Exhibit 10.18

                                 THIRD TERM NOTE

$2,258,000.00                                        Elk Grove Village, Illinois
                                                                     May 1, 1998
                                                           Loan No. 600804665-64

                  FOR  VALUE   RECEIVED,   the   undersigned,   CTI   Industries
Corporation, a Delaware corporation (the "Borrower"),  hereby promises to pay to
the order of First American Bank, an Illinois banking  corporation (the "Bank"),
the  principal  sum of Two Million Two Hundred  Fifty Eight  Thousand and No/100
Dollars  ($2,258,000.00) on August 1, 2003 (or earlier as hereinafter provided),
or so much  thereof as may be  advanced by the Bank and  evidenced  by this Note
under the Amended and  Restated  Loan and Security  Agreement  dated May 1, 1998
between the Borrower and the Bank (the "Loan Agreement"), together with interest
to  maturity  (whether  by lapse of time,  acceleration,  or  otherwise)  on the
balance of principal remaining from time to time outstanding at a fixed rate per
annum equal to eight and one-quarter  percent (8.25%) per annum.  Interest shall
be calculated on the basis of a 360-day year and actual days.

                  Unless  accelerated  as  hereinafter  provided or as otherwise
provided in the Loan Agreement,  the principal sum outstanding  shall be payable
in equal  installments of $46,194.61 of principal and interest per month payable
on  September 1, 1998 and on the first day of each  succeeding  month until this
Note is fully paid except  that the final  payment of  principal,  if not sooner
paid,  shall be due on August 1, 2003.  Accrued  interest  shall also be due and
payable  on the  first  day of each  calendar  month  commencing  with the month
following  the date on which the first  disbursement  of the Note is made except
that the final payment of accrued and unpaid  interest shall be due on August 1,
2003. If an Event of Default (as defined in the Loan Agreement) shall occur, the
outstanding  principal  of and  accrued  and unpaid  interest on this Note shall
become  immediately  due and payable as provided in the Loan  Agreement  without
notice.

                  All payments on account of the indebtedness  evidenced by this
Note (other than required  prepayments which shall be applied as provided in the
Loan  Agreement and optional  prepayments  which shall be applied as provided in
this  Note)  shall be  applied  first to accrued  and  unpaid  interest  and the
remainder  to  principal.  Payments on this Note shall be made at the offices of
the Bank or at such other office as the legal holder of this Note may, from time
to time, designate in writing.

                  Notwithstanding anything to the contrary contained herein, the
undersigned  agrees to pay a late charge of five  percent  (5%) of the amount of
any monthly installment received more than 10 days after the installment is due.
Late charges shall be due and payable on the due date of the next installment of
principal or interest, together with the regular installment then due.

                  Upon and  after the  occurrence  of an Event of  Default,  the
undersigned  shall pay interest at the rate (the  "Default  Rate") of eleven and
one-quarter percent (11.25%) per annum.

                  Except as otherwise provided in the Loan Agreement,  this Note
may be prepaid in whole or in part without premium or penalty at any time at the
option of the  undersigned in accordance  with the Loan  Agreement.  Any partial
prepayment  made at the option of the  undersigned  shall be applied against the
principal  amount  outstanding  and  shall  not  postpone  the  due  date of any
subsequent monthly



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                                 Third Term Note
                                    Page Two


installment  or change  the  amount of such  installment  unless  the Bank shall
otherwise agree in writing.

                  This  Note  is  secured  by  the  Loan   Agreement  and  other
documents,  agreements,  and instruments executed by the Borrower.  This Note is
made and delivered  pursuant to the Loan Agreement and is subject to the further
terms and  conditions  thereof,  including the right of the holder to accelerate
payment of the  principal  of and accrued  and unpaid  interest on this Note and
other  remedies  upon the  occurrence  of an Event of Default,  all of which are
hereby incorporated and made a part of this Note by reference.

                  Any waiver of any payment due  hereunder or the  acceptance by
the Bank of partial payments hereunder shall not, at any other time, be taken to
be a  waiver  of the  terms  of this  Note or the Loan  Agreement  or any  other
agreement between the Borrower and the Bank.

                  The makers, sureties,  guarantors, and endorsers of this Note,
if any,  jointly and severally hereby waive notice of and consent to any and all
extensions  of this Note or any part  thereof  without  notice,  and each hereby
waives demand,  presentment for payment,  notice of nonpayment,  and protest and
any and all  notice of  whatever  kind or  nature  and the  exhaustion  of legal
remedies  herein,  or any  release  of  liability  or any other  indulgences  or
forbearances whatsoever,  without releasing or in any way affecting the personal
liability of any other party hereunder.

                  This Note  shall be the joint and  several  obligation  of all
makers,  sureties,  guarantors,  and  endorsers  and shall be binding upon them,
their heirs, personal representatives, and assigns.

                  In the event the holder of this Note shall  refer this Note to
an attorney for collection, the undersigned agrees to pay, in addition to unpaid
principal and interest,  all of the costs and expenses incurred in attempting or
effecting collection,  including reasonable attorneys' fees, whether or not suit
is instituted.

                  IN WITNESS WHEREOF,  the undersigned has executed this Note as
of the date first written above.

                                                  CTI Industries Corporation


                                                  BY:_______________________ 
                                                     Stephen M. Merrick
                                                     Chief Executive Officer