EXHIBIT 10.10
MEMORANDUM OF AGREEMENT
FOR JOINT VENTURE AMONG
PULIDOS ET TERMINADOS FINOS AND CTI INDUSTRIES CORPORATION
THIS MEMORANDUM OF AGREEMENT is made and entered into this 16th day of
September, 1996 by and among Pulidos et Terminados Finos, a corporation
organized and existing under the laws of Mexico ("P&TF") and CTI Industries
Corporation, a corporation organized and existing under the laws of the State of
Delaware, U.S.A. ("CTI").
WHEREAS, P&TF is engaged in Guadalajara, Mexico in the manufacture and
sale of latex balloons and manufactures latex balloons under a long term
agreement for sale to CTI;
WHEREAS, CTI is engaged in the manufacture of metallized balloons and
other products and in the sale and distribution of metallized and latex balloons
and other products in the United States and throughout the world;
WHEREAS, the parties desire to enter into an agreement for the
formation and operation, as a joint venture, of a corporation under laws of
Mexico.
NOW, THEREFORE, in consideration of the premises and of the terms,
covenants and conditions hereinafter contained, the parties hereto agree as
follows:
1. Organization of Entity. Promptly upon execution of this Agreement,
the parties shall cause a Sociedad Anonima de Capital Variable ("Joint Venture")
to be organized and established under the laws of Mexico, pursuant to the
following terms:
1.1 The parties shall cause the Joint Venture to be properly
organized and registered promptly after execution of this Agreement;
1.2 The Joint Venture shall be authorized to issue capital
stock of up to 50,000 shares at the price per share of One Peso
(N$1.00)
1.3 Each of P&TF and CTI do hereby subscribe for and agree to
purchase 25,000 shares of capital stock of the Joint Venture at the
price of One Peso (N$1.00) per share. Promptly after organization of
the Joint Venture, the parties shall make full payment to the Joint
Venture for such shares and the Joint Venture shall issue and deliver
to each of them certificates representing the shares.
1.4 The Joint Venture shall be managed by a Board of Directors
of six persons to be elected by the shareholders. The parties agree
that, for the full term of this
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Agreement, they shall vote all shares of capital stock of the Joint
Venture for the election as Directors three persons designated by each
of PT&F and CTI.
1.5 The Board of Directors shall designate a General Manager
who shall manage the day to day operations of the Joint Venture and
such other officers and personel as they shall determine from time to
time. The vote of a majority of all of the members of the Board of
Directors shall be required for any action on the part of the Board of
Directors. The Board of Directors shall hold at least six meetings each
year. A director may participate in a meeting of the Board of Directors
by telephone. Written minutes of all meetings of the Board of Directors
shall be maintained. The Board of Directors may act by unanimous
written consent in lieu of a meeting. The General Manager shall have
such authority and duties as shall be prescribed by the Board of
Directors from time to time.
1.6 A certificate of organization and by-laws or similar
governing documents of the Joint Venture shall be adopted and shall not
be inconsistent with the provisions of this Agreement.
1.7 Sale or transfer of the shares of capital stock of the
Joint Venture shall be restricted in accordance with the following
provisions:
1.7.1 All shares of capital stock of the Joint
Venture which either of the parties hereto shall own, whether
now or hereafter acquired, shall be subject to the
restrictions on transfer provided herein;
1.7.2 No party shall be authorized or permitted to
sell or transfer any shares of capital stock of the Joint
Venture owned by such party, or any interest therein,
including without limitation to sell or pledge as security,
except strictly in accordance with the provisions hereof. Any
attempted sale or transfer in violation of the provisions
hereof shall be void and without effect. All shares of capital
stock of the Joint Venture issued to the parties shall bear an
appropriate legend stating that transfer of the shares are
restricted under this Agreement.
1.7.3 In the event that a party shall desire to sell
all, but not less than all of the shares of capital stock of
the Joint Venture owned by it and shall have received a bona
fide written offer therefor setting forth the price and all
terms of such offer, such party shall first offer to sell all
of such shares to the other party, by written notice the other
party, including a true copy of the bona fide offer to
purchase received. The other party shall have 30 days after
the date of such notice to accept such offer to sell all of
the party's shares. If such other party shall fail to accept
such offer by written notice to the party offering the shares
within 30 days after the date of such offer, the party
offering the shares shall be entitled to sell all, but not
less than all, of the shares but only to the third party
submitting the bona
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fide offer on the terms specified in the offer; provided,
further, that in connection with any sale to a third party,
such third party shall execute and deliver an agreement
accepting all of the terms of this Agreement.
1.7.4 In the event that a party hereto shall become
insolvent, shall cease to conduct business, shall file a
petition for relief under any bankruptcy laws, shall suffer or
permit any determination of insolvency or bankrutcy under any
bankruptcy laws or shall sell all or substantially all of its
assets, the other party shall have the option and right for a
period of 90 days from and after receiving notice of any such
event to purchase all of such party's shares of capital stock
of the Joint Venture at the price paid therefore by such
party. Such right and option shall be exercised by written
notice to the party from whom the shares are to be purchased
and the tender of the purchase price for the shares against
delivery of the certificates therefore, duly endorsed for
transfer.
1.8 The Joint Venture shall obtain and maintain all permits
and licenses necessary or appropriate to the conduct of its business as
provided herein.
2. Office and Facilities.
2.1 The initial office and facility of the Joint Venture shall
be at _________________, Zapopan, Jalisco, Mexico, which is a leased
facility of approximately ____________ square feet.
2.2 The Joint Venture shall enter into a lease agreement for
the lease of the Initial Facility on such terms as the Board of
Directors shall agree.
2.3 The Joint Venture shall acquire, lease, own and operate
such other and additional facilities and equipment as the Board of
Directors of the Joint Venture shall from time to time authorize and
approve.
3. Business and Operations.
3.1 The Joint Venture shall be authorized to engage in any and
all lawful business activites under the laws of Mexico and shall engage
from time to time in such business ventures and activities as the Board
of Directors of the Joint Venture shall authorize.
3.2 It is contemplated that the Joint Venture shall provide a
variety of services, initially, and may provide products, to P&TF and
CTI, as well as to third parties. The charges or prices for services or
products to be provided by the Joint Venture to a party shall be
determined by the Board of Directors of the Joint Venture. The parties
agree that such charges and prices shall be fair and reasonable and
consistent with rates, prices and
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charges in the industry. In the event that the Board of Directors is
unable to agree on a charge or price for any service or product which,
under this Agreement, the Joint Venture is to provide to a party, such
charge or price shall be determined by arbitration in the manner
provided herein.
3.2 The parties contemplate and agree that the business
activities in which the Joint Venture initially shall engage shall
include the following:
3.2.1 The Joint Venture shall provide the service of
printing of latex balloons utilizing printing equipment
supplied by P&TF and CTI and leased to the Joint Venture. P&TF
agree that, for the term, they shall retain the Joint Venture
exclusively for the printing of all latex balloons which
either shall manufacture or sell. Latex balloons owned by P&TF
or CTI shall be delivered to the Joint Venture for printing
and P&TF or CTI, as the case may be, shall pay to the Joint
Venture a service charge for such printing services.
3.2.2 The Joint Venture shall provide packaging
services to P&TF and CTI in which packaging for latex and
mylar balloons is provided and balloons are placed in packages
for retail display and sale.
3.2.3 It is contemplated that the Joint Venture shall
provide services to CTI in converting (producing balloons from
printed film) and packaging mylar balloons on equipment
supplied by CTI and leased to the Joint Venture utilizing
printed film supplied by CTI.
3.3 With respect to all materials and products provided by
P&TF or CTI as to which the Joint Venture shall provide services, (i)
at all times the party providing such materials or products shall be
and remain the sole owner of such materials and products, (ii) the
Joint Venture shall not have or obtain any right, title or interest in
or to such materials or products, (iii) the Joint Venture shall not,
and shall not have any authority or right to, sell, transfer, deliver,
pledge or grant any right or interest in or to any of such materials or
products, and (iv) the Joint Venture shall hold, handle, process,
package and deliver such materials and products strictly in accordance
with the directions of the party providing and owning such materials
and products.
3.4 The parties shall deliver and lease to the Joint Venture
equipment as follows:
3.4.1 The terms of the lease of equipment owned by a
party and leased to the Joint Venture shall be on such terms
as the Board of Directors of the Joint Venture. Such terms
shall be fair and reasonable and shall be consistent with
standards in the industry. In the event that the Board of
Directors is unable to agree on lease terms for an item of
equipment provided herein to be leased to the
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Joint Venture by a party, the terms of such lease shall be
determined by arbitration in accordance with the provisions
hereof.
3.4.2 P&TF agrees to lease to the Joint Venture the
following equipment:
3.4.3 CTI agrees to lease to the Joint Venture the
following equipment:
3.4.3 With respect to all equipment leased by a party
to the Joint Venture, (i) the Joint Venture shall have all
risk of loss with respect to the equipment, (ii) the Joint
Venture shall have the obligation to maintain such equipment
in good working order and condition and, at the termination of
the lease, to return the equipment to the owner in the same
condition as at the time of the lease, ordinary wear and tear
excepted, and (iii) the Joint Venture shall have the
obligation to obtain and maintain insurance covering such
equipment in such amounts and for such risks as the party
owning the equipment reasonably shall require.
4. Certain Operational Matters.
4.1 The Joint Venture shall maintain proper and complete books
of account, files and records of its business and operations in
accordance with law and as the Board of Directors of the Joint Venture
or any party shall reasonably request. All books of account, files and
records shall at all times be open to inspection and copying by any
member of the Board of Directors or any authorized representative of a
party.
4.2 The Joint Venture shall prepare, have prepared and
maintain financial statements in proper form on a monthly and annual
basis, such statements to include a statement of the results of
operation, balance sheet and cash flows, prepared in accordance with
generally accepted accounting principles. The General Manager shall
provide financial statments of the Joint Venture to each member of the
Board of Directors, for each month within thirty days after the last
day of such month and for each year within 90 days after the last day
of the fiscal year.
4.3 The Joint Venture shall make such distributions to the its
shareholders as the Board of Directors shall determine from time to
time and in accordance with law. All distributions to shareholders of
the Joint Venture shall be proportionate among them in accordance with
their interests as shareholders.
4.4 The Joint Venture shall not enter into or perform any
contract, agreement, or transaction of any kind or nature with
(including without limitation any purchase or sale of goods or
services, lease, expense provision or reimbursement), or make any
payment of any kind to, any party hereto or any officer, director or
shareholder of any party hereto unless the same shall have been fully
disclosed to, and authorized by, the Board of Directors of the Joint
Venture.
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5. Arbitration.
5.1 Any dispute, controversy or claim arising out of or in
relation to this Agreement including but not limited to its existence,
breach, termination or legal validity, shall be finally and exclusively
settled by binding arbitration in accordance with the UNCITRAL
arbitration rules as are then in force by a single arbitrator appointed
by the Arbitration Center most proximate to Chicago, Illinois who will
be requested to provide the appropriate administrative services.
6.2 The place of the arbitration shall be Chicago, Illinois,
U.S.A. and the English language shall be used throughout the
arbitration proceedings.
6.3 The parties expressly agree to confer upon the arbitrator
the powers to fill gaps, cure contractual omissions and to perform all
other activities which he may deem necessary or appropriate.
6.4 The award of the arbitrator shall be the sole and
exclusive remedy between the parties regarding any claims and
counter-claims presented to the arbitrator and shall be final and
binding on the parties. The parties undertake to fully and punctually
abide by the award rendered by the arbitrator. Failing such voluntary
compliance, judgment upon the award or any other appropriate procedures
may be entered or sought in any court having jurisdiction thereof to
secure enforcement of said award.
6.5 The final award of the arbitrator shall be payable in
United States currency without deduction or offset and costs, fees or
taxes incidental to the enforcement of the arbitration award shall be
charged in accordance with the decision of the arbitrator against a
party resisting enforcement. Payment of the award including interest
from the date of breach and violation shall be made in accordance with
the relevant provisions of this Agreement.
6.6 Nothing herein contained shall prevent any party hereto
from instituting an action at law against the other party requesting
temporary restraining orders, preliminary injunctions or other
procedures in a court of competent jurisdiction to obtain interim
relief when deemed necessary by such court to preserve the status quo
or prevent irreparable injury pending formal settlement of such dispute
by arbitration. Each of the parties does hereby consent to the
jurisdiction of the courts situated in the State of Illinois, U.S.A.
for such purposes and does hereby consent to service of process for any
action in such courts by notice delivered in accordance with the notice
provisions of this Agreement.
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7. Notices.
7.1 Any notice, demand, consent, service or other
communication required or permitted to be given under this Agreement
shall be in writing and addressed to the party at its address stated
below:
If to CTI Xxxxxx X. Xxxxxx
Executive Vice President
CTI Industries Corporation
00000 Xxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000, X.X.X.
If to P&TF Xxxxxxx Xxxx Xxxxxxx
Pulidos & Terminados Finos
Xxxx Xxxxxxx Xxxxx Xx. 00
Xxxxxxx, Xxxxxxx, Xxxxxx
Any party may change the address to which notices to it shall be sent
hereunder by giving a proper notice of such change of address to the
other party hereunder.
7.2 Notices may be delivered by hand, registered mail, or fax
and shall be deemed to have been received as follows:
7.2.1 If delivered by hand, at the time of delivery
to a responsible person at the address for the party;
7.2.2 If sent by fax, at the time of confirmation of
transmission provided a confirmation copy is sent by airmail
or registered mail within twenty-four hours after the
transmission; or,
7.2.3 If sent by registered mail, at the time of
delivery or at the time of attempted delivery in the case
delivery cannot be completed due to no fault of the sender.
If the time of such deemed receipt as provided above is not during the
customary business hours of the party, the notice shall be deemed to
have been received at 10:00 a.m. at the place of delivery on the first
customary day of business thereafter.
7.3 All such notices, demands, service or other communications
shall be in the English language.
8. Force Majeure. A party hereto shall not be in default hereunder or
be liable for any loss or damage for any delay in the performance of its
obligations hereunder due to causes beyond its control such as acts of God, acts
of the other party, acts of military authority,
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priorities, fires, strikes, floods, epidemics, quarantine restrictions, war,
riots, delays in transportation, or inability due to causes beyond its
reasonable control to obtain necessary labor, material or manufacturing
facilities.
9. Binding Effect. This Agreement shall be binding upon, and shall
inure to the benefit of, the parties hereto and their respective successors in
interest and, to the extent permitted herein, their assigns.
10. Assignment. This Agreement, and the rights and obligations of a
party, may not be assigned without the express written consent of the other
party; provided, however, that the rights and obligations of a party hereunder
may be assigned to a third party in connection with a transaction in which
substantially all of the assets, properties and business of the party are
acquired by a third party in a merger or purchase of all or substantially all of
the assets of the party and such third party executes an instrument by which it
agrees to assume and be bound by all of the obligations of the party in this
Agreement.
11. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law. If any paragraph of this Agreement shall be unenforceable or
invalid under applicable law, such provision shall be ineffective only to the
extent and duration of such unenforceability or invalidity and the remaining
substance of such provision and the remaining paragraphs of this Agreement shall
in such event continue to be binding and in full force and effect.
12. Waivers. Nor failure by a party to exercise any of such party's
rights hereunder or to insist upon strict compliance with respect to any
obligation hereunder, and no custom or practice of the parties at variance with
the terms hereof, shall constitute a waiver by any party to demand exact
compliance with the terms hereof. Waiver by any party of any particular default
by any other party shall not affect or impair such party's rights in respect to
any subsequent default of the same or of a different nature, nor shall any delay
or omission of any party to exercise any right arising from any default by any
other party affect or impair such party's rights as to such default or any
subsequent default.
13. Entire Agreement. This Agreement constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof and
supersedes all prior written or oral negotiations, representations, inducements,
understandings, commitments, contracts or agreements. This Agreement may not be
amended or modified except by a written instrument signed by the parties hereto.
14. Governing Law. This Agreement shall be governed by, and shall be
construed and enforced in all respects in accordance with, the laws of the State
of Illinois, U.S.A.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
CTI INDUSTRIES CORPORATION
BY /s/ Xxxxxx X. Xxxxxx
----------------------
Xxxxxx X. Xxxxxx
Executive Vice President
WITNESS:
/s/ Xxxx X. Flower
--------------------------
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PULIDOS & TERMINADOS FINOS
s.a. de c.v.
BY /s/ Xxxxxxx Xxxx Xxxxxxx
------------------------
Xxxxxxx Xxxx Xxxxxxx
Director - Apodegrado
WITNESS:
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