EXHIBIT 10.14
AGREEMENT
THIS AGREEMENT is made and entered into this __ day of March, 1996 by
and among CTI Industries Corporation, a Delaware corporation ("CTI") and Xxxxxxx
X. Xxxxxx, an individual residing at 0000 X. Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx
("Xxxxxx")
WHEREAS, Xxxxxx has been an employee of CTI since September, 1984 and
was employed by CTI as Senior Vice President:
WHEREAS, CTI and Xxxxxx entered into a deferred compensation agreement
dated January 15, 1987, a copy of which is attached hereto as Exhibit A
(Deferred Compensation Agreement);
WHEREAS, CTI and Xxxxxx entered into a Subscription Agreement dated
August 14, 1987, attached hereto as Exhibit B ("Subscription Agreement"),
pursuant to which Xxxxxx purchased 45,000 shares of Common Stock of the
Corporation (subsequently split to three for one to 135,000 shares) (such shares
hereinafter sometimes referred to as the "Stock");
WHEREAS, pursuant to the Stock Purchase Agreement, Xxxxxx executed and
delivered to CTI that certain Promissory Note dated October 30, 1987, attached
hereto as Exhibit C ("Promissory Note") and an associated Security Agreement;
WHEREAS, on or about October 30, 1987, Xxxxxx entered into a Buy-Sell
Agreement with the Company and Xxxx X. Xxxxx;
WHEREAS, on or about December 15, 1988, Xxxx X. Xxxxx, Xxxxxxx X.
Xxxxxxx and Xxxxxxx X. Xxxxxx, as voting trustees and Xxxxxx and several other
persons as shareholders entered into that certain Amended and Restated Voting
Trust Agreement ("Voting Trust Agreement") pursuant to which the Stock and
shares of Common Stock of certain other shareholders of the Company were
transferred to the voting trustees;
WHEREAS, the parties desire to enter into an agreement respecting the
termination of Xxxxxx'x full time employment with CTI, a consulting arrangement
among Xxxxxx and CTI, the Deferred Compensation Agreement, the Stock Purchase
Agreement and Promissory Note.
NOW, THEREFORE, in consideration of the premises and of the terms,
covenants and conditions hereinafter contained, the parties hereto agree as
follows:
1. Termination of Employment. The parties agree that Xxxxxx'x full time
employment with CTI was terminated on December 15, 1995 and that Xxxxxx
continued to receive compensation as an employee through January 31, 1996.
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2. Consulting Services.
2.1 CTI hereby retains Xxxxxx effective February 1, 1996, and
Xxxxxx accepts such retention, as a consultant to CTI to provide such
advice and consulting services to CTI for the term provided herein as
CTI shall request from time to time consistent with the provisions
hereof. During the Initial Term, Xxxxxx shall provide services up to 40
hours per week as requested. Xxxxxx shall not be obligated to provide
more than 10 hours of service during any month during the Second Term
provided herein. It is agreed that, during both terms, Xxxxxx may be
employed by, or provide services to, other persons or entities and
Xxxxxx shall not be obligated to provide services hereunder which would
conflict with any obligations of Xxxxxx with respect to such other
persons or entities.
2.2 In consideration of Xxxxxx'x agreement to provide
consulting services hereunder, the Company shall pay to Xxxxxx the sum
of $3,000 on or before the 15th day of each month during the Initial
Term and $1,000 per month for the Second Term, provided herein for such
services. Further, the Company shall continue coverage of Xxxxxx under
its health insurance coverage for employees for the Initial Term of the
consulting agreement herein.
2.3 The Initial Term of the consulting agreement herein shall
be for a period of fifteen months commencing on February 1, 1996 and
the Second Term shall be for a period commencing on May 1, 1997 and
expiring on the earlier of Xxxxxx'x death or January 31, 2016.
2.4 Xxxxxx shall provide consulting services hereunder as an
independent contractor, not as an employee. Xxxxxx shall not be
obligated to provide services at the offices of the Company or at any
particular time or location. Xxxxxx shall not be an agent for the
Company and shall not have any authority to bind the Company with
respect to any matter.
2.5 In connection with the provision of services by Xxxxxx
hereunder which the Company shall have requested, the Company shall
reimburse Xxxxxx for the reasonable and necessary expenses incurred by
Xxxxxx, provided that any expense in excess of $100 shall have been
approved by the Company in advance of the time it is incurred.
2.6 During the Initial Term of the consulting agreement
herein, Xxxxxx shall not be employed by or provide services to any
person who is engaged anywhere in the United States in the business of
manufacturing, distributing or selling (other than at retail)
metallized or latex balloons as a material part of the business of such
person and where Xxxxxx shall have any responsibility or authority in
connection with the marketing or sale of metallized or latex balloons.
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2.7 Xxxxxx agrees that, during the term of the consulting
agreement, and after expiration thereof for so long as the Confidential
Information shall not be generally known or generally disclosed, Xxxxxx
shall not use any Confidential Information except on behalf of the
Company during the term of the consulting agreement, or disclose any
Confidential Information to any person, firm, partnership, company,
corporation or other entity, except as may be authorized in writing by
the Company. For purposes of this paragraph, "Confidential Information"
shall mean and include information disclosed to Xxxxxx by the Company,
or developed or obtained by Xxxxxx during the term of his employment by
the Company or during the term of this consulting agreement, provided
that such information is not generally known in the business or
industry in which the Company is engaged relating to or concerning the
business, financial condition, projects, products, processes, formulas,
know-how, techniques, designs or methods of the Company, whether
relating to research, development, manufacture, purchasing, accounting,
engineering, marketing, merchandising, selling or otherwise. Without
limitation, Confidential Information shall include all know-how,
technical information, financial information, inventions, ideas,
concepts, processes or designs relating to metallized balloons, latex
balloons, printing or laminations and all prices, written customer
lists or written lists of its suppliers, employees, agents, consultants
or independent contractors.
2.8 Xxxxxx agrees that, promptly after request by the Company,
Xxxxxx shall deliver to the Company all documents in his possession or
control which contain any Confidential Information.
2.9 Xxxxxx acknowledges and agrees that any violation by him
of the terms of paragraphs 2.6, 2.7 or 2.8 hereof could not reasonably
or adequately be compensated in damages in an action at law and,
accordingly, in addition to any other remedies provided by law with
respect to any such violation, the Company shall have the right to
compel specific performance of such provisions by Xxxxxx or to obtain
injunctive relief against violations thereof by Xxxxxx, and if the
Company prevails in any such proceeding, it will be entitled to recover
all reasonable costs and expenses incurred by it in connection
therewith, including a reasonable sum for its attorneys fees.
3. CTI Stock.
3.1 The Subscription Agreement is hereby amended to provide
that the purchase price per share for the Stock is $1.22 per share
($.407 per share, post split). The Company acknowledges that Xxxxxx has
paid to the Company the entire amount of the purchase price for the
Stock and that all shares of the Stock are duly authorized, validly
issued, fully paid and non-assessable.
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3.2 The Promissory Note is hereby terminated and canceled and
is of no further force or effect. The Company agrees forthwith to
deliver the original of the Promissory Note to Xxxxxx or to destroy the
same.
3.3 The Pledge Agreement is hereby terminated and canceled and
is of no further force or effect.
3.4 The Buy-Sell Agreement is hereby terminated and canceled
and shall be of no further force or effect.
3.5 On March 6, 1996, the Voting Trust Agreement was
terminated by instrument executed by all of the voting trustees
thereof.
3.6 Promptly after execution of this Agreement, the Company
shall deliver to Xxxxxx a certificate or certificates evidencing all
shares of the Stock.
4. Deferred Compensation. The Deferred Compensation Agreement
is hereby canceled and terminated as of the date hereof.
5. Life and Disability Policies.
5.1 The Company has maintained a life insurance policy on
Xxxxxx with a face amount of $500,000 ("Policy One"), a life insurance
policy on Xxxxxx in the face amount of $300,000 in connection with the
Deferred Compensation Agreement ("Policy Two"), a disability policy on
Xxxxxx providing for disability benefits to him of $3,200 per month
("Policy Three"), a disability policy on Xxxxxx providing for
disability benefits to him of $2,800 per month ("Policy Four") and, the
parties believe, pursuant to the health insurance program of the
Company, a life insurance policy in the face amount of $160,000
("Policy Five")
5.2 With respect to Policy One, (i) the Company acknowledges
that Xxxxxx is the owner thereof and has all rights to the cash
surrender value of the policy, (ii) the Company has paid all premiums
due on the policy for the period expiring on November 1, 1996, (iii)
the Company shall have no obligation to pay any additional premiums
with respect to Policy One.
5.3 With respect to Policy Two, (i) the Company is the sole
owner of the policy and any and all cash surrender value of such
policy, (ii) the Company has paid all premiums due on the policy
through November 15, 1996, (iii) the Company shall have no obligation
to pay any additional premiums with respect to such policy.
5.4 With respect to Policies Three and Four, (i) the Company
has paid the premiums with respect to such policies for the period
through October, 1996 and (ii) the
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Company will have no obligation to pay future premiums with respect
to such policies hereafter and shall have no obligation to maintain
any disability coverage with respect to Xxxxxx hereafter.
5.5 The parties are informed, and to the best of their
knowledge believe, that upon termination of Xxxxxx'x benefits under the
Company's health insurance program, Xxxxxx will have the right to
convert and maintain Policy Five as an ordinary life insurance policy.
However, no assurance is made by the Company that Policy Five will be
in effect at the time of such termination, in the face amount of
$160,000, or any other amount, or that Xxxxxx will be able to convert
and maintain Policy Five after such termination on terms acceptable to
Xxxxxx or the Company, if at all. The parties agree with respect to
Policy Five as follows:
5.5.1 Xxxxxx and the Company shall use their best
efforts to effect a conversion and transfer of Policy Five as
an ordinary life policy at the time of the termination of
Xxxxxx'x coverage under the Company's health insurance
program;
5.5.2 The Company shall pay all premiums with respect
to such policy during the term of the consulting agreement
herein; such premium amounts may be paid directly to Xxxxxx
who, in such event, shall use such funds solely for the
purpose of paying the premiums on such policy;
5.5.3 At all times, Xxxxxx shall borrow the maximum
amount allowed under such policy and apply the amount of such
borrowing to payment of premiums on the policy.
In the event that Xxxxxx shall inform the Company on or before May 30,
1997, that he is unable to obtain to obtain the conversion and transfer
of Policy Five as an ordinary life policy, the obligation of the
Company to pay premiums with respect to such a policy shall terminate
and (1) the amount of the consulting fee payable each month during the
Second Term shall be increased by $1,000 and (2) the Second Term shall
expire on the earlier of the death of Xxxxxx or September 30, 2006.
6. Release.
6.1 The Company does hereby absolutely and forever remise,
release and discharge Xxxxxx from any and all causes of action in law
or in equity, claims, suits, demands, or other obligations or liability
of any nature whatsoever, whether known or unknown, that the Company
ever had, now has, or may hereafter have, by reason of any matter,
cause or thing whatsoever existing prior to or as of the date of the
execution hereof, except the obligations of Xxxxxx provided herein or
in any document referred to herein.
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6.2 Xxxxxx does hereby absolutely and forever remise, release
and discharge the Company and each of its officers, directors,
shareholders, employees, agents and representatives from any and all
causes of action in law or in equity, claims, suits, demands, or other
obligations or liability of any nature whatsoever, whether known or
unknown, that Xxxxxx ever had, now has, or may in the future have, by
reason of any matter, cause or thing whatsoever existing prior to or as
of the date of execution hereof, except the obligations of the Company
provided herein or in any document referred to herein.
7. Severability. If any provision of this Agreement or any part hereof
or application hereof to any person or circumstance shall be finally determined
by a court of competent jurisdiction to be invalid or unenforceable to any
extent, the remainder of this Agreement, or the remainder of such provision or
the application of such provision to persons or circumstances other than those
as to which it has been held invalid or unenforceable, shall not be affected
thereby and each provision of this Agreement shall remain in full force and
effect to the fullest extent permitted by law. The parties also agree that, if
any portion of this Agreement, or any part hereof or application hereof to any
person or circumstance, shall be finally determined by a court of competent
jurisdiction to be invalid or unenforceable to any extent, any court may modify
the objectionable provision so as to make it valid, reasonable and enforceable.
8. Notices. All notices or other communications required or permitted
to be given hereunder shall be in writing and shall be delivered personally or
mailed, certified mail, return receipt requested, postage prepaid, to the
parties, as follows:
If to CTI: Xx. Xxxxxxx X. Xxxxxxx
CTI Industries Corporation
00000 X. Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
If to Xxxxxx: Xx. Xxxxxxx X. Xxxxxx
0000 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Any notice mailed in accordance with the terms hereof shall be deemed received
on the third day following the date of mailing. Either party may change the
address to which notices to such party may be given hereunder by serving a
proper notice of such change of address to the other party.
9. Waivers. No failure or delay by any party to exercise any of such
party's rights hereunder or to insist upon strict compliance with respect to any
obligation hereunder, and no custom or practice of the parties at variance with
the terms hereof, shall constitute a waiver by any party to demand exact
compliance with the terms hereof. Waiver by any party of any particular default
by any other party shall not affect or impair such party's rights in respect to
any subsequent default of the same or of a different nature, nor shall any delay
or omission of any party to exercise any right arising from any default by any
other party affect or impair such party's rights as to such default or any
subsequent default.
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10. Benefit and Assignment. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective heirs,
personal representatives and successors in interest. No party may assign any of
such party's rights or duties hereunder to any other person.
11. Entire Agreement. This Agreement constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof and
supersedes all prior written or oral negotiations, representations,
understandings, commitments, contracts or agreements with respect to the subject
matter hereof.
12. Rights to Specific Performance. Each of the parties acknowledges
that, in the event of a violation of the provisions of this Agreement, the
remedies of the parties hereto at law may be inadequate and either party may, as
a result of such violation, suffer irreparable harm and, accordingly, the
parties hereto shall have the right to obtain specific performance, or to enjoin
violations hereof, in a court of competent jurisdiction, and the prevailing
party in any action in which injunctive relief or specific performance shall be
granted shall be entitled to recover all reasonable costs and expenses of such
party in such action including a reasonable sum for attorneys' fees.
13. Governing Law. This Agreement shall be governed by, and shall be
construed and enforced in all respects, in accordance with the laws of the State
of Illinois.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
CTI INDUSTRIES CORPORATION
/s/ Xxxxxxx X. Xxxxxx By /s/ Xxxxxxx X. Xxxxxxx
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XXXXXXX X. XXXXXX Authorized Officer
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