EXHIBIT 10.11
AGREEMENT
THIS AGREEMENT is made and entered into this 8th day of September, 1995
by and among CTI Industries Corporation, a corporation organized and existing
under the laws of the State of Delaware, U.S.A. ("CTI") and Pulidos & Terminados
Finos s.a. de c.v., a corporation organized and existing under the laws of
Mexico and having its principal place of business in Zapopan, State of Jalisco,
Mexico ("P&TF).
WHEREAS, CTI presently owns and operates in the State of Illinois,
U.S.A. two dipping machines used in the manufacture of latex balloons, such
machines being more particularly described in Exhibit A hereto;
WHEREAS, CTI is engaged in the business of manufacturing and selling,
among other things, latex balloons;
WHEREAS, P&TF is engaged in Mexico in the business of manufacturing and
selling latex balloons;
NOW, THEREFORE, in consideration of the premises and of the terms,
covenants and conditions hereinafter contained, the parties hereto agree as
follows:
1. Definition of Terms. The terms set forth in this paragraph shall,
for purposes of this Agreement, have the meanings set forth herein:
1.1 "Balloons" shall mean latex balloons.
1.2 "CTI Balloons" shall mean Balloons manufactured and
produced on the Machines when delivered and operating at P&TF's
facility.
1.3 "Machines" means the two dipping machines owned by CTI and
used in the manufacture of latex balloons as more particularly
described and including all of the items set forth on Exhibit A hereto.
"Machine" shall mean one of the Machines.
1.4 "Specifications" shall mean (i) with respect to CTI
Balloons, CTI's present specifications for latex balloons which it
manufactures utilizing the Machines, which specifications are in
writing and shall be transmitted to P&TF promptly after the execution
of this Agreement by the parties, (ii) with respect to Balloons other
than CTI Balloons produced by P&TF and sold to CTI hereunder, the
specifications therefor developed and agreed upon by the parties
pursuant to paragraph 3.6 hereof.
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2. Sale and Delivery of Machines.
2.1 CTI does hereby agree to sell and deliver to P&TF, and
P&TF agrees to purchase, acquire, own, install and operate, the
Machines on the terms and conditions set forth herein. The Machines
shall include the machinery and components described on Exhibit A
hereto, together with (i) copies of all blueprints and schematics for
the equipment in CTI's possession and (ii) all auxiliary and associated
equipment such as tanks, mixers and dryers. CTI shall be entitled to
retain any and all plans, blueprints, schematics or other technical
information concerning the Machines and all rights to use, sell,
license or dispose of such items and information (including without
limitation the right to manufacture, assemble, use or sell the
equipment) and nothing herein shall be deemed a sale or transfer of any
technical or proprietary rights in the Machines or any components
thereof, whether patentable or not.
2.2 The purchase price for the Machines shall be $400,000,
which the parties agree is the fair value therefor. The purchase price
shall be allocated among the two Machines as the parties shall agree.
The purchase price herein shall be exclusive of any and all sales, use,
excise, transfer or other similar taxes or charges, or any customs,
duty or other levy arising from the sale and delivery of the Machines
which may be imposed by any governmental authority in the United States
or Mexico. P&TF shall pay any and all such taxes, duties, charges or
levies, or shall reimburse CTI therefor if paid or advanced by CTI
promptly upon receipt of an invoice therefor. Payment of the purchase
price for the Machines shall be made by P&TF in accordance with the
provisions of paragraph 5.9 hereof. In the event that either party
hereto shall terminate this Agreement pursuant to paragraph 9 hereof
prior to the time that the purchase price for the Machines shall have
been paid in full, the balance of the purchase price shall become
immediately due and payable at such time.
2.3 Promptly upon execution of this Agreement and within 30
days thereafter, CTI shall, at CTI's expense, disassemble, crate and
ship to P&TF one of the Machines. Promptly upon receipt of the Machine
shipped and, in any event within 60 days after receipt thereof, P&TF
shall reassemble the Machines and shall commence manufacture of latex
balloons utilizing the Machine. Within 30 days after CTI shall confirm
that the first Machine shall be fully operational and shall be in
production of CTI Balloons meeting the Specifications, CTI shall
disassemble, crate and ship to P&TF the second balloon machine.
Promptly upon receipt thereof, and in any event within 60 days after
receipt thereof, P&TF shall reassemble such second Machine and begin
manufacture of latex balloons on such machine. Except as otherwise
provided herein with respect to the services of a
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CTI engineer, P&TF shall bear all of the expenses of assembly,
installation and operation of the Machines at its plant.
2.4 CTI shall be responsible for the cost of freight charges
in connection with shipping the machines to the Mexico border and P&TF
shall be responsible for freight charges from the Mexican border to its
plant. Title and risk of loss shall pass to P&TF at the time of
delivery of the Machines to the carrier.
2.5 CTI shall make available to P&TF the services of one
engineer employed by CTI who is knowledgeable concerning the Machines
for a period of 90 days from the date that each Machine shall be
received by P&TF for the purpose of assisting P&TF in the assembly,
installation and operation of the Machines and the training of P&TF
personnel in Jalisco. For both such 90 day periods, CTI will be
responsible for the wages of such engineer and P&TF shall be
responsible for, and shall pay, all of the travel, lodging, meal and
other related and reasonable expenses of such engineer in connection
with the provision of such services. In the event that P&TF shall
request services of such engineer after either of such 90 day periods,
CTI shall provide reasonable additional assistance of such person and
P&TF shall be responsible for, and shall pay to CTI, a per diem charge
which for such services which shall cover the full cost to CTI of
compensation and related expense for such person as well as all travel,
lodging and meal expenses incurred in the provision of such services.
2.6 Until the date of disassembly of a Machine, CTI shall be
entitled to continue to operate the Machine for the production of latex
balloons, at the sole cost, and for the sole benefit of CTI.
2.7 CTI warrants only that the Machines are presently in good
working order and condition, subject to reasonable wear and tear from
operation, and include all of the parts and components necessary for
operation. EXCEPT AS EXPRESSLY PROVIDED IN THE FOREGOING SENTENCE, CTI
EXPRESSLY DISCLAIMS ALL WARRANTIES WITH RESPECT TO THE MACHINERY,
EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. P&TF acknowledges
and agrees that (i) it has knowledge and expertise with respect to
machinery and equipment for the manufacture of latex balloons, has made
a full inspection of the Machinery and has found the Machinery to be in
good working order and condition, (i) the Machines are, and have been
in use, that components of the Machinery may fail by reason of wear and
tear in ordinary use and operation and that no warranty is made as to
the continued operation or condition of any part or component of the
Machines and (iii) P&TF, based on its inspection and observation of the
Machines,
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has determined the method of function, capability and capacity of the
Machines and that no warranty, promise or assurance is made by CTI with
respect thereto. CTI shall be responsible for the repair or replacement
of any loss or damage to the Machines arising from the disassembly and
crating of the Machines; P&TF shall be responsible for any loss or
damage arising from the assembly and installation of the Machines at
its plant.
CTI's sole liability for breach of the limited express
warranty provided herein with respect to the Machines, and P&TF's
exclusive remedy on any claim arising out of any failure of the
Machines or any component thereof constituting a breach of the limited
express warranty herein, shall be limited to the repair or replacement
of any part or component shown to have been defective and not in good
operating condition at the time of disassembly by CTI, and in no event
shall CTI be liable to P&TF for any incidental or consequential
damages.
3. Manufacture and Sale of Latex Balloons.
3.1 Subject to and on the terms and conditions provided in
this Agreement, P&TF agrees to manufacture, sell and deliver latex
balloons to CTI and CTI agrees to purchase and pay for latex balloons
manufactured by P&TF.
3.2 The Balloons which P&TF agrees to manufacture, sell and
deliver to CTI hereunder are 11" CTI Balloons, Standards, Crystals,
Metallics and Pearls and the present standard line of latex balloons
manufactured by P&TF including 12", 9" and 5" Standards and Crystals.
P&TF agrees to manufacture and sell to CTI any and all other latex
balloons which it shall determine, in its sole discretion, to
manufacture during the term hereof.
3.3 P&TF agrees that, during the term provided herein, it will
not sell any CTI Balloons or any of its 5", 9" or 12" Balloons to any
customer situated in the United States orCanada or to any customer who
shall resell such balloons to a customer or customers in the United
States, other than CTI, Imperial Toy and Xxxxxxxx. P&TF shall make
reasonable inquiry of each of its customers to determine the place of
resale of Balloons by such customer and shall require each customer for
such balloons other than CTI, Imperial Toy and Xxxxxxxx to certify in
writing that such balloons will not be offered for sale or sold in the
United States or Canada. P&TF agrees that, during the term designated
herein, it will not sell any Balloons to any person found to have
violated such certification. P&TF agrees that it will give priority to
CTI orders over orders for Balloons from Imperial Toy and Xxxxxxxx.
3.4 Subject to and on the terms and conditions provided herein
and for the term provided herein, CTI agrees that it will purchase all
of its requirements for 5", 9" , 11" and 12" Balloons from P&TF.
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3.5 Promptly after the execution of this Agreement, CTI shall,
by written notice to P&TF, provide to P&TF written specifications for
Balloons. Unless P&TF shall, by written notice to CTI given within 15
days after such notice from CTI, reasonably object to any provision of
such specifications, such specifications provided by CTI shall become
the Specifications for Balloons produced and sold hereunder (other than
CTI Balloons). If P&TF shall reasonably object to any portion of the
specifications provided by CTI, the parties shall negotiate in good
faith to develop agreed terms of the Specifications.
4. Ordering and Supply.
4.1 CTI shall submit to P&TF orders for Balloons from time to
time during the term hereof. All such orders shall be in writing and
shall specify the quantity and the type of the Balloons ordered. Orders
may be transmitted to P&TF by mail or by facsimile transmission.
4.2 Balloons may be ordered by CTI, and P&TF will supply
Balloons as ordered, bulk packed, in gross bags and in 36-count bags.
The parties agree to negotiate, in good faith, terms under which P&TF
will supply Balloons in single packages.
4.3 P&TF agrees to utilize its best efforts to delivery
Balloons ordered by CTI to the carrier for shipment within 30 days
after the date of receipt of the order and, in any event shall deliver
Balloons ordered by CTI to the carrier for shipment within ___ days
after the receipt of the order. The obligation of P&TF to deliver CTI
Balloons shall commence at the time of the completion of assembly and
installation of the first Machine as provided in paragraph 3 hereof.
4.4 P&TF shall select the carrier for shipment to CTI of
Balloons sold hereunder, subject to the reasonable approval of CTI.
Title and risk of loss with respect to Balloons shall transfer to CTI
at the time of delivery of the goods to CTI at its plant.
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5. Price.
5.1 The initial prices per gross for Balloons sold and
delivered to CTI hereunder shall be:
CTI Balloons
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11" Standards $3.50 per gross/packed in Hytex Bags
11" Crystals $3.50 per gross/packed in Hytex Bags
11" Metallics $4.00 per gross/packed in Hytex Bags
11" Pearls $4.00 per gross/packed in Hytex Bags
P&TF Balloons
12" Standards $2.90 per gross/packed in Pivoli Bags
12" Crystals $2.90 per gross/packed in Pivoli Bags
9" Standards $1.39 per gross/packed in Xxxxxx Xxxx
0" Xxxxxxxx $1.39 per gross/packed in Pivoli Bags
5" Standards $0.62 per gross/packed in Xxxxxx Xxxx
0" Xxxxxxxx $0.62 per gross/packed in Pivoli Bags
5.2 With respect to any Balloons other than designated in
paragraph 5.1 hereof which P&TF may manufacture during the term hereof,
or packaging other than that specified in paragraph 4.2 or 5.1 hereof,
the parties shall negotiate in good faith a price for such Balloons if
ordered by CTI, such prices to be consistent with the prices for the
Balloons designated in paragraph 5.1 hereof in termsof manufacturing
cost.
5.3 P&TF shall be entitled during the term hereof, upon 60
days prior written notice, to increase the price for any Balloon
hereunder solely to the extent of any demonstrable increase in the cost
of raw materials.
5.4 Atthe time of shipment of Balloons ordered, manufactured
and sold hereunder, P&TF shall prepare and deliver to CTI an invoice
for such Balloons. Delivery of the invoice may be by mail or facsimile
transmission.
5.5 For a period of one year from the date of this Agreement,
payment for Balloons manufactured, sold and delivered hereunder shall
be due at the time of shipment of the Balloons. From and after one year
from the date of this Agreement, payment for Balloons manufactured,
sold and delivered hereunder shall be due 30 days after the date of
shipment. Payment shall be made by CTI for Balloons purchased hereunder
by check or by wire transfer, at the discretion of CTI.
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5.6 All prices and amounts herein shall be expressed and paid
in United States currency.
5.7 All prices herein are FOB CTI's plant Barrington,
Illinois.
5.8 All prices herein are exclusive of any applicable sales,
use or excise taxes imposed by any governmental authority which may be
due with respect to the transaction. CTI shall be responsible for the
payment of any and all such taxes. P&TF may, if required to do so, make
payment for any of such taxes and shall include on its invoice to CTI
the amount thereof.
5.9 Notwithstanding the other provisions of this paragraph,
with respect to invoices issued for CTI Balloons more than 60 days
after CTI's first order for CTI Balloons hereunder, the amount due for
CTI Balloons designated and sold in the invoice shall be reduced by 40%
of the amount shown to be due on the invoice (being the price therefor
as set forth in paragraph 5.1 hereof) until the aggregate amount of the
reduction in price for CTI Balloons, by reason of the reduction in the
amount due provided for in this paragraph, shall be $400,000; provided
that the foregoing reduction shall be applicable with respect to the
first $1 million of purchases made within 12 months after CTI's first
order for CTI Balloons hereunder. The amount of such reductions shall
be credited against and deemed as payments for, the purchase price of
the Machines purchased pursuant to paragraph 2 hereof.
6. Warranty.
6.1 P&TF warrants to CTI the Balloons manufactured and sold by
it to CTI hereunder shall conform with the Specifications and shall be
free of defects in workmanship and materials.
6.2 CTI shall not be obligated to inspect any of the Balloons
at any time, it being understood that the Balloons shall be received in
packaged form and may be resold in such form, and the rights of CTI
hereunder with respect to any breach of warranty shall not be affected
by the fact that CTI shall, or shall not, have conducted an inspection
of any lot or shipment of Balloons manufactured and sold to it
hereunder.
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7. Indemnification. P&TF shall indemnify CTI, and its successors and
assigns, officers, directors, employees and agents, and save and hold each of
them harmless from and against any liabilities, claims, causes of actions,
suits, damages and expenses (including reasonable attorney's fees and expenses)
which CTI or any of such other persons indemnified herein is or becomes liable
for, or may incur, or may be called upon to pay, or may pay, by reason of:
7.1 Any personal injury suffered by any third party as a
result of the use of any Balloon sold hereunder;
7.2 Any injury, loss or damage suffered, or claimed to be
suffered, by any third party by reason of, or arising out of, the
violation by P&TF of any of its obligations in this Agreement or of any
warranty respecting the Balloons sold pursuant to this Agreement.
8. Term. The term of this Agreement for the purposes set forth herein
shall be a period of three years from the date hereof.
9. Termination. Either party hereto may terminate this Agreement as to
executory covenants or obligations of the party herein in the event of a
violation by the other party of any of its obligations hereunder and the failure
by such other party to cure such violation within 30 days after written notice
of the violation shall have been given.
10. Arbitration.
10.1 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.
10.2 The place of the arbitration shall be Chicago, Illinois,
U.S.A. and the English language shall be used throughout the
arbitration proceedings.
10.3 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.
10.4 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
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procedures may be entered or sought in any court having jurisdiction
thereof to secure enforcement of said award.
10.5 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.
10.6 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 notice
provisions of this Agreement.
11. Notices.
11.1 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 Xxxx X. Xxxxx
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.
11.2 Notices may be delivered by hand, registered mail, or fax
and shall be deemed to have been received as follows:
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11.2.1 If delivered by hand, at the time of delivery
to a responsible person at the address for the party;
11.2.2 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
11.2.3 If sent by registered mail, at the time of
delivery or at the time 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.
11.3 All such notices, demands, service or other
communications shall be in the English language.
12. 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, 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.
13. 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.
14. 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.
15. 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
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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.
16. Waivers. No 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 wavier 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.
17. 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 be
amended or modified except by a written instrument signed by the parties hereto.
18. 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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
CTI INDUSTRIES CORPORATION
By:/s/ Xxxx X. Xxxxx
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Xxxx X. Xxxxx
Chief Executive Officer
WITNESS:
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PULIDOS & TERMINADOS FINOS
s.a. de c.v.
By: /s/ Xxxxxxx Xxxx Xxxxxxx
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Xxxxxxx Xxxx Xxxxxxx
Director - Apodegrado
WITNESS:
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