Document:

Exhibit
10.38

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”)
is made and entered into as of January 13,
2008, by and between LIQUIDMETAL TECHNOLOGIES, Inc., a Delaware
corporation (the “Company”), GERALD E. MORROW
(the “Employee”).

 

RECITALS

 

WHEREAS, the Employee desires to
be employed by the Company upon the terms and conditions set forth in this
Agreement; and

 

WHEREAS, the Company desires to
assure itself of the Employee’s continued employment in the capacities set
forth herein.

 

NOW, THEREFORE, in consideration
of the foregoing recitals and for other good and valuable consideration, the
parties hereto covenant and agree as follows:

 

1.                                       Employment.  The Company hereby employs Employee, and the
Employee hereby accepts such employment, upon the terms and conditions set
forth in this Agreement.

 

2.                                       Term. Subject to the terms and
conditions of this Agreement, including, but not limited to, the provisions for
termination set forth in Section 5 hereof, the employment of the Employee
under this Agreement shall commence on January 13, 2008 and shall continue
through the close of business on January 13, 2011 (the “Initial Term”).  Upon the expiration of the Initial Term, the
Employee’s employment with the Company will continue on an “at-will” basis and
may be terminated by Employee or the Company for any reason and at any time,
provided that the terminating party shall provide at least thirty (30) days
prior written notice of the termination to the other party (unless the
termination is With Cause as defined in this Agreement, in which case the
Employee’s employment may be terminated immediately).  Notwithstanding the expiration of the Initial
Term of this Agreement, the provisions of this Agreement other than those of
Sections 1, 4, and 5, Term, Compensation, and Termination, respectively, shall
remain in full force and effect.  All
other provisions of this Agreement, including but without limitation, Sections
2, 6, and 7, entitled Employment, Nonsolicitation and Nondisclosure Covenants,
and Employee Inventions, respectively, shall survive the expiration of the
Initial Term.  Notwithstanding the
expiration of the this Agreement or the termination of employment by any means
by any party, Sections 2, 6, and 7, entitled Term, Nonsolicitation and Nondisclosure
Covenants, and Employee Inventions, respectively, shall survive and remain
fully enforceable.

 

3.                                       Duties.  Employee will initially serve as Chief Financial Officer of the Company. The
Employee will devote the necessary business time, attention, skill, and energy
to the business of the Company, will use the Employee’s best efforts to promote
the success of the Company’s business, and will cooperate fully with the Board
of Directors in the 

 

 

advancement of the best
interests of the Company.  Furthermore,
the Employee shall assume and competently perform such reasonable
responsibilities and duties as may be assigned to the Employee from time to
time by the Board of Directors, Chairman of the Board, President, Chief
Executive Officer of the Company or their designee.  To the extent that the Company shall have any
parent company, subsidiaries, affiliated corporations, partnerships, or joint
ventures (collectively “Related Entities”), the Employee shall perform such
duties to promote these entities and to promote and protect their respective
interests to the same extent as the interests of the Company without additional
compensation. At all times, the Employee agrees that the Employee has read and
will abide by, and prospectively will read and abide by, any employee handbook,
policy, or practice that the Company or Related Entities has or hereafter
adopts with respect to its employees generally. The Employee will report
directly to the Chairman of the Board.

 

4.                                       Compensation.

 

(a)                                  Annual
Base Salary.  As compensation for
Employee’s services and in consideration for the Employee’s covenants contained
in this Agreement, the Company shall pay the Employee an annual base salary of $175,000.00.  The annual compensation (and commission
rates, if applicable) may be adjusted upward or downward in the sole discretion
of the Board of Directors or Chief Executive Officer.  For purposes of this Agreement, the term “Salary
Year” means the one year, 365-day period (or 366 day period for a leap
year) that begins on the January 13, 2008 and each successive one year
period thereafter.

 

(b)                                 Bonuses.  In addition to the Employee’s annual base
compensation, during the term of the Employee’s employment hereunder, the
Employee shall be entitled to only such bonuses or additional compensation as
may be granted to the Employee by the Board of Directors or Chief Executive
Officer of the Company, in their sole discretion.

 

(c)                                  Reimbursement
of Expenses.  The Employee shall be
reimbursed for all reasonable and customary travel and other business expenses
incurred by Employee in the performance of Employee’s duties hereunder,
provided that such reimbursement shall be subject to, and in accordance with,
any expense reimbursement policies and/or expense documentation requirements of
the Company that may be in effect from time to time.

 

(d)                                 Option
Grant.  In addition to the foregoing,
in consideration of the execution of this Agreement by the Employee, the
Company shall, on the date hereof, grant to the employee an option to purchase
up to 200,000  shares of the common
stock of the Company in accordance with a stock option agreement in the form
set forth as Exhibit A hereto.

 

(e)                                  Other  Benefits.  During
the term of the Employee’s employment hereunder, the Employee shall be eligible
to participate in such pension, life insurance, health insurance, disability
insurance and other benefits plans, if any, which the Company may from time to
time make available to similar-level employees.

 

(f)                                    Vacation.  The Employee shall be entitled to three weeks
paid vacation during each Salary Year during the term of the Employee’s
employment hereunder.  Vacation 

 

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shall be taken at such
times and with such notice so as to not disrupt or interfere with the business
of the Company.  Unused vacation from a
particular Salary Year will not carry over to succeeding Salary Years, and the
Employee will not be paid for any unused vacation.

 

5.                                       Termination.

 

(a)                                  Death.  The Employee’s employment under this
Agreement shall terminate immediately upon Employee’s death.  In the event of a termination pursuant to
this Section 5(a), the Employee’s estate shall be entitled to receive any
unpaid base salary owing to Employee up through and including the date of the
Employee’s death.

 

(b)                                 Disability.  If, during the term of the Employee’s
employment hereunder, the Employee becomes physically or mentally disabled in
the determination of a physician appointed or selected by the Company, or, if
due to any physical or mental condition, the Employee becomes unable for a
period of more than sixty (60) days during any six-month period to perform
Employee’s duties hereunder on substantially a full-time basis as determined a
physician selected by the Company, the Company may, at its option, terminate
the Employee’s employment upon not less than thirty (30) days written notice.
In the event of a termination pursuant to this Section 5(b), the Employee
shall be entitled to receive any unpaid base salary owing to Employee up
through and including the effective date of Termination.

 

(c)                                  Termination
By Company Without Cause.  In
addition to the other termination provisions of this Agreement, the Company may
terminate the Employee’s employment at any time without cause (a “Termination
Without Cause”).  In the event of a
Termination Without Cause, the Employee shall continue to receive the Employee’s
base salary (as then in effect) during the six month period immediately
following the effective date of the Termination Without Cause (the “Severance
Period”).  In addition to the severance
pay described in the preceding sentence, the Employee shall continue to
receive, during the Severance Period, all employee health and welfare benefits
that Employee would have received during the Severance Period in the absence of
such termination.  Employee agrees and
acknowledges, however, that Employee will forfeit the right to receive base
salary and benefits during the Severance Period immediately upon the Employee’s
breach of any covenant set forth in Section 6 of this Agreement.  The Employee will also forfeit the right to
salary and benefits during the Severance Period upon accepting employment with
another employer with comparable salary and benefits hereunder shall be forfeited
and shall cease upon the Employee becoming eligible for benefits from the
Employee’s new employer.  Notwithstanding
the foregoing, the termination of the Employee’s employment pursuant to the
second sentence of Section 2 of this Agreement shall not constitute a
Termination Without Cause and shall not give rise to any severance payment or
other benefits pursuant to this Section 5(c).

 

(d)                                 Termination
By Company With Cause.  The Company
may terminate the Employee’s employment at any time with Cause.  As used in this Agreement, “Cause” shall include
the following: (1) the Employee’s failure or inability to perform Employee’s
duties under this Agreement; (2) dishonesty or other serious misconduct, (3) the
commission of an unlawful act material to Employee’s employment, (4) a
material violation of the Company’s policies or practices which reasonably
justifies immediate termination; 

 

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(5) committing,
pleading guilty, nolo contendre or no contest (or their equivalent) to,
entering into a pretrial intervention or diversion program regarding, or
conviction of, a felony or any crime or act involving moral turpitude, fraud,
dishonesty, or misrepresentation; (6) the commission by the Employee of
any act which could reasonably affect or impact to a material degree the
interests of the Company or Related Entities or in some manner injure the
reputation, business, or business relationships of the Company or Related
Entities; (7) the Employee’s inability to perform an essential function of
Employee’s position; or (8) any material breach by Employee of this
Agreement.  The Company may terminate
this Agreement for Cause at any time without notice.  In the event of a termination for Cause, the
Company shall be relieved of all its obligations to the Employee provided for
by this Agreement as of the effective date of termination, and all payments to
the Employee hereunder shall immediately cease and terminate as of such date,
except that Employee shall be entitled to the annual base salary hereunder up
to and including the effective date of termination, provided, however, that the
Employee’s obligations under Sections 6 and 7 shall survive such a Termination
for Cause and any liabilities or obligations which have accrued and are owed by
the Employee to the Company shall not be extinguished or released thereby.

 

6.                                       Nonsolicitation and Nondisclosure Covenants.

 

(a)                                  Rationale
for Restrictions.  Employee
acknowledges that Employee’s services hereunder are of a special, unique, and
extraordinary character, and Employee’s position with the Company places
Employee in a position of confidence and trust with customers, suppliers, and
other persons and entities with whom the Company and its Related Entities have
a business relationship.   The Employee
further acknowledges that the rendering of services under this Agreement will
likely require the disclosure to Employee of Confidential Information (as
defined below) including Trade Secrets of the Company relating to the Company
and/or Related Entities.  As a
consequence, the Employee agrees that it is reasonable and necessary for the
protection of the goodwill and legitimate business interests of the Company and
Related Entities that the Employee make the covenants contained in this Section 6,
that such covenants are a material inducement for the Company to employ the
Employee and to enter into this Agreement, and that the covenants are given as
an integral part of and incident to this Agreement.

 

(b)                                 Nonsolicitation
Covenants.  As used herein, the term “Restrictive
Period” means the time period commencing on the date of this Agreement and
ending on the second (2nd) anniversary of the date on which the
Employee’s employment by the Company (or any Related Entity) expires or is
terminated for any reason, including both a termination by the Company for
Cause and Not for Cause.  In addition,
the term “Covered Business” means any business which is the same as, or
similar to, any business conducted by the Company or any of the Related
Entities at any time during the Restrictive Period.  The Employee agrees that the Employee will
not engage in any of the following acts anywhere in the world during the
Restrictive Period:

 

(i)                                     directly
or indirectly assist, promote or encourage any existing or potential employees,
customers, clients, or vendors of the Company or any Related Entity, as well as
any other parties which have a business 

 

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  relationship with the
  Company or a Related Entity, to terminate, discontinue, or reduce the extent
  of their relationship with the Company or a Related Entity;

  
	
   

  	
   

  	
   

  
	
  (ii)

  	
   

  	
  directly or
  indirectly solicit business of the same or similar type as a Covered
  Business, from any person or entity known by the Employee to be a customer or
  client of the Company, whether or not the Employee had contact with such
  person or entity during the Employee’s employment with the Company;

  
	
   

  	
   

  	
   

  
	
  (iii)

  	
   

  	
  disparage the
  Company, any Related Entities, and/or any shareholder, director, officer,
  employee, or agent of the Company or any Related Entity; and/or

  
	
   

  	
   

  	
   

  
	
  (iv)

  	
   

  	
  engage in any
  practice the purpose of which is to evade the provisions of this
  Section 6 or commit any act which adversely affects the Company, any
  Related Entity, or their respective businesses.

  

 

Employee acknowledges
that Employee’s services hereunder are of a special, unique, and extraordinary
character, and Employee’s position with the Company places Employee in a
position of confidence and trust with customers, suppliers, and other persons
and entities with whom the Company and its Related Entities have a business
relationship.  The Employee further
acknowledges that the rendering of services under this Agreement will likely
require the disclosure to Employee of Confidential Information (as defined
below) and Trade Secrets (as defined below) of the Company relating to the
Company and/or Related Entities.  As a
consequence, the Employee agrees that it is reasonable and necessary for the
protection of the goodwill and legitimate business interests of the Company and
Related Entities that the Employee make the covenants contained in this Section 6,
that such covenants are a material inducement for the Company to employ the
Employee and to enter into this Agreement, and that the covenants are given as
an integral part of and incident to this Agreement.  Accordingly, the Employee agrees that the
geographic scope of the above covenants is a reasonable means of protecting the
Company’s (and the Related Entities’) legitimate business interests.  Notwithstanding the foregoing covenants,
nothing set forth in this Agreement shall prohibit the Employee from owning the
securities of (i) corporations which are listed on a national securities
exchange or traded in the national over-the-counter market in an amount which
shall not exceed 5% of the outstanding shares of any such corporation or (ii) any
corporation, partnership, firm or other form of business organization which
does not compete with, is not engaged in, and does not carry on any aspect of,
either directly or indirectly through a subsidiary or otherwise, any Covered
Business.

 

(c)                                  Disclosure
of Confidential Information.  The
Employee acknowledges that the inventions, innovations, software, Trade
Secrets, business plans, financial strategies, finances, and all other
confidential or proprietary information with respect to the business and
operations of the Company and Related Entities are valuable, special, and
unique assets of the Company. 
Accordingly, the Employee agrees not to, at any time whatsoever either
during or after the Employee’s term of employment with the Company, disclose,
directly or indirectly, 

 

5

 

to any person or entity,
or use or authorize any person or entity to use, any confidential or
proprietary information with respect to the Company or Related Entities without
the prior written consent of the Company, including, without limitation,
information as to the financial condition, results of operations, identities of
clients or prospective clients, products under development, acquisition
strategies or acquisitions under consideration, pricing or cost information,
marketing strategies, passwords or codes or any other information relating to
the Company or any of the Related Entities which could be reasonably regarded
as confidential (collectively referred to as “Confidential Information”).  However, the term “Confidential Information”
does not include any information which is or shall become generally available
to the public other than as a result of disclosure by the Employee or by any
person or entity which the Employee knows (or which the Employee reasonably
should know) has a duty of confidentiality to the Company or a Related Entity
with respect to such information.  In
addition to the foregoing, Company will be fully entitled to all of the
protections and benefits afforded by the California Uniform Trade Secrets Acts
and any other applicable law.  Trade
Secret shall mean information, including a formula, pattern, compilation,
program, device, method technique, or process that derives independent economic
value, actual or potential, from being not generally known to, and not being
readily ascertainable by proper means by, other persons who can derive economic
value from its disclosure or use, including but not limited to the patented
information and processes as well as the unpatented information and processes
comprising, underlying, arising from, and associated with Liquidmetal Alloy and
Liquidmetal Coatings used by the Company.

 

(d)                                 Prevention
of Premature Disclosure of Confidential Information and Trade Secrets.  The Employee agrees and acknowledges that,
because the success of the Company is heavily dependent upon maintaining the
secrecy of the Company’s Confidential Information and Trade Secrets and
preventing the premature public disclosure of the Company’s proprietary
information and technology including its Confidential Information and Trade
Secrets, the Employee agrees to use the Employee’s best efforts and his or her
highest degree of care, diligence, and prudence to ensure that no Confidential
Information or Trade Secret prematurely leaks or otherwise prematurely makes
its way into the public domain or any public forum, including, without
limitation, into any trade publications, internet chat rooms, or other similar
forums.  In the event that the Employee
becomes aware of any premature leak of Confidential Information or Trade Secret
or becomes aware of any circumstances creating a risk of such a leak, the
Employee shall immediately inform the Board of Directors, the Chief Executive
Officer, or the Employee’s supervisor of such leak or of such circumstances.

 

(e)                                  Removal
and Return of Proprietary Items.  The
Employee will not remove from the Company’s premises (except to the extent such
removal is for purposes of the performance of the Employee’s duties at home or
while traveling, and under such conditions and restrictions as are specifically
authorized and/or required by the Company) or transmit by any means, electronic
or otherwise, any document, record, notebook, plan, model, component, device,
computer software or code, or Confidential Information or Trade Secret whether
embodied in a disk or in any other form, including electronic form
(collectively, the “Proprietary Items”). 
The Employee recognizes that, as between the Company and the Employee,
all of the Proprietary Items, whether or not developed by the Employee, are the

 

6

 

exclusive property of the
Company.  Upon termination of Employee’s
employment with the Company by either party (regardless of the reason for
termination), or upon the request of the Company during the term of employment,
the Employee will return to the Company all of the Proprietary Items in the
Employee’s possession or subject to the Employee’s control, and the Employee
shall not retain any copies, abstracts, sketches, or other physical embodiment
of any of the Proprietary Items, Confidential Information, Trade Secret or any
part thereof.

 

(f)                                    Enforcement
and Remedies.  In the event of any
breach of any of the covenants set forth in this Section 6, the Employee
recognizes that the remedies at law will be inadequate and that in addition to
any relief at law which may be available to the Company for such violation or
breach and regardless of any other provision contained in this Agreement, the
Company shall be entitled to equitable remedies (including an injunction) and
such other relief as a court may grant after considering the intent of this Section 6.  Additionally, the period of time applicable
to any covenant set forth in this Section 6 will be extended by the
duration of any violation by Employee of such covenant.  In the event a court of competent
jurisdiction determines that any of the covenants set forth in this Section 6
are excessively broad as to duration, geographic scope, prohibited activities
or otherwise, the parties agree that this covenant shall be reduced or
curtailed to the extent, but only to the extent, necessary to render it
enforceable.

 

7.                                       Employee Inventions.

 

(a)                                  Definition.
For purposes of this Agreement, “Employee Invention” means any idea,
invention, technique, modification, process, or improvement (whether patentable
or not), any industrial design (whether registerable or not), any mask work,
however fixed or encoded, that is suitable to be fixed, embedded or programmed
in a semiconductor product (whether recordable or not), and any work of
authorship (whether or not copyright protection may be obtained for it)
created, conceived, or developed by the Employee, either solely or in
conjunction with others, during the Employee’s employment with the Company or
during the twenty four (24) month period following such employment, that
relates in any way to, or is useful in any manner in, the businesses then being
conducted or proposed to be conducted by the Company or any Related Entity.

 

(b)                                 Ownership
of Employee Inventions.  Employee
agrees and acknowledges that all Employee Inventions will belong exclusively to
the Company and that all Employee Inventions are works made for hire and the
property of the Company, including any copyrights, patents, semiconductor mask
protection, or other intellectual property rights pertaining thereto.  If it is determined that any such works are
not works made for hire, the Employee hereby assigns to the Company all of the
Company’s right, title, and interest, including all rights of copyright,
patent, semiconductor mask protection, and other intellectual property rights,
to or in such Employee Inventions. The Employee covenants that the Employee
will promptly:

 

	
  (i)

  	
   

  	
  disclose to the
  Company in writing any Employee Invention;

  
	
   

  	
   

  	
   

  
	
  (ii)

  	
   

  	
  assign to the
  Company or to a party designated by the Company, at the Company’s request and
  without additional compensation, all of the

  

 

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  Employee’s right
  to the Employee Invention for the United States and all foreign
  jurisdictions;

  
	
   

  	
   

  	
   

  
	
  (iii)

  	
   

  	
  execute and
  deliver to the Company such applications, assignments, and other documents as
  the Company may request in order to apply for and obtain patents or other
  registrations with respect to any Employee Invention in the United States and
  any foreign jurisdictions;

  
	
   

  	
   

  	
   

  
	
  (iv)

  	
   

  	
  sign all other
  papers necessary to carry out the above obligations; and

  
	
   

  	
   

  	
   

  
	
  (v)

  	
   

  	
  give testimony
  and render any other assistance in support of the Company’s rights to any
  Employee Invention.

  

 

8.                                       Essential and Independent Covenants.  The Employee’s covenants in Sections 6 and 7
of this Agreement are independent covenants, and the existence of any claim by
the Employee against the Company under this Agreement or otherwise will not
excuse the Employee’s breach of any covenant in Section 6 or 7.  The covenants of Sections 6 and 7 shall
survive the termination, extinguishment, or lapse of this Agreement under any circumstances,
even if this Agreement is terminated by either party, whether for Cause or Not
for Cause.

 

9.                                       Representations and Warranties by The Employee.
The Employee represents and warrants to the Company that the execution and
delivery by the Employee of this Agreement do not, and the performance by the
Employee of the Employee’s obligations hereunder will not, with or without the
giving of notice or the passage of time, or both: (a) violate any
judgment, writ, injunction, or order of any court, arbitrator, or governmental
agency applicable to the Employee, or (b) conflict with, result in the
breach of any provisions of or the termination of, or constitute a default
under, any agreement to which the Employee is a party or by which the Employee
is or may be bound, including, without limitation, any noncompetition agreement
or similar agreement.  Employee further
represents and warrants that he fully and completely understands this Agreement
and that he has engaged in negotiations with the Company and has either
consulted with an attorney of his choice or has had ample opportunity to do so
and is fully satisfied with the opportunity he has had.

 

10.                                 Notices.  For purposes of this Agreement, notices and
all other communications provided for herein shall be in writing and shall be
deemed to have been duly given when hand-delivered, sent by facsimile
transmission (as long as receipt is acknowledged), or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to the address or facsimile number for each party set forth on the
signature page hereto, or to such other address or facsimile number as
either party may have furnished to the other in writing in accordance herewith,
except that a notice of change of address shall be effective only upon receipt.

 

11.                                 Miscellaneous.  No provision of this Agreement may be
modified or waived unless such waiver or modification is agreed to in writing
signed by both of the parties hereto.  No
waiver by any party hereto of any breach by any other party hereto shall be
deemed a waiver of any similar or dissimilar term or condition at the same or
at any prior or subsequent time.  This
Agreement is the entire agreement between the parties hereto with respect to
the 

 

8

 

Employee’s employment by
the Company, and there are no agreements or representations, oral or otherwise,
expressed or implied, with respect to or related to the employment of the
Employee which are not set forth in this Agreement.  This Agreement shall be binding upon, and
inure to the benefit of, the Company, its respective successors and assigns,
and the Employee and Employee’s heirs, executors, administrators and legal
representatives.  The duties and
covenants of the Employee under this Agreement, being personal, may not be
delegated or assigned by the Employee without the prior written consent of the
Company, and any attempted delegation or assignment without such prior written
consent shall be null and void and without legal effect.  The parties agree that if any provision of
this Agreement shall under any circumstances be deemed invalid or inoperative,
the Agreement shall be construed with the invalid or inoperative provision deleted
and the rights and obligations of the parties shall be construed and enforced
accordingly.  This Agreement may be
assigned by the Company without the consent of the Employee, provided, however,
that the Employee is given notice of the assignment.

 

12.                                 Governing Law; Resolution of Disputes.
 The validity, interpretation,
construction, and performance of this Agreement shall be governed by the laws
of the State of California without regard to principles of choice of law or
conflicts of law thereunder.  Any action
or proceeding seeking to enforce any provision of, or based on any right
arising out of, this Agreement may be brought against either of the parties in
the courts of the State of California, County of Orange, or, if it has or can
acquire jurisdiction, in the federal courts located in, Orange County,
California, and each of the parties consents to the jurisdiction of such courts
(and of the appropriate appellate courts) in any such action or proceeding and
waives any objection to venue laid therein. Process in any action or proceeding
referred to in the preceding sentence may be served on either party anywhere in
the world.  The parties hereto agree that
having venue and jurisdiction solely in California is reasonable in that the
headquarters for the Company is in Orange County, California and that site for
litigation is the most central for such matters.  THE PARTIES HEREBY WAIVE A JURY TRIAL IN ANY
LITIGATION ARISING UNDER OR RELATING TO THIS AGREEMENT OR THE EMPLOYMENT OF THE
EMPLOYEE WITH THE COMPANY.  This
Agreement shall not be construed against either party but shall be construed
without regard to the participation of either party in the drafting of this
Agreement or any part thereof.

 

13.                                 Counterparts; Facsimile Signatures.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.  This Agreement may be effective upon the
execution and delivery by any party hereto of facsimile copies of signature pages hereto
duly executed by such party; provided, however, that any party
delivering a facsimile signature page covenants and agrees to deliver
promptly after the date hereof two (2) original copies to the other party
hereto.

 

14.                                 Modification By The Court.   In
the event that any provision or Section of this Agreement violates any law
of the state of California or is for some other reason unenforceable as written
in the state of California, the Employee and the Company agree that the
unenforceable provision or Section should not cause the entire Agreement
to become unenforceable unless it is caused to fail in its essential
purpose.  In the event that any provision

 

9

 

or Section of this
Agreement violates any law of the state of California or is for some other
reason unenforceable as written in the state of California, the Employee agrees
that the provision should be reduced in scope or length or otherwise modified
by the Court, if possible under the law, to cause the provision or Section of
the Agreement to be legal and enforceable but to still provide to the Company
the maximum protection available to it under the law.

 

IN
WITNESS WHEREOF, the parties have executed this Agreement as
of the day and year first above written.

 

	
   

  	
  LIQUIDMETAL
  TECHNOLOGIES, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John Kang

  
	
   

  	
  John Kang,
  Chairman

  
	
   

  	
   

  
	
   

  	
  Liquidmetal
  Technologies

  
	
   

  	
  30452 Esperanza

  
	
   

  	
  Rancho Santa
  Margarita, CA 92688

  
	
   

  	
  Facsimile
  Number: 949-635-2108

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMPLOYEE

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerald
  Morrow

  
	
   

  	
   

  
	
   

  	
  Printed Name:

  	
  Gerald Morrow

  
	
   

  	
   

  
	
   

  	
  Address and
  Facsimile Number:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
				

 

10ex4-1.htm

     

    
      Exhibit
4.1

      FORM
OF RIGHTS CERTIFICATE

      
      

       

      
        	Certificate No.
      R- 	
                 Rights     
       

              

      

       

       

      NOT
EXERCISABLE AFTER APRIL 2, 2018, OR EARLIER IF TERMINATED BY THE COMPANY. THE
RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.0001 PER
RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE
OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.
[THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY
OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED
HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e)
OF SUCH RIGHTS AGREEMENT.]1

       

      RIGHTS
CERTIFICATE

       

      This
certifies that ______________________ or registered owner of the number of
Rights set forth above, each of which entitles the owner thereof, subject to the
terms, provisions and conditions of the Preferred Shares Rights Agreement, dated
as of April 2, 2008 (the “RIGHTS AGREEMENT”), between Entertainment Distribution
Company, Inc., a Delaware corporation (the “COMPANY”), and American Stock
Transfer & Trust Company (the “RIGHTS AGENT”), to purchase from the Company
at any time after the Distribution Date (as such term is defined in the Rights
Agreement) and prior to 5:00 P.M., New York, New York time, on the Expiration
Date (as such term is defined in the Rights Agreement), at the office of the
Rights Agent designated for such purpose, or at the office of its successor as
Rights Agent, one one-hundredth (1/100) of a fully paid non-assessable share of
Series A Junior Participating Preferred Stock (the “PREFERRED SHARES”), of the
Company, at a purchase price of $3.50 per one-hundredth of a Preferred Share
(the “PURCHASE PRICE”), upon presentation and surrender of this Rights
Certificate with the Form of Election to Purchase and related Certificate duly
executed. The number of Rights evidenced by this Rights Certificate (and the
number of one-hundredths of a Preferred Share which may be purchased upon
exercise hereof) set forth above, are the number and Purchase Price as of April
14, 2008, based on the Preferred Shares as constituted at such date. As provided
in the Rights Agreement, the Purchase Price and the number and kind of Preferred
Shares or other securities which may be purchased upon the exercise of the
Rights evidenced by this Rights Certificate are subject to modification and
adjustment upon the happening of certain events.

      

        

      
        1 The
portion of the legend in brackets shall be inserted only if applicable and if so
used, shall replace the preceding sentence.

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

      

      This
Rights Certificate is subject to all of the terms, provisions and conditions of
the Rights Agreement, which terms, provisions and conditions are hereby
incorporated herein by reference and made a part hereof and to which Rights
Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the principal executive offices of
the Company and the above-mentioned office of the Rights Agent.

       

      Subject
to the provisions of the Rights Agreement, the Rights evidenced by this Rights
Certificate (i) may be redeemed by the Company, at its option, at a redemption
price of $0.0001 per Right or (ii) may be exchanged by the Company in whole or
in part for Common Shares, substantially equivalent rights or other
consideration as determined by the Company.

       

      This
Rights Certificate, with or without other Rights Certificates, upon surrender at
the office of the Rights Agent designated for such purpose, may be exchanged for
another Rights Certificate or Rights Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate amount of
securities as the Rights evidenced by the Rights Certificate or Rights
Certificates surrendered shall have entitled such holder to purchase. If this
Rights Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Rights Certificate or Rights Certificates
for the number of whole Rights not exercised.

       

      No
fractional portion less than integral multiples of one one-hundredth of a
Preferred Share will be issued upon the exercise of any Right or Rights
evidenced hereby but in lieu thereof a cash payment will be made, as provided in
the Rights Agreement.

       

      No holder
of this Rights Certificate, as such, shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the Preferred Shares or of
any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Rights Certificate shall have been
exercised as provided in the Rights Agreement.

       

      This
Rights Certificate shall not be valid or obligatory for any purpose until it
shall have been countersigned by an authorized signatory of the Rights
Agent.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      WITNESS
the facsimile signature of the proper officers of the Company and its corporate
seal. Dated as of

      

       

      
        	 
      	
                ENTERTAINMENT
      DISTRIBUTION 
COMPANY, INC.

                 

                By:__________________________

                Name:
      Jordan M. Copland

                Title:
      Interim Chief Executive Officer, Chief 
Financial Officer, Treasurer
      and Secretary

              
	
                Countersigned:

              	 
      
	 	 
	
                American
      Stock Trust & Trust

                  Company,
      as Rights Agent

                 

                By:_________________________

                Authorized
    Signatory

              	 
      
	 	 
	
                Date
      of countersignature:

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