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Exhibit 10.26
AMENDED AND RESTATED DISTRIBUTION AGREEMENT
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This Amended and Restated Distribution Agreement, dated to be effective
as of August 29, 1997, is entered into by and between Vitro, S.A., a sociedad
anonima organized under the laws of the United Mexican States ( "VITRO"), Crisa
Corporation, a corporation organized under the laws of the State of Texas
("CRISA" or "SELLER"), and Vitrocrisa, S.A. de C.V., a sociedad anonima
organized under the laws of the United Mexican States ("VITROCRISA" or
"MANUFACTURER"), on the one part (collectively, the "VITRO PARTIES"), and Libbey
Inc., a corporation organized under the laws of the State of Delaware
("LIBBEY"), and Libbey Glass Inc., a corporation organized under the laws of the
State of Delaware ("LIBBEY GLASS" or "DISTRIBUTOR"), on the other part
(collectively, the "LIBBEY PARTIES").
PURPOSE OF AGREEMENT
Vitro, Crisa, Vitrocrisa, Libbey, and Libbey Glass entered into that
certain Distribution Agreement dated August 29, 1997 (the "DISTRIBUTION
AGREEMENT"). Vitro, Crisa, Vitrocrisa, Libbey, and Libbey Glass have agreed to
amend, restate, and supersede the Distribution Agreement by the terms and
provisions of this Agreement.
It is the expressed purpose of both Libbey Glass and Vitrocrisa to
carry out the sales plans set forth in the Vitrocrisa annual operating budgets,
which will derive from the broader guidelines of the ongoing three-year
strategic plans of Vitrocrisa, as such budgets and strategic plans may be
approved by appropriate directors action of the board of directors of
Vitrocrisa.
ARTICLE I
DEFINITIONS
Section 1.1 The term "ADJUSTED GROSS PROFIT" shall have the meaning as
set forth in SECTION 5.3.
Section 1.2 The term "AFFILIATE" shall mean, with respect to each of
the parties, any other person or party which at the relevant time, directly or
indirectly, controls, is controlled by, or is under common control with such
party. The term "CONTROL" as used with respect to any person or party means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person or party, whether
through the ownership of voting securities, by contract, or otherwise.
Section 1.3 The term "AGREEMENT" shall mean this Amended and Restated
Distribution Agreement.
Section 1.4 The term "AVERAGE OPERATING MARGIN" shall have the meaning
as set forth in SECTION 6.2(d).
Section 1.5 The term "DUTY" shall have the meaning as set forth in
SECTION 5.4.
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Section 1.6 The term "EXCLUDED PRODUCTS" shall mean coffee pots, meter
covers, glass covers for cooking ware, blender jars, and lighting fixtures sold
to OEM's. In addition, "Excluded Products" shall mean any other OEM article for
sale to OEM customers that are not in direct competition with Distributor's
products sold to the Foodservice, Industrial, Premium or Retail Channels of
Distribution and are not sold to Distributor's customers, including those in the
Foodservice, Industrial, Premium, and Retail Channels of Distribution.
Section 1.7 The term "EXPECTED SALES" shall have the meaning as set
forth in SECTION 6.2.
Section 1.8 The term "FOODSERVICE CHANNEL OF DISTRIBUTION" shall mean
sales to foodservice distributors, foodservice importers, hotels, restaurants,
chain restaurants, bars, casinos, airlines, cruise lines, breweries,
microbreweries, hospitals, health care facilities, penal institutions, colleges,
all eating and drinking establishments, independent cutters and decorators, and
warehouse clubs; internet sales in all the above segments; and all other
generally acknowledged distributor and end-user segments of the traditional
foodservice sector of the country specified.
Section 1.9 The term "FREIGHT" shall have the meaning as set forth in
SECTION 5.4.
Section 1.10 The term "GLASS TABLEWARE" shall mean those products which
are the subject of the distribution rights set forth in this Agreement and shall
mean the glass product lines illustrated in the current 1997 catalogs of Libbey
Glass or Vitrocrisa, Crisa Corporation, and WorldCrisa Corporation; all glass
products of the type sold by Libbey Glass or Vitrocrisa, other than Excluded
Products, into the Foodservice, Industrial, Premium, or Retail Channels of
Distribution; future new products, other than Excluded Products, sold by Libbey
Glass or Vitrocrisa; and new and existing products, other than Excluded
Products, sold by Libbey Glass or Vitrocrisa and specially differentiated
through packaging under the brand name, identification, or logo of the purchaser
(a "SPECIALLY DIFFERENTIATED PRODUCT"). The intent is that any glass tableware,
other than Excluded Products, that is destined for application in the
Foodservice, Industrial, Premium, and Retail Channels of Distribution are the
products intended by this Agreement to be the subject of the exclusive
distribution rights set forth herein.
Section 1.11 The term "INDUSTRIAL CHANNEL OF DISTRIBUTION" shall mean
sales to candle packers, religious candle markets, distilleries, wineries,
floral distributors, mounters and fabricators, cosmetic industry, and all other
generally acknowledged segments of the traditional industrial sector of the
country specified.
Section 1.12 The term "LANDED DUTY PAID PRICE" shall mean a price equal
to Vitrocrisa's Standard Cost allocable to the Glass Tableware sold hereunder,
including the cost of any accessories and packaging supplies supplied with, or
separately in connection with, the Glass Tableware, plus Freight plus Duty.
Section 1.13 The term "LIBBEY GLASS EXPENSE ALLOCATION" shall have the
meaning as set forth in SECTION 5.3.
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Section 1.14 The term "LOST PROFITS" shall have the meaning as set
forth in SECTION 6.2(D).
Section 1.15 The term "OEM" shall mean original equipment manufacturer.
Section 1.16 The term "PREMIUM CHANNEL OF DISTRIBUTION" shall mean
sales for use as a premium or to promote another product, including, without
limitation, sales for such purposes to customers in the fast food industry, oil
industry, soft-drink industry, supermarket continuity industry, premium
packaging, and all other generally acknowledged segments of the traditional
premium and incentive sector of the country specified.
Section 1.17 The term "RETAIL CHANNEL OF DISTRIBUTION" shall mean sales
to retail distributors, mass merchant discount stores, department stores,
specialty retail stores, craft stores, supermarkets, factory outlet stores,
dinnerware companies, flea markets, door-to-door direct sales, wholesale
outlets, gift shops, potteries, catalog showrooms, warehouse clubs, home
shopping networks, internet sales for consumer use, private label sales for any
class of retailer, importers, and all other generally acknowledged segments of
the traditional retail sector of the country specified.
Section 1.18 The term "STANDARD COST" shall have the meaning as set
forth in SECTION 5.4.
Section 1.19 The term "TERRITORY" shall mean those certain geographic
areas set forth on SCHEDULE 1 to this Agreement.
ARTICLE II
AMENDED AND RESTATED DISTRIBUTION AGREEMENT
Section 2.1 AMENDED AND RESTATED DISTRIBUTION AGREEMENT. The terms and
provisions of the Distribution Agreement are hereby canceled and superseded by
the terms and provisions of this Agreement. All references in any other
agreement to the Distribution Agreement dated August 29, 1997 by and between
Vitro, Crisa, Vitrocrisa, Libbey, and Libbey Glass shall be deemed to refer to
this Agreement, and all references to specific provisions of such Distribution
Agreement contained in any other agreement shall refer to the corresponding
provisions of this Agreement.
ARTICLE III
APPOINTMENT OF DISTRIBUTOR
Section 3.1 APPOINTMENT OF LIBBEY GLASS. The Vitro Parties hereby
appoint Libbey Glass as the exclusive seller, distributor, and sales
representative for all sales in the Territory of the Vitro Parties' Glass
Tableware manufactured in the United Mexican States, except for Excluded
Products. Notwithstanding the foregoing, Vitrocrisa reserves the right to sell
Glass Tableware to customers in the Premium Channel of Distribution in those
certain geographic
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areas set forth on SCHEDULE 2 to this Agreement even though, to the knowledge of
the Vitro Parties, such Glass Tableware is purchased with the intention of
exporting the same to customers in the Territory, but Vitrocrisa will not
actively solicit such sales for export into the Territory.
ARTICLE IV
TERM
Section 4.1 TERM. The term of this Agreement with respect to Glass
Tableware will continue until terminated by either party on ninety (90) days
advance written notice to the other parties; provided, that the Vitro Parties
may not terminate this Agreement for any reason without Libbey's express written
consent as long as Libbey, directly or indirectly through one or more
Affiliates, maintains a minimum ownership of twenty-five percent (25%) of the
equity of Vitrocrisa or of an entity which, directly or indirectly, owns or
controls Vitrocrisa.
ARTICLE V
PRICING AND PAYMENT TERMS
Section 5.1 Vitrocrisa agrees to sell to Crisa, and Crisa agrees to
purchase from Vitrocrisa, Glass Tableware at a price equal to Vitrocrisa's
Standard Cost. In addition to the price as defined in the previous sentence, a
fee as described herein is to be paid by Crisa to Vitrocrisa for its share of
the profit achieved upon ultimate sale of the Glass Tableware by Libbey Glass or
any of its Affiliates. Payment by Crisa to Vitrocrisa for the initial portion of
the price shall be due on the fifth business day after receipt of payment by
Crisa from Libbey Glass for such Glass Tableware pursuant to SECTION 5.2, and
payment by Crisa to Vitrocrisa for the fee shall be due on the fifth business
day after receipt of payment of the fee by Crisa from Libbey Glass for such
Glass Tableware pursuant to SECTION 5.2.
Section 5.2 Crisa agrees to sell to Libbey Glass, and Libbey Glass
agrees to purchase from Crisa, Glass Tableware FOB at Laredo, Texas or at such
other location at the USA/Mexico border as is, from time to time, designated by
Libbey Glass at the Landed Duty Paid Price. In addition to the Landed Duty Paid
Price, a fee as described herein is to be paid by Libbey Glass to Crisa for its
share of the profit achieved upon the ultimate sale of the Glass Tableware by
Libbey Glass or any of its Affiliates. Title and risk of loss pass to Libbey
Glass on delivery of the Glass Tableware to Libbey Glass at its warehouse at
Laredo, Texas or such other location at the USA/Mexico border as is, from time
to time, designated by Libbey Glass. Any cost of freight in excess of the cost
of Freight, and any cost of insurance beyond the Laredo, Texas warehouse or, as
applicable, such other location at the USA/Mexico border is the responsibility
of Libbey Glass. Payment by Libbey to Crisa of the Landed Duty Paid Price shall
be due forty-five (45) days after receipt of the Glass Tableware by Libbey
Glass. Payment of the profit sharing fee by Libbey Glass shall be due on the
last business day of the calendar month following the month in which the sale
was made by Libbey Glass to its customer.
Section 5.3 The profit sharing fee to be paid by Libbey Glass to Crisa
shall be determined in accordance with the terms set forth on SCHEDULE 3 to this
Agreement.
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Section 5.4
(a) For purposes of this Agreement the term "DUTY" shall mean the
actual customs duty, import tax, or other tax, fee, or charge
required by a governmental authority for goods imported from a
foreign country into the country imposing such charge. For
purposes of this Agreement, the term "FREIGHT" shall mean the
actual cost of transportation charges incurred to move goods
from the plant of manufacture by Vitrocrisa to the warehouse
used by Libbey Glass at Laredo, Texas or such other location
at the USA/Mexico border as is, from time to time, designated
by Libbey Glass plus all taxes imposed directly upon such
cost. For purposes of this Agreement, the term "STANDARD COST"
shall mean the standard cost of production employed by
Vitrocrisa in its manufacturing operation at the time goods
are manufactured which cost shall closely approximate the
actual cost of production at the time the standards are
established for the period for which they are established in
accordance with generally accepted accounting practices
consistently applied.
(b) From the date of this Agreement until the third anniversary of
this Agreement, Standard Cost for stock SKU's shall be
expressed in United States of America dollars and shall remain
in effect for one year. After the third anniversary of this
Agreement, the Manufacturer and Distributor agree to review
the method of determining Standard Cost for SKU's and will
review the assumptions for the United States of America
dollar/Mexico peso exchange rates and the inflation rates on a
quarterly basis and will agree to consider adjustments to
pricing for material deviations from such assumptions.
Non-stock and made to order items will be priced on a case by
case basis, and such terms may include quarterly adjustments
to the assumed United States of America dollar/Mexican peso
exchange rates and inflation rates as mutually agreed. Any
estimates or assumptions, whether during the first three years
of this Agreement or thereafter, of the United States of
America dollar/Mexican peso exchange rate or inflation rate
that are included in determining Standard Cost will be
included in the discussions with Libbey and must be reasonable
in light of the then-existing market forecasts of such by
reputable third parties.
(c) Once the Standard Cost is established with respect to an item,
unless revised by mutual agreement, such Standard Cost shall
remain in effect for the balance of the calendar year and
thereafter until revised in conjunction with the adoption and
approval of the Vitrocrisa annual operating budget by its
board of directors. Notwithstanding the foregoing, the parties
may by mutual agreement from time to time, for as long as
there is mutual agreement, use a formula or methodology other
than actual cost to compute either or both Duty and Freight,
but in no case shall the charge to Libbey Glass for Duty and
Freight be increased retroactively above the amount included
in the Landed Duty Paid Price initially charged to Libbey.
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Section 5.5 With respect to Vitrocrisa Glass Tableware products listed
in catalogs and selling sheets published by Libbey Glass, the discounts given by
Libbey Glass with respect to Glass Tableware manufactured by Vitrocrisa will be
substantially the same as established by Libbey Glass for Glass Tableware
manufactured by it and listed in such catalogs and selling sheets. Other Glass
Tableware products purchased by Libbey Glass will be priced and discounted by
Libbey Glass in the manner determined by it in its sole and absolute discretion
to be appropriate and consistent with the purposes of this Agreement.
Section 5.6 Vitrocrisa shall keep, or cause to be kept, full and
accurate records and books of account of its costs and expenses relating to the
production of the Glass Tableware prepared in accordance with generally accepted
accounting principles in effect in Mexico, at its facilities in Monterrey,
Mexico. Libbey Glass, or an independent firm of certified public accountants
designated by Libbey Glass, shall at any reasonable time or times, but not more
often than twice in any calendar year, have the right to inspect, examine, and
audit all pertinent records and books in the possession of Vitrocrisa pertaining
to its operations and inspect and observe the operation of Vitrocrisa's facility
in Mexico for the purpose of verifying the calculations of the price of the
products under this Agreement, including, without limitation, Vitrocrisa's
Standard Costs, the cost of Freight, and the cost of Duty.
Section 5.7 Libbey Glass and its Affiliates that sell Glass Tableware
purchased by Crisa shall keep, or cause to be kept, full and accurate records
and books of account of its costs, expenses, sales, and rebates relating to the
sale of the Glass Tableware purchased from Crisa, prepared in accordance with
generally accepted accounting principles in effect in the United States, at its
facilities in Toledo, Ohio. Crisa, or an independent firm of certified public
accountants designated by Vitrocrisa, shall at any reasonable time or times, but
not more often than twice in any calendar year, have the right to inspect,
examine, and audit all pertinent records and books in the possession of Libbey
Glass and its Affiliates that sell Glass Tableware purchased by Crisa pertaining
to the sale of Glass Tableware purchased from Crisa for the purpose of verifying
the calculations of the profit sharing under this Agreement including, without
limitation, (a) during the first three years of this Agreement, sales and
rebates, and (b) after the third anniversary of this Agreement, sales,
marketing, distributing, general, and administrative expenses, new product
development costs paid to third parties, mold costs, and rebates paid with
respect to products sold by Crisa hereunder.
Section 5.8 Notwithstanding the foregoing, from time to time by mutual
agreement in writing, Libbey Glass, Crisa, and Vitrocrisa may agree upon special
pricing, special terms, or special profit sharing for any particular transaction
whereby Libbey Glass wishes to purchase Glass Tableware to meet a competitive
situation or otherwise obtain a particular piece of business in the Territory in
which case such mutual agreement shall supersede the pricing, terms and profit
sharing set forth above.
Section 5.9 All payments by Libbey Glass to Crisa will be in US
dollars.
Section 5.10 On and after the third anniversary of this Agreement the
amount of the Libbey Glass Expense Allocation set forth in SECTION 5.3 may be
reviewed annually at the
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request of either Vitrocrisa or Libbey Glass and changed prospectively, upward
or downward, to some other percentage or method of computation as is necessary
to more accurately compensate (but not over compensate) Libbey Glass for its
full, direct and indirect, costs of distributing Vitrocrisa Glass Tableware
hereunder, including, without limitation, the Channels of Distribution where the
Glass Tableware is sold and the sales, marketing, distributing, general, and
administrative expenses allocable to such sales, and new product development
costs paid to third parties allocable to such sales. If mold costs allocable to
such sales are paid by Vitrocrisa, amortization of such costs will be included
in the Standard Cost. If mold costs allocable to such sales are paid by Libbey
Glass, the mold amortization expense will be included as a new product
development cost.
Section 5.11 The methodology of computing the amount to be paid by
Crisa to Vitrocrisa pursuant to SECTION 5.1 and by Libbey Glass to Crisa
pursuant to SECTION 5.2 to purchase Glass Tableware hereunder sets forth the
intended sharing of profits and margins among Vitrocrisa, Crisa, and Libbey
Glass with respect to Glass Tableware sold hereunder. If any change in the
methodology of computing such prices is required in order to comply with
governmental regulations or legal requirements and such change would have a
material adverse economic effect on either Vitrocrisa, Crisa, or Libbey Glass
with respect to the profits and margins intended to be shared hereunder,
Vitrocrisa, Crisa, and Libbey Glass agree to negotiate in good faith another
methodology of computing such price to meet governmental regulations and legal
requirements and to place Vitro and Libbey in the same relative economic
position with respect to the sharing of profits and margins as is intended by
this ARTICLE V.
Section 5.12 At the date of this Agreement, as its initial purchase,
Libbey Glass agrees to purchase from Crisa, and Crisa agrees to sell to Libbey
Glass, Glass Tableware held in Crisa's warehouse at Laredo, Texas for sale to
customers in the Territory at the price set forth in SECTION 5.2. For the
initial purchase, to the extent the book value of the Glass Tableware is less
than or more than the Landed Duty Price Paid, after the time for return of such
Glass Tableware has expired, Crisa will issue a credit or debit memo, as
appropriate, to Libbey Glass for forty-nine percent (49%) of the difference. In
addition to Glass Tableware, Crisa agrees to sell to Libbey, and Libbey agrees
to purchase at book value from Crisa, any accessories and packaging supplies
held in the Laredo Warehouse which are to be assembled or repackaged with Glass
Tableware to be sold to customers in the Territory. Terms for this sale are 45
days, net, or at Libbey's option, return of all or any portion of the Glass
Tableware, accessories, and packaging supplies to Crisa at the warehouse in
Laredo, Texas for full credit. Crisa shall then repatriate those returned
products to Vitrocrisa to be sold in Mexico or any other country other than
those in the Territory.
ARTICLE VI
PERFORMANCE STANDARD
Section 6.1 Libbey Glass and Vitrocrisa agree to use their best efforts
to carry out the sales plans agreed upon in the annual operating budgets which
will derive from the broader guidelines of the ongoing three-year strategic
plans of Vitrocrisa, as such budgets and strategic plans may be approved by
extraordinary directors action of the board of directors of Vitrocrisa.
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Section 6.2 Expected sales by Distributor of Glass Tableware in the
Territory in each of the calendar years 1998, 1999, and 2000 (herein "EXPECTED
SALES") will be measured by the actual dollar sales of Glass Tableware in the
Territory in calendar year 1997 plus a growth rate as set forth on SCHEDULE 4 to
this Agreement, subject to assigned production capacity consistent with
forecasted sales, competitive and expected fill rates, inventory, product
availability, and reasonable flexibility in response to business opportunities
and subject to the absence of any currency crises or unplanned increases in
import Duty.
(a) To allow Vitrocrisa to move from current fill rates to
Distributor's standards, order fill rates defined as
quantities shipped on time as ordered shall not be less than
the amount set forth on SCHEDULE 5 to this Agreement. Order
fill rates require that Glass Tableware is shipped in the
quantities, at the times and in the manner requested in full
conformity with the order. Quantities required from Vitrocrisa
should be within the daily capacity assigned to the
Distributor for each annual operating budget unless otherwise
mutually agreed, i.e., if there is available capacity over the
minimum assigned daily capacity there would be flexibility to
assign this extra capacity to the Distributor.
(b) As part of the annual operating budget discussion, the
Expected Sales may be adjusted up or down by mutual agreement
of Distributor and Vitrocrisa if warranted by general business
conditions in the Territory, competitive conditions in the
Territory, and growth as reported in recognized indexes such
as the Restaurant and Institutions Index.
(c) In determining the payment by Distributor for a shortfall in
Expected Sales for a calendar year (i) a shortfall allowance
of fifteen percent (15%) of Expected Sales shall be allowed
before any calculation of the amount of payment is made and
(ii) Distributor and Vitrocrisa shall examine and take into
account through an appropriate adjustment in Expected Sales
any extraneous events and any events beyond the reasonable
control of the Distributor (as set forth in ARTICLE IX) which
resulted in the shortfall.
(d) In the event the Distributor fails to achieve the Expected
Sales in the Territory, Distributor will pay Crisa its share
of the Lost Profits (as defined on SCHEDULE 6 to this
Agreement) based upon (i) the Average Operating Margin
attained on sales of Glass Tableware in the Territory during
the calendar year times (ii) the shortfall in sales in excess
of fifteen percent (15%) of the Expected Sales as determined
in accordance with SECTION 6.2(c), and Crisa will pay
Vitrocrisa its share of such Lost Profits, all in accordance
with the procedures established hereunder in ARTICLE V for the
sharing of profits on sales by Distributor. The term "AVERAGE
OPERATING MARGIN" is defined as total Adjusted Gross Profit
divided by total net invoiced selling price of Glass Tableware
for a calendar year.
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(e) Distributor will pay to Crisa the Lost Profits within sixty
(60) days following the end of the calendar year, and Crisa
shall pay Vitrocrisa its share at the time established in
ARTICLE V hereof for the distribution of Vitrocrisa's share of
the Lost Profits.
Section 6.3 After the calendar year 2000, the Distributor and
management of Vitrocrisa, in connection with the preparation of the annual
operating budget for consideration and adoption by extraordinary directors
action of the board of directors of Vitrocrisa, shall review and discuss the
future direction, expectations, and strategies for sales in the Territory with
any impasses being resolved pursuant to the same procedures established for
deadlocks and impasses between the shareholders or between the directors of
Vitrocrisa in the Vitrocrisa, S.A. de C.V. Shareholders Agreement, dated of even
date, unless otherwise mutually agreed. Quantities required from Vitrocrisa
should be within the capacity assigned to the Distributor for each annual
operating budget unless otherwise mutually agreed, i.e., if there is available
capacity over the minimum assigned daily capacity there would be flexibility to
assign this extra capacity to the Distributor.
ARTICLE VII
OPERATING PROCEDURES
Section 7.1 Distributor shall maintain its own offices and places of
business and pay all of its own expenses in connection with the sale and
distribution of Glass Tableware under this Agreement, except as otherwise
provided herein.
Section 7.2 Distributor is designated to serve customers in the
Territory. Any inquiries or orders for Manufacturer's brand of Glass Tableware
from customers outside of the Territory will be referred by Distributor to
Manufacturer.
Section 7.3 Manufacturer shall furnish Distributor in connection with
the Glass Tableware to be distributed hereunder a reasonable number of catalogs
and existing sales literature which the Manufacturer may, from time to time,
have in connection with its own sales, but the Manufacturer shall not be
obligated to generate or create any catalogs or sales literature for
Distributor.
Section 7.4 The relationship between the parties hereto shall be one of
independent contractors. Neither the Distributor nor the Manufacturer shall be
empowered to have any authority to act for the other, make any commitment on
behalf of the other, make any agreement on behalf of the other, make any payment
on behalf of the other, nor otherwise obligate the other in any way. Neither
Distributor nor Manufacturer shall hold itself out as having any authority to
act in any way for the other unless otherwise specifically agreed in writing.
Section 7.5 All Glass Tableware sold hereunder shall be transferred to
Distributor free and clear of all liens and encumbrances.
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Section 7.6 Manufacturer shall secure and apply all packaging for Glass
Tableware sold hereunder and unless otherwise agreed in writing with respect to
any particular transaction the prices charged for Glass Tableware shall be
deemed to include all packaging expenses.
Section 7.7 Regular current stock items to be procured and imported
hereunder will be ordered at levels that correspond to a mutually agreed upon
level per SKU. Should the Distributor require quantities in excess of the agreed
threshold levels, a separate Make and Ship order must be processed with specific
quantities and release dates. Failure by the Distributor to honor the Make and
Ship order by the release date or within thirty (30) days thereafter will result
in shipment and invoicing of the full order, as originally specified.
Section 7.8 In some cases, Distributor may desire and request Specially
Differentiated Product to be created specifically for its customers in the
Territory, which new items are beyond the normal stock collection of the
Manufacturer. These will be private items and may require new molds and cartons.
Unless otherwise, agreed, the cost of developing new molds and cartons is the
responsibility of the Distributor and will be invoiced to the Distributor at
actual out of pocket costs paid to third party vendors in arms length
transactions. Four-color photography, artwork separations, and final layout for
any retail packaging for these items are the responsibilities of the Distributor
specifying the new package development of these "retail type" boxes. These
materials must be supplied in cooperation with the respective scheduling
department of the Manufacturer. Responsibility for the actual box itself and its
procurement will reside with the Manufacturer and will be included in the Landed
Duty Paid Price with respect to Distributor's purchases. Distributor
acknowledges receipt of minimum run per production process from Manufacturer for
non-stock items. These minimum quantities, including any subsequent
modifications, will be used as guidelines (but not the sole criteria) by
Manufacturer in rejecting orders from Distributor for production.
Section 7.9 It is the intent of all parties to keep the packaging of
Specially Differentiated Products to a minimum. No more than 150 SKU's, on a
revolving basis, will be made in the United Mexican States and carry the brand
of a Libbey Party on the box. It is expected this program of differentiation
will be phased in over a one-year period, commencing on the date of this
Agreement.
Section 7.10 Shipper carton markings, country of origin markings, and
appropriate languages to be reflected on the packaging will be the
responsibility of the Manufacturer. A close exchange and co-operative working
relationship between the new product development organization of the Distributor
and the new product development organization of the Manufacturer will be
absolutely necessary. It is expected that the Distributor will be very specific
in its requirements at the time of the order.
Section 7.11 All specifications applicable to Glass Tableware supplied
hereunder, including, but not limited to, material, packaging, property,
dimensions, limit samples, esthetics, cosmetics, inspection, acceptance quality
limits, and acceptance samples will be agreed upon by the Manufacturer, the
Seller, and the Distributor at the time an order is accepted. Once established
for an item the specifications shall remain in effect until revised by mutual
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agreement. All Glass Tableware must meet all such specifications or may be
rejected by Distributor in which case the Distributor shall receive a full
refund or credit against the purchase price as the Distributor may elect, and
the product in question shall be returned to the Manufacturer at the
Manufacturer's expense or disposed of at the Manufacturer's expense.
Section 7.12 In special situations where clearly identified in advance
at the time an order is accepted by the Manufacturer, Glass Tableware may be
ordered for a customer of the Distributor where timely, complete delivery of
Glass Tableware conforming to the specifications is required. In such cases, any
penalty paid by the Distributor for any failure to meet the requirements of the
order will be reimbursed by the Manufacturer unless such failure was not the
fault of the Manufacturer as set forth in ARTICLE IX.
Section 7.13 Claims for breakage, shortages, overages, wrong-ware
shipped, and all other distribution related errors must be sent to the
Manufacturer by the Distributor within seven (7) days from the date of receipt
of shipment.
Section 7.14 Claims for quality issues will be sent by the Distributor
to the Manufacturer on or before thirty (30) days following notification to the
Distributor from its customer of such issues. Resolution of such claims must be
within ninety (90) days of receipt by the Manufacturer of the quality claim.
Section 7.15 Product liability claims and all associated legal costs
and any settlement costs will be the final responsibility of the Manufacturer.
The Manufacturer will defend and hold harmless at its expense the Distributor
from and against any and all cost, expense, and liability resulting from any
claim by a third party for bodily injury or damage to property alleging that any
Glass Tableware supplied hereunder is defective or fails to conform to the
specifications, from any claim by a governmental authority that the Glass
Tableware does not meet applicable legal requirements, and from any claim by a
governmental authority that Glass Tableware must be recalled due to a safety
condition or defect. The Manufacturer's obligations under this SECTION 7.15 are
subject to timely notice (unless failure to give timely notice does not
materially adversely affect the Manufacturer) and the right to control the
defense and settlement of the claim if so desired by the Manufacturer. The
Manufacturer's obligations under this SECTION 7.15 do not apply to any cost,
expense, or liability caused by the negligent or wrongful act or omission of the
Distributor; provided, however, the simple purchase and resale shall not be
deemed to be the negligent or wrongful act or omission of the Distributor.
Section 7.16 Libbey Glass will work to maintain and perpetuate the
Crisa brand name in the United States of America in market niches such as floral
ware, tempered glass plates, and the "Impressions" line of tumblers and other
areas where in Libbey Glass's reasonable opinion the name has continued
strength.
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ARTICLE VIII
ADDITIONAL PRODUCTS OTHER THAN GLASS TABLEWARE
Section 8.1 It is anticipated that by mutual agreement, from time to
time, the Libbey Parties and the Vitro Parties may authorize the other to
distribute additional products other than Glass Tableware in all or part of the
Territory. Such agreements with respect to products other than Glass Tableware
shall be on such terms and conditions as may be agreed upon by the parties at
the time, including, without limitation, pricing, products, territories,
duration, and terms and conditions of sale, all of which may be different or the
same as set forth herein and unless specifically otherwise agreed in writing
shall be subject to change and the agreement subject to termination, on written
notice from either Vitrocrisa or Libbey Glass to the other. All such agreements
shall be separate and distinct agreements from this Agreement and in no event
shall additional products other than Glass Tableware be subject to the
provisions of this Agreement.
ARTICLE IX
FORCE MAJEURE
Section 9.1 Except for an obligation for the payment of money when due,
neither party shall be liable for any failure or delay in the performance of its
obligations under this Agreement when such failure or delay is caused by acts of
God, riot or civil commotion, strike, lockout or other labor disturbance, fire,
act or any order of government (whether or not valid), flood, war, peril of sea,
breakdown of machinery, delay in supply and/or transit of materials, components,
parts or assemblies from suppliers or sub-contractors, or any other matter or
peril; provided, however, that in all cases such cause is beyond the reasonable
control of the party who failed or was delayed in performance and such party
could not have prevented the failure or delay through reasonable action and has
taken reasonable action to mitigate the effect of the delay or failure. With
respect to an obligation for the payment of money, if by any regulation or order
of an applicable governmental authority a party is precluded from transmitting a
payment due under or by reason of this Agreement, the party owing the payment
shall make the payment in accordance with its obligations hereunder if it places
the sum due to the credit of the party to whom the payment is due in a bank
located in the country of paying party or if it effects payment by some other
method then authorized by the applicable governmental authority.
ARTICLE X
ENFORCEMENT; NON-WAIVER
Section 10.1. The parties hereby acknowledge and agree that Libbey
Glass and Vitrocrisa would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with its specific
terms or otherwise is breached. Accordingly, the parties hereto agree that,
subject to the provisions of SECTION 11.14, Vitrocrisa and Libbey Glass shall be
entitled to an injunction or injunctions to prevent breaches of the provisions
of this Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any action instituted in any court of the United States of
America (or of any state thereof) or of the
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United Mexican States having jurisdiction over Vitro, in addition to any other
remedy to which Libbey Glass or Vitrocrisa may be entitled, at law or in equity.
Section 10.2 A failure by the Vitro Parties or the Libbey Parties to
exercise or enforce any right conferred upon them by this Agreement shall not be
deemed to be a waiver of any right or operate so as to bar the exercise or
enforcement thereof at any subsequent time or times and all express rights
granted to any Vitro Party and any Libbey Party hereunder shall be in addition
to any right that the Vitro Parties and the Libbey Parties may have under the
general law in respect of a breach hereof. No waiver by either the Vitro Parties
or the Libbey Parties of any condition or the breach of any term, covenant,
representation, warranty, or undertaking contained in this Agreement, whether by
conduct or otherwise, in any one or more instances shall be deemed to be or
construed as a further or continuing waiver of any such condition or breach or a
waiver of any other condition or deemed to be or construed as a waiver of the
breach of any other term, covenant, representation, warranty, or undertaking
contained in this Agreement.
ARTICLE XI
MISCELLANEOUS
Section 11.1 GOVERNING LANGUAGE. Notwithstanding the translation of
this Agreement or any of its Schedules or Exhibits into Spanish or any other
language, the English language version of this Agreement and any of its
Schedules and Exhibits shall be controlling and shall govern in any legal
proceeding or arbitration.
Section 11.2 COMMUNICATIONS. All correspondence, information,
specifications, reports, notices, and other written or oral communications
between the parties with respect to this Agreement and the transactions
contemplated hereunder shall be in the English language.
Section 11.3 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not
confer any rights or remedies upon any person other than the parties and their
respective successors and permitted assigns.
Section 11.4 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties related to the subject matter hereof and supersedes
any prior understandings, agreements, or representations by or among the
parties, written or oral, that may have related in any way to the subject matter
hereof.
Section 11.5 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties named herein and their respective
successors and permitted assigns.
Section 11.6 ASSIGNMENT. No party may assign or otherwise transfer any
of its rights or obligations under this Agreement, by operation of law or
otherwise, without the prior written consent of the other parties, which consent
shall not be unreasonably withheld. Any purported or attempted assignment
contrary to the terms hereof shall be null and void and of no force or effect.
Notwithstanding the foregoing, Libbey Glass may permit its Affiliates to
purchase Glass Tableware from Vitrocrisa and distribute such Glass Tableware in
the Territory provided that
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Libbey and Libbey Glass each shall be responsible to cause such Affiliates of
Libbey Glass to perform the obligations of Libbey Glass hereunder.
Section 11.7 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
Section 11.8 HEADINGS. The article and section headings contained in
this Agreement are inserted for convenience only and are not part of this
Agreement and shall not affect in any way the meaning or interpretation of this
Agreement.
Section 11.9 NOTICES. All notices, demands, requests, and other
communications to be given or made under this Agreement shall be in writing in
English and shall be:
(a) personally delivered with signed receipt obtained
acknowledging delivery;
(b) transmitted by postage prepaid registered mail, return receipt
requested (air mail if international);
(c) transmitted by telex or facsimile, subject to confirmation of
receipt by the addressee; or
(d) sent by overnight express mail to the parties at their
addresses set forth below:
If to a Libbey Party, such notices shall be addressed to:
Libbey Inc.
300 Madison Avenue
Toledo, Ohio 43604
USA
Attn.: General Counsel Fax No.: 419-325-2585
or to any subsequent address of which Libbey Glass may notify Vitrocrisa in
writing.
If to a Vitro Party, such notices shall be addressed to:
Vitrocrisa, S.A. de C.V.
Doblado 1627 Nte.
Col. Terminal
Monterrey, N.L. 64580
Mexico
Attn.: Director General Fax No.: 528-329-3009
or at any subsequent address of which Vitrocrisa or Vitro may notify Libbey
Glass in writing.
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Any notice, demand, request, or other communication shall be effective only if
and when it is received by the addressee.
SECTION 11.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF THE STATE OF TEXAS, UNITED
STATES OF AMERICA, WITHOUT GIVING EFFECT TO ANY CONFLICTS-OF-LAW RULES OR
PRINCIPLE THAT MIGHT REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION.
Section 11.11 AMENDMENTS AND WAVIER. This Agreement may be amended,
modified, superseded, or canceled and any of its terms, covenants,
representations, warranties, undertakings, or conditions may be waived only by
an instrument in writing signed by (or by some person duly authorized by) all of
the parties hereto or, in the case of a waiver, by the party waiving compliance.
Section 11.12 SEVERABILITY. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction declares that any term or provision hereof is
invalid or unenforceable, the parties agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce
the scope, duration, or area of the term or provision, to delete specific words
or phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed.
Section 11.13 NO VIOLATION OF LAW. Any obligation of any party hereto
is subject to the approval of all applicable governmental authorities,
including, without limitation, any export or import license required by the
government of any country. Nothing in this Agreement shall be construed to
require any party to disclose to the other any information, to take any action
or refrain from taking any action or remain in any situation in violation of any
law or regulation, rule, or requirement of any applicable governmental authority
to which such party is subject. Subject to the foregoing, in performing its
distribution functions hereunder, Libbey Glass agrees to use reasonable efforts,
and to cause its customers to use reasonable efforts, to furnish such
information and do such acts to enable Vitrocrisa to comply with any
requirement, restriction, or condition imposed upon any export out of the
country of manufacture or upon Vitrocrisa by any applicable governmental
authority of the United Mexican States, and Vitrocrisa agrees to use reasonable
efforts, and to cause its suppliers to use reasonable efforts, to furnish such
information and do such acts to enable Libbey Glass to comply with any
requirement, restriction, or condition imposed upon any import into the
Territory or upon Libbey Glass by any applicable governmental authority.
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Section 11.14 Arbitration.
-----------
(a) The parties to this Agreement shall exert good faith efforts
promptly to resolve any controversy or claim arising out of or
related to this Agreement or the breach thereof within fifteen
(15) days of receipt of notice by one party from another party
that such a controversy or claim exists. If the parties fail
to resolve such controversy or claim within such fifteen (15)
day period, they shall, unless otherwise provided in this
Agreement, give notice in writing to the Chief Executive
Officers of Libbey and Vitro (the "CEOS"), who will meet
within fifteen (15) days of receipt of such notice at a
mutually acceptable time and place to attempt to resolve any
such controversy or claim. Notwithstanding the foregoing, the
parties hereby agree that either party can seek injunctive
relief as contemplated by SECTION 10.1. In the event the CEOs
fail to meet or to resolve the controversy or claim arising
out of or related to this Agreement or the breach thereof
within such fifteen (15) day period, the controversy or claim
(other than business and operational decisions customarily
exercised by management in entities similar to Vitrocrisa and
Libbey Glass, which are to be resolved by the CEOs) shall be
settled by arbitration in accordance with the then existing
International Arbitration Rules of the American Arbitration
Association (the "AAA"), which shall commence upon one party
providing the other parties with a written demand for
arbitration (the "DEMAND FOR ARBITRATION"). The arbitrators
may determine the appropriate monetary damages for any breach
or other appropriate remedy, but may not cause this Agreement
to be terminated. Notwithstanding the foregoing, the parties
hereby agree that if either party seeks injunctive relief as
contemplated by SECTION 10.1 such party does not thereby waive
its rights to arbitration under this SECTION 11.14.
(b) The arbitral tribunal shall be composed of three arbitrators
with Libbey Glass and Vitrocrisa each appointing one
arbitrator. If either Libbey Glass or Vitrocrisa fails to
appoint an arbitrator within thirty (30) days after the date
the claimant's Demand for Arbitration is communicated to the
other party (hereinafter the "NOTIFICATION DATE"), the AAA
shall make such appointment. The two arbitrators thus
appointed shall attempt to agree upon the appointment of a
third arbitrator to serve as chairman of the arbitral
tribunal. If said two arbitrators fail to agree upon the
appointment of such third arbitrator within sixty (60) days
after the Notification Date, the AAA shall make such
appointment. The place of arbitration shall be Dallas, Texas,
United States of America. The arbitral proceeding shall be
conducted in the English language.
(c) To the extent that they may validly so agree, the parties
hereby exclude any right of appeal to any court in connection
with the arbitral award. Judgment upon the arbitral award may
be entered in any court having jurisdiction thereof or having
jurisdiction over any party or any party's assets.
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(d) The validity of this SECTION 11.14 shall be governed by the
United Nations Convention on the Recognition and Enforcement
of Foreign Arbitral Awards or the Inter-American Convention on
International Commercial Arbitration, to which Mexico and the
United States of America have adhered.
(e) All costs of arbitration and enforcement thereof, including
reasonable attorney's fees and court costs, costs of expert
witnesses, transportation, lodging and meal costs of the
parties and witnesses, costs of transcript preparation, and
other reasonable and necessary direct and incidental costs
shall be apportioned to one or more of the parties by a
majority of the arbitrators as they deem appropriate. In the
event any party to this Agreement commences legal proceedings
to enforce the arbitral award, the expense of such litigation
(including reasonable attorneys' fees and costs of court)
shall be borne by the party or parties not prevailing therein.
Section 11.15 SCHEDULES AND EXHIBITS. The Schedules and Exhibits
attached hereto and referenced herein constitute a part of this Agreement and
are specifically incorporated by reference herein.
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IN WITNESS WHEREOF, the parties have hereunto have caused this
Agreement to be executed by their duly authorized officers as of the day and
year first above written.
LIBBEY GLASS INC.,
a Delaware corporation
By: /s/ Kenneth G. Wilkes
---------------------------------
Title: CFO - VP
---------------------------------
LIBBEY INC.,
a Delaware corporation
By: /s/ Kenneth G. Wilkes
---------------------------------
Title: CFO - VP
---------------------------------
VITRO, S.A.,
a sociedad anonima organized under the
laws of the United Mexican States
By: /s/ Claudio Del Ville
---------------------------------
Title: Attorney in Fact
---------------------------------
CRISA CORPORATION,
a Texas corporation
By: /s/ Roberto B. Rubio
---------------------------------
Title: General Manager
---------------------------------
VITROCRISA S.A. DE C.V.,
a sociedad anonima with variable capital
organized under the laws of the United
Mexican States
By: /s/ Roberto B. Rubio
---------------------------------
Title: President
---------------------------------