Exhibit 10.2


 


THIS SUBORDINATED PROMISSORY NOTE (THIS “NOTE”) HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS.  THIS NOTE MAY NOT
BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF (A) AN
EFFECTIVE REGISTRATION STATEMENT AS TO THIS NOTE UNDER SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAWS OR (B) AN EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS.


 


SUBORDINATED PROMISSORY NOTE


 




	
  U.S.
  $2,000,000.00

  	
   

  	
  May 28, 2010

  






 


FOR VALUE RECEIVED, the undersigned
maker (the “Maker”), promises to pay to Norden, LLC (the “Holder”),
at 5641 North Broadway, Denver, Colorado 80216, the principal sum of TWO
MILLION DOLLARS ($2,000,000.00) or so much thereof as may be outstanding from
time to time.


 


1.                                       Interest Rate
and Payments.  This Note
shall bear interest computed at a rate equal to thirteen percent (13%) per
annum, simple interest.  All interest on
this Note shall be computed daily on the basis of the actual number of days
elapsed over a year assumed to consist of three hundred sixty (360) days
(having 12 months of 30 days each). 
Except as set forth in Section 3 below, no payments of
interest shall be made prior to the Maturity Date (as defined below).  Following the Maturity Date, the balance of
unpaid principal and interest under this Note shall bear simple interest at a
default rate equal to fifteen percent (15%) per annum.  All payments under this Note shall be applied
first to the payment of accrued but unpaid interest and then to principal.


 


2.                                       Payment Terms.


 


(a)                                  Subject to Section 4
below, the outstanding principal amount of this Note, plus all accrued and
unpaid interest thereon, shall be due and payable on the date (the “Maturity
Date”) that is the earlier of (i) January 3, 2011 and (ii) the
date on which all amounts outstanding under the 8% Senior Secured Convertible
Notes due January 3, 2011 (the “Senior Notes”) issued by the
Company to certain buyers (the “Senior Lenders”), including both
principal and accrued but unpaid interest, have been paid in full.


 


(b)                                 Subject to Section 4 below,
the Maker may, at its option, elect to pay all or any portion of the
outstanding principal amount of this Note and/or all or any portion of the
accrued and unpaid interest thereon to the Holder in cash or in duly authorized,
validly issued, fully paid and non-assessable shares of the Maker’s common
stock, par value $0.001 per share (the “Common Stock”) or a combination
thereof; provided, however, that payment, in whole or in part, in
shares of Common Stock may only occur if (i) the Maturity Date is the date
set forth in clause (ii) of Section 2(a) above, (ii) the
Maker shall have given the Holder notice in accordance with the notice
requirements set forth in 2(c) below and (iii) the Holder shall have
given its written consent to the proposed payment in Common Stock.  In such event, the Maker shall deliver to
Holder on the payment date a stock certificate representing a number of fully
paid and 


 

















 


non-assessable shares of the Common Stock equal to the
quotient of (x) the total amount of outstanding principal and accrued and
unpaid interest to be paid in shares of Common Stock divided by (y) the
Repayment Price (as defined below).


 


(c)                                  At least ten business days prior to the
Maturity Date or any proposed prepayment date on which Maker proposes make a
payment that includes Common Stock, the Maker shall deliver to the Holder a
written notice of its election to pay such amounts either in cash, shares of
Common Stock or a combination thereof and the dollar amount to be paid in
shares of Common Stock.  For purposes of
this Note, the term “Repayment Price” shall mean the lesser of (A) $.26
per share or (B) the average VWAP (as defined below) for the ten (10) consecutive
trading days ending on the trading day that is immediately prior to the date on
which the payment is made.  For purposes
of this Note, the term “VWAP” shall mean the daily volume weighted
average price per share of the Common Stock for a given date on the trading
market on which the Common Stock is then listed or quoted for trading as
reported by Bloomberg L.P.


 


3.                                       Prepayment. Subject to Section 4
below, this Note may be repaid, in whole or in part, without penalty or premium
at any time.


 


4.                                       Subordination.


 


(a)                                  This Note shall
be subordinate in right of payment to the Senior Notes and all extensions,
refinancings, or renewals thereof and interest thereon owing or payable by the
Maker (collectively, the “Senior Indebtedness”).


 


(b)                                 As long as any
Senior Indebtedness has not been paid in full, the Holder shall not be entitled
to demand, attempt to receive, or receive, and the Holder hereby agrees not to
demand, attempt to receive or receive, any payments (whether made in cash,
securities, or other property or by set-off) of interest or principal under
this Note and the Holder shall not exercise any right of set-off or recoupment
with respect to this Note.  If any such
payments are received by the Holder in violation of this Section 4(b),
(i) the Holder will hold such payments in trust for the Senior Lenders in
the same medium in which received, (ii) the Holder will not commingle the
same with any of the assets of the Holder, and (iii) the Holder will
deliver the same to the Maker to be distributed to the Senior Lenders, in the
form received, not later than the next business day following the day of their
receipt.


 


(c)                                  Notwithstanding
any rights or remedies available to the Holder under applicable law or under
this Note, the Holder shall not be permitted to enforce any rights or exercise
any remedies with respect thereto (including, without limitation, (A) the
right to accelerate this Note, (B) take any action to foreclose,
repossess, marshall, control or exercise any remedies with respect to any
assets of the Maker, (C) contact, communicate with or notify any account
debtor or obligor with respect to any account, chattel paper, instrument or
general intangible of the Maker, or (D) take any other action which would
interfere with or impair the rights of the Senior Lenders against any
collateral securing the payment of the Senior Notes), until the payment in full
of the Senior Indebtedness.  Nothing
contained in this Section 4(c) shall prohibit the Holder from
demanding a payment under this Note as long as such payment is permitted under Section 4(b) above.


 


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5.                                       Costs.  Subject to Section 4 above, in
the event that this Note is collected by law or through attorneys at law, or
under advice therefrom (whether such attorneys are employees of the Holder or
an affiliate of the Holder or are outside counsel), the Maker and any endorser,
guarantor or other person primarily or secondarily liable for payment hereof
hereby, severally and jointly agree to pay all costs of collection, including
reasonable attorneys’ fees including charges for paralegals and others working
under the direction or supervision of the Holder’s attorneys, whether or not
suit is brought, and whether incurred in connection with collection, trial,
appeal, bankruptcy or other creditors’ proceedings or otherwise.


 


6.                                       Jurisdiction.  The laws of the State of California shall
govern the interpretation and enforcement of this Note without giving effect to
its choice of law provisions.  In the
event that legal action is instituted to collect any amounts due under, or to enforce
any provision of, this instrument, the Maker and any endorser, guarantor or
other person primarily or secondarily liable for payment hereof consent to, and
by execution hereof submit themselves to, the jurisdiction of the courts of the
State of California, and, notwithstanding the place of residence of any of them
or the place of execution of this instrument, such litigation may be brought in
or transferred to a court of competent jurisdiction in and for Orange County,
in the State of California.


 


7.                                       Waivers.  No delay on the part of the Holder in
exercising any right or remedy hereunder shall operate as a waiver of such
right or remedy.  No single or partial
exercise of a right or remedy shall preclude other or further exercise of that
or any other right or remedy.  The
failure of the Holder to insist upon the strict performance of any term of this
Note, or to exercise any right or remedy hereunder, shall not be construed as a
waiver or relinquishment by the Holder for the future of that term, right or
remedy.  No waiver of any right of the
Holder hereunder shall be effective unless in writing executed by the Holder.


 


8.                                       Severability.  The unenforceability or invalidity of any
provision or provisions of this Note as to any persons or circumstances shall
not render that provision or those provisions unenforceable or invalid as to
any other provisions, persons or circumstances, and all provisions hereof, in
all other respects, shall remain valid and enforceable.


 


9.                                       Binding Effect.  This Note shall be binding on and inure to
the benefit of the parties hereto and their respective successors and assigns.


 


10.                                 Compliance With
Usury Laws.  As it is
the intent of all parties to this Note to abide by the interest limitations of
any applicable usury law, it is expressly agreed, anything herein to the
contrary notwithstanding, that the Holder shall not be allowed or entitled to
collect any interest (or any sum which is considered interest by law) which is
in excess of any legal rate applicable hereto. 
Should any amount be collected hereunder which would cause the interest
to exceed said lawful rate, such part of said amount in excess of the lawful
rate shall automatically be credited to principal, or, if all principal amounts
have been paid, shall be refunded to the Maker. 
The provisions of this Note are hereby modified to the extent necessary
to conform with the limitations and provisions of this Section 10.


 


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11.                                 Waiver
of Jury Trial.  THE MAKER AND THE HOLDER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS NOTE, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. 
THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE HOLDER ENTERING INTO
THIS AGREEMENT.


 


12.                                 Representations and Warranties of Maker. 
Maker acknowledges and agrees that the representations, warranties and
covenants made by Maker in Section 3 of the Subscription Agreement between
Maker and Holder with respect to this Note are being relied upon by Holder in
its decision to purchase this Note, and such representations, warranties and
covenants are incorporated by reference in this Note.


 


[Signature Pages Follow]


 


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IN WITNESS WHEREOF, the Maker has duly
executed this Note on the        day of                   ,
2010.


 


 


	
   

  	
  MAKER:

  
	
   

  	
   

  
	
   

  	
  LIQUIDMETAL TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 


[Maker Signature Page to
Subordinated Promissory Note]


 

















 


ACKNOWLEDGED, AGREED AND ACCEPTED


 


By
signing below, the Holder acknowledges, agrees and accepts that (i) this
Note and the indebtedness evidenced by this Note are subordinate in the manner
and to the extent set forth in Section 4 of this Note, and (ii) the
Holder shall be bound by the terms of this Note.


 


 


HOLDER:


 


 


	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  



 


[Holder Signature
Page to Subordinated Promissory Note]