NOTE EXCHANGE AGREEMENT

Note Purchase Agreement

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Title: NOTE EXCHANGE AGREEMENT
Governing Law: New York Date: 8/20/2004
Industry: Misc. Fabricated Products Law Firm: Foley & Lardner LLP; Wollmuth Maher & Deutsch LLP

NOTE EXCHANGE AGREEMENT, Parties: liquidmetal technologies inc.

EXHIBIT 10.1

THE SECURITIES DESCRIBED HEREIN HAVE NOT BEEN REGISTERED FOR OFFER OR SALE UNDER

THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR

OFFERED FOR SALE EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER

SAID ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN APPLICABLE EXEMPTION FROM

SUCH REGISTRATION REQUIREMENTS.

NOTE EXCHANGE AGREEMENT

NOTE EXCHANGE AGREEMENT (this "Agreement") dated as of July

29, 2004, by and among Liquidmetal Technologies, Inc., a Delaware corporation

(the "Company"), and each person or entity listed as a Noteholder on Schedule I

attached to this Agreement (collectively and individually, the "Noteholders").

Capitalized terms used herein and not otherwise defined shall have the meanings

set forth in the Exchange Notes (as defined below).

W I T N E S S E T H:

WHEREAS, the Company sold and issued to the Noteholders 6%

Senior Convertible Notes in the aggregate principal amount of approximately

seven million United States dollars ("Dollars") ($7,000,000.00) (the "Original

Notes") pursuant to that certain Securities Purchase Agreement, dated as of

March 1, 2004, by and among the Company and the Noteholders (the "Purchase

Agreement");

WHEREAS, each of the Noteholders owns an Original Note in the

principal amount set forth opposite such Noteholder's name in Column 3 of

Schedule I attached hereto, and such principal amount remains outstanding as of

the date of this Agreement;

WHEREAS, the Original Notes are convertible into shares

("Common Shares") of common stock, par value $.001, of the Company ("Common

Stock"), pursuant to the terms of the Original Notes, and the Noteholders were

granted registration rights with respect to the Common Shares issuable upon

conversion of the Original Notes, pursuant to the terms of that certain

Registration Rights Agreement dated March 1, 2004, entered into by and among the

Company and the Noteholders (the "Registration Rights Agreement" and, together

with this Agreement, the Original Notes, the Warrants (as defined below), the

Security Agreement dated March 1, 2004, between the Company and Middlebury

Capital LLC ("Middlebury") as agent for the Noteholders, and the Placement

Agency Agreement between the Company and Middlebury, the "Original Transaction

Documents");

WHEREAS, in connection with the Purchase Agreement, each of

the Noteholders was also issued a Common Stock Purchase Warrant dated March 1,

2004, to purchase additional shares of Common Stock on the terms and conditions

set forth therein (the "Warrants," with the shares of Common Stock that are

issuable pursuant to the Warrant hereafter referred to as the "Warrant

Shares.").

WHEREAS, the Company and the Noteholders desire to exchange

the Original Notes (the "Exchange") for (A) 6% Senior Secured Notes due 2007 in

the form of Exhibit A attached hereto with an aggregate principal amount equal

<PAGE>

to fifty percent (50%) of the aggregate principal of the outstanding Original

Notes (each a "3-Year Note," and collectively, the "3-Year Notes"), and (B) 10%

Senior Secured Notes due 2005 in the form of Exhibit B attached hereto with an

aggregate principal amount equal to fifty percent (50%) of the aggregate

principal of the outstanding Original Notes (each a "1-Year Note," collectively,

the "1-Year Notes" and collectively with the 3-Year Notes, the "Exchange

Notes"), all on the terms and conditions set forth herein;

WHEREAS, in connection with the Exchange, the Company and the

Noteholders desire to amend certain of the Original Transaction Documents, as

more particularly described herein; and

WHEREAS, each Noteholder's entire Original Note must be

exchanged in order to participate in the Exchange.

NOW, THEREFORE, in consideration of the foregoing premises and

the covenants contained herein and other good and valuable consideration, the

receipt and sufficiency of which are hereby acknowledged, the parties hereby

agree as follows:

ARTICLE I

Exchange of Notes

-----------------

Section 1.1 Exchange of Notes. Subject to the terms and conditions

contained herein, the Company shall issue to the Noteholders the following in

exchange for the Original Notes being exchanged by the Noteholders: (i) a 3-Year

Note with an aggregate principal amount set forth opposite the Noteholder's name

in Column 4 of Schedule I attached hereto, which equals fifty percent (50%) of

the principal of the Original Note being exchanged by such Noteholder, and (ii)

a 1-Year Note with an aggregate principal amount set forth opposite the

Noteholder's name in Column 5 of Schedule I attached hereto, which equals fifty

percent (50%) of the principal of the Original Note being exchanged by such

Noteholder.

Section 1.2 The Closing.

(a) Timing. Subject to the fulfillment or waiver of the

conditions set forth in Article VIII hereof, the purchase and sale of the

Exchange Notes shall take place at a closing (the "Closing"), on or about the

date hereof or such other date as the Noteholders and the Company may agree upon

(the "Closing Date"), provided that the Closing Date shall be no later than

July 29, 2004.

(b) Form of Payment and Closing. On the Closing Date, the

Company shall deliver to each Noteholders the Exchange Notes purchased

hereunder, registered in the name of the Noteholder or its nominee plus a

payment in cash equal to the amount of any accrued and unpaid interest on the

Original Notes. On the Closing Date each Noteholder shall deliver to the Company

the original executed Original Note being exchanged hereunder. In addition, each

party shall deliver all documents, instruments and writings required to be

<PAGE>

delivered by such party pursuant to this Agreement at or prior to the Closing.

The Exchange Notes will be fully owned and fully paid by the Noteholders as of

the Closing Date.

ARTICLE II

Representations and Warranties

------------------------------

Section 2.1 Representations and Warranties of the Company. The

Company hereby makes the following representations and warranties to the

Noteholders as of the date hereof and the Closing Date:

(a) Authorization; Enforcement. (i) The Company has all

requisite corporate power and authority to enter into and perform this

Agreement, the Exchange Notes, and the Original Transaction Documents as amended

pursuant to this Agreement (the "Transaction Documents") and to issue the

Exchange Notes in accordance with the terms hereof, (ii) the execution and

delivery of the Transaction Documents by the Company and the consummation by it

of the transactions contemplated hereby and thereby, including the issuance of

the Exchange Notes, have been duly authorized by all necessary corporate action,

and no further consent or authorization of the Company or its Board of Directors

(or any committee or subcommittee thereof) or stockholders is required, (iii)

the Transaction Documents will have been duly executed and delivered by the

Company as of the Closing, (iv) the Transaction Documents constitute valid and

binding obligations of the Company enforceable against the Company, except (A)

as such enforceability may be limited by applicable bankruptcy, insolvency,

reorganization, moratorium, liquidation or similar laws relating to, or

affecting generally the enforcement of creditors' rights and remedies or by

other equitable principles of general application, and (B) to the extent the

indemnification provisions contained in this Agreement and the Registration

Rights Agreement, as amended, may be limited by applicable federal or state

securities laws and (v) the Exchange Notes and the Common Shares issuable upon

the conversion thereof, have been duly authorized and, upon issuance thereof and

payment therefor in accordance with the terms of this Agreement, will be validly

issued, fully paid and non-assessable, free and clear of any and all liens,

claims and encumbrances.

(b) Issuance of Shares. Upon issuance in accordance with

this Agreement and the terms of the Exchange Notes, the Exchange Notes will be

validly issued, fully paid and nonassessable and free from all taxes, liens and

charges with respect to the issue thereof.

the Transaction Documents by the Company and the consummation by the Company of

the transactions contemplated hereby and thereby and issuance of the Exchange

Notes and the Common Shares underlying the Exchange Notes will not (i) result in

a violation of the Company's Certificate of Incorporation, as amended and as in

effect on the date hereof (the "Certificate of Incorporation"), any certificate

of designations, preferences and rights of any outstanding series of preferred

stock of the Company or the Company's By-laws, as in effect on the date hereof

(the "By-laws"); (ii) conflict with, or constitute a default (or an event which

with notice or lapse of time or both would become a default) under, or give to

others any rights of termination, amendment, acceleration or cancellation of,

any agreement, indenture or instrument to which the Company or any of its

<PAGE>

subsidiaries is a party, or (iii) result in a violation of any law, rule,

regulation, order, judgment or decree (including United States federal and state

securities laws and regulations) applicable to the Company or any of its

subsidiaries or by which any property or asset of the Company or any of its

subsidiaries is bound or affected, except in the case of clause (ii), such

conflicts that would not have a Material Adverse Effect. "Material Adverse

Effect" means any adverse effect on the business, operations, properties,

prospects or financial condition of the Company and its subsidiaries, if any,

and which is (either alone or together with all other adverse effects) material

to the Company and its subsidiaries, if any, taken as a whole, and any material

adverse effect on the transactions contemplated under this Agreement, the Note,

and the Registration Rights Agreement.

(d) Disclosure. No representation or warranty by the Company

in this Agreement, nor in any certificate, Schedule or Exhibit delivered or to

be delivered pursuant to this Agreement: contains or will contain any untrue

statement of material fact or omits or will omit to state a material fact

necessary to make the statements contained herein or therein not misleading.

(e) Issuance of Common Shares. The Common Shares into which

the Exchange Notes are convertible are duly authorized and reserved for issuance

and, upon conversion of the Exchange Notes in accordance with the terms thereof,

such Common Shares will be validly issued, fully paid and non-assessable, free

and clear of any and all liens, claims and encumbrances, and the holders of such

Common Shares shall be entitled to all rights and preferences accorded to a

holder of Common Stock.

(f) Representations and Warranties in Purchase Agreement.

Subject to the Supplemental Disclosure Schedule attached to this Agreement and

incorporated herein by this reference, the representations and warranties set

forth in Article II of the Purchase Agreement shall continue to remain in full

force and effect as though made on the date of this Agreement, and nothing in

this Agreement shall limit or otherwise amend or alter such representations and

warranties.

Section 2.2 Representations and Warranties of the Noteholders. Each

of the Noteholders hereby makes the following representations and warranties to

the Company as of the date hereof and the Closing Date:

(a) Accredited Investor Status; Sophisticated Purchaser. The

Noteholder is an "accredited investor" as that term is defined in Rule 501(a) of

Regulation D under the Securities Act of 1933, as amended ("Securities Act" or

"1933 Act"). The Noteholder has such knowledge and experience in financial and

business matters that it is capable of evaluating the merits and risks of the

purchase of the Exchange Notes and the Common Shares. The Noteholder is not

registered as a broker or dealer under Section 15(a) of the 1934 Act, affiliated

with any broker or dealer registered under Section 15(a) of the 1934 Act, or a

member of the National Association of Securities Dealers, Inc.

(b) Information. The Noteholder and its advisors, if any,

have been furnished with all materials relating to the business, finances and

operations of the Company which have been requested and materials relating to

the offer and sale of the Exchange Notes and the Common Shares which have been

<PAGE>

requested by the Noteholder. The Noteholder and its advisors, if any, have been

afforded the opportunity to ask questions of the Company. In determining whether

to enter into this Agreement and purchase the Exchange Notes, the Noteholder has

relied solely on the written information supplied by Company employees in

response to the written due diligence information request provided by the

Noteholder to the Company, and the Noteholder has not received nor relied upon

any oral representation or warranty relating to the Company, this Agreement, the

Exchange Notes, or any of the transactions or relationships contemplated

thereby. The Noteholder understands that its purchase of the Exchange Notes and

Common Shares involves a high degree of risk. The Noteholder has sought such

accounting, legal and tax advice as it has considered necessary to make an

informed investment decision with respect to its acquisition of the Exchange

Notes and Common Shares.

no United States federal or state agency or any other government or governmental

agency has passed on or made any recommendation or endorsement of the Exchange

Notes or the Common Shares or the fairness or suitability of the investment in

the Exchange Notes and the Common Shares nor have such authorities passed upon

or endorsed the merits thereof.

(d) Legends. The Company shall issue the Exchange Notes and

certificates for the Common Shares to the Noteholder without any legend except

as described in Article IX below. The Noteholder covenants that, in connection

with any transfer of Common Shares by the Noteholder pursuant to the

registration statement contemplated by the Registration Rights Agreement, as

amended, it will comply with the applicable prospectus delivery requirements of

the 1933 Act, provided that copies of a current prospectus relating to such

effective registration statement are or have been supplied to the Noteholder.

(e) Authorization; Enforcement. This Agreement has been duly

and validly authorized, executed and delivered on behalf of the Noteholder and

is a valid and binding agreement of the Noteholder enforceable against the

Noteholder in accordance with their terms, subject as to enforceability to

general principles of equity and to applicable bankruptcy, insolvency,

reorganization, moratorium, liquidation and other similar laws relating to, or

affecting generally, the enforcement of applicable creditors' rights and

remedies. The Noteholder has the requisite power and authority to enter into and

perform its obligations under this Agreement and each other agreement entered

into by the parties hereto in connection with the transactions contemplated by

this Agreement.

(f) Investment Representation. The Noteholder is purchasing

the Exchange Notes for its own account and not with a view to distribution in

violation of any securities laws. The Noteholder has been advised and

understands that neither the Exchange Notes nor the Common Shares issuable upon

conversion thereof have been registered under the 1933 Act or under the "blue

sky" laws of any jurisdiction and may be resold only if registered pursuant to

the provisions of the 1933 Act or if an exemption from registration is

available, except under circumstances where neither such registration nor such

an exemption is required by law. The Noteholder has been advised and understands

that the Company, in issuing the Exchange Notes, is relying upon, among other

things, the representations and warranties of the Noteholder contained in this

Section 2.2 in concluding that such issuance is a "private offering" and is

exempt from the registration provisions of the 1933 Act.

<PAGE>

(g) Rule 144. The Noteholder understands that there is no

public trading market for the Exchange Notes, that none is expected to develop,

and that the Exchange Notes must be held indefinitely unless and until such

Exchange Notes, or if applicable, the Common Shares received upon conversion

thereof are registered under the 1933 Act or an exemption from registration is

available. The Noteholder has been advised or is aware of the provisions of Rule

144 promulgated under the 1933 Act.

(h) Brokers. Other than with respect to fees payable to

Middlebury (if any) in connection with the transaction described herein, the

Noteholder has taken no action which would give rise to any claim by any person

for brokerage commissions, finder's fees or similar payments by the Company or

the Noteholder relating to this Agreement or the transactions contemplated

hereby.

(i) Reliance by the Company. The Noteholder understands that

the Exchange Notes are being offered and sold in reliance on a transactional

exemption from the registration requirements of Federal and state securities

laws and that the Company is relying upon the truth and accuracy of the

representations, warranties, agreements, acknowledgments and understandings of

the Noteholder set forth herein in order to determine the applicability of such

exemptions and the suitability of the Noteholder to acquire the Exchange Notes

and the Common Shares issuable upon conversion thereof.

ARTICLE III

Covenants

---------

Section 3.1 Registration and Listing; Effective Registration. Until

such time as the Exchange Notes are not outstanding and the Warrants have

expired, the Company will cause the Common Stock to continue at all times to be

registered under Sections 12(b) or (g) of the 1934 Act, will comply in all

material respects with its reporting and filing obligations under the 1934 Act,

and will not take any action or file any document (whether or not permitted by

the 1934 Act or the rules thereunder) to terminate or suspend such reporting and

filing obligations. Until such time as the Exchange Notes and Warrants are not

outstanding, the Company shall use its best efforts to cause the Common Stock to

be listed or quoted on the Nasdaq National Market System, Nasdaq Small Cap

Market, New York Stock Exchange, American Stock Exchange, or OTC Bulletin Board

(the "Approved Markets") and shall comply in all material respects with the

Company's reporting, filing and other obligations under the bylaws or rules of

the Approved Market on which the Common Stock is listed or quoted. The Company

shall use its best efforts to cause the Common Shares and Warrant Shares to be

listed or quoted on one of the Approved Markets no later than the effectiveness

of the registration of the Common Shares and Warrant Shares under the 1934 Act,

and shall use its best efforts to continue such listing(s) or quotation on one

of the Approved Markets, for so long as the Exchange Notes or Warrants are

outstanding. Notwithstanding the foregoing, the Noteholders acknowledge that the

Company is not as of the date hereof in compliance with its reporting and filing

obligations under the Exchange Act and that the Company shall not be in breach

of this Agreement as a result of this noncompliance so long as the Company

regains compliance with such obligations within ninety (90) days after the date

of Closing.

<PAGE>

Section 3.2 Certificates on Conversion. Upon any conversion by the

Noteholder (or then holder of the Exchange Notes) of the Exchange Notes pursuant

to the terms thereof, the Company shall issue and deliver to the Noteholder (or

holder) within three (3) Trading Days of the conversion date a certificate for

the Common Shares issuable in connection with such conversion and a new Exchange

Note or Exchange Notes for the aggregate principal amount of Exchange Notes

which the Noteholder (or holder) has not yet elected to convert but which are

evidenced in part by the Exchange Notes submitted to the Company in connection

with such conversion (with the denominations of such new Exchange Note(s)

designated by the Noteholder or holder). As used herein, "Trading Day" shall

mean a day on which there is trading on the market, exchange, or quotation

service on which the Common Stock is then principally traded or quoted.

Section 3.3 Replacement Notes. The Exchange Note held by the

Noteholder (or then holder) may be exchanged by the Noteholder (or such holder)

at any time and from time to time for Exchange Note(s) with different

denominations representing an equal aggregate principal amount of Exchange

Note(s), as requested by the Noteholder (or such holder) upon surrendering the

same. No service charge will be made for such registration or transfer or

exchange.

Section 3.4 Securities Compliance. The Company shall notify the

Securities and Exchange Commission, in accordance with its requirements, of the

transactions contemplated by this Agreement, the Note, the Warrants, and the

Registration Rights Agreement, as amended, and shall take all other necessary

action and proceedings as may be required and permitted by applicable law, rule

and regulation, for the legal and valid issuance of the Exchange Notes hereunder

and the Common Shares and Warrant Shares issuable upon conversion or exercise

thereof.

Section 3.5 Notices. The Company agrees to provide all holders of

Exchange Notes with copies of all notices and information, including without

limitation, notices and proxy statements in connection with any meetings that

are provided to the holders of shares of Common Stock, contemporaneously with

the delivery of such notices or information to such Common Stock holders.

Section 3.6 Reservation of Shares; Stock Issuable Upon Conversion.

The Company shall at all times reserve and keep available out of its authorized

but unissued shares of Common Stock, solely for the purpose of effecting the

conversion of the Exchange Notes, such number of its shares of Common Stock as

shall from time to time be sufficient to effect the conversion of the Exchange

Notes.

Section 3.7 Best Efforts. The parties shall use their best efforts

to satisfy timely each of the conditions described in Article VIII of this

Agreement.

Section 3.8 Form D; Blue Sky Laws. The Company agrees to file a Form

D with respect to the Exchange Notes and Common Stock, in accordance with

Regulation D and to provide a copy thereof to the Noteholders promptly after

such filing. The Company shall, on or before the Closing Date, take such action

as the Company shall have reasonably determined is necessary to qualify the

Exchange Notes the Common Shares for sale to the Noteholders under applicable

securities or "blue sky" laws of the states of the United States (or to obtain

an exemption from such qualification), and shall provide evidence of any such

action so taken to the Noteholders on or prior to the Closing Date; provided,

however, that the Company shall not be required in connection therewith to

<PAGE>

now so qualified or to take any action that would subject it to service of

process in suits or taxation, in each case, in any jurisdiction where it is not

now so subject.

Section 3.9 Information. The Company agrees to send to the

Noteholders for so long as the Exchange Notes are outstanding copies of any

notices and other information made available or given to the stockholders of the

Company generally, contemporaneously with the making available or giving thereof

to the stockholders.

Section 3.10 Prohibition on Net Short Positions. From and including

the date of this Agreement, each Noteholder agrees that such Noteholder shall

not maintain a Net Short Position. "Net Short Position" shall mean that the

aggregate number of shares of Common Stock held in a short position by such

Noteholder exceeds the sum of (i) the number of shares of Common Stock owned by

such Noteholder, plus (ii) the number of Common Shares issuable to such

Noteholder.

Section 3.11 Prohibition on Certain Actions. The Company shall not,

between the date hereof and the Closing Date (both dates inclusive), take any

action or decision which (had the Exchange Notes already been issued) would

result in an adjustment of the Conversion Price (as defined in the Exchange

Notes).

Section 3.12 Senior Status of Notes. Beginning on the date of this

Agreement and for so long as any Exchange Notes remain outstanding, neither the

Company nor any subsidiary of the Company shall, without the prior written

consent of Noteholders holding a majority of the aggregate outstanding Principal

Amount of the Exchange Notes, incur or otherwise become liable with respect to

any indebtedness that would rank senior or pari passu to the Exchange Notes in

order of payment, other than (i) indebtedness in existence on the date hereof,

(ii) secured indebtedness used solely to finance the purchase or lease of assets

(provided that such debt may only be secured by the purchased or leased assets

and not by any other assets of the Company), (iii) any indebtedness from any

loan that replaces or refinances the Company's existing credit facility with

Kookmin Bank, (iv) indebtedness to trade creditors in the ordinary course of

business, or (v) any new notes (the "New Michigan Notes") issued by the Company

simultaneously herewith or at any time hereafter in exchange for the 6% Senior

Convertible Notes issued by the Company pursuant to that certain Amended and

Restated Securities Purchase Agreement, dated March 1, 2004, among the Company,

Michigan Venture Capital Co., Ltd, and the investors identified as "Purchasers"

therein (the "Old Michigan Notes") which shall be pari passu with the Exchange

Notes.

Section 3.13 Replacement of Purchase Agreement Covenants. The parties

hereto acknowledge and agree that that the covenants set forth in this Article

III shall supplant and replace in their entirety the covenants set forth in

Article III of the Purchase Agreement, which covenants shall no longer have any

force or effect as of the Closing.

Section 3.14 Certain Definitions. As used in this Agreement, the

following terms shall have the following respective meanings:

"Effective Registration" shall mean that all registration

obligations of the Company pursuant to the Registration Rights Agreement, as

amended, have been satisfied and (i) such Registration Statement is not subject

to any suspension or stop orders; (ii) the resale of such Registrable Securities

may be effected pursuant to a current and deliverable prospectus; (iii) the

requisite number of shares of Common Stock shall have been duly authorized and

<PAGE>

reserved for issuance as required by the terms of the Transaction Documents;

(iv) no Interfering Event (as described in the Registration Rights Agreement, as

amended) then exists; (v) the Registrable Securities shall have been duly

qualified or exempt under all state "blue sky" laws; and (viii) none of the

Company or any direct or indirect subsidiary of the Company is subject to any

Bankruptcy Event (as defined below).

"Bankruptcy Event" means any of the following events: (a) the

Company or any subsidiary commences a case or other proceeding under any

bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors,

dissolution, insolvency or liquidation or similar law of any jurisdiction

relating to the Company or any subsidiary thereof; (b) there is commenced

against the Company or any subsidiary any such case or proceeding that is not

dismissed within 30 days after commencement; (c) the Company or any subsidiary

is adjudicated insolvent or bankrupt or any order of relief or other order

approving any such case or proceeding is entered; (d) the Company or any

subsidiary suffers any appointment of any custodian or the like for it or any

substantial part of its property that is not discharged or stayed within 30

days; (e) the Company or any subsidiary makes a general assignment for the

benefit of creditors; (f) the Company or any subsidiary, by any act or failure

to act, expressly indicates its consent to, approval of or acquiescence in any

of the foregoing or takes any corporate or other action for the purpose of

effecting any of the foregoing.

ARTICLE IV

Transfer Agent Instructions

---------------------------

The Company shall issue irrevocable instructions to its

transfer agent, and any subsequent transfer agent, to issue certificates,

registered in the name of the respective Noteholder or its respective

nominee(s), for the Common Shares in such amounts as specified from time to time

by the Noteholder to the Company upon delivery of a conversion or exercise

notice (the "Irrevocable Transfer Agent Instructions"). The Company warrants

that no instruction relating to the Common Shares other than the Irrevocable

Transfer Agent Instructions referred to in this Article IV will be given by the

Company to its transfer agent and that the Common Shares shall be freely

transferable on the books and records of the Company as contemplated by Article

IX below when the legend referred to therein may be removed. Nothing in this

Article IV shall affect in any way the Noteholders' obligations and agreements

set forth in Section 2.2(d) to comply with all applicable prospectus delivery

requirements, if any, upon resale of the Common Shares. The Company shall

instruct its transfer agent to issue one or more certificates in such name and

in such denominations as specified by the Noteholders and without any

restrictive legends except as contemplated by Article IX.

ARTICLE V

Amendment of Registration Rights Agreement

------------------------------------------

Section 5.1 Amendment.

(a) The first Recital of the Registration Rights Agreement

is hereby amended to reflect that (i) the definition of "Purchase Agreement"

thereunder shall include each of the Purchase Agreement and this Agreement, and

<PAGE>

(ii) the definition of "Note" thereunder shall collectively mean the Exchange

Notes.

(b) Section 2(a)(i) of the Registration Rights Agreement is

hereby deleted in its entirety and replaced with the following:

(i) But in any event by ninety (90) days after the Closing

Date (the "Required Filing Date"), prepare and file a

registration statement with the Commission pursuant to Rule

415 under the Securities Act on Form S-3 under the Securities

Act (or in the event that the Company is ineligible to use

such form, such other form as the Company is eligible to use

under the Securities Act provided that such other form shall

be converted into an S-3 as soon as Form S-3 becomes available

to the Company) covering resales by the Holders as selling

stockholders (not underwriters) of the Registrable Securities

("Registration Statement"), which Registration Statement, to

the extent allowable under the Securities Act and the rules

promulgated thereunder (including Rule 416), shall state that

such Registration Statement also covers such indeterminate

number of additional shares of Common Stock as may become

issuable upon conversion of the Note. The number of shares of

Common Stock initially included in such Registration Statement

shall be no less than the sum of 1.5 times the sum of the

number of Common Shares that are issuable upon conversion of

the Note as of the date of this Agreement, at the then

applicable Conversion Price (as defined in the Note).

Thereafter the Company shall use its best efforts to cause

such Registration Statement and other filings to be declared

effective as soon as possible, and in any event no later than

the following date, as appropriate (the "Required Effective

Date"): (A), if the SEC notifies that the Company that the SEC

will not review the Registration Statement, the Required

Effective Date shall be five (5) days after the SEC provides

such notification, or (B) if the SEC notifies the Company that

it will review the Registration Statement, then the Required

Effective Date shall be sixty (60) days after the Company

receives the first written comments on the Registration

Statement from the SEC. Without limiting the foregoing, the

Company will promptly respond to all SEC comments, inquiries

and requests, and shall request acceleration of effectiveness

at the earliest possible date. The Purchasers acknowledge

that, as of the date hereof, the Company is not eligible to

utilize Form S-3 and does not expect to be eligible to utilize

Form S-3 at the time of the filing of the Registration

Statement, and the inability to utilize Form S-3 shall not

constitute a breach of this Agreement.

<PAGE>

hereby deleted in its entirety and replaced with the following:

(i) Payments by the Company. If (i) at any time after

effectiveness of the Registration Statement, sales thereunder

during the registration period (as described in Section 5)

cannot be made for any reason, other than by reason of the

operation of Section 2(b), for a period of more than 10

consecutive business days, (ii) at any time after

effectiveness of the Registration Statement, sales thereunder

during the Registration Period cannot be made for a period of

time that exceeds the limitations set forth in Section 2(b),

or (iii) at any time after the Registrable Securities are

listed in accordance with Section 2(a)(viii), the Common

Shares are not listed or included for quotation on the Nasdaq

National Market or other exchange, market, or the OTC Bulletin

Board where shares of the Company's common stock are then

traded or quoted for more than 10 consecutive calendar days,

then the Company will thereafter make a payment to each Holder

as set forth below. The amount of the payment made to each

Holder will be equal to 1% of the purchase price paid for the

Notes purchased by the Holder and not previously converted

into Common Shares and sold by the Holder for each 30 business

days that sales cannot be made under the effective

Registration Statement or the Common Shares are not listed or

included for quotation on the Nasdaq National Market or other

exchange, market, or the OTC Bulletin Board where shares of

the Company's common stock are then traded or quoted (but any

day on which both conditions exist shall count as a single day

and no day taken into account for purposes of determining

whether any payment is due under Section 2 (c)(ii) shall be

taken into account for purposes of determining whether any

payment is due under this Section 2(c)(i) or the amount of

such payment). The number of shares not previously sold as

specified in the previous sentence shall be determined as of

the end of the respective 30-business day period. In no event

shall payment pursuant to this Section exceed 10% in the

aggregate of the purchase price paid for the Notes purchased

by the Holder (including such Holder's predecessors and

successors) for the entire registration period (as described

in Section 5). These payments will be prorated on a daily

basis during the 30-business day period and will be paid to

each Holder within ten business days following the end of each

30- business day period as to which payment is due hereunder

or, at the Company's option, will be added to the outstanding

Principal Amount of the Notes, provided that the respective

Holder delivered to the Company at least two business days

prior thereto information with respect to the number of Notes

and Common Shares not previously sold by such Holder (together

<PAGE>

with reasonable supporting documentation). The Holders may

make a claim for additional damages as a remedy for the

Company's failure to comply with the timelines set forth in

this Section, but acknowledgement of such right in this

Agreement shall not constitute an admission by the Company

that any such damages exist or may exist. Notwithstanding the

foregoing, if the Company has used its best efforts to avoid

circumstances as a result of which sales cannot be made under

the Registration Statement during the Registration Period or

the Common Shares are not listed or included for quotation on

the Nasdaq National Market or other exchange, market, or the

OTC Bulletin Board where the Common Shares are traded or

quoted, then the damages described above shall be the Holders'

sole and exclusive remedy for damages arising out of such

circumstances. Nothing contained in the preceding sentence

shall be read to limit the ability of the Holders to seek

specific performance of this Agreement.

(d) Section 2(c)(ii) of the Registration Rights Agreement is

hereby deleted in its entirety and replaced with the following:

(ii) Effect of Late Filing or Registration. If the

Registration Statement has not been filed by the Required

Filing Date other than by reason of the operation of Section

2(b), then the Company will make a payment to each Holder for

such delay (each a "Late Filing Payment"). Each Late Filing

Payment will be equal to 3% of the purchase price paid for the

Notes purchased by such Holder and not previously sold (or

converted into Common Shares and sold) by such Holder for each

period of 30 business days that the filing of the Registration

Statement is made past the Required Filing Date (but no day

taken into account for purposes of determining whether any

payment is due under Section 2(c)(i) shall be taken into

account for purposes of determining whether any payment is due

under this Section 2(c)(ii) or the amount of such payment). If

the Registration Statement has not been declared effective by

the Required Effective Date other than by reason of the

operation of Section 2(b), then the Company will make a

payment to each Holder for such delay (each a "Late

Registration Payment"). Each Late Registration Payment will be

equal to 2% of the purchase price paid for the Notes purchased

by such Holder and not previously sold (or converted into

Common Shares and sold) by such Holder for the first 30

business days after the Required Effective Date, and 1% of

such purchase price for each period of 30 business days

thereafter (but no day taken into account for purposes of

determining whether any payment is due under Section 2(c)(i)

shall be taken into account for purposes of determining

whether any payment is due under this Section 2(c)(ii) or the

<PAGE>

amount of such payment). In no event shall payments pursuant

to this Section 2(c)(ii) exceed 18% in the aggregate of the

purchase price paid for the Notes purchased by the Holder

(including such Holder's predecessors and successors) for the

period beginning of the date hereof and continuing through the

expiration of the registration period (as described in Section

5). The Late Filing Payments and Late Registration Payments

will be prorated on a daily basis during the 30-business day

period and will be paid to the initial Holders in cash or, at

the Company's option, will be added to the outstanding

Principal Amount of the Notes, within ten (10) business days

following the end of each 30-business day period as to which

payment is due hereunder, provided that the respective Holder

delivered to the Company at least two business days prior

thereto information with respect to the number of Notes and

Common Shares not previously sold by such Holder (together

with reasonable supporting documentation). The Holders may

make a claim for additional damages as a remedy for the

Company's failure to comply with the timelines set forth in

this Section, but acknowledgement of such right in this

Agreement shall not constitute an admission by the Company

that any such damages exist or may exist. Notwithstanding the

foregoing, if the Company has used its reasonable best efforts

to avoid circumstances as a result of which the Registration

Statement has not been filed by the Required Filing Date or

declared effective by the Required Effective Date, then the

damages described above shall be the Holders' sole and

exclusive remedy for damages arising out of such

circumstances. Nothing contained in the preceding sentence

shall be read to limit the ability of the Holders to seek

specific performance of this Agreement. Notwithstanding the

foregoing, if the Registration Statement has not yet been

declared effective and the Holders are no longer entitled to

receive Late Registration Payments as a result of the

above-described percentage limitation on said payments, then

each Holder shall have the right, at any time upon at least

thirty (30) days written notice, to sell all (but not less

than all) of its Notes to the Company for a cash purchase

price equal to the outstanding Principal Amount of the Notes

plus any accrued but unpaid interest.

Section 5.2 Ratification. Except as specifically amended and

modified by this Article V, the Registration Rights Agreement shall remain in

full force and effect and is hereby reaffirmed and ratified.

<PAGE>

ARTICLE VI

Amendment of Warrant

--------------------

Section 6.1 Amendment. Each of the Noteholders and the Company

hereby covenants and agrees that each and every Warrant is hereby amended to

provide that the Termination Date (as defined in the Warrants) shall be March 1,

2006.

Section 6.2 Ratification. Except as specifically amended and

modified by this Article VI, the Warrant shall remain in full force and effect

and is hereby reaffirmed and ratified.

Section 6.3 Exchange. At the election of a Noteholder, any existing

Warrant may be exchanged for a new Warrant certificate reflecting the amendment

described in Section 6.1.

ARTICLE VII

Security

--------

The Company shall cause Liquidmetal Korea Co., Ltd., a wholly

owned subsidiary of the Company ("Liquidmetal Korea"), to use its best efforts

to grant to the Noteholders as additional security for the Exchange Notes a lien

upon and security interest in Liquidmetal Korea's manufacturing plant in Korea

(the "Factory Lien"), including without limitation, seeking to obtain the

consent and approval of the Bank of Korea to the granting of such lien and

security interest. Such lien (if granted) shall be in addition to the prior

liens held or to be held by Kookmin Bank (or any financial institution through

which the Company's indebtedness with Kookmin Bank is refinanced) and the lien

held by the holders of the Old Michigan Notes or New Michigan Notes (the

"Michigan Lien" and "Michigan Holders," respectively), provided that the Company

will use its best efforts to obtain an agreement from the Michigan Holders

providing that the Factory Lien is pari passu with the Michigan Lien. In

addition to the foregoing, the parties acknowledge that the Security Agreement

will continue to remain in full force and effect, provided that the following

new definitions shall be added to Section 2 of the Security Agreement: "Note"

means the Exchange Notes, as defined in the Note Exchange Agreement dated July

29, 2004 by and among the Company and the Noteholders listed therein (the

"Exchange Agreement") and "Michigan Note" means the Old Michigan Notes and the

New Michigan Notes as defined in the Exchange Agreement.

The Company represents and warrants that each Noteholder's

security interest in the collateral, described in the Security Agreement, shall

be a perfected first priority security interest.

<PAGE>

ARTICLE VIII

Conditions to Closings

----------------------

Section 8.1 Conditions Precedent to the Obligation of the Company.

The obligation hereunder of the Company to issue the Exchange Notes and the

other Transaction Documents to the Noteholders at the applicable Closing is

subject to the satisfaction, at or before the applicable Closing, of each of the

applicable conditions set forth below. These conditions are for the Company's

sole benefit and may be waived by the Company at any time in its sole

discretion.

(a) Accuracy of the Noteholders' Representations and

Warranties. The representations and warranties of each Noteholder will be true

and correct in all material respects as of the date when made and as of the

Closing Date, as though made at that time.

(b) Performance by the Noteholders. The Noteholders shall

have performed all agreements and satisfied all conditions required to be

performed or satisfied by the Noteholders at or prior to the Closing, including

fully delivering to the Company all of the Original Notes owned by the

Noteholders.

order, decree, ruling or injunction shall have been enacted, entered,

promulgated or endorsed by any court or governmental authority of competent

jurisdiction which prohibits the consummation of any of the transactions

contemplated by this Agreement, the Registration Rights Agreement, as amended,

the Exchange Notes, or the Warrant.

(d) Closing Date. The Closing shall have occurred by July

29, 2004.

Section 8.2 Conditions Precedent to the Obligation of the

Noteholders. The obligation hereunder of the Noteholders to acquire the Exchange

Notes at the applicable Closing is subject to the satisfaction, at or before the

applicable Closing, of each of the applicable conditions set forth below. These

conditions are for the Noteholder's benefit and may be waived by the

Noteholders' at any time in their sole discretion.

(a) Accuracy of the Company's Representations and

Warranties. The representations and warranties of the Company shall be true and

correct in all material respects as of the date when made and as of the Closing

Date as though made at that time (except for representations and warranties as

of an earlier date, which shall be true and correct in all material respects as

of such date).

(b) No Injunction. No statute, rule, regulation, executive

order, decree, ruling or injunction shall have been enacted, entered,

promulgated or endorsed by any court or governmental authority of competent

jurisdiction which prohibits the consummation of any of the transactions

contemplated by this Agreement, the Registration Rights Agreement, as amended,

the Exchange Notes or the Warrant.

to the Noteholders a certificate in form and substance satisfactory to the

Noteholders and the Noteholders' counsel, executed by an officer of the Company,

<PAGE>

certifying as to satisfaction of closing conditions, incumbency of signing

officers, and the true, correct and complete nature of the Certificate of

Incorporation, By-Laws, good standing and authorizing resolutions of the

Company.

ARTICLE IX

Legend and Stock

----------------

Upon exchange therefor as provided in this Agreement, the

Company will issue the Exchange Notes in the name of the respective Noteholder

or its designees and in such denominations to be specified by the Noteholder

prior to (or from time to time subsequent to) Closing. The Exchange Notes and

any certificate representing Common Shares issued upon conversion thereof, prior

to such Common Shares being registered under the 1933 Act for resale or

available for resale under Rule 144 under the 1933 Act, shall be stamped or

otherwise imprinted with a legend in substantially the following form:

THESE SECURITIES HAVE NOT BEEN REGISTERED FOR OFFER OR SALE

UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE

SOLD OR OFFERED FOR SALE EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT

UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN APPLICABLE

EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.

The Company agrees to reissue the Exchange Notes and Common

Shares issuable upon conversion or exercise of the foregoing, without the legend

set forth above, at such time as (i) the holder thereof is permitted to dispose

of such Exchange Notes and Common Shares issuable upon conversion thereof

pursuant to Rule 144(k) under the 1933 Act, or (ii) such securities are sold to

a purchaser or purchasers who (in the opinion of counsel to the seller or such

purchaser(s), in form and substance reasonably satisfactory to the Company and

its counsel) are able to dispose of such shares publicly without registration

under the 1933 Act, or (iii) such securities have been registered under the 1933

Act.

Notwithstanding the removal of such legend, the Noteholders

agrees to sell the Common Shares represented by the new certificates in

accordance with the applicable prospectus delivery requirements (if copies of a

current prospectus are provided to the Noteholders by the Company) or in

accordance with an exemption from the registration requirements of the 1933 Act.

Nothing herein shall limit the right of any holder to pledge

these securities pursuant to a bona fide margin account or lending arrangement

entered into in compliance with law, including applicable securities laws.

<PAGE>

ARTICLE X

Release and Waiver

In exchange for the agreements and covenants of the Company

hereunder, each of the Noteholders, on behalf of himself/herself and his/her

agents, assigns, heirs, devisees, and successors, releases and forever

discharges the Company, its agents, officers, directors, shareholders,

employees, attorneys, and representatives, from any and all claims, causes of

action, suits, debts, liabilities, damages and expenses (including attorneys'

fees and costs) of any type whatsoever (collectively, "Claims"), whether known

or unknown, that any of the Noteholders have or may have or may have at any time

through the date hereof, with respect to any Event of Default under the Original

Notes or the Purchase Agreement or any breach under the Registration Rights

Agreement, provided that such Event of Default or breach arises from any facts

or circumstances (i) detailed in that certain letter dated April 28, 2004 (the

"MC Letter") from Middlebury to the Company, (ii) that have been publicly

disclosed by the Company as of the date hereof, or (iii) that are known to

Middlebury or the Noteholders as of the date of this Agreement. The Noteholders

also hereby agree to irrevocably waive and forego the exercise of the

Noteholders' rights triggered by the Company's default under the Original Notes,

as detailed in the MC Letter, provided that such waiver shall not apply to any

breach or default occurring hereafter under this Agreement, the Purchase

Agreement, the Exchange Notes, the Registration Rights Agreement (as amended

herein), or the Security Agreement (as amended herein).

ARTICLE XI

Termination

-----------

Section 11.1 Termination by Mutual Consent. This Agreement may be

terminated at any time prior to the Closing by the mutual written consent of the

Company and the Noteholders.

Section 11.2 Other Termination. This Agreement may be terminated by

action of the Board of Directors of the Company or by the Noteholders at any

time if the Closing shall not have been consummated on the Closing Date;

provided, however, that the party (or parties) prepared to close shall retain

its (or their) right to sue for any breach by the other party (or parties).

ARTICLE XII

Indemnification

---------------

In consideration of the Noteholders' execution and delivery of

the this Agreement and acquiring the Exchange Notes hereunder and in addition to

all of the Company's other obligations under the Transaction Documents, the

Company shall defend, protect, indemnify and hold harmless the Noteholders and

all of their partners, officers, directors, employees, members and direct or

indirect investors and any of the foregoing person's agents or other

representatives (including, without limitation, those retained in connection

with the transactions contemplated by this Agreement) (collectively, the

"Indemnitees") from and against any and all actions, causes of action, suits,

claims, losses, costs, penalties, fees, liabilities and damages, and expenses in

<PAGE>

connection therewith (irrespective of whether any such Indemnitee is a party to

the action for which indemnification hereunder is sought), and including

reasonable attorneys' fees and disbursements (the "Indemnified Liabilities"),

incurred by any Indemnitee as a result of, or arising out of, or relating to (a)

any misrepresentation or breach of any representation or warranty made by the

Company in the Transaction Documents or any other certificate or document

contemplated hereby or thereby, (b) any breach of any covenant, agreement or

obligation of the Company contained in the Transaction Documents or any other

certificate or document contemplated hereby or thereby. Notwithstanding the

foregoing, Indemnified Liabilities shall not include any liability of any

Indemnitee arising out of such Indemnitee's negligence. To the extent that the

foregoing undertaking by the Company may be unenforceable for any reason, the

Company shall make the maximum contribution to the payment and satisfaction of

each of the Indemnified Liabilities which is permissible under applicable law.

Except as otherwise set forth herein, the mechanics and procedures with respect

to the rights and obligations under this Article XII shall be the same as those

set forth in Section 6 (other than Section 6(b)) of the Registration Rights

Agreement, as amended, including, without limitation, those procedures with

respect to the settlement of claims and Company's right to assume the defense of

claims.

ARTICLE XIII

Governing Law; Miscellaneous

----------------------------

Section 13.1 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND

INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD

TO THE PRINCIPLES OF CONFLICT OF LAWS. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO

THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN NEW YORK

COUNTY, NEW YORK, FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION

HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN, AND

HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR

PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF

ANY SUCH COURT, THAT SUCH SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN

INCONVENIENT FORUM OR THAT THE VENUE OF SUCH SUIT, ACTION OR PROCEEDING IS

IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND

CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY

MAILING A COPY THEREOF TO SUCH PARTY AT THE ADDRESS FOR SUCH NOTICES TO IT UNDER

THIS AGREEMENT BY CERTIFIED OR REGISTERED MAIL (RETURN RECEIPT REQUESTED) AND

AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS

AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY

ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. IF ANY PROVISION OF

THIS AGREEMENT SHALL BE INVALID OR UNENFORCEABLE IN ANY JURISDICTION, SUCH

INVALIDITY OR UNENFORCEABILITY SHALL NOT AFFECT THE VALIDITY OR ENFORCEABILITY

OF THE REMAINDER OF THIS AGREEMENT IN THAT JURISDICTION OR THE VALIDITY OR

ENFORCEABILITY OF ANY PROVISION OF THIS AGREEMENT IN ANY OTHER JURISDICTION.

EACH PARTY HERETO IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY.

<PAGE>

Section 13.2 Counterparts. This Agreement may be executed in two or

more identical counterparts, all of which shall be considered one and the same

agreement and shall become effective when counterparts have been signed by each

party and delivered to the other party; provided that a facsimile signature

shall be considered due execution and shall be binding upon the signatory

thereto with the same force and effect as if the signature were an original, not

a facsimile signature.

Section 13.3 Headings. The headings of this Agreement are for

convenience of reference and shall not form part of, or affect the

interpretation of, this Agreement.

Section 13.4 Severability. If any provision of this Agreement shall

be invalid or unenforceable in any jurisdiction, such invalidity or

unenforceability shall not affect the validity or enforceability of the

remainder of this Agreement in that jurisdiction or the validity or

enforceability of any provision of this Agreement in any other jurisdiction.

Section 13.5 Costs and Expenses. All actual reasonable out-of-pocket

costs and expenses the Noteholders incur with respect to this Agreement and the

transactions contemplated by this Agreement shall be paid by the Company to the

Noteholders at the Closing up to an aggregate maximum of $50,000.00.

Section 13.6 Entire Agreement; Amendments; Waivers.

(a) This Agreement supersedes all other prior oral or

written agreements between the Noteholders, the Company, their affiliates and

persons acting on their behalf with respect to the matters expressly discussed

herein, and this Agreement and the instruments referenced herein (including the

other Transaction Documents) contain the entire understanding of the parties

with respect to the matters covered herein and therein and, except as

specifically set forth herein or therein, neither the Company nor the

Noteholders makes any representation, warranty, covenant or undertaking with

respect to such matters. No provision of this Agreement may be amended other

than by an instrument in writing signed by the Company and the Noteholders, and

no provision hereof may be waived other than by an instrument in writing signed

by the party against whom enforcement is sought. Except for the Original Notes

and except as expressly amended herein, the Original Transaction Documents shall

remain in full force and effect.

(b) The Noteholders may at any time elect, by notice to the

Company, to waive (whether permanently or temporarily, and subject to such

conditions, if any, as the Noteholders may specify in such notice) any of its

rights under any of the Transaction Documents to acquire shares of Common Stock

from the Company, in which event such waiver shall be binding against the

Noteholders in accordance with its terms; provided, however, that the voluntary

waiver contemplated by this sentence may not reduce the Noteholders' obligations

to the Company under the Transaction Documents.

Section 13.7 Notices. Any notices, consents, waivers or other

communications required or permitted to be given under the terms of this

Agreement must be in writing, must be delivered by (i) courier, mail or hand

delivery or (ii) facsimile, and will be deemed to have been delivered upon

receipt. The addresses and facsimile numbers for such communications shall be:

<PAGE>

If to the Company:

Liquidmetal Technologies, Inc.

25800 Commercentre Dr., Suite 100

Lake Forest, California 92630

Telephone: (949) 206-8002

Fax: (949) 206-8008

Attention: John Kang, Chairman

With a copy to:

Foley & Lardner LLP

100 North Tampa Street, Suite 2700

Tampa, Florida 33602

Telephone: (813) 229-2300

Facsimile: (813) 221-4210

Attention: Curt P. Creely

If to the Transfer Agent:

American Stock Transfer & Trust Company

59 Maiden Lane

Plaza Level

New York, New York 10039

Telephone: (718) 921-8124

Facsimile: (718) 236-2641

Attention: Joe Wolf

If to the Noteholders, to the addresses listed on Schedule I hereto:

With a copy to:

Wollmuth Maher & Deutsch LLP

500 Fifth Avenue, 12th Floor

New York, New York 10110

Telephone: (212) 382-3300

Facsimile: (212) 382-0050

Attention: Rory M. Deutsch

Each party shall provide five (5) days prior written notice to

the other party of any change in address, telephone number or facsimile number.

Written confirmation of receipt (A) given by the recipient of such notice,

consent, waiver or other communication, (B) mechanically or electronically

generated by the sender's facsimile machine containing the time, date, recipient

facsimile number and an image of the first page of such transmission or (C)

provided by a nationally recognized overnight delivery service, shall be

rebuttable evidence of personal service, receipt by facsimile or receipt from a

<PAGE>

nationally recognized overnight delivery service in accordance with clause (i),

(ii) or (iii) above, respectively.

Section 13.8 Successors and Assigns. Except as otherwise provided

herein, this Agreement shall be binding upon and inure to the benefit of the

parties and their respective successors and assigns, including any Permitted

Assignee (as defined below). The Noteholders may assign some or all of their

rights hereunder to any assignee of the Exchange Notes or the Common Shares (in

each case, a "Permitted Assignee"); provided, however, that any such assignment

shall not release such Noteholder from its obligations hereunder unless such

obligations are assumed by such assignee and the Company has consented to such

assignment and assumption.

Section 13.9 No Third Party Beneficiaries. This Agreement is intended

for the benefit of the parties hereto and their respective permitted successors

and assigns, and is not for the benefit of, nor may any provision hereof be

enforced by, any other person.

Section 13.10 Survival. The representations, warranties and agreements

of the Company and the Noteholders contained in the Agreement shall survive as

long as the Company is obligated to maintain the effectiveness of the

registration statement and keep a current prospectus thereunder.

Section 13.11 Further Assurances. Each party shall do and perform, or

cause to be done and performed, all such further acts and things, and shall

execute and deliver all such other agreements, certificates, instruments and

documents, as the other party may reasonably request in order to carry out the

intent and accomplish the purposes of this Agreement and the consummation of the

transactions contemplated hereby.

Section 13.12 No Strict Construction. The language used in this

Agreement will be deemed to be the language chosen by the parties to express

their mutual intent, and no rules of strict construction will be applied against

any party.

Section 13.13 Remedies. The Noteholders and each Permitted Assignee

shall have all rights and remedies set forth in this Agreement and the

Registration Rights Agreement and all rights and remedies which such holders

have been granted at any time under any other agreement or contract and all of

the rights which such holders have under any law. Any person having any rights

under any provision of this Agreement or the Registration Rights Agreement shall

be entitled to enforce such rights specifically (without posting a bond or other

security), to recover damages by reason of any breach of any provision of this

Agreement or the Registration Rights Agreement and to exercise all other rights

granted by law. The Noteholders and each Permitted Assignee without prejudice

may withdraw, revoke or suspend its pursuit of any remedy at any time prior to

its complete recovery as a result of such remedy.

Section 13.14 Payment Set Aside. To the extent that the Company makes

a payment or payments to the Noteholders hereunder or under the Registration

Rights Agreement or the Noteholders enfo

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