EXHIBIT
10.3

    
      


      
        

        

      

    

    Mortgage
and Security Agreement

    with
Assignment of Rents

     

    dated as
of

     

    April 29,
2010,

     

    from

     

    CTI
Industries Corporation,

    an
Illinois corporation

     

    to

     

    Harris
N.A.,

    a
national banking association


     

    
      

      

    

    This
instrument was prepared by and when
recorded return to:

     

    
      	
              Stephanie
      A. Zabela, Esq.

            


    

    
      	
              McGuireWoods
      LLP

            


    

    
      	
              77
      West Wacker Drive

            


    

    
      	
              Suite
      4100

            


    

    
      	
              Chicago,
      Illinois  60601

            


    

     

    
      
        
        

      

      
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    Mortgage
And Security Agreement With

    Assignment
Of Rents

     

    This
Mortgage and Security Agreement with Assignment of Rents (the “Mortgage”) is dated as of
April 29, 2010, from CTI
Industries Corporation, an Illinois corporation with its principal place
of business and mailing address at 22160 North Pepper Road, Barrington, Illinois
60010 (hereinafter referred to as “Mortgagor”) to Harris
N.A., a national banking association with its mailing address at 111 West
Monroe Street, Chicago, Illinois 60603 (hereinafter referred to as “Mortgagee”);

     

    WITNESSETH
THAT:

     

    Whereas,
Mortgagor may from
time to time borrow money or otherwise obtain credit from Mortgagee and, in
connection therewith, Mortgagor may sign and deliver to
Mortgagee such notes, agreements, guaranties, and/or applications evidencing
such obligations or otherwise setting forth the terms and conditions related
thereto, which indebtedness, obligations, and liabilities (together with all
interest and fees thereon, and all costs and expenses related thereto), whether
now existing or hereafter arising, are to be secured by this
Mortgage;

     

    Now,
Therefore, to secure:

     

    (i)         
the payment of all amounts now and from time to time hereafter advanced to or
for the account of Mortgagor under that certain Credit Agreement dated as of
April 29, 2010, between Mortgagor and Mortgagee, as the same may from time to
time be amended, modified or restated (the “Credit Agreement”;
capitalized terms used herein and not otherwise defined shall have the meanings
given such terms in the Credit Agreement), which advances may aggregate up to
$14,416,683.50 in principal at any one time outstanding and are expressed to
mature as set forth in the Credit Agreement, and all promissory
note(s) issued thereunder (if any), including all promissory notes issued, in
whole or in part, in extension or renewal thereof or in substitution or
replacement therefor, as each of the foregoing may from time to time be amended
or modified (the “Notes”), together with all
interest on the outstanding principal balance of such Mortgage Loan and the
payment of all prepayment premiums, fees, costs and expenses from time to time
payable under the terms of or otherwise relating to the Credit Agreement or the
Notes (all such notes, agreements, and/or applications evidencing such
indebtedness, obligations, and liabilities or otherwise setting forth the terms
and conditions related thereto, and all guaranties and security documents
therefor, being hereinafter collectively referred to as the “Loan Documents”),


     

    (ii)         the
payment of all other indebtedness, obligations and liabilities which this
Mortgage secures pursuant to any of its terms, and

     

    (iii)         the
observance and performance of all covenants and agreements contained herein or
in the Loan Documents or in any other instrument or document at any time
evidencing or securing any of the foregoing or setting forth terms and
conditions applicable thereto (all of such indebtedness, obligations and
liabilities described in clauses (i), (ii), and (iii) above being hereinafter
collectively referred to as the “Secured Indebtedness”),


     

    
      
        
        

      

      
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    Mortgagor
does hereby grant, bargain, sell, convey, mortgage, warrant, assign, and pledge
unto Mortgagee, its successors and assigns, and grant to Mortgagee, its
successors and assigns, a continuing security interest in, all and singular the
properties, rights, interests and privileges described in Granting Clauses I,
II, III, IV, V, VI, and VII below, all of the same being collectively referred
to herein as the “Mortgaged
Premises”:

     

    Granting
Clause I

     

    That
certain real estate lying and being in City of Barrington, County of Lake and
State of Illinois more particularly described in Schedule I attached
hereto and made a part hereof.

     

    Granting
Clause II

     

    All
buildings and improvements of every kind and description heretofore or hereafter
erected or placed on the property described in Granting Clause I and all
materials intended for construction, reconstruction, alteration and repairs of
the buildings and improvements now or hereafter erected thereon, all of which
materials shall be deemed to be included within the premises immediately upon
the delivery thereof to the said real estate, and all fixtures, machinery,
apparatus, equipment, fittings and articles of personal property of every kind
and nature whatsoever now or hereafter attached to or contained in or used or
useful in connection with said real estate and the buildings and improvements
now or hereafter located thereon and the operation, maintenance and protection
thereof, including but not limited to all machinery, motors, fittings,
radiators, awnings, shades, screens, all gas, coal, steam, electric, oil and
other heating, cooking, power and lighting apparatus and fixtures, all fire
prevention and extinguishing equipment and apparatus, all cooling and
ventilating apparatus and systems, all plumbing, incinerating, and sprinkler
equipment and fixtures, all elevators and escalators, all communication and
electronic monitoring equipment, all window and structural cleaning rigs and all
other machinery and equipment of every nature and fixtures and appurtenances
thereto and all items of furniture, appliances, draperies, carpets, other
furnishings, equipment and personal property used or useful in the operation,
maintenance and protection of the said real estate and the buildings and
improvements now or hereafter located thereon and all renewals or replacements
thereof or articles in substitution therefor, whether or not the same are or
shall be attached to said real estate, buildings or improvements in any manner,
and all proceeds thereof; it being mutually agreed, intended and declared that
all the aforesaid property shall, so far as permitted by law, be deemed to form
a part and parcel of the real estate and, for the purpose of this Mortgage, to
be real estate and covered by this Mortgage; and as to the balance of the
property aforesaid, this Mortgage is hereby deemed to be as well a security
agreement under the provisions of the Uniform Commercial Code of the State of
Illinois for the purpose of creating hereby a security interest in said
property, which is hereby granted by Mortgagor as debtor to Mortgagee as secured
party, securing the Secured Indebtedness.  The addresses of Mortgagor
(debtor) and Mortgagee (secured party) appear at the beginning
hereof.  Mortgagor’s organizational registration number is
61786341.

     

    
      
        
        

      

      
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    Granting
Clause III

     

    All
right, title and interest of Mortgagor now owned or hereafter acquired in and to
all and singular the estates, tenements, hereditaments, privileges, easements,
licenses, franchises, appurtenances and royalties, mineral, oil, and water
rights belonging or in any wise appertaining to the property described in the
preceding Granting Clause I and the buildings and improvements now or hereafter
located thereon and the reversions, rents, issues, revenues and profits thereof,
including all interest of Mortgagor in all rents, issues and profits of the
aforementioned property and all rents, issues, profits, revenues, royalties,
bonuses, rights and benefits due, payable or accruing (including all deposits of
money as advanced rent or for security) under any and all leases or subleases
and renewals thereof, or under any contracts or options for the sale of all or
any part of, said property (including during any period allowed by law for the
redemption of said property after any foreclosure or other sale), together with
the right, but not the obligation, to collect, receive and receipt for all such
rents and other sums and apply them to the Secured Indebtedness and to demand,
sue for and recover the same when due or payable; provided that the assignments
made hereby shall not impair or diminish the obligations of Mortgagor under the
provisions of such leases or other agreements nor shall such obligations be
imposed upon Mortgagee.  By acceptance of this Mortgage, Mortgagee
agrees, not as a limitation or condition hereof, but as a personal covenant
available only to Mortgagor that until an Event of Default (as hereinafter
defined) shall occur giving Mortgagee the right to foreclose this Mortgage,
Mortgagor may collect, receive (but not more than 30 days in advance) and enjoy
such rents.

     

    Granting
Clause IV

     

    All
plans, specifications, working drawings and like materials prepared in
connection with improvements constituting part of the Mortgaged Premises, all
rights of Mortgagor against vendors or manufacturers in connection with
equipment located upon the Mortgaged Premises, whether arising by virtue of
warranty or otherwise, all rights against contractors, sub-contractors and
materialmen arising in connection with work performed at or on the Mortgaged
Premises or with materials furnished for the construction of improvements at or
on the Mortgaged Premises, and all rights of Mortgagor under contracts to
provide any of the foregoing, in each case whether now owned or existing or
hereafter arising or acquired.

     

    Granting
Clause V

     

    All
judgments, awards of damages, settlements and other compensation heretofore or
hereafter made resulting from condemnation proceedings or the taking of the
property described in Granting Clause I or any part thereof or any building or
other improvement now or at any time hereafter located thereon or any easement
or other appurtenance thereto under the power of eminent domain, or any similar
power or right (including any award from the United States Government at any
time after the allowance of the claim therefor, the ascertainment of the amount
thereof and the issuance of the warrant for the payment thereof), whether
permanent or temporary, or for any damage (whether caused by such taking or
otherwise) to said property or any part thereof or the improvements thereon or
any part thereof, or to any rights appurtenant thereto, including severance and
consequential damage, and any award for change of grade of streets
(collectively, “Condemnation
Awards”); and all right, title, and interest in all insurance policies
maintained in connection with the property described in Granting Clause I or any
part thereof or any building or other improvement now or at any time hereafter
located thereon or any easement or other appurtenance thereto or for any damage
to said property or any part thereof or the improvements thereon or any part
thereof, or to any rights appurtenant thereto.

     

    
      
        
        

      

      
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    Granting
Clause VI

     

    All
property and rights, if any, which are by the express provisions of this
Mortgage required to be subjected to the lien hereof and any additional property
and rights that may from time to time hereafter be subjected to the lien hereof
by Mortgagor or by anyone on Mortgagor’s behalf.

     

    Granting
Clause VII

     

    All
rights in and to common areas and access roads on adjacent properties heretofore
or hereafter granted to Mortgagor and any after-acquired title or reversion in
and to the beds of any ways, roads, streets, avenues and alleys adjoining the
property described in Granting Clause I or any part thereof.

     

    Granting
Clause VIII

     

    All
proceeds of the conversion, voluntary or involuntary, of any of the foregoing
into cash or other liquidated claims, including, without limitation, all
proceeds of insurance.

     

    To
Have And To Hold the Mortgaged Premises and the properties, rights and
privileges hereby granted, bargained, sold, conveyed, mortgaged, warranted,
pledged and assigned, and in which a security interest is granted, or intended
so to be, unto Mortgagee, its successors and assigns, forever; provided, however, that this
Mortgage is upon the express condition that if the Secured Indebtedness shall be
fully paid and performed and all commitments contained in the Loan Documents to
extend credit thereunder shall have terminated, then this Mortgage and the
estate and rights hereby granted shall cease and this Mortgage shall be released
by Mortgagee upon the written request and at the expense of Mortgagor, otherwise
to remain in full force and effect.

     

    This
Mortgage is given to secure, among other things, future advances made or to be
made under a line of credit and/or arising out of draws made or to be made under
letter(s) of credit and shall secure not only presently existing Secured
Indebtedness under the Loan Documents but also future advances, whether such
advances are obligatory or to be made at the option of Mortgagee, or otherwise,
as are made within 20 years from the date hereof, to the same extent as if
such future advances were made on the date of the execution of this Mortgage,
although there may be no advance made at the time of execution of this Mortgage
and although there may be no Secured Indebtedness outstanding at the time any
advance is made.  The lien of this Mortgage shall be valid as to all
Secured Indebtedness, including future advances, from the time of its filing for
record in the recorder’s office in the county in which the Mortgaged Premises
are located.  The total amount of Secured Indebtedness may increase or
decrease from time to time, but the total unpaid balance of Secured Indebtedness
(including disbursements which Mortgagee may make under this Mortgage, the Loan
Documents or any other documents related thereto) at any one time outstanding
shall not exceed a maximum principal amount of Thirty Million and 00/100 Dollars
($30,000,000.00) plus interest thereon, all fees, costs and expenses payable
thereunder, and all disbursements made for payment of taxes, special assessments
or insurance on the Mortgaged Premises and interest on such disbursements (all
such indebtedness being hereinafter referred to as the “maximum amount secured
hereby”).  This Mortgage shall be valid and have priority over
all subsequent liens and encumbrances, including statutory liens, excepting
solely taxes and assessments levied on the Mortgaged Premises, to the extent of
the maximum amount secured hereby. 

     

    
      
        
        

      

      
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    Mortgagor
hereby covenants and agrees with Mortgagee as follows:

     

    1.         
Payment of the Secured
Indebtedness.  The
Secured Indebtedness will be promptly paid as and when the same becomes
due.

     

    2.         
Ownership of Mortgaged
Premises.  Mortgagor covenants and warrants that it is lawfully
seized of and has good and marketable title to the Mortgaged Premises free and
clear of all liens, charges, and encumbrances except those exceptions to title
listed on Schedule
II attached hereto (the “Permitted Exceptions”) and
Mortgagor has good right, full power, and authority to convey, transfer, and
mortgage the same to Mortgagee for the uses and purposes set forth in this
Mortgage; and Mortgagor will warrant and forever defend the title to the
Mortgaged Premises subject to the Permitted Exceptions against all claims and
demands whatsoever.

     

    3.         
Further
Assurances.  Mortgagor will execute and deliver such further
instruments and do such further acts as may be necessary or proper to carry out
more effectively the purpose of this Mortgage and, without limiting the
foregoing, to make subject to the lien hereof any property agreed to be
subjected hereto or covered by the Granting Clauses hereof or intended so to
be.

     

    4.         
Possession.  Provided
no Event of Default has occurred and is continuing hereunder, Mortgagor shall be
suffered and permitted to remain in full possession, enjoyment and control of
the Mortgaged Premises, subject always to the observance and performance of the
terms of this Mortgage.

     

    5.         
Payment of
Taxes.  Mortgagor shall pay before any penalty attaches, all
general taxes and all special taxes, special assessments, water, drainage and
sewer charges and all other charges of any kind whatsoever, ordinary or
extraordinary, which may be levied, assessed, imposed or charged on or against
the Mortgaged Premises or any part thereof and which, if unpaid, might by law
become a lien or charge upon the Mortgaged Premises or any part thereof, and
shall, upon written request, exhibit to Mortgagee official receipts evidencing
such payments, except that, unless and until foreclosure, distraint, sale or
other similar proceedings shall have been commenced, no such charge or claim
need be paid if being contested (except to the extent any full or partial
payment shall be required by law), after notice to Mortgagee, by appropriate
proceedings which shall operate to prevent the collection thereof or the sale or
forfeiture of the Mortgaged Premises or any part thereof to satisfy the same,
conducted in good faith and with due diligence and if Mortgagor shall have
furnished such security, if any, as may be required in the proceedings or
requested by Mortgagee.

     

    6.         
Payment of Taxes on Loan
Documents, Mortgage or Interest of Mortgagee.  Mortgagor agrees
that if any tax, assessment or imposition upon this Mortgage or the Secured
Indebtedness or any Loan Document or the interest of Mortgagee in the Mortgaged
Premises or upon Mortgagee by reason of or as a holder of any of the foregoing
(including, without limitation, corporate privilege, franchise and excise taxes,
but excepting therefrom any income tax on interest payments on the principal
portion of the Secured Indebtedness imposed by the United States or any state)
is levied, assessed or charged, then, unless all such taxes are paid by
Mortgagor to, for or on behalf of Mortgagee as they become due and payable
(which Mortgagor agrees to do upon demand of Mortgagee, to the extent permitted
by law), or Mortgagee is reimbursed for any such sum advanced by Mortgagee, all
sums hereby secured shall become immediately due and payable, at the option of
Mortgagee upon thirty (30) days’ notice to Mortgagor, notwithstanding anything
contained herein or in any law heretofore or hereafter enacted, including any
provision thereof forbidding Mortgagor from making any such
payment.  Mortgagor agrees to exhibit to Mortgagee, upon request,
official receipts showing payment of all taxes and charges which Mortgagor is
required to pay hereunder.

     

    
      
        
        

      

      
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    7.         
Recordation and Payment of
Taxes and Expenses Incident Thereto.  Mortgagor will cause this
Mortgage, all amendments hereto, all mortgages supplemental hereto, and any
financing statement or other notice of a security interest required by Mortgagee
at all times to be kept, recorded and filed at its own expense in such manner
and in such places as may be required by law for the recording and filing or for
the rerecording and refiling of a mortgage, security interest, assignment or
other lien or charge upon the Mortgaged Premises, or any part thereof, in order
fully to preserve and protect the rights of Mortgagee hereunder and, without
limiting the foregoing, Mortgagor will pay or reimburse Mortgagee for the
payment of any and all taxes, fees or other charges incurred in connection with
any such recordation or rerecordation, including any documentary stamp tax or
tax imposed upon the privilege of having this Mortgage or any instrument issued
pursuant hereto recorded.

     

    8.         
Insurance.  Mortgagor
will, at its expense, keep all buildings, improvements, equipment and other
property now or hereafter constituting part of the Mortgaged Premises insured
against loss or damage by fire, lightning, windstorm, explosion and such other
risks as are usually included under extended coverage policies, or which are
usually insured against by owners of like property, in amount sufficient to
prevent Mortgagor or Mortgagee from becoming a co-insurer of any partial loss
under applicable policies and in any event not less than the then full insurable
value (actual replacement value without deduction for physical depreciation)
thereof, as determined at the request of Mortgagee and at Mortgagor’s expense by
the insurer or insurers or by an expert approved by Mortgagee, all under
insurance policies payable, in case of loss or damage, to Mortgagee, such rights
to be evidenced by the usual standard non-contributory form of mortgage clause
to be attached to each policy.  Mortgagor shall not carry separate
insurance concurrent in kind or form and contributing in the event of loss, with
any insurance required hereby.  Mortgagor shall also obtain and
maintain public liability, property damage and workmen’s compensation insurance
in each case in form and content satisfactory to Mortgagee and in amounts as are
customarily carried by owners of like property and approved by
Mortgagee.  Mortgagor shall also obtain and maintain such other
insurance with respect to the Mortgaged Premises in such amounts and against
such insurable hazards as Mortgagee from time to time may require, including,
without limitation, boiler and machinery insurance, insurance against flood
risks, host liquor liability, war risk insurance when and to the extent
obtainable from the United States Government or any agency thereof, and
insurance against loss of rent due to fire and risks now or hereafter embraced
by so-called “extended
coverage”.  All insurance required hereby shall be maintained
with good and responsible insurance companies satisfactory to Mortgagee and
shall not provide for any deductible amount in excess of $10,000 not approved in
writing by Mortgagee, shall provide that any losses shall be payable
notwithstanding any act or negligence of Mortgagor, shall provide that no
cancellation thereof shall be effective until at least thirty (30) days
after receipt by Mortgagor and Mortgagee of written notice thereof
(ten (10) days in the case of non-payment of premiums), and shall be
satisfactory to Mortgagee in all other respects.  Upon the execution
of this Mortgage and thereafter not less than fifteen (l5) days prior to
the expiration date of any policy delivered pursuant to this Mortgage, Mortgagor
will deliver to Mortgagee certificates of insurance evidencing Mortgagor’s
compliance with the foregoing (and, at Mortgagee’s request, the originals of any
policy or renewal policy, as the case may be, required by this Mortgage, bearing
notations evidencing the payment of all premiums).  In the event of
foreclosure, Mortgagor authorizes and empowers Mortgagee to effect insurance
upon the Mortgaged Premises in amounts aforesaid for a period covering the time
of redemption from foreclosure sale provided by law, and if necessary therefor
to cancel any or all existing insurance policies.

     

    
      
        
        

      

      
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    Unless
Mortgagor provides Mortgagee with evidence of the insurance coverage required by
this Mortgage, Mortgagee may purchase insurance at Mortgagor’s expense to
protect Mortgagee’s interests in the Mortgaged Premises.  This
insurance may, but need not, protect Mortgagor’s interests in the Mortgaged
Premises.  The coverage purchased by Mortgagee may not pay any claims
that Mortgagor makes or any claim that is made against Mortgagor in connection
with the Mortgaged Premises.  Mortgagor may later cancel any such
insurance purchased by Mortgagee, but only after providing Mortgagee with
evidence that Mortgagor has obtained insurance as required by this
Mortgage.  If Mortgagee purchases insurance for the Mortgaged
Premises, Mortgagor will be responsible for the costs of that insurance,
including interest and any other charges that Mortgagee may impose in connection
with the placement of the insurance, until the effective date of the
cancellation or expiration of the insurance.  The costs of the
insurance may be added to the Secured Indebtedness.  The costs of the
insurance may be more than the cost of insurance Mortgagor may be able to obtain
on its own.

     

    9.         
Damage to or Destruction of
Mortgaged Premises.

     

    (a)         
Notice.  In
case of any material damage to or destruction of the Mortgaged Premises or any
part thereof, Mortgagor shall promptly give written notice thereof to Mortgagee,
generally describing the nature and extent of such damage or
destruction.

     

    (b)         
Restoration.  In
case of any damage to or destruction of the Mortgaged Premises or any part
thereof, Mortgagor, whether or not the insurance proceeds, if any, received on
account of such damage or destruction shall be sufficient for the purpose, at
Mortgagor’s expense, will promptly commence and complete (subject to unavoidable
delays occasioned by strikes, lockouts, acts of God, inability to obtain labor
or materials, governmental restrictions and similar causes beyond the reasonable
control of Mortgagor) the restoration, replacement or rebuilding of the
Mortgaged Premises as nearly as possible to its value, condition and character
immediately prior to such damage or destruction.

     

    (c)         
Adjustment of
Loss.  Mortgagor hereby authorizes Mortgagee, at Mortgagee’s
option, to adjust and compromise any losses under any insurance afforded, but
unless Mortgagee elects to adjust the losses as aforesaid, said adjustment
and/or compromise shall be made by Mortgagor, subject to final approval of
Mortgagee in the case of losses exceeding $10,000.

     

    (d)         
Application of Insurance
Proceeds.  Net insurance proceeds received by Mortgagee under
the provisions of this Mortgage or any instruments supplemental hereto or
thereto or under any policy or policies of insurance covering the Mortgaged
Premises or any part thereof may be applied toward the payment of the amount
owing on the Secured Indebtedness in such order of application as Mortgagee may
elect whether or not the same may then be due or be otherwise adequately secured
and any amounts not so applied shall be held as collateral security therefor;
provided, however, that
Mortgagee shall have the right, but not the duty, to release the proceeds
thereof for use in restoring the Mortgaged Premises or any part thereof for or
on behalf of Mortgagor in lieu of applying said proceeds to the Secured
Indebtedness and for such purpose may do all acts necessary to complete such
restoration, including advancing additional funds, and any additional funds so
advanced shall constitute part of the Secured Indebtedness and shall be payable
on demand with interest at the Reimbursement Rate.  

     

    
      
        
        

      

      
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    10.        Eminent
Domain.  Mortgagor acknowledges that Condemnation Awards have
been assigned to Mortgagee, which awards Mortgagee is hereby irrevocably
authorized to collect and receive, and to give appropriate receipts and
acquittances therefor, and at Mortgagee’s option, to apply the same toward the
payment of the amount owing on account of the Secured Indebtedness in such order
of application as Mortgagee may elect and whether or not the same may then be
due and payable or otherwise adequately secured and any amounts not so applied
may held as collateral security therefor.  Mortgagor covenants and
agrees that Mortgagor will give Mortgagee immediate notice of the actual or
threatened commencement of any proceedings under condemnation or eminent domain
affecting all or any part of the Mortgaged Premises including any easement
therein or appurtenance thereof or severance and consequential damage and change
in grade of streets, and will deliver to Mortgagee copies of any and all papers
served in connection with any such proceedings.  Mortgagor further
covenants and agrees to make, execute and deliver to Mortgagee, at any time or
times upon request, free, clear and discharged of any encumbrances of any kind
whatsoever, any and all further assignments and/or instruments deemed necessary
by Mortgagee for the purpose of validly and sufficiently assigning all awards
and other compensation heretofore and hereafter to be made to Mortgagor for any
taking, either permanent or temporary, under any such proceeding. 

     

    11.        Construction, Repair, Waste,
Etc.  Mortgagor agrees (i) that no building or other
improvement on the Mortgaged Premises and constituting a part thereof shall be
altered, removed or demolished nor shall any fixtures or appliances on, in or
about said buildings or improvements be severed, removed, sold or mortgaged,
without the consent of Mortgagee and in the event of the demolition or
destruction in whole or in part of any of the fixtures, chattels or articles of
personal property covered hereby, Mortgagor covenants that the same will be
replaced promptly by similar fixtures, chattels and articles of personal
property at least equal in quality and condition to those replaced, free from
any security interest in or encumbrance thereon or reservation of title thereto;
(ii) to permit, commit or suffer no waste, impairment or deterioration of
the Mortgaged Premises or any part thereof; (iii) to keep and maintain said
Mortgaged Premises and every part thereof in good and first class repair and
condition; (iv) to effect such repairs as Mortgagee may reasonably require
and from time to time to make all needful and proper replacements and additions
so that said buildings, fixtures, machinery and appurtenances will, at all
times, be in good and first class condition, fit and proper for the respective
purposes for which they were originally erected or installed; (v) to comply
with all statutes, orders, requirements or decrees relating to the Mortgaged
Premises by any federal, state or municipal authority; (vi) to observe and
comply with all conditions and requirements necessary to preserve and extend any
and all rights, licenses, permits (including, but not limited to, zoning
variances, special exceptions and non-conforming uses), privileges, franchises
and concessions which are applicable to the Mortgaged Premises or which have
been granted to or contracted for by Mortgagor in connection with any existing
or presently contemplated use of the Mortgaged Premises or any part thereof and
not to initiate or acquiesce in any changes to or terminations of any of the
foregoing or of zoning classifications affecting the use to which the Mortgaged
Premises or any part thereof may be put without the prior written consent of
Mortgagee; and (vii) to make no material alterations in or improvements or
additions to the Mortgaged Premises except as required by governmental authority
or as permitted by Mortgagee.

     

    
      
        
        

      

      
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    12.        Liens and
Encumbrances.  Mortgagor will not, without the prior written
consent of Mortgagee, directly or indirectly, create or suffer to be created or
to remain and will discharge or promptly cause to be discharged any mortgage,
lien, encumbrance or charge on, pledge of, or conditional sale or other title
retention agreement with respect to, the Mortgaged Premises or any part thereof,
whether superior or subordinate to the lien hereof, except for this Mortgage and
the Permitted Exceptions.

     

    13.        Right of Mortgagee to Perform
Mortgagor’s Covenants, Etc.  If Mortgagor shall fail to make
any payment or perform any act required to be made or performed hereunder,
Mortgagee, without waiving or releasing any obligation or default, may (but
shall be under no obligation to) at any time thereafter make such payment or
perform such act for the account and at the expense of Mortgagor, and may enter
upon the Mortgaged Premises or any part thereof for such purpose and take all
such action thereon as, in the opinion of Mortgagee, may be necessary or
appropriate therefor.  All sums so paid by Mortgagee and all costs and
expenses (including, without limitation, attorneys’ fees and expenses) so
incurred, together with interest thereon from the date of payment or incurrence
at the Reimbursement Rate, shall constitute so much additional Secured
Indebtedness and shall be paid by Mortgagor to Mortgagee on
demand.  Mortgagee in making any payment authorized under this Section
relating to taxes or assessments may do so according to any bill, statement or
estimate procured from the appropriate public office without inquiry into the
accuracy of such bill, statement or estimate or into the validity of any tax
assessment, sale, forfeiture, tax lien or title or claim
thereof.  Mortgagee, in performing any act hereunder, shall be the
sole judge of whether Mortgagor is required to perform the same under the terms
of this Mortgage.

     

    14.        After-Acquired
Property.  Any and all property hereafter acquired which is of
the kind or nature herein provided, or intended to be and become subject to the
lien hereof, shall ipso facto, and without any further conveyance, assignment or
act on the part of Mortgagor, become and be subject to the lien of this Mortgage
as fully and completely as though specifically described herein; but
nevertheless Mortgagor shall from time to time, if requested by Mortgagee,
execute and deliver any and all such further assurances, conveyances and
assignments as Mortgagee may reasonably require for the purpose of expressly and
specifically subjecting to the lien of this Mortgage all such
property.

     

    15.        Inspection by
Mortgagee.  Mortgagee and any participant in the Secured
Indebtedness shall have the right to inspect the Mortgaged Premises at all
reasonable times, and access thereto shall be permitted for that
purpose.

     

    16.        Financial
Reports.  Mortgagor will furnish to Mortgagee such information
and data with respect to the financial condition, business affairs and
operations of Mortgagor and the Mortgaged Premises as may be reasonably
requested (all such information and data to be prepared in accordance with
generally accepted accounting principles consistently applied), such information
and data to be prepared and certified by independent public accountants
satisfactory to Mortgagee if so requested by Mortgagee not more often than
annually.

     

    17.        Subrogation.  Mortgagor
acknowledges and agrees that Mortgagee shall be subrogated to any lien
discharged out of the proceeds of any credit extended under the Loan Documents
or out of any advance by Mortgagee hereunder, irrespective of whether or not any
such lien may have been released of record.

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

     

    18.        Events of Default. Any one or
more of the following shall constitute an “Event of Default”
hereunder:

     

    (a)        default
in the payment when due (whether by demand, lapse of time, acceleration, or
otherwise) of the principal of or interest on any Secured Indebtedness;
or

     

    (b)        default
in the observance or performance of any provision hereof requiring the
maintenance of insurance on the Mortgaged Premises or dealing with the use or
remittance of proceeds of the Mortgaged Premises or any part thereof;
or

     

    (c)        default
for more than fifteen (l5) days in the observance or compliance with any terms
or provisions of this Mortgage or any other Loan Document (including, without
limitation, the Credit Agreement) or of any separate assignment of leases and/or
rents or any other instrument or document securing the Secured Indebtedness or
any part thereof or relating thereto; or

     

    (d)        any
representation or warranty made by Mortgagor herein or in any separate
assignment of leases and/or rents or any other instrument or document securing
the Secured Indebtedness or any part thereof or relating thereto or in any
statement or certificate furnished by it pursuant hereto or thereto proves to be
untrue in any material respect as of the date of issuance or making thereof;
or

     

    (e)        any
indebtedness, obligation or liability of the Mortgagor at any time owing to
Harris N.A. or any of its affiliates shall not be paid when due (whether by
demand, lapse of time, acceleration, or otherwise) provided that the foregoing
shall constitute an event of default only if and so long as Harris N.A. is the
holder of the Secured Indebtedness or any part thereof; or

     

    (f)        the
Mortgaged Premises or any part thereof shall be sold, transferred, or conveyed,
whether voluntarily or involuntarily, by operation of law or otherwise, except
for sales of obsolete, worn out or unusable fixtures or personal property which
are concurrently replaced with similar fixtures or personal property at least
equal in quality and condition to those sold and owned by Mortgagor free of any
lien, charge or encumbrance other than the lien hereof; or

     

    (g)        any
indebtedness secured by a lien or charge on the Mortgaged Premises or any part
thereof is not paid when due or proceedings are commenced to foreclose or
otherwise realize upon any such lien or charge or to have a receiver appointed
for the property subject thereto or to place the holder of such indebtedness or
its representative in possession thereof; or

     

    (h)        Mortgagor
or any person, firm or corporation at any time guaranteeing all or any part of
the Secured Indebtedness (a “Guarantor”) shall (i) have
entered involuntarily against it an order for relief under the United States
Bankruptcy Code, as amended, (ii) not pay, or admit in writing its inability to
pay, its debts generally as they become due, (iii) make an assignment for the
benefit of creditors, (iv) apply for, seek, consent to, or acquiesce in, the
appointment of a receiver, custodian, trustee, examiner, liquidator or similar
official for it or any substantial part of its property, (v) institute any
proceeding seeking to have entered against it an order for relief under the
United States Bankruptcy Code, as amended, to adjudicate it insolvent, or
seeking dissolution, winding up, liquidation, reorganization, arrangement,
adjustment or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or fail to file an
answer or other pleading denying the material allegations of any such proceeding
filed against it, (vi) take any action in furtherance of any matter described in
parts (i) through (v) above, or (vii) fail to contest in good faith any
appointment or proceeding described in Section 18(i) hereof;
or

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

     

    (i)        a
custodian, receiver, trustee, examiner, liquidator or similar official shall be
appointed for Mortgagor or any Guarantor or any substantial part of any of their
property, or a proceeding described in Section 18(h)(v) shall be instituted
against Mortgagor or any Guarantor, and such appointment continues undischarged
or such proceeding continues undismissed or unstayed for a period of sixty (60)
days; or

     

    (j)        any
event occurs or condition exists which is specified as an event of default in
any Loan Document or any separate assignment of leases and/or rents or of any
other instrument or document securing the Secured Indebtedness or any part
thereof or relating thereto; or

     

    (k)        dissolution
or termination of existence of Mortgagor or of any Guarantor; or

     

    (l)        any
Guarantor dies or any financial or other information submitted by any Guarantor
to Mortgagee proves untrue in any material respect; or

     

    (m)      the
Mortgaged Premises is abandoned.

     

    19.        Remedies.  When any
Event of Default has happened and is continuing (regardless of the pendency of
any proceeding which has or might have the effect of preventing Mortgagor from
complying with the terms of this instrument and of the adequacy of the security
for the Secured Indebtedness) and in addition to such other rights as may be
available under the Loan Documents or applicable law, but subject at all times
to any mandatory legal requirements:

     

    (a)        Acceleration.  Mortgagee
may, by written notice to Mortgagor, declare the Secured Indebtedness, including
all principal and interest then accrued thereon, to be forthwith due and
payable, whereupon the same shall become and be forthwith due and payable,
without other notice or demand of any kind.

     

    (b)        Uniform Commercial
Code.  Mortgagee shall, with respect to any part of the
Mortgaged Premises constituting property of the type in respect of which
realization on a lien or security interest granted therein is governed by the
Uniform Commercial Code, have all the rights, options and remedies of a secured
party under the Uniform Commercial Code of Illinois, including without
limitation, the right to the possession of any such property, or any part
thereof, and the right to enter without legal process any premises where any
such property may be found.  Any requirement of said Uniform
Commercial Code for reasonable notification shall be met by mailing written
notice to Mortgagor at its address above set forth at least ten (l0) days prior
to the sale or other event for which such notice is required.  The
costs and expenses of retaking, selling, and otherwise disposing of said
property, including attorneys’ fees and legal expenses incurred in connection
therewith, shall constitute so much additional Secured Indebtedness and shall be
payable upon demand with interest at the Reimbursement Rate.

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

     

    (c)        Foreclosure.  Mortgagee
may proceed to protect and enforce the rights of Mortgagee hereunder (i) by any
action at law, suit in equity or other appropriate proceedings, whether for the
specific performance of any agreement contained herein, or for an injunction
against the violation of any of the terms hereof, or in aid of the exercise of
any power granted hereby or by law, or (ii) by the foreclosure of this
Mortgage.

     

    (d)        Appointment of
Receiver.  Mortgagee shall, as a matter of right, without
notice and without giving bond to Mortgagor or anyone claiming by, under or
through it, and without regard to the solvency or insolvency of Mortgagor or the
then value of the Mortgaged Premises, be entitled to have a receiver appointed
of all or any part of the Mortgaged Premises and the rents, issues and profits
thereof, with such power as the court making such appointment shall confer, and
Mortgagor hereby consents to the appointment of such receiver and shall not
oppose any such appointment.  Any such receiver may, to the extent
permitted under applicable law, without notice, enter upon and take possession
of the Mortgaged Premises or any part thereof by force, summary proceedings,
ejectment or otherwise, and may remove Mortgagor or other persons and any and
all property therefrom, and may hold, operate and manage the same and receive
all earnings, income, rents, issues and proceeds accruing with respect thereto
or any part thereof, whether during the pendency of any foreclosure or until any
right of redemption shall expire or otherwise.

     

    (e)        Taking Possession, Collecting Rents,
Etc.  Mortgagee may enter and take possession of the Mortgaged
Premises or any part thereof and manage, operate, insure, repair and improve the
same and take any action that, in Mortgagee’s judgment, is necessary or proper
to conserve the value of the Mortgaged Premises.  Mortgagee may also
take possession of, and for these purposes use, any and all personal property
contained in the Mortgaged Premises and used in the operation, rental or leasing
thereof or any part thereof.  Mortgagee shall be entitled to collect
and receive all earnings, revenues, rents, issues and profits of the Mortgaged
Premises or any part thereof (and for such purpose Mortgagor does hereby
irrevocably constitute and appoint Mortgagee its true and lawful
attorney-in-fact for it and in its name, place and stead to receive, collect and
receipt for all of the foregoing, Mortgagor irrevocably acknowledging that any
payment made to Mortgagee hereunder shall be a good receipt and acquittance
against Mortgagor to the extent so made) and to apply same to the reduction of
the Secured Indebtedness.  The right to enter and take possession of
the Mortgaged Premises and use any personal property therein, to manage, operate
and conserve the same, and to collect the rents, issues and profits thereof,
shall be in addition to all other rights or remedies of Mortgagee hereunder or
afforded by law, and may be exercised concurrently therewith or independently
thereof.  The expenses (including any receiver’s fees, counsels’ fees,
costs and agent’s compensation) incurred pursuant to the powers herein contained
shall be so much additional Secured Indebtedness, which Mortgagor promises to
pay upon demand together with interest at the Reimbursement
Rate.  Mortgagee shall not be liable to account to Mortgagor for any
action taken pursuant hereto other than to account for any rents actually
received by Mortgagee.  Without taking possession of the Mortgaged
Premises, Mortgagee may, in the event the Mortgaged Premises becomes vacant or
is abandoned, take such steps as it deems appropriate to protect and secure the
Mortgaged Premises (including hiring watchmen therefor) and all costs incurred
in so doing shall constitute so much additional Secured Indebtedness payable
upon demand with interest thereon at the Reimbursement Rate.

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

     

    20.        Waiver of Right to Redeem From Sale
- Waiver of Appraisement, Valuation, Etc. Mortgagor shall not and will
not apply for or avail itself of any appraisement, valuation, stay, extension or
exemption laws, or any so-called “Moratorium Laws”, now
existing or hereafter enacted in order to prevent or hinder the enforcement or
foreclosure of this Mortgage, but hereby waives the benefit of such
laws.  Mortgagor for itself and all who may claim through or under it
waives any and all right to have the property and estates comprising the
Mortgaged Premises marshalled upon any foreclosure of the lien hereof and agrees
that any court having jurisdiction to foreclose such lien may order the
Mortgaged Premises sold as an entirety.  In the event of any sale made
under or by virtue of this Mortgage, the whole of the Mortgaged Premises may be
sold in one parcel as an entirety or in separate lots or parcels at the same or
different times, all as Mortgagee may determine.  Mortgagee shall have
the right to become the purchaser at any sale made under or by virtue of this
Mortgage and Mortgagee so purchasing at any such sale shall have the right to be
credited upon the amount of the bid made therefor by Mortgagee with the amount
payable to Mortgagee out of the net proceeds of such sale.  In the
event of any such sale, the Secured Indebtedness, if not previously due, shall
be and become immediately due and payable without demand or notice of any
kind.  Mortgagor hereby waives any and all rights of redemption prior
to or from sale under any order or decree of foreclosure pursuant to rights
herein granted, on behalf of Mortgagor, and each and every person acquiring any
interest in, or title to the Mortgaged Premises described herein subsequent to
the date of this Mortgage, and on behalf of all other persons to the extent
permitted by applicable law.

     

    21.        Costs and Expenses of
Foreclosure.  In any suit to foreclose the lien hereof there
shall be allowed and included as additional indebtedness in the decree for sale
all expenditures and expenses which may be paid or incurred by or on behalf of
Mortgagee for attorneys’ fees, appraisers’ fees, environmental auditors’ fees,
outlays for documentary and expert evidence, stenographic charges, publication
costs and costs (which may be estimated as the items to be expended after the
entry of the decree) of procuring all such abstracts of title, title searches
and examination, guarantee policies, and similar data and assurances with
respect to title as Mortgagee may deem to be reasonably necessary either to
prosecute any foreclosure action or to evidence to the bidder at any sale
pursuant thereto the true condition of the title to or the value of the
Mortgaged Premises, all of which expenditures shall become so much additional
Secured Indebtedness which Mortgagor agrees to pay and all of such shall be
immediately due and payable with interest thereon from the date of expenditure
until paid at the Reimbursement Rate.

     

    22.        Application of
Proceeds.  The proceeds of any foreclosure sale of the
Mortgaged Premises or of any sale of property pursuant to Section l9(b)
hereof shall be distributed in the following order of
priority:  First, on account of all costs and expenses incident to the
foreclosure or other proceedings including all such items as are mentioned in
Sections l9(b) and 21 hereof; Second, to the Secured Indebtedness in such
order and manner as Mortgagee shall determine, with any overplus to whomsoever
Mortgagee shall reasonably determine to be lawfully entitled to the
same.

     

    23.        Deficiency
Decree.  If at any foreclosure proceeding the Mortgaged
Premises shall be sold for a sum less than the total amount of indebtedness for
which judgment is therein given, the judgment creditor shall be entitled to the
entry of a deficiency decree against Mortgagor and against the property of
Mortgagor for the amount of such deficiency; and Mortgagor does hereby
irrevocably consent to the appointment of a receiver for the Mortgaged Premises
and the property of Mortgagor and until such deficiency decree is satisfied in
full.

     

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

     

    24.        Mortgagee’s Remedies Cumulative - No
Waiver.  No remedy or right of Mortgagee shall be exclusive of
but shall be cumulative and in addition to every other remedy or right now or
hereafter existing at law or in equity or by statute or otherwise.  No
delay in the exercise or omission to exercise any remedy or right accruing on
any default shall impair any such remedy or right or be construed to be a waiver
of any such default or acquiescence therein, nor shall it affect any subsequent
default of the same or a different nature.  Every such remedy or right
may be exercised concurrently or independently, and when and as often as may be
deemed expedient by Mortgagee.

     

    25.        Mortgagee Party to
Suits.  If Mortgagee shall be made a party to or shall
intervene in any action or proceeding affecting the Mortgaged Premises or the
title thereto or the interest of Mortgagee under this Mortgage (including
probate and bankruptcy proceedings), or if Mortgagee employs an attorney to
collect any or all of the Secured Indebtedness or to enforce any of the terms
hereof or realize hereupon or to protect the lien hereof, or if Mortgagee shall
incur any costs or expenses in preparation for the commencement of any
foreclosure proceedings or for the defense of any threatened suit or proceeding
which might affect the Mortgaged Premises or the security hereof, whether or not
any such foreclosure or other suit or proceeding shall be actually commenced,
then in any such case, Mortgagor agrees to pay to Mortgagee, immediately and
without demand, all reasonable costs, charges, expenses and attorney’s fees
incurred by Mortgagee in any such case, and the same shall constitute so much
additional Secured Indebtedness payable upon demand with interest at the
Reimbursement Rate.

     

    26.        Modifications Not to Affect Lien.
Mortgagee, without notice to anyone, and without regard to the
consideration, if any, paid therefor, or the presence of other liens on the
Mortgaged Premises, may in its discretion release any part of the Mortgaged
Premises or any person liable for any of the Secured Indebtedness, may extend
the time of payment of any of the Secured Indebtedness and may grant waivers or
other indulgences with respect hereto and thereto, and may agree with Mortgagor
to modifications to the terms and conditions contained herein or otherwise
applicable to any of the Secured Indebtedness (including modifications in the
rates of interest applicable thereto), without in any way affecting or impairing
the liability of any party liable upon any of the Secured Indebtedness or the
priority of the lien of this Mortgage upon all of the Mortgaged Premises not
expressly released, and any party acquiring any direct or indirect interest in
the Mortgaged Premises shall take same subject to all of the provisions
hereof.

     

    27.        Notices.  All
communications provided for herein shall be in writing and shall be deemed to
have been given when delivered personally or mailed by first class mail, postage
prepaid, addressed to the parties hereto at their addresses as shown at the
beginning of this Mortgage or to such other and different address as Mortgagor
or Mortgagee may designate pursuant to a written notice sent in accordance with
the provisions of this Section.

     

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

     

    28.        Other Security
Documents.  Mortgagor acknowledges that this Mortgage is one of
several mortgages and/or other security documents (the aforesaid being together
called the “Other Security
Documents”) that secure the Secured Indebtedness or portions
thereof.  Mortgagor agrees that the lien of this Mortgage shall be
absolute and unconditional and shall not in any manner be affected or impaired
by any acts or omissions whatsoever of Mortgagee or any other holder of any of
the Secured Indebtedness, and without limiting the generality of the foregoing,
the lien and security hereof shall not be impaired by any acceptance by
Mortgagee or any other holder of any of the Secured Indebtedness of any security
for or guarantors upon any of the Secured Indebtedness or by any failure,
neglect or omission on the part of Mortgagee or any other holder of any of the
Secured Indebtedness to realize upon or protect any of the Secured Indebtedness
or any collateral or security therefor including the Other Security
Documents.  The lien and security interest hereof shall not in any
manner be impaired or affected by any release (except as to the property
released), sale, pledge, surrender, compromise, settlement, renewal, extension,
indulgence, alteration, substitution, exchange, change in, modification or
disposition of any of the Secured Indebtedness, or of any of the collateral or
security therefor, including, without limitation, the Other Security Documents
or of any guaranty thereof, or of any instrument or agreement setting forth the
terms and conditions pertaining to any of the foregoing.  Mortgagee
may at its discretion foreclose, exercise any power of sale, or exercise any
other remedy available to it under any or all of the Other Security Documents
without first exercising or enforcing any of its right and remedies
hereunder.  Such exercise of Mortgagee’s rights and remedies under any
or all of the Other Security Documents shall not in any manner impair the
Secured Indebtedness, except to the extent of payment, or the lien of this
Mortgage and any exercise of the rights or remedies of Mortgagee hereunder shall
not impair the lien of any of the Other Security Documents or any of Mortgagee’s
rights and remedies thereunder.  Mortgagor specifically consents and
agrees that Mortgagee may exercise its rights and remedies hereunder and under
the Other Security Documents separately or concurrently and in any order that it
may deem appropriate. 

     

    29.        Reimbursement
Rate.  For purposes of this Mortgage, the term “Reimbursement Rate”
means (a) the rate per annum equal to the per annum interest rate applicable to Base Rate
Portions under the Credit Agreement from time to time and (b) at all
times on and after the occurrence of an Event of Default hereunder, the rate per
annum determined by adding two percent (2%) to the rate determined under
subsection (a) above (in each case, computed on the basis of a year of 360
days for the actual number of days elapsed). 

     

    32.        Governing Law.  The
creation of this Mortgage, the perfection of the lien and security interest in
the Mortgaged Premises, and the rights and remedies of Mortgagee with respect to
the Mortgaged Premises, as provided herein and by the laws of the state in which
the Mortgaged Premises is located, shall be governed by and construed in
accordance with the internal laws of the state in which the Mortgaged Premises
are located without regard to principles of conflicts of
law.  Otherwise, the Loan Documents and all other obligations of
Mortgagor (including, but not limited to, the liability of Mortgagor for any
deficiency following a foreclosure of all or any part of the Mortgaged Premises)
shall be governed by and construed in accordance with the internal laws of the
State of Illinois without regard to principles of conflicts of laws, such state
being the state where such documents were executed and delivered.

     

    33.        Partial
Invalidity.  All rights, powers and remedies provided herein
are intended to be limited to the extent necessary so that they will not render
this Mortgage invalid, unenforceable or not entitled to be recorded, registered
or filed under any applicable law.  If any term of this Mortgage shall
be held to be invalid, illegal or unenforceable, the validity and enforceability
of the other terms of this Mortgage shall in no way be affected
thereby.

     

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

     

    34.        Successors and
Assigns.  Whenever any of the parties hereto is referred to,
such reference shall be deemed to include the successors and assigns of such
party; and all the covenants, promises and agreements in this Mortgage contained
by or on behalf of Mortgagor, or by or on behalf of Mortgagee, shall bind and
inure to the benefit of the respective successors and assigns of such parties,
whether so expressed or not.  If more than one party signs this
instrument as Mortgagor, then the term “Mortgagor” as used herein
shall mean all of such parties, jointly and severally.

     

    35.        Headings. The headings in
this Mortgage are for convenience of reference only and shall not limit or
otherwise affect the meaning of any provision hereof.

     

    36.        Changes, Etc.  This
Mortgage and the provisions hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is
sought.

     

    [Signature
Page to Follow]

    


    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

     

    In
Witness Whereof, Mortgagor has caused these presents to be signed and
sealed the day and year first above written.

     

    
      
      

      
        
          	 
      	 
      	
                  CTI
      Industries Corporation

                
	 
      	 
      	 
      
	 
      	
                  By: 

                	
                  /s/ Stephen M. Merrick

                
	 
      	 
      	
                  Executive
      Vice-President and Chief Financial

                  Officer

                


        

      

    

     

    
      
        
        

      

      
         

        
          

        

      

      
        
        

      

    

     

    Acknowledgment

     

    
      
        
          
            	
                    State
      of Illinois

                  	
                    )

                  
	 
      	
                    )  SS

                  
	
                    County
      of _____________

                  	
                    )

                  


          

        

      

    

     

    The
undersigned, a Notary Public in and for said County in the State aforesaid, does
hereby certify that _____________________, the _____________ of CTI Industries
Corporation, an Illinois corporation, personally known to me to be the same
person whose name is subscribed to the foregoing instrument, appeared before me
this day in person and acknowledged that she/he signed and delivered the said
instrument as her/his own free and voluntary act, and as the free and voluntary
act of said corporation for the purposes therein set forth.

     

    Given
under my hand and notarial seal this _____ day of _______________,
2010.

     

    
      
        
          
            	
                    (Notary
      Seal)

                  	 
      
	 
      	
                    Notary
      Public

                  
	 
      	 
      
	 
      	 
      
	 
      	
                    (Type
      or Print Name)

                  
	 
      	 
      
	 
      	
                    My
      commission
expires: ____________________

                  


          

        

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Schedule
I

     

    Legal
Description


    


    THAT
PART OF THE SOUTH 1/2 OF SECTION 21, TOWNSHIP 43 NORTH, RANGE 9, EAST OF THE
THIRD PRINCIPAL MERIDIAN, DESCRIBED AS FOLLOWS: COMMENCING AT A POINT IN THE
EAST LINE OF THE WEST 1/2 OF THE SOUTH EAST 1/4 OF SAID SECTION 21, 691.81 FEET
NORTH OF THE SOUTHEAST CORNER THEREOF; THENCE WEST PARALLEL WITH THE SOUTH LINE
OF SAID SOUTH EAST 1/4 746.66 FEET; THENCE NORTH PARALLEL WITH THE EAST LINE OF
THE SAID WEST 1/2 OF THE SOUTH EAST 1/4 291.81 FEET; THENCE EAST PARALLEL WITH
THE SOUTH LINE OF SAID SOUTH EAST 1/4 746.66 FEET TO THE EAST LINE OF THE WEST
1/2 OF THE SOUTH EAST 1/4; THENCE SOUTH 291.81 FEET TO THE POINT OF BEGINNING,
IN LAKE COUNTY, ILLINOIS.

    


    PROPERTY
ADDRESS:

    


    22160
North Pepper Road

    Barrington,
Illinois  60010

    


    PERMANENT TAX
NUMBER:

    


    13-21-400-014

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    Schedule II

     

    Permitted
Exceptions

    


    General
real estate taxes for the year 2009, due and payable in 2010, and each year
thereafter.  The 2008 real estate taxes are paid.

    


    The
exceptions contained on Schedule B – Part I of Chicago Title Insurance Company
loan policy No. 1409-000754046 dated as of April 29, 2010.