EXHIBIT 10.1

 

CONFIDENTIALITY AGREEMENT

 

This Confidentiality Agreement (this “Agreement”), is entered into on this 11th
day of March, 2013, between Ikonics Corporation, a Minnesota corporation (the
“Company”), and Joseph R. Nerges, an individual resident of the State of
Pennsylvania (the “Shareholder”).

 

RECITALS

 

WHEREAS, the common stock of the Company, par value $0.10 per share (the “Common
Stock”), is the only authorized and issued voting security of the Company;

 

WHEREAS, the Common Stock is traded in the Nasdaq Capital Market under the
ticker symbol IKNX;

 

WHEREAS, the Shareholder is the Company’s largest shareholder and is an
“affiliate” as such term is defined under the Exchange Act;

 

WHEREAS, the Shareholder has requested that the Company disclose material,
nonpublic information regarding the Company and its Common Stock to the
Shareholder; and

 

WHEREAS, the Company is willing to disclose to the Shareholder certain material,
nonpublic information regarding the Company or its Common Stock subject to and
in accordance with the terms and conditions set forth in this Agreement.

 

AGREEMENT

 

NOW, THEREFORE, in view of the foregoing, the Parties agree as follows:

 

1.             Certain Definitions.  As used herein:

 

(a)           “Confidential Information” means any information regarding the
Company or its Common Stock, whether in written, electronic or oral form,
including data, reports, interpretations, forecasts, records, statements,
documents and information of any kind concerning the Company or any of its
subsidiaries which the Company or any of its Representatives provides to the
Shareholder; provided, however, that “Confidential Information” shall not
include information that (i) has become available to the public other than as a
result of a disclosure by the Shareholder or any of its Representatives,
(ii) was available to the Shareholder or any of its Representatives on a
non-confidential basis prior to its disclosure to the Shareholder by the Company
or any of its Representatives, (iii) has become available to the Shareholder or
any of its Representatives on a non-confidential basis from a source other than
the Company or any of its Representatives, provided that such source is not
bound by law or a confidentiality agreement in respect of such information with
the Company or such Representative or otherwise prohibited from transmitting
such information to the Shareholder or such Representative by a contractual,
legal or fiduciary obligation, or (iv) has been independently developed or
acquired by the Shareholder or any of its Representatives without violating any
of its obligations under this Agreement.

 

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(b)           The term “person” shall mean an individual, corporation,
partnership, limited liability company, association, trust, governmental entity,
any other organization or entity or any group including any of the foregoing,
and the terms “group” and “affiliate” shall have the meanings provided under the
Exchange Act.

 

(c)           “Exchange Act” means the Securities Exchange Act of 1934.

 

(d)           “Parties” means the Company and the Shareholder and “Party” means
either of them.

 

(e)           “Representative” means, in relation to any Party, such Party’s
affiliates and such Party’s and its affiliates’ respective directors, officers,
employees, agents or representatives, including, without limitation, financial
advisors, attorneys or accountants of such person.

 

2.             Disclosure of Confidential Information to the Shareholder.

 

(a)           In light of the Shareholder’s status as the Company’s largest
shareholder and as an affiliate of the Company, the Company may, in its sole
discretion, disclose certain Confidential Information to the Shareholder which
is initially expected to include the Company’s 2013 strategic plan and budget, a
current status report on certain ongoing projects as of the date of this
Agreement, and monthly financial information in the form provided to the
Company’s non-employee directors together with a brief narrative on such
financial information from the Company’s Chief Executive Officer; provided
however, that: (i) the Shareholder shall protect and maintain the
confidentiality of any Confidential Information and shall not in any manner,
directly or indirectly, disclose, in whole or in part, any Confidential
Information to any person (including to the Shareholder’s Representatives),
(ii) the Shareholder shall not in any manner, directly or indirectly, use any
Confidential Information for any purpose other than analyzing the Shareholder’s
investment in the Company, (iii) the Shareholder shall not, directly or
indirectly, contact or have communications with any person at the Company
regarding any Confidential Information other than the Company’s Chief Executive
Officer (currently Bill Ulland) or the Company’s Chief Financial Officer
(currently Jon Gerlach), (iv) the Shareholder shall be subject to, and shall
abide by, both the Company’s General Policy on Securities Trading by Company
Employees, Agents and Advisors and the Company’s Supplemental Policy on
Securities Trading by Officers, Directors and Other Access Personnel (including
by refraining from trading in the Company’s Common Stock during all restricted
trading periods described in such Supplemental Policy), copies of which have
been provided to the Shareholder, and (v) the Shareholder shall take all steps
necessary to comply with International Traffic in Arms Regulations with respect
to the Confidential Information.

 

(b)           The Shareholder acknowledges and agrees that (i) if the Company or
any of its Representatives discloses to the Shareholder any Confidential
Information about the Company or its Common Stock, that such disclosure is being
made pursuant to this Agreement and in accordance with the confidentiality
agreement exclusion in Rule 100(b)(2)(ii) of Regulation FD promulgated under the
Exchange Act, (ii) the Shareholder is otherwise aware of the requirements of
Regulation FD, and (iii) the Shareholder is aware that the United States
securities laws

 

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prohibit any person who has material, nonpublic information about a company from
purchasing or selling securities of such company or from communicating such
information to any other person under circumstances in which it is reasonably
foreseeable that such person is likely to purchase or sell such securities.

 

3.             Exceptions to the Shareholder’s Confidentiality Obligations.

 

(a)           In the event that the Shareholder is required by law, regulation
or other legal process or is requested (by oral questions, interrogatories,
requests for information or documents, subpoena, court order, civil
investigative demand or other process) to disclose any Confidential Information,
which disclosure is not otherwise permitted hereunder, the Shareholder shall
provide the Company with prompt written notice of any such request or
requirement (if legally permitted) so that the Company may seek an appropriate
protective order or waive compliance with the provisions of this Agreement.  If,
failing the entry of a protective order or the receipt of a waiver hereunder,
the Shareholder is, after consultation with legal counsel for the Shareholder,
required or compelled to disclose Confidential Information pursuant to such
request, the Shareholder may disclose that portion of the Confidential
Information which such counsel has advised that the Shareholder is required or
compelled to disclose as aforesaid.  In any event, the Shareholder will not
oppose action by, and will cooperate with, the Company, at the Company’s
expense, in its efforts to obtain an appropriate protective order or other
assurance that confidential treatment will be accorded the Confidential
Information.  All references to the Shareholder in this paragraph shall be
deemed to include the Shareholder’s Representatives.

 

(b)           If at any time, in the opinion of legal counsel for the
Shareholder, the Shareholder is required by law, regulation or other legal
process or stock exchange or stock market rules to disclose Confidential
Information in a context that is not covered by the immediately preceding
Section 3(a), the Shareholder may disclose that portion of the Confidential
Information that such counsel has advised that the Shareholder is required to
disclose, provided that the Shareholder gives the Company prompt written notice
of such disclosure (if legally permitted).

 

4.             No Representations or Warranties.  The Shareholder acknowledges
and agrees that, except as expressly set forth in any definitive, written
documentation, neither the Company nor any of its Representatives makes any
representation or warranty as to the accuracy or completeness of any
Confidential Information and that neither the Company nor its Representatives
shall have any liability to the Shareholder or any of its Representatives
resulting from the use of the Confidential Information by the Shareholder.

 

5.             Equitable Remedies.  The Shareholder agrees that money damages
would not be a sufficient remedy for any breach of this Agreement by it or any
of its Representatives and that the Company shall be entitled to specific
performance and injunctive or other equitable relief as remedies for any such
breach.  Such remedies shall not be deemed to be the exclusive remedies but
shall be in addition to all other remedies available at law or in equity to the
Company.

 

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6.             Governing Law.  This Agreement shall be governed and construed in
accordance with the laws of the State of Minnesota without giving effect to its
conflicts of laws principles or rules.

 

7.             Term; Survivability; Disclosure of Agreement.  Notwithstanding
anything to the contrary in this Agreement, the Company is not obligated to
furnish the Shareholder with any Confidential Information and the Company may
terminate the Shareholder’s access to any Confidential Information at any time
in its sole discretion.  This Agreement may be terminated by either Party for
any or no reason upon written notice to the other Party and shall terminate
immediately upon the breach of this Agreement by either Party; provided,
however, that the Shareholder’s confidentiality obligations under this Agreement
shall remain effective and survive the termination of this Agreement with
respect to any Confidential Information furnished by the Company during the term
of this Agreement.  This Agreement may be disclosed by either Party in a filing
with the Securities and Exchange Commission if required by applicable law or
regulation.

 

8.             Miscellaneous.  This Agreement sets forth the entire agreement of
the Parties with respect to the subject matter hereof.  This Agreement may not
be assigned, in whole or in part, by either Party without the prior written
consent of the other Party.  This Agreement shall be binding upon and shall
inure to the benefit of the Parties and their successors and permitted assigns. 
This Agreement is solely for the benefit of the Parties and may not be enforced
by any third party.  If any of the provisions of this Agreement is not
enforceable in whole or in part, the remaining provisions of this Agreement
shall not be affected thereby.  No failure or delay in exercising any other
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder.  This
Agreement may only be amended by the mutual written agreement of the Parties.

 

[signature page follows]

 

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first set forth above.

 

 

COMPANY:   

 

 

 

IKONICS CORPORATION

 

 

 

 

 

/s/ William C. Ulland

 

By:

Bill Ulland

 

Title:

CEO

 

 

 

SHAREHOLDER:

 

 

 

 

 

/s/ Joseph R. Nerges

 

Joseph R. Nerges

 

[Signature page to Confidentiality Agreement]

 

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