Exhibit 10.3


 


NEITHER THESE SECURITIES NOR THE
SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES REGULATORS OF ANY
STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION 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 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 AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY, SUBJECT TO CERTAIN EXCEPTIONS, A LEGAL OPINION
OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, IN FORM AND SUBSTANCE OF WHICH
SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THESE SECURITIES AND THE
SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES IN
ACCORDANCE WITH APPLICABLE LAWS.


 


LIQUIDMETAL
TECHNOLOGIES, INC.


 


COMMON STOCK
PURCHASE WARRANT


 


	
  Warrant No. [  ]

  	
   

  	
  Date of
  Original Issuance: January 3, 2007

  



 


Liquidmetal Technologies, Inc., a
Delaware corporation (together with any entity that shall succeed to or assume
the obligations of Liquidmetal Technologies, Inc. hereunder, the “Company”), hereby certifies that, for
value received, [ ] or its registered assigns (the “Holder”), is entitled to purchase from the Company up to a
total of [ ] shares of common stock, 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 $1.93 per share (as adjusted from time to time as
provided in Section 9, the “Exercise
Price”), at any time and from time to time from and after the date
hereof and through and including January 3, 2012; provided that with respect to
any Warrant Shares that are not covered by an effective registration statement
by the date which is one hundred twenty (120) calendars days after the Date of
Original Issuance of this Warrant (the “Extension
Date”), the expiration date of this Warrant as to such Warrant
Shares shall be extended, but not beyond the seventh (7th)
anniversary of the Date of Original Issuance, by an additional thirty (30)
calendar days for every thirty (30) day period following the Extension Date
that such Warrant Shares are not covered by an effective registration statement
(the “Expiration Date”), and
subject to the following terms and conditions:


 


1.             Definitions. In
addition to the terms defined elsewhere in this Warrant, capitalized terms that
are not otherwise defined herein shall have the meanings given to such


 

















 


terms in the
Securities Purchase Agreement dated January 3, 2007 to which the Company and
the original 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 include the Company’s common stock, par value $0.001
per share as authorized on the date of the Purchase Agreement and any other
securities or property of the Company or of any other person (corporate or
otherwise) which the Holder at any time shall be entitled to receive on the
exercise hereof in lieu of or in addition to such common stock, or which at any
time shall be issuable in exchange for or in replacement of such common stock. The
term “Affiliate” shall mean any
Person that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with a Person, as such
terms are used in and construed under Rule 144 promulgated by the SEC pursuant
to the Securities Act of 1933, as amended.


 


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


 


3.             Recording of Transfers. Subject to Section 6, the Company shall register the transfer of any
portion of this Warrant in the Warrant Register, upon surrender of this
Warrant, with the Form of Assignment attached hereto duly completed and signed,
to the Company at its address specified herein. As a condition to the transfer,
the Company may request a legal opinion as contemplated by the legend above and
related terms of the Purchase Agreement. Upon any such registration or
transfer, a new Warrant 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 the transferee and a New Warrant evidencing the remaining
portion of this Warrant not so transferred, if any, shall be issued to the transferring
Holder. The acceptance of the New Warrant by the transferee thereof shall be
deemed the acceptance by such transferee of all of the rights and obligations
of a holder of a Warrant.


 


4.             Exercise and Duration of Warrants.


 


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


 


2

















 


are the subject
of the Exercise Notice (the “Unavailable
Warrant Shares”) is not available for the resale of such Unavailable
Warrant Shares, the holder of this Warrant also may exercise this Warrant as to
any or all of such Unavailable Warrant Shares and, in lieu of making the cash
payment otherwise contemplated to be made to the Company upon such exercise in
payment of the aggregate Exercise Price, elect instead to receive upon such
exercise a reduced number of shares of Common Stock (the “Net Number”) determined according to the
following formula (a “Cashless Exercise”):


 


	
   

  	
  Net Number =

  	
  (A x B) - (A x C)

  	
   

  
	
   

  	
   

  	
  B

  	
   

  



 


For purposes of the foregoing
formula:


 


A= the total number of shares with
respect to which this Warrant is then being exercised in a Cashless Exercise.


 


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


 


C= the Exercise Price then in
effect for the applicable Warrant Shares at the time of such exercise.


 


VWAP = For any date, the price determined by
the first of the following clauses that applies: (a) if the Common Stock is
then listed or quoted on a Trading Market, the daily volume weighted average
price per share of the Common Stock for such date (or the nearest preceding
date) on the Trading Market on which the Common Stock is then listed or quoted
as reported by Bloomberg Financial L.P. (based on a Trading Day from 9:30 a.m.
Eastern Time to 4:02 p.m. Eastern Time); (b) if the Common Stock is not
then listed or quoted on a Trading Market and if prices for the Common Stock
are then quoted on the OTC Bulletin Board, the volume weighted average price
per share of the Common Stock for such date (or the nearest preceding date) on
the OTC Bulletin Board; (c) if the Common Stock is not then listed or quoted on
the OTC Bulletin Board and if prices for the Common Stock are then reported in
the “Pink Sheets” published by the Pink Sheets, LLC (or a similar organization
or agency succeeding to its functions of reporting prices), the most recent bid
price per share of the Common Stock so reported; or (d) in all other
cases, the fair market value of a share of Common Stock as determined by an
independent appraiser selected in good faith by the Holder and reasonably
acceptable to the Company.


 


There cannot be a Cashless Exercise
unless “B” exceeds “C”.


 


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


 


3

















 


as set forth on
the applicable Notice of Exercise, would beneficially own in excess of the
Beneficial Ownership Limitation (as defined below). For purposes of the
foregoing sentence, the number of shares of Common Stock beneficially owned by
such Holder and its Affiliates shall include the number of shares of Common
Stock issuable upon exercise of this Warrant with respect to which such
determination is being made, but shall exclude the number of shares of Common
Stock which would be issuable upon (A) exercise of the remaining, nonexercised
portion of this Warrant beneficially owned by such Holder or any of its
Affiliates and (B) exercise or conversion of the unexercised or nonconverted
portion of any other securities of the Company (including, without limitation,
any other Warrants or Notes) subject to a limitation on conversion or exercise
analogous to the limitation contained herein beneficially owned by such Holder
or any of its affiliates. Except as set forth in the preceding sentence, for
purposes of this Section 4(b), beneficial ownership shall be calculated in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”) and
the rules and regulations promulgated thereunder, it being acknowledged by a
Holder that the Company is not representing to such Holder that such
calculation is in compliance with Section 13(d) of the Exchange Act and such
Holder is solely responsible for any schedules required to be filed in
accordance therewith. To the extent that the limitation contained in this
Section 4(b) applies, the determination of whether this Warrant is exercisable
(in relation to other securities owned by such Holder together with any
Affiliates) and of which a portion of this Warrant is exercisable shall be in
the sole discretion of a Holder, and the submission of a Notice of Exercise
shall be deemed to be each Holder’s determination of whether this Warrant is
exercisable (in relation to other securities owned by such Holder together with
any Affiliates) and of which portion of this Warrant is exercisable, in each
case subject to such aggregate percentage limitation, and the Company shall
have no obligation to verify or confirm the accuracy of such determination. In
addition, a determination as to any group status as contemplated above shall be
determined in accordance with Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder. For purposes of this Section 4(b), in
determining the number of outstanding shares of Common Stock, a Holder may rely
on the number of outstanding shares of Common Stock as reflected in (x) the
Company’s most recent Form 10-Q or Form 10-K, as the case may be, (y) a more
recent public announcement by the Company or (z) any other notice by the
Company or the Company’s transfer agent setting forth the number of shares of
Common Stock outstanding. Upon the written or oral request of a Holder, the
Company shall within two Trading Days confirm orally and in writing to such
Holder the number of shares of Common Stock then outstanding. In any case, the
number of outstanding shares of Common Stock shall be determined after giving
effect to the conversion or exercise of securities of the Company, including
this Warrant, by such Holder or its Affiliates since the date as of which such
number of outstanding shares of Common Stock was reported. The “Beneficial
Ownership Limitation” shall be 4.99% of the number of shares of the Common
Stock outstanding immediately after giving effect to the issuance of shares of
Common Stock issuable upon exercise of this Warrant. The Beneficial Ownership
Limitation provisions of this Section 4(b) may be waived by such Holder, at the
election of such Holder, upon not less than 61 days’ prior notice to the
Company to change the Beneficial Ownership Limitation to 9.99% of the number of
shares of the Common Stock outstanding immediately after giving effect 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. Upon such a change by
a Holder of the Beneficial Ownership Limitation from such 4.99% limitation to
such 9.99% limitation, the Beneficial Ownership Limitation may not be further
waived by such


 


4

















 


Holder. The
provisions of this paragraph shall be construed and implemented in a manner
otherwise than in strict conformity with the terms of this Section 4(b)) to
correct this paragraph (or any portion hereof) which may be defective or
inconsistent with the intended Beneficial Ownership Limitation herein contained
or to make changes or supplements necessary or desirable to properly give
effect to such limitation. The limitations contained in this paragraph shall
apply to a successor holder of this Warrant.


 


5.             Delivery of Warrant Shares.


 


(a)           To
effect exercises hereunder, the Holder shall not be required to physically surrender
this Warrant upon exercise unless this Warrant ceases to be further exercisable
for additional Warrant Shares. Upon delivery of the Exercise Notice to the
Company (with the attached Warrant Shares Exercise Log) at its address for
notice set forth herein and upon payment of the Exercise Price multiplied by
the number of Warrant Shares that the Holder intends to purchase hereunder, the
Company shall promptly (but in no event later than three Trading Days after the
Date of Exercise (as defined herein)) issue and deliver to the Holder, a
certificate for the Warrant Shares issuable upon such exercise, which, unless
otherwise required by the Purchase Agreement, shall be free of restrictive
legends. A “Date of Exercise”
means the date on which the Holder shall have delivered to Company: (i) the
Exercise Notice (with the Warrant Exercise Log attached to it), appropriately
completed and duly signed and (ii) except in the case of a Cashless Exercise,
payment in full of the Exercise Price in immediately available funds or federal
funds for the number of Warrant Shares so indicated by the Holder to be
purchased.


 


(b)           If
by the third Trading Day after a Date of Exercise the Company fails to deliver
the 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)           If
by the third Trading Day after a Date of Exercise the Company fails to deliver
the 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 Warrant Shares, the Holder purchases in a bona fide arm’s length
transaction for fair market value (in an open market transaction or otherwise)
the number of shares of Common Stock necessary to deliver in satisfaction of a
bona fide arm’s length sale for fair market value by the Holder of the Warrant
Shares which the Holder 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) the Holder’s total purchase price
(including brokerage commissions, if any) for the shares of Common Stock so
purchased exceeds (y) the Holder’s total sales price (including brokerage
commissions, if any) for the shares of Common Stock so sold and (2) at the
option of the Holder, either reinstate the portion of the Warrant and
equivalent number of Warrant Shares for which such exercise was not honored or
deliver to the Holder the number of shares of Common Stock that would have been
issued had the Company timely complied with its exercise and delivery
obligations hereunder. The Holder shall provide the Company written notice and
reasonably detailed documentation indicating the amounts requested by the
Holder in respect of the Buy-In.


 


(d)           The
Company’s obligations to issue and deliver Warrant Shares in accordance with
the terms hereof are absolute and unconditional, irrespective of any action or


 


5

















 


inaction by the
Holder to enforce the same, any waiver or consent with respect to any provision
hereof, the recovery of any judgment against any Person or any action to
enforce the same, or any setoff, counterclaim, recoupment, limitation or
termination, or any breach or alleged breach by the Holder or any other Person
of any obligation to the Company or any violation or alleged violation of law
by the Holder or any other Person, and irrespective of any other circumstance
which might otherwise limit such obligation of the Company to the Holder in
connection with the issuance of Warrant Shares. Nothing herein shall limit a
Holder’s right to pursue any other remedies available to it hereunder, at law
or in equity including, without limitation, a decree of specific performance
and/or injunctive relief with respect to the Company’s failure to timely
deliver certificates representing shares of Common Stock upon exercise of the
Warrant as required pursuant to the terms hereof.


 


6.             Charges, Taxes and Expenses. Issuance and delivery of certificates for shares of Common Stock upon
exercise of this Warrant shall be made without charge to the Holder for any
issue or transfer tax, withholding tax, transfer agent fee or other incidental
tax or expense in respect of the issuance of such certificates, all of which
taxes and expenses shall be paid by the Company; provided, however, that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the registration of any certificates for Warrant
Shares or Warrants in a name other than that of the Holder. The Holder shall be
responsible for all other tax liability that may arise as a result of holding
or transferring this Warrant or receiving Warrant Shares upon exercise hereof.


 


7.             Replacement of Warrant. If this Warrant is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation hereof, or in lieu of and substitution for this Warrant, a New
Warrant, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and ownership thereof and customary
and reasonable indemnity. Applicants for a New Warrant under such circumstances
shall also comply with such other reasonable regulations and procedures and pay
such other reasonable third-party costs as the Company may prescribe. If a New
Warrant is requested as a result of a mutilation of this Warrant, then the
Holder shall deliver such mutilated Warrant to the Company as a condition
precedent to the Company’s obligation to issue the New Warrant.


 


8.             Reservation of Warrant Shares. The Company covenants that it will at all times reserve and keep
available out of the aggregate of its authorized but unissued and otherwise
unreserved Common Stock, solely for the purpose of enabling it to issue Warrant
Shares upon exercise of this Warrant as herein provided, the number of Warrant
Shares which are then issuable and deliverable upon the exercise of this entire
Warrant, free from preemptive rights 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 deliverable shall, upon issuance and the payment of the
applicable Exercise Price in accordance with the terms hereof, be duly and
validly authorized, issued and fully paid and nonassessable.


 


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


 


6

















 


(a)           Stock Dividends and Splits, Recapitalizations, Etc. If the Company, at any time while this Warrant
is outstanding, (i) pays a stock dividend on its Common Stock or otherwise
makes a distribution on any class of capital stock that is payable in shares of
Common Stock or subdivides the outstanding shares of Common Stock into a larger
number of shares (by any stock split, recapitalization or otherwise), then in
each such case the Exercise Price shall be proportionately reduced and the
number of Warrant Shares shall be proportionately increased, and (ii) combines
outstanding shares of Common Stock into a smaller number of shares (by reverse
stock split, recapitalization, or otherwise), then in each such case the
Exercise Price shall be proportionately increased and the number 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 record date for the determination of stockholders entitled to receive such
dividend or distribution or immediately after the effective date of such
subdivision or combination (as the case may be). If any event requiring an adjustment
under this paragraph occurs during the period that an Exercise Price is
calculated hereunder, then the calculation of such Exercise Price shall be
adjusted appropriately to reflect such event.


 


(b)           Pro Rata Distributions. If the Company, at any time while this Warrant is outstanding,
distributes to all holders of Common 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) any other asset (in each case, “Distributed Property”), then in each such
case the Exercise Price shall be appropriately adjusted. Any adjustment made
pursuant to this paragraph shall become effective immediately after the record
date for the determination of stockholders entitled to receive such
distribution. If any event requiring an adjustment under this paragraph occurs
during the period that an Exercise Price is calculated hereunder, then the
calculation of such Exercise Price shall be adjusted appropriately to reflect
such event.


 


(c)           Adjustment of Exercise Price upon Issuance of Common Stock. If and whenever on or after the Issuance
Date, the Company issues or sells, or in accordance with this Section 7(a) is
deemed to have issued or sold, any shares of Common Stock (including the
issuance or sale of shares of Common Stock owned or held by or for the account
of the Company, but excluding shares of Common Stock deemed to have been issued
or sold by the Company in connection with any Excluded Security) for a
consideration per share (the “New Securities
Issuance Price”) less than a price (the “Applicable Price”) equal to the Conversion Price in effect
immediately prior to such issue or sale (the foregoing a “Dilutive Issuance”), then immediately
after such Dilutive Issuance, the Exercise Price then in effect shall be
reduced 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)            Issuance of Options. If
the Company in any manner grants or sells any Options and the lowest price per
share for which one share of Common Stock is issuable upon the exercise of any
such Option or upon conversion or exchange or exercise of any Convertible
Securities issuable upon exercise of such Option is less than the Applicable
Price, then such share of Common Stock shall be deemed to be outstanding and to
have been issued and sold by the Company at the time of the granting or sale of
such Option for such price per share. For purposes of this Section 9(c)(i), the
“lowest price per share for which one share of Common Stock is issuable upon
the exercise of any such Option or upon conversion or exchange


 


7

















 


or exercise of
any Convertible Securities issuable upon exercise of such Option” shall be
equal to the sum of the lowest amounts of consideration (if any) received or
receivable by the Company with respect to any one share of Common Stock upon
granting or sale of the Option, upon exercise of the Option and upon conversion
or exchange or exercise of any Convertible Security issuable upon exercise of
such Option. No further adjustment of the Exercise Price shall be made upon the
actual issuance of such Common Stock or of such Convertible Securities upon the
exercise of such Options or upon the actual issuance of such Common Stock upon
conversion or exchange or exercise of such Convertible Securities.


 


(ii)           Issuance of Convertible Securities. If the Company in any manner issues or sells any
Convertible Securities and the lowest price per share for which one share of
Common Stock is issuable upon such conversion 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 have been issued and sold by the Company at the
time of the issuance of sale of such Convertible 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 such conversion or exchange or
exercise” shall be equal to the sum of the lowest amounts of consideration (if
any) received or receivable by the Company with respect to any one share of
Common Stock upon the issuance or sale of the Convertible Security and upon the
conversion or exchange or exercise of such Convertible Security. No further
adjustment of the Exercise Price shall be made upon the actual issuance of such
Common Stock upon conversion or exchange or exercise of such Convertible
Securities, and if any such issue or sale of such Convertible Securities is
made upon exercise of any Options for which adjustment of the Exercise Price
had 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 such issue
or sale.


 


(iii)          Change in Option Price or Rate of Conversion. If the purchase price provided for in any Options,
the additional consideration, if any, payable upon the issue, conversion,
exchange or exercise of any Convertible Securities, or the rate at which any
Convertible Securities are convertible into or exchangeable or exercisable for
Common Stock changes at any time, the Exercise Price in effect at the time of
such change shall be adjusted to the Exercise Price which would have been in
effect at such time had such Options or Convertible Securities provided for
such changed purchase price, additional consideration or changed conversion
rate, as the case may be, at the time initially granted, issued or sold. Notwithstanding
anything in this Warrant to the contrary, in the event that the Company agrees
to decrease the conversion price of any of its 7% Convertible Secured
Promissory Notes due August 2007 in connection with an agreement by the holder
of any such notes to convert the same, such decrease in the conversion price
will not result in any adjustment to the Exercise Price pursuant to this
Section 9(c) of this Warrant.


 


(iv)          Calculation of Consideration Received. In case any Option is issued in connection with
the issue or sale of other securities of the Company, together comprising one
integrated transaction in which no specific consideration is allocated to such
Options by the parties thereto, the Options will be deemed to have been issued
for a consideration of $.01. If any Common Stock, Options or Convertible
Securities 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 amount
received by the Company therefor. If any Common Stock, Options


 


8

















 


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


 


(v)           Record Date. If the
Company takes a record of the holders of Common Stock for the purpose of
entitling them (A) to receive a dividend or other distribution payable in
Common Stock, Options or in Convertible Securities or (B) to subscribe for or
purchase Common Stock, Options or Convertible Securities, then such record date
will be deemed to be the date of the issue or sale of the shares of Common
Stock deemed to have been issued or sold upon the declaration of such dividend
or the making of such other distribution or the date of the granting of such
right of subscription or purchase, as the case may be.


 


(d)           Fundamental Transactions. If, at any time while this Warrant is outstanding, (1) the Company
effects any merger or consolidation of the Company with or into another Person,
(2) the Company effects any sale of all or substantially all of its assets in
one or a series of related transactions, (3) any tender offer or exchange offer
(whether by the Company or another Person) is completed pursuant to which
holders of Common Stock are permitted to tender or exchange their shares for
other securities, cash or property, or (4) the Company effects any
reclassification of the Common Stock or any compulsory share exchange pursuant
to which the Common Stock is effectively converted into or exchanged for other
securities, cash or property (in any such case, a “Fundamental Transaction”), then the Holder shall have the
right thereafter to receive, 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 occurrence of such Fundamental Transaction if it had been, immediately
prior to such Fundamental Transaction, the holder of the number of Warrant
Shares then issuable upon exercise in full of this Warrant (the “Alternate Consideration”). For purposes of
any such exercise, the determination of the Exercise Price shall be
appropriately adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the
Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as to the
securities, cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate Consideration it
receives upon any exercise of this Warrant following such Fundamental
Transaction. At the Holder’s option and request, any successor to the Company
or surviving entity in such Fundamental Transaction shall issue to the Holder a
new warrant substantially in the form of this Warrant and consistent with the
foregoing provisions and evidencing the Holder’s right to purchase the
Alternate Consideration for the aggregate Exercise Price upon exercise thereof.
Any such successor or surviving entity shall be deemed to be required to comply
with the provisions of this paragraph (d) and shall insure that the Warrant (or
any such replacement security) will be similarly adjusted upon any subsequent


 


9

















 


transaction
analogous to a Fundamental Transaction. Notwithstanding the foregoing, in the
event of a Fundamental Transaction that constitutes a Change in Control (as
defined in the Notes), at the request of the Holder delivered before the 90th
day after such Fundamental Transaction is consummated, the Company (or the
successor to the Company) shall purchase this Warrant from the Holder by paying
to the Holder, within five Business Days after such request (or, if later, on
the effective date of the Fundamental Transaction), cash in an amount equal to the
Black Scholes Value of the remaining unexercised portion of this Warrant on the
date such Fundamental Transaction is consummated. For the purpose of this
Warrant, “Black Scholes Value”
means the value, as reasonably calculated by the Company, of this Warrant based
on the Black-Scholes Option Pricing Model, provided that the Black Sholes Value
of this Warrant shall not for this purpose exceed an amount equal to $5.00
multiplied by the number of shares of Common Stock for which this Warrant is
exercisable 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)           Number of Warrant Shares. Simultaneously with any adjustment to the Exercise Price pursuant to
paragraph (a) of this Section, the number of Warrant Shares that may be
purchased upon exercise of this Warrant shall be increased or decreased
proportionately, so that after such adjustment the aggregate Exercise Price
payable hereunder for the adjusted number of Warrant Shares shall be the same
as the aggregate Exercise Price in effect immediately prior to such adjustment.


 


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


 


(g)           Notice of Adjustments. Upon the occurrence of each adjustment pursuant to this Section 9,
the Company at its expense will promptly compute such adjustment in accordance
with the terms of this Warrant and prepare a certificate setting forth such
adjustment, including a statement of the adjusted Exercise Price and adjusted
number or type of Warrant Shares or other securities issuable upon exercise of
this Warrant (as applicable), describing the transactions giving rise to such
adjustments and showing in detail the facts upon which such adjustment is based.
Upon written request, the Company will promptly deliver a copy of each such
certificate to the Holder and to the Company’s Transfer Agent. No adjustment in
the Exercise Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in such rate; provided, however,
that any adjustments which by reason of this Section 9(g) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment.


 


(h)           Notice of Corporate Events. If the Company (i) declares a dividend or any other distribution of cash,
securities or other property in respect of its Common Stock, including without
limitation any granting of rights or warrants to subscribe for or purchase any
capital stock of the Company or any Subsidiary, (ii) authorizes or approves,
enters into any agreement contemplating or solicits stockholder approval for
any Fundamental Transaction or (iii) authorizes the voluntary dissolution, liquidation
or winding up of the affairs of the Company,


 


10

















 


then the Company
shall deliver to the Holder a notice describing the material terms and
conditions of such transaction, at least five calendar days prior to the
applicable record or effective date on which a Person would need to hold Common
Stock in order to participate in or vote with respect to such transaction, and
the Company will take all steps reasonably necessary in order to insure that
the Holder is given the practical opportunity to exercise this Warrant prior to
such time so as to participate in or vote with respect to such transaction;
provided, however, that the failure to deliver such notice or any defect
therein shall not affect the validity of the corporate action required to be
described in such notice.


 


10.           Payment of Exercise Price. Upon exercise of this Warrant the Holder shall pay the Exercise Price in
immediately available funds unless it is a Cashless Exercise in accordance with
Section 4 hereof.


 


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


 


12.           Notices. Any and all
notices or other communications or deliveries hereunder (including, without
limitation, any Exercise Notice) shall be in writing and shall be deemed given
and effective on the earliest of (i) the date of transmission, if such notice
or communication is delivered via facsimile 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 the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified in
this Section on a day that is not a Trading Day or later than 6:30 p.m. (New
York City time) on any Trading Day, (iii) the Trading Day following the date of
mailing, if sent and delivered by nationally recognized overnight courier
service, or (iv) upon actual receipt by the party to whom such notice is
required to be given. The addresses for such communications shall be:  (i) if to the Company, to Liquidmetal
Technologies, Inc., 25800 Commercentre Drive, Suite 100, Lake Forest,
California  92630. Attn: Chief Executive
Officer, Facsimile No.: (949) 206-8008, or (ii) if to the Holder, to the
address or facsimile number appearing on the Warrant Register or such other
address or facsimile number as the Holder may provide to the Company in
accordance with this Section.


 


13.           Warrant Agent. The
Company shall serve as warrant agent under this Warrant. Upon 30 days’ notice
to the Holder, the Company may appoint a new warrant agent. Any corporation
into which the Company or any new warrant agent may be merged or any
corporation resulting from any consolidation to which the Company or any new
warrant agent shall be a party or any corporation to which the Company or any
new warrant agent transfers substantially all of its corporate trust or
shareholders services business shall be a successor warrant agent under this
Warrant without any further act. Any such successor warrant agent shall
promptly cause notice of its succession as warrant agent to be mailed (by first
class mail, postage prepaid) to the Holder at the Holder’s last address as
shown on the Warrant Register.


 


11

















 


14.           Miscellaneous.


 


(a)           This
Warrant shall be binding on and inure to the benefit of the parties hereto and
the respective successors and assigns of the Holder it being understood that
transfers of this Warrant by the Holder are subject to the legend set forth of
the face hereof. Subject to the preceding sentence, nothing in this Warrant
shall be construed to give to any Person 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 and the Holder and
their successors and assigns.


 


(b)           All
questions concerning the construction, validity, enforcement and interpretation
of this Warrant shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all legal
proceedings to resolve any dispute concerning the interpretations, enforcement
and defense of this Warrant and the transactions herein contemplated (“Proceedings”) (whether brought against a
party hereto or its respective Affiliates, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the City of New York,
Borough of Manhattan (the “New York Courts”),
although depositions may be taken in other locations. Each party hereto hereby
irrevocably submits to the exclusive jurisdiction of the New York Courts 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 Proceeding, any claim that it is not
personally subject to the jurisdiction of any New York Court, or that such
Proceeding has been commenced in an improper or inconvenient forum. Each party
hereto hereby irrevocably waives personal service of process and consents to
process being served in any such Proceeding by mailing a copy thereof via
registered 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 and
agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to limit
in any way any right to serve process in any manner permitted by law. Each
party hereto hereby irrevocably waives, to the fullest extent permitted by
applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Warrant or the transactions contemplated
hereby. If either party shall commence a Proceeding to enforce any provisions
of this Warrant, then the prevailing party in such Proceeding shall be
reimbursed by the other party for its attorney’s fees and other costs and
expenses incurred with the investigation, preparation and prosecution of such
Proceeding.


 


(c)           The
headings herein are for convenience only, do not constitute a part of this
Warrant and shall not be deemed to limit or affect any of the provisions
hereof.


 


(d)           In
case any one or more of the provisions of this Warrant shall be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Warrant shall not in any way be affected or
impaired thereby and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be a commercially reasonable substitute
therefor, and upon so agreeing, shall incorporate such substitute provision in
this Warrant.


 


(e)           The
Company will not, by amendment of its Articles of Incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of


 


12

















 


any of the terms
of this Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the holder of this Warrant
against such impairment.


 


(f)            This Warrant does not entitle the Holder to any voting rights or other
rights as a shareholder of the Company prior to the exercise hereof. In
connection with an exercise of this Warrant in accordance with the terms
hereof, upon the surrender of this Warrant and the payment of the aggregate
Exercise Price (or by means of a Cashless Exercise if permitted hereunder), the
Warrant Shares so purchased shall be and be deemed to be issued to such Holder
as the record owner of such shares as of the 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 this Warrant to be duly executed by its authorized officer as of the
date first indicated above.


 


	
   

  	
  LIQUIDMETAL
  TECHNOLOGIES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Young Ham

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
					



 


14

















 


EXERCISE NOTICE


 


To Liquidmetal Technologies, Inc.


 


The undersigned hereby irrevocably 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 Cashless Exercise in accordance with Section 4, encloses herewith
$         in cash, federal funds or
other immediately available funds, which sum represents the aggregate Exercise
Price (as defined in the Warrant) for the number of shares of Common Stock to
which this Exercise Notice relates, together with any applicable taxes payable
by the undersigned pursuant to the Warrant.


 


The undersigned hereby certifies to the Company
that the undersigned’s exercise of the amount set forth above will not directly
result in the undersigned (together with the undersigned’s affiliates)
beneficially owning in excess of 4.99% of the number of shares of Common Stock
outstanding immediately after giving effect to such exercise, calculated in
accordance with Section 4(b) of the Warrant; provided that if the undersigned
has waived the 4.99% beneficial ownership requirement by providing the Company
with notice at least 61 days prior to the date hereof, the undersigned hereby
certifies to the Company that the undersigned’s exercise of the amount set
forth above will not directly result in the undersigned (together with the
undersigned’s affiliates) beneficially owning in excess of 9.99% of the number
of shares of Common Stock outstanding immediately after giving effect to such
conversion, calculated in accordance with Section 4(b) of the Warrant.


 


The undersigned requests that certificates for the
shares of Common Stock issuable upon this exercise be issued 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 of Warrant]


 


FOR VALUE RECEIVED, the undersigned
hereby sells, assigns and transfers unto                                          
the right represented by the within Warrant to purchase                    
shares of Common Stock of Liquidmetal Technologies, Inc. to which the within
Warrant relates and appoints                         
attorney to transfer said right on the books of the Company with full power of
substitution in 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

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  In the presence of: