**Exhibit 10.39**

**EMPLOYMENT AGREEMENT**

This Employment Agreement, dated as of the 14th day of August, 2006, between**Richard F. Sowerby** (the “Executive”) and **Memry Corporation**, a Delaware corporation (the “Company”). 

WITNESSETH, 

WHEREAS, the Company and the Executive desire to enter into an employment agreement on the terms andconditions set forth below (this “Agreement”) 

NOW, THEREFORE, in consideration of the premises and of the covenants andagreements set forth herein, the parties agree as follows: 

1. **Employment and Duties.**

(a) The Company hereby agrees to employ the Executive, and the Executive hereby accepts employment, upon the terms and conditions set forth herein. Duringthe period during which he is employed hereunder (the “Period of Employment”), the Executive shall diligently and faithfully serve the Company in the capacity of Chief Financial Officer and Treasurer, or in such other and/or lesserexecutive capacity or capacities as the Board of Directors and the Executive may, from time to time, agree. 

(b) During the Period ofEmployment hereof, the Executive shall, at the request of the Company, serve as an officer and/or director of direct and indirect subsidiaries, and other affiliates, of the Company as the Company, acting through its Board of Directors, shall requestfrom time to time. 

(c) The Executive shall devote his best efforts and substantially all of his business time, services and attention tothe advancement of the Company’s business and interests during the Period of Employment. The restrictions in this Section 1 shall in no way prevent the Executive from (except as set forth in the immediately succeeding sentence) pursuingother activities, so long as all of such other activities do not, in the aggregate, materially interfere with the Executive’s duties hereunder (including his obligation to devote substantially all of his business time, services and attention tothe Company). Notwithstanding the foregoing, however, the Executive shall not accept any outside directorships during the Period of Employment without the prior consent of the Company’s Board of Directors. 

(d) The Executive shall, at all times during the Period of Employment, diligently and faithfully carry out the policies, programs and directions of theBoard of Directors of the Company and the Company’s senior management. The Executive shall comply with the directions and instructions made or given by or under the authority of the Company’s Chief Executive Officer and/or its Board ofDirectors and whenever requested to do so shall give an account of all transactions, matters and things related to the Company and its affiliates and their affairs with which the Executive is entrusted. 

2. **Term**. The initial term of this Agreement shall commence on the date hereof, and shallterminate on August 13th of the following year (the “Initial Term”). Thereafter, the term of thisAgreement shall be automatically renewed for successive one-year periods, each commencing on the month and day of this Agreement in the appropriate year and terminating on the day before such date in the subsequent year, unless either party notifiesthe other in writing of such party’s intention not to renew at least ninety (90) days prior to the date on which the term of this Agreement would otherwise terminate. The Initial Term and such other periods for which the term hereof hasbeen extended as aforesaid is collectively referred to herein as the “Term.” In the event the Company elects not to renew this Agreement at the end of any Term, then the Company shall pay to the Executive (i) the Executive’s basesalary for a period of six (6) months following termination of this Agreement, as and when the same would otherwise be due (including continuation of employee health insurance as provided to active employees), and (ii) an amount equal to50% of the Executive’s bonus described in Section 3(b) payable for the fiscal year in which such non renewal occurs, in one lump sum when it would otherwise be payable; provided, however, that such payment shall not be paid by the Companyif such non-renewal is “for cause” (as defined below). 

3. **Compensation.** In consideration of the services renderedand to be rendered by the Executive, the Company agrees to compensate the Executive during the Period of Employment as follows: 

(a) Fromthe date hereof the Company shall pay to the Executive an annual base salary of $195,000, payable in equal installments every two weeks. The Executive’s base salary may be increased from time to time by the Board in accordance with normalbusiness practices of the Company. 

(b) In consideration of the commencement of the performance described in this Agreement, and effectiveas of the date of the next Compensation Committee meeting of the Board of Directors, the Company shall issue to the Executive an option to acquire 60,000 shares of the common stock of the Company pursuant to the terms of the Company’s Amendedand Restated 1997 Long Term Incentive Plan, which options shall (1) be incentive stock options to the extent permitted under the Internal Revenue Code of 1986, as amended, (2) have an exercise price equal to the fair market value of thecommon stock on the date such award is made, and (3) vest equally in annual installments over four years beginning on the first anniversary thereof. 

(c) The Executive shall also be entitled to receive additional compensation in the form of an annual target bonus in an amount equal to 45% of the Executive’s base annual salary, determined by and in the solediscretion of the Board of Directors of the Company. Such target amount is based upon the Company meeting Company performance goals and objectives. For the bonus payable for the Fiscal Year ending during the Initial Term of this Agreement, theExecutive shall be paid a bonus equal to the greater of $50,000 or the bonus otherwise payable in accordance with the terms of this Agreement and the Company’s program as approved by the Board of Directors. The Executive shall also be eligibleto receive, on an annual basis 40,000 performance based stock option grants pursuant to any bonus and/or incentive compensation programs that may be established by the Company, including without limitation the Company’s current incentive plans;provided, however, that nothing set forth in this sentence will in any way limit the Board of Directors discretion to approve or reject any bonus that the Executive would otherwise be due under any such plans. 

(d) The Executive shall be entitled to an automobile allowance of $350 per month, to be paid inaccordance with the Company’s policy for paying automobile allowances as in effect from time to time. 

(e) The Executive shall beentitled to other fringe benefits comparable to the benefits afforded to other executive employees of the Company, including but not limited to reasonable sick leave and coverage under any health, dental, accident, hospitalization, disability,retirement, life insurance, 401(k), and annuity plans, programs or policies maintained by the Company. In addition, and without limiting the foregoing, the Company shall provide the Executive with twenty working days of vacation per year.

(f) The Executive shall be entitled to reimbursement, in accordance with Company policy, of all reasonable out-of-pocket expenses which heincurs on behalf of the Company in the course of performing his duties hereunder, subject to furnishing appropriate documentation of such expenses to the Company’s Chief Executive Officer. 

4. **Covenant Not to Compete; Nonsolicitation.**

(a) Except as specifically set forth in this Section 4, during the Period of Employment, the Executive will not engage, directly or indirectly, anywhere in the United States (including its territories,possessions and commonwealths) or Canada in any business which competes or could reasonably be expected to compete with the Company and/or its affiliates and, for a period of six months after the termination of the Period of Employment, or suchlonger period to match any period of severance payable pursuant to Sections 2 and 8 to the Executive, any business which competes or could reasonably be expected to compete with the Company and/or its affiliates as of the date of termination;provided, however, that (i) the ownership by the Executive of less than 2% of the outstanding stock of any publicly traded corporation shall not be deemed solely by reason thereof to cause the Executive to be engaged in anybusinesses being conducted by such publicly traded corporation; If the final judgment of a court of competent jurisdiction declares that any term or provision of this Section 4(a) is invalid or unenforceable, the parties agree that the courtmaking the determination of invalidity or unenforceability shall have the power to reduce the scope, duration, or area of the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with aterm or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified after the expiration of the time withinwhich the judgment may be appealed. 

(b) During the Period of Employment and for a period of two years thereafter, the Executive will not,directly or indirectly, either for himself or for any other person or entity (i) solicit (A) any employee of the Company or any affiliate of the Company to terminate his or her employment with the Company or such affiliate during his orher employment with the Company or such affiliate or (B) any former employee of the Company or an affiliate of the Company for a period of one year after such individual terminates his or his employment with the Company or such affiliate,(ii) solicit any customer or client of the Company or any such affiliate (or any prospective customer or client of the Company or such affiliate) as of the termination of the Period of Employment to terminate its relationship with the Companyor such affiliate, or do business with any third parties, or (iii) take any action that is reasonably likely to cause 

injury to the relationships between the Company or any such affiliate or any of their respectiveemployees and any lessor, lessee, vendor, supplier, customer, distributor, employee, consultant or other business associate of the Company or any such affiliate as such relationship relates to the Company’s or such affiliate’s conduct ofits business. 

5. **Covenant Not to Disclose Information.** The Executive agrees that during the Period of Employment andthereafter, he will not use or disclose, other than to another employee of the Company, qualified by the Company to receive that information in the normal course of business, any then confidential information or trade secrets of the Company or anyaffiliate of the Company which were made known to him by the Company, its officers or employees or affiliates, or learned by him while in the Company’s employ, without the prior written consent of the Company, and that upon termination of hisemployment for any reason, he will promptly return to the Company any and all properties, records, figures, calculations, letters, papers, drawings, schematics or copies thereof or other confidential information of the Company and its affiliates ofany type or description. It is understood that the term “trade secrets” as used in this Agreement is deemed to include, without limitation, lists of the Company’s and its affiliates’ respective customers, information relating totheir practices, know-how, processes and inventions, and any other information of whatever nature which gives the Company or any affiliate an opportunity to obtain an advantage over its competitors who do not have access to such information.

6. **Remedy at Law Inadequate.** The Executive acknowledges that any remedy at law for breach of any of the restrictivecovenants (Sections 4 and 5) contained in this Agreement would be inadequate and the Company shall be entitled to injunctive relief in the event of any such breach. 

7. **Inventions and Improvements.** With respect to any and all inventions (as defined in Section 7(e) below) made or conceived by the Executive, whether or not during his hours of employment, eithersolely or jointly with others, during the Period of Employment, without additional consideration: 

(a) The Executive shall promptly informthe Company of any such invention. 

(b) Any such invention, whether patentable or not, shall be the property of the Company, and theExecutive hereby assigns and agrees to assign to the Company all his rights to any such invention, and to any United States and/or foreign letters patent granted upon any such invention or any application therefor. 

(c) The Executive shall apply, at the Company’s request and expense, for United States and/or foreign letters patent either in the Executive’sname or otherwise as the Company may desire. 

(d) The Executive shall acknowledge and deliver promptly to the Company, without charge to theCompany but at its expense, all sketches, drawings, models and figures and other information and shall perform such other acts, such as giving testimony in support of his inventorship, as may be necessary in the opinion of the Company to obtain andmaintain United States and/or foreign letters patent and to vest the entire right and title thereto in the Company. 

(e) For purposes ofthis Section, the term “invention” shall be deemed to mean any discovery, concept or idea (whether patentable or not), including but not limited to 

processes, methods, formulas, techniques, hardware developments and software developments, as well asimprovements thereof or know-how related thereto, (i) concerning any present or prospective activities of the Company and its affiliates and (ii) (A) which the Executive becomes acquainted with as a result of his employment by theCompany, (B) which results from any work he may do for, or at the request of, the Company or any of its affiliates, (C) which relate to the Company’s or any affiliates’ business or actual or demonstrably anticipated research anddevelopment, or (D) which are developed in any part by use of the Company’s or any such affiliates’ equipment, supplies, facilities or trade secrets. 

The parties hereto agree that the covenants and agreements contained in this Section 7 are, taken as a whole, reasonable in their scope and duration, and no party shall raise any issue of the reasonableness ofthe scope or duration of any such covenants in any proceeding to enforce any such covenants. 

8. **Termination of Employment.**

(a) The Executive’s Period of Employment hereunder may not be terminated prior to the expiration of the Term except in accordance withthe provisions of this Section. 

(b) The Executive’s Period of Employment may be terminated by the Company with or without Cause or bythe Executive with or without Good Reason (as defined in subsection (e)). For purposes of this Agreement, “Cause” means that termination occurs in connection with a determination, made at a meeting of the Board of Directors at which theExecutive (and, at the Executive’s option, his counsel) shall have had a right to participate, that the Executive has (i) committed an act of gross negligence or willful misconduct, or a gross dereliction of duty, that has materially andadversely affected the overall performance of his duties hereunder; (ii) committed fraud upon the Company in his capacity as an employee hereunder; (iii) been convicted of, or pled guilty (or nolo contendere) to, a felony that the Board ofDirectors, acting in good faith, determines is or would reasonably be expected to have a material adverse effect upon the business, operations, reputation, integrity, financial condition or prospects of the Company; (iv) any material breach bythe Executive of the terms hereof; (v) failure to follow instructions from a person authorized to give them pursuant to Section 1(d) above that is lawful and not inconsistent with the terms hereof; (vi) the Executive’s habitualdrunkenness or habitual substance abuse; (vii) civil or criminal violation of any state or federal government statute or regulation, or of any state or federal law relating to the workplace environment (including without limitation lawsrelating to sexual harassment or age, sex or other prohibited discrimination), or any violation of any Company policy adopted in respect of any of the foregoing; or (viii) a failure by the Executive to meet the minimum objectives established inthe annual “Memry Sharing Plan” to receive any bonus pursuant to Section 3(b) above with respect to two consecutive fiscal years. A termination for Cause must be accompanied by a written notice to that effect. If the Executive’semployment is terminated by the Company for Cause or by the Executive without Good Reason, the Executive shall be paid his base salary through the date of his termination and any unreimbursed business expenses in accordance with Section 3(e)hereof (the “Accrued Obligations”). 

(c) If the Executive dies, the Period of Employment shall terminate effective at the time ofhis death; provided, however, that such termination shall not result in the loss of any benefit or rights which the Executive may have accrued through the date of his death. 

If the Period of Employment is terminated prior to the expiration of the Term due to the Executive’sdeath, the Company shall make a severance payment to the Executive’s legal representatives equal to the Executive’s regular base salary payments through the end of the month in which such death occurs and any Accrued Obligations. Inaddition, the Company shall make a severance payment to the Executive’s legal representatives equal to the Executive’s target bonus described in Section 3(b), pro rated for the portion of such fiscal year completed prior to theExecutive’s death; provided, however, that such pro rated portion of the Executive’s target bonus shall be paid to the Executive’s legal representatives following the completion of such fiscal year at the time similarbonuses are paid to other employees of the Company. 

(d) If the Executive becomes disabled, the Period of Employment may be terminated, atthe Company’s option, at the end of the calendar month during which his disability is determined; provided, however, that such termination shall not result in the loss of any benefits or rights which the Executive may have accrued through thedate of his disability. If the Period of Employment is terminated prior to the expiration of the Term due to the Executive’s disability, the Company shall make a severance payment to the Executive or his legal representative equal to theExecutive’s regular salary payments for a period of six (6) months from the date of such termination or, if sooner, until payments begin under any disability insurance policy maintained by the Company for the benefit of the Executive. Forthe purposes of this section, the definition of “disability” shall be the same as the definition of a “permanent disability” contained in any long-term disability insurance policy maintained by the Company in effect at the timeof the purported disability, or last in effect, if no policy is then in effect. 

(e) If the Executive’s Period of Employment isterminated by the Executive for “Good Reason,” as hereinafter defined, or is terminated by the Company without cause (and the Company may terminate the Period of Employment without cause at any time) other than at the end of the Term,then, in addition to the other rights to which the Executive is entitled upon a termination as provided for herein, the Executive shall also be entitled to a lump-sum payment equal to the sum of (i) 50% of the Executive’s annual basesalary, at the rate of salary in effect immediately prior to the effective date of such termination (without regard to any purported or attempted reduction of such rate by the Company), plus (ii) 50% of the Executive’s bonus otherwisepayable for the fiscal year during which termination occurs (subject to the provisions made for the bonus payable under Section 3(b) above). For purposes of this Agreement, the term “Good Reason” shall mean: (i) the failure bythe Company to observe or comply with any of the provisions of this Agreement if such failure has not been cured within ten (10) days after written notice thereof has been given by the Executive to the Company; or (ii) at the election ofthe Executive, upon a Change in Control of the Company, as defined in Section 10(f) (which election can be made at any time upon thirty (30) days’ prior written notice given within two (2) years following the date on which theChange in Control of the Company occurred) if, subsequent to such Change in Control, there is a material diminution in the position, duties and/or responsibilities of the Executive. 

9. **Effect of Termination.** Upon termination of the Executive’s employment for any reason whatsoever, all rights and obligations of theparties under this Agreement shall cease, except that the Executive shall continue to be bound by the covenants set forth in Sections 4, 5, 6 and 7 hereof, and the Company shall be bound to pay to the Executive accrued compensation, including salaryand other benefits, to the date of termination and any severance payments which may be owed under the provisions of Section 8 hereof. 

10. **Miscellaneous.**

(a) This Agreement may not be assigned by the Executive. The Company may assign this Agreement in connection with a Change in Control the Company.

(b) In the event that any provision of this Agreement is found by a court of competent jurisdiction to be invalid or unenforceable, suchprovision shall be, and shall be deemed to be, modified so as to become valid and enforceable, and the remaining provisions of this Agreement shall not be affected. 

(c) This Agreement shall be governed by and construed in accordance with the laws of the State of Connecticut. 

(d) No modification of this Agreement shall be effective unless in a writing executed by both parties. 

(e) This Agreementconstitutes the entire agreement of the parties with respect to the subject matter hereof, and supercedes all prior agreements, representations and promises by either party or between the parties, including without limitation, the Offer Letter.

(f) For purposes of this Agreement, “Change in Control of the Company” shall mean: (i) any merger or consolidation or othercorporate reorganization of the Company in which the Company is not the surviving entity; or (ii) any sale of all or substantially all of the Company’s assets, in either a single transaction or a series of transactions; or (iii) aliquidation of all or substantially all of the Company’s assets; or (iv) a change within one twelve-month period of a majority of the directors constituting the Company’s Board of Directors at the beginning of such twelve-monthperiod; or (v) if a single person or entity, or a related group of persons or entities, at any time acquires beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended) of 25% ormore of the Company’s outstanding voting securities; unless, (x) with respect to any event described in clauses (i) through (v), the Executive agrees in writing, prior to the consummation of the event giving rise to the Change inControl of the Company, that such event or events does not for purposes of this Agreement constitute a Change in Control of the Company, or (y) with respect to clause (iv), the change of directors is approved by the Board of Directors asconstituted prior to such change. 

(g) Section 409A. Payments in the event of a Termination of Employment, Disability, Change inControl or Otherwise. 

(1) Notwithstanding anything to the contrary contained herein, in the event that the Executiveconstitutes a “specified employee” (within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”)) and becomes entitled to one or more payments hereunder on account of termination ofemployment, to the extent such payments would otherwise be subject to the excise tax under Code Section 409A and are payable within the first six (6) months following a termination of employment, such payments shall instead be made on thefirst day of the seventh month following such termination of employment and any remaining payments shall be paid according to the schedule otherwise applicable to the payments. 

(2) The parties hereto intend that this Agreement shall be in compliance with CodeSection 409A and this Agreement shall be interpreted consistent therewith. Notwithstanding the foregoing, the Company shall not be liable for any taxes, penalties, interest or other costs that may arise under Section 409A orotherwise.” 

IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the date first above written. 

 
MEMRY CORPORATIONBy: 
/s/ Marcy Macdonald
Name: Marcy MacdonaldTitle: VP Human ResourcesRichard F. Sowerby
/s/ Richard F. Sowerby