Document:

Exhibit
10.65

[*]=                          CERTAIN
CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS, HAS
BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.

LIQUIDMETAL LICENSE AGREEMENT

THIS
LICENSE  AGREEMENT (this
“Agreement”) is made and entered into as of the 
1st day of June 1, 2007 (the “Effective Date”), by and between LIQUIDMETAL TECHNOLOGIES, INC., a Delaware corporation
having its principal place of business at 25800 Commercentre Drive, Suite 100,
Lake Forest, CA  92629, USA (“Licensor”),
and GRACE METAL, a Korean
corporation having its principal place of business at Balan Industrial Complex
6-9, Gumunchunri, Hyangnam, Hwasung, Kyungkido, Republic of Korea (“Licensee”).

RECITALS:

A.            Licensor is engaged in
the business of developing, manufacturing, and marketing products made from
Amorphous Alloys (as defined herein).

B.            Licensor has certain
patents, trade secrets, know how and technical information pertaining to the
composition, processing, properties, and applications of Amorphous Alloys.

C.            Licensee desires to
license from Licensor certain patents, trade secrets, know how and technical
information for the limited purpose of producing certain licensed products within
a specified field of use, subject to the terms and conditions of this
Agreement.

D.            On the date hereof,
the parties have entered into an Equipment Purchase Agreement (the “Equipment
Purchase Agreement”) pursuant to which Licensor agrees to sell to Licensee and
Licensee agrees to purchase from Licensor certain manufacturing equipment as
described in the Equipment Purchase Agreement.

AGREEMENTS:

NOW,
THEREFORE, in consideration of the foregoing recitals and the
mutual covenants and agreements set forth herein, Licensor and Licensee agree
as follows:

ARTICLE 1

DEFINITIONS

For purposes of
this Agreement and except as otherwise specifically set forth herein, the
following capitalized terms shall have the following meanings:

1.1.  “Amorphous Alloy” means any one or
more amorphous or semi-amorphous alloys (i.e., metal-based alloys having a
noncrystalline atomic structure in whole or in part) or bulk metallic glasses
(or composite materials containing amorphous alloys or bulk metallic glasses).  The term “Amorphous Alloy” includes, but is
not limited to, any and all alloys that now or in the future are proprietary to
Licensor, including by in-licensing, or marketed or sold under the Liquidmetal® brand (collectively, “Liquidmental Alloys” or “Liquidmetal® Alloys”).

1.2.  “Confidential Information” shall
mean any and all commercial, technical, financial, proprietary, and other
information relating to the Discloser, its affiliates, and their respective
business operations, including, but not limited to, samples, data, technical
information, know-how, formulas, ideas, inventions, discoveries,
unpublished Patent applications, business and financial

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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.  For purposes of this Agreement, Licensor’s
Confidential Information shall include, but not be limited to, the Licensed
Technical Information, and any and all information relating to the composition,
processing, properties, and applications of Liquidmetal® Alloys. 
“Confidential Information” also includes any information described above
which the 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.

1.3.  “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.

1.4.  “Field of Use” shall mean the sale of Licensed Products to companies whose principal
headquarters are located in Korea or whose major operations are located in the
Republic of Korea.

1.5.  
“Field of Use Restrictions”
shall mean and refer to the field of use restrictions set forth in Exhibit B.

1.6.   “Improvements” means all
discoveries and/or inventions (whether patented or not) that constitute a
modification of the licensed invention or process described in a Licensed
Patent, provided such modification, if unlicensed, would infringe one or more
claims of the Licensed Patent.

1.7.  “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.

1.8.   “Licensed Patents” means the
Patents listed in Exhibit A attached hereto plus  Licensor’s other Patents in existence as of
the Effective Date relating to Liquidmetal Alloys, and all Patents issuing from
later filed divisionals, reissues, reexaminations, continuations, continuations-in-part,
renewals, extensions, substitutions, and foreign equivalents and counterparts
thereof.

1.9.  “Licensed Products” means (i) any
products made from Licensor’s proprietary bulk Amorphous Alloys, except for luxury
goods, certain sporting goods and eyewear (as defined in the agreements entered
into by Licensor prior to the date of this Agreement pursuant to which licenses
to these categories have been granted); and (ii) such additional products as
may mutually be agreed upon from time to time by Licensor and Licensee, in
their sole discretion, through an amendment this Section 1.8 as listed on Exhibit
D hereto signed by both parties.

1.10.              “Licensed Technical Information”
means unpublished research and development information, unpatented inventions,
know-how, trade secrets, and technical data now or hereafter in the
possession of Licensor that are reasonably necessary for using the Licensed
Patents to produce Licensed Products in accordance with this Agreement, provided
Licensor has the right to disclose such items to Licensee.

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1.11.              “Licensee Affiliate” means any
corporation, limited liability company or other legal entity which directly or
indirectly controls, is controlled by, or is under common control with Licensee
or its successors or assigns, or any successor or assign of such an
entity.  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 subject entity to elect directors or managers, or
the right to direct or cause the direction of the management and policies of
the subject entity whether by contract or otherwise; and the terms “controlling”
and “controlled” have meanings correlative to the foregoing.

1.12.              “Margin” shall mean and refer to
Licensee’s margin on Licensed Products calculated in accordance with Exhibit
C.

1.13.              “Net Sales” means, for purposes of
computing monthly royalties under this Agreement, Licensee’s gross  invoice price on the sale of Licensed
Products less returns or refunds, but before deduction of any other items,
including, but not limited to, freight allowances and cash discounts.

1.14.              “New Amorphous Alloy Technology”
means, to the extent developed or acquired after the Effective Date, all new
Amorphous Alloys and/or new Intellectual Property relating to the composition,
processing, properties, or applications of Amorphous Alloys, and all Patents
therefor, including, but not limited to, Improvements to the Licensed Patents.

1.15.              “Patents” means any and all letters
patent (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.

1.16.              “Recipient” shall mean the party
receiving Confidential Information that is protected under this Agreement.

1.17.              “Representatives” shall mean the
respective directors, officers, employees, financial advisors, accountants,
attorneys, agents, and consultants of a party.

1.18.              “Trademark” shall mean the “Liquidmetal®” mark.

ARTICLE 2

LICENSE GRANT

2.1.  Patent License.  Licensor hereby grants to Licensee an
exclusive, royalty-bearing, non-transferable license under the
Licensed Patents to make, offer to sell, sell and export Licensed Products
within the Field of Use and subject to the Field of Use Restrictions.  This license shall not include the right to
grant sublicenses.

2.2.  Trade Secrets, Know How and Technical Information
License.  Licensor hereby
grants to Licensee an exclusive royalty-bearing, non-transferable
license under the Licensed Technical Information to make, offer to sell, and
export Licensed Products in the Field of Use and subject to the Field of Use
Restrictions.  This license shall not
include the right to grant sublicenses.

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2.3.  Reservation of Rights.  The parties agree and acknowledge that
Licensor shall at all times retain the right to engage in research and
technology development activities relating to the Licensed Patents, the
Licensed Know-How, and Licensed Products, and Licensor shall have the unlimited
right to engage, partner with, or otherwise work with third parties of its
choosing in connection with such activities. 
Additionally, all rights not specifically granted to Licensee by this
Agreement are expressly reserved by Licensor.

2.4.  Delivery of Materials Relating to Licensed Patents and
Technical Information.  In
connection with the grant of the licenses set forth in Sections 2.1 and 2.2
above, at all reasonable times and upon reasonable request of Licensee,
Licensor shall make available to Licensee, in each case within a commercially
reasonable time frame, for Licensee’s internal use pursuant to this Agreement
and subject to the confidentiality provisions of this Agreement, one copy of
all Licensed Technical Information and one copy of all documentation relating
to the Licensed Patents, in each case to the extent then already in possession
and control of Licensor and reasonably reproducible.

2.5.    Trademark License.  Licensee must at all times market, promote,
and sell the Licensed Products under the Trademark and may not use any other
trade, brand, or product name without the prior written consent of
Licensor.  Licensor hereby grants to
Licensee a worldwide, royalty-free, fully paid up, non-transferable
license to use the Trademark in connection with the marketing and sale of
Licensed Products, subject to the following terms and conditions:

(a)   Except as otherwise agreed to
by Licensor in writing, all use of the Trademark by Licensee is subject to
Licensor’s standard trademark usage policy in effect from time to time
(provided that Licensor delivers a copy of such policy to Licensee).

(b)   All stylized use of the Trademark shall be solely in the original
logotype identified by Licensor, except as otherwise agreed in writing by
Licensor.

(c)   Licensee
agrees not to affix the Trademark to products other than the Licensed
Products.  Furthermore, Licensee agrees
not to attach any additional trademarks, logos, or designations to the Licensed
Products without the prior written consent of Licensor (which consent will not be
unreasonably withheld.  The “®” icon
shall always follow the Trademark.

(d)   Licensee shall not challenge the validity of Licensor’s rights in and
to the Trademark or the validity of the Trademark or any registration(s)
thereof.  Licensee agrees that it shall
not register or attempt to register the Trademark or any other trademark or
trade name of Licensor, or use or register any other trademark or trade name
which may be confusingly similar to the Trademark or any other trademark or
trade name of Licensor.

(e)   Licensee shall promptly, upon receipt of notice thereof, fully inform
Licensor as to any actual or proposed action, by any governmental agency,
consumer or environmental group, media or other organization, directed toward
removing from the market any Licensed Product based on alleged injury or death,
alleged potential for harm, product defect, alleged contamination, tampering or
similar occurrence, actual or alleged violation of law in connection with
production, labeling, packaging, storage, shipment, advertising or sale, or for
any other reason whatsoever.  Licensee
shall likewise promptly inform Licensor as to any proposal to remove from the
market any such Licensed Product as described above on account of suspected
nonconformity with applicable product quality or safety standards, improper
labeling, possibility of consumer harm, and/or violation of any law or
regulation.  Licensee shall not issue any
public statement stating or implying that Licensor has any responsibility for
the manufacture, packaging, labeling, shipping, advertising or any other
activity related to the sale of Licensed Products, without first reviewing the
same with and seeking the input on the same from Licensor.

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2.6.  Additional Retained Rights.

(a)   Notwithstanding
the exclusivity set forth in Sections 2.1 and 2.2 above, Licensor shall retain
the right, along with Licensee, to manufacture Licensed Products within the
Field of Use and otherwise within the scope of the licenses granted herein
until the Equipment Completion Date for a period of time thereafter as shall be
necessary to fulfill all customer orders received or solicited prior to the
Equipment Completion Date.  For purposes
hereof, the “Equipment Completion Date” shall mean the date on which the last
piece of purchased equipment under the Equipment Purchase Agreement is
delivered, installed and commissioned by Licensee.  The Licensee shall have the right to utilize
its equipment capacity first as it pertains to the Licensed Products.

(b)   In the event
that Licensee fails during the second Contract Year or any Contract Year
thereafter to generate Net Sales of Licensed Products sufficient to result in
royalties of Five Hundred Thousand U.S. Dollars (U.S. $500,000) hereunder, then
Licensor shall have the right, upon written notice to Licensee at any time
thereafter, to convert the exclusive licenses in Sections 2.1 and 2.2 hereof to
non-exclusive licenses.

ARTICLE 3

LICENSE FEES AND ROYALTIES

3.1.  Royalty Rate.  Licensee agrees to pay Licensor a royalty
equal to ten percent (10%) of the Net Sales of Licensed Products sold to
Licensee’s customers.  All royalties will
be paid in United States Dollars.  If the
Licensee’s Margin for a product is less than 20% for any particular calendar
month, then the parties (Licensor
and Licensee) will negotiate in good faith a new royalty amount for that
product, and Licensee will not engage in the further manufacture of such
Licensed Product until the parties are in agreement on such new royalty amount.

3.2.  Royalties for Transactions Not at Arm’s Length.  In order to assure to Licensor the full
royalty payments contemplated by this Agreement, Licensee agrees that in the
event any Licensed Products shall be sold (1) to a Licensee Affiliate, or
(2) to a corporation, firm, or association with which, or individual with
whom, Licensee 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 corporation, firm, association or individual for the
Licensed Products would be higher than the Net Sales Price reported by
Licensee, or if such agreement, understanding or arrangement results in
extending to such corporation, firm, association or individual lower prices for
Licensed Products other 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 to be
determined in a manner mutually agreed upon by Licensor and Licensee.

3.3.  Monthly Payment.  Royalties on Net Sales of Licensed Products
shall be paid to Licensor on a monthly basis within twenty (20) days following
the end of the month in which Licensee receives payment on its invoices
relating to such Net Sales.  For purposes
of calculating Net Sales, returns received or refunds given by Licensee during
any month will be deducted from any gross sales for which Licensee received
payment during such month, but if Licensee has not received any such payments
during such month (or has not received sufficient payments to offset the
returns or refunds), then such returns or refunds will be deducted during the
next calendar month in which Licensee receives such payments.

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3.4.  Taxes. 
All payments due hereunder shall be paid without deduction for taxes,
assessments, or other charges of any kind or description that may be imposed on
Licensor by any government (except the taxes and withholding tax imposed by the
government of the country of the Licensee and the federal government of the
United States) or any political subdivision of such non-United States
government, with respect to any amounts payable to Licensor pursuant to this
Agreement, and such taxes, assessments, and other charges shall be paid for and
assumed by Licensee.

3.5.  Early Termination.  In the event Licensor terminates the licenses
granted under this Agreement for nonpayment of royalties or other amounts owed
by Licensee, in accordance with the terms of this Agreement, all amounts then
owing by Licensee shall immediately become due and payable.  In the event Licensee terminates this
Agreement for nonpayment of contract manufacturing invoices owed by Licensor
under Section 12, in accordance with the terms of this Agreement, Licensee may
offset royalty payments as described in Section 9.3.

ARTICLE 4

REPORTS AND AUDITS

4.1.  Reports.  Licensee shall keep accurate and sufficient
records to determine amounts owed to Licensor under this Agreement.  Licensee shall make a written report
detailing the basis for any computations to Licensor within ten (10) days
following each calendar month.  Records
necessary for the computation of amounts payable by Licensee under this
Agreement shall be maintained by Licensee for a period of five (5) years
following each accounting report due hereunder.

4.2.  Audits. 
Such records of Licensee shall be open to inspection by Licensor or an
auditor selected by Licensor during regular business hours of Licensee.

ARTICLE 5

LICENSOR REPRESENTATIONS AND WARRANTIES

5.1.  Representations and Warranties.  Licensor represents and warrants that it
either owns or licenses the Licensed Patents or otherwise has the full right
and power to grant the licenses set forth herein.

5.2.  Disclaimer of Warranties.  THE WARRANTIES CONTAINED IN THIS ARTICLE ARE
THE ONLY WARRANTIES MADE BY LICENSOR.  LICENSOR
EXPRESSLY DISCLAIMS ALL OTHER REPRESENTATIONS AND WARRANTIES, WHETHER EXPRESS,
IMPLIED, STATUTORY, OR ARISING OUT OF CUSTOM OR TRADE USAGE, INCLUDING, BUT NOT
LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, AND NON-INFRINGEMENT. 
LICENSOR MAKES NO WARRANTIES WITH RESPECT TO FREEDOM FROM ALLEGED
INFRINGEMENT OF THIRD PARTY PATENTS OR FREEDOM FROM THIRD PARTY
INFRINGERS.  LICENSOR MUST ONLY HOLD
LICENSEE HARMLESS AGAINST SUCH ALLEGED INFRINGEMENT OF THIRD PARTIES.

5.3.  Licensed Products.  Licensor assumes no responsibility whatsoever
for the performance, operation, maintenance, or manner of use of the Licensed
Products made, used, sold, imported, or otherwise disposed of by Licensee.  Licensor shall have no liability with respect
to the Licensed Products.

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ARTICLE 6

LICENSEE WARRANTIES AND INDEMNIFICATION

6.1.  Permits.  Licensee represents and warrants that it has
obtained any and all governmental permits, licenses, or other approvals
required for the performance of its obligations and the enjoyment of its rights
under this Agreement, and Licensee agrees that it will at all times hereafter
comply with all laws and regulations (whether national, state, provincial,
local, or international) applicable to the exercise of its licenses hereunder
and the manufacture, sale, and export of Licensed Products.

6.2.  Product and Environmental Liability.  Licensee agrees that Licensor shall have no
liability to Licensee or to any purchasers or users of Licensed Products made
or sold by Licensee for any claims, demands, losses, costs, or damages suffered
by Licensee, or purchasers or users of Licensed Products, which relate in any
way to the manufacture, use, import, or sale of such Licensed Products,
including, but not limited to, personal injury, death, property damage,
environmental damage, or any claim of defects in design or workmanship of any
kind including in the Licensed Products (hereafter, the “Claims”).  Licensee agrees to indemnify and hold
Licensor, its officers, directors, employees, agents, representatives,
successors and assigns harmless from and against all Claims.

ARTICLE 7

INTELLECTUAL PROPERTY

7.1.  Licensee Inventions and Improvements.
In the course of practicing the Licensed Patents and Licensed Technical
Information pursuant to licenses granted by this Agreement, Licensor or
Licensee may develop or assist in the development of New Amorphous Alloy
Technology.  The parties agree that all
such New Amorphous Alloy Technology shall be owned solely and exclusively by Licensor.  Upon the conception or development of any New
Amorphous Alloy Technology by Licensee, whether alone or in conjunction with
others, Licensee shall provide written notification to Licensor describing in
sufficient detail the nature of the New Amorphous Alloy Technology.  Items of New Amorphous Alloy Technology shall
become part of the Licensed Patents and/or Licensed Technical Information
hereunder, provided that (i) in the case of any New Amorphous Alloy Technology
developed by Licensee, such technology shall not become a part of the Licensed
Patents and/or Licensed Technical Information until such technology is
disclosed to Licensor, and (ii) with respect to any New Amorphous Alloy
Technology developed or otherwise acquired by Licensor, such technology shall
not become a part of the Licensed Patents and/or Licensed Technical Information
in case Licensor has not the right to grant a license to said technology.  If the New Amorphous Alloy improvement is
essential to the practice of the Licensed Patents and Licensed Technical
Information, such technology shall be included in this Agreement.

7.2.  Assignment.  Title to any and all New Amorphous Alloy
Technology shall vest solely and exclusively in Licensor, regardless of
inventorship.  Licensee hereby assigns to
Licensor, and will cause its employees, contractors, representatives,
successors, assigns, affiliates, parents, subsidiaries, officers and directors
to assign to Licensor, all right, title and interest in and to any New
Amorphous Alloy Technology in which Licensee or any of them acquire
rights.  Licensee agrees to cooperate and
cause its employees and contractors to cooperate in the preparation and
prosecution of

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Patent applications relating to Licensor’s Intellectual Property,
including any New Amorphous Alloy Technology. 
Notwithstanding the foregoing, in the event that Licensee solely
initiates, continuously directs and, largely through its own efforts, develops
any new Improvement or other intellectual property that can be patented, then
the Licensor and Licensee shall negotiate in good faith a reasonable
compensation for assignment of the intellectual property to Licensor.

ARTICLE 8

ADDITIONAL MATTERS

8.1.  Alloy Ingots and Raw Material Availability. 
During the term of this Agreement set forth in Section 10.1, Licensor
shall use commercially reasonable efforts to supply Licensee a steady inventory
of Amorphous Alloy ingots and/or raw materials for the exercise of Licensee’s
license hereunder, and Licensee shall purchase Amorphous Alloy ingots and/or
raw materials only from Licensor or any alternative supplier designated by
Licensor.  Licensee shall have the right
to alloy the raw materials and cast the alloy purchased from Licensor or
suppliers approved by Licensor in accordance with the terms of this
Agreement.  Byproduct material which
results from the production process that can be recycled (as determined by
agreement between Licensor and Licensee) may, in Licensor’s sole discretion, be
repurchased by Licensor from Licensee at the same price at which it was
originally sold by Licensor to Licensee. It is the duty of Licensor to use
reasonable commercial efforts to supply Licensee with adequate quantity and
quality of Amorphous Alloy ingots and raw materials upon the pricing and terms
set forth in Section 8.2 below and elsewhere in this Agreement, and Licensor
will use all commercially reasonable efforts to make Amorphous Alloy ingots and
raw materials available on a thirty (30) day notice basis.  If Licensor cannot fulfill in providing
Licensee with adequate quantity and quality of Amorphous Alloy ingots and raw
materials, then Licensee can find different suppliers for these goods so long
as these suppliers are approved by the Licensor, which approval shall not be
unreasonably withheld.

8.2.  Amorphous Alloy Ingots and Raw Material Pricing. 
Amorphous Alloy ingots and raw material prices shall be for the material
delivered at Licensee plant and shall be FOB from the Licensor’s facility.  All prices for Amorphous Alloy ingots shall
be subject to quarterly adjustments (based on calendar quarters) upon thirty
days’ prior notice to Licensee and shall be competitive with any other party
purchasing in similar volumes.  Price
adjustments for Amorphous Alloy ingots will be based upon the change in an
index of metal commodity prices presented by Licensor and will take into
consideration significant reductions in processing costs (an example of an
index of metal commodity prices is set forth in Exhibit E).  Raw materials pricing will be at market rates
at the time of purchase.

ARTICLE 9

TERM AND TERMINATION

9.1.  Term. 
This Agreement shall be in effect from the Effective Date and shall
continue for ten (10) years, unless sooner terminated in accordance with the
terms of this Agreement.  At the end of
the first ten (10) years Term, this Agreement shall be automatically renewed for periods of additional three
years, unless terminated by the Parties with twelve months written notices.

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9.2.  Early Termination.  Notwithstanding any other provision contained
herein, this Agreement may be terminated as follows:

(a)   Material Breach. 
This Agreement shall terminate on the thirtieth (30th) day after
either party gives the other party written notice of a material breach by the
other party of any term or condition of this Agreement, unless the breach is
cured before that day to the reasonable satisfaction of the non-breaching
party.  The right of a party to terminate
this Agreement shall be in addition to and not in lieu of any other right or
remedy that the terminating party may have at law or in equity.  The failure to timely pay any sales-based
royalties or earned royalties hereunder shall be deemed to be a material breach
under this Agreement. Notwithstanding the foregoing, any breach by Licensee of
any provision of Article 10 hereof shall constitute a material breach entitling
Licensor to immediately terminate this Agreement upon written notice to
Licensee without an opportunity to cure.

(b)   Bankruptcy.  This
Agreement may be terminated immediately by a party in the event the other party
becomes insolvent, files or has filed against it a petition under any chapter
of the United States Bankruptcy Code (or any similar petition under the
insolvency law of an applicable jurisdiction) and such petition is not
dismissed within thirty (30) days, proposes any dissolution, liquidation,
financial reorganization, or re-capitalization with creditors, or makes
an assignment or trust mortgage for the benefit of creditors, or if a receiver,
trustee, custodian, or similar agent is appointed or takes possession of any
property or business of such other party. 
If Licensor shall file a petition of insolvency, Licensee may continue
to exercise its rights under this Agreement so long as the Licensee is not in breach
itself of any terms or conditions of this Agreement.

(c)   Misappropriation. 
This Agreement may be terminated immediately without liability by
Licensor in the event that Licensor has reasonable grounds to believe that
unauthorized use of the Licensed Patents, Licensed Technical Information, or
other Confidential Information of Licensor has been made by Licensee or a
person or party within its control.

9.3.  Effect of Termination.

(a)   Licensee’s Rights Upon Termination.  Upon termination of this Agreement, the
licenses and all other rights granted to Licensee under this Agreement shall
immediately terminate.  If Licensee
terminates this Agreement due to nonpayment for contract manufacturing under
Section 12 and such breach has not been cured within sixty (60) days of written
notice by Licensee to Licensor, then Licensee may offset the Licensor’s unpaid
amount against royalties due to Licensor until such unpaid amounts are fully
recovered by Licensee through this offset.

(b)   Return of Confidential Materials.  Within fifteen (15) days after termination
of this Agreement, Licensee shall return to Licensor all Licensed Technical
Information and other Confidential Information of Licensor then in its
possession, custody or control.

(c)   No Obligation to Refund. 
After termination of this Agreement, Licensor shall have no obligation
to refund any money paid to Licensor under this Agreement. Licensee will be
free to use all its assets relating to the entire business of selling and
manufacturing products using Amorphous Alloys for other purposes than selling
and manufacturing products using Amorphous Alloys. Licensor will re-purchase
all inventory or feedstock then in possession of Licensee or otherwise owned by
Licensee.

(d)   Continuation of Obligations.  After termination of this Agreement, the
provisions of this Agreement concerning the parties’ obligations and
responsibilities under Article 10 (Confidentiality) shall continue in full
force and effect for an additional period of ten (10) years, and
indefinitely for trade secrets; and Licensee’s payment and other obligations
under Section 3 (License Fees and Royalties) shall

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continue in effect until paid.  In the event Licensor terminates the licenses
granted under this Agreement in accordance with the terms hereof for nonpayment
of royalties or other breach by Licensee, all amounts then owing by Licensee
shall immediately become due and payable.

(e)   No Damages for Termination; No Effect on Other Rights and Remedies.  Neither party shall be liable for damages of
any kind as a result of properly exercising its respective right to terminate
this Agreement according to the terms and conditions of this Agreement, and
termination will not affect any other right or remedy of either party.

ARTICLE 10

CONFIDENTIALITY

10.1.          Terms of Agreement.  Each party agrees not to disclose any terms
of this Agreement to any third party without the consent of the other party;
provided, however, that disclosures may be made as required by securities or
other applicable laws; or by either party to its accountants, attorneys, and other
professional advisors.  Neither party
shall release any publicity or information concerning this Agreement without
the other party’s prior written approval, which shall not be unreasonably
withheld or delayed.

10.2.          Restrictions on Disclosure and Use.

(a)   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 (including results of tests on material
samples) to any other person (except as set forth in Section 10.2(b)
(Disclosure to Representatives) 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 or the exercise of its rights
under this Agreement, (iv) 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 (v) 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, copies and extracts.

(b)   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 to the Recipient’s Representatives and shall take
such action (legal or otherwise) to the extent necessary to cause them to
comply with this Agreement.

(c)   Trade Secrets.  Any
trade secrets of the Discloser will also be entitled to all of the protections
and benefits of applicable trade secret law, and the Recipient agrees to be
bound by all applicable trade secret laws, unfair competition laws, and any
other similar laws with respect to the Discloser’s Confidential
Information.  If any Confidential
Information that the Discloser deems to be a trade secret is found by a court
of competent jurisdiction not be a trade secret under applicable law, such
Confidential Information will nevertheless still be protected by this
Agreement.

 10
 

(d)   Protection of Licensed Technical Information by Licensee.  Licensee acknowledges and agrees that the
Licensed Technical Information derives economic value from not being generally
known to other persons who can obtain economic value from its disclosure or
use.  Therefore, without the express
written consent of Licensor, Licensee covenants and agrees that it, its
employees, contractors, representatives, successors, assigns, affiliates,
parents, subsidiaries, officers, directors, and the like will (1) hold the
Licensed Technical Information in strict confidence, use a high degree of care
in safeguarding the Licensed Technical Information, and take all precautions
reasonably necessary to protect the Licensed Technical Information including,
without limitation, all precautions Licensee normally takes with respect to its
own most sensitive and confidential information, (2) not divulge any of
the Licensed Technical Information or any information derived therefrom to any
person other than Licensor, (3) not make any use whatsoever at any time of
the Licensed Technical Information except in furtherance of Licensee’s
obligations to Licensor and as necessary to produce Licensed Products in
accordance with the license granted under this Agreement, and (4) notify
Licensor in writing immediately upon discovery of any unauthorized use or
disclosure of the Licensed Technical Information by Licensee or its employees
or any third party.

(e)   Enforcement. 
Licensee acknowledges and agrees that due to the unique nature of the
Licensed Technical Information and other Confidential Information of Licensor,
there can be no adequate remedy at law for any breach of its obligations
hereunder, which breach may result in irreparable harm to Licensor, and
therefore, that upon any such breach or any threat thereof, Licensor 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.

(f)    Exceptions. 
Confidential Information does not include information:

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

(ii)           or 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

(iii)          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; or

(iv)          is required to be disclosed by Licensor
pursuant to U.S. securities laws.

A specific item of Confidential Information shall not
be deemed to fall within the foregoing exceptions merely because such specific
item is embraced or implied by more general Confidential Information that falls
within the foregoing exceptions.

 11
 

ARTICLE 11

MISCELLANEOUS

11.1.              Force Majeure.  Excluding payment obligations, neither party
shall be liable for, nor shall it be considered in breach of this Agreement due
to, any failure to perform its obligations under this Agreement as a result of
a cause beyond its control, including any act of God or public enemy, act of
any military, civil or regulatory authority, terrorism or threat thereof,
change in any law or regulation, fire, flood, earthquake, storm or other like
event, disruption or outage of communications, power or other utility, labor
problem, unavailability of supplies, or any other cause, whether similar or
dissimilar to any of the foregoing, which could not have been prevented by the
party with reasonable care.

11.2.              Notices.  All notice, requests, demands and other
communications hereunder shall be in English and shall be given in writing and
shall be:  (i) personally delivered; (ii)
sent by telecopier, facsimile transmission or other electronic means of
transmitting written documents with confirmation of receipt; or (iii) sent to
the parties at their respective addresses indicated herein by registered or
certified mail, return receipt requested and postage prepaid, or by private
overnight mail courier services with confirmation of receipt.  The respective addresses to be used for all
such notices, demands or requests are as follows:

(a)   If to Licensee:

Grace Metal Co., Ltd.

Balan Industrial Complex
6-9

Gumunchunri, Hyangnam

Hwasung, Gyeonggi

Republic of Korea

Attention: James Kang

Phone No.: +82 (31)
366-2303

Fax No.: +82 (31)
366-2306

Or to such other
person or address as Licensee shall furnish to Licensor in writing.

(b)   If to Licensor:

Liquidmetal Technologies,
Inc.

25800 Commercentre Drive,
Suite 100

Lake Forest, California
92630

Attention:  Larry Buffington, President

Phone No.:  (949) 206-8000

Fax No.:  (949) 206-8008

Or
to such other person or address as Licensor shall furnish to Licensee in
writing.

If personally delivered, such communication shall be
deemed delivered upon actual receipt by the “attention” addressees or persons
authorized to accept for such addressees; if transmitted by facsimile pursuant
to this paragraph, such communication shall be deemed delivered the next
business day after transmission (and sender shall bear the burden of proof of
delivery); if sent by overnight courier pursuant to this paragraph, such
communication shall be deemed delivered upon receipt by the “attention”
addressees or persons authorized to accept for such addressees; and if sent by
mail pursuant to this paragraph, such communication shall be deemed delivered
as of the date of delivery indicated on the receipt issued by the relevant
postal service, or, if the addressee fails or refuses to accept delivery, as of
the date of such failure or refusal.  Any
party to this Agreement may change its address for the purposes of this
Agreement by giving notice thereof in accordance with this paragraph.

 12
 

11.3.              Independent Contractors.  In the performance of this Agreement,
Licensor and Licensee are independent contractors.  Neither party nor any of its employees or
agents shall be considered an employee or agent of the other party.  Nor shall any partnership, co-venture
or joint-employer relationship be created or implied by virtue of this
Agreement or of its performance.  The
parties intend that this Agreement shall not create a partnership for tax
purposes.

11.4.              Survival. 
Articles 3, 4, 5, 6, 7, 8, 9, 10 and 11, and Section 9.3, and any other
provisions which by their express or implicit terms are intended to survive the
expiration or termination of this Agreement, shall survive the expiration or
termination of this Agreement and be enforceable in accordance with their
terms.

11.5.              Severability.  Each provision contained in this Agreement is
declared to constitute a separate and distinct covenant and provision and to be
severable from all other separate, distinct covenants and provisions.  It is agreed that should any clause,
condition or term, or any part thereof, contained in this Agreement be
unenforceable or prohibited by law or by any present or future legislation then
such clause, condition, term or part thereof, shall be amended, and is hereby
amended, so as to be in compliance with the said legislation or law but, if
such clause, condition or term, or part thereof, cannot be amended so as to be
in compliance with the said legislation or law, then such clause, condition,
term or part thereof is severable from this Agreement, and all the rest of the
clauses, terms and conditions or parts thereof contained in this Agreement
shall remain unimpaired and continue in full force and effect.

11.6.              Amendment.  This Agreement may not be amended or modified
other than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.

11.7.              Waiver. 
No waiver of a breach of any provision of this Agreement shall be deemed
to be, or shall constitute, a waiver of a breach of any other provision of this
Agreement, whether or not similar, nor shall such waiver constitute a
continuing waiver of such breach unless otherwise expressly provided in such
waiver.

11.8.              Governing Law.  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 California
(U.S.A.), excluding any choice of law rules that may direct the application of
the laws of another jurisdiction.

11.9.              Resolution of 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 Orange County,
California and the United States, 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 Licensor’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. 
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.

11.10.            Attorneys’ Fees.  In any action between the parties for relief
based in whole or in part on this Agreement (or the breach thereof), including
actions to collect overdue royalty payments, the prevailing party shall be
entitled to recover (in addition to any other relief awarded or granted) its
reasonable costs and expenses (including attorneys’ fees and expert witness
fees) incurred in the proceeding.

 13
 

11.11.            Entire Agreement.  This Agreement sets forth the complete
agreement of the parties concerning the subject matter hereof.  No claimed oral agreement in respect thereto
shall be considered as any part hereof. 
No waiver of or change in any of the terms hereof subsequent to the
execution hereof claimed to have been made by any representative of either
party shall have any force or effect unless in writing, signed by duly
authorized representatives of the parties.

11.12.            Assignment.  This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.  Neither party shall
assign its rights or duties under this Agreement, in whole or in part, without
the prior written consent of the other party, except that without securing such
prior consent, Licensor shall have the right to assign the Agreement to any
successor by way of merger or consolidation or the acquisition of substantially
all of the entire business and assets of Licensor relating to the subject
matter of this Agreement.  For purposes
hereof, a merger, consolidation, or change in equity ownership of Licensee
shall constitute an “assignment” of this Agreement unless the equity holders of
Licensee on the date of this Agreement continue to hold, as a group, 75% or
more of the total equity interest in Licensee immediately after such merger,
consolidation, or change in equity ownership.

11.13.            Headings; Recitals.  The section and paragraph headings in this
Agreement are for convenience only and are not intended to affect the meaning
or interpretation of this Agreement.  The
recitals set forth in the preamble to this Agreement are true and correct and
are made a part of this Agreement.

11.14.            Counterparts.  This Agreement may be executed simultaneously
in counterparts, each of which will be deemed an original, but all of which
together will constitute the same Agreement.

11.15.            Language.  In the event of controversy between the
parties respecting the interpretation or application of this Agreement, the
English language version of the Agreement shall be controlling.

11.16.            Consent Not to be Unreasonably Withheld.  When consent to an action is requested of a
party to this Agreement, unless otherwise specifically provided for in this
Agreement, such consent shall not be arbitrarily or unreasonably withheld.

11.17.            Orders and Inquiries Regarding Licensed Products.  If any person within Korea or Licensed
Products communicates with Licensor regarding, submits to Licensor an order
for, or indicates to Licensor an interest in ordering any Licensed Products,
then Licensor shall so advise Licensee and refer such person for such purpose
to Licensee.

ARTICLE
12

CONTRACT MANUFACTURING

12.1.              Contract Manufacturing.  As
an inducement for Licensee to build and maintain capacity on behalf of
Licensor, Licensor agrees to engage Licensee to serve as a contract
manufacturer with respect to Liquidmetal Alloy products that are not Licensed
Products (“Contracted Products”). 
Licensor agrees to pay to Licensee a price for Contracted Products such
that Licensee earns a twenty percent (20%) gross margin on the cost incurred by
Licensee for production of Contracted Products. 
The gross margin shall exclude selling, general and administrative
expenses, but will include appropriate depreciation of the manufacturing assets
and equipment used for the production of Contracted Products.

 14
 

12.2.              Payment Terms. 
Licensor will pay Licensee on a monthly basis within thirty (30) days
following the end of the month in which the Licensee delivers the Contracted
Products.  Licensee will invoice the
Licensor promptly at the end of each month.

12.3.              Minimum Commitment and
Reserved Capacity.  Licensor agrees to commit a minimum of fifty
percent (50%) of its available production to Licensee during the first twelve
(12) months after Licensee is established and ready for production in
China.  During the second twelve (12)
months, the Licensor shall commit a minimum of twenty-five percent (25%) of its
available production to Licensee.  Licensee shall also reserve up to fifty
percent (50%) of its capacity for production of Contracted Products of Licensor
during the first twelve (12) months after Licensee is established and ready for
production in China.  During the second
twelve (12) months, the Licensor shall commit a minimum of thirty-five percent
(35%) of its available capacity to Licensor.

IN WITNESS WHEREOF,
the parties have caused this Agreement to be executed by their duly authorized
representatives as of the Effective Date set forth above:

	
  

  	
   

  	
  GRACE METAL

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ James Kang

  	
   

  
	
   

  	
   

  	
   

  	
  James Kang,
  President / Chairman

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LIQUIDMETAL TECHNOLOGIES, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Larry Buffington

  	
   

  
	
   

  	
   

  	
   

  	
  Larry
  Buffington, President

  

 

 15

EXHIBIT A

LICENSED
PATENTS

	
   

  	
   

  	
  US

  Patent #

  	
   

  	
  Appl. #

  	
   

  	
  Description

  	
   

  	
  Filing D.

  	
   

  	
  Iss. Date

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  5,288,344

  	
   

  	
  08/044,814

  	
   

  	
  Be Containing Alloys (Compositon)

  	
   

  	
  04/07/93

  	
   

  	
  02/22/94

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2

  	
   

  	
  5,368,659

  	
   

  	
  08/198,873

  	
   

  	
  Be Containing Alloys (Method)

  	
   

  	
  02/18/94

  	
   

  	
  11/29/94

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3

  	
   

  	
  5 482 580

  	
   

  	
  08/258,766

  	
   

  	
  Joining Using Bulk Alloys

  	
   

  	
  06/13/94

  	
   

  	
  01/09/96

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4

  	
   

  	
  5 567 251

  	
   

  	
  08/417,749

  	
   

  	
  Composites of Bulk Alloy (Method)

  	
   

  	
  04/06/95

  	
   

  	
  10/22/96

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5

  	
   

  	
  5 711 363

  	
   

  	
  08/602,899

  	
   

  	
  Die-Casting of Bulk Alloys

  	
   

  	
  02/16/96

  	
   

  	
  01/27/98

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6

  	
   

  	
  5 797 443

  	
   

  	
  08/720,483

  	
   

  	
  Casting of Zr-base Bulk Alloys

  	
   

  	
  09/30/96

  	
   

  	
  08/25/98

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7

  	
   

  	
  5 866 254

  	
   

  	
  08/732,546

  	
   

  	
  Composites of Bulk Alloy (Article)

  	
   

  	
  10/15/96

  	
   

  	
  02/02/99

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8

  	
   

  	
  5 896 642

  	
   

  	
  08/683,319

  	
   

  	
  Die-Forming (Molding) of Bulk Alloys

  	
   

  	
  07/17/96

  	
   

  	
  04/27/99

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9

  	
   

  	
  5 950 704

  	
   

  	
  08/683,320

  	
   

  	
  Replication with Bulk Alloys

  	
   

  	
  07/18/96

  	
   

  	
  09/14/99

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10

  	
   

  	
  6,021,840

  	
   

  	
  09/012,347

  	
   

  	
  Vacuum Die-Casting

  	
   

  	
  01/23/98

  	
   

  	
  02/08/00

  

 

 16
 

EXHIBIT B

FIELD OF
USE RESTRICTIONS

The licenses granted in Sections 2.1 and 2.2 of this
Agreement are limited as follows:

(a)          On a monthly basis or more frequently,
Licensee will report, in writing, to Licensor the Licensee’s activities related
to Korea-based customers.

(b)         Licensee may only make Licensed Products
through a die-casting process utilizing casting machines that are purchased
from Licensor or that are otherwise approved by Licensor in writing.

(c)          Licensee must purchase all alloy feedstock
necessary for the manufacture of Licensed Products from either Licensor or an
authorized supplier of Liquidmetal Alloy feedstock (as selected by Licensee and
approved by Licensor).  Licensee may only
utilize its Vacuum Induction Melting Machine for melting of Liquidmetal Alloys
and not for any other use.  Licensee may
not use such feedstock for any purpose other than the exercise of its license
under this Agreement.

(d)         Licensee must purchase future machines used in
the manufacturing of amorphous alloys from either the Licensor or a supplier
approved by Licensor.  Licensor agrees
that Licensee will be able to purchase future machines used in the
manufacturing of amorphous alloys at fair market prices.  If the Licensor or its approved supplier(s)
cannot provide equipment within a reasonable time period or at a fair market
price, the Licensee may request that Licensor consent, which consent shall not
be unreasonably withheld, to the Licensee’s purchase of equipment from a
non-approved supplier.

(e)          Licensee will provide space to accommodate
the manufacturing of the Licensed Products in China.  The space provided must be acceptable to
Licensor and, in particular, must be a protected environment restricted from
unauthorized access and viewing. 
Licensee will manufacture Licensed Products only at its facility in
China and not at any other location, and any breach of this limitation will
constitute a material breach of the Agreement.

 17
 

EXHIBIT C

MARGIN

The Margin for each Licensed Product for
purposes of Section 3.1 of this Agreement will be equal to a percentage that is
calculated by dividing, for any particular calendar month (the “Selected Month”),
(i) the Gross Sale Price of the Licensed Product minus the Total Cost of Sale
for the Licensed Products, by (ii) the Gross Sale Price of the Licensed
Product.  For purposes of this
calculation, the following terms shall have the following meanings:

“Gross Sale Price” shall mean the Licensee’s
revenues from sales of the Licensed Product for the Selected Month calculated
in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”).

“Total Cost of Sale” shall mean the sum of
(i) the costs of goods sold on the Licensed Products for the Selected Month
calculated in accordance with GAAP, plus (ii) the Allocated Depreciation for
the Selected Month, minus (iii) royalties payable to Licensor pursuant to this
Agreement.

“Allocated Depreciation” for the Selected
Month with respect to each different Licensed Product shall be calculated by
dividing the Licensee’s aggregate purchase price paid for the Equipment by 60
to arrive at the “Monthly Depreciation Cost,” and then allocating the Monthly
Depreciation Cost to each Licensed Product produced during the Selected Month
(on a model-by-model basis) based on the number of hours of casting-machine
operation utilized with respect to each such product model as a percentage of
the total number of hours of casting-machine available for use, taking into
consideration routine maintenance and machine set-up time, during such Selected
Month with respect to all Licensed Products.. 
Routine maintenance and machine set up time shall not exceed thirty
percent (30%) of the total number of hours of casting-machine hours available
for use.

The cost of services provided by Licensor to
Licensee shall be excluded from “Total Cost of Sale” unless accepted by
Licensee and provided that such services are at levels of competitive services.

 18
 

EXHIBIT D

AMENDMENTS TO SECTION 1.8 - LICENSED PRODUCTS

AMENDMENT
TO LICENSED PRODUCTS

	
  Market

  	
   

  	
  Approved

  Customers

  	
   

  	
  Effective Date

  
	
     

  	
   

  	
   

  	
   

  	
   

  
	
     

  	
   

  	
   

  	
   

  	
   

  
	
     

  	
   

  	
   

  	
   

  	
   

  

 

	
  Approved by Licensor:

  	
   

  	
  LIQUIDMETAL TECHNOLOGIES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Larry
  Buffington, President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Approved by
  Licensee:

  	
   

  	
  GRACEMETAL

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  	
   

  
										

 

 19
 

EXHIBIT E

EXAMPLE OF INDEX OF METAL COMMODITY PRICES

For purposes of Section 9.4, an example of
the index of metal commodity prices is provided below :

	
  Raw Material

  	
   

  	
  % Weight

  	
   

  
	
  [*]

  	
   

  	
  [*]

  	
   

  
	
  Total Weight and
  Cost of materials

  	
   

  	
  1,00000

  	
   

  

 

 20

EQUIPMENT PURCHASE AGREEMENT

THIS EQUIPMENT PURCHASE AGREEMENT (this
“Agreement”) is made and entered into this 1st day of June, 2007 (the “Purchase
Date”), by and between

GRACEMETAL, a company
incorporated under the laws of Korea, with legal office in Balan Industrial
Complex 6-9, Gumunchunri, Hyangnam, Hwasung, Kyungkido, Republic of Korea (“Grace
Metal”), and

LIQUIDMETAL TECHNOLOGIES, INC.,
a Delaware corporation (“Liquidmetal”),

Hereinafter, GraceMetal and Liquidmetal are sometimes
referred to individually as a “Party” and together as the “Parties.”

RECITALS:

A.            Liquidmetal
is engaged in the business of developing, manufacturing, and marketing products
made from amorphous alloys, and Liquidmetal utilizes proprietary machines for
the processing of its proprietary bulk amorphous alloys.

B.            Liquidmetal
and GraceMetal are entering into a Liquidmetal License Agreement on the date
hereof (the “License Agreement”), pursuant to which Liquidmetal has
granted to GraceMetal a license (subject to the terms and conditions of the
License Agreement) to make, offer to sell, sell, and export certain products
containing or incorporating, among other things, alloys that now or in the
future are proprietary to Liquidmetal or marketed or sold under the Liquidmetal® brand (collectively, “Liquidmetal Alloys”
or “Liquidmetal® Alloys”).

C.            Upon
the terms and conditions set forth in this Agreement, GraceMetal desires to
purchase from Liquidmetal, and Liquidmetal desires to sell to GraceMetal,
proprietary casting machines and vacuum induction melting machines used in the
production of products made of Liquidmetal Alloys.

AGREEMENTS:

NOW, THEREFORE, in consideration
of the foregoing recitals and the mutual agreements and covenants contained
herein, the Parties agree as follows:

ARTICLE I

PURCHASE OF MANUFACTURING EQUIPMENT

13.1.                        Purchase
and Sale. Upon the terms and conditions herein, Liquidmetal agrees to sell
to GraceMetal, and GraceMetal agrees to buy from Liquidmetal, manufacturing
equipment to be used in the manufacturing of products made from Liquidmetal
Alloys as described more fully in Exhibit A (the “Equipment”).

 1
 

13.2.                        Delivery
of Equipment. Liquidmetal shall ship the Equipment FOB from its facility
through a carrier selected by GraceMetal (with the ultimate destination being
Weihai, China). All shipping costs, insurance and duties from the Liquidmetal
facility shall be paid by and shall be for the account of GraceMetal. Title and
risk of loss to the Equipment shall transfer to GraceMetal at the time of
delivery of the Equipment to GraceMetal’s carrier.  GraceMetal shall insure the Equipment against
loss or damage during shipment in the full amount of the purchase price
hereunder, and the proceeds of such insurance shall be payable to Liquidmetal
to the extent of the portion of the purchase price that has not yet then been
paid.  Evidence of such insurance naming
Liquidmetal as loss payee must be provided by GraceMetal prior to delivery to
GraceMetal’s carrier.  GraceMetal will also maintain insurance on
the Equipment following the shipment thereof in the full amount of the purchase
price against loss or damage at all times prior to making full payment of its
entire obligation to the Liquidmetal, and proceeds of such insurance shall be
payable to the Liquidmetal to the extent of the portion the purchase price that
has not yet been paid.  Evidence of such insurance naming Liquidmetal as
loss payee must be provided by GraceMetal upon delivery of Equipment to
GraceMetal’s carrier.  The parties
acknowledge that Liquidmetal and GraceMetal shall cooperate to determine the
times at which the Equipment will be delivered based on Liquidmetal’s
continuing manufacturing needs and the receipt, installation, and commissioning
by Liquidmetal of new manufacturing equipment, and Liquidmetal and GraceMetal
may elect to deliver the Equipment to GraceMetal on an incremental basis from
time to time.

13.3.                        Price
and Payment Terms. The nonrefundable purchase price for the Equipment is
Two Million U.S. Dollars (U.S. $2,000,000.00) and shall be paid as follows:

(a)   Four
Hundred Thousand U.S. Dollars (U.S. $400,000.00) will be paid as a deposit by
GraceMetal upon the effectiveness of this Agreement.

(b)   The
balance of One Million Six Hundred Thousand U.S. Dollars (U.S. $1,600,000.00)
will be due and payable within thirty (30) days following the completion of the
commissioning of the Equipment as provided in Section 2.2.

(c)   Amounts
owed by Liquidmetal to GraceMetal and/or James Kang (and acknowledged by
Liquidmetal in writing) may be offset against the purchase price of the
Equipment upon the written consent of the Parties.

 2
 

Liquidmetal will maintain a purchase money
security interest in the Equipment until the full purchase price thereof shall
have been paid, and GraceMetal hereby agrees to execute upon Liquidmetal’s
request and at Liquidmetal’s expense any documentation required to protect or
perfect Liquidmetal’s security interest. GraceMetal’s failure to pay any
amounts when due shall give Liquidmetal the right to possession and removal of
the Equipment at any time upon Liquidmetal’s demand. Liquidmetal’s taking of
such possession shall be without prejudice to any other legal remedies
Liquidmetal may have. Should legal action be taken by Liquidmetal for the
collection of the overdue purchase price or any portion thereof, GraceMetal
will reimburse Liquidmetal for all reasonable costs, attorney fees, and other
expenses associated with such collection. 
GraceMetal hereby absolutely and unconditionally guarantees to Liquidmetal,
its successors and assigns the punctual payment when due of all outstanding
amounts due to Liquidmetal under this Agreement.

13.4.                        Delivery
to Site.  The Parties shall instruct
the carrier transporting the Equipment to deliver the Equipment at such site
within a time frame reasonably determined by the Parties.

13.5.                        Usage
Rights and Restrictions. GraceMetal agrees that its use of the Equipment is
subject to the confidentiality provisions and other limitations required by
Liquidmetal and this Agreement, and additionally, GraceMetal agrees that it may
not use the Equipment to cast, alloy, or otherwise process any amorphous alloys
(or composite materials containing amorphous alloys) other than Liquidmetal
Alloys. GraceMetal will have the right to utilize the Equipment only for
internal use and only for the development and production of the Products as
provided in the License Agreement.

1.6                           No
Warranty. THE EQUIPMENT IS BEING PURCHASED “AS IS” AND “WITH ALL FAULTS”
AND WITHOUT WARRANTIES (WHETHER EXPRESS OR IMPLIED) OF ANY KIND, INCLUDING WITHOUT
LIMITATION WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

ARTICLE II

COMMISSIONING OF EQUIPMENT

14.1.              Installation.  Liquidmetal
will provide an installation team to oversee and assist in the installation of
the Equipment at GraceMetal’s site in accordance with the specifications for
the Equipment and in accordance with the site requirements provided by
GraceMetal and approved by Liquidmetal. 
Liquidmetal agrees that the installation team will consist of no less
than two qualified individuals selected by Liiquidmetal.  GraceMetal agrees to provide sufficient
personnel (in terms of number and qualifications) to handle the installation of
the Equipment with the assistance and oversight of Liquidmetal’s installation
team.  All costs and expenses associated
with the personnel involved in the installation of the Equipment will be born
by their respective parties (this is to include the costs of travel and
transportation to and from GraceMetal’s facility, all living accommodations and
all food and beverage needs of the installation team during the installation,
testing and commissioning period).

 3
 

14.2.              Commissioning.  The
Parties will jointly commission the Equipment at the installation site as
follows:

(i)            Commissioning will follow as soon as
reasonably practicable after the installation of the Equipment.

(ii)           Drawings of a product  will be provided by Liquidmetal, with such
specifications to be determined by Liquidmetal (the product set forth in such
drawings will be referred to as the “Commissioning Product”).

(iii)          One used mold suitable for manufacturing the
Commissioning Product for use in the commissioning process will be provided by
Liquidmetal.

(iv)          Commissioning will be deemed complete and
acceptable when Liquidmetal can demonstrate that one of the molded
Commissioning Products can be produced in line with the drawing specifications,
to quality standards reasonably agreed upon by the Parties, and continuously
for a minimum run time of 4 hours.  The
date on which commissioning is completed is referred to as the “Commissioning
Date.”

(v)           Liquidmetal will provide a team of no less
than two qualified Liquidmetal employees to assist and oversee the
commissioning process, which two employees will be selected by Liquidmetal and
which may or may not be  the same
individuals who are a part of the Liquidmetal installation team.  GraceMetal will fully cooperate in the
commissioning process, including by providing a sufficient number of qualified
personnel to undertake the commissioning process with the advice and assistance
of the Liquidmetal commissioning team. 
To enable proper training of the GraceMetal technicians and operators,
the commissioning period will not be less than eight working days.  Each Party shall bear its own costs
associated with the commissioning process as set forth in this Section 2.2.

14.3.                              Ongoing Support. 
Liquidmetal shall provide GraceMetal ongoing support as reasonably
necessary after commissioning of the Equipment. 
As a part of such support, Liquidmetal will advise and consult with
GraceMetal regarding the use, maintenance and operation of the Equipment,
including by making available a qualified technician available at GraceMetal’s
facility in China at reasonable times and upon reasonable notice.  In connection with the provision of such
support services, GraceMetal shall bear all travel, transportation,
accommodation, food and beverage and similar costs associated with such
services plus a per diem charge to be agreed upon by Liquidmetal and GraceMetal. 
As a part of this support, for critical situations where the Equipment
is not operational, Liquidmetal will use reasonable commercial efforts to make
available a qualified technician upon five (5) business days’ prior notice, at
GraceMetal’s facility in China.

 4
 

ARTICLE
III

INTELLECTUAL PROPERTY

15.1.                        Confidentiality.
The Parties acknowledge that they are and will be subject to certain
confidentiality obligations set forth in the License Agreement and they further
acknowledge that any disclosures relating to the purchase or delivery of the
Equipment shall be deemed “Confidential Information” within the meaning of the
License Agreement. GraceMetal further understands that the Equipment contains
significant confidential and proprietary know-how and technology that is the sole
and exclusive property of Liquidmetal, and therefore the Equipment itself
(including the design and components thereof) and any information regarding the
Equipment shall be Liquidmetal’s “Confidential Information” that is protected
by Liquidmetal.

15.2.                        New
Intellectual Property. GraceMetal acknowledges that it is subject to the
License Agreement with respect to all New Amorphous Alloy Technology (as
defined in the License Agreement) developed by GraceMetal, either alone or in
conjunction with others, arising from GraceMetal’s use of the Equipment. The
License Agreement will regulate the developments made by GraceMetal.

ARTICLE IV

GENERAL

16.1.                        Notices.
All notices required by or referred to in this Agreement shall be in writing
and in the English language and sent by personal delivery, Federal Express (or
other reliable overnight delivery service), facsimile, or U.S. Certified Mail,
postage prepaid, and properly addressed as follows:

If to GraceMetal:                  Grace
Metal Co., Ltd.

Balan Industrial Complex
6-9

Gumunchunri, Hyangnam

Hwasung, Gyeonggi

Republic of Korea

Tel: +82 (31) 366-2303

Fax: +82 (31) 366-2306

Attention: James Kang

If to Liquidmetal:                  Liquidmetal
Technologies, Inc..

25800 Commercentre Drive, Suite 100

Lake Forest, CA 
92630

Tel: +1 (949) 206-8000

Fax: +1 (949) 206-8008

Attention: Larry Buffington

All notices required by or referred to in this
Agreement which are addressed as provided in this Section 3.1 shall be
effective, (a) if sent by personal delivery, upon delivery, (b) if sent by
Federal Express or other reliable overnight delivery service, upon delivery,
(c) if sent by facsimile, upon the sending party’s receipt of electronic
confirmation of successful transmission provided a confirmation copy is sent
within one (1) business day by personal delivery or by

 5
 

Federal Express or other reliable overnight delivery
service. Any Party may change its address for the purposes of this Section 3.1
by giving written notice of such change to the other Parties in the manner
provided for in this Section 3.1.

16.2.                        Governing
Law. This Agreement shall be governed by and interpreted in accordance with
the laws of the State of California, without regard to its conflict of law
principles.

16.3.                        Successors
and Assigns. Neither this Agreement nor any interest herein may be
assigned, in whole or in part, by any Party without the prior written consent
of the other Parties and Liquidmetal Technologies.

16.4.                        Entire
Agreement; Amendment; Severability. This Agreement is the entire agreement
between the Parties with respect to the subject matter hereof and supersedes
any prior oral or written agreements, commitments, drafts, memorandums of
understanding, or other communications with respect to the subject matter of
this Agreement. This Agreement shall be subject to amendment at any time upon
the mutual written agreement of the Parties. Any such amendment shall be in
writing, shall identify the provisions of this Agreement that are to be
amended, and shall be signed by authorized signatories of the Parties. If any
term, provision, covenant or condition of this Agreement is held invalid or
unenforceable for any reason, the remainder of the provision shall continue in
full force and effect as if this Agreement had been executed with the invalid
portion eliminated.

16.5.                        Waiver.
No waiver by any Party of strict compliance with any of the terms and
conditions of this Agreement shall constitute a waiver of any subsequent
failure of any other Party to comply strictly with each and every term and
condition hereof.

16.6.                        Headings;
Counterparts. The section headings in this Agreement are for convenience
only and are not intended to affect the meaning or interpretation of this
Agreement. This Agreement may be executed simultaneously in counterparts, each
of which will be deemed an original, but all of which together will constitute
the same Agreement.

3.7                           Intended
Beneficiary.  The Parties agree and
acknowledge that Liquidmetal is an intended third-party beneficiary of each
Parties’ obligations and duties hereunder and that Liquidmetal shall have the
right to enforce any of the provisions of this Agreement.

 6
 

IN WITNESS WHEREOF,
the Parties have caused their duly authorized representatives to execute this
Agreement as of the Effective Date.

	
  Liquidmetal Technologies, Inc.

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Larry Buffington

  	
   

  
	
  Name: Larry Buffington

  	
   

  
	
  Title: President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  GraceMetal

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ James Kang

  	
   

  
	
  Name:   James
  Kang

  	
   

  
	
  Title:

  	
  President & Chairman

  	
   

  
						

 

 7
 

EXHIBIT A

EQUIPMENT

	
  Quantity

  	
   

  	
  Description

  
	
  3

  	
   

  	
  50 Kg Simple Type Vacuum Induction Melting Machine

  
	
  1

  	
   

  	
  100 Kg Tilting Type Vacuum Induction Melting Machine

  
	
  14

  	
   

  	
  Die Casting Machines

  
	
  2

  	
   

  	
  CNC Milling Machines

  
	
  5

  	
   

  	
  Supporting Machines (Mold Shop)

  

 

 8

Exhibit 10.65

TRANSFER AGREEMENT REGARDING WEIHAI OPERATIONS

THIS TRANSFER  AGREEMENT (this “Agreement”) is made and entered into this 1st day
of June, 2007 (the “Agreement Date”), by and between LIQUIDMETAL
TECHNOLOGIES KOREA CO., LTD., a South Korean
corporation (“LMTK”) and GRACE  METAL CO.,
LTD., also a South Korean corporation (“Grace Metal”).  Hereinafter, Grace Metal and LMTK are sometimes referred to
individually as a “Party” and together as the “Parties.”

RECITALS:

A.    LMTK, a wholly-owned subsidiary of Liquidmetal
Technologies, Inc. (“LMT”), is engaged in the business of developing,
manufacturing, and marketing products made from amorphous alloys, and LMTK
utilizes proprietary machines for the processing of its proprietary bulk
amorphous alloys.

B.    In connection with the License Agreement and Equipment
Purchase Agreement dated June 1, 2007 between LMT, a parent company of LMTK,
and Grace Metal, this Agreement clarifies the understanding of the Parties with
regard to the LMTK’s post-processing operation located in Weihai, China.

C.    Upon the terms and conditions set forth in this Agreement, Grace Metal
desires to assume from LMTK, LMTK desires to transfer to Grace Metal, the operating and financial responsibility of
the Weihai operation.

AGREEMENTS:

NOW, THEREFORE, in consideration
of the foregoing recitals and the mutual agreements and covenants contained
herein, the Parties agree as follows:

Article I

Transfer of WEIHAI
OPERATIONS

1.1.  General
Assumption of Operational and Financial Responsibility.  Effective as of June 1, 2007, GraceMetal
became completely responsible for the operational and financial management of
the Weihai operations.  GraceMetal agrees
to employ all of the personnel at the Weihai operations as of June 1, 2007 and
assume any liability with regards to their employment, such as health, welfare
and retirement benefits.  GraceMetal
further agrees to assume responsibility for all expenses incurred on or after
June 1, 2007 with regards to the Weihai operation.  LMTK agrees not to seek reimbursement for the
prepaid rent of the Weihai facility.

1.2.  Post-Processing
for LMTK.  As an inducement to LMTK
to enter into this Agreement, GraceMetal commits to provide post-processing of
products for LMTK.  For existing
products, current pricing will prevail. 
For new products, GraceMetal will provide quotations based upon product
specifications provided by LMTK. 
GraceMetal agrees to provide 

 1
 

post-processing of products for LMTK which meet specifications,
workmanship standards and quality requirements with on-time delivery and at
competitive market rates.

1.3.  Addition of Certain Equipment Located in Weihai.  Exhibit A of the Equipment Purchase Agreement
dated June 1, 2007 describes the equipment to be used in the manufacturing of
products made of Liquidmetal Alloys to be purchased by GraceMetal.  Exhibit A to this Agreement lists certain
additional equipment located in Weihai which the Parties wish to add to and
make a part of Exhibit A of the Equipment Purchase Agreement dated June 1,
2007.

1.4.  Laser Marking Machines.  Exhibit
A to this Agreement specifically omits all laser marking machines at Weihai
which will remain the property of LMTK. 
GraceMetal agrees to house the laser marking machines at its facility in
Weihai and utilize those laser marking machines only on projects for LMT and
LMTK.

1.5.  Inventory. All inventory
located in Weihai shall remain the property of LMT or LMTK including, but not
limited to, any finished goods, work-in-process, raw material, scrap parts,
defect parts, samples and the like. 
GraceMetal may issue purchase orders to LMTK for work-in-process
inventory that may be completed and sold pursuant to the License Agreement
dated June 1, 2007 between the Parties.

1.6.  Corporate Records.  LMT and LMTK presently maintain corporate records
in Weihai.  GraceMetal agrees that these
corporate records will be maintained in good order.  In addition, GraceMetal agrees to grant LMT
and LMTK personnel, auditors and other representatives with access to corporate
and financial records in Weihai upon reasonable notice during working hours.

Article II

GENERAL

2.1.              Notices.  All notices required by or referred to in
this Agreement shall be in writing and in the English language and sent by
personal delivery, Federal Express (or other reliable overnight delivery
service), facsimile, or a certified mail, postage prepaid, and properly addressed as follows:

If to Grace Metal:                             Grace Metal Co., Ltd

Balan Industrial Complex 6-9

Gumunchunri, Hyangnam

Hwasung, Gyeonggi

Republic of Korea

Tel:     +82 (31)
366-2303

Fax:     +82 (31)
366-2306

Attention:
James Kang

If to LMTK:                                      Liquidmetal
Korea Co., Ltd.

884 EoyeonHansan

Cheongbuk, Pyeongtaek

Gyeonggi, Republic of Korea

Attention:

 2
 

All notices required by or referred to in this
Agreement which are addressed as provided shall be effective, (a) if sent by
personal delivery, upon delivery, (b) if sent by Federal Express or other
reliable overnight delivery service, upon delivery, or (c) if sent by
facsimile, upon the sending party’s receipt of electronic confirmation of successful
transmission provided a confirmation copy is sent within one (1) business day
by personal delivery or by Federal Express or other reliable overnight delivery
service.

2.2.              Governing Law.
This Agreement shall be governed by and interpreted in accordance with the laws
of the Republic of
Korea, without regard to its conflict of law principles.

2.3.             Successors
and Assigns. Neither this Agreement nor any interest herein may be
assigned, in whole or in part, by any Party without the prior written consent of
the other Parties and LMTK.

2.4.              Entire
Agreement: Severability. This Agreement is the
entire agreement between the Parties with respect to the subject matter hereof
and supersedes any prior oral or written agreements.  If any term, provision, covenant or condition
of this Agreement is held invalid or unenforceable for any reason, the
remainder of the provision shall continue in full force and effect as if this
Agreement had been executed with the invalid portion eliminated.

2.5.              Waiver.
No waiver by any Party of strict compliance with any of the terms and
conditions of this Agreement shall constitute a waiver of any subsequent
failure of any other Party to comply strictly with each and every term and
condition hereof.

 IN WITNESS WHEREOF, the Parties have caused
their duly authorized representatives to execute this Agreement as of the
Effective Date.

	
   Liquidmetal Technologies Korea Co., Ltd.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ David Choi

  	
   

  	
   

  
	
  Name: David Choi

  	
   

  
	
  Title: GM of
  Casting Business Unit

  	
   

  
	
   

  	
   

  
	
  Grace  Metal Co.,
  Ltd.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Patrick
  Hobum Lee

  	
   

  	
   

  
	
  Name: Patrick
  Hobum Lee

  	
   

  
	
  Title: Chief
  Financial Officer

  	
   

  

 

 3
 

EXHIBIT A

ADDITIONAL EQUIPMENT LOCATED
IN WEIHAI

 

 

Other
included assets:

	
  Description

  	
   

  	
  Serial No

  	
   

  	
  Qty

  	
   

  
	
  Grinding Booth

  	
   

  	
  GB0405-10

  	
   

  	
  6

  	
   

  
	
  CNC Miling Machine

  	
   

  	
  ML01

  	
   

  	
  1

  	
   

  

 

Items
specifically excluded:

	
  Description

  	
   

  	
  Serial No

  	
   

  	
  Qty

  	
   

  
	
  Laser Marking
  Machines

  	
   

  	
  V102-H0102 (Violino2)

  V102E1805

  V100380406

  V1003D0206

  V1003E1406

  	
   

  	
  5

  	
   

  
	
  Video Conference
  Equipment

  	
   

  	
   

  	
   

  	
  1

  	
   

  
	
  Laptops

  	
   

  	
   

  	
   

  	
  3

  	
   

  
	
  Polishing Booth

  	
   

  	
  PB0401-4

  	
   

  	
  4

  	
   

  
	
  Polishing Booth

  	
   

  	
  PB0405-9

  	
   

  	
  5

  	
   

  
	
  Dust Collector

  	
   

  	
  0211023, 0209086

  	
   

  	
  2

  	
   

  
	
  Air Suction
  Blasting Machine

  	
   

  	
  BL01-02

  	
   

  	
  2

  	
   

  
	
  Auto Blasting
  Machine

  	
   

  	
  Hanablast — 0200A

  	
   

  	
  1

  	
   

  
	
  Ultrasonic
  Cleaning Machine

  	
   

  	
  KUS-001

  	
   

  	
  1

  	
   

  
	
  Proector
  (PJ-H3000F)

  	
   

  	
   

  	
   

  	
  1

  	
   

  
	
  Auto Blasting
  Machine

  	
   

  	
  Hanablast — 0200B

  	
   

  	
  1

  	
   

  
	
  Wheel Plate
  Machine (Jaras)

  	
   

  	
   

  	
   

  	
  1

  	
   

  
	
  Wheel Plate Machine
  (Jaras)

  	
   

  	
   

  	
   

  	
  1

  	
   

  

 

 4

ASSUMPTION OF RETIREMENT
ALLOWANCE AGREEMENT

THIS ASSUMPTION OF RETIREMENT
ALLOWANCE  AGREEMENT  (this “Agreement”) is made
and entered into this 1st day of June, 2007 (the “Agreement Date”), by and between LIQUIDMETAL KOREA CO., LTD., a South Korean
corporation (“LMTK”) and GRACE  METAL CO.,
LTD., also a South Korean corporation (“Grace Metal”).  Hereinafter, Grace Metal and LMTK are sometimes referred to
individually as a “Party” and together as the “Parties.”

RECITALS:

A.            LMTK, a
wholly-owned subsidiary of Liquidmetal Technologies, Inc. (“LMT”), is
engaged in the business of developing, manufacturing, and marketing products
made from amorphous alloys, and LMTK utilizes proprietary machines for the
processing of its proprietary bulk amorphous alloys.

B.            In connection
with the Equipment Purchase Agreement dated June 1, 2007 between LMT, a parent
company of LMTK, and Grace Metal, certain employees of LMTK will join Grace
Metal as full-time employees. 
Accordingly, Grace Metal desires to assume the accrued retirement allowance for the
employees of LMTK who will transfer their employment to Grace Metal, and
provide the same retirement benefit plan for the employees who will transfer to
Grace Metal.

C.            Upon
the terms and conditions set forth in this Agreement, Grace Metal
desires to assume from LMTK, LMTK desires to transfer to Grace Metal, the retirement allowance liability of the employees
of LMTK who will join Grace Metal as full-time employees.

AGREEMENTS:

NOW, THEREFORE, in consideration
of the foregoing recitals and the mutual agreements and covenants contained
herein, the Parties agree as follows:

ARTICLE I

TRANSFER
OF RETIREMENT
ALLOWANCE

3.1.          Assumption and Transfer of Liability.
Upon the terms and conditions herein, Grace
Metal agrees to assume from LMTK,
and LMTK agrees to transfer to Grace
Metal, the retirement allowance liability
for the employees of LMTK who will join Grace Metal as full-time employees as
described in Exhibit A (the “Employees
of LMTK to Grace Metal”).

3.2.          Retirement
Allowance. In accordance with LMTK’s corporate policy, a retirement allowance is
calculated and accrued for all full-time employees who have continuously worked
for more than one (1) year at LMTK.  For
each year of continuous employment, an amount equivalent to salaries for thirty
(30) working days, based on the employee’s average salaries during the year, is
determined and accrued for by LMTK.  The
Board of Directors of LMTK, however, has the authority to approve an amount
exceeding the 

 1
 

amount
determined using the methodology aforementioned.  For any remaining days between the annual
retirement allowance calculation date and the resignation or termination date,
the retirement allowance shall be calculated proportionately.  For example, at the termination date, if an
employee has worked continuously at LMTK for a period of three (3) years and
five (5) months, the retirement benefit for the 5 month period shall be
calculated as follows:

  5 months

---------------    X  salaries for 30 days.

12 months

3.3.          Assumed Liability Amount. LMTK will prepare and provide Grace Metal a
detail schedule of retirement allowance including but not limited to employees’
name, hiring date, title, national identity number, address and phone number
and past and current annual salaries.  In
addition, LMTK will calculate and provide Grace Metal the retirement allowance
balance for the employees who will transfer from LMTK to Grace Metal as
described in Appendix A within seven (7) business days from the date of
employees’ transfer from LMTK to Grace Metal.

3.4.  Indemnification.  As
of the Agreement Date, Grace Metal shall assume, pay, perform and become
obligated for the retirement allowance liability of the employees
of LMTK who will join Grace Metal as full-time employees.  Grace Metal agrees to indemnify
and hold harmless LMTK, its parent and affiliates from and against any losses,
directly or indirectly, as a result of, in connection with, or based upon or
arising from any of the assumed retirement allowance liability.  Grace Metal shall reimburse LMTK, its parent
or affiliates promptly upon demand for any loss suffered or incurred or
any payment made by LMTK, its parent or affiliates at any time after the Agreement Date as to any loss to which the foregoing
indemnity relates.

ARTICLE
II

GENERAL

4.1.          Notices.  All notices required by or referred to in
this Agreement shall be in writing and in the English language and sent by
personal delivery, Federal Express (or other reliable overnight delivery
service), facsimile, or a certified mail, postage prepaid, and properly addressed as follows:

	
  If to Grace Metal:

  	
  Grace Metal Co., Ltd

  
	
   

  	
  Balan Industrial Complex 6-9

  
	
   

  	
  Gumunchunri, Hyangnam

  
	
   

  	
  Hwasung, Gyeonggi

  
	
   

  	
  Republic of Korea

  
	
   

  	
   

  
	
   

  	
  Tel:  +82 (31) 366-2303

  
	
   

  	
  Fax:  +82 (31) 366-2306

  
	
   

  	
  Attention: James Kang

  

 

 2
 

 

	
  If to LMTK:

  	
  Liquidmetal Korea Co., Ltd.

  
	
   

  	
  884 EoyeonHansan

  
	
   

  	
  Cheongbuk, Pyeongtaek

  
	
   

  	
  Gyeonggi, Republic of Korea

  
	
   

  	
  Attention:

  

 

All notices required by or referred to in this
Agreement which are addressed as provided shall be effective, (a) if sent by
personal delivery, upon delivery, (b) if sent by Federal Express or other
reliable overnight delivery service, upon delivery, or (c) if sent by
facsimile, upon the sending party’s receipt of electronic confirmation of
successful transmission provided a confirmation copy is sent within one (1)
business day by personal delivery or by Federal Express or other reliable
overnight delivery service.

4.2.          Governing
Law. This Agreement shall be governed by and interpreted in accordance with
the laws of the Republic
of Korea, without regard to its conflict of law principles.

4.3.          Successors
and Assigns. Neither this Agreement nor any interest herein may be
assigned, in whole or in part, by any Party without the prior written consent
of the other Parties and LMTK.

4.4.          Entire
Agreement: Severability. This Agreement is the
entire agreement between the Parties with respect to the subject matter hereof
and supersedes any prior oral or written agreements.  If any term, provision, covenant or condition
of this Agreement is held invalid or unenforceable for any reason, the
remainder of the provision shall continue in full force and effect as if this
Agreement had been executed with the invalid portion eliminated.

4.5.          Waiver.
No waiver by any Party of strict compliance with any of the terms and
conditions of this Agreement shall constitute a waiver of any subsequent
failure of any other Party to comply strictly with each and every term and
condition hereof.

IN WITNESS WHEREOF,
the Parties have caused their duly authorized representatives to execute this
Agreement as of the Effective Date.

	
  Liquidmetal Korea
  Co., Ltd.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: /s/ David
  Choi

  	
   

  
	
  Name: David Choi

  	
   

  
	
  Title: GM of
  Casting Business Unit

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Grace  Metal Co.,
  Ltd.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:/s/ Patrick
  Hobum Lee

  	
   

  
	
  Name: Patrick
  Hobum Lee

  	
   

  
	
  Title: Chief
  Financial Officer

  	
   

  

 

 3
 

EXHIBIT A

EMPLOYEES OF LMTK TO GRACE
METAL

	
  Name

  	
   

  	
  Department

  	
   

  	
  Title

  	
   

  	
  Date
  of Hire

  
	
  KYOUNG JIN KIM

  	
   

  	
  Executive

  	
   

  	
  Representative Director

  	
   

  	
  November 22, 2002

  
	
  SEYONG JEON

  	
   

  	
  CS

  	
   

  	
  Assistant Manager

  	
   

  	
  May 15, 2002

  
	
   SOONHO
  KIM

  	
   

  	
  CS

  	
   

  	
  Assistant Manager

  	
   

  	
  October 1, 2002

  
	
  JUNGHA HWANG

  	
   

  	
  CS

  	
   

  	
  Dept. Assistant
  Manager

  	
   

  	
  October 7, 2002

  
	
   HYUNMI
  KIM

  	
   

  	
  CS

  	
   

  	
  Sawon

  	
   

  	
  October 1, 2004

  
	
   JEONGGIL KIM

  	
   

  	
  CS

  	
   

  	
  Department Manager

  	
   

  	
  October 15, 2004

  
	
   HACHUNG
  JUNG

  	
   

  	
  CS

  	
   

  	
  Sawon

  	
   

  	
  February 13, 2006

  
	
   HYUNLEE
  KIM

  	
   

  	
  CS

  	
   

  	
  Sawon

  	
   

  	
  June 1, 2006

  
	
   NAMYOUNG LEE

  	
   

  	
  Die casting

  	
   

  	
  Assistant Manager

  	
   

  	
  October 1, 2002

  
	
   SUNGHWA
  CHO

  	
   

  	
  Die casting

  	
   

  	
  Section Manager

  	
   

  	
  October 21, 2002

  
	
   DOOHO
  KIM

  	
   

  	
  Die casting

  	
   

  	
  Section Manager

  	
   

  	
  November 11, 2002

  
	
   HYUNWOO
  JO

  	
   

  	
  Die casting

  	
   

  	
  Department Manager

  	
   

  	
  August 1, 2005

  
	
   MINWOO
  KIM

  	
   

  	
  Die casting

  	
   

  	
  Sawon

  	
   

  	
  March 1, 2006

  
	
   JINGU
  SEO

  	
   

  	
  Die casting

  	
   

  	
  Sawon

  	
   

  	
  August 14, 2006

  
	
   HONGJU
  LEE

  	
   

  	
  Die casting

  	
   

  	
  Sawon

  	
   

  	
  October 23, 2006

  
	
   KWANGCHUL
  HAN

  	
   

  	
  Die casting

  	
   

  	
  Sawon

  	
   

  	
  November 7, 2006

  
	
   DONGSOO
  OH

  	
   

  	
  LMC

  	
   

  	
  Assistant Manager

  	
   

  	
  November 25, 2004

  
	
   MINWOO
  LEE

  	
   

  	
  LMC

  	
   

  	
  Sawon

  	
   

  	
  July 1, 2005

  
	
   YUNYUNG
  HAN

  	
   

  	
  LMC

  	
   

  	
  Sawon

  	
   

  	
  February 1, 2006

  
	
   MOONTAE
  KIM

  	
   

  	
  Mold

  	
   

  	
  Department Manager

  	
   

  	
  June 1, 2002

  
	
   JUNGDAE
  KIM

  	
   

  	
  Mold

  	
   

  	
  Section Manager

  	
   

  	
  September 2, 2002

  
	
   BOHYUN
  KIM

  	
   

  	
  Mold

  	
   

  	
  Assistant Manager

  	
   

  	
  October 14, 2002

  
	
   BYUNGKYUN JUNG

  	
   

  	
  Mold

  	
   

  	
  Department Manager

  	
   

  	
  September 1, 2005

  
	
   SANGSIK
  KIM

  	
   

  	
  Mold

  	
   

  	
  Assistant Manager

  	
   

  	
  February 15, 2006

  
	
   CHANSUB
  LEE

  	
   

  	
  Mold

  	
   

  	
  Assistant Manager

  	
   

  	
  March 27, 2006

  
	
   SEUNGPYO RYU

  	
   

  	
  Mold

  	
   

  	
  Sawon

  	
   

  	
  April 1, 2006

  
	
   JANGHO
  KIM

  	
   

  	
  Mold

  	
   

  	
  Sawon

  	
   

  	
  May 29, 2006

  
	
   JUNGHYUNG GO

  	
   

  	
  Mold

  	
   

  	
  Sawon

  	
   

  	
  October 12, 2006

  
	
   SUNGSANG PARK

  	
   

  	
  Outsourcing Management

  	
   

  	
  Department Manager

  	
   

  	
  December 7, 2005

  
	
   JAEDUK
  JANG

  	
   

  	
  Post Processing

  	
   

  	
  Sawon

  	
   

  	
  November 1, 2005

  
	
   JONGBOK
  LIM

  	
   

  	
  Post Processing

  	
   

  	
  Section Manager

  	
   

  	
  April 2, 2003

  
	
   JAEHAK
  YUN

  	
   

  	
  Product Development

  	
   

  	
  Section Manager

  	
   

  	
  December 2, 2002

  
	
   DONGKYU
  LEE

  	
   

  	
  Production Planning

  	
   

  	
  Department Manager

  	
   

  	
  June 13, 2005

  
	
   SUNGCHUL WOO

  	
   

  	
  Sales

  	
   

  	
  Sawon

  	
   

  	
  June 15, 2005

  
	
   SUNGYOL
  PARK

  	
   

  	
  Sales

  	
   

  	
  Assistant Manager

  	
   

  	
  May 1, 2006

  

 

 4Exhibit 10.126
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made effective as of July 2, 2007 (the “Effective Date”), between VCampus Corporation, a corporation organized and existing under the laws of the State of Delaware (“VCampus”) and James H.R. Brady (“Brady”).
WHEREAS, VCampus desires to employ Brady and Brady desires to accept such employment on the terms and conditions hereinafter set forth; and
WHEREAS, the parties hereby acknowledge that the goodwill, continued patronage, names, addresses and specific business requirements of VCampus’ clients and customers, and the designs, procedures, systems, strategies, business methods and know-how of VCampus, having been acquired through VCampus’ efforts and the expenditure of considerable time and money, are among the principal assets of VCampus; and
WHEREAS, the parties hereby acknowledge that as a result of the position(s) in which Brady will be employed, Brady will develop special skills and knowledge peculiar to VCampus’ business, whereby he will become, through his employment with VCampus, acquainted with the identities of the clients and customers of VCampus, and will acquire access to the techniques of VCampus in carrying on its business, as well as other confidential and proprietary information; and
WHEREAS, the parties hereto acknowledge that the Covenants set forth in Section 8 of this Agreement are necessary for the reasonable and proper protection of VCampus’ confidential and proprietary information (as defined in subsection 8(c) herein), customer relationships, and the goodwill of VCampus’ business, and that such Covenants constitute a material portion of the consideration for Brady’s employment hereunder.
NOW, THEREFORE, in consideration of the premises and mutual promises and covenants contained herein, and for other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, the parties agree as follows:
1.               Term.  VCampus agrees to employ Brady, and Brady agrees to be employed, initially as Vice President of Finance (from the Effective Date through August 15, 2007) and thereafter as Chief Financial Officer, for a term commencing on the Effective Date and ending one the one year anniversary of such date (hereinafter, the “Initial Term”), unless such employment is sooner terminated as provided herein.
2.               Renewal Terms.  Unless either party provides written notice to the other of its/his intention not to renew the Agreement at least thirty (30) days prior to the expiration of the Initial Term (or the then current renewal term thereof), this Agreement shall be automatically renewed for consecutive additional one (1) year renewal terms, subject to the termination provisions set forth in Section 6 hereof.

   
 

3.               Compensation.
(a)            Base Salary.  In consideration of Brady’s services as Chief Financial Officer (or any other capacity in which Brady may be employed by VCampus), VCampus shall pay Brady a minimum annual base salary of Two Hundred and Forty Thousand Dollars  ($240,000.00) per annum (equivalent to $20,000 per month), payable in equal monthly or semi-monthly installments in accordance with VCampus’ normal payroll practices.
(b)         Stock Options.  As approved by the VCampus Board of Directors and upon execution of this Agreement, VCampus agrees to grant Brady an option (intended to qualify as an incentive stock option to the extent permitted by applicable law) to purchase 250,000 shares of VCampus’ common stock pursuant to an Incentive Stock Option Agreement in the form attached hereto as Exhibit B.  The options shall vest in accordance with VCampus’ normal employee vesting schedule over 4 years.
(c)          Bonuses.  Brady shall be eligible to receive performance bonuses, as determined by the Board of Directors of VCampus, based upon the criteria described in Exhibit A attached hereto.  The performance bonuses will be calculated based on calendar year performance and shall be payable during the first quarter following the end of each calendar year covered by the Agreement.  Brady and VCampus agree to negotiate in good faith to determine the performance criteria for any renewal terms under this Agreement to be used for establishing Brady’s potential performance bonus.
4.               Employee Benefits, Vacation.  During the term of this Agreement, Brady shall be eligible to receive and/or participate in all regular employee benefits that are offered by VCampus to its executive employees, including, without limitation, major medical, dental, 401(k) Retirement Plan and long- and short-term disability insurance coverage for Brady.  Except for the specific employee benefits set forth above, VCampus shall have no obligation to provide Brady with life insurance, car allowance, memberships or any other similar executive benefits.  During the initial term or any renewal terms hereof, Brady shall be entitled to receive up to one hundred twenty (120) hours of paid vacation per calendar year (or a pro rata portion thereof based on the length of the then current term).  Brady may only carry over a number of hours of accrued but unused vacation from one calendar year to the next in accordance with the VCampus’ customary employee policy (currently a maximum of one week).

 2
 

5.               Reimbursement of Expenses.  Brady is authorized to incur reasonable expenses in connection with the business of VCampus including expenses for travel and similar items.  VCampus will reimburse Brady for all such reasonable and management-approved expenses upon presentation of an itemized account of expenditures.  In particular, Brady will be entitled to receive an allowance for mobile phone expenses related to VCampus of $175.00 per month.
6.               Termination.
(a)              Termination Without Cause.  Either VCampus or Brady may terminate this Agreement without cause with thirty (30) days’ written notice to the other party.  Upon termination without cause by Brady, Brady shall receive accrued but unpaid base salary for days worked prior to termination.  If Brady is terminated without cause by VCampus, Brady will also receive accrued vacation and accrued but unpaid pro rata performance bonus, if any  for days worked prior to termination as well as the Severance Benefit described in Section 7.  If VCampus fails to provide thirty (30) days advance written notice of its intention to terminate without cause, in its sole discretion VCampus may elect to pay Brady his regular base salary in lieu of such notice for all or a portion of such notice period.
(b)             Termination for “Cause”.  VCampus may discharge Brady immediately and without any advance notice for “Cause,” which shall be limited to:
(i)                                     Brady’s gross negligence or willful misconduct that results in material harm to the financial condition, business, assets, or prospects of VCampus;
(ii)                                  the conviction of, or the entering of a plea of no contest by, Brady for a felony or crime involving moral turpitude;
(iii)                               the Board of Directors determines that Brady has engaged in theft, fraud, misappropriation or embezzlement in connection with his services for VCampus; or
(iv)                              the Board of Directors determines that Brady has repeatedly failed to carry out the reasonable directions of the Board of Directors of VCampus, which failure cannot be cured or shall not have been cured within thirty (30) days after receipt by Brady of written notice specifying in reasonable detail the failure to so carry out such directions.

If
Brady is terminated for “Cause,” pursuant to subsection 6(b)(i), 6(b)(iii) or
6(b)(iv), VCampus agrees to provide Brady with written notice of the reasons
for its decision to terminate his employment. 
Upon receipt of such notice from VCampus, Brady’s employment with
VCampus shall be temporarily suspended for a period of thirty (30) days
following his receipt of such written notice (the “Suspension Period”) and he
shall have thirty (30) days in which to respond to the Board of Directors.  During the Suspension Period, Brady shall
continue to receive the compensation and benefits set out 

 3
 

in
Section 3(a) hereof, but Brady agrees that he shall not have any rights to vest
or exercise his options during such period. 
If in the sole discretion of the Board of Directors, Brady’s response to
the Board of Directors’ written notice is satisfactory, Brady shall be
reinstated to his position and any options held by Brady will vest as if his
employment had never been suspended.

In
the alternative, if, in the sole discretion of the Board of Directors, Brady’s
response to the Board of Directors’ written notice is unsatisfactory for any
reason whatsoever, then Brady’s employment hereunder will be terminated
immediately.  Provided, however, that
within thirty (30) days after such termination, Brady may elect to commence an
arbitration proceeding in Reston, Virginia (or Raleigh, North Carolina) to
determine whether Brady may be entitled to the Severance Benefit provided in
Section 7, but not for the purpose of reinstatement.  Any such arbitration proceeding shall be
conducted before a panel of arbitrators in accordance with the rules of the
American Arbitration Association then in effect.  The expenses of the parties to such
arbitration shall be apportioned as determined by the arbitration panel.

(c)              Termination for “Good Reason”.  Brady may terminate this Agreement for “Good Reason” (as defined below) by giving VCampus written notice of the event constituting Good Reason.  Such termination shall become effective thirty (30) days following delivery of notice thereof by Brady to VCampus.  If Brady terminates this Agreement for Good Reason, Brady shall be entitled to receive the Severance Benefit described in Section 7.
“Good Reason” shall exist if:
i.  There occurs a “Change of Control” (as defined in subsection 6(c)(iv)), pursuant to which Brady exercises the option, within a ninety (90) day period commencing three (3) months after the Change of Control, to terminate his employment voluntarily;
ii.  There is a material change in Brady’s duties, titles, authority or position with VCampus, excluding isolated or insubstantial action not taken in bad faith and remedied by VCampus within thirty (30) days after receipt of notice thereof by Brady; or
iii.  There is a failure by VCampus to comply with any material provision of this Agreement and such failure has continued for a period of thirty (30) days after written notice of such failure has been given by Brady to VCampus.
iv.  For purposes of this Agreement, “Change of Control” shall mean (1) any merger, exchange offer involving VCampus’ stockholders, or sale of all or substantially all of the assets of VCampus, in each case only if the stockholders of VCampus immediately prior to such transaction own less than a majority of the voting shares of the entity surviving such transaction; and (2) a one-time change in the composition of a majority of the members of the VCampus Board of Directors.

 4
 

(d)             Termination due to Death or Disability.  In the event of Brady’s death or “disability” (as defined below), this Agreement shall terminate immediately, and VCampus shall pay to Brady’s spouse or beneficiary (i) accrued but unpaid base salary through the last complete day of active employment, subject to the provisions of subsection 3(a) of this Agreement and (ii) accrued but unpaid pro rata performance bonus, if earned and approved by the Board of Directors of VCampus in accordance with subsection 3(c) of this Agreement, for days worked prior to termination.  For purposes of this Agreement, “disability” shall mean the event of Brady’s physical or mental inability (as verified by a physician selected by VCampus) to perform his essential functions hereunder, with or without reasonable accommodation, for a period of at least sixty (60) consecutive days during this Agreement.
7.               Severance Benefit.  If this Agreement is terminated (i) by VCampus under Section 6(a) hereof, or by Brady under Section 6(c) hereof, then Brady shall be entitled to receive, as his exclusive remedy for such termination, the severance benefit set forth in this Section 7 (the “Severance Benefit”).  The Severance Benefit shall equal six (6) months of Brady’s base salary and the payments of  health insurance premiums, less required withholdings.  The Severance Benefit shall be payable to Brady in equal monthly or semi-monthly installments consistent with VCampus’ normal payroll practices (the “Severance Period”), the first of such installments to be due within thirty (30) days after termination hereof.  VCampus’ obligation to pay the Severance Benefit described herein is conditioned upon Brady’s execution of a full Release of all claims that Brady may have against VCampus in a form satisfactory to VCampus.
8.               Restrictive Covenants.  In exchange for VCampus’ agreement to employ Brady on the terms set forth herein, Brady agrees that the following restrictions shall apply during Brady’s employment and for the indicated periods of time following the termination of Brady’s employment.
(a)          Non-solicitation of Customers.  During Brady’s employment with VCampus, and for the three(3) month period of time following termination or expiration of his employment by either party for any reason whatsoever, Brady agrees not to solicit business with any client or customer of VCampus (which did business with VCampus during Brady’s employment), whether or not VCampus is doing work for such client or customer as of the date of termination of Brady’s employment.
(b)         Non-solicitation of Employees.  During Brady’s employment with VCampus, and for the two (2) year period following termination or expiration of his employment by either party for any reason whatsoever, Brady agrees not to initiate contact with, solicit, entice, or attempt to entice in any form, fashion or manner any employee of VCampus for the purpose of inducing that employee to terminate his/her employment with VCampus.

 5
 

(c)          Non-disclosure.  During Brady’s employment with VCampus, and for the two (2) year period following termination or expiration of his employment by either party for any reason whatsoever, Brady agrees not to disclose, or to knowingly allow any other employee to disclose, to any other person or business entity, or use for personal profit or gain, any confidential or proprietary information of VCampus, regardless of whether the same shall be or may have been originated, discovered or invented by Brady or by Brady in conjunction with others.  For purposes of this Agreement, the term “confidential or proprietary information” shall include, without limitation: the names, addresses and telephone numbers of past, present and prospective clients or customers of VCampus, as well as products, designs, business plans, proposed business development, marketing strategies, customers requirements, contractual provisions, employee capabilities, proposed marketing initiatives, pricing methods, company earnings, computer software and reporting systems; and the procedures, systems and business methods of VCampus.

(d)         Non-competition.  During Brady’s employment with VCampus, and
for the three (3) month
period following termination or expiration of his employment by either party
for any reason whatsoever, Brady agrees that he will not:  (a) engage in, manage, operate, control or
supervise, or participate in the management, operation, control or supervision
of, any business or entity that provides products or services competitive with
those currently provided by VCampus or those VCampus is providing as of the
date of the termination or expiration of Brady’s employment with VCampus; or (b)
have any ownership or financial interest, directly or indirectly, in any entity
that provides products or services competitive with those currently provided by
VCampus or those VCampus is providing as of the date of the termination or
expiration of Brady’s employment with VCampus, including, without limitation,
as an individual, partner, shareholder (other than as a shareholder of a
publicly-owned corporation in which Brady owns less than two percent (2.0%) of
the outstanding shares of such corporation), officer, director, employee,
member, associate, principal, agent, representative or consultant, and shall
not in any other manner, directly or indirectly, compete to any extent with
such business of VCampus.

9.               Remedies for Breach.  Brady hereby acknowledges and agrees that a violation of any of the covenants set forth in Section 8 (the “Covenants”) would result in immediate and irreparable harm to VCampus, and that VCampus’ remedies at law, including, without limitation, the award of money damages, would be inadequate relief to VCampus for any such violation.  Therefore, any violation or threatened violation by Brady of the Covenants shall give VCampus the right to enforce such Covenants through specific performance, temporary restraining order, preliminary or permanent injunction, and other equitable relief.  Such remedies shall be cumulative and in addition to any other remedies VCampus may have, at law or in equity.

 6
 

10.           Employee Representations.
(a)            No Conflict.  Brady represents and warrants to VCampus that to his knowledge, neither the execution and delivery of this Agreement, nor the performance of his duties hereunder, violates or will violate the provisions of any other agreement to which he is a party or by which he is bound.  Brady agrees to hold harmless and indemnify VCampus in the event that of any claims against VCampus arising out of such breach.
(b)            Director and Officer Liability Insurance.  Brady represents and warrants to VCampus that:  (i) he is unaware of any act or omission that would make him ineligible to be covered under  VCampus’ Directors’ and Officers’ Liability Insurance Policy; and (ii) he is unaware of any act or omission that would materially increase VCampus’ premiums under its Directors’ and Officers’ Liability Insurance Policy.
11.           Return of VCampus Property; Assignment of Inventions.
(a)            Return of VCampus Property.  Upon the termination or expiration of Brady’s employment with VCampus for any reason, Brady shall return to VCampus all personal property belonging to VCampus  (“VCampus Property”) that is in Brady’s possession or control as of the date of such termination or expiration of employment, including, without limitation, all records, papers, drawings, notebooks, specifications, marketing materials, software, reports, proposals, equipment, or any other device, document or possession, however obtained, whether or not such VCampus Property contains confidential or proprietary information of VCampus as described in Section 8(c) hereof.
(b)            Assignment of Inventions.  If at any time or times during Brady’s employment, Brady shall (either alone or with others) make, conceive, discover or reduce to practice any invention, modification, discovery, design, development, improvement, process, software program, work of authorship, documentation, formula, data, technique, know-how, secret or intellectual property right whatsoever, or any interest therein (whether or not patentable or registrable under copyright or similar statutes or subject to analogous protection) (herein called “Developments”) that (i) relates to the business of VCampus or that may be used in relation therewith, (ii) results from tasks assigned him by VCampus, or (iii) results from the use of premises or personal property (whether tangible or intangible) owned, leased or contracted for by VCampus, such Developments and the benefits thereof shall immediately become the sole and absolute property of 

 7
 

VCampus and its assigns, and Brady shall promptly disclose to VCampus (or any persons designated by it) each such Development and hereby assigns any rights Brady may have or acquire in the Developments and benefits and/or rights resulting therefrom to VCampus and its assigns without further compensation and shall communicate, without cost or delay, and without publishing the same, all available information relating thereto (with all necessary plans and models) to VCampus.
12.  Cooperation.  Upon disclosure of each Development to VCampus, Brady will during his employment and at any time thereafter, at the request and expense of VCampus, sign, execute, make and do all deeds, documents, acts and things as VCampus and its duly authorized agents may reasonably require: (i) to apply for, obtain and vest in the name of VCampus alone (unless VCampus otherwise directs) letters patent, copyrights or other analogous protection in any country throughout the world and when so obtained or vested to renew and restore the same; and (ii) to defend any opposition proceedings in respect of such applications and any opposition proceedings or petitions or applications for revocation of such letters patent, copyright or other analogous protection.
13.  Power of Attorney.  In the event VCampus is unable, after reasonable effort, to secure Brady’s signature on any letters patent, copyright or other analogous protection relating to a Development, whether because of Brady’s physical or mental incapacity or for any other reason, Brady hereby irrevocably designates and appoints VCampus and its duly authorized officers and agents as Brady’s agents and attorneys-in-fact, to act for and on behalf of Brady and stead to execute and file any such application or applications and to do all other lawfully permitted acts to further the prosecution and issuance of letters patent, copyright or other analagous protection thereon with the same legal force and effect as if executed by Brady.
14. Survival.  The provisions of Sections 8, 9, 10 and 11 hereof shall survive the termination or expiration of this Agreement, regardless of the manner or cause of such termination.
15. Effect of Agreement. This Agreement sets forth the final and complete Agreement of the parties with respect to the subject matter hereof. It shall not be assigned by Brady and may not be modified except by way of a writing executed by both parties.  All terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their successors and assigns.

 8
 

16. Notices.  Any Notice, demand, or other communication required or permitted hereunder shall be deemed properly given when placed in writing and deposited in the United States Postal Service, by registered mail, postage prepaid, overnight mail or personal delivery, addressed as follows:
If to Brady:
James H.R. Brady
(at his address as shown on the records of VCampus)
If to VCampus:
VCampus Corporation
1850 Centennial Park Drive, Suite 200
Reston, VA  20191
Attn:  Chief Executive Officer
With a copy to:
Williams Mullen Maupin Taylor
Highwoods Tower One
3200 Beechleaf Court, Suite 500
Raleigh, NC 27604
Attn:  Kevin A. Prakke
17. Governing Law.  The provisions of this Agreement and any disputes arising hereunder shall be governed by and construed in accordance with the laws of the Commonwealth of Virginia.
18. Amendment and Waiver.  No amendment or modification of this Agreement shall be valid or binding upon VCampus unless made in writing and signed by a duly authorized representative of VCampus, or upon Brady unless made in writing and signed by Brady.
[Signature page follows.]

 9
 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and their seals affixed hereto as of the day and year first above written.
 

	
  

  	
  VCampus Corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (SEAL)

  
	
   

  	
   

  	
  James H.R. Brady

  

 

 10

 

Exhibit A
Performance Bonus Criteria
For
James H.R. Brady
(for the period of July 1, 2007 to Dec 31, 2007)
(TBD )

1) Reduce the cost of outside professional services by
25% from the average monthly rate during January to June period of 2007

2) Help with current financing on an as needed basis

3) Help with any acquisition necessitated as part of
current round of financing

4) Help with any bridge financing

5) Leading the selection of an Accounting/ERP/CRM
integrated Web-based system that meets both of our business and sales needs as
well as eCommerce, Accounting, SEC Filings, Finance, and Management Reporting
needs.

 

 11

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