TERMINATION AGREEMENT
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This Agreement is made and entered into as of this 30th day of June, 1997,
among CONVERSION TECHNOLOGIES INTERNATIONAL, INC., ("Conversion"), CTI
ACQSUB-II, INC. ("Sub") and OCTAGON, INC. ("Octagon").
R E C I T A L S:
A. On November 18, 1996, Octagon, Conversion and Sub entered into an
Agreement and Plan of Reorganization (as heretofore amended, the "Merger
Agreement"), pursuant to which Octagon was to be merged with and into Sub, with
Octagon continuing as a wholly-owned subsidiary of Conversion (the "Merger").
B. The parties desire to terminate the Merger Agreement on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants among
the parties, the sufficiency of which is hereby acknowledged, Conversion, Sub
and Octagon hereby agree as follows:
AGREEMENT
1. Termination of Merger Agreement. The parties agree that (i) the Merger
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Agreement is hereby terminated by the mutual consent of Conversion, Sub and
Octagon, (ii) the Merger Agreement shall be of no further force and (iii) no
party hereto, nor any of its stockholders, directors, officers or affiliates,
shall have any liability in connection therewith; provided, however, that the
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Confidentiality Agreements dated June 6, 1996 and June 28, 1996 between Octagon
and Conversion shall remain in full force and effect.
2. Mutual General Releases and Indemnity. (a) Conversion, inclusive of its
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stockholders, directors, officers, employees, affiliates and agents, hereby
remises, releases and forever discharges Octagon and Octagon's past and present
affiliates and subsidiaries and their stockholders, directors, officers,
employees and agents and each of their heirs, assigns, executors and
administrators (the "Octagon Releasees") from all claims, actions, causes of
action, suits, rights, debts, dues, sums of money, accounts, bonds, bills,
covenants, contracts, controversies, omissions, judgments, executions and
demands whatsoever in law, admiralty or equity, which against the Octagon
Releasees Conversion ever had, now has or which Conversion, Conversion's
affiliates, anyone claiming in a derivative capacity on behalf of Conversion and
the predecessors, successors and assigns of any of them now or hereafter can,
shall or may have, whether known or unknown, foreseen or unforeseen, liquidated
or unliquidated and whether based upon facts now known or unknown, direct or
derivative, for, upon or by reason of any matter, cause or thing whatsoever from
the beginning of time to the day of this Agreement, including, but not limited
to, any and all rights and claims arising under the Merger Agreement (all of the
foregoing being referred to as the "Conversion Released Claims"), excepting only
all obligations of Octagon provided for or expressly reserved in this Agreement.
Conversion hereby agrees to indemnify and hold harmless the Octagon Releasees
and each of them from and against any and all liabilities, losses, damages,
expenses, fees (including, without limitation, reasonable attorneys' fees and
disbursements), settlements, awards or costs of any kind assessed against or
incurred by them or any of them arising from the assertion of any Conversion
Released Claim by or on behalf of Conversion or any of Conversion's affiliates,
stockholders, directors, officers,
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employees and agents and each of their predecessors, successors and assigns or
anyone who is entitled to make a claim in a derivative capacity on behalf of
Conversion.
(b) Octagon, inclusive of its stockholders, directors, officers, employees,
affiliates and agents, hereby remises, releases and forever discharges
Conversion, CTI Acqsub-II, Inc. and Paramount Capital, Inc. and their respective
past and present affiliates and subsidiaries and their stockholders, directors,
officers, employees and agents and each of their heirs, assigns, executors and
administrators (the "Conversion Releasees") from all claims, actions, causes of
action, suits, rights, debts, dues, sums of money, accounts, bonds, bills,
covenants, contracts, controversies, omissions, judgments, executions and
demands whatsoever in law, admiralty or equity, which against the Conversion
Releasees Octagon ever had, now has or which Octagon, Octagon's affiliates,
anyone claiming in a derivative capacity on behalf of Octagon and the
predecessors, successors and assigns of any of them now or hereafter can, shall
or may have, whether known or unknown, foreseen or unforeseen, liquidated or
unliquidated and whether based upon facts now known or unknown, direct or
derivative, for, upon or by reason of any matter, cause or thing whatsoever from
the beginning of time to the day of this Agreement, including, but not limited
to, any and all rights and claims arising under the Merger Agreement (all of the
foregoing being referred to as the "Octagon Released Claims"), excepting only
all obligations of Conversion provided for or expressly reserved in this
Agreement. Paramount Capital, Inc. shall be a third-party beneficiary of this
Section 2(b). Octagon hereby agrees to indemnify and hold harmless the
Conversion Releasees and each of them from and against any and all liabilities,
losses, damages, expenses, fees (including, without limitation, reasonable
attorneys' fees and disbursements), settlements, awards or costs of any kind
assessed against or incurred by them or any of them arising from the assertion
of any Octagon Released Claim by or
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on behalf of Octagon or any of Octagon's affiliates, stockholders, directors,
officers, employees and agents and each of their predecessors, successors and
assigns or anyone who is entitled to make a claim in a derivative capacity on
behalf of Octagon.
3. Fee for Octagon Past Services. Conversion acknowledges that during the
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Executory Period (as defined in the Merger Agreement), Octagon provided certain
services to Conversion, including, among other things, budget planning, budget
analysis, market research, market analysis, sales support and financial
planning. Conversion agrees that Octagon shall receive a credit of $558,680 in
respect of such services, which is deemed by Conversion and Octagon to be fair
and adequate consideration therefor, which amount shall be offset against
amounts owing by Octagon to Conversion pursuant to Section 5 below. Octagon
agrees that any and all work product resulting from such services is "work for
hire", which is and shall remain the property of Conversion.
4. Octagon Recruiting Fee. Conversion has expressed a desire to recruit the
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Octagon executives listed below and Octagon will raise no objection if
Conversion hires such executives. Accordingly, Octagon shall be entitled to a
recruiting fee, to be paid as an offset to amounts owing by Octagon to
Conversion pursuant to Section 5 below, in an amount equal to twenty-five
percent (25%) of the annual salaries of the following individuals:
Annual Salaries Fee
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1. Xxx Xxxxxxxxx $ 72,000 per annum $ 18,000
2. Xxxxxxx Xxxxxx $ 90,000 per annum 22,500
3. Xxxx Xxxx $ 125,000 per annum 31,250
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Total $ 71,750
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Notwithstanding the foregoing, Octagon will be required to reimburse the
recruiting fee of any of the foregoing individuals who voluntarily terminates
his employment with Conversion during the four-month period following the date
hereof.
5. Offset of Note. The parties agree that the amounts owing by Conversion
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to Octagon pursuant to Sections 3 and 4 above are hereby satisfied in full by
offsetting in full the aggregate of $630,430 of indebtedness due to Conversion
from Octagon pursuant to the Loan and Security Agreement dated September 19,
1996, between Conversion and Octagon. Such $630,430 aggregate amount consists of
(i) an aggregate of $255,000 in outstanding principal and $18,788 in interest
accrued through the date hereof due under the promissory note of Octagon dated
September 20, 1996 and (ii) $350,000 in principal and $6,642 in interest accrued
through the date hereof due under the promissory note of Octagon dated March 26,
1997, which amounts are hereby deemed paid in full and discharged.
6. Services by Octagon in Favor of Conversion. Conversion has requested
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that Octagon provide certain ongoing services on a fixed fee basis in certain
areas, including, among others, accounting, human resources and regulatory
compliance services. Octagon has agreed to provide such services in the manner
and for the sums specified immediately below:
(a) Octagon will provide Conversion with accounts payable, accounts
receivable, payroll, financial reporting, treasury services and audit support
services for a fixed monthly fee equal to $13,500.
(b) Octagon will provide human resources expertise to include benefit plan
administration, recruiting and general personnel support for a fixed monthly fee
equal to $3,200. In addition, special, time intensive services (such as
development of a 401(k) plan) shall be
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directed by Octagon's Vice President of Human Resources at a rate of $175 per
hour; provided that such services shall be agreed upon by Conversion in writing
in advance.
(c) Octagon will provide Conversion with regulatory compliance services
including environmental lobbying, EPA support and OSHA support on an as-needed
basis to be provided by Xxxx Xxxxxxxxx at the rate of $155.00 per hour, provided
that such services shall be agreed upon by Conversion in advance in writing.
(d) In connection with the services provided pursuant to subparagraphs (a),
(b) and (c) above, Conversion shall also reimburse Octagon for reasonable actual
out-of-pocket costs incurred in the rendering of such services, provided that
Conversion agrees to the incurrence of such expenses in writing in advance.
(e) The rights and obligations of the parties under this Section 5 may be
terminated on not less than 30 days' prior written notice by either party to the
other party.
7. Shared Facilities Arrangement. Conversion has requested to use
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facilities, furniture and office equipment of Octagon in Octagon's Altamonte
Springs, Florida office. Octagon has agreed to provide such facilities to
Conversion under the following terms:
(a) Use of 3 to 4 offices in Octagon's facility including related fixtures,
furniture, office equipment, telephone and computer services. Reimbursement
shall be based on a payment by Conversion equal to Octagon's rental rate, in
accordance with its lease, multiplied by the number of square feet occupied by
Conversion, together with a correlative share of common area expenses within
Octagon's space (i.e., such things as a reimbursement to Octagon for areas of
common use such as kitchen, restrooms, office services headquarters and the
like) and Octagon's external common area charges as are required to be paid by
Octagon to it landlord under its lease. Presently, the parties agree that such
reimbursement shall be an aggregate of
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$7,500 per month. In the event of a change of the rental rate, internal common
area rate and external common area rate, Conversion shall be responsible for a
correlative increase in the rates predicated upon the increase for all of
Octagon's space pursuant to its lease; provided that such change shall be
effective only upon 30 days prior written notice to Conversion. Such shared
facilities services may be cancelled by either party upon not less than 30 days'
advance written notice to the other party.
8. No Joint Venture, Defacto Merger or Complicity. Anything contained in
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this Agreement notwithstanding, the parties expressly disclaim any form of
defacto merger, joint venture or other form of joint enterprise between
Conversion and Octagon. Accordingly, neither Conversion nor Octagon shall be
liable for the debts, liabilities or obligations of the other, nor shall
Conversion or Octagon participate in any way in the profits and losses of the
other.
9. Applicable Law. The rights of all parties hereunder shall be governed
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and decided exclusively by the laws of the State of Delaware.
10. Definitions of Terminology and Construction. The parties agree that
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wherever used in this Agreement, unless the context clearly indicates a contrary
intent or unless otherwise specifically provided therein, references to
Conversion, Octagon and Paramount Capital, Inc. shall include their officers,
directors, employees, agents, stockholders, representatives, successors and
assigns of the parties hereof, and all those holding under either of them. The
pronouns used herein shall include, when appropriate, either gender and both
singular and plural, and the grammatical construction of sentences shall conform
thereto.
11. Notices. In the event of the need to provide notice by either party to
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the other, such notice shall be given in writing and shall be personally
delivered or mailed by first class,
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registered, or certified mail, return receipt requested, postage prepaid, or via
telecopy to the parties at the addresses shown below:
(a) If to Conversion:
Attn: Xxxxxxx X. Xxxx
00 Xxxxxxx Xxxx
Xxxxxx, Xxx Xxxxxx 00000
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
with a copy to:
Xxxxx X. Xxxxxx, Esq.
Xxxxxxxx Ingersoll
000 Xxxxxxx Xxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Telepcopy: (000) 000-0000
Telephone: (000) 000-0000
(b) If to Octagon:
Attn: Xxxxxxx X. Amt
000 Xxxxx Xxxxx Xxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxxxx Xxxxxxx, Xxxxxxx 00000
Telecopy: 000-000-0000
Telephone: 000-000-0000
with a copy to:
Xxxxxxx X. Xxxxxxxx, Esq.
Greenberg, Taurig, Hoffman, Lipoff, Xxxxx & Xxxxxxx. P.A.
0000 X. Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
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12. Entire Agreement. This Agreement contains the entire agreement among
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the parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
13. Severability. In the event that any provision of this Agreement would
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be held unenforceable in any jurisdiction, such provision shall be deemed
ineffective as to such jurisdiction without invalidating or causing to be
unenforceable the remaining provisions of this Agreement.
14. Benefits. This Agreement shall be binding upon and inure to the benefit
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of the parties hereto and their respective successors and assigns; provided,
however, that the services to be provided by Octagon hereunder may not be
assigned to another party without the prior written consent of Conversion.
15. Counterparts. This Agreement may be signed in counterparts, with each
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counterpart to have the force of an original instrument, but all counterparts
constituting but one agreement.
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IN WITNESS WHEREOF, Conversion, Sub and Octagon have executed and
delivered this Agreement on the date first set forth above.
CONVERSION TECHNOLOGIES
INTERNATIONAL, INC.
By: /s/ Xxxxxxx X. Xxxx
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Xxxxxxx X. Xxxx, Chairman
CTI ACQSUB-II, INC.
By: /s/ Xxxxxxx X. Xxxx
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Xxxxxxx X. Xxxx, President
OCTAGON, INC.
By: /s/ Xxxxxxx X. Amt
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Xxxxxxx X. Amt, President
