Document:

Ex-10.gg Wachovia's Savings Restoration Plan

 

EXHIBIT 10(GG)

WACHOVIA CORPORATION

SAVINGS RESTORATION PLAN

Effective January 1, 2002

 

 

WACHOVIA CORPORATION

Savings Restoration Plan

Effective January 1, 2002

Section 1. Establishment and Purpose

	1.1	 	Establishment. Wachovia Corporation established, effective
as of January 1, 2002 an unfunded deferred compensation plan for a
select group of management and highly compensated Employees and
their Beneficiaries as described herein, known as the “WACHOVIA
CORPORATION SAVINGS RESTORATION PLAN” (the “Plan”).
	 
	1.2	 	Purpose. The purpose of the Plan is to provide a means
whereby certain selected Employees may defer the receipt of
compensation and the receipt of a Company Matching Contribution that
would otherwise be limited due to statutory or governmental
regulation in the Savings Plan , and to motivate such Employees to
continue to make contributions to the profitable growth of the
Company.
	 
	1.3	 	Application of Plan. The terms of this Plan are applicable
only to Eligible Employees who are in the employ of an Employer on
or after January 1, 2002. Any Eligible Employee who retires or
terminates employment with all Employers prior to such date shall
not be covered by this plan.

Section 2. Definitions

	2.1	 	Definitions. Whenever used hereinafter, the following terms
shall have the meaning set forth below:

	 	a.	 	“Applicable Limitations” means the statutory and
regulatory provisions that reduce benefits and/or
contributions under the Savings Plan, including, but not
limited to Sections 401(a)(17), 402(g) and 415 of the Code.
	 
	 	b.	 	“Beneficiary” means the person or persons
designated as such in accordance with Section 7.
	 
	 	c.	 	“Board” means the board of directors of the
Company.
	 
	 	d.	 	“Change of Control” means a change in the control
of the Company of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act
of 1934, as amended (“Exchange Act”); provided that, without
limitation, such a change in control shall be deemed to have
occurred if (i) any one person, or more than one person acting
as a group, acquires ownership of stock of the Company that,
together with stock held by such person or group, possesses
more than 50 percent of the total fair market value or total
voting power of the stock of the Company, ( ii) any one
person, or more than one

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	 	 	 	person acting as a group, acquires (or has acquired during the
12-month period ending on the date of the most recent
acquisition by such person or persons) ownership of stock of the
Company possessing 20 percent or more of the total voting power
of the stock of the Company, or (iii) a majority of members of
the Company’s Board is replaced during any 12-month period by
directors whose appointment or election is not endorsed by a
majority of the members of the Company’s Board prior to the date
of the appointment or election.
	 
	 	e.	 	“Code” means the Internal Revenue Code of 1986,
as amended, and any successor statute thereof, as interpreted
by the rules and regulations issued thereunder, in each case
as in effect from time to time. References to sections of the
Code shall be construed also to refer to any successor
sections.
	 
	 	f.	 	“Committee” means the Management Resources and
Compensation Committee of the Board, as appointed annually in
accordance with the corporate bylaws of the Company.
	 
	 	g.	 	“Company” means Wachovia.
	 
	 	h.	 	“Company Matching Contribution” means the amount
which an Employer would be obligated to contribute to the
Savings Plan but for the Applicable Limitations, subject to
all vesting requirements of the Savings Plan.
	 
	 	i.	 	“Compensation” means, for any date within a Plan
Year, the Participant’s Salary as it may be adjusted from time
to time during the Plan Year.
	 
	 	j.	 	“Death Valuation Date” means the Valuation date
coincident with or next following a Participant’s date of
death.
	 
	 	k.	 	“Deferral Account” means the hypothetical account
maintained by the Company for recordkeeping purposes with
respect to a Participant’s deferrals pursuant to Section 5.1.
Within each Deferral Account, separate sub-accounts (“Deferral
Sub-Accounts”), shall be maintained to the extent necessary
for the administration of the Plan for each different Plan
Year deferral election, form of distribution election, or
allocation elections among Investment Indexes.
	 
	 	l.	 	“Disability” means total disability of a
Participant as a result of injury or sickness as defined in
the Wachovia Corporation Long Term Disability Plan (plan
number 502) (the “LTD Plan”), as amended from time to time.
The determination of whether a Participant has suffered a
Disability shall rest with the claims administrator of the LTD
Plan. In the case of a Participant who is ineligible to
participate in the LTD Plan, the determination shall rest
solely with the Committee and such determination shall be
final, conclusive and not subject to appeal.
	 
	 	m.	 	“Election Form” means the election form which an
Eligible Employee files with the Company to participate in the
Plan each Plan Year.
	 
	 	n.	 	“Eligible Employee” means an Employee who is
eligible to participate as provided in Section 3.1,

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	 	o.	 	“Employee” means any person employed by an
Employer who, under an Employer’s employment classification
practices, is considered a regular salaried employee.
	 
	 	p.	 	“Employer” means (i) Wachovia and any entity that
is directly or indirectly controlled by Wachovia, or (ii) any
entity in which Wachovia has a significant equity interest, as
determined by the Committee.
	 
	 	q.	 	“Financial Hardship Distribution” means the
benefit that is payable pursuant to Section 6.5 of the Plan.
	 
	 	r.	 	“Investment Indexes” mean one or more mutual
funds, investment return benchmarks, interest rate indexes or
common trust funds designated as available under the Plan by
the Committee from time to time.
	 
	 	s.	 	“Participant” means an Eligible Employee who has
filed a completed and executed Election Form with the
Committee and is participating in the Plan in accordance with
the provisions of Section 4.
	 
	 	t.	 	“Pension Plan” means the Wachovia Corporation
Pension Plan and Trust (plan number 001), as amended from time
to time.
	 
	 	u.	 	“Plan” means the Wachovia Corporation Savings
Restoration Plan, as amended from time to time.
	 
	 	v.	 	“Plan Year” means the Plan’s accounting year of
twelve months commencing on January 1 of each year and ending
on the following December 31.
	 
	 	w.	 	“Retirement” means the termination of a
Participant’s employment with an Employer upon satisfaction of
the eligibility requirements for retirement under the terms of
the Pension Plan, determined without regard to eligibility to
participate in the Pension Plan.
	 
	 	x.	 	“Retirement Benefit” means benefits payable to a
Participant when such Participant has satisfied all of the
eligibility requirements for Retirement.
	 
	 	y.	 	“Retirement Valuation Date” means the Valuation
Date coincident with or next following the date a Participant
ceases to be an Employee or the first Valuation Date
coincident with or next following the date the Committee takes
action pursuant to Sections 6.3(e) or (f).
	 
	 	z.	 	“Salary” means a Participant’s fixed, basic,
straight time, and regularly recurring wages and salary, any
payment for overtime hours, vacation pay, compensation paid in
lieu of vacation, and holiday pay, but excluding (even if
includible in gross income) all (i) bonus, long-term incentive
awards, and other forms of incentive compensation, (ii)
reimbursements or other expense allowances, (iii) moving
expenses, (iv) welfare or fringe benefits (cash or non-cash),
(v) deferred compensation, (vi) severance pay, and (vii) any
other form of special compensation as designated by the
Committee.
	 
	 	aa.	 	“Savings Plan” means the Wachovia Corporation
Savings Plan (plan number 002), as may be amended from time to
time.

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	 	bb.	 	“Scheduled Distribution” means a distribution of
all or a portion of a Participant’s Deferral Account as
elected by the Participant pursuant to Section 6.6.
	 
	 	cc.	 	“Survivor Benefit” means those Plan benefits that
become payable upon the death of a Participant pursuant to the
provisions of Section 6.4.
	 
	 	dd.	 	“Termination Benefit” means benefits payable to a
Participant when such Participant has ceased to be an Employee
pursuant to the provisions of Section 6.3.
	 
	 	ee.	 	“Termination Valuation Date” means the later of
the Valuation Date coincident with or next following the date
a Participant ceases to be an Employee or the first Valuation
Date coincident with or next following the date the Committee
takes action pursuant to Sections 6.3(e) or (f).
	 
	 	ff.	 	“Valuation Date” means any day the United States
financial markets are open for which a Participant’s Deferral
Account is required to be valued for any purpose under the
Plan.
	 
	 	gg.	 	“Wachovia” means Wachovia Corporation or any
successor that shall maintain this Plan.

Section 3. Eligibility for Participation

	3.1	 	Eligibility. The Committee (or its delegatee) shall
determine which Employees shall be eligible to participate in the
Plan for a given Plan Year; provided, however, any such Employee
must be a member of a select group of management or highly
compensated employees. The Committee’s determination of eligibility
for any given Plan Year does not guarantee eligibility in subsequent
Plan Years. In the event any Employee is no longer designated as an
active Participant eligible to make further deferrals under the
Plan, such Employee shall become an inactive Participant and retain
all other rights described under this Plan, until the Employee again
becomes an active Participant.

Section 4. Election to Participate

	4.1	 	Election to Participate. Any Eligible Employee may enroll in
the Plan effective as of the first day of a Plan Year, by filing a
completed and fully executed Election Form with the Committee during
enrollment periods established by the Committee, or in the case of
an Employee who is designated as an Eligible Employee after the
commencement of a Plan Year, within thirty days of the date on which
such Employees becomes eligible. On such Election Form for each
Plan Year, the Eligible Employee shall (i) irrevocably elect the
amount of Compensation for such Plan Year to be deferred, and (ii)
irrevocably elect the form of distribution in which the Deferral
Sub-Account for such Plan Year shall be paid in accordance with
Section 6.1.

	 	a.	 	Deferral Election. A Participant may elect to
defer Compensation on a pre-tax basis only, in accordance with
the Employee contribution provisions of the

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	 	 	 	Savings Plan for the applicable Plan Year. Deferrals under the
Plan will be credited in accordance with the applicable deferral
election to the extent that the Participant’s deferral elections
exceed the Applicable Limitations under the Savings Plan. Any
amounts that cannot be credited to the Participant’s account
under the Savings Plan because of the Applicable Limitations
shall be credited to the Participant’s Deferral Account
maintained pursuant to Section 5.
	 
	 	b.	 	Matching Credits. Each Participant’s Deferral
Account who has made a deferral election under Section 4.1(a)
will be credited with a Company Matching Contribution for each
pay period to the extent any amounts cannot be credited to the
Participant’s account under the Savings Plan because of the
Applicable Limitations.

Section 5. Deferral Accounts

	5.1	 	Deferral Accounts. The Committee shall establish and
maintain a separate Deferral Account for each Participant. The
amount by which a Participant’s Compensation is reduced pursuant to
Section 4.1 shall be credited by the Company to the Participant’s
Deferral Account as of the date the amount of the compensation that
is deferred otherwise would have been payable. The value of each
Participant’s Deferral Account shall be adjusted each day the
financial markets in the United States are open as follows:

	 	a.	 	Pursuant to the procedures established by the
Committee, a Participant shall elect to have his Deferral
Sub-Account for a given Plan Year allocated among Deferral
Sub-Accounts to reflect the Participant’s selection of the
Investment Indexes available under the Plan at that time, in 5
percent increments, up to 100 percent of the amount credited
to such Deferral Sub-Account.
	 
	 	b.	 	Such Deferral Sub-Account shall be credited or
debited to reflect gains or losses (including dividends and
capital gains and losses) as if the Deferral Sub-Account had
been invested in an equivalent number of shares or units of
the funds or investments referenced by the Investment Indexes
available under the Plan from time to time, pursuant to the
allocation elections made by the Participant from time to
time.
	 
	 	c.	 	Pursuant to the procedures established by the
Committee, a Participant may change the election with respect
to the allocation of the Participant’s Deferral Sub-Accounts
among the Investment Indexes available under the Plan from
time to time. Unless the Participant indicates otherwise, any
such reallocation election shall apply to all such
Participant’s Deferral Sub-Accounts.

	5.2	 	Charge Against Accounts. There shall be charged against each
Participant’s Deferral Account any payments made to the Participant
or Beneficiary in accordance with Section 6. In addition, the
Committee may allocate a portion of any administrative expenses of
the Plan to each Participant’s Deferral Account.

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	5.3	 	Statement of Accounts. The Committee shall submit to each
participant, within a reasonable period of time after the close of
each calendar quarter of a Plan Year, a statement of the balance in
each such Participant’s Deferral Account as of the last Valuation
Date of such quarter, in such form as the Committee deems
appropriate.
	 
	5.4	 	Acquired Deferral Accounts. In addition to the foregoing,
the Chief Executive Officer of the Company may authorize the
transfer to a Participant’s Deferral Account of such Participant’s
deferred balances held under a deferral plan maintained by any
organization acquired by the Company. Such balances transferred
will retain the deferral period, vesting provisions and distribution
provisions as set forth in the original deferral plan acquired by
the Company.

Section 6. Benefits

	6.1	 	Retirement Benefit. Upon Retirement of a Participant, the
Participant’s Employer (or another entity as directed by the
Committee) shall pay a Retirement Benefit based on the value of the
Participant’s Deferral Account as of the Retirement Valuation Date.
Such Retirement Benefit shall be paid in the manner as elected by
the Participant on each Plan Year’s Election Form in the form of
either a lump sum or ten (10) annual installments:

	 	a.	 	If a Participant’s Deferral Sub-Account is
payable in a lump sum, the Participant shall receive payment
of such Retirement Benefit within ninety (90) days of the
Retirement Valuation Date.
	 
	 	b.	 	If a Participant’s Deferral Sub-Account is
payable in installments, the amount to be paid with each
installment shall be the value of such Deferral Sub-Account as
of the date of the installment Valuation Date multiplied by a
fraction, the numerator of which is one (1) and the
denominator of which is the number of installment payments
remaining. For purposes of this Section, the installment
Valuation Date for the first installment payment shall be the
Retirement Valuation Date, and the installment Valuation Date
for subsequent installment payments shall be the first
Valuation Date of each Plan Year thereafter; provided,
however, that in no event shall more than one installment
payments be made to a Participant in any one Plan Year, except
due to an action by the Committee pursuant to Section 6.3(f).
A Participant shall receive each installment payment within
ninety (90) days of the applicable installment Valuation Date.
	 
	 	c.	 	Following receipt of a Participant’s complete
Retirement Benefit, such Participant shall be entitled to no
further benefits under the Plan.

	6.2	 	Disability. If a Participant suffers a Disability, the value
of each of the Participant’s Deferral Sub-Accounts will continue to
be adjusted in accordance with Section 5.1(b). The Participant’s
Deferral Account will be distributed as a Retirement Benefit,
Termination Benefit, or Survivor Benefit, whichever is applicable,
in the distribution form of benefit elected by the Participant, once
the Participant ceases to receive benefits under the Wachovia
Corporation Long-Term

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	 	 	Disability Plan (plan number 502). Notwithstanding the foregoing,
if the Participant returns to employment with the Employer within
sixty (60) days following recovery from a Disability, the
Participant’s Deferral Account shall not be distributed until such
time as said Participant ceases to be an Employee whereupon such
Participant will receive the Participant’s Deferral Account as a
Retirement Benefit, Termination Benefit, or Survivor Benefit
commencing at the time said Participant finally ceases to be an
Employee. In its sole and absolute discretion, the Committee may
alter the timing or manner of payment of all or a portion of the
Deferral Account of a Participant who suffers a Disability.
	 
	6.3	 	Termination Benefit. If a Participant ceases to be an
Employee for a reason other than those reasons described in Sections
6.1, 6.2, and 6.3 (d), (e) or (f), the Committee shall direct the
Participant’s Employer to pay a Termination Benefit based on the
value of the Participant’s Deferral Account as of the Termination
Valuation Date. Such Termination Benefit shall be paid in the
manner originally elected by the Participant on each Plan Year’s
Election Form in the form of either a lump sum payment or ten (10)
annual installments:

	 	a.	 	If a Participant’s Deferral Sub-Account is
payable in a lump sum, the Participant shall receive payment
of such Termination Benefit within ninety (90) days of the
Termination Valuation Date.
	 
	 	b.	 	If a Participant’s Deferral Sub-Account is
payable in installments, the amount to be paid with each
installment shall be the value of such Deferral Sub-Account as
of the date of the installment Valuation Date multiplied by a
fraction, the numerator of which is one (1) and the
denominator of which is the number of installment payments
remaining. For the purposes of this Section, the installment
Valuation Date for the first installment payment shall be the
Termination Valuation Date, and the installment Valuation Date
for subsequent installment payments shall be the first
Valuation Date of each Plan Year thereafter; provided,
however, that in no event shall more than one installment
payment be made to a Participant in any one Plan Year, except
due to an action by the Committee pursuant to Sections 6.3(f).
A Participant shall receive each installment payment within
ninety (90) days of the applicable installment Valuation Date.
	 
	 	c.	 	Following receipt of a Participant’s complete
Termination Benefit, such Participant shall be entitled to no
further benefits under the Plan.
	 
	 	d.	 	Lump Sum Payment Upon Voluntary Termination of
Employment. If a Participant (i) voluntarily ceases to be an
Employee for any reason, or (ii) fails to return to the status
of an Employee within sixty (60) days following recovery from
a Disability prior to qualifying for Retirement, the Company
shall pay to such Participant in a lump sum a Termination
Benefit equal to the balance of such Participant’s Deferred
Account as of the Termination Valuation Date. A Participant
shall receive such Termination Benefit within ninety (90) days
of the Termination Valuation Date. Following receipt of a

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	 	 	 	Participant’s complete Terminated Benefit, such participant
shall be entitled to no further benefits under the Plan.
	 
	 	e.	 	Lump Sum Payment Upon Misconduct or Crime. If a
Participant is discharged from employment with an Employer for
dishonesty, conviction of a felony, willful unauthorized
disclosure of confidential material information of an
Employer, or other willful, deliberate, or gross misconduct of
similar magnitude, such Participant’s entire Deferral Account
shall be paid in a single lump sum as a Termination Benefit
within ninety (90) days of the Termination Valuation Date.
	 
	 	f.	 	Lump Sum Payment Upon Affiliation With
Competitor. In the event that a Participant ceases to be an
Employee of an Employer for any reason and thereafter becomes
a proprietor, officer, partner, employee, or otherwise becomes
affiliated with any business that is in competition with an
Employer, or becomes an employee of any federal, state, or
municipal agency, office, subdivision, or other component
having jurisdiction over any activity of any Employer, such
Participant’s entire Deferral Account shall be paid in a
single lump sum as a Termination Benefit within ninety (90)
days of the Termination Valuation Date. The determination of
whether an Employee has become affiliated with a business in
competition with an Employer, or with a governmental component
having jurisdiction over any activity of an Employer shall
rest solely with the Committee and such determination shall be
final, conclusive, and not subject to appeal.

	6.4	 	Survivor Benefits.

	 	a.	 	Pre-Retirement. If a Participant dies before
otherwise becoming eligible to receive Retirement Benefits, a
Survivor Benefit will be paid to the Participant’s Beneficiary
in a lump sum equal to such Participant’s Deferral Account as
of the Death Valuation Date. A Beneficiary shall receive the
Survivor Benefit within ninety (90) days after the Death
Valuation Date. If a Participant dies after becoming eligible
to receive Retirement Benefits but before such benefits have
been paid in full, the Retirement Benefits the deceased
Participant would have otherwise received shall be paid to the
Participant’s Beneficiary as a Survivor Benefit pursuant to
the Participant’s prior elections.
	 
	 	b.	 	Post-Retirement. If a Participant dies after
such Retirement Benefits have commenced, the Retirement
Benefits the deceased Participant would have otherwise
received shall be paid to the Participant’s Beneficiary as a
Survivor Benefit pursuant to the Participant’s prior
elections.
	 
	 	c.	 	Following receipt of a Participant’s complete
Survivor Benefit, a Beneficiary shall be entitled to no
further benefits under the Plan.

	6.5	 	Financial Hardship Distribution. In the event that the
Committee, upon written petition of the Participant or Beneficiary,
determines, in its sole discretion, that the Participant or
Beneficiary has suffered an unforeseeable financial emergency, the
Company shall pay to the Participant or Beneficiary, as soon as
practicable

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	 	 	following such determination, an amount necessary to meet the
emergency not in excess of the Termination Benefit to which the
Participant would have been entitled pursuant to Section 6.3 if
said Participant had a termination of service on the date of such
determination (the “Financial Hardship Distribution”). For
purposes of this Plan, an unforeseeable financial emergency is an
unexpected need for cash arising from an illness, casualty loss,
sudden and unforeseeable financial reversal, or such other
unforeseeable occurrence.
	 
	 	 	Notwithstanding the foregoing, the final determination by the Internal
Revenue Service (“IRS”) or court of competent jurisdiction, all time
for appeal having lapsed, that the Company is not the owner of the
assets of any grantor trust established by the Company with respect to
this Plan (a “rabbi trust”), with the result that the income of such
trust is not treated as income of the Company pursuant to sections 671
through 679 of the Code, or the final determination by (i) the IRS,
(ii) a court of competent jurisdiction, all time for appeal having
lapsed or (iii) counsel to the Company that a federal tax is payable
by the Participant or Beneficiary with respect to assets of the rabbi
trust or the Participant’s or Beneficiary’s Deferral Accounts prior to
the distribution of those assets of Deferral Accounts to the
Participant or Beneficiary shall in any event constitute an
unforeseeable financial emergency entitling such Participant or
Beneficiary to a Financial Hardship Distribution provided for in this
Section.
The amount of benefits otherwise payable under the Plan shall
thereafter be adjusted to reflect the reduction of a Deferral Account
due to the early payment of the Financial Hardship Distribution.
	 
	6.6	 	Scheduled Distributions.

	 	a.	 	In General. A Participant may, when filing an
Election Form with respect to a given Plan Year, elect to
receive a distribution while employed of all or a portion of
the Participant’s Deferral Sub-Account for such Plan Year at a
specified time or times in the future. The election of such a
Scheduled Distribution shall be irrevocable and shall apply
only to prospective deferrals for that Plan Year.
	 
	 	b.	 	Timing and Forms of Distribution. The first year
specified for a Scheduled Distribution must be at least five
(5) Plan Years after the Plan Year in which commencement of
deferrals covered by the Election Form in which a Scheduled
Distribution is elected. A Participant will receive such
Scheduled Distribution in either a lump sum or ten annual
installments as specified by prior elections within ninety
(90) days of the first Valuation Date of the Year of
distribution specified on the Election Form.
	 
	 	c.	 	Election Void Upon Death and Termination of
Employment. In the event a Participant has elected to receive
any Scheduled Distributions and, before said distributions the
Participant dies or ceases employment with all Employers, the
election with respect to such Scheduled Distributions shall be
voided and such Participant’s Deferral Account shall be paid
as a Termination Benefit.

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	6.7	 	Small Benefit. Notwithstanding anything herein to the
contrary, in the event the total amount owed to a Participant or a
Beneficiary after the Participant ceases to be an Employee is
$50,000 or less, the Committee, in its sole and absolute discretion,
may elect to distribute any such amount in a single lump sum
payment.
	 
	6.8	 	Withholding; Payroll Taxes. To the extent required by the
law in effect at the time payments are made, a Participant’s
Employer shall withhold from payments made hereunder the taxes
required to be withheld by the federal or any state or local
government. As to any payroll tax that is due from a Participant
for Compensation deferred under this Plan, the Employer shall
collect such tax from funds paid to such Participant with respect to
other compensation not deferred under the Plan unless said other
compensation is insufficient to pay such payroll taxes whereupon the
shortfall shall serve to reduce the elected deferral amount.

Section 7. Beneficiary Designation

	7.1	 	Beneficiary Designation. Each Participant shall have the
right, at any time, to designate any person or persons as
Beneficiary or Beneficiaries to whom payment under this Plan shall
be made in the event of Participant’s death prior to complete
distribution to Participant of the Benefits due under the Plan.
Each Beneficiary designation shall become effective only when filed
in writing with the Committee during the Participant’s lifetime on a
form prescribed by the Committee.
	 
	 	 	The filing of a new Beneficiary designation form will cancel all
Beneficiary designations previously filed.
	 
	 	 	If a Participant fails to designate a Beneficiary as provided above
or all designated Beneficiaries predecease the Participant, then
the Committee shall direct the Participant’s Employer to distribute
such benefits in a lump sum to the Participant’s estate within
ninety (90) days of the applicable Valuation Date. If all
designated Beneficiaries die prior to complete distribution of a
deceased Participant’s benefits, then the Committee shall direct
the Participant’s Employer to distribute the balance of such
benefits in a lump sum to the last surviving designated
Beneficiary’s estate within ninety (90) days of the applicable
Valuation Date.

Section 8. Administration of the Plan

	8.1	 	Administration. The Committee shall administer the Plan in
accordance with its terms and shall have the power, in its sole and
absolute discretion, to construe the terms of the Plan and to
determine all questions arising in connection with the
administration, interpretation, and application of the Plan. Any
such determination by the Committee shall be conclusive and binding
upon all persons. The Committee may establish rules and procedures,
correct any defect, supply any information, or reconcile any
inconsistency in such manner and to such extent as shall be deemed
necessary or advisable to carry out the purposes of the Plan.

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	 	 	To the extent it deems necessary or desirable in connection with
the administration of the Plan, the Committee may (i) delegate all
or a portion of its duties to Employees or other persons, and (ii)
appoint counsel, accountants, advisers, and other service
providers.

Section 9. Nature of Company’s Obligation

	9.1	 	No Trust. The Company’s obligation under this Plan shall be
an unfunded and unsecured promise to pay. The Company shall not be
obligated under any circumstances to fund its financial obligations
under this Plan prior to the date any payments are due, and neither
the Company, the Employer, members of the Board or Committee, nor
any other person shall be deemed to be a trustee of any amounts to
be paid under the Plan; provided, however, the Company may, in its
sole and absolute discretion, (i) establish a grantor trust, the
income of which is treated as income of the Company pursuant to
sections 671 through 679 of the Code, to provide for the
accumulation of funds to satisfy all or a portion of its financial
liabilities with respect to this Plan, (ii) purchase life insurance
policies on the life of a Participant, in which case the Participant
shall cooperate with the Company in complying with any underwriting
requirements with respect to such a policy, or (iii) both.
	 
	9.2	 	Nature of Participant’s Rights and Interests. Any assets
which the Company may choose to acquire to help cover its financial
liabilities, including, but not limited to any assets referred to in
Section 9.1, are and will remain general assets of the Company
subject to the claims of its general creditors. The Company does
not give, and this Plan does not give, any ownership interest in any
assets of the Company to a Participant or Beneficiary. All rights
of ownership in any assets are and remain in the Company, and the
rights of each Participant, any Beneficiary, or any person claiming
through a Participant shall be solely those of an unsecured general
creditor of the Company. Any liability of the Company to any
Participant, Beneficiary, or any person claiming through a
Participant shall be based solely upon the contractual obligations
created by the Plan.

Section 10. Miscellaneous

	10.1	 	Nonassignability. Neither a Participant nor any other person
shall have any right to commute, sell, assign, transfer, pledge,
anticipate, mortgage, or otherwise encumber, hypothecate, or convey
in advance of actual receipt the amounts, if any, payable hereunder
or any part thereof, or interest therein which are, and all rights
to which are, expressly declared to be unassignable and
non-transferable. No part of the amounts payable shall, prior to
actual payment, be subject to seizure or sequestration for the
payment of any debts, judgments, alimony, or separate maintenance
owed by a Participant or any other person, nor be transferable by
operation of law in the event of a Participant’s or any other
person’s bankruptcy or insolvency.

11

 

	10.2	 	Employment Not Guaranteed. Nothing contained in this Plan
nor any action taken hereunder shall be construed as a contract of
employment or as giving any Employee any right to be retained in the
employ of the Company.
	 
	10.3	 	Amendment or Termination. The Company expects the Plan to be
permanent but, since future conditions affecting the Company cannot
be anticipated or foreseen, the Company must necessarily and does
hereby reserve the right to amend, modify, or terminate the Plan at
any time by action of the Committee. No amendment or termination of
the Plan shall operate to decrease any Participant’s accrued benefit
under the Plan as of the date of such action (subject to investment
risk changes in value) provided, however, that in the event of
termination of the Plan, the Company may direct the acceleration of
distribution of Deferral Accounts. Furthermore, in the event of (i)
a merger, consolidation, or acquisition where the Company is not the
surviving corporation or (ii) any other Change of Control, no
amendment or termination of the Plan may be made for the first three
full Plan Years that follow such an event. Prior to such an event
or after the aforesaid three-year Change of Control window, the
Company may terminate the Plan by action of the Committee, whereupon
all Deferral Accounts shall become immediately due and payable.
	 
	10.4	 	Protective Provisions. Each Participant shall cooperate with
the Employer by furnishing any and all information requested by the
Employer in order to facilitate the payment of benefits hereunder,
taking such physical examinations as the Employer may deem necessary
and taking such other relevant action as may be requested by the
Employer. If a Participant refuses to so cooperate, the Employer
shall have no further obligation to the Participant under the Plan,
other than payment to such Participant of the cumulative reductions
in Compensation theretofore made pursuant to this Plan (subject to
reduction due to change in value as a result of investment
performance).
	 
	10.5	 	Obligations to Company. If a Participant becomes entitled to
a distribution of benefits under the Plan, and if at such time the
Participant has outstanding any debt, obligation, or other liability
representing an amount owing to the Company or the Participant’s
Employer, then the Employer may offset such amount owed to it
against the amount of benefits otherwise distributable. Such
determination shall be made by the Committee.
	 
	10.6	 	Gender, Singular, and Plural. All pronouns and any
variations thereof shall be deemed to refer to the masculine,
feminine, or neuter, as the identity of the person or persons may
require. As the context may require, the singular may be read as
the plural and the plural as the singular.
	 
	10.7	 	Captions. The captions of the sections and paragraphs of
this Plan are for convenience only and shall not control or affect
the meaning or construction of any of its provisions.

12

 

	10.8	 	Validity. In the event any provision of the Plan is held
invalid, void, or unenforceable, the same shall not affect the
validity of any other provision of this Plan.
	 
	10.9	 	Applicable Law. Except to the extent superseded by federal
law, this Plan shall be governed and construed in accordance with
the internal laws of the state of North Carolina, without reference
to the principles of conflict of laws.

13<PAGE>
                                                                    EXHIBIT 10.2

                       IMPROVED PROPERTY COMMERCIAL LEASE

1.   PARTIES: The parties to this lease are the owner of the Property, Paul and
Sherry Vick dba P&S Properties (Landlord) and the tenant, Liquidmetal Coatings,
a division of Liquidmetal Technologies (Tenant).

2.   LEASED PREMISES: Landlord leases to Tenant the following described real
property, known as the "leased premises," along with all its improvements:

     Number Bldg. "C" containing approximately 10,000 square feet of rentable
     area, located with the FM 3083 Industrial Park on the land known as 12070
     FM 3083 Conroe, Texas 77301, which is legally described as [left blank] or
     as described on attached exhibit. "Property" means the building or complex
     in which the leased premises are located, inclusive of any common areas,
     drives, parking areas, and walks. The parties agree that the rentable area
     of the leased premises may not equal the actual or useable area within the
     leased premises and may include an allocation of common areas in the
     Property.

3.   TERM:

     A.   Term: The term of this lease is 60 months, commencing on October 1st,
          2002 (Commencement Date) and ending on September 30th, 2007
          (Expiration Date).

     B.   Delay of Occupancy: If Tenant is unable to occupy the leased premises
          on the Commencement Date because of construction on the leased
          premises to be completed by Landlord that is not substantially
          complete or a prior tenant's holding over of the leased premises,
          Landlord will not be liable to Tenant for such delay and this lease
          will remain enforceable. In the event of such a delay, the
          Commencement Date will automatically be extended to the date Tenant is
          able to occupy the Property and the Expiration Date will also be
          extended by a like number of days, so that the term of this lease
          remains unchanged. If Tenant is unable to occupy the leased premises
          after the 30th day after the Commencement Date because of construction
          on the leased premises to be completed by Landlord that is not
          substantially complete or a prior tenant's holding over of the leased
          premises, Tenant may terminate this lease by giving written notice to
          Landlord before the leased premises becomes available to be occupied
          by tenant and Landlord will refund to Tenant any amounts paid to
          Landlord by Tenant. This Paragraph 3B does not apply to any delay in
          occupancy caused by cleaning or repairs.
<PAGE>
4.   RENT AND EXPENSES:

     A.   Base Monthly Rent: On or before the first day of each month during
          this lease, Tenant will pay Landlord base monthly rent in the amount
          of $4,850.00. The first full base monthly rent is due on or before
          October 1st, 2002 (NOTE: Upon signing of this lease agreement, tenant
          is to pay landlord the 1st and last months rent $9,700.00)

     B.   Prorated Rent: If the Commencement Date is on a day other than the
          first day of a month, Tenant will pay Landlord as prorated rent, an
          amount equal to the base monthly rent multiplied by the following
          fraction: the number of days from the Commencement Date to the first
          day of the following month divided by the number of days in the month
          in which this lese commences. The prorated rent is due on or before
          the Commencement Date.

     C.   Additional Rent: In addition to any base monthly rent or prorated
          rent, Tenant will pay Landlord all other amounts as provided by the
          attached:

<TABLE>
<S>              <C>
          [ ]    (1) Net Addendum
          [ ]    (2) Percentage Rent Addendum
          [ ]    (3) Expense reimbursement Addendum
          [ ]    (4) Expense Addendum for Single-Tenant Property
          [ ]    (5) Parking Addendum
          [ ]    (6)
                     -----------------------------------------------------------
</TABLE>

     D.   Place of Payment: Tenant will remit all amounts due Landlord under
          this lease to P & S Properties at 11449 Outpost Cove Dr., Willis, TX
          77318, or to such other person or at such other place as Landlord may
          designate in writing.

     E.   Method of Payment: Tenant must pay all rent timely without demand,
          deduction, or offset, except as permitted by law or this lease. Time
          is of the essence for the payment of rent. If Tenant fails to timely
          pay any amounts due under this lease or if any check of Tenant is
          returned to Landlord by the institution on which it was drawn,
          landlord may require Tenant to pay, in addition to any other available
          remedy, all amounts due under this lease by certified funds by
          providing written notice to Tenant.

     F.   Late Charges: If Landlord does not actually receive a rent payment at
          the designated place of payment within 5 days after the date the rent
          is due, Tenant will pay Landlord a late charge equal to 5% of the base
          monthly rent. The mailbox is not the agent for receipt for Landlord.
          The late charge is a cost associated with the collection of rent and
          Landlord's
<PAGE>
          acceptance of a late charge does not waive Landlord's rights to
          exercise remedies under Paragraph 20.

     G.   Returned Checks: Tenant will pay $25.00 (not to exceed $25) for each
          check Tenant tenders to Landlord which is returned by the institution
          on which it is drawn for any reason, plus any late charges until
          Landlord receives payment.

5.   SECURITY DEPOSIT: Upon execution of this lease, Tenant will pay a security
     deposit to landlord in the amount of $4,850.00. Landlord may apply the
     security deposit to any amounts owed by Tenant under this lease. If
     Landlord applies any part of the security deposit during any time this
     lease is in effect to amounts owed by Tenant, Tenant must, within 120 days
     after receipt of notice from Landlord, restore the security deposit to the
     amount stated. Within a reasonable time after this lease ends, Landlord
     will refund the security deposit to Tenant less any amounts applied toward
     amounts owed by Tenant.

6.   TAXES: Unless otherwise agreed by the parties, Landlord will pay all real
     property ad valorem taxes assessed against the leased premises.

7.   UTILITIES: Tenant will pay all charges for the use of all utility services
     to the leased premises and any connection charges except the following
     which will be paid by Landlord:     Water.
                                     -------------
     NOTICE: Tenant should determine if any and all necessary utilities (e.g.,
     water, gas, electricity, telephone, sewer, etc.) are available to the
     leased premises, are adequate for Tenant's intended use, and the cost to
     provide the necessary utilities.

8.   TENANT'S INSURANCE:

     A.   During all times this lease is in effect, Tenant must maintain in full
          force and effect:

          (1)  public liability insurance from an insurer acceptable to Landlord
               in an amount not less than $1,000,000.00 on an occurrence basis
               naming Landlord as an additional insured; and

          (2)  personal property damage insurance for Tenant's business
               operations on the leased premises from an insurer acceptable to
               Landlord in an amount not less than $1,000,000.00, on an
               occurrence basis.

     B.   Before the Commencement Date, Tenant must provide landlord with a copy
          of the insurance certificates evidencing the required coverage. If the
          insurance coverage changes in any manner or degree at any time this
          lease is in effect, Tenant must provide Landlord a copy of an
          insurance certificate evidencing such change within 10 days of the
          change.
<PAGE>
     C.   If Tenant fails to maintain the required insurance in full force and
          effect at all times this lease is in full effect, Landlord may (1)
          purchase such insurance3 on behalf of Tenant and Tenant must
          immediately reimburse Landlord for such expense; or (2) exercise
          Landlord's remedies under Paragraph 20.

     D.   If there is an increase in Landlord's insurance premiums for the
          leased premises or Property or its contents that is caused by Tenant,
          Tenant's use of the leased premises, or any improvements made by or
          for Tenant, Tenant will, for each year this lease is in effect, pay
          Landlord the increase immediately after Landlord notifies Tenant of
          the increase.

9.   USE AND HOURS: Tenant may use the leased premises for the following purpose
     and no other: (1) To warehouse welding wire; (2). Use of thermal research
     cell, (3) Production of thermal parts; (4) Normal office use pertaining to
     this business.

     A.   Tenant's Normal Business Hours: Tenant's normal business hours are
          7:00 a.m. to 5:00 p.m., Monday thru Saturday.

     B.   Building Operating Hours: The building in which the leased premises
          are located maintains operating hours of 7:00 a.m. to 5:00 p.m.,
          Monday thru Saturday. If Landlord is to provide HVAC services to the
          leased premises under this lease, Landlord is obligated to provide the
          HVAC services only during the specified building operating hours.

10.  LEGAL COMPLIANCE:

     A.   Tenant may not use or permit any part of the leased premises to be
          used for:

          (1)  any activity which is a nuisance or is offensive, noisy, or
               dangerous;
          (2)  any activity that interferes with any other tenant's normal
               business operations or Landlord's management of the Property;
          (3)  any activity that violates any applicable law, regulation, zoning
               ordinance, restrictive covenant, governmental order, owners'
               association rules, tenants' association rules, Landlord's rules
               or regulations, or this lease;
          (4)  any hazardous activity that would require any insurance premium
               on the Property or leased premises to increase or that would void
               any such insurance;
          (5)  any activity that violates any applicable federal, state, or
               local law, including but not limited to those laws related to air
               quality, water quality, hazardous materials, wastewater, waste
               disposal, air emissions, or other environmental matters;
          (6)  the permanent or temporary storage of any hazardous material; or
<PAGE>
          (7)  Landlord recognizes and approves tenant installing the thermal
               spray research cell. Plans to be approved by Landlord.

     B.   "Hazardous Material" means any pollutant, toxic substance, hazardous
          waste, hazardous material, hazardous substance, solvent, or oil as
          defined by any federal, state, or local environmental law, regulation,
          ordinance, or rule existing as of the date of this lease or later
          enacted.

     C.   Landlord does not represent or warrant that the leased premises or
          Property conform to applicable restrictions, zoning ordinances,
          setback lines, parking requirements, impervious ground cover ratio
          requirements, and other matters that may relate to Tenant's intended
          use. Tenant must satisfy itself that the leased premises may be used
          as Tenant intends by independently investigating all matters related
          to the use of the leased premises or Property. Tenant agrees that it
          is not relying on any warranty or representation made by Landlord.
          Landlord's agent, or any broker concerning the use of the leased
          premises or Property.

11.  SIGNS:

     A.   Tenant may not post or paint any signs at, on, or about the leased
          premises or Property without Landlord's written consent. Landlord may
          remove any unauthorized sign, and tenant will promptly reimburse
          Landlord for any expense related to the removal of any unauthorized
          sign. Any authorized sign must comply with all laws, restrictions,
          zoning ordinances, and any governmental order relating to signs on the
          leased premises or Property. Landlord may temporarily remove any
          authorized sign to complete repairs or alterations to the leased
          premises or the Property.

     B.   By providing written notice to Tenant before this lease ends, Landlord
          may require Tenant, upon move-out and at Tenant's expense, to remove
          without damage to the Property or leased premises, any or all signs
          that were placed on the Property or leased premises by or at the
          request of Tenant. Any signs that Landlord does not require Tenant to
          remove and that are fixtures become the property of the Landlord and
          must be surrendered to Landlord at the time this lease ends.

12.  ACCESS BY LANDLORD:

     A.   During Tenant's normal business hours Landlord may enter the leased
          premises for any reasonable purpose, including but not limited to
          purposes for repairs, maintenance, alterations, and showing the leased
          premises to prospective tenants or purchasers. Landlord may access the
          leased premises after Tenant's normal business hours with tenant's
          permission or to complete emergency repairs. Landlord will not
          unreasonably interfere with Tenant's business operations when
          accessing the leased premises.
<PAGE>
     B.   During the last 90 days of this lease, Landlord may place a "For
          Lease" or similarly worded sign in the leased premises.

13.  MOVE-IN CONDITION: Tenant ahs inspected the leased premises and accepts it
in its present (as-is) condition unless expressly noted otherwise in this lease.
Landlord and any agent have made no express or implied warranties as to the
condition or permitted use of the leased premises or Property.

14.  MOVE-OUT CONDITION AND FORFEITURE OF TENANT'S PERSONAL PROPERTY:

     A.   At the time this lease ends, Tenant will surrender the leased premises
          in the same condition as when received, normal wear and tear excepted.
          Tenant will leave the leased premises in a clean condition free of all
          trash, debris, personal property, hazardous materials, and
          environmental contaminants. Before this lease ends, Tenant will not
          provide Landlord with a report, by an environmental engineer or
          assessor acceptable to Landlord, dated not earlier than 20 days before
          the date this lease ends that indicates that no hazardous material or
          other environmental hazard is on or affects the leased premises.

     B.   If Tenant leaves any personal property in the leased premises after
          Tenant surrenders possession of the leased premises, Landlord may: (1)
          require Tenant, at tenant's expense, to remove the personal property
          by providing written notice to Tenant; or (2) retain such personal
          property as forfeited property to Landlord.

     C.   "Surrender" means vacating the leased premises and returning all keys
          and access devices to Landlord. "Normal wear and tear" means
          deterioration that occurs without negligence, carelessness, accident,
          or abuse.

     D.   By providing written notice to Tenant before this lease ends, Landlord
          may require Tenant, upon move-out and at tenant's expense, to remove,
          without damage to the Property or leased premises, any or all fixtures
          that were placed on the Property or leased premises by or at the
          request of Tenant. Any fixtures that Landlord does not require Tenant
          to remove become the property of the Landlord and must be surrendered
          to Landlord at the time this lease ends.

15.  MAINTENANCE AND REPAIRS:

     A.   Cleaning: Tenant must keep the leased premises clean and sanitary and
          promptly dispose of all garbage in appropriate receptacles. Tenant
          will provide, at its expense, reasonable janitorial services to the
          leased
<PAGE>
          premises. Landlord will do all yard mowing and related maintenance to
          surrounding areas.

     B.   Repairs of Conditions Caused by a Party: Each party must promptly
          repair a condition caused, either intentionally or negligently, by
          that party or that party's guests, patrons, invitees, contractors or
          permitted subtenants.

     C.   Repair and Maintenance Responsibility: Except as provided by Paragraph
          15B, the party designated below, at its expense, is responsible to
          maintain and repair the following specified items in the leased
          premises. The specified items must be maintained in: (i) clean
          condition; (ii) good repair; and (iii) operable condition. If a
          modification to any of the specified items is required by law or
          governmental regulation or order, the party designated to maintain the
          item must complete and pay the expense of the modification. The
          specified items include and relate only to real property in the leased
          premises. Tenant is responsible for the repair and maintenance of its
          personal property. Tenant to keep trash and debris picked up within 50
          feet of the building. Landlord to maintain all grass and tree areas.

<TABLE>
<S>                                                                             <C>     <C>       <C>
                                                                                N/A     LANDLORD  TENANT
           ---------------------------------------------------------------------------------------------
           (1) Foundation, exterior walls, roof, and other structural
           components.                                                                     X
           ---------------------------------------------------------------------------------------------
           (2)  Glass and windows                                                                   X
           ---------------------------------------------------------------------------------------------
           (3)  Fire protection equipment and fire sprinkler systems                                X
           ---------------------------------------------------------------------------------------------
           (4)  Exterior & overhead doors, including closure devices,
           molding, locks and hardware                                                              X
           ---------------------------------------------------------------------------------------------
           (5) Grounds maintenance, including landscaping and ground
           sprinklers                                                                               X
           ---------------------------------------------------------------------------------------------
           (6)  Interior doors, including closure devices, frames,
           molding, locks, and hardware                                                             X
           ---------------------------------------------------------------------------------------------
           (7)Parking areas and walks                                                               X
           ---------------------------------------------------------------------------------------------
           (8) Plumbing systems, drainage systems, electrical systems
           *(including ballast and lamp replacement) & mechanical
           systems, except those specifically designated otherwise                                  X
           ---------------------------------------------------------------------------------------------
           (9) Heating Ventilation and Air Conditioning (HVAC) systems                              X
           ---------------------------------------------------------------------------------------------
           (10)  Signs                                                                              X
           ---------------------------------------------------------------------------------------------
           (11) Extermination and pest control, excluding
           wood-destroying insects                                                                  X
           ---------------------------------------------------------------------------------------------
           (12) Storage yards and storage buildings                                                 X
           ---------------------------------------------------------------------------------------------
           (13) Wood-destroying insect treatment and repairs                                        X
           ---------------------------------------------------------------------------------------------
           (14) Cranes and related systems                                                          X
           ---------------------------------------------------------------------------------------------
           (15) [Left Blank]
           ---------------------------------------------------------------------------------------------
           (16) [Left Blank]
           ---------------------------------------------------------------------------------------------
           (17) All other items and systems.
           ---------------------------------------------------------------------------------------------
</TABLE>

     D.   Repair Persons: Repairs must be completed by trained, qualified, and
          insured repair persons.
<PAGE>
     E.   HVAC Service Contract: If Tenant is responsible to maintain the HVAC
          system, Tenant is not required to maintain, at its expense, a
          regularly scheduled maintenance and service contract for the HVAC
          system. The maintenance and service contract must be purchased from a
          HVAC maintenance company that regularly provides such contracts to
          similar properties. If Tenant fails to maintain a required HVAC
          maintenance and service contract in effect at all times during this
          lease, Landlord may do so and charge Tenant the expense of such a
          maintenance and service contract or exercise Landlord's remedies under
          Paragraph 20.

     F.   Common Areas: Landlord will maintain any common areas in the Property
          in a manner as Landlord determines to be in the best interest of the
          Property. Landlord will maintain any elevator and signs in the common
          area. Landlord may change the size, dimension, and location of any
          common areas, provided that such change does not materially impair
          Tenant's use and access to the leased premises. If a modification to
          the common areas is required by law or governmental regulation or
          order, Landlord will modify the item. Tenant has the non-exclusive
          license to use the common areas in compliance with Landlord's rules
          and restrictions. Tenant may not solicit any business in the common
          areas or interfere with any other person's right to use the common
          areas.

     G.   Notice of Repairs: Tenant must promptly notify Landlord of any item
          that is in need of repair and that is Landlord's responsibility to
          repair. All requests for repairs to Landlord must be in writing.

     H.   Failure to Repair: Landlord must make a repair for which Landlord is
          responsible within a reasonable period of time after tenant provides
          Landlord written notice of the needed repair. If tenant fails to
          repair or maintain an item for which Tenant is responsible within 10
          days after Landlord provides Tenant written notice of the needed
          repair or maintenance, Landlord may: (1) repair or maintain the item,
          without liability for any damage or loss to Tenant, and Tenant must
          immediately reimburse Landlord for the cost to repair or maintain; or
          (2) exercise Landlord's remedies under Paragraph 20.

16.  ALTERATIONS:

     A.   Tenant may not alter, improve, or add to the Property or the leased
          premises without Landlord's written consent. Landlord will not
          unreasonably withhold consent for the tenant to make reasonable
          alterations, modifications, or improvements to the leased premises.

     B.   Tenant may not alter any locks or any security devices on the Property
          or the leased premises without Landlord's consent. If Landlord
          authorizes the
<PAGE>
          changing, addition, or rekeying of any locks or other security
          devices, Tenant must immediately deliver the new keys and access
          devices to Landlord.

     C.   If a governmental order requires alteration or modification to the
          leased premises, the party obligated to maintain and repair the item
          to be modified or altered as designated in Paragraph 15 will, at its
          expense, modify or alter the item in compliance with the order.

     D.   Any alterations, improvements, fixtures or additions to the Property
          or leased premises installed by either party during the term of this
          lease will become Landlord's property and must be surrendered to
          Landlord at the time this lease ends, except for those fixtures
          Landlord requires Tenant to remove under Paragraph 14 or if the
          parties agree otherwise in writing.

17.  LIENS: Tenant may not do anything that will cause the title of the Property
     or leased premises to be encumbered in any way. If Tenant causes a lien to
     be filed against the Property or leased premises, Tenant will within 60
     days after Landlord demands Tenant to take action to remove the lien, pay
     the lien or take whatever action is necessary to cause the lien to be
     released of record. Tenant will provide Landlord a copy of any release
     Tenant obtains pursuant to this paragraph.

18.  LIABILITY: To the extent permitted by law, Landlord is NOT responsible to
     Tenant or Tenant's employees, patrons, guests, or invitees for any damages,
     injuries, or losses to person or property caused by:

     A.   an act, omission, or neglect of: Tenant, Tenant's agent, Tenant's
          guest, Tenant's employees, Tenant's patrons or Tenant's invitees;

     B.   fire, flood, water leaks, ice, snow, hail, winds, explosion, smoke,
          riot, strike, interruption of utilities, theft, burglary, robbery,
          assault, vandalism, other persons, environmental contaminants, or
          other occurrences or casualty losses.

19.  INDEMNITY: Tenant will indemnify and hold Landlord harmless from any
     property damage, personal injury, suits, actions, liabilities, damages,
     cost of repairs or service to the leased premises or Property, or any other
     loss caused, negligently or otherwise, by Tenant or tenant's employees,
     patrons, guests, or invitees.

20.  DEFAULT:

     A.   If Landlord fails to comply with this lease within 30 days after
          Tenant notifies Landlord of Landlord's failure to comply, Landlord
          will be in default and Tenant may seek any remedy provided by law. If,
          however, Landlord's non-
<PAGE>
          compliance reasonably requires more than 30 days to cure, Landlord
          will not be in default if the cure is commenced within the 30 day
          period and is diligently pursued.

     B.   If landlord does not actually receive at the place designated for
          payment any rent due under this lease within 5 days after it is due,
          Tenant will be in default. If tenant fails to comply with this lease
          for any other reason within 14 days after landlord notifies Tenant of
          its failure to comply, Tenant will be in default.

     C.   If Tenant is in default, Landlord may terminate Tenant's right to
          occupy the leased premises by providing tenant with at least 14 days
          written notice; Landlord will attempt to mitigate any damage or loss
          caused by Tenant's breach. If Tenant is in default, Tenant will be
          liable for:

          (1)  any lost rent;

          (2)  Landlord's cost of reletting the leased premises, including
          brokerage fees, advertising fees, and other fees necessary to relet
          the leased premises;

          (3)  repairs to the leased premises for use beyond normal wear and
          tear;

          (4)  all Landlord's costs associated with eviction of Tenant, such as
          attorney's fees, court costs, and prejudgment interest;

          (5)  all landlord's costs associated with collection of rent, such as
          collection fees, late charges, and returned check charges;

          (6)  cost of removing any equipment and trade-fixtures left on the
          leased premises by Tenant;

          (7)  cost to remove any trash, debris, personal property, hazardous
          materials, or environmental contaminants left by Tenant or Tenant's
          employees, patrons, guests, or invitees in the leased premises or
          Property; and

          (8)  any other recovery to which Landlord may be entitled by law.

21.  ABANDOMNMENT, INTERRUPTION OF UTILITIES, REMOVAL OF TENANT'S PROPERTY, AND
     LOCKOUT: Chapter 93 of the Texas Property Code governs the rights and
     obligations of the parties with regard to: (a) abandonment of the leased
     premises; (b) interruption of utilities; (c) removal of Tenant's personal
     property; and (d) "lock-out" of Tenant.

22.  HOLDOVER: If Tenant fails to vacate the leased premises at the time this
     lease ends, Tenant will become at tenant-at-will and must vacate the leased
     premises immediately upon receipt of demand from Landlord. No holding over
     by Tenant, with or without the consent of Landlord, will extend this lease.
     Tenant will indemnify Landlord and any prospective tenants for any and all
     damages caused by the holdover. Rent for any holdover period will be 2
     times the base monthly rent plus any additional rent calculated on a daily
     basis and will be immediately due and payable daily without notice or
     demand.
<PAGE>
23.  LANDLORD'S LIEN AND SECURITY INTEREST: To secure tenant's performance under
     this lease, Tenant grants to Landlord a lien and security interest against
     all of Tenant's nonexempt personal property that is in the leased premises
     or Property. This lease is a security agreement for the purposes of the
     Uniform Commercial Code. Landlord may file a copy of this lease as a
     financing statement.

24.  ASSIGNMENT AND SUBLETTING: Tenant may not assign this lease or sublet any
     part of the leased premises without Landlord's written consent. An
     assignment of this lease or subletting of the leased premises without
     Landlord's written consent is voidable by Landlord. If Tenant assigns this
     lease or sublets any part of the leased premises, Tenant will remain liable
     for all of Tenant's obligations under this lease regardless if the
     assignment or sublease is made with or without the consent of Landlord.

25.  RELOCATION: [Left Blank]

26.  SUBORDINATION:

     A.   This lease and Tenant's leasehold interest are and will be subject,
          subordinate, and inferior to:

          (1)  any lien, enumbrance, or ground lease not or hereafter placed on
               the leased premises or the Property by Landlord;
          (2)  all advances made under any such lien, encumbrance, or ground
               lease;
          (3)  the interest payable on any such lien or encumbrance;
          (4)  any and all renewals and extensions of any such lien,
               encumbrance, or ground lease;
          (5)  any restrictive covenant affecting the leased premises or the
               Property; and
          (6)  the rights of any owners' association affecting the leased
               premises or Property.

     B.   Tenant must, on demand, execute any instrument subordinating this
          lease as Landlord may request, provided that such subordination is
          made on the condition that this lease and Tenant's rights under this
          lease are recognized and not disturbed by the lien-holder.

27.  ESTOPPEL CERTIFICATES: Within 10 days after receipt of a written request
     from Landlord, Tenant will execute and deliver to Landlord an estoppel
     certificate that identifies: (a) when this lease commences and ends; (b)
     any amendments to this lease; (c) any rights that Tenant may have to extend
     this lease to purchase the Property or leased premises; (d) any default by
     Landlord; and (e) any other information reasonably requested in the
     certificate.
<PAGE>
28.  CASUALTY LOSS:

     A.   Tenant must immediately notify Landlord of any casualty loss in the
          leased premises. Within 20 days after receipt of Tenant's notice of a
          casualty loss, Landlord will notify Tenant if the leased premises are
          less than or more than 50% unusable, on a per square foot basis, and
          if Landlord can substantially restore the leased premises within 120
          days after Tenant notifies Landlord of the casualty loss.

     B.   If the leased premises are less than 50% unusable and Landlord can
          substantially restore the leased premises within 120 days after Tenant
          notifies Landlord of the casualty, Landlord will restore the leased
          premises to substantially the same condition as before the casualty.
          If Landlord fails to substantially restore within the time required,
          Tenant may terminate this lease.

     C.   If the leased premises are more than 50% unusable and Landlord can
          substantially restore the leased premises within 120 days after Tenant
          notifies Landlord of the casualty, Landlord may: (1) terminate this
          lease; or (2) restore the leased premises to substantially the same
          condition as before the casualty. If Landlord chooses to restore and
          does not substantially restore the leased premises within the time
          required, Tenant may terminate this lease.

     D.   If Landlord notifies Tenant that Landlord cannot substantially restore
          the leased premises within 120 days after Tenant notifies Landlord of
          the casualty loss, Landlord may: (1) choose not to restore and
          terminate this lease; or (2) choose to restore, notify Tenant of the
          estimated time to restore, and give Tenant the option to terminate
          this lease by notifying Landlord within 10 days.

     E.   If this lease does not terminate because of a casualty loss, rent will
          be reduced from the date Tenant notifies Landlord of the casualty loss
          to the date the leased premises are substantially restored by an
          amount proportionate to the extent the leased premises are unusable.

29.  CONDEMNATION: If after a condemnation or purchase in lieu of condemnation
the leased premises are totally unusable for the purposes stated in this lease,
this lease will terminate. If after a condemnation or purchase in lieu of
condemnation the leased premises are partially unusable for the purposes stated
in this lease, this lease will continue and rent will be reduced in an amount
proportionate to the extent the leased premises are unusable, but if a material
portion of the premises is unusable, the Tenant shall have the right to
terminate this lease. Any condemnation award or proceeds in lieu of condemnation
are the property of Landlord and Tenant has
<PAGE>
no claim to such proceeds or award. Tenant may seek compensation from the
condemning authority for its moving expenses and damages to tenant's personal
property.

30.  ATTORNEY'S FEES: Any person who is a prevailing party in any legal
proceeding brought under or related to the transaction described in this lease
is entitled to recover prejudgment interest, reasonable attorney's fees, and all
other costs of litigation from the non-prevailing party.

31.  REPRESENTATIONS: Tenant's statements in this lease and application for
rental are material representations relied upon by Landlord. Each party signing
this lease represents that he or she is of legal age to enter into a binding
contract and is authorized to sign the lease. If Tenant makes any
misrepresentation in this lease or in any application for rental, Tenant is in
default. Landlord is not aware of any material defect on the Property that would
affect the health and safety of an ordinary person or any environmental hazard
on or affecting the Property that would affect the health or safety of an
ordinary person, except                                           .
                       -------------------------------------------

32.  BROKERS FEES:

<TABLE>
<S>           <C>
     A.       N/A                                                     (Broker A) represents
              --------------------------------------------------------
              [ ] Landlord [ ] Tenant. Broker A's fees will be paid pursuant to (choose 1 or 2)
              [ ] (1) a separate written agreement between Broker A and [ ]Landlord [ ] Tenant
              [ ] Broker ___
              [ ] (2) the attached Addendum for Broker's Fee.

     B.       N/A                                                     (Broker B) represents
              --------------------------------------------------------
              [ ] Landlord [ ] Tenant. Broker B's fees will be paid pursuant to (choose 1 or 2)
              [ ] (1) a separate written agreement between Broker B and [ ] Landlord [ ] Tenant
              [ ] Broker ___
              [ ] (2) the attached Addendum for Broker's Fee.

     C.       N/A                                                    (Broker C) represents
              -------------------------------------------------------
              [ ] Landlord [ ] Tenant. Broker C's fees will be paid pursuant to (choose 1 or 2)
              [ ] (1) a separate written agreement between Broker C and [ ] Landlord [ ]Tenant
              [ ] Broker ___
              [ ] (2) the attached Addendum for Broker's Fee.
</TABLE>

33.  ADDENDA: Incorporated into this lease are the addenda, exhibits and other
information marked in the Addenda and Exhibit section of the Table of Contents.
If Landlord's Rules and regulations are made part of this lease, Tenant agrees
to comply with the Rules and Regulations as Landlord may, at its discretion,
amend from time to time.

34.  AGREEMENT OF PARTIES:
<PAGE>
     A.   Entire Agreement: This lease contains the entire agreement between
          Landlord and Tenant and may not be changed except by written
          agreement.

     B.   Binding Effect: This lease is binding upon and inures to the benefit
          of the parties and their respective heirs, executors, administrators,
          successors, and permitted assigns.

     C.   Joint and Several: All Tenants are jointly and severally liable for
          all provisions of this lease. Any act or notice to, or refund to, or
          signature of, any one or more of the Tenants regarding any term of
          this lease, its renewal, or its termination is binding on all Tenants.

     D.   Controlling Law: The laws of the State of Texas govern the
          interpretation, performance, and enforcement of this lease.

     E.   Severable Clauses: If any clause in this lease is found invalid or
          unenforceable by a court of law, the remainder of this lease will not
          be affected and all other provisions of this lease will remain valid
          and enforceable.

     F.   Waiver: Landlord's delay, waiver, or non-enforcement of acceleration,
          contractual or statutory lien, rental due date, or any other right
          will not be deemed a waiver of any other or subsequent breach by
          Tenant or any other term in this lease.

     G.   Quiet Enjoyment: Provided that tenant is not in default of this lease,
          Landlord covenants that tenant will enjoy possession and use of the
          leased premises free from serious interference.

     H.   Force Majeure: If Landlord's performance of a term in this lease is
          delayed by strike, lock-out, shortage of material, governmental
          restriction, riot, flood, or any cause outside Landlord's control, the
          time for Landlord's performance will be abated until after the delay.

35.  NOTICES: All notices under this lease must be in writing and are effective
     when hand-delivered, sent by mail, or sent by facsimile transmission to:

<TABLE>
<S>                                                       <C>
     Tenant                                               Landlord: P&S Properties
     At the address of the leased premises.               At 11449 Outpost Cove
                                                             Willis, TX 77318
                                                          Fax: (936) 756-1755

     with a copy to:                                      with a copy to
                    -----------------------------                       ------------------------------
     at                                                   at
       ------------------------------------------           ------------------------------------------

     --------------------------------------------         --------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S>                                                       <C>
     Fax:                                                 Fax:
         ----------------------------------------             ----------------------------------------
</TABLE>

36.  SPECIAL PROVISIONS:

REAL ESTATE BROKERS ARE NOT QUALIFIED TO RENDER LEGAL ADVICE, PROPERTY
INSPECTIONS, SURVEYS, ENGINEERING STUDIOS (E.G. STUDIES OF THE STRUCTURES,
DRAINAGE, AND SOIL CONDITIONS), ENVIRONMENTAL ASSESSMENTS, TAX ADVICE, FINANCIAL
ADVICE, OR INSPECTIONS TO DETERMINE COMPLIANCE WITH ZONING, GOVERNMENTAL
REGULATIONS, OR ANY LAW (E.G., ADA, TEXAS ARCHITECTURAL BARRIERS STATUTE, ETC.).
THE PARTIES SHOULD SEEK EXPERTS TO RENDER SUCH SERVICES. SELECTION OF SUCH
EXPERTS IS THE RESPONSIBILITY OF THE PARTIES AND NOT THE REAL ESTATE BROKER. THE
TERMS OF THIS LEASE ARE NEGOTIABLE AMONG THE PARTIES. THIS IS INTENDED TO BE A
LEGAL AGREEMENT BINDING UPON FINAL ACCEPTANCE. READ IT CAREFULLY. IF YOU DO NOT
UNDERSTAND THE EFFECT OF THIS LEASE, CONSULT YOUR ATTORNEY BEFORE SIGNING.

<TABLE>
<S>                                                           <C>
P & S Properties                    9/11/02                   /s/ David Binnie       9/18/02
-------------------------------------------                   -----------------------------------
LANDLORD                            DATE                      TENANT                 DATE
BY:/s/Paul Vick, Sherry Vick        9/11/02
  -----------------------------------------                   -----------------------------------
                                                              TENANT
AS                                  FOR LANDLORD              TITLE: SVP
  ----------------------------------
</TABLE>
<PAGE>
                              SUPPLEMENTAL ADDENDUM
                                       TO
                       IMPROVED PROPERTY COMMERCIAL LEASE

     THIS SUPPLEMENTAL ADDENDUM, dated September 11, 2002, is incorporated into
and made a part of that certain Improved Property Commercial lease of even date
herewith (the "Lease") by and between PAUL AND SHERRY VICK dba P&S PROPERTIES
("Landlord") and LIQUIDMETAL TECHNOLOGIES, a California Corporation ("Tenant").

                                   WITNESSETH:

     WHEREAS, Landlord and Tenant desire to hereby set forth certain terms and
conditions as a supplement to the Lease, and the terms and conditions set forth
in this Supplemental Addendum shall be incorporated into and made a part of the
Lease.

     NOW THEREFORE, in consideration of the mutual promises contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:

     1.   In connection with Section 3(A) of the Lease, tenant shall have the
          right to defined in the Lease), provided that tenant delivers to
          Landlord written notice of renewal at lest three (3) months prior to
          the Expiration Date. In the event of such a renewal, the base monthly
          rent for the renewal term shall be equal to the market rate for the
          premises (to be determined on the basis of other premises of a
          comparable size, type, and location). Tenant and Landlord shall work
          together in good faith to determine what such market rate shall be,
          but if they cannot come to agreement on such market rate, then the
          market rate shall be deemed to be equal to the average of (i) the
          market rate as determined by a real estate appraiser selected by
          Tenant, and (ii) the market rate as determined by a real estate
          appraiser selected by Landlord.

     2.   Landlord, at its own cost and expense, shall cause to be maintained on
          the leased premises fire insurance and other casualty insurance in
          appropriate amounts for buildings of such type, size, nature, and use.

     3.   In connection with Section 8 and 10 and of the lease, Landlord and
          Tenant agree that Tenant shall be permitted to bring only that
          quantity of hazardous materials onto the leased premises necessary to
          accomplish its own business and Tenant may utilize such materials
          thereon, if and only if, Tenant secures all permits, licenses, and
          approvals of any Federal, State, or local governmental agency
          necessary for such activities (including any permits from OSHA or the
          EPA) and complies with all applicable laws, rules and regulations in
          connection with such activities and disposal of such chemicals, if
          applicable. In connection with its responsibilities under Sections 8
          and 10
<PAGE>
          respectively, tenant shall provide Landlord and Tenant's Insurer with
          all material data safety sheets for each such hazardous chemical
          intended to be brought on the premises and Tenant agrees to update
          Landlord and Insurer as such chemicals change from time to time.
          Tenant shall include in the insurance it purchases in compliance with
          Paragraph No. 10 insurance sufficient to cover Landlord from hazards
          typically associated with the use or storage of such hazardous
          chemicals.

     4.   Landlord acknowledges that Tenant will be keeping proprietary and/or
          confidential information and/or materials on the leased premises, and
          Landlord agrees that if Landlord becomes aware of any nonpublic
          information as a result of Landlord's access to the leased premises
          (whether pursuant to Section 12 of the Lease or otherwise), then
          Landlord agrees that Landlord will not disclose such information to
          any third party without Tenant's prior written consent.

     5.   Notwithstanding Section 15(C) of the Lease, Landlord will repair any
          items listed in Section 15(C ) if and to the extent that such items
          are covered by a warranty held by Landlord.

     6.   In addition to Section 19 of the Lease, Landlord will indemnify and
          hold Tenant harmless from any property damage, personal injury, suits,
          actions, liabilities, damages, cost of repairs or service, or any
          other loss caused, negligently or otherwise, by Landlord or Landlord's
          employees, patrons, guests, or invitees.

     7.   Not withstanding the provisions of Section 22 of the Lease, at the
          time that the Lease ends, Tenant may extend the term of the Lease for
          a period of up to six (6) additional months at a monthly rental rate
          period equal to 1.25 times the base monthly rent then in effect,
          provided that tenant gives Landlord notice of Tenant's intent to
          extend no later than three (3) months prior to the originally
          scheduled Expiration Date for the Lease. This extension shall not
          constitute a "holdover" and will not be deemed to be a breach of the
          Lease. In the event of such a six-month extension, Tenant shall have
          the right, upon expiration of such six-month extension, to renew the
          Lease pursuant to paragraph 1 of this Supplemental Addendum.

     8.   Landlord acknowledges that all improvements and other work items
          reflected on the Leasehold Construction Addendum (as attached to the
          Lease) shall be at the sole cost and expense of Landlord.

     9.   Whenever the Lease requires Tenant to obtain the consent of Landlord
          for a particular action or inaction, Landlord agrees that such consent
          shall not be unreasonably withheld, conditioned, or delayed. This
          paragraph 9 shall apply to the entire Lease and all appendices,
          attachments, addenda, and exhibits thereto.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Supplemental Addendum on the
day and year first written above.

<TABLE>
<S>                                                  <C>
LANDLORD:                                            TENANT:

By: /s/ Paul Vick                                    LIQUIDMETAL TECHNOLOGIES
    -------------------------------
        Paul Vick

By: /s/ Sherry Vick                                  By:  /s/ David G. Binnie
    -------------------------------                       ------------------------------
        Sherry Vick                                           David G. Binnie
</TABLE>

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