NANOPHASE TECHNOLOGIES CORPORATION (Form: 8-K, Received: 12/06/2012 12:17:13)

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): December 6, 2012 (December 2, 2012)

NANOPHASE TECHNOLOGIES CORPORATION

(Exact name of registrant as specified in its charter)

Delaware

0-22333

36-3687863

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)


1319 Marquette Drive, Romeoville, Illinois				60446
(Address of principal executive offices)				(Zip Code)

Registrant’s telephone number, including area code: (630) 771-6700

Not applicable

(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 ( see General Instruction A.2. below):

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement

On December 2, 2012, Nanophase Technologies Corporation (the “Company”) and BASF Corporation (“BASF”) entered into Amendment No. 3 (the “Amendment”) to the Zinc Oxide Supply Agreement originally dated September 16, 1999 and subsequently amended during 2001 and 2003 (the “Supply Agreement”). The Amendment reduces the cash on hand the Company must have pursuant to its US GAAP financial statements from $2 million down to $1 million with regard to a potential “Triggering Event” under the terms of the Supply Agreement. In the event such a Triggering Event occurs, BASF would have the right, but not the obligation, to license certain technology and/or purchase certain production equipment from the Company and pay the Company a royalty on products sold using that technology and equipment pursuant to the Supply Agreement. Reducing the cash requirement lowers the Company’s burden to keep excess cash on hand to satisfy this contractual obligation, and thus reduces the possibility of a Triggering Event occurring.

In addition, this Amendment clarifies how certain costs will be incorporated into future price changes and documents the collaborative nature of the parties’ relationship in terms of material sourcing. Such clarification was designed to document in the Supply Agreement what the parties have been doing in practice, and thus is not expected to impact future pricing.

All other terms and conditions in the Supply Agreement as in effect immediately prior to the Amendment remain in full force and effect thereafter. The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the text of the Amendment, which is filed, with confidential portions redacted, as Exhibit 10.1 hereto and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits:

The following item is filed as an exhibit to this Current Report on Form 8-K:


Exhibit No.		Exhibit

10.1*		Amendment No. 3 to Zinc Oxide Supply Agreement, entered into on December 2, 2012, between the Company and BASF Corporation

*	Confidential treatment has been requested with respect to certain portions of this exhibit. Omitted portions have been filed separately with the Securities and Exchange Commission.

SIGNATURES

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.

Dated: December 6, 2012


NANOPHASE TECHNOLOGIES CORPORATION

By:		/s/ Frank Cesario
		Name: Frank Cesario
		Title: Chief Financial Officer

EXHIBIT INDEX


Exhibit No.		Exhibit

10.1*		Amendment No. 3 to Zinc Oxide Supply Agreement, entered into on December 2, 2012, between the Company and BASF Corporation

*	Confidential treatment has been requested with respect to certain portions of this exhibit. Omitted portions have been filed separately with the Securities and Exchange Commission.

EXHIBIT 10.1

Portions of this Exhibit have been redacted pursuant to a request for confidential treatment under Rule 24b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934. Omitted information, marked “[*]” in this Exhibit, has been filed separately with the Securities and Exchange Commission together with such request for confidential treatment.

AMENDMENT NO. 3 TO ZINC

OXIDE SUPPLY AGREEMENT

THIS AMENDMENT NO. 3 TO ZINC OXIDE SUPPLY AGREEMENT is entered into as of September 30, 2012 by and between BASF CORPORATION, a Delaware corporation (“BASF”) and NANOPHASE TECHNOLOGIES CORPORATION, a Delaware corporation (“Nanophase”).

RECITALS

A. Nanophase and BASF (as successor-in-interest to Sun Smart, Inc.) entered into that certain Zinc Oxide Supply Agreement, dated September 16, 1999 (the “Agreement”), as amended by that certain Amendment No. 1 to Zinc Oxide Supply Agreement dated January 2001 and Amendment No. 2 to Zinc Oxide Supply Agreement dated March 17, 2003 (collectively the “Amendments”).

B. BASF and Nanophase desire to amend the Agreement and Amendments as set forth herein.

NOW THEREFORE, BE IT RESOLVED, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

1. The “Triggering Event” set forth in Section 5.01(e)(i) of the Agreement, as amended by Paragraph 1 of Amendment No. 2 to the Agreement, is hereby further amended to temporarily delete the language in Section 5.01(e)(i) of the Agreement and Paragraph 1 of Amendment No. 2 and replace it with the following language:

“(i) Earnings of Nanophase for the twelve month period ending on the date of Nanophase’s most recent published quarterly financial statements (calculated in accordance with generally accepted accounting principles applied on a consistent basis) shall be less than $0 and cash, cash equivalents of Nanophase at the end of such period (calculated in accordance with generally accepted accounting principles applied on a consistent basis) shall be less than $1,000,000;”

2. Section 1.04 (f) of the Agreement is hereby amended to delete the language in that section and replace it with the following language:

“The pricing set forth in Exhibit B will be subject to increases or decreases based upon changes in Nanophase’s costs for electricity, labor, and Zinc metal, as set forth in Exhibit C.”

3. Exhibit C of the Agreement is hereby amended to delete the language in Exhibit C and replace it with the following language:

“Beginning January 1, 2010, the pricing set forth in Exhibit B shall be subject to changes in Nanophase’s electricity, labor, and Zinc metal costs as follows:

1. For Zinc Metal: If Nanophase’s cost of Zinc metal exceeds $[*]/kg, [*]% of the cost per kilogram above $[*]/kg will be added to all Zinc-based products sold to BASF as a Zinc Surcharge. If Nanophase’s cost of Zinc metal falls below $[*]/kg, [*]% of the cost per kilogram below $[*]/kg will be deducted from all Zinc-based products sold to BASF as a Zinc Credit. If Nanophase’s cost of Zinc metal exceeds $[*]/kg, [*]% of the cost per kilogram above $[*]/kg will be added to all Zinc-based products sold to BASF as a Zinc Surcharge. Pricing adjustments will be made approximately 30 days after the purchase of the Zinc metal by Nanophase. Although Nanophase intends to purchase Zinc metal once per quarter to service BASF’s Rolling Forecasted product requirements, the frequency of such Nanophase purchases may change from time to time at Nanophase’s discretion. Nanophase agrees to consult with BASF Procurement 15 days prior to any Zn metal purchases.

2. For Electricity: If Nanophase’s average annual electricity costs for a current year (defined as the average cost per consistent unit of electricity, such as USD per megawatt hour, for as many of the twelve (12) calendar months as such data is available before setting pricing for the following year) increase or decrease by [*]% or more compared to the same period of the previous year, [*]% of the change in cost will be added to or subtracted from the current pricing table for uncoated nanocrystalline formulations of zinc oxide, on a per kilogram basis. Electricity prices will be fixed without further adjustment for twelve (12) months after such prices become effective, as of the 1 ^st day of January following the year of measure, unless otherwise agreed by both parties.

3. For Labor: If the Average Hourly Wages reported in the U.S. Government Monthly Labor Report for non-farm jobs increase or decrease, [*]% of the change in such labor cost will be added to or subtracted from the current pricing table for uncoated nanocrystalline formulations of Zinc oxide, on a per kilogram basis. Labor prices will be fixed without further adjustment for twelve

(12) months after such prices become effective, as of the 1 ^st day of January following the adjustment, unless otherwise agreed by both parties.”

4. All other terms and conditions of the Agreement and the Amendments shall remain in full effect in accordance with their terms

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


Nanophase Technologies Corporation		BASF Corporation

By:	/s/ Jess Jankowski	By:	/s/ Mark Miller
Name:	Jess Jankowski	Name:	Mark Miller
Title:	President and CEO	Title:	Vice President
Date: 11-13-2012		Date: 12-2-2012