Nanophase Technologies Corporation 10-K


Exhibit
10.34


 


PROMISSORY
NOTE


 





	 	 	 	 
	Borrower:	Nanophase Technologies
    Corporation	Lender:	Libertyville Bank and
    Trust Company
	 	1319 Marquette Drive	 	507 N. Milwaukee Ave
	 	Romeoville, IL 60446	 	Libertyville, IL 60048
	 	 	 	(847) 367-6800
	 	 	 	 










 





	Principal
    Amount: $500,000.00	Date
    of Note: March 4, 2018







 


PROMISE
TO PAY. Nanophase Technologies Corporation (“Borrower”) promises to pay to Libertyville Bank and Trust Company (“Lender”),
or order, in lawful money of the United States of America, the principal amount of Five Hundred Thousand & 00/100 Dollars
($500,000.00) or so much as may be outstanding, together with interest on the unpaid outstanding principal balance of each advance.
Interest shall be calculated from the date of each advance until repayment of each advance.


 


PAYMENT.
Borrower will pay this loan in one payment of all outstanding principal plus all accrued unpaid interest on March 4, 2019. In
addition, Borrower will pay regular monthly payments of all accrued unpaid interest due as of each payment date, beginning April
4, 2018, with all subsequent interest payments to be due on the same day of each month after that. Unless otherwise agreed or
required by applicable law, payments will be applied first to any accrued unpaid interest; then to principal; then to any escrow
or reserve account payments as required under any mortgage, deed of trust, or other security instrument or security agreement
securing this Note; then to any late charges; and then to any unpaid collection costs. Borrower will pay Lender at Lender’s address
shown above or at such other place as Lender may designate in writing.


 


VARIABLE
INTEREST RATE. The interest rate on this Note is subject to change from time to time based on changes in an independent
index which is the Prime Rate as published in the Money Rates section of The Wall Street Journal (the “Index”).
The Index is not necessarily the lowest rate charged by Lender on its loans. If the
Index becomes unavailable during the term of this loan, Lender may designate a substitute index after notifying Borrower.
Lender will tell Borrower the current Index rate upon Borrower’s request. The interest rate change will not occur more
often than each day. Borrower understands that Lender may make loans based on other rates as well. Interest on the unpaid
principal balance of this Note will be calculated as described in the “INTEREST CALCULATION METHOD” paragraph
using a rate of 1.000 percentage point over the Index, rounded to the nearest 0.001 percent. NOTICE: Under no circumstances will
the interest rate on this Note be more than the maximum rate allowed by applicable law.


 


INTEREST
CALCULATION METHOD. Interest on this Note is computed on a 365/360 basis; that is, by applying the ratio of the interest rate
over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal
balance is outstanding. All interest payable under this Note is computed using this method.


 


PREPAYMENT.
Borrower may pay without penalty all or a portion of the amount owed earlier than it is due. Early payments will not, unless
agreed to by Lender in writing, relieve Borrower of Borrower’s obligation to continue to make payments of accrued unpaid
interest. Rather, early payments will reduce the principal balance due. Borrower agrees not to send Lender payments marked “paid
in full”, “without recourse”, or similar language. If Borrower sends such a payment, Lender may accept it without
losing any of Lender’s rights under this Note, and Borrower will remain obligated to pay any further amount owed to Lender.
All written communications concerning disputed amounts, including any check or other payment instrument that indicates that
the payment constitutes “payment in full” of the amount owed or that is tendered with other conditions or limitations
or as full satisfaction of a disputed amount must be mailed or delivered to: Libertyville Bank and Trust Company, 507 N. Milwaukee
Ave Libertyville, IL 60048.


 


LATE
CHARGE. If a payment is 10 days or more late, Borrower will be charged 5.000% of the unpaid
portion of the regularly scheduled payment.


 


INTEREST
AFTER DEFAULT. Upon default, including failure to pay upon final maturity, the interest rate on this Note shall be increased
by adding an additional 6.000 percentage point margin (“Default Rate Margin”). The Default Rate Margin shall also apply
to each succeeding interest rate change that would have applied had there been no default. However, in no event will the interest
rate exceed the maximum interest rate limitations under applicable law.


 


DEFAULT.
Each of the following shall constitute an event of default (“Event of Default”) under this Note: 


 


Payment
Default. Borrower fails to make any payment when due under this Note.


 


Other
Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this
Note or in any of the related documents or to comply with or to perform any term, obligation, covenant or condition contained
in any other agreement between Lender and Borrower.


 


Default
in Favor of Third Parties. Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase
or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower’s
property or Borrower’s ability to repay this Note or perform Borrower’s obligations under this Note or any of the related documents.


 


False
Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower’s behalf under
this Note or the related documents is false or misleading in any material respect, either now or at the time made or furnished
or becomes false or misleading at any time thereafter.


 


Insolvency.
The dissolution or termination of Borrower’s existence as a going business, the insolvency of Borrower, the appointment of
a receiver for any part of Borrower’s property, any assignment for the benefit of creditors, any type of creditor workout, or
the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower.


 


Creditor
or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the
loan. This includes a garnishment of any of Borrower’s accounts, including deposit accounts, with Lender. However, this Event
of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which
is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture
proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined
by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.


 


Events
Affecting Guarantor. Any of the preceding events occurs with respect to any guarantor, endorser, surety, or accommodation
party of any of the indebtedness or any guarantor, endorser, surety, or accommodation party dies or becomes incompetent, or revokes
or disputes the validity of, or liability under, any guaranty of the indebtedness evidenced by this Note.


 


Change
In Ownership. Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower.


 


Adverse
Change. A material adverse change occurs in Borrower’s financial condition, or Lender believes the prospect of payment or
performance of this Note is impaired.



 






    


     


    

 





	 	PROMISSORY
                                         NOTE

                                               (Continued)
	Page
    2








  


Insecurity.
Lender in good faith believes itself insecure.


 


Cure
Provisions. If any default, other than a default in payment, is curable and if Borrower has not been given a notice of a breach
of the same provision of this Note within the preceding twelve (12) months, it may be cured if Borrower, after Lender sends written
notice to Borrower demanding cure of such default: (1) cures the default within fifteen (15) days; or (2) if the cure requires
more than fifteen (15) days, immediately initiates steps which Lender deems in Lender’s sole discretion to be sufficient to cure
the default and thereafter continues and completes all reasonable and necessary steps sufficient to produce compliance as soon
as reasonably practical.


 


LENDER’S
RIGHTS. Upon default, Lender may declare the entire unpaid principal balance under this Note and all accrued unpaid interest
immediately due, and then Borrower will pay that amount.


 


ATTORNEYS’
FEES; EXPENSES. Lender may hire or pay someone else to help collect this Note if Borrower does not pay. Borrower will pay
Lender that amount. This includes, subject to any limits under applicable law, Lender’s attorneys’ fees and Lender’s legal expenses,
whether or not there is a lawsuit, including attorneys’ fees, expenses for bankruptcy proceedings (including efforts to modify
or vacate any automatic stay or injunction), and appeals. If not prohibited by applicable law, Borrower also will pay any court
costs, in addition to all other sums provided by law.


 


JURY
WAIVER. Lender and Borrower hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by either
Lender or Borrower against the other.


 


GOVERNING
LAW. This Note will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws
of the State of Illinois without regard to its conflicts of law provisions. This Note has been accepted by Lender in the State
of Illinois.


 


CONFESSION
OF JUDGMENT. Borrower hereby irrevocably authorizes and empowers any attorney-at-law to appear in any court of record and
to confess judgment against Borrower for the unpaid amount of this Note as evidenced by an affidavit signed by an officer of Lender
setting forth the amount then due, attorneys’ fees plus costs of suit, and to release all errors, and waive all rights of appeal.
If a copy of this Note, verified by an affidavit, shall have been filed in the proceeding, it will not be necessary to file the
original as a warrant of attorney. Borrower waives the right to any stay of execution and the benefit of all exemption laws now
or hereafter in effect. No single exercise of the foregoing warrant and power to confess judgment will be deemed to exhaust the
power, whether or not any such exercise shall be held by any court to be invalid, voidable, or void; but the power will continue
undiminished and may be exercised from time to time as Lender may elect until all amounts owing on this Note have been paid in
full. Borrower hereby waives and releases any and all claims or causes of action which Borrower might have against any attorney
acting under the terms of authority which Borrower has granted herein arising out of or connected with the confession of judgment
hereunder.


 


RIGHT
OF SETOFF. To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower’s accounts with Lender
(whether checking, savings, or some other account). This includes all accounts Borrower holds jointly with someone else and all
accounts Borrower may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for
which setoff would be prohibited by law. Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff
all sums owing on the indebtedness against any and all such accounts, and, at Lender’s option, to administratively freeze all
such accounts to allow Lender to protect Lender’s charge and setoff rights provided in this paragraph.


 


LINE
OF CREDIT. This Note evidences a revolving line of credit. Advances under this Note may be requested either orally or in writing
by Borrower or as provided in this paragraph. Lender may, but need not, require that all oral requests be confirmed in writing.
All communications, instructions, or directions by telephone or otherwise to Lender are to be directed to Lender’s office
shown above. The following person or persons are authorized to request advances and authorize payments under the line of credit
until Lender receives from Borrower, at Lender’s address shown above, written notice of revocation of such authority: Jess
Jankowski, President of Nanophase Technologies Corporation. Borrower agrees to be liable
for all sums either: (A) advanced in accordance with the instructions of an authorized person or (B) credited to any of Borrower’s
accounts with Lender. The unpaid principal balance owing on this Note at any time may be evidenced by endorsements on this Note
or by Lender’s internal records, including daily computer print-outs. Lender will have no obligation to advance funds under
this Note if: (A) Borrower or any guarantor is in default under the terms of this Note or any agreement that Borrower or any guarantor
has with Lender, including any agreement made in connection with the signing of this Note; (B) Borrower or any guarantor ceases
doing business or is insolvent; (C) any guarantor seeks, claims or otherwise attempts to limit, modify or revoke such guarantor’s
guarantee of this Note or any other loan with Lender; (D) Borrower has applied funds provided pursuant to this Note for purposes
other than those authorized by Lender; or (E) Lender in good faith believes itself insecure.


 


PRIOR
NOTE. This Note restates and replaces a certain Promissory Note dated March 4, 2015, as amended from time to time, between
Borrower and Lender in the original principal amount of $300,000.00 (the “Prior Note”) and is not a repayment or novation
of the Prior Note.


 


SUCCESSOR
INTERESTS. The terms of this Note shall be binding upon Borrower, and upon Borrower’s heirs, personal representatives, successors
and assigns, and shall inure to the benefit of Lender and its successors and assigns.


 


NOTIFY
US OF INACCURATE INFORMATION WE REPORT TO CONSUMER REPORTING AGENCIES. Borrower may notify Lender if Lender reports any inaccurate
information about Borrower’s account(s) to a consumer reporting agency. Borrower’s written notice describing the specific inaccuracy(ies)
should be sent to Lender at the following address: Libertyville Bank and Trust Company 507 N. Milwaukee Ave Libertyville, IL 60048.


 


GENERAL
PROVISIONS. If any part of this Note cannot be enforced, this fact will not affect the rest of the Note. Lender may delay
or forgo enforcing any of its rights or remedies under this Note without losing them. Borrower and any other person who signs,
guarantees or endorses this Note, to the extent allowed by law, waive presentment, demand for payment, and notice of dishonor.
Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who signs this Note, whether
as maker, guarantor, accommodation maker or endorser, shall be released from liability. All such parties agree that Lender may
renew or extend (repeatedly and for any length of time) this loan or release any party or guarantor or collateral; or impair,
fail to realize upon or perfect Lender’s security interest in the collateral; and take any other action deemed necessary by Lender
without the consent of or notice to anyone. All such parties also agree that Lender may modify this loan without the consent of
or notice to anyone other than the party with whom the modification is made. The obligations under this Note are joint and several.


 


ILLINOIS
INSURANCE NOTICE. Unless Borrower provides Lender with evidence of the insurance coverage required by Borrower’s agreement with
Lender, Lender may purchase insurance at Borrower’s expense to protect Lender’s interests in the collateral. This insurance may,
but need not, protect Borrower’s interests. The coverage that Lender purchases may not pay any claim that Borrower makes or any
claim that is made against Borrower in connection with the collateral. Borrower may later cancel any insurance purchased by Lender,
but only after providing Lender with evidence that Borrower has obtained insurance as required by their agreement. If Lender purchases
insurance for the collateral, Borrower will be responsible for the costs of that insurance, including interest and any other charges
Lender may impose in connection with the placement of the insurance, until the effective date of the cancellation or expiration
of the insurance. The costs of the insurance may be added to Borrower’s total outstanding balance or obligation. The costs of
the insurance may be more than the cost of insurance Borrower may be able to obtain on Borrower’s own.


 



 






    


     


    

 





	 	PROMISSORY
                                         NOTE

                                               (Continued)
	Page
    3












 


PRIOR
TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS.
BORROWER AGREES TO THE TERMS OF THE NOTE.


 


BORROWER
ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.


 


BORROWER:


 





	NANOPHASE TECHNOLOGIES CORPORTION	 
	 	 	 
	By:	/s/ Jess Jankowski	 
	 	Jess Jankowski, President of Nanophase Technologies Corporation	 
	 		 












 


Laser
Pro, Ver.  17.4.21.005   Copr. D+H USA Corporation 1997, 2018.  All Rights Reserved - IL  C:\LASERPRO\CCO\CFI\LPL\C40.
FC  TR-5287   PR-162