PRODUCTION AND SUPPLY AGREEMENT
THIS
AGREEMENT is made and entered into this 17th
day of
March, 2006 by and between ITW SPACEBAG (“ITW”) a division of Illinois Tool
Works Inc. and CTI INDUSTRIES CORPORATION, an Illinois corporation
(“CTI”).
WHEREAS,
CTI is engaged in the development, production and sale of plastic films and
pouches;
WHEREAS,
ITW is engaged in the development, production, marketing and sale of, among
other things, storage pouches;
WHEREAS,
for some time, CTI has produced film and pouches for ITW and utilizes converting
machines located at CTI’s premises which are owned by ITW for the production of
pouches for ITW;
WHEREAS,
CTI has developed and owns certain technology, including certain patent rights
related to the storage pouches;
WHEREAS,
the parties desire to enter into an agreement pursuant to which, without
limitation, (i) CTI will produce and sell film to ITW for use in the production
of storage pouches and (ii) CTI will produce and sell storage pouches to
ITW.
NOW,
THEREFORE, in consideration of the mutual promises and of the terms, covenants
and conditions hereinafter contained, the parties hereto agree as
follows:
1. Definitions
of Terms.
The
following terms shall, for purposes of this Agreement, have the meanings set
forth in this paragraph:
1.1
“Affiliate”
shall mean any person or entity controlling, controlled by or under common
control with a party to this Agreement.
1.2 “Competitive”
shall have the meaning provided in Section 2.3 hereof;
1.3 “Confidential
Information” shall have the meaning provided in Section 11.5
hereof;
1.4 “CTI”
shall mean CTI Industries Corporation and its Affiliates.
1.5 “Film”
shall mean flexible film material which may be composed of and include nylon,
polyethylene and such other components as shall be specified by the
parties;
1.7 “ITW
Equipment” shall have the meaning provided in Section 4.1 hereof.
1.8 “Extra
Large Space Bags” shall mean bags identified as such by ITW;
1.9 “Qualified
Film” shall have the meaning provided in Section 2.2 hereof;
1.10 “Roll-Up
Bags” shall mean Space Bags incorporating a one-way valve and intended to be
rolled-up by the user to evacuate air;
1.11 “Space
Bags” shall mean pouches intended for the storage and compression of personal
and household items, generally of the kind of product presently sold and
distributed by ITW and identified as Space Bags®.
2. Sale
and Purchase of Film.
2.1 Sale
and Purchase.
Subject
to and on the terms and conditions of this Agreement, and for the term provided
herein, CTI agrees to produce, sell and supply to ITW, and ITW agrees to
purchase from CTI all of its requirements for Qualified Film for the
manufacture, conversion or processing of Extra Large Space Bags in North America
(U.S., Canada and Mexico), whether or not such manufacture, conversion or
processing is by ITW or by any other party for ITW. This Agreement does not
specify a minimum quantity of Qualified Film to be purchased by ITW, nor does
this Agreement obligate ITW to purchase any specific quantity of Qualified
Film.
The purchase of Qualified Film pursuant to this Agreement will be by purchase
order issued from time to time by ITW.
2.2 Qualification.
To be
“Qualified Film” and the obligation of ITW to purchase Qualified Film from CTI
in accordance with Section 2.1 hereof shall be subject to the condition and
requirements that:
| a. |
The
film shall have been qualified to be utilized for the production
of Extra
Large Space Bags on ITW’s
equipment;
|
| b. |
CTI’s
pricing for the Film shall be
Competitive.
|
With
respect to qualification of film for purposes of Section 2.2a., promptly upon
the execution of this Agreement, CTI shall submit film samples to ITW and ITW
promptly shall perform such testing and other procedures with respect to such
samples as ITW deems appropriate. ITW shall make a determination that the film
samples meet ITW’s specifications within 60 days after the submission thereof by
CTI to ITW. Film of a particular specification, once determined to be qualified,
shall remain qualified at all times during the term of the Agreement so long
as
it continues to meet ITW’s specifications; provided, however, that if film of a
different specification shall be introduced by CTI, ITW shall be entitled to
determine the qualification of such film prior to any obligation to
purchase.
2
2.3 Determination
of Pricing for Qualified Film.
The
determination of CTI’s pricing for Qualified Film as being Competitive shall be
made in accordance with the provisions of this Section 2.3. Within thirty (30)
days after the date of this Agreement, and separately at the time film is first
qualified by ITW pursuant to Section 2.2 hereof, CTI shall provide a price
quotation to ITW with respect to the Qualified Film. CTI shall be bound to
such
pricing until it shall have submitted a revised price quotation for Qualified
Film to ITW. CTI shall be entitled to submit to ITW a revised price quotation
for Qualified Film at any time after 180 days from the submission of a prior
price quotation for Qualified Film. Within thirty (30) days after CTI shall
have
submitted a price quotation to ITW for Qualified Film, ITW shall advise CTI
if
the quotation is accepted or if ITW has determined that the pricing quoted
by
CTI is not Competitive to an Alternative Quotation. For purposes of determining
whether a price quoted by CTI is “Competitive” in relation to a price quoted by
an alternative supplier (“Alternative Quotation”): (i) the alternative supplier
shall have submitted a written quotation for film, (ii) the quotation shall
include price and all other material terms, (ii) the material terms of the
quotation shall not materially differ from the terms quoted by CTI, (iii) the
quotation shall be binding on the alternative supplier for a period of at least
180 days, (iv) the specifications for the film on which the quotation is made
shall have the same or better specifications as the Qualified Film on which
CTI
shall have provided its quotation. CTI’s price quotation for Qualified Film
shall be considered Competitive if it is equal to or less than 105% of the
price
quoted in the Alternative Quotation. If CTI elects not to make a Competitive
price quote, ITW shall be free to purchase Qualified Film from a third party.
2.4 Film
Specifications.
With
respect to Qualified Film to be provided by CTI to ITW pursuant to Section
2.1
hereof, the parties shall determine and communicate, by written notice, the
specifications for such Qualified Film.
2.5 Other
Film Purchases.
In
addition to the Qualified Film which ITW shall purchase from CTI pursuant to
Section 2.1 hereof, ITW may, as it shall determine in its sole discretion,
purchase from CTI Film produced or processed by CTI during the term of this
Agreement. The purchase of such additional Film will be by purchase order issued
from time to time by ITW at such prices, specifications and other terms as
the
parties shall agree. Except as otherwise provided by purchase order or
otherwise, the purchase and sale of such Film shall be subject to the terms
of
this Agreement.
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3. Sale
and Purchase of Bags
3.1 Purchase
of Bags.
During
the term of this Agreement, ITW shall purchase all of its requirements for
Roll-Up Bags for sale in ▇▇▇▇▇ ▇▇▇▇▇▇▇ (▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ and Mexico)
from CTI and CTI agrees to manufacture and sell Roll-Up Bags for ITW as ordered
by ITW from time to time. During the term of the Agreement, ITW may purchase
Space Bags other than Roll-Up Bags from CTI and CTI agrees to manufacture and
sell such Space Bags to ITW in accordance with purchase orders of ITW submitted
to CTI from time to time and with the terms of this Agreement. The amount and
timing of the purchase by ITW from CTI of Space Bags other than Roll-Up Bags
shall be within the sole discretion of ITW.
3.2 Quantities.
No
specific or minimum amount of purchases of Roll-Up Bags is specified in this
Agreement. ITW shall provide to CTI, no less often than on a calendar quarter
basis, a non-binding estimate of the volume of Roll-Up Bags which ITW projects
for purchase from CTI over the six month period following the date of the
estimate. For the period from the date of this Agreement to December 31, ▇▇▇▇,
▇▇▇ estimates that it will purchase Roll-Up Bags from CTI at the approximate
annual rate of 7,000,000 units.
3.3 Pricing.
The
prices at which CTI shall sell Roll-Up Bags to ITW shall be as
follows:
| i. |
The
initial prices for Roll-Up Bags which shall be in effect from the
date
hereof to December 1, 2006, shall be as set forth on Schedule A
hereto;
|
| ii. |
The
parties agree to negotiate the pricing for Roll-Up Bags on an annual
basis
taking into account raw materials costs, current market pricing,
savings
to CTI which may arise from the use of production equipment provided
by
ITW to CTI and other relevant
factors;
|
| iii. |
On
or before September 1, 2006, and on or before September 1 of each
year
thereafter during the term of this Agreement, or any renewal term,
CTI
shall submit to ITW by written notice proposed pricing to be effective
from December 1 of such year to November 30 of the following
year.
|
| iv. |
Within
thirty (30) days after having received such notice of proposed pricing,
ITW shall give notice to CTI of its acceptance or rejection of such
proposal. If ITW shall accept CTI’s proposed pricing, such pricing shall
be in effect and binding on the parties for the period from December
1 of
such year to November 30 of the following year. If ITW shall not
give
notice of rejection of CTI’s proposed pricing within the time provided for
such notice, CTI’s proposed pricing shall be deemed accepted by ITW. If
ITW shall reject CTI’s proposed pricing, the parties shall negotiate in
good faith to reach agreement on pricing to be in effect for the
designated period.
|
4
| v. |
In
the event that the parties are unable to agree on pricing for the
designated period:
|
| a. |
The
pricing in effect for the prior period shall remain in
effect;
|
| b. |
Either
party shall be entitled to terminate this Agreement upon one hundred
eighty (180) days notice at any
time.
|
Pricing
for Space Bags other than Roll-Up Bags shall be as the parties shall negotiate
and determine from time to time.
3.4 Modification
to Roll-Up Bags.
ITW
may, from time to time, during the term hereof, make modifications or changes
to
the design or specifications of Roll-Up Bags. ITW shall give notice to CTI
of
each modification or change specifying the same in writing. CTI shall utilize
its best efforts to make provision for the production of Roll-Up Bags
incorporating such modifications or changes within ninety (90) days after
receiving notice and detailed specifications therefore. The parties agree that,
with respect to each modification or change in a Roll-Up Bag design or
specification, the price to ITW for such item will be adjusted consistent with
the actual change in materials cost for such item, as closely as can be
determined by the parties. In connection with any change in design or
specification by ITW, ITW shall purchase at actual cost CTI’s inventory of
Roll-Up Bags made from the prior design or specifications, or all raw materials
specifically identified for use to make Roll-Up Bags of the prior design or
specifications.
4. ITW
Means
of Production.
4.1 ITW
Equipment.
In
connection with the production of Space Bags for ITW, it is contemplated and
agreed between the parties that CTI shall have the possession and use of certain
items of equipment, tools and fixtures supplied to CTI by ITW. CTI acknowledges
and agrees that (i) it currently has possession, in its plant at Barrington,
Illinois, all of the items of equipment, tools and fixtures designated in
Schedule B hereto and (ii) title to all of such items of equipment, tools and
fixtures are in the name of ITW and ITW has and retains the sole right of
ownership and possession thereof, subject only to CTI’s right to possession and
use thereof as is permitted pursuant to the terms of this Agreement. During
the
term of this Agreement, ITW may, in its sole discretion and cost, and subject
to
the consent of CTI, determine to deliver additional items of equipment, tools
or
fixtures to CTI for use by CTI in the manufacture of Space Bags for ITW. At
the
time of delivery to CTI of each such additional item, and at the time CTI shall
deliver any items on Schedule B to ITW, Schedule B hereto shall be amended
to
add or delete the item. All items on Schedule B in the possession of CTI from
time to time shall be referred to as “ITW Equipment.”
4.2 Possession
and Use of ITW Equipment.
CTI
shall be entitled to maintain possession of all items of ITW Equipment and
to
use the same in accordance with the terms of this Agreement, free of any rent
or
other charge by ITW. CTI shall maintain all items of ITW Equipment in its
possession in good working order, subject to ordinary wear and tear from normal
and intended use; provided, however, that (i) CTI shall not be obligated to
incur expense with respect to any one machine in any six month period in excess
of $5,000 to repair or maintain such machine and (ii) in the event CTI shall
determine that expenditures in excess of $5,000 shall be desirable or necessary,
CTI shall so inform ITW and shall make such expenditures and shall perform
such
maintenance, modification, improvement or repair if so requested by ITW and
if
ITW shall agree to reimburse CTI for such expenditures. Notwithstanding the
foregoing, CTI will be responsible for, and agrees to pay, all costs to repair
any damage to ITW Equipment that is caused by CTI. During the term of this
Agreement, ITW authorizes CTI to use each item of ITW Equipment in its
possession, in such manner and to such extent as CTI shall determine, in the
production of Space Bags for ITW. CTI is not authorized to, and shall not use,
any item of ITW Equipment in connection with any research or development
activity of CTI, except as ITW may specifically authorize in writing. Without
the express written consent of ITW, CTI shall not use any of the ITW Equipment
for any purpose other than the manufacture of Space Bags for ITW.
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4.3 Risk
of Loss; Insurance.
At all
times while CTI shall be in possession of an item of ITW Equipment, CTI shall
bear the risk of loss of such item due to fire, theft or other casualty and
shall maintain insurance coverage with respect to all of such items of at least
$1,000,000.00 naming ITW as loss payee. .
4.4 Right
of CTI to Return ITW Equipment.
CTI
shall have the right to return any item of ITW Equipment to ITW at any time
in
its sole discretion. If CTI shall determine to return an item of ITW Equipment
to ITW, CTI shall give notice to ITW of its intent to do so sixty (60) days
prior to the date such item shall be shipped to ITW. CTI may, at ITW’s request,
agree to maintain an item of ITW Equipment it wishes to return to ITW at its
plant for such time as it determines subject to the agreement of ITW to pay
to
CTI rent for the area of CTI’s facility occupied by such equipment.
4.5 Return
of ITW Equipment. The
procedure and terms for return to ITW of ITW Equipment shall be in accordance
with this paragraph. With respect to any item of ITW Equipment to be returned
to
ITW:
| i. |
CTI
shall, or shall arrange for a third party to, disassemble, crate,
and
prepare the item for
shipping;
|
| ii. |
With
respect to any item requiring disassembly, CTI may retain the services
of
a third party for such action provided that it has obtained ITW’s consent
to the cost; ITW shall be responsible for payment for such services
to the
extent it has given its
approval;
|
| iii. |
CTI,
or the retained third party, shall place the item to be returned
at the
shipping dock at CTI, in proper condition for shipping, on the date
designated for the return of the item to
ITW;
|
6
| iv. |
ITW
shall be responsible to arrange for shipping, to ITW’s plant or designated
site, of each item to be returned to ITW and shall be responsible
for all
costs of shipping;
|
| v. |
All
risk of loss related to items of ITW Equipment shall pass to ITW
at the
time of delivery of the same by CTI to the
transporter.
|
5. Terms
of Manufacture, Sale and Delivery.
5.1 Purchase
Orders.
From
time to time, ITW shall place written purchase orders with CTI for Film,
Qualified Film, Space Bags or Roll-Up Bags. Each purchase order shall specify
with respect to each item ordered (i) the item, (ii) the quantity of the item
ordered, (iii) the unit and total price, (iv) a delivery date and (v) a
destination for delivery. Subject to the provisions hereof, CTI shall use
reasonable commercial efforts to produce and deliver all items ordered pursuant
to purchase order. CTI shall be entitled to reject a purchase order by notice
given within ten (10) days after the date of receipt of such order (i) with
respect to any order for Film, other than Qualified Film, (ii) with respect
to
any order for Space Bags, other than Roll-Up Bags or (iii) for any order with
respect to which CTI shall determine that it is unable to produce and deliver
the items ordered within the time provided in the purchase order.
Notwithstanding any obligation of ITW herein to purchase any item from CTI,
if
CTI shall reject any purchase order, ITW shall be entitled to produce such
item,
or to purchase such item from a third party, in the amount specified in the
purchase order to CTI. If CTI shall fail to reject a purchase order in the
manner and time provided herein, CTI shall be deemed to have accepted the same.
No purchase order shall vary the terms of this Agreement.
5.2 Production.
CTI
shall produce Film, Qualified Film, Space Bags or Roll-Up Bags, in accordance
with purchase orders submitted by ITW to CTI from time to time, and accepted
by
CTI, subject and pursuant to the terms of this Agreement. All products
manufactured by CTI hereunder shall conform substantially to the specifications
therefor, as provided herein, or if not provided herein as specified by ITW
in
the purchase order and as accepted by CTI.
5.3 Delivery.
The
terms for all items produced by CTI and purchased by ITW hereunder shall be
F.O.B. CTI’s plant. ITW shall be responsible for all costs of delivery and for
insurance of all product shipped during delivery. ITW may designate the means
of
shipping. In the absence of such designation, CTI shall designate the means
of
shipping and arrange for shipping of the product to the designated destination.
Title and risk of loss for all product sold hereunder shall pass to ITW when
the
product is delivered to the shipper.
5.4 Lead
Time.
The
parties shall develop and establish written delivery schedules for Roll-Up
Bags
and Qualified Film based upon various quantity levels. CTI shall utilize
reasonable commercial efforts to produce and deliver Roll-Up Bags and Qualified
Film, as ordered from time to time by ITW, in accordance with such delivery
schedules. Each purchase order shall specify a delivery date for the goods
ordered. If an item ordered shall not be covered by a delivery schedule
established hereunder, CTI shall, within 10 days after receipt of such order,
give notice to ITW of the date upon which delivery of the items ordered can
be
made. If CTI shall fail to provide such notice, CTI shall be deemed to have
accepted the delivery date specified in the purchase order.
7
5.5 Cancellation
or Modification of Orders.
From
and after the date of receipt of a purchase order by CTI hereunder, ITW shall
not be entitled to cancel or modify a purchase order, without the express
written consent of CTI, and shall be bound to accept delivery of, and make
payment for, all items ordered.
5.6 Quality
Control and Standards. CTI
shall
employ equipment, machinery, production methods and manufacturing quality
control procedures with respect to all products manufactured by CTI for ITW
hereunder, including but not limited to, inspections and testing from time
to
time as is customary in the industry and shall maintain records of all such
inspection and testing for a period of no less than two (2) years. Such records
shall be made available to ITW for inspection no more than twice each year
during the term of this Agreement at reasonable times during working hours
and
upon reasonable prior notice. At the request of ITW, the parties shall develop
written quality control procedures with respect to each product manufactured
by
CTI for ITW hereunder and CTI shall employ such procedures for its quality
control inspection and testing.
5.7 Inspection
and Testing.
All
products manufactured and sold hereunder shall be subject to inspection and
testing by ITW at reasonable times and places. All products sold and delivered
hereunder shall be deemed accepted if not inspected and rejected by ITW within
ten (10) days after the date of receipt thereof by an ITW facility. Whether
or
not ITW Inspects or tests products delivered to ITW hereunder shall not cause
or
effect a loss or waiver of any rights of ITW for breach of warranty
hereunder.
5.8 Books
and Records.
CTI
shall keep and maintain in its offices accurate books and records relating
to
the production of products, inspection and testing thereof and performance
of
its obligations hereunder, including without limitation, any and all licenses,
permits, approvals and corporate documents required or obtained in connection
with this Agreement or the performance thereof. All accounting books and records
shall be maintained in accordance with applicable generally accepted accounting
principles consistently applied. The duly authorized representative of ITW
shall
have the right, no more than once each year during the term hereof, at
reasonable times during regular business hours and upon reasonable advance
notice, to inspect and make copies of CTI’s books and records, solely as
relating to CTI’s production of products, quality control actions or
performance, under this Agreement. All of such books and records shall be deemed
Confidential Information hereunder and shall be treated as such in accordance
with the provisions of this Agreement relating to Confidential
Information.
8
5.9. Insurance.
CTI
shall maintain commercial general liability insurance, including a contractual
liability endorsement, in the amount of $1,000,000 per occurrence and $2,000,000
in the aggregate. CTI shall provide ITW with evidence of such insurance together
with a certificate naming ITW, its affiliates, officers, directors, employees
and agents as additional insureds. The certificate shall specify that ITW shall
be given at least thirty (30) days prior written notice by the insurer in the
event of any material modification, cancellation or termination of
coverage.
6. Invoices,
Payment Terms.
6.1 Invoices.
CTI
shall
be entitled to, and shall, issue and deliver to ITW an invoice with respect
to
product ordered by ITW, and produced by CTI, at the time of shipment thereof
to
ITW. Unless otherwise agreed, all prices for products sold hereunder shall
be
exclusive of shipping costs and all national, federal, state or local, use,
sales, excise, occupational or other similar tax. If CTI shall pay any amount
for shipping or tax in connection with any transaction, CTI shall be entitled
to
include the amount thereof on the invoice to ITW.
6.2 Payment
Terms.
Payment
of all invoices issued by CTI hereunder to ITW shall be due and payable within
thirty (30) days of the date of the invoice.
6.3 Interest.
The
amount of any invoice outstanding more than thirty (30) days after the date
thereof that is not in dispute shall bear interest at the rate of 10% per
annum.
6.4 Suspension
of CTI’s Obligations.
In the
event that the amount due by ITW to CTI more than thirty (30) days from the
date
of invoice shall exceed the sum of $250,000, and for so long as such amount
due
over thirty (30) days shall remain outstanding, the obligations of CTI to
manufacture and deliver product hereunder shall be suspended, provided that
CTI
has given ITW at least 10 days prior notice of such past due payment and an
opportunity to cure the non-payment.
7. Warranties
7.1 CTI
Warranties
7.1.1 CTI
warrants that products produced and sold by it to ITW hereunder shall (i)
conform substantially to any specification for such product provided herein
or
agreed to by the parties and (ii) be free of defects in design, workmanship
and
materials;
7.1.2 CTI
warrants that it has the right to sell and transfer the products sold hereunder
to ITW free of all defects in title, liens or encumbrances.
7.2 Remedies.
Except
as provided in Section 10, ITW’s sole remedy with respect to a breach of
warranty hereunder shall be, at ITW’s election, the return and credit for, or
replacement of, any defective items. With respect to any item as to which ITW
shall claim a breach of warranty, ITW shall return the same to CTI. CTI shall
be
responsible for the cost of freight, insurance or other charges for the return
to CTI of defective product manufactured and sold by it. Except as provided
in
Section 10, in no event shall either party be responsible or liable for
exemplary damages or consequential damages in the nature of lost profits, lost
sales, diminished goodwill, lost opportunity or similar economic
damages.
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7.3 Inspection.
The
warranties provided herein shall survive, and shall not be affected by, any
inspection, delivery or payment with respect to the defective
product.
7.4 Disclaimer.
EXCEPT
WITH RESPECT TO ANY EXPRESS WARRANTIES PROVIDED HEREIN, CTI DISCLAIMS ALL
WARRANTIES WITH RESPECT TO PRODUCT SOLD HEREUNDER, INCLUDING ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
8. Term
and Termination.
8.1 This
Agreement shall be for a term commencing on April 1, 2006 and expiring on March
31, 2010. At the expiration of the initial term the Agreement may be extended
by
mutual agreement of the parties.
8.2 Either
party shall be entitled to terminate this Agreement prior to the expiration
of
the initial term, or any renewal term, as follows:
8.2.1 Upon
written notice of termination given during the initial term eighteen months
in
advance of the date of such termination;
8.2.2 Upon
written notice of termination to a party, effective on the giving of such notice
in the event of an Event of Default with respect to the other party. An “Event
of Default” shall mean a breach or failure to perform by a party of any
obligation of this Agreement on its part to be performed and the failure of
such
party to cure such breach or non-performance within thirty (30) days after
notice thereof, specifying the breach or non-performance, shall have been given
to such party. A breach of warranty shall not constitute an Event of Default
if
CTI shall provide credit or replacement for the product as to which there shall
be a breach of warranty.
8.2.3
Upon five (5) days prior written notice to the other party in the event of
the
other’s Bankruptcy, defined for purposes of this Agreement as (i) an assignment
for the benefit of creditors, (ii) the filing of an voluntary petition in
bankruptcy, (iii) an adjudication of bankruptcy or insolvency, (iv) the filing
of a petition or answer seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any statute,
law
or regulation, (v) the filing of an answer or other pleading admitting or
failing to content the material allegations of a petition filed against any
party hereto in any bankruptcy proceeding, (vi) a party seeking, consenting
to
or acquiescing in the appointment of a trustee, receiver or liquidator of all
or
any substantial part of the party’s properties, or (vii) the failure to dismiss,
within sixty (60) days after its commencement, any proceeding against such
other
party seeking reorganization, arrangement composition, readjustment,
liquidation, dissolution or similar relief under any statute, law or
regulation.
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8.4 Effect
of Termination.
8.4.1 Upon
the
termination of this Agreement as provided herein, except as provided herein,
all
rights and obligations of the parties hereto shall cease and terminate;
provided, however that:
a.
All
rights and obligations hereunder providing or intended to survive the
termination of this Agreement shall survive such termination and shall continue
in full force and effect;
b. All
rights or obligations which shall have accrued to the date of such termination
shall survive the termination.
8.4.2 Upon
termination of the Agreement, CTI shall cease any use of equipment or property
of ITW and shall return the same to ITW in accordance with the provisions
hereof.
9. Non-Competition
9.1 During
the term of this Agreement and until the expiration of the initial term or
any
renewal term hereof, or the termination of the Agreement in accordance with
Section 8 hereof, CTI agrees that it will not manufacture or sell any products
similar to or the same as Space Bags for any person or entity other than
ITW.
9.2 ITW
acknowledges that CTI is engaged in the business of the development,
manufacture, distribution and sale of pouches and containers for a variety
of
purposes and nothing herein shall be intended or deemed to limit or restrict
the
right of CTI to engage in such activities during the term hereof, or thereafter,
with respect to any product, container or pouch except as expressly provided
and
defined herein. Without limiting the generality of the foregoing, it is
understood and agreed that Section 9.1 of this Agreement shall not apply to
the
development, manufacture, distribution or sale of pouches for the storage or
packaging of food, liquids or commercial or industrial items, but shall apply
to
the pouches intended for the storage and compression of commercial or industrial
items.
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10. Indemnity.
10.1 Indemnity
by CTI .
CTI
will at all times be deemed to be performing as an independent contractor and
not as an agent or employee of ITW. The acts and omissions of CTI’s employees
and agents and subcontractors of any tier will be deemed to be those of CTI.
CTI
will defend, indemnify and hold harmless ITW and its directors, officers,
employees, agents, employees, successors and assigns from and against any and
all liability, damages, losses, claims, demands, judgments, costs and expenses
of every nature and kind by reason of injury to or death of any person or damage
to or destruction of property to the extent arising out of or incidental to
or
in any way resulting from defects in the products that are the subject of this
Agreement as the result of the tortious acts or omissions of CTI its employees,
subcontractors or agents in performance under this Agreement. CTI will not
be
responsible for any such losses, liabilities, claims, judgments, costs, demands
and expense to the extent caused by the negligence or willful misconduct of
ITW,
its directors, officer or employees. If a claim is filed against ITW for which
CTI is to be responsible under this provision, ITW will promptly notify CTI
in
writing of such claim.
10.2 Indemnity
by ITW.
ITW
will at all times be deemed to be performing as an independent contractor and
not as an agent or employee of CTI. The acts and omissions of ITW’s employees
and agents and subcontractors of any tier will be deemed to be those of ITW.
ITW
will defend, indemnify and hold harmless CTI, its directors, officers,
employees, agents, employees, successors and assigns from and against any and
all liability, damages, losses, claims, demands, judgments, costs and expenses
of every nature and kind by reason of injury to or death of any person or damage
to or destruction of property to the extent arising out of or incidental to
or
in any way resulting from defects in the products that are the subject of this
Agreement as the result of the tortious acts or omissions of ITW, its employees,
subcontractors or agents in performance under this Agreement. ITW will not
be
responsible for any such losses, liabilities, claims, judgments, costs, demands
and expense to the extent caused by the negligence or willful misconduct of
CTI,
its directors, officer or employees. If a claim is filed against CTI for which
ITW is to be responsible under this provision, CTI will promptly notify ITW
in
writing of such claim.
11. Intellectual
Property; Confidential Information.
11.1 Intellectual
Property.
Each
party expressly acknowledges and agrees that, except as may be specifically
provided in this or other agreement, neither party shall acquire, retain or
appropriate for its own use any right, title, license or interest in or to
any
patent, trademark, tradename, copyright, trade secret, Confidential Information
or other intellectual property right of the other party. Neither party shall
take any action that might impair in any way any right, title or interest of
the
other party in any such intellectual property.
11.2 Use
of Trade Names and Marks.
Neither
party shall use any logo, name, trademark, trade name or service ▇▇▇▇ of the
other party except as may be expressly authorized by the other
party.
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11.3 Inventions;
Developments.
11.3.1 CTI
may,
at the express written request and direction of ITW, for such compensation
as
the parties shall agree, engage in research and development activities with
respect to pouches, films or other matters. ITW shall be the sole owner of
any
and all patents (domestic and foreign), inventions, trade secrets or other
proprietary rights which are conceived or developed by CTI in the performance
of
such research and development and they will be treated as work made for hire
under applicable law or otherwise assigned from CTI to ITW. At the request
of
ITW, CTI shall take any and all necessary or appropriate action, and shall
execute and deliver to ITW all such documents as may be necessary or appropriate
to perfect the ownership interest of ITW in any such items.
11.3.2 The
parties acknowledge that each party may engage in research and development,
including without limitation with respect to films, pouches, valves or closures.
Except as expressly provided herein or in other written agreement, the parties
agree that each party shall be and remain the sole owner of any and all patents
(domestic or foreign), inventions, trade secrets, trademarks, trade names or
other intellectual property rights independently made, conceived or developed
by
or for such party during the term hereof or otherwise and, except as otherwise
provided herein or in other written agreement, neither party shall have any
right, license, title or interest in or to any such independently developed
intellectual property arising from any such developments; provided, however,
CTI
agrees that, in connection with any patent issued with respect to any invention
independently made or conceived by or for CTI during the term of this Agreement
any claim of which covers any element of a Space Bag, the parties agree to
discuss the possibility of a license on commercially reasonable terms when
so
requested by ITW.
11.4 Confidential
Information.
11.4.1 “Confidential
Information” shall mean and include information, consisting of or concerning or
relating to (i) product design or composition, (ii) product components, (iii)
methods of production, (iv) equipment design or use, (v) sources of supply,
(vi)
research or development, (vii) financial information or (vii) other information
deemed by the party providing the information to be confidential which (A)
has
been exchanged by the parties prior to the date hereof, (B) is contained in
a
document market “Confidential”, (C) is orally communicated by one party to
another and is identified by the party providing such information as being
Confidential Information by written communication to the other party given
within ten (10) days after the date the information is provided orally or (D)
by
reason of the nature and treatment of the information as confidential by the
disclosing party, shall be deemed confidential. Information is not Confidential
Information (a) if it is already public on the date of this agreement; (b)
if it
becomes public other than through a breach of this agreement; or (c) if it
is
information that ITW or CTI develops independently without using the other
party’s Confidential Information. If ITW or CTI receives non-public information
about the other party from another source, it should assume that the information
is Confidential Information unless it has written confirmation to the contrary
from the other party.
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11.4.2 During
the term of this Agreement, and thereafter for so long as the information
remains confidential, each party agrees to maintain as confidential all
Confidential Information of the other party communicated to it and not to use
such information except as is authorized and appropriate in the performance
of
this Agreement or to disclose such Confidential Information to any person except
(i) to its own employees and agents, who have a need to know as required for
performance of the party’s obligations hereunder or (ii) as shall be expressly
authorized in writing by the disclosing party.
11.4.3 Each
party shall take all steps necessary or appropriate to protect Confidential
Information of the other party against unauthorized disclosure or use. It is
further understood and agreed that money damages may not be a sufficient remedy
for any breach of this confidentiality agreement and that the non-breaching
party may be entitled to seek specific performance and injunctive or other
equitable relief as a remedy for any such breach. Each party agrees to waive
any
requirement for the securing or posting of any bond in connection with such
remedy. Such remedy shall not be deemed to be the exclusive remedy, but shall
be
in addition to all other remedies available at law or equity.
12. Arbitration.
12.1 Agreement
to Arbitrate.
The
parties agree that any dispute, controversy or claim arising out of or relating
to this Agreement, or to the interpretation, performance, breach or termination
thereof (other than disputes related to Confidential Information, intellectual
property rights and cross-claims or counterclaims arising in pending
litigation), shall be resolved by binding arbitration under the Commercial
Rules
and Regulations of American Arbitration Association (“AAA”), as amended from
time to time. The arbitration will be conducted in the city of Chicago,
Illinois. The appointing authority will be the AAA. The number of arbitrators
will be three (3), who shall constitute the “arbitral panel”.
12.2 Notice
of Arbitration.
The
arbitration will begin on the date on which the notice of demand for arbitration
is delivered to the responding party (the “Respondent”) at the address appearing
for that party for notices herein. The party giving notice of the arbitration
will include the following and any other information required by the AAA: (a)
a
demand that the dispute be submitted to arbitration; (b) the names and domiciles
of the parties; (c) a reference to this Agreement and this arbitration
provision; (d) a description of the failure to perform an obligation under
this
Agreement and of the petitions and amounts claimed.
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12.3 Certain
Procedures; Confidentiality.
The
arbitration shall be conducted in accordance with the Commercial Rules of
Arbitration of the AAA. The parties shall be entitled to all discovery in
accordance with the Federal Rules of Civil Procedure, including document
production, interrogatories and depositions. At least fifteen (15) days prior
to
the date of the hearing, the parties will deliver to the arbitrator: (i) the
names and addresses of any witness that they intend to present; (ii) the
documents that will be submitted at the hearing; and (iii) a description of
any
other evidence to be presented in the arbitration. The parties agree to continue
performing their respective obligations under this Agreement during the
resolution of any dispute regarding the Agreement. All the matters regarding
or
submitted to the arbitral panel during any arbitration proceeding herein will
be
treated as Confidential Information and any and all arbitrators will maintain
its confidentiality.
12.4 Interim
Relief.
The
parties expressly agree that prior to the selection of the arbitral panel,
nothing in this Agreement shall prevent the parties from applying to a court
that would otherwise have jurisdiction for provisional or interim measures.
After the arbitral panel is selected, it shall have sole jurisdiction to hear
such applications, except that the parties agree that any measure ordered by
the
arbitral panel may be immediately and specifically enforced by a court otherwise
having jurisdiction over the parties.
12.5 Arbitral
Award.
The
arbitral panel’s award will be issued no later than ten (10) days after the
beginning of the arbitration hearing. The award will be final and binding,
without additional recourse, and will be the exclusive remedy of the parties
for
all claims, counterclaims, issues or accountings presented or pleaded to the
arbitral panel. The arbitral tribunal will render its award strictly in
accordance with this Agreement and does not have authority to change or diverge
from any provision of this Agreement. The arbitral panel may impose
indemnification measures as part of the award. The arbitral award will (i)
be
granted and paid in United States Dollars exclusive of any tax, deduction or
offset and (ii) include interest from the date the award is rendered until
it is
fully paid, computed at the then prevailing prime rate.
12.6 Judgment
on Award. Judgment
upon the arbitral award may be entered in any court of competent jurisdiction.
The parties submit themselves to the jurisdiction of the courts of the states
of
Illinois for purposes of enforcing any interim or final award of the arbitral
panel. Any additional costs, fees or expenses incurred in enforcing the arbitral
award shall be charged against the party that resists its
enforcement.
12.7 Expenses
of Arbitration.
In any
arbitration proceeding hereunder, each party shall bear the expenses of its
witnesses. All other costs of arbitration, including, without limitation, the
fees and expenses of the arbitral panel, the cost of the record or transcripts
thereof, if any, administrative fees, and all other fees and costs shall be
allocated to the parties to the arbitration as determined by the arbitral
panel.
12.8 Law
Applicable.
Notwithstanding anything to the contrary contained herein, the law applicable
to
the validity of this Section 12 regarding arbitration, the conduct of the
arbitration, including any resort to a court for provisional or interim
remedies, the enforcement of any award and any other question of arbitration
law
or procedure, shall be the Untied States Federal Arbitration Act, 9 U.S.C Sec.1,
et
seq.
15
13. Compliance
with Laws.
The
parties will comply with the provisions of all laws and all orders, rules and
regulations issued thereunder applicable to this Agreement and performance
pursuant to this Agreement. Products will be manufactured, labeled, packaged,
sold and shipped in accordance with all applicable laws, orders, rules and
regulations.
14. Legal
Relationships.
ITW and
CTI each represents and warrants to the other that they have entered into no
agreements, nor are subject to any obligations, which prevent them from entering
into and performing this Agreement. It is understood and agreed that ITW and
CTI
are, and at all times during the effective period of this Agreement will remain,
independent contractors. This Agreement will not be construed as creating any
relationship between ITW and CTI’s employees. CTI’s employees will not be
entitled as a result of this Agreement to any benefits under any employee
benefit plan ITW presently has in effect or may put into effect nor will CTI
employees be considered employees of ITW for the purpose of any tax or
contribution levied by any federal, state or local government. At no time will
either party represent to any third party that it is the agent of the other
for
any reason whatsoever. ITW and CTI further covenant that no authorization will
be given to any employee to act for the other party. Without limiting the
foregoing, CTI and ITW agree that they will not, during or after the term of
this Agreement, represent themselves as acting for the other party or without
the other party’s name.
15. Waiver
of Terms and Conditions, Survival.
15.1 No
Waiver.
The
failure of ITW or CTI in any one or more instances to insist upon performance
of
any of the terms and conditions of this Agreement, or to exercise any right
or
privilege contained in this Agreement or the waiver of any breach of the terms
or conditions of this Agreement will not be construed as thereafter waiving
any
such terms, conditions, rights or privileges, and the same will continue and
remain in force and effect as if no waiver had occurred.
15.2 Survival.
Either
party’s obligations under this Agreement which by their nature or terms would
continue beyond the termination, expiration or cancellation of this Agreement
will survive termination, expiration or cancellation of this Agreement including
but not limited to Section 7, Warranties; Section 10, Indemnity; Section 11.5,
Confidential Information; and Section 12, Arbitration.
16. Miscellaneous.
16.1 Authority;
No Conflict.
Each
party executing this Agreement represents and warrants to the other parties
(i)
that it has the absolute and unrestricted right, power, authority, and capacity
to execute and deliver this Agreement and that, upon execution and delivery
thereof by other parties, this Agreement will constitute the legal, valid and
binding obligation of such party, and (ii) that the execution and delivery
of
this Agreement and the performance of the transactions contemplated hereby,
will
not, directly or indirectly (with or without notice or lapse of time),
contravene, conflict with, or result in a violation of any provision of the
organizational documents or board or shareholder action of such party, and
(iii)
that such party is not, and will not be, required to give any notice to obtain
any consent from any third party in connection with the execution and delivery
of this Agreement or the consummation or performance of any of the transactions
contemplated hereby.
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16.2 Force
Majeure.
The
parties will not be considered in default or liable for any failure to perform
their obligations under this Agreement if such failure arises out of an act
of
nature, war, strikes, lockouts, trade disputes, fires, quarantine restrictions,
Governmental action or by causes beyond the reasonable control of the affected
party. Any affected party will immediately notify the other in writing if a
force majeure event delays performance and will state the revised date for
performance. Should CTI be unable to perform because of a force majeure event
continues for a period in excess of 30 days, ITW will not be obligated to
purchase, at a later date, that portion of the product ordered that CTI is
unable to deliver because of a force majeure event, and during the period of
CTI’s inability to perform ITW will be free to purchase any products covered by
this Agreement from another source.
16.3 Severability.
If any
provision of this Agreement or the application of any such provision to any
person or circumstance, is declared judicially to be invalid, unenforceable
or
void, such decision will not have the effect of invalidating or voiding the
remainder of this Agreement, it being the intent and agreement of the parties
that this Agreement will be deemed to have been amended by modifying such
provision to the extent necessary to render it valid, legal and enforceable
while preserving its intent or, if such modification is not possible, by
substituting therefor another provision that is legal and enforceable and that
achieves the same objective.
16.4 Assignment.
Neither
party will assign this Agreement or any rights, responsibilities, or obligations
in this Agreement, without the express written approval of the other (which
consent will not be unreasonably withheld) and any attempted assignment in
violation of this provision shall be void; provided, however, that no consent
will be required in the event of a transfer of all or substantially all of
the
assets or business of either party to an affiliate or as part of a
reorganization, merger or spin off.
16.5 Notices.
All
notices required or permitted by or made pursuant to this Agreement shall in
writing and shall be sent by facsimile, electronic mail with confirmation of
receipt, commercial courier service for next day delivery, or by delivery to
a
reliable international air courier to the addresses set forth in this Section
16.5. Any notices shall be deemed effectively given when received by the other
party.
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| If to ITW: |
ITW
Space Bag
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▇▇▇
▇▇▇▇▇▇ ▇▇▇▇
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▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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Attn:
General Manager
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| If to CTI: |
CTI
Industries Corporation
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▇▇▇▇▇
▇. ▇▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
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Attn:
President
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Fax:
▇▇▇-▇▇▇-▇▇▇▇
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16.6 Subject
Headings.
The
subject headings of this Agreement are included for purposes of convenience
only
and shall not affect the construction or interpretation of any of its
provisions.
16.7 Counterparts.
This
Agreement may be executed in several duplicate originals, each of which shall
be
deemed an original but all of which together shall constitute one and the same
instrument.
16.8 Governing
Law.
This
Agreement has been entered into within the State of Illinois and this Agreement
shall be governed by, and construed and interpreted in accordance with, the
laws
of that jurisdiction, as applicable to contracts which are executed and
delivered in that jurisdiction, and which are to be performed wholly within
that
jurisdiction, without taking into account provisions thereof regarding choice
or
conflict of laws.
16.9 Entire
Agreement and Modification.
This
Agreement and the attachments to this Agreement and made a part of this
Agreement sets forth the entire Agreement of the Parties with respect to the
subject matter of this Agreement and supersedes and merges all prior agreements
and understandings, whether written or oral. No amendment, modification, or
waiver of any provisions of this Agreement or consent to any departure therefrom
will be effective unless in writing signed by duly authorized officers or
representatives of both parties.
[THE
REMAINDER OF THIS PAGE INTENTIONALLY BLANK]
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IN
WITNESS WHEROF, the parties hereto have executed this Agreement as of the day
and year first above written.
| ITW SPACEBAG | ||
| |
|
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| By: | /s/ ▇▇▇▇▇ ▇▇▇▇ | |
|
▇▇▇▇▇ ▇▇▇▇, General Manager |
||
| CTI INDUSTRIES CORPORATION | ||
| |
|
|
| By: | /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ | |
|
▇▇▇▇▇▇ ▇▇▇▇▇▇, President |
||
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