Nanophase Technologies Corporation 10-Q [nanx-10q_033120.htm]

 

Exhibit 10.2

 

LOAN AGREEMENT

 

  THIS LOAN AGREEMENT (“Agreement”) is made between Nanophase Technologies
Corporation (“Borrower”), and Libertyville Bank & Trust Company, N.A.
(“Lender”).

 

  The U.S. Small Business Administration (“SBA”) has authorized a guaranty
(“Authorization”) of a loan from Lender to Borrower (“Loan”) having 2020 SBA
Loan Number 31931171-00 which may be evidenced by an agreement between SBA and
Lender for the amount and under the terms stated in the Authorization. In
consideration of the promises in this Agreement and for other good and valuable
consideration, Borrower and Lender agree as follows:

 

 

1.

Subject to the terms and conditions of the Authorization and SBA’s Participating
Lender Rules as defined in the Guarantee Agreement between Lender and SBA and
the program requirements of the SBA’s Paycheck Protection Program, as set out in
the Coronavirus Aid, Relief, and, Economic Security Act and SBA regulations
promulgated thereunder (collectively, the “Act”), Lender agrees to make the Loan
if Borrower complies with the following “Borrower Requirements.” Borrower must:

 

 

a.

Provide Lender with all certifications, documents or other information Lender is
required by the Act and the Authorization to obtain from Borrower or any third
party;

 

 

b.

Execute a note (“Note”) and any other documents required by Lender (“Loan
Documents”); and

 

 

c.

Do everything necessary for Lender to comply with the terms and conditions of
the Act and the Authorization.

 

 

2.

The terms and conditions of this Agreement:

 

 

a.

Are binding on Borrower and Lender and their successors and assigns; and

 

 

b.

Will remain in effect after the closing of the Loan.

 

 

3.

Failure to abide by any of the Borrower Requirements will constitute an event of
default under the note and other loan documents.

 

 

4.

Borrower further certifies to Lender as follows:

 

 

a.

Borrower was in operation on February 15, 2020 and had employees for whom it
paid salaries and payroll taxes or paid independent contractors, as reported on
a Form 1099-MISC.

 

 

b.

Current economic uncertainty makes this loan request necessary to support the
ongoing operations of Borrower.

 

 

c.

The loan proceeds will be used to retain workers and maintain payroll; up to 25
percent of the loan proceeds may be used for mortgage interest payments, lease
payments, and utility payments, and any other uses allowable under the Act and
applicable regulations. Borrower understands and acknowledges that if the funds
are used for unauthorized purposes, the SBA will direct Borrower to repay those
amounts without potential eligibility for loan forgiveness (as described in
paragraph 4(e) of this Agreement); if funds are knowingly used for unauthorized
purposes, the federal government may hold Borrower legally liable for fraudulent
use of funds.

 

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d.

Documentation verifying the number of full-time equivalent employees on payroll
as well as the dollar amounts of payroll costs, covered mortgage interest
payments, covered lease payments, and covered utilities for the eight- week
period after the loan is made will be provided to Lender.

 

 

e.

In accordance with the then-applicable law and guidance of the United States
Treasury Department and the SBA and subject to Paragraph 4(j) of this Agreement,
Loan forgiveness will be provided for the sum of documented payroll costs,
covered mortgage interest payments, covered lease payments, and covered
utilities, except that not more than 25 percent of the forgiven amount may be
for non-payroll costs.

 

 

f.

During the period beginning on February 15, 2020 and ending on December 31,
2020, Borrower has not and will not receive another loan under this program.

 

 

g.

The information provided in this Agreement and Borrower’s Loan application
submitted to Lender, and the information provided in all supporting documents
and forms is true and accurate in all material respects. Borrower understands
that knowingly making a false statement to obtain a guaranteed loan from the SBA
is punishable under the law, including: (i) under 18 USC 1001 and 3571 by
imprisonment of not more than five years and/or a fine of up to $250,000; (ii)
under 15 USC 645 by imprisonment of not more than two years and/or a fine of not
more than $5,000; and, (iii) if submitted to a federally insured institution,
under 18 USC 1014 by imprisonment of not more than thirty years and/or a fine of
not more than $1,000,000.

 

 

h.

Borrower has the right and power and is duly authorized to execute and deliver
each Loan Document to which it is a party and to perform and observe the
provisions of the Loan Documents to which it is a party; Borrower is duly
authorized to borrow monies hereunder; the individual(s) executing the Loan
Documents on behalf of Borrower has been duly authorized to execute the Loan
Documents on behalf of Borrower. The execution, delivery and performance by
Borrower of each Loan Document to which it is a party, and the borrowings by the
Borrower hereunder, do not and will not (a) require any consent or approval of
any Governmental Authority or agency (other than any consent or approval that
has been obtained and is in full force and effect), or (b) conflict with,
violate, result in any breach of any of the provisions of, or constitute a
default under, (i) any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award that is applicable to or binding on any Borrower,
(ii) the charter, by-laws or other organizational documents of Borrower or (iii)
any agreement, indenture, instrument or other document, or any judgment, order
or decree, that is binding upon any Borrower.

 

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i.

Borrower is eligible to receive the Loan under the rules that have been issued
by the SBA implementing the Paycheck Protection Program under the Act. Borrower
shall comply with all rules and regulations of the Paycheck Protection Program
in existence at the time of the Loan and thereafter promulgated.

 

 

j.

Borrower understands and acknowledges that forgiveness of the Loan is only
available for principal that is used for the limited purposes that qualify for
forgiveness under the Paycheck Protection Program under the Act and the rules
and regulations promulgated thereunder. Forgiveness is not automatic, and
Borrower must request forgiveness and provide Lender with documentation in
accordance with the rules and regulations implementing the Paycheck Protection
Program. Borrower understands and acknowledges that Borrower shall remain
responsible under the Loan for any amounts not forgiven. Borrower acknowledges
that it is not relying on Lender for its understanding of the Paycheck
Protection Program requirements for forgiveness.

  

 

k.

Borrower acknowledges and agrees that Borrower’s liability under the Note for
the Loan will continue with respect to any amounts the SBA may pay Lender based
on an SBA guarantee of the Note. Any agreement between the Lender and SBA under
which SBA may guarantee the Note does not create any third party rights or
benefits for Borrower, and regardless if SBA pays Lender under any such
agreement, SBA or Lender may seek recovery from Borrower of all amounts due on
the Loan under the Note.

 

 

5.

Borrower has received a copy of the Equal Employment Opportunity Poster (SBA
Form 722), and will display such poster at Borrower’s place of business where it
is clearly visible to employees, job applicants, and the general public.

 

 

6.

Borrower understands, acknowledges and agrees that Lender is relying solely on
Borrower’s representations, warranties, certifications, confirmations or other
statements of, and information from, the Borrower and/or any of its affiliates,
officers, directors, owners, principals, agents, and/or controlling persons as
to the Borrower, its business or activities, its eligibility for the proposed
Loan, its use of the proceeds or any other benefits of the Loan, the existence
of any hardship or other condition, the eligibility of the Borrower for
forgiveness of all or any portion of the Loan, the amount of any Loan
forgiveness, or any other matters of compliance with the Act or SBA requirements
without limitation or without Lender’s examination of any other information not
included in the Borrower’s Loan application which may be in Borrower’s
possession.

 

 

7.

Waiver; Amendments. No failure or delay on the part of the Lender in the
exercise of any right, power, privilege or remedy shall operate as a waiver
thereof, nor shall any single or partial exercise by Lender of any right, power,
privilege or remedy preclude other or further exercise thereof, or the exercise
of any other right, power, privilege or remedy. No amendment, modification or
waiver of, or consent with respect to, any provision of this Agreement or the
other Loan Documents shall in any event be effective unless the same shall be in
writing and signed and delivered by the Lender (and in the case of an amendment,
the Borrower), and then such amendment, modification, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.

 

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8.

Severability. Whenever possible each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement. All obligations of the Borrower
and rights of the Lender expressed herein or in any other Loan Document shall be
in addition to and not in limitation of those provided by applicable law.

 

 

9.

Waiver of Class Actions. The terms “Claim” or “Claims” refer to any disputes,
controversies, claims, counterclaims, allegations of liability, theories of
damage, or defenses between Borrower, its subsidiaries and affiliates, on the
one hand, and the Lender, on the other hand (all of the foregoing each being
referred to as a “Party” and collectively as the “Parties”). Whether in state
court, federal court, or any other venue, jurisdiction, or before any tribunal,
the Parties agree that all aspects of litigation and trial of any Claim will
take place without resort to any form of class or representative action. Thus
the Parties may only bring Claims against each other in an individual capacity
and waive any right they may have to do so as a class representative or a class
member in a class or representative action. THIS CLASS ACTION WAIVER PRECLUDES
ANY PARTY FROM PARTICIPATING IN OR BEING REPRESENTED IN ANY CLASS OR
REPRESENTATIVE ACTION REGARDING A CLAIM.

 

 

10.

INDEMNIFICATION BY THE BORROWER. IN CONSIDERATION OF THE EXECUTION AND DELIVERY
OF THIS AGREEMENT BY THE LENDER AND THE AGREEMENT TO EXTEND THE COMMITMENTS
PROVIDED HEREUNDER, THE BORROWER HEREBY AGREES TO INDEMNIFY, EXONERATE AND HOLD
THE LENDER AND EACH OF THE LENDER’S OFFICERS, DIRECTORS, EMPLOYEES, AFFILIATES,
LENDER AGENTS AND OTHER AGENTS (EACH A “LENDER PARTY”) FREE AND HARMLESS FROM
AND AGAINST ANY AND ALL ACTIONS, CAUSES OF ACTION, SUITS, LOSSES, LIABILITIES,
DAMAGES AND EXPENSES, INCLUDING ATTORNEY COSTS (COLLECTIVELY, THE “INDEMNIFIED
LIABILITIES”), INCURRED BY THE LENDER PARTIES OR ANY OF THEM AS A RESULT OF, OR
ARISING OUT OF, OR RELATING TO (A) THE LENDER’S ACTIONS ARISING FROM OR RELATED
TO THE ACT, AND (B) THE EXECUTION, DELIVERY, PERFORMANCE OR ENFORCEMENT OF THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT BY ANY OF THE LENDER PARTIES, EXCEPT FOR
ANY SUCH INDEMNIFIED LIABILITIES ARISING ON ACCOUNT OF THE APPLICABLE LENDER
PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS DETERMINED BY A FINAL,
NONAPPEALABLE JUDGMENT OF A COURT OF COMPETENT JURISDICTION. IF AND TO THE
EXTENT THE FOREGOING UNDERTAKING MAY BE UNENFORCEABLE FOR ANY REASON, THE
BORROWER HEREBY AGREES TO MAKE THE MAXIMUM CONTRIBUTION TO THE PAYMENT AND
SATISFACTION OF EACH OF THE INDEMNIFIED LIABILITIES THAT IS PERMISSIBLE UNDER
APPLICABLE LAW. ALL OBLIGATIONS PROVIDED FOR IN THIS SECTION SHALL SURVIVE
REPAYMENT OF THE LOAN, CANCELLATION OF THE NOTE, OR ANY MODIFICATION, RELEASE,
DISCHARGE OR TERMINATION OF, ANY OR ALL OF THIS AGREEMENT.

 

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11.

FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE
OF ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
ILLINOIS; PROVIDED THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO
PRECLUDE THE LENDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER
JURISDICTION. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE
JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH
LITIGATION AS SET FORTH ABOVE. THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH
COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM.

 

 

12.

WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND THE LENDER HEREBY WAIVES ANY
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS UNDER THIS AGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT AND ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE
BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY LENDING
RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, AND AGREES THAT
ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A
JURY.

 

Remainder of page left blank intentionally – signature page to follow.

 

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BORROWER:

 

 

 

 

 

 

 

 

Nanophase Technologies Corporation

 

 

 

 

 

 

 

 

 

 

 

 

By:

(SIGNATURE) [ex102003.jpg] 

 

Date:

Apr 16, 2020

 

Name:

Jess Jankowski

 

 

 

 

Its:

President

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Date:

Apr 16, 2020

 

Name:

    

 

 

 

 

Its:

   

 

 

 

 

 

LENDER:

 

 

 

 

 

 

 

 

Libertyville Bank & Trust Company, N.A.

 

 

 

 

 

 

 

 

 

 

 

 

By:

 [ex102004.jpg]

 

Date:

Apr 16, 2020

 

Name:

Ben Johnson

 

 

 

 

Its:

Bank Officer

 

 

 

 

 

 

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