Exhibit 10.5


 


REGISTRATION RIGHTS AGREEMENT


 


This
Registration Rights Agreement (this “Agreement”) is
entered into as of May 1, 2009, between Liquidmetal Technologies, Inc.,
a Delaware corporation (the “Company”), and each of the buyers
signatory hereto (each a “Buyer” and collectively, the “Buyers”).


 


W  I
T  N  E  S  S  E  T  H:


 


WHEREAS, the Company and the Buyers have entered
into a Securities Purchase and Exchange Agreement, dated as of May 1,
2009  (the “Purchase
Agreement”), pursuant to which, among other things, the Company has
agreed to issue and sell to the Buyers, in the amounts set forth on the
Schedule of Buyers attached to the Purchase Agreement, (i) shares of the
Company’s Series A-1 Preferred Stock, including those purchasable pursuant
to the Series A-1 Option (as such term is defined in the Purchase
Agreement) (collectively, the “Series A-1 Shares”),
(ii) shares of the Company’s Series A-2 Preferred Stock (the “Series A-2 Shares,” and together with the Series A-1
Shares, the “Series A Shares”), (iii) Common
Stock Purchase Warrants to be issued in connection with the issuance of the Series A
Shares (the “Preferred Warrants”), (iv) 8% Senior Secured Convertible Notes of the
Company (the “Exchange Notes”), and (v) Common
Stock Purchase Warrants to be issued in connection with the issuance of the
Exchange Notes (the “Exchange Warrants,”
and together with the Preferred Warrants, the “Warrants”);


 


WHEREAS, the Series A Shares and the Exchange
Notes are convertible into shares of Common Stock (the “Conversion
Shares”); and


 


WHEREAS, the Warrants are exercisable into shares of
Common Stock pursuant to the terms and conditions set forth in the Warrants
(the “Warrant Shares”).


 


NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in the Purchase
Agreement and this Agreement, the Company and the Buyers agree as follows:


 


1.             Certain
Definitions.  Capitalized terms used
herein and not otherwise defined shall have the meanings ascribed thereto in
the Purchase Agreement.  As used in this
Agreement, the following terms shall have the following respective meanings:


 


“Business Day”  means any day except any Saturday, any Sunday, any day
which shall be a federal legal holiday in the United States or any day on which
banking institutions in the State of New York are authorized or required by law
or other governmental action to close.


 


“Commission” or “SEC” shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act (as
defined below).


 


“Common Stock”
means the common stock of the Company, $0.001 par value per share.


 


“Effectiveness
Date”  means, with respect to a
registration statement filed pursuant to Section 2 of this Agreement, the
earlier of (a) the sixtieth (60th) day following the Filing Date (as
defined below) (or, in the event that the registration statement receives a “full
review” by the 


 

















 


Commission,
the one hundred twentieth (120th) day following the Filing Date), and (b) the
date which is three (3) Business Days after the date on which the
Commission informs the Company (i) that the Commission will not review the
registration statement or (ii) that the Company may request the
acceleration of the effectiveness of the registration statement.


 


“Exchange  Act” means the Securities Exchange
Act of 1934, as amended.


 


“Holder”
and “Holders” shall mean the Buyer and any
permitted transferee or transferees of Registrable Securities (as defined
below), Series A Shares, Exchange Notes or Warrants that have not been
sold to the public and to whom the registration rights conferred by this
Agreement have been transferred in compliance with this Agreement and the
Purchase Agreement; provided that neither such person nor any affiliate of such
person is registered as a broker or dealer under Section 15(a) of the
Exchange Act or a member of the Financial Industry Regulatory Authority.


 


The terms “register,” “registered” and
“registration” shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and the applicable rules and
regulations thereunder, and the declaration or ordering of the effectiveness of
such registration statement.


 


“Registrable
Securities” shall mean (i) the Conversion Shares issuable upon
conversion of the Series A Shares and the Exchange Notes outstanding on
the date of the Demand (as defined below), (ii) any Warrant Shares
issuable upon exercise of the Warrants outstanding on the date of the Demand,
and (iii) any other securities into which the Warrant Shares and
the Conversion Shares may be reclassified after the date hereof; provided however, that all such securities
shall cease to be Registrable Securities at such time as they have been sold
under a registration statement or pursuant to Rule 144 under the
Securities Act or otherwise or at such time as they are eligible to be sold
without volume limitations pursuant to Rule 144.


 


“Registration
Expenses” shall mean all expenses to be incurred by the Company in
connection with each Holder’s registration rights under this Agreement,
including, without limitation, all registration and filing fees, printing
expenses, fees and disbursements of counsel for the Company, the reasonable
attorney’s fees of Special Counsel (as defined below) which shall in no event
exceed $20,000 per registration, blue sky fees and expenses, and the expense of
any special audits incident to or required by any such registration.


 


 “Regulation D”
shall mean Regulation D as promulgated pursuant to the Securities Act, and as
may be amended from time to time.


 


“Securities
Act” or “Act” shall mean
the Securities Act of 1933, as amended.


 


“Selling
Expenses” shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities, as well as all
fees and disbursements of counsel for Holders other than Special Counsel.


 


“Special Counsel” means the single attorney selected by a
majority in interest of the Holders (which attorney shall be reasonably
acceptable to the Company) to represent the Holders’ interests in connection
with the registrations contemplated by this Agreement.


 


2

















 


2.             Demand Registration Rights.


 


(a)   Subject to the conditions of
this Section 2, if at any time following the 180th day after the date of this Agreement, the
Company receives a written request from the Holders of more than fifty percent
(50%) of the total number of Registrable Securities (for purposes of this Section 2,
the “Initiating Holders,” and such request
the “Demand”) that the Company file a
registration statement under the Act
covering the registration for resale of the Registrable Securities, then the
Company shall, within twenty (20) days of the receipt thereof, give written
notice of such request to all Holders, and subject to the limitations of this Section 2,
use commercially reasonable efforts to effect, as soon as practicable, the
registration for resale under the Act of all the Registrable Securities that
the Holders request to be registered in a written request received by the
Company within twenty (20) days of the mailing of the Company’s notice pursuant
to this Section 2(a). 
Notwithstanding anything in this Agreement to the contrary and in
addition to any other limitation herein, no Demand may be made by the
Initiating Holders until (i) the Series A-1 Option described in Section 1(f) of
the Purchase Agreement has expired, or, where a purchase of Series A-1
Shares pursuant to the Series A-1 Option is being completed following the
expiration of the option period pursuant to Section 1(f)(v) of the
Purchase Agreement, the closing of such purchase, or (ii) the closing of
the purchase of all of the Series A-1 Shares available pursuant to the Series A-1
Option.


 


(b)   If the Initiating Holders intend
to distribute the Registrable Securities covered by their Demand by means of an
underwriting, they shall so advise the Company as a part of their Demand made
pursuant to Section 2(a), and the Company shall include such information
in its written notice to all
Holders given pursuant to Section 2(a). 
In such event, the right of any Holder to include its Registrable
Securities in such registration shall be conditioned upon such Holder’s
participation in such underwriting and the inclusion of such Holder’s
Registrable Securities in the underwriting (unless otherwise mutually agreed by
a majority in interest of the Initiating Holders and such Holder) to the extent
provided herein.  All Holders proposing
to distribute their securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by a majority in interest of the Initiating
Holders (which underwriter or underwriters shall be reasonably acceptable to the
Company).  Notwithstanding any other
provision of this Section 2, if the underwriter advises the Company that
marketing factors require a limitation on the number of securities underwritten
(including Registrable Securities), then the Company shall so advise all
Holders of Registrable Securities that would otherwise be underwritten pursuant
hereto, and the number of shares that may be included in the underwriting shall
be allocated to the Holders of such Registrable Securities pro rata based on
the number of Registrable Securities held by all such Holders (including the
Initiating Holders).  In no event shall
any Registrable Securities be excluded from such underwriting unless all other
securities are first excluded.  Any
Registrable Securities excluded or withdrawn from such underwriting shall be
withdrawn from the registration.


 


(c)   Notwithstanding the foregoing,
the Company shall not be required to effect a registration pursuant to this Section 2:


 


(A)          in
any particular jurisdiction in which the Company would be required to execute a
general consent to service of process in effecting 


 


3

















 


such registration, unless the Company is already
subject to service in such jurisdiction and except as may be required under the
Act; or


 


(B)           after
the Company has effected two (2) registrations pursuant to this Section 2,
and such registrations have been declared or ordered effective; or


 


(C)           if
the Company shall furnish to the Holders requesting a registration statement pursuant
to this Section 2 a certificate signed by the Company’s Chief Executive
Officer or Chairman of the Board stating that, in the good faith judgment of
the Board of Directors of the Company, it would be seriously detrimental to the
Company and its stockholders for such registration statement to be effected at
such time, the Company shall have the right to defer such filing for a period
of not more than one hundred twenty (120) days after receipt of the Demand of
the Initiating Holders, provided that such right shall be exercised by the
Company not more than once in any twelve (12) month period and provided
further that the Company shall  not register
any securities for the account of itself or any other stockholder during such
one hundred twenty (120) day period (other than a registration relating to a
corporate reorganization or transaction under Rule 145 of the Act, a
registration on any form that does not include substantially the same
information as would be required to be included in a registration statement
covering the resale of the Registrable Securities, or a registration in which
the only Common Stock being registered is Common Stock issuable upon conversion
of debt securities that are also being registered).


 


(d)  If: (i) the registration statement required by Section 2 is
not filed on or prior to its Filing Date (as defined below), or (ii) the
Company fails to file with the Commission a request for acceleration of a
registration statement in accordance with Rule 461 promulgated by the
Commission pursuant to the Securities Act within five (5) Business Days of
the date that the Company is notified (orally or in writing, whichever is
earlier) by the Commission that such registration statement will not be “reviewed”
or will not be subject to further review, or (iii) all of the Registrable
Securities required by this Agreement to be included in such registration
statement are not registered for resale on or before the Effectiveness Date and
Rule 144 is not available to the Holders with respect thereto, or (iv) after
the Effectiveness Date of a registration statement, such registration statement
ceases for any reason to remain continuously effective as to all Registrable
Securities required to be included in such registration statement, or the
Holders are otherwise not permitted to utilize the prospectus therein to resell
such Registrable Securities, for more than ten (10) consecutive calendar
days or more than an aggregate of twenty (20) calendar days (which need not be
consecutive calendar days) during any 12-month period, except to the extent
that a suspension of the Registration Statement is otherwise permitted by this
Agreement (any such failure or breach being referred to as an “Event,” and for purposes of clauses (i) and (iv), the
date on which such Event occurs, and for purpose of clause (ii) the date
on which such five (5) Business Day period is exceeded, and for purpose of
clause (iv) the date on which such ten (10) or twenty (20) calendar
day period, as applicable, is exceeded being referred to as “Event Date”), then, in addition to any other rights the
Holders may have


 


4

















 


hereunder or under applicable law, on each
monthly anniversary of each such Event Date (if the applicable Event shall not
have been cured by such date) until the applicable Event is cured, from the
date of the Event until the twelve-month anniversary of the Event, the Company
shall pay to each Holder an amount in cash, as partial liquidated damages and
not as a penalty, equal to two percent (2%) of the aggregate purchase price
paid by such Holder pursuant to the Purchase Agreement for any unregistered
Registrable Securities underlying Exchange Notes or Series A Shares then
held by such Holder (so long as such Holder has requested that such Registrable
Securities be included in the registration statement and they are required by
this Agreement to be included in the registration statement); provided,
however, such partial liquidated damages shall not be paid with respect to any
Registrable Securities which the Holder thereof may sell at such time under Rule 144
and which have been held by such Holder for a period of more than one (1) year
for purposes of Rule 144(d).  If the
Company fails to pay any partial liquidated damages pursuant to this Section in
full within seven (7) days after the date payable, the Company will pay
interest thereon at a rate of eighteen percent (18%) per annum (or such lesser
maximum amount that is permitted to be paid by applicable law) to the Holder,
accruing daily from the date such partial liquidated damages are due until such
amounts, plus all such interest thereon, are paid in full.  The partial liquidated damages pursuant to
the terms hereof shall apply on a daily pro rata basis for any portion of a
month prior to the cure of an Event.


 


(e)  If at any time the Commission takes the
position that the offering of some or all of the Registrable Securities in a
registration statement is not eligible to be made on a delayed or continuous
basis under the provisions of Rule 415 under the Securities Act or
requires any Holder to be named as an “underwriter,” the Company shall use its
best efforts to persuade the Commission that the offering contemplated by the
registration statement is a valid secondary offering and not an offering “by or
on behalf of the issuer” as defined in Rule 415 and that none of the
Holders is an “underwriter.”  The Holders
shall have the right to participate or have their Special Counsel participate
in any meetings or discussions with the Commission regarding the Commission’s
position and to comment or have their Special Counsel comment on any written
submission made to the Commission with respect thereto.  No such written submission shall be made to
the Commission to which the Holders’ Special Counsel reasonably objects.  In the event that, despite the Company’s best
efforts and compliance with the terms of this Section 2(e), the Commission
refuses to alter its position, the Company shall (i) remove from the
registration statement such portion of the Registrable Securities (the “Cut Back Shares”) and/or (ii) agree to such
restrictions and limitations on the registration and resale of the Registrable
Securities as the Commission may require to assure the Company’s compliance
with the requirements of Rule 415 (collectively, the “Commission
Restrictions”); provided, however, that the Company shall not agree
to name any Holder as an “underwriter” in such registration statement without
the prior written consent of such Holder. 
Any cut-back imposed on the Holders pursuant to this Section 2(e) shall
be allocated among the Holders on a pro rata basis and shall be applied first
to any Warrant Shares, unless the Commission Restrictions otherwise require or
provide or the Holders otherwise agree. 
No liquidated damages shall accrue as to any Cut Back Shares except for
any liquidated damages that would accrue, if at all, in accordance with Section 4(d)(iv) hereof
after the date on which the Company is able to effect the registration of such
Cut Back Shares in accordance with any Commission Restrictions.


 


5

















 


3.             Obligations of the
Company.  Whenever required under Section 2 of this
Agreement to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:


 


(a)   prepare and file with the SEC a
registration statement with respect to such Registrable Securities within
ninety (90) days of the Company’s receipt of the Demand (the “Filing Date”), which shall contain a “Plan of Distribution”
in substantially the form attached hereto as Annex A, and use reasonable
commercial  efforts to cause such registration
statement to become effective not later than the applicable Effectiveness Date,
and, upon the request of the Holders of a majority of the Registrable
Securities registered thereunder, keep such registration statement effective
until the distribution contemplated in the registration statement has been
completed or the Registrable Securities can be sold without volume limitations
pursuant to Rule 144 under the Act;


 


(b)   not less than three (3) Business
Days prior to the filing of a Registration Statement or any pre-effective or
post-effective amendment thereto, furnish to the Holders’ Special Counsel by
e-mail copies of all such documents proposed to be filed, which documents
(other than those incorporated or deemed to be incorporated by reference) will
be subject to the review of such Holders’ Special Counsel (and changes (if any)
to correct appropriate information about the Holders).  The Company shall not be required to file a
Registration Statement or any pre-effective amendments thereto to which the
Holders of a majority of the Registrable Securities shall reasonably object in
good faith in writing.


 


(c)   prepare and file with the SEC
such amendments and supplements to such registration statement and the
prospectus used in connection with such registration statement as may be
necessary to comply with the provisions of the Act with respect to the
disposition of all securities covered by such registration statement;


 


(d)   furnish to the Holders such
number of copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Act, and such other documents as they
may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by them;


 


(e)   notify the Holders promptly
(and, if requested, confirm such advice in writing) (i) when a
registration statement has become effective and when any post-effective
amendments and supplements thereto become effective, and (ii) of the
issuance by the SEC or any state securities commission of any stop order
suspending the effectiveness of a registration statement;


 


(f)    use commercially reasonable
efforts to register and qualify the securities covered by such registration
statement under such other securities or Blue Sky laws of such jurisdictions as
shall be reasonably requested by the Holders;


 


(g)   in the event of any
underwritten public offering, enter into and perform its obligations under an
underwriting agreement, in usual and customary form, with the managing
underwriter of such offering;


 


(h)   notify each Holder of
Registrable Securities covered by such 


 


6

















 


registration statement at any time when a prospectus
relating thereto is required to be delivered under the Act of the happening of
any event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing;


 


(i)    provide a transfer agent and
registrar for all Registrable Securities registered pursuant to this Agreement
and a CUSIP number for all such Registrable Securities, in each case not later
than the effective date of such registration;


 


(j)    cooperate with the Holders and
the managing underwriter, if any, to facilitate the timely preparation and
delivery of certificates not bearing any restrictive legends representing the
Registrable Securities to be sold, and cause such Registrable Securities to be
issued in such denominations and registered in such names in accordance with the
underwriting agreement prior to any sale of Registrable Securities to the
underwriters or, if not an underwritten offering, in accordance with the
instructions of the Holders, and instruct any transfer agent and registrar of
Registrable Securities to release any stop transfer orders in respect thereto;


 


(k)   deliver promptly to the Holders’
Special Counsel and each underwriter, if any, copies of all correspondence
between the SEC and the Company, its counsel or auditors and all memoranda
relating to discussions with the SEC or its staff with respect to the
registration statement, other than those portions of any such memoranda which
contain information subject to attorney-client privilege with respect to the
Company, and, upon receipt of such confidentiality agreements as the Company
may reasonably request, make reasonably available for inspection by the Holders
or their Special Counsel, by any underwriter, if any, participating in any
disposition to be effected pursuant to such registration statement and any
attorney, accountant or other agent retained by any such underwriter, all
pertinent financial and other records, pertinent corporate documents and
properties of the Company, and cause all of the Company’s officers, directors
and employees to supply all information reasonably requested by the Holders or
their Special Counsel or such underwriter, attorney, accountant or agent in
connection with such registration statement;


 


(l)    use commercially reasonable
efforts to obtain the withdrawal of any order suspending the effectiveness of
the registration statement; and


 


(m)  upon written request, furnish to
the Holders without charge at least one conformed copy of the registration
statement and any post-effective amendments thereto, including financial
statements and schedules, all documents incorporated therein by reference and
all exhibits (including those incorporated by reference).


 


Notwithstanding the provisions of this Section 3, the
Company shall be entitled to postpone or suspend, for a reasonable period of time
and upon written notice to the Holders (a “Suspension Notice”),
the filing, effectiveness or use of, or trading under, any registration
statement if the Company shall determine that any such filing or the sale of
any securities pursuant to such registration statement would in the good faith
judgment of the Board of Directors of the Company:


 


7

















 


(A)          materially
impede, delay or interfere with any material pending or proposed financing,
acquisition, corporate reorganization or other similar transaction involving
the Company for which the Board of Directors of the Company has authorized
negotiations;


 


(B)           materially
adversely impair the consummation of any pending or proposed material offering
or sale of any class of securities by the Company; or


 


(C)           require
disclosure of material nonpublic information that, if disclosed at such time,
would be materially harmful to the interests of the Company and its
stockholders; provided, however, that during any such period all
executive officers and directors of the Company are also prohibited from
selling securities of the Company (or any security of any of the Company’s
subsidiaries or affiliates).


 


In the event of the suspension of effectiveness of any
registration statement pursuant to this Section 3, the applicable time period
during which such registration statement is to remain effective shall be
extended by that number of days equal to the number of days the effectiveness
of such registration statement was suspended.


 


4.             Expenses of
Registration.  All Registration
Expenses in connection with any registration, qualification or compliance with
registration pursuant to this Agreement shall be borne by the Company, and all
Selling Expenses of a Holder shall be borne by such Holder.


 


5.             Indemnification.


 


(a)   Company Indemnity.  The Company will indemnify each Holder, each
of its officers, directors, agents and partners, and each person controlling
each of the foregoing, within the meaning of Section 15 of the Securities
Act and the rules and regulations thereunder with respect to which
registration, qualification or compliance has been effected pursuant to this
Agreement, and each underwriter, if any, and each person who controls, within
the meaning of Section 15 of the Securities Act and the rules and
regulations thereunder, any underwriter, against all claims, losses, damages
and liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any final prospectus (as amended or supplemented if the Company files any
amendment or supplement thereto with the SEC), registration statement filed
pursuant to this Agreement or any post-effective amendment thereof or based on
any omission (or alleged omission) to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading in
light of the circumstances under which they were made, or any violation by the
Company of the Securities Act or any state securities law or in either case,
any rule or regulation thereunder applicable to the Company and relating
to action or inaction required of the Company in connection with any such
registration, qualification or compliance, and will reimburse each Holder, each
of its officers, directors, agents and partners, and each person controlling
each of the foregoing, for any reasonable legal fees of a single counsel and
any other expenses reasonably incurred in connection with investigating and
defending any such claim, loss, damage, liability or action, provided that the
Company will not be liable in any such case to a 


 


8

















 


Holder to the extent that
any such claim, loss, damage, liability or expense arises out of or is based on
(i) any untrue statement or omission based upon written information
furnished to the Company by such Holder or underwriter (if any) therefor and
stated to be specifically for use therein, (ii) any failure by any Holder
to comply with prospectus delivery requirements or the Securities Act or the
Exchange Act or any other law or legal requirement applicable to such Holder or
any covenant or agreement contained in the Purchase Agreement or this Agreement
applicable to such Holder, or (iii) an offer of sale of Conversion Shares
or Warrant Shares occurring during a period in which sales under the
registration statement are suspended as permitted by this Agreement.  The indemnity agreement contained in this Section 5(a) shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Company (which consent will not be unreasonably withheld).


 


(b)   Holder Indemnity.  Each Holder will, severally but not jointly,
if Registrable Securities held by it are included in the securities as to which
such registration, qualification or compliance is being effected, indemnify the
Company, each of its directors, officers, agents and partners, and any other
stockholder selling securities pursuant to the registration statement and any
of its directors, officers, agents, partners, and any person who controls such
stockholder within the meaning of the Securities Act or Exchange Act and each
underwriter, if any, of the Company’s securities covered by such a registration
statement, each person who controls the Company or such underwriter within the
meaning of Section 15 of the Securities Act and the rules and
regulations thereunder, each other Holder (if any), and each of their officers,
directors and partners, and each person controlling such other Holder(s) against
all claims, losses, damages and liabilities (or actions in respect thereof)
arising out of or based on (i) any untrue statement (or alleged untrue
statement) of a material fact contained in any such final prospectus (as
amended or supplemented if the Company files any amendment or supplement
thereto with the SEC), registration statement filed pursuant to this Agreement
or any post-effective amendment thereof or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances under which they were made, but only to the extent such statement
or omission was furnished by the Holder to the Company in writing for the
specific purpose of including the same in such registration statement,
prospectus, or amendment or supplement thereto or (ii) failure by any
Holder to comply with (A) the prospectus delivery requirements of the
Securities Act after being advised by the Company that it has not satisfied the
conditions of Rule 172 and that such Holder is, as a consequence, required
to deliver a prospectus in connection with any disposition of Registrable Securities
and after the Company has provided such Holder with a current prospectus to be
used in connection with any such dispositions, (B) the Securities Act, (C) the
Exchange Act, (D) any other law or legal requirement applicable to such
Holder, or (E) any covenant or agreement contained in the Purchase
Agreement or this Agreement applicable to such Holder, and will reimburse the Company, such stockholders, and such other
Holder(s) and their directors, officers, agents and partners, underwriters
or control persons for any reasonable legal fees or any other expenses
reasonably incurred in connection with investigating and defending any such
claim, loss, damage, liability or action, in each case to the extent, but only
to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such final prospectus (as amended or
supplemented if the Company files any amendment or supplement thereto with the
SEC), registration statement filed pursuant to this Agreement or any post-


 


9

















 


effective amendment thereof
in reliance upon and in conformity with written information furnished to the
Company by such Holder and stated to be specifically for use therein, and
provided that the maximum amount for which such Holder shall be liable under
this indemnity shall not exceed the net proceeds received by such Holder from
the sale of the Registrable Securities pursuant to the registration statement
in question.  The indemnity agreement
contained in this Section 5(b) shall not apply to amounts paid in
settlement of any such claims, losses, damages or liabilities if such
settlement is effected without the consent of such Holder (which consent shall
not be unreasonably withheld).


 


(c)   Procedure.  Each party entitled to indemnification under
this Section 5 (the “Indemnified Party”)
shall give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and
shall permit the Indemnifying Party to assume the defense of any such claim in
any litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
be unreasonably withheld), and the Indemnified Party may participate in such
defense at its own expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 5 except to the
extent that the Indemnifying Party is materially and adversely affected by such
failure to provide notice.  No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.  Each Indemnified Party shall
furnish such non-privileged information regarding itself or the claim in
question as an Indemnifying Party may reasonably request in writing and as
shall be reasonably required in connection with the defense of such claim and
litigation resulting therefrom.


 


6.             Contribution.  If the indemnification provided for in Section 5
herein is unavailable to the Indemnified Parties in respect of any losses,
claims, damages or liabilities referred to herein (other than by reason of the
exceptions provided therein), then each such Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such losses, claims, damages
or liabilities as between the Company on the one hand and any Holder(s) on
the other, in such proportion as is appropriate to reflect the relative fault of
the Company and of such Holder(s) in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations.  The relative fault of the Company on the one
hand and of any Holder(s) on the other shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company or by such Holder(s).


 


In no event shall the
obligation of any Indemnifying Party to contribute under this Section 6
exceed the amount that such Indemnifying Party would have been obligated to pay
by way of indemnification if the indemnification provided for under Section 5(a) or
5(b) hereof had been available under the circumstances.


 


10

















 


The Company and the Holders
agree that it would not be just and equitable if contribution pursuant to this Section 6
were determined by pro rata allocation (even if the Holders were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in the immediately
preceding paragraphs.  The amount paid or
payable by an Indemnified Party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraphs shall be deemed
to include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any such action or claim. 
Notwithstanding the provisions of this Section, no Holder shall be
required to contribute any amount in excess of the amount equal to the net
proceeds received by such Holder from the sale of Registrable Securities
pursuant to the registration statement in question.  No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.


 


7.             Survival.  The indemnity and contribution agreements
contained in Sections 5 and 6 shall remain operative and in full force and
effect regardless of (i) any termination of this Agreement or the Purchase
Agreement, and (ii) the consummation of the sale or successive resales of
the Registrable Securities.


 


8.             Information
by Holders.  As a condition to the obligations of the Company to complete any
registration pursuant to this Agreement with respect to the Registrable
Securities of each Holder, such Holder will furnish to the Company such
information regarding itself, the Registrable Securities held by it and the
intended methods of disposition of the Registrable Securities held by it as is
reasonably required by the Company to effect the registration of the
Registrable Securities.  At least ten
Business Days prior to the first anticipated filing date of a registration
statement for any registration under this Agreement, the Company will notify
each Holder of the information the Company requires from that Holder whether or
not such Holder has elected to have any of its Registrable Securities included
in the registration statement. If the Company has not received the requested
information from a Holder by the Business Day prior to the anticipated filing
date, then the Company may file the registration statement without including
Registrable Securities of that Holder.


 


9.             Further Assurances. Each Holder will cooperate with the Company, as
reasonably requested by the Company, in connection with the preparation and
filing of any registration statement hereunder, unless such Holder has notified
the Company in writing of such Holder’s irrevocable election to exclude all of
such Holder’s Registrable Securities from such registration statement.


 


10.           Suspension of Sales. Upon receipt of any Suspension Notice from the
Company, each Holder will immediately discontinue disposition of Registrable
Securities pursuant to the registration statement covering such Registrable
Securities until (i) it receives copies of a supplemented or amended
prospectus or (ii) the Company advises the Holder that a suspension of
sales under Section 3 has terminated. If so directed by the Company, each Holder
will deliver to the Company (at the expense of the Company) or destroy all
copies in the Holder’ s possession (other than a limited number of file copies)
of the prospectus covering such Registrable Securities that is current at the
time of receipt of such notice.


 


11
















 


11.           Replacement Certificates.  The certificate(s) representing the
Conversion Shares and the Warrant Shares held by the Buyer (or then Holder) may
be exchanged by the Buyer (or such Holder) at any time and from time to time
for certificates with different denominations representing an equal aggregate
number of shares of Common Stock, as reasonably requested by such Buyer (or
such Holder) upon surrendering the same. 
No service charge will be made for such registration or transfer or
exchange.


 


12.           Transfer or Assignment.  Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns. 
The rights granted to the Buyer by the Company under this Agreement to
cause the Company to register the Registrable Securities may be transferred or
assigned (in whole or in part) to a transferee or assignee of the Series A
Shares, the Exchange Notes, or the Warrants, and all other rights granted to
the Buyer by the Company hereunder may be transferred or assigned to any
transferee or assignee of the Series A Shares, the Exchange Notes, the
Warrants or the Registrable Securities; provided in each case that (i) the
Company is given written notice by the Buyer at the time of or within a
reasonable time after such transfer or assignment, stating the name and address
of said transferee or assignee and identifying the securities with respect to
which such registration rights are being transferred or assigned; and provided
further that the transferee or assignee of such rights agrees in writing to be
bound by the registration provisions of this Agreement, (ii) such transfer
or assignment is not made under the registration statement or Rule 144, (iii) such
transfer is made according to the applicable requirements of the Purchase
Agreement, and (iv) the transferee has provided to the Company an investor
questionnaire (or equivalent document) evidencing that the transferee is a “qualified
institutional buyer” or an “accredited investor” defined in Rule 501(a)(1),(2),(3),
or (7) of Regulation D.


 


13.           No Piggyback on Registrations.  Neither the
Company nor any of its security holders (other than the Holders in such
capacity pursuant hereto) may include securities of the Company in a
registration statement filed pursuant to this Agreement other than the
Registrable Securities, and the Company shall not after the date hereof enter
into any agreement providing any such right to any of its security holders.


 


14.           Piggyback Registration
Rights.


 


(a)   If (but without any obligation to do so) the Company shall
determine to prepare and file with the Commission a registration statement
relating to an offering for its own account or the account of others under the
Securities Act of any of its equity securities, other than on Form S-4 or Form S-8
(each as promulgated under the Securities Act) or their then equivalents
relating to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in connection
with stock option or other employee benefit plans, then the Company shall send
to each Holder written notice of such determination and, if within fifteen (15)
days after receipt of such notice, any such Holder shall so request in writing,
the Company shall include in such registration statement all or any part of
such Registrable Securities (not already covered by an effective registration
statement) such Holder requests to be registered, subject to customary
underwriter cutbacks applicable to holders of registration rights (as described
in Section 14(b) below) and subject to restrictions in applicable
registration rights agreements.  The Company shall have the right to terminate
or withdraw any registration initiated by it under this Section 14 prior to
the effectiveness of such 


 


12

















 


registration whether or not
any Holder has elected to include securities in such registration.


 


(b)   In connection with any offering involving an underwriting of equity securities
being issued by the Company for its own account or for the account of others
pursuant to a registration statement, the Company shall not be required
under this Section 14 to include in such registration statement the
Registrable Securities held by any Holder unless such Holder accepts and agrees
to the terms of the underwriting as agreed upon between the Company and the
underwriters selected by the Company (or by other persons entitled to select
the underwriters) and enters into an underwriting agreement in customary form
with such underwriters, and then only in such quantity as the underwriters
determine in their sole discretion will not jeopardize the success of the
offering by the Company.  If the total amount
of Registrable Securities requested to be included in such offering exceeds the
amount of Registrable Securities that the underwriters determine in their sole
discretion is compatible with the success of the offering (after taking into
account the maximum number of shares to be sold by the Company and the other
selling stockholders, if any, in the offering), then the Company shall be
required to include in the offering only that number of Registrable Securities
that the underwriters determine in their sole discretion will not jeopardize the
success of the offering.  In the event
that the underwriters determine that less than all of the Registrable
Securities requested to be registered can be included in such offering, then
the Registrable Securities that are included in such offering shall be
apportioned pro rata among the selling Holders based on the number of
Registrable Securities held by all selling Holders or in such other proportions
as shall mutually be agreed to by all such selling Holders.


 


15.           Miscellaneous.


 


(a)           Remedies.  The Company and the Buyer
acknowledge and agree that irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. 
It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent or cure breaches of the provisions of this
Agreement and to enforce specifically the terms and provisions hereof, this
being in addition to any other remedy to which any of them may be entitled by
law or equity.


 


(b)           Governing
Law; Jurisdiction.  All questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule (whether
of the State of New York or any other jurisdictions) that would cause the
application of the laws of any jurisdictions other than the State of New
York.  Each party hereby irrevocably
submits to the non-exclusive jurisdiction of the state and federal courts
sitting in the City of New York, Borough of Manhattan, 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 and agrees that such 


 


13

















 


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.


 


(c)           Notices.  Any notices or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered:  (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by electronic mail or facsimile
(provided confirmation of transmission is mechanically or electronically
generated and kept on file by the sending party); or (iii) one Business
Day after deposit with an overnight courier service, in each case properly
addressed to the party to receive the same. 
The addresses and facsimile numbers for such communications shall be:


 


If
to the Company:


 


Liquidmetal Technologies, Inc.

30452 Esperanza

Rancho Santa Margarita, California  92688

Facsimile: 949-635-2188

Attention:  Tony Chung, CFO

Email:  Tony.Chung@Liquidmetal.com


 


with a copy to:


 


Foley &
Lardner LLP


100
North Tampa Street, Suite 2700


Tampa,
Florida 33602


Facsimile:  813-221-4210


Attention:
Curt P. Creely


 


If to a Buyer, to its address, electronic mail address, or facsimile
number set forth on the Schedule of Buyers attached to the Purchase Agreement,
with copies to such Buyer’s representatives as set forth on such Schedule of
Buyers, or to such other address and/or facsimile number and/or to the
attention of such other person as the recipient party has specified by written
notice given to each other party five (5) days prior to the effectiveness
of such change.  Written confirmation of
receipt (A) given by the recipient of such notice 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 an overnight courier service shall be
rebuttable evidence of personal service, receipt by facsimile or receipt from
an overnight courier service in accordance with clause (i), (ii) or (iii) above,
respectively.


 


(d)           Waivers.  No waiver by any party of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver
of any other provision, condition or requirement hereof, nor shall any delay or
omission of any party to exercise any right hereunder in any manner impair the
exercise of any such right accruing to it thereafter.  The representations and warranties and the
agreements and covenants of the Company and each Buyer contained herein shall
survive the Closing.


 


14

















 


(e)           Execution in Counterpart.  This
Agreement may be executed in two or more counterparts, all of which shall be
considered one and the same agreement, it being understood that all parties
need not sign the same counterpart.


 


(f)            Signatures.  Facsimile signatures and signatures delivered
in portable document format (PDF) shall be valid and binding on each party
submitting the same.


 


(g)           Entire Agreement; Amendment.  This
Agreement, together with the Purchase Agreement, the Warrants, and the
agreements and documents contemplated hereby and thereby, contains the entire
understanding and agreement of the parties, and may not be amended, modified or
terminated except by a written agreement signed by the Company and the Holder
of the Registrable Securities seeking registration of such securities.


 


(h)           Jury
Trial.  EACH PARTY HERETO WAIVES THE
RIGHT TO A TRIAL BY JURY.


 


(i)            Force Majeure.  The
Company shall not be deemed in breach of its commitments under this Agreement
if the Company is unable to fulfill its obligations hereunder in a timely
fashion if the SEC is closed or operating on a limited basis as a result of the
occurrence of a Force Majeure.  As used
herein, “Force Majeure” means war or armed
hostilities or other national or international calamity, or one or more acts of
terrorism, which are having a material adverse effect on the financial markets
in the United States.


 


(j)            Titles.  The titles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.


 


(k)           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 rule of strict construction
will be applied against any party.


 


[Signatures follow]


 


15

















 


IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.


 


 


	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  LIQUIDMETAL TECHNOLOGIES,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Tony Chung

  
	
   

  	
  Name: Tony Chung

  
	
   

  	
  Title: Chief Financial Officer

  



 

















 


COUNTERPART SIGNATURE PAGE


TO REGISTRATION RIGHTS AGREEMENT,


 


DATED MAY 1 2009,


AMONG LIQUIDMETAL TECHNOLOGIES, INC. AND


THE “BUYERS” IDENTIFIED THEREIN


 


The undersigned hereby executes and delivers the Registration Rights
Agreement to which this signature page is attached, which, together with
all counterparts of the Registration Rights Agreement and the signature pages of
the Company and the other Buyers under the Registration Rights Agreement, shall
constitute one and the same document in accordance with the terms of the
Registration Rights Agreement.


 


	
   

  	
  BUYERS

  
	
   

  	
   

  
	
   

  	
  /s/ Carlyle Liquid
  Holdings, LLC

  
	
   

  	
   

  
	
   

  	
  /s/ Fort Mason
  Master, LP

  
	
   

  	
   

  
	
   

  	
  /s/ Fort Mason Partners,
  LP

  
	
   

  	
   

  
	
   

  	
  /s/ The Tail Wind
  Fund Ltd.

  
	
   

  	
   

  
	
   

  	
  /s/ Solomon
  Strategic Holdings, Inc.

  
	
   

  	
   

  
	
   

  	
  /s/ Carlyle Liquid,
  LLC

  
	
   

  	
   

  
	
   

  	
  /s/ Carlyle
  Holdings, LLC

  
	
   

  	
   

  
	
   

  	
  /s/ Castlerigg
  Master Investments Ltd.

  
	
   

  	
   

  
	
   

  	
  /s/ Diamond
  Opportunity Fund, LLC

  
	
   

  	
   

  
	
   

  	
  /s/ Rockmore
  Investment Master Fund Ltd.

  
	
   

  	
   

  
	
   

  	
  /s/ Abdi Mahamedi

  
	
   

  	
   

  
	
   

  	
  /s/ BridgePointe
  Master Fund Ltd.

  
	
   

  	
   

  
	
   

  	
  /s/ Iroquois Master
  Fund

  
	
   

  	
   

  
	
   

  	
  /s/ Rodd Friedman

  
	
   

  	
   

  
	
   

  	
  /s/ Myron Neugeboren

  
	
   

  	
   

  
	
   

  	
  /s/ Ricardo Salas

  
	
   

  	
   

  
	
   

  	
  /s/ Chang Ki Cho

  



 

















 


	
   

  	
  /s/ Eric Brachfeld

  
	
   

  	
   

  
	
   

  	
  /s/ Ed Neugeboren

  
	
   

  	
   

  
	
   

  	
  /s/ Wynnefield
  Partners Small Cap Value LP

  
	
   

  	
   

  
	
   

  	
  /s/ Wynnefield
  Partners Small Cap Value LP I

  
	
   

  	
   

  
	
   

  	
  /s/ Wynnefield Small
  Cap Value Offshore Fund, Ltd.

  
	
   

  	
   

  
	
   

  	
  /s/ Kenneth Lisiak

  
	
   

  	
   

  
	
   

  	
  /s/ Vestal Venture
  Capital

  
	
   

  	
   

  
	
   

  	
  /s/ Mermelstein
  Development

  
	
   

  	
   

  
	
   

  	
  /s/ Atlantic Realty

  



 

















 


Annex A


 


Plan of Distribution


 


Each Selling Securityholder (the “Selling
Securityholders”) of the common stock and any of their pledgees, assignees
and successors-in-interest may, from time to time, sell any or all of their
shares of common stock on the Over-the-Counter Bulletin Board or any stock
exchange, or other market or trading facility on which the shares are traded or
in private transactions.  These sales may
be at fixed or negotiated prices.  A
Selling Securityholder may use any one or more of the following methods when
selling shares:


 


·      ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;


·      block trades in which the broker-dealer will attempt to sell the shares
as agent but may position and resell a portion of the block as principal to
facilitate the transaction;


·      purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;


·      an exchange distribution in accordance with the rules of the
applicable exchange;


·      privately negotiated transactions;


·      settlement of short sales entered into after the effective date of the
registration statement of which this prospectus is a part;


·      broker-dealers may agree with the Selling Securityholders to sell a
specified number of such shares at a stipulated price per share;


·      through the writing or settlement of options or other hedging
transactions, whether through an options exchange or otherwise;


·      a combination of any such methods of sale; or


·      any other method permitted pursuant to applicable law.


 


The Selling Securityholders may also sell
shares under Rule 144 under the Securities Act of 1933, as amended (the “Securities
Act”), if available, rather than under this prospectus.


 


Broker-dealers engaged by the Selling
Securityholders may arrange for other brokers-dealers to participate in
sales.  Broker-dealers may receive
commissions or discounts from the Selling Securityholders (or, if any
broker-dealer acts as agent for the purchaser of shares, from the purchaser) in
amounts to be negotiated, but, except as set forth in a supplement to this
Prospectus, in the case of an agency transaction not in excess of a customary
brokerage commission in compliance with FINRA NASD Rule 2440; and in the
case of a principal transaction a markup or markdown in compliance with NASD
IM-2440.


 


In connection with the sale of the common
stock or interests therein, the Selling Securityholders may enter into hedging
transactions with broker-dealers or other financial institutions, which may in
turn engage in short sales of the common stock in the course of hedging the
positions they assume.  The Selling
Securityholders may also sell shares of the common stock short and deliver
these securities to close out their short positions, or loan or pledge the
common stock to broker-dealers that in turn may sell these securities.  The Selling Securityholders may also enter
into option or other transactions with broker-dealers or other financial
institutions or the creation of one or more derivative securities which require
the 


 

















 


delivery to such broker-dealer or other financial institution of shares
offered by this prospectus, which shares such broker-dealer or other financial
institution may resell pursuant to this prospectus (as supplemented or amended
to reflect such transaction).


 


The Selling Securityholders and any
broker-dealers or agents that are involved in selling the shares may be deemed
to be “underwriters” within the meaning of the Securities Act in connection
with such sales.  In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.  Each Selling Securityholder has informed the
Company that it does not have any written or oral agreement or understanding,
directly or indirectly, with any person to distribute the common stock.


 


Because Selling Securityholders may be deemed
to be “underwriters” within the meaning of the Securities Act, they will be
subject to the prospectus delivery requirements of the Securities Act including
Rule 172 thereunder.  In addition,
any securities covered by this prospectus which qualify for sale pursuant to Rule 144
under the Securities Act may be sold under Rule 144 rather than under this
prospectus.  There is no underwriter or
coordinating broker acting in connection with the proposed sale of the resale
shares by the Selling Securityholders.


 


The resale shares will be sold only through
registered or licensed brokers or dealers if required under applicable state
securities laws.  In addition, in certain
states, the resale shares may not be sold unless they have been registered or
qualified for sale in the applicable state or an exemption from the
registration or qualification requirement is available and is complied with.


 


Under applicable rules and regulations
under the Exchange Act, any person engaged in the distribution of the resale
shares may not simultaneously engage in market making activities with respect
to the common stock for the applicable restricted period, as defined in
Regulation M, prior to the commencement of the distribution.  In addition, the Selling Securityholders will
be subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, including Regulation M, which may limit the timing
of purchases and sales of shares of the common stock by the Selling
Securityholders or any other person.  We
will make copies of this prospectus available to the Selling Securityholders
and have informed them of the need to deliver a copy of this prospectus to each
purchaser at or prior to the time of the sale (including by compliance with Rule 172
under the Securities Act).