<Page>
EXHIBIT 10.40
THIS SPECIMEN NON-QUALIFIED DEFERRED COMPENSATION PLAN DOCUMENT IS PROVIDED BY
DIVERSIFIED SOLELY FOR THE GUIDANCE OF THE EMPLOYER AND ITS COUNSEL. DIVERSIFIED
IS PROHIBITED FROM GIVING LEGAL ADVICE AND THEREFORE CAN GIVE NO ASSURANCES THAT
ANY EMPLOYER'S NON-QUALIFIED DEFERRED COMPENSATION ARRANGEMENTS WILL MEET ALL
APPLICABLE INTERNAL REVENUE SERVICE (IRS) AND DEPARTMENT OF LABOR (DOL)
REQUIREMENTS. PARTICULAR ATTENTION SHOULD BE PAID TO THE COMPOSITION OF THE
GROUP OF EMPLOYEES ELIGIBLE TO PARTICIPATE IN THE NON-QUALIFIED DEFERRED
COMPENSATION ARRANGEMENT.
<Page>
TABLE OF CONTENTS
Article 1. Introduction
Article 2. Definitions
Article 3. Plan Specifications
Article 4. Loans and Hardship Withdrawals
Article 5. Plan Investment
Article 6. Beneficiary
Article 7. Vesting and Forfeitures
Article 8. Benefits
Article 9. Administration
Article 10. Miscellaneous
<Page>
ARTICLE 1. - INTRODUCTION
Whereas, the Employer wishes to establish a supplementary retirement plan to
provide deferred compensation for a select group of management as chosen by the
Employer effective January 1, 1997, and
Whereas, the Employer, who has determined pursuant to the laws of the Employer's
state, may establish such a Plan;
Whereas, the Employer wishes to provide that the Plan to be established under
this Agreement shall be called The Chase Corporation Non-Qualified Retirement
Savings Plan for the Board of Directors, and
Whereas, the Employer wishes to provide under the Plan for the payment of vested
accrued benefits to the Participants and their beneficiary or beneficiaries, and
Whereas, the Employer wishes to provide under the Plan that the Employer shall
pay the entire cost of vested accrued benefits from its general assets and set
aside contributions by the Employer to meet its obligations under the Plan, and
Whereas, the Employer intends that the assets of the Plan shall at all times be
subject to the claims of the general creditors of the Employer,
Now therefore, the Employer does hereby establish the Plan as follows, and does
also hereby agree that the Plan shall be structured, held and disposed of as
follows:
<Page>
ARTICLE 2. - DEFINITIONS
"Age" means age at nearest birthday.
"Beneficiary" means the beneficiary or beneficiaries designated by the
Participant in the Beneficiary Designation Form who are to receive any
distributions payable upon the death of the Participant.
"Board" means the Employer's Board of Directors.
"Beneficiary Designation Form" means the form signed by the Participant which
specifies the Participant's Beneficiary.
"Compensation" means the amount payable for all Board of Director fees for
services rendered to the Employer, that is reportable to the Federal Government
for the purpose of withholding Federal income taxes, or which would be
reportable if it were not deferred by the Eligible Employee under this Plan.
"Deferred Compensation" means the amount of Compensation that the Participant
elects to defer under the Enrollment Agreement and that the Participant and the
Employer mutually agree shall be deferred in accordance with the Plan and/or the
amount of any contributions made by the Employer on behalf of the Participant.
"Disability" means a Participant's total and permanent disability as a result of
disease or bodily injury so as to render the Participant incapable of engaging
in any substantial gainful activity by reason of any medically determinable
physical or mental impairment or impairments that can be expected to result in
death or that have lasted or can be expected to last for a continuous period of
not less than twelve (12) months, provided that the Participant is eligible for
and receives disability benefits under the Social Security Act.
"Effective Date" means January 1, 1997. "Eligible
Member" means a member of the Board.
"Employer" means The Chase Corporation and any succeeding or continuing
corporation.
"Enrollment Agreement" means the agreement entered into by a Participant which
specifies the amount of Deferred Compensation, the Participant's Beneficiary and
the Participant' election of form of payment on Termination of Employment.
"Entry Date" means the first day of the month each year.
"Hardship Withdrawal" A withdrawal is on account of hardship if it is due to an
unforeseen emergency which creates a hardship and which occurs prior to the
Participant's commencement of benefits. An unforeseen emergency is defined as
(1) a severe financial
<Page>
hardship to the Participant, or (2) loss of the Participant's or beneficiary's
property due to casualty, or (3) other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the
Participant or beneficiary.
Payment may not be made to the extent that such hardship is or may be relieved
(1) through reimbursement or compensation by insurance or otherwise, (2) by
liquidation of the Participant's assets to the extent the liquidation of these
assets would not itself cause severe financial hardship or (3) cessation of
deferrals under the Plan.
"Participant" shall mean any Eligible Member who has elected to participate in
the Plan by entering into an Enrollment Agreement.
"Participant's Account" The individual account maintained for a Participant by
the insurance company under the group contract in accordance with the terms of
the group contract(s) and the Plan.
"Plan Year" The first Plan Year is the period beginning on the Effective Date
and ending on December 31, 1997. A Plan Year other than the first Plan Year is
the 12 consecutive month period beginning on January 1st, a Plan Anniversary,
and ending on the next following December 31st.
"Termination of a Board Member" shall mean the date the individual is no longer
a Member of the Board of Directors of the Employer.
<Page>
ARTICLE 3. - PLAN SPECIFICATIONS
Each Eligible Employee shall be eligible to participate in the Plan on the first
Entry Date coinciding with or next following the date on which he becomes an
Eligible Member.
An Eligible Employee may enroll and become a Participant by executing an
Enrollment Agreement in each calendar year preceding the calendar year in which
deferral of compensation is to commence. However, during the first Plan Year, an
Eligible Employee may enroll and become a Participant within 30 days after the
Plan is effective. In the first year an employee first becomes an Eligible
Member, the Eligible Member may enroll and become a Participant within 30 days
after the date the employee becomes an Eligible Member.
The Participant shall specify in his Enrollment Agreement the amount of
Compensation to be deferred (from 1% to 100% of his Compensation) under the
Plan.
Any salary deferrals made by an Eligible Member under this Plan shall be held as
an asset of the Employer.
The Participant may terminate his Enrollment Agreement at any time and be
restored to full Compensation. The Participant may change his Enrollment
Agreement by written notice of such change, prior to the calendar year in which
such change is to be effective. An election to defer Compensation under this
Plan, or to change the amount of Deferred Compensation, shall apply only to
Compensation earned after such election.
The Employer has the power to establish rules and from time to time to modify or
change such rules governing the manner and method by which salary deferral
contributions may be changed or discontinued temporarily or permanently.
A Participant's Enrollment Agreement shall remain in effect unless previously
modified or terminated as herein permitted until the Participant's Termination
as a Board Member.
All salary deferral contributions shall be authorized by the Participant in
writing, deducted from the Participant's compensation without reduction for any
taxes or withholding (except to the extent required by law or the regulations)
and paid over to the Plan by the Employer.
Contributions made to the Plan on behalf of a Participant shall include salary
deferral contributions.
The salary deferral contributions, made under the Plan on behalf of each
Participant shall be credited to the Participant's Account. The Account consists
of the aggregate of all records maintained by the Employer for purposes of
determining the Participant's interest in the Plan.
<Page>
ARTICLE 4. - LOANS AND HARDSHIP WITHDRAWALS
4.1 There are no loans available under this Plan; however, a Participant may
make a Hardship Withdrawal, as defined in Article 2, from the Plan.
<Page>
ARTICLE 5. - PLAN INVESTMENT
5.1 All contributions will be invested under a Group Annuity Contract or
Contracts issued to the Employer by the AUSA Life Insurance Company, Inc.
("AUSA") under which Participant Accounts will be established for each
Participant.
5.2 All amounts under this Plan, including all investments purchased with such
amounts and all income attributable thereto, shall remain (until made
available to the Participant or Beneficiary) solely the property of the
Employer (without being restricted to the provision of benefits under the
Plan) subject to the claims of the Employer's general creditors. No
Participant or Beneficiary shall have any secured or beneficial interest in
any property, rights or investments held by the Employer in connection with
the Plan.
<Page>
ARTICLE 6. - BENEFICIARY
6.1 The Participant's Beneficiary Designation Form shall designate the
Beneficiary or Beneficiaries who are to receive distributions in the event
of the Participant's death. If the Participant has not properly designated
a Beneficiary, or if for any reason such designation shall not be legally
effective, or if said designated Beneficiary or Beneficiaries shall
predecease the Participant, then the Participant's estate shall be treated
as the Beneficiary. A Participant may change his Beneficiary designation at
any time by amending his Beneficiary Designation Form.
<Page>
ARTICLE 7. - VESTING AND FORFEITURES
7.1 The value of that portion of Participant's Account which consists of salary
deferral contributions shall be fully vested at all times subject, however,
to the reach of the Employer's creditors in the event of insolvency.
7.2 When the Participant resigns as a Board Member and payment is not deferred,
the amount of the payment shall be based on the value of the Participant's
Account plus any contributions subsequently credited to such Account and
less any distributions subsequently made from the Account.
<Page>
ARTICLE 8. - BENEFITS
8.1 The Participant or Beneficiary shall elect the payment option described in
8.3 below under which distribution will be made following his Termination
as a Board Member. Payment of benefits will begin on the first day of the
first month that is at least 60 days after his Termination as a Board
Member provided that in no case will payment of benefits begin later than
60 days after the close of the Plan Year in which the Participant is no
longer an Eligible Member. Any such election or change of election must be
made in writing.
8.2 Benefits are immediately payable upon the Participant's death or Disability
under one of the payment options described in Article 8.3. Death benefits
must be paid to the Beneficiary designated by the Participant in the
Beneficiary Designation Form.
8.3 As elected under 8.1 or 8.2 and subject to 8.4 below, distributions may be
made under one or more of the following payment options:
(a) in a lump-sum cash payment; or
(b) in substantially equal annual payments over a period of years not
to exceed the life expectancy of the Participant or the joint
life expectancies of the Participant and the Participant's
spouse; or
(c) any installment payout agreed to in writing by the Employer.
8.4 A Participant may change his form of payment at any time prior to the
commencement of distributions by providing written instructions to the
Employer; except that a change in the form of payment from (a) to (b) or
(c) above will not be effective unless made at least one year prior to the
Participant's Termination as a Board Member or death, whichever occurs
earlier.
<Page>
ARTICLE 9. - ADMINISTRATION
9.1 ADMINISTRATOR. The Employer shall be the Administrator of the Plan.
Administrative concerns of the Plan include, but are not limited to, the
enrollment of Eligible Members as Participants, the maintenance of all
records, and the distribution of benefits to Participants.
<Page>
ARTICLE 10. - MISCELLANEOUS
10.1 AMENDMENT OF PLAN. The Employer reserves the right to amend any provisions
of the Plan at any time to the extent that it may deem advisable without
the consent of the Participant or any Beneficiary provided that no such
amendment shall impair the rights of Participants or Beneficiaries with
respect to Compensation deferred before such amendment.
10.2 TERMINATION OF PLAN, The Employer reserves the right to terminate the Plan
at any time. Upon termination of the Plan, the Participant's full
Compensation on a non-deferred basis will be thereupon restored.
Distribution of any benefits to Participants may only commence upon the
occurrence of any of the specified events as provided in Article 8 except
as stated in the following sentence. If the Plan, which was designed and
intended to be a Top-Hat Plan is deemed not to be a Top-Hat Plan, it will
be terminated and contributions will be distributed to Participants in the
Plan.
10.3 PLAN ADMINISTRATOR TO ESTABLISH RULES. The Employer may at any time make
rules as it determines necessary regarding the administration of the Plan.
10.4 The Employer may, from time to time, hire outside consultants, accountants,
actuaries, legal counsel, or recordkeepers to perform such tasks as the
Employer may from time to time determine.
10.5 In the event that any Participants are found to be ineligible, that is, not
members of a select group of highly compensated employees, according to a
determination made by the Department of Labor, the Employer will take
whatever steps it deems necessary, in its sole discretion, to equitably
protect the interests of the affected Participants.
10.6 No benefits under the Plan shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge or encumbrance. The
provisions of this Plan shall be binding upon and inure to the benefit of
the Employer and Participants and their respective successors, heirs,
personal representatives, executors, administrators, and legatees.
The vested Account balance of a Participant shall be paid from the Plan
only to the extent the Employer is not at the time of payment insolvent.
Any vested accrued benefits under the Plan represent an unfunded, unsecured
promise by the Employer to pay these benefits to the Participants when due.
A Participant has no greater right to Plan assets than the general
creditors of the Employer in the event that the Employer shall become
insolvent. Plan assets can be used to pay only vested accrued benefits
under the Plan or the claims of the Employer's general creditors.
12
<Page>
10.7 This Plan and the Enrollment Agreement, and any subsequently adopted
amendment thereof, shall constitute the total agreement or contract between
the Employer and the Participant regarding the Plan. No oral statement
regarding the Plan may be relied upon by the Participant.
10.8 This Plan shall be construed under the laws of the State of Massachusetts.
IN WITNESS WHEREOF, The Chase Corporation has caused this Plan to be executed by
its duly authorized officers this 30th
day of June , 1997
IN PRESENCE OF:
/s/ Everett Chadwick By: /s/ Peter R. Chase
- ------------------------------------ ------------------------------------
Everett Chadwick Peter R. Chase
- --------------------------------------------------------------------------------
Treasurer & CFO President & CEO
- --------------------------------------------------------------------------------
<Page>
DIRECTIONS FOR ALTERNATIVE METHOD OF COMPLIANCE
FOR TOP HAT PLANS FOR THE DOL
Department of Labor (DOL) regulations (DOL Reg. 2520.104-23) provide for an
alternative method of compliance with the reporting and disclosure requirements
of Title I of ERISA for "top hat" plans. The plan administrator of the "top hat"
plan must make a one-time filing with the DOL providing certain information and,
also, he must provide the DOL with plan documents IF SO REQUESTED.
Attached for your information is a specimen letter which can be used as a guide
to fulfill these requirements. Please note the following:
(a) The filing should be made and signed by the plan's administrator.
(b) The plan administrator should enumerate the number of all such plans
maintained by the employer, I.E., all "top hat" plans maintained, and
the number of employees in each.
(c) The filing should be made within 120 days of the plan's being adopted.
<Page>
________________________
Top Hat Plan Exemption
Pension and Welfare Benefits Administration
Room N-5644
U.S. Department of Labor
200 Constitution Avenue, NW
Washington, D.C. 20210
Dear Sir:
The purpose of this filing is to comply with the reporting and disclosure
requirements of Part I of Title I of ERISA with respect to an unfunded or
insured pension plan maintained for a select group of management or highly
compensated employees. This filing is intended to comply with DOL Reg.
2520.104-23.
Plan Name: Chase Corporation Non-Qualified Retirement Savings Plan for Board of
Directors is maintained by
Employer's Name: Chase Corporation
Full Address: 50 Braintree Hill Park, Suite 220
Braintree, MA 02184
The Employer identification number (EIN) assigned by the Internal Revenue
Service is
11-1797126
<Page>
The plan(s) is maintained primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employees.
The number of deferred compensation plans maintained by the employer is
___________________________________________________ in which there are
________________________ participating employees. In accordance with Section
104(a)(1) of ERISA, the employer will provide Plan documents to the Secretary of
Labor upon request.
Sincerely,
- ----------------------------
(Name of Plan Administrator)
<Page>
"By countersigning this letter, I acknowledge that I have read it and understand
it, and I agree to its terms. The approval of the Massachusetts Insurance
Department is required. If, after any such required Insurance Department filing
and approval, the contract is not executed within 90 days of the contract
issuance date, it is agreed that the Plan funds invested pursuant to this
Authorization letter (along with any earnings thereon but less any expenses
authorized by the contract form) will be returned to the Employer.
If the Contract is disapproved by the Insurance Department concerned, I agree
that those funds in the Stable Fund and/or Government Fixed Fund (including any
earnings thereon but less any expenses that were previously deducted) will be
returned to, or as directed by, the proposed Contractholder. However, any
unrecovered expenses will not be deducted."
Execution by Proposed Contractholder:
BY: /s/ [ILLEGIBLE]
------------------------
(Signature)
President & CEO
------------------------
Dec.31, 1996
------------------------