EXHIBIT
10.3


 


Amendment
No. 9 

to Credit Agreement


 


This Amendment No. 9 to Credit Agreement
is dated as of October 12, 2016, but effective as of September 30, 2016, and is between CTI
Industries Corporation, an Illinois corporation (the “Borrower”); CTI Supply, Inc.,
an Illinois corporation f/k/a CTI Helium, Inc., and a Wholly-Owned Subsidiary of the Borrower, in its capacity as a guarantor
(the “Subsidiary Guarantor”); and BMO Harris Bank N.A.,
a national banking association, successor to Harris N.A. (the “Bank”).


 


The Borrower and the Bank entered into a
Credit Agreement dated as of April 29, 2010 (as amended, modified, or supplemented before the effective date of this agreement,
the “Credit Agreement”), under which the Bank has extended certain credit facilities to the Borrower.


 


In connection with the Credit Agreement,
the Subsidiary Guarantor entered into a Guaranty dated as of April 29, 2010 (the “Subsidiary Guaranty”),
under which, among other things, the Subsidiary Guarantor guarantees the prompt and complete payment and performance of the Obligations.


 


The parties now desire to amend the Credit
Agreement in certain respects.


 


The parties therefore agree as follows:


 


1.          Definitions.
Defined terms used but not defined in this agreement are as defined in the Credit Agreement.


 


2.          Amendments
to Credit Agreement. (a) The definition of “CTI Helium” in section 5.1 of the Credit Agreement is
hereby amended to read in its entirety as follows:


 


“            “CTI Helium” means CTI Supply, Inc.,
an Illinois corporation and a Wholly-Owned Subsidiary f/k/a CTI Helium, Inc.”


 


(b)          The
definition of “Fixed Charges” in section 5.1 of the Credit Agreement is hereby amended to read in its entirety
as follows:


 


“            “Fixed Charges” means,
with reference to any period, the sum of (a) the aggregate amount of payments made or required to be made by the Borrower and its
Subsidiaries, on a consolidated basis, during such period in respect of principal on all Indebtedness for Borrowed Money (whether
at maturity, as a result of mandatory sinking fund redemption, scheduled payments or otherwise) other than (i) Revolving Loans,
(ii) Intercompany Debt, and (iii) in the case of Subordinated Debt, principal reductions caused by the exercise of warrants by
the holders of such debt and principal reductions made prior to the date of this Agreement, plus (b) total cash interest
expense (including interest on Subordinated Debt but excluding interest on Intercompany Debt) for such period.”


 




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(c)          The
definition of “Total Funded Debt” in section 5.1 of the Credit Agreement is hereby amended to read in its entirety
as follows:


 


“            “Total Funded Debt”
means, at any time the same is to be determined, the aggregate of all Indebtedness for Borrowed Money of the Borrower and its Subsidiaries,
on a consolidated basis, at such time, plus all Indebtedness for Borrowed Money of any other person or entity which is directly
or indirectly guaranteed by the Borrower or any of its Subsidiaries or which the Borrower or any of its Subsidiaries has agreed
(contingently or otherwise) to purchase or otherwise acquire or in respect of which the Borrower or any of its Subsidiaries has
otherwise assured a creditor against loss. For purposes of this Agreement, “Total Funded Debt” includes the 2016 CTI–Merrick
Debt and the 2016 CTI–Schwan Debt, but “Total Funded Debt” does not include any Excluded VIE Debt or the
Subordinated Debt owing to John H. Schwan and Stephen M. Merrick described in Section 8.7(f).”


 


(d)          Section 5.1
of the Credit Agreement is hereby further amended by inserting each of the following new definitions in the appropriate alphabetical
order:


 


“            “2016 CTI–Merrick Debt”
means the Indebtedness for Borrowed Money of the Borrower owing to Stephen M. Merrick evidenced by a Promissory Note dated
September 30, 2016, in the original principal amount of $370,000 made by the Borrower and payable to Stephen M. Merrick.


 


“2016 CTI–Schwan
Debt” means the Indebtedness for Borrowed Money of the Borrower owing to John H. Schwan evidenced by a Promissory Note
dated September 30, 2016, in the original principal amount of $530,000 made by the Borrower and payable to John H. Schwan.


 


“2016 Walmart Promotional
Program” means a program and arrangement pursuant to which the Borrower will provide and sell to Walmart in November 2016
approximately 4,000 half-pallets of vacuum-sealing machines and rolls of film for sale at Walmart stores.


 


“Amendment No. 9 Effective
Date” means September 30, 2016, which is the effective date of an Amendment No. 9 to Credit Agreement dated
as of October 12, 2016, but effective as of September 30, 2016, between the Borrower, CTI Helium, and the Bank.”


 




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(e)          Section 8.5(a)
of the Credit Agreement is hereby amended to read in its entirety as follows:


 


“            (a)          (i) from
and after the Amendment No. 9 Effective date through and including the earlier of (A) the date as of which all Receivables
from the 2016 Walmart Promotional Program have been paid to the Borrower (as determined by the Bank in its sole and absolute
discretion based, in part, on delivery to the Bank of invoice documentation and proof of payment remittance from Walmart) and (B) February 28,
2017, as soon as available, and in any event by the first Business Day of each week, a Borrowing Base certificate in the form attached
hereto as Exhibit F showing the computation of the Borrowing Base in reasonable detail as of the close of business on the
last day of the immediately preceding week, together with an accounts receivable and accounts payable aging and an inventory report
supporting the computation of the Borrowing Base, prepared by the Borrower and certified to by its chief financial officer or such
other officer acceptable to the Bank; and (ii) thereafter, as soon as available, and in any event within fifteen (15) days
after the last day of each calendar month, a Borrowing Base certificate in the form attached hereto as Exhibit F showing
the computation of the Borrowing Base in reasonable detail as of the close of business on the last day of such month, together
with an accounts receivable and accounts payable aging and an inventory report supporting the computation of the Borrowing Base,
prepared by the Borrower and certified to by its chief financial officer or such other officer acceptable to the Bank;”


 


(f)          Section 8.7
of the Credit Agreement is hereby amended as follows: (1) by deleting “and” from the end of section 8.7(h);
(2) by renumbering existing section 8.7(i) as a new section 8.7(k); and (3) by inserting the following as new
sections 8.7(i) and 8.7(j):


 


“             (i)          the
2016 CTI–Merrick Debt existing on the Amendment No. 9 Effective Date in an aggregate principal amount not to exceed
$370,000 as of the Amendment No. 9 Effective Date, as reduced by permitted payments or permitted deemed payments thereon,
and provided that (A) the maturity date for the 2016 CTI–Merrick Debt shall be not earlier than the date that is
six months after the latest of the Equipment Loan Final Maturity Date, the Mortgage Loan Final Maturity Date, and the Revolving
Credit Termination Date, (B) the 2016 CTI–Merrick Debt shall be unsecured, (C) the 2016 CTI–Merrick
Debt shall be Subordinated Debt, and (D) the first $900,000 of Receivables from the 2016 Walmart Promotional Program
paid to the Borrower shall, subject to Section 8.21, be used by the Borrower to make one or more prepayments
or deemed prepayments of all of the outstanding principal amount of the 2016 CTI–Merrick Debt and the 2016 CTI–Schwan
Debt;


 




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(j)          the
2016 CTI–Schwan Debt existing on the Amendment No. 9 Effective Date in an aggregate principal amount not to exceed
$530,000 as of the Amendment No. 9 Effective Date, as reduced by permitted payments or permitted deemed payments thereon,
and provided that (A) the maturity date for the 2016 CTI–Schwan Debt shall be not earlier than the date that is
six months after the latest of the Equipment Loan Final Maturity Date, the Mortgage Loan Final Maturity Date, and the Revolving
Credit Termination Date, (B) the 2016 CTI–Schwan Debt shall be unsecured, (C) the 2016 CTI–Schwan
Debt shall be Subordinated Debt, and (D) the first $900,000 of Receivables from the 2016 Walmart Promotional Program
paid to the Borrower shall, subject to Section 8.21w, be used by the Borrower to make one or more prepayments
or deemed prepayments of all of the outstanding principal amount of the 2016 CTI–Merrick Debt and the 2016 CTI–Schwan
Debt; and”


 


(g)          Clause (b)
of Section 8.21 of the Credit Agreement is hereby amended to read in its entirety as follows:


 


“(b) make any voluntary prepayment of Subordinated
Debt or effect any voluntary redemption thereof, other than voluntary prepayments (or deemed voluntary prepayments) of the 2016 CTI–Merrick
Debt and the 2016 CTI–Schwan Debt that are not prohibited under the terms of any instrument or agreement subordinating
the same to the Obligations, or”


 


3.            Reaffirmation
of Subsidiary Guaranty. The Subsidiary Guarantor hereby expressly does each of the following:


 


		(1)	consents to the execution by the Borrower and the Bank
of this agreement;



 


		(2)	acknowledges that the “Indebtedness” (as defined
in the Subsidiary Guaranty) includes all of the “Obligations” under and as defined in the Credit Agreement, as amended
from time to time (including as amended by this agreement);



 


		(3)	acknowledges that the Subsidiary Guarantor does not have
any set-off, defense, or counterclaim to the payment or performance of any of the obligations of the Borrower under the Credit
Agreement or the Subsidiary Guarantor under the Subsidiary Guaranty;



 




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		(4)	reaffirms, assumes, and binds itself in all respects to
all of the obligations, liabilities, duties, covenants, terms, and conditions contained in the Subsidiary Guaranty;



 


		(5)	agrees that all such obligations and liabilities under
the Subsidiary Guaranty continue in full force and that the execution and delivery of this agreement to, and its acceptance by,
the Bank will not in any manner whatsoever do any of the following:



 


		(A)	impair or affect the liability of the Subsidiary Guarantor
to the Bank under the Subsidiary Guaranty;



 


		(B)	prejudice, waive, or be construed to impair, affect, prejudice,
or waive the rights and abilities of the Bank at law, in equity, or by statute against the Subsidiary Guarantor pursuant to the
Subsidiary Guaranty; or



 


		(C)	release or discharge, or be construed to release or discharge,
any of the obligations and liabilities owing to the Bank by the Subsidiary Guarantor under the Subsidiary Guaranty; and



 


		(6)	represents and warrants that each of the representations
and warranties made by the Subsidiary Guarantor in any of the documents executed in connection with the Loans remain true and
correct as of the date of this agreement.



 


4.            Representations
and Warranties. To induce the Bank to enter into this agreement, the Borrower hereby represents to the Bank as follows:


 


		(1)	that the Borrower is duly authorized to execute and deliver
this agreement and is and will continue to be duly authorized to borrow monies under the Credit Agreement, as amended by this
agreement, and to perform its obligations under the Credit Agreement, as amended by this agreement;



 


		(2)	that the execution and delivery of this agreement and the
performance by the Borrower of its obligations under the Credit Agreement, as amended by this agreement, do not and will not conflict
with any provision of law or of the articles of organization or operating agreement of the Borrower or of any agreement binding
upon the Borrower;



 


		(3)	that the Credit Agreement, as amended by this agreement,
is a legal, valid, and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms, except
as enforceability might be limited by bankruptcy, insolvency, or other similar laws of general application affecting the enforcement
of creditors’ rights or by general principles of equity limiting the availability of equitable remedies;



 


		(4)	that the representation and warranties set forth in section 6
of the Credit Agreement, as amended by this agreement, are true and correct with the same effect as if those representations and
warranties had been made on the date hereof, except that all references to the financial statements mean the financial statements
most recently delivered to the Bank and except for changes specifically permitted under the Credit Agreement, as amended by this
agreement;



 




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		(5)	that the Borrower has complied with and is in compliance
with all of the covenants set forth in the Credit Agreement, as amended by this agreement, including the covenants stated in section 8
of the Credit Agreement; and



 


		(6)	that as of the date of this agreement no Default and no
Event of Default under section 10 of the Credit Agreement, as amended by this agreement, has occurred or is continuing.



 


5.            Conditions.
The effectiveness of this agreement is subject to satisfaction of the following conditions:


 


		(1)	that the Bank has received the following:



 


		(A)	a copy of this agreement, duly executed by the parties;



 


		(B)	one or more subordination agreements with respect to the
2016 CTI–Merrick Debt and the 2016 CTI–Schwan Debt (each as defined in the Credit Agreement as in effect
immediately after giving effect to this agreement), each in form and substance satisfactory to the Bank and duly executed by all
applicable Persons;



 


		(C)	a copy of an amendment to the BMO Mezzanine NWPA and
each of the other documents required to be delivered in accordance with that amendment, each in form and substance satisfactory
to the Bank and duly executed by all applicable Persons; and



 


		(D)	all other documents, certificates, resolutions, and opinions
of counsel as the Bank requests; and



 


		(2)	that all legal matters incident to the execution and delivery
of this agreement are satisfactory to the Bank and its counsel.



 


6.            General.
(a) This agreement and the rights and duties of the parties hereto are governed by, and are to be construed in accordance with,
the internal laws of State of Illinois without regard to principles of conflicts of laws. Wherever possible each provision of the
Credit Agreement and this agreement is to be interpreted in such manner as to be effective and valid under applicable law, but
if any provision of the Credit Agreement and this agreement is prohibited by or invalid under any such law, that provision will
be deemed ineffective to the extent of that prohibition or invalidity, without invalidating the remainder of that provision or
the remaining provisions of the Credit Agreement and this agreement.


 




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(b)          This
agreement is a Loan Document.


 


(c)          This
agreement binds each party and their respective successors and assigns, and this agreement inures to the benefit of each party
and the successors and assigns of the Bank.


 


(d)          Except
as specifically modified or amended by the terms of this agreement, the terms and provisions of the Credit Agreement, the Subsidiary
Guaranty, and the other Loan Documents are incorporated by reference herein and in all respects continue in full force and effect.
The Borrower, by execution of this agreement, hereby reaffirms, assumes, and binds itself to all of the obligations, duties, rights,
covenants, terms, and conditions contained in the Credit Agreement and the other Loan Documents to which it is a party.


 


(e)          Each
reference in the Credit Agreement to “this Agreement,” “hereunder,” “hereof,” or words of like
import, and each reference to the Credit Agreement in any and all instruments or documents delivered in connection therewith, are
deemed to refer to the Credit Agreement, as amended by this agreement.


 


(f)          The
Borrower shall pay all costs and expenses in connection with the preparation of this agreement and other related loan documents,
including, without limitation, reasonable attorneys’ fees and time charges of attorneys who are employees of the Bank or
any affiliate or parent of the Bank. The Borrower shall pay any and all stamp and other taxes, UCC search fees, filing fees, and
other costs and expenses in connection with the execution and delivery of this agreement and the other instruments and documents
to be delivered hereunder, and agrees to save the Bank harmless from and against any and all liabilities with respect to or resulting
from any delay in paying or omission to pay such costs and expenses.


 


(g)          The
Borrower hereby waives and releases any and all current existing claims, counterclaims, defenses, or set-offs of every kind and
nature which it has or might have against the Bank arising out of, pursuant to, or pertaining in any way to the Credit Agreement,
any and all documents and instruments in connection with or relating to the foregoing, or this agreement. The Borrower hereby further
covenants and agrees not to sue the Bank or assert any claims, defenses, demands, actions, or liabilities against the Bank arising
out of, pursuant to, or pertaining in any way to the Credit Agreement, any and all documents and instruments in connection with
or relating to the foregoing, or this agreement.


 


(h)          The
parties may sign this agreement in several counterparts, each of which will be deemed an original but all of which together will
constitute one instrument. Receipt of an executed signature page to this agreement by facsimile or other electronic transmission
will constitute effective delivery of that executed signature page. Electronic records of executed Loan Documents (including this
agreement) maintained by the Bank will be deemed to be originals.


 


[Signature pages follow]


 




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The parties are signing this Amendment No. 9
to Credit Agreement as of the date stated in the introductory clause.


 


	 	CTI Industries Corporation
	 	 	 
	 	By:	/s/ Stephen Merrick
	 	Name:	Stephen Merrick
	 	Title:	President
	 	 	 
	 	CTI Supply, Inc.
	 	(f/k/a CTI Helium, Inc.)
	 	 	 
	 	By:	/s/ Stephen Merrick
	 	Name:	Stephen Merrick
	 	Title:	President
	 	 	 
	 	BMO Harris BANK N.A.
	 	 	 
	 	By:	Timothy J. Moran
	 	Name:	Timothy J. Moran
	 	Title:	Managing Director


 


Signature page to Amendment No. 9 to Credit Agreement