Exhibit 10.16


                                 FIRST TERM NOTE

$1,788,328.39                                        Elk Grove Village, Illinois
                                                                     May 1, 1998
                                                           Loan No. 600804665-63

                  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 One Million Seven  Hundred  Eighty Eight  Thousand  Three
Hundred  Twenty  Eight and  39/100  Dollars  ($1,788,328.39)  on May 1, 2002 (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 $43,978.98 of principal and interest per month payable
on the first day of each calendar month  commencing with the month of June, 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
May 1, 2002.  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  installment or change the amount of such installment unless
the Bank shall otherwise agree in writing.



<PAGE>



                                 First Term Note
                                    Page Two


                  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