Territory. 

  
	
   
	
   

	
   
	
  The United
  Kingdom.  

  
	
   
	
   

	
  1.20
	
  Trademark. 

	
   
	
   

	
   
	
  The names
  and style “ZERUST”, “THE ZERUST PEOPLE”, and the colour yellow in relation
  thereto (which, in each case, are the subject of Community Trade Mark
  applications), which includes trade literature, technical specifications and
  application instructions, and promotional material pertaining thereto.  

ARTICLE 2.

	
  2.
	
  EMPLOYMENT OF TP AS MANAGER 

	
   
	
   

	
  2.1
	
  Employment of Manager. 

	
   
	
   

	
   
	
  The Company
  hereby employs TP to manage, supervise and conduct the Company’s
  Business.  TP hereby accepts such
  employment and agrees to serve in such capacity in accordance with the terms
  hereof and of the Joint Venture Agreement and the Ancillary Agreements. 

	
   
	
   

	
  2.2
	
  Duties and Authority of Manager. 

	
   
	
   

	
   
	
  TP shall
  have all authority which may be necessary, desirable or appropriate in
  connection with the discharge of its duties hereunder, subject only to
  applicable limitations contained in the Joint Venture Agreement, the
  Ancillary Agreements and the provisions of Article 2 hereof.  TP shall use its best efforts in the performance
  of its duties and shall discharge same and conduct the Company’s Business in
  a good, workmanlike and commercially reasonable manner and in accordance with
  sound business practices and the standard of diligence and care normally
  exercised by duly qualified persons in the performance of comparable
  work.  

	
   
	
   

	
  2.3
	
  Responsibility of Manager for Specific Activities. 

	
   
	
   

	
   
	
  In the
  course of fulfilling its responsibilities pursuant to this Agreement, TP
  shall carry out the following activities on behalf of the Company.  

	
   
	
  2.3.1
	
  Cause the
  Company to comply with the terms of the Joint Venture Agreement and the
  Ancillary Agreements; 

	
   
	
   
	
   

	
   
	
  2.3.2
	
  Acquire such
  materials, supplies, equipment, services and technical assistance as may be
  necessary, desirable or appropriate for the conduct of the Company’s
  Business; 

	
   
	
   
	
   

4

	
   
	
  2.3.3
	
  Procure from
  outside experts, consultants and professionals such engineering, legal,
  advertising, promotional, and, except for accounting services (which shall be
  provided in accordance with the Joint Venture Agreement), other advisory and
  professional services as may be necessary, desirable or appropriate for the
  conduct of the Company’s Business; 

	
   
	
  2.3.4
	
  Protect,
  keep and maintain the properties and assets of the Company and such properties
  and assets of the Parties to the Joint Venture Agreement as are in the
  Company’s actual possession; 

	
   
	
   
	
   

	
   
	
  2.3.5
	
  Hire, train
  and supervise such personnel as may be necessary, desirable or appropriate
  for the conduct of the Company’s Business; 

	
   
	
   
	
   

	
   
	
  2.3.6
	
  Provide all
  executive and administrative responsibilities and services necessary,
  desirable or appropriate for the conduct of the Company’s Business; 

	
   
	
   
	
   

	
   
	
  2.3.7
	
  Cause the
  Company to comply with all laws applicable to the Company’s Business; 

	
   
	
   
	
   

	
   
	
  2.3.8
	
  Process all
  customer orders, provide billings to customers and make adjustments with
  customers as appropriate; 

	
   
	
   
	
   

	
   
	
  2.3.9
	
  Manage the
  credit risk of the Company including making inquiries regarding the
  creditworthiness of potential customers; 

	
   
	
   
	
   

	
   
	
  2.3.10
	
  Manufacture
  or cause the manufacture of the Product by Submanufacturers (as hereinafter
  defined) in the Territory At Cost as far as the Manager and its affiliates
  are concerned; 

	
   
	
   
	
   

	
   
	
  2.3.11
	
  Maintain the
  books and records of the Company in accordance with the normal practices of
  similar businesses in the Territory; 

	
   
	
   
	
   

	
   
	
  2.3.12
	
  Prepare and
  file with governmental authorities all required reports and returns relating
  to the Company’s Business; 

	
   
	
   
	
   

	
   
	
  2.3.13
	
  Procure on
  behalf of the Company product liability, public liability and other
  liability, casualty, and general insurance, necessary, desirable and
  appropriate for the conduct of the Company’s Business the Territory; 

	
   
	
   
	
   

	
   
	
  2.3.14
	
  Establish
  and maintain a segregated bank account or accounts in the name of the Company
  for the deposit and disposition of all funds generated by and disbursed for
  the Company’s Business; 

	
   
	
   
	
   

	
   
	
  2.3.15
	
  Apply
  standards for the extension of credit and establish and maintain systems for
  the collection of all accounts, including overdue accounts in accordance with
  the normal practices of similar businesses in the Territory;  

5

	
   
	
  2.3.16
	
  Coordinate
  the pricing and discount structure for the sale of Product to customers
  and/or distributors in the Territory, which will result in a reasonable
  profit to the Company, subject to the provisions of Article 7.3.q. of the
  Joint Venture Agreement; 

	
   
	
   
	
   

	
   
	
  2.3.17
	
  Arrange for
  the preparation and delivery of the Company’s financial statements as
  required by the Joint Venture Agreement; and 

	
   
	
   
	
   

	
   
	
  2.3.18
	
  Do or cause
  the Company to do all other acts and things as may be necessary, desirable or
  appropriate in connection with the conduct of the Company’s Business within
  its corporate authority as stated in its Articles of Incorporation, subject
  to the Joint Venture Agreement, the Ancillary Agreements and Resolutions of
  the Board of Directors. 

ARTICLE 3.

	
  3.
	
  EMPLOYMENT OF TP AS EXCLUSIVE SALES REPRESENTATIVE 

	
   
	
   

	
  3.1
	
  Employment of Exclusive Sales Representative. 

	
   
	
   

	
   
	
  The Company
  hereby employs TP as its Exclusive Sales Representative for the marketing and
  sale of Product in the Territory, and TP hereby accepts such employment and
  agrees to use its best efforts in accordance with the terms hereof to promote
  the marketing and sale of Product in the Territory. 

	
   
	
   

	
  3.2
	
  Duties and Authority of Exclusive Sales Representative. 

	
   
	
   

	
   
	
  TP shall use
  its best efforts in the performance of its duties hereunder and shall
  discharge the same in a good, workmanlike and commercially reasonable manner
  and in accordance with sound business practices and the standard of diligence
  and care normally exercised by duly qualified persons in the performance of
  comparable work.  

	
   
	
   

	
  3.3
	
  Promotion of Product and Trademark. 

	
   
	
   

	
   
	
  In
  connection with the discharge of its duties hereunder TP shall use its best
  efforts to solicit and to obtain business and, in so doing, to develop an
  increasing awareness of the Product and the ZERUST trade name and the
  Trademark among potential customers. 
  Such sales efforts will be carried on by properly trained sales
  personnel who shall thoroughly, energetically and regularly canvass and call
  upon customers and potential customers. 
  TP shall advise NTI on a periodic basis (not less frequently than
  quarterly) as to the status of its sales efforts, the nature of orders
  obtained and the amount of backlog.  

	
   
	
   

	
  3.4
	
  Preparation and Use of Promotional Material. 

	
   
	
   

	
   
	
  TP shall not
  prepare or distribute any promotional material, literature, specifications,
  manuals, product claims or descriptions concerning the Materials,
  Masterbatch, Process, Knowhow, Product or NTI Intellectual Property Rights
  without the prior written consent and approval thereof by NTI.  

6

	
  3.5

  	
  Warranties. 

  
	
   
	
   

	
   
	
  TP shall
  make no warranty on behalf of NTI or the Company and shall instruct its
  Agents (as hereinafter defined) and Submanufacturers (as hereinafter defined)
  to make no warranty on behalf of NTI or the Company TP as to the Process,
  Knowhow, Product or NTI Intellectual Property Rights, except in accordance
  with documentation specifically approved by NTI.  

  

ARTICLE 4.

	
  4.
	
  PAYMENTS TO TP FOR ITS SERVICES AS MANAGER AND AS EXCLUSIVE SALES
  REPRESENTATIVE OF THE COMPANY 

	
   
	
   

	
  4.1
	
  Basis for Payments. 

	
   
	
   

	
   
	
  The Company
  shall make payments to TP which are provided for in this Article 4 in
  consideration of the services performed by TP as set forth in Articles 2 and
  3 hereof.  Such payments shall be made
  throughout the full term of this Management and Sales Representation
  Agreement as compensation for the services set forth above and duly provided
  by TP.  

	
   
	
   

	
  4.2
	
  Compensation to TP for Management Services Rendered to the Company. 

	
   
	
   

	
   
	
  As
  compensation for its management services to be rendered pursuant to this
  Agreement, the Company shall pay to TP a fee equal to five percent (5%) of the
  amount of Net Sales of Product, plus reimbursement of all out-of-pocket
  expenses (At Cost) paid or incurred by TP in the discharge of its
  responsibilities hereunder.  Such
  amounts shall be paid to TP within thirty (30) days after the conclusion of
  each quarterly period, based upon Net Sales and out-of-pocket expenses during
  the preceding quarterly period.  

	
   
	
   

	
  4.3
	
  Compensation to TP for Services as Exclusive Sales Representative to
  the Company. 

	
   
	
   

	
   
	
  TP shall
  receive compensation for its services to the Company as Exclusive Sales
  Representative hereunder equal to ten percent (10%) of the total Net Sales of
  Product by the Company, plus out-of-pocket expenses (At Cost) incurred in the
  performance of its duties in this regard. 
  In the course of effectuating sales, TP may either purchase Product
  directly from the Company and thereupon resell same to customers for its own
  account, or alternatively serve as a commission agent for the Company, but
  not both; provided that the total margin to TP does not exceed 10%.  Payment terms for Product purchased by TP
  from the Company for resale to customers shall be equal to the same terms
  offered by TP on behalf of the Company to third parties fulfilling the same
  functions and payment for Product purchased shall be made by TP to the
  Company forthwith upon receipt of payment from customers.  

	
   
	
   

	
  4.4
	
  When a Sale is Deemed to Occur. 

	
   
	
   

	
   
	
  A sale shall
  be deemed to have occurred when Product has been billed or (if not billed)
  delivered to and paid for by a customer. 
  

7

	
  4.5

  	
  Support Year. 

  
	
   
	
   

	
   
	
  The term
  “Support Year” shall mean any twelve (12) month period ending on August 31,
  except that the first Support Year shall commence on the Effective Date.  

  
	
   
	
   

	
  4.6
	
  Statements to TP. 

	
   
	
   

	
   
	
  Within
  thirty (30) days after the last day of each quarterly period in each Support
  Year, the Company shall:  

	
   
	
  4.6.1
	
  Prepare and
  deliver to TP a complete and accurate statement setting forth for the quarter
  just ended and separately and cumulatively for and with respect to all
  elapsed quarterly periods for the Support Year: 

	
   
	
  4.6.1.1
	
  The total
  amount of Net Sales (broken down in reasonable detail by individual products
  and customers and showing all costs and discounts leading to the
  establishment of the Net Sales figure for each customer); and 

	
   
	
   
	
   

	
   
	
  4.6.1.2
	
  The total
  amount of compensation on such Net Sales (computed as hereinbefore provided)
  payable to TP for its Management and Sales Representation Services to the
  Company hereunder. 

	
   
	
  4.6.2
	
  Pay to TP
  the full amount of compensation to which it is entitled for and with respect
  to the period or periods of the Support Year covered by the statement(s)
  provided for in Article 4.6.1 hereof 

	
  4.7
	
  Books and Records. 

	
   
	
   

	
   
	
  The Company
  covenants and agrees:  

	
   
	
  4.7.1
	
  That it will
  keep complete and accurate records and books of account showing the amount of
  billings to customers and the amount of deductions therefrom in arriving at
  Net Sales and all additional data and information which may be reasonably
  necessary to enable NTI, TP or their independent accountants to verify the
  completeness and accuracy for each item of information which the Company is
  required to set forth in each of the statements referred to in Article 4.6.1;
  

	
   
	
   
	
   

	
   
	
  4.7.2
	
  That it will
  keep all such records and books of account at its principal office and will
  preserve each such records and books of account for a period of not less than
  three (3) years from and after the date on which such records or the last
  entry in such books of account was made, whichever shall be later; and 

8

	
   
	
  4.7.3
	
  That it will
  make such records, books of account, data and information available to TP,
  NTI and/or their representatives and independent accountants and will give to
  such representative or accountants free and complete access, at any
  reasonable time or times, to all such records, books of account, data and
  information, for the purposes of examining the same and verifying the
  completeness and accuracy of each item of information which the Company is
  required to set forth in each of the statements referred to in Article 4.6.1
  hereof.  In addition, TP and NTI shall
  have the right to make copies of any of the foregoing.  The independent accountants of the Company
  shall in the ordinary course of business provide written confirmation and
  certification to TP and NTI, at least annually, of the data to be supplied to
  TP and NTI pursuant to Article 4.6.1 hereof. 
  The cost of such reports shall be borne by the Company.  In the event that TP or NTI shall cause
  its representatives to confirm or verify the accuracy of the data supplied by
  the Company, then the costs and fees of such representatives shall be borne
  by TP or NTI, as the case may be, unless such representatives shall
  determine, to the satisfaction of the Company’s independent accountants, that
  there is an understatement in the reporting of Net Sales of five (5%) or
  more, in which event the costs and fees of TP’s or NTI’s representatives
  and/or accountants shall be borne by the Company. 

ARTICLE 5. 

	
  5.
	
  PROTECTION OF TP TRADE SECRETS 

	
   
	
   

	
  5.1
	
  Identification of TP Trade Secrets. 

	
   
	
   

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

	
   
	
   

	
  5.2
	
  Protection of TP Trade Secrets. 

	
   
	
   

	
   
	
  The Company
  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 TP Trade Secrets which it now knows or may hereafter come to know as a
  result of the Joint Venture Agreement and Ancillary Agreements.  TP Trade Secrets shall not be disclosed by
  the Company 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 the Company 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 TP
  Trade Secret shall be in the public domain as the result of an act by the
  Company or any Agent thereof, then the Company shall nevertheless continue to
  keep such TP Trade Secrets secret and inviolate.  

9

	
  5.3

  	
  Protection of TP Trade Secrets by Agents of the Company. 

  
	
   
	
   

	
   
	
  Neither the
  Company, nor its Agents (as hereinafter defined), shall at any time copy,
  remove from their proper location - be it within the Company or elsewhere - ;
  or retain without TP’s prior written consent, the originals or copies of any
  TP 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 TP Trade Secrets be strictly
  maintained both as to original documents and copies thereof.  

  

	
   
	
  5.3.1
	
  Insofar as the
  officers, employees and consultants of the Company (herein collectively
  “Agents”) who come in contact with TP Trade Secrets are concerned, the
  Company shall cause such Agents to enter into TP Trade Secrecy Agreements
  substantially in the form of Annex II to this Agreement.  The Company shall exert its best efforts
  to cause its Agents to adhere to and to abide by the provisions, restrictions
  and limitations of the Trade Secrecy Agreements which efforts shall include
  the institution and prosecution of appropriate litigation if such be
  necessary and desirable. 

	
   
	
   
	
   

	
   
	
  5.3.2
	
  The Parties
  hereby agree and acknowledge that TP is an intended third party beneficiary
  of the Trade Secrecy Agreements, and that TP may in its sole discretion, on
  its own behalf or derivatively and/or on behalf of the Company directly
  enforce the provisions of the Trade Secrecy Agreements and/or any breach
  thereof against any and all Agents (as defined in Article 5.3.1 hereof)
  and/or Submanufacturers (as defined in Article 6.3.1.1 of the Licence
  Agreement) who have executed same. 

	
  5.4

  	
  Remedies in the Event of a Violation of Article 5 hereof. 

  
	
   
	
   

	
   
	
  It is
  understood and recognized by the Company that in the event of any violation
  by the Company of the provisions of Article 5 hereof, TP’s remedy at law will
  be inadequate and TP will suffer irreparable injury.  Accordingly, the Company consents to
  injunctive and other appropriate equitable relief in any court of competent
  jurisdiction to protect TP Trade Secrets. 
  Such relief shall be in addition to any other relief to which TP may
  be entitled at law or in equity, which shall include but not be limited to
  the right of immediate termination of this Agreement.  

  
	
   
	
   

	
  5.5
	
  Exculpation of the Company in the Event of Disclosure of TP Trade
  Secrets as a result of Any Action by TP. 

	
   
	
   

	
   
	
  Notwithstanding
  the foregoing or any other provision of this Agreement, the Company shall be
  exculpated from any action by TP which results in the disclosure of Trade
  Secrets to any third party, whether such action results from the performance
  of under this Agreement, the Joint Venture Agreement, any other Ancillary
  Agreement or otherwise.  

10

ARTICLE 6.

	
  6.

  	
  COVENANT TO OBSERVE THE DOCTRINE OF “CORPORATE OPPORTUNITY” 

  
	
   
	
   

	
  6.1

  	
  Doctrine of Corporate Opportunity and Observance Thereof. 

  
	
   
	
   

	
   
	
  It is the
  intent of the Parties to this Agreement, the Joint Venture Agreement and to
  the other Ancillary Agreements to deal exclusively with each other with
  respect to the commercial, technical and strategic development of the Company’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 on the performance of their duties under the Joint Venture
  Agreement or the Ancillary Agreements in the Territory, or (b) have the
  effect of displacing or substituting the Knowhow, Materials, Process, Product
  or Masterbatch in the Territory; except as agreed to by the Parties in
  furtherance of the Company’s Business. 
  

  
	
   
	
   

	
  6.2
	
  Agreement Not to Divert Resources. 

	
   
	
   

	
   
	
  TP agrees
  and covenants that during the term of this Agreement, TP 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
  the Product from the Company within the Territory except through the Company
  in furtherance of the Company’s Business. 
  During said term TP shall not 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 Company.  In the
  event that this Agreement is terminated: (i) because of a material Breach of
  the Joint Venture Agreement by a Party; or (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 7 hereof; (iv) pursuant
  to Article 8 hereof; (v) or upon a Breach of Articles 5 or 6 hereof, then the
  Company shall continue to be bound by the provisions of this Article 6 for a period
  of two years following the date of termination, but shall at no time be
  permitted to use TP Trade Secrets, as the case may be, for any activity
  outside TP’s involvement with the Company. 
  

	
   
	
   

	
  6.3
	
  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 6 hereof by a Party, the remedy at law will be
  inadequate and the Company and the other Parties to the Joint Venture and the
  Ancillary Agreements 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 a non-violating Party.  Such relief shall be in addition to any
  other relief to which a Party may be entitled at law in equity, which shall
  include but not be limited to the right of immediate termination of this
  Agreement.  

11

ARTICLE 7.

	
  7.

  	
  TERM OF AGREEMENT 

  
	
   
	
   

	
  7.1

  	
  Indefinite Term. 

  
	
   
	
   

	
   
	
  This
  Agreement shall become effective on the Effective Date and shall, unless
  otherwise terminated in accordance with the provisions hereof, continue in
  effect indefinitely unless: - 

  

	
   
	
  7.1.1
	
  terminated
  by either Party in accordance with the provisions of Articles 5 and/or 6
  hereof; 

	
   
	
   
	
   

	
   
	
  7.1.2
	
  terminated
  by either Party by reason of a Default of this Agreement by the other Party
  which has not been cured or remedied in accordance with Article 8 hereof; or 

	
   
	
   
	
   

	
   
	
  7.1.3
	
  any of the
  Ancillary Agreements or the Joint Venture Agreement shall be terminated by a
  Party in accordance with its terms. 

	
   
	
  In such
  event this Agreement shall likewise terminate on the same date, without any
  further act or notice given by a Party hereto.  

	
   
	
   

	
  7.2
	
  Payment of Amounts Due. 

	
   
	
   

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

	
   
	
   

	
  7.3
	
  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 Article 5 hereof, upon
  termination of this Agreement TP Trade Secrets shall continue to be kept
  secret and confidential.  

ARTICLE 8.

	
  8.
	
  DEFAULT 

	
   
	
   

	
  8.1
	
  Default. 

	
   
	
   

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

	
   
	
  8.1.1
	
  Non-payment
  of funds by one Party to another Party when due and owing; and/or 

	
   
	
   
	
   

	
   
	
  8.1.2
	
  A material
  breach (“Breach”) of any provision of the Joint Venture Agreement or the
  Ancillary Agreements other than Articles 5 or 6 hereof; 

12

	
   
	
  8.1.3
	
  A breach of
  Articles 5 and/or 6 hereof. 

	
  8.2
	
  Remedies upon Default. 

	
   
	
   

	
   
	
  The remedies
  available to each Party in an instance of Default by another Party shall be
  as follows:  

	
   
	
  8.2.1
	
  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 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 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 such Breach 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 such Breach proceeds to cure such Default with due diligence.  A Party’s right of termination shall be in
  addition to and not in limitation of any of his other rights at law or in
  equity based upon the other Party’s Breach or Default.  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. 

	
   
	
   
	
   

	
   
	
  8.2.2
	
  Notwithstanding
  the forgoing, in the event of a violation of Articles 5 and/or hereof by a
  Party hereto, each other Party may at its sole discretion terminate this
  Agreement with immediate effect upon giving notice to the other Parties as
  provided herein. 

	
  8.3

  	
  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 8.1 or 8.2 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 8.2 hereof), or on account of
  any subsequent Breach or Default by a Party. 
  

  

ARTICLE 9.

	
  9.
	
  ARBITRATION 

	
   
	
   

	
  9.1
	
  Arbitration Mandatory. 

	
   
	
   

	
   
	
  Any of the
  following disputes which may arise between the Parties during the term of
  this Agreement, after the termination thereof, or following the liquidation
  or dissolution of the Company, upon failure by the Parties to amicably
  resolve same after mutual good faith negotiations, shall be exclusively
  settled by arbitration:  

13

	
   
	
  9.1.1
	
  a dispute as
  to whether a Default exists; 

	
   
	
   
	
   

	
   
	
  9.1.2
	
  a dispute as
  to whether a Default entitles the non-defaulting Party to terminate this
  Agreement; 

	
   
	
   
	
   

	
   
	
  9.1.3
	
  a dispute as
  to the validity of this Article 9; 

	
   
	
   
	
   

	
   
	
  9.1.4
	
  a dispute
  relating to the construction, meaning, interpretation, application or effect
  of this Agreement or anything contained herein; 

	
   
	
   
	
   

	
   
	
  9.1.5
	
  a dispute as
  to the rights, obligations or liabilities of the Parties hereunder. 

	
   
	
  Such
  arbitration proceedings shall be conducted in English and shall be carried on
  in the City of Brussels or any other place mutually agreeable to the Parties,
  under the UNCITRAL Arbitration Rules. 
  In such proceedings, the laws of England shall apply.  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. Notwithstanding anything to the contrary set
  forth in this Agreement, no matter shall be referred to or settled by
  Arbitration which is:  

	
   
	
  (a)
	
  based upon a
  Party’s violation of the provisions of this Agreement relating to TP Trade
  Secrets or Corporate Opportunity, the remedies for which are set forth in
  Articles 5 and/or 6 hereof 

	
   
	
   
	
   

	
   
	
  (b)
	
  expressed in
  this Agreement to be agreed upon by or determined with the consent or
  approval of both Parties. 

	
  9.2
	
  Punitive Damages Excluded. 

	
   
	
   

	
   
	
  Notwithstanding
  the foregoing, 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.  

ARTICLE 10.

	
  10.

  	
  GENERAL PROVISIONS 

  
	
   
	
   

	
  10.1

  	
  Benefit of Parties. 

  
	
   
	
   

	
   
	
  All of the
  terms and provisions of this Agreement, and of the Joint Venture Agreement
  and of the other 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 responsibility hereunder and (ii) the assignee
  shall expressly assume in writing and agree to perform such obligations,
  liabilities and responsibilities of the assignor.  

  

14

	
  10.2
	
  Counterparts. 

	
   
	
   

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

	
   
	
   

	
  10.3
	
  Cooperation. 

	
   
	
   

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

	
   
	
   

	
  10.4
	
  Index and Captions. 

	
   
	
   

	
   
	
  The captions
  of the Sections and Articles of this Agreement 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 shall be incorporated herein as written and made a part hereof.  

	
   
	
   

	
  10.5
	
  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 Parties 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.  

	
   
	
   

	
  10.6
	
  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, lockouts, 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. 
  

15

	
  10.7

  	
  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 or equivalent, as follows: 

  

	
   
	
  If to TP to:
	
  Taylor
  Packaging (Bishop Auckland) Limited

  Meadowfield Avenue

  Green Lane Industrial Estate

  Spennymoor

  Co. Durham

  DLI6 6YJ

  Tel: 01388 420 555

  Fax: 01388 420 777

	
   
	
   
	
   

	
   
	
  If to the
  Company:
	
  Zerust (UK)
  Limited

  Meadowfield Avenue

  Green Lane Industrial Estate

  Spennymoor

  Co. Durham

  DLI6 6YJ

  Tel: 01388 420 555

  Fax: 01388 420 777

	
   
	
   
	
   

	
   
	
  Copy to:
	
  Philip M
  Lynch

  One Commerce Park Square

  23200 Chagrin Blvd., Suite 107

  Beachwood, OH 44122

  Tel: 216-595-1740

  Fax: 216-595-1741

	
   
	
   
	
   

	
   
	
  If to NTI,
  to:
	
  Northern
  Technologies International Corporation

  6680 North Highway 49

  Lino Lakes, MN 55014

  Attention: President

  Tel: 612-784-1250

  Fax: 612-784-2902

	
   
	
   
	
   

	
   
	
  Copy to:
	
  Philip M.
  Lynch

  One Commerce Park Square

  23200 Chagrin Blvd., Suite 107

  Beachwood, OH 44122

  Tel: 216-595-1740

  Fax: 216-595-1741

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

16

	
  10.8

  	
  Entire Agreement.

  
	
   
	
   

	
   
	
  This
  Management and Sales Representation Agreement, together with the Joint
  Venture Agreement and the other Ancillary Agreements and any other documents
  now or subsequently referred to herein or attached hereto which form a part
  of this Agreement, contain the entire understanding of the parties
  hereto.  There are no prior
  representations, promises, warranties, covenants, agreements or undertakings
  other than those expressly set forth or provided for in this Agreement, the
  Joint Venture Agreement and the other Ancillary Agreements, and the same
  supersede all prior agreements and understandings between the Parties with
  respect to the relationships and transactions contemplated by this Agreement.

  
	
   
	
   

	
  10.9
	
  Validity of Provisions.

	
   
	
   

	
   
	
  Should any
  part of this Agreement, the Joint Venture Agreement, or the other 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, the Joint Venture
  Agreement, or any other 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.

	
   
	
   

	
  10.10
	
  Governmental Filings.

	
   
	
   

	
   
	
  The Company
  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. 
  TP shall provide whatever material and information required of and
  available to it in connection with the preparation and filing of such
  reports.

17

	
  10.11

  	
  Payments.

  
	
   
	
   

	
   
	
  Any payment
  to be made by the Company to TP 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 TP. 
  TP shall have the right to specify in writing any bank account to
  which payments due shall be made.

  
	
   
	
   

	
  10.12
	
  Derivative Enforcement.

	
   
	
   

	
   
	
  NTI may,
  derivatively for and on behalf of the Company, enforce the terms hereof
  against TP, its Agents, and/or the Agents and/or the Submanufacturers of the
  Company in the event of a material Breach or Default of this Agreement.  In the event of derivative enforcement
  hereunder, the matter shall be submitted to arbitration in accordance with
  the provisions of Article 9 hereof.

	
   
	
   

	
  10.13
	
  Changes Subject to Approval of NTI.

	
   
	
   

	
   
	
  The parties
  to this Agreement shall not change, modify or amend this Agreement in any
  respect without the prior written consent of NTI.

	
   
	
   

	
  10.14
	
  Applicable Law.

	
   
	
   

	
   
	
  This
  Agreement shall be read and construed in accordance with and be governed by
  the laws of England.

	
   
	
   

	
  10.15
	
  RTPA.

	
   
	
   

	
   
	
  No provision
  of this Agreement, or of any arrangement of which it forms part, by virtue of
  which such agreement or arrangement is subject to registration under the
  Restrictive Trade Practices Act 1976, shall take effect until the day after
  particulars of such agreement or arrangement have been furnished to the
  Director General of Fair Trading pursuant to that Act. Particulars shall, if
  necessary, be furnished to the Director General of Fair Trading within three
  months of the date of this Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.

	
   
	
   
	
  TAYLOR
  PACKAGING (BISHOP

  AUCKLAND) LIMITED

	
   
	
   
	
   

	
   
	
   
	
  By

	
   
	
   
	
   
	
  

  
	
   
	
   
	
   

	
   
	
   
	
  ZERUST (UK)
  LIMITED

	
   
	
   
	
   

	
   
	
   
	
  By

	
   
	
   
	
   
	
  

  

18

ANNEX I

APPROVAL OF NORTHERN TECHNOLOGIES
INTERNATIONAL CORPORATION

By its signature hereto Northern Technologies International Corporation
approves and agrees to the terms and provisions of this Management and Sales
Representation Agreement and the Trade Secrecy Agreement attached hereto, and agrees
to be bound thereto to the extent that such terms and provisions are applicable
to it, it being understood that Northern Technologies International Corporation
shall also have a direct right of action in its own name for the enforcement of
the provisions of this Agreement.

	
   
	
   
	
  NORTHERN
  TECHNOLOGIES

  INTERNATIONAL CORPORATION

	
   
	
   
	
   

	
   
	
   
	
  By

	
   
	
   
	
   
	
  

  

19

ANNEX II

TRADE SECRECY AGREEMENT

THIS AGREEMENT,
dated this [       ] day of
[                    ]

BETWEEN:

	
  (1)
	
  ZERUST (UK) LIMITED a company incorporated
  under the laws of England and Wales with number 3248266 and whose registered
  office is at Meadowfield Avenue, Green Lane Industrial Estate, Spennymoor, Co
  Durham. DL 16 6YT (“the Company”);

	
   
	
   

	
  (2)
	
  [                                           ] (“the Agent”); and

	
   
	
   

	
  (3)
	
  NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION,
  a company organised under the laws of the State of Delaware, USA (“NTI”) the
  principal place of business of which is Lino Lakes, Minnesota, USA. 

WHEREAS, the Company is engaged in the development, manufacture, and
sale of various products and services and in research work and, in such
activities, utilizes secret and confidential techniques, methods, processes,
equipment, formulae, customer lists and information;

WHEREAS, the Company receives Technical Assistance and Marketing
Support from Northern Technologies International Company (“NTI”) for the
Promotion, Sale and Application of polyethylene film and solid material of
polyethylene substance in the form of boxes, tubes and other containers utilizing
the trademark “ZERUST”‘ in the Territory (the “Product”); and

WHEREAS, the Company and NTI have expended and will continue to expend
substantial sums of money to train the Agent in the Company’s business
including but not limited to marketing the Product, and without which
expenditures the Agent would have no such training in the Company’s business
and marketing the Product; and

WHEREAS, the Company and NTI have imparted and will continue to impart
to the Agent in the course of his employment and training information
pertaining to the Product, certain processes, technical knowhow, marketing and
sales techniques, customer identities and other confidential information not
now known to the general public, which knowhow and information constitute
valuable, proprietary and confidential trade secrets of the Company and NTI;

NOW THEREFORE, in consideration of the employment of the Agent by the
Company, the special training with respect to the Company’s business and the
Product to be provided to him, and the salary to be paid to the Agent by the
Company during the term of his employment, it is agreed as follows:

20

	
  1.
	
  The Agent
  agrees that during his employment by the Company and for so long thereafter
  as the same has not (other than a result of disclosure by the Company)
  entered the public domain, he will not, without the prior written consent of
  the Company and NTI, (i) use outside of the service of the Company or (ii)
  disclose or divulge to anyone other than persons designated by the Company,
  any of the following: 

	
   
	
   

	
   
	
  a.
	
  any
  knowledge or information of a confidential nature acquired by him with
  respect to the trade secrets of NTI including, but not limited to, process,
  techniques, research, methods technology, equipment, formulae, pricing, cost
  data, technical knowhow, memoranda, marketing/sales strategy, promotion,
  suppliers and customers which he now knows or other confidential information
  of the Company or NTI, knowledge of which is acquired by the Agent during the
  term of his employment by the Company (collectively, “Trade Secrets”).

	
   
	
   
	
   

	
   
	
  b.
	
  any of the
  unpublished records, books of account, documents, letters, diagrams, computer
  disks, papers or memoranda of NTI or (collectively “Internal Data”). 

	
   
	
   
	
   

	
  2.
	
  The Agent
  shall at no time copy, remove from their proper location, or retain without
  the Company’s prior written consent, the originals or copies of such Trade
  Secrets or Internal Data. 

	
   
	
   

	
  3.
	
  The Agent
  shall not, for a period of three (3) years subsequent to the termination of
  his employment with the Company for any reason, compete, directly or
  indirectly (whether as an employee, partner, investor, shareholder or
  director), or accept any employment with any person or company competing with
  the Company in the marketing, sale of manufacturing of the Product or
  products similar thereto in any place in the Territory which are competitive
  in nature to the business of the Company, if such employment would in its
  inherent nature require the Agent to utilize any of the Trade Secrets,
  Internal Data or portions thereof.

	
   
	
   

	
  4.
	
  The Agent
  and the Company hereby agree and acknowledge that NTI is an intended
  beneficiary of this Trade Secrecy Agreement and that NTI shall have the
  incontroversible right to enforce this Trade Secrecy Agreement independently
  of the Company, if NTI, in its sole judgement, chooses to do so, and may
  proceed directly against the Agent for any breach of the Agent’s obligations
  hereunder to the full extent of the law. 

IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as a Deed on the day and year first above written.

21

ANNEX 3

LICENCE AGREEMENT

43

LICENSE AGREEMENT

BY AND BETWEEN

NORTHERN TECHNOLOGIES

INTERNATIONAL CORPORATION

AND

ZERUST (UK) LIMITED

DATED AS
OF            DECEMBER
1996

LICENSE AGREEMENT

THIS AGREEMENT is
made the
             day
of December 1996

BETWEEN

	
  (1)
	
  NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION,
  whose principal office is located in Lino Lakes, Minnesota, U.S.A.,
  (hereinafter “NTI”); and

	
   
	
   

	
  (2)
	
  ZERUST (UK) LIMITED a company incorporated
  in England and Wales with number 3248266 and whose registered office is at
  Meadowfield Avenue, Green Lane Industrial Estate, Spennymoor, Co. Durham,
  DL16 6YJ (hereinafter the “Company”).

ARTICLE 1

	
  1.

  	
  DEFINITIONS

  
	
   
	
   

	
   
	
  For the
  purposes of this Agreement, the following definitions shall apply:

  
	
   
	
   

	
  1.1
	
  Ancillary Agreements

	
   
	
   

	
   
	
  The
  following are the Ancillary Agreements and the Parties thereto:

	
   
	
   

	
   
	
  1.1.1
	
  Management
  and Sales Representation Agreement between TP and the Company (“Management
  Agreement”);

	
   
	
   
	
   

	
   
	
  1.1.2
	
  License
  Agreement between NTI and the Company (“License Agreement”); and

	
   
	
   
	
   

	
   
	
  1.1.3
	
  Technical
  Assistance and Marketing Support Agreement between NTI and the Company
  (“Technical Assistance Agreement”)

	
   
	
   
	
   

	
   
	
  and
  “Ancillary Agreement” shall be construed accordingly.

	
   
	
   

	
  1.2
	
  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 prescription “At Cost”).

	
   
	
   

	
  1.3
	
  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 Joint Venture Agreement or any of the Ancillary Agreements.

	
   
	
   

	
  1.4
	
  Company or Joint Venture

	
   
	
   

	
   
	
  Zerust (UK)
  Limited, being that entity created in the Territory by the Parties pursuant
  to the Joint Venture Agreement to conduct the Company’s Business. 

1

	
  1.5

  	
  Company’s Business

  
	
   
	
   

	
   
	
  The
  Company’s Business shall be the manufacturing, marketing and distribution
  of  Product in the Territory. 

  
	
   
	
   

	
  1.6
	
  Completion

	
   
	
   

	
   
	
  Means
  completion of the Joint Venture Agreement in accordance with its terms.
  Completed” shall be construed accordingly. 

	
   
	
   

	
  1.7
	
  Effective Date

	
   
	
   

	
   
	
  The date
  upon which the Joint Venture Agreement is Completed. 

	
   
	
   

	
  1.8
	
  Joint Venture Agreement

	
   
	
   

	
   
	
  That certain
  Joint Venture Agreement by and between Northern Technologies International Corporation,
  6680 North Highway 49, Lino Lakes, Minnesota 55014, (“NTI”) and TP for the
  formation and governance of a new entity under the laws of England in the
  form of a company (the “Company”), which shall be known as Zerust (UK)
  Limited. 

	
   
	
   

	
  1.9
	
  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 use and application of the Process, together with all
  improvements and modifications with respect thereto. 

	
   
	
   

	
  1.10
	
  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. 

	
   
	
   

	
  1.11
	
  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. 

	
   
	
   

	
  1.12
	
  Net Sales

	
   
	
   

	
   
	
  The total
  proceeds from the sale of Product within the Territory by the Company in
  normal, bona fide commercial transactions on an arm’s length basis to, by,
  with, or through an entity which is not affiliated to 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. 

2

	
  1.13

  	
  NTI Affiliates

  
	
   
	
   

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

  
	
   
	
   

	
  1.14
	
  NTI Intellectual Property Rights

	
   
	
   

	
   
	
  The Knowhow,
  Materials, Process, NTI Trade Secrets, Product, Masterbatch and Trademark,
  collectively, as such currently exist and shall hereinafter be modified,
  developed and/or acquired by NTI. 

	
   
	
   

	
  1.15
	
  NTI Trade Secrets

	
   
	
   

	
   
	
  All
  information deemed and designated confidential, both in the 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 business of NTI, the Company and NTI
  Affiliates (as hereinafter defined) both in the Territory and elsewhere. 

	
   
	
   

	
  1.16
	
  Parties

	
   
	
   

	
   
	
  The Parties
  to the Joint Venture Agreement and/or the Ancillary Agreements, their
  successors and permitted assigns and “Party” shall be construed accordingly. 

	
   
	
   

	
  1.17
	
  Process

	
   
	
   

	
   
	
  The
  procedure utilizing the Knowhow for the manufacture of polyethylene materials
  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 materials, together with future technology,
  knowledge and product development which is useful in the manufacture of the
  Product. 

3

	
  1.18

  	
  Product

  
	
   
	
   

	
   
	
  Corrosion inhibiting polyethylene film and solid
  material of polyethylene in the form of boxes, tubes and other containers
  manufactured by means of the Process, incorporating the Materials and
  utilizing the Trademark. 

  
	
   
	
   

	
  1.19
	
  Territory

	
   
	
   

	
   
	
  The United Kingdom. 

	
   
	
   

	
  1.20
	
  TP

	
   
	
   

	
   
	
  Taylor Packaging (Bishop Auckland) Limited
  (registered number 01999397), whose registered office is at Meadowfield
  Avenue, Green Lane Industrial Estate, Spennymoor, Co. Durham, DLl6 6YJ; 

	
   
	
   

	
  1.21
	
  Trademark

	
   
	
   

	
   
	
  The names and style “ZERUST”, “THE ZERUST PEOPLE”,
  and the colour yellow in relation thereto (which, in each case, are the
  subject of Community Trade Mark applications), which includes trade
  literature, technical specifications and application instructions, and
  promotional material pertaining thereto. 

	
   
	
   

	
  ARTICLE
  2

	
   
	
   

	
  2.
	
  GRANT OF LICENSE BY NTI TO TP

	
   
	
   

	
  2.1
	
  NTI’S Representations

	
   
	
   

	
   
	
  NTI hereby represents that it is the owner of the
  Intellectual Property Rights and that it is free to license and to disclose
  same to the Company.

	
   
	
   

	
  2.2
	
  Grant of License

	
   
	
   

	
   
	
  NTI hereby grants to the Company upon the terms,
  provisions and conditions set forth herein, an exclusive, non-transferable
  right and license under NTI’s Intellectual Property Rights to make, have
  made, use, sell or otherwise dispose of the Product incorporating the
  Materials and Masterbatch under the Trademark within the Territory.  The Company shall not sell, distribute,
  promote or solicit customers for the Product outside of the Territory in such
  countries or regions where (i) NTI has a corresponding patent(s) filed and in
  effect; (ii) NTI has licensed or otherwise authorized the use of the
  Trademark; (iii) NTI has granted exclusive sales rights to a third party
  licensee; (iv) NTI has formed an alliance with another NTI Affiliate; or (v)
  NTI engages in the regular sale of Product.

4

	
  2.3

  	
  Commitment to NTI

  
	
   
	
   

	
   
	
  If during the term of this Agreement, the Company,
  without the prior written consent of NTI, enters into a licence, distribution
  agreement or any other agreement or relationship with any other undertaking
  for the use of such undertaking’s processes, know-how, techniques and
  procedures which would in any way conflict with, substitute or impede the
  Company’s obligation to develop the market relating to the NTI Intellectual
  Property Rights licensed hereunder, NTI shall have the right to terminate
  this Agreement forthwith. The Company shall use its best endeavors to
  manufacture and market the Product and to develop the market for the Product
  in the Territory. 

  
	
   
	
   

	
  2.4
	
  Enlargement of Scope of NTI
  Intellectual Property Rights not subject to this License

	
   
	
   

	
   
	
  It is recognized that over a period of time the
  scope of the NTI Intellectual Property Rights not covered by this License
  Agreement may expand in related areas. 
  The addition of such new NTI Intellectual Property Rights under this
  License Agreement shall be as mutually agreed by NTI and the Company, based
  upon their joint assessment of the prospective market therefor within the
  Territory and the suitability of including such new NTI Intellectual Property
  Rights within the Company’s Business.

	
   
	
   

	
  2.5
	
  Claims against the Company for
  Infringement

	
   
	
   

	
   
	
  In the event that any third party shall claim that
  the Company is infringing upon its patents or other intellectual property
  rights, the Company shall promptly notify NTI of such claims. Thereafter, NTI
  and the Company shall together determine an appropriate course of conduct in
  response to such claims. 

	
   
	
   

	
  ARTICLE
  3

	
   

	
  3.
	
  IMPROVEMENTS AND MODIFICATIONS TO
  NTI INTELLECTUAL PROPERTY RIGHTS

	
   
	
   

	
  3.1
	
  Ongoing Research and Development by
  NTI

	
   
	
   

	
   
	
  NTI shall continue its efforts in the research and
  development of the Process and in the improvement of the Product and shall
  make the results of such research and development available to the Company. 

	
   
	
   

	
  3.2
	
  Improvements by NTI

	
   
	
   

	
   
	
  Any and all Knowhow, improvements or modifications,
  of whatever nature and description, made by or through NTI’s efforts or
  acquired by it or coming under its control during the term of this Agreement
  which relate to the Product and which are useful or suitable for use in the
  Company’s Business, shall be deemed to be covered by this Agreement and shall
  be made available to the Company without any payment in addition to the
  payments provided for in this Agreement. 
  It is understood, however, that if NTI should acquire such Knowhow,
  improvements or modifications related to the Product by means of a license
  from third parties, then NTI’s obligations hereunder shall be subject to the
  provisions of such license. 

5

	
  3.3

  	
  Disclosure by NTI to the Company

  
	
   
	
   

	
   
	
  NTI agrees to promptly disclose to the Company any
  and all improvements or modifications to the NTI Intellectual Property Rights
  covered by this license, and any and all Knowhow and technical information
  which NTI may acquire with respect to or relating to any such improvements or
  modifications. Anything in this Agreement to the contrary notwithstanding, in
  the event that: 

  
	
   
	
   

	
   
	
  3.3.1
	
  NTI should determine that any improvements or
  modifications to the Product are themselves patentable and the disclosure
  thereof would in any manner adversely affect NTI’s ability to obtain a patent
  with respect thereto or would otherwise be adverse to its best interests, and

	
   
	
   
	
   

	
   
	
  3.3.2
	
  NTI intends to file or has filed a patent
  application with respect thereto, then NTI shall be under no obligation to
  make disclosure thereof to the Company until it has obtained adequate patent
  protection in the opinion of its patent counsel.  When such patent protection has been obtained, the subject
  improvements or modifications will be disclosed to the Company and the same
  will fall within the scope of the License granted to the Company pursuant to
  this License Agreement.

	
   
	
   
	
   

	
  ARTICLE
  4

	
   

	
  4.
	
  GRANT OF RIGHT AND LICENSE BY THE
  COMPANY TO NTI

	
   
	
   

	
  4.1
	
  Disclosure of Improvements to NTI
  by the Company

	
   
	
   

	
   
	
  The Company agrees to promptly disclose to NTI any
  improvements or modifications to NTI Intellectual Property Rights of whatever
  nature or description, which come to be learned by the Company or which are
  made by or through its efforts, without any obligation by NTI to make payment
  therefor. 

	
   
	
   

	
  4.2
	
  Grant of Right and License

	
   
	
   

	
   
	
  The Company hereby grants to NTI an exclusive,
  non-transferable, worldwide and fully paid-up right and license under any
  intellectual property rights, trade secrets and knowhow owned, controlled,
  acquired or which may otherwise be transferred or granted by the Company
  during the term of this Agreement to make, have made, use, sell or otherwise
  dispose of products incorporating any or all improvements to NTI Intellectual
  Property Rights and to sublicense third parties to do the same.  The term of such license shall continue so
  long as this Agreement and the Ancillary Agreements shall be in full force and
  effect. 

	
   
	
   

	
  4.3
	
  Obligations of The Company Concerning
  the Filing of New Patents

	
   
	
   

	
   
	
  The Company agrees that at NTI’s request and at NTI’s
  cost it will promptly file and diligently prosecute applications for letters
  patents in NTI’s name on any and all patentable improvements to NTI
  Intellectual Property Rights coming into its purview in the Territory.  The Company further agrees, upon NTI’s
  request and at NTI’s cost, to promptly file and diligently prosecute
  corresponding patent applications in NTI’s name in such other countries
  outside the Territory as are designated by NTI. 

6

	
  4.4

  	
  Review of Potentially Infringing
  Technology

  
	
   
	
   

	
   
	
  In the event that the Company 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 the Company will forthwith provide NTI with whatever information
  it may have with respect thereto.  NTI
  and the Company will then consult with one another as to an appropriate
  course of conduct: 

  
	
   
	
   

	
   
	
  4.4.1
	
  taking appropriate legal action against such third
  party for infringement of NTI’s Trade Secrets or other NTI Intellectual
  Property Rights; and/or 

	
   
	
   
	
   

	
   
	
  4.4.2
	
  the advisability of purchasing, licensing or
  otherwise acquiring 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 4.2 hereof.  Based
  upon their joint decision, the Company shall exert its best efforts to carry
  out whatever the Parties have determined to be in their mutual best interest.

	
   
	
   

	
  ARTICLE
  5

	
   

	
  5.
	
  ROYALTIES

	
   
	
   

	
  5.1
	
  Basis for Royalties

	
   
	
   

	
   
	
  The Company shall pay the royalties to NTI which are
  provided for in this Article 5 in consideration of the grant of license as
  set forth in Article 2. Payment of the royalties shall be made throughout the
  term of this License Agreement as compensation for the use of NTI
  Intellectual Property Rights. 

	
   
	
   

	
  5.2
	
  Amount of Royalties

	
   
	
   

	
   
	
  The Company shall pay to NTI a royalty equal to
  seven and one-half percent (7.5%) of Net Sales from the Company’s
  Business.  Royalties shall be paid in
  United States Dollars to an account or accounts as may be designated by NTI
  from time to time. 

	
   
	
   

	
  5.3
	
  When a Sale is Deemed to Occur

	
   
	
   

	
   
	
  A sale shall be deemed to have occurred when Product
  has been billed, (if applicable) and delivered to and paid for by a customer.
  

	
   
	
   

	
  5.4
	
  License Year

	
   
	
   

	
   
	
  The term “License Year” shall mean any twelve (12)
  month period ending on August 31, except that the first License Year shall
  commence on the Effective Date. 

7

	
  5.5

  	
  Statements to NTI

  
	
   
	
   

	
   
	
  Within thirty (30) days after the last day of each
  quarterly period in each License Year, the Company shall: 

  
	
   
	
   

	
   
	
  5.5.1
	
  Prepare and deliver to NTI a complete and accurate
  statement setting forth for the quarter just ended and separately and
  cumulatively for and with respect to all elapsed quarterly periods for the
  License Year:

	
   
	
   
	
   

	
   
	
  5.5.2
	
  The total amount of Net Sales (broken down in
  reasonable detail by individual products and customers and showing all costs
  and discounts leading to the establishment of the Net Sales figure for each
  customer); and

	
   
	
   
	
   

	
   
	
  5.5.3
	
  The total amount of the royalties on such Net Sales
  (computed as hereinbefore provided) payable to NTI.

	
   
	
   
	
   

	
   
	
  5.5.4
	
  Pay to NTI the full amount of the royalties to which
  it is entitled for and with respect to the period or periods of the License
  Year covered by the statement(s) provided for in Article 5.5.1 hereof.

	
   
	
   

	
  5.6
	
  Books and Records

	
   
	
   

	
   
	
  The Company covenants and agrees: 

	
   
	
   

	
   
	
  5.6.1
	
  That it will keep complete and accurate records and
  books of account showing the amount of billings to customers and the amount
  of deductions therefrom in arriving at Net Sales and all additional data and
  information which may be reasonably necessary to enable NTI or NTI’s
  independent accountants to verify the completeness and accuracy for each item
  of information which the Company is required to set forth in each of the
  statements referred to in Article 5.5.1;

	
   
	
   
	
   

	
   
	
  5.6.2
	
  That it will keep all such records and books of
  account at its principal office and will preserve each such records and books
  of account for a period of not less than three (3) years from and after the
  date on which such records or the last entry in such books of account was
  made, whichever shall be later; and

	
   
	
   
	
   

	
   
	
  5.6.3
	
  That it will make such records, books of account,
  data and information available to NTI’s representatives and to NTI’s
  independent accountants and will give to such representative or accountants
  free and complete access, at any reasonable time or times, to all such
  records, books of account, data and information, for the purposes of
  examining the same and verifying the completeness and accuracy of each item
  of information which the Company is required to set forth in each of the
  statements referred to in Article 5.5.1 hereof.  In addition, NTI shall have the right to make copies of any of
  the foregoing.  The Company’s auditors
  shall in the ordinary course of business provide written confirmation and certification
  to NTI, at least annually, of the data to be supplied to NTI pursuant to
  Article 5.5. I hereof.  The cost of
  such reports shall be borne by the Company. 
  In the event that NTI shall cause its representatives to confirm or
  verify the accuracy of the data supplied by the Company, then the costs and
  fees of such representatives shall be borne by NTI unless such
  representatives shall determine, to the satisfaction of the Company’s
  auditors, that there is an understatement in the reporting of Net Sales of
  five (5%) or more, in which event the costs and fees of NTI’s representatives
  and/or accountants shall be borne by the Company.

8

	
  ARTICLE
  6

  
	
   

	
  6.

  	
  PROTECTION OF NTI TRADE SECRETS

  
	
   
	
   

	
  6.1

  	
  Recognition of NTI Trade Secrets

  
	
   
	
   

	
   
	
  The Company acknowledges and agrees that (i) NTI
  Intellectual property Rights; (ii) other information confidential to NTI and
  designated herein and hereafter relating to the business of NTI, of the
  Company, and of NTI Affiliates, both in the Territory and elsewhere,
  including but not limited to applications of NTI Intellectual Property
  Rights, cost data and cost accounting, 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 Trade Secrets set forth in Article 1.15 hereof and
  constitute valuable property rights of NTI and NTI Affiliates. 

  
	
   
	
   

	
  6.2
	
  Protection of NTI Trade Secrets

	
   
	
   

	
   
	
  The Company 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 Trade Secrets which it now
  knows or may hereafter come to know as a result of the Joint Venture
  Agreement and Ancillary Agreements. 
  NTI Trade Secrets shall not be disclosed by the Company 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 the Company 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 Trade Secret shall be
  in the public domain as the result of an act by the Company or any Agent (as
  hereinafter defined) thereof, then the Company shall nevertheless continue to
  keep such NTI Trade Secrets secret and inviolate. 

	
   
	
   

	
  6.3
	
  Protection of NTI Trade Secrets by
  Agents (as hereinafter defined) and Submanufacturers (as hereinafter defined)
  of the Company

	
   
	
   

	
   
	
  Neither the Company, nor its Agents (as hereinafter
  defined), nor its Submanufacturers (as hereinafter defined) shall at any time
  copy, remove from their proper location, or retain without NTI’s prior
  written consent, the originals or copies of any NTI Trade Secrets or of any
  of the unpublished records, books of account, documents, letters, diagrams,
  computer disks, papers or memoranda of NTI or the Company.  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 Trade Secrets be strictly maintained both as to original
  documents and copies thereof. 

9

	
   
	
  6.3.1
	
  Insofar as the officers, employees and consultants
  of the Company (herein collectively “Agents”) who come in contact with NTI
  Trade Secrets are concerned, the Company shall cause such Agents to enter
  into NTI Trade Secrecy Agreements substantially in the form of Annex II to
  this Agreement.  The Company shall
  exert its best efforts to cause its Agents to adhere to and to abide by the
  provisions, restrictions and limitations of the Trade Secrecy Agreements
  which efforts shall include the institution and prosecution of appropriate
  litigation if such be necessary and desirable.

	
   
	
   
	
   
	
   

	
   
	
   
	
  6.3.1.1
	
  To the extent that the Company provides Masterbatch
  to Submanufacturers requisite quantities to allow such Submanufacturers to
  manufacture the Product in the Territory in such volumes and forms as may be
  required for the Company’s Business (“Submanufacturers”), it is understood
  that the Company may find it necessary to disclose certain NTI Trade Secrets
  to such Submanufacturers.

	
   
	
   
	
   
	
   

	
   
	
   
	
  6.3.1.2
	
  NTI Trade Secrets shall be disclosed only to such
  Submanufacturers who have been specifically approved in writing by NTI and
  who have entered into Trade Secrecy Agreements with the Company in a form
  approved by NTI, but substantially in the form of the Trade Secrecy Agreement
  set forth in Annex II hereof.

	
   
	
   
	
   
	
   

	
   
	
   
	
  6.3.1.3
	
  Moreover, only those NTI Trade Secrets which are
  absolutely essential for the manufacturing activities to be carried on by
  such Submanufacturers shall be disclosed to them.

	
   
	
   
	
   
	
   

	
   
	
  6.3.2
	
  The Company shall not transfer ownership, by sale or
  any other means, of Materials or Masterbatch to any Submanufacturers but
  rather shall provide Masterbatch to Submanufacturers without charge for the
  sole purpose of allowing such Submanufacturers to manufacture the Product,
  incorporating Masterbatch, for the account of the Company.  Upon completion of any order for the
  Product by a Submanufacturer, the Company shall pay such Submanufacturer for
  its services and the raw materials provided by the Submanufacturer and so
  take title to the Product, and shall require the return of any Masterbatch
  not utilized in the Process.

	
   
	
   
	
   

	
   
	
  6.3.3
	
  The Parties hereby agree and acknowledge that NTI is
  an intended third party beneficiary of the Trade Secrecy Agreements, and that
  NTI may in its sole discretion, on its own behalf or derivatively and/or on
  behalf of the Company directly enforce the provisions of the Trade Secrecy
  Agreements and/or any breach thereof against any and all Agents (as defined
  in Article 6.3.1 hereof) and/or Submanufacturers (as defined in Article
  6.3.1.1 hereof) who have executed same.

						

10

	
  6.4

  	
  Remedies in the Event of a
  Violation of Article 6 hereof

  
	
   
	
   

	
   
	
  It is understood and recognized by the Company that
  in the event of any violation by the Company of the provisions of Article 6
  hereof, NTI’s remedy at law will be inadequate and NTI will suffer
  irreparable injury.  Accordingly, the
  Company consents to injunctive and other appropriate equitable relief in any
  court of competent jurisdiction in order to protect the NTI Trade
  Secrets.  Such relief shall be in
  addition to any other relief to which NTI may be entitled at law or in
  equity. 

  
	
   
	
   

	
  ARTICLE
  7

	
   

	
  7.
	
  COVENANT TO OBSERVE THE DOCTRINE OF
  “CORPORATE OPPORTUNITY”

	
   
	
   

	
  7.1
	
  Doctrine of Corporate Opportunity
  and Observance Thereof

	
   
	
   

	
   
	
  It is the intent of the Parties to this Agreement,
  the Joint Venture Agreement and to the other Ancillary Agreements to deal
  exclusively with each other with respect to the commercial, technical and
  strategic development of the Company’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 on the performance of their
  duties under the Joint Venture Agreement or the Ancillary Agreements in the
  Territory, or (b) have the effect of displacing or substituting the Knowhow,
  Materials, Process, Product or Masterbatch in the Territory; except as agreed
  to by the Parties in furtherance of the Company’s Business. 

	
   
	
   

	
  7.2
	
  Agreement Not to Divert Resources

	
   
	
   

	
   
	
  The Company, and NTI 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 the Product from the
  Company within the Territory except through the Company in furtherance of the
  Company’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 Company.  In the
  event that this Agreement is terminated: (i) because of a material Breach of
  the Joint Venture Agreement by a Party; or (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 8 hereof; (iv) pursuant
  to Article 9 hereof; (v) or upon a Breach of Articles 6 or 7 hereof, then the
  Party in Breach or subject to such adverse condition shall continue to be
  bound by the provisions of this Article 7 for a period of two years following
  the date of termination, but shall at no time be permitted to use NTI Trade
  Secrets, as the case may be, for any activity outside the Company. 

11

	
  7.3

  	
  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 7 hereof by a Party,
  the remedy at law will be inadequate and the Company and the other Parties to
  the Joint Venture and the Ancillary Agreements 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 a non-violating
  Party.  Such relief shall be in
  addition to any other relief to which a Party may be entitled at law in
  equity, which shall include but not be limited to the right of immediate
  termination of this Agreement. 

  
	
   
	
   

	
  ARTICLE
  8

	
   

	
  8.
	
  TERM OF AGREEMENT

	
   
	
   

	
  8.1
	
  Indefinite Term

	
   
	
   

	
   
	
  This Agreement shall become effective on the
  Effective Date and shall, unless otherwise terminated in accordance with the
  provisions hereof, continue in effect indefinitely unless: 

	
   
	
   

	
   
	
  8.1.1
	
  terminated by either Party in accordance with the
  provisions of Articles 6 or 7 hereof;

	
   
	
   
	
   

	
   
	
  8.1.2
	
  terminated by either Party by reason of a Default of
  this Agreement by the other Party which has not been cured or remedied in
  accordance with Article 9 hereof; or

	
   
	
   
	
   

	
   
	
  8.1.3
	
  any of the Ancillary Agreements or the Joint Venture
  Agreement shall be terminated by a Party in accordance with its terms.  In such event this Agreement shall
  likewise terminate on the same date, without any further act or notice given
  by a Party hereto.

	
   
	
   

	
  8.2
	
  Payment of Amounts Due

	
   
	
   

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

	
   
	
   

	
  8.3
	
  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 Article 6, upon termination
  of this Agreement NTI Trade Secrets shall continue to be kept secret and
  confidential. 

12

	
  ARTICLE
  9

  
	
   

	
  9.

  	
  DEFAULT

  
	
   
	
   

	
  9.1

  	
  Default

  
	
   
	
   

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

  
	
   
	
   

	
   
	
  9.1.1
	
  Non-payment of funds by one Party to another Party
  when due and owing; and/or 

	
   
	
   
	
   

	
   
	
  9.1.2
	
  A material breach (“Breach”) of any provision of the
  Joint Venture Agreement or the Ancillary Agreements other than Articles 6
  and/or 7 hereof;

	
   
	
   
	
   

	
   
	
  9.1.3
	
  A breach of Articles 6 and/or 7 hereof.

	
   
	
   

	
  9.2
	
  Remedies upon Default

	
   
	
   

	
   
	
  The remedies available to each Party in an instance
  of Default by another Party shall be as follows: 

	
   
	
   

	
   
	
  9.2.1
	
  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 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 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 such Breach 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 such Breach
  proceeds to cure such Default with due diligence.  A Party’s right of termination shall be in addition to and not
  in limitation of any of his other rights at law or in equity based upon the
  other Party’s Breach or Default.  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.

	
   
	
   
	
   

	
   
	
  9.2.2
	
  Notwithstanding the forgoing, in the event of a
  violation of Articles 6 and/or 7 hereof by a Party hereto, each other Party
  may at its sole discretion terminate this Agreement with immediate effect
  upon giving notice to the other Parties as provided herein.

	
   
	
   

	
  9.3
	
  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
  9.1 or 9.2 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 9.2 hereof), or on account of any subsequent Breach or Default by a
  Party. 

13

	
  ARTICLE
  10.

  
	
   

	
  10.

  	
  ARBITRATION

  
	
   
	
   

	
  10.1

  	
  Arbitration Mandatory 

  
	
   
	
   

	
   
	
  Any of the following disputes which may arise
  between the Parties during the term of this Agreement, after the termination
  thereof, or following the liquidation or dissolution of the Company, upon
  failure by the Parties to amicably resolve same after mutual good faith
  negotiations, shall be exclusively settled by arbitration:  

  
	
   
	
   

	
   
	
  10.1.1
	
  a dispute as to whether a Default exists; 

	
   
	
   
	
   

	
   
	
  10.1.2
	
  a dispute as to whether a Default entitles the
  non-defaulting Party to terminate this Agreement; 

	
   
	
   
	
   

	
   
	
  10.1.3
	
  a dispute as to the validity of this Article 10; 

	
   
	
   
	
   

	
   
	
  10.1.4
	
  a dispute relating to the construction, meaning,
  interpretation, application or effect of this Agreement or anything contained
  herein; 

	
   
	
   
	
   

	
   
	
  10.1.5
	
  a dispute as to the rights, obligations or
  liabilities of the Parties hereunder. 

	
   
	
   
	
   

	
   
	
  Such arbitration proceedings shall be conducted in
  English and shall be carried on in the City of Brussels or any other place
  mutually agreeable to the Parties, under the UNCITRAL Arbitration Rules.  In such proceedings, the laws of England
  shall apply. Judgement 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.  Notwithstanding
  anything to the contrary set forth in this Agreement, no matter shall be
  referred to or settled by Arbitration which is: 

	
   
	
   

	
   
	
  (a)
	
  based upon a Party’s violation of the provisions of
  this Agreement relating to NTI Trade Secrets or Corporate Opportunity, the
  remedies for which are set forth in Articles 6 and 7 hereof. 

	
   
	
   
	
   

	
   
	
  (b)
	
  expressed in this Agreement to be agreed upon by or
  determined with the consent or approval of both Parties. 

	
   
	
   
	
   

	
  10.2
	
  Punitive Damages Excluded

	
   
	
   

	
   
	
  Notwithstanding the foregoing, 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.  

14

	
  ARTICLE
  11

  
	
   

	
  11.

  	
  GENERAL PROVISIONS

  
	
   
	
   

	
  11.1

  	
  Benefit of Parties

  
	
   
	
   

	
   
	
  All of the terms and provisions of this Agreement,
  and of the Joint Venture Agreement and of the other 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
  responsibility hereunder and (ii) the assignee shall expressly assume in
  writing and agree to perform such obligations, liabilities and
  responsibilities of the assignor. 

  
	
   
	
   

	
  11.2
	
  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.

	
   
	
   

	
  11.3
	
  Cooperation.

	
   
	
   

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

	
   
	
   

	
  11.4
	
  Index and Captions.

	
   
	
   

	
   
	
  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 shall be incorporated herein as
  written and made a part hereof. 

	
   
	
   

	
  11.5
	
  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 Parties 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. 

15

	
  11.6

  	
  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. 

  
	
   
	
   

	
  11.7
	
  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 or
  equivalent, as follows:

	
   
	
  If to NTI, to:
	
  Northern Technologies
  International Corporation

	
   
	
   
	
  6680 North Highway 49

	
   
	
   
	
  Lino Lakes, MN  55014

	
   
	
   
	
  Attention:  President

	
   
	
   
	
  Tel:  612-784-1250

	
   
	
   
	
  Fax:  612-784-2902 

	
   
	
   
	
   

	
   
	
  Copy to:
	
  Philip M. Lynch 

	
   
	
   
	
  One Commerce Park Square

	
   
	
   
	
  23200 Chagrin Blvd.,

	
   
	
   
	
  Suite 107 Beachwood,

	
   
	
   
	
  OH  44122 Tel:  216-595-1740

	
   
	
   
	
  Fax:  216-595-1741 

	
   
	
   
	
   

	
   
	
  If to the Company:
	
  Zerust (UK) Limited

	
   
	
   
	
  Meadowfield Avenue

	
   
	
   
	
  Green Lane Industrial
  Estate

	
   
	
   
	
  Spennymoor

	
   
	
   
	
  Co. Durham

	
   
	
   
	
  DLI6 6YJ

	
   
	
   
	
  Attention:  Company Secretary

	
   
	
   
	
  Tel:   01388 420 555 

	
   
	
   
	
  Fax: 
  01388 420 777

16

	
   
	
  Copy to:
	
  Taylor
  Packaging (Bishop Auckland) Limited

	
   
	
   
	
  Meadowfield
  Avenue

	
   
	
   
	
  Green Lane
  Industrial Estate

	
   
	
   
	
  Co. Durham

	
   
	
   
	
  DLI6 6YJ 

	
   
	
   
	
  Tel:  01388 420 555

	
   
	
   
	
  Fax:  01388 420 777

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

	
   
	
   

	
  11.8
	
  Entire Agreement

	
   
	
   

	
   
	
  This License Agreement,
  together with the Joint Venture Agreement and the other Ancillary Agreements
  and any other documents now or subsequently referred to herein or attached
  hereto which form a part of this Agreement, contain the entire understanding
  of the parties hereto.  There are no
  prior representations, promises, warranties, covenants, agreements or
  undertakings other than those expressly set forth or provided for in this
  Agreement, the Joint Venture Agreement and the other Ancillary Agreements,
  and the same supersede all prior agreements and understandings between the
  Parties with respect to the relationships and transactions contemplated by
  this Agreement.

	
   
	
   

	
  11.9
	
  Validity of Provisions

	
   
	
   

	
   
	
  Should any part of this Agreement, the Joint Venture
  Agreement, or the other 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, the Joint Venture Agreement, or any other 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. 

	
   
	
   

	
  11.10
	
  Governmental Filings

	
   
	
   

	
   
	
  The Company 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.  NTI shall provide
  whatever material and information required of and available to it in
  connection with the preparation and filing of such reports. 

17

	
  11.11

  	
  Payments

  
	
   
	
   

	
   
	
  Any payment to be made by the Company to NTI 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
  NTI.  NTI shall have the right to
  specify in writing any bank account to which payments due shall be made. 

  
	
   
	
   

	
  11.12
	
  Derivative Enforcement

	
   
	
   

	
   
	
  TP may, derivatively for and on behalf of the
  Company, enforce the terms hereof against NTI, in the event of a material Breach
  or Default of this Agreement by NTI.  In the
  event of derivative enforcement hereunder, the matter shall be submitted to
  arbitration in accordance with the provisions of Article 10 hereof.

	
   
	
   

	
  11.13
	
  Changes Subject to Approval of TP

	
   
	
   

	
   
	
  The parties to this Agreement shall not change,
  modify or amend this Agreement in any respect without the prior written
  consent of TPI. 

	
   
	
   

	
  11.14
	
  Applicable Law

	
   
	
   

	
   
	
  This Agreement shall be read and construed in
  accordance with and be governed by the laws of England. 

	
   
	
   

	
  11.15
	
  RTPA

	
   
	
   

	
   
	
  No provision of this Agreement, or of any
  arrangement of which it forms part, by virtue of which such agreement or
  arrangement is subject to registration under the Restrictive Trade Practices
  Act 1976, shall take effect until the day after particulars of such agreement
  or arrangement have been furnished to the Director General of Fair Trading
  pursuant to that Act. Particulars shall, if necessary, be furnished to the
  Director General of Fair Trading within three months of the date of this
  Agreement. 

IN WITNESS WHEREOF, the
parties have executed this Agreement as of the day and year first above
written.

	
   
	
  NORTHERN TECHNOLOGIES

	
   
	
  INTERNATIONAL CORPORATION

	
   
	
   

	
   
	
  By
	
   

	
   
	
   
	
  

  	
   
	 

	
   
	
   
	 

	
   
	
   
	
   
	 

	
   
	
  ZERUST (UK) LIMITED

	
   
	
   

	
   
	
  By
	
   

	
   
	
   
	
  

  	
   

							

18

ANNEX
I

APPROVAL
OF NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION

By its signature hereto
Northern Technologies International Corporation approves and agrees to the
terms and provisions of this Management and Sales Representation Agreement and
the Trade Secrecy Agreement attached hereto, and agrees to be bound thereto to
the extent that such terms and provisions are applicable to it, it being
understood that Northern Technologies International Corporation shall also have
a direct right of action in its own name for the enforcement of the provisions
of this Agreement.

	
   
	
  TAYLOR PACKAGING (BISHOP

  AUCKLAND) LIMITED

	
   
	
   

	
   
	
  By
	
   

	
   
	
   
	
  

  	
   

19

ANNEX
II

TRADE
SECRECY AGREEMENT

THIS
AGREEMENT, dated this
[       ] day of
[                    ]

BETWEEN:

	
  (1)

  	
  ZERUST (UK) LIMITED
  a company incorporated under the laws of England and Wales with number
  3248266 and whose registered office is at Meadowfield Avenue, Green Lane
  Industrial Estate, Spennymoor, Co Durham. DL 16 6YT (“the Company”);

	
   
	
   

	
  (2)
	
  [                                     ]
  (“the Agent”); and

	
   
	
   

	
  (3)
	
  NORTHERN TECHNOLOGIES INTERNATIONAL
  CORPORATION, a company organised under the laws of the
  State of Delaware, USA (“NTI”) the principal place of business of which is
  Lino Lakes, Minnesota, USA. 

	
   
	
   

	
  WHEREAS, the Company is engaged in the development,
  manufacture, and sale of various products and services and in research work
  and, in such activities, utilizes secret and confidential techniques,
  methods, processes, equipment, formulae, customer lists and information;

	
   

	
  WHEREAS, the Company receives Technical Assistance
  and Marketing Support from Northern Technologies International Company (“NTI”)
  for the Promotion, Sale and Application of polyethylene film and solid
  material of polyethylene substance in the form of boxes, tubes and other
  containers utilizing the trademark “ZERUST”‘ in the Territory (the “Product”);
  and

	
   

	
  WHEREAS, the Company and NTI have expended and will
  continue to expend substantial sums of money to train the Agent in the
  Company’s business including but not limited to marketing the Product, and
  without which expenditures the Agent would have no such training in the
  Company’s business and marketing the Product; and

	
   

	
  WHEREAS, the Company and NTI have imparted and will
  continue to impart to the Agent in the course of his employment and training
  information pertaining to the Product, certain processes, technical knowhow,
  marketing and sales techniques, customer identities and other confidential
  information not now known to the general public, which knowhow and
  information constitute valuable, proprietary and confidential trade secrets
  of the Company and NTI;

	
   

	
  NOW THEREFORE, in consideration of the employment of
  the Agent by the Company, the special training with respect to the Company’s
  business and the Product to be provided to him, and the salary to be paid to
  the Agent by the Company during the term of his employment, it is agreed as
  follows:

	
   

	
  1.
	
  The Agent agrees that during his employment by the
  Company and for so long thereafter as the same has not (other than a result
  of disclosure by the Company) entered the public domain, he will not, without
  the prior written consent of the Company and NTI, (i) use outside of the
  service of the Company or (ii) disclose or divulge to anyone other than
  persons designated by the Company, any of the following: 

20

	
   
	
  a.
	
  any knowledge or information of a confidential
  nature acquired by him with respect to the trade secrets of NTI including,
  but not limited to, process, techniques, research, methods technology,
  equipment, formulae, pricing, cost data, technical knowhow, memoranda,
  marketing/sales strategy, promotion, suppliers and customers which he now
  knows or other confidential information of the Company or NTI, knowledge of
  which is acquired by the Agent during the term of his employment by the
  Company (collectively, “Trade Secrets”).

	
   
	
   
	
   

	
   
	
  b.
	
  any of the unpublished records, books of account,
  documents, letters, diagrams, computer disks, papers or memoranda of NTI or
  (collectively “Internal Data”). 

	
   
	
   
	
   

	
  2.
	
  The Agent shall at no time copy, remove from their
  proper location, or retain without the Company’s prior written consent, the
  originals or copies of such Trade Secrets or Internal Data. 

	
   
	
   

	
  3.
	
  The Agent shall not, for a period of three (3) years
  subsequent to the termination of his employment with the Company for any
  reason, compete, directly or indirectly (whether as an employee, partner,
  investor, shareholder or director), or accept any employment with any person
  or company competing with the Company in the marketing, sale of manufacturing
  of the Product or products similar thereto in any place in the Territory
  which are competitive in nature to the business of the Company, if such
  employment would in its inherent nature require the Agent to utilize any of
  the Trade Secrets, Internal Data or portions thereof.

	
   
	
   

	
  4.
	
  The Agent and the Company hereby agree and
  acknowledge that NTI is an intended beneficiary of this Trade Secrecy
  Agreement and that NTI shall have the incontroversible right to enforce this
  Trade Secrecy Agreement independently of the Company, if NTI, in its sole
  judgement, chooses to do so, and may proceed directly against the Agent for
  any breach of the Agent’s obligations hereunder to the full extent of the
  law. 

	
   
	
   

IN WITNESS WHEREOF, the
parties hereto have executed and delivered this Agreement as a Deed on the day
and year first above written.

21

ANNEX
4

TECHNICAL
ASSISTANCE AND MARKETING SUPPORT AGREEMENT

44

TECHNICAL
ASSISTANCE AND 

MARKETING SUPPORT AGREEMENT

BY
AND BETWEEN

NORTHERN
TECHNOLOGIES 

INTERNATIONAL CORPORATION

AND

ZERUST
(UK) LIMITED

DATED AS
OF               DECEMBER
1996

 

TECHNICAL ASSISTANCE AND MARKETING SUPPORT
AGREEMENT

THIS AGREEMENT is
made the                day of December
1996 

BETWEEN 

	
  (1)

  	
  NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION,
  whose principal office is located in Lino Lakes, Minnesota, U.S.A., (hereinafter
  “NTI”); and 

	
   
	
   

	
  (2)
	
  ZERUST (UK) LIMITED a company incorporated
  in England and Wales with registered number 3248266 whose registered office
  is at Meadowfield Avenue, Green Lane Industrial Estate, Spennymoor, Co.
  Durham, DLl6 6YJ (hereinafter the “Company”).  

ARTICLE 1. 

	
  1.
	
  DEFINITIONS 

	
   
	
   

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

	
   
	
   

	
  1.1
	
  Ancillary Agreements 

	
   
	
   

	
   
	
  The
  following are the Ancillary Agreements and the Parties thereto: 

	
   
	
  1.1.1
	
  Management
  and Sales Representation Agreement between TP and the Company (“Management
  Agreement”); 

	
   
	
   
	
   

	
   
	
  1.1.2
	
  License
  Agreement between NTI and the Company (“License Agreement”); and 

	
   
	
   
	
   

	
   
	
  1.1.3
	
  Technical
  Assistance and Marketing Support Agreement between NTI and the Company
  (“Technical Assistance Agreement”) 

	
   
	
  and
  “Ancillary Agreement” shall be construed accordingly. 

	
   
	
   

	
  1.2
	
  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 prescription “At Cost”). 

	
   
	
   

	
  1.3
	
  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 Joint Venture Agreement or any of the Ancillary
  Agreements.  

1

	
  1.4

  	
  Company or Joint Venture 

  
	
   
	
   

	
   
	
  Zerust (UK)
  Limited, being that entity created in the Territory by the Parties pursuant
  to the Joint Venture Agreement to conduct the Company’s Business.  

  
	
   
	
   

	
  1.5
	
  Company’s Business 

	
   
	
   

	
   
	
  The
  Company’s Business shall be the manufacturing, marketing and distribution of
  Product in the Territory.  

	
   
	
   

	
  1.6
	
  Completion 

	
   
	
   

	
   
	
  Means
  completion of the Joint Venture Agreement in accordance with its terms.
  “Completed” shall be construed accordingly. 
  

	
   
	
   

	
  1.7
	
  Effective Date 

	
   
	
   

	
   
	
  The date
  upon which the Joint Venture Agreement is Completed.  

	
   
	
   

	
  1.8
	
  Joint Venture Agreement or Agreement 

	
   
	
   

	
   
	
  That certain
  Joint Venture Agreement by and between Northern Technologies International
  Corporation, 6680 North Highway 49, Lino Lakes, Minnesota 55014, (“NTI”) and
  TP for the formation and governance of a new entity under the laws of England
  in the form of a company (the “Company”), which shall be known as Zerust (UK)
  Limited.  

	
   
	
   

	
  1.9
	
  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 use and application of the Process, together with all
  improvements and modifications with respect thereto.  

	
   
	
   

	
  1.10
	
  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.  

	
   
	
   

	
  1.11
	
  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.  

2

	
  1.12

  	
  Net Sales 

  
	
   
	
   

	
   
	
  The total
  proceeds from the sale of Product within the Territory by the Company in
  normal, bona fide commercial transactions on an arm’s length basis to, by,
  with, or through an entity which is not affiliated to 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.  

  
	
   
	
   

	
  1.13
	
  NTI Affiliates 

	
   
	
   

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

	
   
	
   

	
  1.14
	
  NTI Intellectual Property Rights 

	
   
	
   

	
   
	
  The Knowhow,
  Materials, Process, NTI Trade Secrets, Product, Masterbatch and Trademark,
  collectively, as such currently exist and shall hereinafter be modified,
  developed and/or acquired by NTI.  

	
   
	
   

	
  1.15
	
  NTI Trade Secrets 

	
   
	
   

	
   
	
  All
  information deemed and designated confidential, both in the 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 business of NTI, the Company and NTI
  Affiliates (as hereinafter defined) both in the Territory and elsewhere.  

	
   
	
   

	
  1.16
	
  Parties 

	
   
	
   

	
   
	
  The Parties
  to the Joint Venture Agreement and/or the Ancillary Agreements, their
  successors and permitted assigns and “Party” shall be construed
  accordingly.  

	
   
	
   

	
  1.17
	
  Process 

	
   
	
   

	
   
	
  The
  procedure utilizing the Knowhow for the manufacture of polyethylene materials
  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 materials, together with future technology,
  knowledge and product development which is useful in the manufacture of the Product.  

3

	
  1.18

  	
  Product 

  
	
   
	
   

	
   
	
  Corrosion
  inhibiting polyethylene film and solid material of polyethylene in the form
  of boxes, tubes and other containers manufactured by means of the Process,
  incorporating the Materials and utilizing the Trademark.  

  
	
   
	
   

	
  1.19
	
  Territory 

	
   
	
   

	
   
	
  The United
  Kingdom.  

	
   
	
   

	
  1.20
	
  TP 

	
   
	
   

	
   
	
  Taylor
  Packaging (Bishop Auckland) Limited, a company incorporated in England and
  Wales with registered number 01999397 whose registered office is at
  Meadowfield Avenue, Green Lane Industrial Estate, Spennymoor, Co. Durham,
  DLl6 6YJ.  

	
   
	
   

	
  1.21
	
  Trademark 

	
   
	
   

	
   
	
  The names
  and style “ZERUST”, “THE ZERUST PEOPLE”, and the colour yellow in relation
  thereto (which, in each case, are the subject of Community Trade Mark
  applications) which includes trade literature, technical specifications and
  application instructions, and promotional material pertaining thereto.  

ARTICLE 2. 

	
  2.

  	
  RESPONSIBILITIES
OF NTI WITH RESPECT TO PROVIDING TECHNICAL ASSISTANCE TO THE COMPANY

  
	
   
	
   

	
  2.1

  	
  Technical Assistance 

  
	
   
	
   

	
   
	
  NTI shall,
  at the Company’s request, provide the Company with technical advice,
  applications engineering, support in manufacturing the Product, and
  assistance in responding to inquiries and problems of customers in the
  Territory.  

  
	
   
	
   

	
  2.2
	
  Development of New Applications 

	
   
	
   

	
   
	
  NTI shall
  continue its efforts to expand the range of applications of the Product and
  shall make the results of all such efforts available to the Company.  

	
   
	
   

	
  2.3
	
  Assistance by NTI in the Manufacturing of the Product in the
  Territory 

	
   
	
   

	
   
	
  NTI shall
  provide assistance and training as may reasonably be required by the Company
  to facilitate the manufacture of the Product in the Territory.  This shall include training of the
  Company’s Agents or Submanufacturers (as set forth in Article 5 hereof) at a
  location to be mutually determined.  

4

	
  2.4

  	
  Source of Materials 

  
	
   
	
   

	
   
	
  The parties
  recognize that the Materials consist of a unique, proprietary and secret
  combination of chemicals which has been developed by NTI and which chemicals
  are prepared, mixed and combined prior to shipment in the form of
  Masterbatch; and that the Masterbatch is essential in order for the Process
  to work safely and effectively. 
  Accordingly, in order to ensure proper quality control, NTI agrees to
  sell to the Company, at the Company’s request, and the Company agrees to
  purchase from NTI, such Materials and/or Masterbatch as may be necessary to
  carry out the Company’s Business. 
  Alternatively, the Company may purchase Materials and/or Masterbatch
  from any other NTI Affiliate or external bona fide supplier, provided that
  NTI has approved the quality and reliability of such materials and such
  supplier.  

  

	
   
	
  2.4.1
	
  Terms of
  Trade for Materials.  Shipments of the Materials and/or Masterbatch by NTI to the
  Company and the terms of sale thereof will be pursuant to and in accordance
  with the Terms of Sale set forth in Schedule A hereto.  The initial price schedule for the
  Materials and Masterbatch is also set forth in Schedule A. Materials and/or
  Masterbatch purchased from NTI shall be paid at the head office of NTI or at
  any other place designated by NTI in the currency invoiced within thirty (30)
  days following receipt by the Company of such Materials and/or Masterbatch at
  its principal place of business or at such other places in the Territory as
  shall be designated by the Company in the purchase order issued with respect
  thereto. 

	
   
	
   
	
   

	
   
	
  2.4.2
	
  Material
  Safety Data Sheets. 
  NTI shall provide the Company with Material Safety Data Sheets for all
  Materials and Masterbatch provided by NTI to the Company. 

	
   
	
   
	
   

	
   
	
  2.4.3
	
  Product
  Liability Insurance.  NTI warrants to the Company that NTI presently carries product
  liability insurance (as set out in Schedule B hereto).  The product liability coverage under the
  Policy extends solely to the Materials and Masterbatch manufactured by NTI
  and provided by NTI to the Company. 
  As of the Effective Date hereof, the pro rata charge to the Company by
  NTI for the Product Liability Insurance Coverage on the Materials and
  Masterbatch provided to the Company by NTI shall be incorporated within the
  compensation to be paid to NTI pursuant to Article 4.2 hereof for services,
  performed hereunder; any subsequent adjustment in the premium of the coverage
  for Product Liability Insurance may, however, necessitate a separate
  additional charge therefor to the Company by NTI in the future. 

5

	
  2.5

  	
  Availability of Laboratory Test Facilities 

  
	
   
	
   

	
   
	
  NTI shall
  make its Laboratory Test Facilities reasonably available to the Company,
  without charge to the Company, for the purposes of analyzing the specific
  corrosion prevention requirements of customers and/or potential customers for
  the Product, which customers shall have been identified by the Company in the
  Territory, on a schedule to be mutually determined.  In the course of the technical analysis and testing procedures
  conducted in the Laboratory Test Facilities of NTI, NTI shall use reasonable
  efforts to determine whether the NTI Intellectual Property Rights can be
  utilized effectively to meet, in whole or in part, the specific requirements
  for corrosion inhibiting technology posed by the customers or prospective
  customers for the applications specified. 
  Various different Materials and Masterbatch formulations may be tested
  in this process.  NTI shall inform the
  Company as to the results of the analysis performed and tests conducted in
  each such case as promptly as practicable. 
  All of the concepts, analyses and results of such analyses and testing
  procedures shall be and remain the sole property of NTI, without any
  additional fee or cost to it, subject to the provisions of this Agreement and
  the Licence Agreement in the event a Product is developed.  Notwithstanding the foregoing, if greater
  demands on the Laboratory Test Facilities of NTI are posed by the Company
  than demands for such support posed by other NTI Affiliates of the same
  approximate size and scope, NTI may not be required to perform the requested
  services unless the Company agrees to the payment of a reasonable charge
  therefor. 

  

ARTICLE 3. 

	
  3.
	
  RESPONSIBILITIES OF NTI WITH RESPECT TO PROVIDING MARKETING SUPPORT
  TO THE COMPANY 

	
   
	
   

	
  3.1
	
  Marketing Support 

	
   
	
   

	
   
	
  NTI shall,
  at the Company’s request, provide the Company with assistance in marketing
  the Product in the Territory and in responding to inquiries and problems of
  customers.  

	
   
	
   

	
  3.2
	
  Improvements in Marketing 

	
   
	
   

	
   
	
  NTI shall
  also continue its efforts to improve the marketing techniques and the
  customer base for the Product, and shall make any tangible results of all
  such efforts available to the Company. 
  

	
   
	
   

	
  3.3
	
  Sales Promotion 

	
   
	
   

	
   
	
  NTI shall
  provide support and assistance in the sales promotion and advertising efforts
  of the Company.  NTI shall provide
  text, photographs, artwork and mats NTI has developed for its own proprietary
  Sales Promotion Tools to the Company at cost; upon the Company’s
  request.  

	
   
	
   

	
  3.4
	
  Participation in Trade Fairs 

	
   
	
   

	
   
	
  At the
  Company’s request, and upon mutual agreement as to timing, cost and scope,
  NTI shall provide support to the Company in preparing, designing and staffing
  the Company’s booth at appropriate Trade Fairs to promote the Product in the
  Territory.  

6

	
  3.5

  	
  Customer Lists 

  
	
   
	
   

	
   
	
  NTI shall
  identify international companies working in the Territory which have become
  users of the Product in the United States and in the respective territories
  of other NTI Affiliates, and provide such customer lists to the Company for
  use in the Territory.  

  
	
   
	
   

	
  3.6
	
  Joint Sales Calls 

	
   
	
   

	
   
	
  Upon mutual
  agreement, proper advance planning and identification of suitable prospects,
  NTI management shall make sales calls in the Territory with the Company’s
  sales staff to promote the Product.  

ARTICLE 4. 

	
  4.
	
  PAYMENTS TO NTI FOR TECHNICAL ASSISTANCE AND MARKETING SUPPORT TO THE
  CORPORATION 

	
   
	
   

	
  4.1
	
  Basis for Payments 

	
   
	
   

	
   
	
  The Company
  shall make payments to NTI which are provided for in this Article 4 in
  consideration of the services performed by NTI as set forth in Articles 2 and
  3 hereof.  Such payments shall be made
  throughout the full term of this Technical Assistance and Marketing Support
  Agreement as compensation for the services set forth above and duly provided
  by NTI.  

	
   
	
   

	
  4.2
	
  Amount of Payments 

	
   
	
   

	
   
	
  The Company
  shall pay to NTI an amount equal to seven and one-half percent (7.5%) of Net
  Sales from the Company’s Business. 
  Payments shall be paid in United States Dollars to an account or
  accounts as may be designated by NTI from time to time.  

	
   
	
   

	
  4.3
	
  When a Sale is Deemed to Occur 

	
   
	
   

	
   
	
  A sale shall
  be deemed to have occurred when Product as been billed, (if applicable) and
  delivered to and paid for by a customer. 
  

	
   
	
   

	
  4.4
	
  Support Year 

	
   
	
   

	
   
	
  The term
  “Support Year” shall mean any twelve (12) month period ending on August 31,
  except that the first Support Year shall commence on the Effective Date. 

	
   
	
   

	
  4.5
	
  Statements to NTI 

	
   
	
   

	
   
	
  Within
  thirty (30) days after the last day of each quarterly period in each Support
  Year, the Company shall:  

	
   
	
  4.5.1
	
  Prepare and
  deliver to NTI a complete and accurate statement setting forth for the
  quarter just ended and separately and cumulatively for and with respect to
  all elapsed quarterly periods for the Support Year: 

7

	
   
	
  4.5.1.1
	
  The total
  amount of Net Sales (broken down in reasonable detail by individual products
  and customers and showing all costs and discounts leading to the
  establishment of the Net Sales figure for each customer); and 

	
   
	
   
	
   

	
   
	
  4.5.1.2
	
  The total
  amount of the compensation on such Net Sales (computed as hereinbefore
  provided) payable hereunder to NTI for its services with respect to Technical
  Assistance and Marketing Support. 

	
   
	
  4.5.2
	
  Pay to NTI
  the full amount of the royalties to which it is entitled for and with respect
  to the period or periods of the Support Year covered by the statement(s)
  provided for in Article 4.5.1 hereof. 

	
  4.6

  	
  Books and Records 

  
	
   
	
   

	
   
	
  The Company
  covenants and agrees:  

  

	
   
	
  4.6.1
	
  That it will
  keep complete and accurate records and books of account showing the amount of
  billings to customers and the amount of deductions therefrom in arriving at
  Net Sales and all additional data and information which may be reasonably necessary
  to enable NTI or NTI’s independent accountants to verify the completeness and
  accuracy for each item of information which the Company is required to set
  forth in each of the statements referred to in Article 4.5.1; 

	
   
	
   
	
   

	
   
	
  4.6.2
	
  That it will
  keep all such records and books of account at its principal office and will
  preserve each such records and books of account for a period of not less than
  three (3) years from and after the date on which such records or the last
  entry in such books of account was made, whichever shall be later; and 

	
   
	
   
	
   

	
   
	
  4.6.3
	
  That it will
  make such records, books of account, data and information available to NTI’s
  representatives and to NTI’s independent accountants and will give to such
  representative or accountants free and complete access, at any reasonable
  time or times, to all such records, books of account, data and information,
  for the purposes of examining the same and verifying the completeness and
  accuracy of each item of information which the Company is required to set
  forth in each of the statements referred to in Article 4.5.1 hereof.  In addition, NTI shall have the right to
  make copies of any of the foregoing. 
  The Company’s auditors shall in the ordinary course of business
  provide written confirmation and certification to NTI, at least annually, of
  the data to be supplied to NTI pursuant to Article 4.5.1 hereof.  The cost of such reports shall be borne by
  the Company.  In the event that NTI
  shall cause its representatives to confirm or verify the accuracy of the data
  supplied by the Company, then the costs and fees of such representatives
  shall be borne by NTI unless such representatives shall determine, to the
  satisfaction of the Company’s auditors, that there is an understatement in
  the reporting of Net Sales of five (5%) or more, in which event the costs and
  fees of NTI’s representatives and/or accountants shall be borne by the
  Company. 

8

ARTICLE 5. 

	
  5.

  	
  PROTECTION OF NTI TRADE SECRETS 

  
	
   
	
   

	
  5.1

  	
  Recognition of NTI Trade Secrets 

  
	
   
	
   

	
   
	
  The Company
  acknowledges and agrees that (i) NTI Intellectual property Rights; (ii) other
  information deemed confidential by NTI and designated herein and hereafter
  relating to the business of NTI, of the Company, and of NTI Affiliates, both
  in the Territory and elsewhere, including but not limited to applications of
  NTI Intellectual Property Rights, cost data and cost accounting, 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 Trade Secrets set forth in
  Article 1.15 hereof and constitute valuable property rights of NTI and NTI
  Affiliates.  

  
	
   
	
   

	
  5.2
	
  Protection of NTI Trade Secrets 

	
   
	
   

	
   
	
  The Company
  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 Trade Secrets which it now knows or may hereafter come
  to know as a result of the Joint Venture Agreement and Ancillary
  Agreements.  NTI Trade Secrets shall
  not be disclosed by the Company 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 the Company 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 Trade Secret shall be in the public domain as the
  result of an act by the Company or any Agent (as hereinafter defined)
  thereof, then the Company shall nevertheless continue to keep such NTI Trade
  Secrets secret and inviolate.  

	
   
	
   

	
  5.3
	
  Protection of NTI Trade Secrets by Agents (as hereinafter defined)
  and Submanufacturers (as hereinafter defined) of the Company 

	
   
	
   

	
   
	
  Neither the
  Company, nor its Agents (as hereinafter defined), nor its Submanufacturers
  (as hereinafter defined) shall at any time copy, remove from their proper
  location, or retain without NTI’s prior written consent, the originals or
  copies of any NTI Trade Secrets or of any of the unpublished records, books
  of account, documents, letters, diagrams, computer disks, papers or memoranda
  of NTI or the Company.  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 Trade Secrets be
  strictly maintained both as to original documents and copies thereof. 

9

	
   
	
  5.3.1
	
  Insofar as
  the officers, employees and consultants of the Company (herein collectively
  “Agents”) who come in contact with NTI Trade Secrets are concerned, the
  Company shall cause such Agents to enter into NTI Trade Secrecy Agreements
  substantially in the form of Annex II to this Agreement.  The Company shall exert its best efforts
  to cause its Agents to adhere to and to abide by the provisions, restrictions
  and limitations of the Trade Secrecy Agreements which efforts shall include
  the institution and prosecution of appropriate litigation if such be
  necessary and desirable. 

	
   
	
  5.3.1.1
	
  To the
  extent that the Company provides Masterbatch to Submanufacturers.  In requisite quantities to allow such
  Submanufacturers to manufacture the Product in the Territory in such volumes
  and forms as may be required for the Company’s Business (“Submanufacturers”),
  it is understood that the Company may find it necessary to disclose certain
  NTI Trade Secrets to such Submanufacturers. 

	
   
	
   
	
   

	
   
	
  5.3.1.2
	
  NTI Trade
  Secrets shall be disclosed only to such Submanufacturers who have been
  specifically approved in writing by NTI and who have entered into Trade
  Secrecy Agreements with the Company in a form approved by NTI, but
  substantially in the form of the Trade Secrecy Agreement set forth in Annex
  II hereof 

	
   
	
   
	
   

	
   
	
  5.3.1.3
	
  Moreover,
  only those NTI Trade Secrets which are absolutely essential for the
  manufacturing activities to be carried on by such Submanufacturers shall be
  disclosed to them. 

	
   
	
  5.3.2
	
  The Company
  shall not transfer ownership, by sale or any other means, of Materials or
  Masterbatch to any Submanufacturers but rather shall provide Masterbatch to
  Submanufacturers without charge for the sole purpose of allowing such
  Submanufacturers to manufacture the Product, incorporating Masterbatch, for
  the account of the Company.  Upon
  completion of any order for the Product by a Submanufacturer, the Company
  shall pay such Submanufacturer for its services and the raw materials
  provided by the Submanufacturer and so take title to the Product, and shall
  require the return of any Masterbatch not utilized in the Process. 

	
   
	
  5.3.3
	
  The Parties
  hereby agree and acknowledge that NTI is an intended third party beneficiary
  of the Trade Secrecy Agreements, and that NTI may in its sole discretion, on
  its own behalf or derivatively and/or on behalf of the Company directly enforce
  the provisions of the Trade Secrecy Agreements and/or any breach thereof
  against any and all Agents (as defined in Article 5.3.1 hereof) and/or
  Submanufacturers (as defined in Article 5.3.1.1 hereof) who have executed
  same. 

	
  5.4
	
  Remedies in the Event of a Violation of Article 5 hereof 

	
   
	
   

	
   
	
  It is understood and recognized by the
  Company that in the event of any violation by the Company of the provisions
  of Article 5 hereof, NTI’s remedy at law will be inadequate and NTI will
  suffer irreparable injury.  Accordingly, the Company consents to injunctive and other
  appropriate equitable relief in any court of competent jurisdiction in order
  to protect the NTI Trade Secrets. Such relief shall be in addition to any
  other relief to which NTI may be entitled at law or in equity.

10

ARTICLE 6. 

	
  6.

  	
  COVENANT TO OBSERVE THE DOCTRINE OF “CORPORATE. OPPORTUNITY” 

  
	
   
	
   

	
  6.1

  	
  Doctrine of Corporate Opportunity and Observance Thereof 

  
	
   
	
   

	
   
	
  It is the
  intent of the Parties to this Agreement, the Joint Venture Agreement and to
  the other Ancillary Agreements to deal exclusively with each other with
  respect to the commercial, technical and strategic development of the
  Company’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 on the performance of their duties under the Joint Venture
  Agreement or the Ancillary Agreements in the Territory, or (b) have the
  effect of displacing or substituting the Knowhow, Materials, Process, Product
  or Masterbatch in the Territory; except as agreed to by the Parties in
  furtherance of the Company’s Business. 
  

  
	
   
	
   

	
  6.2
	
  Agreement Not to Divert Resources 

	
   
	
   

	
   
	
  The Company
  and NTI 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
  the Product from the Company within the Territory except through the Company
  in furtherance of the Company’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 Company. 
  In the event that this Agreement is terminated: (i) because of a material
  Breach of the Joint Venture Agreement by a Party; or (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 7
  hereof; (iv) pursuant to Article 8 hereof; (v) or upon a Breach of Articles 5
  or 6 hereof, then the Party in Breach or subject to such adverse condition
  shall continue to be bound by the provisions of this Article 6 for a period
  of two years following the date of termination, but shall at no time be
  permitted to use NTI Trade Secrets, as the case may be, for any activity
  outside the Company. 

	
   
	
   

	
  6.3
	
  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 6 hereof by a Party, the remedy at law will be
  inadequate and the Company and the other Parties to the Joint Venture and the
  Ancillary Agreements 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 a non-violating Party.  Such relief shall be in addition to any
  other relief to which a Party may be entitled at law in equity, which shall
  include but not be limited to the right of immediate termination of this
  Agreement. 

11

ARTICLE 7. 

	
  7.

  	
  TERM OF AGREEMENT 

  
	
   
	
   

	
  7.1

  	
  Indefinite Term 

  
	
   
	
   

	
   
	
  This
  Agreement shall become effective on the Effective Date and shall, unless
  otherwise terminated in accordance with the provisions hereof, continue in
  effect indefinitely unless:  

  

	
   
	
  7.1.1
	
  terminated
  by either Party in accordance with the provisions of Articles 13, 14 and/or
  15 hereof; 

	
   
	
   
	
   

	
   
	
  7.1.2
	
  terminated
  by either Party by reason of a Default of this Agreement by the other Party
  which has not been cured or remedied in accordance with Article 18 hereof; or
  

	
   
	
   
	
   

	
   
	
  7.1.3
	
  any of the
  Ancillary Agreements or the Joint Venture Agreement shall be terminated by a
  Party in accordance with its terms. In such event this Agreement shall
  likewise terminate on the same date, without any further act or notice given
  by a Party hereto. 

	
  7.2

  	
  Payment of Amounts Due 

  
	
   
	
   

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

  
	
   
	
   

	
  7.3
	
  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 Article 5 hereof, upon termination of this Agreement
  NTI Trade Secrets shall continue to be kept secret and confidential.  

ARTICLE 8. 

	
  8.
	
  DEFAULT 

	
   
	
   

	
  8.1
	
  Default 

	
   
	
   

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

	
   
	
  8.1.1
	
  Non-payment
  of funds by one Party to another Party when due and owing; and/or 

12

	
   
	
  8.1.2
	
  A material
  breach (“Breach”) of any provision of the Joint Venture Agreement or the
  Ancillary Agreements other than Articles 5 or 6 hereof; 

	
   
	
   
	
   

	
   
	
  8.1.3
	
  A breach of
  Articles 5 or 6 hereof. 

	
  8.2
	
  Remedies upon Default 

	
   
	
   

	
   
	
  The remedies
  available to each Party in an instance of Default by another Party shall be
  as follows:  

	
   
	
  8.2.1
	
  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 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 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 such Breach 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 such Breach proceeds to cure such Default with due diligence.  A Party’s right of termination shall be in
  addition to and not in limitation of any of his other rights at law or in
  equity based upon the other Party’s Breach or Default.  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. 

	
   
	
   
	
   

	
   
	
  8.2.2
	
  Notwithstanding
  the forgoing, in the event of a violation of Articles 5 or 6 hereof by a
  Party hereto, each other Party may at its sole discretion terminate this
  Agreement with immediate effect upon giving notice to the other Parties as
  provided herein. 

	
  8.3

  	
  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 8.1 or 8.2 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 8.2 hereof), or on account of
  any subsequent Breach or Default by a Party. 
  

  

13

ARTICLE 9. 

	
  9.
	
  ARBITRATION 

	
   
	
   

	
  9.1
	
  Arbitration Mandatory 

	
   
	
   

	
   
	
  Any of the
  following disputes which may arise between the Parties during the term of
  this Agreement, after the termination thereof, or following the liquidation
  or dissolution of the Company, upon failure by the Parties to amicably
  resolve same after mutual good faith negotiations, shall be exclusively
  settled by arbitration:  

	
   
	
  9.1.1
	
  a dispute as
  to whether a Default exists; 

	
   
	
   
	
   

	
   
	
  9.1.2
	
  a dispute as
  to whether a Default entitles the non-defaulting Party to terminate this
  Agreement; 

	
   
	
   
	
   

	
   
	
  9.1.3
	
  a dispute as
  to the validity of this Article 9; 

	
   
	
   
	
   

	
   
	
  9.1.4
	
  a dispute
  relating to the construction, meaning, interpretation, application or effect
  of this Agreement or anything contained herein; 

	
   
	
   
	
   

	
   
	
  9.1.5
	
  a dispute as
  to the rights, obligations or liabilities of the Parties hereunder. 

	
   
	
  Such
  arbitration proceedings shall be conducted in English and shall be carried on
  in the City of Brussels or any other place mutually agreeable to the Parties,
  under the UNCITRAL Arbitration Rules. 
  In such proceedings, the laws of England shall apply.  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. 
  Notwithstanding anything to the contrary set forth in this Agreement,
  no matter shall be referred to or settled by Arbitration which is:  

	
   
	
  (a)
	
  based upon a
  Party’s violation of the provisions of this Agreement relating to NTI Trade
  Secrets or Corporate Opportunity, the remedies for which are set forth in
  Articles 5 and 6 hereof. 

	
   
	
   
	
   

	
   
	
  (b)
	
  expressed in
  this Agreement to be agreed upon by or determined with the consent or
  approval of both Parties. 

	
  9.2
	
  Punitive Damages Excluded 

	
   
	
   

	
   
	
  Notwithstanding
  the foregoing, 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.  

14

ARTICLE 10

	
  10.

  	
  GENERAL PROVISIONS 

  
	
   
	
   

	
  10.1

  	
  Benefit of Parties 

  
	
   
	
   

	
   
	
  All of the
  terms and provisions of this Agreement, and of the Joint Venture Agreement
  and of the other 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 responsibility hereunder
  and (ii) the assignee shall expressly assume in writing and agree to perform
  such obligations, liabilities and responsibilities of the assignor.  

  
	
   
	
   

	
  10.2
	
  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.  

	
   
	
   

	
  10.3
	
  Cooperation 

	
   
	
   

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

	
   
	
   

	
  10.4
	
  Index and Captions 

	
   
	
   

	
   
	
  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 shall be incorporated herein as written and made a part hereof.  

	
   
	
   

	
  10.5
	
  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 Parties 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.  

15

	
  10.6

  	
  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, lockouts, 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. 
  

  
	
   
	
   

	
  10.7
	
  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 or equivalent, as follows:  

	
   
	
  If to NTI,
  to:
	
  Northern
  Technologies International Corporation

  6680 North Highway 49

  Lino Lakes, MN 55014

  Attention: President

  Tel: 612-784-1250

  Fax: 612-784-2902

	
   
	
   
	
   

	
   
	
  Copy to:
	
  Philip M.
  Lynch

  One Commerce Park Square

  23200 Chagrin Blvd., Suite 107

  Beachwood, OH 44122

  Tel: 216-595-1740

  Fax: 216-595-1741

	
   
	
   
	
   

	
   
	
  If to the
  Company:
	
  Zerust (UK)
  Limited

  Meadowfield Avenue

  Green Lane Industrial Estate

  Spennymoor

  Co. Durham

  DLI6 6YJ

  Attention: Company Secretary

  Tel: 01388 420 555

  Fax: 01388 420 777

	
   
	
   
	
   

	
   
	
  Copy to:
	
  Taylor
  Packaging (Bishop Auckland) Limited

  Meadowfield Avenue

  Green Lane Industrial Estate

  Spennymoor

  Co. Durham

  DLI6 6YJ

  Tel: 01388 420 555

  Fax: 01388 420 777

16

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

	
   
	
   

	
  10.8
	
  Entire Agreement 

	
   
	
   

	
   
	
  This
  Technical Assistance and Marketing Support Agreement, together with the Joint
  Venture Agreement and the other Ancillary Agreements and any other documents
  now or subsequently referred to herein or attached hereto which form a part
  of this Agreement, contain the entire understanding of the parties
  hereto.  There are no prior
  representations, promises, warranties, covenants, agreements or undertakings
  other than those expressly set forth or provided for in this Agreement, the
  Joint Venture Agreement and the other Ancillary Agreements, and the same
  supersede all prior agreements and understandings between the Parties with
  respect to the relationships and transactions contemplated by this Agreement.  

	
   
	
   

	
  10.9
	
  Validity of Provisions 

	
   
	
   

	
   
	
  Should any
  part of this Agreement, the Joint Venture Agreement, or the other 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, the Joint Venture
  Agreement, or any other 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.  

	
   
	
   

	
  10.10
	
  Governmental Filings 

	
   
	
   

	
   
	
  The Company
  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.  NTI shall provide whatever material and information required of
  and available to it in connection with the preparation and filing of such
  reports.  

17

	
  10.11

  	
  Payments 

  
	
   
	
   

	
   
	
  Any payment
  to be made by the Company to NTI 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 NTI. 
  NTI shall have the right to specify in writing any bank account to
  which payments due shall be made.  

  
	
   
	
   

	
  10.12
	
  Derivative Enforcement 

	
   
	
   

	
   
	
  TP may,
  derivatively for and on behalf of the Company, enforce the terms hereof
  against NTI in the event of a material Breach or Default of this Agreement by
  NTI.  In the event of derivative
  enforcement hereunder, the matter shall be submitted to arbitration in
  accordance with the provisions of Article 9 hereof. 

	
   
	
   

	
  10.13
	
  Changes Subject to Approval of 

	
   
	
   

	
   
	
  The parties
  to this Agreement shall not change, modify or amend this Agreement in any
  respect without the prior written consent of TP.  

	
   
	
   

	
  10.14
	
  Applicable Law 

	
   
	
   

	
   
	
  This
  Agreement shall be read and construed in accordance with and be governed by
  the laws of England.  

	
   
	
   

	
  10.15
	
  RTPA 

	
   
	
   

	
   
	
  No provision
  of this Agreement, or of any arrangement of which it forms part, by virtue of
  which such agreement or arrangement is subject to registration under the
  Restrictive Trade Practices Act 1976, shall take effect until the day after
  particulars of such agreement or arrangement have been furnished to the
  Director General of Fair Trading pursuant to that Act.  Particulars shall, if necessary, be
  furnished to the Director General of Fair Trading within three months of the
  date of this Agreement.  

IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written. 

	
   
	
  NORTHERN
  TECHNOLOGIES 

	
   
	
  INTERNATIONAL
  CORPORATION 

	
   
	
   

	
   
	
  By 

	
   
	
   
	
  

  
	
   
	
   

	
   
	
  ZERUST (UK)
  LIMITED  

	
   
	
   

	
   
	
  By 

	
   
	
   
	
  

  

18

ANNEX I 

APPROVAL OF TAYLOR PACKAGING (BISHOP AUCKLAND) LIMITED

By its signature  hereto Taylor  Packaging  (Bishop  Auckland)  Limited approves and agrees to the terms and provisions of this License
Agreement  and the Trade  Secrecy  Agreement  attached  hereto,  and  agrees to be bound  thereto  to the  extent  that such  terms app
provisions are applicable to it, it being understood that Taylor  Packaging  (Bishop  Auckland)  Limited shall also have a direct right
of action in its own name for the enforcement of the provisions of this Agreement.

	
   
	
  TAYLOR
  PACKAGING (BISHOP 

	
   
	
  AUCKLAND)
  LIMITED 

	
   
	
   

	
   
	
  By 

19

SCHEDULE A

MASTERBATCH PRICING & TERMS OF TRADE

as of 20 November, 1996

	
  Masterbatch
	
   
	
  Color
	
   
	
  Protection
	
   
	
  J. V. Price

	
  

  	
   
	
  

  	
   
	
  

  	
   
	
  

  
	
   
	
   
	
   
	
   
	
   
	
   
	
   

	
  PAY4733
	
   
	
  Yellow
	
   
	
  Ferrous
  Metals
	
   
	
  US$7.06/1b

	
   
	
   
	
   
	
   
	
   
	
   
	
   

	
  CLR 10227
	
   
	
  Clear
	
   
	
  Ferrous
  Metals
	
   
	
  US$7.06/lb

	
   
	
   
	
   
	
   
	
   
	
   
	
   

	
  MM61453
	
   
	
  Clear
	
   
	
  Multimetal
	
   
	
  US$11.06/1b

	
   
	
   
	
   
	
   
	
   
	
   
	
   

	
   
	
   
	
   
	
   
	
  (w/o Sodium
  Nitrite)
	
   
	
   

	
   
	
   
	
   
	
   
	
   
	
   
	
   

	
  MM62321
	
   
	
  Clear
	
   
	
  Multimetal
	
   
	
  US$11.06/1b

	
   
	
   
	
   
	
   
	
   
	
   
	
   

	
   
	
   
	
   
	
   
	
  (low odor)
	
   
	
   

	
   
	
   
	
   
	
   
	
   
	
   
	
   

	
  NFC60222
	
   
	
  Clear
	
   
	
  Nonferrous
  Metals
	
   
	
  US$11.06/1b

Masterbatches are packaged in 40 lb bags. 

Trade terms are net 30 days. 

Notice of changes contemplated by NTI for masterbatch prices will be
sent to all joint ventures prior to effecting the change. 

20

SCHEDULE B 

21

FOREIGN LIABILITY POLICY

General Liability and Automobile Coverage
Section

	
  Insurance
  Company:
	
  CIGNA

	
   
	
   

	
  Policy
  Number:
	
  PHF018946

	
   
	
   

	
  Policy
  Period:
	
  4/23/96 -
  4/23/97

	
   
	
   

	
  Named
  Insured:
	
  Northern
  Technologies

	
   
	
       International
  Corporation

	
   
	
  Northern
  Instruments Corporation

	
   
	
  Micro
  Sensors, Inc.

	
   
	
  Special
  Control Systems, Inc.

	
   
	
   

	
  Liability Limits:
	
   
	
   
	
   
	
   

	
   
	
   
	
   
	
   
	
   

	
  Each
  Occurrence:
	
   
	
  $
	
  3,000,000
	
   

	
       Products/Completed
  Operations:
	
   
	
  $
	
  3,000,000
	
   

	
       Personal
  Injury & Advertising:
	
   
	
  $
	
  3,000,000
	
   

	
       Fire
  Legal Liability:
	
   
	
  $
	
  3,000,000
	
   

	
       Contingent
  Automobile:
	
   
	
  $
	
  3,000,000
	
   

	
       Employee
  Benefits - Each claim
	
   
	
  $
	
  3,000,000
	
   

	
            Annual
  Aggregate
	
   
	
  $
	
  3,000,000
	
   

	
   
	
   
	
   
	
   
	
   

	
  Minimum
  Premium (Flat):
	
   
	
  $
	
  6,350
	
   

						

This policy providing foreign liability coverage anywhere in the world
excluding the United States, Canada, Puerto Rico, Cuba, Kampuchea, North Korea,
Vietnam, Libya, and Iran.  Your
activities taking place in international waters or airspace are covered except
those occurring between two destinations of the United States, its territories,
Canada or Puerto Rico. Should a claim take place in jurisdictions overseas
where the foreign law prohibits CIGNA from defending or paying a claim on
behalf of Northern Technologies International Corporation, CIGNA will reimburse
Northern Technologies International Corporation for those claims and expenses
you are required to pay, including the cost of your defense. 

This policy provides protection for Northern Technologies International
Corporation, Northern Instruments Corporation, Micro Sensors, Inc. and Special
Control Systems, Inc. as entities and also for the interest the Corporations
may have in any joint ventures if damages arise out of the operations of those
joint ventures.  The purpose is not to
protect the joint venture itself, but to protect the interest of Northern
Technologies International Corporation, Northern Instruments, Inc., Micro
Sensors, Inc. and Special Control Systems, Inc. solely.  Coverage is limited to the percentage of
interest that you have in the Joint Venture. 

The Automobile section of this policy provides Automobile Liability
coverage for owned, leased, hired or borrowed vehicles you may operate in a
foreign country.  It should be
noted  there is no Automobile Physical
Damage coverage on this policy.  If you
rent vehicles in foreign countries, we need to address the Physical Damage
coverage. 

The policy is primary coverage where no primary policy exists in a
foreign country.  The policy is excess
and contingent coverage over any local foreign insurance.  All claims paid by this policy will be paid
in U.S. dollars.  In countries where
this would not be acceptable the current dollar rate of exchange will prevail
as of the date of loss. 

The policy is written on a flat charge basis.  This means the policy is not subject to audit.  The premium is also the minimum premium, so
if the policy is canceled prior to expiration, there would be no return
premium.

ANNEX II

TRADE SECRECY AGREEMENT

THIS AGREEMENT,
dated this [     ] day of [               ]

BETWEEN:

	

  (1)
	
  ZERUST (UK) LIMITED a company incorporated
  under the laws of England and Wales with number 3248266 and whose registered
  office is at Meadowfield Avenue, Green Lane Industrial Estate, Spennymoor, Co
  Durham. DL16 6YT (lithe Company”);

	
   
	
   

	
  (2)
	
  [     ]
  (“the Agent”); and

	
   
	
   

	

  (3)
	
  NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION, a
  company organised under the laws of the State of Delaware, USA (“NTI”) the
  principal place of business of which is Lino Lakes, Minnesota, USA.

WHEREAS, the Company is engaged in the development, manufacture, and
sale of various products and services and in research work and, in such
activities, utilizes secret and confidential techniques, methods, processes,
equipment, formulae, customer lists and information; 

WHEREAS, the Company receives Technical Assistance and Marketing
Support from Northern Technologies International Company (“NTI”) for the
Promotion, Sale and Application of polyethylene film and solid material of
polyethylene substance in the form of boxes, tubes and other containers
utilizing the trademark “ZERUST” in the Territory (the “Product”); and 

WHEREAS, the Company and NTI have expended and will continue to expend
substantial sums of money to train the Agent in the Company’s business
including but not limited to marketing the Product, and without which
expenditures the Agent would have no such training in the Company’s business
and marketing the Product; and 

WHEREAS, the Company and NTI have imparted and will continue to impart
to the Agent in the course of his employment and training information
pertaining to the Product, certain processes, technical knowhow, marketing and
sales techniques, customer identities and other confidential information not
now known to the general public, which knowhow and information constitute
valuable, proprietary and confidential trade secrets of the Company and NTI; 

NOW THEREFORE, in consideration of the employment of the Agent by the
Company, the special training with respect to the Company’s business and the Product
to be provided to him, and the salary to be paid to the Agent by the Company
during the term of his employment, it is agreed as follows: 

	
  1.
	
  The Agent
  agrees that during his employment by the Company and for so long thereafter
  as the same has not (other than a result of disclosure by the Company)
  entered the public domain, he will not, without the prior written consent of
  the Company and NTI, (i) use outside of the service of the Company or (ii)
  disclose or divulge to anyone other than persons designated by the Company,
  any of the following:

23

	
   
	
  a.
	
  any
  knowledge or information of a confidential nature acquired by him with
  respect to the trade secrets of NTI including, but not limited to, process,
  techniques, research, methods technology, equipment, formulae, pricing, cost
data,
  technical knowhow, memoranda, marketing/sales strategy, promotion, suppliers
  and customers which he now knows or other confidential information of the
  Company or NTI, knowledge of which is acquired by the Agent during the term
  of his employment by the Company (collectively, “Trade Secrets”).

	
   
	
   
	
   

	
   
	
  b.
	
  any of the
  unpublished records, books of account, documents, letters, diagrams, computer
  disks, papers or memoranda of NTI or (collectively “Internal Data”).

	
   
	
   
	
   

	
  2.
	
  The Agent
  shall at no time copy, remove from their proper location, or retain without
  the Company’s prior written consent, the originals or copies of such Trade
  Secrets or Internal Data.

	
   
	
   

	
  3.
	
  The Agent
  shall not, for a period of three (3) years subsequent to the termination of
  his employment with the Company for any reason, compete, directly or
  indirectly (whether as an employee, partner, investor. shareholder or
  director), or accept any employment with any person or company competing with
  the Company in the marketing, sale of manufacturing of the Product or
  products similar thereto in any place in the Territory which are competitive
  in nature to the business of the Company, if such employment would in its
  inherent nature require the Agent to utilize any of the Trade Secrets,
  Internal Data or portions thereof.

	
   
	
   

	
  4.
	
  The Agent
  and the Company hereby agree and acknowledge that NTI is an intended
  beneficiary of this Trade Secrecy Agreement and that NTI shall have the
  incontroversible right to enforce this Trade Secrecy Agreement independently
  of the Company, if NTI, in its sole judgement, chooses to do so, and may
  proceed directly against the Agent for any breach of the Agent’s obligations
  hereunder to the full extent of the law.

IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as a agreed on the day and year first above written. 

24 

ANNEX 5

TRADE SECRECY AGREEMENT

THIS AGREEMENT,
dated this [     ] day of
[               ],
[     ]

BETWEEN: 

	
  (1)
	
  ZERUST (UK) LIMITED, whose registered office
  is at Meadowfield Avenue, Green  Lane
  Industrial Estate, Spennymoor, Co Durham, DL166YJ (Company”); and

	
   
	
   

	
  (2)
	
  [     ]
  (“Agent”).

	
   
	
   

	
  (3)
	
  NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION,
  a company organised under the laws of the State of Delaware USA (“NTI”) the
  principal place of business of which is Lino Lakes, Minnesota, USA.  

WHEREAS, Company is
engaged in the development, manufacture, and sale of various products and
services and in research work and, in such activities, utilizes secret and confidential
techniques, methods, processes, equipment, formulae, customer lists and
information; and 

WHEREAS, Company
receives Technical Assistance and Marketing Support from NTI for the Promotion,
Sale and Application of polyethylene film and solid material of polyethylene
substance in the form of boxes, tubes and other containers utilising the
trademark “ZERUST” in the United Kingdom (“the Territory”) (the “Product”); and

WHEREAS, Company and
NTI have expended and will continue to expend substantial sums of money to
train Agent in the Company’s business including but not limited to marketing
the Product, and without which expenditures Agent would have no such training
in the Company’s business and marketing the Product; and 

WHEREAS, Company and
NTI have imparted and will continue to impart to Agent in the course of his
employment and training information pertaining to the Product, certain
processes, technical knowhow, marketing and sales techniques, customer
identities and other confidential information not now known to the general
public, which knowhow and information constitute valuable, proprietary and
confidential trade secrets of Company and NTI. 

NOW THEREFORE, in
consideration of the employment of Agent by Company, the special training with
respect to the Company’s business and the Product to be provided to him, and
the remuneration to be paid to Agent by Company during the term of his
employment, it is agreed as follows: 

45 

	

  l.

  	
  Agent agrees
  that during his employment by Company and for so long thereafter as the same
  has not (other than a result of disclosure by Company) entered the public
  domain, he will not, without the prior written consent of Company and NTI,
  (i) use outside of the service of Company or (ii) disclose or divulge to
  anyone other than persons designated by Company, any of the following:

	

   
	
  (a)
	
  any
  knowledge or information of a confidential nature acquired by him with
  respect to the trade secrets of NTI including, but not limited to, process,
  techniques, research, methods, technology, equipment, formulae, pricing, cost
  data, technical knowhow, memoranda, marketing/sales strategy, promotion,
  suppliers and customers which he now knows or other confidential information
  of Company or NTI, knowledge of which is acquired by Agent during the term of
  his employment by the Company (collectively, “Trade Secrets”).

	
   
	
   
	
   

	
   
	
  (b)
	
  any of the
  unpublished records, books of account, documents, letters, diagrams, computer
  disks, papers or memoranda of NTI or (collectively “Internal Data”).

	
   
	
   
	
   

	
  2.
	
  Agent shall
  at no time copy, remove from their proper location, or retain without
  Company’s prior written consent, the originals or copies of such Trade
  Secrets or Internal Data.

	
   
	
   

	

  3.
	
  Agent shall
  not, for a period of three (3) years subsequent to the termination of his
  employment with Company for any reason, compete, directly or indirectly
  (whether as an employee, partner, investor, shareholder or director), or
  accept any employment with any person or company competing with Company in
  the marketing, sale or manufacturing of the Product or products similar
  thereto in any place in the Territory which are competitive in nature to the
  business of Company, if such employment would in its inherent nature require
  Agent to utilise any of the Trade Secrets, Internal Data or portions thereof.

	
   
	
   

	

  4.
	
  Agent and
  Company hereby agree and acknowledge that NTI is an intended beneficiary of
  this Trade Secrecy Agreement and that NTI shall have the incontrovertible
  right to enforce this Trade Secrecy Agreement independently of Company, if
  NTI, in its sole judgment, chooses to do so, and may proceed directly against
  Agent for any breach of Agent’s obligations hereunder to the full extent of
  the law.

IN WITNESS WHEREOF,
the parties hereto have executed and delivered this Agreement as a Deed on the
day and year first above written. 

46 

ANNEX 6 

TRADE SECRECY AGREEMENT

THIS AGREEMENT,
dated this [     ] day of
[               ],
[     ]

BETWEEN: 

	
  (1)
	
  ZERUST (UK) LIMITED, whose registered office
  is at Meadowfield Avenue, Green Lane Industrial Estate, Spennymoor, Co
  Durham, DL166YJ (Company”); and

	
   
	
   

	
  (2)
	
  [     ]
  (“Agent”). 

	
   
	
   

	
  (3)
	
  TAYLOR PACKAGING (BISHOP AUCKLAND) LIMITED,
  whose registered office is at Meadowfield Avenue, Green Lane Industrial
  Estate, Spennymoor, Co Durham DL16 6YJ. 
  

WHEREAS, Company is
engaged in the development, manufacture, and sale of various products and
services and in research work and, in such activities, utilises secret and
confidential techniques, methods, processes, equipment, formulae, customer
lists and information; and  

WHEREAS, Company
receives Management and Sales Representation from TP in connection with the
Promotion, Sale and Application of polyethylene film and solid material of
polyethylene substance in the form of boxes, tubes and other containers
utilising the trademark “ZERUST” in the United Kingdom (“the Territory”) (the
“Product”); and 

WHEREAS, Company and
TP have expended and will continue to expend substantial sums of money to train
Agent in the Company’s business including but not limited to marketing the
Product, and without which expenditures Agent would have no such training in
the Company’s business and marketing the Product; and 

WHEREAS, Company and
TP have imparted and will continue to impart to Agent in the course of his
employment and training information pertaining to the Product, certain
processes, technical knowhow, marketing and sales techniques, customer
identities and other confidential information not now known to the general
public, which knowhow and information constitute valuable, proprietary and
confidential trade secrets of Company and TP. 

NOW THEREFORE, in
consideration of the employment of Agent by Company, the special training with
respect to the Company’s business and the Product to be provided to him, and
the remuneration to be paid to Agent by Company during the term of his
employment, it is agreed as follows: 

	
  1.

  	
  Agent agrees
  that during his employment by Company and for so long thereafter as the same
  has not (other than a result of disclosure by Company) entered the public
  domain, he will not, without the prior written consent of Company and TP, (i)
  use outside of the service of Company or (ii) disclose or divulge to anyone
  other than persons designated by Company, any of the following:

47

	
   
	
  (a)
	
  any
  knowledge or information of a confidential nature acquired by him with
  respect to the trade secrets of TP including, but not limited to, process,
  techniques, research, methods, technology, equipment, formulae, pricing, cost
  data, technical knowhow, memoranda, marketing/sales strategy, promotion,
  suppliers and customers which he now knows or other confidential information
  of Company or TP, knowledge of which is acquired by Agent during the term of
  his employment by Agent (collectively, “Trade Secrets”).

	
   
	
   
	
   

	
   
	
  (b)
	
  any of the
  unpublished records, books of account, documents, letters, diagrams, computer
  disks, papers or memoranda of TP or (collectively “Internal Data”).

	
   
	
   
	
   

	
  2.
	
  Agent shall
  at no time copy, remove from their proper location, or retain without
  Company’s prior written consent, the originals or copies of such Trade
  Secrets or Internal Data.

	
   
	
   

	
  3.
	
  Agent shall
  not, for a period of three (3) years subsequent to the termination of his
  employment with Company for any reason, compete, directly or indirectly
  (whether as an employee, partner, investor, shareholder or director), or
  accept any employment with any person or company competing with Company in
  the marketing, sale or manufacturing of the Product or products similar
  thereto in any place in the Territory which are competitive in nature to the
  business of Company, if such employment would in its inherent nature require
  Agent to utilise any of the Trade Secrets, Internal Data or portions thereof.

	
   
	
   

	
  4.
	
  Agent and
  Company hereby agree and acknowledge that TP is an intended beneficiary of
  this Trade Secrecy Agreement and. that TP shall have the incontrovertible
  right to enforce this Trade Secrecy Agreement independently of Company, if
  TP, in its sole judgment, chooses to do so, and may proceed directly against
  Agent for any breach of Agent’s obligations hereunder to the full extent of
  the law.

IN WITNESS WHEREOF,
the parties hereto have executed and delivered this Agreement as a Deed on the
day and year first above written.

48

ANNEX 7 

DEED OF ADHERENCE

THIS DEED OF ADHERENCE is
made the [     ] day of [    ]
19[     ] by
[          ] of
[               ]
(hereinafter called “the Covenantor”) 

SUPPLEMENTAL to a
joint venture agreement dated the
[               ]
1996 and made between (1) TAYLOR PACKAGING (BISHOP AUCKLAND) LIMITED and (2)
NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION (“the JV Agreement”) 

WITNESSES as
follows: 

	
  1.
	
  The
  Covenantor hereby confirms that [he] [it] has been supplied with a copy of
  the JV Agreement and hereby covenants with each of the other parties to the
  JV Agreement from time to time to observe perform and be bound by all the
  terms of the JV Agreement which are capable of applying to the Covenantor and
  which have not been performed at the date hereof to the intent and effect
  that the Covenantor shall be deemed with effect from the date on which the
  Covenantor is registered as a member of the Company to be a party to the JV
  Agreement and to be a Shareholder and a Party (as defined in the JV
  Agreement).  

	
   
	
   

	
  2.
	
  This Deed
  shall be governed by and construed in accordance with the laws of England. 

EXECUTED as a deed
the day and year first before written.

49MANUFACTURERS’ REPRESENTATIVE  

AGREEMENT

          THIS
AGREEMENT, dated as of October 1, 1976, is between NORTHERN INSTRUMENTS
CORPORATION, a Minnesota corporation with its principal place of business at
6680 North Highway 49, Lino Lakes, Minnesota 55014 (hereinafter referred to as
the “Company”), and THE SAXXON ORGANIZATION INCORPORATED, located at c/o
Schupak, Rosenfeld & Fischbein, 555 Madison Avenue, New York, New York
10022 (hereinafter referred to as the “Representative”). 

W I T N E S S E T H:

          WHEREAS,
the Company is engaged in the business of manufacturing and selling an oil
quality analyzer, certain corrosion-inhibiting goods and other goods and
desires to enlist a Representative in the furtherance of its interests; and 

          WHEREAS, said Representative will act as an independent Manufacturers’
Representative for its own account, and wishes to render the services set forth
below, 

          NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and the compensation hereinafter provided for, it is covenanted and
mutually agreed as follows: 

I. DESIGNATION OF REPRESENTATIVE

          The Company
hereby enlists and designates Representative, an independent contractor, as a
Manufacturers’ Representative on matters relating to the sale of goods and
services of the Company under the following terms and conditions.  Representative hereby agrees to, and by
these presents does accept, such designation and enlistment. 

II. RELATIONSHIP BETWEEN COMPANY AND
REPRESENTATIVE

          A.          This
designation and enlistment is not to be construed to prohibit the
Representative from being similarly designated or employed by other persons,
firms or corporations in noncompetitive product lines, but shall be construed
to prohibit the Representative from being so designated or employed by other
persons, firms or corporations in competitive product lines.

          B.          The
Representative is considered to be an independent agent, and not an employee of
the Company.  The Company is not and
cannot be held liable for any acts or liabilities of the Representative not set
forth in this Agreement or for any legal actions instituted against the
Representative.  The Representative
shall indemnify the Company and hold it harmless against all claims or demands
brought by customers or other third parties which arise from acts,
representations, or omissions, or alleged acts, representations, or omissions
of Representative, which if proved, would constitute a breach of
Representative’s duties under this Agreement. 
Representative shall be given notice of same and shall have right to
defend all charges, actions, etc. with counsel of its choosing.

          C.          The
Representative shall have a non-exclusive worldwide right to offer for sale and
solicit orders for all of the Company’s products, subject to Article VII of
this Agreement.

          D.          This
Agreement is not transferable to successors or assigns of Representative. 

III. CONTRACTING AUTHORITY OF
REPRESENTATIVE AND CONTRACT RESPONSIBILITY OF COMPANY

          A.          Nothing
in this Agreement shall be construed as giving the Representative authority to
bind or obligate the Company to any parties or persons not covered by this
Agreement, in any manner whatsoever.

          B.          
The establishment of prices for its products and services shall be solely the
responsibility of the Company, and the Representative shall follow the
Company’s directives regarding pricing, with the Company hereby reserving the
right to change all prices when and how it sees fit, upon thirty (30) days
prior written notice. 

2 

          C.          
Representative is not authorized to submit in Representative’s name written
proposals and quotations purporting to be binding on the Company.  The Company will be bound only by proposals
and quotations made and signed by authorized personnel at the Company’s Home
Office; said proposals and quotations may be transmitted by Representative
under Representative’s letter referring to the Company’s proposal and quotation.

          D.          
Each order secured by Representative shall be in the name of the Company, and
not in the name of the Representative, and shall indicate that it is subject to
final acceptance by the Company.  Only
the Company, by an authorized person at its Home Office, shall have power to
accept and execute orders and contracts.

          E.          
The Company shall assume all liabilities for the performance of contracts
executed by it, including warranty liabilities, except to the extent otherwise
herein explicitly provided.

          F.          The
Company shall hold harmless and indemnify Saxxon, its officers, directors,
shareholders and contractors from any losses, claims or liabilities, jointly or
severally, to which they or any of them may become subject and to reimburse
each such person for any legal or other expenses reasonably incurred by it or
them in connection with defending any action, insofar as such losses, claims,
damages, liabilities or action arise because of personal injuries or physical
property damage proximately caused by the product, and insofar as the same are
based on a theory of products liability as against Company, provided that said
injury or damages did not result from any misrepresentations or misstatements
of any director, officer, employee, agent or other representative of Saxxon or
which contradicted information contained in literature, data, advertising
materials or other materials furnished by the Company to Representative.  The Company shall be given prompt notice in
writing of any such claims and such authority, information and assistance (at
Company’s expense) as may be necessary to resist or defend the same.  The Company represents that in the
reasonable opinion of its officers, it carries adequate insurance to cover its
products liability and shall continue to do so.

3

          G.          The Company shall defend any suit or proceeding brought
against Representative so far as based upon a claim that goods supplied by the
Company to its customers hereunder constitutes an infringement of any patent,
if notified promptly in writing and given authority, information and assistance
(at Company’s expense) for the defense of such a suit or proceeding, and will
pay all damages and costs awarded therein against customer, provided that the
application or use of such goods is free of Representative’s own design.

          H.          Invoicing,
collections of payments due, and credit determinations shall be made only by
the Company at its Home Office, and not by the Representative.

          I.          The
Company reserves the right to modify, alter, improve, change or discontinue any
or all of its products at any time, and will give timely notice thereof to
Representative. 

IV. REPRESENTATIVE’S COMPENSATION

          A.          The
Company agrees to pay the Representative for services rendered according to the
commission schedule set forth in Attachment A hereto.  The Company shall not be obligated to compensate the
Representative for time, services and/or expenses connected with efforts to
effect sales, except to pay commissions in the manner set forth herein upon
sales actually made for and in the designated territory as a result of the
Representative’s efforts.

          B.          If
the contract or order is cancelled or reduced by the customer prior to
delivery, acceptance or payment for the goods under the order, the commissions
paid or due by the Company to the Representative under Attachment B hereto
shall be proportionately reduced, and the Representative shall owe to the Company
the balance (if any) of excess commissions already paid under such order.

4 

V. DUTIES AND RESPONSIBILITIES OF
REPRESENTATIVE

          A.          Representative
shall be free, except as agreed herein, to conduct its business as it sees fit.

          B.          Representative
shall devote such time to rendering the services set forth herein as necessary
to the adequate representation of the Company in the fulfillment of this Agreement,
and shall maintain suitable quarters to conduct its business, paying all
expenses commensurate therewith.

           C.          
In sales and service, Representative shall use its best efforts to:

	
   
	
  1.
	
  Promote
  sales of the products and/or services set forth herein in the territory,
  accounts and/or market areas under its jurisdiction. 

	
   
	
   
	
   

	
   
	
  2.
	
  Increase the
  Company’s revenue from sales; canvass and develop his assigned territory to
  maximize sale of the Company’s assigned products and services.

	
   
	
   
	
   

	
   
	
  3.
	
  Investigate
  procurement needs for goods and services, study and analyze current
  engineering problems, endeavor to anticipate and promptly advise the Company
  of requirements for new mechanisms and applications thereof.

	
   
	
   
	
   

	
   
	
  4.
	
  Assist in
  preparing proposals to customers, negotiating contracts, expediting execution
  and performance of contractual instruments, and render assistance to the
  Government or commercial concerns to promote the sales of the Company.

	
   
	
   
	
   

	
   
	
  5.
	
  Receive
  written and dated order commitments from prospective customers and present
  customers, subject to acceptance and execution by the Company at its Home
  Office only, the order to describe the kind, quantity, price, delivery date,
  shipping instruments and service to be provided by the Company.

5 

	
   
	
  6.
	
  Follow up
  proposals and quotations at frequent intervals, and promptly submit customer
  contact reports on same, critically analyzing the requirements for closing
  the order, and competitive aspects.

	
   
	
   
	
   

	
   
	
   
	
   

	
   
	
  7.
	
  Distribute
  to prospective customers appropriate corporate and product brochures, manuals
  and other promotional material, and up-to-date pricing information.

	
   
	
   
	
   

	
   
	
  8.
	
  While the
  Company agrees to have prime responsibility with respect to all post order
  “contractual” and “technical” matters, Representative agrees to assist the
  Company with respect to such matters.

           D.          In
communications, Representative shall: 

	
   
	
  1.
	
  On forms
  supplied by the Company, or by other written media, make customer contact
  reports promptly on all pertinent sales calls and contacts with customers and
  prospective customers in its territory; make appropriate recommendations
  regarding the things that must be done in the opinion of the Representative
  to satisfy customer requirements. 
  These reports will be used by the Company for marketing information as
  one means by which the Representative’s performance will be evaluated.  Failure to submit reports shall be cause
  for review and/or termination of this Agreement at the option of the Company
  after notice to Representative.

	
   
	
   
	
   

	
   
	
  2.
	
  Keep the
  Company apprised of sales efforts with regard to specified customers so that
  major emphasis and assistance by the Company can be placed where needed.

6 

	
   
	
  3.
	
  Collect and
  promptly transmit to the Company technical and other data which will assist
  in proposal preparation, negotiations and expedition of the execution and
  performance of contractual instruments.

           E.          Other
Responsibilities of Representative: 

	
   
	
  1.
	
  The
  Representative shall make all oral and written representations relative to
  the Company and its product and service offerings in a strictly factual
  manner and conduct all business representations pertinent to the Company in
  conformance with the highest business ethics.

	
   
	
   
	
   

	
   
	
  2.
	
  The
  Representative shall convey a good “corporate image” as the Company’s
  Representative to prospective customers and to the public.

	
   
	
   
	
   

	
   
	
  3.
	
  The
  Representative shall make sales calls emphasizing the establishment of new
  accounts for the Company, at the same time adequately maintaining
  relationships with and servicing established accounts.

	
   
	
   
	
   

	
   
	
  4.
	
  The
  Representative shall furnish the Company within thirty (30) days after the
  effective date of this Agreement a list of other manufacturers that he
  represents, the addresses of their principal offices, the products of these
  manufacturers that he is authorized to offer for sale, and shall notify the
  Company of any changes that occur in this list within thirty (30) days after
  such a change occurs.

	
   
	
   
	
   

	
   
	
  5.
	
  [The Representative shall maintain and staff an office during normal
  business hours.] [This is deleted].

7 

	
   
	
  6.
	
  The
  Representative shall maintain as confidential all customer lists, price lists
  and all other information deemed confidential by the Company and so marked by
  the Company.

VI. SUPPLIES AND EXPENSES

          A.          The
Company agrees to supply the Representative with sufficient quantities of
product samples, sales literature, warranties, and instruction booklets.  The Representative shall pay all its
expenses, including out-of-pocket costs, travel expenses, phone expenses and
similar expenses of the Representative or any employee of the
Representative.  Letterheads and calling
cards shall be supplied by Representative according to his needs, and shall
conspicuously show that he is an independent Manufacturers’ Representative; the
Company’s name may be indicated as
the company which he is representing in this capacity.

          B.          Routine communications by mail are
preferred by the Company as providing written records and being less costly. 

VII. AGREEMENTS WITH OTHER PARTIES

          Representative
acknowledges that it has been fully informed of the terms of certain other
marketing/distributorship agreements to which the Company is a party and agrees
with respect to such agreements as follows:

          A.          
Singer Products Company, Incorporated (“Singer”).  Singer has two exclusive marketing/distributorship agreements
applicable to international marketing of (1) Cornox, having a duration of two
years from May 8, 1975, and (2) other products of the Company, having a
duration of three years from May 8, 1975. 
Any international sales proposed prior to expiration of the above two
agreements with Singer, respectively, which are developed by Representative,
shall be presented to Company for review and comments.  Within the times covered by the Singer
agreements, respectively, all new international activities proposed by
Representative shall be conducted only with prior written approval by the
Company.  Any potential sales or
proposals will be presented to the Company for prior submission to Singer on a
case by case basis.

8 

          B.          Hoffman
Engineering Company (“Hoffman”). 
Hoffman has an exclusive distributorship agreement applicable to the
continental U.S., Alaska, Hawaii and Canada, relating to NIC-1, NIC-2 and NIC-3
in the Industrial Electric Market, as defined. 
Any sales proposed prior to expiration of the above agreement with
Hoffman, which are developed by Representative, shall be presented to the
Company for review and comments.  Within
the time covered by the Hoffman agreement, all new activities proposed by
Representative shall be conducted only with prior written approval by the
Company.

          C.          Others.
Representative acknowledges that other industry distributorship agreements
similar to that with Hoffman may from time to time be made by the Company, with
which agreements the Representative agrees to abide.  Company shall advise Representative in writing of all such
agreements and explain terms thereof, if so requested, to the Representative. 

VIII. MANAGEMENT CONSULTING SERVICES

          Upon the
request of the Company, the Representative agrees to render management
consulting services to the Company on a project-oriented basis at fees and upon
such other terms as shall be negotiated between the parties.  It is the parties’ intent that such services
may cover such projects as (1) employee recruitment, (2) equity financing, (3)
banking relations, (4) product licensing and (5) product joint venturing. 

IX. TERMINATION OF AGREEMENT

          A.          Unless
earlier terminated as provided herein, this Agreement shall continue in full
force and effect from its effective date as described in Paragraph VII hereof
to and through September 30, 1977, and shall continue thereafter until either
party shall give the other party written notice that this Agreement shall
terminate sixty (60) days thereafter.

9 

          B.          Material
breach of the terms of this Agreement by either party shall give the other
party the right to immediately terminate this Agreement by giving written
notice of its intention to do so to said party.

          C.          This
Agreement shall be automatically terminated by legal proceedings instituted by
or against the Representative for bankruptcy or insolvency, although none of
the Company’s or Representative’s rights and claims under this Agreement will
he construed to be abrogated thereby.

          D.          Within
fifteen (15) days after the actual termination date for any termination of this
Agreement, Representative shall prepare and present to the Company a
declaration of all matters which Representative considers that, if a purchase
contract is awarded, its work to date of such termination in connection with
said purchase contract was a material contribution to obtaining said contract,
and upon which Representative would therefore claim a commission.  If Representative does not present such a
declaration to the Company, Representative shall have no right or claim, and
shall be deemed to have waived such right or claim if it otherwise existed, to
receive a commission on any contract awarded subsequent to the termination
date. Representative shall continue to represent the Company in the
negotiations with respect to such contracts, to the extent requested by the
Company in each negotiation, until an acceptable contract has been received by
the Company, and failure to continue such representation shall in any event
constitute a waiver of all commissions upon contracts resulting from such
negotiations. Provided, however, that in no event shall a commission be paid on
order(s) which are not received and accepted by the Company within six (6)
months after the date of termination of this Agreement.  The Company shall act in good faith to fill
all such orders within the six (6) month period, and Representative shall
continue to service such account in accordance with Section V of this
Agreement.

10

          Notwithstanding any other provision of this Agreement, however,
Representative will continue to receive commissions with respect to sales made
to persons who are existing customers of the Company as of the date of
termination hereof, if commissions would otherwise have been payable but for
termination, as follows:

	
   
	
  1.
	
  If
  termination is by Representative, for the remaining term of this Agreement,
  but in no event, for excess of one year.

	
   
	
   
	
   

	
   
	
  2.
	
  If
  termination is by the Company, for as long as Representative services the
  account in accordance with the provisions of paragraph V hereof.

           E.          In
regard to commissions subject to Paragraph IX(D) hereof, Representative’s
commission shall: 

	
   
	
  1.
	
  Be reduced
  by fifty percent (50%) if the Agreement was terminated by the Company for
  cause; or

	
   
	
   
	
   

	
   
	
  2.
	
  Remain the
  same as that set forth in Attachment A hereto if the Agreement was terminated
  by the Company without cause or by the Representative with or without cause. 

           F.          It
is agreed that in the event of the dissolution of the Representative for any
reason, the Company will have completed its full obligation to the Representative
by mailing a check (or checks) to the Representative covering the Company’s
commission obligations at the address above designated by the Representative,
and that it shall be the duty of the Representative, and not that of the
Company, to distribute the amounts of check or checks to those having claims.

11

          G.          Upon
termination of this Agreement by either party, the Representative shall, at the
Company’s expense, promptly return to the Company all Company-related property,
including price lists, sales aids, demonstrators, and unused literature.

          H.
          In the event of termination of this Agreement, the Company shall not be liable
for any amounts except as provided above.

X. CONFIDENTIALITY

          The
Representative will not impart to any competitor of the Company, or otherwise
use for the purpose of competition with the Company, any confidential
information which it may acquire in the performance of this Agreement.  Representative will cause its employees to
execute the Company’s standard form nondisclosure agreement.  For a period of one year after the
termination of this Agreement, Representative will not solicit, directly or
indirectly, any of the customers of the Company.  During the course of this Agreement and thereafter, Representative
and the Company agree not to employ in any capacity each other’s employees,
agents, consultants, or independent contractors without the prior written
consent of the other, with the exception of Phillip K. Schneiderman who may be
called upon from time to time to fulfill duties commensurate to the functions
of a shareholder and director of Saxxon. Representative agrees not to use any
proprietary or confidential information obtained from the Company except for
uses contemplated hereby.  The Company shall
appropriately mark and bring to Representatives attention all matters which it
deems to be trade secrets, proprietary, confidential, etc.  Saxxon shall appropriately mark and bring to
Company’s attention all matters which it deems to be trade secrets,
proprietary, confidential, etc.

12

IX. GENERAL

          A.          All
notices, requests and demands shall be given to or made upon the parties hereto
at their respective addresses specified above, or as to any party, at such
other address as may be designated by it in a written notice to the other
party.  All notices, requests, consents
and demands hereunder shall be effective when mailed by certified or registered
mail, return receipt requested, properly addressed as aforesaid, with postage
included, or delivered personally.

          B.          This
Agreement may not be amended or modified, nor may any of its terms be modified
or waived, except by written instrument signed by the parties hereto.  This Agreement supersedes and cancels any
and all prior understandings, agreements and representations, oral or written,
between the parties hereto, except a certain Stock Purchase Agreement dated
March 4, 1976.  This Agreement also
terminates a certain Management Services Agreement dated March 4, 1976, and a
certain letter agreement dated January 15, 1976, the parties to have no further
obligations thereunder, except for obligations arising under paragraph 7 of
said Management Services Agreement.

          C.          This
Agreement shall be binding upon and inure to the benefit of the Company and
Representative and their respective successors and assigns.

          D.          This
Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one agreement, and any of the parties hereto may
execute this Agreement by signing such counterpart.

          E.          This
Agreement and the exhibits hereto shall be construed in accordance with and
governed by the laws of the State of Minnesota.

          F.          Any
dispute relating to the interpretation or construction, or dispute arising out
of this Agreement shall be settled by binding arbitration governed by the Rules
then obtaining of the American Arbitration Association.  Each party shall designate one arbitrator and
the two thus designated shall promptly choose a third.  The arbitration shall proceed expeditiously
and shall take place in Minneapolis, Minnesota.  Each party will bear their own expenses and the costs of the
arbitration shall be shared equally.

13

          IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be duly executed as
of the day, month and year first above written. 

	
   
	
  NORTHERN
  INSTRUMENTS CORPORATION

	
   
	
   
	
   

	
   
	
   
	
   

	
  SEAL
	
  By
	
   

	
   
	
   
	
  

  
	
   
	
   
	
   

	
   
	
  Its
	
   

	
   
	
   
	
  

  
	
   
	
   
	
   

	
   
	
   
	
   

	
   
	
  By
	
   

	
   
	
   
	
  

  
	
   
	
   
	
   

	
   
	
  Its
	
   

	
   
	
   
	
  

  
	
   
	
   
	
   

	
   
	
   
	
   

	
   
	
  THE SAXXON
  ORGANIZATION

	
   
	
            INCORPORATED

	
   
	
   
	
   

	
   
	
   
	
   

	
  SEAL
	
  By
	
   

	
   
	
   
	
  

  
	
   
	
   
	
   

	
   
	
  Its
	
   

	
   
	
   
	
  

  
	
   
	
   
	
   

	
   
	
   
	
   

	
   
	
  By
	
   

	
   
	
   
	
  

  
	
   
	
   
	
   

	
   
	
  Its
	
   

	
   
	
   
	
  

  
	
   
	
   
	
   

14 

ATTACHMENT A

COMPENSATION

          Representative
will be paid commissions by the Company at the following rates:

	
   
	
  1.          Twenty-five
  percent (25%) of net proceeds from sales of the Company’s goods outside the
  United States of America generated by the Representative’s efforts; or 

	
   
	
   
	
   

	
   
	
  2.          Ten percent
  (10%) of net proceeds from sales of the Company’s goods within the United
  States of America generated by the Representative’s efforts.

 “Net proceeds” means proceeds of sale less discounts, credits or
refunds and exclusive of transportation, delivery, installation and training
charges, and less all taxes, charges, duties, tariffs and other similar costs
levied on such sales.  In the event
withholding taxes apply to the international transfer of funds as a result of
sales outside the United States of America, the Company’s obligation to pay
commissions will be based upon the net proceeds from the sale received in the
country where the final sale occurs reduced by all withholding or equivalent
taxes applied in transferring the funds to the United States of America.

Representative will be paid the
commission within thirty (30) days after Company has received payment.

ASSIGNMENT

Agreement dated as of January 9, 1980, by and between The Saxxon
Organization Incorporated (“Saxxon”), Inter Alia Holding Co. (“Inter Alia”) and
Northern Instruments Corporation (“Northern”).

WHEREAS, Northern and Saxxon as of October 1, 1976, entered into a
Manufacturer’s Representative Agreement (the “Agreement”) pursuant to which
Northern designated Saxxon an independent Manufacturer’s Representative on
matters relating to the sale of goods and services of Northern, and 

WHEREAS, the parties desire that Inter Alia succeed Saxxon as
Representative under the Agreement and that all the rights and obligations of
Saxxon thereunder be assigned and transferred to Inter Alia,

NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, it is agreed as follows: 

1.          Saxxon
does hereby assign, transfer and set over unto Inter Alia all of its right,
title and interest in and to the Agreements and to any sums to become due
thereunder.  Saxxon does further resign
as Representative under the Agreement effective upon Inter Alia’s assumption of
such status. 

2.          Saxxon
hereby represents, warrants and covenants that the Agreement is in full force
and effect and is valid and enforceable in accordance with its terms; that
neither party thereto is in breach of any of the terms of the Agreement and
there are no defaults or notices of default 
hereunder; and that there are as of the date hereof no unsatisfied
claims or demands existing between the parties to the Agreement. 

3.          Inter
Alia hereby accepts the foregoing assignment and agrees to assume and perform
all the covenants, agreements and obligations of Saxxon as Representative under
the Agreement. 

4.          Northern
hereby consents to the foregoing assignment, acknowledges the resignation by
Saxxon as Representative and designates Inter Alia as successor Representative
to Saxxon under the Agreement. 

5.          This
Assignment shall not be deemed in any respect a termination of the Agreement,
and Saxxon specifically acknowledges its continuing obligations under Section X
thereof. 

6.          This
Assignment shall be binding upon and, in accordance with its terms, inure to
the benefit of the parties hereto and the respective successors and assigns of
Northern and Inter Alia. 

7.          This
Assignment shall be construed in accordance with and governed by the laws of
the State of Minnesota.

IN WITNESS WHEREOF, the parties hereto have executed
this agreement in several counterparts (each of which shall be deemed to be an
original hereof) as of the day and year first above written.

	
   
	
  THE SAXXON
  ORGANIZATION
	
   

	
   
	
            INCORPORATED
	
   

	
   
	
   
	
   

	
   
	
   
	
   

	
   
	
   
	
   

	
  SEAL
	
  By  /s/

	
   
	
   
	
  

  
	
   
	
   
	
   

	
   
	
  Its  Vice Presid. & Secretary

	
   
	
   
	
  

  
				

2 

	
   

   
	
  INTER ALIA HOLDING
  COMPANY
	
   

	
   
	
   
	
   

	
   
	
   
	
   

	
  SEAL
	
  By  /s/

	
   
	
   
	
  

  
	
   
	
   
	
   

	
   
	
  Its  Exec V.P.

	
   
	
   
	
  

  
	
   
	
   
	
   

	
   
	
   
	
   

	
   
	
  NORTHERN
  INSTRUMENTS CORPORATION
	
   

	
   
	
   
	
   

	
   
	
   
	
   

	
  SEAL
	
  By  /s/

	
   
	
   
	
  

  
	
   
	
   
	
   

	
   
	
  Its  President

	
   
	
   
	
  

  
				

3 

 

4

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