Exhibit 10.38

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of
January 13, 2008, by and between LIQUIDMETAL TECHNOLOGIES, Inc., a Delaware
corporation (the “Company”), GERALD E. MORROW (the “Employee”).

 

RECITALS

 

WHEREAS, the Employee desires to be employed by the Company upon the terms and
conditions set forth in this Agreement; and

 

WHEREAS, the Company desires to assure itself of the Employee’s continued
employment in the capacities set forth herein.

 

NOW, THEREFORE, in consideration of the foregoing recitals and for other good
and valuable consideration, the parties hereto covenant and agree as follows:

 

1.                                       EMPLOYMENT.  THE COMPANY HEREBY EMPLOYS
EMPLOYEE, AND THE EMPLOYEE HEREBY ACCEPTS SUCH EMPLOYMENT, UPON THE TERMS AND
CONDITIONS SET FORTH IN THIS AGREEMENT.

 

2.                                       TERM. SUBJECT TO THE TERMS AND
CONDITIONS OF THIS AGREEMENT, INCLUDING, BUT NOT LIMITED TO, THE PROVISIONS FOR
TERMINATION SET FORTH IN SECTION 5 HEREOF, THE EMPLOYMENT OF THE EMPLOYEE UNDER
THIS AGREEMENT SHALL COMMENCE ON JANUARY 13, 2008 AND SHALL CONTINUE THROUGH THE
CLOSE OF BUSINESS ON JANUARY 13, 2011 (THE “INITIAL TERM”).  UPON THE EXPIRATION
OF THE INITIAL TERM, THE EMPLOYEE’S EMPLOYMENT WITH THE COMPANY WILL CONTINUE ON
AN “AT-WILL” BASIS AND MAY BE TERMINATED BY EMPLOYEE OR THE COMPANY FOR ANY
REASON AND AT ANY TIME, PROVIDED THAT THE TERMINATING PARTY SHALL PROVIDE AT
LEAST THIRTY (30) DAYS PRIOR WRITTEN NOTICE OF THE TERMINATION TO THE OTHER
PARTY (UNLESS THE TERMINATION IS WITH CAUSE AS DEFINED IN THIS AGREEMENT, IN
WHICH CASE THE EMPLOYEE’S EMPLOYMENT MAY BE TERMINATED IMMEDIATELY). 
NOTWITHSTANDING THE EXPIRATION OF THE INITIAL TERM OF THIS AGREEMENT, THE
PROVISIONS OF THIS AGREEMENT OTHER THAN THOSE OF SECTIONS 1, 4, AND 5, TERM,
COMPENSATION, AND TERMINATION, RESPECTIVELY, SHALL REMAIN IN FULL FORCE AND
EFFECT.  ALL OTHER PROVISIONS OF THIS AGREEMENT, INCLUDING BUT WITHOUT
LIMITATION, SECTIONS 2, 6, AND 7, ENTITLED EMPLOYMENT, NONSOLICITATION AND
NONDISCLOSURE COVENANTS, AND EMPLOYEE INVENTIONS, RESPECTIVELY, SHALL SURVIVE
THE EXPIRATION OF THE INITIAL TERM.  NOTWITHSTANDING THE EXPIRATION OF THE THIS
AGREEMENT OR THE TERMINATION OF EMPLOYMENT BY ANY MEANS BY ANY PARTY, SECTIONS
2, 6, AND 7, ENTITLED TERM, NONSOLICITATION AND NONDISCLOSURE COVENANTS, AND
EMPLOYEE INVENTIONS, RESPECTIVELY, SHALL SURVIVE AND REMAIN FULLY ENFORCEABLE.

 

3.                                       DUTIES.  EMPLOYEE WILL INITIALLY SERVE
AS CHIEF FINANCIAL OFFICER OF THE COMPANY. THE EMPLOYEE WILL DEVOTE THE
NECESSARY BUSINESS TIME, ATTENTION, SKILL, AND ENERGY TO THE BUSINESS OF THE
COMPANY, WILL USE THE EMPLOYEE’S BEST EFFORTS TO PROMOTE THE SUCCESS OF THE
COMPANY’S BUSINESS, AND WILL COOPERATE FULLY WITH THE BOARD OF DIRECTORS IN THE

 

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advancement of the best interests of the Company.  Furthermore, the Employee
shall assume and competently perform such reasonable responsibilities and duties
as may be assigned to the Employee from time to time by the Board of Directors,
Chairman of the Board, President, Chief Executive Officer of the Company or
their designee.  To the extent that the Company shall have any parent company,
subsidiaries, affiliated corporations, partnerships, or joint ventures
(collectively “Related Entities”), the Employee shall perform such duties to
promote these entities and to promote and protect their respective interests to
the same extent as the interests of the Company without additional compensation.
At all times, the Employee agrees that the Employee has read and will abide by,
and prospectively will read and abide by, any employee handbook, policy, or
practice that the Company or Related Entities has or hereafter adopts with
respect to its employees generally. The Employee will report directly to the
Chairman of the Board.

 

4.                                       COMPENSATION.

 

(A)                                  ANNUAL BASE SALARY.  AS COMPENSATION FOR
EMPLOYEE’S SERVICES AND IN CONSIDERATION FOR THE EMPLOYEE’S COVENANTS CONTAINED
IN THIS AGREEMENT, THE COMPANY SHALL PAY THE EMPLOYEE AN ANNUAL BASE SALARY OF
$175,000.00.  THE ANNUAL COMPENSATION (AND COMMISSION RATES, IF APPLICABLE) MAY
BE ADJUSTED UPWARD OR DOWNWARD IN THE SOLE DISCRETION OF THE BOARD OF DIRECTORS
OR CHIEF EXECUTIVE OFFICER.  FOR PURPOSES OF THIS AGREEMENT, THE TERM “SALARY
YEAR” MEANS THE ONE YEAR, 365-DAY PERIOD (OR 366 DAY PERIOD FOR A LEAP YEAR)
THAT BEGINS ON THE JANUARY 13, 2008 AND EACH SUCCESSIVE ONE YEAR PERIOD
THEREAFTER.

 

(B)                                 BONUSES.  IN ADDITION TO THE EMPLOYEE’S
ANNUAL BASE COMPENSATION, DURING THE TERM OF THE EMPLOYEE’S EMPLOYMENT
HEREUNDER, THE EMPLOYEE SHALL BE ENTITLED TO ONLY SUCH BONUSES OR ADDITIONAL
COMPENSATION AS MAY BE GRANTED TO THE EMPLOYEE BY THE BOARD OF DIRECTORS OR
CHIEF EXECUTIVE OFFICER OF THE COMPANY, IN THEIR SOLE DISCRETION.

 

(C)                                  REIMBURSEMENT OF EXPENSES.  THE EMPLOYEE
SHALL BE REIMBURSED FOR ALL REASONABLE AND CUSTOMARY TRAVEL AND OTHER BUSINESS
EXPENSES INCURRED BY EMPLOYEE IN THE PERFORMANCE OF EMPLOYEE’S DUTIES HEREUNDER,
PROVIDED THAT SUCH REIMBURSEMENT SHALL BE SUBJECT TO, AND IN ACCORDANCE WITH,
ANY EXPENSE REIMBURSEMENT POLICIES AND/OR EXPENSE DOCUMENTATION REQUIREMENTS OF
THE COMPANY THAT MAY BE IN EFFECT FROM TIME TO TIME.

 

(d)                                 Option Grant.  In addition to the foregoing,
in consideration of the execution of this Agreement by the Employee, the Company
shall, on the date hereof, grant to the employee an option to purchase up to
200,000 shares of the common stock of the Company in accordance with a stock
option agreement in the form set forth as Exhibit A hereto.

 

(e)                                  Other Benefits.  During the term of the
Employee’s employment hereunder, the Employee shall be eligible to participate
in such pension, life insurance, health insurance, disability insurance and
other benefits plans, if any, which the Company may from time to time make
available to similar-level employees.

 

(f)                                    Vacation.  The Employee shall be entitled
to three weeks paid vacation during each Salary Year during the term of the
Employee’s employment hereunder.  Vacation

 

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shall be taken at such times and with such notice so as to not disrupt or
interfere with the business of the Company.  Unused vacation from a particular
Salary Year will not carry over to succeeding Salary Years, and the Employee
will not be paid for any unused vacation.

 

5.                                       TERMINATION.

 

(A)                                  DEATH.  THE EMPLOYEE’S EMPLOYMENT UNDER
THIS AGREEMENT SHALL TERMINATE IMMEDIATELY UPON EMPLOYEE’S DEATH.  IN THE EVENT
OF A TERMINATION PURSUANT TO THIS SECTION 5(A), THE EMPLOYEE’S ESTATE SHALL BE
ENTITLED TO RECEIVE ANY UNPAID BASE SALARY OWING TO EMPLOYEE UP THROUGH AND
INCLUDING THE DATE OF THE EMPLOYEE’S DEATH.

 

(B)                                 DISABILITY.  IF, DURING THE TERM OF THE
EMPLOYEE’S EMPLOYMENT HEREUNDER, THE EMPLOYEE BECOMES PHYSICALLY OR MENTALLY
DISABLED IN THE DETERMINATION OF A PHYSICIAN APPOINTED OR SELECTED BY THE
COMPANY, OR, IF DUE TO ANY PHYSICAL OR MENTAL CONDITION, THE EMPLOYEE BECOMES
UNABLE FOR A PERIOD OF MORE THAN SIXTY (60) DAYS DURING ANY SIX-MONTH PERIOD TO
PERFORM EMPLOYEE’S DUTIES HEREUNDER ON SUBSTANTIALLY A FULL-TIME BASIS AS
DETERMINED A PHYSICIAN SELECTED BY THE COMPANY, THE COMPANY MAY, AT ITS OPTION,
TERMINATE THE EMPLOYEE’S EMPLOYMENT UPON NOT LESS THAN THIRTY (30) DAYS WRITTEN
NOTICE. IN THE EVENT OF A TERMINATION PURSUANT TO THIS SECTION 5(B), THE
EMPLOYEE SHALL BE ENTITLED TO RECEIVE ANY UNPAID BASE SALARY OWING TO EMPLOYEE
UP THROUGH AND INCLUDING THE EFFECTIVE DATE OF TERMINATION.

 

(C)                                  TERMINATION BY COMPANY WITHOUT CAUSE.  IN
ADDITION TO THE OTHER TERMINATION PROVISIONS OF THIS AGREEMENT, THE COMPANY MAY
TERMINATE THE EMPLOYEE’S EMPLOYMENT AT ANY TIME WITHOUT CAUSE (A “TERMINATION
WITHOUT CAUSE”).  IN THE EVENT OF A TERMINATION WITHOUT CAUSE, THE EMPLOYEE
SHALL CONTINUE TO RECEIVE THE EMPLOYEE’S BASE SALARY (AS THEN IN EFFECT) DURING
THE SIX MONTH PERIOD IMMEDIATELY FOLLOWING THE EFFECTIVE DATE OF THE TERMINATION
WITHOUT CAUSE (THE “SEVERANCE PERIOD”).  IN ADDITION TO THE SEVERANCE PAY
DESCRIBED IN THE PRECEDING SENTENCE, THE EMPLOYEE SHALL CONTINUE TO RECEIVE,
DURING THE SEVERANCE PERIOD, ALL EMPLOYEE HEALTH AND WELFARE BENEFITS THAT
EMPLOYEE WOULD HAVE RECEIVED DURING THE SEVERANCE PERIOD IN THE ABSENCE OF SUCH
TERMINATION.  EMPLOYEE AGREES AND ACKNOWLEDGES, HOWEVER, THAT EMPLOYEE WILL
FORFEIT THE RIGHT TO RECEIVE BASE SALARY AND BENEFITS DURING THE SEVERANCE
PERIOD IMMEDIATELY UPON THE EMPLOYEE’S BREACH OF ANY COVENANT SET FORTH IN
SECTION 6 OF THIS AGREEMENT.  THE EMPLOYEE WILL ALSO FORFEIT THE RIGHT TO SALARY
AND BENEFITS DURING THE SEVERANCE PERIOD UPON ACCEPTING EMPLOYMENT WITH ANOTHER
EMPLOYER WITH COMPARABLE SALARY AND BENEFITS HEREUNDER SHALL BE FORFEITED AND
SHALL CEASE UPON THE EMPLOYEE BECOMING ELIGIBLE FOR BENEFITS FROM THE EMPLOYEE’S
NEW EMPLOYER.  NOTWITHSTANDING THE FOREGOING, THE TERMINATION OF THE EMPLOYEE’S
EMPLOYMENT PURSUANT TO THE SECOND SENTENCE OF SECTION 2 OF THIS AGREEMENT SHALL
NOT CONSTITUTE A TERMINATION WITHOUT CAUSE AND SHALL NOT GIVE RISE TO ANY
SEVERANCE PAYMENT OR OTHER BENEFITS PURSUANT TO THIS SECTION 5(C).

 

(D)                                 TERMINATION BY COMPANY WITH CAUSE.  THE
COMPANY MAY TERMINATE THE EMPLOYEE’S EMPLOYMENT AT ANY TIME WITH CAUSE.  AS USED
IN THIS AGREEMENT, “CAUSE” SHALL INCLUDE THE FOLLOWING: (1) THE EMPLOYEE’S
FAILURE OR INABILITY TO PERFORM EMPLOYEE’S DUTIES UNDER THIS AGREEMENT;
(2) DISHONESTY OR OTHER SERIOUS MISCONDUCT, (3) THE COMMISSION OF AN UNLAWFUL
ACT MATERIAL TO EMPLOYEE’S EMPLOYMENT, (4) A MATERIAL VIOLATION OF THE COMPANY’S
POLICIES OR PRACTICES WHICH REASONABLY JUSTIFIES IMMEDIATE TERMINATION;

 

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(5) committing, pleading guilty, nolo contendre or no contest (or their
equivalent) to, entering into a pretrial intervention or diversion program
regarding, or conviction of, a felony or any crime or act involving moral
turpitude, fraud, dishonesty, or misrepresentation; (6) the commission by the
Employee of any act which could reasonably affect or impact to a material degree
the interests of the Company or Related Entities or in some manner injure the
reputation, business, or business relationships of the Company or Related
Entities; (7) the Employee’s inability to perform an essential function of
Employee’s position; or (8) any material breach by Employee of this Agreement. 
The Company may terminate this Agreement for Cause at any time without notice. 
In the event of a termination for Cause, the Company shall be relieved of all
its obligations to the Employee provided for by this Agreement as of the
effective date of termination, and all payments to the Employee hereunder shall
immediately cease and terminate as of such date, except that Employee shall be
entitled to the annual base salary hereunder up to and including the effective
date of termination, provided, however, that the Employee’s obligations under
Sections 6 and 7 shall survive such a Termination for Cause and any liabilities
or obligations which have accrued and are owed by the Employee to the Company
shall not be extinguished or released thereby.

 

6.                                       NONSOLICITATION AND NONDISCLOSURE
COVENANTS.

 

(A)                                  RATIONALE FOR RESTRICTIONS.  EMPLOYEE
ACKNOWLEDGES THAT EMPLOYEE’S SERVICES HEREUNDER ARE OF A SPECIAL, UNIQUE, AND
EXTRAORDINARY CHARACTER, AND EMPLOYEE’S POSITION WITH THE COMPANY PLACES
EMPLOYEE IN A POSITION OF CONFIDENCE AND TRUST WITH CUSTOMERS, SUPPLIERS, AND
OTHER PERSONS AND ENTITIES WITH WHOM THE COMPANY AND ITS RELATED ENTITIES HAVE A
BUSINESS RELATIONSHIP.   THE EMPLOYEE FURTHER ACKNOWLEDGES THAT THE RENDERING OF
SERVICES UNDER THIS AGREEMENT WILL LIKELY REQUIRE THE DISCLOSURE TO EMPLOYEE OF
CONFIDENTIAL INFORMATION (AS DEFINED BELOW) INCLUDING TRADE SECRETS OF THE
COMPANY RELATING TO THE COMPANY AND/OR RELATED ENTITIES.  AS A CONSEQUENCE, THE
EMPLOYEE AGREES THAT IT IS REASONABLE AND NECESSARY FOR THE PROTECTION OF THE
GOODWILL AND LEGITIMATE BUSINESS INTERESTS OF THE COMPANY AND RELATED ENTITIES
THAT THE EMPLOYEE MAKE THE COVENANTS CONTAINED IN THIS SECTION 6, THAT SUCH
COVENANTS ARE A MATERIAL INDUCEMENT FOR THE COMPANY TO EMPLOY THE EMPLOYEE AND
TO ENTER INTO THIS AGREEMENT, AND THAT THE COVENANTS ARE GIVEN AS AN INTEGRAL
PART OF AND INCIDENT TO THIS AGREEMENT.

 

(B)                                 NONSOLICITATION COVENANTS.  AS USED HEREIN,
THE TERM “RESTRICTIVE PERIOD” MEANS THE TIME PERIOD COMMENCING ON THE DATE OF
THIS AGREEMENT AND ENDING ON THE SECOND (2ND) ANNIVERSARY OF THE DATE ON WHICH
THE EMPLOYEE’S EMPLOYMENT BY THE COMPANY (OR ANY RELATED ENTITY) EXPIRES OR IS
TERMINATED FOR ANY REASON, INCLUDING BOTH A TERMINATION BY THE COMPANY FOR CAUSE
AND NOT FOR CAUSE.  IN ADDITION, THE TERM “COVERED BUSINESS” MEANS ANY BUSINESS
WHICH IS THE SAME AS, OR SIMILAR TO, ANY BUSINESS CONDUCTED BY THE COMPANY OR
ANY OF THE RELATED ENTITIES AT ANY TIME DURING THE RESTRICTIVE PERIOD.  THE
EMPLOYEE AGREES THAT THE EMPLOYEE WILL NOT ENGAGE IN ANY OF THE FOLLOWING ACTS
ANYWHERE IN THE WORLD DURING THE RESTRICTIVE PERIOD:

 

(I)                                     DIRECTLY OR INDIRECTLY ASSIST, PROMOTE
OR ENCOURAGE ANY EXISTING OR POTENTIAL EMPLOYEES, CUSTOMERS, CLIENTS, OR VENDORS
OF THE COMPANY OR ANY RELATED ENTITY, AS WELL AS ANY OTHER PARTIES WHICH HAVE A
BUSINESS

 

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relationship with the Company or a Related Entity, to terminate, discontinue, or
reduce the extent of their relationship with the Company or a Related Entity;

 

 

 

(II)

 

DIRECTLY OR INDIRECTLY SOLICIT BUSINESS OF THE SAME OR SIMILAR TYPE AS A COVERED
BUSINESS, FROM ANY PERSON OR ENTITY KNOWN BY THE EMPLOYEE TO BE A CUSTOMER OR
CLIENT OF THE COMPANY, WHETHER OR NOT THE EMPLOYEE HAD CONTACT WITH SUCH PERSON
OR ENTITY DURING THE EMPLOYEE’S EMPLOYMENT WITH THE COMPANY;

 

 

 

(III)

 

DISPARAGE THE COMPANY, ANY RELATED ENTITIES, AND/OR ANY SHAREHOLDER, DIRECTOR,
OFFICER, EMPLOYEE, OR AGENT OF THE COMPANY OR ANY RELATED ENTITY; AND/OR

 

 

 

(IV)

 

ENGAGE IN ANY PRACTICE THE PURPOSE OF WHICH IS TO EVADE THE PROVISIONS OF THIS
SECTION 6 OR COMMIT ANY ACT WHICH ADVERSELY AFFECTS THE COMPANY, ANY RELATED
ENTITY, OR THEIR RESPECTIVE BUSINESSES.

 

Employee acknowledges that Employee’s services hereunder are of a special,
unique, and extraordinary character, and Employee’s position with the Company
places Employee in a position of confidence and trust with customers, suppliers,
and other persons and entities with whom the Company and its Related Entities
have a business relationship.  The Employee further acknowledges that the
rendering of services under this Agreement will likely require the disclosure to
Employee of Confidential Information (as defined below) and Trade Secrets (as
defined below) of the Company relating to the Company and/or Related Entities. 
As a consequence, the Employee agrees that it is reasonable and necessary for
the protection of the goodwill and legitimate business interests of the Company
and Related Entities that the Employee make the covenants contained in this
Section 6, that such covenants are a material inducement for the Company to
employ the Employee and to enter into this Agreement, and that the covenants are
given as an integral part of and incident to this Agreement.  Accordingly, the
Employee agrees that the geographic scope of the above covenants is a reasonable
means of protecting the Company’s (and the Related Entities’) legitimate
business interests.  Notwithstanding the foregoing covenants, nothing set forth
in this Agreement shall prohibit the Employee from owning the securities of
(i) corporations which are listed on a national securities exchange or traded in
the national over-the-counter market in an amount which shall not exceed 5% of
the outstanding shares of any such corporation or (ii) any corporation,
partnership, firm or other form of business organization which does not compete
with, is not engaged in, and does not carry on any aspect of, either directly or
indirectly through a subsidiary or otherwise, any Covered Business.

 

(C)                                  DISCLOSURE OF CONFIDENTIAL INFORMATION. 
THE EMPLOYEE ACKNOWLEDGES THAT THE INVENTIONS, INNOVATIONS, SOFTWARE, TRADE
SECRETS, BUSINESS PLANS, FINANCIAL STRATEGIES, FINANCES, AND ALL OTHER
CONFIDENTIAL OR PROPRIETARY INFORMATION WITH RESPECT TO THE BUSINESS AND
OPERATIONS OF THE COMPANY AND RELATED ENTITIES ARE VALUABLE, SPECIAL, AND UNIQUE
ASSETS OF THE COMPANY.  ACCORDINGLY, THE EMPLOYEE AGREES NOT TO, AT ANY TIME
WHATSOEVER EITHER DURING OR AFTER THE EMPLOYEE’S TERM OF EMPLOYMENT WITH THE
COMPANY, DISCLOSE, DIRECTLY OR INDIRECTLY,

 

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to any person or entity, or use or authorize any person or entity to use, any
confidential or proprietary information with respect to the Company or Related
Entities without the prior written consent of the Company, including, without
limitation, information as to the financial condition, results of operations,
identities of clients or prospective clients, products under development,
acquisition strategies or acquisitions under consideration, pricing or cost
information, marketing strategies, passwords or codes or any other information
relating to the Company or any of the Related Entities which could be reasonably
regarded as confidential (collectively referred to as “Confidential
Information”).  However, the term “Confidential Information” does not include
any information which is or shall become generally available to the public other
than as a result of disclosure by the Employee or by any person or entity which
the Employee knows (or which the Employee reasonably should know) has a duty of
confidentiality to the Company or a Related Entity with respect to such
information.  In addition to the foregoing, Company will be fully entitled to
all of the protections and benefits afforded by the California Uniform Trade
Secrets Acts and any other applicable law.  Trade Secret shall mean information,
including a formula, pattern, compilation, program, device, method technique, or
process that derives independent economic value, actual or potential, from being
not generally known to, and not being readily ascertainable by proper means by,
other persons who can derive economic value from its disclosure or use,
including but not limited to the patented information and processes as well as
the unpatented information and processes comprising, underlying, arising from,
and associated with Liquidmetal Alloy and Liquidmetal Coatings used by the
Company.

 

(D)                                 PREVENTION OF PREMATURE DISCLOSURE OF
CONFIDENTIAL INFORMATION AND TRADE SECRETS.  THE EMPLOYEE AGREES AND
ACKNOWLEDGES THAT, BECAUSE THE SUCCESS OF THE COMPANY IS HEAVILY DEPENDENT UPON
MAINTAINING THE SECRECY OF THE COMPANY’S CONFIDENTIAL INFORMATION AND TRADE
SECRETS AND PREVENTING THE PREMATURE PUBLIC DISCLOSURE OF THE COMPANY’S
PROPRIETARY INFORMATION AND TECHNOLOGY INCLUDING ITS CONFIDENTIAL INFORMATION
AND TRADE SECRETS, THE EMPLOYEE AGREES TO USE THE EMPLOYEE’S BEST EFFORTS AND
HIS OR HER HIGHEST DEGREE OF CARE, DILIGENCE, AND PRUDENCE TO ENSURE THAT NO
CONFIDENTIAL INFORMATION OR TRADE SECRET PREMATURELY LEAKS OR OTHERWISE
PREMATURELY MAKES ITS WAY INTO THE PUBLIC DOMAIN OR ANY PUBLIC FORUM, INCLUDING,
WITHOUT LIMITATION, INTO ANY TRADE PUBLICATIONS, INTERNET CHAT ROOMS, OR OTHER
SIMILAR FORUMS.  IN THE EVENT THAT THE EMPLOYEE BECOMES AWARE OF ANY PREMATURE
LEAK OF CONFIDENTIAL INFORMATION OR TRADE SECRET OR BECOMES AWARE OF ANY
CIRCUMSTANCES CREATING A RISK OF SUCH A LEAK, THE EMPLOYEE SHALL IMMEDIATELY
INFORM THE BOARD OF DIRECTORS, THE CHIEF EXECUTIVE OFFICER, OR THE EMPLOYEE’S
SUPERVISOR OF SUCH LEAK OR OF SUCH CIRCUMSTANCES.

 

(E)                                  REMOVAL AND RETURN OF PROPRIETARY ITEMS. 
THE EMPLOYEE WILL NOT REMOVE FROM THE COMPANY’S PREMISES (EXCEPT TO THE EXTENT
SUCH REMOVAL IS FOR PURPOSES OF THE PERFORMANCE OF THE EMPLOYEE’S DUTIES AT HOME
OR WHILE TRAVELING, AND UNDER SUCH CONDITIONS AND RESTRICTIONS AS ARE
SPECIFICALLY AUTHORIZED AND/OR REQUIRED BY THE COMPANY) OR TRANSMIT BY ANY
MEANS, ELECTRONIC OR OTHERWISE, ANY DOCUMENT, RECORD, NOTEBOOK, PLAN, MODEL,
COMPONENT, DEVICE, COMPUTER SOFTWARE OR CODE, OR CONFIDENTIAL INFORMATION OR
TRADE SECRET WHETHER EMBODIED IN A DISK OR IN ANY OTHER FORM, INCLUDING
ELECTRONIC FORM (COLLECTIVELY, THE “PROPRIETARY ITEMS”).  THE EMPLOYEE
RECOGNIZES THAT, AS BETWEEN THE COMPANY AND THE EMPLOYEE, ALL OF THE PROPRIETARY
ITEMS, WHETHER OR NOT DEVELOPED BY THE EMPLOYEE, ARE THE

 

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exclusive property of the Company.  Upon termination of Employee’s employment
with the Company by either party (regardless of the reason for termination), or
upon the request of the Company during the term of employment, the Employee will
return to the Company all of the Proprietary Items in the Employee’s possession
or subject to the Employee’s control, and the Employee shall not retain any
copies, abstracts, sketches, or other physical embodiment of any of the
Proprietary Items, Confidential Information, Trade Secret or any part thereof.

 

(F)                                    ENFORCEMENT AND REMEDIES.  IN THE EVENT
OF ANY BREACH OF ANY OF THE COVENANTS SET FORTH IN THIS SECTION 6, THE EMPLOYEE
RECOGNIZES THAT THE REMEDIES AT LAW WILL BE INADEQUATE AND THAT IN ADDITION TO
ANY RELIEF AT LAW WHICH MAY BE AVAILABLE TO THE COMPANY FOR SUCH VIOLATION OR
BREACH AND REGARDLESS OF ANY OTHER PROVISION CONTAINED IN THIS AGREEMENT, THE
COMPANY SHALL BE ENTITLED TO EQUITABLE REMEDIES (INCLUDING AN INJUNCTION) AND
SUCH OTHER RELIEF AS A COURT MAY GRANT AFTER CONSIDERING THE INTENT OF THIS
SECTION 6.  ADDITIONALLY, THE PERIOD OF TIME APPLICABLE TO ANY COVENANT SET
FORTH IN THIS SECTION 6 WILL BE EXTENDED BY THE DURATION OF ANY VIOLATION BY
EMPLOYEE OF SUCH COVENANT.  IN THE EVENT A COURT OF COMPETENT JURISDICTION
DETERMINES THAT ANY OF THE COVENANTS SET FORTH IN THIS SECTION 6 ARE EXCESSIVELY
BROAD AS TO DURATION, GEOGRAPHIC SCOPE, PROHIBITED ACTIVITIES OR OTHERWISE, THE
PARTIES AGREE THAT THIS COVENANT SHALL BE REDUCED OR CURTAILED TO THE EXTENT,
BUT ONLY TO THE EXTENT, NECESSARY TO RENDER IT ENFORCEABLE.

 

7.                                       EMPLOYEE INVENTIONS.

 

(A)                                  DEFINITION. FOR PURPOSES OF THIS AGREEMENT,
“EMPLOYEE INVENTION” MEANS ANY IDEA, INVENTION, TECHNIQUE, MODIFICATION,
PROCESS, OR IMPROVEMENT (WHETHER PATENTABLE OR NOT), ANY INDUSTRIAL DESIGN
(WHETHER REGISTERABLE OR NOT), ANY MASK WORK, HOWEVER FIXED OR ENCODED, THAT IS
SUITABLE TO BE FIXED, EMBEDDED OR PROGRAMMED IN A SEMICONDUCTOR PRODUCT (WHETHER
RECORDABLE OR NOT), AND ANY WORK OF AUTHORSHIP (WHETHER OR NOT COPYRIGHT
PROTECTION MAY BE OBTAINED FOR IT) CREATED, CONCEIVED, OR DEVELOPED BY THE
EMPLOYEE, EITHER SOLELY OR IN CONJUNCTION WITH OTHERS, DURING THE EMPLOYEE’S
EMPLOYMENT WITH THE COMPANY OR DURING THE TWENTY FOUR (24) MONTH PERIOD
FOLLOWING SUCH EMPLOYMENT, THAT RELATES IN ANY WAY TO, OR IS USEFUL IN ANY
MANNER IN, THE BUSINESSES THEN BEING CONDUCTED OR PROPOSED TO BE CONDUCTED BY
THE COMPANY OR ANY RELATED ENTITY.

 

(B)                                 OWNERSHIP OF EMPLOYEE INVENTIONS.  EMPLOYEE
AGREES AND ACKNOWLEDGES THAT ALL EMPLOYEE INVENTIONS WILL BELONG EXCLUSIVELY TO
THE COMPANY AND THAT ALL EMPLOYEE INVENTIONS ARE WORKS MADE FOR HIRE AND THE
PROPERTY OF THE COMPANY, INCLUDING ANY COPYRIGHTS, PATENTS, SEMICONDUCTOR MASK
PROTECTION, OR OTHER INTELLECTUAL PROPERTY RIGHTS PERTAINING THERETO.  IF IT IS
DETERMINED THAT ANY SUCH WORKS ARE NOT WORKS MADE FOR HIRE, THE EMPLOYEE HEREBY
ASSIGNS TO THE COMPANY ALL OF THE COMPANY’S RIGHT, TITLE, AND INTEREST,
INCLUDING ALL RIGHTS OF COPYRIGHT, PATENT, SEMICONDUCTOR MASK PROTECTION, AND
OTHER INTELLECTUAL PROPERTY RIGHTS, TO OR IN SUCH EMPLOYEE INVENTIONS. THE
EMPLOYEE COVENANTS THAT THE EMPLOYEE WILL PROMPTLY:

 

(I)

 

DISCLOSE TO THE COMPANY IN WRITING ANY EMPLOYEE INVENTION;

 

 

 

(II)

 

ASSIGN TO THE COMPANY OR TO A PARTY DESIGNATED BY THE COMPANY, AT THE COMPANY’S
REQUEST AND WITHOUT ADDITIONAL COMPENSATION, ALL OF THE

 

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EMPLOYEE’S RIGHT TO THE EMPLOYEE INVENTION FOR THE UNITED STATES AND ALL FOREIGN
JURISDICTIONS;

 

 

 

(III)

 

EXECUTE AND DELIVER TO THE COMPANY SUCH APPLICATIONS, ASSIGNMENTS, AND OTHER
DOCUMENTS AS THE COMPANY MAY REQUEST IN ORDER TO APPLY FOR AND OBTAIN PATENTS OR
OTHER REGISTRATIONS WITH RESPECT TO ANY EMPLOYEE INVENTION IN THE UNITED STATES
AND ANY FOREIGN JURISDICTIONS;

 

 

 

(IV)

 

SIGN ALL OTHER PAPERS NECESSARY TO CARRY OUT THE ABOVE OBLIGATIONS; AND

 

 

 

(V)

 

GIVE TESTIMONY AND RENDER ANY OTHER ASSISTANCE IN SUPPORT OF THE COMPANY’S
RIGHTS TO ANY EMPLOYEE INVENTION.

 

8.                                       ESSENTIAL AND INDEPENDENT COVENANTS. 
THE EMPLOYEE’S COVENANTS IN SECTIONS 6 AND 7 OF THIS AGREEMENT ARE INDEPENDENT
COVENANTS, AND THE EXISTENCE OF ANY CLAIM BY THE EMPLOYEE AGAINST THE COMPANY
UNDER THIS AGREEMENT OR OTHERWISE WILL NOT EXCUSE THE EMPLOYEE’S BREACH OF ANY
COVENANT IN SECTION 6 OR 7.  THE COVENANTS OF SECTIONS 6 AND 7 SHALL SURVIVE THE
TERMINATION, EXTINGUISHMENT, OR LAPSE OF THIS AGREEMENT UNDER ANY CIRCUMSTANCES,
EVEN IF THIS AGREEMENT IS TERMINATED BY EITHER PARTY, WHETHER FOR CAUSE OR NOT
FOR CAUSE.

 

9.                                       REPRESENTATIONS AND WARRANTIES BY THE
EMPLOYEE. THE EMPLOYEE REPRESENTS AND WARRANTS TO THE COMPANY THAT THE EXECUTION
AND DELIVERY BY THE EMPLOYEE OF THIS AGREEMENT DO NOT, AND THE PERFORMANCE BY
THE EMPLOYEE OF THE EMPLOYEE’S OBLIGATIONS HEREUNDER WILL NOT, WITH OR WITHOUT
THE GIVING OF NOTICE OR THE PASSAGE OF TIME, OR BOTH: (A) VIOLATE ANY JUDGMENT,
WRIT, INJUNCTION, OR ORDER OF ANY COURT, ARBITRATOR, OR GOVERNMENTAL AGENCY
APPLICABLE TO THE EMPLOYEE, OR (B) CONFLICT WITH, RESULT IN THE BREACH OF ANY
PROVISIONS OF OR THE TERMINATION OF, OR CONSTITUTE A DEFAULT UNDER, ANY
AGREEMENT TO WHICH THE EMPLOYEE IS A PARTY OR BY WHICH THE EMPLOYEE IS OR MAY BE
BOUND, INCLUDING, WITHOUT LIMITATION, ANY NONCOMPETITION AGREEMENT OR SIMILAR
AGREEMENT.  EMPLOYEE FURTHER REPRESENTS AND WARRANTS THAT HE FULLY AND
COMPLETELY UNDERSTANDS THIS AGREEMENT AND THAT HE HAS ENGAGED IN NEGOTIATIONS
WITH THE COMPANY AND HAS EITHER CONSULTED WITH AN ATTORNEY OF HIS CHOICE OR HAS
HAD AMPLE OPPORTUNITY TO DO SO AND IS FULLY SATISFIED WITH THE OPPORTUNITY HE
HAS HAD.

 

10.                                 NOTICES.  FOR PURPOSES OF THIS AGREEMENT,
NOTICES AND ALL OTHER COMMUNICATIONS PROVIDED FOR HEREIN SHALL BE IN WRITING AND
SHALL BE DEEMED TO HAVE BEEN DULY GIVEN WHEN HAND-DELIVERED, SENT BY FACSIMILE
TRANSMISSION (AS LONG AS RECEIPT IS ACKNOWLEDGED), OR MAILED BY UNITED STATES
CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, POSTAGE PREPAID,
ADDRESSED TO THE ADDRESS OR FACSIMILE NUMBER FOR EACH PARTY SET FORTH ON THE
SIGNATURE PAGE HERETO, OR TO SUCH OTHER ADDRESS OR FACSIMILE NUMBER AS EITHER
PARTY MAY HAVE FURNISHED TO THE OTHER IN WRITING IN ACCORDANCE HEREWITH, EXCEPT
THAT A NOTICE OF CHANGE OF ADDRESS SHALL BE EFFECTIVE ONLY UPON RECEIPT.

 

11.                                 MISCELLANEOUS.  NO PROVISION OF THIS
AGREEMENT MAY BE MODIFIED OR WAIVED UNLESS SUCH WAIVER OR MODIFICATION IS AGREED
TO IN WRITING SIGNED BY BOTH OF THE PARTIES HERETO.  NO WAIVER BY ANY PARTY
HERETO OF ANY BREACH BY ANY OTHER PARTY HERETO SHALL BE DEEMED A WAIVER OF ANY
SIMILAR OR DISSIMILAR TERM OR CONDITION AT THE SAME OR AT ANY PRIOR OR
SUBSEQUENT TIME.  THIS AGREEMENT IS THE ENTIRE AGREEMENT BETWEEN THE PARTIES
HERETO WITH RESPECT TO THE

 

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Employee’s employment by the Company, and there are no agreements or
representations, oral or otherwise, expressed or implied, with respect to or
related to the employment of the Employee which are not set forth in this
Agreement.  This Agreement shall be binding upon, and inure to the benefit of,
the Company, its respective successors and assigns, and the Employee and
Employee’s heirs, executors, administrators and legal representatives.  The
duties and covenants of the Employee under this Agreement, being personal, may
not be delegated or assigned by the Employee without the prior written consent
of the Company, and any attempted delegation or assignment without such prior
written consent shall be null and void and without legal effect.  The parties
agree that if any provision of this Agreement shall under any circumstances be
deemed invalid or inoperative, the Agreement shall be construed with the invalid
or inoperative provision deleted and the rights and obligations of the parties
shall be construed and enforced accordingly.  This Agreement may be assigned by
the Company without the consent of the Employee, provided, however, that the
Employee is given notice of the assignment.

 

12.                                 GOVERNING LAW; RESOLUTION OF DISPUTES.  THE
VALIDITY, INTERPRETATION, CONSTRUCTION, AND PERFORMANCE OF THIS AGREEMENT SHALL
BE GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO PRINCIPLES
OF CHOICE OF LAW OR CONFLICTS OF LAW THEREUNDER.  ANY ACTION OR PROCEEDING
SEEKING TO ENFORCE ANY PROVISION OF, OR BASED ON ANY RIGHT ARISING OUT OF, THIS
AGREEMENT MAY BE BROUGHT AGAINST EITHER OF THE PARTIES IN THE COURTS OF THE
STATE OF CALIFORNIA, COUNTY OF ORANGE, OR, IF IT HAS OR CAN ACQUIRE
JURISDICTION, IN THE FEDERAL COURTS LOCATED IN, ORANGE COUNTY, CALIFORNIA, AND
EACH OF THE PARTIES CONSENTS TO THE JURISDICTION OF SUCH COURTS (AND OF THE
APPROPRIATE APPELLATE COURTS) IN ANY SUCH ACTION OR PROCEEDING AND WAIVES ANY
OBJECTION TO VENUE LAID THEREIN. PROCESS IN ANY ACTION OR PROCEEDING REFERRED TO
IN THE PRECEDING SENTENCE MAY BE SERVED ON EITHER PARTY ANYWHERE IN THE WORLD. 
THE PARTIES HERETO AGREE THAT HAVING VENUE AND JURISDICTION SOLELY IN CALIFORNIA
IS REASONABLE IN THAT THE HEADQUARTERS FOR THE COMPANY IS IN ORANGE COUNTY,
CALIFORNIA AND THAT SITE FOR LITIGATION IS THE MOST CENTRAL FOR SUCH MATTERS. 
THE PARTIES HEREBY WAIVE A JURY TRIAL IN ANY LITIGATION ARISING UNDER OR
RELATING TO THIS AGREEMENT OR THE EMPLOYMENT OF THE EMPLOYEE WITH THE COMPANY. 
THIS AGREEMENT SHALL NOT BE CONSTRUED AGAINST EITHER PARTY BUT SHALL BE
CONSTRUED WITHOUT REGARD TO THE PARTICIPATION OF EITHER PARTY IN THE DRAFTING OF
THIS AGREEMENT OR ANY PART THEREOF.

 

13.                                 COUNTERPARTS; FACSIMILE SIGNATURES.  THIS
AGREEMENT MAY BE EXECUTED IN ONE OR MORE COUNTERPARTS, EACH OF WHICH SHALL BE
DEEMED AN ORIGINAL, BUT ALL OF WHICH TOGETHER SHALL CONSTITUTE ONE AND THE SAME
INSTRUMENT.  THIS AGREEMENT MAY BE EFFECTIVE UPON THE EXECUTION AND DELIVERY BY
ANY PARTY HERETO OF FACSIMILE COPIES OF SIGNATURE PAGES HERETO DULY EXECUTED BY
SUCH PARTY; PROVIDED, HOWEVER, THAT ANY PARTY DELIVERING A FACSIMILE SIGNATURE
PAGE COVENANTS AND AGREES TO DELIVER PROMPTLY AFTER THE DATE HEREOF TWO
(2) ORIGINAL COPIES TO THE OTHER PARTY HERETO.

 

14.                                 MODIFICATION BY THE COURT.   IN THE EVENT
THAT ANY PROVISION OR SECTION OF THIS AGREEMENT VIOLATES ANY LAW OF THE STATE OF
CALIFORNIA OR IS FOR SOME OTHER REASON UNENFORCEABLE AS WRITTEN IN THE STATE OF
CALIFORNIA, THE EMPLOYEE AND THE COMPANY AGREE THAT THE UNENFORCEABLE PROVISION
OR SECTION SHOULD NOT CAUSE THE ENTIRE AGREEMENT TO BECOME UNENFORCEABLE UNLESS
IT IS CAUSED TO FAIL IN ITS ESSENTIAL PURPOSE.  IN THE EVENT THAT ANY PROVISION

 

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or Section of this Agreement violates any law of the state of California or is
for some other reason unenforceable as written in the state of California, the
Employee agrees that the provision should be reduced in scope or length or
otherwise modified by the Court, if possible under the law, to cause the
provision or Section of the Agreement to be legal and enforceable but to still
provide to the Company the maximum protection available to it under the law.

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.

 

 

LIQUIDMETAL TECHNOLOGIES, Inc.

 

 

 

 

 

By:

/s/ John Kang

 

John Kang, Chairman

 

 

 

Liquidmetal Technologies

 

30452 Esperanza

 

Rancho Santa Margarita, CA 92688

 

Facsimile Number: 949-635-2108

 

 

 

 

 

EMPLOYEE

 

 

 

By:

/s/ Gerald Morrow

 

 

 

Printed Name:

Gerald Morrow

 

 

 

Address and Facsimile Number:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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