Exhibit 10.67


 


THESE SECURITIES
HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.


 


8%
UNSECURED SUBORDINATED NOTE


OF


LIQUIDMETAL
TECHNOLOGIES, INC.


 


 


	
  Note
  No.:    

  	
   

  	
  Original
  Principal Amount: $              

  
	
  Issuance
  Date: May 17, 2006

  	
   

  	
   

  	
  Lake
  Forest, California

  



 


THIS NOTE (this “Note”) is one of a duly authorized issue of Notes issued by LIQUIDMETAL TECHNOLOGIES, INC., a
corporation duly organized and existing under the laws of the State of Delaware
(the “Company”), designated as the
Company’s 8% Unsecured Subordinated Note in an aggregate principal amount equal
to approximately Four Million U.S. Dollars (U.S. $4,000,000) (the “Notes”). All principal and
interest under this Note shall become due and payable on the first to occur of
(i) August 17, 2007 or (ii) the closing after the date hereof of a public or
private equity or debt offering pursuant to which the Company receives gross
proceeds of at least $6,000,000 to be used for working capital purposes and
repayment of debt, but excluding financings for the purpose of purchasing
capital assets (a “Follow-On Financing”),
subject to Section 2 and the last sentence of Section 4(b) below (the “Maturity Date”). In calculating the gross
proceeds of an offering to determine whether it constitutes a Follow-On
Financing for purposes of this Note, any proceeds used to satisfy Senior Notes
will be excluded.


 


FOR VALUE RECEIVED, the Company hereby
promises to pay to the order of                        , or its registered assigns or
successors-in-interest (“Holder”),
the principal sum of                                                                                   
(U.S. $                      )
together with all accrued but unpaid interest thereon, if any, on the Maturity
Date, in accordance with the terms hereof. Interest on the unpaid principal
balance hereof shall accrue at the rate of 8% per annum from the Issuance Date
stated above, until the same becomes due and payable on the Maturity Date. Interest
on this Note shall accrue daily commencing on the Issuance Date and shall be
computed on the basis of a 360-day year, 30-day months and actual days elapsed
and shall be payable in accordance with Section 1 hereof. Unless otherwise
agreed or required by applicable law, payments will be applied first to any
unpaid collection costs, then to unpaid interest and fees and any remaining
amount to principal. Notwithstanding anything contained herein, this Note shall
bear interest on the due and unpaid Original Principal Amount (stated above)
from and after the occurrence and during the continuance of an Event of Default
pursuant to Section 4, at the rate (the “Default Rate”)
equal to the lower of fourteen percent (14%) per annum or the highest rate
permitted by law.


 

















 


Except as otherwise provided herein, all
payments of principal and interest on this Note shall be made in lawful money
of the United States of America by wire transfer of immediately available funds
to such account as the Holder may from time to time designate by written notice
in accordance with the provisions of this Note. Notwithstanding anything to the
contrary herein, this Note may be prepaid in whole or in part at any time
without penalty. Whenever any amount expressed to be due by the terms of this
Note is due on any day which is not a Business Day (as defined below), the same
shall instead be due on the next succeeding day which is a Business Day.


 


Capitalized terms used herein and not
otherwise defined shall have the meanings set forth in the Securities Purchase
Agreement dated on or about the Issuance Date pursuant to which the Note was
originally issued (the “Purchase Agreement”).
For purposes hereof the following terms shall have the meanings ascribed to
them below:


 


“Business Day” shall mean any day other than a Saturday, Sunday or a day
on which commercial banks in the City of New York are authorized or required by
law or executive order to remain closed.


 


“Debt” shall mean indebtedness of any kind.


 


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


 


The following terms and conditions shall
apply to this Note:


 


Section
1.      Payments
of Principal and Interest.


 


(a)   Interest Payment. All accrued interest
shall be payable in cash on the Maturity Date.


 


(b)   Payment of Principal. Subject to the
provisions hereof, the principal amount of this Note shall be due
and payable on the Maturity Date. Payment of the principal amount shall be
effected in cash.


 


(c)   Taxes. The Company may withhold
and pay over to the relevant authorities any appropriate tax or other legally
required withholdings from any interest payment to be made to the Holder to the
extent that such withholding is required by the Internal Revenue Code or any
other applicable law, rule, or regulation.


 


Section 2.      Subordination. This Note is subordinate in
right of payment and in all other respects to the 6% Senior Secured
Notes Due July 29, 2007 (the “July 2007 Notes”),
the 7% Senior Secured Convertible Notes Due August 2007 (the “August 2007 Notes”), and any other notes
that may be issued by the Company after the date hereof in exchange for or in
satisfaction of any July 2007 Notes or August 2007 Notes (collectively, the “Senior Notes”). Notwithstanding the
Maturity Date of this Note, the Company will not make any payments of
principal, interest, or otherwise under this Note unless and until all amounts
due and payable under the Senior Notes have been satisfied in full (whether
through cash payment or conversion).


 


Section 3.      Unsecured
Status of Note. This Note is unsecured and shall
not be deemed secured under the Amended and Restated Security Agreement, dated
August 2, 2005, between the Company and the holders of the Senior Notes.


 


2

















 


Section 4.      Defaults
and Remedies.


 


(a)  Events of Default. An “Event of Default” is:  (i) a default in payment of the principal amount under this Note when due, or failure to pay
any accrued but unpaid interest thereon of the Note within five (5) days the date such interest payment is due; (ii) failure by
the Company for thirty (30) days after written notice has been received by the
Company to comply with any other material provision of the Note, the Purchase
Agreement or the Transaction Documents, (iii) a material breach by the Company
of its representations or warranties in the Purchase Agreement or Transaction
Documents that remains uncured for thirty (30) business days after notice to
the Company; or (iv) if the Company or any of its subsidiaries is subject to
any Bankruptcy Event. “Bankruptcy Event”
means any of the following events: (a) the Company or any subsidiary commences
a case or other proceeding under any bankruptcy, reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency or liquidation
or similar law of any jurisdiction relating to the Company or any subsidiary
thereof; (b) there is commenced against the Company or any subsidiary any such
case or proceeding that is not dismissed within 30 days after commencement; (c)
the Company or any subsidiary is adjudicated insolvent or bankrupt or any order
of relief or other order approving any such case or proceeding is entered; (d)
the Company or any subsidiary suffers any appointment of any custodian or the
like for it or any substantial part of its property that is not discharged or
stayed within 30 days; (e) the Company or any subsidiary makes a general
assignment for the benefit of creditors; (f) the Company or any subsidiary, by
any act or failure to act, expressly indicates its consent to, approval of or
acquiescence in any of the foregoing or takes any corporate or other action for
the purpose of effecting any of the foregoing. Notwithstanding the foregoing, it
will not constitute an Event of Default if the Company cannot pay the principal
amount or any interest or other amounts due under this Note when due if such
inability is due to the subordination provisions set forth in Section 3.2 of
the Purchase Agreement (and Section 2 hereof).


 


(b)   Remedies. If an Event of
Default occurs and is continuing with respect to the Note, the Holder may
declare all of the then outstanding principal amount of this Note, including
any interest due thereon, to be due and payable immediately. The remedies under
this Note shall be cumulative.


 


Section 5.      Covenants.
The Company covenants and agrees that for so long as
any portion of the indebtedness evidenced by this Note, whether principal,
accrued and unpaid interest or any other amount at any time due hereunder,
remains unpaid, the Company shall present the Holder an opportunity to
participate in any Follow-On Financing after the date hereof, but only if the
Follow-On Financing is primarily an offering of Company common stock or
securities exchangeable, convertible, or exercisable for Company common stock. If
Holder elects to participate in such a Follow-On Financing, then Holder will be
entitled to purchase the securities being offered in such Follow-On Financing
at a discount of 7% of the gross per share purchase price in the transaction
(in the case of an offering of common stock or preferred stock) or 7% of the
face amount of the security being sold in such transaction (in the case of an
offering of debt securities). However, in the case of an offering of
convertible securities (whether equity or debt), such discount will only be
applied to the purchase price or face amount thereof, as the case may be, and
will not be applied to the conversion price of such security. Furthermore, such
discount shall not be applied to the exercise price of any warrants or similar
securities issued in the Follow-On Financing.


 


3

















 


Section
6.      General.


 


(a)   Payment of Expenses. The Company
agrees to pay all reasonable charges and expenses, including attorneys’ fees
and expenses, which may be incurred by the Holder in successfully enforcing
this Note and/or collecting any amount due under this Note.


 


(b)   Savings Clause. In case any provision
of this Note is held by a court of competent jurisdiction to be excessive in
scope or otherwise invalid or unenforceable, such provision shall be adjusted
rather than voided, if possible, so that it is enforceable to the maximum
extent possible, and the validity and enforceability of the remaining
provisions of this Note will not in any way be affected or impaired thereby. In
no event shall the amount of interest paid hereunder exceed the maximum rate of
interest on the unpaid principal balance hereof allowable by applicable law. If
any sum is collected in excess of the applicable maximum rate, the excess
collected shall be applied to reduce the principal debt. If the interest
actually collected hereunder is still in excess of the applicable maximum rate,
the interest rate shall be reduced so as not to exceed the maximum allowable
under law.


 


(c)   Amendment. Neither this Note nor any
term hereof may be amended, waived, discharged or terminated other than by a
written instrument signed by the Company and the Holder.


 


(d)   Assignment, Etc. The Holder may assign
or transfer this Note to any transferee provided that the transferee
acknowledges and agrees to the subordination provisions set forth in Section
3.2 of the Purchase Agreement. Such acknowledgement and agreement shall be in
writing and in a form reasonably acceptable to the Company. The Holder shall
notify the Company of any such assignment or transfer promptly. This Note shall
be binding upon the Company and its successors and shall inure to the benefit
of the Holder and its successors and permitted assigns.


 


(e)   No Waiver. No failure on the part of
the Holder to exercise, and no delay in exercising any right, remedy or power
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise by the Holder of any right, remedy or power hereunder preclude any
other or future exercise of any other right, remedy or power. Each and every
right, remedy or power hereby granted to the Holder or allowed it by law or
other agreement shall be cumulative and not exclusive of any other, and may be
exercised by the Holder from time to time.


 


(f)    Governing Law; Jurisdiction.


 


(i)    Governing
Law. THIS NOTE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY CONFLICTS OF LAWS
PROVISIONS THEREOF THAT WOULD OTHERWISE REQUIRE THE APPLICATION OF THE LAW OF
ANY OTHER JURISDICTION.


 


(ii)   Jurisdiction. The Company irrevocably submits to the
jurisdiction of any State or Federal Court sitting in the State of New York,
County of New York, over any suit, action, or proceeding arising out of or
relating to this Note. The Company irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the
laying of the venue of any such suit, action, or proceeding brought in such a
court and any claim that suit, action, or proceeding has been brought in an
inconvenient forum. The Company agrees that the service of process upon it
mailed by certified or registered mail, postage prepaid and return receipt
requested (and service so made shall be deemed complete three days after the
same has been posted as aforesaid) or by personal service shall be deemed in
every respect effective service of process upon it in any such suit or
proceeding. Nothing herein shall affect Holder’s right to serve process in any
other manner permitted by law. The Company agrees that a final non-appealable
judgment in any such suit or proceeding shall be conclusive and may be enforced
in other jurisdictions by suit on such judgment or in any other lawful manner.


 


4

















 


(iii)  NO JURY
TRIAL. THE COMPANY HEREBY KNOWINGLY AND VOLUNTARILY WAIVES ANY AND
ALL RIGHTS IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION BASED
ON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS NOTE.


 


(g)   Replacement Notes. This Note may be
exchanged by Holder at any time and from time to time for a Note or Notes with
different denominations representing an equal aggregate then-outstanding principal
amount of this Note, as reasonably requested by Holder, upon surrendering the
same. No service charge will be made for such registration or exchange. In the
event that Holder notifies the Company that this Note has been lost, stolen or
destroyed, a replacement Note identical in all respects to the original Note
(except for registration number and principal amount, if different than that
shown on the original Note), shall be issued to the Holder, provided that the
Holder executes and delivers to the Company an agreement reasonably
satisfactory to the Company to indemnify the Company from any loss incurred by
it in connection with the Note.


 


(h)   Cancellation. After all of the principal
amount including accrued but unpaid interest and default payments at any time
owed on this Note have been paid in full, this Note shall automatically be
deemed canceled and the Holder shall promptly surrender the Note to the Company
at the Company’s principal executive offices.


 


(i)    Notices Procedures. Any and all
notices or other communications or deliveries to be provided by the Holder
hereunder, shall be in writing and delivered personally, by confirmed
facsimile, or by a nationally recognized overnight courier service to the
Company at the facsimile telephone number or address of the principal place of
business of the Company as set forth in the Purchase Agreement. Any and all
notices or other communications or deliveries to be provided by the Company
hereunder shall be in writing and delivered personally, by facsimile, or by a
nationally recognized overnight courier service addressed to the Holder at the
facsimile telephone number or address of the Holder appearing on the books of
the Company, or if no such facsimile telephone number or address appears, at
the principal place of business of the Holder. Any notice or other
communication or deliveries hereunder shall be deemed delivered (i) upon
receipt, when delivered personally, (ii) when sent by facsimile, upon receipt
if received on a Business Day prior to 5:00 p.m. (Eastern Time), or on the
first Business Day following such receipt if received on a Business Day after
5:00 p.m. (Eastern Time) or (iii) upon receipt, when deposited with a
nationally recognized overnight courier service.


 


[Signature Page Follows]


 


5

















 


IN WITNESS WHEREOF, the Company has caused
this Note to be duly executed on May 17, 2006.


 


 


	
   

  	
  LIQUIDMETAL
  TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:  Ricardo
  A. Salas

  
	
   

  	
  Title:    President
  and Chief Executive Officer

  



 


6