Document:

TERM
      NOTE

     

    
      

        
          	
                  $3,500,000.00

                	
                  Date:
                    as of February 1, 2006

                
	
                  Chicago,
                    Illinois

                	
                  Due
                    Date: January 31, 2011

                

        

      

       

       

    

    FOR
      VALUE
      RECEIVED, CTI Industries Corporation, an Illinois corporation (the
      “Borrower”), whose address is 22160 North Pepper Road, Barrington, Illinois
      60010, promises to pay to the order of CHARTER ONE BANK, N.A., a national
      banking association (hereinafter, together with any holder hereof, the “Bank”),
      whose address is 71 South Wacker Drive, Suite 2900, Chicago, Illinois 60606,
      on
      or before January 31, 2011 (the “Term Loan Maturity Date”), the principal sum of
      Three Million Five Hundred Thousand and 00/100 Dollars ($3,500,000.00), which
      amount is the principal amount of the Term Loan made by the Bank to the Borrower
      under and pursuant to that certain Loan and Security Agreement dated as of
      February 1, 2006, executed by and between the Borrower and the Bank, as amended
      from time to time (as amended, supplemented or modified from time to time,
      the
“Loan Agreement”), together with interest (computed on the actual number of days
      elapsed on the basis of a 360 day year) on the principal amount of the Term
      Loan
      outstanding from time to time as provided in the Loan Agreement. Capitalized
      words and phrases not otherwise defined herein shall have the meanings assigned
      thereto in the Loan Agreement.

    

    The
      outstanding principal of this Term Note, and all accrued interest thereon,
      shall
      be payable as provided in the Loan Agreement, and the outstanding principal
      balance of this Term Note, and all accrued and unpaid interest thereon, shall
      be
      due and payable in full on the Term Loan Maturity Date, unless payable sooner
      pursuant to the provisions of the Loan Agreement.

    

    This
      Note
      evidences the Term Loan incurred by the Borrower under and pursuant to the
      Loan
      Agreement, to which reference is hereby made for a statement of the terms and
      conditions under which the Term Loan Maturity Date or any payment hereon may
      be
      accelerated. The holder of this Term Note is entitled to all of the benefits
      and
      security provided for in the Loan Agreement.

    

    Principal
      and interest shall be paid to the Bank at its address set forth above, or at
      such other place as the holder of this Term Note shall designate in writing
      to
      the Borrower. The Term Loan made by the Bank, and all payments on account of
      the
      principal and interest thereof shall be recorded on the books and records of
      the
      Bank and the principal balance as shown on such books and records, or any copy
      thereof certified by an officer of the Bank, shall be rebuttably presumptive
      evidence of the principal amount owing hereunder.

    

    Except
      for such notices as may be required under the terms of the Loan Agreement,
      the
      Borrower waives presentment, demand, notice, protest, and all other demands,
      or
      notices, in connection with the delivery, acceptance, performance, default,
      or
      enforcement of this Term Note, and assents to any extension or postponement
      of
      the time of payment or any other indulgence.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    The
      Term
      Loan evidenced hereby has been made and this Term Note has been delivered at
      the
      Bank’s main office set forth above. This Term Note shall be governed and
      construed in accordance with the laws of the State of Illinois, in which state
      it shall be performed, and shall be binding upon the Borrower, and its legal
      representatives, successors, and assigns. Wherever possible, each provision
      of
      the Loan Agreement and this Term Note shall be interpreted in such manner as
      to
      be effective and valid under applicable law, but if any provision of the Loan
      Agreement or this Term Note shall be prohibited by or be invalid under such
      law,
      such provision shall be severable, and be ineffective to the extent of such
      prohibition or invalidity, without invalidating the remaining provisions of
      the
      Loan Agreement or this Term Note. The term “Borrower” as used herein shall mean
      all parties signing this Term Note, and each one of them, and all such parties,
      their respective successors and assigns, shall be jointly and severally
      obligated hereunder.

    

    

    IN
      WITNESS WHEREOF, the Borrower has executed this Term Note as of the date set
      forth above.

    

    CTI
      Industries Corporation, an Illinois corporation

    

    By: /s/Howard
      W. Schwan

    Name: Howard
      W.
      Schwan

    Title: President

    

     

    
      
         

      

      
        2SUBORDINATION
      AGREEMENT

    

    

    This
      SUBORDINATION AGREEMENT is entered into as of February 1, 2006 (the
      "Subordination Agreement"), by and among John H. Schwan, an individual (the
      "Junior Lender"), whose address is 27 Watergate, South Barrington, Illinois
      60010, CHARTER ONE BANK, N.A., a national banking association (the "Senior
      Lender"), whose address is 71 South Wacker Drive, Suite 2900, Chicago, Illinois
      60606, and CTI Industries Corporation, an Illinois corporation (the "Borrower"),
      whose address is 22160 North Pepper Road, Barrington, Illinois
      60010.

    

    R
      E C I T
      A L S:

    

    A. The
      Borrower and its United States subsidiaries are now or will be from time to
      time
      hereafter indebted in various sums to the Junior Lender pursuant to certain
      existing and/or future notes, agreements and instruments (collectively, the
      "Junior Debt Instruments").

    

    B. The
      Junior Lender desires that the Senior Lender extend and/or continue the
      extension of credit to the Borrower from time to time as the Senior Lender
      in
      its sole discretion may determine, and the Senior Lender has refused to consider
      the extension and/or continued extension of such credit until the "Junior Debt"
      (as defined below) is subordinated to the "Senior Debt" (as defined below)
      in
      the manner hereinafter set forth; and

    

    C. The
      extension and/or continued extension of credit, as aforesaid, by the Senior
      Lender is necessary or desirable to the conduct and operation of the business
      of
      the Borrower, and will inure to the benefit of the Junior Lender.

    

    NOW,
      THEREFORE, in consideration of the extension and/or continued extension of
      credit by the Senior Lender to the Borrower, as the Senior Lender may, in its
      sole discretion, determine, and for other good and valuable consideration to
      the
      Junior Lender, the receipt and sufficiency of which are hereby acknowledged,
      the
      Junior Lender and the Borrower hereby agree with the Senior Lender as
      follows:

    

    A
      G R E E
      M E N T S:

    

    1. Subordination.

    

    1.1 The
      Junior Lender hereby subordinates the indebtedness evidenced by the Junior
      Debt
      Instruments, and any and all other indebtedness now or at any time or times
      hereafter owing by the Borrower, or any successor or assign of the Borrower,
      including without limitation, a receiver, trustee or debtor-in-possession (the
      term "Borrower" as used hereinafter shall include any such successor or assign)
      to the Junior Lender, whether such indebtedness is absolute or contingent,
      direct or indirect and howsoever evidenced, including without limitation, all
      interest thereon, including pre-petition and post-petition interest, fees and
      expenses and any other charges, and any refinancings thereof (collectively,
      the
      "Junior Debt") to any and all indebtedness now or at any time hereafter owing
      by
      the Borrower to the Senior Lender, whether absolute or contingent, direct or
      indirect and howsoever evidenced, including, but not limited to, all
      pre-petition and post-petition interest thereon, fees, expenses and all other
      demands, claims, liabilities or causes of action for which the Borrower may
      now
      or at any time or times hereafter in any way be liable to the Senior Lender,
      whether under any agreement, instrument or document executed and delivered
      or
      made by the Borrower to the Senior Lender or otherwise, including any
      refinancings thereof (collectively, the "Senior Debt").

    

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    1.2 The
      Junior Lender hereby subordinates all security interests, liens, encumbrances
      and claims, whether now existing or hereafter arising, which in any way secure
      the payment of the Junior Debt (the "Junior Lender's Collateral") to all
      security interests, liens, encumbrances and claims, whether now existing or
      hereafter arising, which in any way secure the payment of the Senior Debt (the
      "Senior Lender's Collateral").

    

    1.3 The
      Junior Lender shall not take any action to enforce any of its liens on the
      Junior Lender's Collateral, and shall not ask for or receive from the Borrower
      or any other person or entity any security for the Junior Debt not specifically
      granted by the Junior Debt Instruments.

    

    1.4 The
      Junior Lender agrees that it shall have no right to possession of any assets
      included in the Junior Lender's Collateral or in the Senior Lender's Collateral,
      whether by judicial action or otherwise.

    

    1.5 The
      Junior Lender agrees to instruct the Borrower not to pay, and agrees not to
      accept payment of, or assert, demand, sue for or seek to enforce against the
      Borrower or any other person or entity, by setoff or otherwise, all or any
      portion of the Junior Debt with the exception that the Borrower may pay accrued
      interest (but no principal) on the Junior Debt Instruments at a per annum rate
      of interest not in excess of the rate in effect from time to time under the
      Junior Debt Instruments (which rate may not be increased without the prior
      written consent of the Bank); provided, however, that the Borrower shall not
      pay, and the Junior Lender shall not accept, any payments of the Junior Debt
      following the occurrence of a default under any of the loan documents evidencing
      the Senior Debt.

    

    1.6 The
      Junior Lender hereby assigns to the Senior Lender and subrogates to the Senior
      Lender all of the Junior Lender's right, title and interest in and to the Junior
      Debt and the Junior Lender's Collateral, and hereby irrevocably authorizes
      the
      Senior Lender (i) to collect, receive, enforce and accept any and all sums
      or
      distributions of any kind, whether cash, securities or other property, that
      may
      become due, payable or distributable on or in respect of the Junior Debt or
      the
      Junior Lender's Collateral, whether paid directly by the Borrower or paid or
      distributed in any liquidation, bankruptcy, arrangement, receivership,
      assignment, reorganization or dissolution proceedings or otherwise, and (ii)
      in
      the Senior Lender's sole discretion, to make, present and vote claims therefor
      in, and take such other actions as the Senior Lender deems necessary or
      advisable in connection with, any such proceedings, either in the Senior
      Lender's name or in the name of the Junior Lender, including, but not limited
      to, any election in any proceeding instituted under Chapter 11 of Title 11
      of
      United States Code (11 U.S.C. § 101 et. seq.) (the "Bankruptcy Code"); and
      agrees that upon the written request of the Senior Lender it will promptly
      assign, endorse and deliver to and deposit with the Senior Lender all
      agreements, instruments and documents evidencing the Junior Debt, including
      without limitation the Junior Debt Instruments.

     

    
      
         

      

      
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    1.7 The
      Junior Lender hereby agrees that all agreements, instruments and documents
      evidencing the Junior Debt and the Junior Lender's Collateral will be endorsed
      with proper notice of this Subordination Agreement as follows:

    

    "This
      Note is subordinated to all indebtedness now or hereafter owing by the maker
      to
      Charter One Bank, N.A., Chicago, Illinois, as provided in that certain
      Subordination Agreement dated as of January _____, 2006."

    

    The
      Junior Lender will promptly deliver to the Senior Lender a certified copy
      of
      the Junior Debt Instruments, as well as certified copies of all other
      agreements, instruments and documents hereafter evidencing any Junior Debt,
      in
      each case showing such endorsement.

    

    1.8 The
      Junior Lender agrees to receive and hold in trust for and promptly turn over
      to
      the Senior Lender, in the form received (except for the endorsement or
      assignment by the Junior Lender where necessary), any sums at any time paid
      to,
      or received by, the Junior Lender in violation of the terms of this
      Subordination Agreement and to reimburse the Senior Lender for all costs,
      including reasonable attorney's fees, incurred by the Senior Lender in the
      course of collecting said sums should the Junior Lender fail to voluntarily
      turn
      the same over to the Senior Lender as herein required.

    

    1.9 The
      Junior Lender hereby irrevocably makes, constitutes and appoints the Senior
      Lender (and any officer of the Senior Lender or any person designated by the
      Senior Lender for that purpose) as the Junior Lender's true and lawful proxy
      and
      attorney-in-fact (and agent-in-fact) in the Junior Lender's name, place and
      stead, with full power of substitution, to (i) take any and all actions as
      are
      permitted in this Subordination Agreement, (ii) execute such financing
      statements and other documents and to do such other acts as the Senior Lender
      may require to perfect and preserve the Junior Debt and the Junior Lender's
      Collateral, and (iii) carry out any remedy provided for in this Subordination
      Agreement. The Junior Lender hereby acknowledges that the constitution and
      appointment of such proxy and attorney-in-fact are coupled with an interest
      and
      are irrevocable. The Junior Lender hereby ratifies and confirms all that said
      attorney-in-fact may do or cause to be done by virtue of any provision of this
      Subordination Agreement.

    

    1.10 
      The
      Junior Lender agrees that it shall not modify or amend any agreement, instrument
      or document evidencing or securing the Junior Debt, including without limitation
      the Junior Debt Instruments, without the prior written consent of the Senior
      Lender.

    

    2. Representations.

    

    2.1 The
      Junior Lender represents and warrants to the Senior Lender that the Junior
      Lender has not assigned or otherwise transferred the Junior Debt or the Junior
      Lender's Collateral, or any interest therein to any person or entity, that
      the
      Junior Lender will make no such assignment or other transfer
      thereof.

     

    
      
         

      

      
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    2.2 The
      Junior Lender represents and warrants to the Senior Lender that no default
      or of
      any event which, with the lapse of time, the giving of notice or both, would
      constitute a default under the Junior Debt or any instrument evidencing or
      securing the Junior Debt, has occurred and is continuing (a "Junior Debt
      Default"), and the Junior Lender further agrees to promptly provide the Senior
      Lender with written notice of any Junior Debt Default.

    

    2.3 The
      Junior Lender represents and warrants to the Senior Lender that a true and
      complete copy of all Junior Debt Instruments existing as of the date hereof
      have
      been delivered to the Senior Lender and that the amount of the Junior Debt
      is
      properly stated on the financial statements of Borrower delivered to Senior
      Lender.

    

    3. Further
      Agreements.

    

    3.1 The
      Junior Lender expressly waives all notice of the acceptance by the Senior Lender
      of the subordination and other provisions of this Subordination Agreement and
      all notices not specifically required pursuant to the terms of this
      Subordination Agreement, and the Junior Lender expressly waives reliance by
      the
      Senior Lender upon the subordination and other provisions of this Subordination
      Agreement as herein provided.

    

    3.2 The
      Junior Lender consents and agrees that all Senior Debt shall be deemed to have
      been made, incurred and/or continued at the request of the Junior Lender and
      in
      reliance upon this Subordination Agreement.

    

    3.3 The
      Junior Lender agrees that the Senior Lender has made no warranties or
      representations with respect to the due execution, legality, validity,
      completeness or enforceability of the documents, instruments and agreements
      evidencing the Senior Debt, that the Senior Lender shall be entitled to manage
      and supervise its financial arrangements with the Junior Lender in accordance
      with its usual practices, without impairing or affecting this Subordination
      Agreement.

    

    3.4 The
      Junior Lender agrees that the Senior Lender shall have no liability to the
      Junior Lender, and in particular, the Junior Lender hereby waives any claim
      which it may now or hereafter have against the Senior Lender arising out of
      (i)
      any and all actions which the Senior Lender takes or omits to take (including
      without limitation actions with respect to the creation, perfection or
      continuation of liens or security interests in any existing or future the Senior
      Lender's Collateral, actions with respect to the occurrence of an event of
      default under any documents, instruments or agreements evidencing the Senior
      Debt, actions with respect to the foreclosure upon, sale, release, or
      depreciation of, or failure to realize upon, any of the Senior Lender's
      Collateral and actions with respect to the collection of any claim for all
      or
      any part of the Senior Debt from any account debtor, guarantor or other person
      or entity) with respect to the documents, instruments and agreements evidencing
      the Senior Debt or to the collection of the Senior Debt or the valuation, use,
      protection or release of the Senior Lender's Collateral, (ii) the Senior
      Lender's election (whether on behalf of the Senior Lender or the Junior Lender)
      in any proceeding instituted under the Bankruptcy Code, and/or (iii) any
      borrowing or grant of a security interest under Section 364 of the Bankruptcy
      Code by the Borrower, as debtor-in-possession.

     

    
      
         

      

      
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    4. Further
      Assurances.
      The
      Junior Lender agrees that the Senior Lender, at any time and from time to time
      hereafter, may enter into such agreements with the Borrower as the Senior Lender
      may deem proper extending the time of payment of or renewing or otherwise
      altering the terms of all or any of the Senior Debt or affecting any of the
      Senior Lender's Collateral, and may sell or surrender or otherwise deal with
      any
      of the Senior Lender's Collateral, and may release any balance of funds of
      the
      Borrower with the Senior Lender, without notice to the Junior Lender and without
      in any way impairing or affecting this Subordination Agreement.

    

    5. Continuing
      Agreement.
      This
      Subordination Agreement shall be irrevocable and shall constitute a continuing
      agreement of subordination and shall be binding on the Junior Lender and its
      heirs, personal representatives, successors and assigns, and shall inure to
      the
      benefit of the Senior Lender, its successors and assigns until the Senior Lender
      has, in writing, notified the Junior Lender that all of the Senior Debt has
      been
      paid in full and all obligations arising in connection therewith have been
      discharged. The Senior Lender may continue, without notice to the Junior Lender,
      to lend monies, extend credit and make other accommodations to or for the
      account of the Borrower on the faith hereof. The Junior Lender hereby agrees
      that all payments received by the Senior Lender may be applied, reversed, and
      reapplied, in whole or in part, to any of the Senior Debt, without impairing
      or
      affecting this Subordination Agreement.

    

    6. No
      Reliance.
      The
      Junior Lender hereby assumes responsibility for keeping itself informed of
      the
      financial condition of the Borrower, any and all endorsers and any and all
      guarantors of the Senior Debt and the Junior Debt, and of all other
      circumstances bearing upon the risk of nonpayment of the Senior Debt and the
      Junior Debt that diligent inquiry would reveal, and the Junior Lender hereby
      agrees that the Senior Lender shall have no duty to advise the Junior Lender
      of
      information known to the Senior Lender regarding such condition or any such
      circumstances or to undertake any investigation. If the Senior Lender, in its
      sole discretion, undertakes, at any time or from time to time, to provide any
      information of the type described herein to the Junior Lender, the Senior Lender
      shall be under no obligation to subsequently update any such information or
      to
      provide any such information to the Junior Lender on any subsequent
      occasion.

    

    7. Senior
      Lender's Duty Limited.
      The
      rights granted to the Senior Lender in this Subordination Agreement are solely
      for its protection and nothing herein contained imposes on the Senior Lender
      any
      duties with respect to any property of either the Borrower or of the Junior
      Lender received by the Senior Lender beyond the duty to exercise reasonable
      care
      in the custody and preservation of such property while in the Senior Lender's
      possession. The Senior Lender shall have no duty to preserve rights against
      prior parties on any instrument or chattel paper received from the Borrower
      or
      the Junior Lender as collateral security for the Senior Debt or any portion
      thereof.

    

    8. No
      Marshalling.
      The
      Junior Lender, on its own behalf and on behalf of its successors and assigns
      hereby expressly waives all rights, if any, to require a marshalling of the
      Borrower's assets by the Senior Lender or to require that the Senior Lender
      first resort to some or any portion of any collateral for the Senior Debt before
      foreclosing upon, selling or otherwise realizing on any other portion
      thereof.

     

    
      
         

      

      
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    9. Reinstatement.
      To the
      extent that the Borrower makes a payment to the Senior Lender or the Senior
      Lender receives any payment or proceeds of the collateral securing the Senior
      Debt for the Borrower's benefit, which payment or proceeds or any part thereof
      are subsequently invalidated, declared to be fraudulent or preferential, set
      aside and/or required to be repaid to a trustee, receiver or any other party
      under any bankruptcy law, state or federal law, common law or equitable
      doctrine, then, to the extent of such payment or proceeds received and not
      retained by the Senior Lender, the Junior Lender's obligations intended to
      be
      satisfied thereby and this Subordination Agreement shall be reinstated and
      continue in full force and effect until full and final payment shall have been
      made to the Senior Lender. The Junior Lender agrees to hold in trust for the
      Senior Lender and promptly remit to the Senior Lender any payments received
      by
      the Junior Lender after such invalidated, rescinded or returned payment was
      originally made.

    

    10. Waiver
      In Writing.
      No
      waiver shall be deemed to be made by the Senior Lender of any of its rights
      hereunder unless the same shall be in writing signed on behalf of the Senior
      Lender and each such waiver, if any, shall be a waiver only with respect to
      the
      specific matter or matters to which the waiver relates and shall in no way
      impair the rights of the Senior Lender or the obligations of the Junior Lender
      to the Senior Lender in any other respect at any other time.

    

    11. Choice
      Of Law.
      This
      Subordination Agreement shall be governed and controlled by the internal laws
      of
      the State of Illinois.

    

    12. FORUM.
      TO
      INDUCE THE SENIOR LENDER TO ACCEPT THIS SUBORDINATION AGREEMENT, THE JUNIOR
      LENDER IRREVOCABLY AGREES THAT, SUBJECT TO THE SENIOR LENDER'S SOLE AND ABSOLUTE
      ELECTION, ALL ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT, ARISING
      OUT
      OF OR FROM OR RELATED TO THIS SUBORDINATION AGREEMENT SHALL BE LITIGATED IN
      COURTS HAVING SITUS WITHIN THE CITY OF CHICAGO, STATE OF ILLINOIS. THE JUNIOR
      LENDER HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE
      OR
      FEDERAL COURTS LOCATED WITHIN SAID CITY AND STATE. THE JUNIOR LENDER HEREBY
      IRREVOCABLY APPOINTS AND DESIGNATES THE SECRETARY OF STATE OF ILLINOIS, WHOSE
      ADDRESS IS SPRINGFIELD, ILLINOIS (OR ANY OTHER PERSON HAVING AND MAINTAINING
      A
      PLACE OF BUSINESS IN SUCH STATE WHOM THE JUNIOR LENDER MAY FROM TIME TO TIME
      HEREAFTER DESIGNATE UPON TEN (10) DAYS WRITTEN NOTICE TO THE SENIOR LENDER
      AND
      WHO THE SENIOR LENDER HAS AGREED IN ITS SOLE DISCRETION IN WRITING IS
      SATISFACTORY AND WHO HAS EXECUTED AN AGREEMENT IN FORM AND SUBSTANCE
      SATISFACTORY TO THE SENIOR LENDER AGREEING TO ACT AS SUCH ATTORNEY AND AGENT),
      AS THE JUNIOR LENDER'S TRUE AND LAWFUL ATTORNEY AND DULY AUTHORIZED AGENT FOR
      ACCEPTANCE OF SERVICE OF LEGAL PROCESS. THE JUNIOR LENDER AGREES THAT SERVICE
      OF
      SUCH PROCESS UPON SUCH PERSON SHALL CONSTITUTE PERSONAL SERVICE OF SUCH PROCESS
      UPON THE JUNIOR LENDER. THE JUNIOR LENDER HEREBY WAIVES ANY RIGHT IT MAY HAVE
      TO
      TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST THE JUNIOR LENDER
      BY THE SENIOR LENDER IN ACCORDANCE WITH THIS PARAGRAPH.

     

    
      
         

      

      
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    13. WAIVER
      OF JURY TRIAL.
      THE
      JUNIOR LENDER AND THE SENIOR LENDER, AFTER CONSULTING OR HAVING HAD THE
      OPPORTUNITY TO CONSULT WITH COUNSEL, EACH KNOWINGLY, VOLUNTARILY AND
      INTENTIONALLY WAIVE IRREVOCABLY, THE RIGHT TO TRIAL BY JURY WITH RESPECT TO
      ANY
      ACTION OR PROCEEDING WHICH PERTAINS DIRECTLY OR INDIRECTLY TO THIS SUBORDINATION
      AGREEMENT. THIS PROVISION IS A MATERIAL INDUCEMENT TO THE BANK GRANTING ANY
      FINANCIAL ACCOMMODATION TO THE BORROWER AND ENTERING INTO THIS SUBORDINATION
      AGREEMENT.

    

    14. Additional
      Borrower Agreements.

    

    14.1 The
      Borrower hereby agrees that until all Senior Debt is paid in full and all
      obligations arising in connection therewith have been satisfied, the Borrower
      will make no payments or distributions contrary to the provisions hereof and
      will do every other thing necessary to carry out such provisions. The Borrower
      will give the Senior Lender notice of any suit or action brought in violation
      of
      said agreement.

    

    14.2 The
      Borrower represents and warrants to the Senior Lender that no Junior Debt
      Default exists and agrees to promptly provide the Senior Lender with written
      notice of any Junior Debt Default.

    

    14.3 In
      the
      event of any violation of any of the provisions of this Subordination Agreement,
      then, at the election of the Senior Lender, any and all obligations of the
      Borrower to the Senior Lender shall immediately become due and payable and
      any
      and all agreements of the Senior Lender to make loans, advances or other
      financial accommodations to the Borrower shall immediately terminate,
      notwithstanding any provision hereof to the contrary.

    

    IN
      WITNESS WHEREOF, the Junior Lender, the Senior Lender and the Borrower have
      executed this Subordination Agreement as of the date set forth
      above.

    

    
      	 	
              JUNIOR
                LENDER:

            
	 	 
	 	
              /s/John
                H. Schwan

            
	 	
              John
                H. Schwan, individually

            
	 	 
	 	
              SENIOR
                LENDER:

            
	 	 
	 	
              CHARTER
                ONE BANK, N.A., a national banking association

            
	 	 
	 	
              By:
                /s/Richard Bott

            
	 	
              Name:Richard
                Bott

            
	 	
              Title:
                Senior Vice-President

            

    

    
 

    
      
         

      

      
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    BORROWER'S
      CONSENT

     

    

    The
      Borrower hereby agrees and consents to the foregoing Subordination Agreement
      (and the terms thereof) and agrees to abide thereby and to keep, observe and
      perform the several matters and things therein intended to be kept, observed
      and
      performed by it, and specifically agrees not to make any payments contrary
      to
      the intention and terms of the Subordination Agreement.

    

    A
      breach
      of any of the terms or conditions contained in the Subordination Agreement
      shall
      constitute a default in any and all of the Senior Debt.

    

    Signed
      and delivered by the Borrower as of February _____, 2006.

    

    BORROWER:

    

    CTI
      Industries Corporation, an Illinois corporation

    

    By: /s/Howard
      W. Schwan

    Name: Howard
      W.
      Schwan

    Title: President

    
 

    
      
         

      

      
        8

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00097-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00097-of-00352.parquet"}]]