Document:

REVOLVING
      NOTE

    
      
        	
                $6,500,000.00

              	
                Date:
                  as of: February 1, 2006

              
	
                Chicago,
                  Illinois

              	
                Due
                  Date: January 31, 2009

              
	 	 

      

    

     

    

      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, 2009 (the “Revolving Loan Maturity Date”), the lesser of
        (i) Six Million Five Hundred Thousand and 00/100 Dollars ($6,500,000.00),
        or
        (ii) the aggregate principal amount of all Revolving Loans outstanding 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”), and made available by the Bank to the Borrower at the maturity or
        maturities and in the amount or amounts stated on the records of the Bank,
        together with interest (computed on the actual number of days elapsed on
        the
        basis of a 360 day year) on the aggregate principal amount of all Revolving
        Loans 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.

      

      This
        Revolving Note evidences the Revolving Loans, Letters of Credit and other
        indebtedness 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 Revolving Loan Maturity Date or any payment hereon may be
        accelerated. The holder of this Revolving Note is entitled to all of the
        benefits and security provided for in the Loan Agreement. All Revolving Loans
        shall be repaid by the Borrower on the Revolving Loan Maturity Date, unless
        payable sooner pursuant to the provisions of 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 Revolving Note shall designate in
        writing
        to the Borrower. Each Revolving Loan made, and all Letters of Credit issued
        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 Revolving Note, and assents to any extension or postponement
        of the time of payment or any other indulgence.

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      The
        Revolving Loans and the Letters of Credit evidenced hereby have been made
        and/or
        issued and this Revolving Note has been delivered at the Bank’s main office set
        forth above. This Revolving 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 Revolving 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 Revolving 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 Revolving Note. The term “Borrower” as used herein shall
        mean all parties signing this Revolving 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 Revolving 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

                	 

        

      

    

     

     

     

    
      
        
        

      

      
        2MORTGAGE
      NOTE

     

    

      
        	
                $2,800,000.00

              	
                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 “Mortgage Loan Maturity Date”), the principal
        sum of Two Million Eight Hundred Thousand and 00/100 Dollars ($2,800,000.00),
        which amount is the principal amount of the Mortgage 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 Mortgage Loan outstanding from time to time as provided in the Loan
        Agreement. This Mortgage Note is also secured by that certain Mortgage, Security
        Agreement, Assignment of Rents and Leases and Fixture Filing of even date
        herewith, executed by Borrower and delivered to Bank (the “Mortgage”).
        Capitalized words and phrases not otherwise defined herein shall have the
        meanings assigned thereto in the Loan Agreement.

      

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

      

      This
        Note
        evidences the Mortgage 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 Mortgage Loan Maturity Date or any payment
        hereon
        may be accelerated. The holder of this Mortgage Note is entitled to all of
        the
        benefits and security provided for in the Loan Agreement and in the
        Mortgage.

      

      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 Mortgage Note shall designate in writing
        to the Borrower. The Mortgage 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
        or the
        Mortgage, 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 Mortgage Note, and assents to
        any
        extension or postponement of the time of payment or any other
        indulgence.

      

      The
        Mortgage Loan evidenced hereby has been made and this Mortgage Note has been
        delivered at the Bank’s main office set forth above. This Mortgage 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, Mortgage and this Mortgage Note shall be
        interpreted in such manner as to be effective and valid under applicable
        law,
        but if any provision of the Loan Agreement, Mortgage or this Mortgage 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, Mortgage
        or
        this Mortgage Note. The term “Borrower” as used herein shall mean all parties
        signing this Mortgage 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 Mortgage 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

                	 

        

      

    

     

     

    
      
        
        

      

      
        2

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