EXHIBIT 10.6


 


SUBORDINATION AGREEMENT


 


This SUBORDINATION
AGREEMENT made and entered into as of December 14, 2017 (as amended, restated, supplemented or otherwise modified from time to
time, this "Agreement"), is by and among CTI INDUSTRIES CORPORATION, an Illinois corporation (the "Debtor"),
the Subordinated Creditors (as defined in Section 1 below), and PNC BANK, NATIONAL ASSOCIATION, in its capacity as Agent (the "Agent")
for the Lenders referred to below.


 


RECITALS:


 


A.           Pursuant
to that certain Revolving Credit, Term Loan and Security Agreement of even date herewith (as amended, restated, supplemented, or
otherwise modified from time to time, the "Credit Agreement"), by and among the Debtor, certain affiliates of
the Debtor, the lenders (the "Lenders") from time to time party thereto and the Agent, the Agent and Lenders have
agreed to make available to the Debtor the "Advances" and other financial accommodations on the terms and subject to
the conditions set forth in the Credit Agreement.


 


B.           Pursuant
to certain existing and/or future notes, agreements, and instruments (collectively, the "Subordinated Debt Instruments"),
including, without limitation, the notes identified on Schedule I hereto, the Debtor is or will be indebted in various amounts
to the Subordinated Creditors.


 


AGREEMENTS:


 


In consideration of
the Recitals and for other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the parties
agree as follows:


 


1.           Definitions.
Capitalized terms not otherwise defined herein (including the Recitals) have the meaning assigned to such terms in the Credit Agreement.
As used herein, the following terms have the following meanings:


 


(a)       "Enforcement
Action" means (a) to take from or for the account of any Credit Party, by set-off or in any other manner, the whole
or any part of any moneys which may now or hereafter be owing by any Credit Party with respect to the Subordinated Debt, (b) to
sue for payment of, or to initiate or participate with others in any suit, action or proceeding against any Credit Party to (i) enforce
payment of or to collect the whole or any part of the Subordinated Debt or (ii) commence judicial enforcement of any of the
rights and remedies under the Subordinated Debt Documents or applicable law with respect to the Subordinated Debt, (c) to
accelerate the Subordinated Debt, (d) to exercise any put option or to cause any Credit Party to honor any redemption or mandatory
prepayment obligation under any Subordinated Debt Document, or (e) to take any action under the provisions of any state or
federal law, including, without limitation, the Uniform Commercial Code, or under any contract or agreement, to enforce, foreclose
upon, take possession of or sell any property or assets of any Credit Party, including any collateral for the Superior Debt.


 




     


     


    




 


(b)       "Subordinated
Creditor" means, individually, each individual or entity who from time to time executes a counterpart signature page to
this Agreement as a Subordinated Creditor; and "Subordinated Creditors" means, collectively, all such individuals.
As of the date of execution of this Agreement, the only Subordinated Creditor is John H. Schwan.


 


(c)       "Subordinated
Debt" means all of the indebtedness, obligations and liabilities of the Debtor to the Subordinated Creditors.


 


(d)       "Subordinated
Debt Documents" means each Subordinated Debt Instrument, any other guaranties with respect to the Subordinated Debt and
all other documents, agreements and instruments now existing or hereinafter entered into evidencing or pertaining to all or any
portion of the Subordinated Debt, as the same may be amended, restated, supplemented or otherwise modified from time to time, as
permitted hereunder.


 


(e)       "Superior
Debt" means all liabilities, indebtedness and obligations of the Debtor to the Agent or any Lender, whether direct or
indirect, absolute or contingent, due or to become due, now existing or hereafter arising, and whether created directly or acquired
by assignment or otherwise, whether before or after the filing of an insolvency proceeding together with any interest, fees, costs
and expenses accruing thereon after the commencement of an insolvency proceeding, without regard to whether or not such interest,
fees, costs and expenses are allowed, including, but not limited to, all "Obligations" under and as defined in the Credit
Agreement.


 


2.           Subordination.


 


(a)       Subordination
of the Subordinated Debt. Each Subordinated Creditor postpones and subordinates to the extent and in the manner provided in
this Agreement all of such Subordinated Creditor's Subordinated Debt to the payment of all of the Superior Debt. Except as expressly
set forth herein, until the payment in full of the Superior Debt and the termination of all commitments under the Credit Agreement,
no payment or distribution of property, claims or interests of any kind or character whatsoever in respect of any Subordinated
Debt shall be made by or on behalf of Company or accepted by Subordinated Creditor. Each Subordinated Creditor shall insure that
any instrument or document evidencing such Subordinated Creditor's Subordinated Debt shall bear the following legend:


 


Payment of the indebtedness evidenced
by this instrument or document and the rights of the holder hereof are subordinated and subject to the rights of PNC Bank, National
Association, as Agent for certain Lenders, to the extent provided in a Subordination Agreement dated as of December 14, 2017, from
the payee to said lender.


 


The Debtor's and each Subordinated Creditor's
books shall be marked to evidence subordination of all of the Subordinated Debt to the Superior Debt. The Agent is authorized to
examine such books from time to time and to make any notations required by this Agreement. All instruments and documents evidencing
the Subordinated Debt shall, upon request, be delivered to the Agent properly assigned or endorsed to the Agent. Nothing contained
in this Agreement shall affect the validity of the Subordinated Debt.


 




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(b)       Subordination
of the Liens Securing the Subordinated Debt. Each Subordinated Creditor (i) acknowledges that, as of the date hereof, such
Subordinated Creditor has no lien, security interest in, or other right to, any property of the Debtor, and (ii) covenants that
it will not obtain any lien, security interest in, or other right to, any property of the Debtor without the Agent's prior written
consent. To the extent that, notwithstanding the foregoing acknowledgment and covenant, any Subordinated Creditor acquires any
lien, security interest in, or other right to, any of the Subordinated Creditor Collateral (as hereinafter defined), each Subordinated
Creditor expressly subordinates all of its rights in any property of the Debtor, real or personal, now or later securing the Subordinated
Debt (the "Subordinated Creditor Collateral"), to all present and future rights of the Agent in any of the Subordinated
Creditor Collateral to secure the Superior Debt, without regard to the time or order of attachment or perfection of any security
interest, the time or order of filing any financing statement, or the giving or failure to give any notice of the acquisition or
expected acquisition of any purchase money security interest. Each Subordinated Creditor consents to the creation and continuance
of all present and future security interests of the Agent in the Subordinated Creditor Collateral to secure the Superior Debt and
to the enforcement of those security interests, including the removal of the Subordinated Creditor Collateral from the real property
of the Debtor. Each Subordinated Creditor agrees that it will not at any time contest the validity, perfection, priority or enforceability
of the Superior Debt, the Credit Agreement and related loan documents, or the liens and security interests of the Agent in the
collateral securing the Superior Debt. This subordination as to the Subordinated Creditor Collateral is intended to define the
rights and duties of the Agent and the Subordinated Creditors; it is not intended that any third party shall benefit from it. If
the effect of any provision of this subordination would be to give any third party a priority status to which that party would
not otherwise be entitled, that provision shall, to the extent necessary to avoid that priority, be given no effect and the rights
and priorities of the Agent and the Subordinated Creditors shall be determined in accordance with applicable law.


 


3.           Payments
on Subordinated Debt.


 


(a)       Limitations.
Except as permitted by Section 3(c), until all the Superior Debt is paid in full: (i) the Debtor shall not, directly or indirectly,
make any payments on account of or (other than the liens securing the Subordinated Creditor Collateral) grant a security interest
in, mortgage, assign, or transfer, any properties to secure or satisfy any part of the Subordinated Debt; (ii) no Subordinated
Creditor shall demand or accept from the Debtor or any other person any such payment or collateral or cancel, set off or otherwise
discharge any part of the Subordinated Debt; and (iii) neither the Debtor nor any Subordinated Creditor shall otherwise take or
permit any action prejudicial to or inconsistent with the Agent's priority position over the Subordinated Creditors created by
this Agreement.


 


(b)       Payments
Received. If any payment (other than a payment permitted by this Agreement) on account of or any collateral for any part of
the Subordinated Debt is received by any Subordinated Creditor, such payment or collateral shall be delivered forthwith to the
Agent by such Subordinated Creditor for application to the Superior Debt, in the form received except for the addition of any endorsement
or assignment necessary to effect transfer of all rights therein to the Agent. The Agent is irrevocably authorized (but not required),
and each Subordinated Creditor does hereby irrevocably appoint the Agent, or any of its officers or employees on behalf of the
Agent as the attorney-in-fact for such Subordinated Creditor in connection with the Subordinated Debt, to supply any required endorsement
or assignment which may have been omitted. Until so delivered any such payment or collateral shall be held by the recipient in
trust for the Agent and shall not be commingled with other funds or property of the recipient.




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(c)       Permitted
Payments. The Debtor shall be permitted to make, and the Subordinated Creditors shall be permitted to accept from the Debtor,
(i) regularly scheduled interest payments on the Subordinated Debt to the extent paid-in-kind (but not paid in cash), (ii) non-cash
principal reductions resulting from the exercise of warrants by the Subordinated Creditors and corresponding conversion of Subordinated
Debt into Equity Interests of Debtor, and (iii) cash payments of interest and principal on the Subordinated Debt in an aggregate
amount not to exceed $130,000 during any calendar year so long as, in each case, both before and after giving effect to any such
payment (A) no Default or Event of Default exists or would result therefrom and (B) Undrawn Availability is greater than or equal
to $2,500,000.


 


4.           Collection
of the Subordinated Debt, Bankruptcy, Etc. Until all of the Superior Debt is paid in full, no Subordinated Creditor shall,
without the prior written consent of the Agent, take any Enforcement Action with respect to the Subordinated Debt. The Agent is
irrevocably authorized (but not required), and each Subordinated Creditor does hereby irrevocably appoint the Agent, or any of
its officers or employees on behalf of the Agent as the attorney-in-fact for such Subordinated Creditor in connection with the
Subordinated Debt, at its option, at any meeting of the creditors of the Debtor or in any such proceeding or any proceeding initiated
by the Debtor:


 


(a)       to
enforce claims comprising the Subordinated Debt either in its own name or in the name of the Subordinated Creditors, by proof of
debt, proof of claim, suit or otherwise;


 


(b)       to
collect any assets of the Debtor distributed, divided or applied by way of dividend or payment, or any securities issued, on account
of the Subordinated Debt and apply the same, or the proceeds of any realization upon the same the Agent in its discretion elects
to effect, to the Superior Debt until all of the Superior Debt has been paid in full, rendering any surplus to the Subordinated
Creditors;


 


(c)       to
vote claims comprising the Subordinated Debt to accept or reject any plan of partial or complete liquidation, reorganization, arrangement,
composition or extension; and


 


(d)       to
take generally any action in connection with any such meeting or proceeding which any Subordinated Creditor might otherwise take.


 




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5.           Warranties
and Representations Concerning Subordinated Debt. The Debtor and the Subordinated Creditors jointly and severally represent
and warrant that (a) no part of Subordinated Debt is evidenced by any instrument, security or other writing which has not previously
been or is not concurrently being deposited with the Agent (if requested by the Agent), (b) the Subordinated Creditors are the
lawful owner of the Subordinated Debt and no part thereof has been assigned to or subordinated or subjected to any other security
interest in favor of anyone other than the Agent, and (c) as of the date hereof, the aggregate outstanding principal balance of
indebtedness from the Debtor to John H. Schwan is $1,498,822.01. Until all of the Superior Debt has been paid in full, (i) no Subordinated
Creditor shall assign or subordinate any part of the Subordinated Debt except to or in favor of the Agent; and (ii) except as set
forth in Section 8 hereof, neither the Debtor nor the Subordinated Creditors shall agree to any amendment, supplement, waiver,
or other modification of any of the terms of the Subordinated Debt.


 


6.           Waivers;
Subrogation.


 


(a)       The
Subordinated Creditors jointly and severally waive (i) any defense based on the adequacy of a remedy at law which might be asserted
as a bar to the remedy of specific performance hereof in any action brought therefor by the Agent, (ii) presentment, notice and
protest in connection with all negotiable instruments evidencing the Superior Debt or the Subordinated Debt to which they may be
parties, notice of the acceptance of this Agreement by the Agent, notice of any loans made, increases in the amount of, or interest
rate on the Superior Debt, extensions granted or other action taken or postponement of the time of payment or any other indulgence
in connection with the Superior Debt, to any substitution, exchange or release of collateral therefor and to the addition or release
of any person primarily or secondarily liable thereon and (iii) all rights, if any, to require a marshalling of the Debtor's assets
by the Agent or to require that the Agent first resort to some or any portion of any collateral for the Superior Debt before foreclosing
upon, selling or otherwise realizing on any other portion thereof. No waiver is made by the Agent of any of its rights hereunder
unless the same is in writing, and each waiver, if any, is a waiver only with respect to the specific instance involved.


 


(b)       No
Subordinated Creditor shall exercise any rights against any Credit Party which such Subordinated Creditor may acquire by way of
subrogation or otherwise, until the payment in full of all Superior Debt and the termination of all commitments under the Credit
Agreement. If any amount is paid to any Subordinated Creditor on account of subrogation rights under this Agreement at any time
prior to the payment in full of all Superior Debt and the termination of all commitments under the Credit Agreement, the amount
shall be held in trust for the benefit of the Agent and Lenders and shall be promptly paid to the Agent to be credited and applied
to the Superior Debt, whether matured, unmatured, absolute or contingent, in accordance with the provisions of the Credit Agreement.


 


7.           Duration;
Reinstatement.


 


(a)       The
terms of this Agreement, the subordination effected hereby, and the rights and the obligations of any Subordinated Creditor, Debtor
and the Agent arising hereunder shall not be affected, modified or impaired in any manner or to any extent by: (i) any amendment
or modification of or supplement to the Credit Agreement or any Subordinated Debt Document; (b) the validity or enforceability
of any of such documents or any liens or security interests granted thereunder; or (c) any exercise or non-exercise of any
right, power or remedy under or in respect of the Superior Debt or the Subordinated Debt or any of the instruments or documents
referred to in clause (i) above. Each Subordinated Creditor hereby acknowledges that the provisions of this Agreement are
intended to be enforceable at all times, whether before the commencement of, after the commencement of, in connection with or premised
on the occurrence of a bankruptcy or other similar wind-up, liquidation or insolvency proceeding. This Agreement may be terminated
by the Subordinated Creditor only if all of the Superior Debt is finally paid in full.


 




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(b)       This
Agreement shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of
any of the Superior Debt is rescinded or must otherwise be restored or returned by the Agent or any Lender upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of Debtor or any of its affiliates, or upon or as a result of the appointment
of a receiver, intervenor or conservator of, or trustee or similar officer for, Debtor or any of its affiliates or any substantial
part of the assets of either or both of them, or otherwise, all as though such payments had not been made.


 


8.           Waiver
and Amendment of Subordinated Debt. Each of the Subordinated Creditors hereby waives any default that may have occurred and
be continuing under any of the Subordinated Debt or any notes or other documents executed in connection therewith. The Debtor and
each of the Subordinated Creditors hereby agrees that any Subordinated Debt that was due and payable prior to the date hereof shall
henceforth be due and payable on demand (but in all cases subject to the terms of this Agreement), and each of the notes governing
such Subordinated Debt shall be deemed to be so amended.


 


9.           Default.
If any representation or warranty in this Agreement or in any instrument evidencing the Superior Debt proves to have been materially
false when made or in the event of a breach by the Debtor or any Subordinated Creditor in the performance of any of the terms of
this Agreement or upon the occurrence of any event of default under any instrument or agreement evidencing the Superior Debt, the
Agent may, at its option, declare all Superior Debt to be forthwith due and payable, without presentment, demand, protest, or notice
of any kind, notwithstanding any time or credit otherwise allowed. At any time any Subordinated Creditor fails to comply with any
provision applicable to such Subordinated Creditor, the Agent may demand specific performance of this Agreement, whether or not
the Debtor has complied with this Agreement, or exercise any other remedy available at law or equity.


 


10.           The
Agent's Duties Limited. The rights granted to the Agent in this Agreement are solely for its protection and nothing herein
contained imposes on the Agent any duties with respect to any property of the Debtor or any Subordinated Creditor received hereunder
beyond reasonable care in their custody and preservation while in the Agent 's possession. The Agent has no duty to preserve rights
against prior parties in any instrument or chattel paper received hereunder.


 


11.           Authority.
The Debtor and the Subordinated Creditors jointly and severally represent and warrant that they have authority to enter into this
Agreement and the persons signing for each party are authorized and directed to do so.


 


12.           Modification.
This Agreement may only be modified in writing signed by the Agent, the Debtor and each Subordinated Creditor.


 




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13.           Additional
Documentation. The Debtor and each Subordinated Creditor shall execute and deliver to the Agent such further instruments and
shall take such further action as the Agent may at any time or times reasonably request in order to carry out the provisions and
intent of this Agreement.


 


14.           Expenses.
The Debtor agrees to pay the Agent on demand all expenses of every kind, including actual attorney's fees, which the Agent may
incur in enforcing or protecting any of their rights under this Agreement.


 


15.           Persons
Bound. This Agreement benefits the Agent and its successors and assigns, and binds the Debtor, each Subordinated Creditor and
their respective successors and assigns (including, without limitation, a receiver, trustee or debtor-in-possession of or for Debtor).


 


16.           Notices.
All notices, demands and communications provided for herein or made hereunder shall be delivered, or mailed first class with postage
prepaid, or telefaxed, addressed in each case as follows, until some other address shall have been designated in a written notice
given in like manner, and shall be deemed to have been given when so delivered, mailed or telefaxed:


 


 


	If to the Debtor:	CTI Industries Corporation
	 	22160 North Pepper Road
	 	Barrington, Illinois 60010
	 	Attention:      Stephen M. Merrick
	 	Telephone:      (847) 620-1308
	 	Facsimile:      (847) 382-1219
	 	 
	with a copy to:	Vanasco, Genelly & Miller
	 	33 North LaSalle Street, Suite 2200 Chicago, Illinois 60602
	 	Attention:      Gerald Miller
	 	Telephone:      (312) 786-5100
	 	Facsimile:      (312) 786-5111
	 	 
	If to the Subordinated Creditors:	John H. Schwan
	 	22160 North Pepper Road
	 	Barrington, Illinois 60010
	 	Facsimile: (847) 382-1219


 




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	If to the Agent:	PNC Bank, National Association
	 	c/o PNC Business Credit
	 	One North Franklin Street
	 	Chicago, Illinois 60606
	 	Attention:      Account Manager – CTI Industries
	 	Telephone:      (312) 454-2920
	 	Facsimile:      (312) 454-2919
	 	 
	with copy to:	Goldberg Kohn Ltd.
	 	55 E. Monroe, Suite 3300
	 	Chicago, Illinois 60603
	 	Attention:      Jeffrey Dunlop
	 	Telephone:      (312) 863-7128
	 	Facsimile:      (312) 863-7828


 


17.           Counterparts.
This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one agreement, and any
of the parties hereto may execute this Agreement by signing any such counterpart. Delivery of an executed counterpart of a signature
page hereto by facsimile or other electronic transmission (i.e. pdf) shall be effective as delivery of a manually executed counterpart
thereof.


 


18.           Law
Governing. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES (OTHER THAN SECTIONS
5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW) THEREOF.


 


19.           Submission
to Jurisdiction; Waiver of Service and Venue. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST DEBTOR OR SUBORDINATED CREDITOR ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH,
MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING
AND DELIVERING THIS AGREEMENT, EACH OF DEBTOR AND EACH SUBORDINATED CREDITOR, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
IRREVOCABLY (a) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NON-EXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (b) WAIVES ANY DEFENSE
OF FORUM NON CONVENIENS; (c) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED
OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE APPLICABLE PARTY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 16 HEREOF;
(d) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (c) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER THE APPLICABLE PARTY
IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (e) AGREES
THAT THE AGENT AND LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST THE APPLICABLE PARTY IN THE COURTS OF ANY OTHER JURISDICTION.


 




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20.           Waiver
of Right to Trial by Jury. EACH OF DEBTOR AND EACH SUBORDINATED CREDITOR, ON THE ONE HAND, AND THE AGENT, ON THE OTHER HAND,
HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a) ARISING UNDER THIS AGREEMENT OR ANY
OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (b) IN ANY WAY CONNECTED WITH OR RELATED
OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM IN RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT
OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT, TORT OR OTHERWISE. EACH OF DEBTOR AND EACH SUBORDINATED CREDITOR, ON THE ONE HAND, AND THE AGENT, ON THE
OTHER HAND, HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY AND THAT ANY PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHTS TO TRIAL BY JURY.


 


[SIGNATURE PAGE FOLLOWS]


 




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IN WITNESS WHEREOF,
the Debtor has executed this Subordination Agreement as of the date first written above.


 


	 	DEBTOR:	 
	 	 	 
	 	CTI INDUSTRIES CORPORATION,	 
	 	an Illinois corporation	 
	 	 	 	 
	 	By:	/s/ Stephen M. Merrick	 
	 	Name:	Stephen M. Merrick	 
	 	Title:	CEO	 


 


Signature Page to Subordination Agreement


 




     


     


    

 


IN WITNESS WHEREOF,
the undersigned Subordinated Creditors have executed this Subordination Agreement as of the date first written above.


 


	 	SUBORDINATED CREDITORS
	 	 
	 	JOHN H. SCHWAN,	 
	 	an Individual	 
	 	 	 
	 	/s/ John H. Schwan	 


 


Signature Page to Subordination Agreement


 




     


     


    

 


IN WITNESS WHEREOF,
the Agent has executed this Subordination Agreement as of the date first written above.


 


	 	AGENT:	 
	 	 	 
	 	PNC BANK, N.A.,	 
	 	as Agent	 
	 	 	 
	 	By:	/s/ James Clifton	 
	 	Name:	James Clifton	 
	 	Title:	Senior Vice President	 


 


Signature Page to Subordination Agreement


 




     


     


    

 


SCHEDULE I TO SUBORDINATION AGREEMENT


 


Existing Subordinated Notes


 


Promissory Note dated as of December 14,
2017 made by CTI Industries Corporation, an Illinois corporation, to the order of John H. Schwan or his assigns in the original
principal amount of One Million Four Hundred Ninety-Eight Thousand Eight Hundred Twenty-Two and 01/100 Dollars ($1,498,822.01).