Document:

Nanophase Technologies Corporation 10-K

Exhibit 10.35

 

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

 

THIS
COMMERCIAL SECURITY AGREEMENT dated March 4, 2018, Is made and executed between Nanophase Technologies Corporation (“Grantor”)
and Libertyvllle Bank and Trust Company (“Lender”).

 

GRANT
OF SECURITY INTEREST. For valuable consideration, Grantor grants to Lender a security interest in the Collateral to secure the
Indebtedness and agrees that Lender shall have the rights stated in this Agreement with respect to the Collateral, in addition
to all other rights which Lender may have by law.

 

COLLATERAL
DESCRIPTION. The word “Collateral” as used in this Agreement means the following described property, whether now
owned or hereafter acquired, whether now existing or hereafter arising, and wherever located, in which Grantor is giving to Lender
a security interest for the payment of the Indebtedness and performance of all other obligations under the Note and this Agreement:

 

All
Inventory, Chattel Paper, Accounts, Equipment, General Intangibles and Fixtures

 

In addition,
the word “Collateral” also includes all the following, whether now owned or hereafter acquired, whether now existing
or hereafter arising, and wherever located:

 

(A)    All
accessions, attachments, accessories, tools, parts, supplies, replacements of and additions to any of the collateral described
herein, whether added now or later. 

 

(B)     All
products and produce of any of the property described in this Collateral section. 

 

(C)     All
accounts, general intangibles, instruments, rents, monies, payments, and all other rights, arising out of a sale, lease, consignment
or other disposition of any of the property described in this Collateral section. 

 

(D)    All
proceeds (including insurance proceeds) from the sale, destruction, loss, or other disposition of any of the property described
in this Collateral section, and sums due from a third party who has damaged or destroyed the Collateral or from that party’s
insurer, whether due to judgment, settlement or other process. 

 

(E)     All
records and data relating to any of the property described in this Collateral section, whether in the form of a writing, photograph,
microfilm, microfiche, or electronic media, together with all of Grantor’s right, title, and interest in and to all computer
software required to utilize, create, maintain, and process any such records or data on electronic media.

 

CROSS-COLLATERALIZATION.
In addition to the Note, this Agreement secures all obligations, debts and liabilities,
plus interest thereon, of Grantor to Lender, or any one or more of them, as well as all claims by Lender against Grantor or any
one or more of them, whether now existing or hereafter arising, whether related or unrelated to the purpose of the Note, whether
voluntary or otherwise, whether due or not due, direct or indirect, determined or undetermined, absolute or contingent, liquidated
or unliquidated, whether Grantor may be liable individually or jointly with others, whether obligated as guarantor, surety, accommodation
party or otherwise, and whether recovery upon such amounts may be or hereafter may become barred by any statute of limitations,
and whether the obligation to repay such amounts may be or hereafter may become otherwise unenforceable.

 

FUTURE
ADVANCES. In addition to the Note, this Agreement secures all future advances made by
Lender to Grantor regardless of whether the advances are made a) pursuant to a commitment or b) for the same purposes.

 

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

 

GRANTOR’S
REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL. With respect to the Collateral,
Grantor represents and promises to Lender that:

 

Perfection
of Security Interest. Grantor agrees to take whatever actions are requested by Lender
to perfect and continue Lender’s security interest in the Collateral. Upon request of Lender, Grantor will deliver to Lender
any and all of the documents evidencing or constituting the Collateral, and Grantor will note Lender’s interest upon any
and all chattel paper and instruments if not delivered to Lender for possession by Lender. This
is a continuing Security Agreement and will continue in effect even though all or any part of the Indebtedness is paid in full
and even though for a period of time Grantor may not be indebted to Lender.

 

Notices
to Lender. Grantor will promptly notify Lender in writing at Lender’s address shown
above (or such other addresses as Lender may designate from time to time) prior to any (1) change in Grantor’s name; (2)
change in Grantor’s assumed business name(s); (3) change in the management of the Corporation Grantor; (4) change in the
authorized signer(s); (5) change in Grantor’s principal office address; (6) change in Grantor’s state of organization;
(7) conversion of Grantor to a new or different type of business entity; or (8) change in any other aspect of Grantor that directly
or indirectly relates to any agreements between Grantor and Lender. No change in Grantor’s name or state of organization
will take effect until after Lender has received notice.

 

No
Violation. The execution and delivery of this Agreement will not violate any law or agreement
governing Grantor or to which Grantor is a party, and its certificate or articles of incorporation and bylaws do not prohibit
any term or condition of this Agreement.

 

Enforceability
of Collateral. To the extent the Collateral consists of accounts, chattel paper, or general
intangibles, as defined by the Uniform Commercial Code, the Collateral is enforceable in accordance with its terms, is genuine,
and fully complies with all applicable laws and regulations concerning form, content and manner of preparation and execution,
and all persons appearing to be obligated on the Collateral have authority and capacity to contract and are in fact obligated
as they appear to be on the Collateral. At the
time any account becomes subject to a security interest in favor of Lender, the account shall be a good and valid account representing
an undisputed, bona fide indebtedness incurred by the account debtor, for merchandise held subject to delivery instructions or
previously shipped or delivered pursuant to a contract of sale, or for services previously performed by Grantor with or for the
account debtor. So long as this Agreement remains in effect, Grantor shall not, without Lender’s prior written consent,
compromise, settle, adjust, or extend payment under or with regard to any such Accounts. There shall be no setoffs or counterclaims
against any of the Collateral, and no agreement shall have been made under which any deductions or discounts may be claimed concerning
the Collateral except those disclosed to Lender in writing.

 

    

     

    

 

	 	COMMERCIAL SECURITY AGREEMENT	 
	 	(Continued)	Page 2
	 	 	 
	 

 

Location
of the Collateral. Except in the ordinary course of Grantor’s business, Grantor
agrees to keep the Collateral (or to the extent the Collateral consists of intangible property such as accounts or general intangibles,
the records concerning the Collateral) at Grantor’s address shown above or at such other locations as are acceptable to
Lender. Upon Lender’s request, Grantor will deliver to Lender in form satisfactory to Lender a schedule of real properties
and Collateral locations relating to Grantor’s operations, including without limitation the following: (1) all real property
Grantor owns or is purchasing; (2) all real property Grantor is renting or leasing; (3) all storage facilities Grantor owns, rents,
leases, or uses; and (4) all other properties where Collateral is or may be located.

 

Removal
of the Collateral. Except in the ordinary course of Grantor’s business, including
the sales of inventory, Grantor shall not remove the Collateral from its existing location without Lender’s prior written
consent. To the extent that the Collateral consists of vehicles, or other titled property, Grantor shall not take or permit any
action which would require application for certificates of title for the vehicles outside the State of Delaware, without Lender’s
prior written consent. Grantor shall, whenever requested, advise Lender of the exact location of the Collateral.

 

Transactions
Involving Collateral. Except for inventory sold or accounts collected in the ordinary
course of Grantor’s business, or as otherwise provided for in this Agreement, Grantor shall not sell, offer to sell, or
otherwise transfer or dispose of the Collateral. While Grantor is not in default under this Agreement, Grantor may sell inventory,
but only in the ordinary course of its business and only to buyers who qualify as a buyer in the ordinary course of business.
A sale in the ordinary course of Grantor’s business does not include a transfer in partial or total satisfaction of a debt
or any bulk sale. Grantor shall not pledge, mortgage, encumber or otherwise permit the Collateral to be subject to any lien, security
interest, encumbrance, or charge, other than the security interest provided for in this Agreement, without the prior written consent
of Lender. This includes security interests even if junior in right to the security interests granted under this Agreement. Unless
waived by Lender, all proceeds from any disposition of the Collateral (for whatever reason) shall be held in trust for Lender
and shall not be commingled with any other funds; provided however, this requirement shall not constitute consent by Lender to
any sale or other disposition. Upon receipt, Grantor shall immediately deliver any such proceeds to Lender.

 

Title.
Grantor represents and warrants to Lender that Grantor holds good and marketable title
to the Collateral, free and clear of all liens and encumbrances except for the lien of this Agreement. No financing statement
covering any of the Collateral is on file in any public office other than those which reflect the security interest created by
this Agreement or to which Lender has specifically consented. Grantor shall defend Lender’s rights in the Collateral against
the claims and demands of all other persons.

 

Repairs
and Maintenance. Grantor agrees to keep and maintain, and to cause others to keep and
maintain, the Collateral in good order, repair and condition at all times while this Agreement remains in effect. Grantor further
agrees to pay when due all claims for work done on, or services rendered or material furnished in connection with the Collateral
so that no lien or encumbrance may ever attach to or be filed against the Collateral.

 

Inspection
of Collateral. Lender and Lender’s designated representatives and agents shall have
the right at all reasonable times to examine and inspect the Collateral wherever located.

 

Taxes,
Assessments and Liens. Grantor will pay when due all taxes, assessments and liens upon
the Collateral, its use or operation, upon this Agreement, upon any promissory note or notes evidencing the Indebtedness, or upon
any of the other Related Documents. Grantor may withhold any such payment or may elect to contest any lien if Grantor is in good
faith conducting an appropriate proceeding to contest the obligation to pay and so long as Lender’s interest in the Collateral
is not jeopardized in Lender’s sole opinion. If the Collateral is subjected to a lien which is not discharged within fifteen
(15) days, Grantor shall deposit with Lender cash, a sufficient corporate surety bond or other security satisfactory to Lender
in an amount adequate to provide for the discharge of the lien plus any interest, costs, reasonable attorneys’ fees or other
charges that could accrue as a result of foreclosure or sale of the Collateral. In any contest Grantor shall defend itself and
Lender and shall satisfy any final adverse judgment before enforcement against the Collateral. Grantor shall name Lender as an
additional obligee under any surety bond furnished in the contest proceedings. Grantor further agrees to furnish Lender with evidence
that such taxes, assessments, and governmental and other charges have been paid in full and in a timely manner. Grantor may withhold
any such payment or may elect to contest any lien if Grantor is in good faith conducting an appropriate proceeding to contest
the obligation to pay and so long as Lender’s interest in the Collateral is not jeopardized.

 

Compliance
with Governmental Requirements. Grantor shall comply promptly with all laws, ordinances,
rules and regulations of all governmental authorities, now or hereafter in effect, applicable to the ownership, production, disposition,
or use of the Collateral, including all laws or regulations relating to the undue erosion of highly-erodible land or relating
to the conversion of wetlands for the production of an agricultural product or commodity. Grantor may contest in good faith any
such law, ordinance or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as Lender’s
interest in the Collateral, in Lender’s opinion, is not jeopardized.

 

Hazardous
Substances. Grantor represents and warrants that the Collateral never has been, and never
will be so long as this Agreement remains a lien on the Collateral, used in violation of any Environmental Laws or for the generation,
manufacture, storage, transportation, treatment, disposal, release or threatened release of any Hazardous Substance. The representations
and warranties contained herein are based on Grantor’s due diligence in investigating the Collateral for Hazardous Substances.
Grantor hereby (1) releases and waives any future claims against Lender for indemnity or contribution in the event Grantor becomes
liable for cleanup or other costs under any Environmental Laws, and (2) agrees to indemnify, defend, and hold harmless Lender
against any and all claims and losses resulting from a breach of this provision of this Agreement. This obligation to indemnify
and defend shall survive the payment of the Indebtedness and the satisfaction of this Agreement.

 

Maintenance
of Casualty Insurance. Grantor shall procure and maintain all risks insurance, including
without limitation fire, theft and liability coverage together with such other insurance as Lender may require with respect to
the Collateral, in form, amounts, coverages and basis reasonably acceptable to Lender and issued by a company or companies reasonably
acceptable to Lender. Grantor, upon request of Lender, will deliver to Lender from time to time the policies or certificates of
insurance in form satisfactory to Lender, including stipulations that coverages will not be cancelled or diminished without at
least ten (10) days’ prior written notice to Lender and not including any disclaimer of the insurer’s liability for
failure to give such a notice. Each insurance policy also shall include an endorsement providing that coverage in favor
of Lender will not be impaired in any way by any act, omission or default of Grantor or any other person. In connection with all
policies covering assets in which Lender holds or is offered a security interest, Grantor will provide Lender with such loss payable
or other endorsements as Lender may require. If
Grantor at any time fails to obtain or maintain any insurance as required under this Agreement, Lender may (but shall not
be obligated to) obtain such insurance as Lender deems appropriate, including if Lender so chooses “single interest insurance,”
which will cover only Lender’s interest in the Collateral.

 

Application
of Insurance Proceeds. Grantor shall promptly notify Lender of any loss or damage to the
Collateral if the estimated cost of repair
or replacement exceeds $1,000.00, whether or not such casualty or loss is covered by insurance. Lender may make proof of loss
if Grantor fails to do so within fifteen (15) days of the casualty. All proceeds of any insurance on the Collateral, including
accrued proceeds thereon, shall be held by Lender as part of the Collateral. If
Lender consents to repair or replacement of the damaged or destroyed Collateral, Lender shall, upon satisfactory proof
of expenditure, pay or reimburse Grantor from the proceeds for the reasonable cost of repair or restoration. If Lender does not
consent to repair or replacement of the Collateral, Lender shall retain a sufficient amount of the proceeds to pay all of the
Indebtedness, and shall pay the balance to Grantor. Any proceeds which have not been disbursed within six (6) months after their
receipt and which Grantor has not committed to the repair or restoration of the Collateral shall be used to prepay the Indebtedness.

 

    

     

    

 

	 	COMMERCIAL SECURITY AGREEMENT	 
	 	(Continued)

                                    
	Page 3
	 

 

Insurance
Reserves. Lender may require Grantor to maintain with Lender reserves for payment of insurance
premiums, which reserves shall be created by monthly payments from Grantor of a sum estimated by Lender to be sufficient to produce,
at least fifteen (15) days before the premium due date, amounts at least equal to the insurance premiums to be paid. If fifteen
(15) days before payment is due, the reserve funds are insufficient, Grantor shall upon demand pay any deficiency to Lender. The
reserve funds shall be held by Lender as a general deposit and shall constitute a non-interest-bearing account which Lender may
satisfy by payment of the insurance premiums required to be paid by Grantor as they become due. Lender does not hold the reserve
funds in trust for Grantor, and Lender is not the agent of Grantor for payment of the insurance premiums required to be paid by
Grantor. The responsibility for the payment of premiums shall remain Grantor’s sole responsibility.

 

Insurance
Reports. Grantor, upon request of Lender, shall furnish to Lender reports on each existing
policy of insurance showing such information as Lender may reasonably request including the following: (1) the name of the insurer;
(2) the risks insured; (3) the amount of the policy; (4) the property insured; (5) the then current value on the basis of which
insurance has been obtained and the manner of determining that value; and (6) the expiration date of the policy. In addition,
Grantor shall upon request by Lender (however not more often than annually) have an independent appraiser satisfactory to Lender
determine, as applicable, the cash value or replacement cost of the Collateral.

 

Financing
Statements. Grantor authorizes Lender to file a UCC financing statement, or alternatively,
a copy of this Agreement to perfect Lender’s security interest. At Lender’s request, Grantor additionally agrees to
sign all other documents that are necessary to perfect, protect, and continue Lender’s security interest in the Property.
Grantor will pay all filing fees, title transfer fees, and other fees and costs involved unless prohibited by law or unless Lender
is required by law to pay such fees and costs. Grantor irrevocably appoints Lender to execute documents necessary to transfer
title if there is a default. Lender may file a copy of this Agreement as a financing statement.

 

GRANTOR’S
RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS. Until default and except as otherwise provided
below with respect to accounts, Grantor may have possession of the tangible personal property and beneficial use of all the Collateral
and may use it in any lawful manner not inconsistent with this Agreement or the Related Documents, provided that Grantor’s
right to possession and beneficial use shall not apply to any Collateral where possession of the Collateral by Lender is required
by law to perfect Lender’s security interest in such Collateral. Until otherwise notified by Lender, Grantor may collect
any of the Collateral consisting of accounts. At any time and even though no Event of Default exists, Lender may exercise its
rights to collect the accounts and to notify account debtors to make payments directly to Lender for application to the Indebtedness.
If Lender at any time has possession of any Collateral, whether before or after an Event of Default, Lender shall be deemed to
have exercised reasonable care in the custody and preservation of the Collateral if Lender takes such action for that purpose
as Grantor shall request or as Lender, in Lender’s sole discretion, shall deem appropriate under the circumstances, but
failure to honor any request by Grantor shall not of itself be deemed to be a failure to exercise reasonable care. Lender shall
not be required to take any steps necessary to preserve any rights in the Collateral against prior parties, nor to protect, preserve
or maintain any security interest given to secure the Indebtedness.

 

LENDER’S
EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender’s
interest in the Collateral or if Grantor fails to comply with any provision of this Agreement or any Related Documents, including
but not limited to Grantor’s failure to discharge or pay when due any amounts Grantor is required to discharge or pay under
this Agreement or any Related Documents, Lender on Grantor’s behalf may (but shall not be obligated to) take any action
that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens, security interests, encumbrances
and other claims, at any time levied or placed on the Collateral and paying all costs for insuring, maintaining and preserving
the Collateral. All such expenditures incurred or paid by Lender for such purposes will then bear interest at the rate charged
under the Note from the date incurred or paid by Lender to the date of repayment by Grantor. All such expenses will become a part
of the Indebtedness and, at Lender’s option, will (A) be payable on demand; (B) be added to the balance of the Note and
be apportioned among and be payable with any installment payments to become due during either (1) the term of any applicable insurance
policy; or (2) the remaining term of the Note; or (C) be treated as a balloon payment which will be due and payable at the Note’s
maturity. The Agreement also will secure payment of these amounts. Such right shall be in addition to all other rights and remedies
to which Lender may be entitled upon Default.

 

DEFAULT.
Each of the following shall constitute an Event of Default under this Agreement:

 

Payment
Default. Grantor fails to make any payment when due under the Indebtedness.

 

Other
Defaults. Grantor fails to comply with or to perform any other term, obligation, covenant
or condition contained in this Agreement or in any of the Related Documents or to comply with or to perform any term, obligation,
covenant or condition contained in any other agreement between Lender and Grantor.

 

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

 

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

 

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

 

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

 

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

 

Events
Affecting Guarantor. Any of the preceding events occurs with respect to any guarantor,
endorser, surety, or accommodation party of any of the Indebtedness or guarantor, endorser, surety, or accommodation party dies
or becomes incompetent or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness.

 

    

     

    

 

	 	COMMERCIAL SECURITY AGREEMENT	 
	 	(Continued)

                                    
	Page 4
	 

 

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

 

Insecurity.
Lender in good faith believes itself insecure.

 

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

 

RIGHTS
AND REMEDIES ON DEFAULT. If an Event of Default occurs under this Agreement, at any time
thereafter, Lender shall have all the rights of a secured party under the Delaware Uniform Commercial Code. In addition and without
limitation, Lender may exercise any one or more of the following rights and remedies:

 

Accelerate
Indebtedness. Lender may declare the entire Indebtedness, including any prepayment penalty
which Grantor would be required to pay, immediately due and payable, without notice of any kind to Grantor.

 

Assemble
Collateral. Lender may require Grantor to deliver to Lender all or any portion of the
Collateral and any and all certificates of title and other documents relating to the Collateral. Lender may require Grantor to
assemble the Collateral and make it available to Lender at a place to be designated by Lender. Lender also shall have full power
to enter upon the property of Grantor to take possession of and remove the Collateral. If the Collateral contains other goods
not covered by this Agreement at the time of repossession, Grantor agrees Lender may take such other goods, provided that Lender
makes reasonable efforts to return them to Grantor after repossession.

 

Sell
the Collateral. Lender shall have full power to sell, lease, transfer, or otherwise deal
with the Collateral or proceeds thereof in Lender’s own name or that of Grantor. Lender may sell the Collateral at public
auction or private sale. Unless the Collateral threatens to decline speedily in value or is of a type customarily sold on a recognized
market, Lender will give Grantor, and other persons as required by law, reasonable notice of the time and place of any public
sale, or the time after which any private sale or any other disposition of the Collateral is to be made. However, no notice need
be provided to any person who, after Event of Default occurs, enters into and authenticates an agreement waiving that person’s
right to notification of sale. The requirements of reasonable notice shall be met if such notice is given at least ten (10) days
before the time of the sale or disposition. All expenses relating to the disposition of the Collateral, including without limitation
the expenses of retaking, holding, insuring, preparing for sale and selling the Collateral, shall become a part of the Indebtedness
secured by this Agreement and shall be payable on demand, with interest at the Note rate from date of expenditure until repaid.

 

Appoint
Receiver. Lender shall have the right to have a receiver appointed to take possession
of all or any part of the Collateral, with the power to protect and preserve the Collateral, to operate the Collateral preceding
foreclosure or sale, and to collect the rents from the Collateral and apply the proceeds, over and above the cost of the receivership,
against the Indebtedness. The receiver may serve without bond if permitted by law. Lender’s right to the appointment of
a receiver shall exist whether or not the apparent value of the Collateral exceeds the Indebtedness by a substantial amount. Employment
by Lender shall not disqualify a person from serving as a receiver.

 

Collect
Revenues, Apply Accounts. Lender, either itself or through a receiver, may collect the
payments, rents, income, and revenues from the Collateral. Lender may at any time in Lender’s discretion transfer any Collateral
into Lender’s own name or that of Lender’s nominee and receive the payments, rents, income, and revenues therefrom
and hold the same as security for the Indebtedness or apply it to payment of the Indebtedness in such order of preference as Lender
may determine. Insofar as the Collateral consists of accounts, general intangibles, insurance policies, instruments, chattel paper,
choses in action, or similar property, Lender may demand, collect, receipt for, settle, compromise, adjust, sue for, foreclose,
or realize on the Collateral as Lender may determine, whether or not Indebtedness or Collateral is then due. For these purposes,
Lender may, on behalf of and in the name of Grantor, receive, open and dispose of mail addressed to Grantor; change any address
to which mail and payments are to be sent; and endorse notes, checks, drafts, money orders, documents of title, instruments and
items pertaining to payment, shipment, or storage of any Collateral. To facilitate collection, Lender may notify account debtors
and obligors on any Collateral to make payments directly to Lender.

 

Obtain
Deficiency. If Lender chooses to sell any or all of the Collateral, Lender may obtain
a judgment against Grantor for any deficiency remaining on the Indebtedness due to Lender after application of all amounts received
from the exercise of the rights provided in this Agreement. Grantor shall be liable for a deficiency even if
the transaction described in this subsection is a sale of accounts or chattel paper.

 

Other
Rights and Remedies. Lender shall have all the rights and remedies of a secured creditor
under the provisions of the Uniform Commercial Code, as may be amended from time to time. In addition, Lender shall have and may
exercise any or all other rights and remedies it
may have available at law, in equity, or otherwise.

 

Election
of Remedies. Except as may be prohibited by applicable law, all of Lender’s rights
and remedies, whether evidenced by this Agreement, the Related Documents, or by any other writing, shall be cumulative and may
be exercised singularly or concurrently. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy,
and an election to make expenditures or to take action to perform an obligation of Grantor under this Agreement, after Grantor’s
failure to perform, shall not affect Lender’s right to declare a default and exercise its remedies.

 

MISCELLANEOUS
PROVISIONS. The following miscellaneous provisions are a part of this Agreement:

 

Amendments.
This Agreement, together with any Related Documents, constitutes the entire understanding
and agreement of the parties as to the matters set forth in this Agreement. No alteration of or amendment to this Agreement shall
be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment.

 

Attorneys’
Fees; Expenses. Grantor agrees to pay upon demand all of Lender’s costs and expenses,
including Lender’s reasonable attorneys’ fees and Lender’s legal expenses, incurred in connection with the enforcement
of this Agreement. Lender may hire or pay someone else to help enforce this Agreement, and Grantor shall pay the costs and expenses
of such enforcement. Costs and expenses include Lender’s reasonable attorneys’ fees and legal expenses whether or
not there is a lawsuit, including reasonable attorneys’ fees and legal expenses for bankruptcy proceedings (including efforts
to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services. Lender
may also recover from Grantor all court, alternative dispute resolution or other collection costs (including, without limitation,
fees and charges of collection agencies) actually incurred by Lender.

 

Caption
Headings. Caption headings in this Agreement are for convenience purposes only and are
not to be used to interpret or define the provisions of this Agreement.

 

Governing
Law. With respect to procedural matters related to the perfection and enforcement of Lender’s rights against the Collateral,
this Agreement will be governed by federal law applicable to Lender and to the extent not preempted by federal law, the laws of
the State of Delaware. In all other respects, this Agreement will be governed
by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of Illinois without
regard to its conflicts of law provisions. However, if there ever is a question about whether any provision of this Agreement
is valid or enforceable, the provision that is questioned will be governed by whichever state or federal law would find the provision
to be valid and enforceable. The loan transaction that is evidenced by the Note and this Agreement has been applied for, considered,
approved and made, and all necessary loan documents have been accepted by Lender in the State of Illinois.

 

    

     

    

 

	 	COMMERCIAL SECURITY AGREEMENT	 
	 	(Continued)

                                    
	Page 5
	 

 

No
Waiver by Lender. Lender shall not be deemed to have waived any rights under this Agreement
unless such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right
shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Agreement shall not prejudice
or constitute a waiver of Lender’s right otherwise to demand strict compliance with that provision or any other provision
of this Agreement. No prior waiver by Lender, nor any course of dealing between Lender and Grantor, shall constitute a waiver
of any of Lender’s rights or of any of Grantor’s obligations as to any future transactions. Whenever the consent of
Lender is required under this Agreement, the granting of such consent by Lender in any instance shall not constitute continuing
consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the
sole discretion of Lender.

 

Notices.
Any notice required to be given under this Agreement shall be given in writing, and shall be effective when actually delivered,
when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight
courier, or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid,
directed to the addresses shown near the beginning of this Agreement. Any party may change its address for notices under this
Agreement by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party’s
address. For notice purposes, Grantor agrees to keep Lender informed at all times of Grantor’s current address. Unless otherwise
provided or required by law, if there is more than one Grantor, any notice given by Lender to any Grantor is deemed to be notice
given to all Grantors.

 

Power
of Attorney. Grantor hereby appoints Lender as Grantor’s irrevocable attorney-in-fact
for the purpose of executing any documents necessary to perfect, amend, or to continue the security interest granted in this Agreement
or to demand termination of filings of other secured parties. Lender may at any time, and without further authorization from Grantor,
file a carbon, photographic or other reproduction of any financing statement or of this Agreement for use as a financing statement.
Grantor will reimburse Lender for all expenses for the perfection and the continuation of the perfection of Lender’s security
interest in the Collateral.

 

Severability.
If a court of competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to
any circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other circumstance.
If feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending
provision cannot be so modified, it shall be considered deleted from this Agreement. Unless otherwise required by law, the illegality,
invalidity, or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of
any other provision of this Agreement.

 

Successors
and Assigns. Subject to any limitations stated in this Agreement on transfer of Grantor’s
interest, this Agreement shall be binding upon and inure to the benefit of the parties, their successors and assigns. If ownership
of the Collateral becomes vested in a person other than Grantor, Lender, without notice to Grantor, may deal with Grantor’s
successors with reference to this Agreement and the Indebtedness by way of forbearance or extension without releasing Grantor
from the obligations of this Agreement or liability under the Indebtedness.

 

Survival
of Representations and Warranties. All representations, warranties, and agreements made
by Grantor in this Agreement shall survive the execution and delivery of this Agreement, shall be continuing in nature, and shall
remain in full force and effect until such time as Grantor’s Indebtedness shall be paid in full.

 

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

 

Waive
Jury. All parties to this Agreement hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought
by any party against any other party.

 

DEFINITIONS.
The following capitalized words and terms shall have the following meanings when used
in this Agreement. Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money
of the United States of America. Words and terms used in the singular shall include the plural, and the plural shall include the
singular, as the context may require. Words and terms not otherwise defined in this Agreement shall have the meanings attributed
to such terms in the Uniform Commercial Code:

 

Agreement.
The word “Agreement” means this Commercial Security Agreement, as this Commercial
Security Agreement may be amended or modified from time to time, together with all exhibits and schedules attached to this Commercial
Security Agreement from time to time.

 

Borrower.
The word “Borrower” means Nanophase Technologies Corporation and includes
all co-signers and co-makers signing the Note and all their successors and assigns.

 

Collateral.
The word “Collateral” means all of Grantor’s right, title and interest
in and to all the Collateral as described in the Collateral Description section of this Agreement.

 

Default.
The word “Default” means the Default set forth in this Agreement in the section
titled “Default”.

 

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

 

Event
of Default. The words “Event of Default” mean any of the events of default
set forth in this Agreement in the default section of this Agreement.

 

Grantor.
The word “Grantor” means Nanophase Technologies Corporation.

 

Guaranty.
The word “Guaranty” means the guaranty from guarantor, endorser, surety,
or accommodation party to Lender, including without limitation a guaranty of all or part of the Note.

 

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

 

    

     

    

 

	 	COMMERCIAL SECURITY AGREEMENT	 
	 	(Continued)

                                    
	Page 6
	 

 

Indebtedness.
The word “Indebtedness” means the indebtedness evidenced by the Note or Related
Documents, including all principal and interest together with all other indebtedness and costs and expenses for which Grantor
is responsible under this Agreement or under any of the Related Documents. Specifically, without limitation, Indebtedness includes
the future advances set forth in the Future Advances provision, together with all interest thereon and all amounts that may be
indirectly secured by the Cross-Collateralization provision of this Agreement.

 

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

 

Note.
The word “Note” means the Note dated March 4, 2018 and executed by Nanophase
Technologies Corporation in the principal amount of $500,000.00, together with all renewals of, extensions of, modifications of,
refinancings of, consolidations of, and substitutions for the note or credit agreement.

 

Property.
The word “Property” means all of Grantor’s right, title and interest
in and to all the Property as described in the “Collateral Description” section of this Agreement.

 

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

 

GRANTOR
HAS READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS COMMERCIAL SECURITY AGREEMENT AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED
MARCH 4, 2018.

 

THIS
AGREEMENT IS DELIVERED UNDER SEAL AND IT IS INTENDED THAT THIS AGREEMENT IS AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED
INSTRUMENT ACCORDING TO LAW.

 

GRANTOR:

 

NANOPHASE
TECHNOLOGIES CORPORATION

 

	By:

	/s/ Jess Jankowski	(Seal)
	 	Jess
Jankowski, President of Nanophase Technologies Corporation	 
	 	 	 

LaserPro, Ver.  17.4.21.005  Copr. D+H USA Corporation 1997, 2018.  All Rights Reserved -
DE/IL  C:\LASERPRO\CCO\CFI\LPL\E40. FC  TR-5287   PR-162Exhibit

Exhibit 10.14

	
		
	www.DicksSportingGoods.com
	345 Court Street · Coraopolis, PA 15108    

	 
	Main Phone: 724-273-3400

November 1, 2017

Paul Gaffney
44 Park Lane, NE
Atlanta, GA  30309

Dear Paul,

It is our great pleasure to offer you a leadership position on our DICK’S Sporting Goods Team contingent upon approval by our Board of Directors.  At DICK’S we look for leaders who share our passion for sports and our belief that sports make people better. Like the most successful athletes, our professionals are driven, skilled, passionate and committed, and we believe you are someone who exhibits these same valuable traits.

Enclosed is important information about our organization, your individual position, compensation and benefits. Please review the attached materials and contact me at 724-273-5302 with any questions. The major provisions of your offer are as follows:

Position: Your position is EVP - Chief Technology Officer. This position is based in our Customer Support Center, and you will report to Ed Stack, Chairman & Chief Executive Officer. We look forward to having you begin employment on a date to be determined.

Base Pay: Your annual salary will be $675,000 paid bi-weekly in the amount of $25,961.54.  

Annual Incentive:  Your target incentive award is 75% of your eligible earnings. The award can range from 0% to 150%, based on company and individual performance. Your next opportunity for an incentive award will be in the Spring of 2019 based on fiscal year 2018 results.

Sign-on Bonus: You will receive a one-time sign-on bonus of $1,500,000 to be paid with your first paycheck. All applicable federal, state and local taxes will be withheld from this payment.

Sign-on Equity: You will receive a sign-on equity grant valued at $1,600,000 consisting of a restricted stock grant valued at $1,120,000 that will vest 33.3% each year over a three-year period and a stock option grant valued at $480,000 that will vest 25% each year over a four-year period.

Annual Equity: Your target equity award is $1,100,000. The award will be split with 70% of the value in the form of restricted stock and 30% of the value in the form of stock options.  Your next opportunity for an annual equity grant will be in the Spring of 2018 with an expected vesting schedule of three-year cliff vest for restricted stock and four-year ratable vesting for options.

Long-term Incentive Plan:  You are eligible to participate in our DICK’S Sporting Goods long-term incentive plan (LTIP).  The number of shares granted will be pro-rated from the initial target grant date value of $1,250,000 based on your start date.  Additional plan details will be provided during your orientation.

Relocation: You are eligible to participate in our relocation program. A copy of the relocation policy is enclosed.

Health & Welfare Benefits: As a full-time salaried associate, after 30 days of continuous full-time service, you are eligible to participate in the full range of benefits, including medical, prescription, vision, dental, life and disability insurances, as well as retirement plans. Additional information on the benefit plans can be found at www.benefityourliferesources.com.

Paid Time Off: Your vacation time will accrue on a bi-weekly basis up to a total of 20 days annually. Three personal days are awarded at the beginning of each calendar year and are prorated over the course of the year for new hires. In addition, the Customer Support Center observes seven paid holidays each year.

Non-Qualified Deferred Compensation: You may defer up to 25% of your base salary and up to 100% of your annual bonus. DICK’S makes a yearly matching contribution of 20% of your annual deferrals up to a maximum match of $200,000. 

Terms: This offer is contingent upon satisfactory background and reference checks. You will receive a separate email with a link directing you to our background screening process. DICK’S is an at-will employer, which means that either you or DICK’S are free to end the employment relationship at any time, with or without notice or cause. All compensation and benefit plans are governed by their respective plan documents.

In addition, the following documents are enclosed and need to be executed prior to your start date. Please review, sign and forward to my attention. 

		
	•
	Non-Compete Agreement

		
	•
	Sign-On Bonus Agreement

		
	•
	Relocation Agreement

On your first day of employment, you will be required to provide documentation indicating that you are legally eligible for employment in the United States.  If you decide to accept our offer, please bring the appropriate identification with you on your first day of employment.

We hope that you’ll accept our offer of employment by signing and returning this letter to me.

Once again, we’d like to congratulate you on your offer. Please let me know if I can be of any help to you between now and your first day of employment. We look forward to welcoming you to the DICK’S team and building a future of success together. 

Sincerely,

/s/ Holly Tyson

Holly Tyson
Chief Human Resources Officer

I accept the above offer of employment:

  /s/ Paul J. Gaffney                                                          7 Nov 2017            
Signature                                    Date

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