Nanophase Technologies Corporation 8-K [nanx-8k_031618.htm]

 

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

Employment Agreement dated and effective as of March 26, 2018 (this
“Agreement”), between NANOPHASE TECHNOLOGIES CORPORATION, a Delaware corporation
(with its successors and assigns, referred to as the “Company”), and Jaime
Escobar (referred to as Chief Financial Officer or CFO).

Preliminary Statement

The Company desires to employ CFO, and CFO wishes to be employed by the Company,
upon the terms and subject to the conditions set forth in this Agreement. The
Company and CFO also wish to enter into the other covenants set forth in this
Agreement, all of which are related to CFO’s employment with the Company. In
consideration of the mutual promises and covenants stated below, CFO and the
Company therefore agree as follows:

Agreement

1.       

Employment for Term. The Company employs CFO, and CFO hereby accepts employment
with the Company, beginning on March 26, 2018, and renewing automatically on an
annual basis until terminated pursuant to Section 7 below (the “Term”).

2.       

Position and Duties. During the Term, CFO shall serve as Chief Financial Officer
and shall report to the President and Chief Executive Officer of the Company.
During the Term, CFO shall also hold such additional positions and titles as the
Chief Executive Officer of the Company may determine from time to time. During
the Term, CFO shall devote his best efforts and substantially all of his
business time to his duties as a CFO of the Company.

3.       

Signing Benefits. In consideration of and in reliance upon CFO’s execution of
this Agreement, and based entirely upon CFO’s acceptance of the duties and
obligations to the Company under this Agreement (specifically including, without
limitation, CFO’s obligations under the covenants in Section 9, and the
restrictions in Section 10 of the Agreement), the Company shall provide CFO with
the following signing benefits:

(a)       

the following Severance Benefits if the Company ends the Term for reasons other
than “Cause” (as defined in Section 8(a)) and CFO signs, without subsequent
revocation, a Separation Agreement and Release in a form acceptable to the
Company: (i) the Company shall pay CFO a sum equal in annual amount to CFO’s
base salary in effect at the time of termination during the period (the
“Severance Period”) of 26 full weeks after the effective date of termination
(provided that termination without Cause occurs on or before September 30,
2020); if termination without Cause occurs thereafter, the Company shall pay CFO
13 full weeks of severance benefits, 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 CFO prior to termination
shall become fully vested, and shall become exercisable (by CFO, 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 2010
Equity Compensation Plan, as amended (the “Plan”).

   

 

 

4.       

Compensation.

(a)       

Base Salary. The Company shall pay CFO a base salary, beginning on the first day
of the Term and ending on the last day of the Term, of not less than $150,000
per annum, payable on the Company’s regular pay cycle for professional
employees;

(b)       

Bonus Payment. CFO will be eligible for discretionary bonuses for services to be
performed as a CFO of the Company based on performance milestones agreed upon by
CFO and the Vice-President of Operation, the CEO of the Company and approved by
the Board.

(c)       

Stock Options. In connection with the execution of this Agreement, the Company
will recommend its Board of Directors grant to CFO 36,000 options of the
Company’s common stock immediately upon start date, vesting over three years,
one-third per year from grant date. All option grants are subject to the
provisions of the Company’s 2010 Equity Compensation Plan and to the approval of
the Board of Directors. Subject to the provisions of the Company’s Plan; and as
determined by the Board in its sole discretion, CFO shall be eligible for such
additional stock options and other equity compensation as the Board deems
appropriate.

(d)       

Other and Additional Compensation. Section 4(a) establishes the minimum salary
level for CFO during the Term, and shall not preclude the Board from awarding
CFO a higher salary at any time, nor shall they preclude the Board from awarding
CFO additional bonuses or other compensation in the discretion of the Board.

5.       

Employee Benefits. During the Term, CFO 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. CFO 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 CFO for actual out-of-pocket expenses
reasonably incurred by CFO 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 CFO’s death, or (ii) upon CFO
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 CFO 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 CFO or the Board
(but subject to each party’s obligations under this Agreement), provided that
CFO will provide the Company with at least two (2) weeks’ prior written notice
of CFO’s resignation from his position as an CFO with the 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 CFO shall receive the compensation required under Section 4(a) of
this Agreement for a full two (2) week period.

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(b)       

Notice of Termination. If the Company ends the Term, it shall give CFO at least
two (2) weeks 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 CFO shall receive the compensation required
under Section 4(a) of this Agreement for a full two (2) week 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 CFO’s
employment, nor shall the lack of such notice entitle CFO to any rights or
claims against the Company other than those arising from CFO’s right to receive
the compensation required under Section 4(a) of this Agreement for a full two
(2) week period.

8.       

Severance Benefits.

(a)       

“Cause” Defined. “Cause” means (i) willful or gross malfeasance or misconduct by
CFO in connection with CFO’s employment; (ii) CFO’ negligence in performing any
of CFO’s duties under this Agreement; (iii) CFO’s conviction of, or entry of a
plea of guilty or nolo contendere with respect to, any felony or misdemeanor
reflecting upon CFO’s honesty; (iv) CFO’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 CFO 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,
CFO shall receive the Severance Benefits provided under Section 3 (c) of this
Agreement, provided that CFO signs, without subsequent revocation, a Separation
Agreement and Release in a form acceptable to the Company.

(c)       

Termination for Any Other Reason. If the Company ends the Term for Cause, or if
CFO resigns as an employee of the Company, then the Company shall have no
obligation to pay CFO 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. CFO confirms his acceptance of all his obligations under that
certain Confidential Information and Proprietary Rights Agreement between CFO
and the Company dated as of March 26, 2018.

(b)       

“Non-Competition Period” Defined. “Non-Competition Period” means the period
beginning at the end of the Term and ending twelve (12) months thereafter.

(c)       

Covenants of Non-Competition and Non-Solicitation.

(i)       

CFO acknowledges that: [a] the Company will rely upon CFO to help maintain and
grow the Company’s business and related functions; [b] CFO 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] CFO 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.

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(ii)       

For the foregoing reasons, and in consideration of the benefits available to CFO
under Sections 3(a), 3(b), 3(c), 7(a), 7(b), and 8(b) of this Agreement, CFO
covenants that both during the term of this Agreement and the subsequent
Non-Competition Period, CFO 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 CFO has worked or over which CFO has exercised any form of
supervisory authority during a period of twelve (12) months before the date of
CFO’s termination; or (b) where CFO 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.; NanoMaterials Technology
Pte, LTD; Nanogate, SDC Materials; Primet Precision Materials, Inc.; ItN
Nanovation; Nanux, Inc.; PPG Industries; Nanomaterials Company.

[B] Whether on CFO’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 CFO’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 CFO’s termination.

(iii) The restrictions in this Section 9(c)(ii) shall not preclude CFO 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 CFO’s access to the Company’s confidential information,
and in consideration of the value of such property to the Company, CFO 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
CFO would not have had access to or involvement in but for his employment with
the Company. CFO confirms that enforcement of the covenants in this Section 9
will not prevent him from earning a livelihood. CFO 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 calculate, and the Company therefore will not
have an adequate remedy at law. Accordingly, CFO 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.

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(ii)       

Enforcement. CFO 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 CFO has solicited in violation of this Agreement.

(iii)       

Arbitration. No dispute arising from CFO’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 CFO’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. CFO 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 ARISIES OUT OF THE PROVISIONS OF THIS AGREEMENT)
LATER THAN SIX MONTHS AFTER THE FIRST TO OCCUR OF (A) THE DATE SUCH CLAIM
INITIALLY ARISIES, OR (B) THE DATE CFO’S EMPLOYMENT TERMINATES FOR ANY REASON
WHATSOEVER. CFO EXPRESSLY WAIVES ANY APPLICABLE STATUTE OF LIMITATIONS TO THE
CONTRARY.

11.       

Successors and Assigns.

(a)       

Vice-President. This Agreement is a personal contract, and the rights and
interests that this Agreement accords to CFO may not be sold, transferred,
assigned, pledged, encumbered, or hypothecated by CFO. Except to the extent
contemplated in Section 3(c)(ii) above, CFO shall not have any power of
anticipation, alienation or assignment of the payments contemplated by this
Agreement, all rights and benefits of CFO shall be for the sole personal benefit
of CFO, 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 CFO. Except as so provided, this Agreement shall
inure to the benefit of and be binding upon CFO and CFO’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 CFO), in which
case such successor or purchaser, but not the Company, shall thereafter be the
only party obligated to perform the obligations that 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 CFO’s employment
with the Company and supersede all prior negotiations, discussions,
understandings and agreements, whether written or oral, between CFO and the
Company relating to the subject matter of this Agreement.

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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 CFO
and by a duly authorized officer of the Company other than CFO. 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

1319 Marquette Drive

Romeoville, IL 60446

Attn: Chief Executive Officer

Facsimile: (630) 771-0825

 

To CFO:

Mr. Jaime Escobar

715 Grove Drive, Unit 208

Buffalo Grove, Illinois 60089

 

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 CFO 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.

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 CFO 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.

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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/JESS JANKOWSKI     Its:
Chief Executive Officer                       /S/JAIME ESCOBAR       Jaime
Escobar      

 

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