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): March 11, 2019

 

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))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).  

 


Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

     
 

 

Item 1.01 Entry into a Material Definitive Agreement

On March 11, 2019, Nanophase Technologies Corporation (the “Company”) and BASF Corporation (“BASF”) entered into Amendment No. 4, effective as of January 1, 2019 (the “Amendment”), to the Zinc Oxide Supply Agreement originally dated September 16, 1999 and subsequently amended during 2001, 2003 and 2012 (the “Supply Agreement”). The Amendment reduces from $1,000,000 to $500,000 the amount of cash and cash equivalents (calculated in accordance with U.S. generally accepted accounting practices (“GAAP”) that the Company must maintain to prevent a “Triggering Event” and consequent “Technology Transfer” (as those terms as defined in the Supply Agreement) during a trailing 12-month period when the Company also reports a net loss. The Amendment also provides that a Technology Transfer may be triggered if the Company’s cash and cash equivalents, using a broader, non-GAAP definition that includes the Company’s aged receivables from BASF, zinc metal raw materials on hand, and inventory of certain of the Company’s zinc-based personal care ingredients, are less than $1,000,000. The Amendment further changes certain requirements relating to the minimum inventory of certain zinc-based personal care ingredients that the Company must maintain under the Supply Agreement.

All other terms and conditions in the Supply Agreement 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. 4 to Zinc Oxide Supply Agreement, dated as of January 1, 2019 and entered into on March 11, 2019, 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: March 15, 2019

  NANOPHASE TECHNOLOGIES CORPORATION
   
   
  By: /s/ Jaime Escobar  
    Name:    Jaime Escobar
    Title:      Chief Financial Officer

     
 

 

EXHIBIT INDEX  

Exhibit No. Exhibit
10.1 * Amendment No. 4 to Zinc Oxide Supply Agreement, dated as of January 1, 2019 and entered into on March 11, 2019, 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.

 

 

 

     

 

Nanophase Technologies Corporation 8-K

 

Exhibit 10.1

AMENDMENT NO.4 TO

ZINC OXIDE SUPPLY AGREEMENT

 

THIS AMENDMENT NO. 4 TO ZINC OXIDE SUPPLY AGREEMENT is entered into as of January 1, 2019 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, Amendment No. 2 to Zinc Oxide Supply Agreement dated March 17, 2003, and Amendment No. 3 to Zinc Oxide Supply Agreement dated September 30, 2012 (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, and amended by Paragraph 1 of Amendment No. 3, is hereby further amended to delete the language in Section 5.01(e)(i) of the Agreement and Paragraph 1 of Amendment No. 2 and Paragraph 1 of Amendment No. 3, and replace it with the following language:

“(e)(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 and 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 $500,000. Cash and cash equivalents – including any accounts receivable outstanding and due from BASF over 30 days from ship date ($[*] min), finished goods Z-COTE in Nanophase inventory ($[*]max), and zinc metal Nanophase inventory ($[*]max) shall be less than $1,000,000.”

 

 
 

 

2. Section 3.04 of the Agreement is hereby amended to delete the language in that section and replace it with the following language:

 

a. “Nanophase shall maintain inventory of manufactured Product available to fill orders from BASF equal to the higher of either [*]kg or the monthly average of the previous [*] months orders. Nanophase shall be required to establish this safety stock level by August 31, 2019. [*]kg minimum of inventory shall be established by Mar 31, 2019; 34,000 kg minimum of inventory shall be established by Jun 31, 2019; the full [*]kg minimum of inventory shall be established by Aug 31, 2019. This inventory value may be revised after Dec 31, 2019 depending on business demands.”

 

b. Should BASF commercial requirements exceed [*] full truckloads during this time, Nanophase shall be permitted one week of additional time for each truckload shipped in excess of the [*] truckloads shipped to meet BASF demand.

 

c. Implementation grace period: During the ramp up of safety stock levels, Nanophase shall follow the same ramp up for working capital mix.

 

d. Implementation Requirements:

 

i. Q1 2019: $500,000 cash minimum, plus [*]kg min. inventory

 

ii. Q2 2019: $500,000 cash minimum, plus [*]kg min. inventory

 

iii. Q3 2019: Full requirements outlined in amendment apply.

 

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

 

*Confidential Treatment Requested

 

[ Signatures next page ]

 

 
 

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/ Amy Ciemniecki
Name: Jess Jankowski   Name: Amy Ciemniecki
Title: President and CEO   Title: Category Buyer