EX-10.1



 Exhibit 10.1 
  





 
 *0000000880066269-3096004132015* 

CHANGE IN TERMS AGREEMENT 
  

 
  

 

									
	Borrower:	 	Nanophase Technologies Corporation	  		 	Lender:	 	Libertyville Bank and Trust Company
		 	(TIN: 36-3687863)	  		 		 	507 N. Milwaukee Ave
		 	1319 Marquette Drive	  		 		 	Libertyville, IL 60048
		 	Romeoville, IL 60446	  		 		 	(847) 367-6800

  
  

 
  

			
	Principal Amount: $300,000.00	  	Date of Agreement: April 13, 2015

 DESCRIPTION OF EXISTING INDEBTEDNESS. Original Promissory Note dated March 04, 2015, in the original principal
amount of $300,000.00, from Grantor to Lender, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for the promissory note or agreement. 

DESCRIPTION OF CHANGE IN TERMS. 
  

	•	 	Removing “Following each draw, a hold in the amount of the outstanding balance of the RLOC will be placed on the deposit account. The hold will be released when the balance is repaid” from the Business Loan
Agreement dated March 4, 2015 

 All other terms and conditions shall remain the same. 

PAYMENT. Borrower will pay this loan in full immediately upon Lender’s demand. If no demand is made, Borrower will pay this loan in one payment of all
outstanding principal plus all accrued unpaid interest on March 4, 2016. In addition, Borrower will pay regular monthly payments of all accrued unpaid interest due as of each payment date, beginning May 4, 2015, with all subsequent
interest payments to be due on the same day of each month after that. 
 VARIABLE INTEREST RATE. The interest rate on this loan is subject to
change from time to time based on changes in an index which is Lender’s Prime Rate (the “Index”). This is the rate Lender charges, or would charge, on 90-day unsecured loans to the most creditworthy corporate customers. This rate may
or may not be the lowest rate available from Lender at any given time. 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. The Index currently is 3.250% per annum. Interest on the unpaid principal balance of this loan 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, resulting in an initial rate of 4.250%. NOTICE: Under no circumstances will the interest rate on this loan be more than the maximum rate allowed by applicable law.

 INTEREST CALCULATION METHOD. Interest on this loan 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 loan is computed using this method. 

CONTINUING VALIDITY. Except as expressly changed by this Agreement, the terms of the original obligation or obligations, including all agreements
evidenced or securing the obligation(s), remain unchanged and in full force and effect. Consent by Lender to this Agreement does not waive Lender’s right to strict performance of the obligation(s) as changed, nor obligate Lender to make any
future change in terms. Nothing in this Agreement will constitute a satisfaction of the obligation(s). It is the intention of Lender to retain as liable parties all makers and endorsers of the original obligation(s), including accommodation parties,
unless a party is expressly released by Lender in writing. Any maker or endorser, including accommodation makers, will not be released by virtue of this Agreement. If any person who signed the original obligation does not sign this Agreement below,
then all persons signing below acknowledge that this Agreement is given conditionally, based on the representation to Lender that the non-signing party consents to the changes and provisions of this Agreement or otherwise will not be released by it.
This waiver applies not only to any initial extension, modification or release, but also to all such subsequent actions. 
 CHANGE IN TERMS. 1. Consent
of Guarantor. Each Guarantor expressly agrees to the terms, provisions and conditions of this Change In Terms Agreement, and acknowledges and ratifies all other terms of its Commercial Guaranty. 

2. Agreements Continue. All the terms, provisions, stipulations, powers, and covenants in the Related Documents (as defined below) shall stand and
remain unchanged and in full force and effect and shall be binding upon all parties thereto, except as changed or modified in express terms by this Change In Terms Agreement. 

(a) The words “Related Documents” mean all promissory notes, credit agreements, loan agreements, environmental agreements,
guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connections with the Loan 

3. Release. Borrower and each Guarantor hereby remises, releases, acquits, satisfies and forever discharges Lender of and from any and all manner of
action and actions, cause and causes of action, suits, losses, collection costs, expenses (including without limitation attorneys’ fees and expenses), covenants, controversies, promises, damages, whatsoever in law or in equity which Borrower or
Guarantor have ever had or now have to their knowledge, or which any personal representative, successor, assignee or beneficiary thereof ever had or now has to its knowledge arising under or in connection with this Change In Terms Agreement, any
action taken or actions not taken by Lender in connection with the Note, or any other documents related thereto. Lender represents that it does not know of any claim by Lender against Borrower under the Note or Related Documents. 

4. Loan Balance. Borrower hereby acknowledges that as of April 13, 2015, the current principal balance of the Loan is $0.00 with accrued unpaid
interest of $0.00, but not including any late charges, expenses, attorneys’ fees or default rate interest. 
 5. Covenants and Warranties. 

(a) Borrower and each Guarantor, as applicable, hereby represent to, covenant with Lender, and acknowledge that: 

(i) At the date hereof, the Note and Related Documents as amended hereby are in full force and effect as originally executed and delivered by
the parties, except as expressly modified and amended herein. 
 (ii) Neither Borrower nor Guarantor is in default in the payment of any
sums, charges or obligations under the Note or Related Documents or in the payment or performance of any covenants, agreements or conditions of Borrower or Guarantor, as applicable, contained in the Note or Related Documents. 









					
		 	CHANGE IN TERMS AGREEMENT	 	
	Loan No: 880066269-3	 	(Continued)	 	 Page
 2


  
  

 
  

 (iii) Borrower and Guarantor hereby confirm and reaffirm all of their obligations under the
Note and the Related Documents, as modified and amended herein, and confirm and reaffirm that the Related Documents secure the Note. 
 (iv)
As of the date hereof, neither Borrower nor Guarantor have any right or claim of set-off, discount, deduction, defense or counterclaim which could be asserted in any action brought to enforce the Note or Related Documents. 

(v) As of the date hereof, neither Borrower or Guarantor have any actual or potential actions, claims, suit or defenses arising from any
letters of intent, correspondence or other communications (oral or written) between Borrower, Guarantor or Lender. 
 (vi) There are no
actions, suits or proceedings (including, without limitation, proceedings before any court, arbitrator or governmental authority or agency) pending or threatened against Borrower or Guarantor, as applicable (or to the knowledge of Borrower or
Guarantor, as applicable, any basis for any such action, suit or proceeding), which if adversely determined, might individually, or in the aggregate, materially adversely: 

1. impair the ability of Borrower or Guarantor to pay or perform its obligations under the Note or Related Documents; or 

2. affect the assets pledged as collateral under the Related Documents; 

(vii) There is no presently known fact which affects, or may affect in the future (so far as the undersigned can foresee), materially and
adversely the condition (financial or other) of Borrower or Guarantor to pay or perform its obligations under the Note or Related Documents. 

(viii) Borrower represents and warrants that the liens of the Related Documents shall secure the Note as hereby amended to the same extent as
If the amendments made herein were set forth and described In the Note and Related Documents. 
 6. Certifications, Representations and Warranties.
To induce Lender to enter into this Change In Terms Agreement, Borrower and each Guarantor hereby certify, represent and warrant to Lender that all certifications, representations and warranties contained in the Note and the Related Documents and in
all certifications, representations and warranties are hereby remade and made to speak as of the date of this Change In Terms Agreement. 
 7.
Reaffirmation of Guaranty. Each Guarantor hereby reaffirms each and every obligation for payment and performance as set forth in its Commercial Guaranty and acknowledges that it remains unconditionally and absolutely liable for the due and
punctual payment of the outstanding principal balance of the Note plus interest thereon and any other monies due or which may come due thereon, as set forth in the Commercial Guaranty. 

8. No Waiver. Notwithstanding anything contained in this Change In Terms Agreement to the contrary or any prior act of Lender or any procedure
established by Lender with regard to the Loan, Borrower and each Guarantor acknowledge and agree that Lender has not heretofore waived any of its rights or remedies under the Note or Related Documents nor has Lender waived any of the duties or
obligations of Borrower or Guarantor thereunder. No waiver by Lender of any covenant or condition under the Note or Related Documents shall be deemed a subsequent waiver of the same or any other covenant or condition. No covenant, term or condition
of the Note or Related Documents shall be deemed waived by Lender unless waived in writing. 
 9. Governing Law. This Change In Terms Agreement shall
be governed by the laws of the State of Illinois. 
 10. JURY WAIVER. ALL OF THE PARTIES HERETO EACH WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION
OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS (I) UNDER THIS CHANGE IN TERMS AGREEMENT OR ANY OF THE NOTE OR RELATED DOCUMENTS OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
HEREWITH, WITH THE NOTE, OR ANY RELATED DOCUMENT OR (II) ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION HEREWITH, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING WILL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. BORROWER AND THE
GUARANTORS AGREE THAT THEY WILL NOT ASSERT ANY CLAIM AGAINST LENDER OR ANY OTHER PERSON INDEMNIFIED OR RELEASED UNDER THIS CHANGE IN TERMS AGREEMENT ON ANY THEORY OF LIABILITY FOR SPECIAL, INDIRECT, CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGES.

 11. Miscellaneous. 
 (a) This Change
In Terms Agreement may be executed by facsimile and/or in two or more counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute and be taken as one and the same instrument. 

(b) None of the covenants, terms or conditions of this Change In Terms Agreement shall in any manner be altered, waived, modified, changed or
abandoned, except by written instrument, duly signed and delivered by all the parties hereto. 
 (c) This Change In Terms Agreement contains
the entire agreement between the parties hereto as to the subject matter hereof and there are no other terms, obligations, covenants, representations, warranties, statements or conditions, oral or otherwise, of any kind. 

(d) The recitals to this Change In Terms Agreement are hereby incorporated into and made a part of this Change In Terms Agreement, and shall
constitute covenants and representations of Borrower and shall be binding upon and enforceable against Borrower. 
 (e) Any defined terms
contained in this Change In Terms Agreement not otherwise defined in this Change In Terms Agreement shall have the meaning as set forth in the Note or Related Documents. 

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

			
	NANOPHASE TECHNOLOGIES CORPORATION
		
	By:	 	 /s/ Frank Cesario

		 	Frank Cesario, Chief Financial Officer of Nanophase Technologies Corporation


  
  

 
 LaserPro, Ver. 15.1.0.023 Copr. D+H USA
Corporation 1997, 2015. All Rights Reserved. - IL c:\LASERPRO\LBT\WINAPPS\CFIWIN\CFI\LPL\D20C FC TR-17013 PR-40 








 



 
 *0000000880066269-3007004132015* 

BUSINESS LOAN AGREEMENT (ASSET BASED) 
  

 
  

 

									
	Borrower:	 	Nanophase Technologies Corporation	  		 	Lender:	 	Libertyville Bank and Trust Company
		 	(TIN: 36-3687863)	  		 		 	507 N. Milwaukee Ave
		 	1319 Marquette Drive	  		 		 	Libertyville, IL 60048
		 	Romeoville, IL 60446	  		 		 	(847) 367-6800

  
  

 
 THIS BUSINESS LOAN AGREEMENT (ASSET BASED) dated
April 13, 2015, is made and executed between Nanophase Technologies Corporation (“Borrower”) and Libertyville Bank and Trust Company (“Lender”) on the following terms and conditions. Borrower has received prior commercial
loans from Lender or has applied to Lender for a commercial loan or loans or other financial accommodations, including those which may be described on any exhibit or schedule attached to this Agreement. Borrower understands and agrees that:
(A) in granting, renewing, or extending any Loan, Lender is relying upon Borrower’s representations, warranties, and agreements as set forth in this Agreement; (B) the granting, renewing, or extending of any Loan by Lender at all
times shall be subject to Lender’s sole judgment and discretion; and (C) all such Loans shall be and remain subject to the terms and conditions of this Agreement. This Agreement shall apply to any and all present and future loans, loan
advances, extension of credit, financial accommodations and other agreements and undertakings of every nature and kind that may be entered into by and between Borrower and Lender now and in the future. 

TERM. This Agreement shall be effective as of April 13, 2015, and shall continue in full force and effect until such time as all of
Borrower’s Loans in favor of Lender have been paid in full, including principal, interest, costs, expenses, attorneys’ fees, and other fees and charges, or until March 4, 2016. 

ADVANCE AUTHORITY. 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: Frank Cesario, Chief Financial Officer of Nanophase Technologies Corporation. 

LINE OF CREDIT. Lender agrees to make Advances to Borrower from time to time from the date of this Agreement to the Expiration Date, provided the
aggregate amount of such Advances outstanding at any time does not exceed the Borrowing Base. Within the foregoing limits, Borrower may borrow, partially or wholly prepay, and reborrow under this Agreement as follows: 

Conditions Precedent to Each Advance. Lender’s obligation to make any Advance to or for the account of Borrower under this
Agreement is subject to the following conditions precedent, with all documents, instruments, opinions, reports, and other items required under this Agreement to be in form and substance satisfactory to Lender: 

(1) Lender shall have received evidence that this Agreement and all Related Documents have been duly authorized, executed, and delivered by
Borrower to Lender. 
 (2) Lender shall have received such opinions of counsel, supplemental opinions, and documents as Lender may request.

 (3) The security interests in the Collateral shall have been duly authorized, created, and perfected with first lien priority and shall be
in full force and effect. 
 (4) All guaranties required by Lender for the credit facility(ies) shall have been executed by each Guarantor,
delivered to Lender, and be in full force and effect. 
 (5) Lender, at its option and for its sole benefit, shall have conducted an audit of
Borrower’s Accounts, books, records, and operations, and Lender shall be satisfied as to their condition. 
 (6) Borrower shall have
paid to Lender all fees, costs, and expenses specified in this Agreement and the Related Documents as are then due and payable. 
 (7) There
shall not exist at the time of any Advance a condition which would constitute an Event of Default under this Agreement, and Borrower shall have delivered to Lender the compliance certificate called for in the paragraph below titled “Compliance
Certificate.” 
 Making Loan Advances. Advances under this credit facility, as well as directions for payment from
Borrower’s accounts, may be requested orally or in writing by authorized persons. Lender may, but need not, require that all oral requests be confirmed in writing. Each Advance shall be conclusively deemed to have been made at the request of
and for the benefit of Borrower (1) when credited to any deposit account of Borrower maintained with Lender or (2) when advanced in accordance with the instructions of an authorized person. Lender, at its option, may set a cutoff time,
after which all requests for Advances will be treated as having been requested on the next succeeding Business Day. 
 Mandatory Loan
Repayments. If at any time the aggregate principal amount of the outstanding Advances shall exceed the applicable Borrowing Base, Borrower, immediately upon written or oral notice from Lender, shall pay to Lender an amount equal to the
difference between the outstanding principal balance of the Advances and the Borrowing Base. On the Expiration Date, Borrower shall pay to Lender in full the aggregate unpaid principal amount of all Advances then outstanding and all accrued unpaid
interest, together with all other applicable fees, costs and charges, if any, not yet paid. 
 Loan Account. Lender shall maintain on
its books a record of account in which Lender shall make entries for each Advance and such other debits and credits as shall be appropriate in connection with the credit facility. Lender shall provide Borrower with periodic statements of
Borrower’s account, which statements shall be considered to be correct and conclusively binding on Borrower unless Borrower notifies Lender to the contrary within thirty (30) days after Borrower’s receipt of any such statement which
Borrower deems to be incorrect. 
 COLLATERAL. To secure payment of the Primary Credit Facility and performance of all other Loans, obligations and
duties owed by Borrower to Lender, Borrower (and others, if required) shall grant to Lender Security Interests in such property and assets as Lender may require. Lender’s Security Interests in the Collateral shall be continuing liens and shall
include the proceeds and products of the Collateral, including without limitation the proceeds of any insurance. With respect to the Collateral, Borrower agrees and represents and warrants to Lender: 

Perfection of Security Interests. Borrower agrees to execute all documents perfecting Lender’s Security Interest and to take
whatever actions are requested by Lender to perfect and continue Lender’s Security Interests in the Collateral. Upon request of Lender, Borrower will deliver to Lender any and all of the documents evidencing or constituting the Collateral, and
Borrower will note Lender’s interest upon any 









					
	BUSINESS LOAN AGREEMENT (ASSET BASED)
	Loan No: 880066269-3	 	(Continued)	 	Page 2

  
  

 
  

 
and all chattel paper and instruments if not delivered to Lender for possession by Lender. Contemporaneous with the execution of this Agreement, Borrower will execute one or more UCC financing
statements and any similar statements as may be required by applicable law, and Lender will file such financing statements and all such similar statements in the appropriate location or locations. Borrower hereby appoints Lender as its irrevocable
attorney-in-fact for the purpose of executing any documents necessary to perfect or to continue any Security Interest. Lender may at any time, and without further authorization from Borrower, file a carbon, photograph, facsimile, or other
reproduction of any financing statement for use as a financing statement. Borrower will reimburse Lender for all expenses for the perfection, termination, and the continuation of the perfection of Lender’s security interest in the Collateral.
Borrower promptly will notify Lender before any change in Borrower’s name including any change to the assumed business names of Borrower. Borrower also promptly will notify Lender before any change in Borrower’s Social Security Number or
Employer Identification Number. Borrower further agrees to notify Lender in writing prior to any change in address or location of Borrower’s principal governance office or should Borrower merge or consolidate with any other entity. 

Collateral Records. Borrower does now, and at all times hereafter shall, keep correct and accurate records of the Collateral, all of
which records shall be available to Lender or Lender’s representative upon demand for inspection and copying at any reasonable time. With respect to the Accounts, Borrower agrees to keep and maintain such records as Lender may require,
including without limitation information concerning Eligible Accounts and Account balances and agings. Records related to Accounts (Receivables) are or will be located at. The above is an accurate and complete list of all locations at which Borrower
keeps or maintains business records concerning Borrower’s collateral. 
 Collateral Schedules. Concurrently with the execution
and delivery of this Agreement, Borrower shall execute and deliver to Lender schedules of Accounts and schedules of Eligible Accounts in form and substance satisfactory to the Lender. Thereafter supplemental schedules shall be delivered according to
the following schedule: 
 Representations and Warranties Concerning Accounts. With respect to the Accounts, Borrower represents and
warrants to Lender: (1) Each Account represented by Borrower to be an Eligible Account for purposes of this Agreement conforms to the requirements of the definition of an Eligible Account; (2) All Account information listed on schedules
delivered to Lender will be true and correct, subject to immaterial variance; and (3) Lender, its assigns, or agents shall have the right at any time and at Borrower’s expense to inspect, examine, and audit Borrower’s records and to
confirm with Account Debtors the accuracy of such Accounts. 
 CONDITIONS PRECEDENT TO EACH ADVANCE. Lender’s obligation to make the initial
Advance and each subsequent Advance under this Agreement shall be subject to the fulfillment to Lender’s satisfaction of all of the conditions set forth in this Agreement and in the Related Documents. 

Loan Documents. Borrower shall provide to Lender the following documents for the Loan: (1) the Note; (2) Security Agreements
granting to Lender security interests in the Collateral; (3) financing statements and all other documents perfecting Lender’s Security Interests; (4) evidence of insurance as required below; (5) together with all such Related
Documents as Lender may require for the Loan; all in form and substance satisfactory to Lender and Lender’s counsel. 

Borrower’s Authorization. Borrower shall have provided in form and substance satisfactory to Lender properly certified resolutions,
duly authorizing the execution and delivery of this Agreement, the Note and the Related Documents. In addition, Borrower shall have provided such other resolutions, authorizations, documents and instruments as Lender or its counsel, may require.

 Fees and Expenses Under This Agreement. Borrower shall have paid to Lender all fees, costs, and expenses specified in this
Agreement and the Related Documents as are then due and payable. 
 Representations and Warranties. The representations and warranties
set forth in this Agreement, in the Related Documents, and in any document or certificate delivered to Lender under this Agreement are true and correct. 

No Event of Default. There shall not exist at the time of any Advance a condition which would constitute an Event of Default under this
Agreement or under any Related Document. 
 REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as of the date of this
Agreement, as of the date of each disbursement of loan proceeds, as of the date of any renewal, extension or modification of any Loan, and at all times any Indebtedness exists: 

Organization. Borrower is a corporation for profit which is, and at all times shall be, duly organized, validly existing, and in good
standing under and by virtue of the laws of the State of Delaware. Borrower is duly authorized to transact business in the State of Illinois and all other states in which Borrower is doing business, having obtained all necessary filings,
governmental licenses and approvals for each state in which Borrower is doing business. Specifically, Borrower is, and at all times shall be, duly qualified as a foreign corporation in all states in which the failure to so qualify would have a
material adverse effect on its business or financial condition. Borrower has the full power and authority to own its properties and to transact the business in which it is presently engaged or presently proposes to engage. Borrower maintains an
office at 1319 Marquette Drive, Romeoville, IL 60446. Unless Borrower has designated otherwise in writing, the principal office is the office at which Borrower keeps its books and records including its records concerning the Collateral. Borrower
will notify Lender prior to any change in the location of Borrower’s state of organization or any change in Borrower’s name. Borrower shall do all things necessary to preserve and to keep in full force and effect its existence, rights and
privileges, and shall comply with all regulations, rules, ordinances, statutes, orders and decrees of any governmental or quasi-governmental authority or court applicable to Borrower and Borrower’s business activities. 

Assumed Business Names. Borrower has filed or recorded all documents or filings required by law relating to all assumed business names
used by Borrower. Excluding the name of Borrower, the following is a complete list of all assumed business names under which Borrower does business: None. 

Authorization. Borrower’s execution, delivery, and performance of this Agreement and all the Related Documents have been duly
authorized by all necessary action by Borrower, do not require the consent or approval of any other person, regulatory authority, or governmental body, and do not conflict with, result in a violation of, or constitute a default under (1) any
provision of (a) Borrower’s articles of incorporation or organization, or bylaws, or (b) any agreement or other instrument binding upon Borrower or (2) any law, governmental regulation, court decree, or order applicable to
Borrower or to Borrower’s properties. Borrower has the power and authority to enter into the Note and the Related Documents and to grant collateral as security for the Loan. Borrower has the further power and authority to own and to hold all of
Borrower’s assets and properties, and to carry on Borrower’s business as presently conducted. 
 Financial Information. Each
of Borrower’s financial statements supplied to Lender truly and completely disclosed Borrower’s financial condition as of the date of the statement, and there has been no material adverse change in Borrower’s financial condition
subsequent to the date of the most recent financial statement supplied to Lender. Borrower has no material contingent obligations except as disclosed in such financial statements. 

Legal Effect. This Agreement constitutes, and any instrument or agreement Borrower is required to give under this Agreement when
delivered will constitute legal, valid, and binding obligations of Borrower enforceable against Borrower in accordance with their respective terms. 

  










					
	BUSINESS LOAN AGREEMENT (ASSET BASED)
	Loan No: 880066269-3	 	(Continued)	 	Page 3

  
  

 
  

 Properties. Except as contemplated by this Agreement or as previously disclosed in
Borrower’s financial statements or in writing to Lender and as accepted by Lender, and except for property tax liens for taxes not presently due and payable, Borrower owns and has good title to all of Borrower’s properties free and clear
of all Security Interests, and has not executed any security documents or financing statements relating to such properties. All of Borrower’s properties are titled in Borrower’s legal name, and Borrower has not used or filed a financing
statement under any other name for at least the last five (5) years. 
 Hazardous Substances. Except as disclosed to and
acknowledged by Lender in writing, Borrower represents and warrants that: (1) During the period of Borrower’s ownership of the Collateral, there has been no use, generation, manufacture, storage, treatment, disposal, release or threatened
release of any Hazardous Substance by any person on, under, about or from any of the Collateral. (2) Borrower has no knowledge of, or reason to believe that there has been (a) any breach or violation of any Environmental Laws; (b) any
use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance on, under, about or from the Collateral by any prior owners or occupants of any of the Collateral; or (c) any actual or
threatened litigation or claims of any kind by any person relating to such matters. (3) Neither Borrower nor any tenant, contractor, agent or other authorized user of any of the Collateral shall use, generate, manufacture, store, treat, dispose
of or release any Hazardous Substance on, under, about or from any of the Collateral; and any such activity shall be conducted in compliance with all applicable federal, state, and local laws, regulations, and ordinances, including without
limitation all Environmental Laws. Borrower authorizes Lender and its agents to enter upon the Collateral to make such inspections and tests as Lender may deem appropriate to determine compliance of the Collateral with this section of the Agreement.
Any inspections or tests made by Lender shall be at Borrower’s expense and for Lender’s purposes only and shall not be construed to create any responsibility or liability on the part of Lender to Borrower or to any other person. The
representations and warranties contained herein are based on Borrower’s due diligence in investigating the Collateral for hazardous waste and Hazardous Substances. Borrower hereby (1) releases and waives any future claims against Lender
for indemnity or contribution in the event Borrower becomes liable for cleanup or other costs under any such laws, and (2) agrees to indemnify, defend, and hold harmless Lender against any and all claims, losses, liabilities, damages,
penalties, and expenses which Lender may directly or indirectly sustain or suffer resulting from a breach of this section of the Agreement or as a consequence of any use, generation, manufacture, storage, disposal, release or threatened release of a
hazardous waste or substance on the Collateral. The provisions of this section of the Agreement, including the obligation to indemnify and defend, shall survive the payment of the Indebtedness and the termination, expiration or satisfaction of this
Agreement and shall not be affected by Lender’s acquisition of any interest in any of the Collateral, whether by foreclosure or otherwise. 

Litigation and Claims. No litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid
taxes) against Borrower is pending or threatened, and no other event has occurred which may materially adversely affect Borrower’s financial condition or properties, other than litigation, claims, or other events, if any, that have been
disclosed to and acknowledged by Lender in writing. 
 Taxes. To the best of Borrower’s knowledge, all of Borrower’s tax
returns and reports that are or were required to be filed, have been filed, and all taxes, assessments and other governmental charges have been paid in full, except those presently being or to be contested by Borrower in good faith in the ordinary
course of business and for which adequate reserves have been provided. 
 Lien Priority. Unless otherwise previously disclosed to
Lender in writing, Borrower has not entered into or granted any Security Agreements, or permitted the filing or attachment of any Security Interests on or affecting any of the Collateral directly or indirectly securing repayment of Borrower’s
Loan and Note, that would be prior or that may in any way be superior to Lender’s Security Interests and rights in and to such Collateral. 

Binding Effect. This Agreement, the Note, all Security Agreements (if any), and all Related Documents are binding upon the signers
thereof, as well as upon their successors, representatives and assigns, and are legally enforceable in accordance with their respective terms. 

Commercial Purposes. Borrower intends to use the Loan proceeds solely for business or commercially related purposes. 

Employee Benefit Plans. Each employee benefit plan as to which Borrower may have any liability complies in all material respects with
all applicable requirements of law and regulations, and (1) no Reportable Event nor Prohibited Transaction (as defined in ERISA) has occurred with respect to any such plan, (2) Borrower has not withdrawn from any such plan or initiated
steps to do so, (3) no steps have been taken to terminate any such plan or to appoint a trustee to administer such a plan, and (4) there are no unfunded liabilities other than those previously disclosed to Lender in writing. 

Investment Company Act. Borrower is not an “investment company” or a company “controlled” by an “investment
company”, within the meaning of the Investment Company Act of 1940, as amended. 
 Public Utility Holding Company Act. Borrower
is not a “holding company”, or a “subsidiary company” of a “holding company”, or an “affiliate” of a “holding company” or of a “subsidiary company” of a “holding company”, within
the meaning of the Public Utility Holding Company Act of 1935, as amended. 
 Regulations T and U. Borrower is not engaged
principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulations T and U of the Board of Governors of the Federal Reserve System). 

Information. All information previously furnished or which is now being furnished by Borrower to Lender for the purposes of or in
connection with this Agreement or any transaction contemplated by this Agreement is, and all information furnished by or on behalf of Borrower to Lender in the future will be, true and accurate in every material respect on the date as of which such
information is dated or certified; and no such information is or will be incomplete by omitting to state any material fact the omission of which would cause the information to be misleading. 

Claims and Defenses. There are no defenses or counterclaims, offsets or other adverse claims, demands or actions of any kind, personal
or otherwise, that Borrower, any Grantor, or any Guarantor could assert with respect to the Note, Loan, this Agreement, or the Related Documents. 

AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, so long as this Agreement remains in effect, Borrower will: 

Repayment. Repay the Loan in accordance with its terms and the terms of this Agreement. 

Notices of Claims and Litigation. Promptly inform Lender in writing of (1) all material adverse changes in Borrower’s
financial condition, and (2) all existing and all threatened litigation, claims, investigations, administrative proceedings or similar actions affecting Borrower or any Guarantor which could materially affect the financial condition of Borrower
or the financial condition of any Guarantor. In addition, Borrower shall provide Lender with written notice of the occurrence of any Event of Default, the occurrence of any Reportable Event under, or the institution of steps by Borrower to withdraw
from, or the institution of any steps to terminate, any employee benefit plan as to which Borrower may have any liability. 

  










					
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 Financial Records. Maintain its books and records in accordance with GAAP, applied on
a consistent basis, and permit Lender to examine and audit Borrower’s books and records at all reasonable times. 
 Financial
Statements. Furnish Lender with the following: 
 Additional Requirements. 

 

	 	•	 	Interim Statements as requested 

  

	 	•	 	Quarterly Accounts Receivable Aging, within 15 Days. 

 All financial reports required to be
provided under this Agreement shall be prepared in accordance with GAAP, applied on a consistent basis, and certified by Borrower as being true and correct. 

Additional Information. Furnish such additional information and statements, as Lender may request from time to time. 

Financial Covenants and Ratios. Comply with the following covenants and ratios: 

Additional Requirements. 

1. Borrower must have $1 million in cash at LBTC on the borrowing date, inclusive of the borrowed amount 

2. The combination of cash plus 75% of eligible receivables will never drop below the 2x the borrowed amount during the term of any borrowing.

 3. The draw must be repaid in full within 5 days of the advance. 

4. Draws must only occur at the end/beginning of the quarter. (March, June, September, December). 

Except as provided above, all computations made to determine compliance with the requirements contained in this paragraph shall be made in
accordance with generally accepted accounting principles, applied on a consistent basis, and certified by Borrower as being true and correct. 

Insurance. Maintain fire and other risk insurance, public liability insurance, and such other insurance as Lender may require with
respect to Borrower’s properties and operations, in form, amounts, coverages and with insurance companies acceptable to Lender. Borrower, upon request of Lender, will deliver to Lender from time to time the policies or certificates of insurance
in form satisfactory to Lender, including stipulations that coverages will not be cancelled or diminished without at least thirty (30) days prior written notice to Lender. Each insurance policy also shall include an endorsement providing that
coverage in favor of Lender will not be impaired in any way by any act, omission or default of Borrower or any other person. In connection with all policies covering assets in which Lender holds or is offered a security interest for the Loans,
Borrower will provide Lender with such lender’s loss payable or other endorsements as Lender may require. 
 Insurance Reports.
Furnish to Lender, upon request of Lender, reports on each existing insurance policy showing such information as Lender may reasonably request, including without limitation the following: (1) the name of the insurer; (2) the risks insured;
(3) the amount of the policy; (4) the properties insured; (5) the then current property values on the basis of which insurance has been obtained, and the manner of determining those values; and (6) the expiration date of the
policy. In addition, upon request of Lender (however not more often than annually), Borrower will have an independent appraiser satisfactory to Lender determine, as applicable, the actual cash value or replacement cost of any Collateral. The cost of
such appraisal shall be paid by Borrower. 
 Other Agreements. Comply with all terms and conditions of all other agreements, whether
now or hereafter existing, between Borrower and any other party and notify Lender immediately in writing of any default in connection with any other such agreements. 

Loan Proceeds. Use all Loan proceeds solely for Borrower’s business operations, unless specifically consented to the contrary by
Lender in writing. 
 Taxes, Charges and Liens. Pay and discharge when due all of its indebtedness and obligations, including without
limitation all assessments, taxes, governmental charges, levies and liens, of every kind and nature, imposed upon Borrower or its properties, income, or profits, prior to the date on which penalties would attach, and all lawful claims that, if
unpaid, might become a lien or charge upon any of Borrower’s properties, income, or profits. Provided however, Borrower will not be required to pay and discharge any such assessment, tax, charge, levy, lien or claim so long as (1) the
legality of the same shall be contested in good faith by appropriate proceedings, and (2) Borrower shall have established on Borrower’s books adequate reserves with respect to such contested assessment, tax, charge, levy, lien, or claim in
accordance with GAAP. 
 Performance. Perform and comply, in a timely manner, with all terms, conditions, and provisions set forth in
this Agreement, in the Related Documents, and in all other instruments and agreements between Borrower and Lender, and in all other loan agreements now or in the future existing between Borrower and any other party. Borrower shall notify Lender
immediately in writing of any default in connection with any agreement. 
 Operations. Maintain executive and management personnel
with substantially the same qualifications and experience as the present executive and management personnel; provide written notice to Lender of any change in executive and management personnel; conduct its business affairs in a reasonable and
prudent manner. 
 Environmental Studies. Promptly conduct and complete, at Borrower’s expense, all such investigations, studies,
samplings and testings as may be requested by Lender or any governmental authority relative to any substance, or any waste or by-product of any substance defined as toxic or a hazardous substance under applicable federal, state, or local law, rule,
regulation, order or directive, at or affecting any property or any facility owned, leased or used by Borrower. 
 Compliance with
Governmental Requirements. Comply with all laws, ordinances, and regulations, now or hereafter in effect, of all governmental authorities applicable to the conduct of Borrower’s properties, businesses and operations, and to the use or
occupancy of the Collateral, including without limitation, the Americans With Disabilities Act. Borrower may contest in good faith any such law, ordinance, or regulation and withhold compliance during any proceeding, including appropriate appeals,
so long as Borrower has notified Lender in writing prior to doing so and so long as, in Lender’s sole opinion, Lender’s interests in the Collateral are not jeopardized. Lender may require Borrower to post adequate security or a surety
bond, reasonably satisfactory to Lender, to protect Lender’s interest. 
 Inspection. Permit employees or agents of Lender at any
reasonable time to inspect any and all Collateral for the Loan or Loans and Borrower’s other properties and to examine or audit Borrower’s books, accounts, and records and to make copies and memoranda of Borrower’s books, accounts,
and records. If Borrower now or at any time hereafter maintains any records (including without limitation computer generated records and computer software programs for the generation of such records) in the possession of a third party, Borrower,
upon request of Lender, shall notify such party to permit Lender free access to such records at all reasonable times and to provide Lender with copies of any records it may request, all at Borrower’s expense. 

Change of Location. Immediately notify Lender in writing of any additions to or changes in the location of Borrower’s businesses.


  










					
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 Title to Assets and Property. Maintain good and marketable title to all of
Borrower’s assets and properties. 
 Notice of Default, Litigation and ERISA Matters. Forthwith upon learning of the occurrence
of any of the following, Borrower shall provide Lender with written notice thereof, describing the same and the steps being taken by Borrower with respect thereto: (1) the occurrence of any Event of Default, or (2) the institution of, or
any adverse determination in, any litigation, arbitration proceeding or governmental proceeding, or (3) the occurrence of a Reportable Event under, or the institution of steps by Borrower to withdraw from, or the institution of any steps to
terminate, any employee benefit plan as to which Borrower may have any liability. 
 Other Information. From time to time Borrower
will provide Lender with such other information as Lender may reasonably request. 
 Employee Benefit Plans. So long as this Agreement
remains in effect, Borrower will maintain each employee benefit plan as to which Borrower may have any liability, in compliance with all applicable requirements of law and regulations. 

Compliance Certificates. Unless waived in writing by Lender, provide Lender at least annually, with a certificate executed by
Borrower’s chief financial officer, or other officer or person acceptable to Lender, certifying that the representations and warranties set forth in this Agreement are true and correct as of the date of the certificate and further certifying
that, as of the date of the certificate, no Event of Default exists under this Agreement. 
 Environmental Compliance and Reports.
Borrower shall comply in all respects with any and all Environmental Laws; not cause or permit to exist, as a result of an intentional or unintentional action or omission on Borrower’s part or on the part of any third party, on property owned
and/or occupied by Borrower, any environmental activity where damage may result to the environment, unless such environmental activity is pursuant to and in compliance with the conditions of a permit issued by the appropriate federal, state or local
governmental authorities; shall furnish to Lender promptly and in any event within thirty (30) days after receipt thereof a copy of any notice, summons, lien, citation, directive, letter or other communication from any governmental agency or
instrumentality concerning any intentional or unintentional action or omission on Borrower’s part in connection with any environmental activity whether or not there is damage to the environment and/or other natural resources. 

Additional Assurances. Make, execute and deliver to Lender such promissory notes, mortgages, deeds of trust, security agreements,
assignments, financing statements, instruments, documents and other agreements as Lender or its attorneys may reasonably request to evidence and secure the Loans and to perfect all Security Interests, 

LENDER’S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender’s interest in the Collateral or if
Borrower fails to comply with any provision of this Agreement or any Related Documents, including but not limited to Borrower’s failure to discharge or pay when due any amounts Borrower is required to discharge or pay under this Agreement or
any Related Documents, Lender on Borrower’s behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens, security interests, encumbrances and
other claims, at any time levied or placed on any Collateral and paying all costs for insuring, maintaining and preserving any Collateral. All such expenditures incurred or paid by Lender for such purposes will then bear interest at the rate charged
under the Note from the date incurred or paid by Lender to the date of repayment by Borrower. All such expenses will become a part of the Indebtedness and, at Lender’s option, will (A) be payable on demand; (B) be added to the balance
of the Note and be apportioned among and be payable with any installment payments to become due during either (1) the term of any applicable insurance policy; or (2) the remaining term of the Note; or (C) be treated as a balloon
payment which will be due and payable at the Note’s maturity. 
 CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower, whether under this Agreement or under any other agreement, Lender shall have no obligation to make Loan Advances or to disburse Loan proceeds if: (A) Borrower or any Guarantor is in default under the terms of this Agreement or any of
the Related Documents or any other agreement that Borrower or any Guarantor has with Lender; (B) Borrower or any Guarantor dies, becomes incompetent or becomes insolvent, files a petition in bankruptcy or similar proceedings, or is adjudged a
bankrupt; (C) there occurs a material adverse change in Borrower’s financial condition, in the financial condition of any Guarantor, or in the value of any Collateral securing any Loan; or (D) any Guarantor seeks, claims or otherwise
attempts to limit, modify or revoke such Guarantor’s guaranty of the Loan or any other loan with Lender; or (E) Lender in good faith deems itself insecure, even though no Event of Default shall have occurred. 

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. 
 DEFAULT.
Each of the following shall constitute an Event of Default under this Agreement: 
 Payment Default. Borrower fails to make any
payment when due under the Loan. 
 Other Defaults. Borrower fails to comply with or to perform any other term, obligation, covenant
or condition contained in this Agreement 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 or any Grantor’s property or Borrower’s or any Grantor’s ability to repay the Loans or perform their
respective obligations under this Agreement 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, or made by Guarantor, under this Agreement or the Related Documents in connection with the obtaining of the Loan evidenced by the Note or any security document directly
or indirectly securing repayment of the Note 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. 

Defective Collateralization. This Agreement or any of the Related Documents ceases to be in full force and effect (including failure of
any collateral document to create a valid and perfected security interest or lien) at any time and for any reason. 
 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 

  










					
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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. 
 Execution;
Attachment. Any execution or attachment is levied against the Collateral, and such execution or attachment is not set aside, discharged or stayed within thirty (30) days after the same is levied. 

Change in Zoning or Public Restriction. Any change in any zoning ordinance or regulation or any other public restriction is enacted,
adopted or implemented, that limits or defines the uses which may be made of the Collateral such that the present or intended use of the Collateral, as specified in the Related Documents, would be in violation of such zoning ordinance or regulation
or public restriction, as changed. 
 Default Under Other Lien Documents. A default occurs under any other mortgage, deed of trust or
security agreement covering all or any portion of the Collateral. 
 Judgment. Unless adequately covered by insurance in the opinion
of Lender, the entry of a final judgment for the payment of money involving more than ten thousand dollars ($10,000.00) against Borrower and the failure by Borrower to discharge the same, or cause it to be discharged, or bonded off to Lender’s
satisfaction, within thirty (30) days from the date of the order, decree or process under which or pursuant to which such judgment was entered. 

Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or any Guarantor
dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness. 
 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 the Loan is impaired. 

Insecurity. Lender in good faith believes itself insecure. 

Right to Cure. If any default, other than a default on Indebtedness, is curable and if Borrower or Grantor, as the case may be, has not
been given a notice of a similar default within the preceding twelve (12) months, it may be cured if Borrower or Grantor, as the case may be, after Lender sends written notice to Borrower or Grantor, as the case may be, demanding cure of such
default: (1) cure the default within fifteen (15) days; or (2) if the cure requires more than fifteen (15) days, immediately initiate steps which Lender deems in Lender’s sole discretion to be sufficient to cure the default
and thereafter continue and complete all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical. 
 EFFECT OF AN
EVENT OF DEFAULT. If any Event of Default shall occur, except where otherwise provided in this Agreement or the Related Documents, all commitments and obligations of Lender under this Agreement or the Related Documents or any other agreement
immediately will terminate (including any obligation to make further Loan Advances or disbursements), and, at Lender’s option, all Indebtedness immediately will become due and payable, all without notice of any kind to Borrower, except that in
the case of an Event of Default of the type described in the “Insolvency” subsection above, such acceleration shall be automatic and not optional. In addition, Lender shall have all the rights and remedies provided in the Related Documents
or available at law, in equity, or otherwise. Except as may be prohibited by applicable law, all of Lender’s rights and remedies shall be cumulative and may be exercised singularity or concurrently. Election by Lender to pursue any remedy shall
not exclude pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation of Borrower or of any Grantor shall not affect Lender’s right to declare a default and to exercise its rights and remedies.

 ADDITIONAL DOCUMENTS. Borrower shall provide Lender with the following additional documents: 

Corporate Resolution. Borrower has provided or will provide Lender with a certified copy of resolutions properly adopted by
Borrower’s Board of Directors, and certified by Borrower’s corporate secretary, assistant secretary, or other authorized officer, under which Borrower’s Board of Directors authorized one or more designated officers or employees to
execute this Agreement, the Note and any and all Security Agreements directly or indirectly securing repayment of the same, and to consummate the borrowings and other transactions as contemplated under this Agreement, and to consent to the remedies
following any default by Borrower as provided in this Agreement and in any Security Agreements. 
 Opinion of Counsel. When required
by Lender, Borrower has provided or will provide Lender with an opinion of Borrower’s counsel certifying to and that: (1) Borrower’s Note, any Security Agreements and this Agreement constitute valid and binding obligations on
Borrower’s part that are enforceable in accordance with their respective terms; (2) Borrower is validly existing and in good standing; (3) Borrower has authority to enter into this Agreement and to consummate the transactions
contemplated under this Agreement; and (4) such other matters as may have been requested by Lender or by Lender’s counsel. 
 MISCELLANEOUS
PROVISIONS. The following miscellaneous provisions are a part of this Agreement: 
 Amendments. This Agreement, together with any
Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writing and signed by the party or
parties sought to be charged or bound by the alteration or amendment. 
 Attorneys’ Fees; Expenses. Borrower agrees to pay upon
demand all of Lender’s costs and expenses, including Lender’s attorneys’ fees and Lender’s legal expenses, incurred in connection with the enforcement of this Agreement. Lender may hire or pay someone else to help enforce this
Agreement, and Borrower shall pay the costs and expenses of such enforcement. Costs and expenses include Lender’s attorneys’ fees and legal expenses whether or not there is a lawsuit, including attorneys’ fees and legal expenses for
bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services. Borrower also shall pay all court costs and such additional fees as may be directed by
the court. 
 Borrower Information. Borrower consents to the release of information on or about Borrower by Lender in accordance with
any court order, law or regulation and in response to credit inquiries concerning Borrower. 
 Caption Headings. Caption headings in
this Agreement are for convenience purposes only and are not to be used to interpret or define the provisions of this Agreement. 

Consent to Loan Participation. Borrower agrees and consents to Lender’s sale or transfer, whether now or later, of one or more
participation interests in the Loan to one or more purchasers, whether related or unrelated to Lender. Lender may provide, without any limitation whatsoever, to any one or more purchasers, or potential purchasers, any information or knowledge Lender
may have about Borrower or about any other matter relating to the Loan, and Borrower hereby waives any rights to privacy Borrower may have with respect to such matters. Borrower additionally waives any and all notices of sale of participation
interests, as well as all notices of any repurchase of such participation interests. Borrower also agrees that the purchasers of any such participation interests will be considered as the absolute owners of such interests in the Loan and will have
all the rights granted under the participation agreement or agreements governing the sale of such participation interests. Borrower further waives all rights of offset or counterclaim that it may have now or later


  










					
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against Lender or against any purchaser of such a participation interest and unconditionally agrees that either Lender or such purchaser may enforce Borrower’s obligation under the Loan
irrespective of the failure or insolvency of any holder of any interest in the Loan. Borrower further agrees that the purchaser of any such participation interests may enforce its interests irrespective of any personal claims or defenses that
Borrower may have against Lender. 
 Governing Law. This Agreement 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 Agreement has been accepted by Lender in the State of Illinois. 

Non-Liability of Lender. The relationship between Borrower and Lender created by this Agreement is strictly a debtor and creditor
relationship and not fiduciary in nature, nor is the relationship to be construed as creating any partnership or joint venture between Lender and Borrower. Borrower is exercising Borrower’s own judgment with respect to Borrower’s business.
All information supplied to Lender is for Lender’s protection only and no other party is entitled to rely on such information. There is no duty for Lender to review, inspect, supervise or inform Borrower of any matter with respect to
Borrower’s business. Lender and Borrower intend that Lender may reasonably rely on all information supplied by Borrower to Lender, together with all representations and warranties given by Borrower to Lender, without investigation or
confirmation by Lender and that any investigation or failure to investigate will not diminish Lender’s right to so rely. 
 Notice of
Lender’s Breach. Borrower must notify Lender in writing of any breach of this Agreement or the Related Documents by Lender and any other claim, cause of action or offset against Lender within thirty (30) days after the occurrence of
such breach or after the accrual of such claim, cause of action or offset. Borrower waives any claim, cause of action or offset for which notice is not given in accordance with this paragraph. Lender is entitled to rely on any failure to give such
notice. 
 Indemnification of Lender. Borrower agrees to indemnify, to defend and to save and hold Lender harmless from any and all
claims, suits, obligations, damages, losses, costs and expenses (including, without limitation, Lender’s attorneys’ fees), demands, liabilities, penalties, fines and forfeitures of any nature whatsoever that may be asserted against or
incurred by Lender, its officers, directors, employees, and agents arising out of, relating to, or in any manner occasioned by this Agreement and the exercise of the rights and remedies granted Lender under this, as well as by: (1) the
ownership, use, operation, construction, renovation, demolition, preservation, management, repair, condition, or maintenance of any part of the Collateral; (2) the exercise of any of Borrower’s rights collaterally assigned and pledged to
Lender hereunder; (3) any failure of Borrower to perform any of its obligations hereunder; and/or (4) any failure of Borrower to comply with the environmental and ERISA obligations, representations and warranties set forth herein. The
foregoing indemnity provisions shall survive the cancellation of this Agreement as to all matters arising or accruing prior to such cancellation and the foregoing indemnity shall survive in the event that Lender elects to exercise any of the
remedies as provided under this Agreement following default hereunder. Borrower’s indemnity obligations under this section shall not in any way be affected by the presence or absence of covering insurance, or by the amount of such insurance or
by the failure or refusal of any insurance carrier to perform any obligation on its part under any insurance policy or policies affecting the Collateral and/or Borrower’s business activities. Should any claim, action or proceeding be made or
brought against Lender by reason of any event as to which Borrower’s indemnification obligations apply, then, upon Lender’s demand, Borrower, at its sole cost and expense, shall defend such claim, action or proceeding in Borrower’s
name, if necessary, by the attorneys for Borrower’s insurance carrier (if such claim, action or proceeding is covered by insurance), or otherwise by such attorneys as Lender shall approve. Lender may also engage its own attorneys at its
reasonable discretion to defend Borrower and to assist in its defense and Borrower agrees to pay the fees and disbursements of such attorneys. 

Counterparts. This Agreement may be executed in multiple counterparts, each of which, when so executed, shall be deemed an original, but
all such counterparts, taken together, shall constitute one and the same Agreement. 
 No Waiver by Lender. Lender shall not be deemed
to have waived any rights under this Agreement unless such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by
Lender of a provision of this Agreement shall not prejudice or constitute a waiver of Lender’s right otherwise to demand strict compliance with that provision or any other provision of this Agreement. No prior waiver by Lender, nor any course
of dealing between Lender and Borrower, or between Lender and any Grantor, shall constitute a waiver of any of Lender’s rights or of any of Borrower’s or any Grantor’s obligations as to any future transactions. Whenever the consent of
Lender is required under this Agreement, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld
in the sole discretion of Lender. 
 Notices. Any notice required to be given under this Agreement shall be given in writing, and
shall be effective when actually delivered, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, if mailed, when deposited in the United States mail, as first
class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Agreement. Any party may change its address for notices under this Agreement by giving formal written notice to the other parties,
specifying that the purpose of the notice is to change the party’s address. For notice purposes, Borrower agrees to keep Lender informed at all times of Borrower’s current address. Unless otherwise provided or required by law, if there is
more than one Borrower, any notice given by Lender to any Borrower is deemed to be notice given to all Borrowers. 
 Severability. If
a court of competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to any circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other
circumstance. If feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending provision cannot be so modified, it shall be considered deleted from this Agreement. Unless otherwise
required by law, the illegality, invalidity, or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any other provision of this Agreement. 

Sole Discretion of Lender. Whenever Lender’s consent or approval is required under this Agreement, the decision as to whether or
not to consent or approve shall be in the sole and exclusive discretion of Lender and Lender’s decision shall be final and conclusive. 

Subsidiaries and Affiliates of Borrower. To the extent the context of any provisions of this Agreement makes it appropriate, including
without limitation any representation, warranty or covenant, the word “Borrower” as used in this Agreement shall include all of Borrower’s subsidiaries and affiliates. Notwithstanding the foregoing however, under no circumstances
shall this Agreement be construed to require Lender to make any Loan or other financial accommodation to any of Borrower’s subsidiaries or affiliates. 

Successors and Assigns. All covenants and agreements by or on behalf of Borrower contained in this Agreement or any Related Documents
shall bind Borrower’s successors and assigns and shall inure to the benefit of Lender and its successors and assigns. Borrower shall not, however, have the right to assign Borrower’s rights under this Agreement or any interest therein,
without the prior written consent of Lender. 
 Survival of Representations and Warranties. Borrower understands and agrees that in
extending Loan Advances, Lender is relying on all representations, warranties, and covenants made by Borrower in this Agreement or in any certificate or other instrument delivered by Borrower to Lender under this Agreement or the Related Documents.
Borrower further agrees that regardless of any investigation made by Lender, all such representations, warranties and covenants will survive the extension of Loan Advances and delivery to Lender of the


  










					
	BUSINESS LOAN AGREEMENT (ASSET BASED)
	Loan No: 880066269-3	 	(Continued)	 	Page 8

  
  

 
  

 
Related Documents, shall be continuing in nature, shall be deemed made and redated by Borrower at the time each Loan Advance is made, and shall remain in full force and effect until such time as
Borrower’s Indebtedness shall be paid in full, or until this Agreement shall be terminated in the manner provided above, whichever is the last to occur. 

Time is of the Essence. Time is of the essence in the performance of this Agreement. 

Waive Jury. All parties to this Agreement hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by any
party against any other party. 
 DEFINITIONS. The following capitalized words and terms shall have the following meanings when used in this
Agreement. Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shall include the plural, and the plural shall include
the singular, as the context may require. Words and terms not otherwise defined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code. Accounting words and terms not otherwise defined in this Agreement
shall have the meanings assigned to them in accordance with generally accepted accounting principles as in effect on the date of this Agreement: 

Account. The word “Account” means a trade account, account receivable, other receivable, or other right to payment for goods
sold or services rendered owing to Borrower (or to a third party grantor acceptable to Lender). 
 Account Debtor. The words
“Account Debtor” mean the person or entity obligated upon an Account. 
 Advance. The word “Advance” means a
disbursement of Loan funds made, or to be made, to Borrower or on Borrower’s behalf under the terms and conditions of this Agreement. 

Agreement. The word “Agreement” means this Business Loan Agreement (Asset Based), as this Business Loan Agreement (Asset
Based) may be amended or modified from time to time, together with all exhibits and schedules attached to this Business Loan Agreement (Asset Based) from time to time. 

Borrower. The word “Borrower” means Nanophase Technologies Corporation and includes all co-signers and co-makers signing the
Note and all their successors and assigns. 
 Borrowing Base. The words “Borrowing Base” mean, as determined by Lender from
time to time, the lesser of (1) $300,000.00 or (2) 75.000% of the aggregate amount of Eligible Accounts. 

Business Day. The words “Business Day” mean a day on which commercial banks are open in the State of Illinois. 

Collateral. The word “Collateral” means all property and assets granted as collateral security for a Loan, whether real or
personal property, whether granted directly or indirectly, whether granted now or in the future, and whether granted in the form of a security interest, mortgage, collateral mortgage, deed of trust, assignment, pledge, crop pledge, chattel mortgage,
collateral chattel mortgage, chattel trust, factor’s lien, equipment trust, conditional sale, trust receipt, lien, charge, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien
interest whatsoever, whether created by law, contract, or otherwise. The word Collateral also includes without limitation all collateral described in the Collateral section of this Agreement. 

Eligible Accounts. The words “Eligible Accounts” mean at any time, all of Borrower’s Accounts which contain selling terms
and conditions acceptable to Lender. The net amount of any Eligible Account against which Borrower may borrow shall exclude all returns, discounts, credits, and offsets of any nature. Unless otherwise agreed to by Lender in writing, Eligible
Accounts do not include: 
 (1) Accounts with respect to which the Account Debtor is employee or agent of Borrower. 

(2) Accounts with respect to which the Account Debtor is a subsidiary of, or affiliated with Borrower or its shareholders, officers, or
directors. 
 (3) Accounts with respect to which goods are placed on consignment, guaranteed sale, or other terms by reason of which the
payment by the Account Debtor may be conditional. 
 (4) Accounts with respect to which Borrower is or may become liable to the Account
Debtor for goods sold or services rendered by the Account Debtor to Borrower. 
 (5) Accounts which are subject to dispute, counterclaim, or
setoff. 
 (6) Accounts with respect to which the goods have not been shipped or delivered, or the services have not been rendered, to the
Account Debtor. 
 (7) Accounts with respect to which Lender, in its sole discretion, deems the creditworthiness or financial condition of
the Account Debtor to be unsatisfactory. 
 (8) Accounts of any Account Debtor who has filed or has had filed against it a petition in
bankruptcy or an application for relief under any provision of any state or federal bankruptcy, insolvency, or debtor-in-relief acts; or who has had appointed a trustee, custodian, or receiver for the assets of such Account Debtor; or who has made
an assignment for the benefit of creditors or has become insolvent or fails generally to pay its debts (including its payrolls) as such debts become due. 

(9) Accounts which have not been paid in full within 90 days from the invoice date. The entire balance of any Account of any single
Account Debtor will be ineligible whenever the portion of the Account which has not been paid within 90 days from the invoice date is in excess of 25.000% of the total amount outstanding on the Account. 

Environmental Laws. The words “Environmental Laws” mean any and all state, federal and local statutes, regulations and
ordinances relating to the protection of human health or the environment, including without limitation the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq.
(“CERCLA”), the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 (“SARA”), the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource Conservation and Recovery Act,
42 U.S.C. Section 6901, et seq., or other applicable state or federal laws, rules, or regulations adopted pursuant thereto. 

ERISA. The word “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and including
all regulations and published interpretations of the act. 
 Event of Default. The words “Event of Default” mean
individually, collectively, and interchangeably any of the events of default set forth in this Agreement in the default section of this Agreement. 

Expiration Date. The words “Expiration Date” mean the date of termination of Lender’s commitment to lend under this
Agreement. 
 GAAP. The word “GAAP” means generally accepted accounting principles. 

  










					
	BUSINESS LOAN AGREEMENT (ASSET BASED)
	Loan No: 880066269-3	 	(Continued)	 	Page 9

  
  

 
  

 Grantor. The word “Grantor” means each and all of the persons or entities
granting a Security Interest in any Collateral for the Loan, including without limitation all Borrowers granting such a Security Interest. 

Guarantor. The word “Guarantor” means any guarantor, surety, or accommodation party of any or all of the Loan, and, in each
case, Borrower’s successors, assigns, heirs, personal representatives, executors and administrators of any guarantor, surety, or accommodation party. 

Guaranty. The word “Guaranty” means the guaranty from Guarantor to Lender, including without limitation a guaranty of all or
part of the Note. 
 Hazardous Substances. The words “Hazardous Substances” mean materials that, because of their quantity,
concentration or physical, chemical or infectious characteristics, may cause or pose a present or potential hazard to human health or the environment when improperly used, treated, stored, disposed of, generated, manufactured, transported or
otherwise handled. The words “Hazardous Substances” are used in their very broadest sense and include without limitation any and all hazardous or toxic substances, materials or waste as defined by or listed under the Environmental Laws.
The term “Hazardous Substances” also includes, without limitation, petroleum and petroleum by-products or any fraction thereof and asbestos. 

Indebtedness. The word “Indebtedness” means the indebtedness evidenced by the Note or Related Documents, including all
principal and interest together with all other indebtedness and costs and expenses for which Borrower is responsible under this Agreement or under any of the Related Documents. 

Lender. The word “Lender” means Libertyville Bank and Trust Company, its successors and assigns. 

Loan. The word “Loan” means any and all loans and financial accommodations from Lender to Borrower whether now or hereafter
existing, and however evidenced, including without limitation those loans and financial accommodations described herein or described on any exhibit or schedule attached to this Agreement from time to time, and further including any and all
subsequent amendments, additions, substitutions, renewals and refinancings of any of Borrower’s Loans. 
 Note. The word
“Note” means Original Promissory Note dated March 04, 2015, in the original principal amount of $300,000.00, from Grantor to Lender, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of,
and substitutions for the promissory note or agreement. 
 Primary Credit Facility. The words “Primary Credit Facility” mean
the credit facility described in the Line of Credit section of this Agreement. 
 Related Documents. The words “Related
Documents” mean all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and
documents, whether now or hereafter existing, executed in connection with the Loan. 
 Security Agreement. The words “Security
Agreement” mean and include without limitation any agreements, promises, covenants, arrangements, understandings or other agreements, whether created by law, contract, or otherwise, evidencing, governing, representing, or creating a Security
Interest. 
 Security Interest. The words “Security Interest” mean, individually, collectively, and interchangeably, without
limitation, any and all types of collateral security, present and future, whether in the form of a lien, charge, encumbrance, mortgage, deed of trust, security deed, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage,
chattel trust, factor’s lien, equipment trust, conditional sale, trust receipt, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever whether created by law,
contract, or otherwise. 
 BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN AGREEMENT (ASSET BASED) AND BORROWER AGREES TO ITS
TERMS. THIS BUSINESS LOAN AGREEMENT (ASSET BASED) IS DATED APRIL 13, 2015. 
 BORROWER: 

 

			
	NANOPHASE TECHNOLOGIES CORPORATION
		
	By:	 	 /s/ Frank Cesario

		 	Frank Cesario, Chief Financial Officer of Nanophase Technologies Corporation
	
	LENDER:
	
	LIBERTYVILLE BANK AND TRUST COMPANY
		
	By:	 	 /s/ J. Bert Carstens

		 	Authorized Signer


  
   

 
  

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