Document:

Nanophase Technologies Corporation 10-Q

 

 Exhibit
4.3

NEITHER
THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT. 

THIS
NOTE DOES NOT REQUIRE PHYSICAL SURRENDER OF THE NOTE IN THE EVENT OF A PARTIAL REDEMPTION OR CONVERSION. AS A RESULT, FOLLOWING
ANY REDEMPTION OR CONVERSION OF ANY PORTION OF THIS NOTE, THE OUTSTANDING PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE MAY BE LESS
THAN THE PRINCIPAL AMOUNT AND ACCRUED INTEREST SET FORTH BELOW.

2%
SECOND SECURED CONVERTIBLE NOTE DUE MAY 15, 2024

OF

NANOPHASE
TECHNOLOGIES CORPORATION

	Note
    No.:  2019-1	Original
    Principal Amount: $2,000,000.00
	Issuance
    Date:  November 20, 2019	Evanston,
    Illinois

 

For
Value Received, NANOPHASE TECHNOLOGIES CORPORATION,
a Delaware corporation (the “Company”) hereby promises to pay
to the order of BRADFORD T. WHITMORE or its registered assigns or successors-in-interest (“Holder”)
the principal sum of TWO MILLION U.S. DOLLARS (U.S. $2,000,000.00) together with all accrued but unpaid interest thereon, if any,
on May 15, 2024 (“Maturity Date”), to the extent such principal amount and interest has not been converted
into the Company’s Common Stock, $0.01 par value per share (the “Common Stock”), in accordance with the
terms hereof. Interest on the unpaid principal balance hereof shall accrue at the rate of 2% per annum from the original date
of issuance, November 20, 2019 (the “Issuance Date”). Notwithstanding anything contained herein, this Note
shall bear interest on the due and unpaid Principal Amount from and after the occurrence and during the continuance of an Event
of Default pursuant to Section 5(a), at the rate (the “Default Rate”) equal to the lower of twelve percent
(12%) per annum or the highest rate permitted by law. Unless otherwise agreed or required by applicable law, payments will be
applied first to any unpaid collection costs, then to unpaid interest and fees (including late charges, if applicable) and any
remaining amount to principal.

Except
as otherwise provided herein, all payments of principal and interest (including late charges, if applicable) on this Note shall
be made in lawful money of the United States of America by wire transfer of immediately available funds to such account as the
Holder may from time to time designate by written notice in accordance with the provisions of this Note or by Company check. This
Note may not be prepaid in whole or in part except as otherwise provided herein. Whenever any amount expressed to be due by the
terms of this Note is due on any day which is not a Business Day (as defined below), the same shall instead be due on the next
succeeding day which is a Business Day.

    	 	 	 

    	 

    

 

Capitalized
terms used herein and not otherwise defined shall have the meanings set forth in the Securities Purchase Agreement dated on or
about the Issuance Date pursuant to which the Notes were originally issued (the “Purchase Agreement”). For
purposes hereof the following terms shall have the meanings ascribed to them below:

“Business
Day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the City of Chicago
are authorized or required by law or executive order to remain closed.

“Certificate
Amendment” shall have the meaning set forth in the Purchase Agreement.

“Change
in Control Transaction” means (a) the disposition by the Company of all or substantially all of its assets, whether
in one transaction or in a series of related transactions, to an unaffiliated buyer for value and (b) any sale by the Company
of its stock or of instruments or securities convertible into or exchangeable for its stock, or any merger, consolidation, conversion
or reorganization of the Company, in one transaction or in a series of related transactions pursuant to which the persons owning
the right to receive distributions and dividends declared and paid on the Company’s stock (including any holders of instruments
and securities convertible into or exchangeable for the Company’s stock which are entitled pursuant to their terms to participate
in such distributions and dividends) immediately before such transaction or series of related transactions own less than half
of the right to receive such distributions and dividends immediately after such transaction or series of related transactions.

“Conversion
Ratio” means, at any time, a fraction, of which the numerator is the entire outstanding Principal Amount of this
Note (or such portion thereof that is being redeemed or repurchased), and of which the denominator is the then applicable Conversion
Price.

“Conversion
Price” shall equal USD 0.20 (which Conversion Price shall be subject to adjustment as set forth herein).

“Conversion
Shares” means the shares of Common Stock into which the Notes are convertible (including repayment in Common Stock
as set forth herein) in accordance with the terms hereof and the Purchase Agreement.

“Convertible
Securities” means any convertible securities, warrants, options or other rights to subscribe for or to purchase
or exchange for, shares of Common Stock.

“CSPA”
means the Common Stock Purchase Agreement, dated as May 13, 2019 between the Company and Holder, as amended from time to time.

“Debt”
shall mean indebtedness of any kind.

“Effective
Date” means the date on which a Registration Statement covering all the Conversion Shares and other Registrable
Securities (as defined in the CSPA) is declared effective by the Securities and Exchange Commission.

“Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended.

    	 	2	 

    	 

    

 

“Market
Price” shall equal the average of the VWAP for each of the twenty (20) Trading Days, excluding the five (5) highest
Trading Days (i.e. the Trading Days with the highest VWAP) from the average, immediately preceding the date on which such Market
Price is being determined.

“Principal
Amount” shall refer to the sum of (i) the original principal amount of this Note, (ii) all accrued but unpaid interest
hereunder, and (iii) any default payments owing under the Transaction Documents but not previously paid or added to the Principal
Amount.

“Principal
Market” shall mean the OTCQB trading marketplace or such other principal market or exchange on which the Common
Stock is then listed for trading.

“Registration
Statement” shall have the meaning set forth in the Purchase Agreement.

“Securities
Act” shall mean the Securities Act of 1933, as amended.

“Trading
Day” shall mean (x) if the Common Stock is listed on the New York Stock Exchange, the American Stock Exchange or
Nasdaq Stock Market, a day on which there is trading on such stock exchange, or (y) if the foregoing provisions are inapplicable,
a day on which quotations are reported by OTC Markets Group.

“VWAP”
shall mean the daily volume weighted average price of the Common Stock on the Principal Market as reported by Bloomberg Financial
L.P. (based on a trading day from 9:30 a.m. Eastern Time to 4:00 p.m. Eastern Time) using the AQR function on the date in question.

The
following terms and conditions shall apply to this Note:

Section
1. 

Payments
of Principal and Interest. 

(a)       

Interest.
This Note shall accrue interest monthly (commencing on the Issuance Date) at a rate of 2% per annum. Interest shall be paid semi-annually
on 15th day of May and November each year commencing on May 15, 2020 until this note is paid in full, or such earlier
date upon acceleration or by conversion or redemption in accordance with the terms hereof or of the other Transaction Documents.

(b)       

Payment
of Principal. Subject to the provisions hereof, the Principal Amount of this Note shall be due and payable in cash on the
Maturity Date. The Company shall have no right to prepay the Principal Amount of this Note.

Section
2. 

Seniority.
The obligations of the Company hereunder (a) shall rank junior to the Company’s Notes governed by the Business Loan Agreement,
dated as of November 16, 2018, by and among the Company and the Beachcorp, LLC, as amended from time to time (the “Beachcorp
Loan Agreement”), (b) are secured by liens which are junior to the liens securing the Company’s Promissory Note,
originally dated March 4, 2018, payable to the order of Libertyville Bank and Trust Company, as amended by that certain Change
in Terms Agreement, dated March 4, 2019 (as so amended and as it may be hereafter amended, modified, extended or refinanced from
time to time), and (c) shall be senior to the Company’s unsecured indebtedness.

    	 	3	 

    	 

    

 

Section
3. 

Conversion.

(a)       

Conversion
by Holder. Subject to the terms hereof and restrictions and limitations contained herein, and provided that the Company has
filed the Certificate Amendment as provided for in the Purchase Agreement, the Holder shall have the right, at such Holder’s
option, at any time and from time to time to convert the outstanding Principal Amount under this Note in whole or in part by delivering
to the Company a fully executed notice of conversion in the form of conversion notice attached hereto as Exhibit A (the
“Conversion Notice”), which may be transmitted by facsimile or email (with the original mailed on the same
day be certified or registered mail, postage prepaid and return receipt requested or via overnight courier), on the date of conversion
(the “Conversion Date”). A Conversion Notice shall be deemed sent on the date of delivery if delivered before
5:00 p.m. Central Time on such date, or the day following such date if delivered after 5:00 p.m. Central Time. In the event
that the Certificate Amendment has not been properly approved and filed on or before 5:00pm (Central Time) on December 31, 2019,
the entire principal balance of this Note and all other unpaid amounts accrued hereunder, shall become immediately due and payable
and the Company shall immediately pay to the Holder an amount equal to 105% of the outstanding Principal Amount of the Notes held
by the Holder (plus all accrued and unpaid interest, if any).

(b)       

Conversion
Date Procedures. Upon conversion of this Note pursuant to this Section 3, the outstanding Principal Amount hereunder shall
be converted into such number of fully paid, validly issued and non-assessable shares of Common Stock, free of any liens, claims
and encumbrances, as is determined by dividing the outstanding Principal Amount (and, at the election of the Holder, any accrued
interest or applicable late charges) being converted by the then applicable Conversion Price. If a conversion under this Note
cannot be effected in full for any reason, or if the Holder is converting less than all of the outstanding Principal Amount hereunder
pursuant to a Conversion Notice, the Company shall, upon request by the Holder, promptly deliver to the Holder (but no later than
five Trading Days after the Conversion Date) a Note for such outstanding Principal Amount (and, at the election of the Holder,
any accrued interest or applicable late charges) as has not been converted if this Note has been surrendered to the Company for
partial conversion. The Holder shall not be required to physically surrender this Note to the Company upon any conversion hereunder
unless the full outstanding Principal Amount (and, at the election of the Holder, any accrued interest or applicable late charges)
represented by this Note is being converted or repaid. The Holder and the Company shall maintain records showing the outstanding
Principal Amount (and, at the election of the Holder, any accrued interest or applicable late charges) so converted and repaid
and the dates of such conversions or repayments or shall use such other method, reasonably satisfactory to the Holder and the
Company, so as not to require physical surrender of this Note upon each such conversion or repayment.

(i)       

Stock
Certificates or DWAC. The Company will deliver to the Holder not later than three (3) Trading Days after the Conversion Date,
a certificate or certificates which shall be free of restrictive legends and trading restrictions (assuming that the Registration
Statement has been declared effective), representing the number of shares of Common Stock being acquired upon the conversion of
this Note. In lieu of delivering physical certificates representing the shares of Common Stock issuable upon conversion of this
Note, provided the Company’s transfer agent is participating in the Depository Trust Company (“DTC”)
Fast Automated Securities Transfer (“FAST”) program, upon request of the Holder, the Company shall use commercially
reasonable efforts to cause its transfer agent to electronically transmit such shares issuable upon conversion to the Holder (or
its designee), by crediting the account of the Holder’s (or such designee’s) prime broker with DTC through its Deposit
Withdrawal Agent Commission system (provided that the same time periods herein as for stock certificates shall apply). If in the
case of any conversion hereunder, such certificate or certificates are not delivered to or as directed by the Holder by the third
Trading Day after the Conversion Date, the Holder shall be entitled by written notice to the Company at any time on or before
its receipt of such certificate or certificates thereafter, to rescind such conversion, in which event the Company shall immediately
return this Note tendered for conversion.

    	 	4	 

    	 

    

 

(c)       

Conversion
Price Adjustments.

(i)       

Stock
Dividends and Splits. If the Company or any of its subsidiaries, at any time while the Notes are outstanding (A) shall pay
a stock dividend or otherwise make a distribution or distributions on any equity securities (including instruments or securities
convertible into or exchangeable for such equity securities) in shares of Common Stock, or (B) subdivide outstanding Common Stock
into a larger number of shares, then each Affected Conversion Price (as defined below) shall be multiplied by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding before such event and the denominator of which shall
be the number of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this Section 3(c)(i) shall
become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or
distribution and shall become effective immediately after the effective date in the case of a subdivision.

As
used herein, the Affected Conversion Prices (each an “Affected Conversion Price”) shall refer to: (i) the Conversion
Price; (ii) each reported daily closing price of the Common Stock on the Principal Market occurring on any Trading Day included
in the period used for determining the Market Price, the Conversion Price, and applicability of the restriction in Section 3(f),
as the case may be, which Trading Day occurred before the record date in the case of events referred to in clause (A) of this
Section 3(c)(i) and before the effective date in the case of the events referred to in clause (B) of this Section 3(c)(i).

(ii)       

Distributions.
If the Company or any of its subsidiaries, at any time while the Notes are outstanding, shall distribute to all holders of Common
Stock evidences of its indebtedness or assets or cash or rights or warrants to subscribe for or purchase any security of the Company
or any of its subsidiaries (excluding those referred to in Section 3(c)(i) above), then concurrently with such distributions to
holders of Common Stock, the Company shall distribute to holders of the Notes the amount of such indebtedness, assets, cash or
rights or warrants which lower of: (A) the Conversion Price or (B) the holders of Notes would have received had all their Notes
been converted into Common Stock at the then applicable Market Price immediately prior to the record date for such distribution.

(iii)       

Rounding
of Adjustments. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share,
as the case may be.

(iv)       

Notice
of Adjustments. Whenever any Affected Conversion Price is adjusted pursuant to Section 3(c)(ii) above, the Company shall promptly
deliver to each holder of the Notes, a notice setting forth the Affected Conversion Price after such adjustment and setting forth
a brief statement of the facts requiring such adjustment, provided that any failure to so provide such notice shall not affect
the automatic adjustment hereunder.

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(v)       

Change
in Control Transactions. In case of any Change in Control Transaction, the Holder shall have the right thereafter to, at its
option, require the Company or its successor to redeem this Note, in whole or in part, at a redemption price equal to 105% of
the outstanding Principal Amount (plus any accrued interest or applicable late charges) being redeemed. This provision shall similarly
apply to successive reclassifications, consolidations, mergers, sales, transfers or share exchanges.

(vi)       

Notice
of Certain Events. If:

		A.	the Company shall declare a dividend (or any other distribution) on its Common Stock; or
	 	 	 
		B.	the
Company shall declare a special nonrecurring cash dividend on or a redemption of its Common Stock; or
	 	 	 
		C.	the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights; or
	 	 	 
		D.	the
approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock of the
Company, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the
assets of the Company, of any compulsory share of exchange whereby the Common Stock is converted into other securities, cash or
property; or
	 	 	 
		E.	the
Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company;

then
the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of this Note, and shall
cause to be mailed to the Holder at its last address as it shall appear upon the books of the Company, on or prior to the date
notice to the Company’s stockholders generally is given, a notice stating (x) the date on which a record is to be taken
for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as
of which the holders of Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants
are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is
expected to become effective or close, and the date as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange.

    	 	6	 

    	 

    

 

(d)       

Reservation
and Issuance of Underlying Securities. The Company covenants that it will at all times following the filing of the Certificate
Amendment, reserve and keep available out of its authorized and unissued Common Stock solely for the purpose of issuance upon
conversion of this Note (including repayments in stock), free from preemptive rights or any other actual contingent purchase rights
of persons other than the holders of the Notes, not less than such number of shares of Common Stock as shall (subject to any additional
requirements of the Company as to reservation of such shares set forth in the Purchase Agreement) be issuable (taking into account
the adjustments under this Section 3 but without regard to any ownership limitations contained herein) upon the conversion of
this Note hereunder in Common Stock (including repayments in stock). The Company covenants that all shares of Common Stock that
shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid, nonassessable and, assuming that the Registration
Statement has been declared effective, freely tradeable.

(e)       

No
Fractions. Upon a conversion hereunder the Company shall not be required to issue stock certificates representing fractions
of shares of Common Stock, but may if otherwise permitted, make a cash payment in respect of any final fraction of a share based
on the closing price of a share of Common Stock at such time. If the Company elects not, or is unable, to make such cash payment,
the Holder shall be entitled to receive, in lieu of the final fraction of a share, one whole share of Common Stock.

(f)       

Charges,
Taxes and Expenses. Issuance of certificates for shares of Common Stock upon the conversion of this Note (including repayment
in stock) shall be made without charge to the holder hereof for any issue or transfer tax or other incidental expense in respect
of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall
be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however,
that in the event certificates for shares of Common Stock are to be issued in a name other than the name of the Holder, this Note
when surrendered for conversion shall be accompanied by an assignment form; and provided further, that the Company shall
not be required to pay any tax or taxes which may be payable in respect of any such transfer.

(g)       

Cancellation.
After all of the Principal Amount (including accrued but unpaid interest and default payments (including any applicable late charges)
at any time owed on this Note) have been paid in full or converted into Common Stock, this Note shall automatically be deemed
canceled and the Holder shall promptly surrender the Note to the Company at the Company’s principal executive offices.

(h)       

Notices
Procedures. Any and all notices or other communications or deliveries to be provided by the Holder hereunder, including, without
limitation, any Conversion Notice, shall be in writing and delivered personally, by confirmed facsimile or email, or by a nationally
recognized overnight courier service to the Company at the email, facsimile, telephone number or address of the principal place
of business of the Company as set forth in the Purchase Agreement. Any and all notices or other communications or deliveries to
be provided by the Company hereunder shall be in writing and delivered personally, by facsimile, or by a nationally recognized
overnight courier service addressed to the Holder at the facsimile telephone number or address of the Holder appearing on the
books of the Company, or if no such facsimile telephone number or address appears, at the principal place of business of the Holder.
Any notice or other communication or deliveries hereunder shall be deemed delivered (i) upon receipt, when delivered personally,
(ii) when sent by facsimile, upon receipt if received on a Business Day prior to 5:00 p.m. (Central Time), or on the first Business
Day following such receipt if received on a Business Day after 5:00 p.m. (Central Time) or (iii) upon receipt, when deposited
with a nationally recognized overnight courier service.

    	 	7	 

    	 

    

 

Section
4. 

Defaults
and Remedies.

(a)       

Events
of Default.  An “Event of Default” is: (i) a default in the payment of any Principal Amount of the
Notes; (ii) default under the Beachcorp Loan Agreement, (iii) failure by the Company for ten (10) days after notice to it, to
comply with any provision of the Purchase Agreement or any of the Registration Rights provisions of the CSPA; (iv) an Event
of Default under the Security Agreement; (v) a material breach by the Company of its representations or warranties in the
Purchase Agreement; (vi) any event of default under or acceleration prior to maturity of any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed
by the Company or a subsidiary of the Company or for money borrowed the repayment of which is guaranteed by the Company or a
subsidiary of the Company, whether such indebtedness or guarantee now exists or shall be created hereafter, provided that the
obligations with respect to any such borrowed or accelerated amount exceeds, in the aggregate, $100,000; (vii) any money
judgment, writ or warrant of attachment, or similar process in excess of $100,000 in the aggregate shall be entered or filed
against the Company or a subsidiary of the Company or any of their respective properties or other assets and shall remain
unpaid, unvacated, unbonded and unstayed for a period of 30 days; (viii) if the Company or any subsidiary of the Company
pursuant to or within the meaning of any Bankruptcy Law: (A) commences a voluntary case; (B) has an involuntary case
commenced against it, and such case is not dismissed within 45 days of such commencement or consents to the entry of an order
for relief against it in an involuntary case; (C) consents to the appointment of a Custodian of it for all or substantially
all of its property; (D) makes a general assignment for the benefit of its creditors; or (E) admits in writing that it is
generally unable to pay its debts as the same become due; (ix) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that: (1) is for relief against the Company in an involuntary case; (2) appoints a Custodian of the
Company or for all or substantially all of its property; or (3) orders the liquidation of the Company or any subsidiary, and
the order or decree remains unstayed and in effect for forty-five (45) days; or (x) the Company fails to approve and file the
Certificate Amendment on or before December 31, 2019. The terms “Bankruptcy Law” means Title 11, U.S.
Code, or any similar federal or state law for the relief of debtors. The term “Custodian” means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.

(b)       

Remedies.
If an Event of Default occurs and is continuing with respect to this Note, the Holder may declare all of the then outstanding
Principal Amount of this Note, including any interest due thereon, to be due and payable immediately, except that in the case
of an Event of Default arising from events described in clauses (vii), (viii) and (x) of Section 4(a), this Note shall become
due and payable without further action or notice. In the event of an acceleration under clause (x) of Section 4(a), the amount
due and owing to the Holder shall be 105% of the outstanding Principal Amount of the Notes held by the Holder (plus all accrued
and unpaid interest, if any). In either case the Company shall pay interest on such amount in cash at the Default Rate to the
Holder if such amount is not paid within seven days of Holder’s request. The remedies under this Note shall be cumulative.

Section
5. 

Purchase
Agreement; Security Agreement; CSPA. This Note is being issued to the Holder in connection with the Purchase Agreement
and is entitled to the benefits thereof. The Company’s obligations under this Note are also secured, pursuant to the terms
of the Security Agreement by all the assets of the Company and SOLÉSENCE, LLC, a Delaware limited liability company (“Grantor”).
The Conversion Shares are entitled to registration pursuant to the Registration Rights provisions of the CSPA which is amended
by the Purchase Agreement.

    	 	8	 

    	 

    

 

Section
6. 

General.

(a)       

Payment
of Expenses. The Company agrees to pay all reasonable charges and expenses, including attorneys’ fees and expenses,
which may be incurred by the Holder in successfully enforcing this Note and/or collecting any amount due under this Note.

(b)       

Savings
Clause. In case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise
invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum
extent possible, and the validity and enforceability of the remaining provisions of this Note will not in any way be affected
or impaired thereby. In no event shall the amount of interest paid hereunder exceed the maximum rate of interest on the unpaid
principal balance hereof allowable by applicable law. If any sum is collected in excess of the applicable maximum rate, the excess
collected shall be applied to reduce the principal debt. If the interest actually collected hereunder is still in excess of the
applicable maximum rate, the interest rate shall be reduced so as not to exceed the maximum allowable under law.

(c)       

Amendment.
Neither this Note nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed
by the Company and holders of 75% of the Principal Amount of all Notes.

(d)       

Assignment,
Etc. The Holder may assign or transfer this Note to any transferee. The Holder shall notify the Company of any such assignment
or transfer promptly. This Note shall be binding upon the Company and its successors and shall inure to the benefit of the Holder
and its successors and permitted assigns.

(e)       

No
Waiver. No failure on the part of the Holder to exercise, and no delay in exercising any right, remedy or power hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise by the Holder of any right, remedy or power hereunder
preclude any other or future exercise of any other right, remedy or power. Each and every right, remedy or power hereby granted
to the Holder or allowed it by law or other agreement shall be cumulative and not exclusive of any other, and may be exercised
by the Holder from time to time.

(f)       

Governing
Law; Jurisdiction.

(i)       

Governing
Law. THIS NOTE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS WITHOUT REGARD TO ANY
CONFLICTS OF LAWS PROVISIONS THEREOF THAT WOULD OTHERWISE REQUIRE THE APPLICATION OF THE LAW OF ANY OTHER JURISDICTION.

(ii)       

Jurisdiction.
The Company irrevocably submits to the exclusive jurisdiction of any State or Federal Court sitting in the State of Illinois,
County of Cook, over any suit, action, or proceeding arising out of or relating to this Note. The Company irrevocably waives,
to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such
suit, action, or proceeding brought in such a court and any claim that suit, action, or proceeding has been brought in an inconvenient
forum.

    	 	9	 

    	 

    

 

The
Company agrees that the service of process upon it mailed by certified or registered mail, postage prepaid and return receipt
requested (and service so made shall be deemed complete three days after the same has been posted as aforesaid) or by personal
service shall be deemed in every respect effective service of process upon it in any such suit or proceeding. Nothing herein shall
affect Holder’s right to serve process in any other manner permitted by law. The Company agrees that a final non-appealable
judgment in any such suit or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on such judgment
or in any other lawful manner.

(iii)       

No
Jury Trial. The COMPANY hereBY
knowingly and voluntarily waives any and all rights it may have to a trial by jury with respect to any litigation based on, or
arising out of, under, or in connection with, this Note.

(g)       

Replacement
Notes. This Note may be exchanged by Holder at any time and from time to time for a Note or Notes with different denominations
representing an equal aggregate outstanding Principal Amount, as reasonably requested by Holder, upon surrendering the same. No
service charge will be made for such registration or exchange. In the event that Holder notifies the Company that this Note has
been lost, stolen or destroyed, a replacement Note identical in all respects to the original Note (except for registration number
and Principal Amount, if different than that shown on the original Note), shall be issued to the Holder, provided that the Holder
executes and delivers to the Company an agreement reasonably satisfactory to the Company to indemnify the Company from any loss
incurred by it in connection with the Note.

 

[Signature
Page Follows]

 

 

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IN
WITNESS WHEREOF, the Company has caused this Note to be duly executed on November 20, 2019.

	 	NANOPHASE
    TECHNOLOGIES CORPORATION, a Delaware corporation
	 	 
	 	By:	 
	 	Name: 	 
	 	Title: 	 
	 	 

 

Attest:

 

	Sign:	 	 
	 	Print Name:

 

 

    	 	11	 

    	 

    

 

EXHIBIT
A

FORM
OF CONVERSION NOTICE

(To
be Executed by the Holder in order to Convert a Note)

 

The
undersigned hereby elects to convert the aggregate outstanding Principal Amount (as defined in the Note) indicated below of this
Note into shares of Common Stock, $0.01 par value per share (the “Common Stock”), of NANOPHASE TECHNOLOGIES CORPORATION,
a Delaware corporation (the “Company”) according to the conditions hereof, as of the date written below. If shares
are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance
therewith. No fee will be charged to the holder for any conversion, except for such transfer taxes, if any.

	Conversion
    information:	 
	 	Date
    to Effect Conversion
	 	 
	 	 
	 	Aggregate
    Principal Amount of Note Being Converted
	 	 
	 	 
	 	Aggregate
    Interest (plus any applicable late charges) Being Converted
	 	 
	 	 
	 	Number
    of shares of Common Stock to be Issued
	 	 
	 	 
	 	Applicable
    Conversion Price
	 	 
	 	 
	 	Signature
    
	 	 
	 	 
	 	Name
	 	 
	 	 
	 	Addressex_164836.htm

Exhibit 10.4

 

 

August 16, 2019

 

 

KemPharm, Inc.

1180 Celebration Boulevard, Suite 103

Celebration, FL 34747

 

Re:       Amendment to Facility Agreement

 

Ladies and Gentlemen:

 

Reference is hereby made to that certain Facility Agreement, dated as of June 2, 2014 (as the same may have been previously or in the future be amended, modified, restated or otherwise supplemented from time to time, the “Facility Agreement”), by and between KemPharm, Inc., a Delaware corporation (the “Company”), and Deerfield Private Design Fund III, L.P. (the “Lender”). Capitalized terms used herein which are defined in the Facility Agreement, unless otherwise defined herein, shall have the meanings ascribed to them in the Facility Agreement. The Company and the Lender desire to amend the Facility Agreement on the terms set forth in this letter agreement (this “Letter”).

 

The Facility Agreement obligated the Company to pay to the Lender (i) $3,333,333.33 of the outstanding principal amount of the Senior Secured Convertible Note (the “2019 Principal Payment”) and (ii) accrued and unpaid interest on the entire principal amount of the Senior Secured Convertible Note (the “June 2019 Interest Payment”), in each case, on June 3, 2019. The Company and the Lender entered into letter agreements, dated as of June 3, 2019, June 17, 2019, June 24, 2019, June 28, 2019, July 15, 2019, July 31, 2019, and August 9, 2019, which extended the due date for the June 2019 Principal Payment and the June 2019 Interest Payment from June 3, 2019 to June 17, 2019, June 24, 2019, June 28, 2019, July 12, 2019, July 31, 2019, August 9, 2019, and August 16, 2019, respectively. Effective upon the execution and delivery of this Letter by the Company and the Lender, the Facility Agreement is hereby amended to provide that the due date for payment of the 2019 Principal Payment and the June 2019 Interest Payment shall be extended from the date hereof to August 23, 2019; provided, that the foregoing shall not limit the rights of the Lender under Section 5.4 or Section 5.5 of the Facility Agreement.

 

Except as expressly set forth herein, (i) the Facility Agreement and the other Transaction Documents remain unchanged and in full force and effect, (ii) this Letter shall not be deemed to be a waiver, amendment or modification of, or consent to or departure from, any provision of the Facility Agreement or any other Transaction Document or to be a waiver of any Default or Event of Default under the Facility Agreement or any other Transaction Document, whether arising before or after the date hereof or as a result of the transactions contemplated hereby, and (iii) this Letter shall not preclude the future exercise of any right, remedy, power or privilege available to the Lender, whether under the Facility Agreement, any other Transaction Document or otherwise, and shall not be construed or deemed to be a satisfaction, novation, cure, modification, amendment or release of the Obligations, the Facility Agreement or any other Transaction Document (or any other liability or obligation thereunder) or establish a course of conduct with respect to future requests for amendments, modifications or consents.

 

 

Page 2

 

The Company hereby reaffirms, confirms and ratifies its obligations and liabilities set forth in the Facility Agreement and the other Transaction Documents, all of which shall remain in full force and effect, as modified by this Letter.

 

This Letter (i) is a Transaction Document and constitutes the entire understanding of the parties with respect to the subject matter hereof, and any other prior or contemporaneous agreements, whether written or oral, with respect thereto are expressly superseded hereby, and (ii) shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto. This Letter may be executed in counterparts (which taken together shall constitute one and the same instrument) and by facsimile or other electronic transmission, which facsimile or other electronic signatures shall be considered original executed counterparts.

 

This Letter, and disputes concerning the interpretation, enforceability, performance, breach, termination or validity of all or any portion of this Letter, shall be governed by the laws of the State of New York without giving effect to any laws, rules or provisions that would cause the application of the laws of any jurisdiction other than the State of New York.

 

[Signature pages follow]

 

- 2 -

 

 

 

Very truly yours,

 

DEERFIELD PRIVATE DESIGN FUND III, L.P.

 

By: Deerfield Mgmt III, L.P., its General Partner

By: J.E. Flynn Capital III, LLC, its General Partner

 

By:       /s/ David Clark           

Name: David Clark

Title:   Authorized Signatory

 

 

 

 

 

Acknowledged and Agreed To

as of the date set forth above

 

KEMPHARM, INC.

 

By:       /s/ R. LaDuane Clifton     

Name: R. LaDuane Clifton

Title:   CFO

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