**Exhibit**10.36

 

NEITHERTHESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLEHAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THESECURITIES REGULATORS OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROMREGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),AND, ACCORDINGLY, MAY NOT BE, NOR MAY ANY INTEREST THEREIN BE,OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDERTHE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN ATRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACTAND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY,SUBJECT TO CERTAIN EXCEPTIONS, A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TOSUCH EFFECT, IN FORM AND SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLETO THE COMPANY.  THESE SECURITIES AND THESECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES MAY BE PLEDGED INCONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES INACCORDANCE WITH APPLICABLE LAWS.

 

**LIQUIDMETAL TECHNOLOGIES,INC.**

 

**COMMON STOCK PURCHASEWARRANT**

 
| Warrant No. [ ] |   | Date of Original Issuance: December 28, 2007 |
|----------------------|--------|---------------------------------------------------|

 

Liquidmetal Technologies, Inc., a Delawarecorporation (together with any entity that shall succeed to or assume theobligations of Liquidmetal Technologies, Inc. hereunder, the **“Company”**), hereby certifies that, for value received, [ ]or its registered assigns (the **“Holder”**), isentitled to purchase from the Company up to a total of [ ] shares of commonstock, par value $0.001 per share (the **“Common Stock”**),of the Company (each such share, a **“Warrant Share”**and all such shares, the **“Warrant Shares”**)at an exercise price equal to $1.55 per share (as adjusted from time to time asprovided in Section 9, the **“Exercise Price”**),at any time and from time to time from and after the date hereof and through andincluding December 28, 2012; provided that with respect to any WarrantShares that are not covered by an effective registration statement by the datewhich is one hundred twenty (120) calendars days after the Date of OriginalIssuance of this Warrant (the “**Extension Date**”),the expiration date of this Warrant as to such Warrant Shares shall beextended, but not beyond the seventh (7th) anniversary of the Dateof Original Issuance, by an additional thirty (30) calendar days for everythirty (30) day period following the Extension Date that such Warrant Sharesare not covered by an effective registration statement (the **“Expiration Date”**), and subject to the following terms andconditions:

 

----

 

# 1.             Definitions.  In addition to the termsdefined elsewhere in this Warrant, capitalized terms that are not otherwisedefined herein shall have the meanings given to such terms in the SecuritiesPurchase Agreement dated January 3, 2007 to which the Company and theoriginal Holder are parties (the **“Purchase Agreement”**)and the 8% Subordinated Convertible Unsecured Notes of the Company (the “**Notes**”) issued in connection therewith.  The term **“Common Stock”** shall includethe Company’s common stock, par value $0.001 per share as authorized on thedate of the Purchase Agreement and any other securities or property of theCompany or of any other person (corporate or otherwise) which the Holder at anytime shall be entitled to receive on the exercise hereof in lieu of or inaddition to such common stock, or which at any time shall be issuable inexchange for or in replacement of such common stock.  The term **“Affiliate”**shall mean any Person that, directly or indirectly through one or moreintermediaries, controls or is controlled by or is under common control with aPerson, as such terms are used in and construed under Rule 144 promulgatedby the SEC pursuant to the Securities Act of 1933, as amended.

 

# 2.             Holder of Warrant.  The Company shall registerthis Warrant, upon records to be maintained by the Company for that purpose(the **“Warrant Register”**), in the name of therecord Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant asthe absolute owner hereof for the purpose of any exercise hereof or anydistribution to the Holder, and for all other purposes, absent actual notice tothe contrary from the transferee and transferor.

 

# 3.             Recording of Transfers.  Subject to Section 6, theCompany shall register the transfer of any portion of this Warrant in theWarrant Register, upon surrender of this Warrant, with the Form ofAssignment attached hereto duly completed and signed, to the Company at itsaddress specified herein.  As a conditionto the transfer, the Company may request a legal opinion as contemplated by thelegend above and related terms of the Purchase Agreement.  Upon any such registration or transfer, a newWarrant to purchase Common Stock, in substantially the form of this Warrant(any such new Warrant, a **“New Warrant”**),evidencing the portion of this Warrant so transferred shall be issued to thetransferee and a New Warrant evidencing the remaining portion of this Warrantnot so transferred, if any, shall be issued to the transferring Holder. Theacceptance of the New Warrant by the transferee thereof shall be deemed theacceptance by such transferee of all of the rights and obligations of a holderof a Warrant.

#  

# 4.             Exercise and Duration ofWarrants.

 

## (a)           ThisWarrant shall be exercisable by the registered Holder in whole or in part atany time and from time to time on or after the date hereof to and including theExpiration Date by delivery to the Company of a duly executed facsimile copy ofthe Exercise Notice form annexed  hereto(or such other office or agency of the Company as it may designate by notice inwriting to the registered Holder at the address of such Holder appearing on thebooks of the Company).  At 6:30 p.m.,New York City time on the Expiration Date, the portion of this Warrant notexercised prior thereto shall be and become void and of no value.  The Company may not call or redeem all or anyportion of this Warrant without the prior written consent of the Holder.  If at any time (i) this Warrant isexercised after one year from the date of issuance of this Warrant but beforethe Expiration Date and (ii) during the Trading Day period immediatelypreceding the holder’s delivery of an Exercise Notice in respect of suchexercise, a Registration Statement (as defined in the Registration RightsAgreement) covering the Warrant Shares that 

##  

2

----

##  

## are the subjectof the Exercise Notice (the “**Unavailable Warrant Shares**”)is not available for the resale of such Unavailable Warrant Shares, the holderof this Warrant also may exercise this Warrant as to any or all of suchUnavailable Warrant Shares and, in lieu of making the cash payment otherwisecontemplated to be made to the Company upon such exercise in payment of the aggregateExercise Price, elect instead to receive upon such exercise a reduced number ofshares of Common Stock (the “**Net Number**”) determinedaccording to the following formula (a “**Cashless Exercise**”):

 
|   |   | Net  Number = | (A x B)  - (A x C) |   |   |
|--------|--------|---------------|--------------------|--------|--------|
|   |   |          | B                  |   |   |

 

For purposes ofthe foregoing formula:

 

A= the totalnumber of shares with respect to which this Warrant is then being exercised ina Cashless Exercise.

 

B= the VWAP onthe Trading Day immediately preceding the date of the Exercise Notice.

 

C= the ExercisePrice then in effect for the applicable Warrant Shares at the time of suchexercise.

 

VWAP = For any date, the price determined by the first of the followingclauses that applies: (a) if the Common Stock is then listed or quoted ona Trading Market, the daily volume weighted average price per share of theCommon Stock for such date (or the nearest preceding date) on the TradingMarket on which the Common Stock is then listed or quoted as reported byBloomberg Financial L.P. (based on a Trading Day from 9:30 a.m. EasternTime to 4:02 p.m. Eastern Time); (b) if the Common Stock is not thenlisted or quoted on a Trading Market and if prices for the Common Stock arethen quoted on the OTC Bulletin Board, the volume weighted average price pershare of the Common Stock for such date (or the nearest preceding date) on theOTC Bulletin Board; (c) if the Common Stock is not then listed or quotedon the OTC Bulletin Board and if prices for the Common Stock are then reportedin the “Pink Sheets” published by the Pink Sheets, LLC (or a similarorganization or agency succeeding to its functions of reporting prices), themost recent bid price per share of the Common Stock so reported; or (d) inall other cases, the fair market value of a share of Common Stock as determinedby an independent appraiser selected in good faith by the Holder and reasonablyacceptable to the Company.

 

There cannot be aCashless Exercise unless “B” exceeds “C”.

 

## (b)           TheCompany shall not effect any exercise of this Warrant, and a Holder shall nothave the right to exercise any portion of this Warrant, pursuant to Section 4(a) orotherwise, to the extent that after giving effect to such issuance afterexercise as set forth on the applicable Notice of Exercise, such Holder(together with such Holder’s Affiliates, and any other person or entity actingas a group together with such Holder or any of such Holder’s Affiliates), 

##  

3

----

##  

## as set forth onthe applicable Notice of Exercise, would beneficially own in excess of theBeneficial Ownership Limitation (as defined below). For purposes of theforegoing sentence, the number of shares of Common Stock beneficially owned bysuch Holder and its Affiliates shall include the number of shares of CommonStock issuable upon exercise of this Warrant with respect to which suchdetermination is being made, but shall exclude the number of shares of CommonStock which would be issuable upon (A) exercise of the remaining,nonexercised portion of this Warrant beneficially owned by such Holder or anyof its Affiliates and (B) exercise or conversion of the unexercised ornonconverted portion of any other securities of the Company (including, withoutlimitation, any other Warrants or Notes) subject to a limitation on conversionor exercise analogous to the limitation contained herein beneficially owned bysuch Holder or any of its affiliates. Except as set forth in the precedingsentence, for purposes of this Section 4(b), beneficial ownership shall becalculated in accordance with Section 13(d) of the Securities ExchangeAct of 1934, as amended (the **“Exchange Act”**) and the rules andregulations promulgated thereunder, it being acknowledged by a Holder that theCompany is not representing to such Holder that such calculation is in compliancewith Section 13(d) of the Exchange Act and such Holder is solelyresponsible for any schedules required to be filed in accordance therewith. Tothe extent that the limitation contained in this Section 4(b) applies,the determination of whether this Warrant is exercisable (in relation to othersecurities owned by such Holder together with any Affiliates) and of which aportion of this Warrant is exercisable shall be in the sole discretion of aHolder, and the submission of a Notice of Exercise shall be deemed to be eachHolder’s determination of whether this Warrant is exercisable (in relation toother securities owned by such Holder together with any Affiliates) and ofwhich portion of this Warrant is exercisable, in each case subject to suchaggregate percentage limitation, and the Company shall have no obligation toverify or confirm the accuracy of such determination. In addition, adetermination as to any group status as contemplated above shall be determinedin accordance with Section 13(d) of the Exchange Act and the rules andregulations promulgated thereunder. For purposes of this Section 4(b), indetermining the number of outstanding shares of Common Stock, a Holder may relyon the number of outstanding shares of Common Stock as reflected in (x) theCompany’s most recent Form 10-Q or Form 10-K, as the case may be, (y) amore recent public announcement by the Company or (z) any other notice bythe Company or the Company’s transfer agent setting forth the number of sharesof Common Stock outstanding. Upon the written or oral request of a Holder, theCompany shall within two Trading Days confirm orally and in writing to suchHolder the number of shares of Common Stock then outstanding. In any case, thenumber of outstanding shares of Common Stock shall be determined after givingeffect to the conversion or exercise of securities of the Company, includingthis Warrant, by such Holder or its Affiliates since the date as of which suchnumber of outstanding shares of Common Stock was reported. The “BeneficialOwnership Limitation” shall be 4.99% of the number of shares of the CommonStock outstanding immediately after giving effect to the issuance of shares ofCommon Stock issuable upon exercise of this Warrant. The Beneficial OwnershipLimitation provisions of this Section 4(b) may be waived by suchHolder, at the election of such Holder, upon not less than 61 days’ priornotice to the Company to change the Beneficial Ownership Limitation to 9.99% ofthe number of shares of the Common Stock outstanding immediately after givingeffect to the issuance of shares of Common Stock upon exercise of this Warrant,and the provisions of this Section 4(b) shall continue to apply. Uponsuch a change by a Holder of the Beneficial Ownership Limitation from such4.99% limitation to such 9.99% limitation, the Beneficial Ownership Limitationmay not be further waived by such 

##  

4

----

##  

## Holder. The provisions of this paragraph shall beconstrued and implemented in a manner otherwise than in strict conformity withthe terms of this Section 4(b)) to correct this paragraph (or any portionhereof) which may be defective or inconsistent with the intended BeneficialOwnership Limitation herein contained or to make changes or supplements necessaryor desirable to properly give effect to such limitation. The limitationscontained in this paragraph shall apply to a successor holder of this Warrant.

 

# 5.             Delivery of Warrant Shares.

##  

## (a)           Toeffect exercises hereunder, the Holder shall not be required to physicallysurrender this Warrant upon exercise unless this Warrant ceases to be furtherexercisable for additional Warrant Shares. Upon delivery of the Exercise Notice to the Company (with the attachedWarrant Shares Exercise Log) at its address for notice set forth herein andupon payment of the Exercise Price multiplied by the number of Warrant Sharesthat the Holder intends to purchase hereunder, the Company shall promptly (butin no event later than three Trading Days after the Date of Exercise (asdefined herein)) issue and deliver to the Holder, a certificate for the WarrantShares issuable upon such exercise, which, unless otherwise required by thePurchase Agreement, shall be free of restrictive legends.  A “**Date of Exercise**”means the date on which the Holder shall have delivered to Company: (i) theExercise Notice (with the Warrant Exercise Log attached to it), appropriatelycompleted and duly signed and (ii) except in the case of a CashlessExercise, payment in full of the Exercise Price in immediately available fundsor federal funds for the number of Warrant Shares so indicated by the Holder tobe purchased.

 

## (b)           Ifby the third Trading Day after a Date of Exercise the Company fails to deliverthe required number of Warrant Shares in the manner required pursuant to Section 5(a),then the Holder will have the right to rescind such exercise.

 

## (c)           Ifby the third Trading Day after a Date of Exercise the Company fails to deliverthe required number of Warrant Shares in the manner required pursuant to Section 5(a),and if after such third Trading Day and prior to the receipt of such WarrantShares, the Holder purchases in a bona fide arm’s length transaction for fairmarket value (in an open market transaction or otherwise) the number of sharesof Common Stock necessary to deliver in satisfaction of a bona fide arm’slength sale for fair market value by the Holder of the Warrant Shares which theHolder was entitled to receive upon such exercise (a “**Buy-In**”),then the Company shall (1) pay in cash to the Holder the amount by which (x) theHolder’s total purchase price (including brokerage commissions, if any) for theshares of Common Stock so purchased exceeds (y) the Holder’s total salesprice (including brokerage commissions, if any) for the shares of Common Stockso sold and (2) at the option of the Holder, either reinstate the portionof the Warrant and equivalent number of Warrant Shares for which such exercisewas not honored or deliver to the Holder the number of shares of Common Stockthat would have been issued had the Company timely complied with its exerciseand delivery obligations hereunder.  TheHolder shall provide the Company written notice and reasonably detaileddocumentation indicating the amounts requested by the Holder in respect of theBuy-In.

 

5

----

 

## (d)           TheCompany’s obligations to issue and deliver Warrant Shares in accordance withthe terms hereof are absolute and unconditional, irrespective of any action orinaction by the Holder to enforce the same, any waiver or consent with respectto any provision hereof, the recovery of any judgment against any Person or anyaction to enforce the same, or any setoff, counterclaim, recoupment, limitationor termination, or any breach or alleged breach by the Holder or any otherPerson of any obligation to the Company or any violation or alleged violationof law by the Holder or any other Person, and irrespective of any othercircumstance which might otherwise limit such obligation of the Company to theHolder in connection with the issuance of Warrant Shares.  Nothing herein shall limit a Holder’s rightto pursue any other remedies available to it hereunder, at law or in equityincluding, without limitation, a decree of specific performance and/orinjunctive relief with respect to the Company’s failure to timely delivercertificates representing shares of Common Stock upon exercise of the Warrantas required pursuant to the terms hereof.

#  

# 6.             Charges, Taxes and Expenses.  Issuance and delivery ofcertificates for shares of Common Stock upon exercise of this Warrant shall bemade without charge to the Holder for any issue or transfer tax, withholdingtax, transfer agent fee or other incidental tax or expense in respect of theissuance of such certificates, all of which taxes and expenses shall be paid bythe Company; provided, however, that the Company shall not be required to payany tax which may be payable in respect of any transfer involved in theregistration of any certificates for Warrant Shares or Warrants in a name otherthan that of the Holder.  The Holdershall be responsible for all other tax liability that may arise as a result ofholding or transferring this Warrant or receiving Warrant Shares upon exercisehereof.

#  

# 7.             Replacement of Warrant.  If this Warrant is mutilated,lost, stolen or destroyed, the Company shall issue or cause to be issued inexchange and substitution for and upon cancellation hereof, or in lieu of andsubstitution for this Warrant, a New Warrant, but only upon receipt of evidencereasonably satisfactory to the Company of such loss, theft or destruction andownership thereof and customary and reasonable indemnity.  Applicants for a New Warrant under suchcircumstances shall also comply with such other reasonable regulations andprocedures and pay such other reasonable third-party costs as the Company mayprescribe.  If a New Warrant is requestedas a result of a mutilation of this Warrant, then the Holder shall deliver suchmutilated Warrant to the Company as a condition precedent to the Company’sobligation to issue the New Warrant.

#  

# 8.             Reservation of Warrant Shares.  The Company covenants that itwill at all times reserve and keep available out of the aggregate of itsauthorized but unissued and otherwise unreserved Common Stock, solely for thepurpose of enabling it to issue Warrant Shares upon exercise of this Warrant asherein provided, the number of Warrant Shares which are then issuable anddeliverable upon the exercise of this entire Warrant, free from preemptiverights or any other contingent purchase rights of persons other than the Holder(taking into account the adjustments and restrictions of Section 9).The Company covenants that all Warrant Shares so issuable and deliverableshall, upon issuance and the payment of the applicable Exercise Price inaccordance with the terms hereof, be duly and validly authorized, issued andfully paid and nonassessable.

#  

# 9.             Certain Adjustments.  The Exercise Price and numberof Warrant Shares issuable upon exercise of this Warrant are subject toadjustment from time to time as set forth in this Section 9.

##  

6

----

##  

## (a)           StockDividends and Splits, Recapitalizations, Etc.  If the Company, at any time while thisWarrant is outstanding, (i) pays a stock dividend on its Common Stock orotherwise makes a distribution on any class of capital stock that is payable inshares of Common Stock or subdivides the outstanding shares of Common Stockinto a larger number of shares (by any stock split, recapitalization orotherwise), then in each such case the Exercise Price shall be proportionatelyreduced and the number of Warrant Shares shall be proportionately increased,and (ii) combines outstanding shares of Common Stock into a smaller numberof shares (by reverse stock split, recapitalization, or otherwise), then ineach such case the Exercise Price shall be proportionately increased and thenumber of Warrant Shares shall be proportionately decreased.  Any adjustment made pursuant to clauses (i) and(ii) of this paragraph shall become effective immediately after the recorddate for the determination of stockholders entitled to receive such dividend ordistribution or immediately after the effective date of such subdivision orcombination (as the case may be). If any event requiring an adjustment underthis paragraph occurs during the period that an Exercise Price is calculatedhereunder, then the calculation of such Exercise Price shall be adjustedappropriately to reflect such event.

 

## (b)           ProRata Distributions.  If the Company,at any time while this Warrant is outstanding, distributes to all holders ofCommon Stock (i) evidences of its indebtedness, (ii) any security(other than a distribution of Common Stock covered by the preceding paragraph),(iii) rights or warrants to subscribe for or purchase any security, or (iv) anyother asset (in each case, **“Distributed Property”**),then in each such case the Exercise Price shall be appropriately adjusted.  Any adjustment made pursuant to thisparagraph shall become effective immediately after the record date for thedetermination of stockholders entitled to receive such distribution.  If any event requiring an adjustment underthis paragraph occurs during the period that an Exercise Price is calculatedhereunder, then the calculation of such Exercise Price shall be adjustedappropriately to reflect such event.

 

## (c)           Adjustmentof Exercise Price upon Issuance of Common Stock.  If and whenever on or after the IssuanceDate, the Company issues or sells, or in accordance with this Section 7(a) isdeemed to have issued or sold, any shares of Common Stock (including theissuance or sale of shares of Common Stock owned or held by or for the accountof the Company, but excluding shares of Common Stock deemed to have been issuedor sold by the Company in connection with any Excluded Security) for aconsideration per share (the **“New SecuritiesIssuance Price”**) less than a price (the **“Applicable Price”**) equal to the Conversion Price in effectimmediately prior to such issue or sale (the foregoing a **“Dilutive Issuance”**), then immediatelyafter such Dilutive Issuance, the Exercise Price then in effect shall bereduced to the New Securities Issuance Price. For purposes of determining the adjusted Exercise Price under this Section 9(c),the following shall be applicable:

 

### (i)            Issuanceof Options.  If the Company in anymanner grants or sells any Options and the lowest price per share for which oneshare of Common Stock is issuable upon the exercise of any such Option or uponconversion or exchange or exercise of any Convertible Securities issuable uponexercise of such Option is less than the Applicable Price, then such share ofCommon Stock shall be deemed to be outstanding and to have been issued and soldby the Company at the time of the granting or sale of such Option for suchprice per share.  For purposes of this Section 9(c)(i),the “lowest price per share for which one share of Common Stock is issuableupon the exercise of any such Option or upon conversion or exchange 

###  

7

----

###  

### or exercise ofany Convertible Securities issuable upon exercise of such Option” shall beequal to the sum of the lowest amounts of consideration (if any) received orreceivable by the Company with respect to any one share of Common Stock upongranting or sale of the Option, upon exercise of the Option and upon conversionor exchange or exercise of any Convertible Security issuable upon exercise ofsuch Option.  No further adjustment ofthe Exercise Price shall be made upon the actual issuance of such Common Stockor of such Convertible Securities upon the exercise of such Options or upon theactual issuance of such Common Stock upon conversion or exchange or exercise ofsuch Convertible Securities.

###  

### (ii)           Issuanceof Convertible Securities.  If theCompany in any manner issues or sells any Convertible Securities and the lowestprice per share for which one share of Common Stock is issuable upon suchconversion or exchange or exercise thereof is less than the Applicable Price,then such share of Common Stock shall be deemed to be outstanding and to havebeen issued and sold by the Company at the time of the issuance of sale of suchConvertible Securities for such price per share.  For the purposes of this Section 9(c)(ii),the “price per share for which one share of Common Stock is issuable upon suchconversion or exchange or exercise” shall be equal to the sum of the lowestamounts of consideration (if any) received or receivable by the Company withrespect to any one share of Common Stock upon the issuance or sale of theConvertible Security and upon the conversion or exchange or exercise of suchConvertible Security.  No furtheradjustment of the Exercise Price shall be made upon the actual issuance of suchCommon Stock upon conversion or exchange or exercise of such ConvertibleSecurities, and if any such issue or sale of such Convertible Securities ismade upon exercise of any Options for which adjustment of the Exercise Pricehad been or are to be made pursuant to other provisions of this Section 9(c),no further adjustment of the Exercise Price shall be made by reason of suchissue or sale.

###  

### (iii)          Changein Option Price or Rate of Conversion. If the purchase price provided for in any Options, the additionalconsideration, if any, payable upon the issue, conversion, exchange or exerciseof any Convertible Securities, or the rate at which any Convertible Securitiesare convertible into or exchangeable or exercisable for Common Stock changes atany time, the Exercise Price in effect at the time of such change shall beadjusted to the Exercise Price which would have been in effect at such time hadsuch Options or Convertible Securities provided for such changed purchaseprice, additional consideration or changed conversion rate, as the case may be,at the time initially granted, issued or sold. Notwithstandinganything in this Warrant to the contrary, in the event that the Company agreesto decrease the conversion price of any of its 7% Convertible Secured PromissoryNotes due August 2007 in connection with an agreement by the holder of anysuch notes to convert the same, such decrease in the conversion price will notresult in any adjustment to the Exercise Price pursuant to this Section 9(c) ofthis Warrant.

###  

### (iv)          Calculationof Consideration Received.  In caseany Option is issued in connection with the issue or sale of other securitiesof the Company, together comprising one integrated transaction in which nospecific consideration is allocated to such Options by the parties thereto, theOptions will be deemed to have been issued for a consideration of $.01.  If any Common Stock, Options or ConvertibleSecurities are issued or sold or deemed to have been issued or sold for cash,the consideration received therefor will be deemed to be the net amountreceived by the Company therefor.  If anyCommon Stock, Options 

###  

8

----

###  

### or ConvertibleSecurities are issued or sold for a consideration other than cash, the amountof the consideration other than cash received by the Company will be the fairvalue of such consideration, except where such consideration consists ofsecurities, in which case the amount of consideration received by the Companywill be the Closing Sale Price of such securities on the date of receipt.  If any Common Stock, Options or ConvertibleSecurities are issued to the owners of the non-surviving entity in connectionwith any merger in which the Company is the surviving entity, the amount ofconsideration therefor will be deemed to be the fair value of such portion ofthe net assets and business of the non-surviving entity as is attributable tosuch Common Stock, Options or Convertible Securities, as the case may be.  The fair value of any consideration other thancash or securities will be determined by the Company.

###  

### (v)           RecordDate.  If the Company takes a recordof the holders of Common Stock for the purpose of entitling them (A) toreceive a dividend or other distribution payable in Common Stock, Options or inConvertible Securities or (B) to subscribe for or purchase Common Stock,Options or Convertible Securities, then such record date will be deemed to bethe date of the issue or sale of the shares of Common Stock deemed to have beenissued or sold upon the declaration of such dividend or the making of suchother distribution or the date of the granting of such right of subscription orpurchase, as the case may be.

##  

## (d)           FundamentalTransactions.  If, at any time whilethis Warrant is outstanding, (1) the Company effects any merger orconsolidation of the Company with or into another Person, (2) the Companyeffects any sale of all or substantially all of its assets in one or a seriesof related transactions, (3) any tender offer or exchange offer (whetherby the Company or another Person) is completed pursuant to which holders ofCommon Stock are permitted to tender or exchange their shares for othersecurities, cash or property, or (4) the Company effects anyreclassification of the Common Stock or any compulsory share exchange pursuantto which the Common Stock is effectively converted into or exchanged for othersecurities, cash or property (in any such case, a **“FundamentalTransaction”**), then the Holder shall have the right thereafter toreceive, upon exercise of this Warrant, the same amount and kind of securities,cash or property as it would have been entitled to receive upon the occurrenceof such Fundamental Transaction if it had been, immediately prior to suchFundamental Transaction, the holder of the number of Warrant Shares thenissuable upon exercise in full of this Warrant (the **“AlternateConsideration”**).  For purposesof any such exercise, the determination of the Exercise Price shall beappropriately adjusted to apply to such Alternate Consideration based on theamount of Alternate Consideration issuable in respect of one share of CommonStock in such Fundamental Transaction, and the Company shall apportion theExercise Price among the Alternate Consideration in a reasonable mannerreflecting the relative value of any different components of the AlternateConsideration.  If holders of CommonStock are given any choice as to the securities, cash or property to bereceived in a Fundamental Transaction, then the Holder shall be given the samechoice as to the Alternate Consideration it receives upon any exercise of thisWarrant following such Fundamental Transaction. At the Holder’s option and request, any successor to the Company orsurviving entity in such Fundamental Transaction shall issue to the Holder anew warrant substantially in the form of this Warrant and consistent with theforegoing provisions and evidencing the Holder’s right to purchase theAlternate Consideration for the aggregate Exercise Price upon exercisethereof.  Any such successor or survivingentity shall be deemed to be required to comply with the provisions of thisparagraph (d) and shall insure that the Warrant (or any such replacementsecurity) will be similarly adjusted upon any subsequent 

##  

9

----

##  

## transactionanalogous to a Fundamental Transaction. Notwithstanding the foregoing, in the event of a Fundamental Transactionthat constitutes a Change in Control (as defined in the Notes), at the requestof the Holder delivered before the 90th day after such Fundamental Transactionis consummated, the Company (or the successor to the Company) shall purchasethis Warrant from the Holder by paying to the Holder, within five Business Daysafter such request (or, if later, on the effective date of the FundamentalTransaction), cash in an amount equal to the Black Scholes Value of theremaining unexercised portion of this Warrant on the date such FundamentalTransaction is consummated.  For thepurpose of this Warrant, “**Black Scholes Value**”means the value, as reasonably calculated by the Company, of this Warrant basedon the Black-Scholes Option Pricing Model, provided that the Black Sholes Valueof this Warrant shall not for this purpose exceed an amount equal to $5.00multiplied by the number of shares of Common Stock for which this Warrant isexercisable at the time the Fundamental Transaction is consummated (with such$5.00 cap being subject to adjustment for stock dividends, stock splits,reverse stock splits, and the like).

##  

## (e)           Numberof Warrant Shares.  Simultaneouslywith any adjustment to the Exercise Price pursuant to paragraph (a) ofthis Section, the number of Warrant Shares that may be purchased upon exerciseof this Warrant shall be increased or decreased proportionately, so that aftersuch adjustment the aggregate Exercise Price payable hereunder for the adjustednumber of Warrant Shares shall be the same as the aggregate Exercise Price ineffect immediately prior to such adjustment.

##  

## (f)            Calculations.  All calculations under this Section 9shall be made to the nearest cent or the nearest 1/100th of a share,as applicable.  The number of shares ofCommon Stock outstanding at any given time shall not include shares owned orheld by or for the account of the Company, and the disposition of any suchshares shall be considered an issue or sale of Common Stock.

## (g)           Noticeof Adjustments.  Upon the occurrenceof each adjustment pursuant to this Section 9, the Company at itsexpense will promptly compute such adjustment in accordance with the terms ofthis Warrant and prepare a certificate setting forth such adjustment, includinga statement of the adjusted Exercise Price and adjusted number or type ofWarrant Shares or other securities issuable upon exercise of this Warrant (asapplicable), describing the transactions giving rise to such adjustments andshowing in detail the facts upon which such adjustment is based.  Upon written request, the Company willpromptly deliver a copy of each such certificate to the Holder and to theCompany’s Transfer Agent.  No adjustmentin the Exercise Price shall be required unless such adjustment would require anincrease or decrease of at least 1% in such rate; provided, however,that any adjustments which by reason of this Section 9(g) are notrequired to be made shall be carried forward and taken into account in any subsequent adjustment.

##  

## (h)           Noticeof Corporate Events.  If the Company (i) declaresa dividend or any other distribution of cash, securities or other property inrespect of its Common Stock, including without limitation any granting ofrights or warrants to subscribe for or purchase any capital stock of theCompany or any Subsidiary, (ii) authorizes or approves, enters into anyagreement contemplating or solicits stockholder approval for any FundamentalTransaction or (iii) authorizes the voluntary dissolution, liquidation orwinding up of the affairs of the Company, 

 

10

----

 

## then the Companyshall deliver to the Holder a notice describing the material terms andconditions of such transaction, at least five calendar days prior to theapplicable record or effective date on which a Person would need to hold CommonStock in order to participate in or vote with respect to such transaction, andthe Company will take all steps reasonably necessary in order to insure thatthe Holder is given the practical opportunity to exercise this Warrant prior tosuch time so as to participate in or vote with respect to such transaction;provided, however, that the failure to deliver such notice or any defecttherein shall not affect the validity of the corporate action required to bedescribed in such notice.

#  

# 10.           Payment of Exercise Price.  Upon exercise of this Warrant the Holdershall pay the Exercise Price in immediately available funds unless it is aCashless Exercise in accordance with Section 4 hereof.

#  

# 11.           No Fractional Shares.  No fractional shares ofWarrant Shares will be issued in connection with any exercise of thisWarrant.  In lieu of any fractionalshares which would otherwise be issuable, the Company shall pay cash equal tothe product of such fraction multiplied by the closing price of one WarrantShare as reported by Bloomberg L.P. (or the successor to its function ofreporting share prices) on the date of exercise.

#  

# 12.           Notices.  Any and all notices or other communicationsor deliveries hereunder (including, without limitation, any Exercise Notice)shall be in writing and shall be deemed given and effective on the earliest of (i) thedate of transmission, if such notice or communication is delivered viafacsimile at the facsimile number specified in this Section prior to 6:30 p.m.(New York City time) on a Trading Day, (ii) the next Trading Day after thedate of transmission, if such notice or communication is delivered viafacsimile at the facsimile number specified in this Section on a day thatis not a Trading Day or later than 6:30 p.m. (New York City time) on anyTrading Day, (iii) the Trading Day following the date of mailing, if sentand delivered by nationally recognized overnight courier service, or (iv) uponactual receipt by the party to whom such notice is required to be given.  The addresses for such communications shallbe:  (i) if to the Company, to LiquidmetalTechnologies, Inc., 30452 Esperanza, Rancho Santa Margarita, CA  92688. Attn: Chief Executive Officer, Facsimile No.: (949) 635-2108, or (ii) ifto the Holder, to the address or facsimile number appearing on the WarrantRegister or such other address or facsimile number as the Holder may provide tothe Company in accordance with this Section.

#  

# 13.           Warrant Agent.  The Company shall serve aswarrant agent under this Warrant.  Upon30 days’ notice to the Holder, the Company may appoint a new warrantagent.  Any corporation into which the Companyor any new warrant agent may be merged or any corporation resulting from anyconsolidation to which the Company or any new warrant agent shall be a party orany corporation to which the Company or any new warrant agent transferssubstantially all of its corporate trust or shareholders services businessshall be a successor warrant agent under this Warrant without any furtheract.  Any such successor warrant agentshall promptly cause notice of its succession as warrant agent to be mailed (byfirst class mail, postage prepaid) to the Holder at the Holder’s last addressas shown on the Warrant Register.

 

11

----

 

# 14.           Miscellaneous.

##  

## (a)           ThisWarrant shall be binding on and inure to the benefit of the parties hereto andthe respective successors and assigns of the Holder it being understood thattransfers of this Warrant by the Holder are subject to the legend set forth ofthe face hereof.  Subject to thepreceding sentence, nothing in this Warrant shall be construed to give to anyPerson other than the Company and the Holder any legal or equitable right,remedy or cause of action under this Warrant. This Warrant may be amended only in writing signed by the Company andthe Holder and their successors and assigns.

##  

## (b)           Allquestions concerning the construction, validity, enforcement and interpretationof this Warrant shall be governed by and construed and enforced in accordancewith the internal laws of the State of New York, without regard to theprinciples of conflicts of law thereof. Each party agrees that all legal proceedings to resolve any disputeconcerning the interpretations, enforcement and defense of this Warrant and thetransactions herein contemplated (**“Proceedings”**)(whether brought against a party hereto or its respective Affiliates, employeesor agents) shall be commenced exclusively in the state and federal courtssitting in the City of New York, Borough of Manhattan (the “**New York Courts**”), although depositions may be taken inother locations.  Each party heretohereby irrevocably submits to the exclusive jurisdiction of the New York Courtsfor the adjudication of any dispute hereunder or in connection herewith or withany transaction contemplated hereby or discussed herein, and hereby irrevocablywaives, and agrees not to assert in any Proceeding, any claim that it is notpersonally subject to the jurisdiction of any New York Court, or that suchProceeding has been commenced in an improper or inconvenient forum. Each partyhereto hereby irrevocably waives personal service of process and consents toprocess being served in any such Proceeding by mailing a copy thereof viaregistered or certified mail or overnight delivery (with evidence of delivery)to such party at the address in effect for notices to it under this Warrant andagrees that such service shall constitute good and sufficient service ofprocess and notice thereof.  Nothingcontained herein shall be deemed to limit in any way any right to serve processin any manner permitted by law.  Each partyhereto hereby irrevocably waives, to the fullest extent permitted by applicablelaw, any and all right to trial by jury in any legal proceeding arising out ofor relating to this Warrant or the transactions contemplated hereby.  If either party shall commence a Proceedingto enforce any provisions of this Warrant, then the prevailing party in suchProceeding shall be reimbursed by the other party for its attorney’s fees andother costs and expenses incurred with the investigation, preparation and prosecutionof such Proceeding.

##  

## (c)           Theheadings herein are for convenience only, do not constitute a part of thisWarrant and shall not be deemed to limit or affect any of the provisionshereof.

##  

## (d)           Incase any one or more of the provisions of this Warrant shall be invalid orunenforceable in any respect, the validity and enforceability of the remainingterms and provisions of this Warrant shall not in any way be affected orimpaired thereby and the parties will attempt in good faith to agree upon avalid and enforceable provision which shall be a commercially reasonablesubstitute therefor, and upon so agreeing, shall incorporate such substituteprovision in this Warrant.

##  

## (e)           TheCompany will not, by amendment of its Articles of Incorporation or through anyreorganization, transfer of assets, consolidation, merger, dissolution, issueor sale of securities or any other voluntary action, avoid or seek to avoid theobservance or performance of 

 

12

----

##  

## any of the termsof this Warrant, but will at all times in good faith assist in the carrying outof all such terms and in the taking of all such action as may be necessary orappropriate in order to protect the rights of the holder of this Warrantagainst such impairment.

##  

## (f)            ThisWarrant does not entitle the Holder to any voting rights or other rights as ashareholder of the Company prior to the exercise hereof.  In connection with an exercise of thisWarrant in accordance with the terms hereof, upon the surrender of this Warrantand the payment of the aggregate Exercise Price (or by means of a CashlessExercise if permitted hereunder), the Warrant Shares so purchased shall be andbe deemed to be issued to such Holder as the record owner of such shares as ofthe close of business on the later of the date of such surrender or payment.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,SIGNATURE PAGE FOLLOWS]

 

13

----

 

IN WITNESS WHEREOF, the Company has caused thisWarrant to be duly executed by its authorized officer as of the date firstindicated above.

 
|       | **LIQUIDMETAL  TECHNOLOGIES, INC.** |
|------------|-------------------------------------|
|       | ** **                          |
|       | ** **                          |
| ** ** | **BY:**                             | ** ** |
| ** ** | **Name:**                           | **John  Kang** |
| ** ** | **Title:**                          | **Chairman** |
|            |                                     |  |  |

 

14

----

** **

**EXERCISE NOTICE**

 

To Liquidmetal Technologies, Inc.

 

The undersigned herebyirrevocably elects to purchase  ______________shares of common stock, par value $0.001 per share, of Liquidmetal Technologies, Inc.(“**Common Stock**”), pursuant to Warrant No. [  ], originally issued January 3, 2007(the “**Warrant**”), and, if not a CashlessExercise in accordance with Section 4, encloses herewith $_______ in cash,federal funds or other immediately available funds, which sum represents theaggregate Exercise Price (as defined in the Warrant) for the number of sharesof Common Stock to which this Exercise Notice relates, together with anyapplicable taxes payable by the undersigned pursuant to the Warrant.

 

The undersigned  hereby certifies to the Company that theundersigned’s exercise of the amount set forth above will not directly resultin the undersigned (together with the undersigned’s affiliates) beneficiallyowning in excess of 4.99% of the number of shares of Common Stock outstandingimmediately after giving effect to such exercise, calculated in accordance withSection 4(b) of the Warrant; provided that if the undersigned haswaived the 4.99% beneficial ownership requirement  by providing the Company with notice at least61 days prior to the date hereof, the undersigned hereby certifies to theCompany that the undersigned’s exercise of the amount set forth above will notdirectly result in the undersigned (together with the undersigned’s affiliates)beneficially owning in excess of 9.99% of the number of shares of Common Stockoutstanding immediately after giving effect to such conversion, calculated inaccordance with Section 4(b) of the Warrant.

 

The undersigned requeststhat certificates for the shares of Common Stock issuable upon this exercise beissued in the name of

 
|   |   | Print Name of Holder:            |   |
|--------|--------|----------------------------------|--------|
|   |   |                             |   |
|   |   |                             |   |
|   |   | Signature:                       |   |
|   |   | Name:                            |
|   |   | Title:                           |
|   |   |                             |
|   |   |                             |
|   |   | HOLDER’S SOCIAL SECURITY OR |
|   |   | TAX IDENTIFICATION NUMBER:       |
|   |   |                             |
|   |   |                             |
|   |   |                             |
|   |   |                             |
|   |   | Holder’s Address:           |
|   |   |                             |
|   |   |                             |   |
|   |   |                             |   |
|   |   |                             |   |
|   |   |                             |   |
|        |        |                                  |        |  |  |

 

----

 

Warrant Shares Exercise Log

 
| **Date** | ** ** | **Number of Warrant  Shares Available to be  Exercised** | ** ** | **Number of Warrant Shares  Exercised** | ** ** | **Number of  Warrant Shares  Remaining to  be Exercised** |
|----------|------------|-----------------------------------------------------------------------------------|------------|--------------------------------------------------------|------------|-------------------------------------------------------------------------------|
|     |       |                                                                              |       |                                                   |       |                                                                          |
|     |       |                                                                              |       |                                                   |       |                                                                          |
|     |       |                                                                              |       |                                                   |       |                                                                          |

 

----

** **

**FORM OF ASSIGNMENT**

 

[To be completed and signed only upon transfer ofWarrant]

 

FOR VALUE RECEIVED, the undersigned hereby sells,assigns and transfers unto _______________________________ the rightrepresented by the within Warrant to purchase ____________ shares of Common Stock of Liquidmetal Technologies, Inc.to which the within Warrant relates and appoints ________________ attorney totransfer said right on the books of the Company with full power of substitutionin the premises.

 

Dated:    ______________, ____

 

 
|   |                                                                                                 |
|--------|------------------------------------------------------------------------------------------------------|
|   | (Signature  must conform in all respects to name of  holder as specified on the face of the Warrant) |
|   |                                                                                                 |
|   |                                                                                                 |
|   |                                                                                                 |
|   | Address  of Transferee                                                                               |
|   |                                                                                                 |
|   |                                                                                                 |
|   |                                                                                                 |
|   |                                                                                                 |
|   |                                                                                                 |
|   |                                                                                                 |
|   |                                                                                                 |
|   | Tax  Identification Number or Social Security Number of Transferee                                   |
|   |                                                                                                 |
|   |                                                                                                 |
|   |                                                                                                 |

 

Inthe presence of:

 

 

_________________________

 

----