Document:

Exhibit 10.5

 

PLEDGE AGREEMENT

 

This
Pledge Agreement (the “Agreement”) is made as of June 23, 2010,
between LIQUIDMETAL TECHNOLOGIES, INC., a Delaware corporation (“LMT”),
and ENTERPRISE BANK & TRUST, a Missouri banking corporation (“Bank”).

 

Preliminary Statements

 

(a)                                  Liquidmetal
Coatings, LLC, a Delaware limited liability company (“LMC”), and its
wholly-owned subsidiary, Liquidmetal Coatings Solutions, LLC, a Delaware
limited liability company (“LMCS”), have requested that Bank provide
credit to LMC and LMCS.

 

(b)                                 LMT, as owner
of 47,436.25 Class A Common Units of LMC (the “Pledged Equity Interests”),
will benefit directly or indirectly from Bank’s provision of credit to LMC or
LMCS and, as such, has agreed to pledge to Bank and to grant to Bank a security
interest in the Pledged Equity Interests and the other Pledged Collateral
referred to below to secure various obligations, all as more particularly
described below.

 

NOW,
THEREFORE, to induce Bank to extend credit to LMC or LMCS, and in recognition
that Bank would not extend credit to LMC or LMCS on the same terms but for LMT’s
agreements hereunder, and for other good and valuable consideration the receipt
and sufficiency of which are hereby acknowledged, the parties agrees as
follows:

 

1.                                       Pledge.  LMT pledges and hypothecates to Bank, and
grants to Bank a security interest in, all of LMT’s right, title and interest
in and to the following property, whether such property or right, title or
interest is now owned or existing or hereafter acquired or arising
(collectively, the “Pledged Collateral”):

 

(a)                                  the Pledged
Equity Interests and all certificates representing the Pledged Equity
Interests, and all distributions, dividends, cash, instruments and other
property from time to time received or receivable or distributed or
distributable in respect of or in exchange for all or any part of the Pledged
Equity Interests; and

 

(b)                                  all additional
membership units and all other equity interests and securities of any nature
whatsoever of Issuer, and all certificates, if any, representing such
additional membership units, other equity interests, other securities, and all
distributions, dividends, cash, instruments and other property from time to
time received or receivable or distributed or distributable in respect of or in
exchange for any or all of such membership units, other equity interests and
other securities; and

 

(c)                                  all proceeds of
each of the foregoing.

 

The
term “proceeds,” as used in subsection (c) immediately above, has the
meaning given to it in Article 9 of the Uniform Commercial Code as in
effect in the State of Missouri from time to time.  The term “Issuer,” as used in this
Agreement, means any issuer of any Pledged Equity Interests, including, without
limitation, any successor to the original issuer of such Pledged Equity
Interests.

 

Notwithstanding
the foregoing provisions of this Section 1, non-liquidating cash
distributions paid by Issuer to LMT shall cease to be Pledged Collateral if, at
the time of such payment, such distributions and the payment thereof are
permitted under the Credit Agreement (as defined below).

 

 

2.                                       Security for
Obligations.  This
Agreement secures the payment and performance of all existing and future
obligations of any nature whatsoever of:

 

(a)                                  each of LMC and LMCS to
Bank, including, without limitation, all amounts payable under the Credit
Agreement and the other Credit Documents to which LMC or LMCS is a party; and

 

(b)                                 LMT under this
Agreement and any other Credit Documents to which LMT is a party;

 

in
each case irrespective of whether such obligations are for principal, interest,
fees, expenses, indemnification obligations or otherwise and irrespective of
whether such obligations are existing, future, contingent, joint, several,
direct, indirect, acquired, matured, unmatured or otherwise.  All such obligations, including all renewals,
replacements, extensions, amendments and other modifications thereof are
collectively referred to herein as the “Obligations.”

 

3.                                       Delivery of
Pledged Collateral.  All
certificates or instruments representing or evidencing any of the Pledged
Collateral shall be delivered to and held by or on behalf of Bank pursuant
hereto and shall be in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or assignments in blank,
all in form and substance satisfactory to Bank. 
If an Event of Default exists, Bank shall have the right, in its
discretion and without notice to LMT, to transfer to or to register in the name
of Bank or any of its nominees as pledgee any or all of the Pledged Collateral,
subject only to the revocable rights specified in Section 6(a) below.

 

4.                                       Representations
and Warranties.  LMT
represents and warrants as follows:

 

(a)                                  The Pledged
Equity Interests constitute not less than 69.25% of the issued and outstanding Class A
Common Units of LMC issued and outstanding on the date hereof.  The Pledged Equity Interests have been duly
authorized and were validly issued to LMT. 
No options, warrants or other rights to acquire or sell, or to exercise
any voting rights with respect to, any Pledged Equity Interests are
outstanding, except for (i) the voting and related rights of C3 under the
C3 Proxy, and (ii) the rights of LMC and other equity holders of LMC under
the LMC Operating Agreement, as modified by the attached Consent of Issuer and
Equity Holders.

 

(b)                                 LMT is the
legal and beneficial owners of the Pledged Collateral free and clear of any
security interest or other Lien, except for Permitted Liens.

 

(c)                                  The pledge of
the Pledged Equity Interests pursuant to this Agreement creates a valid
security interest in the Pledged Collateral, securing the payment and
performance of the Obligations, subject to no Liens other than Permitted
Liens.  Bank’s security interest in the
Pledged Collateral will be perfected upon Bank taking possession of the
security certificates representing the Pledged Equity Interests, together with
endorsements or similar transfer instruments relating thereto signed in blank
by LMT.

 

(d)                                 No
authorization, approval, consent or other action by, and no notice to or filing
with, any Person (including, without limitation, Issuer, any other equity
holder of Issuer or any governmental authority or regulatory body), is required
either (i) for the pledge by LMT of the Pledged Collateral pursuant to
this Agreement or for the execution, delivery or performance of this Agreement
by LMT, or (ii) for the exercise by Bank of any of its rights and remedies
provided for in this Agreement , except for (A) any such authorization,
approval, consent, action, 

 

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notice
or filing which has been obtained or made, as the case may be, and which is
currently in effect, and (B) compliance with any applicable federal and
state securities laws in connection with the disposition of any Pledge
Collateral constituting securities under such laws.

 

5.                                       Further
Assurances.  LMT, at its
expense, will promptly execute and deliver all further instruments and
documents, and take all further action, that Bank may reasonably request from
time to time in order to perfect and protect any security interest granted or
purported to be granted hereby or to enable Bank to exercise and enforce its
rights and remedies hereunder with respect to any Pledged Collateral.

 

6.                                       Voting Rights.

 

(a)                              So long as no Event of
Default exists, LMT (subject to the C3’s rights under the C3 Proxy) shall be
entitled to exercise any and all voting and other consensual rights pertaining
to the Pledged Collateral or any part thereof for any purpose not inconsistent
with the terms of this Agreement or any other Credit Document.

 

(b)                                 Upon the
occurrence and during the continuance of any Event of Default, any rights of
LMT (or C3) to exercise the voting and other consensual rights which LMT (or
C3) would otherwise be entitled to exercise pursuant to Section 6(a) above
shall cease, and all such rights shall thereupon become vested in Bank who
shall thereupon have the sole right to exercise such voting and other
consensual rights; provided; however,
that nothing in this Section 6(b) shall impose any duty on Bank to
exercise any voting or other rights granted to Bank pursuant to this Section 6.  C3, by its signature on the attached Consent
of Issuer and Equity Holders, specifically consents to the provisions of this Section 6(b);
it being understood, however, that Bank may elect, pursuant to the grant of a
proxy or otherwise, to permit C3 to exercise the voting and other rights
granted to Bank pursuant to this Section 6(b).

 

7.                                       Transfers and
Other Liens; Additional Equity Interests.

 

(a)                                  LMT will not (i) sell
or otherwise dispose of, or grant any option with respect to, any of the
Pledged Collateral, or (ii) create or permit to exist any security
interest or other Lien with respect to any of the Pledged Collateral, except
for Permitted Liens; and

 

(b)                                 LMT will pledge
hereunder, immediately upon LMT’s acquisition (directly or indirectly) thereof,
any and all additional membership units, other equity interests and other
securities of Issuer in which LMT has or acquires any interest at any time.

 

8.                                       Bank Appointed
Attorney-in-Fact.  LMT
appoints Bank as LMT’s attorney-in-fact, with full authority in the place and
stead of LMT and in the name of LMT or otherwise, so long as an Event of
Default exists, to take any action and to execute any instrument which Bank may
deem necessary to accomplish the purposes of this Agreement, including, without
limitation, to receive, indorse and collect all instruments made payable to LMT
representing any distribution or other payment in respect of the Pledged
Collateral or any part thereof and to give full discharge for the same and to
exercise any voting and other rights available to Bank pursuant to Section 6(b) above.

 

9.                                       Bank May Perform.  If LMT fails to perform any agreement
contained herein after request by Bank to perform such agreement, Bank may
itself perform, or cause the performance of, such agreement, and the expenses
of Bank incurred in connection therewith shall be payable by LMT pursuant to Section 12
below.

 

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10.                                 Reasonable Care.  Bank shall be deemed to have exercised
reasonable care in the custody and preservation of any Pledged Collateral in
its possession if such Pledged Collateral is accorded treatment substantially
equal to that which Bank accords its own property, it being understood that
Bank shall not have any responsibility for (a) ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any Pledged Collateral, whether or not Bank has or is
deemed to have knowledge of such matters, or (b) taking any necessary
steps to preserve rights against any parties with respect to any Pledged
Collateral.

 

11.                                 Remedies Upon
Default.  If any Event of Default exists:

 

(a)                                  Bank may
exercise in respect of the Pledged Collateral, in addition to other rights and
remedies provided for herein or otherwise available to it, all of the rights
and remedies of a secured party on default under the Uniform Commercial Code as
in effect in the State of Missouri at that time, and Bank may also, without
notice except as specified below, sell the Pledged Collateral or any part
thereof in one or more parts at public or private sale, at any exchange, broker’s
board or at any of Bank’s offices or elsewhere, for cash, on credit or for
future delivery, and upon such other terms as are commercially reasonable.  LMT agrees that, to the extent notice of sale
shall be required by law, at least 10 days’ notice to LMT of the time and place
of any public sale or the time after which any private sale is to be made shall
constitute reasonable notification.  Bank
shall not be obligated to make any sale of Pledged Collateral regardless of
notice of sale having been given.  Bank
may adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned.  With respect to any of the Pledged Collateral
that consists of securities not registered under the securities laws of the
United States or any state, LMT agrees that it shall be commercially reasonable
for Bank to sell the Pledged Collateral to a buyer who will represent that such
buyer is purchasing solely for investment and not with a view to the resale or
distribution of such securities, or in such other manner as counsel for Bank
may require to comply with applicable securities laws.

 

(b)                                 Any cash held
by Bank as Pledged Collateral and all cash proceeds received by Bank in respect
of any sale of, collection from, or other realization upon all or any part of
the Pledged Collateral may, in the discretion of Bank, be held by Bank as
collateral for, and/or then or at any time thereafter applied in whole or in
part by Bank against, all or any part of the Obligations and, in the case of
any such application, in such order as Bank shall elect.  Any surplus of such cash or cash proceeds
held by Bank and remaining after payment in full of all the Obligations shall
be paid over to LMT or to whomsoever may be lawfully entitled to receive such
surplus.

 

12.                                 Expenses.  LMT will pay to Bank upon its demand all
reasonable costs, fees and other expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, which Bank may incur in
connection with (a) the sale or other realization of any Pledged
Collateral, (b) the exercise or enforcement of any of the Bank’s rights or
remedies under this Agreement or applicable law, and/or (c) LMT’s failure
to pay, perform or observe any of its obligations under this Agreement.

 

13.                                 Continuing
Security Interest; Bank’s Transfer.  This Agreement shall create a continuing
security interest in the Pledged Collateral and shall (a) remain in full
force and effect until the indefeasible payment in full of all Obligations and
the termination of any duty on Bank’s part to extend any credit to or for the
benefit of LMC or LMCS, (b) be binding upon LMT and LMT’s successors and
assigns, and (c) inure to the benefit of Bank and its successors and
assigns.  Without limiting the generality
of the foregoing clause (c), Bank may assign or otherwise transfer any of its
rights under this Agreement to any other Person, and such Person shall
thereupon become vested with the benefits in 

 

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respect
thereof granted to Bank herein or otherwise. 
Upon the indefeasible payment in full of the Obligations and the
termination of any duty on Bank’s part to extend credit to or for the benefit
of LMC or LMCS, LMT shall be entitled to the return, upon LMT’s request and at
LMT’s expense, of such of the Pledged Collateral as shall not have been
otherwise applied pursuant to the terms hereof or under applicable law.

 

14.                                 Governing Law.  This Agreement shall be governed by the laws
of the State of Missouri without regard to any choice of law rule which
gives effect to the laws of any other jurisdiction, except to the extent the
laws of any other jurisdiction shall govern the perfection, the effect of
perfection or nonperfection, or the priority of any security interests created
under this Agreement.

 

15.                                 Consent to
Jurisdiction.  As part of
the consideration for new value this day received, LMT consents to the
jurisdiction of any state or federal court located in Jackson County, Missouri,
and waives personal service of any and all process upon LMT and consents that
all such service of process be made by certified or registered mail directed to
LMT at LMT’s last known address as reflected in Bank’s records and service so
made shall be deemed to be completed upon delivery thereto.  LMT waives any objection to jurisdiction and
venue of any action instituted against LMT as provided herein and agrees not to
assert any defense based on lack of jurisdiction or venue.  LMT further agrees not to assert against Bank
(except by way of a defense or counterclaim in a proceeding initiated by Bank)
any claim or other assertion of liability with respect to this Agreement, any
of the other Credit Documents, Bank’s actions or inactions or otherwise in any
jurisdiction other than the foregoing jurisdictions.  Nothing in this Section shall prohibit
Bank from asserting any claims or other assertions of liability against LMT or
any of LMT’s properties in any other courts that have proper jurisdiction.

 

16.                                 Waiver of Jury
Trial; Limitation on Damages.  To the fullest extent permitted by law, and
as separately bargained-for consideration to Bank, LMT waives any right to
trial by jury (which Bank also waives) in any action, suit, proceeding or
counterclaim of any kind arising out of or otherwise relating to this Agreement
or any of the other Credit Documents or Bank’s actions or inactions.  To
the fullest extent permitted by law, and as separately bargained-for
consideration to Bank, LMT also waives
any right it may have at any time to claim or recover in any litigation or
other dispute involving Bank, whether the underlying claim or dispute sounds in
contract, tort or otherwise, any special, exemplary, punitive or consequential
damages or any damages other than, or in addition to, actual damages.  LMT acknowledges that Bank is relying upon
and would not enter into the transactions described herein on the terms and
conditions set forth herein but for LMT’s waivers and agreements under this
Section.

 

17.                                 Standards for
Exercising Rights and Remedies. To the extent that
applicable law imposes duties on Bank to exercise remedies in a commercially
reasonable manner, LMT acknowledges and agrees that it is not commercially
unreasonable for Bank (a) to fail to incur expenses reasonably deemed
significant by Bank to prepare Pledged Collateral for disposition, (b) to
fail to obtain third party consents for access to Pledged Collateral to be
disposed of, or to obtain or, if not required by other law, to fail to obtain
governmental or third party consents for the collection or disposition of
Pledged Collateral to be collected or disposed of, (c) to fail to exercise
collection remedies against Persons obligated on Pledged Collateral or to fail
to remove Liens on or any adverse claims against Pledged Collateral, (d) to
exercise collection remedies against Persons obligated on Pledged Collateral
directly or through the use of collection agencies and other collection
specialists, (e) to advertise dispositions of Pledged Collateral through
publications or media of general circulation, whether or not the Pledged
Collateral is of a specialized nature, (f) to contact other Persons,
whether or not in the same business as LMT, for expressions of interest in
acquiring all or any portion of the Collateral, (g) to hire one or more
professional auctioneers to assist in the disposition of Pledged Collateral,
whether or not the Pledged Collateral is of a specialized nature, (h) to
dispose of Pledged Collateral by utilizing internet sites that provide for the
auction of properties of the types included in the Pledged Collateral or that
have the

 

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reasonable
capability of doing so, or that match buyers and sellers, (i) to dispose
of property in wholesale rather than retail markets, (j) to disclaim
disposition warranties, (k) to purchase insurance or credit enhancements
to insure Bank against risks of loss, collection or disposition of Pledged
Collateral or to provide to Bank a guaranteed return from the collection or
disposition of Pledged Collateral, or (l) to the extent deemed appropriate
by Bank, to obtain the services of other brokers, investment bankers,
consultants and other professionals to assist Bank in the collection or disposition
of any of the Pledged Collateral.  LMT
acknowledges that the purpose of this Section is to provide non-exhaustive
indications of what actions or omissions by Bank would fulfill Bank’s duties
under the Uniform Commercial Code or other law of any other relevant
jurisdiction in Bank’s exercise of remedies against the Pledged Collateral and
that other actions or omissions by Bank shall not be deemed to fail to fulfill
such duties solely on account of not being indicated in this Section. Without
limiting the foregoing, nothing contained in this Section shall be
construed to grant any rights to LMT or to impose any duties on Bank that would
not have been granted or imposed by this Agreement or by applicable law in the
absence of this Section.

 

18.                                 Hypothecation;
Limitation on Liability.

 

(a)                                  LMT has not
guaranteed the payment or performance of the Obligations of LMC or LMCS to Bank
and, to the extent of such Obligations, this Agreement shall act as a
hypothecation of LMT’s interest in the Pledged Collateral as security for such
Obligations.  Nothing herein imposes any
personal liability on LMT for the payment or performance of LMC’s or LMCS’
Obligations to Bank, and Bank’s only recourse against LMT in respect of such
Obligations shall be the Pledged Collateral.

 

(b)                                 LMT is
personally liable for the payment and performance of the Obligations of LMT to
Bank.  Bank’s recourse in respect of such
Obligations shall be not only the Pledged Collateral but, to the extent
permitted by applicable law, all other assets of LMT, and without regard to
whether a security interest therein has been granted to Bank.

 

(c)                                  The liability
of LMT under this Agreement shall be absolute and unconditional irrespective of
(i) any lack of validity or enforceability of the Credit Agreement or any
other Credit Documents or any other credit agreement, promissory note or other
agreement or document relating to any of the Obligations (collectively, the “Transaction
Documents”); (ii) any change in the time, manner or place of payment
of, or in any other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to departure from any Transaction
Document; (iii) any exchange, release, non-perfection or other impairment
of any collateral, any release of any Person (including, without limitation,
LMC, LMCS or any surety) liable in whole or in part, or any release or
amendment or waiver of or consent to departure from any guaranty, for all or
any of the Obligations; or (d) any other circumstance which might
otherwise constitute a defense available to, or a discharge of, LMC, LMCS or a
surety.  This Agreement shall continue to
be effective or be reinstated, as the case may be, if (i) at any time any
payment of any Obligations is rescinded or must otherwise be returned by Bank
upon the insolvency, bankruptcy or reorganization of LMC or LMCS or otherwise,
all as though such payment had not been made, or (ii) this Agreement is
released in consideration of a payment of money or transfer of property or
grant of a security interest by LMT or any other Person and such payment,
transfer or grant is rescinded or must otherwise be returned by Bank upon the
insolvency, bankruptcy or reorganization of such Person or otherwise, all as
though such payment, transfer or grant had not been made.

 

19.                                 Additional
Definitions.  In addition
to any other terms defined herein, for purposes of this Agreement the following
terms have the following meanings (terms defined in the singular below or
elsewhere in this Agreement are to have a corresponding meaning when used in
the plural and vice versa):

 

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“C3” means, collectively, C3 Capital Partners, L.P. and C3
Capital Partners II, L.P.

 

“C3 Proxy” means the Irrevocable Springing Proxy, dated on or
about July 24, 2007, from LMT in favor of C3.

 

“Credit Agreement” means the Credit Agreement, dated on or about
the date hereof, among LMC, LMCS and Bank, as the same may be amended, renewed,
restated, replaced, consolidated or otherwise modified from time to time

 

“Credit Documents” means, collectively, the Credit Agreement,
the Notes referred to therein, this Agreement, the other Credit Documents
referred to in the Credit Agreement and other existing or future agreements or
documents which evidence, secure or otherwise relate to any Obligations, as any
of the foregoing may be amended, renewed, restated, replaced, consolidated or
otherwise modified from time to time.

 

“Event of Default” means (a) an “Event of Default,” as
defined in the Credit Agreement, or (b) LMT’s, LMC’s or LMCS’s failure to
pay, perform or observe any obligation of such Person to Bank beyond any
applicable grace, cure or notice period.

 

“Lien” means any pledge, security interest, hypothecation,
assignment, deposit arrangement, mortgage, deed of trust, encumbrance, lien
(statutory or other), or preference, priority, or other security agreement or
preferential arrangement, charge or encumbrance of any kind or nature
whatsoever, including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing, or the filing of any financing statement under the
Uniform Commercial Code or comparable law of any jurisdiction to evidence any
of the foregoing.

 

“LMC Operating Agreement” means the First Amended and Restated
Operating Agreement of Liquidmetal Coatings, LLC dated February 22, 2008,
as amended by Amendment No. 1 to First Amended and Restated Operating
Agreement of Liquidmetal Coatings, LLC dated October 6, 2009, and
Amendment No. 2 to First Amended and Restated Operating Agreement of
Liquidmetal Coatings, LLC dated April 30, 2010.

 

“Permitted Liens” means, collectively, (a) Liens in favor
of Bank, (b) Liens in favor of C3 pursuant to the Pledge Agreement, dated
as of July 24, 2007, among LMT and C3, and (c) to the extent
constituting a Lien, C3’s voting and related rights under the C3 Proxy.

 

“Person” means an individual, corporation, limited liability
company, partnership, trust, governmental entity or any other entity,
organization or group whatsoever.

 

20.                                 Miscellaneous.  No waiver of any provision of this Agreement
nor consent to any departure by LMT herefrom shall be effective unless the same
shall be in writing and signed by Bank and LMT, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.  The section headings
herein are solely for convenience and shall not be deemed to limit or otherwise
affect the meaning or scope of any part of this Agreement.  This Agreement shall be construed without
regard to any presumption or rule requiring construction against the party
causing the Agreement or any portion of it to be drafted.  If any provision of this Agreement shall be
unlawful, then such provision shall be null and void, but the remainder of this
Agreement shall remain in full force and effect and be binding on the
parties.  This Agreement may be validly
executed and delivered by fax, e-mail or other means, and by use of multiple
counterpart signature pages.

 

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IN
WITNESS WHEREOF, the parties have entered into this Agreement as of the date
first above written.

 

 

	
   

  	
  LIQUIDMETAL
  TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ENTERPRISE
  BANK & TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

Pledge Agreement – Consent

 

 

Consent of Issuer and Equity Holders

 

This
Consent of Issuer and Equity Holders (the “Consent”) is given in
connection with the above Pledge Agreement (the “Pledge Agreement”)
between Liquidmetal Technologies, Inc. (“LMT”), and Enterprise Bank &
Trust (“Bank”).  Capitalized terms
used and not defined in this Consent have the meanings given to them in the
Pledge Agreement.

 

Liquidmetal
Coatings, LLC, a Delaware limited liability company, the Issuer referred to in
the Pledge Agreement, (1) consents to LMT and Bank entering into the
Pledge Agreement, (2) agrees to be bound by any provisions in the Pledge
Agreement which are stated to apply to Issuer, and (3) represents and
warrants to Bank that (a) all representations and warranties made by LMT
in Sections 4(a) and 4(d) of the Pledge Agreement are accurate and
complete and are not misleading in any respect, (b) LMT is the sole holder
of the Pledged Equity Interests according to Issuer’s records, and (c) Issuer
has not received any notice of any competing Lien or other claim with respect
to the Pledged Equity Interests, except for C3’s rights as a holder of a
Permitted Lien.  Issuer and each equity
holder of LMC below (each, an “Equity Holder” and, collectively, the “Equity
Holders”) consents to Bank now or hereafter exercising any of its rights or
remedies described in the Pledge Agreement or available at law or in equity,
including, without limitation, Bank’s exercise of any of its voting or other
rights described in Section 6 of the Pledge Agreement and Bank’s
foreclosure or other disposition of any Pledged Collateral to any Person, and
that such Person may succeed to and enjoy all economic, voting and other rights
and benefits held by LMT with respect to such Pledged Collateral prior to its
foreclosure or other disposition.  Issuer
agrees to comply with Bank’s instructions relating to such rights and remedies
without further consent of LMT or any other Person.  Issuer further agrees not to issue any
membership units or other equity interests or other securities in addition to
or in substitution for any Pledged Collateral except to Bank and in compliance
with the provisions of Section 7(b) of the Pledge Agreement.  Issuer further agrees that its Class A
Common Units (i.e., the Pledged Equity
Interests) constitute a “security” for purposes of Article 8 of the
Uniform Commercial Code as in effect in the State of Delaware or any other
applicable jurisdiction, and that, so long as Issuer or any of its subsidiaries
owes any indebtedness or other obligations to Bank, or Bank has any duty to
extend credit to or for the benefit of Issuer or any of its subsidiaries, Issuer
shall not take or acquiesce in any action whereby its Class A Common Units
cease to constitute a “security” as provided above.

 

The
undersigned Equity Holders of LMC, constituting all holders of any equity
interests of LMC, consent to LMT entering into the Pledge Agreement and to its
provisions (including any such provisions stated to be applicable to an Equity
Holder) and to Issuer entering into this Consent; and Issuer and Equity Holders
agree that the provisions of the Pledge Agreement and this Consent regarding
Bank’s rights and remedies with respect to the Pledged Collateral shall prevail
over any conflicting provisions of the LMC Operating Agreement or any of LMC’s
other organizational documents or any other agreement between or among Issuer
and any Equity Holders, or among any Equity Holders.

 

Without
limiting the foregoing, Issuer and Equity Holders agree that (1) Issuer’s
Board of Managers have consented to, or shall be deemed to have consented to,
the grant of the security interest under and all other provisions of the Pledge
Agreement; (2) none of the grant of any Liens to Bank pursuant to the
Pledge Agreement, any sale or other realization of any Pledged Collateral
pursuant to the Pledge Agreement, or any purchase or other acquisition of any
Pledged Collateral pursuant to or in lieu of foreclosure shall be subject to
any right of first refusal, purchase option, purchase right, drag-along right,
tag-along right or any other right of Issuer, any Equity Holder or any other
Person under Article XII or under any other Article of the LMC
Operating Agreement or otherwise, nor shall any such grant, sale, other
realization, purchase or other acquisition be subject to any transfer
restriction or other restriction or requirement contained in such Article XII
or in any other Article of the LMC Operating Agreement or

 

 

otherwise;
and (3) any purchaser of any Pledged Equity Interests pursuant to or in
lieu of foreclosure shall have full voting rights, management participation
rights and similar rights with respect to such Pledged Equity Interests, and,
without limiting the foregoing, shall be deemed to be a Substituted Member
under the LMC Operating Agreement merely by executing and delivering to Issuer
a written acceptance and adoption of the provisions of the LMC Operating
Agreement, and without the need to comply with any other requirement or
provision of Section 12.7 of the LMC Operating Agreement or any other
requirement or provision of the LMC Operating Agreement or any other agreement.

 

This
Consent shall be governed by the same law that governs the Pledge Agreement.  This Consent may be validly executed and
delivered by fax, e-mail or means, and by use of multiple counterpart signature
pages.

 

[signature page(s) to follow]

 

 

IN
WITNESS WHEREOF, the undersigned have executed and delivered this Consent as of
the date of the Pledge Agreement.

 

 

	
  Issuer:

  	
   

  	
  Equity Holders:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  LIQUIDMETAL
  COATINGS, LLC

  	
   

  	
  C3
  CAPITAL PARTNERS, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  C3
  Capital Partners, LLC,

  
	
   

  	
   

  	
   

  	
  its
  general partner

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  C3
  CAPITAL PARTNERS II, L.P.

  
	
  By

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  C3
  Capital Partners II, LLC,

  
	
   

  	
   

  	
   

  	
   

  	
  its
  general partner

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Being
  All of Its Board of Managers

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LIQUIDMETAL
  TECHNOLOGIES, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LARRY
  BUFFINGTON, an individual

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GLOBAL
  STRATEGY & CAPITAL GROUP, INC., d/b/a CRESO Capital Partners

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
							

 

Pledge Agreement – ConsentEXHIBIT
4.14a

 

AMENDMENT NUMBER 1 TO

REGISTRATION RIGHTS AGREEMENT

 

This Amendment Number 1 to Registration Rights
Agreement, dated March 8, 2010 (the “Amendment”), is by and among
Image Entertainment, Inc., a Delaware corporation (the “Company”),
JH Partners, LLC, as the Investor Representative, and the several
Investors listed on Schedule 1 to the Registration Rights Agreement dated January 8,
2010 (the “Registration Rights Agreement”).

 

WHEREAS, the parties wish to amend certain
provisions of the Registration Rights Agreement.

 

NOW THEREFORE, the parties hereto agree as follows:

 

1.                                     Capitalized
terms used herein without definition have the meanings ascribed to them in the
Registration Rights Agreement.

 

2.                                     The second
WHEREAS clause of the Registration Rights Agreement is hereby amended to read
in its entirety as follows:

 

WHEREAS, in connection with such purchase and sale,
the Company has agreed to grant to the Investors the right, under certain
circumstances, to purchase up to an additional 7,400 shares of the Series B
Preferred and 66,163.4 shares of the Series C Preferred.

 

3.                                     Section 2(a) of
the Registration Rights Agreement is hereby amended to read in its entirety as
follows:

 

(a)                                  Subject to the
terms and conditions of this Agreement, including Section 2(c), if at any
time following the later of (i) the date on which the Investors have
purchased all of the Additional Preferred Shares pursuant to the Additional
Purchase Right or (ii) January 3, 2011, the Company receives a
written request from the Investor Representative on behalf of any Electing
Investors that the Company register under the Securities Act Registrable
Securities representing at least 5% of the outstanding shares of Common Stock,
then the Company shall file, as promptly as reasonably practicable but no later
than the applicable Filing Deadline, a registration statement under the
Securities Act covering all Registrable Securities that the Investor
Representative, on behalf of the Electing Investors, requests to be registered.  The registration statement shall be on Form S-3
(except if the Company is not then eligible to register for resale the
Registrable Securities on Form S-3, in which case such registration shall
be on another appropriate form for such purpose) and, if the Company is a WKSI
as of the Filing Deadline, shall be an Automatic Shelf Registration
Statement.  The Company shall use its
commercially reasonable efforts to cause the registration statement to be
declared effective or otherwise to become effective under the Securities Act as
soon as reasonably practicable but, in any event, no later than the
Effectiveness Deadline, and shall use its commercially reasonable efforts to
keep the registration statement continuously effective under the Securities Act
until

 

 

the earlier of (1) the date on which the
Investor Representative notifies the Company in writing that the Registrable
Securities included in such registration statement have been sold or the
offering therefor has been terminated or (2) (x) 15 Business Days
following the date on which such registration statement was declared effective
by the SEC, if the Company is a WKSI and filed an Automatic Shelf Registration
Statement in satisfaction of such demand, (y) 30 Business Days following
the date on which such registration statement was declared effective by the
SEC, if the Company is not a WKSI and registered for resale the Registrable
Securities on Form S-3 in satisfaction of such demand, or (z) 50
Business Days following the date on which such registration statement was declared
effective by the SEC, if the Company is neither a WKSI nor then eligible to use
Form S-3 and registered for resale the Registrable Securities on Form S-1
or other applicable form in satisfaction of such demand; provided that
each period specified in clause (2) of this sentence shall be extended
automatically by one Business Day for each Business Day that the use of such
registration statement or prospectus is suspended by the Company pursuant to Section 2(d) or
pursuant to Section 5(i).  Neither
the Company nor any other Person (other than any Electing Investor) shall be
entitled to include Other Securities in any registration initiated by the
Investor Representative on behalf of the Electing Investors pursuant to this Section 2
without the prior written consent of the Investor Representative (in the case
of Other Securities of the Company, such consent not to be unreasonably
withheld, conditioned or delayed), and upon such consent the Registrable
Securities shall have priority for inclusion in any firm commitment
underwritten offering, ahead of all Other Securities, in any Underwriter
Cutback.

 

4.                                     Section 3(a) of
the Registration Rights Agreement is hereby amended to read in its entirety as
follows:

 

(a)                                  Subject to the
terms and conditions of this Agreement, if at any time following the later of (i) the
date on which the Investors have purchased all of the Additional Preferred
Shares pursuant to the Additional Purchase Right or (ii) January 3,
2011, the Company files a registration statement under the Securities Act with
respect to an offering of Common Stock or other equity securities of the
Company (such Common Stock and other equity securities collectively, “Other
Securities”), whether or not for sale for its own account (other than a
registration statement (i) on Form S-4, Form S-8 or any
successor forms, (ii) filed solely in connection with any employee benefit
or dividend reinvestment plan or (iii) pursuant to a demand registration
in accordance with Section 2), then the Company shall use commercially
reasonably efforts to give written notice of such filing to the Investor
Representative (for distribution to the Investors) at least five Business Days
before the anticipated filing date (or such later date as it becomes
commercially reasonable to provide such notice) (the “Piggyback Notice”).
The Piggyback Notice and the contents thereof shall be kept confidential by the
Investor Representative, the Investors and their respective Affiliates and
representatives, and the Investor Representative and the Investors shall be
responsible for breaches of confidentiality by

 

 

their respective Affiliates
and representatives.  The Piggyback
Notice shall offer the Investors the opportunity to include in such
registration statement, subject to the terms and conditions of this Agreement,
the number of Registrable Securities as they may reasonably request (a “Piggyback
Registration”). Subject to the terms and conditions of this Agreement, the
Company shall use its commercially reasonable efforts to include in each such
Piggyback Registration all Registrable Securities with respect to which the
Company has received from the Investor Representative written requests for
inclusion therein within 10 Business Days following receipt of any Piggyback
Notice by the Investor Representative, which request shall specify the maximum
number of Registrable Securities intended to be disposed of by the Electing
Investors and the intended method of distribution. For the avoidance of doubt
and notwithstanding anything in this Agreement to the contrary, the Company may
not commence or permit the commencement of any sale of Other Securities in a
public offering to which this Section 3 applies unless the Investor
Representative shall have received the Piggyback Notice in respect to such
public offering not less than 10 Business Days prior to the commencement of
such sale of Other Securities. The Electing Investors, acting through the
Investor Representative, shall be permitted to withdraw all or part of the
Registrable Securities from a Piggyback Registration at any time at least two
Business Days prior to the effective date of the registration statement
relating to such Piggyback Registration. No Piggyback Registration shall count
towards the number of demand registrations that the Investors are entitled to
make in any period or in total pursuant to Section 2. Notwithstanding
anything to the contrary in this Agreement, the Company shall not be required
to provide notice of, or include any Registrable Securities in, any proposed or
filed registration statement with respect to an offering of Other Securities
for sale exclusively for the Company’s own account at any time following January 8,
2017.

 

 

On and after the date hereof, each reference in the
Registration Rights Agreement to the “Agreement” shall mean the Registration
Rights Agreement as amended hereby. 
Except as specifically amended above, the Registration Rights Agreement
shall remain in full force and effect and is hereby ratified and confirmed.

 

	
   

  	
  IMAGE ENTERTAINMENT, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JOHN P. AVAGLIANO

  
	
   

  	
   

  	
  Name: John P. Avagliano

  
	
   

  	
   

  	
  Title: COO/CFO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  JH PARTNERS, LLC, as the Investor
  Representative

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JOHN C. HANSEN

  
	
   

  	
   

  	
  Name: John C. Hansen

  
	
   

  	
   

  	
  Title: President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  JH PARTNERS EVERGREEN FUND, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  JH Investment Management III, LLC

  
	
   

  	
   

  	
  Its: General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JOHN C. HANSEN

  
	
   

  	
   

  	
  Name: John C. Hansen

  
	
   

  	
   

  	
  Title: Managing Member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  JH INVESTMENT PARTNERS III, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  JH Investment Management III, LLC

  
	
   

  	
   

  	
  Its: General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JOHN C. HANSEN

  
	
   

  	
   

  	
  Name: John C. Hansen

  
	
   

  	
   

  	
  Title: Managing Member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  JH INVESTMENT PARTNERS GP FUND III, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  JH Investment Management III, LLC

  
	
   

  	
   

  	
  Its: Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JOHN C. HANSEN

  
	
   

  	
   

  	
  Name: John C. Hansen

  
	
   

  	
   

  	
  Title: Managing Member

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