Document:

EXHIBIT 10.18

Amount:  $173,000.00                                     Date: January ___, 2001

                                                         Due: January 5, 2004

                             SECURED PROMISSORY NOTE

     FOR VALUE RECEIVED, the undersigned, CTI INDUSTRIES CORPORATION, a Delaware
corporation, promises to pay to the order of BANCO POPULAR NORTH AMERICA (the
"Bank") at its offices in Chicago, Illinois the principal sum of One Hundred
Seventy-Three Thousand and No/100 Dollars ($173,000.00), upon the terms and
conditions set forth below together with interest on the principal balance
hereof from time to time unpaid at a rate per annum of ten percent (10.0%).
Interest shall be payable from the date of disbursement, calculated on the basis
of the actual number of days elapsed over a year of 360 days but shall not
exceed the maximum rate of interest allowable under applicable law for loans of
this type. Principal due hereunder shall bear interest after maturity, whether
pursuant to acceleration, expiration of the term of this Note or otherwise, at
five percent (5%) per annum plus the prematurity rate.

     Principal and interest due hereunder shall be payable in thirty-five (35)
consecutive monthly installments on the fifth day of each month, commencing on
February 5, 2001 of $5,582.00 each, with a final installment due on January 5,
2004, all sums

<PAGE>

remaining unpaid hereon. The undersigned shall pay to the Bank a late charge of
five percent (5%) of any installment not received by the Bank within fifteen
(15) days after the installment is due.

     At any time any deposit or other indebtedness credited by or due from the
holder hereof to the undersigned may be set off against or applied in whole or
partial payment of amounts owing hereunder or in whole or partial payment of any
other liability of the undersigned to the holder whether now existing or
hereafter arising, direct or indirect, absolute or contingent, or whether due or
to become due. Amounts owing hereunder are secured as set forth in that certain
Real Estate Mortgage and Assignment of Leases and Rents of even date herewith,
executed by the undersigned and delivered to the Bank, the terms and conditions
of which are incorporated by reference herein; and as additional security for
amounts owing hereunder the undersigned grants to the holder a continuing
security interest in all property of the undersigned now or hereafter in the
possession or control of the holder hereof.

     Upon nonpayment of the indebtedness evidenced by this Note or any
obligation or liability of the undersigned to the holder hereof in accordance
with its terms or upon the occurrence of an event of default as defined in the
aforesaid Real Estate Mortgage and Assignment of Leases and Rents or any
agreement given to secure this Note or any other Note or obligation of the
undersigned to the Bank, or if Bank shall in good faith deem

                                     - 2 -
<PAGE>

itself to be insecure for any reason whatsoever then unless Bank shall otherwise
elect the full amount due hereunder shall be immediately due and payable,
without notice or demand.

     No delay on the part of the holder hereof in the exercise of any right or
remedy shall operate as a waiver thereof, no single or partial exercise by said
holder of any right or remedy shall preclude any other future exercise thereof
or the exercise of any other right or remedy and no waiver or indulgence by said
holder of any default shall be effective unless in writing and signed by the
holder hereof nor shall waiver by the holder hereof of any right on one occasion
be construed as or be a bar to or waiver of any such right on any future
occasion.

     The undersigned, each endorser hereof and any other party liable for the
indebtedness evidenced hereby severally waive demand, presentment, notice of
dishonor and consent to: any extension or postponement of the time for its
payment; release of any security interest securing this Note; or the addition of
any party hereto or the release or discharge of or suspension of any rights or
remedies against any person who may be liable for the payment of the
indebtedness evidenced hereby.

     The undersigned warrants and agrees that (1) the obligation evidenced by
this Note is an exempted transaction under the Truth-in-Lending Act, 15 U.S.C. "
1601, et seq.; and (2) said obligation constitutes a business loan which comes
within the purview of subparagraph (1)(c) of Section 4, and a loan secured by a
mortgage on real estate which comes within the purview of

                                     - 3 -
<PAGE>

subparagraph (1)(1) of Section 4 of "an Act in relation to the rate of interest
and other charges in connection with sales on credit and the lending of money,"
approved May 24, 1879, as amended (815 ILCS 205/4(1)(c) and 205/4(1)(l)).

     The loan evidenced hereby has been made and this Note has been delivered at
Chicago, Illinois, and shall be governed by the laws of the State of Illinois.
Wherever possible each provision of this Note shall be interpreted in such
manner as to be effective and valid under applicable law but if any provision of
this Note shall be prohibited by or invalid under such law such provision shall
be ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining provisions of this
Note.

     The undersigned agrees to pay all expenses of collection of the amounts
evidenced under this Note including reasonable

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<PAGE>

attorneys' fees, costs and expenses. This Note shall be binding upon the heirs,
successors, and assigns of the undersigned.

                                                     CTI INDUSTRIES CORPORATION

                                                     By  /s/ Howard Schwan
                                                         ---------------------

                                                     Its President
                                                         ---------------------

ATTEST:

--------------------
Its Secretary

                                     - 5 -EXHIBIT 10.19

                                    GUARANTEE

                                                               January ___, 2001

Congress Financial Corporation (Central)
150 South Wacker Drive
Suite 2200
Chicago, Illinois  60606-4202

     Re:  CTI Industries Corporation ("Borrower")

Gentlemen:

     Congress Financial Corporation (Central) ("Lender") and Borrower have
entered into certain financing arrangements pursuant to which Lender may make
loans and advances and provide other financial accommodations to Borrower as set
forth in the Loan and Security Agreement, dated January __, 2001 by and between
Borrower and Lender (as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced, the "Loan
Agreement"), and other agreements, documents and instruments referred to therein
or at any time executed and/or delivered in connection therewith or related
thereto, including, but not limited to, this Guarantee (all of the foregoing,
together with the Loan Agreement, as the same now exist or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced, being
collectively referred to herein as the "Financing Agreements").

     Due to the close business and financial relationships between Borrower and
the undersigned ("Guarantor"), in consideration of the benefits which will
accrue to Guarantor and as an inducement for and in consideration of Lender
making loans and advances and providing other financial accommodations to
Borrower pursuant to the Loan Agreement and the other Financing Agreements,
Guarantor hereby agrees in favor of Lender as follows:

     1. Guarantee.

     (a) Guarantor absolutely and unconditionally guarantees and agrees to be
liable for the full and indefeasible payment and performance when due of the
following (all of which are collectively referred to herein as the "Guaranteed
Obligations"): (i) all obligations, liabilities and indebtedness of any kind,
nature and description of Borrower to Lender and/or its affiliates, including
principal, interest, charges, fees, costs and expenses, however evidenced,
whether as principal, surety, endorser, guarantor or otherwise, whether arising
under the Loan Agreement, the other Financing Agreements or otherwise, whether
now existing or hereafter arising, whether arising before, during or after the
initial or any renewal term of the Loan Agreement or after the commencement of
any case with respect to

<PAGE>

Borrower under the United States Bankruptcy Code or any similar statute
(including, without limitation, the payment of interest and other amounts, which
would accrue and become due but for the commencement of such case, whether or
not such amounts are allowed or allowable in whole or in part in any such case
and including loans, interest, fees, charges and expenses related thereto and
all other obligations of Borrower or its successors to Lender arising after the
commencement of such case), whether direct or indirect, absolute or contingent,
joint or several, due or not due, primary or secondary, liquidated or
unliquidated, secured or unsecured, and however acquired by Lender and (ii) all
expenses (including, without limitation, attorneys' fees and legal expenses)
incurred by Lender in connection with the preparation, execution, delivery,
recording, administration, collection, liquidation, enforcement and defense of
Borrower's obligations, liabilities and indebtedness as aforesaid to Lender, the
rights of Lender in any collateral or under this Guarantee and all other
Financing Agreements or in any way involving claims by or against Lender
directly or indirectly arising out of or related to the relationships among
Borrower, Guarantor or any other Obligor (as hereinafter defined) and Lender,
whether such expenses are incurred before, during or after the initial or any
renewal term of the Loan Agreement and the other Financing Agreements or after
the commencement of any case with respect to Borrower or Guarantor under the
United States Bankruptcy Code or any similar statute. Notwithstanding anything
in this Guarantee to the contrary, the liability of Guarantor hereunder in the
aggregate shall not exceed Five Hundred Thousand and No/100 Dollars
($500,000.00) (the "Original Maximum Limit"), plus costs and expenses of
collection and prosecution of actions against Guarantor, and provided, further,
that if the audited consolidated financial statements of Borrower for any fiscal
year on or after December 31, 2001 show that Borrower's pre-tax net income
exceeded $750,000 for such fiscal year, then on the tenth day after Lender's
receipt of such financial statements, so long as there exists no Event of
Default under the Loan Agreement, the Original Maximum Limit shall be reduced by
One Hundred Sixty-Six Thousand Six Hundred Sixty-Seven and No/100 Dollars
($166,667.00); provided, further, that the Original Maximum Limit may only be
reduced once and if the audited financial consolidated financial statements of
Borrower for any fiscal year ending on or after December 31, 2002 show a net
loss for such fiscal year, the Original Maximum Limit shall revert to $500,000.
For purposes hereof, net income and net loss shall be calculated exclusive of
nonrecurring or one time gains or extraordinary gains.

     (b) This Guarantee is a guaranty of payment and not of collection.
Guarantor agrees that Lender need not attempt to collect any Guaranteed
Obligations from Borrower, Guarantor or any other Obligor or to realize upon any
collateral, but may require Guarantor to make immediate payment of all of the
Guaranteed Obligations to Lender when due, whether by maturity, acceleration or
otherwise, or at any time thereafter. Lender may apply any amounts received in
respect of the Guaranteed Obligations to any of the Guaranteed Obligations, in
whole or in part (including attorneys' fees and legal expenses incurred by
Lender with respect thereto or otherwise chargeable to Borrower or Guarantor)
and in such order as Lender may elect.

                                      -2-
<PAGE>

     (c) Payment by Guarantor shall be made to Lender at the office of Lender
from time to time on demand as Guaranteed Obligations become due. Guarantor
shall make all payments to Lender on the Guaranteed Obligations free and clear
of, and without deduction or withholding for or on account of, any setoff,
counterclaim, defense, duties, taxes, levies, imposts, fees, deductions,
withholding, restrictions or conditions of any kind. One or more successive or
concurrent actions may be brought hereon against Guarantor either in the same
action in which Borrower or any other Obligor is sued or in separate actions. In
the event any claim or action, or action on any judgment, based on this
Guarantee is brought against Guarantor, Guarantor agrees not to deduct, set-off,
or seek any counterclaim for or recoup any amounts which are or may be owed by
Lender to Guarantor.

     2. Waivers and Consents.

     (a) Notice of acceptance of this Guarantee, the making of loans and
advances and providing other financial accommodations to Borrower and
presentment, demand, protest, notice of protest, notice of nonpayment or default
and all other notices to which Borrower or Guarantor is entitled are hereby
waived by Guarantor. Guarantor also waives notice of and hereby consents to, (i)
any amendment, modification, supplement, extension, renewal, or restatement of
the Loan Agreement and any of the other Financing Agreements, including, without
limitation, extensions of time of payment of or increase or decrease in the
amount of any of the Guaranteed Obligations, interest rate, fees, other charges,
or any collateral, and the guarantee made herein shall apply to the Loan
Agreement and the other Financing Agreements and the Guaranteed Obligations as
so amended, modified, supplemented, renewed, restated or extended, increased or
decreased, (ii) the taking, exchange, surrender and releasing of collateral or
guarantees now or at any time held by or available to Lender for the obligations
of Borrower or any other party at any time liable on or in respect of the
Guaranteed Obligations or who is the owner of any property which is security for
the Guaranteed Obligations (individually, an "Obligor" and collectively, the
"Obligors"), (iii) the exercise of, or refraining from the exercise of any
rights against Borrower or any other Obligor or any collateral, (iv) the
settlement, compromise or release of, or the waiver of any default with respect
to, any of the Guaranteed Obligations and (v) any financing by Lender of
Borrower under Section 364 of the United States Bankruptcy Code or consent to
the use of cash collateral by Lender under Section 363 of the United States
Bankruptcy Code. Guarantor agrees that the amount of the Guaranteed Obligations
shall not be diminished and the liability of Guarantor hereunder shall not be
otherwise impaired or affected by any of the foregoing.

     (b) No invalidity, irregularity or unenforceability of all or any part of
the Guaranteed Obligations shall affect, impair or be a defense to this
Guarantee, nor shall any other circumstance which might otherwise constitute a
defense available to or legal or equitable discharge of Borrower in respect of
any of the Guaranteed Obligations, or Guarantor in respect of this Guarantee,
affect, impair or be a defense to this Guarantee. Without limitation of the
foregoing, the liability of Guarantor hereunder shall not be discharged or
impaired in any respect by reason of any failure by Lender to perfect or
continue perfection of any lien or security interest in any collateral or any
delay by Lender in perfecting any such lien or security interest. As to
interest, fees and expenses, whether

                                      -3-
<PAGE>

arising before or after the commencement of any case with respect to Borrower
under the United States Bankruptcy Code or any similar statute, Guarantor shall
be liable therefor, even if Borrower's liability for such amounts does not, or
ceases to, exist by operation of law. Guarantor acknowledges that Lender has not
made any representations to Guarantor with respect to Borrower, any other
Obligor or otherwise in connection with the execution and delivery by Guarantor
of this Guarantee and Guarantor is not in any respect relying upon Lender or any
statements by Lender in connection with this Guarantee.

     (c) Guarantor hereby irrevocably and unconditionally waives and
relinquishes all statutory, contractual, common law, equitable and all other
claims against Borrower, any collateral for the Guaranteed Obligations or other
assets of Borrower or any other Obligor, for subrogation, reimbursement,
exoneration, contribution, indemnification, setoff or other recourse in respect
to sums paid or payable to Lender by Guarantor hereunder and Guarantor hereby
further irrevocably and unconditionally waives and relinquishes any and all
other benefits which Guarantor might otherwise directly or indirectly receive or
be entitled to receive by reason of any amounts paid by or collected or due from
Guarantor, Borrower or any other Obligor upon the Guaranteed Obligations or
realized from their property.

     3. Subordination. Payment of all amounts now or hereafter owed to Guarantor
by Borrower or any other Obligor is hereby subordinated in right of payment to
the indefeasible payment in full to Lender of the Guaranteed Obligations and all
such amounts and any security and guarantees therefor are hereby assigned to
Lender as security for the Guaranteed Obligations.

     4. Acceleration. Notwithstanding anything to the contrary contained herein
or any of the terms of any of the other Financing Agreements, the liability of
Guarantor for the entire Guaranteed Obligations shall mature and become
immediately due and payable, even if the liability of Borrower or any other
Obligor therefor does not, upon the occurrence of any act, condition or event
which constitutes an Event of Default as such term is defined in the Loan
Agreement.

     5. Account Stated. The books and records of Lender showing the account
among Lender and Borrower shall be admissible in evidence in any action or
proceeding against or involving Guarantor as prima facie proof of the items
therein set forth, and the monthly statements of Lender rendered to Borrower, to
the extent to which no written objection is made within thirty (30) days from
the date of sending thereof to Borrower, shall be deemed conclusively correct
and constitute an account stated among Lender and Borrower and be binding on
Guarantor.

     6. Termination. This Guarantee is continuing, unlimited, absolute and
unconditional. All Guaranteed Obligations shall be conclusively presumed to have
been created in reliance on this Guarantee. Guarantor shall continue to be
liable hereunder until one of Lender's officers actually receives a written
termination notice from Guarantor sent to Lender at its address set forth above
by certified mail, return receipt requested and thereafter as set forth below.
Revocation or termination hereof by Guarantor shall not affect, in any

                                      -4-
<PAGE>

manner, the rights of Lender or any obligations or duties of Guarantor under
this Guarantee with respect to (a) Guaranteed Obligations which have been
created, contracted, assumed or incurred prior to the receipt by Lender of such
written notice of revocation or termination as provided herein, including,
without limitation, (i) all amendments, extensions, renewals and modifications
of such Guaranteed Obligations (whether or not evidenced by new or additional
agreements, documents or instruments executed on or after such notice of
revocation or termination), (ii) all interest, fees and similar charges accruing
or due on and after revocation or termination, and (iii) all attorneys' fees and
legal expenses, costs and other expenses paid or incurred on or after such
notice of revocation or termination in attempting to collect or enforce any of
the Guaranteed Obligations against Borrower, Guarantor or any other Obligor
(whether or not suit be brought), or (b) Guaranteed Obligations which have been
created, contracted, assumed or incurred after the receipt by Lender of such
written notice of revocation or termination as provided herein pursuant to any
contract entered into by Lender prior to receipt of such notice. The sole effect
of such revocation or termination by Guarantor shall be to exclude from this
Guarantee the liability of Guarantor for those Guaranteed Obligations arising
after the date of receipt by Lender of such written notice which are unrelated
to Guaranteed Obligations arising or transactions entered into prior to such
date. Without limiting the foregoing, this Guarantee may not be terminated and
shall continue so long as the Loan Agreement shall be in effect (whether during
its original term or any renewal, substitution or extension thereof).

     7. Reinstatement. If after receipt of any payment of, or proceeds of
collateral applied to the payment of, any of the Guaranteed Obligations, Lender
is required to surrender or return such payment or proceeds to any Person for
any reason, then the Guaranteed Obligations intended to be satisfied by such
payment or proceeds shall be reinstated and continue and this Guarantee shall
continue in full force and effect as if such payment or proceeds had not been
received by Lender. Guarantor shall be liable to pay to Lender, and does
indemnify and hold Lender harmless for the amount of any payments or proceeds
surrendered or returned. This Section 7 shall remain effective notwithstanding
any contrary action which may be taken by Lender in reliance upon such payment
or proceeds. This Section 7 shall survive the termination or revocation of this
Guarantee.

     8. Amendments and Waivers. Neither this Guarantee nor any provision hereof
shall be amended, modified, waived or discharged orally or by course of conduct,
but only by a written agreement signed by an authorized officer of Lender.
Lender shall not by any act, delay, omission or otherwise be deemed to have
expressly or impliedly waived any of its rights, powers and/or remedies unless
such waiver shall be in writing and signed by an authorized officer of Lender.
Any such waiver shall be enforceable only to the extent specifically set forth
therein. A waiver by Lender of any right, power and/or remedy on any one
occasion shall not be construed as a bar to or waiver of any such right, power
and/or remedy which Lender would otherwise have on any future occasion, whether
similar in kind or otherwise.

                                      -5-
<PAGE>

     9. Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.

     (a) The validity, interpretation and enforcement of this Guarantee and any
dispute arising out of the relationship among Guarantor and Lender, whether in
contract, tort, equity or otherwise, shall be governed by the internal laws of
the State of Illinois (without giving effect to principles of conflicts of law).

     (b) Guarantor hereby irrevocably consents and submits to the non-exclusive
jurisdiction of the state courts of Cook County, Illinois and the United States
District Court for the Northern District of Illinois and waives any objection
based on venue or forum non conveniens with respect to any action instituted
therein arising under this Guarantee or any of the other Financing Agreements or
in any way connected with or related or incidental to the dealings of Guarantor
and Lender in respect of this Guarantee or any of the other Financing Agreements
or the transactions related hereto or thereto, in each case whether now existing
or hereafter arising and whether in contract, tort, equity or otherwise, and
agrees that any dispute arising out of the relationship among Guarantor or
Borrower and Lender or the conduct of any such persons in connection with this
Guarantee, the other Financing Agreements or otherwise shall be heard only in
the courts described above (except that Lender shall have the right to bring any
action or proceeding against Guarantor or his or her property in the courts of
any other jurisdiction which Lender deems necessary or appropriate in order to
realize on any collateral at any time granted by Borrower or Guarantor to Lender
or to otherwise enforce its rights against Guarantor or his or her property).

     (c) Guarantor hereby waives personal service of any and all process upon
Guarantor and consents that all such service of process may be made by certified
mail (return receipt requested) directed to his or her address set forth on the
signature pages hereof and service so made shall be deemed to be completed five
(5) days after the same shall have been so deposited in the U.S. mails, or, at
Lender's option, by service upon Guarantor in any other manner provided under
the rules of any such courts. Within thirty (30) days after such service,
Guarantor shall appear in answer to such process, failing which Guarantor shall
be deemed in default and judgment may be entered by Lender against Guarantor for
the amount of the claim and other relief requested.

     (d) GUARANTOR HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS GUARANTEE OR ANY OF THE
OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF GUARANTOR AND LENDER IN RESPECT OF THIS GUARANTEE
OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR
THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN
CONTRACT, TORT, EQUITY OR OTHERWISE. GUARANTOR HEREBY AGREES AND CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY AND THAT GUARANTOR OR LENDER MAY

                                      -6-
<PAGE>

FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF GUARANTOR AND LENDER HERETO TO THE WAIVER OF
THEIR RIGHT TO TRIAL BY JURY.

     (e) Lender shall not have any liability to Guarantor (whether in tort,
contract, equity or otherwise) for losses suffered by Guarantor in connection
with, arising out of, or in any way related to the transactions or relationships
contemplated by this Guarantee, or any act, omission or event occurring in
connection herewith, unless it is determined by a final and non-appealable
judgment or court order binding on Lender that the losses were the result of
acts or omissions constituting gross negligence or willful misconduct. In any
such litigation, Lender shall be entitled to the benefit of the rebuttable
presumption that it acted in good faith and with the exercise of ordinary care
in the performance by it of the terms of the Loan Agreement and the other
Financing Agreements.

     10. Notices. All notices, requests and demands hereunder shall be in
writing and (a) made to Lender at its address set forth above and to Guarantor
at his or her address set forth below, or to such other address as either party
may designate by written notice to the other in accordance with this provision,
and (b) deemed to have been given or made: if delivered in person, immediately
upon delivery; if by telex, telegram or facsimile transmission, immediately upon
sending and upon confirmation of receipt; if by nationally recognized overnight
courier service with instructions to deliver the next business day, one (1)
business day after sending; and if by certified mail, return receipt requested,
five (5) days after mailing.

     11. Partial Invalidity. If any provision of this Guarantee is held to be
invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Guarantee as a whole, but this Guarantee shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.

     12. Entire Agreement. This Guarantee represents the entire agreement and
understanding of the parties concerning the subject matter hereof, and
supersedes all other prior agreements, understandings, negotiations and
discussions, representations, warranties, commitments, proposals, offers and
contracts concerning the subject matter hereof, whether oral or written.

     13. Successors and Assigns. This Guarantee shall be binding upon Guarantor
and his heirs, executors, administrators, successors and assigns and shall inure
to the benefit of Lender and its successors, endorsees, transferees and assigns.

     14. Construction. All references to the term "Guarantor" wherever used
herein shall mean Guarantor and his heirs, executors, administrators, successors
and assigns (including, without limitation, any receiver, trustee or custodian
for Guarantor or any of his assets or Guarantor in his capacity as debtor or
debtor-in-possession under the United States Bankruptcy Code). All references to
the term "Lender" wherever used herein shall mean

                                      -7-
<PAGE>

Lender and its successors and assigns and all references to the term "Borrower"
wherever used herein shall mean Borrower and its successors and assigns
(including, without limitation, any receiver, trustee or custodian for Borrower
or any of its assets or Borrower in its capacity as debtor or
debtor-in-possession under the United States Bankruptcy Code). All references to
the term "Person" or "person" wherever used herein shall mean any individual,
sole proprietorship, partnership, corporation (including, without limitation,
any corporation which elects subchapter S status under the Internal Revenue Code
of 1986, as amended), limited liability company, limited liability partnership,
business trust, unincorporated association, joint stock corporation, trust,
joint venture or other entity or any government or any agency or instrumentality
or political subdivision thereof. All references to the plural shall also mean
the singular and to the singular shall also mean the plural.

     IN WITNESS WHEREOF, Guarantor has executed and delivered this Guarantee as
of the day and year first above written.

WITNESS:

                                            /s/ John H. Schwan
--------------------------------            -----------------------------------
                                                John H. Schwan

                                            Address:
                                                     --------------------------
                                            -----------------------------------

                                      -8-
<PAGE>

STATE OF ____________  )
                       )  SS
COUNTY OF ___________  )

     On this _____ day of ____________, 2001, before me personally came John H.
Schwan to me known, to be the individual described in and which executed the
foregoing instrument.

                                                  -----------------------
                                                       Notary Public

                                      -9-

<PAGE>

                                  EXHIBIT 10.19

                                    GUARANTEE

                                                               January ___, 2001

Congress Financial Corporation (Central)
150 South Wacker Drive
Suite 2200
Chicago, Illinois  60606-4202

     Re:  CTI Industries Corporation ("Borrower")

Gentlemen:

     Congress Financial Corporation (Central) ("Lender") and Borrower have
entered into certain financing arrangements pursuant to which Lender may make
loans and advances and provide other financial accommodations to Borrower as set
forth in the Loan and Security Agreement, dated January__, 2001 by and between
Borrower and Lender (as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced, the "Loan
Agreement"), and other agreements, documents and instruments referred to therein
or at any time executed and/or delivered in connection therewith or related
thereto, including, but not limited to, this Guarantee (all of the foregoing,
together with the Loan Agreement, as the same now exist or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced, being
collectively referred to herein as the "Financing Agreements").

     Due to the close business and financial relationships between Borrower and
the undersigned ("Guarantor"), in consideration of the benefits which will
accrue to Guarantor and as an inducement for and in consideration of Lender
making loans and advances and providing other financial accommodations to
Borrower pursuant to the Loan Agreement and the other Financing Agreements,
Guarantor hereby agrees in favor of Lender as follows:

     1. Guarantee.

     (a) Guarantor absolutely and unconditionally guarantees and agrees to be
liable for the full and indefeasible payment and performance when due of the
following (all of which are collectively referred to herein as the "Guaranteed
Obligations"): (i) all obligations, liabilities and indebtedness of any kind,
nature and description of Borrower to Lender and/or its affiliates, including
principal, interest, charges, fees, costs and expenses, however evidenced,
whether as principal, surety, endorser, guarantor or otherwise, whether arising
under the Loan Agreement, the other Financing Agreements or otherwise, whether
now existing or hereafter arising, whether arising before, during or after the
initial or any renewal term of the Loan Agreement or after the commencement of
any case with respect to

<PAGE>

Borrower under the United States Bankruptcy Code or any similar statute
(including, without limitation, the payment of interest and other amounts, which
would accrue and become due but for the commencement of such case, whether or
not such amounts are allowed or allowable in whole or in part in any such case
and including loans, interest, fees, charges and expenses related thereto and
all other obligations of Borrower or its successors to Lender arising after the
commencement of such case), whether direct or indirect, absolute or contingent,
joint or several, due or not due, primary or secondary, liquidated or
unliquidated, secured or unsecured, and however acquired by Lender and (ii) all
expenses (including, without limitation, attorneys' fees and legal expenses)
incurred by Lender in connection with the preparation, execution, delivery,
recording, administration, collection, liquidation, enforcement and defense of
Borrower's obligations, liabilities and indebtedness as aforesaid to Lender, the
rights of Lender in any collateral or under this Guarantee and all other
Financing Agreements or in any way involving claims by or against Lender
directly or indirectly arising out of or related to the relationships among
Borrower, Guarantor or any other Obligor (as hereinafter defined) and Lender,
whether such expenses are incurred before, during or after the initial or any
renewal term of the Loan Agreement and the other Financing Agreements or after
the commencement of any case with respect to Borrower or Guarantor under the
United States Bankruptcy Code or any similar statute. Notwithstanding anything
in this Guarantee to the contrary, the liability of Guarantor hereunder in the
aggregate shall not exceed Five Hundred Thousand and No/100 Dollars
($500,000.00) (the "Original Maximum Limit"), plus costs and expenses of
collection and prosecution of actions against Guarantor, and provided, further,
that if the audited consolidated financial statements of Borrower for any fiscal
year on or after December 31, 2001 show that Borrower's pre-tax net income
exceeded $750,000 for such fiscal year, then on the tenth day after Lender's
receipt of such financial statements, so long as there exists no Event of
Default under the Loan Agreement, the Original Maximum Limit shall be reduced by
One Hundred Sixty-Six Thousand Six Hundred Sixty-Seven and No/100 Dollars
($166,667.00); provided, further, that the Original Maximum Limit may only be
reduced once and if the audited financial consolidated financial statements of
Borrower for any fiscal year ending on or after December 31, 2002 show a net
loss for such fiscal year, the Original Maximum Limit shall revert to $500,000.
For purposes hereof, net income and net loss shall be calculated exclusive of
nonrecurring or one time gains or extraordinary gains.

     (b) This Guarantee is a guaranty of payment and not of collection.
Guarantor agrees that Lender need not attempt to collect any Guaranteed
Obligations from Borrower, Guarantor or any other Obligor or to realize upon any
collateral, but may require Guarantor to make immediate payment of all of the
Guaranteed Obligations to Lender when due, whether by maturity, acceleration or
otherwise, or at any time thereafter. Lender may apply any amounts received in
respect of the Guaranteed Obligations to any of the Guaranteed Obligations, in
whole or in part (including attorneys' fees and legal expenses incurred by
Lender with respect thereto or otherwise chargeable to Borrower or Guarantor)
and in such order as Lender may elect.

                                        2
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<PAGE>

     (c) Payment by Guarantor shall be made to Lender at the office of Lender
from time to time on demand as Guaranteed Obligations become due. Guarantor
shall make all payments to Lender on the Guaranteed Obligations free and clear
of, and without deduction or withholding for or on account of, any setoff,
counterclaim, defense, duties, taxes, levies, imposts, fees, deductions,
withholding, restrictions or conditions of any kind. One or more successive or
concurrent actions may be brought hereon against Guarantor either in the same
action in which Borrower or any other Obligor is sued or in separate actions. In
the event any claim or action, or action on any judgment, based on this
Guarantee is brought against Guarantor, Guarantor agrees not to deduct, set-off,
or seek any counterclaim for or recoup any amounts which are or may be owed by
Lender to Guarantor.

     2. Waivers and Consents.

     (a) Notice of acceptance of this Guarantee, the making of loans and
advances and providing other financial accommodations to Borrower and
presentment, demand, protest, notice of protest, notice of nonpayment or default
and all other notices to which Borrower or Guarantor is entitled are hereby
waived by Guarantor. Guarantor also waives notice of and hereby consents to, (i)
any amendment, modification, supplement, extension, renewal, or restatement of
the Loan Agreement and any of the other Financing Agreements, including, without
limitation, extensions of time of payment of or increase or decrease in the
amount of any of the Guaranteed Obligations, interest rate, fees, other charges,
or any collateral, and the guarantee made herein shall apply to the Loan
Agreement and the other Financing Agreements and the Guaranteed Obligations as
so amended, modified, supplemented, renewed, restated or extended, increased or
decreased, (ii) the taking, exchange, surrender and releasing of collateral or
guarantees now or at any time held by or available to Lender for the obligations
of Borrower or any other party at any time liable on or in respect of the
Guaranteed Obligations or who is the owner of any property which is security for
the Guaranteed Obligations (individually, an "Obligor" and collectively, the
"Obligors"), (iii) the exercise of, or refraining from the exercise of any
rights against Borrower or any other Obligor or any collateral, (iv) the
settlement, compromise or release of, or the waiver of any default with respect
to, any of the Guaranteed Obligations and (v) any financing by Lender of
Borrower under Section 364 of the United States Bankruptcy Code or consent to
the use of cash collateral by Lender under Section 363 of the United States
Bankruptcy Code. Guarantor agrees that the amount of the Guaranteed Obligations
shall not be diminished and the liability of Guarantor hereunder shall not be
otherwise impaired or affected by any of the foregoing.

     (b) No invalidity, irregularity or unenforceability of all or any part of
the Guaranteed Obligations shall affect, impair or be a defense to this
Guarantee, nor shall any other circumstance which might otherwise constitute a
defense available to or legal or equitable discharge of Borrower in respect of
any of the Guaranteed Obligations, or Guarantor in respect of this Guarantee,
affect, impair or be a defense to this Guarantee. Without limitation of the
foregoing, the liability of Guarantor hereunder shall not be discharged or
impaired in any respect by reason of any failure by Lender to perfect or

                                        3
                                       --
<PAGE>

continue perfection of any lien or security interest in any collateral or any
delay by Lender in perfecting any such lien or security interest. As to
interest, fees and expenses, whether arising before or after the commencement of
any case with respect to Borrower under the United States Bankruptcy Code or any
similar statute, Guarantor shall be liable therefor, even if Borrower's
liability for such amounts does not, or ceases to, exist by operation of law.
Guarantor acknowledges that Lender has not made any representations to Guarantor
with respect to Borrower, any other Obligor or otherwise in connection with the
execution and delivery by Guarantor of this Guarantee and Guarantor is not in
any respect relying upon Lender or any statements by Lender in connection with
this Guarantee.

     (c) Guarantor hereby irrevocably and unconditionally waives and
relinquishes all statutory, contractual, common law, equitable and all other
claims against Borrower, any collateral for the Guaranteed Obligations or other
assets of Borrower or any other Obligor, for subrogation, reimbursement,
exoneration, contribution, indemnification, setoff or other recourse in respect
to sums paid or payable to Lender by Guarantor hereunder and Guarantor hereby
further irrevocably and unconditionally waives and relinquishes any and all
other benefits which Guarantor might otherwise directly or indirectly receive or
be entitled to receive by reason of any amounts paid by or collected or due from
Guarantor, Borrower or any other Obligor upon the Guaranteed Obligations or
realized from their property.

     3. Subordination. Payment of all amounts now or hereafter owed to Guarantor
by Borrower or any other Obligor is hereby subordinated in right of payment to
the indefeasible payment in full to Lender of the Guaranteed Obligations and all
such amounts and any security and guarantees therefor are hereby assigned to
Lender as security for the Guaranteed Obligations.

     4. Acceleration. Notwithstanding anything to the contrary contained herein
or any of the terms of any of the other Financing Agreements, the liability of
Guarantor for the entire Guaranteed Obligations shall mature and become
immediately due and payable, even if the liability of Borrower or any other
Obligor therefor does not, upon the occurrence of any act, condition or event
which constitutes an Event of Default as such term is defined in the Loan
Agreement.

     5. Account Stated. The books and records of Lender showing the account
among Lender and Borrower shall be admissible in evidence in any action or
proceeding against or involving Guarantor as prima facie proof of the items
therein set forth, and the monthly statements of Lender rendered to Borrower, to
the extent to which no written objection is made within thirty (30) days from
the date of sending thereof to Borrower, shall be deemed conclusively correct
and constitute an account stated among Lender and Borrower and be binding on
Guarantor.

     6. Termination. This Guarantee is continuing, unlimited, absolute and
unconditional. All Guaranteed Obligations shall be conclusively presumed to have
been

                                        4
                                       --
<PAGE>

created in reliance on this Guarantee. Guarantor shall continue to be liable
hereunder until one of Lender's officers actually receives a written termination
notice from Guarantor sent to Lender at its address set forth above by certified
mail, return receipt requested and thereafter as set forth below. Revocation or
termination hereof by Guarantor shall not affect, in any manner, the rights of
Lender or any obligations or duties of Guarantor under this Guarantee with
respect to (a) Guaranteed Obligations which have been created, contracted,
assumed or incurred prior to the receipt by Lender of such written notice of
revocation or termination as provided herein, including, without limitation, (i)
all amendments, extensions, renewals and modifications of such Guaranteed
Obligations (whether or not evidenced by new or additional agreements, documents
or instruments executed on or after such notice of revocation or termination),
(ii) all interest, fees and similar charges accruing or due on and after
revocation or termination, and (iii) all attorneys' fees and legal expenses,
costs and other expenses paid or incurred on or after such notice of revocation
or termination in attempting to collect or enforce any of the Guaranteed
Obligations against Borrower, Guarantor or any other Obligor (whether or not
suit be brought), or (b) Guaranteed Obligations which have been created,
contracted, assumed or incurred after the receipt by Lender of such written
notice of revocation or termination as provided herein pursuant to any contract
entered into by Lender prior to receipt of such notice. The sole effect of such
revocation or termination by Guarantor shall be to exclude from this Guarantee
the liability of Guarantor for those Guaranteed Obligations arising after the
date of receipt by Lender of such written notice which are unrelated to
Guaranteed Obligations arising or transactions entered into prior to such date.
Without limiting the foregoing, this Guarantee may not be terminated and shall
continue so long as the Loan Agreement shall be in effect (whether during its
original term or any renewal, substitution or extension thereof).

     7. Reinstatement. If after receipt of any payment of, or proceeds of
collateral applied to the payment of, any of the Guaranteed Obligations, Lender
is required to surrender or return such payment or proceeds to any Person for
any reason, then the Guaranteed Obligations intended to be satisfied by such
payment or proceeds shall be reinstated and continue and this Guarantee shall
continue in full force and effect as if such payment or proceeds had not been
received by Lender. Guarantor shall be liable to pay to Lender, and does
indemnify and hold Lender harmless for the amount of any payments or proceeds
surrendered or returned. This Section 7 shall remain effective notwithstanding
any contrary action which may be taken by Lender in reliance upon such payment
or proceeds. This Section 7 shall survive the termination or revocation of this
Guarantee.

     8. Amendments and Waivers. Neither this Guarantee nor any provision hereof
shall be amended, modified, waived or discharged orally or by course of conduct,
but only by a written agreement signed by an authorized officer of Lender.
Lender shall not by any act, delay, omission or otherwise be deemed to have
expressly or impliedly waived any of its rights, powers and/or remedies unless
such waiver shall be in writing and signed by an authorized officer of Lender.
Any such waiver shall be enforceable only to the extent specifically set forth
therein. A waiver by Lender of any right, power and/or remedy on any one
occasion shall not be construed as a bar to or waiver of any such right, power
and/or

                                        5
                                       --
<PAGE>

remedy which Lender would otherwise have on any future occasion, whether similar
in kind or otherwise.

     9. Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver.

     (a) The validity, interpretation and enforcement of this Guarantee and any
dispute arising out of the relationship among Guarantor and Lender, whether in
contract, tort, equity or otherwise, shall be governed by the internal laws of
the State of Illinois (without giving effect to principles of conflicts of law).

     (b) Guarantor hereby irrevocably consents and submits to the non-exclusive
jurisdiction of the state courts of Cook County, Illinois and the United States
District Court for the Northern District of Illinois and waives any objection
based on venue or forum non conveniens with respect to any action instituted
therein arising under this Guarantee or any of the other Financing Agreements or
in any way connected with or related or incidental to the dealings of Guarantor
and Lender in respect of this Guarantee or any of the other Financing Agreements
or the transactions related hereto or thereto, in each case whether now existing
or hereafter arising and whether in contract, tort, equity or otherwise, and
agrees that any dispute arising out of the relationship among Guarantor or
Borrower and Lender or the conduct of any such persons in connection with this
Guarantee, the other Financing Agreements or otherwise shall be heard only in
the courts described above (except that Lender shall have the right to bring any
action or proceeding against Guarantor or his or her property in the courts of
any other jurisdiction which Lender deems necessary or appropriate in order to
realize on any collateral at any time granted by Borrower or Guarantor to Lender
or to otherwise enforce its rights against Guarantor or his or her property).

     (c) Guarantor hereby waives personal service of any and all process upon
Guarantor and consents that all such service of process may be made by certified
mail (return receipt requested) directed to his or her address set forth on the
signature pages hereof and service so made shall be deemed to be completed five
(5) days after the same shall have been so deposited in the U.S. mails, or, at
Lender's option, by service upon Guarantor in any other manner provided under
the rules of any such courts. Within thirty (30) days after such service,
Guarantor shall appear in answer to such process, failing which Guarantor shall
be deemed in default and judgment may be entered by Lender against Guarantor for
the amount of the claim and other relief requested.

     (d) GUARANTOR HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS GUARANTEE OR ANY OF THE
OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF GUARANTOR AND LENDER IN RESPECT OF THIS GUARANTEE
OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS RELATED HERETO OR
THERETO, IN EACH CASE WHETHER NOW EXISTING OR

                                        6
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<PAGE>

HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. GUARANTOR
HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT GUARANTOR OR
LENDER MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF GUARANTOR AND LENDER HERETO TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

     (e) Lender shall not have any liability to Guarantor (whether in tort,
contract, equity or otherwise) for losses suffered by Guarantor in connection
with, arising out of, or in any way related to the transactions or relationships
contemplated by this Guarantee, or any act, omission or event occurring in
connection herewith, unless it is determined by a final and non-appealable
judgment or court order binding on Lender that the losses were the result of
acts or omissions constituting gross negligence or willful misconduct. In any
such litigation, Lender shall be entitled to the benefit of the rebuttable
presumption that it acted in good faith and with the exercise of ordinary care
in the performance by it of the terms of the Loan Agreement and the other
Financing Agreements.

     10. Notices. All notices, requests and demands hereunder shall be in
writing and (a) made to Lender at its address set forth above and to Guarantor
at his or her address set forth below, or to such other address as either party
may designate by written notice to the other in accordance with this provision,
and (b) deemed to have been given or made: if delivered in person, immediately
upon delivery; if by telex, telegram or facsimile transmission, immediately upon
sending and upon confirmation of receipt; if by nationally recognized overnight
courier service with instructions to deliver the next business day, one (1)
business day after sending; and if by certified mail, return receipt requested,
five (5) days after mailing.

     11. Partial Invalidity. If any provision of this Guarantee is held to be
invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Guarantee as a whole, but this Guarantee shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.

     12. Entire Agreement. This Guarantee represents the entire agreement and
understanding of the parties concerning the subject matter hereof, and
supersedes all other prior agreements, understandings, negotiations and
discussions, representations, warranties, commitments, proposals, offers and
contracts concerning the subject matter hereof, whether oral or written.

                                        7
                                       --
<PAGE>

     13. Successors and Assigns. This Guarantee shall be binding upon Guarantor
and his heirs, executors, administrators, successors and assigns and shall inure
to the benefit of Lender and its successors, endorsees, transferees and assigns.

     14. Construction. All references to the term "Guarantor" wherever used
herein shall mean Guarantor and his heirs, executors, administrators, successors
and assigns (including, without limitation, any receiver, trustee or custodian
for Guarantor or any of his assets or Guarantor in his capacity as debtor or
debtor-in-possession under the United States Bankruptcy Code). All references to
the term "Lender" wherever used herein shall mean Lender and its successors and
assigns and all references to the term "Borrower" wherever used herein shall
mean Borrower and its successors and assigns (including, without limitation, any
receiver, trustee or custodian for Borrower or any of its assets or Borrower in
its capacity as debtor or debtor-in-possession under the United States
Bankruptcy Code). All references to the term "Person" or "person" wherever used
herein shall mean any individual, sole proprietorship, partnership, corporation
(including, without limitation, any corporation which elects subchapter S status
under the Internal Revenue Code of 1986, as amended), limited liability company,
limited liability partnership, business trust, unincorporated association, joint
stock corporation, trust, joint venture or other entity or any government or any
agency or instrumentality or political subdivision thereof. All references to
the plural shall also mean the singular and to the singular shall also mean the
plural.

     IN WITNESS WHEREOF, Guarantor has executed and delivered this Guarantee as
of the day and year first above written.

WITNESS:

                                       /s/ Stephen M. Merrick
--------------------------             --------------------------
                                           Stephen M. Merrick

                                       Address:
                                                ----------------------------
                                       -------------------------------------

                                        8
                                       --
<PAGE>

STATE OF ____________ )
                      )  SS
COUNTY OF ___________ )

     On this _____ day of ____________, 2001, before me personally came Stephen
M. Merrick to me known, to be the individual described in and which executed the
foregoing instrument.

                                        -----------------------
                                             Notary Public

                                        9
                                       --

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