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<SEC-DOCUMENT>0001169232-05-005250.txt : 20051108
<SEC-HEADER>0001169232-05-005250.hdr.sgml : 20051108
<ACCEPTANCE-DATETIME>20051108172519
ACCESSION NUMBER:		0001169232-05-005250
CONFORMED SUBMISSION TYPE:	DEF 14A
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20051202
FILED AS OF DATE:		20051108
DATE AS OF CHANGE:		20051108
EFFECTIVENESS DATE:		20051108

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CTI INDUSTRIES CORP
		CENTRAL INDEX KEY:			0001042187
		STANDARD INDUSTRIAL CLASSIFICATION:	FABRICATED RUBBER PRODUCTS, NEC [3060]
		IRS NUMBER:				362848943
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		DEF 14A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-23115
		FILM NUMBER:		051187173

	BUSINESS ADDRESS:	
		STREET 1:		22160 N PEPPER RD
		CITY:			BARRINGTON
		STATE:			IL
		ZIP:			60010

	MAIL ADDRESS:	
		STREET 1:		22160 N PEPPER RD
		CITY:			BARRINGTON
		STATE:			IL
		ZIP:			60010
</SEC-HEADER>
<DOCUMENT>
<TYPE>DEF 14A
<SEQUENCE>1
<FILENAME>d65797_def14a.htm
<DESCRIPTION>DEFINITIVE PROXY STATEMENT
<TEXT>
<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 3.2 Final//EN">
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     <!-- Project:        X:\JOBS\05-65797\d05-65797.eep                                   -->
     <!-- Control Number: 05-65797                                                         -->
     <!-- Rev Number:     1.0                                                              -->
     <!-- Client Name:    CTI Industries Corporation                                       -->
     <!-- Project Name:   Form Type: DEF 14A                                               -->
     <!-- Firm Name:      CTI Industries Corporation                                       -->
     <TITLE>DEF 14A</TITLE>
</HEAD>
<BODY>

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<DIV STYLE="WIDTH:600" ALIGN=JUSTIFY>
<BR>


<!-- MARKER FORMAT-SHEET="Head Major 10" -->
<H1 ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>SCHEDULE 14A</FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Center 10" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>(Rule 14a-101) </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Center 10" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>INFORMATION REQUIRED IN
PROXY STATEMENT </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major 10" -->
<H1 ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>SCHEDULE 14A INFORMATION</FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Center 10" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Proxy Statement Pursuant to Section 14(a) of the <BR>Securities
Exchange Act of 1934 (Amendment No.&nbsp;&nbsp;&nbsp;)</FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Filed by the Registrant |_|<BR>Filed by a Party other than the Registrant |_| </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Check the appropriate box: </FONT></P>


<!-- MARKER FORMAT-SHEET="Reg Cover Table 2 Col 10" -->
<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD ALIGN=LEFT WIDTH=50%><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>|_|&nbsp;&nbsp;Preliminary Proxy Statement</FONT></TD>
</TR>
</TABLE>

<!-- MARKER FORMAT-SHEET="Reg Cover Table 2 Col 10" -->
<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD ALIGN=LEFT WIDTH=50%><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>|_|&nbsp;&nbsp;Confidential, For Use of the<BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Commission Only (as permitted by <BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Rule 14a-6(e)(2))</FONT></TD>
</TR>
</TABLE>

<!-- MARKER FORMAT-SHEET="Reg Cover Table 2 Col 10" -->
<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD ALIGN=LEFT WIDTH=50%><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>|X|&nbsp;&nbsp;Definitive Proxy Statement</FONT></TD>
<TD ALIGN=LEFT WIDTH=50%><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp; </FONT></TD>
</TR>
</TABLE>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD ALIGN=LEFT WIDTH=80%><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>|_|&nbsp;&nbsp;Definitive Additional Materials</FONT></TD>
<TD ALIGN=LEFT WIDTH=20%><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;</FONT></TD>
</TR>
</TABLE>

<!-- MARKER FORMAT-SHEET="Reg Cover Table 2 Col 10" -->
<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD ALIGN=LEFT WIDTH=50%><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>|_|&nbsp;&nbsp;Soliciting Material Under Rule 14a-12</FONT></TD>
</TR>
</TABLE>
<BR>



<!-- MARKER FORMAT-SHEET="Para Center 10" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><B>CTI INDUSTRIES CORPORATION</B><BR>(Name of Registrant as Specified
In Its Charter)</FONT> </P>


<!-- MARKER FORMAT-SHEET="Para Center 10" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>(Name of Person(s) Filing Proxy Statement, if other than the
Registrant) </FONT></P>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Payment of Filing Fee (Check the appropriate box): </FONT></P>


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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>|X|  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>No
fee required.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>|_|  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Fee
computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.</FONT></TD>
</TR>
</TABLE>
<BR>


<table border="0" cellspacing="0" cellpadding="0" width="600">
  <tr valign="top">
    <td width="5%"><font face="Times New Roman, Times, serif" size="2">1)</font></td>
    <td><font face="Times New Roman, Times, serif" size="2">Title of each class
      of securities to which transaction applies:</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
  </tr>
  <tr valign="bottom">
    <td colspan="2">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif" size="2">2)</font></td>
    <td><font face="Times New Roman, Times, serif" size="2">Aggregate number of
      securities to which transaction applies:</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
  </tr>
  <tr valign="bottom">
    <td colspan="2">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif" size="2">3)</font></td>
    <td><font face="Times New Roman, Times, serif" size="2">Per unit price or
      other underlying value of transaction computed pursuant to Exchange Act
      Rule 0-11 (set forth the amount on which the filing fee is calculated and
      state how it was determined): </font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
  </tr>
  <tr valign="bottom">
    <td colspan="2">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif" size="2">4)</font></td>
    <td><font face="Times New Roman, Times, serif" size="2">Proposed maximum aggregate
      value of transaction:</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
  </tr>
  <tr valign="bottom">
    <td colspan="2">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif" size="2">5)</font></td>
    <td><font face="Times New Roman, Times, serif" size="2">Total fee paid:</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
  </tr>
  <tr valign="bottom">
    <td colspan="2">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif" size="2">|_|</font></td>
    <td><font face="Times New Roman, Times, serif" size="2">Fee paid previously
      with preliminary materials:</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
  </tr>
  <tr valign="bottom">
    <td colspan="2">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif" size="2">|_|</font></td>
    <td><font face="Times New Roman, Times, serif" size="2">Check box if any part
      of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify
      the filing for which the offsetting fee was paid previously. Identify the
      previous filing by registration statement number, or the form or schedule
      and the date of its filing. </font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
  </tr>
  <tr valign="bottom">
    <td colspan="2">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif" size="2">1)</font></td>
    <td><font face="Times New Roman, Times, serif" size="2">Amount previously
      paid:</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
  </tr>
  <tr valign="bottom">
    <td colspan="2">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif" size="2">2)</font></td>
    <td><font face="Times New Roman, Times, serif" size="2">Form, Schedule or
      Registration Statement No.:</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
  </tr>
  <tr valign="bottom">
    <td colspan="2">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif" size="2">3)</font></td>
    <td><font face="Times New Roman, Times, serif" size="2">Filing Party:</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
  </tr>
  <tr valign="bottom">
    <td colspan="2">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif" size="2">4)</font></td>
    <td><font face="Times New Roman, Times, serif" size="2">Date Filed:</font></td>
  </tr>
  <tr valign="top">
    <td><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign="bottom">
    <td colspan="2">
      <hr size="1" noshade>
    </td>
  </tr>
</table>
<BR>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>



<!-- MARKER FORMAT-SHEET="Head Major 10" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>CTI INDUSTRIES
CORPORATION<BR>22160 North Pepper Road<BR>Barrington, Illinois 60010</FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>NOTICE OF ANNUAL
MEETING OF SHAREHOLDERS TO<BR>BE
HELD ON DECEMBER 2, 2005 </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>To: Shareholders of CTI Industries
Corporation </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
annual meeting of the shareholders of CTI Industries Corporation will be held at The
Holiday Inn Crystal Lake, 800 South Route 31, Crystal Lake, Illinois, 60014, on Friday,
December 2, 2005, at 10:00 a.m., Central Standard Time, for the following purposes:  </FONT></P>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>           1. </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>To
elect 7 directors to hold office during the year  following the annual  meeting or until
their  successors are elected                      (Item No. 1 on proxy card);</FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>           2. </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>To
ratify the appointment of Weiser LLP as auditors of the Corporation for 2005 (Item No. 2
on proxy card); and</FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>           3. </FONT></TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>To
transact such other business as may properly come before the meeting.</FONT></P></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
close of business on Tuesday, November 1, 2005, has been fixed as the record date for
determining the shareholders entitled to receive notice of and to vote at the annual
meeting.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;BY
ORDER OF THE BOARD OF DIRECTORS </FONT></P>

<table width="600" border="0" cellspacing="0" cellpadding="0">
  <tr valign="bottom">
    <td width="100%"><font face="Times New Roman, Times, serif" size="2">November
      4, 2005</font></td>
    <td><font face="Times New Roman, Times, serif" size="2"><img src="sig.gif" width="175" height="26"></font></td>
  </tr>
  <tr valign="bottom">
    <td width="50%"><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td valign="top" nowrap><font face="Times New Roman, Times, serif" size="2">&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<br>
      Stephen M. Merrick, Secretary</font></td>
  </tr>
</table>
<BR>
<BR>

<!-- MARKER FORMAT-SHEET="Head Major 10" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>YOUR VOTE IS
IMPORTANT</FONT></H1>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<B>It
is important that as many shares as possible be represented at the annual meeting. Please
date, sign, and promptly return  the proxy in the enclosed envelope. Your proxy may be
revoked  by you at any time before it has been voted.</B> </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>


<!-- MARKER FORMAT-SHEET="Head Major 10" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>CTI INDUSTRIES
CORPORATION<BR>22160 North Pepper Road<BR>Barrington, Illinois 60010</FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major 10" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PROXY
STATEMENT</FONT></H1>

<!-- MARKER FORMAT-SHEET="Left - Underlined" FSL="Project" -->
<P ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><U>Information Concerning
the Solicitation</U> </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
statement is furnished in connection with the solicitation of proxies to be used at the
Annual Shareholders Meeting (the &#147;Annual Meeting&#148;) of CTI Industries
Corporation (the &#147;Company&#148;), an Illinois corporation, to be held at 10:00 a.m.
Central Daylight Savings Time on Friday, December 2, 2005, at The Holiday Inn Crystal
Lake, 800 South Route 31, Crystal Lake, Illinois 60014. The proxy materials are being
mailed to shareholders of record at the close of business on Friday, November 4, 2005.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
solicitation of proxies in the enclosed form is made on behalf of the Board of Directors
of the Company.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
cost of preparing, assembling and mailing the proxy material and of reimbursing brokers,
nominees and fiduciaries for the out-of-pocket and clerical expenses of transmitting
copies of the proxy material to the beneficial owners of shares held of record by such
persons will be borne by the Company. The Company does not intend to solicit proxies
otherwise than by use of the mail, but certain officers and regular employees of the
Company or its subsidiaries, without additional compensation, may use their personal
efforts, by telephone or otherwise, to obtain proxies.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Left - Underlined" FSL="Project" -->
<P ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><U>Quorum and Voting</U> </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Only
shareholders of record at the close of business on Tuesday, November 1, 2005 are entitled
to vote at the Annual Meeting. On that day, there were 1,954,100 shares of Common Stock
outstanding. Each share has one vote. A simple majority of the outstanding shares of
Common Stock is required to be present in person or by proxy at the meeting for there to
be a quorum for purposes of proceeding with the Annual Meeting. The Company&#146;s
Articles of Incorporation grants the holders of Common Stock the right to elect up to
seven total directors, and seven directors will be elected by the Company&#146;s Common
Stockholders at this meeting. The Common Stock does not possess cumulative voting rights,
and the election of directors will be by the vote of a majority of shares of Common Stock
present in person or by proxy at the Annual Meeting. The ratification of auditors will
require the vote of a simple majority of the shares of Common Stock present at the Annual
Meeting by person or proxy. Abstentions and withheld votes have the effect of votes
against these matters. Broker non-votes (shares of record held by a broker for which a
proxy is not given) will be counted for purposes of determining shares outstanding for
purposes of a quorum, but will not be counted as present for purposes of determining the
vote on any matter considered at the meeting.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
shareholder signing and returning a proxy on the enclosed form has the power to revoke it
at any time before the shares subject to it are voted by notifying the Secretary of the
Company in writing. If a shareholder specifies how the proxy is to be voted with respect
to any of the proposals for which a choice is provided, the proxy will be voted in
accordance with such </FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>specifications. If a shareholder
fails to so specify with respect to such proposals, the proxy will be voted &#147;FOR&#148; the
nominees for directors contained in these proxy materials, &#147;FOR&#148; proposal 2,
and &#147;FOR&#148;proposal 3.  </FONT></P>


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<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><U><I>Stock Ownership by
Management and Others</I></U> </FONT></H2>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table provides information concerning the beneficial ownership of the
Company&#146;s common stock by each director and nominee for director, certain executive
officers, and by all directors and officers of the Company as a group as of October 21,
2005. In addition, the table provides information concerning the beneficial owners known
to the Company to hold more than 5 percent of the outstanding common stock of the Company
as of October 21, 2005. </FONT></P>


<table cellpadding=0 cellspacing=0 border=0 width=600>
  <tr valign=Bottom>
    <td align=LEFT nowrap><FONT FACE="Times New Roman, Times, serif" SIZE="1"><B>Name
and Address <SUP>(1)</SUP></B> </FONT></td>
    <td colspan="2" align=left nowrap><FONT FACE="Times New Roman, Times, serif" SIZE="1"><B>Shares
of Common Stock<br>
Beneficially Owned <SUP>(2)</SUP><br></B> </FONT>
</td>
    <td align=RIGHT>&nbsp;</td>
    <td colspan="2" align=left nowrap><b><font face="Times New Roman, Times, serif" size="1">Percent
      of <br>
      Common Stock</font></b></td>
  </tr>
  <tr valign=top>
    <td align=LEFT nowrap>
      <hr size="1" noshade align="left" width="90">
    </td>
    <td colspan="2" align=left nowrap>
      <hr size="1" noshade>
    </td>
    <td align=RIGHT>&nbsp;</td>
    <td colspan="2" align=left nowrap>
      <hr size="1" noshade>
    </td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom bgcolor="#EAF9E8">
    <td width=100% align=LEFT><font face="Times New Roman, Times, serif" size="2">John
      H. Schwan</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">618,428</font></td>
    <td align=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE="2"><SUP>(3)</SUP> </FONT></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">29</font></td>
    <td align=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE="2">%<SUP>(4)</SUP> </FONT></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Stephen
      M. Merrick</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">501,949</font></td>
    <td align=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE="2"><SUP>(5)</SUP> </FONT></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">24.25</font></td>
    <td align=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE="2">%<SUP>(4)</SUP> </FONT></td>
  </tr>
  <tr valign=Bottom bgcolor="#EAF9E8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Howard
      W. Schwan</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">178,904</font></td>
    <td align=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE="2"><SUP>(6)</SUP> </FONT></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">8.91</font></td>
    <td align=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE="2">%<SUP>(4)</SUP> </FONT></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Brent Anderson</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">45,795</font></td>
    <td align=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE="2"><SUP>(7)</SUP> </FONT></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">2.3</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">%</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#EAF9E8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Samuel
      Komar</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">24,879</font></td>
    <td align=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE="2"><SUP>(8)</SUP> </FONT></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">1.3</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">%</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Steve Frank</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">19,049</font></td>
    <td align=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE="2"><SUP>(9)</SUP> </FONT></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">*</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#EAF9E8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Timothy
      Patterson</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">5,000</font></td>
    <td align=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE="2"><SUP>(10)</SUP> </FONT></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">*</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Stanley
      M. Brown</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;1140
      Larkin</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;Wheeling,
      IL 60090</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">9,267</font></td>
    <td align=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE="2"><SUP>(11)</SUP> </FONT></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">*</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#EAF9E8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Bret Tayne</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#EAF9E8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;6834
      N. Kostner Avenue</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#EAF9E8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;Lincolnwood,
      IL 60712</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">9,923</font></td>
    <td align=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE="2"><SUP>(12)</SUP> </FONT></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">*</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Michael
      Avramovich</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;70
      W. Madison Street, Suite 1400</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;Chicago,
      IL 60602</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">0</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">*</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#EAF9E8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">John Collins
      (Director Nominee)</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#EAF9E8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;262
      Pine Street</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#EAF9E8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;Deerfield,
      IL 60015</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">0</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">*</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">All Current
      Directors and Executive Officers</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">as a group
      (10 persons)</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">1,413,194</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">52.67</font></td>
    <td align=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE="2">%<SUP>(4)</SUP> </FONT></td>
  </tr>
</table>
<BR>

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<HR SIZE=1 NOSHADE WIDTH=15% ALIGN=LEFT>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>*  </FONT></TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Less
than one percent</FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><SUP>(1) </SUP> </FONT></TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Except
as otherwise indicated,  the address of each stockholder listed above is c/o CTI
Industries Corporation,  22160 North Pepper            Road, Barrington, Illinois 60010.</FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>(footnotes continued on
next page) </FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><SUP>(2) </SUP> </FONT></TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A
person is deemed to be the  beneficial  owner of  securities  that can be  acquired
 within 60 days from the date set forth above            through the  exercise of any
 option,  warrant or right.  Shares of Common  Stock  subject to options,  warrants or
rights that are            currently  exercisable or exercisable within 60 days are
deemed  outstanding for purposes of computing the percentage  ownership of            the
person  holding such options,  warrants or rights,  but are not deemed  outstanding  for
purposes of computing  the  percentage            ownership of any other person.</FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><SUP>(3) </SUP> </FONT></TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Includes
 warrants to purchase up to 79,364 shares of Common Stock at $1.50 per share,  warrants
to purchase up to 93,000 shares of            Common  Stock at $4.87 per share and
options to purchase up to 5,952 shares of Common  Stock at $2.55 per share  granted
 under the            Company&#146;s  2002 Stock Option Plan.  Also includes  indirect
 beneficial  ownership of 130,821 shares of Common Stock through shares            owned
through CTI Investors, L.L.C. See &#147;Board of Directors Affiliations and Related
Transactions.&#148;</FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><SUP>(4) </SUP> </FONT></TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Assumes
the  exercise of all  warrants  and options  owned by the named person into shares of
Common Stock and all shares of Common            Stock beneficially owned by the named
person through CTI Investors, L.L.C.</FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><SUP>(5) </SUP> </FONT></TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Includes
 warrants to purchase up to 39,683 shares of Common Stock at $1.50 per share,  warrants
to purchase up to 70,000 shares of            Common  Stock at $4.87 per share and
options to purchase up to 5,952 shares of Common  Stock at $2.55 per share  granted
 under the            Company&#146;s  2002 Stock Option Plan.  Also includes  indirect
 beneficial  ownership of 87,214 shares of Common Stock through  shares            owned
through CTI Investors, L.L.C. See &#147;Board of Directors Affiliations and Related
Transactions.&#148;</FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><SUP>(6) </SUP> </FONT></TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Includes
 options to purchase up to 15,873 shares of Common Stock at $6.30 per share granted under
the Company&#146;s  1997 Stock Option            Plan,  options to purchase up to 23,810
shares of Common Stock at $1.89 per share  granted  under the  Company&#146;s  1999 Stock
Option            Plan and options to purchase up to 14,285 shares of Common Stock at
$2.31 per share  granted under the Company&#146;s  2002 Stock Option            Plan.
 Also includes  indirect  beneficial  ownership of 65,410 shares of Common Stock through
 shares owned through CTI Investors,            L.L.C. See &#147;Board of Directors
Affiliations and Related Transactions.&#148;</FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><SUP>(7) </SUP> </FONT></TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Includes
 options to purchase up to 4,761 shares of Common Stock at $6.30 per share granted  under
the Company&#146;s  1997 Stock Option            Plan,  options to purchase up to 17,857
shares of Common Stock at $1.47 per share,  granted  under the Company&#146;s  2001 Stock
Option            Plan and options to purchase up to 8,928 shares of Common Stock at
$2.31 per share granted  under the  Company&#146;s  2002 Stock Option            Plan.</FONT></P></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><SUP>(8) </SUP> </FONT></TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Includes
 options to purchase up to 4,761 shares of Common Stock at $6.30 per share granted  under
the Company&#146;s  1997 Stock Option            Plan,  options to purchase up to 7,976
 shares of Common Stock at $1.89 per share  granted  under the  Company&#146;s  1999
Stock Option            Plan,  options to purchase up to 11,904 shares of Common Stock at
$1.47 per share  granted  under the  Company&#146;s  2001 Stock Option            Plan,
and 238 shares of Common Stock held by immediate family members.</FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>


<!-- MARKER FORMAT-SHEET="Para Hang Super" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><SUP>(9) </SUP> </FONT></TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Includes
 options to purchase up to 4,762 shares of Common Stock at $6.30 per share granted  under
the Company&#146;s  1997 Stock Option            Plan,  options to purchase up to 8,334
 shares of Common Stock at $1.89 per share  granted  under the  Company&#146;s  1999
Stock Option            Plan, options to purchase up to 5,953 shares of Common Stock at
$1.47 per share granted under the Company&#146;s 2001 Stock Option Plan.</FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Super" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><SUP>(10) </SUP> </FONT></TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Includes
 options to purchase up to 5,000 shares of Common Stock at $2.26 per share granted  under
the Company&#146;s  2002 Stock Option            Plan.</FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Super" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><SUP>(11) </SUP> </FONT></TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Includes
 options to purchase up to 1,985 shares of Common Stock at $6.30 per share granted  under
the Company&#146;s  1997 Stock Option            Plan,  options to purchase up to 3,571
shares of Common Stock at $1.89 per share granted under the Company&#146;s 1999 Stock
Option Plan            and options to purchase up to 2,976 shares of Common Stock at
$2.31 per share granted under the Company&#146;s 2002 Stock Option Plan.</FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Super" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><SUP>(12) </SUP> </FONT></TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Includes
 options to purchase up to 1,985 shares of Common Stock at $6.30 per share granted  under
the Company&#146;s  1997 Stock Option            Plan,  options to purchase up to 3,571
shares of Common Stock at $1.89 per share granted under the Company&#146;s 1999 Stock
Option Plan            and options to purchase up to 2,976 shares of Common Stock at
$2.31 per share granted under the Company&#146;s 2002 Stock Option Plan.</FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Head Minor" FSL="Project" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">PROPOSAL ONE - <U>ELECTION
OF DIRECTORS</U> </FONT></H2>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Seven
 directors  will be elected at the Annual  Meeting to serve for one-year  terms expiring
on the date of the Annual Meeting in 2006.  All  directors  will be elected by holders of
the  Company&#146;s  Common  Stock.  Each  director  elected  will  continue in office until a
successor has been elected.  If a nominee is unable to serve,  which the Board of
Directors has no reason to expect,  the persons named in the accompanying proxy intend to
vote for the balance of those named and, if they deem it advisable, for a substitute
nominee. </FONT></P>


<!-- MARKER FORMAT-SHEET="Head Minor" FSL="Project" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>THE BOARD OF DIRECTORS
RECOMMENDS THE ELECTION OF ALL OF THE NOMINEES</FONT></H2>

<!-- MARKER FORMAT-SHEET="Head Minor U and I" FSL="Project" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><U><I>Information
Concerning Nominees</I></U> </FONT></H2>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following is  information  concerning  nominees for election as directors of the Company
as of October 21, 2005.  Messrs.  John Schwan, Howard Schwan, Merrick, Brown, Collins,
Tayne and Avramovich are presently directors of the Company. </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;JOHN
H. SCHWAN,  age 60, Chairman.  Mr. Schwan has been an officer and director of the Company
since January,  1996. Mr. Schwan has been the  President or executive  officer of
Packaging  Systems or  affiliated  companies  for over the last 15 years.  Mr. Schwan has
over 20 years of general management experience,  including manufacturing,  marketing and
sales. Mr. Schwan served in the U.S. Army Infantry in Vietnam from 1966 to 1969, where he
attained the rank of First Lieutenant. </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;HOWARD
W. SCHWAN,  age 50, President.  Mr. Schwan has been associated with the Company for 21
years,  principally in the management of the production and engineering  </FONT></P>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>operations of the Company.  Mr.
Schwan was appointed as Vice President of Manufacturing in November,  1990, was appointed
as a director in January, 1996, and was appointed as President in June, 1997.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;John
Schwan and Howard Schwan are brothers. </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;STEPHEN
M. MERRICK, age 63, Executive Vice President and Secretary.  Mr. Merrick was President of
the Company from January, 1996 to June,  1997 when he became Chief  Executive  Officer of
the Company.  In October,  1999,  Mr. Merrick became  Executive  Vice  President.  Mr.
Merrick is a principal  of the law firm of Merrick &amp;  Associates,  P.C. of Chicago,
 Illinois  and has been engaged in the practice of law for more than 35 years.  Mr.
 Merrick is also Senior Vice  President,  Director and a member of the Management
 Committee of Reliv  International, Inc. (NASDAQ), a manufacturer and direct marketer of
nutritional supplements and food products. </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;STANLEY
M. BROWN, age 58, Director.  Mr. Brown was appointed as a director of the Company in
January,  1996. Since March, 1996, Mr. Brown has been President of Inn-Room  Systems,
 Inc., a manufacturer and lessor of in-room vending systems for hotels.  From 1968 to
1989, Mr. Brown was with the United States Navy as a naval aviator, achieving the rank of
Captain. </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;BRET
TAYNE,  age 46,  Director.  Mr. Tayne was  appointed as a director of the Company in
 December,  1997.  Mr. Tayne has been the President of Everede Tool Company,  a
manufacturer of industrial  cutting tools,  since January,  1992. Prior to that, Mr.
Tayne was Executive Vice President of Unifin,  a commercial  finance  company,  since
1986. Mr. Tayne received a Bachelor of Science degree from Tufts  University and an MBA
from Northwestern University. </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;MICHAEL
AVRAMOVICH,  age, 53, Director. Mr. Avramovich is a principal of the law firm of
Avramovich &amp; Associates,  P.C. of Chicago, Illinois,  and has been  engaged in the
 practice of law for over 6 years.  Prior to the  practice of law,  Mr.  Avramovich  was
an  Associate Professor of Accounting and Finance at  National-Louis  University in
Chicago,  Illinois.  Mr. Avramovich has also worked in various financial accounting
 positions  at Molex  International,  Inc. of Lisle,  Illinois.  Mr.  Avramovich
 received a Bachelor of Arts degree in History and International  Relations  from  North
 Park  University,  a Master of  Management,  Accounting  and  Information  Systems,  and
 Finance  from Northwestern  University,  a Juris  Doctorate  from the John  Marshall
 Law School  and an L.L.M.  in  International  and  Corporate  Law from Georgetown
University Law Center. </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;JOHN
I.  COLLINS,  age 45,  Director  Nominee.  Mr.  Collins is currently  the  Treasurer of
the Illinois  Credit Union  Executives Society,  and is a former member of the Chicago
 Federal  Reserve Bank Advisory Group.  Mr. Collins is also the Chief  Administrative
 Officer and the former  Chief  Financial  Officer of  Mid-States  Corporate  Federal
 Credit Union  (&#147;MSCFCU&#148;),  a $4.5  billion  wholesale  financial institution
 located in Warrenville,  Illinois.  Mr. Collins&#146;  responsibilities at MSCFCU have
included all accounting,  financial  reporting, strategic planning,  risk management,
 lending and data processing  matters,  as well as, more recently,  working directly with
MSCFCU&#146;s Chief Executive Officer in matters concerning MSCFCU&#146;s Board of
Directors and Board Committee matters and administration,  corporate  governance and
legal affairs.  Prior to his  affiliation  with MSCFCU in 2001, Mr. Collins was employed
as both a  </FONT></P>


<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Controller and Chief  Financial
 Officer by Great Lakes Credit Union (&#147;GLCU&#148;),  a $350 million financial
 institution located in North Chicago,  Illinois.  During Mr. Collins tenure with GLCU
from 1991 to 2001, and MSCFCU from 2001 to the present,  Mr.  Collins has experience
 working with audit  committees,  public  accounting firms and regulatory agencies on an
ongoing basis, has supervised principal  accounting officers,  and has had the
responsibility of preparing audited  financial  statements,  internal  controls and
 financial  reporting.  Mr.  Collins  received a Bachelor of Arts degree in Economics,
History and English from Ripon College,  and a Masters in Business  Administration  from
Emory  University.  Mr. Collins has also participated in the Kellogg Management Institute
and the Consumer Marketing Strategy programs at Northwestern University on a
post-graduate basis.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Head Minor U and I" FSL="Project" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><U><I>Executive Officers
Other Than Nominees</I></U> </FONT></H2>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;BRENT
ANDERSON,  age 38, Vice President of  Manufacturing.  Mr. Anderson has been employed by
the Company since January,  1989, and has held a number of engineering  positions with
the Company  including  Plant  Engineer and Plant  Manager.  Mr.  Anderson was appointed
Vice President of Manufacturing in June, 1997. </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SAMUEL
KOMAR,  age 48, Vice  President of Marketing.  Mr. Komar has been employed by the Company
since March of 1998, and was named Vice-President  of Sales in September of 2001. Mr.
Komar has worked in sales for 16 years,  and prior to his employment with the Company,
 Mr. Komar was with Bob Gable &amp;  Associates,  a  manufacturer  of sporting  goods.  Mr.
 Komar  received a Bachelor of Science  Degree in Sales and Marketing from Indiana
University. </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;TIMOTHY
 PATTERSON,  age 44, Vice President of Finance and  Administration.  Mr. Patterson has
been employed by the Company as Vice President of Finance and  Administration  since
 September,  2003.  Prior to his  employment  with the Company,  Mr.  Patterson was
Manager of Controllers for the Thermoforming  group at Solo Cup Company for two years.
 Prior to that, Mr. Patterson was Manager of Corporate  Accounting for Transilwrap
 Company for three years. Mr.  Patterson  received a Bachelor of Science degree in
finance from Northern  Illinois  University and an MBA from the University of Illinois at
Chicago. </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;STEVE
FRANK, age 44, Vice President of Sales.  Mr. Frank has been employed by the Company in a
sales capacity since July, 1996. </FONT></P>


<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>


<!-- MARKER FORMAT-SHEET="Head Minor U and I" FSL="Project" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><U><I>Committees of the
Board of Directors</I></U> </FONT></H2>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company&#146;s Board of Directors has standing Audit, Compensation and Nominating
Committees. </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
 Compensation  Committee is composed of Michael  Avramovich and Bret Tayne and during
2004 was composed of Stanley M. Brown and Bret Tayne. The Compensation  Committee reviews
and makes  recommendations  to the Board of Directors  concerning the compensation of
officers and key employees of the Company. The Compensation Committee met one time during
2004. </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
 Nominating  Committee is composed of Stanley M. Brown and John I. Collins.  The
 Nominating  Committee  identifies and reviews potential  candidates for the Board of
Directors and makes  recommendations  concerning potential candidates for the Board of
Directors of the Company. </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Audit
Committee</I></B> </FONT> </P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since
2000, the Company has had a standing Audit  Committee,  which is presently  composed of
Mr. Tayne, Mr. Brown, Mr. Collins and Mr.  Avramovich.  Mr.  Avramovich  has been
 designated  and is the  Company&#146;s  &#147;Audit  Committee  Financial  Expert&#148;  pursuant
 to  paragraph (h)(1)(i)(A)  of Item 401 of Regulation  S-K of the Exchange Act. The
Audit  Committee held four meetings  during fiscal year 2004,  including quarterly
meetings with management and independent auditors to discuss the Company&#146;s financial
 statements.  Mr. Avramovich and each appointed member of the Audit Committee  satisfies
the definition of  &#147;independent&#148;  as that term is used in Item  7(d)(3)(iv) of
Schedule 14A under the Exchange Act. The Company&#146;s Board of Directors has adopted a
written charter for the Company&#146;s Audit  Committee.  The Audit Committee  reviews
and makes  recommendations to the Company about its financial  reporting  requirements.
 Information  regarding the functions performed by the Committee is set forth in the
&#147;Report of the Audit Committee,&#148; as follows: </FONT></P>


<!-- MARKER FORMAT-SHEET="Head Minor U and I" FSL="Project" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><U><I>Report of the
Audit Committee</I></U> </FONT></H2>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Audit Committee  oversees the Company&#146;s  financial  reporting  process on behalf of
the Board of Directors.  Management has the primary  responsibility for the financial
 statements and the reporting process including the systems of internal controls.  In
fulfilling its oversight  responsibilities,  the  Committee  reviewed the audited
 financial  statements  in the Annual  Report with  management  including a discussion of
the quality, not just the acceptability,  of the accounting  principles,  the
reasonableness of significant  judgments,  and the clarity of disclosures in the
financial statements. </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Committee  reviewed with the  independent  auditors,  who are  responsible for expressing
an opinion on the conformity of those audited financial  statements with generally
accepted accounting  principles,  their judgments as to the quality,  not just the
acceptability, of the Company&#146;s  accounting  principles and such other matters as
are required to be discussed with the Committee  under  generally  accepted auditing
 standards,  including but not limited to those matters  required to be discussed by SAS
61  (Codification  of Statements on Auditing Standards,  AUss.380). In addition,  the
Committee has discussed with the independent  auditors the auditor&#146;s </FONT></P>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>independence from management and the
Company including the matters in the written disclosures required by the Independence
Standards Board.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Committee  discussed  with the Company&#146;s  independent  auditors the overall scope
and plans for their  respective  audits.  The Committee meets with the independent
 auditors,  with and without  management  present,  to discuss the results of their
 examinations,  their evaluations of the Company&#146;s internal controls, and the
overall quality of the Company&#146;s financial reporting. </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
reliance on the reviews and discussions  referred to above,  the Committee  recommended
to the Board of Directors (and the Board has approved)  that the audited  financial
 statements be included in the Annual Report on Form 10-K for the year ended  December
31, 2004 for filing with the  Securities  and  Exchange  Commission.  The  Committee  and
the Board have also  recommended,  subject to future  shareholder approval at the Company&#146;s
2005 annual meeting of shareholders, the selection of Weiser LLP as the Company&#146;s
independent auditors. </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Michael Avramovich, Audit Committee
Chair<BR>Bret Tayne, Audit Committee Member<BR>Stanley M. Brown, III, Audit Committee Member
<BR>John I. Collins, Audit Committee Member </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 0 B&I" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Nominating
Committee</I></B> </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In 2005, the Company established a
Nominating  Committee.  The Nominating  Committee consists of two directors,  Stanley M.
Brown III and John I.  Collins.  The  Nominating  Committee  does not have a charter.
 The Board of  Directors  has  determined  that each of the  members of the Nominating
Committee is independent as defined in the listing standards for the NASDAQ Stock Market. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
 Nominating  Committee has not adopted a formal  policy with regard to  consideration  of
director  candidates  recommended  by security holders.  The Company believes that
continuing  service of qualified  incumbent members of the Board of Directors  promotes
stability and  continuity at the Board level,  contributes to the Board&#146;s  ability
to work as a collective  body and provides the benefit of familiarity and insight  into
the  Company&#146;s  affairs.  Accordingly,  the process of the  Nominating  Committee
 for  identifying  nominees  reflects  the Company&#146;s  practice of  re-nominating
 incumbent  directors who continue to satisfy the criteria for  membership  on the Board.
 For vacancies which are  anticipated on the Board of Directors,  the  Nominating
 Committee  intends to seek out and evaluate  potential  candidates  from a variety of
sources that may include  recommendations  by security holders,  members of management
and the Board of Directors,  consultants and others.  The  minimum  qualifications  for
 potential  candidates  for the  Board  of  Directors  include  demonstrated  business
 experience, decision-making  abilities,  personal  integrity  and a good  reputation.
 In light of the  foregoing,  and the fact that one new  independent director  was
elected to the Board in 2004,  it is believed  that a formal  policy and  procedure  with
 regard to  consideration  of director candidates recommended by security holders is not
necessary in order for the Nominating Committee to perform its duties. </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Nominating  Committee met one time. All of the independent  directors of the Board of
Directors of the Company  participated in the nominating  process and voted in favor of
the  </FONT></P>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>nomination of the of the persons
 nominated for election as directors at the Annual Meeting of Stockholders to be held on
December 2, 2005.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Executive
Compensation</I></B> </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table sets forth a summary of the  compensation  paid or accrued during the
last three fiscal years by the Company to its  President,  Chief  Executive  Officer and
any other  officer who was an officer of the Company at December  31,  2004,  and who
 received compensation in excess of $100,000 (&#147;Named Executive Officers&#148;). </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Summary Compensation Table </FONT></P>


<table cellpadding=0 cellspacing=0 border=0 width=600>
  <tr valign=Bottom align="left">
    <td rowspan="2" nowrap><b><font face="Times New Roman, Times, serif" size="1">Name
      and Principal<br>
      Position <br>
      </font></b></td>
    <td rowspan="2" nowrap><b><font face="Times New Roman, Times, serif" size="1"></font></b><b><font face="Times New Roman, Times, serif" size="1">Year</font></b></td>
    <td rowspan="2" nowrap><b><font face="Times New Roman, Times, serif" size="1"></font></b></td>
    <td colspan="5" nowrap><b><font face="Times New Roman, Times, serif" size="1">Annual
      Compensation</font></b></td>
    <td rowspan="2" nowrap><b><font face="Times New Roman, Times, serif" size="1"></font></b></td>
    <td colspan="7" nowrap><b><font face="Times New Roman, Times, serif" size="1">Long
      Term Compensation</font></b></td>
  </tr>
  <tr valign=Bottom>
    <td colspan="2" nowrap><b><font face="Times New Roman, Times, serif" size="1">Salary<br>
      $ <br>
      </font></b></td>
    <td nowrap><b><font face="Times New Roman, Times, serif" size="1"></font></b></td>
    <td colspan="2" nowrap><b><font face="Times New Roman, Times, serif" size="1">Other
      Annual<br>
      Compensation<br>
      </font></b></td>
    <td colspan="3" nowrap><b><font face="Times New Roman, Times, serif" size="1">Underlying<br>
      Options <br>
      </font></b></td>
    <td nowrap><b><font face="Times New Roman, Times, serif" size="1"></font></b></td>
    <td colspan="3" nowrap><b><font face="Times New Roman, Times, serif" size="1">All
      Other <br>
      Compensation<br>
      ($)</font></b></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT colspan="16" valign="top">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td width=100% align=LEFT><font face="Times New Roman, Times, serif" size="2">Howard
      W. Schwan</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">2004</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 153,000</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 5,520</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">President</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">2003</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 162,500</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 5,520</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">2002</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 162,000</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 8,100</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">14,285</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"><sup>(1)</sup>
      </font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 1,925</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"><sup>(3)</sup>
      </font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Mark Van
      Dyke</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">2004</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 124,000</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Senior
      Vice President</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">2003</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 125,100</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">2002</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 123,000</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Brent Anderson</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">2004</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 99,000</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Vice President
      of Manufacturing</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">2003</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 95,000</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">2002</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 95,000</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">8,928</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"><sup>(2)</sup>
      </font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Samuel
      Komar</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">2004</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 108,000</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Vice President
      of Sales</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">2003</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 104,200</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">2002</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 104,200</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&#151;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
  </tr>
</table>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Super" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><SUP>(1) </SUP> </FONT></TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Stock
options to purchase up to 14,285 shares of the Company&#146;s Common Stock at $2.31 per
share.</FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Super" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><SUP>(2) </SUP> </FONT></TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Stock
options to purchase up to 8,928 shares of the Company&#146;s Common Stock at $2.31 per
share.</FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Super" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><SUP>(3) </SUP> </FONT></TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Company
contribution to the Company&#146;s 401(k) Plan as a pre-tax salary deferral.</FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company has never granted any stock  appreciation  rights.  During the period from
January 1, 1999 to December 31, 2003,  there have been no awards or payments made for
long-term  incentive  compensation  (other than stock option and warrant  grants) and
there have been no restricted stock grants to any of the Named Executive Officers. </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain
Named Executive  Officers have received warrants to purchase Common Stock of the Company
in connection with their guarantee of certain  bank loans  secured by the  Company  and
in  connection  with their  participation  in a private  offering  of notes and  warrants
conducted by the Company. See &#147;Board of Director  Affiliations and Related
 Transactions&#148; below. There were no stock option grants made by the Company in the
fiscal year ended December 31, 2004. </FONT></P>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>9 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>



<!-- MARKER FORMAT-SHEET="Para Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Aggregated Option
Exercises in Last Fiscal Year and FY-End Option Values </FONT></P>





<table cellpadding=0 cellspacing=0 border=0 width=600>
  <tr valign=Bottom align="left">
    <td width=41% nowrap><b><font face="Times New Roman, Times, serif" size="1">Name</font></b></td>
    <td width=1% nowrap><b><font face="Times New Roman, Times, serif" size="1">Shares
      <br>
      Acquired on <br>
      Exercise (#)<br>
      </font></b></td>
    <td width=5% nowrap><b><font face="Times New Roman, Times, serif" size="1"></font></b></td>
    <td width=1% nowrap><b><font face="Times New Roman, Times, serif" size="1">Value
      <br>
      Realized ($)<br>
      </font></b></td>
    <td width=5% nowrap><b><font face="Times New Roman, Times, serif" size="1"></font></b></td>
    <td width=14% nowrap><b><font face="Times New Roman, Times, serif" size="1">Number
      of Securities Underlying <br>
      Unexercised Options at Year End (#)<br>
      Exercisable/Unexercisable <br>
      </font></b></td>
    <td width=5% nowrap><b><font face="Times New Roman, Times, serif" size="1"></font></b></td>
    <td colspan="3" nowrap><b><font face="Times New Roman, Times, serif" size="1">Value
      of Unexercised In- the- <br>
      Money Options at Fiscal Year End<br>
      ($) Exercisable/Unexercisable</font></b></td>
  </tr>
  <tr valign=top>
    <td width=41% align=LEFT>
      <hr size="1" noshade align="left" width="25">
    </td>
    <td width=1% align=RIGHT>
      <hr size="1" noshade>
    </td>
    <td width=5% align=LEFT>&nbsp;</td>
    <td width=1% align=RIGHT>
      <hr size="1" noshade>
    </td>
    <td width=5% align=LEFT>&nbsp;</td>
    <td width=14% align=RIGHT>
      <hr size="1" noshade>
    </td>
    <td width=5% align=LEFT>&nbsp;</td>
    <td colspan="3" align=left>
      <hr size="1" noshade>
    </td>
  </tr>
  <tr valign=Bottom>
    <td width=41% align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td width=1% align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td width=5% align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td width=1% align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td width=5% align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td width=14% align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td width=5% align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td width=1% align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td width=14% align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td width=5% align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td width=41% align=LEFT><font face="Times New Roman, Times, serif" size="2">John
      H. Schwan</font></td>
    <td width=1% align=RIGHT><font face="Times New Roman, Times, serif" size="2">0</font></td>
    <td width=5% align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td width=1% align=RIGHT><font face="Times New Roman, Times, serif" size="2">0</font></td>
    <td width=5% align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td width=14% align=RIGHT><font face="Times New Roman, Times, serif" size="2">29,762/0</font></td>
    <td width=5% align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td width=1% align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td width=14% align=RIGHT><font face="Times New Roman, Times, serif" size="2">
      0/0</font></td>
    <td width=5% align=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE="2"><SUP>(1)</SUP>&nbsp; </FONT></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Howard
      W. Schwan</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">0</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">0</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">53,968/0</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 0/0</font></td>
    <td align=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE="2"><SUP>(1)</SUP>&nbsp; </FONT></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Stephen
      M. Merrick</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">0</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">0</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">29,762/0</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 0/0</font></td>
    <td align=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE="2"><SUP>(1)</SUP>&nbsp; </FONT></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Mark Van
      Dyke</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">0</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">0</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">23,809/0</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 0/0</font></td>
    <td align=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE="2"><SUP>(1)</SUP>&nbsp; </FONT></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Brent Anderson</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">0</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">0</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">31,546/0</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 0/0</font></td>
    <td align=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE="2"><SUP>(1)</SUP>&nbsp; </FONT></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Samuel
      Komar</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">0</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">0</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">24,641/0</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 0/0</font></td>
    <td align=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE="2"><SUP>(1)</SUP>&nbsp; </FONT></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Stanley
      M. Brown</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">0</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">0</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">8,532/0</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 0/0</font></td>
    <td align=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE="2"><SUP>(1)</SUP>&nbsp; </FONT></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Bret Tayne</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">0</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">0</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">8,532/0</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 0/0</font></td>
    <td align=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE="2"><SUP>(1)</SUP>&nbsp; </FONT></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Timothy
      Patterson</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">0</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">0</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">5,000/0</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 0/0</font></td>
    <td align=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE="2"><SUP>(1)</SUP>&nbsp; </FONT></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Michael
      Avramovich</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">0</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">0</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">0/0</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 0/0</font></td>
    <td align=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE="2"><SUP>(1)</SUP>&nbsp; </FONT></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">John Collins</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">0</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">0</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">0/0</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 0/0</font></td>
    <td align=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE="2"><SUP>(1)</SUP>&nbsp; </FONT></td>
  </tr>
</table>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Super" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><SUP>(1) </SUP> </FONT></TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
value of unexercised in-the-money options is based on the difference between the exercise
price and the fair market value of the Company&#146;s Common Stock on December 31, 2004. </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Center" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Equity
Compensation Plan Information </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table provides information regarding the Company&#146;s equity compensation
plans as of December 31, 2004: </FONT></P>



<table cellpadding=0 cellspacing=0 border=0 width=600>
  <tr valign=Bottom>
    <td rowspan="2" align=center nowrap><b><font face="Times New Roman, Times, serif" size="1">Plan
      Category</font></b></td>
    <td rowspan="2" align=LEFT>&nbsp;</td>
    <td colspan="2" align=center nowrap><b><font face="Times New Roman, Times, serif" size="1">(a)</font></b></td>
    <td rowspan="2" align=LEFT>&nbsp;</td>
    <td colspan="2" align=center nowrap><b><font face="Times New Roman, Times, serif" size="1">(b)</font></b></td>
    <td rowspan="2" align=LEFT>&nbsp;</td>
    <td colspan="2" align=center nowrap><b><font face="Times New Roman, Times, serif" size="1">(c)</font></b></td>
    <td rowspan="2" align=LEFT>&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td colspan="2" align=center nowrap><b><font face="Times New Roman, Times, serif" size="1">Number
      of securities to be<br>
      issued upon exercise of <br>
      outstanding options, <br>
      warrants, and rights <br>
      </font></b></td>
    <td colspan="2" align=center nowrap><b><font face="Times New Roman, Times, serif" size="1">Weighted-average
      exercise<br>
      price of outstanding <br>
      options, warrants, and <br>
      rights <br>
      </font></b></td>
    <td colspan="2" align=center nowrap><b><font face="Times New Roman, Times, serif" size="1">
      Number of securities <br>
      remaining available for <br>
      future issuance under equity<br>
      compensation plans <br>
      (excluding securities <br>
      reflected in Column (a))</font></b></td>
  </tr>
  <tr valign=top>
    <td colspan="11" align=LEFT>
      <hr size="1" noshade>
    </td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT>&nbsp;</td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td nowrap align=LEFT><font face="Times New Roman, Times, serif" size="2">Equity
      compensation plans</font></td>
    <td width=100% align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, Serif" size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT nowrap><font face="Times New Roman, Times, serif" size="2">approved
      by security holders</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, Serif" size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td nowrap align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT>&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT nowrap><font face="Times New Roman, Times, serif" size="2">2002
      Stock Option Plan</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">62,954</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 2.75</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">79,907</font></td>
    <td align=LEFT><font face="Times New Roman, Times, Serif" size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT nowrap><font face="Times New Roman, Times, serif" size="2">2001
      Stock Option Plan</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">88,692</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 2.57</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">0</font></td>
    <td align=LEFT><font face="Times New Roman, Times, Serif" size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT nowrap><font face="Times New Roman, Times, serif" size="2">1999
      Stock Option Plan</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">131,550</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 2.25</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">0</font></td>
    <td align=LEFT><font face="Times New Roman, Times, Serif" size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT nowrap><font face="Times New Roman, Times, serif" size="2">1997
      Stock Option Plan</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">98,415</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 6.53</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">0</font></td>
    <td align=LEFT><font face="Times New Roman, Times, Serif" size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td nowrap align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT>&nbsp;</td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT nowrap><font face="Times New Roman, Times, serif" size="2">Equity
      compensation plans not</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> </font></td>
    <td align=LEFT><font face="Times New Roman, Times, Serif" size=2>&nbsp;</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT nowrap><font face="Times New Roman, Times, serif" size="2">approved
      by security holders</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">0</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 0</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">0</font></td>
    <td align=LEFT><font face="Times New Roman, Times, Serif" size=2>&nbsp;</font></td>
  </tr>
  <tr>
    <td nowrap><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td></td>
  </tr>
  <tr valign=Bottom>
    <td nowrap align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT>&nbsp;</td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT nowrap><font face="Times New Roman, Times, serif" size="2">Total</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">381,611</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 3.51</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2">79,901</font></td>
    <td align=LEFT><font face="Times New Roman, Times, Serif" size=2>&nbsp;</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=RIGHT>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td></td>
  </tr>
</table>
<BR>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>


<!-- MARKER FORMAT-SHEET="Head Minor U and I" FSL="Project" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><U><I>Compensation
Committee Report on Executive Compensation</I></U> </FONT></H2>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Compensation Committee of the Board of Directors of the Company is composed of Michael
Avramovich and Bret Tayne. During 2004, the Compensation Committee was composed of Stanley
M. Brown and Bret Tayne. The Compensation Committee is responsible for establishing the
standards and philosophy of the Board of Directors regarding executive compensation, for
reviewing and evaluating executive compensation and compensation programs, and for
recommending levels of salary and other forms of compensation for executives of the
Company to the Board of Directors. The full Board of Directors of the Company is
responsible for setting and administering salaries, bonus payments and other compensation
awards to executives of the Company. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 0 B&I" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Compensation
Philosophy</I></B> </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
philosophy of the Compensation Committee, and of the Board of Directors of the Company,
regarding executive compensation includes the following principal components:  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 1-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
attract and retain quality executive talent, which is regarded as critical to the long
and short-term success of the Company, in substantial part by offering compensation
programs which provide attractive rewards for successful effort.  </FONT></P>
</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 1-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
provide a reasonable level of base compensation to senior executives. </FONT></P>
</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 1-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
create a mutuality of interest between executive officers of the Company and shareholders
through long-term compensation structures, particularly stock option programs, so that
executive officers share the risks and rewards of strategic decision making and its
effect on shareholder value.  </FONT></P>
</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Compensation Committee has recommended, and the Board of Directors has determined, to
take appropriate action to comply with the provisions of Section 162(m) of the Internal
Revenue Code so that executive compensation will be deductible as an expense to the
fullest extent allowable.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company&#146;s executive compensation program consists of two key elements: (i) an annual
component consisting of base salary and (ii) a long-term component, principally stock
options.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent 0 B&I" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Annual
Base Compensation</I></B> </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Compensation Committee recommends annual salary levels for each of the Named Executives,
and for other senior executives of the Company, to the Board of Directors. The
recommendations of the Compensation Committee for base salary levels for senior
executives of the Company are determined annually, in part, by evaluating the
responsibilities of the position and examining market compensation levels and trends for
similar positions in the marketplace. Additional factors which the Compensation Committee
considers in recommending annual adjustments to base salaries include: results of
operation of the Company, sales, shareholder returns, and the experience,
work-performance, leadership and team building skills of each  </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>11 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>executive. The Company receives
information from the Chief Executive Officer with regard to these matters. While each of
these factors is considered in relatively equal weight, the Compensation Committee does
not utilize performance matrices or measured weightings in its review. Each year, the
Compensation Committee conducts a structured review of base compensation of senior
executives with input from the Chief Executive Officer.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent 0 B&I" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Long-Term
Component - Stock Options</I></B> </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
long-term component of compensation provided to executives of the Company has been in the
form of stock options. The Compensation Committee has recommended to the Board of
Directors that a significant portion of the total compensation to executives be in the
form of incentive stock options. Stock options are granted with an exercise price equal
to or greater than the fair market value of the Company&#146;s Common Stock on the date
of the grant. Stock options are exercisable between one and ten years from the date
granted. Such stock options provide incentive for the creation of shareholder value over
the long-term since the full benefit of the compensation package for an executive cannot
be realized unless an appreciation in the price of the Company&#146;s Common Stock occurs
over a specified number of years.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
magnitude of the stock option awards are determined annually by the Compensation
Committee and the Board of Directors. Generally, the number of options granted to an
executive has been based on the relative salary level of the executive.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
October 12, 2002, incentive stock options to purchase up to 14,285, 8,928, 5,952 and 5,
952 shares of the Company&#146;s Common Stock were granted to Messrs. Howard Schwan,
Brent Anderson, Stephen M. Merrick and John Schwan, respectively, under the 2002 Stock
Option Plan (the &#147;2002 Plan&#148;). In addition, on October 12, 2002, non-qualified
stock options to purchase up to 2,926 shares of the Company&#146;s Common Stock were
granted to each of Mssrs. Stanly M. Brown and Bret Tayne, respectively, under the 2002
Plan and incentive stock options to purchase up to 5,000 shares of the Company&#146;s
Common Stock were granted to Timothy Patterson under the 2002 Stock Option Plan on
December 31, 2003.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There
were no other stock options granted to any of the Named Executives in 2002, 2003 or 2004.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent 0 B&I" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>CEO
Compensation</I></B> </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Compensation Committee utilizes the same standards and methods for recommending annual
base compensation for the Chief Executive Officer of the Company as it does for other
senior executive officers of the Company.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
1997, the Company entered into an Employment Agreement with Howard W. Schwan, President
of the Company, providing that Mr. Schwan&#146;s base annual compensation would not be
less than $135,000. During 2002, 2003 and 2004, upon the recommendation of the
Compensation Committee, the base salary of Mr. Schwan was $162,500, $162,500 and
$153,000, respectively.  </FONT></P>



<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Compensation Committee has evaluated the compensation of Mr. Schwan in light of the
results of operation of the Company and in comparison to compensation levels of similar </FONT></P>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>12 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>companies. The Compensation
Committee determined that Mr. Schwan&#146;s level of base compensation be $153,000. In
light of the review, the Compensation Committee recommended no increase in the
compensation of Mr. Schwan during 2004 and also did not recommend any incentive
compensation for Mr. Schwan or other of the named executives.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Compensation Committee:<BR>Bret Tayne,
<BR>Stanley M. Brown, III </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 0 B&I" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Comparative
Stock Price Performance Graph</I></B> </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following graph compares, for the period January 1, 2000 to December 31, 2004, the
cumulative total return (assuming reinvestment of dividends) on the Company&#146;s Common
Stock with (i) the NASDAQ Stock Market Index (U.S.) and (ii) a peer group including S&amp;P
500 Specialty Stores. The graph assumes an investment of $100 on January 1, 2000, in the
Company&#146;s Common Stock and each of the other investment categories.  </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major 10" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Comparison
of Cumulative Total Return</FONT></H1>

<IMG SRC="graph.gif">
<BR>


<!-- MARKER FORMAT-SHEET="Head Major 10" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>INDEXED RETURNS</FONT></H1>





<table cellpadding=0 cellspacing=0 border=0 width=600>
  <tr valign=Bottom>
    <td rowspan="2" align=left nowrap><b><font face="Times New Roman, Times, serif" size="1">Company
      / Index</font></b></td>
    <td rowspan="2" align=center nowrap><b><font face="Times New Roman, Times, serif" size="1">
      Base <br>
      Period<br>
      Oct00<br>
      </font></b></td>
    <td rowspan="2" align=LEFT>&nbsp;</td>
    <td colspan="9" align=center nowrap><b><font face="Times New Roman, Times, serif" size="1">Years
      Ending</font></b></td>
  </tr>
  <tr valign=Bottom>
    <td align=center nowrap><b><font face="Times New Roman, Times, serif" size="1">Dec00</font></b></td>
    <td align=LEFT>&nbsp;</td>
    <td align=center nowrap><b><font face="Times New Roman, Times, serif" size="1">Dec01</font></b></td>
    <td align=LEFT>&nbsp;</td>
    <td align=center nowrap><b><font face="Times New Roman, Times, serif" size="1">Dec02</font></b></td>
    <td align=LEFT>&nbsp;</td>
    <td align=center nowrap><b><font face="Times New Roman, Times, serif" size="1">Dec03</font></b></td>
    <td align=LEFT>&nbsp;</td>
    <td align=center nowrap><b><font face="Times New Roman, Times, serif" size="1">Dec04</font></b></td>
  </tr>
  <tr valign=Bottom>
    <td colspan="12" align=LEFT valign="top">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td width=100% align=LEFT><b><font face="Times New Roman, Times, serif" size="2">CTI
      INDUSTRIES CORP</font></b></td>
    <td align=RIGHT><b><font face="Times New Roman, Times, serif" size="2">100</font></b></td>
    <td align=LEFT><b><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></b></td>
    <td align=RIGHT><b><font face="Times New Roman, Times, serif" size="2">53.33</font></b></td>
    <td align=LEFT><b><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></b></td>
    <td align=RIGHT><b><font face="Times New Roman, Times, serif" size="2">93.33</font></b></td>
    <td align=LEFT><b><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></b></td>
    <td align=RIGHT><b><font face="Times New Roman, Times, serif" size="2">397.46</font></b></td>
    <td align=LEFT><b><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></b></td>
    <td align=RIGHT><b><font face="Times New Roman, Times, serif" size="2">143.49</font></b></td>
    <td align=LEFT><b><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></b></td>
    <td align=RIGHT><b><font face="Times New Roman, Times, serif" size="2">92.06</font></b></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><b><font face="Times New Roman, Times, serif" size="2">NASDAQ
      U.S. INDEX</font></b></td>
    <td align=RIGHT><b><font face="Times New Roman, Times, serif" size="2">100</font></b></td>
    <td align=LEFT><b><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></b></td>
    <td align=RIGHT><b><font face="Times New Roman, Times, serif" size="2">72.95</font></b></td>
    <td align=LEFT><b><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></b></td>
    <td align=RIGHT><b><font face="Times New Roman, Times, serif" size="2">57.87</font></b></td>
    <td align=LEFT><b><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></b></td>
    <td align=RIGHT><b><font face="Times New Roman, Times, serif" size="2">40.01</font></b></td>
    <td align=LEFT><b><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></b></td>
    <td align=RIGHT><b><font face="Times New Roman, Times, serif" size="2">59.82</font></b></td>
    <td align=LEFT><b><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></b></td>
    <td align=RIGHT><b><font face="Times New Roman, Times, serif" size="2">65.10</font></b></td>
  </tr>
  <tr valign=Bottom bgcolor="#eaf9e8">
    <td align=LEFT><b><font face="Times New Roman, Times, serif" size="2">S&amp;P
      500 SPECIALTY STORES</font></b></td>
    <td align=RIGHT><b><font face="Times New Roman, Times, serif" size="2">100</font></b></td>
    <td align=LEFT><b><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></b></td>
    <td align=RIGHT><b><font face="Times New Roman, Times, serif" size="2">86.63</font></b></td>
    <td align=LEFT><b><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></b></td>
    <td align=RIGHT><b><font face="Times New Roman, Times, serif" size="2">139.84</font></b></td>
    <td align=LEFT><b><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></b></td>
    <td align=RIGHT><b><font face="Times New Roman, Times, serif" size="2">124.30</font></b></td>
    <td align=LEFT><b><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></b></td>
    <td align=RIGHT><b><font face="Times New Roman, Times, serif" size="2">167.37</font></b></td>
    <td align=LEFT><b><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></b></td>
    <td align=RIGHT><b><font face="Times New Roman, Times, serif" size="2">176.08</font></b></td>
  </tr>
</table>
<BR>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>13 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>


<!-- MARKER FORMAT-SHEET="Para Indent 0 B&I" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Employment
Agreements</I></B> </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
June, 1997, the Company entered into an Employment Agreement with Howard W. Schwan as
President, which provides for an annual salary of not less than $135,000. The term of the
Agreement was through June 30, 2002 and is automatically renewed thereafter for successive
one year terms. The Agreement contains covenants of Mr. Schwan with respect to the use of
the Company&#146;s confidential information, establishes the Company&#146;s right to
inventions created by Mr. Schwan during the term of his employment, and includes a
covenant of Mr. Schwan not to compete with the Company for a period of three years after
the date of termination of the Agreement. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent 0 B&I" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Director
Compensation</I></B> </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;John
Schwan was compensated in the amount of $24,000 in fiscal 2004 for his services as
Chairman of the Board of Directors. Directors other than members of management received a
fee of $1,000 for each Board meeting attended. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor U and I" FSL="Project" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><U><I>Section 16(a)
Beneficial Ownership Reporting Compliance</I></U> </FONT></H2>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
16(a) of the Securities Exchange Act of 1934 requires the Company&#146;s officers and
directors, and persons who own more than ten percent of a registered class of the
Company&#146;s equity securities, to file reports of ownership and changes in ownership
with the Securities and Exchange Commission and with the NASDAQ Stock Market. Officers,
directors and greater than ten-percent shareholders are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms they file. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based
solely on a review of such forms furnished to the Company, or written representations that
no Form 5&#145;s were required, the Company believes that during calendar year 2004, all
Section 16(a) filing requirements applicable to the officers, directors and ten-percent
beneficial shareholders were complied with. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor U and I" FSL="Project" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><U><I>Code of Ethics </I></U> </FONT></H2>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company has adopted a code of ethics that applies to its senior executive and financial
officers. The Company&#146;s Code of Ethics seeks to promote (i) honest and ethical
conduct, including the ethical handling of actual or apparent conflicts of interest
between personal and professional relationships, (ii) full, fair, accurate, timely and
understandable disclosure of information to the Commission, (iii) compliance with
applicable governmental laws, rules and regulations, (iv) prompt internal reporting of
violations of the Code to predesignated persons, and (v) accountability for adherence to
the Code. A copy of the Company&#146;s Code of Ethics has been included as Exhibit A to
this proxy statement. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor U and I" FSL="Project" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><U><I>Board of Directors
Affiliations and Related Transactions</I></U> </FONT></H2>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stephen
M. Merrick,  Executive Vice President and Secretary of the Company, is a principal of the
law firm of Merrick &amp; Associates, P.C.,  (formerly Merrick &amp; Klimek, P.C.) which serves
as general counsel of the Company. In addition,  Mr. Merrick is a principal  </FONT></P>


<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>14 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>stockholder of the Company.  Legal
fees incurred  from the firm of Merrick &amp; Klimek,  P.C. for the fiscal year ended
 December 31, 2004 were $97,000.  Mr. Merrick is also an officer and director of Reliv
International, Inc. (NASDAQ-RELV).  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;John
H. Schwan is President  of Packaging  Systems,  L.L.C.,  and  affiliated  companies.  The
Company made  purchases of packaging materials  from these entities in the aggregate
 amounts of $172,000  during each of the year ended December 31, 2004. In 2004, Mr.
Schwan was paid $24,000 for services provided to the Company. </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
2004 and 2003, John H. Schwan loaned to Flexo Universal the aggregate amount of $86,000
and $225,000, respectively. During 2004 and 2003, Stephen M Merrick loaned to Flexo
Universal the aggregate amount of $181,000 and $25,000 respectively. These advances are
reflected in notes and bear interest at the rate of 8% per annum.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company entered into a 10-year lease agreement for office and warehouse facilities in
November, 1999, requiring monthly payments of $17,404 to Pepper Road, Inc., a company
related through common ownership. In 2003, the rent was reduced to $15,500 per month.
Approximately 50% of the facility was subleased through March, 2002, and after that, the
Company assumed the remaining 50% of the facility. In July, 2004, the Company signed a
lease with HP Properties LLC for approximately 35,000 square feet of space in Cary,
Illinois. In July of 2004, the Company canceled its lease with Pepper Road, Inc.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
July, 2001, certain members of Company management were issued warrants to purchase
119,050 shares of the Company&#146;s common stock at an exercise price of $1.50 per share
in consideration of their facilitating, securing and guaranteeing bank loans to the
Company in the amount of $1.4 million and for advancing additional monies to the Company
that were repaid in 2001. The warrants have a term of five years.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At
various times during 2003, John H. Schwan loaned an aggregate of $795,204 to the Company
in exchange for notes bearing interest at 8%. These notes are subordinated to the bank
loan of the Company.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
February, 2003, John H. Schwan loaned $930,000 to the Company and Stephen M. Merrick
loaned $700,000 to the Company, in exchange for (i) two year promissory notes bearing
interest at 9% per annum and (ii) five year warrants to purchase up to an aggregate of
163,000 shares of Common Stock of the Company at $4.87 per share, the market price of the
Common Stock on the date of the Warrants. The proceeds of these loans were to (i)
re-finance the loan of bank loan of CTI Mexico in the amount of $880,000 and (ii) to
provide financing for CTI Mexico and Flexo Universal.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
2003, John H. Schwan loaned to the Company an additional aggregate amount of $795,024 .
Such amount is due on demand and bears interest at the rate of 8% per annum.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company believes that each of the transactions set forth above were entered into, and any
future related party transactions will be entered into, on terms as fair as those
obtainable from independent third parties. All related party transactions must be
approved by a majority of disinterested directors and subject to review in the context of
the Company&#146;s Code of Ethics.  </FONT></P>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>15 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>THE BOARD OF DIRECTORS RECOMMENDS
SHAREHOLDERS VOTE &#147;FOR&#148; THE SEVEN NOMINEES FOR DIRECTOR NAMED IN PROPOSAL NO. 1.</B> </FONT> </P>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE="2">PROPOSAL TWO
- - <U>SELECTION OF AUDITORS</U> </FONT></H2>

<!-- MARKER FORMAT-SHEET="Head Minor U and I" FSL="Project" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><U><I>WEISER LLP</I></U> </FONT></H2>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effective
February 10, 2005, the Company engaged Weiser LLP as the Company&#146;s principal
accountants to audit the Registrant&#146;s financial statements for the year ending
December 31, 2004. Weiser LLP replaced Eisner, LLP, which had previously been engaged for
the same purpose, and whose dismissal was effective February 10, 2005. The decision to
change the Company&#146;s principal accountants was approved by the Company&#146;s Audit
Committee and Board of Directors on February 10, 2005.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
reports of Eisner, LLP, on the Registrant&#146;s financial statements for the fiscal year
ended December 31, 2003 did not contain an adverse opinion or disclaimer of opinion, nor
were they qualified or modified as to uncertainty, audit scope, or accounting principles.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Previously,
effective July 24, 2003, the Company dismissed McGladrey &amp; Pullen, LLP which had been
engaged as the Company&#146;s principal accountants to audit the Company&#146;s financial
statements for the year ending December 31, 2002. The reports of McGladrey &amp; Pullen,
LLP on the Company&#146;s financial statements for the fiscal year ended December 31,
2002 did not contain an adverse opinion or disclaimer of opinion, nor were they qualified
or modified as to uncertainty, audit scope or accounting principles.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
the Company&#146;s last two fiscal years ended December 31, 2002 and December 31, 2003
and in the interim periods through April 27, 2005, there were no disagreements with
McGladrey &amp; Pullen, LLP or Eisner, LLP, respectively, on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or procedure,
which disagreements, if not resolved to the satisfaction of McGladrey &amp; Pullen, LLP
or Eisner, LLP would have caused either to make reference to the subject matter of the
disagreements in connection with their respective reports on the financial statements for
such periods.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Neither
McGladrey &amp; Pullen, LLP nor Eisner, LLP has informed the Company of any reportable
events during the Company&#146;s last two fiscal years ended December 31, 2002 and
December 31, 2003, respectively, and in the subsequent interim period ending April 27,
2004.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
reports of Grant Thornton LLP, on the Company&#146;s financial statements for the prior
two fiscal years ended December 31, 2000, and December 31, 2001 did not contain an
adverse opinion or disclaimer of opinion, nor were they qualified or modified as to
uncertainty, audit scope, or accounting principles.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
the Company&#146;s fiscal years ended December 31, 2000, and December 31, 2001, and in
the subsequent interim periods through July 24, 2002, there were no disagreements with
Grant Thornton, LLP on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements, if not
resolved to the satisfaction of Grant Thornton, LLP, would have caused it to make
reference to the subject  </FONT></P>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>16 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>matter of the disagreements in
connection with its reports on the financial statements for such periods.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Grant
Thornton, LLP has not informed the Company of any reportable events during the
Company&#146;s two fiscal years ended December 31, 2000 and 2001 and in subsequent interim
periods through July 24, 2002. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor U and I" FSL="Project" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><U><I>Fees Billed By
Independent Public Accountants</I></U> </FONT></H2>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table sets forth the aggregate amount of audit fees and all other fees billed by
Eisner, LLP, the Company&#146;s principal auditor, for the years ended December 31, 2003
and December 31, 2004: </FONT></P>


<table cellpadding=0 cellspacing=0 border=0 width=600>
  <tr valign=Bottom>
    <td align=LEFT>&nbsp;</td>
    <td align=LEFT>&nbsp;</td>
    <td align=left colspan="2" nowrap><b><font face="Times New Roman, Times, serif" size="1">2003
      Amount</font></b></td>
    <td align=LEFT>&nbsp;</td>
    <td align=left colspan="2" nowrap><b><font face="Times New Roman, Times, serif" size="1">2004
      Amount</font></b></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT>&nbsp;</td>
    <td align=LEFT>&nbsp;</td>
    <td align=left colspan="2" valign="top">
      <hr size="1" noshade>
    </td>
    <td align=LEFT>&nbsp;</td>
    <td align=left colspan="2" valign="top">
      <hr size="1" noshade>
    </td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td width=100% align=LEFT bgcolor="#eaf9e8"><FONT FACE="Times New Roman, Times, serif" SIZE="2">Audit
fees <SUP>(1)</SUP> </FONT></td>
    <td bgcolor="#eaf9e8" align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td bgcolor="#eaf9e8" align=RIGHT><font face="Times New Roman, Times, serif" size="2">
      256,000</font></td>
    <td bgcolor="#eaf9e8" align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></td>
    <td bgcolor="#eaf9e8" align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td bgcolor="#eaf9e8" align=RIGHT><font face="Times New Roman, Times, serif" size="2">
      238,000</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><FONT FACE="Times New Roman, Times, serif" SIZE="2">Other audit
related fees <SUP>(2)</SUP> </FONT></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 0</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 0</font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT bgcolor="#eaf9e8"><FONT FACE="Times New Roman, Times, serif" SIZE="2">All
other fees<SUP>(3)</SUP> </FONT></td>
    <td align=left bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">
      15,000</font></td>
    <td align=LEFT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT bgcolor="#eaf9e8"><font face="Times New Roman, Times, serif" size="2">
      15,000</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=1>
    </td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"></font></td>
  </tr>
  <tr valign=Bottom>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">Total fees</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 271,000</font></td>
    <td align=LEFT><font face="Times New Roman, Times, serif" size="2">&nbsp;</font></td>
    <td align=left><font face="Times New Roman, Times, serif" size="2">$</font></td>
    <td align=RIGHT><font face="Times New Roman, Times, serif" size="2"> 253,000</font></td>
  </tr>
  <tr>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=2>
    </td>
    <td><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td colspan=2 align=left>
      <hr NOSHADE color=#808080 size=2>
    </td>
  </tr>
</table>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Super" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><SUP>(1) </SUP> </FONT></TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Includes
the annual financial statement audit and limited quarterly reviews and expenses.</FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Super" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><SUP>(2) </SUP> </FONT></TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Includes
fees and expenses for other audit related activity provided by Eisner, LLP.</FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Super" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><SUP>(3) </SUP> </FONT></TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Primarily
represents tax services, which include preparation of tax returns and other tax
consulting services.</FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Board of  Directors  have  selected  and  approved  Weiser LLP as the  principal
 independent  auditor  to audit the  financial statements of the Company for 2005,
 subject to ratification by the  shareholders.  It is expected that a representative of
the firm of Weiser LLP will be present at the  annual  meeting  and will have an
 opportunity  to make a  statement  if they so desire and will be  available  to respond
to appropriate questions. </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
audit,  tax and other services to be performed by Weiser LLP for the Company must be
pre-approved by the Audit  Committee.  The Audit  Committee  reviews the  description of
services and an estimate of the anticipated  costs of performing  those  services.
 Services not previously  approved cannot commence until such approval has been granted.
 Pre-approval is granted usually at regularly  scheduled  meetings. If unanticipated
 items arise between meetings of the Audit Committee,  the Audit Committee has delegated
 approval  authority to the Chairman of the Audit Committee,  in which case the Chairman
 communicates such  pre-approvals to the full Committee at its next meeting.  During
2004, all services performed by Eisner,  LLP, the Company&#146;s previous  independent
 auditors,  were pre-approved by the Audit Committee in accordance with this policy. </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Audit Committee of the Board of Directors reviews all relationships with its independent
 auditors,  including the provision of non-audit services,  which may relate to the
independent  registered public accounting firm&#146;s  independence.  The Audit Committee
of the Board of  Directors  considered  the effect of Weiser  LLP&#146;s tax  services in
 assessing  the  </FONT></P>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>17 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>independence  of the  independent
 registered  public accounting  firm and  concluded  that the  provision  of such
 services  by Weiser LLP was  compatible  with the  maintenance  of that  firm&#146;s
independence in the conduct of its auditing function.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Head Minor" FSL="Project" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>THE BOARD OF DIRECTORS
RECOMMENDS SHAREHOLDERS VOTE &#147;FOR&#148; SUCH RATIFICATION.</FONT></H2>

<!-- MARKER FORMAT-SHEET="Head Minor U and I" FSL="Project" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><U><I>Stockholder
Proposals for 2005 Proxy Statement</I></U> </FONT></H2>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proposals
by  shareholders  for inclusion in the Company&#146;s Proxy Statement and form of proxy
relating to the 2006 Annual Meeting of Stockholders,  which is  tentatively  scheduled to
be held on June 9, 2006 should be addressed to the Secretary,  CTI Industries
 Corporation, 22160 North Pepper Road,  Barrington,  Illinois  60010,  and must be
received at such address no later than December 31, 2005. Upon receipt of any such
proposal,  the Company will  determine  whether or not to include such proposal in the
Proxy  Statement and proxy in accordance  with applicable law.  It is suggested that such
proposal be forwarded by certified mail, return receipt requested. </FONT></P>


<!-- MARKER FORMAT-SHEET="Head Minor U and I" FSL="Project" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><U><I>Other Matters to
Be Acted Upon at the Meeting</I></U> </FONT></H2>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
 management of the Company knows of no other matters to be presented at the meeting.
 Should any other matter  requiring a vote of the shareholders arise at the meeting, the
persons named in the proxy will vote the proxies in accordance with their best judgment. </FONT></P>
<BR>

<table width="600" border="0" cellspacing="0" cellpadding="0">
  <tr valign="bottom">
    <td width="100%"><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td><b><font face="Times New Roman, Times, serif" size="2">BY ORDER OF THE
      BOARD<br>
      OF DIRECTORS</font></b></td>
  </tr>
  <tr valign="bottom">
    <td width="100%"><font face="Times New Roman, Times, serif" size="2">November
      4, 2005</font></td>
    <td><font face="Times New Roman, Times, serif" size="2"><img src="sig.gif" width="175" height="26"></font></td>
  </tr>
  <tr valign="bottom">
    <td width="50%"><font face="Times New Roman, Times, serif" size="2"></font></td>
    <td valign="top" nowrap><b><font face="Times New Roman, Times, serif" size="2">&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<br>
      Stephen M. Merrick, Secretary</font></b></td>
  </tr>
</table>
<BR>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>18 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>


<!-- MARKER FORMAT-SHEET="Head Major 10" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>EXHIBIT A</FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major 10" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>CTI INDUSTRIES
CORPORATION</FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major 10" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Code of Ethics
<BR>for Senior Executive and Financial
Officers</FONT></H1>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>I. </B> </FONT></TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>General</B> </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
policy of CTI  Industries  Corporation  (the  &#147;Company&#148;) is to comply  strictly
with all laws  governing its  operations and to conduct its affairs in keeping  with the
highest  moral,  legal and  ethical  standards.  Senior  executive  and  financial
 officers  hold an important  and  elevated  role in  maintaining  a  commitment  to (i)
honest  and  ethical  conduct,  (ii) full,  fair,  accurate,  timely and understandable
 disclosure in the Company&#146;s public  communications,  and (iii) compliance with
applicable  governmental rules and regulations. Accordingly,  the Company has adopted
this Code of Ethics for its Chief Executive Officer,  Chief Financial Officer,
 Controller and any other senior executive or financial  officers  performing  similar
functions and so designated from time to time by the Chief Executive Officer (the &#147;Senior
 Executive and Financial  Officers&#148;).  This Code of Ethics shall be approved
annually by the Audit Committee of the Board of Directors (the  &#147;Committee&#148;)
 and disbursed to the public by means of one of the methods  described in Item 406 of
 Regulation  S-K  promulgated  by the Securities and Exchange Commission (the &#147;SEC&#148;). </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Hang Lv 0-Bold" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>II. </B> </FONT></TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Honest
and Ethical Conduct</B> </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Senior
 Executive and Financial  Officers are expected to exhibit and promote the highest
 standards of honest and ethical conduct, by, among other things, their adherence to the
following policies and procedures: </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Hang Lv 2-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=85%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Senior
Executive and Financial  Officers shall engage in only honest and ethical conduct,
 including the ethical handling of actual                      or apparent conflicts of
interest between personal and professional relationships. </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 2-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=85%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Senior
 Executive  and Financial  Officers  shall inform the Company&#146;s  Corporate  Counsel
or, in his absence,  the Chairman of the                      Committee of (a) deviations
in practice from policies and  procedures  governing  honest and ethical  behavior or (b)
any                      material transaction or relationship that could reasonably be
expected to create a conflict of interest. </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 2-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=85%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Senior
Executive and Financial  Officers shall demonstrate  personal support for the policies
and procedures set forth in this Code                      of Ethics through periodic
communications reinforcing these principles and standards throughout the Company. </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A-1 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=85%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Senior
 Executive  and Financial  Officers  shall respect the  confidentiality  of  information
 acquired in  performance  of one&#146;s                      responsibilities and shall
not use confidential information for personal advantage. </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Head Minor Underlined" FSL="Project" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><U>III.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financial
Records and Periodic Reports</U> </FONT></H2>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company is committed to full,  fair,  accurate,  timely and  understandable  disclosures
in reports and documents that it files with, or submits to, the SEC and in other public
 communications  made by the Company.  In support of this commitment,  the Company has,
among other  measures,  (a)  designed and  implemented  disclosure  controls and
 procedures  (within the meaning of  applicable  SEC rules) and (b) required the
 maintenance  of accurate and complete  records,  the  prohibition  of false,  misleading
or artificial  entries on its books and records,  and the full and  complete
 documentation  and  recording  of  transactions  in the  Company&#146;s  accounting
 records.  In addition to performing their duties and  responsibilities  under these
 requirements,  each of the Senior Executive and Financial  Officers will establish and
manage the Company&#146;s reporting systems and procedures with due care and diligence to
ensure that: </FONT></P>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=85%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Reports
 filed with or submitted to the SEC and other public  communications  contain
 information  that is full,  fair,  accurate,                      timely and
understandable and do not misrepresent or omit material facts. </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 2-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=85%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Business
 transactions  are properly  authorized and completely and accurately  recorded in all
material  respects on the Company&#146;s                      books and records in
accordance with generally accepted  accounting  principles and the Company&#146;s
 established  financial                      policies. </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 2-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=85%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Retention
or disposal of Company records is in accordance with  established  Company  policies and
applicable  legal and regulatory                      requirements. </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 0-Bold" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>IV. </B> </FONT></TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Compliance
with Applicable Laws, Rules and Regulations</B> </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
policy of the Company is to comply  strictly with all laws  governing its operations and
to conduct its affairs in keeping with the highest moral,  legal and ethical  standards.
 Accordingly,  the Senior  Executive and Financial  Officers will comply with all
applicable governmental laws, rules and regulations, and will establish and maintain
mechanisms to: </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Hang Lv 2-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=85%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Monitor
 compliance of the Company&#146;s  finance  organization  and other key employees with
all applicable  federal,  state and local                      statutes, rules,
regulations and administrative procedures. </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Lv 2-TNR" FSL="Project" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=85%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Identify,
 report and correct any detected deviations from applicable  federal,  state and local
statutes,  rules,  regulations and                      administrative procedures. </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A-2 </FONT></P>
<HR SIZE=5 NOSHADE>

<P STYLE="page-break-after:always"> </P><PAGE>
<BR>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>V. </B> </FONT></TD>
<TD WIDTH=95%><P ALIGN=JUSTIFY><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Compliance
with Code of Ethics</B> </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Senior  Executive and Financial  Officers  shall  acknowledge  and certify  their ongoing
 compliance  with this Code of Ethics annually  and  provide a copy of such
 certification  to the  Committee.  This Code of Ethics  will be  published  and made
 available  to all employees,  and any employee  should  promptly  report any violation
of this Code of Ethics to the General  Counsel or, in his or her absence, the Chairman of
the Committee.  The Board of Directors shall take  appropriate  action with respect tot
he failure of any Senior  Executive or Financial  Officer to comply with this Code of
Ethics,  which may include  reprimand,  demotion or dismissal,  depending on the
seriousness of the offense. </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Adopted:   April, 2004 </FONT></P>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>A-3 </FONT></P>
<HR SIZE=5 NOSHADE>



<!-- MARKER FORMAT-SHEET="Div Style Close" FSL="Project" -->
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end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
