Unassociated Document
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
: Filed
by
the Registrant Filed
by
a Party other than the Registrant 9
Check
the
appropriate box:
9 Preliminary
Proxy Statement
9 Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
: Definitive
Proxy Statement
9 Definitive
Additional Materials
9 Soliciting
Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
CTI
INDUSTRIES CORPORATION
(Name
of
Registrant as Specified In Its Charter)
Payment
of Filing Fee (check the appropriate box):
: No
Fee
Required
CTI
INDUSTRIES CORPORATION
22160
North Pepper Road
Barrington,
Illinois 60010
NOTICE
OF
ANNUAL MEETING OF SHAREHOLDERS TO
BE
HELD
ON NOVEMBER 10, 2006
To: Shareholders
of CTI Industries Corporation
The
annual meeting of the shareholders of CTI Industries Corporation will be held
at
The Holiday Inn Crystal Lake, 800 South Route 31, Crystal Lake, Illinois, 60014,
on Friday, November 10, 2006 at 10:00 a.m., Central Standard Time, for the
following purposes:
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1.
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To
elect 7 directors to hold office during the year following the annual
meeting or until their successors are elected (Item No. 1 on proxy
card);
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2.
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To
ratify the appointment of Weiser LLP as auditors of the Corporation
for
2006 (Item No. 2 on proxy card);
and
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3. |
To
transact such other business as may properly come before the
meeting.
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The
close
of business on Tuesday, October 3, 2006, has been fixed as the record date
for
determining the shareholders entitled to receive notice of and to vote at the
annual meeting.
BY
ORDER
OF THE BOARD OF DIRECTORS
October 6, 2006 |
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/s/Stephen M. Merrick |
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Stephen M. Merrick,
Secretary |
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YOUR
VOTE IS IMPORTANT
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It is important that as many
shares
as possible be represented |
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at the annual meeting. Please
date,
sign, and promptly return |
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the proxy in the enclosed envelope.
Your proxy may be revoked |
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by you at any time before it
has been
voted. |
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CTI
INDUSTRIES CORPORATION
22160
North Pepper Road
Barrington,
Illinois 60010
PROXY
STATEMENT
Information
Concerning the Solicitation
This
statement is furnished in connection with the solicitation of proxies to be
used
at the Annual Shareholders Meeting (the “Annual Meeting”) of CTI Industries
Corporation (the “Company”), an Illinois corporation, to be held at 10:00 a.m.
Central Daylight Savings Time on Friday, November 10, 2006, at The Holiday
Inn
Crystal Lake, 800 South Route 31, Crystal Lake, Illinois 60014. The proxy
materials are being mailed to shareholders of record at the close of business
on
Tuesday, October 3, 2006.
The
solicitation of proxies in the enclosed form is made on behalf of the Board
of
Directors of the Company.
The
cost
of preparing, assembling and mailing the proxy material and of reimbursing
brokers, nominees and fiduciaries for the out-of-pocket and clerical expenses
of
transmitting copies of the proxy material to the beneficial owners of shares
held of record by such persons will be borne by the Company. The Company does
not intend to solicit proxies otherwise than by use of the mail, but certain
officers and regular employees of the Company or its subsidiaries, without
additional compensation, may use their personal efforts, by telephone or
otherwise, to obtain proxies.
Quorum
and Voting
Only
shareholders of record at the close of business on Tuesday, October 3, 2006,
are
entitled to vote at the Annual Meeting. On that day, there were 2,130,192 shares
of Common Stock outstanding. Each share has one vote. A simple majority of
the
outstanding shares of Common Stock is required to be present in person or by
proxy at the meeting for there to be a quorum for purposes of proceeding with
the Annual Meeting. The Company's Articles of Incorporation grants the holders
of Common Stock the right to elect up to seven total directors, and seven
directors will be elected by the Company's Common Stockholders at this meeting.
The Common Stock does not possess cumulative voting rights, and the election
of
directors will be by the vote of a majority of shares of Common Stock present
in
person or by proxy at the Annual Meeting. The ratification of auditors will
require the vote of a simple majority of the shares of Common Stock present
at
the Annual Meeting by person or proxy. Abstentions and withheld votes have
the
effect of votes against these matters. Broker non-votes (shares of record held
by a broker for which a proxy is not given) will be counted for purposes of
determining shares outstanding for purposes of a quorum, but will not be counted
as present for purposes of determining the vote on any matter considered at
the
meeting.
A
shareholder signing and returning a proxy on the enclosed form has the power
to
revoke it at any time before the shares subject to it are voted by notifying
the
Secretary of the Company in writing. If a shareholder specifies how the proxy
is
to be voted with respect to any of the proposals for which a choice is provided,
the proxy will be voted in accordance with such specifications. If a shareholder
fails to so specify with respect to such proposals, the proxy will be voted
“FOR” the nominees for directors contained in these proxy materials, “FOR”
proposal 2, and “FOR” proposal 3.
Stock
Ownership by Management and Others
The
following table provides information concerning the beneficial ownership of
the
Company’s common stock by each director and nominee for director, certain
executive officers, and by all directors and officers of the Company as a group
as of October 3, 2006. In addition, the table provides information concerning
the beneficial owners known to the Company to hold more than 5 percent of the
outstanding common stock of the Company as of October 3, 2006.
The
amounts and percentage of stock beneficially owned are reported on the basis
of
regulations of the Securities and Exchange Commission (“SEC”) governing the
determination of beneficial ownership of securities. Under the rules of the
SEC,
a person is deemed to be a “beneficial owner” of a security if that person has
or shares “voting power,” which includes the power to dispose of or to direct
the disposition of such security. A person is also deemed to be a beneficial
owner of any securities of which that person has a right to acquire beneficial
ownership within 60 days after October 3, 2006. Under these rules, more than
one
person may be deemed a beneficial owner of the same securities and a person
may
be deemed a beneficial owner of securities as to which he has no economic
interest. Percentage of class is based on 2,036,474 shares of common stock
outstanding as of October 3, 2006.
Name
and Address (1)
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Shares
of Common Stock Beneficially
Owned (2)
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Percent
of Common
Stock
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John
H. Schwan
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744,228(3)
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31.05%(4)
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Stephen
M. Merrick
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698,123(5)
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29.41%(4)
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Howard
W. Schwan
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176,676(6)
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8.09%(4)
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Brent
Anderson
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67,385(7)
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3.10%(4)
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Samuel
Komar
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32,739(8)
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1.51%(4)
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Steve
Frank
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29,049(9)
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1.35%(4)
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Timothy
Patterson
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15,488(10)
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*
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Stanley
M. Brown
1140
Larkin
Wheeling,
IL 60090
|
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9,532(11)
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*
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Bret
Tayne
6834
N. Kostner Avenue
Lincolnwood,
IL 60712
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9,532(12)
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*
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Michael
Avramovich
70
W. Madison Street, Suite 1400
Chicago,
IL 60602
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1,000(13)
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*
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John
Collins (Director Nominee)
262
Pine Street
Deerfield,
IL 60015
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1,000(14)
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*
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All
Current Directors and Executive Officers as a group (10
persons)
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1,784,752
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63.00%(4)
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_______________
* Less
than
one percent
(1)
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Except
as otherwise indicated, the address of each stockholder listed above
is
c/o CTI Industries Corporation, 22160 North Pepper Road, Barrington,
Illinois 60010.
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(2)
|
A
person is deemed to be the beneficial owner of securities that can
be
acquired within 60 days from the date set forth above through the
exercise
of any option, warrant or right. Shares of Common Stock subject to
options, warrants or rights that are currently exercisable or exercisable
within 60 days are deemed outstanding for purposes of computing the
percentage ownership of the person holding such options, warrants
or
rights, but are not deemed outstanding for purposes of computing
the
percentage ownership of any other
person.
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(3)
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Includes
warrants to purchase up to 151,515 shares of Common Stock at $3.30
per
share, warrants to purchase up to 93,000 shares of Common Stock at
$4.87
per share, options to purchase 15,873 shares of Common Stock at $6.93
per
share granted under the Company’s 1997 Stock Option Plan and options to
purchase up to 5,953 shares of Common Stock at $2.55 per share granted
under the Company’s 2002 Stock Option Plan.
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(4)
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Assumes
the exercise of all warrants and options owned by the named person
into
shares of Common Stock.
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(5)
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Includes
warrants to purchase up to 151,515 shares of Common Stock at $3.30
per
share, warrants to purchase up to 70,000 shares of Common Stock at
$4.87
per share, options to purchase 15,873 shares of Common Stock at $6.93
per
share granted under the Company’s 1997 Stock Option Plan and options to
purchase up to 5,953 shares of Common Stock at $2.55 per share granted
under the Company’s 2002 Stock Option Plan.
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(6)
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Includes
options to purchase up to 15,873 shares of Common Stock at $6.30
per share
granted under the Company’s 1997 Stock Option Plan, options to purchase up
to 23,810 shares of Common Stock at $1.89 per share granted under
the
Company’s 1999 Stock Option Plan and options to purchase up to 14,286
shares of Common Stock at $2.31 per share granted under the Company’s 2002
Stock Option Plan.
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(7)
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Includes
options to purchase up to 4,762 shares of Common Stock at $6.30 per
share
granted under the Company’s 1997 Stock Option Plan, options to purchase up
to 17,858 shares of Common Stock at $1.47 per share, granted under
the
Company’s 2001 Stock Option Plan, options to purchase up to 8,929 shares
of Common Stock at $2.31 per share and options to purchase up to
10,000
shares of Common Stock at $2.88 per share granted under the Company’s 2002
Stock Option Plan.
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(8)
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Includes
options to purchase up to 4,762 shares of Common Stock at $6.30 per
share
granted under the Company’s 1997 Stock Option Plan, options to purchase up
to 8,334 shares of Common Stock at $1.89 per share granted under
the
Company’s 1999 Stock Option Plan, options to purchase up to 11,905 shares
of Common Stock at $1.47 per share granted under the Company’s 2001 Stock
Option Plan, options to purchase 7,500 shares of Common Stock at
$2.88 per
share granted under the Company’s 2002 Stock Option Plan and 238 shares of
Common Stock held by immediate family
members.
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(9)
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Includes
options to purchase up to 4,762 shares of Common Stock at $6.30 per
share
granted under the Company’s 1997 Stock Option Plan, options to purchase up
to 8,334 shares of Common Stock at $1.89 per share granted under
the
Company’s 1999 Stock Option Plan, options to purchase up to 5,953 shares
of Common Stock at $1.47 per share granted under the Company’s 2001 Stock
Option Plan and options to purchase up to 10,000 of Common Stock
at $2.88
per share granted under the Company’s 2002 Stock Option
Plan.
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(10)
|
Includes
options to purchase up to 5,000 shares of Common Stock at $2.29 per
share,
options to purchase up to 10,000 shares of Common Stock at $2.88
per share
granted under the Company’s 2002 Stock Option Plan and 488 shares of
Common Stock.
|
(11)
|
Includes
options to purchase up to 1,984 shares of Common Stock at $6.30 per
share
granted under the Company’s 1997 Stock Option Plan, options to purchase up
to 3,572 shares of Common Stock at $1.89 per share granted under
the
Company’s 1999 Stock Option Plan and options to purchase up to 2,976
shares of Common Stock at $2.31 per share and options to purchase
1,000
shares of Common Stock at $2.88 per share granted under the Company’s 2002
Stock Option Plan.
|
(12)
|
Includes
options to purchase up to 1,984 shares of Common Stock at $6.30 per
share
granted under the Company’s 1997 Stock Option Plan, options to purchase up
to 3,572 shares of Common Stock at $1.89 per share granted under
the
Company’s 1999 Stock Option Plan and options to purchase up to 2,976
shares of Common Stock at $2.31 per share granted under the Company’s 2002
Stock Option Plan.
|
(13)
|
Includes
options to purchase up to 1,000 shares of Common Stock at $2.88 per
share
granted under the Company’s 2002 stock Option
Plan.
|
(14)
|
Includes
options to purchase up to 1,000 shares of Common Stock at $2.88 per
share
granted under the Company’s 2002 Stock Option Plan.
|
PROPOSAL
ONE - ELECTION
OF DIRECTORS
Seven
directors will be elected at the Annual Meeting to serve for one-year terms
expiring on the date of the Annual Meeting in 2007. All directors will be
elected by holders of the Company’s Common Stock. Each director elected will
continue in office until a successor has been elected. If a nominee is unable
to
serve, which the Board of Directors has no reason to expect, the persons named
in the accompanying proxy intend to vote for the balance of those named and,
if
they deem it advisable, for a substitute nominee.
THE
BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF ALL OF THE
NOMINEES
Information
Concerning Nominees
The
following is information concerning nominees for election as directors of the
Company as of October 3, 2006. Messrs. John Schwan, Howard Schwan, Merrick,
Brown, Collins, Tayne and Avramovich are presently directors of the
Company.
JOHN
H.
SCHWAN, age 63, Chairman. Mr. Schwan has been an officer and director of the
Company since January, 1996. Mr. Schwan has been an executive officer of Rapak,
L.L.C or affiliated companies for over the last 15 years. Mr. Schwan has over
20
years of general management experience, including manufacturing, marketing
and
sales. Mr. Schwan served in the U.S. Army Infantry in Vietnam from 1966 to
1969,
where he attained the rank of First Lieutenant.
HOWARD
W.
SCHWAN, age 52, President. Mr. Schwan has been associated with the Company
for
22 years, principally in the management of the production and engineering
operations of the Company. Mr. Schwan was appointed as Vice President of
Manufacturing in November, 1990, was appointed as a director in January, 1996,
and was appointed as President in June, 1997.
John
Schwan and Howard Schwan are brothers.
STEPHEN
M. MERRICK, age 64, Executive Vice President and Secretary. Mr. Merrick was
President of the Company from January, 1996 to June, 1997 when he became Chief
Executive Officer of the Company. In October, 1999, Mr. Merrick became Executive
Vice President. Mr. Merrick is Of Counsel to the law firm of Vanasco Genelly
& Miller of Chicago, Illinois and has been engaged in the practice of law
for more than 40 years. Mr. Merrick is also Senior Vice President, Director
and
a member of the Management Committee of Reliv International, Inc. (NASDAQ),
a
manufacturer and direct marketer of nutritional supplements and food
products.
STANLEY
M. BROWN, age 60, Director. Mr. Brown was appointed as a director of the Company
in January, 1996. Since March, 1996, Mr. Brown has been President of Inn-Room
Systems, Inc., a manufacturer and lessor of in-room vending systems for hotels.
From 1968 to 1989, Mr. Brown was with the United States Navy as a naval aviator,
achieving the rank of Captain.
BRET
TAYNE, age 47, Director. Mr. Tayne was appointed as a director of the Company
in
December, 1997. Mr. Tayne has been the President of Everede Tool Company, a
manufacturer of industrial cutting tools, since January, 1992. Prior to that,
Mr. Tayne was Executive Vice President of Unifin, a commercial finance company,
since 1986. Mr. Tayne received a Bachelor of Science degree from Tufts
University and an MBA from Northwestern University.
MICHAEL
AVRAMOVICH, age, 54, Director. Mr. Avramovich is a principal of the law firm
of
Avramovich & Associates, P.C. of Chicago, Illinois, and has been engaged in
the practice of law for over 7 years. Prior to the practice of law, Mr.
Avramovich was an Associate Professor of Accounting and Finance at
National-Louis University in Chicago, Illinois. Mr. Avramovich has also worked
in various financial accounting positions at Molex International, Inc. of Lisle,
Illinois. Mr. Avramovich received a Bachelor of Arts degree in History and
International Relations from North Park University, a Master of Management,
Accounting and Information Systems, and Finance from Northwestern University,
a
Juris Doctorate from the John Marshall Law School and an L.L.M. in International
and Corporate Law from Georgetown University Law Center.
JOHN
I.
COLLINS, age 46, Director Nominee. Mr. Collins is the Chief Administrative
Officer and the former Chief Financial Officer of Mid-States Corporate Federal
Credit Union (“MSCFCU”), a $4.5 billion wholesale financial institution located
in Warrenville, Illinois. Prior to his affiliation with MSCFCU in 2001, Mr.
Collins was employed as both a Controller and Chief Financial Officer by Great
Lakes Credit Union (“GLCU”), a $350 million financial institution located in
North Chicago, Illinois. Mr. Collins is currently the Treasurer of the Illinois
Credit Union Executives Society, and is a former member of the Chicago Federal
Reserve Bank Advisory Group. Mr. Collins received a Bachelor of Arts degree
in
Economics, History and English from Ripon College, and a Masters in Business
Administration from Emory University. Mr. Collins has also participated in
the
Kellogg Management Institute and the Consumer Marketing Strategy programs at
Northwestern University on a post-graduate basis.
Executive
Officers Other Than Nominees
BRENT
ANDERSON, age 40, Vice President of Manufacturing. Mr. Anderson has been
employed by the Company since January, 1989, and was named Vice President of
Manufacturing in June of 1997. Mr. Anderson has held several managerial
positions within the company including Plant Engineer and Plant Manager. In
such
capacities Mr. Anderson was responsible for designing and/or installing much
of
the Company’s manufacturing equipment. Mr. Anderson earned a Bachelor of Science
Degree in Manufacturing Engineering from Bradley University.
SAMUEL
KOMAR, age 50, Vice President of Marketing. Mr. Komar has been employed by
the
Company since March of 1998, and was named Vice-President of Sales in September
of 2001. Mr. Komar has worked in sales for more than 20 years, and prior to
his
employment with the Company, Mr. Komar was with Bob Gable & Associates, a
manufacturer of sporting goods. Mr. Komar received a Bachelor of Science Degree
in Sales and Marketing from Indiana University.
TIMOTHY
PATTERSON, age 45, Vice President of Finance and Administration. Mr. Patterson
has been employed by the Company as Vice President of Finance and Administration
since September, 2003. Prior to his employment with the Company, Mr. Patterson
was Manager of Controllers for the Thermoforming Group at Solo Cup Company
for
two years. Prior to that, Mr. Patterson was Manager of Corporate Accounting
for
Transilwrap Company for three years. Mr. Patterson received a Bachelor of
Science degree in finance from Northern Illinois University and an MBA from
the
University of Illinois at Chicago.
STEVEN
FRANK, age 45, Vice President of Sales. Mr. Frank has been employed by the
Company in a sales capacity since July, 1996. Mr. Frank was hired as Sales
Manager Wholesale Division and in March 1998 was promoted to National Sales
Manager and most recently to Vice President of Sales in May 2005. Mr. Frank
is
responsible for all sales functions of the Novelty Division.
Committees
of the Board of Directors
The
Company's Board of Directors has standing Audit, Compensation and Nominating
Committees. The Board of Directors met four times during 2005. No director
attended less than 75% of the combined Board of Directors and Committee
meetings.
The
Compensation Committee is composed of Stanley M. Brown, John I. Collins and
Bret
Tayne. The Compensation Committee reviews and makes recommendations to the
Board
of Directors concerning the compensation of officers and key employees of the
Company. The Compensation Committee met one time during 2005.
The
Nominating Committee is composed of Stanley M. Brown and John I. Collins. The
Nominating Committee identifies and reviews potential candidates for the Board
of Directors and makes recommendations concerning potential candidates for
the
Board of Directors of the Company. The Nominating Committee did not meet
separately during 2005.
Audit
Committee
Since
2000, the Company has had a standing Audit Committee, which is presently
composed of Mr. Tayne, Mr. Brown, Mr. Collins and Mr. Avramovich. Mr. Avramovich
has been designated and is the Company’s “Audit Committee Financial Expert”
pursuant to paragraph (h)(1)(i)(A) of Item 401 of Regulation S-K of the Exchange
Act. The Audit Committee held four meetings during fiscal year 2005, including
quarterly meetings with management and independent auditors to discuss the
Company’s financial statements. Mr. Avramovich and each appointed member of the
Audit Committee satisfies the definition of “independent” as that term is used
in Item 7(d)(3)(iv) of Schedule 14A under the Exchange Act. The Company’s Board
of Directors has adopted a written charter for the Company’s Audit Committee.
The Audit Committee reviews and makes recommendations to the Company about
its
financial reporting requirements. Information regarding the functions performed
by the Committee is set forth in the “Report of the Audit Committee,” as
follows:
Report
of the Audit Committee
The
Audit
Committee oversees the Company’s financial reporting process on behalf of the
Board of Directors. Management has the primary responsibility for the financial
statements and the reporting process including the systems of internal controls.
In fulfilling its oversight responsibilities, the Committee reviewed the audited
financial statements in the Annual Report with management including a discussion
of the quality, not just the acceptability, of the accounting principles, the
reasonableness of significant judgments, and the clarity of disclosures in
the
financial statements.
The
Committee reviewed with the independent auditors, who are responsible for
expressing an opinion on the conformity of those audited financial statements
with generally accepted accounting principles, their judgments as to the
quality, not just the acceptability, of the Company’s accounting principles and
such other matters as are required to be discussed with the Committee under
generally accepted auditing standards, including but not limited to those
matters required to be discussed by SAS 61 (Codification of Statements on
Auditing Standards, AU §380). In addition, the Committee has discussed with the
independent auditors the auditor’s independence from management and the Company
including the matters in the written disclosures required by the Independence
Standards Board.
The
Committee discussed with the Company’s independent auditors the overall scope
and plans for their respective audits. The Committee meets with the independent
auditors, with and without management present, to discuss the results of their
examinations, their evaluations of the Company’s internal controls, and the
overall quality of the Company’s financial reporting.
In
reliance on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors (and the Board has approved) that the
audited financial statements be included in the Annual Report on Form 10-K
for
the year ended December 31, 2005 for filing with the Securities and Exchange
Commission. The Committee and the Board have also recommended, subject to future
shareholder approval at the Company’s 2006 annual meeting of shareholders, the
selection of Weiser LLP as the Company’s independent auditors.
Michael
Avramovich, Audit Committee Chair
Bret
Tayne, Audit Committee Member
Stanley
M. Brown, III, Audit Committee Member
John
I.
Collins, Audit Committee Member
Nominating
Committee
In
2005,
the Company established a Nominating Committee. The Nominating Committee
consists of two directors, Stanley M. Brown III and John I. Collins. The
Nominating Committee does not have a charter. The Board of Directors has
determined that each of the members of the Nominating Committee is independent
as defined in the listing standards for the NASDAQ Stock Market.
The
Nominating Committee has not adopted a formal policy with regard to
consideration of director candidates recommended by security holders. The
Company believes that continuing service of qualified incumbent members of
the
Board of Directors promotes stability and continuity at the Board level,
contributes to the Board’s ability to work as a collective body and provides the
benefit of familiarity and insight into the Company’s affairs. Accordingly, the
process of the Nominating Committee for identifying nominees reflects the
Company’s practice of re-nominating incumbent directors who continue to satisfy
the criteria for membership on the Board. For vacancies which are anticipated
on
the Board of Directors, the Nominating Committee intends to seek out and
evaluate potential candidates from a variety of sources that may include
recommendations by security holders, members of management and the Board of
Directors, consultants and others. The minimum qualifications for potential
candidates for the Board of Directors include demonstrated business experience,
decision-making abilities, personal integrity and a good reputation. In light
of
the foregoing, and the fact that one new independent director was elected to
the
Board in 2004, it is believed that a formal policy and procedure with regard
to
consideration of director candidates recommended by security holders is not
necessary in order for the Nominating Committee to perform its
duties.
The
Nominating Committee did not meet separately during 2005. All of the independent
directors of the Board of Directors of the Company participated in the
nominating process and voted in favor of the nomination of the of the persons
nominated for election as directors at the Annual Meeting of Stockholders to
be
held on November 10, 2006.
Executive
Compensation
The
following table sets forth a summary of the compensation paid or accrued during
the last three fiscal years by the Company to its President, Chief Executive
Officer and any other officer who was an officer of the Company at December
31,
2005, and who received compensation in excess of $100,000 (“Named Executive
Officers”).
Summary
Compensation Table
|
|
|
|
|
|
|
|
|
Annual
Compensation
|
Long
Term Compensation
|
|
|
Name
and Principal Position
|
Year
|
Salary
|
Underlying
Options # of Shares
|
All
Other Compensation
|
|
$
|
($)
|
|
Howard
W. Schwan - President
|
2005
|
$138,000
|
|
$20,280(1)
|
|
|
2004
|
$153,000
|
|
$12,705(2)
|
|
|
2003
|
$162,500
|
|
$17,445(3)
|
|
|
|
|
|
|
|
Steven
Frank - VP of Sales
|
2005
|
$97,000
|
10,000
|
|
|
|
2004
|
$85,000
|
|
|
|
|
2003
|
$85,000
|
|
|
|
|
|
|
|
|
|
Brent
Anderson - VP of Manufacturing
|
2005
|
$105,000
|
10,000
|
|
|
|
2004
|
$99,000
|
|
|
|
|
2003
|
$95,000
|
|
|
|
|
|
|
|
|
|
Samuel
Komar - VP of Marketing
|
2005
|
$104,200
|
7,500
|
|
|
|
2004
|
$104,200
|
|
|
|
|
2003
|
$104,200
|
|
|
|
|
|
|
|
|
|
Timothy
Patterson - VP of Finance
|
2005
|
$92,500
|
10,000
|
|
|
|
2004
|
$92,500
|
|
|
|
|
2003
|
$85,000
|
5,000
|
|
|
|
|
|
|
|
|
(1)
Includes Payment of Country Club Dues of $5,520, Employer matching
contributions to the company's 401(k) plan, a
defined contribution plan of $2,760 and Directors Fees paid to
the
directors of our UK subsidiary CTI Balloons Ltd of
$12,000.
|
|
(2)
Includes Payment of Country Club Dues of $5,520, Employer matching
contributions to the company's 401(k) plan,
|
a
defined contribution plan, of $4,685, premiums on Life Insurance
policy on
which Mr. Schwan's estate is entitled to death benefits, $2,500.00.
|
|
(3)
Includes Payment of Country Club Dues of $5,520, Employer matching
contributions to the company's 401(k) plan, a defined contribution
plan of $1,925 and premiums on Life Insurance policy on which
Mr. Schwan's
estate is entitled to death benefits,
$10,000.
|
The
Company has never granted any stock appreciation rights. During the period
from
January 1, 1999 to December 31, 2003, there have been no awards or payments
made
for long-term incentive compensation (other than stock option and warrant
grants) and there have been no restricted stock grants to any of the Named
Executive Officers.
Certain
Named Executive Officers have received warrants to purchase Common Stock of
the
Company in connection with their guarantee of certain bank loans secured by
the
Company and in connection with their participation in a private offering of
notes and warrants conducted by the Company. See “Board of Director Affiliations
and Related Transactions” below.
The
following table provides information related to options to purchase our common
stock granted to Named Executives during the fiscal year ended December 31,
2005:
Option
Grants in Last Fiscal Year
|
|
|
|
|
|
|
|
|
|
Potential
Realizable Value at Assumed Annual Rates of Stock Price Appreciation
for
Option Term
|
|
Grantee
|
|
#
of
Options
|
|
%
of
Total Options Granted to Employees
|
|
Exercise
Price
|
|
Expiration
Date
|
|
5%
($)
|
|
10%
(%)
|
|
Schwan,
Howard
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Komar,
Sam
|
|
|
7,500
|
|
|
9.50
|
%
|
|
2.88
|
|
|
12/30/2015
|
|
$
|
13,584.12
|
|
|
159.40
|
%
|
Anderson,
Brent
|
|
|
10,000
|
|
|
12.70
|
%
|
|
2.88
|
|
|
12/30/2015
|
|
$
|
18,112.17
|
|
|
159.40
|
%
|
Patterson,
Tim
|
|
|
10,000
|
|
|
12.70
|
%
|
|
2.88
|
|
|
12/30/2015
|
|
$
|
18,112.17
|
|
|
159.40
|
%
|
Frank,
Steve
|
|
|
10,000
|
|
|
12.70
|
%
|
|
2.88
|
|
|
12/30/2015
|
|
$
|
18,112.17
|
|
|
159.40
|
%
|
Collins,
John
|
|
|
1,000
|
|
|
1.30
|
%
|
|
2.88
|
|
|
12/30/2015
|
|
$
|
1,811.21
|
|
|
159.40
|
%
|
Brown,
Stanley
|
|
|
1,000
|
|
|
1.30
|
%
|
|
2.88
|
|
|
12/30/2015
|
|
$
|
1,811.21
|
|
|
159.40
|
%
|
Tayne,
Bret
|
|
|
1,000
|
|
|
1.30
|
%
|
|
2.88
|
|
|
12/30/2015
|
|
$
|
1,811.21
|
|
|
159.40
|
%
|
Avromovich,
Michael
|
|
|
1,000
|
|
|
1.30
|
%
|
|
2.88
|
|
|
12/30/2015
|
|
$
|
1,811.21
|
|
|
159.40
|
%
|
Aggregated
Option Exercises in Last Fiscal Year and FY-End Option
Values
Name
|
|
Shares
Acquired on Exercise (#)
|
|
Value
Realized ($)
|
|
Number
of Securities Underlying Unexercised Options at Year End (#)
Exercisable/Unexercisable
|
|
Value
of Unexercised In- the- Money Options at Fiscal Year End ($)
Exercisable/Unexercisable
|
|
John
H. Schwan
|
|
|
0
|
|
|
0
|
|
|
21,826/0
|
|
$
|
2,143/0(1
|
)
|
Howard
W. Schwan
|
|
|
0
|
|
|
0
|
|
|
53,968/0
|
|
$
|
32,859/0
(1
|
)
|
Stephen
M. Merrick
|
|
|
0
|
|
|
0
|
|
|
21,826/0
|
|
$
|
2,143/0(1
|
)
|
Brent
Anderson
|
|
|
0
|
|
|
0
|
|
|
41,549/0
|
|
$
|
25,715/0(1
|
)
|
Samuel
Komar
|
|
|
0
|
|
|
0
|
|
|
32,501/0
|
|
$
|
25,869/0
(1
|
)
|
Timothy
Patterson
|
|
|
0
|
|
|
0
|
|
|
15,000/0
|
|
$
|
3,400/0(1
|
)
|
Stanley
M. Brown
|
|
|
0
|
|
|
0
|
|
|
9,532/0
|
|
$
|
1,816/0(1
|
)
|
Bret
Tayne
|
|
|
0
|
|
|
0
|
|
|
9,532/0
|
|
$
|
5,459/0(1
|
)
|
Michael
Avramovich
|
|
|
0
|
|
|
0
|
|
|
1,000/0
|
|
$
|
30/0(1
|
)
|
John
Collins
|
|
|
0
|
|
|
0
|
|
|
1,000/0
|
|
$
|
30/0(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The
value
of unexercised in-the-money options is based on the difference between the
exercise price and the fair market value of the Company’s Common Stock on
December 31, 2004.
Equity
Compensation Plan Information
The
following table provides information regarding the Company’s equity compensation
plans as of December 31, 2005:
|
|
|
|
|
|
|
|
|
|
(
a
)
|
|
(
b
)
|
|
(
c
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
of securities
|
|
|
|
Number
of securities
|
|
|
|
remaining
available for
|
|
|
|
to
be issued
|
|
Weighted-average
|
|
future
issuance under
|
|
|
|
upon
exercise of
|
|
exercise
|
|
equity
compensation plans
|
|
|
|
upon
exercise of
|
|
price
of outstanding
|
|
(excluding
securities
|
|
Plan
Category
|
|
outstanding
options
|
|
outstanding
options
|
|
reflected
in Column (a) )
|
|
|
|
|
|
|
|
|
|
Equity
compensation plans
|
|
|
|
|
|
|
|
approved
by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2002
Stock Option Plan
|
|
|
135,954
|
|
$
|
2.61
|
|
|
25,382
|
|
2001
Stock Option Plan
|
|
|
44,050
|
|
|
1.84
|
|
|
74,335
|
|
1999
Stock Option Plan
|
|
|
53,574
|
|
|
1.89
|
|
|
91,468
|
|
1997
Stock Option Plan
|
|
|
94,448
|
|
|
6.51
|
|
|
28,570
|
|
Outside
Options
|
|
|
23,810
|
|
|
2.10
|
|
|
23,810
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
compensation plans
|
|
|
|
|
|
|
|
|
|
|
not
approved by security holders
|
|
|
-
|
|
|
|
|
|
|
|
Total
|
|
|
351,836
|
|
$
|
3.42
|
|
|
243,564
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
Committee Interlocks and Insider Participation
The
Compensation Committee of the Board of Directors of the Company is composed
of
Stanley M. Brown, John I. Collins and Bret Tayne. All members of the
Compensation Committee are independent directors. None of the members of the
Compensation Committee is an officer or employee of our Company. No executive
officer of our company serves as a member of the board of directors or
compensation committee of any entity that has one or more executive officers
serving on our Compensation Committee.
Compensation
Committee Report on Executive Compensation
The
Compensation Committee is responsible for establishing the standards and
philosophy of the Board of Directors regarding executive compensation, for
reviewing and evaluating executive compensation and compensation programs,
and
for recommending levels of salary and other forms of compensation for executives
of the Company to the Board of Directors. The full Board of Directors of the
Company is responsible for setting and administering salaries, bonus payments
and other compensation awards to executives of the Company.
Compensation
Philosophy
The
philosophy of the Compensation Committee, and of the Board of Directors of
the
Company, regarding executive compensation includes the following principal
components:
To
attract and retain quality executive talent, which is regarded as critical
to
the long and short-term success of the Company, in substantial part by offering
compensation programs which provide attractive rewards for successful
effort.
To
provide a reasonable level of base compensation to senior
executives.
To
create
a mutuality of interest between executive officers of the Company and
shareholders through long-term compensation structures, particularly stock
option programs, so that executive officers share the risks and rewards of
strategic decision making and its effect on shareholder value.
The
Compensation Committee has recommended, and the Board of Directors has
determined, to take appropriate action to comply with the provisions of Section
162(m) of the Internal Revenue Code so that executive compensation will be
deductible as an expense to the fullest extent allowable.
The
Company’s executive compensation program consists of two key elements: (i) an
annual component consisting of base salary and (ii) a long-term component,
principally stock options.
Annual
Base Compensation
The
Compensation Committee recommends annual salary levels for each of the Named
Executives, and for other senior executives of the Company, to the Board of
Directors. The recommendations of the Compensation Committee for base salary
levels for senior executives of the Company are determined annually, in part,
by
evaluating the responsibilities of the position and examining market
compensation levels and trends for similar positions in the marketplace.
Additional
factors which the Compensation Committee considers in recommending annual
adjustments to base salaries include: results of operation of the Company,
sales, shareholder returns, and the experience, work-performance, leadership
and
team building skills of each executive. The Company receives information from
the Chief Executive Officer with regard to these matters. While each of these
factors is considered in relatively equal weight, the Compensation Committee
does not utilize performance matrices or measured weightings in its review.
Each
year, the Compensation Committee conducts a structured review of base
compensation of senior executives with input from the Chief Executive
Officer.
Long-Term
Component - Stock Options
The
long-term component of compensation provided to executives of the Company has
been in the form of stock options. The Compensation Committee has recommended
to
the Board of Directors that a significant portion of the total compensation
to
executives be in the form of incentive stock options. Stock options are granted
with an exercise price equal to or greater than the fair market value of the
Company’s Common Stock on the date of the grant. Stock options are exercisable
between one and ten years from the date granted. Such stock options provide
incentive for the creation of shareholder value over the long-term since the
full benefit of the compensation package for an executive cannot be realized
unless an appreciation in the price of the Company’s Common Stock occurs over a
specified number of years.
The
magnitude of the stock option awards are determined annually by the Compensation
Committee and the Board of Directors. Generally, the number of options granted
to an executive has been based on the relative salary level of the
executive.
On
December 30, 2005, incentive stock options to purchase up to 10,000, 10,000,
10,000, 1,000, 1,000, 1,000 and 1,000 shares of the Company’s Common Stock were
granted to Messrs. Brent Anderson, Steven Frank, Timothy Patterson, Bret Tayne,
Stanley M. Brown, Michael Avromovich, and John Collins, respectively, under
the
2002 Stock Option Plan (the “2002 Plan”). On December 31, 2003, options to
purchase up to 5,000 shares of the Company’s Common Stock were granted to
Timothy Patterson under the 2002 Stock Option Plan.
There
were no other stock options granted to any of the Named Executives in 2003,
2004
or 2005.
CEO
Compensation
The
Compensation Committee utilizes the same standards and methods for recommending
annual base compensation for the Chief Executive Officer of the Company as
it
does for other senior executive officers of the Company.
In
1997,
the Company entered into an Employment Agreement with Howard W. Schwan,
President of the Company, providing that Mr. Schwan’s base annual compensation
would not be less than $135,000. During 2003, 2004 and 2005, upon the
recommendation of the Compensation Committee, the base salary of Mr. Schwan
was
$162,500, $153,000 and $138,000, respectively.
The
Compensation Committee has evaluated the compensation of Mr. Schwan in light
of
the results of operation of the Company and in comparison to compensation levels
of similar companies. The Compensation Committee determined that Mr. Schwan’s
level of base compensation be $138,000.
Compensation
Committee:
Bret
Tayne
Stanley
M. Brown, III
John
I.
Collins
Comparative
Stock Price Performance Graph
The
following graph compares, for the period January 1, 2001 to December 31, 2005,
the cumulative total return (assuming reinvestment of dividends) on the
Company’s Common Stock with (i) the NASDAQ Stock Market Index (U.S.) and (ii) a
peer group including S&P 500 Specialty Stores. The graph assumes an
investment of $100 on January 1, 2001, in the Company’s Common Stock and each of
the other investment categories.
Comparison
of Cumulative Total Return
|
|
INDEXED
RETURNS
|
|
Base
|
Years
Ending
|
|
Period
|
|
|
|
|
|
Company
/ Index
|
Oct00
|
Dec00
|
Dec01
|
Dec02
|
Dec03
|
Dec04
|
CTI
INDUSTRIES CORP
|
100
|
53.33
|
93.33
|
397.46
|
143.49
|
92.06
|
NASDAQ
U.S. INDEX
|
100
|
72.95
|
57.87
|
40.01
|
59.82
|
65.10
|
S&P
500 SPECIALTY STORES
|
100
|
86.63
|
139.84
|
124.30
|
167.37
|
176.08
|
Employment
Agreements
In
June,
1997, the Company entered into an Employment Agreement with Howard W. Schwan
as
President, which provides for an annual salary of not less than $135,000. The
term of the Agreement was through June 30, 2002 and is automatically renewed
thereafter for successive one year terms. The Agreement contains covenants
of
Mr. Schwan with respect to the use of the Company’s confidential information,
establishes the Company’s right to inventions created by Mr. Schwan during the
term of his employment, and includes a covenant of Mr. Schwan not to compete
with the Company for a period of three years after the date of termination
of
the Agreement.
Director
Compensation
John
Schwan was compensated in the amount of $24,000 in fiscal 2005 for his services
as Chairman of the Board of Directors. Further, he received an additional
$12,000 in directors fees in 2005 from CTI Balloons Limited located in the
United Kingdom. Directors other than members of management received a fee of
$1,000 for each Board meeting attended.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934 requires the Company’s officers and
directors, and persons who own more than ten percent of a registered class
of
the Company’s equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission and with the NASDAQ Stock
Market. Officers, directors and greater than ten-percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
Based
solely on a review of such forms furnished to the Company, or written
representations that no Form 5’s were required, the Company believes that during
calendar year 2004, all Section 16(a) filing requirements applicable to the
officers, directors and ten-percent beneficial shareholders were complied
with.
Code
of Ethics
The
Company has adopted a code of ethics that applies to its senior executive and
financial officers. The Company’s Code of Ethics seeks to promote (i) honest and
ethical conduct, including the ethical handling of actual or apparent conflicts
of interest between personal and professional relationships, (ii) full, fair,
accurate, timely and understandable disclosure of information to the Commission,
(iii) compliance with applicable governmental laws, rules and regulations,
(iv)
prompt internal reporting of violations of the Code to predesignated persons,
and (v) accountability for adherence to the Code. A copy of the Company’s Code
of Ethics has been included as Exhibit A to this proxy statement.
Board
of Directors Affiliations and Related
Transactions
Stephen
M. Merrick, Executive Vice President and Secretary of the Company, is a
principal of the law firm of Merrick & Associates, P.C.which served as
general counsel for the Company during portions of 2005 and is also Of Counsel
to Vanasco, Genelly & Miller, a law firm who provided services to the
Company in 2005. In addition, Mr. Merrick is a principal stockholder of the
Company. During 2005, Mr. Merrick and such firms were paid total fees and
compensation by the Company and subsidiaries in the amount of
$165,000.
John
H.
Schwan is a principal of Shamrock Packaging. The Company purchased a total
of
$165,000 in packaging materials from Shamrock Packaging during 2005.
During
portions of 2005, John H. Schwan was an officer of an affiliate of Rapak L.L.C.
Rapak purchased an aggregate of $ 6,860,000 in goods from the Company in
2005.
Messrs.
Schwan and Merrick made advances to the Company’s Mexican affiliate, Flexo
Universal in the amount of $112,500 and $141,900 respectively, in 2005.
Additionally, in 2005, Messrs. Schwan and Merrick advanced $130,000 and
$155,000, respectively, to the Company’s UK affiliate, CTI Balloons, Ltd. These
advances are reflected in demand notes bearing interest at the rate of 7% per
annum. Mr. Merrick also advanced $19,209 to the Company in December
2005.
In
July,
2001, certain members of Company management were issued warrants to purchase
119,050 shares of the Company’s common stock at an exercise price of $1.50 per
share in consideration of their facilitating, securing and guaranteeing bank
loans to the Company in the amount of $1.4 million and for advancing additional
monies to the Company that were repaid in 2001. Mr. Schwan and Mr. Merrick
exercised these warrants on June 12, 2006.
On
January 10, 2006, an officer of Flexo Universal, Pablo Gortazar, acquired all
rights in a loan of a credit union to Flexo Universal and CTF International,
both Mexican subsidiaries of the Company, for the book value of the loan. The
principal amount of the obligation of Flexo Universal and CTF International
acquired was $191,000 and such amount bears interest at the rate of 9.5% per
annum.
On
February 1, 2006, Mssrs. John Schwan and Stephen Merrick each loaned to the
Company the sum of $500,000 in exchange for five year subordinated notes and
warrants to purchase up to 151,515 shares of common stock of the Company,
each.
Interest
paid to related parties during 2005 was $ 146,898.
The
Company believes that each of the transactions set forth above were entered
into, and any future related party transactions will be entered into, on terms
as fair as those obtainable from independent third parties. All related party
transactions must be approved by a majority of disinterested directors and
subject to review in the context of the Company’s Code of Ethics.
THE
BOARD OF DIRECTORS RECOMMENDS SHAREHOLDERS VOTE “FOR” THE SEVEN NOMINEES FOR
DIRECTOR NAMED IN PROPOSAL NO. 1.
PROPOSAL
TWO - SELECTION
OF AUDITORS
WEISER
LLP
The
Board
of Directors has selected and approved Weiser, L.L.P. as the independent
registered public accounting firm to audit our financial statements for 2006,
subject to ratification by the stockholders. It is expected that a
representative of the Firm of Weiser, L.L.P. will be present at the Annual
Meeting and will have an opportunity to make a statement if he or she so desires
and will be available to respond to appropriate questions.
Fees
Billed By Independent Public Accountants
The
following table sets forth the amount of fees billed by Weiser, L.L.P. for
services rendered for the years ended December 31, 2004 and 2005:
|
|
2005
Amount
|
|
2004
Amount
|
|
Audit
fees (1)
|
|
$
|
310,500
|
|
$
|
238,000
|
|
Other
audit related fees (2)
|
|
$
|
0
|
|
$
|
0
|
|
All
other fees(3)
|
|
$
|
23,000
|
|
$
|
15,000
|
|
|
|
|
|
|
|
|
|
Total
fees
|
|
$
|
333,500
|
|
$
|
253,000
|
|
(1)
|
Includes
the annual financial statement audit and limited quarterly reviews
and
expenses.
|
(2)
|
Includes
fees and expenses for other audit related activity provided by Eisner,
LLP.
|
(3) |
Primarily
represents tax services, which include preparation of tax returns
and
other tax consulting services.
|
All
audit, tax and other services to be performed by Weiser LLP for the Company
must
be pre-approved by the Audit Committee. The Audit Committee reviews the
description of services and an estimate of the anticipated costs of performing
those services. Services not previously approved cannot commence until such
approval has been granted. Pre-approval is granted usually at regularly
scheduled meetings. If unanticipated items arise between meetings of the Audit
Committee, the Audit Committee has delegated approval authority to the Chairman
of the Audit Committee, in which case the Chairman communicates such
pre-approvals to the full Committee at its next meeting. During 2004, all
services performed by Eisner, LLP, the Company’s previous independent auditors,
were pre-approved by the Audit Committee in accordance with this
policy.
The
Audit
Committee of the Board of Directors reviews all relationships with its
independent auditors, including the provision of non-audit services, which
may
relate to the independent registered public accounting firm’s independence. The
Audit Committee of the Board of Directors considered the effect of Weiser LLP’s
tax services in assessing the independence of the independent registered public
accounting firm and concluded that the provision of such services by Weiser
LLP
was compatible with the maintenance of that firm’s independence in the conduct
of its auditing function.
THE
BOARD OF DIRECTORS RECOMMENDS SHAREHOLDERS VOTE “FOR” SUCH
RATIFICATION.
Stockholder
Proposals for 2006 Proxy Statement
Proposals
by shareholders for inclusion in the Company's Proxy Statement and form of
proxy
relating to the 2006 Annual Meeting of Stockholders, which is tentatively
scheduled to be held on June 8, 2007 should be addressed to the Secretary,
CTI
Industries Corporation, 22160 North Pepper Road, Barrington, Illinois 60010,
and
must be received at such address no later than December 31, 2006. Upon receipt
of any such proposal, the Company will determine whether or not to include
such
proposal in the Proxy Statement and proxy in accordance with applicable law.
It
is suggested that such proposal be forwarded by certified mail, return receipt
requested.
Other
Matters to Be Acted Upon at the Meeting
The
management of the Company knows of no other matters to be presented at the
meeting. Should any other matter requiring a vote of the shareholders arise
at
the meeting, the persons named in the proxy will vote the proxies in accordance
with their best judgment.
Dated: October 6, 2006 |
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BY ORDER OF THE |
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BOARD OF DIRECTORS |
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/s/Stephen M.
Merrick |
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Stephen M. Merrick,
Secretary |
EXHIBIT
A
CTI
INDUSTRIES CORPORATION
Code
of Ethics
for
Senior Executive and Financial Officers
I. General
The
policy of CTI Industries Corporation (the “Company”) is to comply strictly with
all laws governing its operations and to conduct its affairs in keeping with
the
highest moral, legal and ethical standards. Senior executive and financial
officers hold an important and elevated role in maintaining a commitment to
(i)
honest and ethical conduct, (ii) full, fair, accurate, timely and understandable
disclosure in the Company’s public communications, and (iii) compliance with
applicable governmental rules and regulations. Accordingly, the Company has
adopted this Code of Ethics for its Chief Executive Officer, Chief Financial
Officer, Controller and any other senior executive or financial officers
performing similar functions and so designated from time to time by the Chief
Executive Officer (the “Senior Executive and Financial Officers”). This Code of
Ethics shall be approved annually by the Audit Committee of the Board of
Directors (the “Committee”) and disbursed to the public by means of one of the
methods described in Item 406 of Regulation S-K promulgated by the Securities
and Exchange Commission (the “SEC”).
II. Honest
and Ethical Conduct
Senior
Executive and Financial Officers are expected to exhibit and promote the highest
standards of honest and ethical conduct, by, among other things, their adherence
to the following policies and procedures:
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Senior
Executive and Financial Officers shall engage in only honest and
ethical
conduct, including the ethical handling of actual or apparent conflicts
of
interest between personal and professional
relationships.
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Senior
Executive and Financial Officers shall inform the Company’s Corporate
Counsel or, in his absence, the Chairman of the Committee of (a)
deviations in practice from policies and procedures governing honest
and
ethical behavior or (b) any material transaction or relationship
that
could reasonably be expected to create a conflict of
interest.
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Senior
Executive and Financial Officers shall demonstrate personal support
for
the policies and procedures set forth in this Code of Ethics through
periodic communications reinforcing these principles and standards
throughout the Company.
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Senior
Executive and Financial Officers shall respect the confidentiality
of
information acquired in performance of one’s responsibilities and shall
not use confidential information for personal
advantage.
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III. Financial
Records and Periodic Reports
The
Company is committed to full, fair, accurate, timely and understandable
disclosures in reports and documents that it files with, or submits to, the
SEC
and in other public communications made by the Company. In support of this
commitment, the Company has, among other measures, (a) designed and implemented
disclosure controls and procedures (within the meaning of applicable SEC rules)
and (b) required the maintenance of accurate and complete records, the
prohibition of false, misleading or artificial entries on its books and records,
and the full and complete documentation and recording of transactions in the
Company’s accounting records. In addition to performing their duties and
responsibilities under these requirements, each of the Senior Executive and
Financial Officers will establish and manage the Company’s reporting systems and
procedures with due care and diligence to ensure that:
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Reports
filed with or submitted to the SEC and other public communications
contain
information that is full, fair, accurate, timely and understandable
and do
not misrepresent or omit material
facts.
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Business
transactions are properly authorized and completely and accurately
recorded in all material respects on the Company’s books and records in
accordance with generally accepted accounting principles and the
Company’s
established financial policies.
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Retention
or disposal of Company records is in accordance with established
Company
policies and applicable legal and regulatory requirements.
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IV. Compliance
with Applicable Laws, Rules and Regulations
The
policy of the Company is to comply strictly with all laws governing its
operations and to conduct its affairs in keeping with the highest moral, legal
and ethical standards. Accordingly, the Senior Executive and Financial Officers
will comply with all applicable governmental laws, rules and regulations, and
will establish and maintain mechanisms to:
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Monitor
compliance of the Company’s finance organization and other key employees
with all applicable federal, state and local statutes, rules, regulations
and administrative procedures.
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Identify,
report and correct any detected deviations from applicable federal,
state
and local statutes, rules, regulations and administrative
procedures.
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V. Compliance
with Code of Ethics
The
Senior Executive and Financial Officers shall acknowledge and certify their
ongoing compliance with this Code of Ethics annually and provide a copy of
such
certification to the Committee. This Code of Ethics will be published and made
available to all employees, and any employee should promptly report any
violation of this Code of Ethics to the General Counsel or, in his or her
absence, the Chairman of the Committee. The Board of Directors shall take
appropriate action with respect tot he failure of any Senior Executive or
Financial Officer to comply with this Code of Ethics, which may include
reprimand, demotion or dismissal, depending on the seriousness of the
offense.
Adopted: April,
2004