<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
NANOPHASE TECHNOLOGIES CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE> 2
NANOPHASE LOGO
453 COMMERCE STREET
BURR RIDGE, ILLINOIS 60521
April 21, 2000
Dear Stockholder:
On behalf of the Board of Directors, I cordially invite you to attend the
2000 Annual Meeting of Stockholders of Nanophase Technologies Corporation to be
held at Ashton Place, 341 West 75th Street, Willowbrook, Illinois, on Thursday,
May 25, 2000 at 9:00 a.m., local time. The formal notice of the Annual Meeting
appears on the following page.
The attached Notice of Annual Meeting and Proxy Statement describe the
matters that we expect to be acted upon at the Annual Meeting. Immediately after
the Annual Meeting, stockholders will be able to view a presentation by the
Company and have the opportunity to ask questions.
Whether or not you plan to attend the Annual Meeting, it is important that
your shares be represented. Regardless of the number of shares you own, please
sign and date the enclosed proxy card and promptly return it to us in the
enclosed postage paid envelope. If you sign and return your proxy card without
specifying your choices, your shares will be voted in accordance with the
recommendations of the Board of Directors contained in the Proxy Statement.
We look forward to seeing you on May 25, 2000 and urge you to return your
proxy card as soon as possible.
Sincerely,
/s/ Joseph E. Cross
JOSEPH E. CROSS
President and Chief Executive Officer
<PAGE> 3
NANOPHASE LOGO
------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 25, 2000
------------------------------------------------------------------------------
To the Stockholders of
Nanophase Technologies Corporation:
The Annual Meeting of Stockholders of Nanophase Technologies Corporation
(the "Company") will be held at 9:00 a.m., Chicago time, on Thursday, May 25,
2000, at Ashton Place, 341 West 75th Street, Willowbrook, Illinois, for the
following purposes:
(1) To elect two Class III directors to the Company's Board of Directors;
(2) To ratify the appointment by the Board of Directors of Ernst & Young
LLP as the independent auditors of the Company's financial statements
for the year ended December 31, 2000; and
(3) To transact such other business as may properly come before the meeting
or any adjournments thereof.
The foregoing items of business are more fully described in the accompanying
Proxy Statement.
The Board of Directors has fixed the close of business on March 27, 2000 as
the record date for determining stockholders entitled to notice of, and to vote
at, the Annual Meeting.
By Order of the Board of Directors,
JESS JANKOWSKI
Secretary
Burr Ridge, Illinois
April 21, 2000
ALL STOCKHOLDERS ARE URGED TO ATTEND THE MEETING IN PERSON OR BY PROXY. WHETHER
OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE COMPLETE, SIGN AND DATE
THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE PAID
ENVELOPE FURNISHED FOR THAT PURPOSE.
<PAGE> 4
NANOPHASE TECHNOLOGIES CORPORATION
453 COMMERCE STREET
BURR RIDGE, ILLINOIS 60521
(630) 323-1200
---------------------
PROXY STATEMENT
---------------------
The accompanying proxy is solicited by the Board of Directors (the "Board
of Directors") of Nanophase Technologies Corporation, a Delaware corporation
(the "Company"), for use at the Annual Meeting of Stockholders (the "Annual
Meeting") to be held at 9:00 a.m., Chicago time, Thursday, May 25, 2000, at
Ashton Place, 341 West 75th Street, Willowbrook, Illinois, and any adjournments
thereof. This Proxy Statement and accompanying form of proxy are first being
mailed to stockholders on or about April 21, 2000.
RECORD DATE AND OUTSTANDING SHARES -- The Board of Directors has fixed the
close of business on March 27, 2000, as the record date (the "Record Date") for
the determination of stockholders entitled to notice of, and to vote at, the
Annual Meeting or any adjournments thereof. As of the Record Date, the Company
had outstanding 13,449,293 shares of Common Stock, par value $.01 per share (the
"Common Stock"). Each outstanding share of Common Stock is entitled to one vote
on all matters to come before the Annual Meeting.
VOTING OF PROXIES -- Joseph E. Cross and Jess Jankowski, the persons named
as proxies on the proxy card accompanying this Proxy Statement, were selected by
the Board of Directors to serve in such capacity. Messrs. Cross and Jankowski
are executive officers of the Company and Mr. Cross is also a director of the
Company. The shares represented by each executed and returned proxy will be
voted in accordance with the directions indicated thereon, or, if no direction
is indicated, such proxy will be voted in accordance with the recommendations of
the Board of Directors contained in this Proxy Statement. Each stockholder
giving a proxy has the power to revoke it at any time before the shares it
represents are voted. Revocation of a proxy is effective upon receipt by the
Secretary of the Company of either (1) an instrument revoking the proxy or (2) a
duly executed proxy bearing a later date. Additionally, a stockholder may change
or revoke a previously executed proxy by voting in person at the Annual Meeting
(attendance at the Annual Meeting will not, by itself, revoke a proxy).
REQUIRED VOTE -- The vote of a plurality of the shares of Common Stock
voted in person or by proxy is required to elect the nominees for Class III
directors. The affirmative vote of a majority of the shares of Common Stock
represented in person or by proxy is required to ratify the appointment of Ernst
& Young LLP as the independent auditors of the Company's financial statements
for the year ended December 31, 2000. Stockholders will not be allowed to
cumulate their votes in the election of directors.
QUORUM; ABSTENTIONS AND BROKER NON-VOTES -- The required quorum for
transaction of business at the Annual Meeting will be a majority of the shares
of Common Stock issued and outstanding as of the Record Date. Votes cast by
proxy or in person at the Annual Meeting will be tabulated by the election
inspectors appointed for the meeting and will determine whether or not a quorum
is present. Abstentions and broker non-votes will be included in determining the
presence of a quorum. Abstentions and broker non-votes will have no effect on
the vote for directors. Abstentions will be considered present and entitled to
vote with respect to ratifying the appointment of the Company's independent
auditors and will have the same effect as votes "against" such proposal. Broker
non-votes will not be considered present and entitled to vote with respect to
ratifying the appointment of the Company's independent auditors and will have no
effect on such proposal.
ANNUAL REPORT TO STOCKHOLDERS -- The Company's Annual Report to
Stockholders for the year ended December 31, 1999, containing financial and
other information pertaining to the Company, is being furnished to stockholders
simultaneously with this Proxy Statement.
<PAGE> 5
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Board of Directors currently consists of six directors.
Article VI of the Company's Certificate of Incorporation provides that the Board
of Directors shall be classified with respect to the terms for which its members
shall hold office by dividing the members into three classes. At the Annual
Meeting, two directors of Class III will be elected for a term of three years
expiring at the Company's 2003 Annual Meeting of Stockholders. Both of the
nominees are presently serving as directors of the Company. See "Nominees"
below.
The four directors whose terms of office do not expire in 2000 will
continue to serve after the Annual Meeting until such time as their respective
terms of office expire or their successors are duly elected and qualified. See
"Other Directors" below.
If at the time of the Annual Meeting any of the nominees should be unable
or decline to serve, the persons named in the proxy will vote for such
substitute nominee or nominees as the Board of Directors recommends, or vote to
allow the vacancy created thereby to remain open until filled by the Board of
Directors, as the Board of Directors recommends. The Board of Directors has no
reason to believe that any nominee will be unable or decline to serve as a
director if elected.
NOMINEES
The names of the nominees for the office of director, together with certain
information concerning such nominees, are set forth below:
<TABLE>
<CAPTION>
SERVED AS
DIRECTOR
NAME SINCE AGE POSITION WITH COMPANY
---- --------- --- ---------------------
<S> <C> <C> <C>
Jerry K. Pearlman.......................... 1999 61 Director
Donald S. Perkins.......................... 1998 73 Chairman of the Board of Directors
</TABLE>
MR. PEARLMAN has served as a director of the Company since April 1999. Mr.
Pearlman retired as chairman of Zenith Electronics Corporation in November 1995.
He joined Zenith as controller in 1971 and served as chief executive officer
from 1983 through April 1995. Mr. Pearlman is a director of Smurfit Stone
Container Corporation, Ryerson-Tull, Inc., Parson Group LLC, and the Bernard van
Leer Foundation. He is a trustee of Northwestern University where he is vice
chairman of the capital campaign and a director and past chairman of the board
of Evanston Northwestern Healthcare. Mr. Pearlman graduated from Princeton with
honors from the Woodrow Wilson School and from Harvard Business School with
highest honors.
MR. PERKINS has served as a director of the Company since February 1998.
Mr. Perkins retired from Jewel Companies, Inc., the retail supermarket and drug
chain, in 1983. He had been with Jewel since 1953, serving as President from
1965 to 1970, as Chairman of the Board of Directors from 1970 to 1980, and as
Chairman of the Executive Committee until his retirement. He has served on a
number of corporate boards and is currently a director of Aon Corporation,
LaSalle Hotel Properties and Luminant Worldwide. For more than 30 years, he has
served on corporate boards including AT&T, Cummins Engine Company, Kmart
Corporation, Lucent Technologies, Inc., and Time-Warner, Inc. Mr. Perkins is a
trustee and Vice Chairman of the Board of Trustees of Northwestern University.
Mr. Perkins holds a B.A. degree from Yale University and an M.B.A. degree from
the Harvard Graduate School of Business Administration.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR BOTH OF THE
NOMINEES FOR ELECTION AS CLASS III DIRECTORS.
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OTHER DIRECTORS
The following persons will continue to serve as directors of the Company
after the Annual Meeting until their terms of office expire (as indicated below)
or until their successors are duly elected and qualified.
<TABLE>
<CAPTION>
SERVED AS TERM
NAME AGE POSITION WITH COMPANY DIRECTOR SINCE EXPIRES
---- --- --------------------- -------------- -------
<S> <C> <C> <C> <C>
Joseph S. Cross................... 52 President, Chief Executive Officer 1998 2002
Edward E. Hagenlocker, Ph.D....... 60 Director 1999 2001
James A. McClung, Ph.D............ 62 Director 2000 2001
Richard W. Siegel, Ph.D........... 62 Director 1989 2002
</TABLE>
MR. CROSS has served as Chief Executive Officer of the Company since
December 1998 and President and a director of the Company since joining the
Company in November 1998. From November 1998 to December 1998, Mr. Cross served
as the Company's Chief Operating Officer. Prior to joining the Company in
November 1998, Mr. Cross served as President and Chief Executive Officer of
Aptech, a manufacturer of measurement, metering and control devices for the
electric utility market, from August 1996 to October 1998. From December 1993 to
July 1996, Mr. Cross served as President of Aegis Technologies, a
telecommunications company. He holds a BS degree from Southwest Missouri
University and attended graduate school at Southwest Missouri University.
DR. HAGENLOCKER has served as a director of the Company since April 1999.
Dr. Hagenlocker served as vice chairman of Ford Motor Company from November 1996
to January 1999 and chairman of Visteon, an automotive systems enterprise, from
September 1997 to January 1999. Dr. Hagenlocker served in various other
capacities after joining Ford as a research scientist in 1964, including
Executive Vice President of Ford North American Automotive Operations from
January 1993 to May 1994, President of Ford Automotive Operations from May 1994
to November 1996 and Chairman, Ford of Europe from August 1996 to November 1996.
Dr. Hagenlocker is a director of Boise Cascade Corporation, Amerisource
Corporation, and Air Products and Chemicals. Dr. Hagenlocker earned B.S. and
M.S. degrees in engineering physics from Ohio State University, an M.B.A. degree
from Michigan State University and a Ph.D. in physics from Ohio State
University.
MR. MCCLUNG has served as a director of the Company since February 2000. He
is currently a senior vice president of FMC Corporation, a leading producer of
chemicals and machinery for industry and agriculture. At FMC he has managed
machinery operations in the United States, Africa and Europe. After living
outside the United States for over seven years, he returned in 1978 to assume
the responsibility for FMC's largest chemical operation. In 1981 he was
appointed vice president international. In his current position, Mr. McClung is
FMC's global executive with over 25 years of international business experience
and the responsibility for worldwide marketing as well as international
development and government affairs. Mr. McClung serves on the boards of
directors of Turtle Wax, and William Kent International. He also serves as a
board member of: Thunderbird, The American Graduate School of International
Management (Glendale, Arizona); College of Wooster (Ohio); U.S.-Russia Business
Council (Washington, D.C.); Japan American Society; Ravinia International
Festival of the Arts; and the Mid-America Club. In addition, Mr. McClung is a
member of the Economic Club, Chicago Council on Foreign Relations, Executive
Club, and the Mid-America Committee for International Business and Government
Cooperation. Mr. McClung earned a B.S. degree from the College of Wooster, an
M.S. from the University of Kansas and a Ph.D. from Michigan State University.
DR. SIEGEL is a co-founder of the Company and has served as a director of
the Company since 1989. Dr. Siegel also has served as a consultant to the
Company since 1990 with regard to the application and commercialization of
nanocrystalline materials. Dr. Siegel is an internationally renowned scientist
in the field of nanocrystalline materials. During his tenure on the research
staff at Argonne National Laboratory from July 1974 to May 1995, he was the
principal scientist engaged in research with the laboratory-scale synthesis
process that was the progenitor of the Company's physical-vapor-synthesis
production system. He currently is the Robert W. Hunt Professor and Head of the
Materials Science and Engineering Department of Rensselaer
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Polytechnic Institute, a position he has held since June 1995. During 1995, he
was also a visiting professor at the Max Planck Institute for Microstructure
Physics in Germany on an Alexander von Humboldt Research Prize. He has served on
the Council of the Materials Research Society and as Chairman of the
International Committee on Nanostructured Materials. He also served on the
Committee on Materials with Sub-Micron Sized Microstructures of the National
Materials Advisory Board and was the co-chairman of the Study Panel on Clusters
and Cluster-Assembled Materials for the U.S. Department of Energy. Dr. Siegel
holds an A.B. degree in physics from Williams College and an M.S. degree and
Ph.D. from the University of Illinois at Urbana/Champaign.
DIRECTOR COMPENSATION -- Upon first being elected to the Board of
Directors, each director of the Company who is not an employee or consultant of
the Company (an "Outside Director") is granted, pursuant to the Company's
Amended and Restated 1992 Stock Option Plan, as amended (the "Stock Option
Plan"), stock options to purchase 10,000 shares of Common Stock at the fair
market value of the Common Stock, as determined by a committee appointed by the
Board of Directors, as of the date of issuance of such stock options. On the
date of each annual meeting of the stockholders of the Company, each Outside
Director who is re-elected or continues to serve as a director because his or
her term has not expired is granted stock options to purchase 2,000 shares of
Common Stock pursuant to the Stock Option Plan; provided that no such automatic
grant is made to an Outside Director who was first elected to the Board of
Directors within three months prior to such annual meeting. The options granted
to Outside Directors under the Stock Option Plan vest in three equal annual
installments beginning on the first anniversary of the date of grant. All
options granted under the Stock Option Plan to Outside Directors expire ten
years from the date of grant. Effective January 1, 2000, the Company granted
3,177 shares of common stock to each of Donald Perkins, Richard Siegel, Jerry
Pearlman and Edward Hagenlocker. The Company also agreed to issue a cash payment
of $10,000 to reimburse these Directors for personal income tax liabilities
relating to this grant of common shares. In addition the Company entered into a
consulting agreement dated March 1, 2000 with Richard Siegel, Ph.D. pursuant to
which the Company pays Mr. Siegel $2,000 per month for consulting services over
a twelve-month term. This agreement is renewable for successive twelve-month
terms or may be terminated by either party under conditions defined in the
agreement.
All Outside Directors are reimbursed for their reasonable out-of-pocket
expenses incurred in attending board and committee meetings.
MEETINGS -- During the year ended December 31, 1999, the Board of Directors
held ten formal meetings. Each of the Company's current directors attended at
least 75% of the aggregate of the number of board meetings held (during the
period in which he was a director) and the total number of committee meetings on
which he served that were held (during the period in which he was a member of
such committee) during 1999.
COMMITTEES OF THE BOARD OF DIRECTORS -- The Board of Directors has
established an Audit and Finance Committee and a Compensation and Governance
Committee, each comprised entirely of directors who are not officers or
employees of the Company. The members of the Audit and Finance Committee are Mr.
Hagenlocker (Chairman), Mr. Pearlman and Mr. Perkins. The members of the
Compensation and Governance Committee are Mr. Pearlman (Chairman), Mr.
Hagenlocker and Mr. Perkins. The Company does not have a standing nominating
committee.
The Audit and Finance Committee generally has responsibility for
recommending independent public auditors to the Board of Directors for
selection, reviewing the plan and scope of the accountants' annual audit,
reviewing the Company's internal control functions and financial management
policies, and reporting to the Board of Directors regarding all of the
foregoing. The Audit and Finance Committee held two formal meetings in 1999.
The Compensation and Governance Committee generally has responsibility for
recommending to the Board of Directors guidelines and standards relating to the
determination of executive and key employee compensation, reviewing the
Company's executive compensation policies and reporting to the Board of
Directors regarding the foregoing. The Compensation and Governance Committee
also has responsibility for administering the Stock Option Plan, determining the
number of options, if any, to be granted to the
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<PAGE> 8
Company's employees and consultants pursuant to the Stock Option Plan and
reporting to the Board of Directors regarding the foregoing. The Compensation
and Governance Committee held 3 formal meetings in 1999. See "Report of the
Compensation and Governance Committee of the Board of Directors."
EXECUTIVE OFFICERS
The table below identifies executive officers of the Company who are not
identified in the tables entitled "Election of Directors -- Nominees" or
" -- Other Directors."
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Jess Jankowski............................... 34 Acting Chief Financial Officer, Corporate
Controller, Secretary and Treasurer
Gina R. Kritchevsky, Ph.D. .................. 46 Vice President -- Technology and Engineering
Daniel S. Bilicki............................ 56 Vice President -- Sales and Marketing
Richard W. Brotzman, Ph.D. .................. 46 Vice President -- Research and Development
Donald J. Freed, Ph.D. ...................... 58 Vice President -- Business Development
</TABLE>
MR. JANKOWSKI has served as Controller of the Company since joining in
1995. He was elected Secretary and Treasurer in November 1999. From 1990-1995 he
served as Controller for two building contractors in the Chicago area. Mr.
Jankowski holds a BS in accountancy from Northern Illinois University, an MBA
from Loyola University, and received his certified public accountant certificate
from the State of Illinois.
DR. KRITCHEVSKY has served as Vice President -- Technology and Engineering
of the Company since joining the Company in February 1999. From June 1998 to
February 1999, Dr. Kritchevsky provided consulting services to companies in a
variety of markets, including electronics packaging and liquid crystal display
technology. From January 1997 to May 1998, Dr. Kritchevsky was Vice President of
Strategic Initiatives for Donnelly Optics Corporation, an optics company. From
1989 to January 1997, Dr. Kritchevsky served in various positions with Donnelly
Corporation, an automotive supplier, including Director of Corporate New
Business Development. She holds a B.S. degree in chemistry and a Ph.D. in
material sciences and engineering from MIT.
MR. BILICKI has served as Vice President -- Sales and Marketing of the
Company since joining the Company in March 1999. From January 1996 until March
1999, Mr. Bilicki served as President/Director of PT Crosfield Indonesia in
Jakarta, Indonesia, a subsidiary of Crosfield Company, which is a global
chemical company. From January 1994 to December 1995, Mr. Bilicki held the
position of President/Director North America of Crosfield Company. He holds a
B.S. degree from Indiana Institute of Technology and an M.B.A. degree from
Winthrop University.
DR. BROTZMAN joined the Company in July 1994 as a senior scientist and has
served as Vice President -- Research and Development of the Company since July
1996. He is the inventor of the Company's coating technology. Dr. Brotzman has
15 years experience in research and development of advanced materials leading to
new products. His technical areas of expertise include interfacial adhesion and
chemistry, self-assembled polymeric coatings, nanosized inorganic powders,
powder processing, reactive coupling agents, solgel derived protective coatings,
non-destructive evaluation of composites, neo-debye relaxation in green
inorganic gels, asymmetric membranes and plasma processing. From January 1991 to
July 1994, Dr. Brotzman served as Director of Research at TPL, Inc., an advanced
materials company. He holds a B.S. degree in chemical engineering from Lafayette
College, an M.S. degree in engineering and applied science from the University
of California, Davis and a Ph.D. in chemistry from the University of Washington.
DR. FREED joined the Company in April 1995 as Vice President -- Marketing
and has served as Vice President -- Business Development of the Company since
June 1998. He has extensive experience in the commercial development of new
technology products, and has been responsible for the successful startup of
advanced-materials initiatives in three Fortune 50 companies. From 1985 to April
1995, Dr. Freed held senior marketing, strategic planning and
product-development positions with AMP, Inc., and certain of its
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<PAGE> 9
subsidiaries, primarily in the development and marketing of advanced materials
for microelectronics and photonics. From 1980 to 1985, he held similar positions
with GTE Corp. and Imperial Chemical Industries, PLC. Previously, Dr. Freed held
various scientific and managerial positions at Bell Laboratories. He holds a
B.A. degree in chemistry from Queens College and an A.M. degree and Ph.D. in
chemistry from Harvard University. Dr. Freed is a member of The Illinois
Coalition and is past chairman of the International Standards Council for
Electronic Interconnection and Packaging Technologies.
The Board of Directors elects executive officers annually and such
executive officers, subject to the terms of certain employment agreements, serve
at the discretion of the Board of Directors. Messrs. Cross, Jankowski, Bilicki
and Drs. Freed and Kritchevsky each have employment agreements with the Company.
See "Executive Compensation -- Employment and Consulting Agreements." There are
no family relationships among any of the directors or officers of the Company.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE -- Section 16 of
the Securities Exchange Act of 1934, as amended (the "1934 Act"), requires the
Company's officers (as defined under Section 16), directors and persons who
beneficially own greater than 10% of a registered class of the Company's equity
securities to file reports of ownership and changes in ownership with the
Securities and Exchange Commission. Based solely on a review of the forms it has
received and on written representations from certain reporting persons that no
such forms were required for them, the Company believes that during 1999 all
Section 16 filing requirements applicable to its officers, directors and 10%
beneficial owners were complied with by such persons.
6
<PAGE> 10
EXECUTIVE COMPENSATION
The following table provides information concerning the annual and
long-term compensation for services in all capacities to the Company for the
years ended December 31, 1999, 1998 and 1997 of those persons who were (i)
during 1999, the chief executive officer of the Company, (ii) at December 31,
1999, the four other most highly compensated (based upon combined salary and
bonus) executive officers of the Company whose total salary and bonus exceeded
$100,000 during 1999, and (iii) two additional individuals for whom disclosures
would have been provided but for the fact that the individual was not serving as
an executive officer of the Company at December 31, 1999 (collectively, the
"Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
AWARDS(1)
ANNUAL COMPENSATION ------------
------------------------------------------ SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS(1) COMPENSATION($)
--------------------------- ---- --------- -------- --------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Joseph E. Cross(2).............. 1999 $216,538 $ 0 $120,188(3) 100,000 $71,157(4)
President and Chief 1998 29,487 0 14,111(5) 100,000 36,450(6)
Executive Officer
Gina R. Kritchevsky, Ph.D.(7)... 1999 $142,789 $ 0 $ 51,370(8) 100,000 $ 0
Vice President Technology and
Engineering
Daniel S. Bilicki(9)............ 1999 $130,096 $ 0 $ 0 100,000 $ 0
Vice President Sales and
Marketing
Donald J. Freed, Ph.D........... 1999 $126,154 $ 0 $ 0 10,000 $ 0
Vice President Business 1998 120,753 0 0 27,572 0
Development 1997 112,806 35,000 0 0 0
Richard Brotzman, Ph.D.......... 1999 $126,154 $ 6,000 $ 0 15,000 $ 0
Vice President Research and 1998 119,721 0 0 40,600 0
Development 1997 109,779 0 0 0 0
Dennis J. Nowak(10)............. 1999 $114,035 $ 0 $ 85,000(11) 0 $ 0
Vice President Finance and 1998 159,258 0 0 43,500 0
Administration, Chief 1997 178,037(12) 35,000 0 0 0
Financial
Officer, Treasurer and
Secretary
</TABLE>
- ---------------
(1) With the exception of 24,500 shares of stock granted to Joseph Cross in
August of 1999 (see note 4), none of the Named Officers had any restricted
stock holdings as of December 31, 1999.
(2) Joseph E. Cross commenced employment as the President and Chief Operating
Officer of the Company in November 1998 and became its Chief Executive
Officer in December 1998.
(3) Includes $50,571 paid for lodging in Burr Ridge, Illinois, $35,085 paid for
airfare to and from Chicago, Illinois, and $26,820 in payments related to
use of a car,. These expenses were incurred evenly throughout 1999. All
amounts have been "grossed-up" significantly to compensate Mr. Cross for
personal income tax liabilities associated with the reimbursement of these
expenses.
(4) Represents compensation relating to the grant of 24,500 shares of
unregistered common stock to Mr. Cross in August of 1999. This amount has
been "grossed-up" to compensate Mr. Cross for personal income tax
liabilities associated with the grant of these shares.
(5) Includes $8,602 paid for airfare to and from Chicago, Illinois.
(6) Represents a one-time payment to Mr. Cross for the preparation of his
residence for sale in connection with his intended move to the greater
Chicago metropolitan area.
(7) Dr. Kritchevsky's employment with the Company commenced on February 15,
1999.
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<PAGE> 11
(8) Includes $25,000 paid at signing of her employment agreement and $13,082
paid for lodging in Burr Ridge, Illinois. All amounts other than the
$25,000 paid at the signing of her employment agreement have been
"grossed-up" to compensate Dr. Kritchevsky for personal income tax
liabilities associated with the reimbursement of these expenses.
(9) Mr. Bilicki's employment commenced with the Company on March 15, 1999.
(10) Mr. Nowak's employment terminated pursuant to a Consulting Agreement dated
June 25, 1999.
(11) Represents payments made to Mr. Nowak in 1999 pursuant to the Consulting
Agreement mentioned in Note 10 above.
(12) Includes a lump sum payment of $35,000 paid to Mr. Nowak in September 1997
in consideration of him still being employed by the Company at such time.
OPTION GRANTS IN 1999 -- The following table provides information on grants
of stock options to the Named Officers during 1999. No stock appreciation rights
were granted to the Named Officers during 1999.
OPTION GRANTS IN 1999
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
---------------------------------------- VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS EXERCISE PRICE APPRECIATION FOR
UNDERLYING GRANTED TO OR BASE OPTION TERM(2)
OPTIONS EMPLOYEES IN PRICE EXPIRATION -----------------------
NAME GRANTED(#)(1) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
---- ------------- ------------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Joseph E. Cross................. 50,000 12.59% $2.1875 1/4/09 $ 68,785 $174,316
50,000 12.59% $1.7500 7/27/09 $ 55,028 $139,452
Gina R. Kritchevsky, Ph.D....... 75,000 18.88% $2.8125 2/15/09 $132,657 $336,180
25,000 6.30% $1.7500 7/27/09 $ 27,514 $ 69,726
Daniel S. Bilicki............... 50,000 12.59% $2.3750 3/15/09 $ 74,681 $189,257
50,000 12.59% $1.7500 7/27/09 $ 55,028 $139,452
Donald J. Freed, Ph.D........... 10,000 2.52% $1.7500 7/27/09 $ 11,006 $ 27,890
Richard W. Brotzman, Ph.D....... 15,000 3.78% $1.7500 7/27/09 $ 16,508 $ 41,836
</TABLE>
- ---------------
(1) These options are all non-qualified stock options. Subject to certain
restrictions, these options become exercisable in five or three (7/27/99
grant) equal annual installments, beginning on the first anniversary of the
date of grant. These options expire ten years from their date of grant.
(2) Potential realizable value is presented net of the option exercise price but
before any federal or state income taxes associated with exercise. These
amounts represent certain assumed rates of appreciation only. Actual gains
will be dependent on the future performance of the Common Stock and the
option holder's continued employment through the vesting period. The amounts
reflected in the table may not necessarily be achieved.
8
<PAGE> 12
AGGREGATED OPTION EXERCISES IN 1999 AND YEAR-END 1999 OPTION VALUES -- The
following table provides information regarding each of the Named Officers'
option exercises in 1999 and unexercised options at December 31, 1999.
YEAR-END 1999 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED IN-THE-MONEY
UNEXERCISED OPTIONS AT OPTIONS AT
SHARES YEAR-END 1999(#) YEAR-END 1999($)(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Joseph E. Cross.............. 0 $ 0 20,000 180,000 $ 38,750 $445,625
Gina R. Kritchevsky, Ph.D.... 0 $ 0 0 100,000 $ 0 $232,813
Daniel S. Bilicki............ 0 $ 0 0 100,000 $ 0 $281,250
Donald J. Freed, Ph.D........ 0 $ 0 59,049 82,743 $118,808 $144,816
Richard W. Brotzman, Ph.D.... 0 $ 0 91,700 111,545 $235,036 $207,246
Dennis J. Nowak.............. 0 $ 0 72,206 87,094 $ 72,051 $ 88,694
</TABLE>
- ---------------
(1) The value per option is calculated by subtracting the exercise price per
option from the closing price of the Common Stock on the Nasdaq National
Market on December 31, 1999, which was $4.875.
EMPLOYMENT AND CONSULTING AGREEMENTS
The Company entered into an employment agreement with Joseph E. Cross dated
November 9, 1999 which provides for an annual base salary of not less than
$220,000. In addition, Mr. Cross will receive a lump sum payment of $50,000 on
the first anniversary of the commencement of this agreement if he is employed by
the Company at such time. The Company also granted to Mr. Cross options to
purchase up to 100,000 shares of Common Stock at an exercise price of $2.9375
per share and options to purchase up to 50,000 shares of Common Stock at an
exercise price of $2.1875, with options for one-fifth of such shares becoming
exercisable on each of the first five anniversaries of the dates of grant. No
term has been assigned to Mr. Cross' employment agreement. If Mr. Cross is
terminated other than for "cause" (as such term is defined in Mr. Cross'
employment agreement), Mr. Cross will receive severance benefits in an amount
equal to Mr. Cross' base salary for 52 weeks.
Effective as of February 15, 1999, the Company also entered into an
employment agreement with Gina R. Kritchevsky, Ph.D. providing for an annual
base salary of not less than $165,000. In addition, Dr,. Kritchevsky was granted
a signing bonus of $25,000 and a further bonus of $35,000 on the first
anniversary of the commencement of this agreement if she is employed by the
Company at such time. The Company also granted to Dr. Kritchevsky options to
purchase up to 75,000 shares of Common Stock at an exercise price of $2.8125. No
term has been assigned to Dr. Kritchevsky's employment agreement. If Dr.
Kritchevsky is terminated other than for "cause" (as such term is defined in Dr.
Kritchevsky's employment agreement), Dr. Kritchevsky will receive severance
benefits in an amount equal to Dr. Kritchevsky's base salary for 52 weeks.
Effective as of March 15, 1999, the Company also entered into an employment
agreement with Daniel Bilicki providing for an annual base salary of not less
than $165,000. In addition, Mr. Bilicki was granted options to purchase up to
50,000 shares of Common Stock at an exercise price of $2.375. No term has been
assigned to Mr. Bilicki's employment agreement. If Mr. Bilicki is terminated
other than for "cause" (as such term is defined in Mr. Bilicki's employment
agreement), Mr. Bilicki will receive severance benefits in an amount equal to
Mr. Bilicki's base salary for 26 weeks.
Effective as of June 1, 1999, the Company also entered into an employment
agreement with Donald Freed providing for an annual base salary of not less than
$125,000. No term has been assigned to Mr. Freed's employment agreement. If Mr.
Freed is terminated other than for "cause" (as such term is defined in Mr.
Freed's employment agreement), Mr. Freed will receive severance benefits in an
amount equal to Mr. Freed's base salary for 26 weeks.
9
<PAGE> 13
On June 25, 1999, the Company entered into a consulting agreement with
Dennis J. Nowak. Under the terms of this agreement, Mr. Nowak's employment with
the Company was terminated on June 25, 1999, at which time Mr. Nowak received
severance payments of (i) $30,403.85 representing accrued vacation time, (ii)
$4,250 of out-placement services, (iii) $1,000 for attorneys fees in negotiating
the consulting agreement, (iv) COBRA payments for 12 months (v) certain
equipment. From June 25, 1999 through June 25, 2000, Mr. Nowak will serve as an
independent consultant to the Company. During such period, the Company will pay
Mr. Nowak a consulting fee equal $170,000 payable in 26 equal bi-weekly
installments.
REPORT OF THE COMPENSATION
AND GOVERNANCE COMMITTEE
OF THE BOARD OF DIRECTORS
The objectives of the Compensation and Governance Committee in determining
the levels and components of executive compensation are to (1) attract, motivate
and retain talented and dedicated executive officers, (2) provide executive
officers with both cash and equity incentives to further the interests of the
Company and its stockholders, and (3) compensate executive officers at levels
comparable to those of executive officers at other comparable high technology
companies. In setting compensation, the Compensation and Governance Committee
reviews the achievement of corporate goals and individual contributions of
particular executives. Generally, the compensation of the Company's executive
officers is composed of base annual compensation, in the form of salary and
other benefits, incentives in the form of fiscal year-end bonuses, and long-term
compensation consisting of options awarded under the Company's stock option
plan.
BASE SALARIES
In determining the base salaries of the executive officers in 1999, the
Compensation and Governance Committee considered the performance of each
executive, the nature of the executive's responsibilities, the salary levels of
executives at comparable high technology companies, including other
publicly-held advanced materials and advanced technologies companies, and the
Company's general compensation practices.
CASH BONUSES
Discretionary cash bonuses for executive officers are directly tied to
achievement of specified goals of the Company and are a function of the criteria
which the Compensation and Governance Committee believes appropriately take into
account the specific areas of responsibility of the particular officer.
STOCK OPTIONS
Periodically, the Compensation and Governance Committee also grants stock
options to executive officers in order to provide a long-term incentive which is
directly tied to the performance of the Company's stock. These options provide
an incentive to maximize stockholder value because they reward option holders
only if stockholders also benefit. The exercise price of these stock options is
the fair market of the Common Stock on the date of grant. In general, the
options vest in equal annual installments over a five-year period beginning one
year after the date of grant, in certain instances the Board (or the
Compensation and Governance Committee) can reduce the vesting period for
performance-based options. Vesting periods are used to retain key employees and
to emphasize the long-term aspect of contribution and performance. In making
stock option grants to executives, the Compensation and Governance Committee
considered a number of factors, including the performance of such persons, the
Company's performance in 1998, achievement of specific delineated goals, the
responsibilities and the relative position of such persons within the Company,
the compensation of executives in comparable high technology companies and the
number of stock options each such person currently possesses.
COMPLIANCE WITH SECTION 162(M)
The Compensation and Governance Committee currently intends for all
compensation paid to the Named Officers to be tax deductible to the Company
pursuant to Section 162(m) of the Internal Revenue
10
<PAGE> 14
Code of 1986, as amended ("Section 162(m)"). Section 162(m) provides that
compensation paid to the Named Officers in excess of $1,000,000 cannot be
deducted by the Company for Federal income tax purposes unless, in general, (1)
such compensation is performance-based, established by a committee of outside
directors and objective, and (2) the plan or agreement providing for such
performance-based compensation has been approved in advance by stockholders. The
Compensation and Governance Committee believes that the requirements of Section
162(m) are uncertain at this time and may arbitrarily impact the Company. In the
future, the Compensation and Governance Committee may determine to adopt a
compensation program that does not satisfy the conditions of Section 162(m) if
in its judgment, after considering the additional costs of not satisfying
Section 162(m), such program is appropriate.
COMPENSATION AND GOVERNANCE COMMITTEE
Jerry K. Pearlman
Edward E. Hagenlocker, Ph.D.
Donald S. Perkins
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Pursuant to a consulting agreement effective as of October 29, 1998, and
prior to his appointment as Chairman of the Board of Directors, Donald S.
Perkins was engaged by the Company to provide additional services in connection
with the Company's organizational restructuring and refocusing. In consideration
for such services, Mr. Perkins was granted options to purchase 25,000 shares of
Common Stock at an exercise price of $3.50 per share. Such options vest in five
equal annual installments beginning on October 29, 1999; provided, however, that
unvested options will expire upon Mr. Perkins no longer providing such services
to the Company.
11
<PAGE> 15
PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total returns for the
Company, the Nasdaq Market Composite Index and an index of peer companies
selected by the Company during the period commencing on November 26, 1997, the
date of the Company's initial public offering, and ending on December 31, 1999.
The comparison assumes $100 was invested on November 26, 1997 in the Common
Stock, the Nasdaq Market Composite Index and the peer companies selected by the
Company and assumes the reinvestment of all dividends, if any. The performance
graph must begin with the closing price of the Common Stock on the date of the
initial public offering, which was $8.00 (this was also the price at which the
Common Stock was offered in the initial public offering.)
COMPARISON OF CUMULATIVE TOTAL RETURNS
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
11/26/97 12/31/97 12/31/98 12/31/99
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Nanophase Technologies
Corporation 100.00 158.59 28.13 60.94
Nasdaq 100.00 98.49 137.52 255.21
Peer Group 100.00 87.80 98.04 97.03
</TABLE>
The companies in the peer group, all of which are advanced materials or
advanced technologies companies, are: Alyn Corporation, Delta & Pine Land
Company and Landec Corporation.
The above graph shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act or under the Exchange Act, except to the extent
that the Company specifically incorporates this information by reference, and
shall not otherwise be deemed filed under such Acts.
12
<PAGE> 16
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth, as of March 31, 2000 certain information
with respect to the beneficial ownership of the Common Stock by (i) each person
known by the Company to own beneficially more than 5% of the outstanding shares
of Common Stock, (ii) each Company director, (iii) each of the Named Officers
and (iv) all Company executive officers and directors as a group.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SHARES SHARES
BENEFICIALLY BENEFICIALLY
NAME AND ADDRESS OWNED(1) OWNED
---------------- ------------ ------------
<S> <C> <C>
Spurgeon Corporation........................................ 1,882,343(2) 14.0%
Bradford T. Whitmore........................................ 1,882,343(3) 14.0%
Grace Investments, Ltd...................................... 1,069,750(4) 8.0%
Grace Brothers, Ltd......................................... 812,593(5) 6.0%
Harris & Harris Group, Inc.(6).............................. 672,916 5.0%
Joseph E. Cross............................................. 54,500(7) *
Edward E. Hagenlocker, Ph.D................................. 3,333(8) *
Richard W. Siegel, Ph.D..................................... 246,034(9) 1.8%
James A. McClung, Ph.D...................................... 15,000 *
Jerry Pearlman.............................................. 13,333(10) *
Donald S. Perkins........................................... 42,332(11) *
Gina R. Kritchevsky, Ph.D................................... 18,000(12) *
Daniel S. Bilicki........................................... 30,000(13) *
Donald J. Freed, Ph.D....................................... 200(14) *
Richard W. Brotzman, Ph.D................................... 107,333(15) *
All executive officers and directors as a group (11
persons).................................................. 539,877(16) 4.0%
</TABLE>
- ------------
* Denotes beneficial ownership less than one percent.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission (the "Commission"). Unless otherwise
indicated below, the persons in the above table have sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by them.
(2) Includes 812,593 shares of Common Stock held by Grace Brothers, Ltd. and
1,069,750 shares of Common Stock held by Grace Investments, Ltd. Spurgeon
Corporation is a general partner of both Grace entities and shares voting
and investment power with respect to the shares of Common Stock held by
such Grace entities. This information is based on information reported on
Schedule 13G/A dated February 4, 2000 filed with the Commission by Spurgeon
Corporation. The address of the stockholder is 290 South County Farm Road,
Third Floor, Wheaton, Illinois 60187.
(3) Includes 812,593 shares of Common Stock held by Grace Brothers, Ltd. and
1,069,750 shares of Common Stock held by Grace Investments, Ltd. Mr.
Whitmore is a general partner of Grace Brothers, Ltd. and is the sole owner
of an entity which is a general partner of Grace Investments, Ltd. In such
capacities, Mr. Whitmore shares voting and investment power with respect to
the shares of Common Stock held by the Grace entities. This information is
based on information reported on Schedule 13G/A dated February 4, 2000
filed with the Commission by Mr. Whitmore. The address of the stockholder
is 1560 Sherman Avenue, Suite 900, Evanston, Illinois 60201.
(4) This number of shares is based on information reported on Schedule 13G/A's
dated February 4, 2000 filed with the Commission by Spurgeon Corporation
and Bradford T. Whitmore. The address of the stockholder is 1560 Sherman
Avenue, Suite 900, Evanston, Illinois 60201.
(5) This number of shares is based on information reported on Schedule 13G/A's
dated February 4, 2000 filed with the Commission by Spurgeon Corporation
and Bradford T. Whitmore. The address of the stockholder is 1560 Sherman
Avenue, Suite 900, Evanston, Illinois 60201.
(6) The address of the stockholder is One Rockefeller Plaza, Suite 1430, New
York, New York
13
<PAGE> 17
(7) Includes 30,000 shares of Common Stock issuable upon exercise of options
exercisable currently or within 60 days of March 31, 2000.
(8) Consists of 3,333 shares of Common Stock issuable upon exercise of options
exercisable currently or within 60 days of March 31, 2000.
(9) Includes 28,950 shares of Common Stock issuable upon exercise of warrants
presently exercisable and 60,350 shares of Common Stock issuable upon
exercise of options exercisable currently or within 60 days of March 31,
2000.
(10) Includes 3,333 shares of Common Stock issuable upon exercise of options
exercisable currently or within 60 days of March 31, 2000.
(11) Includes 12,332 shares of Common Stock issuable upon exercise of options
exercisable currently or within 60 days of March 31, 2000.
(12) Includes 15,000 shares of Common Stock issuable upon exercise of options
exercisable currently or within 60 days of March 31, 2000.
(13) Includes 10,000 shares of Common Stock issuable upon exercise of options
exercisable currently or within 60 days of March 31, 2000.
(14) Consists of 200 shares of Common Stock issuable upon exercise of options
exercisable currently or within 60 days of March 31, 2000.
(15) Consists of 107,333 shares of Common Stock issuable upon exercise of
options exercisable currently or within 60 days of March 31, 2000.
(16) Includes 28,950 shares of Common Stock issuable upon exercise of warrants
presently exercisable and 251,393 shares of Common Stock issuable upon
exercise of options exercisable currently or within 60 days of March 31,
2000.
14
<PAGE> 18
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors, upon the recommendation of the Audit and Finance
Committee, has appointed Ernst & Young LLP, independent certified public
accountants, as auditors of the Company's financial statements for the year
ended December 31, 1999. Ernst & Young LLP has acted as auditors for the Company
since 1993. The Board of Directors has determined to afford stockholders the
opportunity to express their opinions on the matter of auditors and,
accordingly, is submitting to the stockholders at the Annual Meeting a proposal
to ratify the Board of Directors' appointment of Ernst & Young LLP. If a
majority of the shares voted at the Annual Meeting, in person or by proxy, are
not voted in favor of the ratification of the appointment of Ernst & Young LLP,
the Board of Directors will interpret this as an instruction to seek other
auditors.
It is expected that representatives of Ernst & Young will be present at the
meeting and will be available to respond to questions. They will be given an
opportunity to make a statement if they desire to do so.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE INDEPENDENT AUDITORS
OF THE COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2000.
MISCELLANEOUS AND OTHER MATTERS
SOLICITATION -- The cost of this proxy solicitation will be borne by the
Company. The Company may request banks, brokers, fiduciaries, custodians,
nominees and certain other record holders to send proxies, proxy statements and
other materials to their principals at the Company's expense. Such banks,
brokers, fiduciaries, custodians, nominees and other record holders will be
reimbursed by the Company for their reasonable out-of-pocket expenses of
solicitation. The Company does not anticipate that costs and expenses incurred
in connection with this proxy solicitation will exceed an amount normally
expended for a proxy solicitation for an election of directors in the absence of
a contest.
PROPOSALS OF STOCKHOLDERS -- Proposals of stockholders (1) intended to be
considered at the Company's 2001 Annual Meeting of Stockholders (the "2001
Annual Meeting") and (2) to be considered for inclusion in the Company's proxy
statement and proxy for the 2001 Annual Meeting, must be received by the
Secretary of the Company on or before December 22, 2000.
OTHER BUSINESS -- The Board of Directors is not aware of any other matters
to be presented at the Annual Meeting other than those mentioned in this Proxy
Statement and the Company's Notice of Annual Meeting of Stockholders enclosed
herewith. If any other matters are properly brought before the Annual Meeting,
however, it is intended that the persons named in the proxies will vote such
proxies as the Board of Directors directs.
ADDITIONAL INFORMATION -- The Company will furnish without charge a copy of
its Annual Report on Form 10-K for its year ended December 31, 1999, as filed
with the Commission, upon the written request of any person who is a stockholder
as of the Record Date, and will provide copies of the exhibits to such Form 10-K
upon payment of a reasonable fee which shall not exceed the Company's reasonable
expenses in connection therewith. Requests for such materials should be directed
to Nanophase Technologies Corporation, 453 Commerce Street, Burr Ridge, Illinois
60521, Attention: Marianne Steimle, Manager of Investor Relations.
By Order of the Board of Directors
JESS JANKOWSKI
Secretary
Burr Ridge, Illinois
April 21, 2000
ALL STOCKHOLDERS ARE REQUESTED TO COMPLETE,
DATE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY.
15
<PAGE> 19
PROXY PROXY
NANOPHASE TECHNOLOGIES CORPORATION
453 COMMERCE STREET
BURR RIDGE, ILLINOIS 60521
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 25, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder(s) hereby appoints Joseph E. Cross and Jess
Jankowski and each of them, with full power of substitution, as attorneys and
proxies for, and in the name and place of, the undersigned, and hereby
authorizes each of them to represent and to vote all of the shares which the
undersigned is entitled to vote at the Annual Meeting of Stockholders of
Nanophase Technologies Corporation to be held at Ashton Place, 341 West 75th
Street, Willowbrook, Illinois, on Thursday, May 25, 2000, at 9:00 a.m., local
time, and at any adjournments thereof, upon the matters as set forth in the
Notice of Annual Meeting of Stockholders and Proxy Statement, receipt of which
is hereby acknowledged.
THIS PROXY, WHEN PROPERLY EXECUTED AND RETURNED IN A TIMELY MANNER, WILL BE
VOTED AT THE ANNUAL MEETING AND AT ANY ADJOURNMENTS THEREOF IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). IF NO CONTRARY INDICATION IS
MADE, THE PROXY WILL BE VOTED FOR ALL NOMINEES LISTED IN PROPOSAL 1, FOR
PROPOSAL 2, AND IN ACCORDANCE WITH THE JUDGMENT OF THE PERSONS NAMED AS PROXIES
HEREIN ON ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
(continued, and to be signed and dated, on reverse side)
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 20
NANOPHASE TECHNOLOGIES CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR ALL NOMINEES
LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2.
<TABLE>
<S> <C> <C> <C> <C>
1. ELECTION OF CLASS III DIRECTORS. For all nominees listed below [ ] Withhold authority to vote [ ]
(except as marked to the contrary below) for all nominees listed below
</TABLE>
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME BELOW)
Jerry Pearlman Donald S. Perkins
<TABLE>
<S> <C> <C> <C>
2. PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP.AS THE INDEPENDENT
AUDITORS OF THE COMPANY'S FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER FOR AGAINST ABSTAIN
31, 1999. [ ] [ ] [ ]
3. EACH OF THE PERSONS NAMED AS PROXIES HEREIN ARE AUTHORIZED, IN SUCH PERSON'S
DISCRETION, TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
ANNUAL MEETING, OR ANY ADJOURNMENTS THEREOF.
</TABLE>
Date:
---------------------------------
2000
---------------------------------
Signature
---------------------------------
Signature (if held jointly)
Please date this Proxy and
sign it exactly as your
name(s) appears hereon. When
shares are held by joint
tenants, both should sign.
When signing as an attorney,
executor, administrator,
trustee, guardian or other
fiduciary, please indicate
your capacity. If you sign
for a corporation, please
print full corporate name and
indicate capacity of duly
authorized officer executing
on behalf of the corporation.
If you sign for a
partnership, please print
full partnership name and
indicate capacity of duly
authorized person executing
on behalf of the partnership.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
PLEASE VOTE, SIGN EXACTLY AS NAME APPEARS ABOVE, DATE AND RETURN
THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE
