EXHIBIT 10.7
SUBSCRIPTION AGREEMENT
THIS AGREEMENT the 8th day of March, 1996 by and among CTI Industries
Corporation, a Delaware corporation, (the "Company") and ______________, an
Illinois _____________ ("Investors").
WHEREAS, the Company is engaged in the business of designing,
developing, manufacturing, marketing or selling metallized balloons, latex
balloons, laminated film, printed film and other products and items;
WHEREAS, the Company has authorized up to 4,000,000 shares of Preferred
Stock of the Company, par value Thirty-Five Cents ($.35) per share;
WHEREAS, the Company is willing to sell, issue and deliver shares of
Preferred Stock and the Investor is willing to purchase shares of Preferred
Stock of the Company on the terms provided herein.
NOW, THEREFORE, in consideration of the premises and of the terms,
covenants, and conditions hereinafter contained, the parties hereto agree as
follows:
1. Subscription. Subject to and on the terms and conditions hereof,
Investor hereby subscribes for, and agrees to purchase, and the Company agrees
to sell, issue and deliver 2,571,428.5 shares of Preferred Stock of the Company,
par value $.35 per share, at the price of Thirty-Five Cents ($.35) per share or
an aggregate purchase price of $900,000.
2. Payment. In consideration of the issuance of the shares of Preferred
Stock and subject to the terms and conditions hereof, the Investor shall pay to
the Company on the date hereof the sum of $700,000 and, on or before March 31,
1996 the sum of $200,000. Upon receipt of payment, the Company shall issue and
deliver to Investor duly executed certificates representing the number of shares
of Preferred Stock then being purchased.
3. Representations and Warranties of the Company. The Company
represents and warrants to Investor that each of the following is true and
correct as of the date hereof:
3.1 The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
which is presently the only state where the nature of its business and
assets require such qualification.
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3.2 The Company is authorized to issue up to 12,000,000 shares
of capital stock, of which 8,000,000 shares are designated as Common
Stock, par value $.075 per share and 4,000,000 shares shall be
designated as Preferred Stock, par value $.35 per share.
3.3 Attached hereto is a true and accurate copy of the
Restated Certificate of Incorporation of the Company providing the
rights, preferences and qualifications with respect to the Preferred
Stock of the Company.
3.4 There are presently issued and outstanding 2,833,188
shares of Common Stock of the Company.
3.5 Except as provided in paragraph 3.4 (i) there are no
contracts, options or other agreements or understandings pursuant to
which the Company is or may be obligated to issue Common Stock,
Preferred Stock or any other security of the Company, (ii) there are no
obligations of the Company outstanding which may be converted into
securities of the Company and (iii) there are no securities of the
Company issued or outstanding.
3.6 All shares of Common Stock of the Company issued and
outstanding are duly authorized and validly issued, fully paid and
nonassessable.
3.7 No holder of any outstanding and issued Common Stock or
any other security of the Company has any preemptive right or right of
first refusal with respect to the issuance by the Company of its stock.
3.8 This Agreement and the issuance of the shares of Preferred
Stock hereunder have been duly authorized and this Agreement, when
executed and delivered, shall constitute a valid and binding obligation
of the Company enforceable in accordance with its terms. All shares of
Preferred Stock to be issued hereunder, when issued in accordance with
the terms hereof, shall be duly authorized, validly issued, fully paid
and non-assessable.
4. Representations, Acknowledgements and Agreements of Investor. The
Investor hereby represents and warrants to the Company and acknowledges and
agrees as follows:
4.1 Investor or its representative has reviewed this Agreement
and the Exhibits hereto and has full and complete knowledge concerning
the business, prospects and condition, financial and otherwise, of the
Company.
4.2 Investor acknowledges that investment in the Preferred
Stock of the Company is speculative and involves a high degree of risk
of loss.
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4.3 Investor acknowledges and understands that the shares of
Preferred Stock purchased by Investor hereunder have not been
registered under the Securities Act of 1933, as amended ("Act"), or
under the laws of any State, in reliance upon exemptions therefrom
provided in such laws and further understands that such securities, or
the sale thereof, have not been approved or disapproved by the
Securities & Exchange Commission or by any other federal or state
agency.
4.4 Investor represents, warrants and agrees that Investor is
acquiring the shares of Preferred Stock hereunder solely for its own
account, for investment, and not with a view to the distribution or
resale thereof. Investor further represents that Investor's financial
condition is such that Investor is not under any present necessity or
constraint to dispose of such securities to satisfy any existing or
contemplated debt or undertaking. Investor (i) has not offered or sold
such securities within the meaning of the Act, (ii) does not have in
mind the sale of such securities either currently or after the passage
of a fixed or determinable period of time or upon the occurrence or
non-occurrence of any predetermined event or circumstance, (iii) has no
present or contemplated agreement, undertaking, arrangement,
obligation, indebtedness or commitment providing for or which is likely
to compel a disposition of the securities and (iv) is not aware of any
circumstances presently in existence which are likely in the future to
promote a disposition of the securities.
4.5 Investor confirms its understanding, and agrees,
as follows:
4.5.1 Certificates for the shares of Preferred Stock
purchased hereunder will bear substantially the following
legend:
"The Securities represented by this Certificate were
acquired on __________________, without registration
under the Securities Act of 1933, as amended. No
transfer or sale of these Securities or interest
therein may be made except under an effective
registration statement under said Act covering such
security unless the Company has received an opinion
of counsel satisfactory to it that such transfer or
sale does not require registration under said Act."
4.5.2 Investor shall be bound by the terms of the
foregoing legend and agrees that an appropriate transfer
restrictions will be noted on the Company's records.
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4.6 Investor and each member of Investor, is an "Accredited
Investor" as defined in Rule 501(a) of Regulation D promulgated under
the Act and shall provide such information and execute such
certificates to the Company as shall be reasonably requested by the
Company or its counsel to assure that Investor, and each member of
Investor, does meet the requirements of such provisions.
5. Entire Agreement. This Agreement and the documents referred to
herein constitute the entire agreement among the parties hereto with respect to
the subject matter hereof and supersedes all prior written or oral warranties,
representations, agreements, commitments or understandings.
6. Benefit. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, personal
representatives, successors and assigns.
7. Notices. Any notice required or permitted under this Agreement shall
be given in writing and shall be given by personal delivery or by depositing the
same with the United States Post Office, by registered or certified mail,
postage prepaid and addressed:
If to the Company: President
CTI Industries Corporation
22160 N. Pepper Road
Barrington, IL 60010
If to Investor: CTI Investors, LLC
c/o Stephen M. Merrick
30 N. LaSalle Street
Suite 3500
Chicago, IL 60602
Any notice mailed in accordance with the provisions of this Agreement shall be
deemed given or effective on the third day following the date of mailing. Any
party to this Agreement may change the address to which notices to such party
shall be given by proper notice given hereunder.
8. 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
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unenforceable to any extent, any court may so modify the objectionable provision
so as to make it valid, reasonable and enforceable.
9. Waivers. No failure 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.
10. Governing Law. This Agreement shall be governed by and shall be
interpreted and enforced 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
By: _____________________________
Authorized Officer
INVESTOR:
By: _____________________________
Authorized Representative
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