Document:

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                                                                   EXHIBIT 10.14

                              CONSULTING AGREEMENT

         This Consulting Agreement is made between Dennis J. Nowak ("Mr.
Nowak") and Nanophase Technologies Corporation ("NTC").

         WHEREAS, during the period between September 3, 1996 and June 25, 1999,
Mr. Nowak served as the Vice President, Chief Financial Officer, Secretary and
Treasurer of NTC pursuant to agreements including that certain letter agreement
presenting the terms of employment between NTC and Mr. Nowak dated as of
September 3, 1996 (the "Employment Agreement");

         WHEREAS, effective June 25, 1999, Mr. Nowak will cease serving as an
officer and employee of NTC;

         WHEREAS, NTC wishes to have periodic future access to Mr. Nowak's
knowledge and experience, and Mr. Nowak wishes to provide NTC with such access;
and

         WHEREAS, NTC wishes to engage Mr. Nowak as NTC's consultant and Mr.
Nowak wishes to provide consulting services to NTC upon the terms and conditions
stated in this Consulting Agreement.

         NOW, THEREFORE, in consideration of the parties' mutual promises set
forth below, Mr. Nowak and NTC agree as follows:

         1. For a period of twelve months starting on June 26, 1999 and ending
on June 26, 2000, Mr. Nowak shall render reasonable consulting services to NTC,
as may reasonably be requested by NTC's President from time to time (the
"Term"). Mr. Nowak shall make himself reasonably available to NTC for such
consulting services; however, Mr. Nowak shall not be required to render services
in an amount or manner that would unreasonably interfere with any other business
activities or employment obligations which Mr. Nowak may have or may hereafter
undertake. To the extent Mr. Nowak incurs reasonable out of pocket expenses in
connection with such consulting services, such expenses shall be reimbursable,
subject to Mr. Nowak's compliance with NTC's reimbursement policy applicable to
corporate executives.

         2. NTC shall pay Mr. Nowak consulting fees in the aggregate amount of
$170,000 (the "Consulting Fees"), payable in 26 equal proportionate amounts on
NTC's regular payroll periods. NTC shall tender payments of all Consulting Fees
by first-class or overnight mail, addressed to Dennis J. Nowak, 10113 Wellington
Terrace, Munster, Indiana 46321 or such other address as Mr. Nowak subsequently
may provide to NTC.

         3. The parties to this Consulting Agreement understand and agree that
the foregoing Consulting Fees shall be paid by NTC solely in exchange for Mr.
Nowak's agreement to perform consulting services for NTC. The Consulting Fees
are not intended and should not be construed

Document #: 353392

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as NTC's payment to Mr. Nowak of wages, salary or compensation for his services.
NTC will forward Form 1099 to the U.S. Internal Revenue Service, the Indiana
Department of Revenue and any other applicable taxing authority in connection
with the Consulting Fees paid by NTC under this Consulting Agreement.

         4. Within five business days after both Mr. Nowak and NTC have signed
this Consulting Agreement, NTC shall provide Mr. Nowak with payment of
$30,403.85, consisting of 372 hours of unused vacation pay that Mr. Nowak
accrued during his employment with NTC. Such vacation pay will be subject to
applicable payroll and withholding taxes and deductions required by law.

         5. Within fourteen days following NTC's receipt of appropriate invoices
from an outplacement provider mutually acceptable to Mr. Nowak and NTC, NTC will
issue to such outplacement provider a maximum payment of $4,250.00 for
outplacement services received by Mr. Nowak from the outplacement provider.

         6. Within fourteen days following NTC's receipt of an appropriately
detailed, itemized invoice from an attorney of Mr. Nowak's choice, NTC will
issue to such attorney a maximum payment of $1,000.00 for legal services the
attorney rendered to Mr. Nowak in connection with his negotiation and review of
this instrument.

         7. Within fourteen days after execution of this Consulting Agreement,
Mr. Nowak shall submit to NTC a request for reimbursement of any outstanding out
of pocket expenses incurred by Mr. Nowak in connection with his employment by
NTC and which are reimbursable pursuant to paragraph 3 of the Employment
Agreement, supported by appropriate documentation. NTC shall process such
reimbursement request in accordance with NTC's policy for reimbursements
applicable to NTC's executive officers on the same terms and conditions
generally applicable to such officers, and submit a check for any such
reimbursable amounts to Mr. Nowak within fourteen days after NTC's receipt of
the reimbursement request and appropriate supporting documentation.

         8. Mr. Nowak shall be entitled to keep the Canon Fax B360IF fax machine
previously provided to him by NTC. NTC hereby transfers to Mr. Nowak all its
right, title and interest in and to this fax machine.

         9. Within five days after Mr. Nowak's execution of this Consulting
Agreement, he shall return to NTC its following property previously entrusted to
Mr. Nowak:

            A. The original and any copies of all documents (including any
         tangible material or computer-maintained data containing information
         derived from such documents) containing, referencing or pertaining to
         information concerning any aspects of NTC's plans or activities
         regarding research, development, products, marketing, unpublished
         financial information, prices, costs or any other information within
         the scope of that certain Confidential Information And Proprietary
         Rights Agreement between Mr. Nowak and NTC dated September 3, 1996.

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                  B. The Dell Latitude CP Laptop Computer with battery, carrying
         case, power cord and related peripherals, and all software and hardware
         contained in this computer (including modem card, ethernet card and
         adapter, Windows 98, Lotus Organizer 98, and Office 97 Professional
         Version). Mr. Nowak warrants that no data or information contained in
         the above-described computer (including its hard-drive or memory) as of
         June 22, 1999 has been subsequently modified, deleted, supplemented or
         altered in any way.

                  C. The portable cellular flip telephone with external battery
         and recharger.

                  D. All keys to any cabinets, containers or doors on NTC's
         premises which were in Mr. Nowak's possession or control as of June 22,
         1999.

         10. Subject to the continuation election and eligibility of Mr. Nowak
and his family for COBRA continuation coverage under the terms of NTC's group
health and dental insurance plans, NTC will pay Mr. Nowak's monthly insurance
premium under COBRA for a period of twelve months starting on June 26, 1999 and
ending on June 26, 2000. Thereafter, Mr. Nowak and his family can continue
participation in NTC's group health and dental insurance plan at their own
expense, pursuant to COBRA.

         11. NTC will not contest any claim for unemployment insurance benefits
that Mr. Nowak may file with the Illinois Department of Employment Security or
an analogous Indiana governmental agency.

         12. Mr. Nowak acknowledges that NTC makes no representations or
warranties to him concerning the tax consequences, if any, of the Consulting
Fees or any other monies paid or benefits provided by NTC under this Consulting
Agreement. Each party to this instrument shall bear its own such tax
consequences, if any, and any related applicable tax reporting or filing
obligations.

         13. NTC acknowledges and confirms that under its Amended and Restated
1992 Stock Option Plan, as amended to date (the "Stock Option Plan") and any
Stock Option Agreement between NTC and Mr. Nowak (the "Stock Option
Agreements"):

                  A. Any stock options previously granted to Mr. Nowak shall
         remain in effect and operate solely according to the provisions of the
         respective Stock Option Agreements and the Stock Option Plan throughout
         the Term of this Consulting Agreement.

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                  B. Throughout the Term of this Consulting Agreement, Mr. Nowak
         shall have "Continuous Status as an Employee, Consultant or Outside
         Director" within the meaning of Sections 2(e) and 2(f) of the Stock
         Option Plan and Mr. Nowak's interests under the Stock Option Agreements
         shall continue to vest consistent with the provisions of each
         respective Stock Option Agreement.

                  C. Pursuant to Section 8(b)(ii)(D) of the Stock Option Plan,
         Mr. Nowak may exercise any stock options previously granted to him,
         subject to the terms of the Stock Option Agreements and the Stock
         Option Plan, by the delivery of cash to NTC by a broker-dealer to whom
         Mr. Nowak has submitted an irrevocable notice of exercise.

                  D. Pursuant to Section 7(d) of the Stock Option Plan and the
         terms of the Stock Option Agreements, Mr. Nowak may exercise any stock
         options previously granted to him in accord with the provisions of each
         respective Stock Option Agreement and subject to the withholding and
         tax payment requirements of the Stock Option Plan, the Stock Option
         Agreements and applicable law. NTC will report any such exercise of
         stock options by Mr. Nowak to the U.S. Internal Revenue Service on Form
         W-2.

         14. The parties to this instrument understand and agree that NTC's
obligations under Paragraphs 2, 5, 6 and 10 of this Consulting Agreement are
expressly subject to Mr. Nowak's complying with his following obligations:

             A. Mr. Nowak shall render such consulting services to NTC as
         reasonably requested pursuant to Paragraph 1 of this Consulting
         Agreement; provided, however, that NTC shall provide Mr. Nowak with
         notice and reasonable opportunity to cure with respect to Paragraph 1.

             B. Concurrently with Mr. Nowak's executing this Consulting
         Agreement, he shall provide NTC with written notice of his voluntary
         resignation as Vice President, Chief Financial Officer, Secretary and
         Treasurer, and as an employee of NTC, effective June 25, 1999.

             C. Mr. Nowak hereby waives and releases any claim, action, suit,
         debt, dues, account, controversy, damages or judgment which Mr. Nowak
         had, has or hereafter may have, whether known or unknown, for (i) any
         claim for salary, bonuses, severance benefits or severance payments
         from NTC, and (ii) any claim under Paragraph 5 of the Employment
         Agreement.

             D. Mr. Nowak hereby confirms the continuing existence and
         enforceability of, and his compliance with: (i) all terms of that
         certain Confidential Information And Proprietary Rights Agreement
         between Mr. Nowak and NTC dated September 3, 1996, and (ii) the
         confidentiality covenant in Paragraph 6 of the Employment Agreement.

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                  E. Mr. Nowak shall maintain the confidentiality of all terms
         of this Consulting Agreement, and he warrants that he will not, in any
         manner or means, by act or omission, disclose the terms of this
         Consulting Agreement to any person or entity. Mr. Nowak specifically
         warrants that he will not represent to any person or entity that he is
         a consultant to, or otherwise affiliated with, NTC. The warranties in
         this Paragraph 14.E shall not apply to Mr. Nowak's disclosures to his
         spouse, financial advisors or lawyers, or to disclosures of Mr. Nowak
         as required by applicable law or legal process.

                  F. Mr. Nowak's complying with all his obligations with respect
         to NTC's property as described in Paragraph 9 of this Consulting
         Agreement.

         15. The parties to this instrument do not intend that any provisions of
this Consulting Agreement shall release or waive any claim, action, suit, debt,
dues, account, controversy, damages or judgment that any party had, has or may
hereafter have against another party or any other person, except as expressly
provided in Paragraph 14.C of this instrument. NTC specifically acknowledges
that this instrument does not waive any rights or claims that Mr. Nowak now has
or hereafter may have under that certain Indemnification Agreement between NTC
and Mr. Nowak dated November 26, 1997, which remains in full force and effect in
accordance with its terms, or under Directors and Officers Insurance and Company
Reimbursement Policy No. GA6079397 issued to NTC by Gulf Insurance Company.

         16. This Consulting Agreement, and all obligations of NTC under
Paragraphs 2, 5, 6 and 10 of this instrument, shall end immediately upon the
earlier of: (a) Mr. Nowak's death; (b) the conclusion of the Term; or (c) Mr.
Nowak failing to comply with his obligations under Paragraph 14 of this
Consulting Agreement; provided, however, that no breach of Paragraph 14.A of
this Consulting Agreement by Mr. Nowak will be deemed to have occurred until NTC
provides him with notice and a reasonable opportunity to cure.

         17. Mr. Nowak shall have no power to assign his respective rights or
obligations under this Consulting Agreement.

         18. Any dispute or controversy based upon or arising in connection with
any party's respective rights or obligations under this Consulting Agreement
shall be submitted to arbitration before a single arbitrator in Chicago,
Illinois pursuant to the commercial arbitration rules of the American
Arbitration Association. An arbitration award rendered pursuant to this
Paragraph 18 shall be final, 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 Uniform Arbitration Act.

         19. Except as otherwise provided in Paragraph 2 of this instrument, any
notice to be given under this Consulting Agreement shall be in writing and
delivered personally or by overnight courier, addressed to the party concerned
at the address stated below or to such other address as such party subsequently
may provide in writing:

              If to Mr. Nowak:  Dennis J. Nowak
                       10113 Wellington Terrace

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                             Munster, Indiana 46321

   with a copy to:           Richard L. Fenton
                             Sonnenschein, Nath & Rosenthal
                             8000 Sears Tower
                             Chicago, Illinois 60606

   If to NTC:                Nanophase Technologies Corporation
                             453 Commerce Street
                             Burr Ridge, Illinois 60521

                             Attention:  President

   with a copy to:           David L. Weinstein
                             Wildman, Harrold, Allen & Dixon
                             225 West Wacker Drive
                             Chicago, Illinois 60606

         20. Mr. Nowak acknowledges that the only consideration for this
Consulting Agreement is described in this instrument; that no other promise or
agreement has been made to or with him by any person or entity whatsoever to
cause him to sign this Consulting Agreement; that he is represented by counsel
and that counsel has explained to him all the terms of this Consulting Agreement
and that he has voluntarily signed it; and that this instrument constitutes the
entire agreement between the parties on all the subjects described herein.

         21. This Consulting Agreement shall be construed in accord with, and
governed by, the laws of the State of Illinois.

         22. David L. Weinstein, one of the attorneys for NTC, represents and
warrants that he has been duly authorized to execute this Consulting Agreement
on behalf of NTC.

         23. This Consulting Agreement may be signed by the parties by facsimile
and in multiple counterparts.

       /s/ Dennis J. Nowak                                June 25, 1999
---------------------------------------                   Date
           DENNIS J. NOWAK

NANOPHASE TECHNOLOGIES
CORPORATION

By: /s/ David L. Weinstein                                June 25, 1999
   ------------------------------                         Date
        David L. Weinstein
        One of Its Attorneys

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                                                                   EXHIBIT 10.15

                              EMPLOYMENT AGREEMENT

         Employment Agreement dated and effective as of November 9, 1999 (this
"Agreement"), between NANOPHASE TECHNOLOGIES CORPORATION, a Delaware corporation
(with its successors and assigns, referred to as the "Company"), and JOSEPH
CROSS (referred to as "Cross").

                              PRELIMINARY STATEMENT

         The Company desires to continue employing Cross, and Cross wishes to
continue being employed by the Company, upon the terms and subject to the
conditions set forth in this Agreement all of which are related to Cross's
employment with the Company. Cross and the Company therefore agree as follows:

                                    AGREEMENT

         1.  EMPLOYMENT FOR TERM. The Company employs Cross, and Cross accepts
employment with the Company, beginning on the date of this Agreement and
continuing until terminated pursuant to Section 6 below (the "Term").

         2.  POSITION AND DUTIES. During the Term, Cross shall serve as the
president and chief executive officer of the Company. During the Term, Cross
shall also (i) hold such additional positions and titles as the Board of
Directors of the Company (the "Board") may determine from time to time, and (ii)
serve as a member of the Board until such time as he may resign or be removed,
or until his successor may be duly qualified and elected. During the Term, Cross
shall devote substantially all of his business time and best efforts to his
duties as an employee, officer and director of the Company.

         3.  COMPENSATION.

         (a) BASE SALARY. The Company shall pay Cross a base salary, beginning
on the first day of the Term and ending on the last day of the Term, of not less
than $220,000 per annum, payable on the Company's regular pay cycle for
professional employees. Cross may be entitled to additional compensation for his
service as a member of the Board, as determined by the Board in its sole
discretion.

         (b) BONUS PAYMENT. The Company shall pay Cross a bonus of $50,000 by
January 15, 2000, in recognition of his service to the Company prior to the date
of this Agreement and in consideration for his accepting his obligations under
the covenants in Section 8 of this Agreement. Cross may be eligible for
additional bonuses for services to be performed as an officer and employee of
the Company for calendar year 2000 and subsequent years, as determined by the
Board in its sole discretion.

         (c) STOCK OPTIONS. Subject to the provisions of the Company's Amended
and Restated 1992 Stock Option Plan ("Plan"), and as determined by the Board in
its sole discretion,

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Cross shall be eligible for such stock grants or stock option grants as the
Board deems appropriate.

         (d) RELOCATION REIMBURSEMENTS. The Company agrees to pay to or on
behalf of Cross the following costs and expenses, as and when incurred by Cross
or otherwise as specifically set forth below, subject to receipt by the Company
of appropriate documentation or other evidence of such expenses: (i) reasonable
out-of-pocket expenses incurred by Cross in the physical move of his family and
household from his current residence to the Chicago Metropolitan area (including
transport of automobiles and packing and unpacking expenses); (ii) out-of-
pocket costs for reasonable living expenses, including housing, utilities and a
rental or leased automobile, for the period commencing with the first day of the
Term through July 1, 2000, or for such time as may be necessary for Cross to
sell his current residence and relocate to the Chicago Metropolitan area, but in
any event no later than July 1, 2000; (iii) out-of-pocket economy class
commuting costs (including air travel and parking expenses) to and from his
current residence and Chicago, Illinois each weekend for such reasonable time as
may be necessary to relocate his family to the Chicago Metropolitan area, but in
any event no later than a reasonable time; (iv) reimbursement for out-of-pocket
economy-class travel expenses to Chicago for Cross' wife for up to three (3)
trips in connection with the relocation; (v) the services of a relocation
advisor in the Chicago Metropolitan area; (vi) realtor fees, attorneys' fees and
closing costs actually paid by Cross and related to the sale by Cross of his
current residence, in an aggregate amount not to exceed 7% of the gross sales
price of such residence; (vii) $27,000 as reimbursement for incidental costs and
expenses incurred by Cross in the relocation of his family to the Chicago
Metropolitan area; (viii) realtor fees, attorneys' fees, loan origination and
application fees and closing costs actually paid by Cross and related to the
purchase by Cross of a residence in the Chicago Metropolitan area, payable on or
before July 1, 2000, unless a later date is agreed upon by Cross and the
Company; (ix) except for moving expenses reimbursed by the Company pursuant to
this Agreement and which do not constitute taxable income to Cross for federal
income tax purposes, cash in the amount of 38% of the total actual out-of-pocket
relocation expenses incurred by Cross and paid or reimbursed by the Company
under these Sections 3(d)(i) through 3(d)(ix) (and further including the amount
paid to Cross pursuant to subsection 3(d)(vii) above) which are required to be
included in Cross' gross income for federal and state income tax purposes in
calendar years 1999 and 2000, and such reasonable percentage (as agreed upon by
the Chairman of the Board or his designee and Cross in order to facilitate
Cross' not incurring any increased taxable income due to his receipt of the
Company's relocation reimbursements under this Section 3(d)) of the amount of
such expenses incurred by Cross and paid or reimbursed by the Company under this
Section 3(d) in calendar years 1999 and 2000; and (x) an amount of $1,500 per
month commencing with the first month for which Cross is obligated to make a
mortgage payment on a principal residence in the Chicago Metropolitan area, and
for each of the next succeeding twenty-three (23) months thereafter.

         (e) OTHER AND ADDITIONAL COMPENSATION. Sections 3(a), 3(b), 3(c) and
3(d) establish minimum salary, reimbursement, bonus, option grant and stock
grant levels for Cross during the Term, and shall not preclude the Board from
awarding Cross a higher salary, stock grants or stock options at any time, nor
shall they preclude the Board from awarding Cross additional bonuses or other
compensation in the discretion of the Board.

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         4.  EMPLOYEE BENEFITS. During the Term, Cross shall be entitled to the
employee benefits made available by the Company generally to all other employees
of the Company, and shall be entitled to four (4) weeks vacation in the twelve
month period ending November 15, 2000, subject to adjustment based on subsequent
changes in the Company's vacation policy from time to time applicable to the
Company's officers generally.

         5.  EXPENSES. Without limitation of Section 3(d) above, the Company
shall reimburse Cross for actual out-of-pocket expenses reasonably incurred by
him in the performance of his services as an officer and employee of the Company
in accordance 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.

         6.  TERMINATION.

        (a)  GENERAL. The Term shall end (i) immediately upon Cross' death, or
(ii) upon Cross 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 Cross 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
Cross or the Board (but subject to each party's obligations under this
Agreement), provided that Cross will provide the Company with at least thirty
(30) days' prior written notice of his resignation from his positions as an
officer and employee with, and director of, the Company. Upon receipt of such
written notice, the Company, in its sole discretion, may accelerate the
effective date of such resignation to such date as the Company deems
appropriate, provided that Cross shall receive the compensation required under
Section 3 of this Agreement for the full thirty (30) day period.

        (b)  NOTICE OF TERMINATION. If the Company ends the Term, it shall give
Cross at least thirty (30) days prior written notice of the termination,
including a statement of whether the termination was for "Cause" (as defined in
Section 7(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 Cross shall receive the
compensation required under Section 3 of this Agreement for the full thirty (30)
day period. The Company's failure to give notice under this Section 6(b) shall
not affect the validity of the Company's termination of the Term or Cross'
employment, nor shall the lack of such notice entitle Cross to any rights or
claims against the Company other than those arising from Cross' right to receive
the compensation required under Section 3 of this Agreement for the full thirty
(30) day period.

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         7.  SEVERANCE BENEFITS.

        (a)  "CAUSE" DEFINED. "Cause" means (i) willful and gross malfeasance or
misconduct by Cross in connection with his employment; (ii) Cross' gross
negligence in performing any of his duties under this Agreement; (iii) Cross'
conviction of, or entry of a plea of guilty or nolo contendere with respect to,
any felony or a misdemeanor reflecting upon Cross' honesty; (iv) Cross' breach
of any material 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
Cross 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, or if the Term ends due to Cross' death or disability under Section
6(a) of this Agreement, (i) the Company shall pay Cross an amount equal in
annual amount to his base salary in effect at the time of termination during the
period (the "Severance Period") of fifty- two (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) any stock options granted to Cross prior to
termination shall become fully vested, and shall immediately become exercisable
(by Cross, or upon his death or disability, by his heirs, beneficiaries and
personal representatives) in accordance with the applicable option grant
agreements and the Plan.

        (c)  TERMINATION FOR ANY OTHER REASON. If the Company ends the Term for
Cause, or if Cross resigns as an employee, officer or director of the Company,
then the Company shall have no obligation to pay Cross 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. In addition, upon the end of the Term for any reason other
than the death of Cross, Cross shall tender his resignation as a member of the
Board as of such date in form acceptable to the Company.

         8.  ADDITIONAL COVENANTS.

        (a) CONFIDENTIALITY. Cross agrees to execute the Company's standard form
of Confidentiality and Proprietary Rights Agreement promptly upon execution of
this Agreement.

        (b) "NON-COMPETITION PERIOD" DEFINED. "Non-Competition Period" means the
period beginning at the end of the Term and ending two years thereafter.

         (c) COVENANTS OF NON-COMPETITION AND NON-SOLICITATION. Cross
acknowledges that his services pursuant to this Agreement are unique and
extraordinary, that the Company relies upon Cross for the development and growth
of its business and related functions, and that he will develop personal
relationships with significant customers and suppliers of the Company

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and have control of confidential information concerning, and lists of customers
of, the Company. Cross further acknowledges that the business of the Company is
international in scope and cannot be confined to any particular geographic area.
For the foregoing reasons, and in consideration of the benefits available to
Cross under Sections 3(b), 3(d) and 7(c) of this Agreement, Cross covenants and
agrees that during both the Term of this Agreement and the subsequent
Non-Competition Period, Cross shall not, in any manner, directly or indirectly,
engage in, be financially interested in, represent, render any advice or
services to, or be employed by, or otherwise affiliated with, any other business
(conducted for profit or not for profit) which is principally or materially
engaged in or is competitive with the Company's business of developing,
producing, coating, refining, forming, marketing, supplying or selling
nanocrystalline and ultrafine powders. For the reasons acknowledged by Cross at
the beginning of this Section 8(c), Cross additionally covenants and agrees that
during the Non-Competition Period, Cross shall not, directly or indirectly,
whether on his own behalf or on behalf of any other person or entity, in any
manner (A) contact, accept or solicit the business of any person or entity that
was a customer, supplier or contractor of or to the Company for the purpose of
obtaining business of the type performed by the Company, or (B) contact, accept
or solicit or attempt to solicit for employment or engagement any persons who
were officers or employees of the Company upon the date of termination of his
employment or at any time during a 180 day period preceding the date of
termination, or aid any person or entity in any attempt to hire or engage any
such officers or employees of the Company. The foregoing restrictions shall not
preclude Cross from the ownership of not more than three percent (3 %) of the
voting securities of any corporation whose voting securities are registered
under Section 12(g) of the Securities Exchange Act of 1934, even if its business
competes with that of the Company.

        (d) REMEDIES.

           (i) INJUNCTION. In view of Cross' access to the Company's
confidential information, and in consideration of the value of such property to
the Company, Cross acknowledges that the covenants contained in this Section 8
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 Cross would not have had access
to or involvement in but for his employment with the Company. Cross confirms
that enforcement of the covenants in Section 8 will not prevent him from earning
a livelihood. Cross further agrees that in the event of his actual or threatened
breach of any covenant in this Section 8, the Company would be irreparably
harmed and the full extent of resulting injury would be impossible to calculate,
and the Company therefore will not have an adequate remedy at law. Accordingly,
Cross agrees that temporary and permanent injunctive relief are appropriate
remedies for any such breach, without bond or security; provided that nothing
herein shall be construed as limiting any other legal or equitable remedies
available to the Company.

           (ii) ENFORCEMENT. Cross 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 the Company's
successfully enforcing its rights under this Agreement. The Company shall be
entitled to disclose the contents of this Agreement or to deliver a copy of it
to any person or entity whom the Company believes Cross has solicited.

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                  (iii) ARBITRATION. No dispute arising from Cross' actual or
threatened breach of any covenant in this Section 8 shall be subject to
arbitration. However, any other dispute or claim arising from any other
provision of this Agreement, or relating to Cross' employment or service as an
officer (whether based on statute, 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 8(c)(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 Illinois Arbitration Act or the Federal
Arbitration Act.

        9. SUCCESSORS AND ASSIGNS.

       (a) CROSS. This Agreement is a personal contract, and the rights and
interests that this Agreement accords to Cross may not be sold, transferred,
assigned, pledged, encumbered, or hypothecated by him. Except to the extent
contemplated in Section 7(c) above, Cross shall not have any power of
anticipation, alienation or assignment of the payments contemplated by this
Agreement, all rights and benefits of Cross shall be for the sole personal
benefit of Cross, and no other person shall acquire any right, tide or interest
under this Agreement by reason of any sale, assignment, transfer, claim or
judgment or bankruptcy proceedings against Cross. Except as so provided, this
Agreement shall inure to the benefit of and be binding upon Cross and his
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; provided that upon the closing of any such sale, merger, consolidation,
combination or affiliation, any stock options granted to Cross prior to such
closing shall become fully vested and shall immediately become exercisable in
accordance with the applicable option grant and the Plan. 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 Cross), 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; provided, however, that such
successor or purchaser shall include in its written assumption of the Company's
obligations under this Agreement the provisions that (a) the successor or
purchaser shall not materially alter Cross' responsibilities, compensation,
assigned work location or title under this Agreement without Cross' prior
written consent, and (b) at Cross' option, any such material alteration made
without Cross' prior written consent shall constitute Termination Without Cause
under Section 7(b) of this Agreement.

                                       6

<PAGE>   7

         10. ENTIRE AGREEMENT. This Agreement and the other agreements
referenced herein represent the entire agreement between the parties concerning
Cross's employment with the Company and supersedes all prior negotiations,
discussions, understandings and agreements, whether written or oral, between
Cross and the Company relating to the subject matter of this Agreement. The
parties specifically agree that upon the Company's execution of this Agreement,
the Company shall have no further obligations of any kind to Cross under any
prior employment agreement between the parties including that certain employment
agreement dated November 9, 1998.

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

         12. 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
                           453 Commerce Street
                           Burr Ridge, IL 60521
                           Attn: Chief Executive Officer
                           Facsimile: (630) 323-1221

                                       7
<PAGE>   8

                   To Executive:

                           Joseph Cross
                           1200 Willow Oaks Trail
                           Matthews, NC 28105

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.

         13. 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 too broad or to any extent
invalid, such provision shall not be determined to be entirely of no effect;
instead, it is the intention of both the Company and Cross 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.

         14. 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.

         15. 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.

         16. WITHHOLDING TAXES. Except as otherwise specifically set forth in
Section 3(d) above, all salary, benefits, reimbursements and any other payments
to Cross 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.

         17. 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.

                                       8

<PAGE>   9

         18. LIMITATION ON CLAIMS. CROSS AGREES THAT HE WILL NOT COMMENCE ANY
ACTION, CLAIM OR SUIT RELATING TO MATTERS ARISING FROM HIS EMPLOYMENT WITH THE
COMPANY (IRRESPECTIVE OF WHETHER SUCH ACTION, CLAIM OR SUIT ARISES FROM THE
TERMS OF THIS AGREEMENT) LATER THAN SIX MONTHS AFTER THE FIRST TO OCCUR OF (a)
THE DATE SUCH CLAIM INITIALLY ARISES OR (b) THE DATE OF TERMINATION OF
EMPLOYMENT FOR ANY REASON WHATSOEVER. CROSS EXPRESSLY WAIVES ANY APPLICABLE
STATUTE OF LIMITATION TO THE CONTRARY.

         IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first written above.

       /s/ Joseph Cross
------------------------------
       JOSEPH CROSS

NANOPHASE TECHNOLOGIES
CORPORATION

By:    /s/ David L. Weinstein
       -------------------------
           David L. Weinstein
           One of Its Attorneys

                                       9

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