Exhibit 10.1

 

BUSINESS DEVELOPMENT AGREEMENT

 

THIS BUSINESS DEVELOPMENT AGREEMENT (the “Agreement”) is effective as of        
                         , 2020 (the “Effective Date”), by and between
LIQUIDMETAL TECHNOLOGIES, INC., a Delaware corporation having its principal
place of business at 20321 Valencia Circle, Lake Forest, California 92630
(“Liquidmetal”), and EUTECTIX, LLC, a Delaware limited liability company having
an address of 323 Main Street, Chatham, New Jersey 07928 (“Eutectix”).
Liquidmetal and Eutectix are sometimes referred to herein individually as a
“Party” or collectively as the “Parties.”

 

RECITALS

 

WHEREAS, Liquidmetal is a global leader in the development and pursuit of
applications for amorphous alloys and has developed relationships with various
prominent corporations with respect to the development of parts and products
made from amorphous alloys;

 

WHEREAS, Eutectix is a global leader in the development and production of
amorphous alloys and other high-quality technical alloys, and possesses certain
intellectual property in connection therewith which is not provided for under
this Agreement;

 

WHEREAS, Liquidmetal and DongGuan Eontec Co., Ltd. (“Eontec”) are parties to a
Parallel License Agreement dated March 10, 2016 (the “Affiliate License
Agreement”), pursuant to which Liquidmetal and Eontec license to each other
certain technology and intellectual property relating to bulk metallic glasses
as further described therein, a copy of which has been provided to Eutectix;

 

WHEREAS, Liquidmetal desires to utilize Eutectix’s capabilities with respect to
amorphous alloy development and the manufacture of amorphous alloy parts, which
Liquidmetal develops with, and intends to sell to, Liquidmetal’s customers, and
Eutectix is interested in providing such product development and manufacturing
services to Liquidmetal;

 

WHEREAS, Liquidmetal and Eutectix desire to further collaborate with respect to
the advancement and commercialization of amorphous alloy materials and
technologies;

 

WHEREAS, Eutectix desires to utilize Liquidmetal processing equipment and
methodologies to independently develop new metallic glass technologies,
including, but not limited to, new metallic glass alloys and related products
for sale, as further described herein; and

 

WHEREAS, the Parties perceive an opportunity for shared growth in worldwide
sales of products made from bulk metallic glasses.

 

NOW THEREFORE, in consideration of the premises and the mutual covenants and
agreements set forth herein and other good and valuable consideration, the
receipt and sufficiency are hereby acknowledged, the Parties hereto hereby agree
as follows:

 

 

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AGREEMENT

 

1. TERM.

 

The initial term of this Agreement shall commence on the Effective Date and
shall continue until the fifth (5th) anniversary of the Effective Date (the
“Term”), unless the Agreement is sooner terminated in accordance with the terms
of this Agreement. Upon the expiration of the Term, the Term shall automatically
extend for successive 12-month periods until one Party terminates the Agreement
by providing at least 180 days prior written notice to the other Party prior to
the expiration of the then-current term or unless sooner terminated in
accordance with the terms of this Agreement.

 

2. EQUIPMENT AND ALLOY.

 

 

2.1

Equipment License. Upon and subject to the terms and conditions stated in this
Agreement, on the Effective Date, for the consideration described in this
Agreement and Eutectix’s performance of its other obligations under this
Agreement, Liquidmetal grants to Eutectix the right and license to use the
following equipment owned by Liquidmetal (the “Licensed Equipment”) (i) solely
for use on Liquidmetal’s behalf, (ii) for Eutectix’s own limited use in the
production of Liquidmetal Products (as defined below) or Licensed Products (as
defined below), (iii) for the continued development of applications utilizing
bulk metallic glasses in cooperation between Liquidmetal and Eutectix, and (iv)
independently by Eutectix pursuant to the terms of this Agreement:

 

 

(a)

Two (2) Engel e-motion 310/120 injection molding machines, and associated
equipment;

 

 

(b)

Two (2) Eontec 300-C Die Casting Machines, and associated equipment;

 

 

(c)

One (1) Flow M21313B Waterjet Machine;

 

 

(d)

Two (2) DMG Mori Milltap 700 CNC machines, and associated consumables and
fixtures;

 

 

(e)

Equipment for cut, mount, and polish analysis operations, including:

 

 

i.

One (1) Struers Accutom-10 cut-off machine

 

 

ii.

One (1) Struers Secotom-50 precision cutting machine

 

 

iii.

One (1) Struers Tegramin-30 tabletop grinding machine

 

 

iv.

One (1) Keyence VH X-S550E microscope

 

 

(f)

Equipment required for vibratory deburring operations, including:

 

 

i.

One (1) Rosler R 125 EC-KF rotary vibrator

 

 

ii.

One (1) Rosler R 125 EC rotary vibrator

 

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(g)

Equipment required for passivation operations, including:

 

 

i.

One (1) ESMA, Inc. E782C ultrasonic cleaning system

 

 

(h)

One (1) Dry Cooler D455 chill water system;

        (i) One (1) MTS 810 MTS mechanical testing frame; and

 

 

(j)

Molds and fixtures needed for production of sample parts.

 

 

2.2

Alloys Purchase. Upon and subject to the terms and conditions of this Agreement,
on the Effective Date, for such consideration as described in this Agreement and
Eutectix’s performance of its other obligations pursuant to this Agreement,
Liquidmetal hereby sells, assigns, conveys, transfers, and delivers to Eutectix,
and Eutectix hereby acquires from Liquidmetal, free and clear of all liens
(other than and to the extent that liens may be imposed by or arise by operation
of law), all of Liquidmetal’s right, title, and interest in and to the following
alloys (the “Transferred Alloy”), subject to Liquidmetal’s right to use said
Transferred Alloy or the corresponding replacement thereof as specified in this
Agreement:

 

 

(a)

Approximately three thousand kilograms (3,000 kg) of “virgin” LM105 Alloy

 

 

(b)

Approximately one thousand kilograms (1,000 kg) of “virgin” 106C Alloy

 

 

(c)

Approximately two thousand kilograms (2,000 kg) of LM 105 Alloy revert

 

 

2.3

Shipment and Delivery. Licensed Equipment and Transferred Alloy shall be
delivered to Eutectix Ex Works Lake Forest (as defined by Incoterms 2010). Title
to the Transferred Alloy shall vest to Eutectix at the point of delivery.
Eutectix will bear all delivery and shipping expenses with respect to the
Licensed Equipment and Transferred Alloy from Liquidmetal’s facility. THE
LICENSED EQUIPMENT AND TRANSFERRED ALLOY ARE BEING PROVIDED “AS IS” AND “WITH
ALL FAULTS” AND WITH NO WARRANTIES OF ANY KIND, INCLUDING WITHOUT LIMITATION
WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE.

 

 

2.4

License. Liquidmetal grants to Eutectix during the Term of this Agreement and
subject to the Field of Use Restrictions (as defined below), a royalty-bearing,
worldwide, non-transferrable, non-exclusive license (or sublicense as the case
may be) to the Licensed Patents (as defined below) and the Licensed Technical
Information (as defined below) to make and have made, assemble and have
assembled, use, sell, offer to sell, import and offer to import, export and
offer to export, distribute and offer to distribute, repair, reconstruct,
practice, and maintain Licensed Products in the Field (as defined below). The
foregoing Licensed Patents and Licensed Technical Information shall not include
the right to sublicense the Licensed Patents and Licensed Technical Information
without the prior written consent of Liquidmetal. For purposes hereof, the
following definitions and provisions shall apply:

 

 

(a)

“Field” shall mean all fields of use except as described in the Field of Use
Restrictions.

 

 

(b)

“Field of Use Restrictions” shall mean the exclusions, conditions, limitations,
and restrictions described on Schedule 1 to this Agreement.

 

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(c)

“Licensed Patents” shall mean any and all Patents of Liquidmetal or any
Affiliate of Liquidmetal in existence at any time during the term of this
Agreement.

 

 

(d)

“Liquidmetal Product” shall mean any product or component made with one or more
amorphous alloys or bulk metallic glasses (or composite materials containing
amorphous alloys or bulk metallic glasses) (i) pursuant to an Order (as defined
below) for and on behalf of Liquidmetal by Eutectix in connection with the
Licensed Equipment; (ii) purchased by Liquidmetal from third party manufacturers
other than Eutectix, and (iii) manufactured by Liquidmetal directly.

 

 

(e)

“Licensed Product” shall mean any metallic glass product produced by Eutectix
for its customers (i) the manufacture, use, offer for sale, sale or importation
of which by Eutectix or its permitted sublicensees would, but for this
Agreement, infringe a valid claim of a Licensed Patent in a jurisdiction where
such valid claim exists, (ii) that incorporates or uses any element of the
Licensed Technical Information in its design or manufacture, or (iii) that is
manufactured or processed in any respect, in whole or in part, with any part of
the Licensed Equipment listed in Sections 2.1(a) and (b).

 

 

(f)

“Licensed Technical Information” shall mean all information as documented in
Schedule 3 hereto, as may be amended from time to time, including but not
limited to, unpublished research and development information, unpatented
inventions, know-how, trade secrets, and technical data, of which Eutectix has
no prior knowledge (where prior knowledge cannot be proven or documented) and is
not generally available in the public domain, which such Licensed Technical
Information is in the possession of Liquidmetal and is reasonably necessary or
useful for using the Licensed Patents to produce Licensed Products within the
Field, provided Liquidmetal has the right to disclose such items to Eutectix.
Liquidmetal shall deliver all available Licensed Technical Information to
Eutectix within ten (10) days of the Effective Date.

 

 

(g)

“Patents” shall mean any and all letters patents (including, but not limited to,
patents of implementation, improvement, or addition, utility model and
appearance design patents, and inventors certificates, as well as all
divisionals, reissues, reexaminations, continuations, continuations-in-part,
renewals, extensions, substitutions, foreign equivalents and counterparts, and
any other forms of patent protection directed to the inventions covered by any
of the foregoing), applications for letters patent (including, but not limited
to, all foreign counterpart patent applications, and letters patent that may
issue on such applications, all as of the Effective Date as documented in
Schedule 3 hereto and any subsequent revisions to Schedule 3 by Liquidmetal
during the Term of this Agreement.

 

 

(h)

Enforcement. Liquidmetal and its Affiliates shall have the sole right and
discretion to prevent, abate, or seek legal recourse for any actual or
threatened misappropriation or infringement and attempt to resolve any claims
relating to Liquidmetal’s Intellectual Property (as defined herein), including
the Licensed Patents and Licensed Technical Information.

 

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2.5

Bailment of Equipment. Eutectix will provide facility space for the Licensed
Equipment in a Eutectix-owned or leased secure and protected property that is
restricted from unauthorized access or viewing (the “Eutectix Property”).
Eutectix shall maintain the Licensed Equipment only in such designated Eutectix
Property and shall not relocate the Licensed Equipment from such Eutectix
Property without the prior written consent of Liquidmetal. Once Eutectix
receives the Licensed Equipment, Eutectix will acknowledge in writing the
receipt thereof. Eutectix’s acknowledgement of receipt of the Licensed Equipment
will constitute an acknowledgement that Eutectix has received and accepted and
possesses the Licensed Equipment on bailment for the benefit of Liquidmetal and
that such receipt of the Licensed Equipment is not subject to the terms and
conditions of any applicable laws pertaining to sales and/or secured
transactions. The Licensed Equipment:

 

 

(a)

is and shall remain the sole property of Liquidmetal,

 

 

(b)

shall be made available for reasonable inspection upon at least three (3) weeks
prior written request by Liquidmetal, such inspection not to occur more than
once per year during the Term, to be conducted with minimal business disruption
to Eutectix and to be conducted at Liquidmetal’s sole cost and expense and

 

Eutectix shall, at its own expense:

 

 

(c)

keep the Licensed Equipment in a suitable place, safe from loss or damage;

 

 

(d)

subscribe to an insurance policy from an insurance company reasonably acceptable
to Eutectix covering the Licensed Equipment at full replacement value against
fire, theft and such other normal business risks, with a waiver of subrogation
in favor of Liquidmetal and with Liquidmetal to be named as an additional
insured and loss payee, and provide, upon receipt of a written request from
Liquidmetal, a certificate evidencing such insurance, and comply with all
requirements associated with such insurance policy;

 

 

(e)

keep the Licensed Equipment in good working order and condition, excepting
normal wear and tear, and perform all regular and routine maintenance and
repairs on the Equipment;

 

 

(f)

perform no act or omission inconsistent with Liquidmetal’s sole ownership of the
Licensed Equipment, nor attempt to sell, assign, loan, donate, mortgage, pledge
or in any other manner permit the Licensed Equipment to be encumbered;

 

 

(g)

comply with all reasonable directions given by Liquidmetal regarding (A) the
inspection of the Licensed Equipment, including upon termination or expiration
of the Agreement and in connection with any non-ordinary or non-routine
revisions or alterations to the Licensed Equipment, (B) the removal and shipment
of the Licensed Equipment, including upon termination or expiration of the
Agreement, and (C) protecting or perfecting Liquidmetal’s interest in the
Licensed Equipment, including by executing and permitting Liquidmetal to file
financing statements and other documents with respect thereto, at Liquidmetal’s
expense; and

 

 

(h)

shall be liable for all loss or damage to Licensed Equipment, except for normal
wear and tear of the Licensed Equipment.

 

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Eutectix may, with prior written consent of Liquidmetal (such consent not to be
unreasonably withheld, conditioned or delayed),

 

 

(i)

transfer or move any Licensed Equipment,

 

 

(j)

make or cause to be made any non-ordinary or non-routine revisions or
alterations to the Licensed Equipment.

 

 

2.6

Alloy Availability. During the initial three (3) years of the Term of this
Agreement, Eutectix shall make available alloy raw materials equal in kind and
quantity to the Transferred Alloy without cost, for use in Orders (as defined in
Section 3.1 below) placed by Liquidmetal.

 

 

2.7

Royalty. In consideration of the license of Liquidmetal Technical Information
and the Licensed Equipment granted by Liquidmetal, Eutectix agrees to pay
Liquidmetal a cash royalty based on a percentage of the invoice price of any
Licensed Products (but not including Liquidmetal Products) sold by Eutectix or
its permitted sublicensees and for which payment was actually received by
Eutectix. The cash royalty shall be an amount equal to six percent (6.0%) of the
Net Sales Price of the invoice price of any Licensed Products and for which
payment was actually received by Eutectix (the “Liquidmetal Royalty”). “Net
Sales Price” is defined as the gross invoice price actually received by Eutectix
or its permitted sublicensees on the sale of Licensed Products, less returns or
refunds, but before deduction of cash discounts. The Net Sales Price shall be
commercially reasonable, and in no case shall the Net Sales Price be less than
the cost of material consumed in a single manufacturing cycle, divided by the
number of Licensed Products produced by such single cycle. The Liquidmetal
Royalty shall be paid in U.S. dollars within 30 days after the end of each
calendar quarter, based on payments received for sales of Licensed Products made
during a given quarter. Liquidmetal hereby waives the payment of any Liquidmetal
Royalty otherwise due and payable pursuant to this Agreement until the one (1)
year anniversary of the Effective Date.

 

 

2.8

Royalties for Transactions Not at Arm’s Length. Eutectix agrees that in the
event any Licensed Products shall be sold (1) to any Affiliate (as defined
herein), or (2) to a corporation, firm, or association with which, or individual
with whom Eutectix or its stockholders or Affiliates shall have any agreement,
understanding, or arrangement (such as, among other things, an option to
purchase stock, or an arrangement involving a division of profits or special
rebates or allowances) without which agreement, understanding, or arrangement,
prices paid by such a corporation, firm, association or individual for the
Licensed Products would be higher than the Net Sales Price reported by Eutectix,
or if such agreement, understanding, or arrangement results in extending to such
corporation, firm, association, or individual lower prices for Licensed Products
than those charged to outside concerns buying similar products in similar
amounts and under similar conditions, then, and in any such events, the
royalties to be paid hereunder in respect of such Licensed Products shall be
computed based on an assumed or deemed Net Sales Price equal to those charged to
such outside concerns.

 

 

2.9

Commission. From time to time, Liquidmetal may encounter, develop, and refer to
Eutectix customer accounts for direct sales by Eutectix. Provided that such
referred customer is not already a Eutectix customer, Eutectix may accept such
customer referral, and in that case hereby agrees to pay Liquidmetal a cash
commission based on a percentage of the invoice price of Licensed Products sold
by Eutectix or its permitted sublicensees and for which payment was actually
received by Eutectix, in addition to the Liquidmetal Royalty. The cash
commission shall be an amount equal to six percent (6.0%) of the Net Sales Price
of the invoice price of Licensed Products sold by Eutectix or its permitted
sublicensees and for which payment was actually received by Eutectix (the
“Liquidmetal Commission”). The Liquidmetal Commission shall be paid in U.S.
dollars within 30 days after the end of each calendar quarter, based on payments
received for sales of Licensed Products made during a given quarter. Liquidmetal
hereby waives the payment of any Liquidmetal Commission otherwise due and
payable pursuant to this Agreement until the one (1) year anniversary of the
Effective Date. For the purposes of this Section, product development teams
within a single corporation or group of corporations under common control are
not the “same customer” as any other product development team unless they (i)
are organized within the same legal entity and under the same product division,
and (ii) operate within the same geographic territory.

 

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2.10

Report. Eutectix shall provide a report to Liquidmetal accompanying the
Liquidmetal Royalty and Liquidmetal Commission stating whether the sales were to
an Affiliate, the Net Sales Price actually received and the amount of
Liquidmetal Royalty and Liquidmetal Commission due and owing.

 

3. ORDERS: PRICING, PAYMENT TERMS, AND CAPACITY.

 

 

3.1

Pricing. During the Term of this Agreement, Liquidmetal may from time to time
purchase from Eutectix such “Liquidmetal Products” as specifically described in
a purchase order issued by Liquidmetal (an “Order”) to Eutectix at the prices
set forth in the Order (the “Prices”). The Parties shall negotiate the Prices in
good faith on a project-by-project basis, taking into consideration strategic
value, competitiveness, profitability, design issues, cost-drivers including
input material costs, export licensing of the Liquidmetal Products and payment
of broker’s fees, duties, tariffs and other similar charges, taxes, tariffs, or
charges imposed by any taxing authority upon the sale, shipment, storage, “value
add” or use of the Liquidmetal Products, set-up, tooling, non-recurring
engineering activities, and any other relevant factors. Prices (a) are in U.S.
Dollars, (b) include Eutectix’s standard packaging, and (c) are based on the
configuration set forth in the specifications provided to Eutectix by
Liquidmetal (the “Specifications”). Consistent with Section 2.6 above, from the
Effective Date, the Prices shall include zero U.S. dollars ($0.00) input
materials cost factor for all Orders requiring LM 105 Alloy and 106C Alloy input
materials until the earlier of the third anniversary of the Effective Date, or
the date upon which Liquidmetal has consumed alloy, including revert (assuming
the Transferred Alloy revert is suitable for use in such Orders), equivalent to
the respective quantities listed in Section 2.2 above.

 

 

3.2

Payment Terms. Eutectix may issue an invoice for Liquidmetal Products any time
after the shipment thereof to Liquidmetal. Payment terms are net 30 days after
the date of the invoice, or the date of receipt by Liquidmetal of the invoice if
the invoice is received more than 10 days after the date of the invoice. Unless
otherwise stated in the applicable Order or as otherwise agreed in writing by
the Parties, payment shall be made in U.S. Dollars.

 

 

3.3

Cost Reduction. Eutectix will work diligently with Liquidmetal in an effort to
reduce waste, enhance productivity, and decrease Prices through reductions in
the cost of producing Liquidmetal Products, all without adversely impacting
quality or delivery times. Throughout the term of this Agreement, Eutectix and
Liquidmetal will work cooperatively and take advantage of cost saving
technologies and other cost reduction opportunities to assist in maintaining a
competitive cost position. The Parties shall meet on a quarterly basis to
discuss specific cost reduction and productivity enhancement activities
(collectively, the “Activities”). In support of these efforts, Liquidmetal shall
provide to Eutectix its own estimates of direct sales costs, including
commissions, inspections, modifications, inventory, repackaging,
shipping/receiving, duties & tariffs, warranty services, and current overhead
rates. Notwithstanding any such estimates Liquidmetal may provide, Eutectix
shall set Prices in accordance with its known costs and margins.

 

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3.4

Forecasts; Manufacturing Capacity. In connection with any Order, Liquidmetal may
concurrent with such Order or subsequent thereto from time to time provide
Eutectix with a six (6) month rolling forecast (each, a “Forecast”) of its
projected additional purchases of Liquidmetal Products covered by an Order
(“Additional Product”). Forecasts will be prepared in good faith. Eutectix
agrees to reserve sufficient manufacturing capacity to satisfy the supply of
Additional Product in accordance with the applicable Forecast, provided that
Eutectix shall not be required to reserve in excess of ten percent (10%) of its
manufacturing capacity pursuant to this Section 3.4.

 

 

3.5

Quotation. Liquidmetal may from time to time request a price quote for certain
Liquidmetal Products (each such request, a “RFQ”). Eutectix agrees to provide a
timely response to Liquidmetal’s RFQ either providing Liquidmetal with such
requested quote (each, a “Quote”), or informing Liquidmetal of Eutectix’s intent
not to provide such requested quote.

 

 

3.6

Purchase Orders. Eutectix agrees to manufacture and deliver Liquidmetal Products
pursuant to Orders (or any changes thereto timely and reasonably requested by
Liquidmetal in writing and agreed to by Eutectix). Each Order shall be in the
form of a written or electronic communication. Liquidmetal and Eutectix shall
agree to the required Acceptance (as defined below) criteria before Eutectix
accepts an Order. The Parties shall negotiate in good faith to resolve any
disputed matter(s).

 

 

3.7

Shipments. Eutectix will make Liquidmetal Product shipments from Eutectix’s
facility of manufacture directly to Liquidmetal or, if directed by Liquidmetal
in writing, to Liquidmetal’s customers (“Customers”) on behalf of Liquidmetal.
In the event that Liquidmetal so directs, Eutectix will use packaging provided
by Liquidmetal at Liquidmetal’s cost indicating Liquidmetal as the seller of the
Product.

 

 

3.8

Delivery. Unless otherwise agreed in writing or in the applicable Order, all
Liquidmetal Product shipments shall be Ex Works (Incoterms 2010) Eutectix’s
facility of manufacture in Tolleson, Arizona. Title to and risk of loss or
damage to the Liquidmetal Product shall pass to Liquidmetal upon Eutectix’s
tender of the Liquidmetal Product to the common carrier.

 

 

3.9

Acceptance. Acceptance of the Liquidmetal Product shall be based on
characteristics that are measurable by a quality system and designed to
demonstrate compliance with the Specifications. Unless Liquidmetal notifies
Eutectix that the Liquidmetal Product does not meet the Specifications within
thirty (30) calendar days after receipt of the Liquidmetal Product, then the
Liquidmetal Product shall be deemed Accepted.

 

 

3.10

Changes. Liquidmetal may upon sufficient timely and reasonable written notice
make changes within the general scope of an Order, if agreed to by Eutectix.
Such changes may include, but are not limited to changes in (1) drawings, plans,
designs, procedures, Specifications or test specifications, (2) methods of
packaging and shipment, (3) quantities of Liquidmetal Products to be furnished,
or (4) delivery schedule. If appropriate, Liquidmetal will prepare an
Engineering Change Order (“ECO”), and Eutectix will communicate to Liquidmetal
any change in Prices and/or delivery schedule. Each ECO shall be mutually agreed
upon. Eutectix shall not make any changes to the design, material, or process of
manufacturing the Liquidmetal Products or any changes to the Specifications,
expect as may be agreed in writing by Liquidmetal in each instance.

 

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3.11

Supply. For avoidance of doubt, Liquidmetal may purchase Liquidmetal Products
from third parties other than Eutectix, and/or manufacture Liquidmetal Products
itself. Liquidmetal makes no commitment that it will purchase any particular
volume of any Liquidmetal Products from Eutectix.

       

3.12

Quality Specifications. Eutectix shall comply with the quality specifications
set forth by Liquidmetal and/or the Customer and agreed to in an Order. Eutectix
shall comply with the standards set forth in ISO 9001.

       

3.13

Eutectix Warranty. Eutectix warrants that the Product (i) will conform to the
Specifications, (ii) will be free from manufacturing defects (including all
defects in workmanship and any defects in materials that were not specified by
Liquidmetal or Customer), ) will be free and clear of all liens, encumbrances,
charges, claims, or adverse interests of any kind, (iii) will comply with, in
all stages of manufacture and distribution to Liquidmetal or Customer, the terms
of Section 10. The foregoing representations and warranties shall survive
delivery, inspection and payment and shall run in favor of Liquidmetal and its
Affiliates, and their respective successors, assigns and customers, both direct
and indirect.

       

3.14

Return Process. Liquidmetal and Eutectix shall concur in advance on all
Liquidmetal Products to be returned for repair or rework. All returns shall
state the specific reason for such return, and will be processed in accordance
with the return policies and processes agreed to in writing by Eutectix and
Liquidmetal. Eutectix shall pay all transportation costs for valid returns of
Liquidmetal Products to Eutectix and for the shipment of repaired or replacement
Liquidmetal Products to Customers, and Eutectix shall bear all risk of loss or
damage to such Liquidmetal Products while in transit.

       

3.15

Exclusions from Warranty. This warranty does not include remedy for defects in
Liquidmetal Products resulting from (a) Customer’s design of Liquidmetal
Products, (b) Eutectix’s compliance with Liquidmetal’s Specifications, or (c)
accident, disaster, neglect, abuse, misuse or improper handling by Customer or
Liquidmetal.

       

3.16

Organization and Qualification. Eutectix is an entity duly incorporated or
otherwise organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, with the requisite power and
authority to own and use its properties and assets and to carry on its business
as currently conducted. Eutectix is not in violation nor default of any of the
provisions of its respective certificate or articles of incorporation, bylaws or
other organizational or charter documents. Eutectix is duly qualified to conduct
business and is in good standing as a foreign corporation or other entity in
each jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, except where the failure to be
so qualified or in good standing, as the case may be, could not have or
reasonably be expected to result in: (i) a material adverse effect on the
legality, validity or enforceability of any this Agreement, (ii) a material
adverse effect on the results of operations, assets, business, prospects or
condition (financial or otherwise) of Eutectix, or (iii) a material adverse
effect on Eutectix’s ability to perform in any material respect on a timely
basis its obligations under this Agreement (any of (i), (ii) or (iii), a
“Material Adverse Effect”) and no proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or
curtail such power and authority or qualification.

 

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3.17

Solvency. Eutectix does not intend to incur debts beyond its ability to pay such
debts as they mature (taking into account the timing and amounts of cash to be
payable on or in respect of its debt). Eutectix has no knowledge of any facts or
circumstances which lead it to believe that it will file for reorganization or
liquidation under the bankruptcy or reorganization laws of any jurisdiction
within one year from the Effective Date.

       

3.18

Remedy. THE WARRANTIES SET FORTH IN THIS ARTICLE 3 ARE THE SOLE WARRANTIES GIVEN
BY EUTECTIX AND ARE IN LIEU OF ANY OTHER WARRANTIES EITHER EXPRESS OR IMPLIED.
EUTECTIX DOES NOT MAKE ANY WARRANTIES REGARDING MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE. Eutectix agrees to indemnify, defend and hold the
Liquidmetal Indemnified Parties (as defined in Section 12.1) harmless from and
against any and all claims, demands liabilities, losses, costs and expenses
(including without limitation, costs of investigation and reasonable attorney’s
fees) irrespective of the theory upon which based, which Liquidmetal or any
other Liquidmetal Indemnified Party may suffer or incur as a result of any
breach of the representations or warranties of Eutectix set forth in this
Article 3.

 

4. LIQUIDMETAL’S REPRESENTATIONS AND WARRANTIES.

 

 

4.1

Liquidmetal represents and warrants that it owns all right, title and interest
in and to the Licensed Equipment, except for that equipment listed in Section
2.1(b). Liquidmetal represents and warrants that it has all necessary right and
authority to deliver and provide to Eutectix the Licensed Equipment for
Eutectix’s sole retention, possession and use as permitted herein. Liquidmetal
represents and warrants that it will perform no act or omission that is
inconsistent with Eutectix’s retention, possession and use of the Licensed
Equipment during the Term.

 

 

4.2

Liquidmetal represents and warrants that there are no outstanding liens,
security interests, mortgages, claims, pledges, obligations or other
encumbrances of any kind against the Licensed Equipment and that Liquidmetal
will not and will not permit any third party to place any liens, security
interests, mortgages, claims, pledges, obligations or other encumbrances of any
kind against the Licensed Equipment during the Term.

 

 

4.3

Liquidmetal represents and warrants that as delivered to Eutectix, Liquidmetal
is not aware of any claim or assertion by any third party that the Licensed
Equipment misappropriates or infringes upon any third party’s Intellectual
Property rights.

 

 

4.4

Liquidmetal represents and warrants that as of the delivery date to Eutectix of
the Licensed Equipment, the Licensed Equipment was functional, operable, and
usable.

 

 

4.5

Liquidmetal represents and warrants that Liquidmetal Products do not
misappropriate or infringe upon any third party’s Intellectual Property rights.
Liquidmetal represents and warrants that it is not aware of any claim or
assertion by any third party that the Liquidmetal Products misappropriates or
infringes upon any third party’s Intellectual Property rights.

 

 

4.6

Liquidmetal represents and warrants that it will maintain the Affiliate License
Agreement in full force and effect during the Term and will perform no act or
omission that would jeopardize the ongoing effectiveness of the Affiliate
License Agreement during the Term.

 

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4.7

Organization and Qualification. Liquidmetal is an entity duly incorporated or
otherwise organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, with the requisite power and
authority to own and use its properties and assets and to carry on its business
as currently conducted. Liquidmetal is not in violation nor default of any of
the provisions of its respective certificate or articles of incorporation,
bylaws or other organizational or charter documents. Liquidmetal is duly
qualified to conduct business and is in good standing as a foreign corporation
or other entity in each jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary, except
where the failure to be so qualified or in good standing, as the case may be,
could not have or reasonably be expected to result in: (i) a material adverse
effect on the legality, validity or enforceability of any this Agreement, (ii) a
material adverse effect on the results of operations, assets, business,
prospects or condition (financial or otherwise) of Liquidmetal, or (iii) a
material adverse effect on Liquidmetal’s ability to perform in any material
respect on a timely basis its obligations under this Agreement (any of (i), (ii)
or (iii), a “Material Adverse Effect”) and no proceeding has been instituted in
any such jurisdiction revoking, limiting or curtailing or seeking to revoke,
limit or curtail such power and authority or qualification.

 

 

4.8

Solvency. Liquidmetal does not intend to incur debts beyond its ability to pay
such debts as they mature (taking into account the timing and amounts of cash to
be payable on or in respect of its debt). Liquidmetal has no knowledge of any
facts or circumstances which lead it to believe that it will file for
reorganization or liquidation under the bankruptcy or reorganization laws of any
jurisdiction within one year from the Effective Date.

 

 

4.9

THE WARRANTIES SET FORTH IN THIS ARTICLE 4 ARE THE SOLE WARRANTIES GIVEN BY
LIQUIDMETAL AND ARE IN LIEU OF ANY OTHER WARRANTIES EITHER EXPRESS OR IMPLIED.
LIQUIDMETAL DOES NOT MAKE ANY WARRANTIES REGARDING MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE. Liquidmetal agrees to indemnify, defend and hold the
Eutectix Indemnified Parties (as defined in Section 12.2) harmless from and
against any and all claims, demands liabilities, losses, costs and expenses
(including without limitation, costs of investigation and reasonable attorney’s
fees) irrespective of the theory upon which based, which Eutectix or any other
Eutectix Indemnified Party may suffer or incur as a result of any breach of the
representations and warranties of Liquidmetal set forth in this Article 4.

 

5. AGREEMENT TERMINATION.

 

 

5.1

Termination for Cause. Either Party may terminate this Agreement hereunder for
default if the other Party materially breaches this Agreement; provided,
however, no termination right shall accrue until thirty (30) days after the
defaulting Party is notified in writing of the material breach and has failed to
cure within the thirty (30) day period after notice of a material breach.

       

5.2

Termination for Convenience. Either Party may terminate this Agreement for any
reason upon providing 180 days prior written notice to the other Party prior to
the expiration of the then-current term or unless sooner terminated in
accordance with the terms of this Agreement.

 

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5.3

Termination by Operation of Law. This Agreement shall immediately and
automatically terminate should either Party (a) become insolvent; (b) enter into
or file a petition, arraignment or proceeding seeking an order for relief under
bankruptcy laws of its respective jurisdiction; (c) enter into receivership of
any of its assets; or (d) enter into a dissolution or liquidation of its assets
or an assignment for the benefit of its creditors.

       

5.4

Consequences of Termination. In the event this Agreement expires or is
terminated for any reason other than a breach by Eutectix, Liquidmetal shall
purchase from Eutectix existing raw material inventory at the purchase price
(including delivery charges) paid by Eutectix to its suppliers in connection
with the Orders accepted by Eutectix hereunder. Upon expiration or termination
of this Agreement:

 

 

(a)

Liquidmetal shall

 

 

 

i.

Pay Eutectix any amounts rightfully owing under each outstanding Order in
accordance with the payment terms set forth in this Agreement;

         

 

ii.

Subject to Eutectix’s right to finish manufacturing work in process as set forth
below, have the unconditional right to possess or repossess the Licensed
Equipment (as defined in Section 2.1) and take all actions it deems appropriate
to effect such possession or repossession at its own cost; and

 

 

(b)

Eutectix shall immediately

 

 

 

i.

cease all activities under this Agreement (including exercising its rights under
the licenses granted hereunder), unless and to the extent otherwise agreed or
requested in writing by Liquidmetal;

         

 

ii.

Notwithstanding the foregoing, with regard to orders received and accepted by
Eutectix before expiration or notice of termination, Eutectix may finish making
any products in process, may conclude any orders in process, including finishing
manufacturing of such products and shipping such products to the customer for up
to 6 months after termination or expiration of this Agreement;

            iii. Comply with Section 9.2 and             iv. transfer title and
deliver to Liquidmetal, in the manner and to the extent requested in writing by
Liquidmetal, such completed or partially completed Liquidmetal Products,
drawings and other information Eutectix has produced or acquired in connection
with this Agreement. Liquidmetal shall not be responsible to Eutectix for any
compensation, reimbursement, profits, expenses, losses or damages whatsoever as
a result of any expiration or termination of the Agreement. Any such expiration
or termination shall be without prejudice to any other rights and remedies that
Liquidmetal may be entitled to at law or in equity.

 

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5.5

Right to Purchase. Upon expiration or termination of this Agreement for any
reason, Eutectix shall have the option to purchase some or all of the Licensed
Equipment at fair market value, less any amounts owed to Eutectix by
Liquidmetal, except the equipment listed under Section 2.1(b) above. The
following additional terms shall apply to Eutectix’s exercise of this option:

 

 

(a)

Eutectix’s option hereunder shall be exercisable by providing Liquidmetal with
written notice of its intention to exercise its chosen option no later than the
effective date of termination. Such notice shall include a description of the
assets Eutectix will purchase (the “Optioned Assets”).

 

 

(b)

In the event that Eutectix and Liquidmetal cannot agree to a fair market value
for the Optioned Assets, then the fair market value shall be determined by an
independent third-party appraisal. Eutectix and Liquidmetal shall each select
one independent, qualified appraiser, and the two so selected shall select a
third appraiser, all three to independently from one another determine the fair
market value of the Optioned Assets. The purchase price shall be the mean of the
fair market values as determined by the three appraisers.

 

 

(c)

The closing for the purchase of the Optioned Assets will take place no later
than sixty (60) days after the termination, unless the Parties cannot agree on
the price, in which case, closing will take place no later than sixty (60) days
after the three independent appraisals have been received. Eutectix will pay the
purchase price in full at the closing. Liquidmetal must sign all documents of
assignment and transfer as are reasonably necessary for purchase of the Optioned
Assets by Liquidmetal.

 

 

(d)

In the event that Eutectix does not exercise its right to purchase the Optioned
Assets as set forth above, Liquidmetal will be free to keep or to sell, after
such termination to any third party, all of the Optioned Assets and shall be
responsible for timely removing equipment not purchased by Eutectix at
Liquidmetal’s own expense. In the event Liquidmetal fails to timely remove such
Optioned Assets, in light of the periods for continued operation in Section
5.4(b)(ii) and closing in Section 5.5(c), Eutectix may dispose of them, at
Liquidmetal’s cost, with no liability to Eutectix.

 

 

5.6

Survival. The terms of this Agreement that by their nature or their express
terms are intended to survive its expiration or termination (including without
limitation, indemnification, warranty, insurance, bailment, and confidentiality
provisions), and any and all rights, remedies and obligations that arose or are
incurred prior to expiration or termination, shall survive expiration or
termination of this Agreement.

 

6. TRAINING AND OTHER SERVICES.

 

 

6.1

Training and Technical Assistance. At any time within one (1) year of the
Effective Date, upon request by Eutectix, Liquidmetal shall remotely supply such
of its then-existing engineering, facilities, or manufacturing experts to
Eutectix, as shall be reasonably necessary to assist in the safe and effective
installation, operation, troubleshooting, and maintenance of the Licensed
Equipment. In the same period, upon request by Eutectix, and subject to
availability, Liquidmetal shall provide on-site support of the same kind.
Eutectix shall pay to Liquidmetal the reasonable documented travel and
accommodation expenses associated with such on-site service.

 

 

6.2

DFM. Upon request by Eutectix, Liquidmetal, at its own cost, shall provide
engineering support for the design of Liquidmetal Products and equipment molds
for optimal manufacturability (that is, engineering the design of the Product in
such a way that the Product is easy to manufacture).

 

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6.3

Research, Development, and Collaboration. Eutectix will meet with Liquidmetal on
at least an annual basis to discuss ways in which Eutectix and Liquidmetal can
collaborate on advancements and improvements to the composition, processing, and
application of bulk metallic glasses and composites and derivatives thereof, and
Eutectix will make available to Liquidmetal any information regarding processing
technologies, bulk metallic glasses, amorphous alloys, and derivatives and
compositions and improvements thereto used by Eutectix in the manufacture of
Liquidmetal Products. The information exchanged at such meetings will be owned
in accordance with Article 8.

 

7. FORCE MAJEURE.

 

 

7.1

Force Majeure Event. For purposes of this Agreement, a “Force Majeure Event”
shall mean the occurrence of unforeseen circumstances beyond a Party’s control
and without such Party’s negligence or intentional misconduct, including, but
not limited to, any act by any governmental authority, act of war, natural
disaster, strike, boycott, embargo, shortage, riot, lockout, labor dispute, and
civil commotion.

       

7.2

Notice of Force Majeure Event. Neither Party shall be responsible for any
failure to perform due to a Force Majeure Event provided that such Party gives
notice to the other Party of the Force Majeure Event as soon as reasonably
practicable, but not later than fifteen (15) days after the date on which such
Party knew of the commencement of the Force Majeure Event, specifying the nature
and particulars thereof and the expected duration thereof.

       

7.3

Termination of Force Majeure Event. The Party claiming a Force Majeure Event
shall use reasonable efforts to mitigate the effect of any such Force Majeure
Event and to cooperate to develop and implement a plan of remedial and
reasonable alternative measure to remove the Force Majeure Event. Upon the
cessation of the Force Majeure Event, the Party affected thereby shall
immediately notify the other Party of such fact, and use its best efforts to
resume normal performance of its obligations under the Agreement as soon as
possible.

       

7.4

Limitations. Notwithstanding that a Force Majeure Event otherwise exists; the
provisions of this Article shall not excuse (i) any obligation of either Party
that arose before the occurrence of the Force Majeure Event causing the
suspension of performance; or (ii) any late delivery of Product caused solely by
negligent acts or omissions on the part of such Party.

       

7.5

Termination for Convenience. In the event a Party fails to perform any of its
obligations for any reasons defined in this Article 7 for a cumulative period of
ninety (90) days or more from the date of such Party’s notification to the other
Party, then the other Party at its option may extend the corresponding delivery
period for the length of the delay, or terminate this upon written notice.

 

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8. OWNERSHIP OF INTELLECTUAL PROPERTY.

 

 

8.1

Definitions.

 

 

8.1.1

For purposes of this Agreement, “Amorphous Alloy” means any one or more
amorphous alloys or bulk metallic glasses (or composite materials containing
amorphous alloys or bulk metallic glasses) limited to the Liquidmetal Products,
amorphous alloys marketed or sold under the Liquidmetal® brand, and Licensed
Products.

 

 

8.1.2

“Intellectual Property” means any and all inventions (whether or not protected
or protectable under patent laws), works of authorship, information fixed in any
tangible medium of expression (whether or not protected or protectable under
copyright laws), moral rights, trade secrets, developments, designs,
applications, processes, know-how, discoveries, ideas (whether or not protected
or protectable under trade secret laws), and all other subject matter protected
or protectable under Patent, copyright, moral right, trademark, trade secret, or
other laws, including, without limitation, all new or useful art, combinations,
formulae, manufacturing techniques, technical developments, applications, data
and research results.

 

 

8.1.3

“New Amorphous Alloy Technology” means, to the extent developed or acquired
after the Effective Date by a Party, alone, with the other Party or with a third
party, in connection with Orders under this Agreement, the Licensed Patents, or
the Licensed Technical Information, all Amorphous Alloys and/or all Intellectual
Property relating to the composition, processing, properties, or applications of
Amorphous Alloys, and all patents therefor, including, but not limited to,
improvements to patents.

 

 

(a)

“New Alloy Technology” means a New Amorphous Alloy Technology that concerns only
the composition, properties, or raw material processing of Amorphous Alloys.

 

 

(b)

“New Process Technology” means a New Amorphous Alloy Technology that concerns
only the process of converting Amorphous Alloy raw material into usable or
saleable parts or components, or equipment related thereto.

 

 

(c)

“New Application Technology” means a New Amorphous Alloy Technology that
concerns only customer end-uses for parts and components manufactured of
Amorphous Alloys.

 

 

8.2

New Technology Ownership. Ownership over New Amorphous Alloy Technologies shall
be determined as follows:

 

 

8.2.1

New Alloy Technology. New Alloy Technologies that have been developed by a Party
alone or with a third party shall be solely owned by the developing Party. New
Alloy Technologies that have been developed by cooperation of the Parties shall
be jointly and equally owned by the Parties, and any royalties for the use
thereof by third parties shall be shared equitably between the Parties. The
Parties shall work cooperatively toward the appropriate patent or other legal
protection of such jointly and equally owned Intellectual Property.

 

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8.2.2

New Process Technology. New Process Technologies that have been developed by
Liquidmetal, alone or with a third party, shall be solely owned by Liquidmetal.
New Process Technologies that have been developed by Eutectix, alone or with a
third party, shall be solely owned by Eutectix, and, if permitted, Eutectix
shall grant Liquidmetal a license to such New Process Technologies as set forth
in Section 8.3 below. New Process Technologies that have been developed by
cooperation of the Parties shall be jointly and equally owned by the Parties,
and any royalties for the use thereof by third parties shall be shared equitably
between the Parties. The Parties shall work cooperatively toward the appropriate
patent or other legal protection of such jointly and equally owned Intellectual
Property.

 

 

8.2.3

New Application Technology. New Application Technologies that have been
developed by Liquidmetal, alone or with a third party, shall be solely owned by
Liquidmetal. New Application Technologies that have been developed by Eutectix
shall be solely owned by Eutectix, and Eutectix shall negotiate with Liquidmetal
a license to such New Application Technologies as set forth Section 8.4 below.
New Application Technologies that have been developed by Eutectix with a third
party shall be owned by Eutectix and the third party, and, if permitted by such
third party, Eutectix shall negotiate with Liquidmetal a license to such New
Application Technology as set forth in Section 8.4 below in the case that (i)
Eutectix retains the authority to grant a such license, and (ii) the New
Application Technology is derived in whole or in part from Liquidmetal
Intellectual Property. New Application Technologies that have been developed by
cooperation of the Parties shall be jointly and equally owned by the Parties,
and any royalties for the use thereof by third parties shall be shared equitably
between the Parties. The Parties shall work cooperatively toward the appropriate
patent or other legal protection of such jointly and equally owned Intellectual
Property.

 

 

8.3

New Process Technology License. Eutectix hereby grants to Liquidmetal a
fully-paid up, royalty-free, perpetual, world-wide, non-exclusive license to any
New Process Technologies in which Eutectix acquires licensing rights pursuant to
Section 8.2 above.

 

 

8.4

New Application Technology License Negotiation. The Parties shall negotiate in
good faith a royalty-bearing, perpetual, world-wide, non-exclusive license to
any New Application Technology in which they acquire rights as set forth in
Section 8.2.3 above. Royalties and other terms shall be commercially reasonable
and negotiated by the Parties in good faith.

 

 

8.5

Assignment & Cooperation. To the extent that the Parties have jointly developed
any New Amorphous Alloy Technology and they have agreed that such New Amorphous
Alloy Technology will be jointly owned, as set forth in Section 8.2 above, each
Party hereby assigns to the other, and will cause its employees, contractors,
representatives, successors, assigns, Affiliates, parents, subsidiaries,
officers and directors to assign to the other, a co-equal right, title and
interest in and to any such jointly developed New Amorphous Alloy Technology.
The parties agree to cooperate and cause their employees and contractors to
cooperate in the preparation and prosecution of patent applications relating to
any joint development work concerning New Process Technology or New Application
Technology.

 

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9. CONFIDENTIALITY.

 

 

9.1

Certain Definitions. For purposes hereof, “Confidential Information” shall mean
any and all commercial, technical, financial, proprietary, and other information
relating to a Discloser, its Affiliates, and their respective business
operations, including, but not limited to, samples, data, technical information,
know-how, formulas, ideas, inventions, discoveries, patents, patent
applications, Intellectual Property, product development plans, demonstrations,
business and financial information, applications and designs, and all
manifestations or embodiments relating to the foregoing and all improvements
made thereto, in whatever form provided, whether oral, written, visual,
machine-readable, electronic, or otherwise. “Confidential Information” also
includes any information described above which a Discloser obtains from a third
party and which the Discloser treats as proprietary or designates as
confidential, whether or not owned or developed by the Discloser. “Discloser”
shall mean the Party that is disclosing Confidential Information under this
Agreement, regardless of whether such Confidential Information is being provided
directly by such Party, by a Representative of the Party, or by any other person
that has an obligation of confidentiality with respect to the Confidential
Information being disclosed. “Recipient” shall mean the Party receiving
Confidential Information that is protected under this Agreement.
“Representatives” shall mean the respective directors, officers, employees,
financial advisors, accountants, attorneys, agents, and consultants of a Party.

       

9.2

Restrictions and Covenants. Except as otherwise provided herein, each Party
agrees that, in its capacity as the Recipient of Confidential Information, it
will (i) hold the Discloser’s Confidential Information in strict confidence, use
a high degree of care in safeguarding the Discloser’s Confidential Information,
and take all precautions necessary to protect the Discloser’s Confidential
Information including, at a minimum, all precautions the Recipient normally
employs with respect to its own Confidential Information, (ii) not divulge any
of the Discloser’s Confidential Information or any information derived therefrom
to any other person (except as set forth in Section 9.3 hereof), (iii) not make
any use whatsoever at any time of the Discloser’s Confidential Information
except as is necessary in the performance of Recipient’s specific duties under
this Agreement, (iv) not copy, reverse engineer, alter, modify, break down, melt
down, disassemble or transmit any of the Discloser’s Confidential Information,
(v) not, within the meaning of United States or other export control laws or
regulations, export or re-export, directly or indirectly, including but not
limited to export on the Internet or other network service, any of the
Discloser’s Confidential Information, (vi) notify the Discloser in writing
immediately upon discovery by the Recipient or its Representatives of any
unauthorized use or disclosure of the Discloser’s Confidential Information, and
(vii) upon the termination or expiration of this Agreement, immediately return
to the Discloser or destroy (at the option of the Recipient) all such
Confidential Information, including all originals and copies.

       

9.3

Disclosure to Representatives. The Recipient may only disseminate the
Discloser’s Confidential Information to its Representatives who have been
informed of the Recipient’s obligations under this Agreement and are bound by an
obligation of confidentiality and non-use with respect to the Discloser’s
Confidential Information at least as broad in scope as the Recipient’s
obligations under this Agreement. The Recipient agrees to reasonably restrict
disclosure of the Discloser’s Confidential Information to the smallest number of
the Recipient’s Representatives which have a need to know the Confidential
Information. The Recipient shall be responsible for enforcing this Agreement as
the Recipient’s Representatives and shall take such action (legal or otherwise)
to the extent necessary to cause them to comply with this agreement.

       

9.4

Enforcement. The Recipient acknowledges and agrees that due to the unique nature
of the Licensed Technical Information and other Confidential Information of the
Discloser, there can be no adequate remedy at law for any breach of its
obligations hereunder, which breach may result in irreparable harm to the
Discloser, and therefore, that upon any such breach or any threat thereof, the
Discloser shall be entitled to appropriate equitable relief, including
injunction, without the requirement of posting a bond, in addition to whatever
remedies it might have at law.

 

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9.5

Exceptions. The restrictions of the Recipient’s disclosure and use of the
Discloser’s Confidential Information under this Article 9 will not apply to the
extent of any Confidential Information:

 

 

(a)

that becomes publicly known without breach of the Recipient’s or its
Representatives’ obligations under this Agreement;

 

 

(b)

that is rightfully acquired by Recipient from a third party which is not subject
to any restriction or obligation (whether contractual, fiduciary, or otherwise)
on disclosure or use of such Confidential Information;

 

 

(c)

that is independently developed by employees of the Recipient without knowledge
of or reference to such Confidential Information, as evidenced by written
documentation or other tangible evidence of Recipient;

 

 

(d)

that is required to be disclosed by law or by court order or government order,
provided that the Recipient (a) promptly notifies the Discloser of any such
disclosure requirement so that the Discloser may seek an appropriate protective
order (or other appropriate protections) and (b) provides reasonable assistance
(at no cost to the Recipient) in obtaining such protective order or other form
of protection; or

 

 

(e)

as to which and to the extent to which the Recipient has received express
written consent from an authorized officer of the Discloser to disclose or use.

 

10. COMPLIANCE.

 

 

10.1

Laws. Eutectix and its operations, facilities and business shall at all times
comply with all applicable federal, national, state, provincial and local laws
(including common law), statutes, ordinances, orders, rules, codes, standards
and regulations of the U.S.A., the country(ies) in which Eutectix or its
operations or facilities are located, customs and export controls, and all other
relevant jurisdictions (each individually a “Law” and collectively “Laws”),
including without limitation Environmental Laws as defined below.

 

 

10.2

Customs. Eutectix shall provide Liquidmetal with all information, certificates
and records relating to the Liquidmetal Products (including Certificates of
Origin) as necessary for Liquidmetal to: (a) fulfill any customs obligations,
origin marking or labeling requirements, and certification or local content
reporting requirements; (b) claim preferential duty treatment under applicable
trade preference regimes; and (c) participate in any duty deferral or free trade
zone programs of the country of import. Liquidmetal shall obtain all
pre-delivery export licenses and authorizations and pay all pre-delivery export
taxes, duties, and fees.

 

 

10.3

Environmental Laws. Eutectix shall promptly furnish to Liquidmetal upon request
from time to time all information evidencing Eutectix’s compliance with Laws,
including Environmental Laws. “Environmental Laws” are Laws pertaining to the
environment and its protection, and the toxic or hazardous nature of products or
their constituents, and any other environmental, toxic or hazardous product
compliance Laws and obligations. Eutectix represents and warrants that the
Liquidmetal Products do not and shall not contain asbestos, and do not and shall
not contain mercury or other chemicals, metals, or minerals in excess of amounts
(if any) permitted by Laws. If Eutectix supplies Liquidmetal or its Customers
with Liquidmetal Products containing hazardous materials as defined by
Environmental Laws, including the provisions promulgated by the U.S. Department
of Transportation, Eutectix shall warn, label, and ship such hazardous materials
in accordance with Environmental Laws. Upon shipment and on an ongoing basis,
Eutectix shall provide Liquidmetal with current Safety Data Sheets and all other
information needed to comply with all Environmental Laws. Eutectix shall have no
liability to or on behalf of Liquidmetal for any failure by Liquidmetal to
comply with any Environmental Law.

 

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10.4

Product Corrective Actions. Each Party shall immediately notify the other Party,
in writing, if it becomes aware of any circumstances indicating that a stop
sale, Liquidmetal Product recall, corrective action, Liquidmetal Product or
quality control action or retrofit, or regulatory action involving any
Liquidmetal Products sold by Eutectix to Liquidmetal or its dealers or customers
(each, a “Product Corrective Action”) may be necessary under Laws or otherwise
appropriate. Liquidmetal shall, to the extent practicable, provide to Eutectix
for review any relevant data and comment upon any potential Product Corrective
Action, and Liquidmetal and Eutectix will mutually decide when to conduct a
Product Corrective Action and the scope of any such Product Corrective Action.

 

 

10.5

Anti-Bribery; Anti-Corruption. In addition to its other obligations under this
Agreement, Eutectix will strictly comply with both the letter and the spirit of
all Laws concerning corrupt practices, “anti-bribery”, or which in any manner
prohibit the giving of anything of value to any official, agent or employee of
any government, political party or public international organization, including
without limitation the U.S. Foreign Corrupt Practices Act, the UK Bribery Act
and similar Laws of other countries. Eutectix represents and warrants to
Liquidmetal that:

 

 

(a)

neither Eutectix nor any of its officers, directors, employees, representatives
or agents will offer, promise, or give anything of value to a government
official or an employee of a state-owned or controlled enterprise, or authorize
the foregoing, directly or indirectly, in order to influence such a person to
act or refrain from acting in the exercise of his/her official duties with
respect to this Agreement;

 

 

(b)

Eutectix and its officers, directors, employees, representatives and agents will
use only ethical, legitimate and legal business practices in commercial
operations and in promoting the position of Liquidmetal on issues before
governmental authorities (it being understood that Eutectix shall not promote
any position of Liquidmetal before any such authorities unless Liquidmetal has
specifically directed Eutectix in writing to do so); and that it and its
officers, directors, employees, representatives and agents will comply with all
applicable anti-corruption Laws;

 

 

(c)

Eutectix and its officers, directors, employees, representatives and agents will
never bribe any employees of Liquidmetal by any means, including but not limited
to providing or promising to provide an off-the-book rebate in secret,
entertainment allowance, employment arrangement, travel home, present, discount
for shopping, or any other material benefits for the employees of Liquidmetal or
their relatives; Eutectix will also refuse any improper interests in any form
required or requested by any of the employees of Liquidmetal and will provide
relevant evidence to assist Liquidmetal to investigate and take action with
respect to any such activities; and

 

 

(d)

Eutectix shall keep its books and records in such a fashion that its compliance
with this Article may be readily audited.

 

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10.6

Components Disclosure; Special Warnings. If requested by Liquidmetal from time
to time, Eutectix shall promptly furnish Liquidmetal in such form and detail as
Liquidmetal may direct: (a) a bill of materials for or list of all ingredients,
components or constituents in the Liquidmetal Products purchased hereunder, (b)
the amount of one or more of such ingredients, components or constituents, and
(c) information concerning any changes in or additions to any such ingredients,
components or constituents.

 

11. AUDIT RIGHTS.

 

Upon reasonable prior notice to Eutectix and at Liquidmetal’s expense, no more
than once per year, during the Term of this Agreement and for one (1) year
following the expiration or termination of this Agreement, Liquidmetal or its
designee shall have the right from time to time to confirm and validate:

 

 

(a)

that Eutectix has complied with the pricing provisions of this Agreement;

 

 

(b)

Eutectix’s financial condition, successorship planning, and ability to continue
operations;

 

 

(c)

that Eutectix’s performance is consistent with the Agreement;

 

 

(d)

that Eutectix has complied with Article 10 (Compliance) of this Agreement. Upon
reasonable and prior notice to Eutectix, Eutectix will also provide Liquidmetal
or its designee from time to time with reasonable access to Eutectix’s facility
and the facilities of its sub-suppliers and other subcontractors to permit
Liquidmetal to inspect the production, handling, and storage of Liquidmetal
Products and the Licensed Equipment and inventories of raw materials and
components. Eutectix shall maintain an orderly storage bookkeeping so that the
respective inventory of the Licensed Equipment, Liquidmetal Products and
property of Liquidmetal can be immediately recognized; and

 

 

(e)

such confirmation and validation to be conducted with minimal disruption to
Eutectix’s business operations and all information disclosed during such
exercise to be deemed to be Confidential Information.

 

12. INSURANCE AND INDEMNIFICATION.

 

 

12.1

Indemnification by Eutectix. Eutectix shall indemnify, defend, and hold harmless
Liquidmetal and its Affiliates, and its and their respective directors,
officers, employees, agents, insurers, Customers (both direct and indirect),
successors and assigns (collectively, the “Liquidmetal Indemnified Parties”),
from and against any and all claims, losses, liabilities, damages and expenses
(including without limitation attorneys’ fees and legal costs and all costs
associated with Product Corrective Actions that are a result or consequence of
any negligent or willful misconduct of Eutectix) that they, or any of them, may
sustain or incur as a result of (a) any actual or alleged breach of any
representation, warranty or covenant made by Eutectix in this Agreement
(including its Schedules); or (b) any actual or alleged injury to or death of
any person, or any actual or alleged damage to or loss of any property, arising
out of (i) any Liquidmetal Products or Licensed Products sold by Eutectix under
the Agreement or that are in the possession or under the control of Eutectix,
its employees, agents, sub-suppliers or other subcontractors, except to the
extent of Liquidmetal’s negligence or willful misconduct, or (ii) any services
performed by Eutectix, its employees, agents, sub-suppliers or other
subcontractors; or (c) the negligent acts or omissions, intentional misconduct,
or breach of contract of or by Eutectix, its employees, agents, sub-suppliers or
other subcontractors; or (d) any infringement by Eutectix’s Intellectual
Property on the Intellectual Property rights of a third party.

 

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12.2

Indemnification by Liquidmetal. Liquidmetal shall indemnify, defend, and hold
harmless Eutectix and its Affiliates, and its and their respective directors,
officers, employees, agents, insurers, Customers (both direct and indirect),
successors and assigns (collectively, the “Eutectix Indemnified Parties”), from
and against any and all claims, losses, liabilities, damages and expenses
(including without limitation attorneys’ fees and legal costs and all costs
associated with Product Corrective Actions that are a result or consequence of
any negligent or willful misconduct of Liquidmetal) that they, or any of them,
may sustain or incur as a result of (a) any actual or alleged breach of any
representation, warranty or covenant made by Liquidmetal in this Agreement
(including its Schedules); or (b) any actual or alleged injury to or death of
any person, or any actual or alleged damage to or loss of any property, arising
out of (i) any Liquidmetal Products designed by Liquidmetal or that are in the
possession or under the control of Liquidmetal, its employees, agents,
sub-suppliers or other subcontractors, except to the extent of Eutectix’s
negligence or willful misconduct, or (ii) any services performed by Liquidmetal,
its employees, agents, sub-suppliers or other subcontractors; or (c) the
negligent acts or omissions, intentional misconduct, or breach of contract of or
by Liquidmetal, its employees, agents, sub-suppliers or other subcontractors; or
(d) any infringement by Liquidmetal’s Intellectual Property on the Intellectual
Property rights of a third party.

 

 

12.3

Insurance. Eutectix shall obtain, pay for, and maintain insurance meeting or
exceeding the minimum insurance requirements set forth on Schedule 2 attached
hereto, with policy terms satisfactory to Liquidmetal.

 

13. LIMITATION OF LIABILITY.

 

NEITHER PARTY SHALL BE LIABLE TO OTHER PARTY FOR ANY LOST PROFITS, LOST
REVENUES, OR ANY OTHER INCIDENTAL, INDIRECT, PUNITIVE, SPECIAL OR CONSEQUENTIAL
DAMAGES WHATSOEVER ARISING OUT OF THIS AGREEMENT OR ANY ORDER, OR OUT OF THE
PERFORMANCE OR BREACH OF THIS AGREEMENT OR ANY ORDER, EVEN IF THE PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

 

14. MISCELLANEOUS.

 

 

14.1

Entire Agreement. This Agreement, including its Schedules, which are attached
hereto and incorporated herein, constitutes the entire understanding and
agreement of the Parties with respect to the subject matter hereof, and
supersedes all prior and contemporaneous agreements, understandings, inducements
or conditions, expressed or implied, written or oral, between the Parties
relating to the subject matter hereof. No additional or different terms
contained in any sales order, Quotes, acknowledgement, invoice or other
communications. This Agreement shall not be changed or modified except by
written agreement signed by Liquidmetal and Eutectix.

 

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14.2

Orders of Precedence. All Quotes, Orders, acknowledgements and invoices issued
pursuant to this Agreement are issued for convenience of the Parties only and
shall be subject to, and governed by, the provisions of this Agreement.

       

14.3

Assignment. Neither this Agreement nor any rights or obligations hereunder shall
be transferred or assigned by either Party without the written consent of the
other Party, which consent shall not be unreasonably withheld; provided,
however, that Liquidmetal shall have the right, without the prior written
consent of Eutectix, to assign its warranty rights and other rights hereunder
with respect to specific Liquidmetal Products to the Customers of such
Liquidmetal Products.

       

14.4

Severability. If any provision of this Agreement, or the application thereof,
shall for any reason and to any extent be invalid or unenforceable, the
remainder of this Agreement and application of such provision to other persons
or circumstances shall be interpreted so as best to reasonably effect the intent
of the Parties hereto. The Parties further agree to replace such void or
unenforceable provision with a provision which will achieve, to the extent
possible, the economic, business and other purposes of the void or unenforceable
provision.

       

14.5

Notices. Wherever one Party is required or permitted or required to give written
notice to the other under this Agreement, such notice will be given by hand, by
certified U.S. mail, return receipt requested, by overnight courier, or by fax
and addressed as follows:

 

If to Liquidmetal:

Liquidmetal Technologies, Inc.

Attn: CEO and/or President

20321 Valencia Cir

Lake Forest, CA 92630

Facsimile: (949) 635-2188

   

If to Eutectix:

Eutectix, LLC

323 Main St.

Chatham, NJ 07928

Attention:                                        

Fax:                                                 

Email:                                              

 

 

 

14.6

Definition of “Affiliate”. For purposes of this Agreement, the term “Affiliate”
means, with respect to any specified person or entity, any corporation, limited
liability company or other legal entity which directly or indirectly controls,
is controlled by, or is under common control with specified person or entity or
its successors or assigns. For the purposes of this Agreement, “control” shall
mean the direct or indirect ownership of more than fifty percent (50%) of the
outstanding shares on a fully diluted basis or other voting rights of the
specified entity to elect directors or managers, or the right to direct or cause
the direction of the management and policies of the specified entity whether by
contract or otherwise; and the terms “controlling” and “controlled” have meaning
correlative to the foregoing.

 

 

14.7

Further Assurances. Each Party agrees to cooperate fully with the other and to
execute such further instruments, documents and agreements and to give such
further written assurances, as may be reasonably requested by another Party to
better evidence and reflect the transactions described herein and contemplated
hereby, and to carry into effect the intents and purposes of this Agreement.

 

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14.8

Disputes. The parties irrevocably agree that any legal actions or proceedings
brought by or against them with respect to this Agreement shall be brought
exclusively in the courts in and for Maricopa County, Arizona, and the United
States District Court for the District of Arizona, and by execution and delivery
hereof, the parties irrevocably submit to such jurisdiction and hereby
irrevocably waive any and all objections which they may have with respect to
venue in any of the above courts. Notwithstanding the foregoing, this paragraph
shall not preclude or limit either Party’s rights to pursue actions in the
International Trade Commission, or for either Party to pursue an action with
respect to a Licensed Patent before a foreign court or governmental agency if
neither the federal courts nor the state courts have subject matter jurisdiction
over the action. This Agreement, the legal relations between the parties, and
any action, whether contractual or non-contractual, instituted by any party with
respect to matters arising under or growing out of or in connection with or in
respect of this Agreement shall be governed by and construed in accordance with
the internal laws of the State of Arizona (U.S.A.), excluding any choice of law
rules that may direct the application of the laws of another jurisdiction, and
except that questions affecting the construction and effect of any Patent shall
be determined by the law of the country in which the Patent has been granted.
The parties agree that the United Nations Convention on Contracts for the
International Sale of Goods (1980) is specifically excluded from application to
this Agreement. THE PARTIES HEREBY EXPRESSLY WAIVE ANY AND ALL RIGHT TO A TRIAL
BY JURY WITH RESPECT TO ANY ACTION, PROCEEDING OR OTHER LITIGATION RESULTING
FROM OR INVOLVING THE ENFORCEMENT OF THIS AGREEMENT.

 

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as of the Effective Date, by their officers, duly authorized.

 

EUTECTIX, LLC

 

LIQUIDMETAL TECHNOLOGIES, INC.

           

By:

/s/ Barry D. Russell  

By:

/s/ Isaac Bresnick          

Name:

Barry D. Russell  

Name:

Isaac Bresnick          

Title:

Chief Executive Officer  

Title:

Executive Administrator

 

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Schedule 1

 

Field of Use Restrictions

 

The licenses granted under this Agreement shall be subject to the following
exclusions, conditions, restrictions, and limitations:

 

 

1.

The “Field” shall exclude the following products and fields of use:

 

 

a.

Any Consumer Electronic Products (as defined below) or any components or
sub-components suitable for use with any Consumer Electronic Products. For this
purpose, “Consumer Electronic Products” means personal computers (portable and
desktop); tablet or slate style computing devices; handheld electronic and/or
communication devices (e.g., smartphones, digital music players, multi-function
devices, etc.); any device whose function includes the creation, storage or
consumption of digital media; any component or sub-component in any Consumer
Electronic Product; and any accessory that is the same or similar (in the sole
discretion of Apple, Inc.) to an accessory made or sold by or on behalf of Apple
(regardless of when Apple sold or started to sell such accessory, including
after date of the closing of the Proposed Transaction) that is suitable for use
with any Consumer Electronic Product.

       

b.

Any watches or components for watches.

       

c.

Finished or semi-finished Jewelry, and also any other products that are sold
under the name of a Luxury Brand or incorporated into products that are sold
under the name of a Luxury Brand, including without limitation (a) buckles for
belts, briefcases, handbags, and clothing; and (b) cigarette lighters and cigar
cutters. For purposes hereof, the term “Jewelry” means rings, necklaces, pins,
cufflinks, and other objects that are ornamental in nature and used for
adornment of the human body. “Luxury Brands” shall not include brands owned or
used by Nokia, Motorola, Samsung, LG, Sony-Ericsson, Apple, RIM, HTC or similar
companies that supply mobile phones and accessories to the mass-market.
Otherwise, “Luxury Brands” consist of the following brands and any other
similar, renowned luxury brand which is used as the sole or primary brand on a
competitive product sold at similar price point:

         

LVMH Moet Hennessey

Rolex

Chanel

Bentley Motors

Chopard

Compagnie Financiere Richemont

Gucci Group

Hermes

IWC

Jaeger LeCoultre

Mercedes Benz

Porsche

ST DuPont

The Swatch Group

 

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Tiffany & Co.

IWC

Cartier

Montblanc

TAG Heuer

Louis Vuitton

Bvlgari

CHANEL

Prada

Dunhill

Aspreys

Porsche

Ferrari

Sellita Group

Safilo Group

Luxottica Group

Ventura

Ellicot

 

 

2.

The licenses to Eutectix shall exclude any patents, technical information,
know-how, or other Intellectual Property that Liquidmetal licenses from a third
party (other than a third party that is an Affiliate of Liquidmetal) if and to
the extent that the terms of the third-party license would prohibit the
sublicensing of such Intellectual Property hereunder.

       

3.

The Field shall exclude any products or services that are intended for use in,
or likely to be used in, military or weapons/munitions applications, other than
with the prior written consent of Liquidmetal. Such written consent shall not be
unreasonably withheld, conditioned or delayed.

       

4.

The licenses granted to Eutectix hereunder shall be subject to and limited by
(and shall contain any exclusions required by) any applicable state or federal
legal or regulatory requirements of any state or federal governmental or
regulatory body. Specifically, the licenses granted hereunder, and the Field
shall exclude, any Intellectual Property that would require an export license
under the United States Export Administration Regulations (EAR) (15 CFR §§
734.2(b)(2)(ii) and 734.2(b)(4)) or that would require any other consent or
authorization of any United States federal or state governmental or regulatory
body, unless and until the required export license or other governmental or
regulatory consent or authorization is obtained, to the extent that the licenses
concern the equipment listed under Section 2.1(b) of this Agreement.

       

5.

Licensed Products may not be sold to any customer in, or to any customer for
distribution into, the following countries, without Liquidmetal’s prior written
consent, which consent shall not be unreasonably withheld, conditioned or
delayed: Brunei, Cambodia, China (P.R.C and R.O.C.), East Timor, Indonesia,
Japan, Laos, Malaysia, Myanmar, North Korea, Philippines, Singapore, South
Korea, Thailand and Vietnam.

 

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Schedule 2

 

Minimum Insurance Requirements

 

Eutectix shall obtain, pay for, and maintain in full force and effect throughout
the term of this Agreement insurance as follows:

 

 

(a)

Workers’ Compensation and Employers’ Liability insurance with limits to conform
with the greater of the amount required by applicable law or one million dollars
($1,000,000) each accident, including occupational disease coverage and an
endorsement to the Workers’ Compensation and Employers’ Liability insurance
policy, in form acceptable to Liquidmetal, containing a waiver of subrogation by
the insurance carrier with respect to Liquidmetal and its parent, subsidiaries,
divisions and Affiliates, and all of their respective directors, officers,
shareholders, employees and representatives;

 

 

(b)

Commercial General Liability insurance with limits of not less than five million
dollars ($5,000,000) combined single limit for bodily injury, death, and
property damage, including personal injury, contractual liability, independent
contractors, broad-form property damage, and products and completed operations
coverage; and,

 

 

(c)

Commercial Automobile Liability insurance with limits of not less than one
million dollars ($1,000,000) each occurrence combined single limit of liability
for bodily injury, death, and property damage, including owned and non-owned and
hired automobile coverages, as applicable.

 

As evidence of insurance coverage, Eutectix shall deliver to Liquidmetal on the
Effective Date and no less than annually thereafter (a) certificates of
insurance issued by Eutectix’s insurance carrier showing each of these policies
in force during the term of this Agreement, and (b) an endorsement to each
required policy, in form acceptable to Liquidmetal, naming Liquidmetal and its
parent, subsidiaries, divisions and Affiliates, and all of their respective
directors, officers, shareholders, employees and representatives as additional
insureds (except under the Workers’ Compensation policies). To the extent any
insurance coverage required under this Agreement is purchased on a “claims-made”
basis, such insurance shall cover all prior acts of Eutectix during the term of
this Agreement, and such insurance shall be continuously maintained until at
least two (2) years beyond the expiration or termination of the term of this
Agreement, or Eutectix shall purchase “tail” coverage, effective upon
termination of any such policy or upon termination or expiration of the term of
this Agreement, to provide coverage for at least two (2) years from the
occurrence of either such event. Eutectix shall give thirty (30) days’ prior
written notice to Liquidmetal of cancellation, non-renewal, or material change
in coverage, scope, or amount of any of the required policies. Eutectix’s
liability under the Agreement shall not be limited or modified in any way by the
amount or terms of any insurance it is required to maintain hereunder.

 

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Schedule 3

 

Licensed Technical Information and Patents Included in the Agreement

 

27