Exhibit 99.2
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH
THE SECURITIES AND EXCHANGE COMMISSION IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
THIS NOTE DOES NOT REQUIRE PHYSICAL SURRENDER OF
THE NOTE IN THE EVENT OF A PARTIAL REDEMPTION. AS A RESULT,
FOLLOWING ANY REDEMPTION OF ANY PORTION OF THIS NOTE, THE
OUTSTANDING PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE MAY BE
LESS THAN THE PRINCIPAL AMOUNT AND ACCRUED INTEREST SET FORTH
BELOW.
10% CONVERTIBLE UNSECURED
NOTE
OF
LIQUIDMETAL TECHNOLOGIES,
INC.
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Note No.:
B-
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Original Principal Amount:
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Original Issuance Date:
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June 13, 2005
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Lake Forest, California
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THIS NOTE (this “ Note
”) is one of a duly authorized issue of Notes issued by
LIQUIDMETAL TECHNOLOGIES, INC. , a corporation duly
organized and existing under the laws of the State of Delaware (the
“ Company ”), designated as the Company’s
10% Convertible Unsecured Short Term Note in an aggregate principal
amount equal to approximately Three Million Two Hundred Fifty
Thousand U.S. Dollars (U.S. $3,250,000) (the “
Notes” ). All principal and interest under this
Note shall become due and payable on the first to occur of
(i) June 13, 2006 or (ii) the consummation of any
public or private equity or debt offering or restructuring
transaction (through a merger, sale, recapitalization,
extraordinary dividend, stock repurchase, spin-off, joint venture
or otherwise) pursuant to which the Company receives gross proceeds
of at least $4,000,000 (a “ Follow-On Financing
”) after the date hereof (the “ Maturity Date
”).
FOR VALUE RECEIVED, the Company
hereby promises to pay to the order of
,
or its registered assigns or successors-in-interest (
“Holder” ), the principal sum of
(U.S.
$ )
together with all accrued but unpaid interest thereon, if any, on
the Maturity Date, in accordance with the terms hereof.
Interest on the unpaid principal balance hereof shall accrue at the
rate of 10% per annum from the original date of issuance,
June 13, 2005 (the “Issuance Date” ), until
the same becomes due and payable on the Maturity Date, or such
earlier date upon acceleration or by redemption in accordance with
the terms hereof or of the other Transaction Documents.
Interest on this Note shall accrue daily commencing on the Issuance
Date and shall be computed on the basis of a 360-day year, 30-day
months and actual days elapsed and shall be payable in accordance
with Section 1 hereof. Notwithstanding anything to the
contrary contained herein, this Note shall bear interest on the due
and unpaid Principal Amount from and after the occurrence and
during the continuance of an Event of Default pursuant to
Section 3(a), at the rate
(the “ Default Rate ”) equal
to the lower of fourteen percent (14%) per annum or the highest
rate permitted by law. Unless otherwise agreed or required by
applicable law, payments will be applied first to any unpaid
collection costs, then to unpaid interest and fees and any
remaining amount to principal.
Except as otherwise provided herein,
all payments of principal and interest on this Note shall be made
in lawful money of the United States of America by wire transfer of
immediately available funds to such account as the Holder may from
time to time designate by written notice in accordance with the
provisions of this Note. This Note may be prepaid in whole or
in part at any time without penalty. Whenever any amount
expressed to be due by the terms of this Note is due on any day
which is not a Business Day (as defined below), the same shall
instead be due on the next succeeding day which is a Business
Day.
Capitalized terms used herein and
not otherwise defined shall have the meanings set forth in the
Securities Purchase Agreement dated on or about the Issuance Date
pursuant to which the Note was originally issued (the
“Purchase Agreement” ). For purposes
hereof the following terms shall have the meanings ascribed to them
below:
“ Business Day
” shall mean any
day other than a Saturday, Sunday or a day on which commercial
banks in the City of New York are authorized or required by law or
executive order to remain closed.
“ Debt
” shall mean
indebtedness of any kind.
“
Exchange Act
” shall
mean the Securities Exchange Act of 1934, as amended.
“
Principal Amount
” shall
refer to the sum of (i) the original principal amount of this
Note, (ii) all accrued but unpaid interest hereunder, and
(iii) any default payments owing under the Transaction
Documents but not previously paid or added to the Principal
Amount.
“Underlying
Shares” means the shares of Common Stock into which
this Note is convertible in accordance with the terms
hereof.
The following terms and conditions
shall apply to this Note:
Section 1.
Payments of Principal and Interest .
(a)
Interest Payments. The Company shall pay all accrued
but unpaid interest on the Principal Amount of this Note (the
“ Quarterly
Amount ”), on the first
business day of each consecutive calendar quarter (each an
“ Interest Payment
Date ”) beginning on
July 1, 2005. The Quarterly Amount shall be paid in
cash.
(b)
Payment of Principal. Subject to the provisions
hereof, including, without limitation, the right to obtain
prepayment of the Principal Amount provided herein, the Principal
Amount of this Note shall be due and payable on the Maturity Date.
Payment of the Principal Amount shall be effected in
cash.
(c)
Taxes . The Company may withhold and pay over to the
relevant authorities any appropriate tax or other legally required
withholdings from any interest payment to be made to the Holder to
the extent that such withholding is required by the Internal
Revenue Code or any other applicable law, rule, or
regulation.
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(d)
Redemption Right . This Note and its related Warrants
issued pursuant to the Purchase Agreement will be redeemable at the
option of the Holder if, on the date that is 180 calendar days of
the Issuance Date of this Note, the Company is either (i) not
then current in the filing of its periodic reports with the U.S.
Securities and Exchange Commission under the Securities Exchange
Act of 1934, as amended, or (ii) not listed, traded, or quoted
on an Approved Market (the “ Redemption Right ”). The
redemption price of this Note and its related Warrants under this
Redemption Right will be equal to the principal amount of this Note
plus all accrued and unpaid interest thereon. Holder’s
election to exercise this Redemption Right must be made in writing
(a “ Notice of
Exercise ”) within seven
(7) days after the date which is 180 calendar days from the
Issuance Date of this Note, and the Company will effect such
redemption and pay the redemption price within 30 days of the
delivery to the Company of the Notice of Exercise, although the
Company shall not be required to pay the redemption price unless
and until the Holder tenders to the Company the originally executed
version of this Note and the related Warrants. In the event
that the Redemption Right is properly exercised for this Note, this
Note shall be deemed to have accrued interest at a rate equal to
14% per annum since the Issuance Date (in lieu of and
notwithstanding the interest rate otherwise specified herein),
provided that any additional interest above the rate otherwise
specified herein and payable by reason of the operation of this
paragraph shall not be due and payable until the date on which this
Note is actually required to be redeemed by the Company. In
the event that Holder elects to exercise the Redemption Right, then
the payment by the Company of the redemption price in accordance
with this paragraph shall constitute the sole and exclusive remedy
of Holder with respect to any breach or Event of Default under this
Note, the Purchase Agreement, and the Transaction Documents, and by
electing to exercise the Redemption Right, Holder irrevocably
waives any and all provisions.
Section 2.
Seniority . The obligations of
the Company hereunder shall rank senior to all other Debt of the
Company, whether now or hereinafter existing, except to
(A) the Company’s and its subsidiaries’
outstanding debt to Kookmin Bank, (B) the previously issued
10% Senior Secured Notes Due July 29, 2005 and 6% Senior
Secured Notes Due July 29, 2007 of the Company (the
“ July 2005
Notes ”), and (C) the
other obligations described in Section 3.2 of the Purchase
Agreement. Notwithstanding the Maturity Date of this Note,
the Company will not make any payments of Principal under this Note
unless and until all amounts due and payable under the
July 2005 Notes have been paid in full (unless otherwise
waived in writing by the holders of the July 2005
Notes).
Section 3.
Defaults and Remedies.
(a)
Events of Default . An “
Event of Default ” is: (i) a
default in payment of the Principal Amount, when due, or failure to
pay any accrued but unpaid interest thereon of the Note within five
(5) days the date such interest payment is due; (ii) a
default in the timely issuance of the Underlying Shares upon and in
accordance with the terms hereof (where for purposes of this Note,
the term timely shall mean within ten (10) days following the
conversion date) (iii) failure by the Company for thirty (30)
days after written notice has been received by the Company to
comply with any other material provision of the Note, the Purchase
Agreement or the Transaction Documents, (iv) a material breach
by the Company of its representations or warranties in the Purchase
Agreement or Transaction Documents that remains uncured for
thirty (30) business days after notice to the Company;
(v) any event or condition shall occur which (x) results in
the acceleration of the maturity of any material long-term debt
(other than the Note) of the Company or
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any of its subsidiaries, or
(y) enables (or, with the giving of notice or lapse of time or
both, would enable) the holder of such material long-term debt or
any or person acting on behalf of such holder’s behalf to
accelerate the maturity thereof, or (vi) if the Company or any
of its subsidiaries is subject to any Bankruptcy Event.
“ Bankruptcy
Event ” means any of the
following events: (a) the Company or any subsidiary commences
a case or other proceeding under any bankruptcy, reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction
relating to the Company or any subsidiary thereof; (b) there
is commenced against the Company or any subsidiary any such case or
proceeding that is not dismissed within 30 days after commencement;
(c) the Company or any subsidiary is adjudicated insolvent or
bankrupt or any order of relief or other order approving any such
case or proceeding is entered; (d) the Company or any
subsidiary suffers any appointment of any custodian or the like for
it or any substantial part of its property that is not discharged
o
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