Document:

Nanophase Technologies Corporation 10-Q

 

Exhibit 10.1

 

 

BUSINESS
LOAN AGREEMENT

 

THIS
BUSINESS LOAN AGREEMENT dated as of November 19, 2018 by and between NANOPHASE TECHNOLOGIES CORPORATION, a Delaware corporation
(“Borrower”), and BEACHCORP, LLC, a Delaware limited liability company (“Lender”). 

 

PREAMBLE

 

WHEREAS,
Borrower desires to enter into certain secured financial transactions with Lender for the financing of its business and Lender
desires to enter into said transactions as more specifically described herein.

 

NOW,
THEREFORE, in consideration of the mutual promises contained herein, Borrower and Lender adopt the Preamble as part of this
Agreement and Borrower and Lender agree to be bound legally, further agreeing to the following terms and conditions.

 

SECTION
1:

AGREEMENTS
REGARDING THE LOANS

 

1.1       

The
Loans.

 

(a)

Generally.
Borrower has applied to Lender for Loans and other financial accommodations and, subject to the terms and conditions hereof
and the Related Documents, Lender has agreed to make Loans to Borrower for such purposes as provided for herein. Borrower understands
and agrees that: (i) in granting, renewing, or extending any Loan, Lender is relying upon Borrower's representations, warranties,
and agreements, as set forth in this Agreement and (ii) all such Loans shall be and shall remain subject to the terms and conditions
of this Agreement.

 

(b)

Term
Loan. Lender will make a $500,000.00 non-revolving term loan (the “Term Loan”) to Borrower. Borrower shall make
quarterly payments of interest only, with the first such payment due on December 31, 2018 and then on the last day of each calendar
quarter thereafter with a final payment of all principal and unpaid interest due on December 31, 2020 (the “Term Maturity
Date”). The Term Loan shall be evidenced by the Term Note. The Term Loan may be prepaid at any time without penalty or fee.

 

(c)       

Revolving
Loans. Lender will make Loans on a revolving basis (individually a “Revolving Loan” and collectively the “Revolving
Loans”) to Borrower until the Revolving Maturity Date in such amounts as Borrower may request in accordance with this Agreement;
provided that the aggregate outstanding principal amount of Revolving Loans may not exceed at any time the lesser
of (i) the $2,000,000.00 and (ii) the Borrowing Base. Each Revolving Loan shall be in the minimum amount of $10,000.00. Borrower
shall pay interest on the Loans in accordance with Section 1.5 hereof, with payment thereof in arrears to be made on the last
day of each calendar quarter, with the first such payment due on December 31, 2018. Each Revolving Loan shall be repaid in full
on the sooner of (a) a determination that the Revolving Loans exceed the Borrowing Base, and (b) the Revolving Maturity Date.
The Revolving Loans shall be evidenced by the Revolving Note. The Revolving Loans may be prepaid at any time without penalty or
fee.

  

    	 	1	 

    	 

    

1.2       

Borrowing
Procedures. Whenever Borrower desire to incur a Revolving Loan, it shall give the Lender written or telephonic notice thereof
(in the case of telephonic notice, promptly confirmed in writing to Lender), which notice must be received by the Lender prior
to 11:00 a.m. (Chicago time), at least one (1) Business Day prior to the proposed date such Loan is to be incurred. Each such
notice (“Notice of Borrowing”) shall be irrevocable, include a current Borrowing Base Certificate and AR Report, and
shall further specify the aggregate principal amount of the Revolving Loan to be made and the date of the proposed Revolving Loan
(which shall be a Business Day).

Without
in any way limiting the obligation of Borrower to confirm in writing any Notice of Borrowing given by telephone, the Lender may
act prior to receipt of written confirmation without liability upon the basis of such telephonic notice believed by the Lender
in good faith to be from an authorized officer of Borrower entitled to give telephonic notices under this Agreement on behalf
of Borrower. In each such case, the Lender's record of the terms of such telephonic notice shall be conclusive absent manifest
error. No later than 5:00 p.m. (Chicago time) on the date specified in each Notice of Borrowing, the Lender will make available
the amount of each Loan requested to be made on such date in the manner provided below. All amounts relating to any Loan incurred
by Borrower shall be made available to Borrower in immediately available funds by depositing such funds into the Borrower’s
designated account.

1.3       

Fees
and Expenses. Whether or not the transactions contemplated hereby shall be consummated, Borrower shall assume and pay upon
demand all out-of-pocket expenses incurred by Lender in connection with the preparation of loan documents and the making of the
Loan, including without limitation the following: (a) all closing costs, fees, and disbursements; (b) all fees and expenses of
Lender's legal counsel; and (c) all title examination fees, appraisal fees, and filing and recording fees.

 

1.4       

Recordkeeping.
Lender shall record in its records, the date and amount of each Loan made by the Lender, and each repayment thereof. The aggregate
unpaid principal amount so recorded shall be rebuttable presumptive evidence of the principal amount owing and unpaid on the Notes.
The failure to so record any such amount or any error in so recording any such amount shall not, however, limit or otherwise affect
the obligations of Borrower hereunder or under any Note to repay the principal amount of the Loan(s) evidenced by such Note together
with all interest accruing thereon.

 

1.5       

Interest.

 

(a)       

Interest
on Loan. 

 

(i)       

The
unpaid principal amount of the Term Loan shall bear interest from the date thereof until the Term Maturity Date (whether by acceleration
or otherwise) at 8.25% fixed.

(ii)
       

The unpaid principal amount of the aggregate outstanding balance of the Revolving Loan
shall bear interest from the date of each advance thereof until the Revolving Maturity Date, at the Prime Rate plus 3.0% floating,
but in no case less than 8.25%.

    	 	2	 

    	 

    

(b)       

Default
Interest. Notwithstanding the above provisions, if an Event of Default is in existence, all outstanding amounts of principal
and, to the extent permitted by law, all overdue interest, in respect of each and every Loan shall bear interest, payable on demand,
at the Default Rate.

 

(c)       

Accrual
and Payment of Interest. Interest shall accrue from and including the date provided in Section 1.5(a) above to, but excluding,
the date of any prepayment or repayment thereof, and shall be payable in accordance with Section 1.1 and on demand after maturity
or following an Event of Default. Interest is paid for the period a Loan is outstanding

 

(d)       

Computations
of Interest. All computations of interest on all Loans and other amounts owing hereunder shall be made on the actual number
of days elapsed divided by 365/6 days (i.e., that is, by applying the ratio of the interest rate divided by 365 days (or 366 if
applicable), multiplied by the funds advanced and outstanding, multiplied by the actual number of days the funds advanced are
outstanding). 

 

(e)

Maximum
Interest Rate. In no event shall the amount of interest paid hereunder, together with all amounts reserved, charged, or taken
by Lender as compensation for fees, services, or expenses incidental to the making, negotiation, or collection of the Loans evidenced
hereby exceed the maximum rate of interest on the unpaid balance hereof allowable by applicable law. If any sum is collected in
excess of the applicable maximum rate, the excess collected shall be applied to reduce the principal amount of the Indebtedness.

 

1.6       

Late
Charges. If any payment is ten (10) days or more late, Borrower will be charged 5.0% of the payment amount or $100.00, whichever
is greater.

 

1.7       

Mandatory
Prepayments.

 

(a)       

Sale,
Casualty, or Condemnation. Borrower (or, in the case of subsection (ii) below, if the Lender is holding the proceeds of insurance
or condemnation as additional collateral pursuant hereto or any Related Document, the Lender) shall make a prepayment of the Loans
(first to the Term Loan and then to the Revolving Loans) upon the occurrence of any of the following, at the following times and
in the following amounts:

 

(i)       

Within
ten (10) days after any sale, transfer or other disposition by Borrower of any tangible asset (other than the sales of inventory
in the ordinary course of business) valued in excess of $100,000.00 (or of any value during the continuance of an Unmatured Default
or Event of Default), in an amount equal to one hundred percent (100%) of the net cash proceeds of such sale, transfer or other
disposition; and

(ii)       

Within
ten (10) days after the receipt of any insurance or condemnation proceeds (or other similar recoveries) by Borrower or by the
Lender (to the extent the Lender is holding the insurance or condemnation proceeds as additional collateral pursuant hereto or
any Related Document) from any casualty loss incurred by Borrower or condemnation of property valued in excess of $100,000.00
(or of any value during the continuance of an Unmatured Default or Event of Default), in an amount equal to one hundred percent
(100%) of such insurance or condemnation proceeds (or other similar recoveries) net of any collection expenses; provided, that
this requirement shall not apply to the extent that Lender has agreed to allow Borrower to use such proceeds for the repair or
restoration of the affected property.

    	 	3	 

    	 

    

(b)       

Overadvances.
Borrower shall immediately prepay the Revolving Loans in the event that the outstanding balance of the Revolving Loans exceeds
the lesser of (i) $2,000,000.00, and (ii) the Borrowing Base.

 

1.8       

Term.
This Agreement shall continue thereafter until all Indebtedness of Borrower to Lender has been performed in full and the parties
terminate this Agreement in writing or this Agreement is terminated by Lender as otherwise provided for herein.

 

1.9       

Setoff.

 

(a)       

Borrower
agrees that, upon the occurrence and during the continuance of any Event of Default, the Lender is hereby authorized, at any time
and from time to time, without notice to the Borrower, (i) to set off against and to appropriate and apply to the payment of any
and all Indebtedness (whether matured or unmatured, fixed or contingent or liquidated or unliquidated) any and all amounts which
the Lender is obligated to pay over to the Borrower (whether matured or unmatured, and, in the case of deposits, whether general
or special, time or demand and however evidenced), and (ii) pending any such action, to the extent necessary, to deposit such
amounts with the Lender as Collateral to secure such Indebtedness, and to dishonor any and all checks and other items drawn against
any deposits so held, as the Lender in its sole discretion may elect.

 

(b)       

The
rights of the Lender under this Section 1.9 are in addition to all other rights and remedies which the Lender may otherwise have
hereunder or in law or equity.

 

1.10       

Application
of Payments. Upon the occurrence of an Unmatured Default or Event of Default, all monies received by Lender pursuant to this
Agreement shall be applied by Lender to any Indebtedness of Borrower (and in whatever order), as Lender shall determine, and the
Borrower does hereby irrevocably agree that the Lender shall have the continuing exclusive right to apply and reapply any and
all payments received at any time or times hereafter, whether with respect to the Collateral or otherwise, against the Borrower's
Indebtedness in such manner as the Lender may deem advisable, notwithstanding any entry by the Lender upon any of its books and
records. Lender shall within a reasonable time period account to Borrower for any sum remaining after the Indebtedness shall be
paid in full. Upon written demand of the Borrower, the Lender shall within a reasonable time period provide a written explanation
to the Borrower reasonably describing how such monies were applied and in what order. Until checks and other instruments delivered
to Lender in payment or on account of Borrower's obligations and the Indebtedness are actually paid to Lender, Borrower agrees
that such items constitute conditional payment only. Without limiting any of Lender's other rights provided herein, Lender may
bill Borrower for accrued interest or make advances of principal hereunder for payment of accrued interest, as and when due. For
purposes of this Agreement, all payments on the Loans or other amounts due under this Agreement or any Related Document shall
be made in immediately available funds prior to 12:30 p.m. (Chicago time) on the day when due. If such payments or other amounts
due are received by Lender on a day other than a Business Day or after 12:30 p.m. (Chicago time) on a Business Day such payments
or other amounts shall be deemed to be applied by Lender on account of the Indebtedness on the next Business Day following receipt
in Lender's account.

 

 

    	 	4	 

    	 

    

SECTION
2:

BORROWER'S
REPRESENTATION AND WARRANTIES

 

2.1       

Representations
and Warranties. Borrower represents and warrants to Lender as of the date of this Agreement and as of the date of each disbursement
of Loan proceeds:

 

(a)

Organization.
Borrower is a corporation which is duly organized, validly existing, and in good standing under the laws of the State of Delaware.
Borrower has the full power and authority to own its properties and to transact the businesses in which it is presently engaged
or presently proposes to engage. Borrower also is duly qualified as a foreign corporation and is in good standing in all jurisdictions
where it conducts business. 

 

(b)

Authorization.
The execution, delivery, and performance of this Agreement and all Related Documents by Borrower have been duly authorized by
all necessary corporate action by Borrower (as applicable); do not require the consent or approval of any other Person, regulatory
authority or governmental body; and do not conflict with, result in a violation of, or constitute a default under (i) any provision
of its articles of incorporation or organization, or bylaws or operating agreement, or any agreement or other instrument binding
upon Borrower or (ii) any law, governmental regulation, court decree, or order applicable to Borrower.

 

(c)

Compliance
with Law; Governmental Approvals and Permits. Borrower (i) is in compliance with all applicable provisions of law, and (ii)
to the extent required by applicable law, has, and is current and in good standing with respect to, all governmental approvals,
permits, certificates, inspections, consents and franchises necessary to continue to conduct its operations as it heretofore conducted
and to own or lease and operate the property now owned or leased by it.

 

(d)

Solvency.
Borrower has sufficient capital to carry on all operations and transactions in which it engages or is about to engage, is solvent
and will continue to be solvent after the creation of the Security Interest in the Collateral in favor of Lender created by this
Agreement or any Related Document and the making of the Loan pursuant hereto, and is able to pay its debts as they mature.

 

(e)

Financial
Statements; Material Adverse Change; Projections. Except as disclosed in writing by Borrower to Lender, all financial data
and other information furnished by Borrower to Lender, will be taken from the books and records of Borrower and are true, accurate
and correct in all material respects. The Financials fairly present the assets, liabilities and financial condition and results
of operations of Borrower described therein as of the dates thereof and were prepared on a basis consistent with the preparation
of the Borrower’s financial statements for prior periods; there are no omissions or other facts or circumstances which are
or may be material as of the date of the Financials, and there has been no material and adverse change in the Collateral, assets,
liabilities or financial condition of Borrower since the date of the Financials; there exist no outstanding advances to any Person
not reflected in the Financials; except as set forth in the Financials, there are no actions or proceedings which are pending,
or, to the best of Borrower's knowledge, threatened against Borrower; to the best of Borrower’s knowledge, there are no
actions or proceedings which are pending or threatened against any other Person which might result in any material adverse change
in Borrower’s financial condition or materially and adversely affect its operations, its assets or the Collateral; except
as stated in the Financials Borrower has no other liabilities and has not guaranteed the obligations of any other Person. Any
financial projections delivered to Lender by or on behalf of Borrower were, at the time of delivery to Lender, reasonable forecasts
based upon good business judgment and all facts and information known to Borrower and its consultants.

 

    	 	5	 

    	 

    

(f)

No
Default. Borrower is not in default, nor, to the best of Borrower’s knowledge, is any third party in default, under
or with respect to any contract, agreement, lease or other instrument to which Borrower is a party. No Unmatured Default or Event
of Default has occurred and is continuing.

 

(g)

Legal
Effect. This Agreement and all of the Related Documents constitute legal, valid and binding obligations of Borrower enforceable
against Borrower in accordance with their respective terms in all applicable jurisdictions.

 

(h)

Properties.
Except for (i) Security Interests in favor of Lender created by this Agreement or any Related Document, (ii) Security Interests,
claims and other encumbrances as set forth on the attached Schedule 2.1(h), and (iii) property tax liens for taxes not presently
due and payable, Borrower owns and has good title to all of Borrower's properties and assets free and clear of all Security Interests,
claims and other encumbrances, and has not executed any Security Agreements or financing statements relating to such properties.
All of Borrower's properties are titled in Borrower's legal name. Borrower has authority to encumber the Collateral in the manner
and form herein provided. The Borrower shall defend and protect the Collateral against and from all claims and demands of all
Persons at any time claiming any interest therein adverse to the Lender. No financing statement or other document similar in effect
covering all or any part of the Collateral is on file in any recording or filing office, other than those identifying the Lender
as the secured party or as set forth in Schedule 2.1(h).

 

(i)

Litigation
and Claims. No litigation, proceeding, suit, action, or claim against Borrower is pending or threatened, and no other event
has occurred which may adversely affect Borrower's financial condition, or operations of the Borrower, or properties, including
the Collateral, other than litigation, proceedings, suits, actions, claims, or other events, if any, that have been disclosed
to and acknowledged by Lender in writing.

 

(j)

Tax
Matters. Borrower has duly filed or properly extended all federal, state and other governmental tax returns which it is required
by law to file; all taxes and other sums which may be due to the United States, any state or other governmental authority have
been fully paid (including, without limitation, all reasonable estimations of penalties or late payment charges or interest).

 

(k)

Lien
Priority. The Security Interest in favor of the Lender provided in this Agreement or any Related Document is a valid and perfected
first priority security interest in the Collateral except as set forth in Schedule 2.1(h), and all filings and other actions necessary
to perfect such Security Interest have been duly taken and all such filings hereof reasonably identify the Collateral. Unless
otherwise disclosed to Lender in writing on the attached Schedule 2.1(h), Borrower has not entered into or granted any Security
Agreements, or permitted the filing or attachment of any Security Interests on or affecting any of the Collateral directly or
indirectly securing repayment of the Loan or other obligations hereunder.

 

(l)

Location
of Borrower's Offices, Records and Collateral. All places of business, and if Borrower has more than one place of business,
an indication of its chief executive office, and the office or offices where Borrower keeps its records concerning the Collateral
is located at those locations set forth on the attached Schedule 2.1(l) which shall include a listing of all previous locations
for the past five (5) years and a listing of any Collateral locations that are not places of business.  If any change in the place
or places of business of the Borrower, or its chief executive office, or the office where the Borrower keeps its records concerning
the Collateral will occur, the Borrower shall provide the Lender with, at Borrower's sole cost and expense, such financing statements
and other documents as the Lender shall request in connection with such change in order to maintain Lender's first priority perfected
security interest in the Collateral.

 

    	 	6	 

    	 

    

(m)

Names.
The Borrower’s exact legal name is as set forth in the first paragraph of this Agreement. Borrower has not used in the
past five (5) years, and shall not hereafter use, any name other than the name set forth in the first paragraph of this
Agreement (including, without limitation, any tradename, assumed name, any fictitious or any similar name) without first
giving Lender thirty (30) days prior written notice. 

 

(n)

Information.
All information heretofore or contemporaneously herewith furnished by Borrower to Lender for the purposes of or in connection
with this Agreement or any transaction contemplated hereby is, and all information hereafter furnished by or on behalf of Borrower
to Lender will be, true and accurate in every material respect on the date as of which such information is dated or certified;
and none of such information is or will be incomplete by omitting to state any material fact necessary to make such information
not misleading.

 

(o)

Employee
Benefit Plans. Each employee benefit plan as to which Borrower may have liability complies with all applicable requirements
of law and regulations, and (i) no “Reportable Event” nor “Prohibited Transaction” (as defined in ERISA)
has occurred with respect to any such plan, (ii) Borrower has not withdrawn from any such plan or initiated steps to do so, (iii)
no steps have been taken to terminate any such plan, and (iv) there are no unfunded liabilities other than those previously disclosed
to Lender in writing.

 

(p)

Representations
and Warranties Concerning Accounts. With respect to the Accounts, Borrower represents and warrants to Lender that, unless
Borrower otherwise notifies Lender pursuant to a writing in form and substance acceptable to Lender in its reasonable determination
and prior to Lender's crediting such Account as part of the Borrowing Base that: (i) Each Account represented by Borrower to be
an Eligible Account for purposes of this Agreement conforms to the requirements of the definition of an Eligible Account; (ii)
All Account information listed on schedules or certificates delivered to Lender will be true and correct, subject to immaterial
variance; (iii) Borrower has not made any agreement with any Account Debtor for any deduction from such Eligible Account, and
to Borrower's knowledge, there are no setoffs, counterclaims or disputes existing or asserted with respect to such Eligible Account;
(iv) to Borrower's knowledge, there are no facts, events or occurrences which in any way impair the validity or enforcement of
any Eligible Account or tend to reduce the amount payable thereunder from the face amount shown on any schedule of Accounts or
Borrowing Base Certificate and on all contracts, invoices and statements delivered to Lender with respect thereto; (v) Borrower
has no knowledge of any fact or circumstance which would impair the validity or collectability of any Eligible Account; and (vi)
to Borrower's knowledge, there are no proceedings or actions which are threatened or pending against any Account Debtor which
questions the enforceability of the Account Debtor's obligations with respect to any Eligible Account.

 

2.2       

Survival
of Representations and Warranties. Borrower understands and agrees that Lender is relying upon the above representations and
warranties in making the Loans to Borrower. Borrower agrees that the foregoing representations and warranties shall be continuing
in nature and shall remain in full force and effect until, unless otherwise specified herein, such time as Borrower's Loans and
the Notes shall be paid in full, or until this Agreement shall be terminated in the manner provided above, whichever is the last
to occur.

 

    	 	7	 

    	 

    

SECTION
3:

BORROWER'S
COVENANTS

 

3.1       

Borrower's
Affirmative Covenants. Borrower covenants and agrees with Lender that, while this Agreement is in effect, Borrower will:

 

(a)

Notice
of Material Events. Notify Lender as promptly as possible, and in any event within five (5) Business Days after the Borrower
has knowledge thereof, of (i) the occurrence of any Unmatured Default or Event of Default, (ii) any action, litigation, claim,
proceeding, or dispute (A) against or affecting the Collateral, (B) against or affecting Borrower seeking the payment of money
by Borrower, whether in the form of damages, liens, penalties or costs, in an amount in excess of $25,000.00, or (C) in any way
regarding the construction, creation, operation or use of the Collateral (regardless of the amount claimed therein), (iii) any
action, litigation, claim, proceeding or dispute involving Borrower and any court, board, commission, agency or instrumentality
of any federal, state or local government or any agency or subdivision thereof, which if adversely resolved could be reasonably
expected to result in a material adverse effect on Borrower's business, assets, operations or financial condition, (iv) any material
adverse change in Borrower's financial condition or operations, or (v) any event, occurrence or other matter which has had a materially
adverse effect or which could have a materially adverse effect on any part of the Collateral.

 

(b)

Financial
Records. Maintain its books and records in accordance with GAAP, applied on a consistent basis, and permit Lender to examine
and audit Borrower's books and records at all reasonable times.

 

(c)

Financial
Statements and Borrowing Base Certificate. Furnish Lender with, as soon as available, but in no event later than 5:00p.m.
(Chicago time) on the second Business Day of each calendar week, an AR Report for the previous week, prepared and certified as
true and correct by Borrower's chief financial officer or other officer or person acceptable to Lender, together with copies of
each new Account reported thereon. All financial reports required to be provided under this Agreement shall be prepared in accordance
with GAAP, applied on a consistent basis, and certified by Borrower as being true and correct. In addition, in connection with
each Revolving Loan advance, Borrower shall furnish Lender with a current Borrowing Base Certificate and AR Report.

 

(d)

Additional
Information. Furnish such additional information and statements, lists of assets and liabilities, agings of receivables and
payables, inventory schedules, budgets, forecasts, tax returns, and other reports with respect to Borrower's financial condition
and business operations as Lender may request from time to time.

 

(e)

Insurance.
Maintain, or cause to be maintained, all risk casualty insurance, public liability insurance, and such other insurance as
Lender may require with respect to Borrower's properties and operations, in form, amounts, coverages and with insurance companies
reasonably acceptable to Lender, but in all cases with respect to casualty insurance, in amounts not less than the full replacement
value of the property covered. Borrower, upon request of Lender, will deliver to Lender from time to time the policies or certificates
of insurance in form satisfactory to Lender, including stipulations that coverages will not be cancelled or diminished without
at least thirty (30) days prior written notice to Lender. In connection with all policies covering assets in which Lender holds
or is offered a Security Interest for the Loan, Borrower will provide Lender with such loss payable or other endorsements as Lender
may require.

 

(f)

Other
Agreements. Pay its indebtedness and liabilities in accordance with good business practices and otherwise comply with all
terms and conditions of all other agreements, whether now or hereafter existing, between Borrower and any other party and notify
Lender immediately in writing of any default in connection with any other such agreements.

 

    	 	8	 

    	 

    

(g)

Loan
Proceeds. Use all Loan proceeds solely as provided for herein.

 

(h)

Taxes,
Charges and Liens.

 

(i)

Pay
and discharge when due all of its indebtedness and obligations, including without limitation, all assessments, taxes, governmental
charges, levies and liens, of every kind and nature, imposed upon any portion of the transactions contemplated hereby, or on Borrower,
the Collateral or Borrower’s other properties, income, or profits, prior to the date on which penalties would attach, and
all lawful claims that, if unpaid, might become a lien or charge upon any of Borrower's properties, income, or profits. Provided,
however, Borrower will not be required to pay and discharge any such assessment, tax, charge, levy, lien or claim (collectively
the “Charges”) so long as: (A) the legality of the same shall be promptly contested in good faith by appropriate proceedings;
(B) Borrower shall have deposited with Lender cash, a sufficient corporate surety bond or other security satisfactory in form
and substance to Lender in an amount adequate to provide for the release of such Charge plus any interest, costs, attorneys' fees
or other amounts that could accrue as a result of foreclosure or sale of the Collateral; (C) such contest operates to suspend
collection of the Charge; and (D) none of the Collateral is subject to forfeiture or loss of any Security Interest (or the priority
thereof) by reason of the institution or prosecution of such contest as determined by Lender. Borrower, upon demand of Lender,
will furnish to Lender evidence of payment of the indebtedness and obligations, including any assessments, taxes, charges, levies,
liens and claims and will authorize the appropriate obligor or governmental official to deliver to Lender at any time a written
statement of any indebtedness and obligations including any Charges.

 

(ii)

Cause
all claims for labor done and materials and services furnished in connection with the Collateral to be fully paid and discharged
in a timely manner.

 

(i)

Performance.
Perform and comply with all terms, conditions, and provisions set forth in this Agreement, the Related Documents, and in all other
instruments and agreements between Borrower and Lender in a timely manner.

 

(j)

Reserved.

 

(k)

Inspection.
Permit employees or agents of Lender at any reasonable time to inspect any and all Collateral and Borrower's other properties
and to examine or audit Borrower's books, accounts, and records and to make copies and memoranda of Borrower's books, accounts,
and records. If Borrower now or at any time hereafter maintains any records (including without limitation computer generated records
and computer software programs for the generation of such records) in the possession of a third party, Borrower, upon request
of Lender, shall notify such party to permit Lender free access to such records at all reasonable times and to provide Lender
with copies of any records it may request, all at Borrower's expense. In addition to any rights provided for herein, Lender shall
be permitted to have a field audit performed on Borrower's books and records on an annual basis, at Borrower's sole expense.

 

(l)

Additional
Assurances. Make, execute and deliver to Lender such promissory notes, mortgages, deeds of trust, security agreements, financing
statements, instruments, documents and other agreements as Lender or its attorneys may reasonably request to evidence and secure
(as contemplated herein or in any of the Related Documents) the Indebtedness and to perfect all Security Interests.

 

(m)

Defense
of Title. Forever defend the title to the Collateral against the claims of all Persons. In the event any action or proceeding
is commenced that questions Borrower's title or the interest of Lender under any Security Agreement, Borrower shall defend the
action at Borrower's expense. Borrower may be the nominal party in such proceeding, but Lender shall be entitled to participate
in the proceeding and to be represented in the proceeding by counsel of Lender's own choice, and Borrower will deliver, or cause
to be delivered, to Lender such instruments as Lender may request from time to time to permit such participation.

 

    	 	9	 

    	 

    

(n)

Collection
Arrangement. 

 

(i)

The
Borrower shall direct all of its Account Debtors to make all electronic payments on the Accounts directly to a special account
maintained by Borrower with Libertyville Bank (the “Collection Account”) which shall be under the control of Lender
as provided for in the Blocked Account Agreement. Borrower will immediately deposit all payments made on the Accounts, and received
by the Borrower, in the identical form in which such payments were made, whether by cash or check, into the Collection Account.
If the Borrower, a Subsidiary or any director, officer, employee, agent or the Borrower or any Subsidiary, or any other Person
acting for or in concert with the Borrower shall receive any monies, checks, notes, drafts or other payments relating to or as
proceeds of Accounts or other Collateral, the Borrower and each such Person shall receive all such items in trust for, and as
the sole and exclusive property of, the Lender and, immediately upon receipt thereof, shall remit the same (or cause the same
to be remitted) in kind to the Collection Account. The Borrower agrees that all payments made to such Collection Account or otherwise
received by Borrower, whether in respect of the Accounts or as proceeds of other Collateral or otherwise, will be applied as provided
in this Agreement. The Borrower agrees to pay all fees, costs and expenses in connection with opening and maintaining the Collection
Account (including, but not limited to, any fees or expenses of Lender). 

 

(ii)

So
long as no Unmatured Default or Event of Default shall have occurred hereunder and remain continuing, Borrower shall be permitted
to withdraw from the Collection Account collected funds therein up to an amount equal to the amount by which the Borrowing Base
exceeds the outstanding principal balance of the Revolving Loans at such time, subject to demonstration thereof by submission
of a new Borrowing Base Certificate and AR Report for that purpose. 

 

3.2       

Borrower's
Negative Covenants. Borrower covenants and agrees with Lender that while this Agreement is in effect, Borrower shall not,
without the prior written consent of Lender, or as otherwise provided for herein:

 

(a)

Transfers
and Liens. Except in connection with the Libertyville Loans, sell, transfer, mortgage, assign, pledge, lease, grant a Security
Interest in, or create, suffer or permit any encumbrance of, any of Borrower's assets (other than the sale of inventory by Borrower
in the ordinary course of business).

 

(b)

Continuity
of Operations. (i) Engage in any business activities substantially different than those in which Borrower is
presently engaged, (ii) change its name without giving Lender thirty (30) days prior written notice, (iii) change its state of
organization, (iv) change its place of business, its chief executive office, or its mailing address, (v) change its
organizational identification number (if it has one), or (vi) cease operations, liquidate, merge or consolidate with any
other entity.

 

(c)

Change
in Ownership; Amend Organizational Documents. Allow any change in ownership of Borrower or the classification of such ownership
interests, or amend, modify or supplement Borrower’s organizational documents or agreements.

 

(d)

Loans,
Acquisitions and Indebtedness. (i) Loan money or assets, (ii) purchase or acquire any interest in any other Person, or
(iii) incur, assume or have outstanding any obligation as surety, borrower or guarantor except (A) Indebtedness owing to Lender,
(B) Indebtedness or liabilities of a nature existing on the date hereof and disclosed in the Financials, including the Libertyville
Loans and capitalized equipment leases, and (C) trade indebtedness incurred in the ordinary course of business and not inconsistent
with prior practices.

 

    	 	10	 

    	 

    

(e)

Distributions.
(i) Make any distribution to partners, shareholders or members in their capacity as such, or (ii) pay any dividends on Borrower's
stock, if any, or (iii) purchase or retire any of Borrower's outstanding shares, partnership interests or membership interests
or otherwise alter or amend Borrower's capital structure.

 

(f)

Investments.
Make any investment in or extend credit to any Person, other than trade credit on customary terms.

 

(g)

Transactions
with Affiliates. Enter into, or be a party to, any transaction or arrangement, including, without limitation, the purchase,
sale, lease or exchange of property or the rendering of any service, with any of its Affiliates except after prior written notice
to Lender and then only in the ordinary course of and pursuant to the reasonable
requirements of Borrower's business and upon fair and reasonable terms no less favorable to the Borrower than would be obtained
in a comparable arm's-length transaction with any Person or entity not its Affiliate. Notwithstanding the foregoing, so long as
such Affiliate as granted a Security Interest in favor of Lender with respect to the Indebtedness of Borrower, transactions with
such Affiliate shall be permitted with notice to Lender.

 

(h)

Salary.
Increase any regular or bonus compensation to, or confer any other economic benefit on, any of the officers, directors, members,
partners, or shareholders of the Borrower outside the ordinary course of business.

 

(i)

Security
Interests. Allow any of its assets to become subject to any Security Interest other than in favor of Lender (other than the
liens identified on Schedule 2.1(h)).

 

(j)

Contracts.
Enter into any contract, license or agreement with respect to or in any way relating to the Collateral on terms other than those
customarily contained in similar contracts, licenses or agreements between unrelated parties.

 

(k)

Libertyville
Loan. Amend the material terms of the Libertyville Loans such that Borrower’s financial obligations thereunder are materially
more onerous than on the date hereof, or in any way in which Borrower would be permitted to (i) draw more funds thereunder than
available on the date hereof, or (ii) draw funds more frequently than on the date hereof. Borrower shall promptly provide copies
of all amendments to the Libertyville Loans to Lender. 

    	 	11	 

    	 

    

 

SECTION
4:

ADDITIONAL
AGREEMENTS REGARDING LOANS AND COLLATERAL

 

4.1       

Distribution
of Casualty Insurance, Eminent Domain and Condemnation Proceeds.

 

(a)

Application
of Insurance Proceeds. Borrower shall promptly notify Lender of any loss or damage to the Collateral estimated to equal or
exceed $100,000.00. Lender may make proof of loss if Borrower fails to do so within fifteen (15) days of the casualty. Whether
or not Lender's Collateral is impaired, Lender may, at its election, apply the proceeds to the reduction of the Indebtedness,
payment of any lien affecting the Collateral, or the restoration and repair of the Collateral. If Lender elects to apply the proceeds
to restoration and repair, Borrower shall repair or replace the damaged or destroyed Collateral in a manner satisfactory to Lender
and in such case Lender shall, upon satisfactory proof of such expenditure and the lien free completion of such restoration or
repair, pay or reimburse Borrower from the proceeds for the reasonable cost of restoration or repair if no Unmatured Default or
Event of Default exists hereunder. Any proceeds which have not been disbursed within 180 days after their receipt and which Lender
has not committed to the repair or restoration of the Collateral shall be applied to the Indebtedness. If Lender holds any proceeds
after payment in full of the Indebtedness, such proceeds shall be paid to Borrower.

 

(b)

Application
of Net Eminent Domain and Condemnation Proceeds. If all or any part of the Collateral is condemned by eminent domain proceedings
or by any proceeding or purchase in lieu of condemnation, Lender may at its election require that all or any portion of the net
proceeds of the award be applied to the Indebtedness or the repair or replacement of the Collateral. The net proceeds of the award
shall mean the award after payment of all costs, expenses, and attorneys' fees incurred by Lender in connection with the condemnation
or eminent domain proceeding or purchase in lieu thereof.

 

4.2       

Right
to Advance Funds. When any event occurs that Lender determines may endanger the fulfillment of any condition or covenant in
this Agreement, Lender may require Borrower to furnish, within ten (10) days after delivery of a written request, adequate security
to eliminate, reduce, or indemnify Lender against such event. In addition, upon such occurrence, Lender may advance funds or agree
to undertake to advance funds to any party to eliminate, reduce, or indemnify Lender against, such danger. All sums paid by Lender
pursuant to such agreements or undertakings shall be for Borrower's account and shall be without prejudice to Borrower's rights,
if any, to receive such funds from the party to whom paid. All sums expended by Lender in the exercise of its option to protect
Lender's interests shall be payable to Lender on demand together with interest from the date of the Loan at the Default Rate.
In addition, any advance of funds under this Agreement including, without limitation, direct disbursements to any third party
of sums due, shall be deemed to have been expended by or on behalf of Borrower and to have been secured by the Security Agreements. 

 

SECTION
5:

CONDITIONS
PRECEDENT

 

5.1       

Delivery
of Documents. In addition to any other conditions precedent set forth herein or in any Related Document, Lender's obligation
to make any Loan is subject to, in addition to delivery of the executed Agreement and Notes and payment of all commitment fees
and costs and expenses of Lender (including attorneys' fees), delivery of the following documents, each to be in form and substance
satisfactory to Lender:

 

(a)

Security
Agreement. The duly executed Commercial Security Agreement of Borrower (and each Grantor as applicable) dated of even date
herewith, together with all documents and instruments deemed necessary by Lender to enable Lender to perfect its Security Interests
in any and all of the Collateral granted therein including, but not limited to, the Control Agreement.

 

    	 	12	 

    	 

    

(b)

Blocked
Account Agreement. The duly executed Blocked Account Agreement among Lender, Borrower and Libertyville Bank, together with
all documents and instruments deemed necessary by Lender with respect thereto, including all account documentation related to
the Collection Account.

 

(c)

Insurance.
Evidence of all insurance required under this Agreement, issued in an amount and by a company acceptable to Lender, containing
a loss payable or other endorsement satisfactory to Lender insuring Lender as loss payee, together with such other endorsements
as may be required by Lender.

 

(d)

Organizational
Documents and Agreements, Resolutions, Articles, By-Laws, etc. Certified copies of all documents, agreements or instruments
pertaining to Borrower’s incorporation, organization, existence operation or governance, together with certified copies
of such documents, agreements or instruments for Borrower's constituents and board of director or other appropriate resolutions,
certificates of incumbency and good standing certificates for all parties, as appropriate.

 

(e)

Approvals
and Consents.Approval of all necessary governmental or regulatory agencies which may have jurisdiction over (i) the Borrower,
any of Borrower's constituents, any Grantor or any of the Collateral or (ii) Lender or its ability to enforce its rights under
this Agreement or any of the Related Documents, and all necessary third party consents.

 

(f)

Landlord’s
Agreements. Within sixty (60) days of the date hereof, the duly executed Landlord’s Agreement from each of
Borrower’s landlords.

 

(g)

Libertyville
Loans. Copies of the documents evidencing the Libertyville Loans, together with a subordination agreement acceptable to Libertyville
Bank and Lender.

 

(h)

Other.
 Such other documents as the Lender may request.

 

5.2       

Certificates;
No Unmatured Defaults or Events of Default. In addition to the satisfaction of the conditions precedent set forth in Section
5.1, and any condition precedent set forth in any Related Document, Lender's obligation to make any Loan is subject to:

 

(a)

Certificate.
Delivery of a certificate from the chief executive officer of Borrower dated the date of the requested Loan, certifying that
(i) each representation and warranty contained herein or in any of the Related Documents is true and correct as if made on the
date of such certificate, and (ii) no Unmatured Default or Event of Default has occurred and remains continuing hereunder or under
any Related Document.

 

(b)

No
Unmatured Defaults or Events of Default. No Unmatured Default or Event of Default having occurred and be continuing hereunder
or under any Related Document.

 

(c)

Borrowing
Base Certificate and AR Report. Lender shall have received the most recent Borrowing Base Certificate and AR Report required
to be delivered pursuant to this Agreement, which, in connection with the initial Loans made hereunder at closing, shall show
availability in an amount acceptable to Lender (after giving effect to the Revolving Loans to be made to Borrower at closing).

 

 

SECTION
6:

EVENTS
OF DEFAULT AND REMEDIES

 

6.1       

Events
of Default. Each of the following (an “Event of Default”) shall constitute an Event of Default under this Agreement:

 

(a)

Default
on Indebtedness. Failure of Borrower to make any payment within ten (10) days of when due hereunder, under the Note, or under
any Related Document. 

 

    	 	13	 

    	 

    

(b)

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

 

(c)

Default
in Favor of Third Parties. Should Borrower or any Grantor default under any loan, extension of credit, security agreement,
purchase or sales agreement, or any other agreement, in favor of any other creditor or Person that may materially affect any of
Borrower's or any Grantor's property or Borrower's or any Grantor's ability to repay the Loan, as applicable, or perform their
respective obligations under this Agreement or any of the Related Documents. Any default or event of default under any of the
Libertyville Loans.

 

(d)

False
Statements. Any warranty, representation, or statement made or furnished to Lender by or on behalf of Borrower or any Grantor
under this Agreement or the Related Documents is untrue, misleading or incorrect in any material respect, either now or at the
time made or furnished or any schedule, certificate, statement, report, document, financial data, notice, or writing furnished
at any time by the Borrower to the Lender is untrue, misleading or incorrect in any material respect, on the date as of which
the facts set forth therein are stated or certified.

 

(e)

Defective
Collateralization; Material Agreements. (i) This Agreement or any of the Related Documents (i) ceases to be in full force
and effect (including failure of any Security Agreement to create a valid and perfected Security Interest) at any time and for
any reason or (ii) shall be, or sought to be, held invalid by any court of law, government or public ministry, shall be in default,
or any Person shall seek to materially limit, modify or revoke such agreement.

 

(f)

Insolvency;
Dissolution. Borrower shall be unable to pay its debts as they mature. The dissolution or termination of Borrower's or any
Grantor's existence as a going business, insolvency, appointment of a receiver for any part of Borrower's or any 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 Borrower or any Grantor, other than an involuntary proceeding which is dismissed, stayed or indemnified
against within forty-five (45) days of the commencement of such proceeding.

 

(g)

Creditor
Proceedings. Commencement of foreclosure, whether by judicial proceeding, self-help, repossession or any other method, by
any creditor of Borrower or any creditor of any Grantor against any Collateral securing the Indebtedness, including, without limitation,
a garnishment, attachment, levy, seizure, writ or distress warrant or the like (collectively, a “creditor proceeding”).
However, this Event of Default shall not apply to such creditor proceeding if Section 3.1(h) applies thereto and is being contested
in accordance therewith.

 

(h)

Judgments.
A judgment or order for the payment of money in excess of One Hundred Thousand Dollars ($100,000.00) shall be rendered against
Borrower or any Grantor and either (i) enforcement proceedings shall have been commenced by any creditor under such judgment or
order, or (ii) a stay of such judgment or order shall not be in effect for any period of thirty (30) consecutive days or (iii)
Borrower or such Grantor, as applicable, have not taken the steps provided for in Section 3.1(h).

 

(i)

Material
Adverse Change. Lender shall have determined in good faith (which determination shall be conclusive) that (i) a material adverse
change has occurred in the business, operations or financial condition of the Borrower, (ii) the prospect of payment or performance
of any obligation or agreement of the Borrower hereunder or under any of the Notes is materially impaired or (iii) a material
adverse change has occurred in the condition, value or operation of any of the Collateral.

 

    	 	14	 

    	 

    

6.2       

Effect
of an Unmatured Default or an Event of Default. If any Unmatured Default or Event of Default shall occur, all commitments
and obligations of Lender under this Agreement or the Related Documents or any other agreement between Lender and the Borrower
immediately will terminate and with respect to an Event of Default, at Lender's option, all Loans immediately will become due
and payable, all without notice of any kind to Borrower, except that in the case of an Event of Default of the type described
in subsection 6.1(f) above, such acceleration shall be automatic and not optional. Upon the occurrence of any Event of Default
and at any time thereafter, Lender may, at its option, but without any obligation to do so, and in addition to any other right
Lender may have, do any one or more of the following without notice to any party: (a) institute appropriate proceedings to enforce
the performance of this Agreement; (b) withhold further disbursement of any Loan hereunder or under any other agreement with Borrower;
(c) expend funds necessary to remedy the Unmatured Default or Event of Default; (d) take possession of the Collateral and operate
same; (e) accelerate maturity of the Notes and/or Indebtedness and demand payment of all sums due under the Notes and/or Indebtedness;
(f) bring an action on the Notes and/or Indebtedness; (g) foreclose on its Security Interests in any manner available under law;
and (h) exercise any other right or remedy which it has under the Notes or Related Documents, or which is otherwise available
at law or in equity or by statute.

 

 

SECTION
7:

DEFINITIONS;
MISCELLANEOUS PROVISIONS

 

7.1       

Definitions.
The following words shall have the following meanings when used in this Agreement. Terms not otherwise defined in this Agreement
shall have the meanings attributed to such terms in the Illinois Uniform Commercial Code to the extent the same are used or defined
therein (810 ILCS 1/1 et seq. as amended from time to time, the “Uniform Commercial Code” or “UCC”).
All references to dollar amounts shall mean amounts in lawful money of the United States of America.

 

Account
Debtor.  The words “Account Debtor” means the Person who is obligated on or under an Account or, if appropriate,
chattel paper or general intangible, as applicable.

 

Accounts.
The word “Accounts” means “accounts” as such term is defined in the UCC, including without limitation,
all rights to payment for goods sold or leased or services rendered, whether or not earned by performance and all rights in respect
of the Account Debtor, including, without limitation, all such rights in which Borrower has any right, title or interest by reason
of the purchase thereof by Borrower, and including, without limitation, all such rights constituting or evidenced by any Account,
chattel paper, general intangible, instrument, contract, invoice, purchase order, draft, acceptance, intercompany account, note,
security agreement, or other evidence of indebtedness or security, together with (a) any collateral assigned, hypothecated or
held to secure any of the foregoing and the rights under any security agreement granting a security interest in such collateral,
(b) all goods, the sale of which gave rise to any of the foregoing, and (c) all powers of attorney for the execution of any evidence
of indebtedness or security or other writing in connection therewith.

 

Affiliate.
The word “Affiliate” means, with respect to any Person (the “subject”), any Person (i) which directly
or indirectly controls or is controlled by, or is under common control with, the subject, (ii) which beneficially owns or holds
5% or more of the equity interest of the subject, or (iii) 5% or more of the equity interest of which is beneficially owned or
held by the subject or its Affiliates. The term “control” means the possession, directly or indirectly, individually
or in concert with others, of the power to direct or cause the direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract or otherwise.

 

Agreement.
The word “Agreement” means this Business Loan Agreement, including the Preamble, as this Business Loan Agreement may
be amended or modified from time to time, together with all exhibits and schedules attached to this Business Loan Agreement from
time to time.

 

    	 	15	 

    	 

    

AR
Report. The words “AR Report” means a report from Borrower setting forth the details for each of the Accounts,
payments received, etc. in form and substance required by Lender. The current form of the AR Report is attached hereto as Exhibit
A. Each AR Report shall be accompanied by copies of invoices for any newly reported Accounts. 

 

Blocked
Account Agreement. The words “Blocked Account Agreement” mean the Control Agreement for the Collection
Account among Borrower, Lender and Libertyville Bank.

 

Borrower.
The word “Borrower” has the meaning set forth in the initial paragraph of this Agreement.

 

Borrowing
Base. The words “Borrowing Base” mean an amount equal to the total of (a) ONE HUNDRED PERCENT (100%) of the unpaid
Net Face Amount (further net of such reserves and allowances as the Lender deems necessary in its discretion) of all Eligible
Accounts owned by Borrower, plus (b) the positive collected balance in the Collection Account.

 

Borrowing
Base Certificate. The words “Borrowing Base Certificate” mean a certificate, certified by an appropriate officer
of Borrower to be true and complete, setting forth the Borrowing Base as of the date on which that certificate is prepared, and
otherwise being in form and detail satisfactory to the Lender.

 

Business
Day. The words “Business Day” mean any day of the year on which Lender is open for business in Evanston, Illinois.

 

Charges.
The word “Charges” has the meaning set forth in Section 3.1(h).

 

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

 

Collection
Account. The words “Collection Account” have the meaning set forth in Section 21(n).

 

Control
Agreement. The words “Control Agreement” mean an Account Control Agreement among Borrower, Lender
and Libertyville Bank providing Lender with springing control over a depository account maintained by Borrower at
Libertyville Bank in form and substance acceptable to Lender. 

 

Default
Rate. The words “Default Rate” mean the rate of interest then applicable to the Loan plus five percent
(5.0%) per annum.

 

Eligible
Account.  The words “Eligible Account” mean any duly invoiced Account of which Borrower is the sole owner and
in which the Lender has an enforceable and duly perfected first priority Security Interest, except any such Account:

 

(i)                

that is not payable in installments and that shall not have been paid in full within ninety (90) days after the date first invoiced
to the Account Debtor or fifteen (15) days after its due date, which ever first elapses;

(ii)             

that is payable in installments;

(iii)           

if the Account Debtor thereon is then obligated to Borrower on other Accounts that are excepted under clause (i);

(iv)            

if the payment of which by the Account Debtor is not, or does not remain, unconditional;

    	 	16	 

    	 

    

(v)              

if and to the extent that the Account Debtor has asserted a defense or offset of any kind against the payment thereof;

(vi)            

that according to its terms may be paid by the Account Debtor by an offset of any claim of the Account Debtor or any other Person
against Borrower;

(vii)         

that arises other than in the ordinary course of Borrower's business or where the product or services has not yet been delivered
to the purchaser thereof;

(viii)       

if the Account Debtor thereon is an Affiliate, director, officer, employee, or agent of Borrower or of any Affiliate of Borrower;

(ix)            

if the Account Debtor thereon is insolvent or is the subject of any insolvency proceeding or is, at the time in question, in default
in any way on an existing obligation (except any obligation classified as an Account) to Borrower;

(x)              

reserved

(xi)            

if the Account Debtor thereon is a resident of any jurisdiction denying creditors access to its courts in the absence of qualification
to transact business therein or the filing of a so-called “notice of business activities report” or other similar
filing, unless Borrower has taken all action required by the jurisdiction in question to have access to its courts, unless specifically
approved by Lender;

(xii)         

which is subject to any law (including, without limitation, the Assignment of Claims Act of 1940 (31 USC 3272, et seq.
and 41 USC 15 et seq.), rule, regulation, order, or agreement now or hereafter in effect that restricts or requires notice
of or consent to assignment, unless all such required notices shall have been given, all such required consents shall have been
obtained, and all other requirements shall have been complied with so that the Lender shall have the unconditional right to enforce
the Account against the Account Debtor thereon;

(xiii)       

is subject to any Security Interest securing payment or performance of any obligation other than the Indebtedness owing to Lender
or the Libertyville Loans;

(xiv)        

that is described in any financing statement naming any Person other than the Lender or Libertyville Bank as the secured party
of record;

(xv)          

that is not evidenced by an invoice dated no later than thirty (30) days following the sale of product or provision of services;

(xvi)        

that is not payable in United States Dollars; or

(xvii)     

the Lender has determined, in good faith, that (A) the creditworthiness of the Account Debtor is not acceptable to Lender, or
(B) the collection or validity of the Accounts have become impaired for any reason.

Event
of Default. The words “Event of Default” have the meaning set forth in Section 6.1. 

 

Financials.
The word “Financials” means those financial statements delivered to Lender by or on behalf of the Borrower.

 

    	 	17	 

    	 

    

GAAP.
The word “GAAP” means generally accepted accounting principles set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board (or any successor authority) that are applicable to the circumstances as of the date of determination,
but for the calculation of any financial covenant or ratio, GAAP means such principals as in effect as of the date of this Agreement.

 

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

 

Indebtedness.
The word “Indebtedness” means and includes without limitation all Loans, together with all other obligations, debts
and liabilities of Borrower to Lender, or any one or more of them, of any and every kind and nature, as well as all claims by
Lender against Borrower, or any one or more of them relating to or arising from the transactions contemplated by this Agreement;
whether now or hereafter existing, voluntary or involuntary, due or not due, absolute or contingent, liquidated or unliquidated
whether arising by operation of law, under this Agreement, or acquired by Lender from any other source; whether Borrower may be
liable individually or jointly with others; whether Borrower may be obligated as a guarantor, surety, or otherwise; whether recovery
upon such Indebtedness may be or hereafter may become barred by any statute of limitations; and whether such Indebtedness may
be or hereafter may become otherwise unenforceable.

 

Inventory.
The word “Inventory” means all “inventory” as such term is defined in the UCC, including, without
limitation, all materials, inventories, and finished goods, wherever located, whether in transit, held by others for Borrower’s
account, covered by warehouse receipts, purchase orders and contracts, or in the possession of any carriers, forwarding agents,
truckers, warehousemen, vendors, customers on a consignment basis or other Persons, including, without limitation, all raw materials,
work in process, finished merchandise, supplies, goods, stores, incidentals, office supplies and packaging materials.

 

Lender.
The word “Lender” has the meaning set forth in the initial paragraph of this Agreement.

 

Libertyville
Bank. The words “Libertyville Bank” mean Libertyville Bank & Trust Company, its successors and assigns.

 

Libertyville
Loans. The words “Libertyville Loans” mean, collectively, (a) the $500,000.00 revolving line of credit made available
by Libertyville Bank to Borrower pursuant to the Business Loan Agreement (Asset Based) dated March 4, 2018 as it may be amended
(as permitted hereby) or extended, (b) the $300,000.00 line of credit made available by Libertyville Bank to Borrower pursuant
to the Business Loan Agreement dated February 24, 2017 as it may be amended (as permitted hereby) or extended and the (c) $30,000.00
line of credit made available by Libertyville Bank to Borrower pursuant to the Business Loan Agreement dated July 7, 2014 as it
may be amended (as permitted hereby) or extended. 

 

Loan.
The word “Loan” or “Loans” means any and all loans and financial accommodations from Lender to Borrower
related to or arising out of the loan transactions contemplated by this Agreement, whether now or hereafter existing, and however
evidenced, including without limitation those loans and financial accommodations described on any exhibit or schedule attached
to this Agreement from time to time.

 

Maturity
Date. The words “Maturity Date” mean either the Term Maturity Date or the Revolving Maturity Date, as applicable.

 

Net
Face Amount. The words “Net Face Amount” means the face amount of an Account less any allowances, discounts or
deductions available to an Account Debtor or any other deduction that Borrower may make available, including so called 2/10 (or
similar) discounts.

 

Notes.
The word “Notes” means (a) the Term Note and (b) the Revolving Note, together with all renewals of, extensions of,
modifications of, refinancings of, consolidations of, and substitutions for such promissory notes.

 

    	 	18	 

    	 

    

Notice
of Borrowing. The words “Notice of Borrowing” have the meaning set forth in Section 1.2.

 

Person.
The word “Person” means an individual or a corporation, partnership, trust, incorporated or unincorporated association,
joint venture, joint stock company, limited liability company, government (or any instrumentality, division, agency, body or political
subdivision thereof) or other entity of any kind.

 

Related
Documents. The words “Related Documents” mean and include without limitation all promissory notes, credit agreements,
loan agreements, guaranties, security agreements, mortgages, deeds of trust, collateral assignments, financing statements, and
all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Indebtedness.

 

Revolving
Loan. The words “Revolving Loan” have the meaning set forth in Section 1.1(c).

 

Revolving
Maturity Date. The words “Revolving Maturity Date” mean March 31, 2020.

 

Revolving
Note. The words “Revolving Note” mean the Promissory Note (Revolving Note) from Borrower to Lender dated of even
date herewith in the principal amount of $2,000,000.00, together with all renewals of, extensions of, modifications of, refinancings
of, consolidations of, and substitutions for such promissory note.

 

Security
Agreement. The words “Security Agreement” mean and include without limitation any agreements, promises, covenants,
arrangements, understandings or other agreements, whether created by law, contract, or otherwise, evidencing, governing, representing,
or creating a Security Interest.

 

Security
Interest. The words “Security Interest” mean and include without limitation any type of collateral security, whether
in the form of a lien, charge, mortgage, deed of trust, assignment, pledge, chattel mortgage, chattel trust, factor's lien, equipment
trust, conditional sale, trust receipt, lien or title retention contract, lease or consignment intended as a security device,
or any other security or lien interest, claim or encumbrance whatsoever, whether created by law, contract, or otherwise.

 

Term
Maturity Date. The words “Term Maturity Date” has the meaning set forth in Section 1.1(b).

 

Term
Note. The words “Term Note” mean the Promissory Note (Term Note) from Borrower to Lender dated of even date herewith
in the principal amount of $500,000.00, together with all renewals of, extensions of, modifications of, refinancings of, consolidations
of, and substitutions for such promissory note.

 

Unmatured
Default. The words “Unmatured Default” mean an event or circumstance which with the giving of notice, the passage
of time, or both, would, unless cured or waived, constitute an Event of Default.

 

7.2       

Other
Terms. Any accounting term used in this Agreement shall have, unless otherwise specifically provided herein, the meaning customarily
given such term in accordance with GAAP, and all financial computations hereunder shall be computed, unless otherwise specifically
provided herein, in accordance with GAAP consistently applied. That certain terms or computations are explicitly modified by the
phrase “in accordance with GAAP” shall in no way be construed to limit the foregoing. The words “herein,”
“hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole, including
the exhibits and schedules hereto, as the same may from time to time be amended, modified or supplemented and not to any particular
section, subsection or clause contained in this Agreement.

 

    	 	19	 

    	 

    

7.3       

Miscellaneous
Provisions. The following miscellaneous provisions are a part of this Agreement:

 

(a)

Interpretation;
Joint and Several Obligations. To the extent that this Agreement is executed by more than one Borrower, all words used herein
in the singular shall be deemed to have been used in the plural and those used in the masculine shall be deemed to have been used
in the feminine where the context and construction so require. The terms “Borrower,” and “Grantor” shall
mean all or any one or more of them. The phrase “to the best of Borrower’s knowledge,” or words of similar import,
shall mean actual knowledge following due inquiry. Each Borrower shall be fully bound by the terms of this Agreement, the obligations
hereunder being joint and several. Lender shall have the right to proceed immediately against any Borrower with respect to any
breach of this Agreement by such Borrower or any other Borrower and Lender is not required to take any action or proceeding of
any kind against all the Borrowers or any of the property, real or personal, of any Borrower before proceeding against such Borrower
or any other Borrower.

 

(b)

Entire
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.

 

(c)

Applicable
Law. This Agreement and all acts, agreements, certificates, assignments, transfers and transactions hereunder, and all rights
of the parties hereto, shall be governed as to validity, enforcement, interpretation, construction, effect and in all other respects
by the internal laws and decisions of the State of Illinois, including, but not limited to, laws regulating interest, loan charges,
commitment fees and brokerage commissions (without regard to conflicts of law principles). It is acknowledged and agreed by Borrower
and Lender that the loan transaction evidenced hereby bears a reasonable relationship to the State of Illinois. 

 

(d)

Consent
to Jurisdiction. To induce Lender to accept this Agreement, Borrower irrevocably agrees that, subject to Lender's election,
ALL ACTIONS OR PROCEEDINGS IN ANY WAY ARISING OUT OF OR RELATED TO THIS AGREEMENT WILL BE LITIGATED IN COURTS HAVING SITUS
IN COOK or WILL COUNTY, ILLINOIS. BORROWER HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY COURT LOCATED WITHIN COOK or
WILL COUNTY, ILLINOIS.

 

(e)

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.

 

(f)

Consent
to Loan Assignment or Participation. Borrower agrees and consents to Lender's sale or transfer, whether now or later, of one
or more interests in the Indebtedness to one or more purchasers, whether related or unrelated to Lender. Lender may provide, without
any limitation whatsoever, to any one or more purchasers, or potential purchasers, any information or knowledge Lender may have
about Borrower or about any other matter relating to the Indebtedness, and Borrower hereby waives any rights to privacy it may
have with respect to such matters. Borrower additionally waives any and all notices of sale of interests, as well as all notices
of any repurchase of such interests. Borrower also agrees that the purchasers of any such interests will be considered as the
absolute owners of such interests in the Indebtedness and will have all the rights granted under the agreement or agreements governing
the sale of such interests. Borrower agrees that either Lender or such purchaser may enforce Borrower's obligations with respect
to the Indebtedness irrespective of the failure or insolvency of any holder of any interest therein. Borrower further agrees that
the purchaser of any such interests may enforce its interests irrespective of any personal claims or defenses that Borrower may
have against Lender.

 

(g)

Costs
and Expenses. Borrower agrees to pay upon demand all of Lender's out-of-pocket expenses, including attorneys' fees, incurred
in connection with this Agreement or any Collateral or in connection with the Indebtedness under this Agreement. Lender may engage
an agent to help collect the Indebtedness and to enforce this Agreement and the Related Documents, and Borrower will reimburse
Lender therefor. This includes, subject to any limits under applicable law, Lender's attorneys' fees and legal expenses, whether
or not there is a lawsuit, including attorneys' fees for bankruptcy proceedings (including efforts to modify or vacate any automatic
stay or injunction), appeals, and any anticipated post-judgment collection services. Borrower also will pay any court costs, in
addition to all other sums provided by law.

 

    	 	20	 

    	 

    

(h)

Advice
of Counsel; Joint Interpretation. The Borrower acknowledges that it has been advised by its counsel with respect to this transaction,
this Agreement, and the Related Documents, including, without limitation, all waivers contained herein and therein. The parties
acknowledge that each party and its counsel have reviewed this Agreement and the Related Documents and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation
of this Agreement, the Related Documents, or any amendments or exhibits thereto.

 

(i)

Notices.
Except as otherwise provided herein, whenever it is provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the parties by another, or whenever any of the parties desires
to give or serve upon another any communication with respect to this Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and shall be delivered in person (by personal delivery, delivery service
or reputable overnight courier service), or telecopied and confirmed immediately in writing by a copy mailed by United States
mail, postage prepaid, addressed as hereafter set forth, or mailed by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:

 

(i)

If
to Lender, at:

 

1603
Orrington Avenue, Suite 900

Evanston,
IL 60201

Attn:
Bradford T. Whitmore

Tel:
847-733-1230 

Fax: 847-733-0339

 

(ii)

If
to Borrower, at:

 

1319
Marquette Drive

Romeoville,
IL 60446

Attn:
Jess Jankowski

Tel:
630-771-6702 

Fax: 630-771-0825

 

or
at such other address as may be substituted by notice given as herein provided. The giving of any notice required hereunder may
be waived in writing by the party entitled to receive such notice. Every notice, demand, request, consent, approval, declaration
or other communication hereunder shall be deemed to have been duly given or secured on the date on which (i) personally delivered
(whether in person, by delivery service, or by reputable overnight courier service), (ii) the date of the telecopy transmission
(provided the confirmation mailing was sent as provided herein), or (iii) on the date of receipt if sent by the United States
mail. Failure or delay in delivering copies of any notice, demand, request, consent, approval, declaration or other communication
to the Persons designed above to receive copies, if any, shall in no way adversely affect the effectiveness of such notice, demand,
request, consent, approval, declaration or other communication.

 

(j)

Consent
to Service of Documents. BORROWER HEREBY AGREES AND CONSENTS THAT, IN ADDITION TO ANY METHODS OF SERVICE OF PROCESS PROVIDED FOR
UNDER APPLICABLE LAW, ALL SERVICE OF PROCESS IN ANY SUIT, ACTION OR PROCEEDING IN ANY ILLINOIS OR FEDERAL COURT INVOLVING LENDER
IN ANY WAY (WHETHER FOR THIS TRANSACTION OR OTHERWISE) MAY BE MADE BY EITHER (A) CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT
REQUESTED, DIRECTED TO BORROWER AT THE ADDRESS INDICATED HEREIN, AND SERVICE SO MADE SHALL BE COMPLETE FIVE DAYS AFTER THE SAME
SHALL HAVE BEEN SO MAILED OR (B) THROUGH BORROWER’S ATTORNEY, DAVID L. WEINSTEIN, AT SUCH ADDRESS AS MAY
BE ON RECORD WITH THE SUPREME COURT OF ILLINOIS.

 

    	 	21	 

    	 

    

(k)

Severability.
If a court of competent jurisdiction finds any provision of this Agreement to be invalid or unenforceable as to any Person or
circumstance, such finding shall not render that provision invalid or unenforceable as to any other Persons or circumstances.
If feasible, any such offending provision shall be deemed to be modified to be within the limits of enforceability or validity;
however, if the offending provision cannot be so modified, it shall be stricken and all other provisions of this Agreement in
all other respects shall remain valid and enforceable.

 

(l)

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

 

(m)

Successors
and Assigns. This Agreement shall be binding upon, and inure to the benefit of, the parties and their successors and assigns
and shall inure to the benefit of Lender, its successors and assigns. Borrower shall not, however, have the right to assign its
rights under this Agreement or any interest therein, without the prior written consent of Lender.

 

(n)

Survival.
All warranties, representations, and covenants made by Borrower in this Agreement or in any certificate or other instrument delivered
by Borrower to Lender under this Agreement shall be considered to have been relied upon by Lender and will survive the making
of the Loan and delivery to Lender of the Related Documents, regardless of any investigation made by Lender or on Lender's behalf.

 

(o)

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

 

(p)

Agency.
Nothing in this Agreement shall be construed to constitute the creation of a partnership or joint venture between Lender and Borrower
or any Person. Lender is not an agent or representative of Borrower. This Agreement does not create a contractual relationship
with and shall not be construed to benefit or bind Lender in any way with or create any contractual duties by Lender to any contractor,
subcontractor, materialman, laborer, or any other Person other than Borrower.

 

(q)

Merger.
There shall be no merger of the interest or estate created by this Agreement or any Related Document with any other interest or
estate in the Collateral at any time held by or for the benefit of Lender in any capacity, without the written consent of Lender.

 

(r)

Indemnity.
Whether or not the transactions contemplated hereby shall be consummated, Borrower agrees to defend, protect and indemnify Lender,
its participants and each of their assigns, and each of their respective directors, officers, employees, affiliates and agents
(collectively, “Indemnified Persons”) from and against, and agrees to hold each such Indemnified Person harmless from,
any and all losses, claims, damages, obligations, judgments, penalties, and liabilities and related costs and expenses, including,
without limitation, reasonable counsel fees and expenses, incurred by such Indemnified Person arising out of any claim, action,
suit, litigation, investigation or proceeding (whether or not such Indemnified Person is a party thereto), which may be imposed
on, incurred by, or asserted against any Indemnified Person (whether direct, indirect or consequential and whether based on any
federal or state laws or other statutory regulations, including, without limitation, securities, environmental and commercial
laws and regulations, under common law or in equity, or in contract or otherwise) in any manner relating to or arising out of
this Agreement, the Related Documents, or any act, event or transaction related or attendant hereto or thereto, the making and
the management of the Loan or the use or intended use of the proceeds of the Loan hereunder; provided, however,
that such indemnity shall not apply to any such losses, claims, damages, or liabilities or related expenses determined by a court
of competent jurisdiction to have arisen from the gross negligence or willful misconduct of such Indemnified Person. The agreements
of Borrower in this subsection shall be in addition to any of the Indebtedness that Borrower may otherwise have. All amounts due
under this subsection shall be payable as incurred upon written demand therefor, shall be added to the Indebtedness of the Borrower
and shall bear interest at the Default Rate, and shall be secured by the Collateral. To the extent that the undertaking to indemnify,
pay and hold harmless set forth in this subsection may be unenforceable because it is violative of any law or public policy, the
Borrower shall contribute the maximum portion which it is permitted to pay and satisfy under applicable law, to the payment and
satisfaction of all matters incurred by the Indemnified Persons. The provisions of and undertakings and indemnifications set out
in this Section shall survive the satisfaction and payment of the Indebtedness of the Borrower and the termination of this Agreement.

 

    	 	22	 

    	 

    

(s)

Waiver
and Consents. Lender shall not be deemed to have waived any rights under this Agreement or under the Related Documents unless
such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Agreement shall not prejudice
or constitute a waiver of Lender's right otherwise to demand strict compliance with that provision or any other provision of this
Agreement. No prior waiver by Lender, nor any course of dealing between Lender and Borrower, or between Lender and any Grantor,
shall constitute a waiver of any of Lender's rights or of any obligations of Borrower or of any Grantor as to any future transactions.

 

(t)

Lender's
Discretion. Whenever this Agreement requires either Lender's consent, election, approval or similar action or otherwise vests
in Lender the authority to make decisions and/or determinations, such actions shall be made or withheld in Lender's sole and absolute
discretion, unless specifically provided otherwise and the granting of any consent, election, approval or similar action by Lender
in any instance shall not constitute continuing consent, election, approval or similar action in subsequent instances where such
is required.

 

(u)

Payments
Set Aside. To the extent that the Borrower makes a payment or payments to the Lender or the Lender enforces its Security Interest
or exercises its rights of setoff, and such payment or payments or the proceeds of such enforcement or setoff or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or federal law, common law or equitable cause, then to the extent
of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force
and effect as if such payment had not been made or such enforcement or setoff had not occurred.

 

(v)

Waiver
of Demand. Demand, presentment, protest and notice of nonpayment are hereby waived by the Borrower, except as otherwise expressly
provided herein.

 

(w)

Conflict
of Terms. Except as otherwise expressly provided in this Agreement and except as otherwise expressly provided in the Related
Documents by specific reference to the applicable provision of this Agreement, if any provision in this Agreement is in conflict
with, or inconsistent with, any provision in the Related Documents or the Commitment Letter, the provision in this Agreement shall
govern and control.

 

(x)

Counterparts.
This Agreement and all Related Documents may be executed in any number of separate counterparts, each of which shall, collectively
and separately, constitute one agreement.

 

(y)

Waiver
of Jury Trial. BORROWER AND LENDER EACH WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS (i) UNDER THIS AGREEMENT OR ANY RELATED DOCUMENT OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT WHICH MAY IN
THE FUTURE BE DELIVERED IN CONNECTION WITH THIS AGREEMENT OR RELATED DOCUMENT OR (ii) ARISING FROM ANY BANKING RELATIONSHIP EXISTING
IN CONNECTION WITH THIS AGREEMENT, AND AGREE THAT ANY SUCH ACTION OR PROCEEDING WILL BE TRIED BEFORE A COURT AND NOT BEFORE A
JURY. BORROWER AGREES THAT IT WILL NOT ASSERT ANY CLAIM AGAINST LENDER OR ANY OTHER PERSON INDEMNIFIED UNDER THIS AGREEMENT ON
ANY THEORY OF LIABILITY FOR SPECIAL, INDIRECT, CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGES.

 

(signatures
to follow)

 

    	 	23	 

    	 

    

 

BORROWER
ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN AGREEMENT, AND BORROWER AGREES TO ITS TERMS. 

 

BORROWER:

 

NANOPHASE
TECHNOLOGIES CORPORATION

 

	/s/
                            JESS A. JANKOWSKI
	 

 Jess
A. Jankowski

Chief
Executive Officer

 

 

LENDER:

 

BEACHCORP,
LLC 

 

	/s/
BRADFORD T. WHITMORE
	 

Bradford
T. Whitmore

Manager

 

 

    	 	24	 

    	 

    

 

BUSINESS
LOAN AGREEMENT

LIST
OF EXHIBITS AND SCHEDULES

 

 

	Exhibit
A	-	Form of AR Report
	 
	Schedule 2.1(h)	-	General List and Description of Security Interests, Claims and Other Encumbrances

	 
	Schedule 2.1(l)	-	Places of Business, Chief Executive Office, Location of Records and Collateral Locations

 

 

 

    	 	25	 

    	 

    

 

Exhibit A  -  Form of AR Report

 

 

    	 	26	 

    	 

    

 

Schedule 2.1(h)  -  General
List and Description of Security Interests, Claims and Other Encumbrances

 

		•	Liens in connection with the Libertyville
Loans

		•	Liens or encumbrances in connection with
capitalized leases below:

 

 

 

 

 

    	 	27	 

    	 

    

 

Schedule
2.1(l)  -  Places of Business, Chief Executive Office, Location of Records and Collateral Locations

 

	Warehouse:
    1277 Naperville Drive, Romeoville IL
	 
	Landlord:	RB
    Properties	 
	 	6475
    Joliet Road	 
	 	Suite
    A100	 
	 	Countryside,
    IL 60525	 
	 	Richard
    Barton	 
	 	708-582-6276	 
	 	Lease
    Dates:	9/1/16
    - 8/31/19
	 	Renewal
    Option:	Option
    to renew one three year period

 

 

	Romeoville: 1319 Marquette Drive, Romeoville IL
	 
	Landlord:	MLRP 1319 Marquette LLC	 
	 	RE Development Solutions, Inc.	 
	 	P.O. Box 5598	 
	 	Woodridge, IL 60517	 
	 	Ramsey Elshafei	 
	 	630-707-0209	 
	 	Lease Dates:	1/1/16 - 12/31/19
	 	Renewal Options:	Option to renew for one period of five years.

 

 

	Burr Ridge: 453 Commerce Street, Burr Ridge IL
	 
	Landlord:	Village of Burr Ridge	 
	 	7660 County Line Road	 
	 	Burr Ridge, IL 60527	 
	 	Steven Stricker	 
	 	630-654-8181 ext. 2000	 
	 	Lease Dates:	9/15/2017-9/15/21
	 	Renewal Options:	Option to renew one three year period

 

 

 

 

    	 	28Nanophase Technologies Corporation 10-Q

 

Exhibit 10.2

 

PROMISSORY
NOTE

(Term
Note)

 

	Principal Amount: $500,000.00	Date of Note: November 19, 2018

 

PROMISE
TO PAY. NANOPHASE TECHNOLOGIES CORPORATION, a Delaware corporation (“Borrower”), hereby promises to pay to BEACHCORP,
LLC, a Delaware limited liability company (“Lender”), or order, in lawful money of the United States of America, the
principal amount of FIVE HUNDRED THOUSAND AND 00/100 DOLLARS ($500,000.00) together with interest on the unpaid principal balance
from the date hereof, until paid in full.

 

LOAN.
This Note evidences Borrower’s Term Loan under the Business Loan Agreement dated as of November 19, 2018 between Borrower
and Lender (as it may be amended from time to time, the “Loan Agreement”). Capitalized terms used herein, but not
otherwise defined herein, shall have the meaning given them in the Loan Agreement.

 

PAYMENT.
Borrower will repay the Loan(s) evidenced hereby in accordance with the terms of the Loan Agreement.

 

INTEREST.

 

(a)

Interest
on the Loans. Borrower shall pay interest on the Loan(s) in accordance with the terms of the Loan Agreement.

(b)

Default
Interest. Notwithstanding the above provisions, if an Event of Default is in existence, all outstanding amounts of principal
and, to the extent permitted by law, all overdue interest, in respect of each and every Loan shall bear interest, payable on demand,
at the Default Rate under the Loan Agreement.

EVENTS
OF DEFAULT. A default in the performance of any obligation hereunder or any Event of Default under the Loan Agreement shall
constitute an Event of Default hereunder.

 

LENDER'S
RIGHTS. Upon the occurrence of an Event of Default, Lender may declare the entire unpaid principal balance on this Note and
all accrued unpaid interest immediately due, without notice, and then Borrower will pay that amount, together with any Prepayment
Fee which Borrower would be required to pay. Lender may hire or pay someone else to help collect this Note if Borrower does not
pay. Borrower also will pay Lender that amount. This includes, subject to any limits under applicable law, Lender's attorneys'
fees and legal expenses whether or not there is a lawsuit, including attorneys' fees and legal expenses for bankruptcy proceedings
(including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection
services. Borrower also will pay any court costs, in addition to all other sums provided by law. This Note has been delivered
to Lender and accepted by Lender in the State of Illinois. If there is a lawsuit, Borrower agrees upon Lender's request to submit
to the jurisdiction and venue of the courts having situs in Cook or Will County, the State of Illinois. LENDER AND BORROWER HEREBY
WAIVE THE RIGHT TO ANY JURY TRIAL IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY EITHER LENDER OR BORROWER AGAINST THE
OTHER. This Note shall be governed by and construed in accordance with the laws of the State of Illinois.

 

    	 	1	 

    	 

    

 

COLLATERAL;
LOAN AGREEMENT. This Note is secured by the Collateral (as defined in the Loan Agreement). This Note is the Term Note referred
to in the Loan Agreement.

 

SAVINGS
CLAUSE. In no event shall the amount of interest or charges paid hereunder, together will all amounts reserved, charged,
or taken by Lender as compensation for fees, services, or expenses incidental to making, negotiation, or collection of the
loan evidenced hereby exceed the maximum rate of interest on the unpaid principal balance hereof, charges or compensation for
fees, services, or expenses allowable by applicable law. If any sum is collected in excess of the applicable maximum
rate or amount, the excess collected shall be applied to reduce the principal debt. 

 

INDEMNITY.
If the introduction of, or any change in, or in the interpretation of, or any change in its application to the Borrower of, any
law or regulation, or compliance with any guideline from any governmental authority (whether or not having the force of law) has
the effect of increasing the cost to the Lender of performing its obligations hereunder or otherwise reducing its effective return
hereunder, then upon demand from time to time the Borrower shall compensate the Lender for such cost or reduction pursuant to
a certificate reasonably prepared by the Lender.

 

GENERAL
PROVISIONS. Lender may delay or forgo enforcing any of its rights or remedies under this Note without losing them. Borrower
and any other Person who signs, guarantees or endorses this Note, to the extent allowed by law, waive presentment, demand for
payment, protest and notice of dishonor. Upon any change in the terms of this Note, and unless otherwise expressly stated in writing,
no party who signs this Note, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability.
All such parties agree that Lender may renew, extend (repeatedly and for any length of time) or modify this Loan, or release any
party or guarantor or Collateral; or impair, fail to realize upon or perfect Lender's security interest in the Collateral; and
take any other action deemed necessary by Lender without the consent of or notice to anyone.

 

LENDER'S
DISCRETION. Whenever this Note requires either Lender's consent, election, approval or similar action or otherwise vests in
Lender the authority to make decisions and/or determinations, such actions shall be made or withheld in Lender's sole and absolute
discretion, unless specifically provided otherwise and the granting of any consent, election, approval or similar action by Lender
in any instance shall not constitute continuing consent, election, approval or similar action in subsequent instances where such
is required.

 

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

 

    	 	2	 

    	 

    

 

PRIOR
TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE. BORROWER AGREES TO THE TERMS OF THE PROMISSORY
NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE PROMISSORY NOTE.

 

BORROWER:

 

NANOPHASE
TECHNOLOGIES CORPORATION

 

 

	/s/ JESS A. JANKOWSKI	 	 
	Jess
A. Jankowski	 
	Chief
Executive Officer	 
	 	 
	Address:	 
	1319
Marquette Drive	 
	Romeoville,
IL 60446	 

 

 

    	 	3

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00289-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00289-of-00352.parquet"}]]