EMPLOYMENT AGREEMENT
Exhibit 99.1
Employment Agreement dated and effective as of January 8, 2007 (this “Agreement”), between
NANOPHASE TECHNOLOGIES CORPORATION, a Delaware corporation (with its successors and assigns,
referred to as the “Company”), and Xxxxx X. Xxxxx (referred to as Executive Vice President, Sales
and Marketing, or EVP).
Preliminary Statement
The Company desires to employ EVP, and EVP wishes to be employed by the Company, upon the
terms and subject to the conditions set forth in this Agreement. The Company and EVP also wish to
enter into the other covenants set forth in this Agreement, all of which are related to EVP’s
employment with the Company. In consideration of the mutual promises and covenants stated below,
EVP and the Company therefore agree as follows:
Agreement
1. Employment for Term. The Company employs EVP, and EVP hereby accepts employment with the
Company, beginning on January 8, 2007, and renewing automatically on an annual basis until
terminated pursuant to Section 7 below (the “Term”).
2. Position and Duties. During the Term, EVP shall serve as Executive Vice President, Sales
and Marketing, and shall report to the President & CEO of the Company. During the Term, EVP shall
also hold such additional positions and titles as the President or the Board of Directors of the
Company (the “Board”) may determine from time to time. During the Term, EVP shall devote
substantially all of his business time and best efforts to his duties as an EVP of the Company.
3. Signing Benefits. In consideration of and in reliance upon EVP’s execution of this
Agreement, and based entirely upon EVP’s acceptance of the duties and obligations to the Company
under this Agreement (specifically including, without limitation, EVP’s obligations under the
covenants in Section 9, and the restrictions in Section 10 of the Agreement), the Company shall
provide EVP with the following signing benefits:
(a) A guarantee of part of EVP’s 2007 bonus payment, as provided under Section 4(b) below;
(b) A grant of stock options, as provided under Section 4(c) below; and
(c) Severance Benefits if the Company ends the Term for reasons other than Cause (as defined
in Section 8): (i) the Company shall pay EVP a sum equal in annual amount to EVP’s base salary in
effect at the time of termination during the period (the “Severance Period”) of 52 full weeks after
the effective date of termination, payable in proportionate amounts on the Company’s regular pay
cycle for professional employees and (if the last day of the Severance Period is not the last day
of a pay period) on the last day of the Severance Period, and (ii) all stock options granted to EVP
prior to termination shall become fully vested, and shall become exercisable (by EVP, or upon his
death or disability, by his heirs, beneficiaries and personal representatives) in accordance with
the applicable option grant agreement and the Company’s 2004 Equity Compensation Plan (the “Plan”)
or such predecessor stock option plan as may govern any particular option grant agreement.
4. Compensation.
(a) Base Salary. The Company shall pay EVP a base salary, beginning on the first day of the
Term and ending on the last day of the Term, of not less than $270,000 per annum, payable on the
Company’s regular pay cycle for professional employees.
(b) Bonus Payment. EVP will be eligible for
discretionary bonuses for services to be performed as an employee of the Company based on
performance milestones agreed upon by EVP and the CEO of the Company and approved by the Board.
During calendar year 2007, EVP’s bonus will be a maximum of $121,500 (or 45% of his initial base
salary), subject to completion of his performance milestones, as determined by the Board in its
sole discretion. However, for calendar year 2007 only, the Company guarantees EVP a bonus payment
of $24,300 (or 20% of EVP’s 2007 bonus target). The guaranteed portion of EVP’s 2007 bonus will be
paid in installments of $12,150 on or about July 8, 2007 and $12,150 on or about January 8, 2008,
provided that EVP’s employment and the Term of this Agreement have not been terminated for Cause
(as defined under Section 8(a) below) on or before the date that an installment of the guaranteed
bonus has been paid. Any discretionary bonus awarded to EVP for his performance in 2007 will be
paid at such time as performance bonuses awarded to other officers of the Company are paid.
(c) Stock Options. In connection with the execution of this Agreement, the Company has
granted to EVP non-qualified options to purchase up to 75,000 shares of the Company’s common stock
under the terms of the Company’s Plan, with a grant date of
January 8, 2007 and vesting at the rate
of 20% on January 8, 2008, 20% on January 8, 2009, 20% on
January 8, 2010, 20% on January 8,
2011 and 20% on January 8, 2012. The stock price of the options shall be determined as of the closing market price of the
Company’s stock on January 8, 2007. Subject to the provisions of the Company’s Plan, and as
determined by the Board in its sole discretion, EVP shall be eligible for such additional stock
options and other equity compensation as the Board deems appropriate.
(d) Other and Additional Compensation. Sections 4(a) and 4(b) establish minimum salary and
bonus levels for EVP during the Term, and shall not preclude the Board from awarding EVP a higher
salary at any time, nor shall they preclude the Board from awarding EVP additional bonuses or other
compensation in the discretion of the Board.
5. Employee Benefits. During the Term, EVP shall be entitled to the employee benefits made
available by the Company generally to all other employees of the Company, subject to all the terms
and conditions of the Company’s employee benefit plans in effect from time to time. EVP shall be
entitled to four (4) weeks of paid vacation during each year of the Term, subject to the Company’s
vacation policy in effect from time to time.
6. Expenses. The Company shall reimburse EVP for actual out-of-pocket expenses reasonably
incurred by EVP in performing services as an employee of the Company in accord with the Company’s
policy for such reimbursements applicable to employees generally, and upon receipt by the Company
of appropriate documentation and receipts for such expenses.
7. Termination.
(a) General. The Term shall end (i) immediately upon EVP’s death, or (ii) upon EVP becoming
disabled (within the meaning of the Americans With Disabilities Act of 1991, as amended) and unable
to perform fully all essential functions of his job, with or without reasonable accommodation, for
a period of 150 calendar days. Either EVP or the Company may end the Term at any time for any
reason or no reason, with or without Cause, in the absolute discretion of EVP or the Board (but
subject to each party’s obligations under this Agreement), provided that EVP will provide the
Company with at least forty-five (45) days’ prior written notice of EVP’s resignation from his
position as an employee with the
2
Company. Upon receipt of such written notice, the Company, in its sole discretion, may
accelerate the effective date of the resignation to such date as the Company deems appropriate,
provided that EVP shall receive the compensation required under Section 4(a) of this Agreement for
a full forty-five (45) day period.
(b) Notice of Termination. If the Company ends the Term, it shall give EVP at least
forty-five (45) days prior written notice of the termination, including a statement of whether the
termination was for “Cause” (as defined in Section 8(a) below). Upon delivery of such written
notice, the Company, in its sole discretion, may accelerate the effective date of such termination
to such date as the Company deems appropriate, provided that EVP shall receive the compensation
required under Section 4(a) of this Agreement for a full forty-five (45) day period. The Company’s
failure to give notice under this Section 7(b) shall not, however, affect the validity of the
Company’s termination of the Term or EVP’s employment, nor shall the lack of such notice entitle
EVP to any rights or claims against the Company other than those arising from EVP’s right to
receive the compensation required under Section 4(a) of this Agreement for a full forty-five (45)
day period.
8. Severance Benefits.
(a) “Cause” Defined. “Cause” means (i) willful or gross malfeasance or misconduct by EVP in
connection with EVP’s employment; (ii) EVP’ gross negligence in performing any of EVP’s duties
under this Agreement; (iii) EVP’s conviction of, or entry of a plea of guilty or nolo contendere
with respect to, any felony or misdemeanor reflecting upon EVP’s honesty; (iv) EVP’s breach of any
written policy applicable to all employees adopted by the Company concerning conflicts of interest,
political contributions, standards of business conduct or fair employment practices, procedures
with respect to compliance with securities laws or any similar matters, or adopted pursuant to the
requirements of any government contract or regulation; or (v) breach by EVP of any of the material
terms and conditions of this Agreement.
(b) Termination without Cause. If the Company ends the Term other than for Cause, EVP shall
receive the Severance Benefits provided under Section 3(c) of this Agreement.
(c) Termination for Any Other Reason. If the Company ends the Term for Cause, or if EVP
resigns as an employee of the Company, then the Company shall have no obligation to pay EVP any
amount, whether for salary, benefits, bonuses, or other compensation or expense reimbursements of
any kind, accruing after the end of the Term, and such rights shall, except as otherwise required
by law (or, with respect to the Options, as set forth in the Plan or the applicable option grant
agreements), be forfeited immediately upon the end of the Term.
9. Additional Covenants.
(a) Confidentiality. EVP confirms his acceptance of all his obligations under that certain
Confidential Information and Proprietary Rights Agreement between EVP and the Company dated as of
January 8, 2007.
(b) “Non-Competition Period” Defined. “Non-Competition Period” means the period beginning at
the end of the Term and ending twelve (12) months thereafter.
3
(c) Covenants of Non-Competition and Non-Solicitation.
(i) EVP acknowledges that: [a] the Company will rely upon EVP to help maintain and grow the
Company’s business and related functions; [b] EVP will have business relationships on the Company’s
behalf with the Company’s significant customers, suppliers and vendors with whom the Company has
exclusive, long-term or near-permanent relationships; and [c] EVP will have access to, use or
control of highly valuable non-public tangible confidential information about the Company’s
developed and developing technology, inventions, equipment, methods and know-how concerning
nanomaterials production, coating and marketing, as well as highly valuable non-public tangible and
non-tangible proprietary information about the Company’s finances, pending transactions, customer
identity and Customer dealings.
(ii) For the foregoing reasons, and in consideration of the benefits available to EVP under
Sections 3(a), 3(b), 3(c), 7(a), 7(b), and 8(b) of this Agreement, EVP covenants that both during
the term of this Agreement and the subsequent Non-Competition Period, EVP shall not in any manner,
directly or indirectly:
[A] Engage in, be financially interested in, represent, render advice or service of any kind
to, or be employed by or in any way affiliated with, any other business (conducted for profit or
not for profit) which is materially engaged in developing, producing, coating, refining, marketing,
supplying or selling nanocrystalline materials (including powders, dispersions and coatings) (a
“Prohibited Business”), (a) where such Prohibited Business is located or conducted within a radius
of fifty (50) miles from any of the Company’s facilities where EVP has worked or over which EVP has
exercised any form of supervisory authority during a period of twelve (12) months before the date
of EVP’s termination; or (b) where EVP provides a Prohibited Business with services the same as or
similar to those he provided to the Company and such Prohibited Business, regardless of its
location, is either Cabot Corporation; Cabot Microelectronics Corporation; DeGussa Corporation;
NanoDynamics, Inc; NanoProducts Corporation; or Nanotechnologies, Inc.
[B] Whether on EVP’s own behalf or on behalf of any other person or entity, (a) contact,
solicit, accept business from, disrupt or in any way interfere with the Company’s business
relationship with any person or entity that was a customer, supplier or vendor of the Company
during EVP’s employment, with respect to the type of business done by the Company, or (b) contact,
solicit or attempt to solicit for employment or engagement any persons who were officers, employees
or contractors of the Company at any time within a 180-day period before the date of EVP’s
termination.
(iii) The restrictions in this Section 9(c)(ii) shall not preclude EVP from owning up to
three percent (3%) of the voting securities of any Prohibited Business whose voting securities are
registered under Section 12(g) of the Securities Exchange Act of 1934.
(d) Remedies.
(i) Injunctions. In view of EVP’s access to the Company’s confidential information, and in
consideration of the value of such property to the Company, EVP agrees that the covenants in this
Section 9 are necessary to protect the Company’s interests in its proprietary information and trade
secrets, and to protect and maintain customer and supplier relationships, both actual and
potential, which EVP would not have had access to or involvement in but for his employment with the
Company. EVP confirms that enforcement of the covenants in this Section 9 will not prevent him
from earning a livelihood. EVP further agrees that in the event of his actual or threatened breach
of any covenant in this Section 9, the Company would be irreparably harmed and the full extent of
injury resulting therefrom would be impossible to
4
calculate, and the Company therefore will not have an adequate remedy at law. Accordingly,
EVP agrees that temporary and permanent injunctive relief are appropriate remedies against such
breach, without bond or security; provided, however, that nothing herein shall be construed as
limiting any other legal or equitable remedies available to the Company.
(ii) Enforcement. EVP shall pay all costs and expenses (including, without limitation, court
costs, investigation costs, expert witness and attorneys’ fees) incurred by the Company in
connection with its successfully enforcing its rights under this Agreement. The Company shall have
the right to disclose the contents of this Agreement or to deliver a copy of it to any person or
entity whom the Company believes the EVP has solicited in violation of this Agreement.
(iii) Arbitration. No dispute arising from EVP’s actual or threatened breach of any covenant
in this Section 9 shall be subject to arbitration. However, any other dispute or claim arising
from any other provision of this Agreement, or relating to EVP’s employment (whether based on
statute, ordinance, regulation, contract, tort or otherwise), shall be submitted to arbitration
before a single arbitrator pursuant to the Employment Arbitration Rules of the American Arbitration
Association. Any such arbitration shall be conducted in Chicago, Illinois. An arbitration award
rendered under this Section 9(d)(iii) shall be final and binding on the parties and may be
submitted to any court of competent jurisdiction for entry of a judgment thereon in accord with the
Federal Arbitration Act or the Illinois Arbitration Act.
10. Limitation On Claims. EVP AGREES THAT HE WILL NOT COMMENCE ANY ACTION OR SUIT RELATING TO
MATTERS ARISING OUT OF HIS EMPLOYMENT WITH THE COMPANY (IRRESPECTIVE OF WHETHER SUCH ACTION OR SUIT
ARISES OUT OF THE PROVISIONS OF THIS AGREEMENT) LATER THAN SIX MONTHS AFTER THE FIRST TO OCCUR OF
(A) THE DATE SUCH CLAIM INITIALLY ARISES, OR (B) THE DATE EVP’S EMPLOYMENT TERMINATES FOR ANY
REASON WHATSOEVER. EVP EXPRESSLY WAIVES ANY APPLICABLE STATUTE OF LIMITATION TO THE CONTRARY.
11. Successors and Assigns.
(a) EVP. This Agreement is a personal contract, and the rights and interests that this
Agreement accords to EVP may not be sold, transferred, assigned, pledged, encumbered, or
hypothecated by EVP. Except to the extent contemplated in Section 3(c)(ii) above, EVP shall not
have any power of anticipation, alienation or assignment of the payments contemplated by this
Agreement, all rights and benefits of EVP shall be for the sole personal benefit of EVP, and no
other person shall acquire any right, title or interest under this Agreement by reason of any sale,
assignment, transfer, claim or judgment or bankruptcy proceedings against EVP. Except as so
provided, this Agreement shall inure to the benefit of and be binding upon EVP and EVP’s personal
representatives, distributees and legatees.
(b) The Company. This Agreement shall be binding upon the Company and inure to the benefit of
the Company and its successors and assigns, including but not limited to any person or entity that
may acquire all or substantially all of the Company’s assets or business or with which the Company
may be consolidated or merged. This Agreement shall continue in full force and effect in the event
the Company sells all or substantially all of its assets, merges or consolidates, otherwise
combines or affiliates with another business, dissolves and liquidates, or otherwise sells or
disposes of substantially all of its assets. The Company’s obligations under this Agreement shall
cease, however, if the successor to the Company, the purchaser or acquirer either of the Company or
of all or substantially all of its assets, or the entity with which the Company has affiliated,
shall assume in writing the Company’s obligations under this Agreement (and deliver an executed
copy of such assumption to EVP), in which case such successor or purchaser, but not the Company,
shall thereafter be the only party obligated to perform the obligations that
5
remain to be performed on the part of the Company under this Agreement.
12. Entire Agreement. This Agreement and the other agreements referenced herein represent the
entire agreement between the parties concerning EVP’s employment with the Company and supersede all
prior negotiations, discussions, understandings and agreements, whether written or oral, between
EVP and the Company relating to the subject matter of this Agreement.
13. Amendment or Modification, Waiver. No provision of this Agreement may be amended or
waived unless such amendment or waiver is agreed to in writing signed by EVP and by a duly
authorized officer of the Company other than EVP. No waiver by any party to this Agreement of any
breach by another party of any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of a similar or dissimilar condition or provision at the same
time, any prior time or any subsequent time.
14. Notices. Any notice provided for in this Agreement must be in writing and must be either
personally delivered, mailed by first class mail (postage prepaid and return receipt requested),
sent by reputable overnight courier service (charges prepaid), or by facsimile to the recipient at
the address below indicated:
To the Company:
|
Nanophase Technologies Corporation | |
0000 Xxxxxxxxx Xxxxx | ||
Xxxxxxxxxx, XX 00000 | ||
Attn: Chief Executive Officer | ||
Facsimile: (000) 000-0000 | ||
To EVP:
|
Xxxxx X. Xxxxx | |
000 Xxxxx Xxxx | ||
Xxxx Xxxxx, XX 00000 |
or such other address or facsimile number, or to the attention of such other person as the
recipient shall have specified by prior written notice to the sending party. Any notice under this
Agreement shall be deemed to have been given when so personally delivered, or one day after
deposit, if sent by courier, when confirmed received if sent by facsimile, or if mailed, five days
after deposit in the U.S. first-class mail, postage prepaid.
15. Severability. If any provision of this Agreement shall be determined by any court of
competent jurisdiction to be unenforceable to any extent, the remainder of this Agreement shall not
be affected, but shall remain in full force and effect. If any provision of this Agreement
containing restrictions is held to cover an area or to be for a length of time that is unreasonable
or in any other way is construed to be invalid, such provision shall not be determined to be
entirely of no effect; instead, it is the intention and desire of both the Company and EVP that any
court of competent jurisdiction shall interpret or reform this Agreement to provide for a
restriction having the maximum enforceable area, time period and such other constraints or
conditions as shall be enforceable under the applicable law.
16. Survivorship. The respective rights and obligations of the parties hereunder shall
survive any termination of this Agreement to the extent necessary to the intended preservation of
such rights and obligations.
6
17. Headings. All descriptive headings of sections and paragraphs in this Agreement are
intended solely for convenience of reference, and no provision of this Agreement is to be construed
by reference to the heading of any section or paragraph.
18. Withholding Taxes. All salary, benefits, reimbursements and any other payments to EVP
under this Agreement shall be subject to all applicable payroll and withholding taxes and
deductions required by any law, rule or regulation of any federal, state or local authority.
19. Applicable Law: Jurisdiction. The laws of the State of Illinois shall govern the
interpretation of the terms of this Agreement, without reference to rules relating to conflicts of
law.
IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement as of the date
first written above.
NANOPHASE TECHNOLOGIES CORPORATION |
||||
By: | /s/ Xxxxxx Xxxxx | |||
Its: | Chief Executive Officer | |||
/s/ Xxxxx X. Xxxxx | ||||
Xxxxx X. Xxxxx | ||||
7