and NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION (2) JOINT VENTURE AGREEMENT

DATED 20^TH JANUARY 1997

▇▇▇▇▇▇ PACKAGING (▇▇▇▇▇▇ AUCKLAND) LIMITED

(1)

and

NORTHERN TECHNOLOGIES INTERNATIONAL CORPORATION

(2)

JOINT VENTURE AGREEMENT

(1)

▇▇▇▇▇▇ PACKAGING (▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇; 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 ▇▇▇▇ Lakes, Minnesota, U.S.A.

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;

“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 ▇▇▇ ▇▇▇▇;

“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 ▇▇▇ ▇▇▇▇ 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;

“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;

(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;

“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 ▇▇▇▇ applications) which includes trade literature, technical specifications and application instructions, and promotional material pertaining thereto;

“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.

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.

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.

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;

3.4

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

4.

Completion

Completion shall take place on 20^th 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:

▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇

▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇

“B” Directors:

▇▇▇▇▇▇ ▇ ▇▇▇▇▇

▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇

and the only secretary shall be ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇;

4.1.5

the address of the Company’s registered office shall be Meadowfield Avenue, Green Lane Industrial Estate, Spennymoor, Co ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇.

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;

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.

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.

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);

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;

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).

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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 ▇▇▇ ▇▇▇▇;

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 ▇.▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ 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

(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.

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.

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.

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;

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.

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.

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.

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.

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.

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.

21.10

Law Applicable to Transferees

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

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.

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.

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.

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
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Tel:  ▇▇▇-▇▇▇-▇▇▇▇
Fax:  ▇▇▇-▇▇▇-▇▇▇▇

Copy to:

▇▇▇▇▇▇ ▇. ▇▇▇▇▇
One Commerce Park Square 
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel:  ▇▇▇-▇▇▇-▇▇▇▇
Fax:  ▇▇▇-▇▇▇-▇▇▇▇

If to TP to:

▇▇▇▇▇▇ Packaging (▇▇▇▇▇▇ Auckland) Limited
Meadowfield Avenue
Green Lane Industrial Estate
Spennymoor
County ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ 
Attention: Company Secretary 
Tel:  ▇▇▇▇▇ ▇▇▇ ▇▇▇
Fax:  ▇▇▇▇▇ ▇▇▇ ▇▇▇

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. 

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 ▇▇▇ ▇▇▇▇, 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. 

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. 

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.

EXECUTED by

)

▇▇▇▇▇▇ PACKAGING (▇▇▇▇▇▇

)

AUCKLAND) LIMITED

)

acting by:

)

               /s/

Director

               /s/

Director/Secretary

EXECUTED by

)

NORTHERN TECHNOLOGIES

)

INTERNATIONAL CORPORATION

)

acting by:

)

/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇

Director

Director/Secretary

(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. 

(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. 

(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. 

1.

Subject as otherwise provided in these Articles, the regulations in Table A prescribed under Section 8 of the Companies ▇▇▇ ▇▇▇▇, 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;

(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.

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 ▇▇▇ ▇▇▇▇;

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.

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. 

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). 

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.

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.