UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington D.C., 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
Of Report (Date Of Earliest Event Reported): September 27, 2006
NANOPHASE TECHNOLOGIES CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Commission File Number: 0-22333
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Delaware
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36-3687863
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(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer
Identification No.)
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1319 Marquette Drive, Romeoville, Illinois 60446
(Address of Principal Executive Offices, Including Zip Code)
(630) 771-6700
(Registrants Telephone Number, Including Area Code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange
Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
TABLE OF CONTENTS
Item 8.01 Other Events
On September 27, 2006, Nanophase Technologies Corporation (the Company) established a stock
appreciation rights plan, the details of which are set forth in the Nanophase Technologies
Corporation 2006 Stock Appreciation Rights Plan (the Plan) (a copy of which is being furnished as
Exhibit 99.1 to this report), and adopted a form of Grant Agreement (a copy of which is being
furnished as Exhibit 99.2 to this report) under said Plan. The purpose of the Plan is to encourage
key employees to contribute materially to the growth of the Company by aligning the financial
incentives of such employees with those of shareholders. The Plan accomplishes this by offering
grants of stock appreciation rights to its employees, the settlement of which will be at fair
market value. The Plan will be administered by the Compensation and Governance Committee of the
Board of Directors which committee is comprised exclusively of
outside directors in accordance with its charter.
Item 9.01 Financial Statements and Exhibits
Exhibit 99.1 2006 Stock Appreciation Rights Plan
Exhibit 99.2 Form of Grant Agreement under the 2006 Stock Appreciation Rights Plan
Signature(s)
Pursuant to the Requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this Report to be signed on its behalf by the undersigned hereunto duly
authorized.
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Nanophase Technologies Corporation
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Date:
October 3, 2006
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By:
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/s/ JESS JANKOWSKI
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JESS JANKOWSKI
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Chief Financial Officer
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Exhibit 99.1
NANOPHASE TECHNOLOGIES CORPORATION
2006 STOCK APPRECIATION RIGHTS PLAN
The purpose of the Nanophase Technologies Corporation 2006 Stock Appreciation Rights Plan (the
Plan) is to attract and retain key employees of Nanophase Technologies Corporation (the
Company) and to align financial incentives of those individuals with the financial objectives of
the shareholders. The Company believes that the Plan will encourage the key employees to
contribute materially to the growth of the Company, thereby benefiting the Companys shareholders.
ARTICLE I
ADMINISTRATION OF THE PLAN
Section 1.1
Administration
.
(a) Committee.
The Plan shall be administered by the Compensation and Governance Committee of
the Board of Directors (the Committee). The Committee shall consist of three or more persons
appointed by the Companys Board of Directors (the Board), all of whom shall be outside
directors as defined under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
Code), and related Treasury regulations, shall be non-employee directors as defined under Rule
16b-3 promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act) and
shall be independent directors as defined in NASDAQ Marketplace Rule 4200(15), as amended.
(b) Committee Authority and Determinations.
The Committee shall have the sole authority to
(i) determine the individuals to whom grants shall be made under the Plan, (ii) determine the
timing and amount of the grants made to each such individual, the grant price, conditions relating
to transferability or forfeiture, vesting or settlement of awards, the duration of any applicable
restrictions or exercise periods, and any waiver, acceleration or expiration of such restrictions
or exercise periods based in each case on such considerations as the Committee will determine
including, but not limited to, a change in control, and (iii) make all determinations about any
other matters under the Plan. The Committee shall have full power to administer the Plan, make
factual determinations, and adopt or amend such rules, agreements and instruments for implementing
the Plan and for conducting its business as it deems advisable, in its sole discretion. All the
Committees determinations under the Plan shall be binding on anyone having any interest in the
Plan or any grants under it. All the Committees powers shall be executed in the Companys best
interest, not as a fiduciary, and in keeping with the Plans objectives. The Committees
determinations under the Plan need not be uniform as to similarly situated individuals.
Section 1.2
Grants
.
Awards under the Plan will consist only of grants of stock
appreciation rights (SARs), as described in Article II (Grants). All Grants shall be subject
to the terms and conditions stated herein and such other terms or conditions consistent with the
Plan as the Committee deems appropriate and specifies in writing in a grant instrument (the Grant
Instrument) or an amendment to it. The Committee shall approve the form and provisions of each
Grant Instrument. Grants under the Plan need not be uniform among the grant recipients (the
Grantees).
Section 1.3
Eligibility for Participation
.
All employees of the Company, its parent
and its subsidiaries (Employees), including Employees who are officers or members of the Board
shall be eligible to participate in the Plan.
ARTICLE II
STOCK APPRECIATION RIGHTS
Section 2.1
Exercise Price
.
The Committee shall establish the exercise price of the
SAR at the time it is granted which shall be equal to the Fair Market Value (as defined in Section
2.4 below) of one share of the Companys common stock, par value $0.01 (a Share).
Section 2.2
Exercisability
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A SAR shall be exercisable during the period specified by
the Committee in the Grant Instrument and shall be subject to such vesting and other restrictions
as may be specified in the Grant Instrument. The Committee may accelerate the exercisability of
any or all outstanding SARs at any time for any reason. SARs may only be exercised while the
Grantee is an Employee or during an applicable period after the Employees separation from service
as specified in the Grant Instrument. No SAR may be exercised by an executive officer or director
of the Company or any of its subsidiaries who is subject to Section 16 of the Exchange Act, except
in accordance with Rule 16b-3 under the Exchange Act.
Section 2.3
Value of SARs
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When a Grantee exercises a SAR, the Grantee shall receive
in settlement of such SAR an amount, payable in cash only, equal to the amount by which the Fair
Market Value of a Share (as defined in Section 2.4 below) on the date of exercise of the SAR
exceeds the exercise price of the SAR specified in the Grant Instrument.
Section 2.4
Fair Market Value of a Share
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The Fair Market Value per Share shall be:
(a)
If the Shares are publicly traded and the principal trading market for the Shares is a
national securities exchange or the Nasdaq National Market, the last reported sale price thereof on
the preceding date or, if there were no trades on that date, the latest preceding date upon which a
sale was reported;
(b)
If the Shares are publicly traded but the Shares are not principally traded on such
exchange or market, the mean between the last reported bid and asked prices of a Share on the
preceding date, as reported on Nasdaq National Market or, if not so reported, as reported by the
National Daily Quotation Bureau, Inc. or as reported in a customary financial reporting service, as
applicable and as the Committee determines; or
(c)
If the Shares are not publicly traded or, if publicly traded but the Shares have not been
traded for 10 trading days, or the Shares are not subject to reported transactions or bid or
asked quotations as set forth above, the Fair Market Value per Share shall be as reasonably
determined in good faith by the Committee using reasonable valuation methods and procedures.
Section 2.5
Adjustments for Significant Events
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If there is any change in the number
or kind of outstanding Shares by reason of (a) a dividend, spin-off, recapitalization, split or
combination or exchange of Shares, (b) a merger, reorganization or consolidation in which the
Company is the surviving corporation, (c) a reclassification or change in par value, or (d) any
other unusual event affecting the Companys outstanding Shares as a class without the Companys
receiving consideration, the number of Shares covered by outstanding Grants and the exercise price
of a SAR may be appropriately adjusted in the sole discretion of the Committee.
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ARTICLE III
GENERAL MATTERS
Section 3.1
Amendment and Termination of the Plan
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The Board may amend or terminate
the Plan at any time in accordance with applicable law; provided that the Board may not amend the
Plan without the approval of the shareholders, if such shareholder approval is required by
applicable law or exchange rules. A termination or amendment of the Plan that occurs after a Grant
is made shall not materially impair the rights of a Grantee unless the Grantee consents or the
amendment is required by applicable law. The termination of the Plan shall not impair the
Committees authority over an outstanding Grant. Whether or not the Plan has terminated, an
outstanding Grant may be terminated or amended pursuant to the Plan or agreement of the Company and
the Grantee consistent with the Plan. The Plan shall be the controlling document. No other
statements or representations, oral or written, may amend the Plan. The Plan shall be binding upon
the Company, its successors and assigns.
Section 3.3
Miscellaneous
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(a) Funding.
The Plan shall be unfunded. In no event shall interest be paid or accrued on
any Grant or any unpaid installments of Grants.
(b) Rights of Participants.
Nothing in the Plan shall entitle any Employee or other person to
any Grant under the Plan. Neither the Plan nor any action taken under it shall give any individual
any right to be retained or employed by the Company.
(c) Tax Withholding.
The Company or any affiliate is authorized to withhold from any payment
relating to a SAR or any payroll or other payment to a Grantee, amounts or withholding and other
taxes due with respect to a SAR, its exercise, or any payment thereunder, and to take such other
action as the Committee may deem necessary or advisable to enable the Company and Grantee to
satisfy obligations for the payment of withholding taxes and other tax liabilities relating to any
SAR.
(d) Effective Date.
The Plan shall be effective immediately upon approval by the Board.
(e) Grants Outside of the Plan.
Nothing in the Plan shall limit the Companys right to grant
other compensation awards outside of this Plan.
(f) Compliance with Law.
The Plan and the obligations of the Company to issue Grants shall be
subject to all applicable laws and approvals required by any regulatory agency. With respect to
persons subject to Section 16 of the Exchange Act, the Company intends that the Plan and all
transactions under it comply with all applicable provisions of Rule 16b-3 or its successors under
the Exchange Act. The Committee may revoke any Grant if it is contrary to law or modify a Grant to
bring it into compliance with applicable law.
(g) Successors.
All the Companys obligations under the Plan and awards granted under it
shall be binding on any successor to the Company, whether by direct or indirect purchase, merger,
consolidation or otherwise, of all or substantially all the business or assets of the Company.
(h) Governing Law.
The validity, construction and effect of the Plan and Grant Instruments
issued under it shall be governed in accord with the law of the State of Delaware.
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Exhibit 99.2
Nanophase Technologies Corporation
Stock Appreciation Rights
Grant Agreement
Grant Date: _____________, _____
To: _________________________
We are pleased to notify you (Grantee) that Nanophase Technologies Corporation, a Delaware
corporation (the Company), has granted to you ___Stock Appreciation Rights (SARs)
under the 2006 Stock Appreciation Rights Plan (the Plan) at an exercise price of $ per
SAR (the Exercise Price), subject to the terms and conditions of the Plan and of this Agreement
as set forth below. Any capitalized terms not otherwise defined in the Agreement shall have the
same meanings set forth in the Plan.
1.
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Term and Exercise of SARs.
Subject to the provisions of the Plan and this Agreement,
the SARs shall vest and may be exercised by you during the term hereunder on or prior to the
tenth anniversary of the Grant Date (the Last Exercise Date) as follows:
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, 2007
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-
SARs
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, 2008
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-
SARs
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, 2009
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-
SARs
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Subject to the provisions of Paragraph 2 below and the provisions of the Plan, any
portion of the vested SARs that you do not exercise shall accumulate and can be exercised by
you any time prior to the Last Exercise Date.
SARs may be exercised by delivering to the Secretary of the Company a written Notice of
Intention to Exercise in the form attached hereto as Exhibit A signed by you and specifying the
number of SARs you desire to exercise. As a holder of SARS, you shall never be deemed to have
the rights of a shareholder with respect to the SARs. Upon such exercise, the Company shall
promptly pay to Grantee, in a single lump sum cash payment, the amount by which the Fair Market
Value per Share (as defined in the Plan) exceeds the Exercise Price of each such exercised SAR.
2.
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Termination of Status.
The grant of SARs hereunder is a separate incentive and is not
in lieu of salary or other compensation. SARs granted hereunder do not vest you with any right
to continue your status as an employee or member of the Board of the Company, nor is the
termination of your status in any way restricted by this Agreement. Upon a Termination of
Service, unvested SARs will terminate and vested SARs will remain exercisable, if at all,
subject to certain restrictions as follows:
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(i)
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a SAR may only be exercised while the Grantee is an employee or member of the
Board. In the event that a Grantee has a Termination of Service (as defined below)
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for any reason other than Disability (as defined below), death or Cause (as defined
below), any SAR which is otherwise exercisable by the Grantee shall terminate unless
exercised within 90 days after the date of such termination, but in any event no later
than the Last Exercise Date.
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(ii)
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In the event the Grantee has a Termination of Service on account of a
termination for Cause by the Company, unless otherwise determined by the Committee any
SARs held by the Grantee shall terminate as of the date of such Termination of Service.
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(iii)
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In the event the Grantee has a Termination of Service on account of
Disability, any SARs which is otherwise exercisable by the Grantee shall terminate
unless exercised within one year after the date of such Termination of Service, but in
any event no later than the Last Exercise Date.
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(iv)
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If the Grantee dies while an employee or member of the Board or within 90 days
after the date on which the Grantee has a Termination of Service, any SARs that are
otherwise exercisable by the Grantee shall terminate unless exercised within one year
after the date of such death or Termination of Service (or within such other period of
time as may be specified by the Committee), but in any event no later than the Last
Exercise Date.
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(v)
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For purposes of this Agreement:
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(A)
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Cause shall mean, except to the extent specified otherwise by the
Committee, a finding by the Committee that (1) the Grantee has breached his or her
employment, service, noncompetition, nonsolicitation or other similar contract with
the Company or its parent and subsidiary corporations, (2) has been engaged in
disloyalty to the Company or its parent and subsidiary corporations, including,
without limitation, fraud, embezzlement, theft, commission of a felony or
dishonesty in the course of his or her employment or service, (3) has disclosed
trade secrets or confidential information of the Company or its parents and
subsidiary corporations to persons not entitled to receive such information or (4)
has entered into competition with the Company or its parent or Subsidiary
Corporations. Notwithstanding the foregoing, if the Grantee has an employment
agreement with the Company defining Cause, then such definition shall supersede
the foregoing definition.
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(B)
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Disability shall mean a Grantees becoming disabled within the
meaning of Section 22(e)(3) of the Internal Revenue Code (the Code).
Notwithstanding the foregoing, if the Grantee has an employment agreement with the
Company defining Disability, then such definition shall supersede the foregoing
definition.
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(C)
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Termination of Service shall mean a Grantees termination of
employment or service as an employee or member of the Board (so that, for purposes
of the Plan, cessation of service as an employee or member of the Board shall not
be treated as a Termination of Service if the Grantee continues without
interruption to serve
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thereafter in another one (or more) of such other capacities) unless the Committee
determines other wise.
3.
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Non-Transferability of SARs.
Grants of SARs hereunder are not transferable and may be
exercised only by you. Any purported transfer or assignment of SARs shall be void and of no
effect, and shall give the Company the right to terminate the SARs granted hereunder as of the
date of such purported transfer or assignment. No transfer of any beneficial economic interest
as described above by you by operation of law shall be effective unless the Company shall have
been furnished with written notice thereof, and such other evidence as the Board of Directors
may deem necessary to establish the validity of the transfer and conditions of the SARs
hereunder, and to establish compliance with any laws or regulations pertaining thereto.
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4.
Reorganization or Change in Control of the Company
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(A)
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As used herein, a Reorganization shall be deemed to have occurred
if the shareholders of the Company approve (or, if shareholder approval is not
required, the Board approves) an agreement providing for (i) the merger or
consolidation of the Company with another corporation where the shareholders of the
Company, immediately prior to the merger or consolidation, will not beneficially own,
immediately after the merger or consolidation, shares entitling such shareholders to
more than 50% of all votes to which all shareholders of the surviving corporation would
be entitled in the election of directors (without consideration of the rights of any
class of stock to elect directors by a separate class vote), (ii) the sale or other
disposition of all or substantially all of the assets of the Company, or (iii) a
liquidation or dissolution of the Company.
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(B)
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As used herein, a Change of Control shall be deemed to have
occurred if any person (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act of 1934, as amended) or any of its subsidiaries or affiliates becomes a
beneficial owner (as defined in Rule 13d-3 under the Exchange Act of 1934, as
amended), directly or indirectly, of securities of the Company representing a majority
of the voting power of the then outstanding securities of the Company except where the
acquisition is approved by the Board.
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(ii)
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Assumption of Grants. Upon a Reorganization where the Company is not the
surviving corporation (or survives only as a subsidiary of another corporation), this
Grant Agreement shall be assumed by, or replaced with comparable options or rights by,
the surviving corporation.
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(iii)
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Notice and Acceleration. Upon a Reorganization or a Change of Control, (A) the
Company shall provide Grantee written notice of such event, and (B) this Grant shall
automatically accelerate and become fully exercisable.
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5.
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Disputes.
Any dispute which may arise under or as a result of or pursuant to this
Agreement shall be finally and conclusively determined in good faith by the Board of Directors
of the Company in its sole discretion, and such determination shall be binding upon all
parties. In the event of an inconsistency between the provisions of this Agreement and the
Plan, the provisions of the Plan shall control.
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6.
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Amendment; Waivers
. This Agreement contains the full and complete understanding and
agreement of the parties hereto as to the subject matter hereof and may not be modified or
amended, nor may any provision hereof be waived, except by a further written agreement duly
signed by each of the parties. The waiver by either of the parties hereto of any provision
hereof in any instance shall not operate as a waiver of any other provision hereof or in any
other instance.
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7.
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Binding Effect
. This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, administrators, representatives,
successors and assigns.
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8.
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Governing Law; Venue
. This Agreement shall be interpreted as a Delaware contract and
is intended to be governed by the laws of said state, without the application of the choice of
law provisions of such or any other state. Each party hereby (a) submits to personal
jurisdiction in the State of Illinois as the exclusive venue for the enforcement of this
Agreement, (b) waives any and all personal rights under the laws of any state to object to
jurisdiction within the State of Illinois for the purposes of litigation to enforce this
Agreement, and (c) consents to be sued in the United States District Court for the Northern
District of Illinois and all courts of general jurisdiction of the State of Illinois. The
parties agree that any litigation regarding this Agreement shall be brought only in the United
States District Court for the Northern District of Illinois or the state courts located in
Cook County, Illinois.
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9.
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Construction
. The titles of the sections of this Agreement are included for
convenience only and shall not be construed as modifying or affecting their provisions. The
masculine gender shall include both sexes; the singular shall include the plural and the
plural the singular unless the context otherwise requires.
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10.
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Notices
. Any notice in connection with this Agreement shall be deemed to have been
properly delivered if it is in writing and is delivered in hand or by facsimile or sent by
registered mail, postage prepaid, to the party addressed as follows, unless another address
has been substituted by notice so given:
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To the Grantee:
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To the address as set forth on the
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signature page hereof.
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To the Company:
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Nanophase Technologies Corporation
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1319 Marquette Drive
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Romeoville, Illinois 60446
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Attn: Chief Financial Officer
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Copy to:
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Wildman, Harrold, Allen & Dixon
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225 West Wacker Drive
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Suite 3000
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Chicago, Illinois 60606
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Attn.: David L. Weinstein, Esq.
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11.
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Entire Agreement
. This Agreement constitutes the entire agreement of the parties
with respect to the subject matter hereof and supersede in their entirety all prior
undertakings and agreements of the Company and Grantee with respect to the subject matter
hereof.
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12.
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Counterparts
. This Agreement may be executed in one or more counter-parts, which
shall together constitute one agreement.
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[Signature Pages to Follow]
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IN WITNESS WHEREOF
, the undersigned have executed this Grant Agreement as of the dates set
forth below.
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Nanophase Technologies Corporation,
a Delaware corporation
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By:
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Its:
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(date of execution)
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I have carefully read the foregoing Agreement and the Companys 2006 Stock Appreciation Rights
Plan, a copy of which has been provided to me, and agree to be bound by the terms of this Agreement
and such Plan.
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(signature of Grantee)
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(printed name of Grantee)
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(address of Grantee)
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(date of execution)
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EXHIBIT A
EXERCISE NOTICE
Nanophase Technologies Corporation
1319 Marquette Drive
Romeoville, Illinois 60446
Attn: Chief Financial Officer
Re: Exercise of Stock Appreciation Right
Gentlemen:
Subject to the terms and conditions of the Grant Agreement between the undersigned and
Nanophase Technologies Corporation (the Company) with a
_________, 20___ grant date
(the Agreement), please take notice that the undersigned hereby elects to exercise the Stock
Appreciation Rights granted to Grantee pursuant to the Agreement by and to the extent of
______ Stock Appreciation Rights at an
Exercise Price of $ ______ per SAR.
The undersigned hereby agrees that amounts may be withheld by the Company to satisfy any
obligation to withhold taxes in connection with the payments relating to such exercise in
accordance with the Agreement and the Plan (as defined in the Agreement).
The undersigned hereby acknowledges that the exercise of these Stock Appreciation Rights is
irrevocable and effective on the date the Company has received this Exercise Notice.
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Very truly yours,
GRANTEE:
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(signature)
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Name of Grantee or other party
duly exercising rights under the Agreement:
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Date:
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