On BAB Systems, Inc. received loan proceeds of from Lake Forest Bank and Trust Company, N.A., pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title of the CARES Act, which was enacted

The PPP Loan, which was in the form of a Note dated was issued to BAB Systems, Inc. The BAB PPP Loan has a -year term and bears interest at a rate of per annum. Monthly principal and interest payments are deferred for months after the date of disbursement. The BAB PPP Loan be prepaid at any time prior to maturity with prepayment penalties. The Note contains events of default and other provisions customary for a loan of this type.

 

Under the terms of the CARES Act, PPP Loan participants can apply for and be granted forgiveness for all or a portion of loans granted under the PPP. Under the terms of the PPP, PPP loans and accrued interest are forgivable between weeks and weeks, as long as the borrower uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains its payroll levels. The amount of loan forgiveness will be reduced if the borrower terminates employees or reduces salaries during the week period. BAB has used the loan proceeds for purposes consistent with the PPP, and anticipates that all or a majority of the loan amount will be forgiven, but there is assurance provided that the Company will obtain forgiveness of the PPP Loan in whole or part.