Document:

EXHIBIT 10.2

 

 

	LOAN NUMBER	LOAN NAME	ACCT. NUMBER	AGREEMENT DATE	INITIALS
	 	 	 	 	 
	2312374	Axion Recycled Plastics	 	11/15/13	CAO
	 	Incorporated	 	 	 
	 	 	 	 	 
	NOTE AMOUNT	INDEX (w/Margin)	RATE	MATURITY DATE	LOAN PURPOSE
	 	 	 	 	 
	$3,500,000.00	Not Applicable	4.250%	11/15/18	Commercial
	 	 	 	 	 
	 	 	Creditor Use Only	 	 

 

COMMERCIAL LOAN AGREEMENT

Single Advance Loan

 

 

DATE AND PARTIES. The date of this Commercial Loan Agreement
(Agreement) is November 15, 2013. The parties and their addresses are as follows:

 

LENDER:

THE COMMUNITY BANK

113 N Fifth Street

Suite 101

Zanesville, OH 43701

 

BORROWER:

AXION RECYCLED PLASTICS INCORPORATED

an Ohio Corporation

4005 All American Way

Zanesville, OH 43701

 

1.  DEFINITIONS. For the purposes
of this Agreement, the following terms have the following meanings.

 

A. Accounting Terms. In
this Agreement, any accounting terms that are not specifically defined will have their customary meanings under generally accepted
accounting principles.

 

B. Insiders. Insiders include
those defined as insiders by the United States Bankruptcy Code, as amended; or to the extent left undefined, include without limitation
any officer, employee, stockholder or member, director, partner, or any immediate family member of any of the foregoing, or any
person or entity which, directly or indirectly, controls, is controlled by or is under common control with me.

 

C. Loan. The Loan refers
to this transaction generally, including obligations and duties arising from the terms of all documents prepared or submitted for
this transaction.

 

D. Loan Documents. Loan
Documents refer to all the documents executed as a part of or in connection with the Loan.

 

E. Pronouns. The pronouns
"I", "me" and "my" refer to every Borrower signing this Agreement, individually and together with
their heirs, successors and assigns, and each other person or legal entity (including guarantors, endorsers, and sureties) who
agrees to pay this Agreement. "You" and "your" refers to the Loan's lender, any participants or syndicators,
successors and assigns, or any person or company that acquires an interest in the Loan.

 

F. Property. Property is
any property, real, personal or intangible, that secures my performance of the obligations of this Loan.

 

2.  SINGLE ADVANCE. In accordance
with the terms of this Agreement and other Loan Documents, you will provide me with a term note in the amount of $3,500,000.00
(Principal). I will receive the funds from this Loan in one advance. No additional advances are contemplated, except those made
to protect and preserve your interests as provided in this Agreement or other Loan Documents.

 

3.  MATURITY DATE. I agree to fully
repay the Loan by November 15, 2018.

 

4.  EXTENSION. The Loan will be extended
for two one year periods, subject to the following conditions.

 

A. In Compliance. No default exists under this Agreement
or the other Loan Documents.

 

B. Additional Extension Term. Extension
requests must be submitted in writing by the Borrower. The Borrower must also remit a payment of $400,000 principal, plus all outstanding
accrued interest, in conjunction with each extension. During each extension period, the Borrower will continue to make monthly
interest payments at the rate of 4.25%. All outstanding principal and interest will be due and payable at final maturity.

 

5.  WARRANTIES AND REPRESENTATIONS. I
make to you the following warranties and representations which will continue as long as this Loan is in effect, except when this
Agreement provides otherwise.

 

A. Power. I am duly organized, and validly existing and
in good standing in all jurisdictions in which I operate. I have the power and authority to enter into this transaction and to
carry on my business or activity as it is now being conducted and, as applicable, am qualified to do so in each jurisdiction in
which I operate.

 

B. Authority. The execution, delivery and performance
of this Loan and the obligation evidenced by the Note are within my powers, have been duly authorized, have received all necessary
governmental approval, will not violate any provision of law, or order of court or governmental agency, and will not violate any
agreement to which I am a party or to which I am or any of my property is subject.

 

C. Name and Place of Business. Other than previously
disclosed in writing to you I have not changed my name or principal place of business within the last 10 years and have not used
any other trade or fictitious name. Without your prior written consent, I do not and will not use any other name and will preserve
my existing name, trade names and franchises.

 

	Axion Recycled Plastics Incorporated	 	 
	Ohio Commercial Loan Agreement	 	Initials ______
	OH/4XXCHRISO00000000000665015N	Wolters Kluwer Financial Services ©1996, 2013 Bankers SystemsTM	Page 1

 

 

    	 

    	 

    

 

D.  Hazardous Substances. Except
as I previously disclosed in writing and you acknowledge in writing, no Hazardous Substance, underground tanks, private dumps or
open wells are currently located at, on, in, under or about the Property.

 

E.  Use of Property. After diligent
inquiry, I do not know or have reason to know that any Hazardous Substance has been discharged, leached or disposed of, in violation
of any Environmental Law, from the Property onto, over or into any other property, or from any other property onto, over or into
the property.

 

F.  Environmental Laws. I have no
knowledge or reason to believe that there is any pending or threatened investigation, claim, judgment or order, violation, lien,
or other notice under any Environmental Law that concerns me or the Property. The Property and any activities with respect to the
Property are in full compliance with all Environmental Law.

 

G.  Loan Purpose. The purpose of
this Loan is to purchase equipment and other business assets.

 

H. No Other Liens. I own all the
Property. I have good and marketable title to all the Property. All of the Property is free and clear of all liens, security interests,
and monetary encumbrances, except those to you and the Ohio Department of Development, or those you consent to in writing.

 

I. Compliance With Laws. I am not
violating any laws, regulations, rules, orders, judgments or decrees applicable to me or the Property, except for those which I
am challenging in good faith through proper proceedings after providing adequate reserves to fully pay the claim and its challenge
should I lose.

 

J. Legal Dispute. There are no pending
or threatened lawsuits, arbitrations or other proceedings against the Property or against me and affecting the Property, that singly
or together may materially and adversely affect my property, operations, financial condition, or business.

 

K. Adverse Agreements. I am not
a party to, nor am I bound by, any agreement that is now or is likely to be adverse to the Property.

 

L. Other Claims. There are no outstanding
claims or rights that would conflict with the execution, delivery or performance by me of the terms and conditions of this Agreement
or the other Loan Documents. No outstanding claims or rights exist that may result in a lien on the Property, the Property's proceeds
and the proceeds of proceeds, except liens that would be junior to your lien.

 

M. Solvency. I am able to pay my
debts as they mature, my assets exceed my liabilities and I have sufficient capital for my current and planned business and other
activities. I will not become insolvent by the execution or performance of this Loan.

 

6.  FINANCIAL STATEMENTS. I will
prepare and maintain my financial records using consistently applied generally accepted accounting principles then in effect. I
will provide you with financial information in a form that you accept and under the following terms.

 

A. Certification. I represent and
warrant that any financial statements that I provide you fairly represents my financial condition for the stated periods, is current,
complete, true and accurate in all material respects, includes all of my direct or contingent liabilities and there has been no
material adverse change in my financial condition, operations or business since the date the financial information was prepared.

 

B. Frequency. In addition to the
financial statements provided to you prior to closing, I will provide you with current financial statements on an annual basis,
or as otherwise requested by you, until I have performed all of my obligations under the Loan and you terminate the Loan in writing.

 

C. SEC Reports. I will provide you
with true and correct copies of all reports, notices or statements that I provide to the Securities and Exchange Commission, any
securities exchange or my stockholders, owners, or the holders of any material indebtedness as soon as available or at least within
15 days after issuance.

 

D. Requested Information. I will
provide you with any other information about my operations, financial affairs and condition within 10 days after your request.

 

7. COVENANTS. Until the Loan and
all related debts, liabilities and obligations are paid and discharged, I will comply with the following terms, unless you waive
compliance in writing.

 

A. Participation. I consent to you
participating or syndicating the Loan and sharing any information that you decide is necessary about me and the Loan with the other
participants or syndicators.

 

B. Inspection. Following your written
request, you may conduct an inspection at your expense of my records, business or the Property that secures the Loan. Upon reasonable
notice, I will permit you or your agents to enter any of my premises and any location where my Property is located during regular
business hours to do the following.

 

(1) You may inspect, audit, check,
review and obtain copies from my books, records, journals, orders, receipts, and any correspondence and other business related
data.

 

(2) You may discuss my affairs,
finances and business with anyone who provides you with evidence that they are a creditor of mine, the sufficiency of which will
be subject to your sole discretion.

 

(3) You may inspect the Property,
audit for the use and disposition of the Property's proceeds and proceeds of proceeds; or do whatever you decide is necessary to
preserve and protect the Property and your interest in the Property.

 

After prior notice to me, you may discuss
my financial condition and business operations with my independent accountants, if any, or my chief financial officer and I may
be present during these discussions. As long as the Loan is outstanding, I will direct all of my accountants and auditors to permit
you to examine my records in their possession and to make copies of these records. You will use your best efforts to maintain the
confidentiality of the information you or your agents obtain, except you may provide your regulator, if any, with required information
about my financial condition, operation and business or that of my parent, subsidiaries or affiliates.

 

C. Business Requirements. I will
preserve and maintain my present existence and good standing in the jurisdiction where I am organized and all of my rights, privileges
and franchises. I will do all that is needed or required to continue my business or activities as presently conducted, by obtaining
licenses, permits and bonds everywhere I engage in business or activities or own, lease or locate my property. I will obtain your
prior written consent before I cease my business or before I engage in any new line of business that is materially different from
my present business.

 

D. Compliance with Laws. I will
not violate any laws, regulations, rules, orders, judgments or decrees applicable to me or the Property, except for those which
I challenge in good faith through proper proceedings after providing adequate reserves to fully pay the claim and its appeal should
I lose. Laws include without limitation the Federal Fair Labor Standards Act requirements for producing goods, the federal Employee
Retirement Income Security Act of 1974's requirements for the establishment, funding and management of qualified deferred compensation
plans for employees, health and safety laws, environmental laws, tax laws, licensing and permit laws. On your request, I will provide
you with written evidence that I have fully and timely paid my taxes, assessments and other governmental charges levied or imposed
on me, my income or profits and my property. Taxes include without limitation sales taxes, use taxes, personal property taxes,
documentary stamp taxes, recordation taxes, franchise taxes, income taxes, withholding taxes, FICA taxes and unemployment taxes.
I will adequately provide for the payment of these taxes, assessments and other charges that have accrued but are not yet due and
payable.

 

E. New Organizations. I will obtain
your written consent, which shall not be unreasonably withheld or delayed, before organizing, merging into, or consolidating with
an entity; acquiring all or substantially all the assets of another; materially changing the legal structure, management, ownership
or financial condition; or effecting or entering into a domestication, conversion or interest exchange.

 

	Axion Recycled Plastics Incorporated	 	 
	Ohio Commercial Loan Agreement	 	Initials ______
	OH/4XXCHRISO00000000000665015N	Wolters Kluwer Financial Services ©1996, 2013 Bankers SystemsTM	Page 2

 

 

    	 

    	 

    

 

F. Other Debts. I will pay when
due any and all other debts owed or guaranteed by me and will faithfully perform, or comply with all the conditions and obligations
imposed on me concerning the debt or guaranty.

 

G. Notice to You. I will promptly
notify you of any material change in my financial condition, of the occurrence of a default under the terms of this Agreement or
any other Loan Document, or a default by me under any agreement between me and any third party which materially and adversely affects
my property, operations, financial condition or business.

 

H. Certification of No Default. On
your request, my chief financial officer or my independent accountant will provide you with a written certification that to the
best of their knowledge no event of default exists under the terms of this Agreement or the other Loan Documents, and that there
exists no other action, condition or event which with the giving of notice or lapse of time or both would constitute a default.
As requested, my chief financial officer or my independent accountant will also provide you with computations demonstrating compliance
with any financial covenants and ratios contained in this Agreement. If an action, condition or event of default does exist, the
certificate must accurately and fully disclose the extent and nature of this action, condition or event and state what must be
done to correct it.

 

I. Use of Loan Proceeds. I will
not permit the loan proceeds to be used to purchase, carry, reduce, or retire any loan originally incurred to purchase or carry
any margin stock or otherwise cause the Loan to violate Federal Reserve Board Regulations U or X, or Section 8 of the Securities
and Exchange Act of 1934 and its regulations, as amended.

 

J. Dispose of No Assets. Without
your prior written consent, which consent shall not be unreasonably withheld, or as the Loan Documents permit, I will not sell,
lease, assign, transfer, dispose of or otherwise distribute all or substantially all of my assets to any person other than in the
ordinary course of business for the assets' depreciated book value or more.

 

K. No Other Liens. I will not create,
permit or suffer any lien or encumbrance upon any of the Property for or by anyone, other than you, and the existing lien of the
Ohio Department of Development, except for: nonconsensual liens imposed by law arising out of the ordinary course of business on
obligations that are not overdue or which I am contesting in good faith after making appropriate reserves; valid purchase money
security interests on personal property; or any other liens specifically agreed to by you in writing.

 

L. Legal Disputes. I will promptly
notify you in writing of any threatened or pending lawsuit, arbitration or other proceeding against me or any of the Property,
not identified in my financial statements, or that singly or together with other proceedings may materially and adversely affect
my assets, operations, financial condition or business. I will use my best efforts to bring about a favorable and speedy result
of any of these lawsuits, arbitrations or other proceedings.

 

M. Other Notices. I will immediately
provide you with any information that may materially and adversely affect my ability to perform this Agreement and of its anticipated
effect.

 

O. No Change in Capital. I will
not release, redeem, retire, purchase or otherwise acquire, directly or indirectly, any of my capital stock or other equity security
or partnership interest, or make any change in my capital structure, except to the extent required by any agreements signed prior
to this Agreement and disclosed to you or with your prior written consent.

 

P. Loan Obligations. I will make
full and timely payment of all principal and interest obligations, and comply with the other terms and agreements contained in
this Agreement and in the other Loan Documents.

 

Q. Insurance. I will obtain and
maintain insurance with insurers, in amounts and coverages that are reasonably acceptable to you and customary with industry practice.
This may include without limitation insurance policies for public liability, fire, hazard and extended risk, workers compensation,
and, at your request, business interruption and/or rent loss insurance. At your request, I will deliver to you certified copies
of all of these insurance policies, binders or certificates. I will obtain and maintain a mortgagee clause (or lender loss payable
clause) endorsement - naming you as the loss payee on the Property. If you require, I will also obtain an "additional insured"
endorsement - naming you as an additional insured. I will immediately notify you of cancellation or termination of insurance. I
will require all insurance policies to provide you with at least 10 days prior written notice to you of cancellation or modification.
I consent to you using or disclosing information relative to any contract of insurance required by the Loan for the purpose of
replacing this insurance. I also authorize my insurer and you to exchange all relevant information related to any contract of insurance
required by any document executed as part of this Loan.

 

R. Property Maintenance. I will
keep all tangible and intangible property that I consider necessary or useful in my business in good working condition by making
all needed repairs, replacements and improvements and by making all rental, lease or other payments due on this property.

 

S. Property Loss. I will immediately
notify you, and the insurance company when appropriate, of any material casualty, loss or depreciation to the Property or to my
other assets that affects my business.

 

T. Additional Taxes. I
will pay all filing and recording costs and fees, but not taxes, that are required to be paid with respect to this Loan and any
Loan Documents.

 

8. DEFAULT. I will be in default
if any of the following events (known separately and collectively as an Event of Default) occur:

 

A. Payments. I fail to make a payment
in full when due after a 10 day notice and grace period.

 

B. Insolvency or Bankruptcy. The
death, dissolution or insolvency of, appointment of a receiver by or on behalf of, application of any debtor relief law, the assignment
for the benefit of creditors by or on behalf of, the voluntary or involuntary termination of existence by, or the commencement
of any proceeding under any present or future federal or state insolvency, bankruptcy, reorganization, composition or debtor relief
law by or against me or any co-signer, endorser, surety or guarantor of this Agreement or any other obligations I have with you.

 

C. Business Termination. I merge,
dissolve, reorganize, end my business or existence, or a partner or majority owner dies or is declared legally incompetent.

 

D. Failure to Perform. I fail to
perform any condition or to keep any promise or covenant of this Agreement which is not cured within 30 days after written notice.

 

E. Other Documents. A default occurs
under the terms of any other Loan Document which is not cured within 30 days after written notice.

 

F. Other Agreements. I am in default
on any other debt or agreement I have with you which is not cured within 30 days after written notice.

 

G. Misrepresentation. I make any
verbal or written statement or provide any financial information that is untrue, inaccurate, or conceals a material fact at the
time it is made or provided.

 

H. Judgment. I fail to satisfy or
appeal any judgment against me that could adversely affect your secured rights in the Property.

 

I. Forfeiture. The Property is used
in a manner or for a purpose that threatens confiscation by a legal authority.

 

J. Name Change. I change my name
or assume an additional name without notifying you before making such a change.

 

K. Property Transfer. I transfer
all or a substantial part of my money or assets.

 

L. Material Change. Without first
notifying you, there is a material change in my business, including ownership, management, and financial conditions.

 

	Axion Recycled Plastics Incorporated	 	 
	Ohio Commercial Loan Agreement	 	Initials ______
	OH/4XXCHRISO00000000000665015N	Wolters Kluwer Financial Services ©1996, 2013 Bankers SystemsTM	Page 3

 

 

    	 

    	 

    

 

M. Insecurity. You determine in
good faith that a material adverse change has occurred in my financial condition from the conditions set forth in my most recent
financial statement before the date of this Agreement or that the prospect for payment or performance of the Loan is materially
impaired for any reason.

 

9. REMEDIES. After I default, you
may at your option do any one or more of the following.

 

A. Acceleration. You may make all
or any part of the amount owing by the terms of the Loan immediately due. If I am a debtor in a bankruptcy petition or in an application
filed under section 5(a)(3) of the Securities Investor Protection Act, the Loan is automatically accelerated and immediately due
and payable without notice or demand upon filing of the petition or application.

 

B. Sources. You may use any and
all remedies you have under state or federal law or in any Loan Document.

 

C. Insurance Benefits. You may make
a claim for any and all insurance benefits or refunds that may be available on my default.

 

D. Payments Made On My Behalf. Amounts
advanced on my behalf will be immediately due and may be added to the balance owing under the terms of the Loan, and accrue interest
at the post-maturity interest rate of 8%.

 

E. Set-Off. You may use the right
of set-off. This means you may set-off any amount due and payable under the terms of the Loan against any right I have to receive
money from you.

 

My right to receive money from you includes
any deposit or share account balance I have with you; any money owed to me on an item presented to you or in your possession for
collection or exchange; and any repurchase agreement or other non-deposit obligation. "Any amount due and payable under the
terms of the Loan" means the total amount to which you are entitled to demand payment under the terms of the Loan at the time
you set-off.

 

Subject to any other written contract,
if my right to receive money from you is also owned by someone who has not agreed to pay the Loan, your right of set-off will apply
to my interest in the obligation and to any other amounts I could withdraw on my sole request or endorsement.

 

Your right of set-off does
not apply to an account or other obligation where my rights arise only in a representative capacity. It also does not apply
to any Individual Retirement Account or other tax-deferred retirement account.

 

You will not be liable for the dishonor
of any check when the dishonor occurs because you set-off against any of my accounts. I agree to hold you harmless from any such
claims arising as a result of your exercise of your right of set-off.

 

F. Waiver. Except as otherwise required
by law, by choosing any one or more of these remedies you do not give up your right to use any other remedy. You do not waive a
default if you choose not to use a remedy. By electing not to use any remedy, you do not waive your right to later consider the
event a default and to use any remedies if the default continues or occurs again.

 

10. COLLECTION EXPENSES AND ATTORNEYS'
FEES. On or after the occurrence of an Event of Default, to the extent permitted by law, I agree to pay all reasonable expenses
of collection, enforcement or protection of your rights and remedies under this Agreement or any other Loan Document. Expenses
include (unless prohibited by law) reasonable attorneys' fees, court costs, and other legal expenses. These expenses are due and
payable immediately. If not paid immediately, these expenses will bear interest from the date of payment until paid in full at
the highest interest rate in effect as provided for in the terms of this Loan. All fees and expenses will be secured by the Property
I have granted to you, if any. In addition, to the extent permitted by the United States Bankruptcy Code, I agree to pay the reasonable
attorneys' fees incurred by you to protect your rights and interests in connection with any bankruptcy proceedings initiated by
or against me.

 

11. APPLICABLE LAW. This Agreement
is governed by the laws of Ohio, the United States of America, and to the extent required, by the laws of the jurisdiction where
the Property is located, except to the extent such state laws are preempted by federal law. In the event of a dispute, the exclusive
forum, venue and place of jurisdiction will be in Ohio, unless otherwise required by law.

 

12. JOINT AND INDIVIDUAL LIABILITY AND
SUCCESSORS. My obligation to pay the Loan is independent of the obligation of any other person who has also agreed to pay it.
You may sue me alone, or anyone else who is obligated on the Loan, or any number of us together, to collect the Loan. Extending
the Loan or new obligations under the Loan, will not affect my duty under the Loan and I will still be obligated to pay the Loan.
You may assign all or part of your rights or duties under this Agreement or the Loan Documents without my consent. If you assign
this Agreement, all of my covenants, agreements, representations and warranties contained in this Agreement or the Loan Documents
will benefit your successors and assigns. I may not assign this Agreement or any of my rights under it without your prior written
consent. The duties of the Loan will bind my successors and assigns.

 

13. AMENDMENT, INTEGRATION AND SEVERABILITY.
This Agreement may not be amended or modified by oral agreement. No amendment or modification of this Agreement is effective
unless made in writing and executed by you and me. This Agreement and the other Loan Documents are the complete and final expression
of the understanding between you and me. If any provision of this Agreement is unenforceable, then the unenforceable provision
will be severed and the remaining provisions will still be enforceable.

 

14. INTERPRETATION. Whenever used,
the singular includes the plural and the plural includes the singular. The section headings are for convenience only and arenot
to be used to interpret or define the terms of this Agreement.

 

15. NOTICE, FINANCIAL REPORTS AND ADDITIONAL
DOCUMENTS. Unless otherwise required by law, any notice will be given by delivering it or mailing it by first class mail to
the appropriate party's address listed in the DATE AND PARTIES section, or to any other address designated in writing. Notice to
one Borrower will be deemed to be notice to all Borrowers. I will inform you in writing of any change in my name, address or other
application information. I will provide you any correct and complete financial statements or other information you request. I agree
to sign, deliver, and file any additional documents or certifications that you may consider necessary to perfect, continue, and
preserve my obligations under this Loan and to confirm your lien status on any Property. Time is of the essence.

 

16. WAIVER OF JURY TRIAL. All of the
parties to this Agreement knowingly and intentionally, irrevocably and unconditionally, waive any and all right to a trial by jury
in any litigation arising out of or concerning this Agreement or any other Loan Document or related obligation. All of these parties
acknowledge that this section has either been brought to the attention of each party's legal counsel or that each party had the
opportunity to do so.

 

CONFESSION OF JUDGMENT. If I default,
I authorize any attorney to appear in a court of record and confess judgment against me in favor of you. The confession of judgment
may be without process and for any amount due on the Loan including collection costs and reasonable attorneys' fees. This is in
addition to other remedies.

 

17. SIGNATURES. By signing, I agree
to the terms contained in this Agreement. I also acknowledge receipt of a copy of this Agreement.

 

	Axion Recycled Plastics Incorporated	 	 
	Ohio Commercial Loan Agreement	 	Initials ______
	OH/4XXCHRISO00000000000665015N	Wolters Kluwer Financial Services ©1996, 2013 Bankers SystemsTM	Page 4

 

 

    	 

    	 

    

 

WARNING: BY SIGNING THIS PAPER YOU GIVE
UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR
KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR
WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE. 

 

	BORROWER:	 
	 	 
	Axion Recycled Plastics Incorporated	 
	 	 	 
	 	By 	/s/ Steven L. Silverman	 Date	11/15/2013
	 	Steven L. Silverman, CEO	 

 

	LENDER:	 
	 	 
	The Community Bank	 
	 	 	 
	 	By	/s/ Chris Olney	 Date	11/15/2013
	 	Chris Olney, Chief Credit Officer	 

 

	Axion Recycled Plastics Incorporated	 	 
	Ohio Commercial Loan Agreement	 	Initials ______
	OH/4XXCHRISO00000000000665015N	Wolters Kluwer Financial Services ©1996, 2013 Bankers SystemsTM	Page 5EXHIBIT 10.3

 

	SECURITY
    AGREEMENT

 

DATE
AND PARTIES. The date of this Security Agreement (Agreement) is November 15, 2013. The parties and their addresses are:

 

SECURED
PARTY:

THE
COMMUNITY BANK 

113
N Fifth Street

Suite
101

Zanesville,
OH 43701

 

DEBTOR:

AXION
INTERNATIONAL, INC.

a
Delaware Corporation

180
South Street, Suite 104

New
Providence, NJ 07974

 

The pronouns
"you" and "your" refer to the Secured Party. The pronouns "I," "me" and "my"
refer to each person or entity signing this Agreement as Debtor and agreeing to give the Property described in this Agreement as
security for the Secured Debts.

 

Where the
owner of the Property is different from the obligor or guarantor whose obligation this Agreement secures, "Debtor" refers
to each person or entity who is an owner of the Property and "Obligor" or "Guarantor," as applicable, refer
to such parties as designated in the SECURED DEBTS section.

 

1.  SECURED
DEBTS. The term "Secured Debts" includes and this
Agreement will secure each of the following:

 

A.  Specific
Debts. The following debts and all extensions, renewals, refinancings,
modifications and replacements. A promissory note or other agreement, No. 2312374, dated November 15, 2013, from Axion Recycled
Plastics Incorporated (Obligor) to you, in the amount of $3,500,000.00.

 

B.  All
Debts. All present and future debts from Obligor to you, even
if this Agreement is not specifically referenced, the future debts are also secured by other collateral, or if the future debt
is unrelated to or of a different type than this debt. If more than one person signs this Agreement, each agrees that it will secure
debts incurred either individually or with others who may not sign this Agreement. Nothing in this Agreement constitutes a commitment
to make additional or future loans or advances. Any such commitment must be in writing.

 

This
Agreement will not secure any debt for which you fail to give any required notice of the right of rescission. This Agreement will
not secure any debt for which a non-possessory, non-purchase money security interest is created in "household goods"
in connection with a "consumer loan," as those terms are defined by federal law governing unfair and deceptive credit
practices. In addition, this Agreement will not secure any other debt if, with respect to such other debt, you fail to fulfill
any necessary requirements or limitations of Sections 19(a), 32 or 35 of Regulation Z or if, as a result, the other debt would
become subject to Section 670 of the John Warner National Defense Authorization Act for Fiscal Year 2007.

 

C.  Sums
Advanced. All sums advanced and expenses incurred by you under
the terms of this Agreement.

 

Loan Documents
refer to all the documents executed in connection with the Secured Debts.

 

2.  NON-OBLIGATED
OWNER. Any one of us, who is not also identified as an Obligor
in the Secured Debts section of this Agreement and who signs this Agreement, is defined as a cosigner for purposes of the Equal
Credit Protection Act and the Consumer Financial Protection Bureau's Regulation B, 12 C.F.R. 1002.7(d)(4) and is referred to herein
as a Non-Obligated Owner. By signing this Agreement, I, as a Non-Obligated Owner, do grant a security interest, and assign my rights
and interests, in the Property to secure payment of the Secured Debts, to create a valid lien, to pass clear title, to waive inchoate
rights and to assign earnings or rights to payment under any lease or rent of the Property. However, I, as a Non-Obligated Owner,
am not personally liable for the Secured Debts.

 

3.  SECURITY
INTEREST. To secure the payment and performance of the Secured
Debts, I grant you a security interest in all of the Property described in this Agreement that I own or have sufficient rights
in which to transfer an interest, now or in the future, wherever the Property is or will be located, and all proceeds and products
from the Property (including, but not limited to, all parts, accessories, repairs, replacements, improvements, and accessions to
the Property). Property is all the collateral given as security for the Secured Debts and described in this Agreement, and includes
all obligations that support the payment or performance of the Property. "Proceeds" includes cash proceeds, non-cash
proceeds and anything acquired upon the sale, lease, license, exchange, or other disposition of the Property; any rights and claims
arising from the Property; and any collections and distributions on account of the Property.

 

This Agreement
remains in effect until terminated in writing, even if the Secured Debts are paid and you are no longer obligated to advance funds
to me under any loan or credit agreement.

 

4.  PROPERTY
DESCRIPTION. The Property is described as follows:

 

A.  Specific
Property. See attached Exhibit A.

 

5.  WARRANTIES
AND REPRESENTATIONS. I make to you the following warranties
and representations which will continue as long as this Agreement is in effect:

 

A.  Power.
I am duly organized, and validly existing and in good standing in all jurisdictions in which I operate. I have the power and authority
to enter into this transaction and to carry on my business or activity as it is now being conducted and, as applicable, am qualified
to do so in each jurisdiction in which I operate.

 

B.  Authority.
The execution, delivery and performance of this Agreement and the obligation evidenced by this Agreement are within my powers,
have been duly authorized, have received all necessary governmental approval, will not violate any provision of law, or order of
court or governmental agency, and will not violate any agreement to which I am a party or to which I am or any of my property is
subject.

 

C.  Name
and Location. My name indicated in the DATE AND PARTIES section
is my exact legal name. I am an entity organized and registered under the laws of Ohio. I will provide verification of registration
and location upon your request. I will provide you with at least 30 days notice prior to any change in my name, address, or state
of organization or registration.

 

D.  Business
Name. Other than previously disclosed in writing to you I have
not changed my name or principal place of business within the last 10 years and have not used any other trade or fictitious name.
Without your prior written consent, I do not and will not use any other name and will preserve my existing name, trade names and
franchises.

 

	Axion
        Recycled Plastics Incorporated

        Ohio
        Security Agreement
	 	Initials ______
	OH/4XXCHRISO00000000000665020N	Wolters
    Kluwer Financial Services ©1996, 2013 Bankers SystemsTM	Page 1

 

 

    	 

    	 

    

 

E.  Ownership
of Property. I represent that I own all of the Property. I
represent that the vehicle portion of the Property is not a vehicle seized pursuant to any federal, state or local forfeiture law.
Your claim to the Property is ahead of the claims of any other creditor, except the Ohio Department of Development and except as
disclosed in writing to you prior to any advance on the Secured Debts. I represent that I am the original owner of the Property
and, if I am not, that I have provided you with a list of prior owners of the Property.

 

6.  DUTIES
TOWARD PROPERTY.

 

A.  Protection
of Secured Party's Interest. I will defend the Property against
any other claim. I agree to do whatever you require to protect your security interest and to keep your claim in the Property ahead
of the claims of other creditors. I will not do anything to harm your position.

 

I
will keep books, records and accounts about the Property and my business in general. I will let you examine these and make copies
at any reasonable time. I will prepare any report or accounting you request which deals with the Property.

 

B.  Use,
Location, and Protection of the Property. I will keep the Property
in my possession and in good repair. I will use it only for commercial purposes. I will not change this specified use without your
prior written consent. You have the right of reasonable access to inspect the Property and I will immediately inform you of any
loss or damage to the Property. I will not cause or permit waste to the Property.

 

I
will keep the Property at my address listed in the DATE AND PARTIES section unless we agree I may keep it at another location.
If the Property is to be used in other states, I will give you a list of those states. The location of the Property is given to
aid in the identification of the Property. It does not in any way limit the scope of the security interest granted to you. I will
notify you in writing and obtain your prior written consent to any change in location of any of the Property. I will not use the
Property in violation of any law. I will notify you in writing prior to any change in my address, name or, if an organization,
any change in my identity or structure.

 

Until
the Secured Debts are fully paid and this Agreement is terminated, I will not voluntarily grant a security interest in any of the
Property without your prior written consent. I will pay all taxes and assessments levied or assessed against me or the Property
and provide timely proof of payment of these taxes and assessments upon request.

 

C.  Selling,
Leasing or Encumbering the Property. I will not sell, offer
to sell, lease, or otherwise transfer or encumber the Property without your prior written permission which shall not be unreasonably
withheld. Any disposition of the Property contrary to this Agreement will violate your rights. Your permission to sell the Property
may be reasonably withheld without regard to the creditworthiness of any buyer or transferee. I will not permit the Property to
be the subject of any court order affecting my rights to the Property in any action by anyone other than you.

 

7.  INSURANCE.
I agree to keep the Property insured against the risks reasonably associated with the Property. I will maintain this insurance
in the amounts you reasonably require. This insurance will last until the Property is released from this Agreement. I may choose
the insurance company, subject to your approval, which will not be unreasonably withheld.

 

I will have
the insurance company name you as loss payee on any insurance policy. I will give you and the insurance company immediate notice
of any loss. You may apply the insurance proceeds toward what is owed on the Secured Debts. You may require added security as a
condition of permitting any insurance proceeds to be used to repair or replace the Property.

 

If you acquire
the Property in damaged condition, my right to any insurance policies and proceeds will pass to you to the extent of the Secured
Debts.

 

I will immediately
notify you of cancellation or termination of insurance. If I fail to keep the Property insured, you may obtain insurance to protect
your interest in the Property and I will pay for the insurance on your demand. You may demand that I pay for the insurance all
at once, or you may add the insurance premiums to the balance of the Secured Debts and charge interest on it at the rate that applies
to the Secured Debts. This insurance may include coverages not originally required of me, may be written by a company other than
one I would choose, and may be written at a higher rate than I could obtain if I purchased the insurance.

 

I acknowledge
and agree that you or one of your affiliates may receive commissions on the purchase of this insurance.

 

8.  AUTHORITY
TO PERFORM. I authorize you to do anything you deem reasonably
necessary to protect the Property, and perfect and continue your security interest in the Property. If I fail to perform any of
my duties under this Agreement or any other Loan Document, you are authorized, without notice to me, to perform the duties or cause
them to be performed.

 

These authorizations
include, but are not limited to, permission to:

 

A.  pay
and discharge taxes, liens, security interests or other encumbrances at any time levied or placed on the Property.

 

B.  order
and pay for the repair, maintenance and preservation of the Property.

 

C.  file
any financing statements on my behalf and pay for filing and recording fees pertaining to the Property.

 

D.  take
any action you feel necessary to realize on the Property, including performing any part of a contract or endorsing it in my name.

 

E.  handle
any suits or other proceedings involving the Property in my name.

 

F.  prepare,
file, and sign my name to any necessary reports or accountings.

 

G.  make
an entry on my books and records showing the existence of this Agreement.

 

If you perform
for me, you will use reasonable care. If you exercise the care and follow the procedures that you generally apply to the collection
of obligations owed to you, you will be deemed to be using reasonable care. Reasonable care will not include: any steps necessary
to preserve rights against prior parties; the duty to send notices, perform services or take any other action in connection with
the management of the Property; or the duty to protect, preserve or maintain any security interest given to others by me or other
parties. Your authorization to perform for me will not create an obligation to perform and your failure to perform will not preclude
you from exercising any other rights under the law or this Agreement. All cash and non-cash proceeds of the Property may be applied
by you only upon your actual receipt of cash proceeds against such of the Secured Debts, matured or unmatured, as you determine
in your sole discretion.

 

If you come
into actual or constructive possession of the Property, you will preserve and protect the Property. For purposes of this paragraph,
you will be in actual possession of the Property only when you have physical, immediate and exclusive control over the Property
and you have affirmatively accepted that control. You will be in constructive possession of the Property only when you have both
the power and the intent to exercise control over the Property.

 

9.  DEFAULT.
I will be in default if any of the following events (known separately and collectively as an Event of Default) occur:

 

A.  Payments.
I or Obligor fail to make a payment in full when due after a 10 day notice and grace period.

 

B.  Insolvency
or Bankruptcy. The death, dissolution or insolvency of, appointment
of a receiver by or on behalf of, application of any debtor relief law, the assignment for the benefit of creditors by or on behalf
of, the voluntary or involuntary termination of existence by, or the commencement of any proceeding under any present or future
federal or state insolvency, bankruptcy, reorganization, composition or debtor relief law by or against me, Obligor, or any co-signer,
endorser, surety or guarantor of this Agreement or any other obligations Obligor has with you.

 

C.  Business
Termination. I merge, dissolve, reorganize, end my business
or existence, or a partner or majority owner dies or is declared legally incompetent.

 

	Axion
        Recycled Plastics Incorporated

        Ohio
        Security Agreement
	 	Initials ______
	OH/4XXCHRISO00000000000665020N	Wolters
    Kluwer Financial Services ©1996, 2013 Bankers SystemsTM	Page 2

 

 

    	 

    	 

    

 

D.  Failure
to Perform. I fail to perform any condition or to keep any
promise or covenant of this Agreement which is not cured within 30 days after written notice.

 

E.  Other
Documents. A default occurs under the terms of any other Loan
Document which is not cured within 30 days after written notice.

 

F.  Other
Agreements. I am in default on any other debt or agreement
I have with you which is not cured within 30 days after written notice.

 

G.  Misrepresentation.
I make any verbal or written statement or provide any financial information that is untrue, inaccurate, or conceals a material
fact at the time it is made or provided.

 

H.  Forfeiture.
The Property is used in a manner or for a purpose that threatens confiscation by a legal authority.

 

I.  Name
Change. I change my name or assume an additional name without
notifying you before making such a change.

 

J.
Property Transfer. I transfer all or a substantial part of my money or property, which shall not be unreasonably withheld.

 

K.
Property Value. You determine in good faith that the value of the Property has declined or is impaired.

 

L.
Material Change. Without first notifying you, there is a material change in my business, including ownership, management, and
financial conditions.

 

M.
Insecurity. You determine in good faith that a material adverse change has occurred in Borrower's financial condition from
the conditions set forth in Borrower's most recent financial statement before the date of this Agreement or that the prospect for
payment or performance of the Secured Debts is materially impaired for any reason.

 

10.  DUE
ON SALE OR ENCUMBRANCE. You may, at your option, declare the
entire balance of this Agreement to be immediately due and payable upon the creation of, or contract for the creation of, any superior
lien or encumbrance on the Property other than the Ohio Department of Development, or the transfer or sale of all or any part of
the Property. This right is subject to the restrictions imposed by federal law (12 C.F.R. 591), as applicable.

 

11.  REMEDIES.
After I default, you may at your option do any one or more of the following.

 

A.  Acceleration.
You may make all or any part of the amount owing by the terms of the Secured Debts immediately due.

 

B.  Sources.
You may use any and all remedies you have under state or federal law or in any Loan Document.

 

C.  Insurance
Benefits. You may make a claim for any and all insurance benefits
or refunds that may be available on my default.

 

D.  Payments
Made On My Behalf. Amounts advanced on my behalf will be immediately
due and may be added to the Secured Debts.

 

E.  Assembly
of Property. You may require me to gather the Property and
make it available to you in a reasonable fashion.

 

F.  Repossession.
You may repossess the Property so long as the repossession does not involve a breach of the peace. You may sell, lease or otherwise
dispose of the Property as provided by law. You may apply what you receive from the disposition of the Property to your expenses,
your attorneys' fees and legal expenses (where not prohibited by law), and any debt I owe you. If what you receive from the disposition
of the Property does not satisfy the debt, I will be liable for the deficiency (where permitted by law). In some cases, you may
keep the Property to satisfy the debt.

 

Where
a notice is required, I agree that ten days prior written notice sent by first class mail to my address listed in this Agreement
will be reasonable notice to me under the Ohio Uniform Commercial Code. If the Property is perishable or threatens to decline speedily
in value, you may, without notice to me, dispose of any or all of the Property in a commercially reasonable manner at my expense
following any commercially reasonable preparation or processing.

 

If
any items not otherwise subject to this Agreement are contained in the Property when you take possession, you may hold these items
for me at my risk and you will not be liable for taking possession of them.

 

G.  Use
and Operation. You may enter upon my premises and take possession
of all or any part of my property for the purpose of preserving the Property or its value, so long as you do not breach the peace.
You may use and operate my property for the length of time you feel is necessary to protect your interest, all without payment
or compensation to me.

 

H.  Waiver.
By choosing any one or more of these remedies you do not give up your right to use any other remedy. You do not waive a default
if you choose not to use a remedy. By electing not to use any remedy, you do not waive your right to later consider the event a
default and to use any remedies if the default continues or occurs again.

 

12.  WAIVER
OF CLAIMS. I waive all claims for loss or damage caused by
your acts or omissions where you acted reasonably and in good faith.

 

13.  PERFECTION
OF SECURITY INTEREST AND COSTS. I authorize you to file a financing
statement and/or security agreement, as appropriate, covering the Property. I will comply with, facilitate, and otherwise assist
you in connection with obtaining perfection or control over the Property for purposes of perfecting your security interest under
the Uniform Commercial Code. I agree to pay all taxes, fees and costs you pay or incur in connection with preparing, filing or
recording any financing statements or other security interest filings on the Property. I agree to pay all actual costs of terminating
your security interest.

 

14.  APPLICABLE
LAW. This Agreement is governed by the laws of Ohio, the United
States of America, and to the extent required, by the laws of the jurisdiction where the Property is located, except to the extent
such state laws are preempted by federal law. In the event of a dispute, the exclusive forum, venue and place of jurisdiction will
be in Ohio, unless otherwise required by law.

 

15.  JOINT
AND INDIVIDUAL LIABILITY AND SUCCESSORS. Each Debtor's obligations
under this Agreement are independent of the obligations of any other Debtor. You may sue each Debtor individually or together with
any other Debtor. You may release any part of the Property and I will still be obligated under this Agreement for the remaining
Property. Debtor agrees that you and any party to this Agreement may extend, modify or make any change in the terms of this Agreement
or any evidence of debt without Debtor's consent. Such a change will not release Debtor from the terms of this Agreement. If you
assign any of the Secured Debts, you may assign all or any part of this Agreement without notice to me or my consent, and this
Agreement will inure to the benefit of your assignee to the extent of such assignment. You will continue to have the unimpaired
right to enforce this Agreement as to any of the Secured Debts that are not assigned. This Agreement shall inure to the benefit
of and be enforceable by you and your successors and assigns and any other person to whom you may grant an interest in the Secured
Debts and shall be binding upon and enforceable against me and my personal representatives, successors, heirs and assigns.

 

16.  AMENDMENT,
INTEGRATION AND SEVERABILITY. This Agreement may not be amended
or modified by oral agreement. No amendment or modification of this Agreement is effective unless made in writing and executed
by you and me. This Agreement and the other Loan Documents are the complete and final expression of the understanding between you
and me. If any provision of this Agreement is unenforceable, then the unenforceable provision will be severed and the remaining
provisions will still be enforceable.

 

17.  INTERPRETATION.
Whenever used, the singular includes the plural and the plural includes the singular. The section headings are for convenience
only and are not to be used to interpret or define the terms of this Agreement.

 

	Axion
        Recycled Plastics Incorporated

        Ohio
        Security Agreement
	 	Initials ______
	OH/4XXCHRISO00000000000665020N	Wolters Kluwer Financial
    Services ©1996, 2013 Bankers SystemsTM	Page 3

 

 

    	 

    	 

    

 

18.  NOTICE
AND ADDITIONAL DOCUMENTS. Unless otherwise required by law,
any notice will be given by delivering it or mailing it by first class mail to the appropriate party's address listed in the DATE
AND PARTIES section, or to any other address designated in writing. Notice to one Debtor will be deemed to be notice to all Debtors.
I will inform you in writing of any change in my name, address or other application information. I will provide you any other,
correct and complete information you request to effectively grant a security interest on the Property. I agree to sign, deliver,
and file any additional documents or certifications that you may consider necessary to perfect, continue, and preserve my obligations
under this Agreement and to confirm your lien status on any Property. Time is of the essence.

 

19.  WAIVER
OF JURY TRIAL. All of the parties to this Agreement knowingly
and intentionally, irrevocably and unconditionally, waive any and all right to a trial by jury in any litigation arising out of
or concerning this Agreement or any other Loan Document or related obligation. All of these parties acknowledge that this section
has either been brought to the attention of each party's legal counsel or that each party had the opportunity to do so.

 

	CONFESSION
    OF JUDGMENT. If I default, I authorize any attorney to appear in a court of record and confess judgment against me in favor
    of you. The confession of judgment may be without process and for any amount due on the Secured Debts including collection
    costs and reasonable attorneys' fees. This is in addition to other remedies.

 

SIGNATURES.
By signing, I agree to the terms contained in this Agreement. I also acknowledge receipt of a copy of this Agreement.

 

WARNING:
BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN
AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU
MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY
OTHER CAUSE.

 

DEBTOR:

 

Axion
International, Inc.

 

	By	/s/ Steven L. Silverman	 	 Date	11/15/2013
	Steven L. Silverman, CEO	 	 	 

 

SECURED PARTY:

 

The Community Bank

 

	By 	/s/ Chris Olney	 	Date	11/15/2013
	Chris Olney, Chief Credit Officer	 	 	 

 

	Axion
        Recycled Plastics Incorporated

        Ohio
        Security Agreement
	 	Initials ______
	OH/4XXCHRISO00000000000665020N	Wolters Kluwer Financial
    Services ©1996, 2013 Bankers SystemsTM	Page 4

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