as exclusive placement agents in connection with the proposed offering of Notes

 EXHIBIT 10.1

                            SBI E2-CAPITAL (USA) INC.
                          HAGERTY STEWART & ASSOCIATES
                            23 Corporate Plaza Drive
                                    Suite 210
                             Newport Beach, CA 92660

                                                                November 6, 2001

Mr. Andre Fernandez
President
American Ammunition Inc.
3545 NW 71st Street
Miami, Florida 33147

Dear Mr. Fernandez:

     This will  confirm  the  intention  of SBI  E2-Capital  (USA) Inc.  and its
affiliate  Hagerty  Stewart &  Associates,  a  registered  broker  dealer,  both
affiliated with Softbank Hong Kong (collectively, the "Placement Agents") to act
as exclusive  placement agents in connection with the proposed offering of Notes
(the  "Offering")  by  American   Ammunition,   Inc.  (the  "Company").   It  is
contemplated  that the Placement  Agents shall use their best efforts to sell an
aggregate of up to $7,000,000 of 12% convertible  senior  subordinated  notes of
the Company  (the  "Notes").  From and after the date of this  letter  agreement
through and  including  January 31, 2002,  subject to  extension as  hereinafter
provided (the  "Termination  Date"),  the Placement Agents shall be the sole and
exclusive  placement agents for the Notes and all other  securities  offered for
sale by the Company.

      The Notes shall contain the following terms and conditions:

Notes Offered.......Up to $7,000,000 of senior  convertible  promissory notes of
                    the Company.

Interest Rate:......10% per  annum.  Interest  shall  be  payable  quarterly  in
                    arrears,  either in cash or at the option of the  Company by
                    the  issuance of shares of the common  stock of the Company,
                    $__ par value per share (the "Common Stock").

                    For purposes of calculating  payment of interest through the
                    issuance  of shares of Common  Stock,  each  share of Common
                    Stock  shall  be  valued  at 80% of the  average  of the bid
                    prices  of  the  Common   Stock  as  traded  on  the  NASD's
                    over-the-counter   bulletin  board  (the  "OTC-BB")  or  the
                    average of the closing  prices of the Common Stock as traded
                    on Nasdaq, the American Stock Exchange or any other national
                    securities exchange (a "National Securities  Exchange");  in
                    each case, for the 20 consecutive  trading days  immediately
                    preceding the date that

American Ammunition Inc.
November 6, 2001
Page 2

                    interest  on the Notes shall be due and  payable;  provided,
                    however, in no event shall a share of Common Stock be valued
                    at less than $0.77 per share.

Maturity Date.......The Notes  shall,  to the extent not  converted  into Common
                    Stock,  be due and payable on a date (the  "Maturity  Date")
                    which shall be the earlier of (a) December 31, 2004,  or (b)
                    three (3) years  from the date on which the  Securities  and
                    Exchange   Commission  ("SEC")  shall  declare  effective  a
                    registration statement on Form S-3 or (if the Company is not
                    Form  S-3   eligible)  on  Form  S-1,  Form  SB-2  or  other
                    applicable    form   for    registering    securities   (the
                    "Registration Statement").

Registration
Statement...........By a date which is expect to be not later than  November 30,
                    2001,  the Company shall cause to be prepared and filed with
                    the SEC the Company's  Registration  Statement  covering the
                    Registrable  Securities.  The  Company  shall  use its  best
                    efforts to cause such Registration  Statement to be declared
                    effective by the SEC as soon as practicable thereafter.

                    Pursuant to such  Registration  Statement  the Company shall
                    register for resale (i) all Notes, (ii) all shares of Common
                    Stock issuable upon conversion of the Notes (the "Conversion
                    Stock"),  and (iii) such other securities as the Company and
                    the Placement Agents shall mutually determine (collectively,
                    the "Registrable Securities").

                    The form and content of the Registration Statement,  and all
                    amendments  thereto,  and all correspondence with the SEC or
                    any  other  regulatory   agency  shall,  at  all  times,  be
                    reasonably  acceptable  by the  Placement  Agents  and their
                    counsel.

Priority............The Notes  shall be senior  to all  other  indebtedness  for
                    money  borrowed by the Company or any  subsidiaries,  except
                    only existing or future  indebtedness  of the Company or its
                    subsidiaries to any bank,  commercial  finance  company,  or
                    other recognized lending institution (a "Senior Lender").

American Ammunition Inc.
November 6, 2001
Page 3

Conversion Price....The  Notes  shall be  convertible  at any time  prior to the
                    Maturity  Date at the  option of the holder  into  shares of
                    Common Stock of the Company (the "Conversion  Stock") at the
                    rate of one share of Conversion Stock for each seventy-seven
                    cents  ($0.77) of principal  amount of Note  converted  (the
                    "Conversion  Price").  Accordingly,  if all $7.0  million of
                    Notes  are  sold  and the  Conversion  Price  is  $0.77,  an
                    aggregate  of  9,090,909  shares  of Common  Stock  would be
                    issued upon full conversion of such Notes.

                    The Conversion Price shall be subject to customary share and
                    price  anti-dilution  adjustments  in the event of any stock
                    splits,  recapitalizations,   or  future  issuances  by  the
                    Company  of  shares  of  its  Common  Stock  or   securities
                    convertible or  exercisable  for Common Stock at prices less
                    than  the  Conversion  Price  then  in  effect,   excluding,
                    however,  conversion  prices relating to the issuance of the
                    Company's Series A convertible preferred stock pursuant to a
                    private placement memorandum dated September 29, 2001.

Optional Redemption.In the event  that the  average of the bid prices or average
                    of the closing  prices of the  Company's  Common  Stock,  as
                    traded on the OTC-BB or a National  Securities  Exchange for
                    any thirty  (30)  consecutive  trading  days shall  equal or
                    exceed  $3.00 per  share,  the  Company  may call all or any
                    portion of the Notes for redemption,  at a redemption  price
                    equal to the outstanding principal amount of the Notes, plus
                    all accrued  interest,  by written  notice given to the Note
                    holders  not more than sixty and not less than  thirty  days
                    prior to the date on which the Notes are to be redeemed (the
                    "Redemption  Date").  Any  holders  of the Note may elect to
                    convert  their  Notes into  Common  Stock at the  Conversion
                    Price  then in  effect at any time  prior to the  Redemption
                    Date.

American Ammunition Inc.
November 6, 2001
Page 4

Subscription
and Offering........The  offering  of  the  Notes  shall  commence  as  soon  as
                    practicable  and shall  continue  for a period not to exceed
                    the earlier of (a) 90 days  following the Effective Date (as
                    defined below) of the  Registration  Statement,  or (b) when
                    all  $7,000,000 of Notes have been  purchased (the "Offering
                    Termination  Date").  There  shall be no  minimum  number of
                    Notes that must be  subscribed  for  following the Effective
                    Date and the net proceeds of all Notes sold (including Notes
                    purchased  upon  exercise  of  the  Argo  Option)  shall  be
                    immediately remitted to the Company.

                    Subscribers  to the Notes  shall  deliver  payment for their
                    Notes  to  the  bank  escrow  account   established  by  the
                    Placements  Agents,  and net proceeds shall be released from
                    such account upon delivery of duly executed Company Notes to
                    the subscribers. In addition,  subscribers to the Notes must
                    execute two copies of a definitive Notes purchase agreement,
                    and investor  questionnaire and deliver such documents along
                    with full  payment for the amount of their Notes  purchased,
                    to the Placement Agents.

Option to Purchase
Notes...............The  Company  agrees,  in  consideration  for the payment of
                    $15,000  (the "Option  Payment") to grant to Argo  Financial
                    Ltd. ("Argo"),  located at The Lom Building, 27 Reid Street,
                    Hamilton,  HM11 Bermuda, the right and option to purchase up
                    to $3,500,000 of the Notes to be offered by the Company (the
                    "Option").  Simultaneous with its Option Payment, Argo shall
                    also  purchase  $135,000  of Notes.  Payment of the  $15,000
                    Option  Payment  and  purchase of $135,000 of Notes shall be
                    consummated  by Argo not  later  than ten (10) days from the
                    date  of  execution  of this  letter  agreement  (the  "Argo
                    Initial Investment").

                    Argo shall  notify the Company and the  Placement  Agents of
                    its intent to exercise its Option and the amount of Notes to
                    be purchased upon such exercise by a date which shall be not
                    later  than  three (3)  business  days  prior to the date on
                    which  the SEC  shall  declare  the  Registration  Statement
                    effective (the "Effective Date"),  and shall  simultaneously
                    deposit,

American Ammunition Inc.
November 6, 2001
Page 5

                    by wire transfer of immediately available funds or cashiers'
                    check in a bank  escrow  account  to be  established  by the
                    Placement  Agents  the  full  amount  of  the  Notes  to  be
                    purchased  upon  exercise of such Option.  Failure to comply
                    with the foregoing, shall void the Argo Option.

1. Our acting as Placement  Agent for the Offering of Notes by the Company shall
be subject to the following general terms, conditions and qualifications:

     (a)  As compensation  for its services in acting as Placement Agent for the
          Offering,  the Company  shall pay or cause to be paid to the Placement
          Agents on closing  of the  Offering  a  commission  equal to ten (10%)
          percent of the gross proceeds received by the Company from the sale of
          the Notes  which have been  placed in the  Offering  (including  Notes
          purchased upon exercise of the Argo Option). The Placement Agent shall
          not, however, receive a commission in connection with the Argo Initial
          Investment.

     (b)  Whether or not the Offering is successfully completed, it shall be the
          Company's  obligation to bear all of its expenses in  connection  with
          the proposed  Offering,  including,  but not limited to the following:
          filing  fees,  printing  and  duplicating  costs,  postage and mailing
          expenses with respect to the transmission of the Offering  Memorandum,
          advertising costs and expenses,  "road show" and information  meetings
          and  presentation  costs,  its own counsel and accounting  fees, bound
          volumes, prospectus memorabilia, issue and transfer taxes, if any, and
          "Blue Sky" counsel fees and expenses.

2. The Placement  Agents shall not be responsible for any expense of the Company
or others  for any  charges  or claims  related  to the  proposed  financing  or
otherwise if the sale of the Notes is not consummated.

3. The  Company  acknowledges  and agrees  that the  Placement  Agents  will not
proceed to perform hereunder until it receives assurances, in form and substance
reasonably  satisfactory to the Placement  Agents and their counsel,  that as of
the  Effective  Date of the  Registration  Statement  there will be no claims or
payments  for  services  in the  nature of a  finder's  fee with  respect to the
proposed Offering or any other arrangements,  agreements, payments, issuances or
understandings that may effect the Placement Agents' compensation, as determined
by the National Association of Notes Dealers, Inc.

4.  Since the  Placement  Agents  will be acting  on  behalf of the  Company  in
connection with this  engagement,  the Company agrees to indemnify the Placement
Agents  as set  forth in a  separate  letteragreement,  dated  the date  hereof,
between the Placement Agents and the Company.

American Ammunition Inc.
November 6, 2001
Page 6

5. By its  execution  and  delivery  of this  letter,  the  Company  does hereby
covenant and agree as follows:

     (a) Subject to consummation of the Argo Initial Investment,  from and after
the date of this letter  agreement  through and including the Termination Date ,
the Company shall not, without the prior written consent of the Placement Agents
and Argo,  file any  registration  statements  with the SEC for the  offering of
securities  (including  registration  statements  on Form  S-8),  other than the
Registration Statement covering the Registrable Securities contemplated hereby;

     (b) Subject to consummation of the Argo Initial Investment,  from and after
the date of this letter  agreement  through and including the Termination  Date,
the Company shall not, without the prior written consent of the Placement Agents
and Argo,  make any offers to sell, or solicit any offers to purchase any Common
Stock,  preferred stock, or other securities convertible into or exercisable for
shares of Common Stock, or enter into any other  agreements or arrangements  for
the sale of such securities; provided, that the foregoing shall not apply to the
Company's   existing  maximum  $6.0  million  private   placement  of  Series  A
convertible preferred stock.

     (c) If for any reason,  other than the termination of this letter agreement
by the  Placement  Agent or Argo or  reasons  not  related to the  Company,  its
business  or  financial   condition,   the  Company  shall:  (i)  not  file  the
Registration  Statement  with the SEC by November 30,  2001;  (ii) not cause the
Effective  Date of the  Registration  Statement to occur by February 15, 2002 or
earlier; or (iii) abandon the Offering for any reason,  other than the inability
of the Placement  Agent to sell the Notes to Argo or others by the expiration of
the  Termination  Date,  then,  upon the occurrence of any of these events,  the
Company  shall be liable to pay to Argo and to the  Placement  Agents,  in equal
amounts, the sum of $700,000 (the "Penalty");  which Penalty shall be payable by
the issuance of 909,091  shares of the  Company's  Common Stock (valued for such
purposes  at $0.77 per  share).  Such  Penalty  shall be payable by the  Company
within 10 days of receipt of written notice from either the Placement  Agents or
Argo.

     (d) If the  Effective  Date  Registration  Statement  shall be on or before
February  15, 2002 (unless  extended by mutual  agreement of the Company and the
Placement  Agents),  the exclusive  agency of the Placement Agents hereunder and
the  Termination  Date shall  automatically  be  extended  to include the 90 day
offering  period of the Notes and shall only expire on the Offering  Termination
Date.

6. This  Agreement may not be amended,  modified or waived,  except in a writing
signed by all of the  parties  hereto.  This  Agreement  may be  executed in any
number of  counterparts,  each of which shall be deemed an  original  but all of
which when taken together shall constitute one and the same instrument.

American Ammunition Inc.
November 6, 2001
Page 7

7. It is expressly  understood  and agreed that nothing  contained  herein shall
obligate the Placement  Agents to consummate  the Offering or effect the sale of
any of the Notes.  The Placement  Agents may terminate this letter agreement and
abandon  the  proposed  Offering  at any time upon ten (10) days  prior  written
notice to the Company;  after which the  Placement  Agents shall have no further
liabilities  or  obligations  whatsoever  to the  Company , Argo or any of their
respective  officers,  directors,  stockholders,  employees or  affiliates.  The
Company may terminate this letter agreement and the Placement  Agents' exclusive
agency hereunder at any time from and after the Termination Date;  provided that
in the event such termination shall be by reason of the occurrence of any of the
events  contemplated  by  Section  5(c)  above,  the  Company  shall  pay to the
Placement  Agents and Argo the Penalty.  Notwithstanding  the foregoing,  by its
execution of this letter  agreement Argo hereby covenants and agrees to make the
Argo Initial Investment.

8. This Agreement is delivered in the State of California and shall be construed
and  enforced  in  accordance  with and  governed  by,  the laws of the State of
California, without giving effect to its conflict of law principles. The parties
hereto hereby agree that any action,  proceeding or claim against it arising out
of or in any way related to this Agreement  shall be brought and enforced in any
court of competent jurisdiction, including without limitation, the courts of the
States of California or Florida or the United States of America for the Southern
District of  California  and the  Southern  District of Florida and  irrevocably
submits to such  jurisdiction,  and hereby  irrevocable  waives any objection to
such exclusive  jurisdiction  or inconvenient  forum.  In addition,  the parties
hereto agree to waive any right to a jury trial.

     Please affix your  signature in the place  designated  and by doing so, you
will confirm our general  understanding in connection with the proposed Offering
referred to herein.

[the balance of this page intentionally left blank]

American Ammunition Inc.
November 6, 2001
Page 8

     We look forward to working  closely with you in connection with this matter
and anticipate a mutually satisfactory completion of the proposed financing.

                                    Very truly yours,

                                     SBI E2-CAPITAL (USA) INC.

                                     By:/s/ Shelly Singhal
                                        ---------------------------
                                          Name:   Shelly Singhal,
                                         Title:   Managing Director

ACCEPTED AND AGREED TO, this __ day of November 2001:

AMERICAN AMMUNITION INC.                     ARGO FINANCIAL, LTD.

By:/s/ Andre Fernandez                    By:_____________________________
---------------------------
  Name:   Andre Fernandez,                   _____________________,
  Title:  President                      Title:________________

                                                                November 2, 2001

SBI E2-Capital (USA) Inc.
23 Corporate Plaza Drive
Suite 210
Newport Beach, CA 92660

Hagerty Stewart & Associates
2600 Michelson Drive Suite 1500
Irvine, CA 92612

Gentlemen:

     In connection with our engagement of SBI E2-Capital  (USA) Inc. and Hagerty
Stewart Associates (collectively,  "the Placement Agents") on November 30, 2001,
the  undersigned  ("we",  "us" or the "Company")  hereby agrees to indemnify and
hold  harmless  each  of the  Placement  Agents  and  its  affiliates,  and  the
respective directors, officers,  shareholders,  agents and employees of the each
of Placement Agents and its affiliates (collectively the "Indemnified Persons"),
from and against  any and all claims,  actions,  suits,  proceedings  (including
those of shareholders),  damages, liabilities and expenses as incurred by any of
them  (including  the fees and expenses of counsel)  which are (A) related to or
arise out of (i) any actions taken or omitted to be taken  (including any untrue
statements  made or any statements  omitted to be made) by the Company,  or (ii)
any actions taken or omitted to be taken by any Indemnified Person in connection
with our  engagement  of the  Placement  Agents,  unless such action or omission
results from the negligence or willful misconduct of any Indemnified  Person, or
(B) otherwise relate to or arise out of the Placement Agents'  activities on our
behalf,  and we  shall  reimburse  any  Indemnified  Person  for all  reasonable
expenses  (including  the fees and  expenses  of  counsel)  as  incurred by such
Indemnified Person in connection with investigating,  preparing or defending any
such claim, action, suit or proceeding (collectively a "Claim"),  whether or not
in  connection  with pending or threatened  litigation in which any  Indemnified
Person is a party or a prospective  party. We will not, however,  be responsible
for any Claim that is finally judicially determined to have resulted exclusively
from the negligence or willful misconduct of any person seeking  indemnification
hereunder.  We further agree that no Indemnified Person shall have any liability
to us for or in connection  with our  engagement of the Placement  Agents except
for any  Claim  incurred  by us solely  as a direct  result  of any  Indemnified
Person's gross negligence or willful misconduct.

     We further agree that we will not, without the prior written consent of the
Placement Agents, settle,  compromise or consent to the entry of any judgment in
any  pending or  threatened  Claim in respect  of which  indemnification  may be
sought  hereunder,  unless such  settlement,  compromise or consent  includes an
unconditional, irrevocable release of each Indemnified Person hereunder from any
and all liability arising out of such Claim.

     Promptly upon receipt by an  Indemnified  Person of notice of any complaint
or  the   assertion  or   institution   of  any  Claim  with  respect  to  which
indemnification is being sought hereunder, such

CTI Industries, Inc.
November 6, 2001
Page 10

Indemnified  Person  shall  notify us in  writing of such  complaint  or of such
assertion or  institution  but failure to so notify us shall not relieve us from
any obligation we may have hereunder, unless and only to the extent such failure
results in the forfeiture by us of substantial rights and defenses, and will not
in any event  relieve us from any other  obligation  or liability we may have to
any Indemnified  Person  otherwise than under this Agreement.  If we so elect or
are  requested by such  Indemnified  Person,  we will assume the defense of such
Claim,  including the  employment  of counsel  reasonably  satisfactory  to such
Indemnified  Person and the payment of the reasonable  fees and expenses of such
counsel.  In  the  event,  however,  that  such  Indemnified  Person  reasonably
determines in its sole  judgment  that having common  counsel would present such
counsel  with a conflict of interest or if the  defendant  in, or target of, any
such Claim,  includes an Indemnified  Person and us, and such Indemnified Person
reasonably  concludes that there may be legal defenses  available to it or other
Indemnified Persons different from or in addition to those available to us, then
such  Indemnified  Person may employ its own  separate  counsel to  represent or
defend it in any such Claim and we shall pay the reasonable fees and expenses of
such counsel. Notwithstanding anything herein to the contrary, if we fail timely
or diligently to defend,  contest,  or otherwise  protect against any Claim, the
relevant  Indemnified  Person shall have the right,  but not the obligation,  to
defend,  contest,  compromise,  settle, assert crossclaims,  or counterclaims or
otherwise  protect  against  the  same,  and  shall be fully  indemnified  by us
therefor,  including without limitation, for the reasonable fees and expenses of
its counsel and all amounts paid as a result of such Claim or the  compromise or
settlement thereof. In any Claim in which we assume the defense, the Indemnified
Person shall have the right to  participate  in such Claim and to retain its own
counsel therefor at its own expense.

     We agree that if any indemnity sought by an Indemnified Person hereunder is
held  by a court  to be  unenforceable  under  California  law,  then we and the
Placement  Agents shall contribute to the Claim for which such indemnity is held
unenforceable  in such  proportion  as is  appropriate  to reflect the  relative
benefits  to us, on the one hand,  and the  Placement  Agents on the  other,  in
connection with the Placement Agents's engagement referred to above,  subject to
the  limitation  that in no event  shall the  amount of the  Placement  Agents's
contribution  to such Claim exceed the amount of fees  actually  received by the
Placement  Agents from us  pursuant to the  Placement  Agents's  engagement.  We
hereby  agree  that  the  relative  benefits  to us,  on the one  hand,  and the
Placement Agents on the other, with respect to the Placement Agents's engagement
shall be deemed to be in the same  proportion  as (a) the  total  value  paid or
proposed to be paid or received  by us or our  stockholders  as the case may be,
pursuant  to the  transaction  (whether  or not  consummated)  for which you are
engaged to render  services  bears to (b) the fee actually paid to the Placement
Agents in connection with such engagement.

     Our  indemnity,  reimbursement  and  contribution  obligations  under  this
Agreement  shall be in  addition  to,  and  shall in no way  limit or  otherwise
adversely  affect any rights  that any  Indemnified  Party may have at law or at
equity.

     Should the Placement Agents or its personnel be required or requested by us
to provide  documentary  evidence or testimony in connection with any proceeding
arising from or relating to the Placement Agents's  engagement,  we agree to pay
all reasonable expenses (including fees incurred for legal counsel) in complying
therewith and customary market rates for  professional  time for sworn testimony
or preparation therefor, payable in advance.

CTI Industries, Inc.
November 6, 2001
Page 11

     We hereby consent to personal jurisdiction and service of process and venue
in any court in the State of  California  for which any Claim for  indemnity  is
brought by any Indemnified Person.

     It  is  understood   that,  in  connection  with  the  Placement   Agents's
engagement, the Placement Agents may be engaged to act in one or more additional
capacities and that the terms of the original  engagement or any such additional
engagement  may be  embodied in one or more  separate  written  agreements.  The
provisions of this Agreement  shall apply to the original  engagement,  any such
additional  engagement and any  modification of the original  engagement or such
additional  engagement  as the parties may agree in writing and shall  remain in
full force and effect  following the  completion or termination of the Placement
Agents's engagement(s).

                                             Very Truly Yours,

                                           AMERICAN AMMUNITION INC.

                                           By:/s/ Andre Fernandez
                                             -------------------------
                                            Name:   Andre Fernandez,
                                            Title:  President

Agreed and Accepted:

SBI E2-CAPITAL (USA) INC.

By:/s/ Shelly Singhal
----------------------------
Name:  Shelly Singhal
Title: Managing Director 

Basic Info X:

Name: as exclusive placement agents in connection with the proposed offering of Notes
Type: of Notes
Date: Nov. 30, 2001
Company: AMERICAN AMMUNITION INC/FL
State: California

Other info: