AGREEMENT
THIS
AGREEMENT is made and entered into this 10th day of April, 2008 by and between
CTI Industries Corporation, an Illinois corporation having its principal
place
of business at 00000 X. Xxxxxx Xxxx, Xxxx Xxxxxxxxxx, Xxxxxxxx 00000 (“CTI”) and
Xxxx Xxxxxxxxx Productions, Inc., a Minnesota corporation having its principal
address at 0000 Xxxxxxx Xxxx, Xxxxxx, Xxxxxxxxx 00000 (“BWP”).
WHEREAS,
CTI is engaged in the production, marketing and sale, among other things,
of a
product line including a plastic bag incorporating a zippered closure and
a
valve for evacuating air from the bag by a portable vacuum pump (the “Product”);
the product is marketed and sold under the brand name and trademark
ZipVac™.
WHEREAS,
BWP is engaged in advertising and public relations, hosting
nationally-syndicated television programs, production of television commercials,
personal appearances, featuring Babe and Xxxx Xxxxxxxxx.
WHEREAS,
CTI wishes to engage BWP to provide advertising and public relations services,
produce commercials, and promote the ZipVac product and brand and to obtain
the
license and right to use the name and likeness of Babe and Xxxx Xxxxxxxxx
on and
in connection with packaging and promotional materials related to the ZipVac
product and brand.
NOW,
THEREFORE, in consideration of the premises, and of the covenants and conditions
hereinafter contained, the parties hereto agree as follows:
1. Retention.
CTI
hereby retains BWP to provide services to CTI as provided herein for the
term
provided. BWP accepts such retention and agrees to provide the services provided
herein for the term.
2. Services.
BWP
agrees that, during the term herein, it shall provide the following services
to
CTI:
2.1 BWP
shall
produce three commercials featuring the ZipVac Product and Babe and Xxxx
Xxxxxxxxx, the first commercial to be completed by approximately April 30,
2008
and additional commercials to be produced at the rate of approximately one
per
week thereafter. The content of the commercials shall be as the parties shall
agree. All of the production costs of the commercials shall be borne by
CTI.
2.2 BWP
shall
produce one Xxxx’ Kitchen segment for the BWP shows featuring Babe and Xxxx
Xxxxxxxxx which will feature the uses of the ZipVac Product line and include
a
demonstration of the Zip Vac Product.
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2.3 BWP
shall
provide air time for broadcast of the commercials at the time of the BWP
shows “
Good Fishing” and “Outdoor Secrets” in each of 58 weeks of the
shows.
2.4 ZipVac
will be identified as a sponsor of the Xxxx’ Kitchen segment of the
shows.
2.5 ZipVac
will be included in:
(a)
Billboards for Xxxx’ Kitchen “Brought to you by ZipVac”
(b)
Credit rolls at show end
(c)
Product Wrap (when applicable-highlighting products used during the
show)
2.6 The
ZipVac logo will be placed on the sponsor page on xxx.xxxxxxxxx.xxx
with a
reciprocating link to xxx.xxx-xxx.xxx.
The
ZipVac logo will also be included on the Xxxx’ Kitchen portion of the
website.
2.7 Xxxx
Xxxxxxxxx and Xxxx Xxxxxxxxx shall be available upon reasonable notice from
time
to time for personal appearances in connection with the promotion of the
ZipVac
Product line. Charges for such personal appearances shall be $3,000 per day
for
Xxxx Xxxxxxxxx and $2,000 per day for Xxxx Xxxxxxxxx, plus reimbursement
for all
transportation, lodging and meal expenses associated with such
appearances.
2.8 Xxxx
Xxxxxxxxx and Xxxx Xxxxxxxxx will include reference to the ZipVac Product
in two
columns written by them for print circulation.
2.9 BWP
will
provide access to BWP marketing professionals to develop cross-promotion
opportunities.
2.10 The
series programs will include editorial and visual support of the ZipVac Product
line in applicable episodes.
3. Certain
Provisions and Covenants.
3.1 CTI
shall
provide to BWP one BETA SP tape of each commercial message CTI wishes to
air
with rotation dates and frequency ratios if more than one commercial message
is
to air. Such tapes shall be provided to BWP within 20 days after completion
of
production thereof by BWP.
3.2 CTI
warrants to BWP that the commercial announcements made by CTI in any commercial
message do not infringe the copyrights, trademarks or trade names of any
third
party and do not include any libel or slander. BWP reserves the right not
to
produce, and not to accept for airing, any material that it reasonably
determines is indecent, violent or morally offensive.
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3.3 BWP
shall
handle the insertion of CTI’s commercial message and make placement thereof in
accordance with instructions from CTI, or in the absence of such instruction,
at
its discretion.
3.4 BWP
shall
provide to CTI proof of airing of the commercial announcements and a post-airing
analysis of household deliveries upon request.
3.5 BWP
represents and warrants that it has the sole and exclusive right to telecast
series during the term of this Agreement, that its is solely liable for full
payment of all costs associated with the series and that the series will
be
ready for telecast for each season.
4. License.
BWP
grants to CTI the license and right to use the name, image, likeness and
testimonies of Babe and Xxxx Xxxxxxxxx on and in connection with ZipVac
packaging, advertising (print and broadcast), on-line and in other promotional
materials during the term of this Agreement. The license granted herein shall
be
subject to the following terms:
4.1 Definition
of Terms.
For
purposes of this paragraph 3, the following terms shall have the meaning
provided herein:
(a) “Net
Revenues” shall mean the gross receipts of CTI from the sale of the Product
during the Term hereof, less (i) any and all discounts or allowances, including
without limitation advertising or slotting fees or allowances, (ii) returns,
(iii) freight charges, (iv) taxes or duties.
(b) “Product”
shall mean and include the product line identified as the Product and related
products sold by CTI under the ZipVac brand.
(c) “Royalty”
shall mean the fee payable to BWP with respect to Net Revenues of CTI from
the
sale of the Product during the Term.
4.2 Royalty.
CTI
shall pay to BWP a Royalty at the rate of Three (3%) of Net Revenues. The
amount
of the Royalty shall be determined and paid on a calendar quarterly basis
during
the term. The amount of the Royalty earned during any calendar quarter during
the Term shall be payable on or before the 30th
day
following the last day of such calendar quarter.
4.3 Statements.
CTI
shall prepare and provide to BWP a report for each calendar quarter during
the
Term which shall include: (i) Net Revenue of CTI for the quarter and (ii)
the
amount of Royalties accrued and payable for the quarter. Such report shall
be
provided to BWP on or before 30 days after the last day of each
quarter.
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4.4 Right
to Review.
During
the Term and for a period of six months after the expiration of the Term
or
termination of this Agreement, no more often than once in a six month period,
BWP, or its authorized representative, shall have the right, upon ten (10)
days
written notice to CTI to inspect the records of CTI relating to the sale
of
Product. CTI shall retain all records relating to the sale of Product during
the
Term and for a period of one year from the date of expiration of the Term
or
termination of this Agreement.
4.5 Use
of
Rights.
CTI’s
right and license to use the name, image, likeness or testimony of Babe or
Xxxx
Xxxxxxxxx shall be subject, in each event to the consent of BWP, which consent
shall not unreasonably be withheld, when the intended use shall be consistent
with the intent and terms of the license granted herein. With respect to
each
proposed use of the rights granted to CTI hereunder, CTI shall give thirty
(30)
days advance written notice of such intended use to BWP, such notice to include:
(i) when the use shall be on printed material, a sample of such material
and
(ii) when the use shall be on video, a sample of the video. In the even that
BWP
shall fail to give notice to CTI within thirty (30) days after the date of
such
notice from CTI with respect to any intended use, BWP shall be deemed to
have
consented to such use.
4.6 Limitation
of Rights.
CTI
shall receive and be entitled solely to the right and license expressly granted
herein and shall not receive, own or have any right, title or interest in
or to
the name, image, likeness or testimony of Babe or Xxxxx Xxxxxxxxx or of any
trademark, tradename, copyright or other intellectual property right of BWP
or
of Babe or Xxxx Xxxxxxxxx except as expressly provided herein, for the Term
provided herein. Upon the termination of this Agreement for any reason, or
the
expiration of the Term of this Agreement, the right and license granted to
CTI
herein shall terminate and CTI shall have no further rights with respect
thereto; provided, however, that CTI shall have the right, for a period of
90
days from the date of such termination or expiration to sell or dispose of
any
and all packaging or promotional materials bearing the name, image, likeness
or
testimony of Babe or Xxxx Xxxxxxxxx, subject to and on the terms and conditions
provided herein.
5. Stock.
In
consideration of the services to be performed hereunder, the air time for
commercials provided and the license granted herein, CTI hereby agrees to
issue
and deliver to BWP 50,000 shares of the common stock of CTI (“Shares”), subject
to and on the following terms and conditions:
5.1 The
Shares shall be earned, and BWP’s right to own, hold and dispose of the Shares
as earned shall vest at the times and in the amount of shares as set forth
below:
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On
or
After Aggregate
No. of Shares
July
1,
2008 6,250
October
1, 2008 12,500
January
1, 2009 18,750
April
1,
2009 25,000
July
1,
2009 31,250
October
1, 2009 37,500
January
1, 2010
43,750
April
1,
2010 50,000
5.2 In
the
even that CTI or BWP shall terminate this Agreement pursuant to paragraph
6.3
hereof, the right of BWP with respect to any Shares not then earned as of
the
date of such termination shall terminate, certificates for such shares shall
be
cancelled and BWP shall have no right or interest in such Shares.
5.3 In
connection with the issuance to BWP of the option herein, BWP hereby represents,
warrants and agrees as follows:
(a) BWP
acknowledges that the Shares are being issued without registration under
the
Securities Act of 1933, as amended (the “Act”), in reliance upon Section 4(2) of
the Act and the rules and regulations promulgated by the Securities and Exchange
Commission (“SEC”) thereunder in a transaction not involving any public
offering, and that such reliance is based in part upon the representations
and
warranties set forth herein.
(b) BWP
represents and warrants that it is an “accredited investor” as defined in Rule
501 of Regulation D under the Act.
(c) BWP
acknowledges that CTI is a reporting company under the Securities Exchange
Act
of 1934, that BWP has received and reviewed the reports of CTI filed with
the
SEC, including its reports on Form 10-K, 10-Q and 8-K and that BWP is fully
informed concerning the business and financial condition of CTI and the risk
factors associated with an investment in the common stock of CTI;
(d) BWP
is
acquiring the Shares, solely for its own account, for investment, and not
with a
view to the distribution or resale thereof. BWP further represents and warrants
that its financial condition is such that BWP is not under any present necessity
or constraint to dispose of such securities to satisfy any existing or
contemplated debt or undertaking.
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(e) BWP
has
not offered or sold the Shares within the meaning of the Act. BWP does not
have
in mind any sale of such securities, either currently or after the passage
of a
fixed or determinable period of time or upon the occurrence or non-occurrence
of
any predetermined event or circumstance. BWP has no present or contemplated
agreement, undertaking, arrangement, obligation, indebtedness or commitment
providing for or which is likely to compel a disposition of such securities.
BWP
is not aware of any circumstances presently in existence which are likely
in the
future to promote a disposition of the securities.
(f) BWP
confirms its understanding and agrees as follows:
(i) The
certificates evidencing any of the Shares shall bear substantially the following
legend:
“The
securities represented by this certificate have not been registered under
the
Securities Act of 1933 or any state securities law. No transfer or sale of
these
securities, or any interest therein, may be made except in connection with
an
effective registration statement under the Act, unless the issuer has receive
an
opinion of counsel that such transfer does not require registration under
the
Act or the transfer shall be made in accordance with Rule 144 promulgated
under
the Act.”
(ii)
Appropriate
transfer restrictions regarding such securities shall be noted in the records
of
CTI and the transfer agent.
6. Term
and Termination.
6.1 This
Agreement shall be for a term commencing on April 1, 2008 and expiring on
March
31, 2011 (“Term”).
6.2 An
Event
of Default with respect to a party shall mean and include:
(i) the
failure by such party to perform any obligation of that party provided herein
to
be performed, or a violation by the party of a provision hereof, and the
failure
of such party to cure such failure to perform or violation within thirty
(30)
days after notice to such party shall have been given specifying the failure
to
perform or violation;
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(ii) the
series “Good Fishing” or “Outdoor Secrets” shall be cancelled;
(iii)
the
death
or incapacity of Xxxx Xxxxxxxxx.
6.3 In
the
event of an Event of Default with respect to a party, the other party shall
be
entitled to terminate this Agreement upon thirty (30) days written
notice.
7. Indemnification.
7.1 CTI
shall
defend, indemnify and hold BWP harmless from and against any damage (including
incidental and consequential damages), expense (including reasonable attorneys’
fees), loss, lawsuit, claim, demand or liability arising out of (i) any breach
of by CTI of its obligations herein or violation of any of its representations
or warranties herein or (ii) bodily injury or property damage arising from
the
sale or use of the ZipVac Products.
7.2 BWP
shall
defend, indemnify and hold CTI harmless from and against any damage (including
incidental and consequential damages), expense (including reasonable attorneys’
fees), loss, lawsuit, claim, demand or liability arising out of any breach
of by
BWP of its obligations herein or violation of any of its representations
or
warranties herein.
8. General
Provisions
8.1 This
Agreement and the relationship of the parties hereunder is governed by and
interpreted in accordance with the internal laws of the State of Minnesota
without regard to its principles of conflict of laws.
8.2
This
Agreement is not modified or supplemented by any agreement or representation
that is not contained in this document. Modifications or supplements to the
Agreement must be agreed to in writing and signed by the parties.
8.3 The
rights and duties under this Agreement are not assignable or delegable by
either
party without the other party's prior written consent.
8.4 Waiver
by
either party of nonperformance or any breach of this Agreement does not
constitute a waiver of any subsequent nonperformance or other breach of the
same
or any other provision.
8.5 Notices
must be in writing and must be sent to the recipient at the address set forth
at
the beginning of this Agreement. Either party may change the address to which
notice must be given by written notice to the other party. Notices are effective
upon receipt or 5 days after sending, whichever comes first, if the notice
is
sent by an overnight delivery service or if mailed postage prepaid, certified
or
registered mail, return receipt requested.
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8.6 If
any
provision of this Agreement is held to be invalid, the validity of the remainder
of the Agreement will not be affected, and the rights and obligations of
the
parties will be construed and enforced as if the Agreement did not contain
the
invalid provision. The provisions of this Agreement are severable.
8.7 This
Agreement and the documents referred to herein constitute the entire agreement
between the parties relating to the subject matter of this Agreement. It
supersedes any other agreement between the parties relating to this subject
matter.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day
and year first above written.
CTI INDUSTRIES CORPORATION | ||
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By: | /s/ Xxxx X. Xxxxxx | |
Xxxx
X. Xxxxxx
Chairman
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XXXX XXXXXXXXX PRODUCTIONS, INC. | ||
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By: | /s/ Xxxx Xxxxxxxx | |
Xxxx
Xxxxxxxx
President
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