EXHIBIT 10.27
EMPLOYMENT AGREEMENT
Employment Agreement dated and effective as of March 24, 2003 (this
"Agreement"), between NANOPHASE TECHNOLOGIES CORPORATION, a Delaware corporation
(with its successors and assigns, referred to as the "Company"), and Mr. Edward
G. Ludwig, Jr. (referred to as "Executive").
Preliminary Statement
The Company desires to employ Executive, and Executive wishes to be
employed by the Company, upon the terms and subject to the conditions set forth
in this Agreement. The Company and Executive also wish to enter into the other
covenants set forth in this Agreement, all of which are related to Executive's
employment with the Company. In consideration of the mutual promises and
covenants stated below, Executive and the Company therefore agree as follows:
Agreement
1. Employment for Term. The Company hereby employs Executive, and
Executive hereby accepts employment with the Company, beginning on March 24,
2003, and renewing automatically on an annual basis until terminated pursuant to
Section 7 below (the "Term").
2. Position and Duties. During the Term, Executive shall serve as the
Vice-President of Business Development and shall report to the Vice President of
Sales & Marketing or such other person as designated by the President of the
Company. During the Term, Executive shall also hold such additional positions
and titles as the President or the Board of Directors of the Company (the
"Board") may determine from time to time. During the Term, Executive shall
devote substantially all of Executive's business time and best efforts to
Executive's duties as an executive of the Company. At no time during the Term
shall Executive enter into, make, agree to or propose any commitment (including,
without limitation, any oral or written contract, contractual provision,
agreement or representation) that in any way binds the Company, except as may be
expressly authorized in writing by the President of the Company.
3. Compensation.
(a) Base Salary. The Company shall pay Executive a base salary,
beginning on the first day of the Term and ending on the last day of the Term,
of not less than $140,000 per annum, payable in equal installments on the
Company's regular pay cycle for professional employees.
(b) Bonus Payment. Executive will be eligible for bonuses for services
to be performed as an employee of the Company in calendar year 2003 and
subsequent years based on performance milestones agreed upon by Executive and
the Vice President of Sales & Marketing of the Company and approved by the
Board.
(c) Stock Options. Subject to the provisions of the Company's Equity
Compensation Plan (the "Plan"), and as determined by the Board in its sole
discretion, Executive shall be eligible for such stock options as the Board
deems appropriate.
(d) Other and Additional Compensation. Sections 3(a) and 3(b) establish
minimum salary and bonus levels for Executive during the Term, and shall not
preclude the Board from awarding Executive a higher salary at any time, nor
shall they preclude the Board from awarding Executive additional bonuses or
other compensation in the discretion of the Board.
4. Employee Benefits. During the Term, Executive shall be entitled to
the employee benefits made available by the Company generally to all other
employees of the Company, and shall be entitled to vacation in accord with the
Company's vacation policy in effect from time to time.
5. Expenses. The Company shall reimburse Executive for actual
out-of-pocket expenses reasonably incurred by Executive in performing services
as an employee of the Company in accord with the Company's policy for such
reimbursements applicable to employees generally, and upon receipt by the
Company of appropriate documentation and receipts for such expenses.
6. Termination.
(a) General. The Term shall end (i) immediately upon Executive's death,
or (ii) upon Executive becoming disabled (within the meaning of the Americans
With Disabilities Act of 1991, as amended) and unable to perform fully all
essential functions of his job, with or without reasonable accommodation, for a
period of 120 calendar days. Either Executive or the Company may end the Term at
any time for any reason or no reason, with or without Cause, in the absolute
discretion of Executive or the Board (but subject to each party's obligations
under this Agreement), provided that Executive will provide the Company with at
least thirty (30) days' prior written notice of Executive's resignation from
Executive's position as an employee with the Company. Upon receipt of such
written notice, the Company, in its sole discretion, may accelerate the
effective date of the resignation to such date as the Company deems appropriate,
provided that Executive shall receive the compensation required under Section
3(a) of this Agreement for a full thirty (30) day period.
(b) Notice of Termination. If the Company ends the Term, it shall give
Executive at least thirty (30) days prior written notice of the termination,
including a statement of whether the termination was for "Cause" (as defined in
Section 7(a) below). Upon delivery of such written notice, the Company, in its
sole discretion, may accelerate the effective date of such termination to such
date as the Company deems appropriate, provided that Executive shall receive the
compensation required under Section 3(a) of this Agreement for a full thirty
(30) day period, The Company's failure to give notice under this Section 6(b)
shall not, however, affect the validity of the Company's termination of the Term
or Executive's employment, nor shall the lack of such notice entitle Executive
to any rights or claims against the Company other than those arising from
Executive's right to receive the compensation required under Section 3(a) of
this Agreement for a full thirty (30) day period.
7. Severance Benefits.
(a) "Cause" Defined. "Cause" means (i) willful or gross malfeasance or
misconduct by Executive in connection with Executive's employment; (ii)
Executive's gross negligence in performing any of Executive's duties under this
Agreement; (iii) Executive's conviction of, or entry of a plea of guilty or nolo
contendere with respect to, any felony or misdemeanor reflecting upon
Executive's honesty; (iv) Executive's breach of any written policy applicable to
all employees adopted by the Company concerning conflicts of interest, political
contributions, standards of business conduct or fair employment practices,
procedures with respect to compliance with securities laws or any similar
matters, or adopted pursuant to the requirements of any government regulation;
or (v) breach by Executive of any of the material terms and conditions of this
Agreement.
(b) Termination without Cause. If the Company ends the Term other than
for Cause, or if the Term ends due to Executive's death or disability under
Section 6(a) of this Agreement, subject to Executive's complying with his
obligations under this Agreement, (i) the Company shall pay Executive an amount
equal in annual amount to Executive's base salary in effect at the time of the
termination during the period (the "Severance Period") of twelve (12) full weeks
after the effective date of termination, payable in proportionate amounts on the
Company's regular pay cycle for professional employees and (if the last day of
the Severance Period is not the last day of a pay period) on the last day of the
Severance Period, and (ii) any stock options granted to Executive prior to
termination shall become fully vested, and shall become exercisable (by
Executive, or upon his death or disability, by his heirs, beneficiaries and
personal representatives) in accordance with the applicable option grant
agreement and the Plan.
(c) Termination for Any Other Reason. If the Company ends the Term for
Cause, or if Executive resigns as an employee of the Company, then the Company
shall have no obligation to pay Executive any amount, whether for salary,
benefits, bonuses, or other compensation or expense reimbursements of any kind,
accruing after the end of the Term, and such rights shall, except as otherwise
required by law (or, with respect to the options, as set forth in the Plan or
the applicable option grant agreements), be forfeited immediately upon the end
of the Term.
8. Additional Covenants.
(a) Confidentiality. Executive agrees to execute the Company's standard
form of Confidential Information and Proprietary Rights Agreement (as may be in
effect as of the date of this Agreement) on or before the execution of this
Agreement.
(b) "Non-Competition Period" Defined. "Non-Competition Period" means
the period beginning at the end of the Term and ending two years thereafter.
(c) Covenants of Non-Competition and Non-Solicitation. Executive
acknowledges that his services pursuant to this Agreement are unique and
extraordinary, that the Company relies upon Executive for the development and
growth of its business and related functions, and that Executive will develop
personal relationships with significant customers and suppliers of the Company
and have control of confidential information concerning, and lists of customers,
employees and contractors of the Company. For the foregoing reasons, and in
consideration of the benefits available to Executive under Sections 3, 6(a) and
7(b) of this Agreement, Executive covenants and agrees that both during the Term
of this Agreement and the subsequent Non-Competition Period Executive shall not,
in any manner, directly or indirectly, engage in, be financially interested in,
represent, render any advice or services to, or be employed by or otherwise
affiliated with, any other business (conducted for profit or not for profit)
which is principally or materially engaged in or is competitive with the
Company's business of developing, producing, coating, refining, forming,
marketing, supplying or selling nanocrystalline and ultrafine powders. For the
reasons acknowledged by Executive at the beginning of this Section 8(c),
Executive additionally covenants and agrees that during the Non-Competition
Period, Executive shall not, directly or indirectly, whether on Executive's own
behalf or in behalf of any other person or entity, in any manner (A) contact,
solicit or accept the business of any person or entity that was a customer,
prospective customer, supplier or contractor of the Company for the purpose of
obtaining business of the type performed by the Company, or (B) contact, accept
or solicit, or attempt to solicit for employment or engagement any persons who
were officers or employees of the Company upon the date of termination of his
employment or at any time within a 180 day period before the date of termination
or to aid any person or entity in any attempt to hire or engage any such
officers or employees of the Company. The foregoing restrictions shall not
preclude Executive from owning not more than three percent (3%) of the voting
securities of any corporation whose voting securities are registered under
Section 12(g) of the Securities Exchange Act of 1934, even if its business
competes with that of the Company.
(d) Remedies.
(i) Injunctions. In view of Executive's access to the Company's
confidential information, and in consideration of the value of such property to
the Company, Executive agrees that the covenants in this Section 8 are necessary
to protect the Company's interests in its proprietary information and trade
secrets, and to protect and maintain customer and supplier relationships, both
actual and potential, which Executive would not have had access to or
involvement in but for his employment with the Company. Executive confirms that
enforcement of the covenants in this Section 8 will not prevent him from earning
a livelihood. Executive further agrees that in the event of his actual or
threatened breach of any covenant in this Section 8, the Company would be
irreparably harmed and the full extent of injury resulting therefrom would be
impossible to calculate, and the Company therefore will not have an adequate
remedy at law. Accordingly, Executive agrees that temporary and permanent
injunctive relief are appropriate remedies against such breach, without bond or
security; provided, however, that nothing herein shall be construed as limiting
any other legal or equitable remedies available to the Company.
(ii) Enforcement. Executive shall pay all costs and expenses
(including, without limitation, court costs, investigation costs, expert witness
and attorneys' fees) incurred by the Company in connection with its successfully
enforcing its rights under this Agreement. The Company shall have the right to
disclose the contents of this Agreement or to deliver a copy of it to any person
or entity that the Company believes the Executive has solicited in violation of
this Agreement.
(iii) Arbitration. No dispute arising from Executive's actual or
threatened breach of any covenant in this Section 8 shall be subject to
arbitration. However, any other dispute or claim arising from any other
provision of this Agreement, or relating to Executive's employment (whether
based on statute, ordinance, regulation, contract, tort or otherwise), shall be
submitted to arbitration before a single arbitrator pursuant to the Employment
Arbitration Rules of the American Arbitration Association. Any such arbitration
shall be conducted in Chicago, Illinois. An arbitration award rendered under
this Section 8 shall be final and binding on the parties and may be submitted to
any court of competent jurisdiction for entry of a judgment thereon in accord
with the Federal Arbitration Act or the Illinois Arbitration Act.
9. Limitation On Claims. Executive agrees that he will not commence any
action or suit relating to matters arising out of his employment with the
Company (irrespective of whether such action or suit arises out of the
provisions of this Agreement) later than six months after the first to occur of
(a) the date such claim initially arises, or (b) the date Executive's employment
terminates for any reason whatsoever. Executive expressly waives any applicable
statute of limitation to the contrary.
10. Successors and Assigns.
(a) Executive. This Agreement is a personal contract, and the rights
and interests that this Agreement accords to Executive may not be sold,
transferred, assigned, pledged, encumbered or hypothecated by Executive.
Executive shall not have any power of anticipation, alienation or assignment of
the payments contemplated by this Agreement. All rights and benefits of
Executive shall be for the sole personal benefit of Executive and no other
person shall acquire any right, title or interest under this Agreement by reason
of any sale, assignment, transfer, claim or judgment or bankruptcy proceedings
against Executive. Except as so provided, this Agreement shall inure to the
benefit of and be binding upon Executive and Executive's personal
representatives, distributees and legatees.
(b) The Company. This Agreement shall be binding upon the Company and
inure to the benefit of the Company and its successors and assigns, including
but not limited to any person or entity that may acquire all or substantially
all the Company's assets or business or with which the Company may be
consolidated or merged. This Agreement shall continue in full force and effect
in the event the Company sells all or substantially all its assets, merges or
consolidates, otherwise combines or affiliates with another business, dissolves
and liquidates, or otherwise sells or disposes of substantially all its assets.
The Company's obligations under this Agreement shall cease, however, if the
successor to the Company, the purchaser or acquirer either of the Company or of
all or substantially all its assets, or the entity with which the Company has
affiliated, shall assume in writing the Company's obligations under this
Agreement (and deliver an executed copy of such assumption to Executive), in
which case such successor or purchaser, but not the Company, shall thereafter be
the only party obligated to perform the obligations that remain to be performed
on the part of the Company under this Agreement.
11. Entire Agreement. This Agreement and the other agreements
referenced herein represent the entire agreement between the parties concerning
Executive's employment with the Company and supersede all prior negotiations,
discussions, understandings and agreements,
whether written or oral, between Executive and the Company relating to the
subject matter of this Agreement.
12. Amendment or Modification, Waiver. No provision of this Agreement
may be amended or waived unless such amendment or waiver is agreed to in writing
signed by Executive and by a duly authorized officer of the Company other than
Executive. No waiver by any party to this Agreement of any breach by another
party of any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of a similar or dissimilar condition or
provision at the same time, any prior time or any subsequent time.
13. Notices. Any notice provided for in this Agreement must be in
writing and must be either personally delivered, mailed by first class mail
(postage prepaid and return receipt requested), sent by reputable overnight
courier service (charges prepaid), or by facsimile to the recipient at the
address below indicated:
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To the Company: Nanophase Technologies Corporation
1319 Marquette Drive
Romeoville, IL 60446
Attn: Chief Executive Officer
Facsimile: (630) 771-0825
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To Executive: Mr. Edward A. Ludwig, Jr.
931 Arlington Drive
Iowa City, IA 52245
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or such other address or facsimile number, or to the attention of such other
person as the recipient shall have specified by prior written notice to the
sending party. Any notice under this Agreement shall be deemed to have been
given when so personally delivered, or one day after deposit, if sent by
courier, when confirmed received if sent by facsimile, or if mailed, five days
after deposit in the U.S. first-class mail, postage prepaid.
14. Severability. If any provision of this Agreement shall be
determined by any Court of competent jurisdiction to be unenforceable to any
extent, the remainder of this Agreement shall not be affected, but shall remain
in full force and effect. If any provision of this Agreement containing
restrictions is held to cover an area or to be for a length of time that is
unreasonable or in any other way is construed to be invalid, such provision
shall not be determined to be entirely of no effect; instead, it is the
intention and desire of both the Company and Executive that any court of
competent jurisdiction shall interpret or reform this Agreement to provide for a
restriction having the maximum enforceable area, time period and such other
constraints or conditions as shall be enforceable under the applicable law.
15. Survivorship. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.
16. Headings. All descriptive headings of sections and paragraphs in
this Agreement are intended solely for convenience of reference, and no
provision of this Agreement is to be construed by reference to the heading of
any section or paragraph.
17. Withholding Taxes. All salary, benefits, reimbursements and any
other payments to Executive under this Agreement shall be subject to all
applicable payroll and withholding taxes and deductions required by any law,
rule or regulation of any federal, state or local authority.
18. Applicable Law: Jurisdiction. The laws of the State of Illinois
shall govern the interpretation of the terms of this Agreement, without
reference to rules relating to conflicts of law.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first written above.
Nanophase Technologies Corporation
By: /s/ Joseph Cross
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Its: Chief Executive Officer
/s/ Edward G. Ludwig, Jr.
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Edward G. Ludwig, Jr.