Exhibit 10.1


 


LIQUIDMETAL TECHNOLOGIES, INC.


 


SUBSCRIPTION AGREEMENT


 


Gentlemen:


 


1.                                       Subscription.


 


(a)          Subject to the conditions set forth in this
Subscription Agreement (this “Agreement”), the undersigned, intending to be
legally bound, hereby irrevocably subscribes to purchase from Liquidmetal
Technologies, Inc., a Delaware corporation (the “Company”), a Subordinated
Promissory Note in the principal amount of Two Million Dollars ($2,000,000)
(the “Note”), in substantially the form attached hereto as Exhibit A.  For purposes of this Agreement, the Note and
any shares of common stock, par value $0.001 per share, of the Company (“Common
Stock”) which may be issued to the undersigned by the Company as payment for
the principal and/or interest due under the terms of the Note (the “Repayment
Shares”) are collectively referred to as the “Securities.”  This subscription is submitted to you in
accordance with and subject to the terms and conditions described in this
Agreement.


 


(b)         The purchase price for the Note shall be made payable
to the Company and should be delivered, together with two executed and properly
completed copies of this Agreement, to the Company.


 


(c)          The undersigned may not withdraw this subscription or
any amount paid pursuant thereto.  The
undersigned understands that his or her purchase of the Note is contingent upon
the acceptance in writing of this Agreement by the Company.  The Company reserves the right, in its sole
and absolute discretion, to withdraw, cancel, modify, or reject any subscription,
in whole or in part, for any reason.


 


2.                                       Representations, Warranties and Covenants
of the Subscriber.
The undersigned hereby represents and warrants to, and agrees with, the Company
as follows:


 


(a)          The undersigned is an “accredited investor” as that
term is defined in Rule 501(a) of Regulation D promulgated under the
Securities Act of 1933, as amended (the “Securities Act”).  Specifically: [PLEASE
RESPOND BELOW AS APPROPRIATE]


 

















 


If the subscriber is an INDIVIDUAL, please answer the following questions:


 


(1)                                 Did your individual annual income during
each of the two most recent years exceed $200,000 and do you expect your annual
income during the current year to exceed $200,000?


 


Yes o          No o


 


(2)                                  If you are married, did your joint annual
income with your spouse during each of the two most recent years exceed
$300,000 and do you expect your joint annual income with your spouse during the
current year to exceed $300,000?


 


Yes o          No o


 


(3)                                 Does your individual or joint (together
with your spouse) net worth (including your home, home furnishings and
automobile) exceed $1,000,000?


 


Yes o          No o


 


IF THE ANSWERS TO ALL OF THE IMMEDIATELY PRECEDING
QUESTIONS ARE “NO,” THE SUBSCRIBER DOES NOT MEET THE REQUISITE FINANCIAL
SOPHISTICATION STANDARDS AND WILL NOT BE ACCEPTED AS A PURCHASER OF THE NOTE.


 


If the subscriber is a CORPORATION, LIMITED LIABILITY COMPANY,
PARTNERSHIP, or TRUST please answer the following questions:


 


(4)                                  Was the corporation, limited liability
company, partnership or trust formed for the specific purpose of investing in
the Company?


 


Yes o          No o


 


(5)                                  Does the corporation, limited liability
company, partnership or trust have total assets in excess of $5,000,000?


 


Yes o          No o


 


If the answer to question (4) is “Yes” or the answer to
question (5) is “No,” please answer the following questions:


 


(6)                                 Please list the names of each shareholder
in the corporation, each member in the limited liability company, each partner
in the partnership, and in the case of a revocable trust, each grantor of the
trust:


 


 


 


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(7)                                  Does each person listed in response to
question (6) either (i) have an individual annual income in excess of
$200,000 in each of the two most recent years and expect to have an annual
income in excess of $200,000 during the current year, (ii) if married,
have a joint annual income with his/her spouse in excess of $300,000 in each of
the two most recent years and expect to have an annual income in excess of $300,000
during the current year, or (iii) have an individual or joint (together
with his/her spouse) net worth (including home, home furnishings and
automobiles) in excess of $1,000,000?


 


Yes o          No o


 


IF THE ANSWER TO QUESTION 7 IS “NO,” THE SUBSCRIBER
DOES NOT SATISFY THE INVESTOR SUITABILITY REQUIREMENTS FOR THIS OFFERING AND
WILL NOT BE ACCEPTED AS A PURCHASER OF THE NOTE.  IN THE CASE OF A TRUST THAT IS NOT A
REVOCABLE TRUST, IF THE ANSWER TO QUESTION 4 IS “YES” OR THE ANSWER TO QUESTION
5 IS “NO”, THE SUBSCRIBER DOES NOT SATISFY THE INVESTOR SUITABILITY
REQUIREMENTS FOR THIS OFFERING AND WILL NOT BE ACCEPTED AS A PURCHASER OF THE
NOTE.


 


(b)         The undersigned has a fundamental understanding of the
Company’s business.


 


(c)          The undersigned has had access to and has received all
materials that have been requested by the undersigned and has had a reasonable
opportunity to ask questions of the Company and its representatives.  The Company has answered all inquiries that
the undersigned or the undersigned’s representatives have asked the Company.
The undersigned has taken all the steps necessary to evaluate the merits and
risks of an investment in the Securities.


 


(d)         The undersigned has such knowledge and experience in
finance, securities, investments and other business matters so as to be able to
protect the interests of the undersigned in connection with this transaction,
and the undersigned’s investment in the Company is not material when compared
to the undersigned’s total financial capacity.


 


(e)          The undersigned understands that there are significant
risks incident to an investment in the Company as proposed herein, and the
undersigned can afford to bear such risks, including, without limitation, the
risk of losing the entire investment.


 


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(f)            The undersigned understands and acknowledges that no
market for the Notes currently exists and none may develop in the future and
that the undersigned may find it impossible to liquidate the investment.


 


(g)                                 The undersigned understands that the
Securities have not been registered under the Securities Act, that the
Securities will be issued on the basis of the exemption provided by Section 4(2) of
the Securities Act and Regulation D promulgated thereunder and under exemptions
under certain state securities laws, that this transaction has not been
reviewed by, passed on or submitted to any federal or state agency or
self-regulatory organization where an exemption is being relied upon, and that
the Company’s reliance thereon is based in part upon the representations made
by the undersigned in this Agreement.


 


(h)                                 The undersigned acknowledges that the
undersigned is familiar with the limitations imposed by the Securities Act and
the rules and regulations thereunder on the transfer of the
Securities.  In particular, the
undersigned agrees that the Company shall not be required to give any effect to
a sale, assignment or transfer of the Securities, unless (i) the sale,
assignment or transfer of the Securities is registered under the Securities
Act, it being understood that the Securities are not currently registered for
sale and that the Company has no obligation or intention to so register the
Securities, or (ii) such Securities are sold, assigned or transferred in
accordance with all the requirements and limitations of Rule 144 under the
Securities Act, it being understood that Rule 144 is not available at the
present time for the sale of the Securities, or (iii) such sale,
assignment or transfer is otherwise exempt from registration under the
Securities Act. The undersigned further understands that an opinion of counsel
and other documents may be required to transfer the Securities.


 


(i)             If the undersigned is an individual, the undersigned
is a bona-fide resident of the state set forth in the address provided on the
undersigned’s signature page to this Agreement.


 


(j)             If the undersigned is a partnership, trust,
corporation or other entity: (A) it has made other investments or engaged
in other substantial business activities prior to receiving an opportunity to
purchase the Securities; (B) it was not organized for the purpose of
acquiring the Securities; (C) the person executing on behalf of the
partnership, trust, corporation or other entity has the full power and
authority to execute and comply with the terms of this Agreement on behalf of
such entity and to make the representations and warranties made herein on its
behalf; (D) its principal place of business and principal office are
located in the state set forth in its address below; and (E) the
investment in the Securities has been affirmatively authorized, if required, by
the governing board of such entity and is not prohibited by the governing
documents of the entity.


 


(k)          The undersigned will acquire the Securities for the
undersigned’s own account for investment and not with a view to the sale or
distribution thereof or the granting of any participation therein, and has no
present intention of distributing or selling to others any of such interest or
granting any participation therein.


 


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(l)             The undersigned acknowledges that the representations,
warranties and agreements made by the undersigned herein shall survive the
execution and delivery of this Agreement and the purchase of the Note.  The information stated herein is true and
complete as of the date hereof and will be true and complete as of the date on
which the Company shall sell the Note to the undersigned.  If, prior to the final consummation of the
offer and sale of the Note, there should be any change in such information or
any of such information becomes incorrect or incomplete, the undersigned agrees
to notify and supply promptly corrective information to the Company.


 


3.                                       Representations and Warranties of the Company. 
The Company hereby represents and warrants to the undersigned that:


 


(a)                                  Organization
and Qualification.  The Company
and its “Subsidiaries” (which
for purposes of this Agreement means any entity in which the Company, directly
or indirectly, owns capital stock or holds an equity or similar interest) are
corporations or other legal entities duly organized and validly existing in
good standing under the laws of the jurisdictions in which they are organized,
as set forth in the disclosure schedule attached hereto (the “Disclosure
Schedule”), and have the requisite power and authorization to own their
properties and to carry on their business as now being conducted.  The Company and each Subsidiary is duly
qualified as a foreign corporation or other legal entity to do business and is
in good standing in every jurisdiction in which its ownership of property or
the nature of the business conducted by it makes such qualification necessary,
as set forth in the Disclosure Schedule, except to the extent that the failure
to be so qualified or be in good standing would not have a Material Adverse
Effect.  As used in this Agreement, “Material Adverse Effect” means any
material adverse effect on the business, properties, assets, operations,
results of operations, or condition (financial or otherwise) of the Company and
its Subsidiaries, taken as a whole.  The
Company has no Subsidiaries except as set forth in the Disclosure Schedule or
in the SEC Documents (as defined below).


 


(b)                                 Authorization;
Enforcement; Validity.  The
Company has the requisite corporate power and authority to enter into and
perform its obligations under this Agreement and the Note (collectively, the “Transaction Documents”) and to issue
the Securities in accordance with the terms hereof and thereof.  The execution and delivery of the Transaction
Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby, including, without limitation,
the issuance of the Note and the reservation for issuance and the issuance of
the Repayment Shares,
have been duly authorized by the Company’s Board of Directors and no
further consent or authorization is required by the Company, its Board of
Directors or its stockholders.  This
Agreement and the Note have been duly executed and delivered by the Company,
and constitute the legal, valid and binding obligations of the Company
enforceable against the Company in accordance with their respective terms,
except as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement of applicable
creditors’ rights and remedies, and except that any rights to indemnity or
contribution under the Transaction Documents may be limited by federal and
state securities laws and public policy considerations.


 


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(c)                                  Issuance of
Securities.  The Note is
duly authorized and, upon issuance in accordance with the terms hereof, shall
be free from all taxes, liens and charges with respect to the issue
thereof.  A number of shares of Common
Stock of the Company equal to the number Repayment Shares issuable under the terms of the Note will be duly
authorized and reserved for issuance. 
Upon issuance in accordance with the terms of the Note, such shares will
be validly issued, fully paid and nonassessable and free from all taxes, liens
and charges with respect to the issue thereof, with the holder being entitled
to all rights accorded to a holder of Common Stock.  Assuming the accuracy of each of the
representations and warranties of the undersigned contained in Section 2
of this Agreement, the issuance by the Company of the Securities is exempt from
the registration requirements of Section 5 of the Securities Act.


 


(d)                                 No Conflicts.  The execution, delivery and performance of
the Transaction Documents by the Company and the consummation by the Company of
the transactions contemplated hereby and thereby (including, without
limitation, the issuance of the Note and the reservation for issuance and
issuance of the Repayment Shares) will not (i) result in a violation of
the certificate of incorporation, any certificate of designations, preferences
and rights of any outstanding series of preferred stock or the bylaws of the
Company or any of its Subsidiaries, (ii) conflict with, or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any material agreement, indenture or
instrument to which the Company or any of its Subsidiaries is a party, except
which are the subject of written waivers or consents which have been obtained or
effected on or prior to the date hereof or (iii) result in a violation of
any law, rule, regulation, order, judgment or decree (including federal and
state securities laws and regulations) applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries is bound or affected, except in the case of clauses (ii) and
(iii), for such breaches or defaults as could not reasonably be expected to
have a Material Adverse Effect.


 


(e)                                  Consents.  Except as disclosed in the Disclosure
Schedule or in the SEC Documents, the Company is not required to obtain any
consent, authorization or order of, or make any filing or registration with,
any court, governmental agency or any regulatory or self-regulatory agency or
any other Person in order for it to execute, deliver or perform any of its
obligations under or contemplated by the Transaction Documents, in each case in
accordance with the terms hereof or thereof. 
All consents, authorizations, orders, filings and registrations which
the Company is required to obtain pursuant to the preceding sentence have been
obtained or effected on or prior to the date hereof (other than filings and
reports relating to the offer and sale of the Securities required under
Regulation D or applicable securities or “Blue Sky” laws), and the Company and
its Subsidiaries are unaware of any facts or circumstances which might prevent
the Company from obtaining or effecting any of the registrations, applications
or filings pursuant to the preceding sentence.


 


(f)                                    Acknowledgment Regarding the Subscriber’s
Purchase of Securities.  The Company acknowledges and
agrees that the undersigned is acting solely in the capacity of arm’s length
purchaser with respect to the Transaction Documents and the transactions
contemplated hereby and thereby and that, except as set forth in the Disclosure
Schedule or in the SEC Documents, the undersigned is not (i) an officer or
director of the Company, (ii) an “affiliate” of the Company (as defined in Rule 144)
or (iii) to the knowledge of the Company, a “beneficial owner” of more
than 10% of the Common Stock (as defined for purposes of Rule 13d-3 of the


 


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Securities Exchange Act of 1934, as amended (the “Exchange Act”)).  The Company further acknowledges that the
undersigned is not acting as a financial advisor or fiduciary of the Company
(or in any similar capacity) with respect to the Transaction Documents and the
transactions contemplated hereby and thereby, and any advice given by the
undersigned or any of its representatives or agents in connection with the
Transaction Documents and the Transactions contemplated hereby and thereby is
merely incidental to the undersigned’s purchase of the Securities.


 


(g)                                 No General
Solicitation; Placement Agent’s Fees.  Neither the Company, nor any of its
affiliates, nor any Person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D) in connection with the offer or sale of the Securities.  The Company shall be responsible for the
payment of any placement agent’s fees, financial advisory fees, or brokers’
commissions (other than for persons engaged by the undersigned or its
investment advisor) relating to or arising out of the transactions contemplated
hereby.


 


(h)                                 No Integrated
Offering.  None of the
Company, its Subsidiaries, any of their affiliates, or any Person acting on
their behalf has, directly or indirectly, made any offers or sales of any security
or solicited any offers to buy any security, under circumstances that would
require registration of any of the Securities under the Securities Act or cause
this offering of the Securities to be integrated with prior offerings by the
Company for purposes of the Securities Act or any applicable stockholder
approval provisions, including, without limitation, under the rules and
regulations of any exchange or automated quotation system on which any of the
securities of the Company are listed or designated.


 


(i)                                     Rights
Agreement.  The Company has not adopted a stockholder rights
plan or similar arrangement relating to accumulations of beneficial ownership
of Common Stock or a change in control of the Company.


 


(j)                                     SEC Documents.  The Company has filed, or intends to file,
all reports, schedules, forms, statements and other documents required to be
filed by it with the United States Securities and Exchange Commission (the “SEC”)
pursuant to the reporting requirements of the Exchange Act (all of the foregoing
filed prior to the date hereof (whether or not required to be filed), the draft
of the Company’s Annual Report on Form 10-K attached hereto, and all exhibits included therein and
financial statements and schedules thereto and documents incorporated by reference
therein being hereinafter referred to as the “SEC Documents”).  As of
their respective dates, the SEC Documents complied in all material respects
with the requirements of the Exchange Act and the rules and regulations of
the SEC promulgated thereunder applicable to the SEC Documents, and, to the
Company’s knowledge, none of the SEC Documents, at the time they were filed
with the SEC or are intended to be filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.


 


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(k)                                  Financial
Statements.  As of their
respective dates, the financial statements of the Company included in the SEC
Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC
with respect thereto.  Such financial
statements have been prepared in accordance with generally accepted accounting
principles, consistently applied, during the periods involved (except (i) as
may be otherwise indicated in such financial statements or the notes thereto,
or (ii) in the case of unaudited interim statements, to the extent they
may exclude footnotes or may be condensed or summary statements) and fairly
present in all material respects the financial position of the Company as of
the dates thereof and the results of its operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments).


 


(l)                                     Conduct of
Business.  Neither the
Company nor any of its Subsidiaries is in violation of any term of or in default
under its Certificate of Incorporation or Bylaws or its organizational charter
or bylaws, respectively.  Except as
disclosed in the Disclosure Schedule or in the SEC Documents, neither the
Company nor any of its Subsidiaries is in violation of any judgment, decree or
order or any statute, ordinance, rule or regulation applicable to the
Company or its Subsidiaries, and neither the Company nor any of its
Subsidiaries will conduct its business in violation of any of the foregoing,
except for possible violations which would not, individually or in the
aggregate, have a Material Adverse Effect.


 


(m)                               Regulatory
Permits.  The Company and its
Subsidiaries possess all certificates, authorizations and permits issued by the
appropriate federal, state or foreign regulatory authorities necessary to
conduct their respective businesses, except where the failure to possess such
certificates, authorizations or permits would not have, individually or in the
aggregate, a Material Adverse Effect, and neither the Company nor any such
Subsidiary has received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit.


 


(n)                                 Equity
Capitalization.  As of the
date hereof, the number of shares and type of all authorized, issued, and
outstanding capital stock of the Company, and all shares of Common Stock
reserved for issuance under the Plans (as defined below), is set forth in the
Disclosure Schedule.  All of such
outstanding shares have been, or upon issuance will be, validly issued and are
fully paid and nonassessable.  All of
such outstanding shares of capital stock are duly authorized, validly issued,
fully paid and nonassessable.  No shares
of capital stock of the Company are subject to preemptive rights or any other
similar rights of the shareholders of the Company or any liens or encumbrances
imposed through the actions or failure to act of the Company.  Except as disclosed in the Disclosure
Schedule or in the SEC Documents and other than pursuant to this Agreement and as
contemplated by the Company’s employee and director benefit, incentive, or
option plans disclosed in the Company’s SEC Documents (the “Plans”), (i) there
are no outstanding options, warrants, scrip, rights to subscribe for, puts,
calls, or rights of first refusal, and (ii) there are no agreements,
understandings, claims, antidilution protection or other commitments or rights
of any character whatsoever that could require the Company to issue additional
shares of capital stock of the Company or adjust the purchase or exercise price
of any such instrument.  Except as
disclosed in the Disclosure Schedule or in the SEC Documents, there are no
agreements or arrangements (other than the Registration Rights Agreement, dated
as of May 1, 2009, between the Company and the buyers signatory thereto)
under which the Company is obligated to register the sale of any of its
securities under the Securities Act.


 


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(o)                                 Indebtedness
and Other Contracts.  Except as
disclosed in the Disclosure Schedule or in the SEC Documents, neither the
Company nor any of its Subsidiaries (i) has any outstanding Indebtedness,
or (ii) is in violation of any term of or in default under any contract,
agreement or instrument relating to any Indebtedness.  For purposes of this Agreement:  (x) “Indebtedness”
of any Person means, without duplication (A) all indebtedness for borrowed
money, (B) all obligations issued, undertaken or assumed as the deferred
purchase price of property or services (other than trade payables entered into
in the ordinary course of business), (C) all reimbursement or payment
obligations with respect to letters of credit, surety bonds and other similar
instruments, (D) all obligations evidenced by notes, bonds, debentures or
similar instruments, including obligations so evidenced incurred in connection
with the acquisition of property, assets or businesses, (E) all
indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect to
any property or assets acquired with the proceeds of such indebtedness (even
though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property), (F) all
monetary obligations under any leasing or similar arrangement which, in
connection with generally accepted accounting principles, consistently applied
for the periods covered thereby, is classified as a capital lease, (G) all
indebtedness referred to in clauses (A) through (F) above secured by
(or for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any mortgage, lien, pledge, charge, security
interest or other encumbrance upon or in any property or assets (including
accounts and contract rights) owned by any Person, even though the Person which
owns such assets or property has not assumed or become liable for the payment of
such indebtedness, and (H) all Contingent Obligations (as defined below)
in respect of indebtedness or obligations of others of the kinds referred to in
clauses (A) through (G) above; (y) “Contingent Obligation” means, as to any Person, any direct or
indirect liability, contingent or otherwise, of that Person with respect to any
indebtedness, lease, dividend or other obligation of another Person if the
primary purpose or intent of the Person incurring such liability, or the
primary effect thereof, is to provide assurance to the obligee of such
liability that such liability will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
liability will be protected (in whole or in part) against loss with respect
thereto; and (z) “Person”
means an individual, a limited liability company, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.


 


(p)                                 Absence of
Litigation.  Except as
disclosed in the Disclosure Schedule or in the SEC Documents, there is no
action, suit, proceeding, inquiry or investigation before or by any court,
public board, government agency, self-regulatory organization or body pending
or, to the knowledge of the Company, threatened against or affecting the
Company, the Common Stock or any of the Company’s Subsidiaries that would,
individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect.


 


(q)                                 Insurance.  The Company and each of its Subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as management of the Company reasonably believes
to be prudent and customary in the businesses in which the Company and its
Subsidiaries are engaged.  Neither the
Company nor any such Subsidiary has been refused any insurance coverage sought
or applied for and neither


 


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the Company nor any such
Subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect.


 


(r)                                    Employee
Relations.  Except as
disclosed in the Disclosure Schedule or in the SEC Documents, neither the
Company nor any of its Subsidiaries is a party to any collective bargaining
agreement or employs any member of a union. 
The Company and its Subsidiaries believe that their relations with their
employees are good.  No executive officer
of the Company (as defined in Rule 501(f) of the Securities Act) has
notified the Company that such officer intends to leave the Company or
otherwise terminate such officer’s employment with the Company.  No executive officer of the Company, to the
knowledge of the Company, is, or is now expected to be, in violation of any
material term of any employment contract, confidentiality, disclosure or
proprietary information agreement, non-competition agreement, or any other
contract or agreement or any restrictive covenant.  The Company and its Subsidiaries are in
compliance with all federal, state, local and foreign laws and regulations
respecting employment and employment practices, terms and conditions of
employment and wages and hours, except where failure to be in compliance would
not, either individually or in the aggregate, reasonably be expected to result
in a Material Adverse Effect.


 


(s)                                  Title.  The Company and its Subsidiaries have good
and marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them which is material to the business
of the Company and its Subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in the Disclosure
Schedule or in the SEC Documents or such as do not materially affect the value
of such property and do not interfere with the use made and proposed to be made
of such property by the Company and any of its Subsidiaries.  Any real property and facilities held under
lease by the Company and any of its Subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material and
do not interfere with the use made and proposed to be made of such property and
buildings by the Company and its Subsidiaries.


 


(t)                                    Intellectual
Property Rights.  To the
knowledge of the Company and except as set forth in the Disclosure Schedule or
in the SEC Documents, the Company and its Subsidiaries own or possess adequate
rights or licenses to use all trademarks, trade names, service marks, service
mark registrations, service names, patents, patent rights, copyrights,
inventions, licenses, approvals, governmental authorizations, trade secrets and
other intellectual property rights (“Intellectual
Property Rights”) necessary to conduct their respective businesses as
now conducted.  The Company does not have
any knowledge of any infringement by the Company or its Subsidiaries of
Intellectual Property Rights of others. 
Except as set forth in the Disclosure Schedule or in the SEC Documents,
there is no claim, action or proceeding being made or brought, or to the
knowledge of the Company, being threatened, against the Company or its
Subsidiaries regarding its Intellectual Property Rights which could have a
Material Adverse Effect.


 


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(u)                                 Environmental
Laws.  The Company and its
Subsidiaries (i) are in material compliance with any and all Environmental
Laws (as hereinafter defined), (ii) have received all material permits,
licenses or other approvals required of them under applicable Environmental
Laws to conduct their respective businesses and (iii) are in material compliance
with all terms and conditions of any such permit, license or approval where, in
each of the foregoing clauses (i), (ii) and (iii), the failure to so
comply could be reasonably expected to have, individually or in the aggregate,
a Material Adverse Effect.  The term “Environmental Laws” means all federal,
state, local or foreign laws relating to pollution or protection of human
health or the environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata), including, without
limitation, laws relating to emissions, discharges, releases or threatened
releases of chemicals, pollutants, contaminants, or toxic or hazardous
substances or wastes (collectively, “Hazardous
Materials”)  into the
environment, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials, as well as all authorizations, codes, decrees, demands or
demand letters, injunctions, judgments, licenses, notices or notice letters,
orders, permits, plans or regulations issued, entered, promulgated or approved
thereunder.


 


(v)                                 Tax Status.  The Company and each of its Subsidiaries (i) has
made or filed all federal and state income and all other tax returns, reports
and declarations required by any jurisdiction in which such filings are
required, (ii) has paid all taxes and other governmental assessments and
charges that are owed by it, including all taxes shown or determined to be due
on such returns, reports and declarations, except those being contested in good
faith and for which adequate reserves have been established on the Company’s
books, and (iii) has set aside on its books provision reasonably adequate
for the payment of all taxes for periods subsequent to the periods to which
such returns, reports or declarations apply. 
There are no unpaid taxes in any material amount claimed to be due by
the taxing authority of any jurisdiction.


 


(w)                               Warrant.  The Company
acknowledges and agrees that on or about the date of this Agreement, Carlyle
Liquid Holdings, LLC (the “Grantor”) has granted or will grant a Warrant to
Purchase Shares of Common Stock (the “Warrant”) to the undersigned.  The Company hereby confirms that the Grantor
is the record owner of 888,743 shares of the Company’s Series A-2
Preferred Stock, which are convertible into 20,198,705 shares of the Company’s
common stock.  To the best of the Company’s
knowledge, the Grantor has the authority to enter into the Warrant and perform
its obligations thereunder and the Warrant will be enforceable against the
Grantor in accordance with its terms. 
The Company is not aware of any restriction that would prevent the
Grantor from transferring shares to the undersigned in accordance with the
terms of the Warrant.  The Company
acknowledges and agrees that the Grantor will appoint the undersigned as the
Grantor’s attorney-in-fact pursuant to paragraph 3.b of the Warrant for
purposes of converting shares of Series A-2 Preferred Stock into shares of
common stock.  The Company will honor and
accept instructions that are given by the undersigned in its capacity as
attorney-in-fact for the Grantor in connection with the conversion of Series A-2
Preferred Stock into common stock


 


(x)                                   Manipulation of Price. 
The Company has not, and to its knowledge no one acting on its behalf
has, (i) taken, directly or indirectly, any action designed to cause or to
result in, or that has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of any of the Securities, (ii) sold,
bid for, purchased, or paid anyone any compensation for soliciting purchases
of, any of the Securities, or (iii) paid or agreed to pay to any person
any compensation for soliciting another to purchase any other securities of the
Company.


 


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(y)                                 Internal Accounting and Disclosure
Controls.  The Company and each of its Subsidiaries
maintains a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
and liability accountability, (iii) access to assets or incurrence of
liabilities is permitted only in accordance with management’s general or
specific authorization and (iv) the recorded accountability for assets and
liabilities is compared with the existing assets and liabilities at reasonable
intervals and appropriate action is taken with respect to any difference.  Except as set forth in the Disclosure Schedule
or in the SEC Documents, the Company maintains disclosure controls and
procedures (as such term is defined in Rule 13a-14 under the Exchange Act)
that are effective in ensuring that information required to be disclosed by the
Company in the reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported, within the time periods specified
in the rules and forms of the SEC, including, without limitation, controls
and procedures designed to ensure that information required to be disclosed by
the Company in the reports that it files or submits under the Exchange Act is
accumulated and communicated to the Company’s management, including its
principal executive officer or officers and its principal financial officer or
officers, as appropriate, to allow timely decisions regarding required
disclosure.  Except as set forth in the
Disclosure Schedule or in the SEC Documents, during the twelve months prior to
the date hereof neither the Company nor any of its Subsidiaries have received
any notice or correspondence from any accountant relating to any potential
material weakness in any part of the system of internal accounting controls of
the Company or any of its Subsidiaries.


 


(z)                                   Investment
Company Status.  The Company is not, and upon consummation of
the sale of the Securities will not be, an “investment company,” a company
controlled by an “investment company” or an “affiliated person” of, or “promoter”
or “principal underwriter” for, an “investment company” as such terms are
defined in the Investment Company Act of 1940, as amended.


 


(aa)                            U.S. Real
Property Holding Corporation.  The Company is not,
nor has it ever been, a U.S. real property holding corporation within the
meaning of Section 897 of the Internal Revenue Code of 1986, as amended,
and the Company shall so certify upon the request of the undersigned.


 


(bb)                          Bank Holding
Company Act.  Neither the Company nor any of its
Subsidiaries is subject to the Bank Holding Company Act of 1956, as amended
(the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve
System (the “Federal Reserve”).  Neither the Company nor any of its
Subsidiaries or affiliates owns or controls, directly or indirectly, five
percent (5%) or more of the outstanding shares of any class of voting
securities or twenty-five (25%) or more of the total equity of a bank or
any equity that is subject to the BHCA and to regulation by the Federal
Reserve.  Neither the Company nor any of its Subsidiaries or affiliates
exercises a controlling influence over the management or policies of a bank or
any entity that is subject to the BHCA and to regulation by the Federal
Reserve.


 


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(cc)                            Shell Company Status. 
The Company is
not, nor has it at any time previously been, considered a “shell company”
within the meaning of Rule 144(i)(1)(i) (or any successor rule) under
the Securities Act.


 


(dd)                          Use of Note Proceeds. 
The Company agrees that it will apply the cash proceeds it receives from
the Note in accordance with the Disclosure Schedule.  Specifically, but without limitation, the
Company agrees that it will not use any portion of the Note proceeds to repay “Senior
Indebtedness” (as defined in the Note).


 


4.                                       Indemnification. The undersigned agrees to indemnify and
hold harmless the Company and each officer, director, employee, agent and
controlling person of the Company from and against any and all loss, damage or
liability due to or arising out of a breach by the undersigned of any of its
representations or warranties in this Agreement.  The Company agrees to indemnify and hold
harmless the undersigned and each officer, director, employee, agent and
controlling person of the undersigned from and against any and all loss, damage
or liability due to or arising out of a breach by the Company of any of its
representations or warranties in this Agreement.


 


5.                                       Miscellaneous.


 


(a)          This Agreement shall be binding upon and inure to the
benefit of the parties hereto, the successors and assigns of the Company, and
the permitted successors and assigns of the undersigned.


 


(b)         This Agreement does not create, and shall not be
construed as creating, any rights enforceable by any person not a party to this
Agreement.


 


(c)          The validity, construction, enforcement, and interpretation
of this Agreement are governed by the laws of the State of California and the
United States of America, without regard to principles of conflict of laws.


 


(d)         The undersigned hereby agrees that the venue of any
action, proceeding, counterclaim, crossclaim, or other litigation relating to,
involving, or resulting from this Agreement shall be the state or federal
courts located in Orange County, California.


 


(e)          This Agreement may not be amended except in a writing
specifically intended for the purpose and executed by the party against whom
enforcement of the amendment is sought.


 


(f)            This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes
all prior agreements and understandings, both written and oral, between the
parties with respect to the subject matter hereof.


 


13

















 


(g)         This Agreement may be executed in counterparts, each
of which shall constitute an original, and all of which, together, shall
constitute the same instrument.


 


[SIGNATURES FOLLOW]


 


14

















 


IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year this subscription has been accepted by the Company as set
forth below.


 


 


	
  Principal Amount of Note to be Purchased:  $2,000,000

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date of Subscription:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  X

  	
   

  
	
  (Print Name of Subscriber) 

  	
   

  	
  (Signature of
  Subscriber or Authorized Person on behalf of Subscriber if Subscriber is an
  Entity)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Print Name and
  Title of Authorized Person if Subscriber is an Entity)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  X

  	
   

  
	
  (Print Name of Joint Subscriber, if any)

  	
   

  	
  (Signature of
  Joint Subscriber, if any)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
  Social Security Number
  or other Taxpayer Identification Number:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ACCEPTED BY:

  	
   

  	
   

  
	
  Liquidmetal Technologies, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  
							



 


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EXHIBIT A


 


FORM OF
SUBORDINATED PROMISSORY NOTE


 

















 


DISCLOSURE
SCHEDULE