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EXHIBIT 10.11
NANOPHASE TECHNOLOGIES CORPORATION
CONSULTING AND STOCK PURCHASE AGREEMENT
CONSULTING AND STOCK PURCHASE AGREEMENT entered into as of May 9, 1990,
between RICHARD W. SIEGEL ("Siegel") and NANOPHASE TECHNOLOGIES CORPORATION, an
Illinois corporation (the "Company").
PRELIMINARY STATEMENT
A. The Company wishes to retain Siegel to provide consulting services to
the Company, on the terms and conditions set forth herein, and in connection
therewith desires to sell Siegel certain shares of common stock of the Company.
B. Siegel desires to provide consulting services to the Company, on such
terms and conditions, and desires to purchase such shares of stock from the
Company.
C. Certain capitalized terms used herein are defined in Article IV
hereof.
THEREFORE, the parties agree as follows:
AGREEMENT
I. CONSULTING SERVICES
1.1 Consulting Services. Siegel hereby agrees to render consulting
services to the Company in the areas described on Exhibit A attached hereto (the
"Scope of the Work"), and on such other matters as Siegel and the Company may
agree from time to time. Siegel agrees to perform his consulting services under
this Agreement solely at facilities provided or designated by the Company for
such purposes, provided that Siegel shall not be required to perform such
services at any location outside of the Chicago area without his consent. Unless
Siegel and the Company shall agree otherwise, Siegel agrees to devote an average
of twenty-four (24) hours per month for each year during the term hereof to
providing consulting services under this Agreement, and the Company agrees to
retain Siegel for the same, the exact times to be agreed upon by Siegel and the
Company.
1.2 Term. Siegel shall provide consulting services to the Company under
this Agreement for a period of five (5) years, unless this Agreement is sooner
terminated by either party as hereinafter provided; provided that such term
shall be renewed for successive one-year terms thereafter unless terminated by
either Siegel or the Company. Siegel may terminate his agreement to provide
consulting services to the Company, and the Company
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may terminate its agreement to retain Siegel to provide consulting services, at
any time on ninety (90) days' written notice to the other party. Notwithstanding
the foregoing, either Siegel or the Company may terminate this Agreement at any
time if the other party shall breach his or its obligations hereunder (provided
that the non-breaching party shall give breaching party written notice of such
breach, and breaching party shall have thirty (30) days after receipt of such
notice to cure such breach). Further, Siegel may terminate his agreement to
provide consulting services under this Agreement, and the Company may terminate
its agreement to retain Siegel to provide consulting services, at any time if
any of Siegel's activities or proposed activities hereunder are disapproved in
writing by the University, as operator of ANL, as provided in Section 3.3
hereof.
1.3 Compensation.
(a) Basic Compensation. The Company shall pay Siegel $150.00 per hour
for providing consulting services hereunder, payable monthly in arrears. The
Company shall also reimburse Siegel for all approved out-of-pocket expenses
actually incurred by Siegel in the performance of his services hereunder.
(b) Stock Purchase and Sale. In addition to the basic compensation
described above, the Company agrees to sell Siegel, and Siegel agrees to
purchase from the Company, ten thousand (10,000) shares of common stock, no par
value, of the Company (the "Stock"), on the terms set forth in Article II
hereof.
1.4 Board of Directors. Upon request of the Company, and subject to the
approval of the University, as operator of ANL, Siegel agrees to serve on the
Board of Directors of the Company.
1.5 Indemnification. The Company hereby agrees to indemnify and hold
Siegel harmless from and against any and all claims, liabilities, losses,
damages, costs and expenses (including without limitation attorneys' fees and
defense costs) relating to or arising directly or indirectly out of Siegel's
serving as a consultant to the Company or out of the performance of his
obligations hereunder, except in the case of gross negligence or bad faith on
the part of Siegel.
II. PURCHASE AND SALE OF STOCK
2.1 Purchase Price; Closing. The purchase price for the Stock shall be
$.001 per share, payable in cash at Closing. Payment for the Stock, and delivery
of the certificates evidencing the Stock, shall be effected at the offices of
the Company, 1115-25 East 58th Street, Chicago, Illinois, at 10:00
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A.M. Central Standard Time on May l0, 1990, or at such other time, date and
place upon which the parties shall agree.
2.2 Unvested Shares Repurchase Option.
(a) Company Repurchase Right. If at any time Siegel shall no longer be
an Associate of the Company, the Company shall have the right (the "Repurchase
Option") to purchase all of the shares of stock which are then Unvested Shares
(as defined in Section 2.2(b) hereof) on the terms set forth in this Section
2.2. The Company may exercise its Repurchase Option at any time during the one
hundred eighty (180) days beginning on the Termination Date. If the Company
shall fail to exercise its Repurchase Option for any Unvested Shares during such
period, such Unvested Shares shall become Vested Shares.
(b) Vesting Schedule. The following number of shares of Stock shall be
subject to the Repurchase Option (such shares, together with the shares and
other property referred to in Section 2.2(f), called "Unvested Shares"):
Period Unvested Shares
------ ---------------
From the date of this Agreement 7 500
through August 31, 1990
From September 1, 1990 5,000
through August 31, 1991
From September 1, 1991 2,500
through August 31, 1992
After September 1, 1992 0
Shares of Stock that are not subject to the Repurchase Option are referred to as
"Vested Shares". Notwithstanding the above Vesting Schedule, no Unvested Shares
shall become Vested Shares after the Termination Date unless the Company shall
fail to exercise its Repurchase Option within the prescribed period, in which
event all such Unvested Shares shall become Vested Shares in accordance with
Section 2.2(a) hereof.
(c) Acceleration of Vesting. Notwithstanding Section 2.2(b) hereof:
(i) upon the occurrence of any of the following events, 2,500
Unvested Shares shall become Vested Shares:
(A) the Company shall receive a funding grant from
the State of Illinois under the State of Illinois Technology
Challenge Grant program;
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(B) the Company shall receive a funding grant from
either of two SBIR proposals previously submitted by the
Company, or the Company shall receive an equivalent funding
grant from some other source and Siegel shall have actively
participated in the preparation of the application or proposal
for such grant, provided that if the Company shall determine
not to seek any other grant funding, then upon such other
event as the Company and Siegel may agree; and
(C) the Company shall receive reasonably satisfactory
commitments from three (3) persons satisfactory to the
Company's Board of Directors to serve on the Company's
Scientific Advisory Board. (For purposes hereof, the Company
acknowledges that Bernard Kear, Herbert Gleiter, and Ilhan
Aksay are satisfactory to the Board of Directors to serve as
members of the Scientific Advisory Board.)
For the purposes of this Section 2.2(c)(i), Unvested Shares shall vest
in the order such shares would have become Vested Shares had the
provisions of this Section 2.2(c)(i) not been satisfied. Therefore,
upon the first of the above events to occur, the Unvested Shares that
would have become Vested Shares on November 1, 1990, shall become
Vested Shares; upon the second of the above events to occur, the
Unvested Shares that would have become Vested Shares on September 1,
1991, shall become Vested Shares; and upon the third of the above
events to occur, the Unvested Shares that would have become Vested
Shares on September 1, 1992, shall become Vested Shares.
(ii) If the Company's Initial Public Offering shall occur,
then all Unvested Shares shall become Vested Shares.
(d) Repurchase Price. The purchase price per share which the Company
shall pay for Unvested Shares repurchased under the Repurchase Option shall
equal the purchase price per share originally paid by Siegel for the Stock as
specified in Section 2.1, adjusted as provided in Section 2.2(f).
(e) Method of Exercise; Payment for Shares. The Company may exercise
its Repurchase Option by written notice to Siegel or Siegel's legal
representative, signed by an officer or director of the Company and delivered
within the exercise period specified in Section 2.2(a). The notice shall specify
the number of Unvested Shares which the Company has elected to repurchase and
the date on which the repurchase shall be effected. Prior to the close of
business on the date specified by the Company to effect the repurchase, (a) the
Escrow Agent referred to in Section 2.5 shall deliver to the Company stock
certificates lodged with the Escrow Agent and evidencing Unvested Shares being
repurchased,
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and (b) any holder of Unvested Shares being repurchased which had been released
from the escrow referred to in Section 2.5 shall deliver to the Company stock
certificates evidencing such Unvested Shares, in either case endorsed for
transfer to the Company or accompanied by endorsed blank assignments separate
from certificate. Upon receipt of such stock certificates, the Company shall pay
the repurchase price therefor to Siegel or Siegel's legal representative or to
the holder thereof, as the case may be, in cash or by check.
(f) Stock Splits, Etc.
(i) If at any time while he holds any Unvested Shares Siegel
shall receive, or shall be entitled to receive, any additional shares
of common stock of the Company, or any other securities or property, by
virtue of his ownership of the Unvested Shares, other than money paid
as a regular cash dividend, whether by stock split, stock dividend, or
otherwise, then any and all such new, substituted, or additional
securities or other property which Siegel receives or is entitled to
receive by virtue of his ownership of the Unvested Shares shall be
immediately subject to the Repurchase Option and shall be included in
the term "Unvested Shares" for all purposes with the same force and
effect as the shares of the Stock then subject to the Repurchase
Option. Such new, additional or substituted shares of Stock or other
property shall be subject to vesting according to the Vesting Schedule
described in Section 2.2(b) hereof, pro rata in accordance with the
number of shares of Unvested Stock then owned by Siegel. Siegel agrees
to accept such new, substituted or additional shares or property in
trust for the Company and deliver the certificates for such shares,
endorsed for transfer to the Company or accompanied by endorsed blank
assignments separate from certificate, or other property, to the Escrow
Agent in accordance with the provisions of Section 2.5 hereof.
(ii) After each such event, the repurchase price per share
shall be adjusted so that the aggregate repurchase price for all
Unvested Stock after the adjustment shall equal the aggregate
repurchase price for such Unvested Stock before the adjustment.
(g) Transfer - Unvested Shares.
(i) Except as provided in Section 2.6 hereof, Siegel shall not
voluntarily Transfer any interest in the Unvested Shares. If any
interest in the Unvested Shares shall be Transferred to any other
person or entity (whether by will, devise, operation of law, or
otherwise), then the Company's
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Repurchase option shall be immediately exercisable for all then
Unvested Shares, on the terms set forth herein.
(ii) In addition to any other legends, each certificate
evidencing Unvested Shares shall be imprinted with the following
legend:
"The shares represented by this certificate are subject to a
repurchase right in favor of the issuer or its assignee, as
set forth in a Consulting and Stock Purchase Agreement between
the issuer and the original holder of the shares. The shares
shall remain subject to the repurchase right, despite any
transfer or attempted transfer. The issuer will furnish a copy
of such agreement upon request and free of charge to the
registered holder hereof."
When any Unvested Shares become Vested Shares, the Company shall upon
request issue one or more new certificates evidencing the Vested Shares
not bearing the above legend.
2.3 Investment Representations: Tax Effects of Investment.
(a) Investment Intent. Siegel represents and warrants that he is
acquiring the Stock for his own account for investment and not with a view to,
or for sale or other disposition in connection with, any distribution of the
Stock, nor with any present intention of selling or otherwise disposing of the
Stock.
(b) Business of the Company. Siegel acknowledges that the Company has
no financial and operating history. Siegel acknowledges that he is familiar with
the proposed business and operations of the Company. Siegel acknowledges that he
has had the opportunity to discuss the Company and its plans, operations and
financial condition with its officers and that he has received all information
which he deems necessary to enable him to evaluate the risks, financial and
otherwise, inherent in making an investment in the Stock.
(c) Economic Risk. Siegel acknowledges that an investment in the Stock
is highly speculative, and represents that he is able, without impairing his
financial position, to hold the Stock for an indefinite period of time and to
suffer a complete loss on his investment in the Stock.
(d) Transferability of the Stock. Siegel acknowledges that:
(i) no public market now exists for the Stock or any other
securities of the Company and the Company has no plans to create a
public market for any of its securities; and,
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(ii) the Stock is not registered under the Securities Act of
1933, as amended, or under any state securities laws, and cannot be
transferred unless registered under such acts or unless an exemption
from registration is available; and
(iii) transfer of the Stock is restricted by law and by the
terms of this Agreement, and Siegel must therefore hold the Stock
indefinitely, and thus bear the economic risk of his investment
indefinitely, unless a subsequent disposition of the Stock is permitted
under the terms of applicable law and this Agreement.
(e) Tax Effects. Siegel acknowledges that it is his sole
responsibility, and not the Company's, to determine the tax consequences to him,
if any, of the issuance of the Stock, and to file in a timely manner any
election which may be available to him in connection with the issuance of the
Stock.
2.4 Restrictions on Transfers.
(a) Right of First Refusal - Vested Shares. If Siegel desires in good
faith to Transfer to any person or entity other than a Permitted Transferee all
or any part of the Vested Shares owned by him ("Sale Shares"), he shall do so
only for cash, a promissory note, or a combination of cash and a promissory
note, and shall deliver written notice thereof to the Company specifying the
number of Vested Shares which he desires to Transfer and the purchase price and
other terms thereof (a "Transfer Notice"). Upon the delivery of such Transfer
Notice, the Company shall have an option, exercisable for thirty (30) days after
the date of receipt of such Transfer Notice, to buy all, but not less than all,
the Sale Shares from Siegel at the price and on the terms set forth in the
Transfer Notice. If the Company does not elect to purchase all of the Sale
Shares, then Siegel shall be free, for a period of thirty (30) days thereafter,
to consummate the Transfer on terms no less favorable than those set forth in
the Transfer Notice. The Company may assign its right of first refusal under
this Section 2.4(a) to any other person, including other shareholders of the
Company; provided, however, that if the consideration for the Sale Shares
includes a promissory note, Siegel's consent shall be required for any such
assignment, which consent shall not be unreasonably withheld. In the event of
any Transfer (including a Transfer to a Permitted Transferee), the Stock so
transferred shall be subject to the provisions of this Agreement, and the
persons acquiring the Stock will, as a condition precedent to the acquisition of
such shares, execute an agreement containing the provisions of this Section 2.4
and shall agree to be bound thereby, and shall also pay any costs incurred by
the Company as a result of such Transfer. Any Transfer made in violation of this
Section 2.4(a) shall be void. Notwithstanding the foregoing, the right of first
refusal set forth in this Section
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2.4(a) shall not apply to any Transfer to a Permitted Transferee. The right of
first refusal set forth in this Section 2.4(a) shall terminate at such time as
the Company shall have completed its Initial Public Offering.
(b) Market Stand-Off. In connection with any underwritten public
offering by the Company of its equity securities pursuant to an effective
registration statement filed under the Securities Act of 1933, as amended,
Siegel shall not Transfer (except to Permitted Transferees) or otherwise agree
to engage in any transactions with respect to any shares of Stock owned by him
without the prior written consent of the Company or its underwriters, for such
period of time as may be requested by the Company or such underwriter; provided,
however, that in no event shall such period exceed 180 days. In order to enforce
this Section 2.4(b), the Company may impose stop-transfer instructions with
respect to the shares until the end of the applicable standoff period.
(c) Legend - All Shares. So long as the shares held by Siegel shall
remain subject to the Company's right of first refusal under Section 2.4(a), in
addition to any other legends, each certificate evidencing such shares of the
Stock shall be imprinted with the following legend:
"The shares represented by this certificate are subject to a right of
first refusal in favor of the issuer or its assignee, as set forth in a
Consulting and Stock Purchase Agreement between the issuer and the
original holder of the shares. The shares shall remain subject to the
repurchase right and right of first refusal, despite any transfer or
attempted transfer. The issuer will furnish a copy of such agreement
upon request and free of charge to the registered holder hereof."
When the Company's rights under this Section 2.4 shall terminate, the Company
shall upon request issue one or more new certificates evidencing the Vested
Shares not bearing the above legend.
2.5 Escrow. To ensure the availability for delivery of the Unvested
Stock upon exercise of the Repurchase Option, upon the issuance of the Unvested
Stock Siegel and the Company shall enter into Joint Escrow Instructions in the
form attached as Exhibit B to this Agreement, and shall deposit with the Escrow
Agent under those Joint Instructions the certificates evidencing all shares of
the Unvested Stock, duly endorsed for transfer to the Company or accompanied by
endorsed blank assignments separate from certificate. Upon a transfer of any
shares of the Unvested Stock which is permitted under the terms of this
Agreement, the transferee shall execute similar Joint Instructions and deposit
similar stock assignments with the Escrow Agent. Upon the termination of the
Repurchase Option, with respect to any shares
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of Stock, the Escrow Agent shall deliver one or more certificates evidencing
those shares of Stock to the holder.
2.6 Repurchase Obligation. In the event that Siegel is required by the
University, as operator of ANL, to divest all of his Stock in the Company, the
Company agrees, upon written notice from Siegel, (a) to purchase all of Siegel's
Vested Shares at a price equal to their Fair Market Value, and (b) to purchase
all of Siegel's Unvested Shares at a price equal to the purchase price
originally paid by Siegel for such Unvested Shares. To the extent that the
Company may not legally purchase Stock from Siegel as required by the preceding
sentence, the Company may (i) assign its right and obligation to any person or
entity selected by the Company, including without limitation one or more
shareholders of the Company, or (ii) defer the consummation of its purchase
until the Company may legally effect the purchase. The Company shall pay the
purchase price due to Siegel in cash, by delivery of the Company's promissory
note bearing interest at 10% per annum and maturing not more than two (2) years
after the date of repurchase, or with a combination of the two.
2.7 Right to Purchase Additional Equity Securities. If the Company
shall hereafter offer any equity security of the Company or any securities
exchangeable for or convertible into equity securities of the Company or any
warrants or other instruments evidencing rights to subscribe for, purchase or
otherwise acquire any equity securities of the Company ("Equity Securities"),
and if the effect of the issuance of such Equity Securities or the exchange,
conversion or exercise of such Equity Securities would be to reduce Siegel's
equity position in the Company (taking the Company as a whole on a fully diluted
basis, assuming the conversion and exchange of all outstanding securities which
are convertible or exchangeable into equity securities and the full exercise of
all outstanding warrants and other rights to acquire equity securities) below
10%, the Company shall promptly notify Siegel thereof and Siegel shall have the
right, by written notice to the Company given within twenty (20) days following
receipt of such notice by Siegel, to purchase on the most favorable terms such
Equity Securities are offered by the Company to other investors such amount of
such Equity Securities which (taking the Company as a whole on a fully diluted
basis, assuming the conversion and exchange of all outstanding securities which
are convertible or exchangeable into equity securities and the full exercise of
all outstanding warrants and other rights to acquire equity securities) would
maintain for Siegel an equity position in the Company equal to Siegel's equity
position in the Company prior to the issuance of such Equity Securities (but in
no event more than 10%). The rights granted to Siegel under this Section 2.7
shall survive the termination for any reason of this Agreement; provided,
however, that such rights shall not apply in the event of, and shall terminate
immediately prior to, the Initial Public Offering.
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III. CONFIDENTIALITY, PROPRIETARY RIGHTS, AND CONFLICTS OF INTEREST
3.1 Nondisclosure Obligation. Siegel understands and acknowledges that
as a shareholder and in the course of performing consulting services under this
Agreement he may be exposed to Proprietary Information rightfully belonging to
the Company. Siegel will hold in confidence all such Proprietary Information and
will not at any time, without the prior written consent of the Company, divulge
or disclose to anyone outside the Company, or appropriate for his own use or the
use of any third party, such Proprietary Information. For purposes of this
Section 3.1, "third parties" shall include each of the University and DOE, and
Siegel specifically agrees that he shall not use or disclose such Proprietary
Information in the course of his employment at ANL. Siegel's agreements and
covenants under this Section 3.1 shall survive the termination of this Agreement
and Siegel's termination as a shareholder of the Company.
3.2 Inventions.
(a) Assignment of Inventions. Any Inventions conceived by Siegel within
the Scope of the Work shall be the property of the Company, and Siegel agrees to
execute such assignments or other documents as the Company may reasonably
request to evidence the Company's ownership of such Inventions. The Company
recognizes the obligation of Siegel pursuant to his employment agreement with
the University, and the University with DOE under ANL Prime Contract No.
W-31-109-ENG-38, and agrees that Invention ownership conflicts with respect
thereto shall be presumed in favor of such obligations and against the present
agreement.
(b) Laboratory Notebooks. Siegel agrees to maintain laboratory
notebooks relating to his work under this Agreement, and to promptly disclose
any Invention conceived by him in the performance of his duties hereunder to the
Company.
(c) Rights in Copyrights. Unless otherwise agreed in writing by the
Company, original works of authorship fixed in any tangible form, prepared by
Siegel (alone or jointly with others) in performing work under this Agreement
shall be deemed a "work made for hire" under the copyright laws (hereinafter
called "Copyright Works") and shall be owned by the Company. Siegel understands
that any assignment or release of such Copyright Works can only be made by the
Company. Siegel shall do everything reasonably necessary to enable the Company
or its nominees to protect its rights in such Copyright Works.
(d) Return of Documents. All writing, records, and other documents and
items of tangible property containing any Inventions, Proprietary Information,
or Copyright Works of the
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Company in Siegel's custody or possession shall be the exclusive property of the
Company, shall not be copied and/or removed from the premises of the Company,
except in pursuit of the business of the Company, and shall be delivered to the
Company (i) upon request, or (ii) in any event, upon the termination of this
Agreement.
3.3 Conflicts of Interest.
(a) ANL and DOE Priority. Company acknowledges that Siegel is employed
by the University and therefore Siegel's availability for consulting services
under this Agreement will be restricted. Siegel will not be required to perform
any services requiring the use of ANL facilities, equipment, materials or time.
The University at any time may revoke Siegel's authority to serve as a
consultant for the Company, or to perform any specific task for the Company, in
which event Siegel shall have the right to decline to perform such task or to
terminate this Agreement. Further, Siegel may terminate this Agreement, or
decline to perform any specific tasks, if Siegel reasonably determines that his
duties hereunder are inconsistent with his obligations to the University. Any
conflicts of interest between Siegel's obligations to the Company and to the
University shall be resolved in favor of the University. Notwithstanding any
other provision of this Agreement, it is understood and agreed that Siegel, by
virtue of his employment with the University at ANL, has a prior commitment with
respect to Inventions, and that all rights in any Invention of Siegel are
subject to the terms and conditions of Siegel's patent agreement with the
University and subject to the provisions of ANL Prime Contract No.
W-31-109-ENG-38 between the University and DOE. No modification or amendment to
Article III of this Agreement, including a modification or amendment to the
Scope of the Work, shall be effective without the prior written consent of the
University, as operator of ANL for DOE.
(b) Absence of Conflicting Agreements. The Company does not desire to
acquire from Siegel any trade secret or other information that he may have
acquired or may in the future acquire from others with restriction, including
the University or DOE. Accordingly, Siegel represents and warrants that to the
best of his knowledge he will not divulge to the Company any information,
practices or techniques in violation of the rights of other parties. Siegel
represents and warrants that, except to the extent he is subject to any of the
policies of ANL as a result of his employment thereby, he is not a party to any
agreement or arrangement, whether oral or written, which would prevent him from
carrying out his obligations to the Company under this Agreement.
(c) No Exclusivity. It is understood and agreed that nothing contained
in this Agreement shall prevent Siegel from
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performing services within the Scope of the Work for others, either as an
employee or as a consultant, so long as the performance of such obligations does
not interfere with the performance of his obligations hereunder.
IV. DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
"ANL" shall mean Argonne National Laboratory.
"Associate" shall mean a person who renders periodic services to the
Company, either as an employee, officer or director of the Company, or as an
independent non-employee consultant to the Company rendering consulting services
pursuant to a written agreement with the Company.
"DOE" shall mean the United States Department of Energy.
"Fair Market Value" shall mean, as of any date, an amount equal to the
fair market value of the Siegel's Vested Shares. If Siegel and the Company
cannot agree on such value, each shall appoint one (1) independent appraiser,
who shall be a person with expertise in valuing privately held and start-up
companies. Such appraisers shall each independently determine the fair market
value of such Shares within forty-five (45) days, and the Fair Market Value
shall be the mean of such valuations; provided however, that if the higher
valuation is more than 50% greater than the lower valuation, then the appraisers
appointed by Siegel and the Company shall appoint a third independent appraiser,
who shall also be a person with expertise in valuing privately held companies,
and such third appraiser shall, within thirty (30) days, determine a value
between the two valuations determined by the first appraisals and such value
shall be the Fair Market Value. Each party shall bear the cost of the appraiser
appointed by it, and the cost of the third appraiser shall be borne equally by
Siegel and the Company.
"Initial Public Offering" shall mean a public sale of equity securities
of the Company pursuant to an effective registration statement under the
Securities Act of 1933, as amended.
"Invention" shall mean any discoveries, concepts and ideas, whether
patentable or not, including but not limited to proprietary or secret processes,
designs, computer software, programs, formulae, inventions, developments,
modifications, procedures, methods, techniques, processes, adaptations, and
applications, as well as improvements thereof, conceived by Siegel (alone or
jointly with others) in performing consulting services under this Agreement.
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"Permitted Transferee" shall mean a person's spouse, ancestor or
descendant, or a trust created for the primary benefit of such persons (provided
that such trust, if it provides for a secondary or contingent beneficiary, shall
provide for a secondary or contingent beneficiary who shall be one of the above
persons.)
"Proprietary Information" shall mean any information not generally
known in the relevant trade or industry, which Siegel acquired, learned,
discovered, developed, conceived, originated or prepared in performing
consulting services under this Agreement for the Company or received by Siegel
as a shareholder of the Company, including without limitation the following:
(A) all knowledge and information relating to
commercialization or development of commercial applications for the
Company's technology within the Scope of the Work;
(B) financial or business information of the Company or any
customer of the Company;
(C) information regarding the terms of employment of any of
the Company's employees or consultants; and
(D) any "trade secrets", as defined in the Illinois Trade
Secrets Act in effect on the date hereof, of the Company or any
customer of the Company.
All Proprietary Information in written or other tangible form shall be marked
"Proprietary"; Proprietary Information in an intangible form shall be reduced to
writing within thirty (30) days of its disclosure, and such writing shall be so
marked. Notwithstanding the foregoing, Proprietary Information does not include
(i) information which is or becomes publicly available without any restriction
as to confidentiality (except as may be disclosed by Siegel in violation of this
Agreement), (ii) information acquired by Siegel from a source other than the
Company or any of its employees, which source legally acquired such information
without any restriction as to confidentiality, (iii) information of a general
nature and information of a specific nature regarding the technology of the
Company known to Siegel prior hereto, or (iv) information disclosed by the
Company to any third party other than under conditions of confidence.
"Termination Date" shall mean the date on which Siegel ceases to be an
Associate of the Company.
"Transfer" shall mean any sale, assignment, negotiation, pledge,
hypothecation, and any other dispositions of the Stock, and all other events or
transactions where a lien is created against the Shares.
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"University" shall mean The University Of Chicago.
V. MISCELLANEOUS
5.1 Amendment and Waiver.
(a) Any term, covenant, agreement or condition contained in this
Agreement may be amended with, and only with, the written consent of the Company
and Siegel, provided that any amendment to Article III hereof shall require the
consent of the University, as set forth in Section 3.3(a) hereof.
(b) Any waiver of any term, covenant, agreement or condition contained
in this Agreement must be in writing. No such waiver shall be deemed a waiver of
any other term, covenant, agreement or condition, and any waiver of any default
in any such term, covenant, agreement or condition shall not be deemed a waiver
of any later default thereof or of any default of any other term, covenant,
agreement or condition.
5.2 Representations and Warranties to Survive Closing. All
representations, warranties and covenants contained herein or made in writing by
Siegel or the Company in connection herewith shall survive the execution and
delivery of this Agreement and the issuance of Stock hereunder.
5.3 Severability. In the event that any court or any governmental
authority or agency declares all or any part of any Section of this Agreement to
be unlawful or invalid, such unlawfulness or invalidity shall not serve to
invalidate any other Section of this Agreement, and in the event that only a
portion of any Section is so declared to be unlawful or invalid, such
unlawfulness or invalidity shall not serve to invalidate the balance of such
Section.
5.4 Successors and Assigns. The Company may from time to time assign
its Repurchase Option for any particular Unvested Shares to any person or entity
selected by the Company, including without limitation one or more shareholders
of the Company. All representations, warranties, covenants and agreements of the
parties contained in this Agreement or made in writing in connection herewith,
shall, except as otherwise provided herein, be binding upon and inure to the
benefit of their respective successors and assigns.
5.5 Shareholder Rights. Until such time as the Company exercises its
Repurchase Option as to any particular Unvested Shares, Siegel (or any successor
in interest) shall have all the rights of a shareholder (including all voting
and dividend rights) with respect to such shares.
- 14 -
15
5.6 Notices. All communications provided for hereunder shall be hand
delivered or sent by registered mail return receipt requested and, if to Siegel,
addressed as follows:
Dr. Richard W. Siegel
211 West Hickory Street
Hinsdale, Illinois 60521-3309
with a copy to:
David E. Grossman, Esq.
Burns & Levinson
(prior to May 4, 1990) or (after May 4, 1990)
50 Milk Street 125 Summit Street
Boston, MA 02109 Boston, MA 02110-1624
and if to the Company, addressed as follows:
Nanophase Technologies Corporation
c/o ARCH Development Corporation
1115-25 East 58th Street
Chicago, Illinois 60637
Attention: President
with a copy to:
Mr. Thomas M. Fitzpatrick
Law Offices of Thomas M. Fitzpatrick
20 North Wacker Drive, Suite 2243
Chicago, Illinois 60606
or such other addresses or recipients as the recipient shall have designated to
the sender by a written notice given in accordance with this Section. Any notice
called for hereunder shall be deemed given when received.
5.7 Governing Law. Except to the extent federal law is applicable, this
Agreement shall be governed by and construed in accordance with the laws of the
State of Illinois applicable to agreements between Illinois residents entered
into and to be performed entirely within Illinois.
5.8 Headings. The headings used herein are solely for the convenience
of the parties and shall not serve to modify or interpret the text of the
Articles or Sections at the beginning of which they appear.
5.9 Remedies. The parties expressly agree that each party shall be
entitled to injunctive and/or equitable relief, without bond, in any court of
competent jurisdiction to prevent or otherwise restrain a breach of this
Agreement.
- 15 -
16
5.10 Entire Agreement. This Agreement represents the entire agreement
and understanding of the parties hereto with respect to the transactions set
forth herein and no representations, warranties or covenants have been made in
connection with this Agreement except those expressly set forth herein. This
Agreement supersedes all prior negotiations, discussions, correspondence,
communications, understandings and agreements between the parties relating to
the subject matter of this Agreement, and all prior drafts of this Agreement,
all of which are merged into this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day first above written.
Siegel: /s/ RICHARD W. SIEGEL
---------------------------------------
RICHARD W. SIEGEL
Company: NANOPHASE TECHNOLOGIES CORPORATION,
an Illinois corporation
By:
------------------------------------
Its
--------------------------------
- 16 -
17
Exhibit A
SCOPE OF THE WORK
Advising and consulting on information in published articles or other
previously disseminated information on nanophase materials with regard to their
application and commercialization.
- 17 -
18
Exhibit B
JOINT ESCROW INSTRUCTIONS
May 9, 1990
Secretary
Nanophase Technologies Corporation
c/o ARCH Development Corporation
1115-25 East 58th Street
Chicago, Illinois 60637
Dear Sir or Madam:
1. As Escrow Agent for both Nanophase Technologies Corporation, an
Illinois corporation (the "Company"), and Richard W. Siegel, as purchaser of
stock of the Company ("Siegel"), you are hereby authorized and directed to hold
the documents delivered to you pursuant to the terms of that certain Consulting
and Stock Purchase Agreement dated May 9, 1990 (the "Stock Agreement"), to
which a copy of these Joint Escrow Instructions is attached as Exhibit B, in
accordance with these Joint Escrow Instructions (the "Instructions").
Capitalized terms used but not defined in these Instructions are used as defined
in the Stock Agreement.
2. In the event that the Company or any assignee of the Company
(collectively called the "Option Holder") exercises the Repurchase Option set
forth in Article II of the Stock Agreement, the Option Holder shall give you and
Siegel written notice specifying the time and place for the consummation of the
purchase and sale of Stock pursuant to the Repurchase Option. The Option Holder
and Siegel hereby irrevocably authorize and direct you to consummate the
purchase and sale of Stock pursuant to the terms of the Stock Agreement and such
notice.
3. At the closing, you are directed (a) to date any stock assignments
necessary for the transfer in question, (b) to fill in the number of shares of
Stock being transferred, and (c) to deliver same, together with any certificates
evidencing the shares of Stock being transferred, to the Option Holder against
simultaneous delivery to you of the purchase price (by check) for the shares of
Stock being transferred. You shall thereupon deliver the purchase price to
Siegel or as he directs by written instructions to you.
4. Siegel irrevocably authorizes the Company to deposit with you any
certificates evidencing shares of Stock being held
- 18 -
19
by you hereunder and any additions to or substitutions for said shares. Siegel
irrevocably constitutes and appoints you as his attorney-in-fact and agent for
the term of this escrow to execute with respect to such securities all documents
necessary or appropriate to make such securities negotiable and complete any
transactions contemplated by these Instructions. Subject to the provisions of
this Section 4, Siegel shall exercise all rights and privileges of a stockholder
of the Company while the Stock is held by you.
5. This escrow shall terminate with respect to particular shares of the
Stock upon the purchase of those shares by the option Holder or when, by the
terms of the Stock Agreement or as otherwise agreed by the Company in writing,
the Repurchase Option does not apply to those shares.
6. This escrow shall terminate upon the termination of the Repurchase
Option with respect to all shares of Stock originally issued under the Stock
Agreement and all other shares or other property to which the Repurchase Option
shall apply, all in accordance with the terms of the Stock Agreement. Upon the
termination of this escrow, you shall deliver to Siegel certificates evidencing
all shares of Stock not previously purchased by the Company or its assignees,
and not otherwise released. Upon the termination of this escrow, if you then
have in your possession any other documents, securities or other property
belonging to Siegel, you shall deliver all of the same to Siegel and shall be
discharged of all further obligations hereunder.
7. Your duties hereunder may be altered, amended, modified, or revoked
only by a writing signed by all of the parties hereto.
8. You shall be obligated only for the performance of such parties as
are specifically set forth herein and may rely and shall be protected in relying
or refraining from acting on any instrument which you reasonably believe to be
genuine and to have been signed or presented by the proper party or parties. You
shall not be personally liable for any act you may do or omit to do hereunder as
escrow agent or as attorney-in-fact for Siegel while acting in good faith and in
the exercise of your own good judgment, and any act done or omitted by you
pursuant to the advice of your own attorneys shall be conclusive evidence of
such good faith. You shall be entitled to rely on any written notice from the
duties hereto without any obligation to verify the truth or accuracy of such
notices.
9. You are hereby expressly authorized to disregard any and all
warnings given by any of the parties hereto or by any other person, excepting
only orders or process of courts of law, and are hereby expressly authorized to
comply with and obey orders, judgments and decrees of any court. In case you
obey or comply
- 19 -
20
with any such order, judgment or decree, you shall not be liable to any of the
parties hereto or to any other person by reason of such compliance,
notwithstanding that such order, judgment or decree may subsequently be
modified, reversed, vacated, annulled or found to be without jurisdiction.
10. You shall not be liable in any respect on account of the identity,
authorities or rights of the parties executing these Joint Escrow Instructions
or any document or paper hereunder.
11. You shall not be liable for the outlawing of any rights under the
statute of limitations with respect to these Joint Escrow Instructions or any
document or paper hereunder.
12. You shall be entitled to employ such legal counsel and other
experts as you may deem necessary properly to advise you in connection with your
obligations under these Instructions, may rely upon the advice of such counsel,
and may pay such counsel reasonable compensation therefor.
13. Your responsibilities as Escrow Agent hereunder shall terminate if
you shall cease to be Secretary of the Company or if you shall resign by written
notice to both the Company and Siegel. In the event of any such termination,
your successor as Secretary of the Company shall be successor Escrow Agent,
provided that if a new Secretary is not appointed or elected, the Company shall
designate any officer of the Company as successor Escrow Agent, by a written
notice to Siegel, you and the successor Escrow Agent.
14. If you reasonably require other or further instruments in
connection with these Instructions, the necessary parties shall join in
furnishing such instruments.
15. Siegel and the Company agree that should any dispute arise with
respect to the delivery, ownership or right of possession of the securities held
by you under these Instructions, you are authorized and directed to retain in
your possession without liability to anyone all or any part of such securities
until the dispute shall have been settled either by mutual written agreement of
the parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.
16. All communications provided for hereunder shall be hand delivered
or sent by registered mail return receipt requested and, if to Siegel, addressed
as follows:
- 20 -
21
Dr. Richard W. Siegel
211 West Hickory Street
Hinsdale, Illinois 60521-3309
and if to the Company, addressed as follows:
Nanophase Technologies Corporation
c/o ARCH Development corporation
1115-25 East 58th Street
Chicago, Illinois 60637
Attention: President
and if to you, addressed as follows:
Secretary
Nanophase Technologies Corporation
c/o ARCH Development corporation
1115-25 East 58th Street
Chicago, Illinois 60637
or such other address as the recipient shall have designated to the sender by a
written notice given in accordance with this section. Any notice called for
hereunder shall be deemed given when received.
17. By signing these Joint Escrow Instructions, you become a party only
to these Instructions, and you do not become a party to the Stock Agreement.
18. All reasonable costs, fees and disbursements that you may incur in
connection with the performance of your duties as Escrow Agent shall be paid by
the Company.
19. These Joint Escrow Instructions shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
- 21 -
22
20. These Joint Escrow Instructions shall be governed by and construed
in accordance with the laws of the State of Illinois applicable to agreements
between Illinois residents entered into and to be performed entirely within
Illinois.
Very truly yours,
/s/ RICHARD W. SIEGEL
---------------------------------------
RICHARD W. SIEGEL
NANOPHASE TECHNOLOGIES CORPORATION,
an Illinois corporation
By: [SIG]
-----------------------------------
Its CEO
-------------------------------
Accepted and Agreed to:
Escrow Agent:
- -----------------------------------
Secretary,
Nanophase Technologies Corporation,
an Illinois corporation
- 22 -
23
February 13, 1991
Dr. Richard W. Siegel
211 West Hickory Street
Hinsdale, Illinois 60521-3309
Dear Richard:
The following will confirm our agreements concerning Sections 2.7 and
2.2(c) of the Consulting and Stock Purchase Agreement (the "Agreement") dated
May 9, 1990, between you and Nanophase. All capitalized terms used herein shall
have the meanings given them in the Agreement. We agree as follows:
1. The term "Equity Securities" as used in Section 2.7 does not include
any Nanophase securities, or options, warrants or other rights to acquire any
Nanophase securities, which Nanophase issues to a Nanophase employee or
consultant in compensation for his/her services to Nanophase.
2. The term "Equity Securities" does not include any warrants, options
or other rights to acquire any Nanophase common or preferred stock at the time
any such rights are issued, but any common or preferred stock which is issued
upon the exercise of any such rights (except any rights described in paragraph 1
above) will constitute "Equity Securities" under Section 2.7 at the time the
common or preferred stock is issued, and that issuance will trigger your rights
under Section 2.7.
3. In the event Nanophase merges or combines with another company and
any Nanophase securities (or rights to acquire Nanophase securities) are issued
as a result of such merger or combination, the 10% benchmark in Section 2.7 will
be measured against the Equity Securities held by the persons who were Nanophase
stockholders immediately before, and not after, the merger or combination.
24
Dr. Richard W. Siegel
February 13, 1991
Page Two
4. The 2,500 Unvested Shares have become Vested Shares pursuant to
Section 2.2(c) of the Agreement. Accordingly, the escrow arrangement
contemplated by the Joint Escrow Instructions executed in connection with the
Agreement is terminated for all purposes, and the Secretary of Nanophase, in his
capacity as escrow agent thereunder, is delivering to you herewith the
certificate issued in your name for 2,500 shares of Nanophase common stock and
the original executed stock assignment relative thereto which were held by him
pursuant to said escrow arrangement.
5. It is understood that all Nanophase securities heretofore or
hereafter issued to you pursuant to Section 2.7 of the Agreement (including,
without limitation, the 2,000 shares accruing to you under said Section 2.7 as a
result of the issuance of Nanophase stock to James E. Moore) shall be Vested
Shares.
If the above confirms your understanding, please signify your agreement
by signing this letter where indicated below.
Sincerely,
NANOPHASE TECHNOLOGIES CORPORATION
By: /s/ JAMES E. MOORE
-----------------------------------
James E. Moore, President
Accepted and agreed this 25th day of
February __, 1991, by:
/s/ RICHARD W. SIEGEL
- ------------------------------------
Dr. Richard W. Siegel
25
November 21, 1991
Dr. Richard W. Sieges
211 West Hickory Street
Hinsdale, Illinois 60521-3309
Re: Nanophase Technologies Corporation (the "Company")
Dear Dr. Siegel:
Reference is made to (i) the Consulting and Stock Purchase Agreement
dated as of May 9, 1990, as amended by a letter dated February 13, 1991 (the
"Consulting Agreement"), between you and the Company, (ii) the Series B
Preferred Stock Purchase Agreement (the "Purchase Agreement") between the
Company and the signatories thereto of even date herewith, (iii) the
Shareholders' Agreement of even date herewith (the "Shareholders' Agreement")
between you and the Company and certain other parties who may be signatories
thereto, and (iv) the Registration Rights Agreement of even date therewith (the
"Registration Agreements) between you and the Company and certain other parties
who may be signatories thereto.
You and the Company agree as follows:
1. Conditional upon and subject to the execution of the Series B
Purchase Agreement and your execution of the Shareholders' Agreement, the
Company agrees to sell you 32,000 shares of the Company's common stock (the
"Common"), for the aggregate price of $320.00, payable by check representing
good funds against receipt of a certificate representing the Common. Upon such
payment, the Common will be fully paid and non-assessable, and will be delivered
to you free and clear of all liens, claims and encumbrances whatsoever.
2. You agree that the Common will be deemed to be "Stock" and "Vested
Shares" (as those terms are defined in the Consulting Agreement) as if the
Common had originally been issued pursuant to the Consulting Agreement, and you
agree (subject only to the provisions of paragraphs 4, 5, 6 and 7 below) to hold
the Common pursuant to all of the applicable terms of the Consulting Agreement
and the Shareholders' Agreement. To induce the Company to sell the common, you
hereby remake the representations and warranties to the Company set forth in
Section 2.3 of the Consulting Agreement as of the date hereof.
3. Conditional upon and subject to your execution of the Series B
Purchase Agreement and the Shareholders' Agreement, and in fu11 satisfaction of
your rights under Section 2.7 of the Consulting Agreement for all purposes
through and including the
26
date hereof, the Company agrees to sell you no less than 77,627 a shares, and no
more than 135,544 shares, of the Company's Series B preferred Stock, no par
value (the "Series B Preferred"), for a per share price of $0.65 and pursuant to
the terms of, and subject to the limitations contained in, the Series B Purchase
Agreement and the Shareholders' Agreement.
4. Section 2.6 of the Consulting Agreement is hereby deleted in its
entirety, and shall be of no further force or effect whatsoever.
5. The terms of Section 4 of the Shareholders' Agreement shall
supersede all of the provisions of Section 2.4(a) of the Consulting Agreement
for so long as the Shareholders' Agreement shall remain in effect, and upon the
termination of the Shareholders' Agreement said Section 2.4(a) shall once again
be of full force and effect in accordance with its terms and the other terms of
the Consulting Agreement.
6. The terms of Section 6 of the Shareholders' Agreement shall
supersede all of the provisions of Section 2.7 of the Consulting Agreement for
so long as the Shareholders' Agreement shall remain in effect, and upon the
termination of the Shareholders' Agreement said Section 2.7 shall once again be
of full force and effect in accordance with its terms and the other terms of the
Consulting Agreement.
7. The terms of Section 7 of the Shareholders' Agreement shall
supersede all of the provisions of Section 2.4(b) of the Consulting Agreement,
and said Section 2.4(b) shall no longer be of any further force or effect
whatsoever, regardless of the continuing existence or effectiveness of the
Shareholders' Agreement from and after the date of this letter agreement.
8. You hereby waive, discharge and forever release the Company from any
and all obligations which the Company may have to you for any sums now owing or
which may become owing pursuant to the Consulting Agreement at any time through
and including November 30, 1991. You agree that you will not bring any action or
claim with respect to any sum so waived, discharged and released.
Except as otherwise specifically provided above, the Consulting
Agreement shall remain in full force and effect in accordance with its terms.
27
Please signify your acceptance of the foregoing by signing the attached
copies of this Agreement where indicated below.
Sincerely,
NANOPHASE TECHNOLOGIES CORPORATION
By: /s/ THOMAS L. CHURCHWELL
---------------------------------------
Thomas L. Churchwell, President
Accepted and agreed
as of the date written above:
- -----------------------------------
Dr. Richard W. Siegel
28
February 25, 1992
Dr. Richard W. Siegel
211 West Hickory Street
Hinsdale, Illinois 60521-3309
Re: Nanophase Technologies Corporation (the "Company")
--------------------------------------------------
Dear Dr. Siegel:
Reference is made to (i) the Consulting and Stock Purchase Agreement
dated as of May 9, 1990, as amended by letters dated February 13, 1991, and
November 21, 1991, between you and the Company (collectively, the "Consulting
Agreement"). Except as otherwise specifically provided in this letter agreement,
the following amendments and waivers shall be deemed effective as of January 1,
1992.
You and the Company agree as follows:
1. You waive, discharge and forever release the Company from any
obligation which the Company may have to you for any sums owing pursuant to the
Consulting Agreement for the month of December, 1991. You agree that you will
not bring any action or claim with respect to such sum.
2. The last sentence of Section 1.1 of the Consulting Agreement is
deleted in its entirety, and shall be of no further force or effect.
3. The first sentence of Section 1.3(a) of the Consulting Agreement is
deleted in its entirety and replaced as follows:
"The Company shall pay Siegel a retainer of $2,000.00 per month as full
consideration for his services hereunder, which sum shall be payable in
the month for which such services are rendered."
4. Except as otherwise specifically provided above, the Consulting
Agreement shall remain in full force and effect in accordance with its terms.
In consideration of the execution of this letter agreement and in
recognition of services previously performed by Siegel for the Company, the
Company hereby grants to Siegel (i) an option to purchase 10,000 shares of the
Company's common stock, the option to be vested and exercisable immediately upon
issuance, and (ii) an additional option to purchase 20,000 shares of the
Company's common
29
stock, the option to vest over a five (5) year period in equal
proportions commencing January 1, 1993, and ending on January 1, 1997
(such option, together with the option described in (i) above, referred
to collectively as the "Options").
The exercise price for all the Options shall be $0.065 per share, and
the Options shall be issued under and subject to all of the terms and conditions
of the Nanophase Technologies Corporation Stock Option Plan adopted on January
13, 1992, as such Plan may be amended in accordance with its terms.
Please signify your acceptance of the foregoing by signing this
Agreement and the attached copies where indicated.
Sincerely,
NANOPHASE TECHNOLOGIES CORPORATION
By: /s/ [SIG]
-----------------------------------
Its President
-------------------------------
Accepted and agreed
as of the date written above:
[SIG]
- -------------------------------------
Dr. Richard W. Siegel
30
Please signify your acceptance of the foregoing by signing the attached
copies of this Agreement where indicated below.
Sincerely,
NANOPHASE TECHNOLOGIES CORPORATION
By:
-----------------------------------
Thomas L. Churchwell, President
Accepted and agreed
as of the date written above:
[SIG]
- -------------------------------------
Dr. Richard W. Siegel