Document:

<PAGE>
                                                                    EXHIBIT 10.2

<TABLE>
<S>                                        <C>                                              <C>              <C>
----------------------------------------------------------------------------------------------------------------------------------
AWARD/CONTRACT                             1.   THIS CONTRACT IS A RATED ORDER              RATING           PAGE OF PAGES
                                                UNDER DPAS (15 CFR 350)                                         1      8
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2.   CONTRACT (Proc. Inst. Ident.) NO.     3.   EFFECTIVE DATE                4.   REQUISITION/PURCHASE REQUEST/PROJECT NO.
DAAD19-01-C-0078                                                 12 Sep 2001   P-42477-MS-000-01072-
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                                                                                                                    --------------
5.   ISSUED BY                     CODE    DAAD19              6.   ADMINISTERED BY  (If other than Item 5)   CODE
                                           -------------------                                                      --------------

U.S. ARMY ROBERT MORRIS ACQUISITION                            SEE ITEM 5
P.O. BOX 12211
RESEARCH TRIANGLE PARK NC  27709-2211

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7.   NAME AND ADDRESS OF CONTRACTOR  (No., street, city, county, state and zip code)  8.   DELIVERY
                                                                                           [    ] FOB ORIGIN    [ X ] OTHER
LIQUIDMETAL TECHNOLOGIES INC.                                                                                         (see below)
25800 COMMERCENTRE, # 100
LAKE FOREST CA  92630
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                                                                                      9.   DISCOUNT FOR PROMPT PAYMENT

                                                                                      Net 30 Days

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                                                                                      10.  SUBMIT INVOICES            ITEM

                                                                                      (4 copies unless otherwise           Block 6
                                                                                      specified)
                                                                                      TO THE ADDRESS
-------------------------------------------------------------------------------------
CODE  0XNT1                                       FACILITY CODE                       SHOWN IN:
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11.  SHIP TO/MARK FOR                     CODE    DAAD19          12.  PAYMENT WILL BE MADE BY                  CODE  HQ303
                                                                                                                      ------------
U.S. ARMY RESEARCH OFFICE                                         DEFENSE FINANCE AND ACCOUNTING SERVICE
RECEIVING                                                         ROCK ISLAND OPERATING LOCATION
P.O. BOX 12211                                                    ATTN:  DFAS-RI-FPV
RESEARCH TRIANGLE PARK NC  27709-2211                             BUILDING 68
                                                                  ROCK ISLAND IL  61299-8000

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15A.  ITEM NO                    15B. SUPPLIES/SERVICES          15C.  QUANTITY    15D.  UNIT    15E.  UNIT PRICE     15F.  AMOUNT
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                                       SEE SCHEDULE

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                                                                       15G.  TOTAL AMOUNT OF CONTRACT                  $249,962.00
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                                              16.  TABLE OF CONTENTS
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  (X)     SEC.                                              PAGE(S)    (X)   SEC.          DESCRIPTION                     PAGE(S)
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                  PART I - THE SCHEDULE                                              PART II - CONTRACT CLAUSES
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   X        A    SOLICITATION/CONTRACT FORM                 1-1         X      I    CONTRACT CLAUSES                           6-8
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   X        B    SUPPLIES OR SERVICES AND PRICES/COSTS      2                  PART III - LIST OF DOCUMENTS, EXHIBITS AND OTHER
                                                                               ATTACHMENTS
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   X        C    DESCRIPTION/SPECS/WORK STATEMENT           3                  J    LIST OF ATTACHMENTS
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   X        D    PACKAGING AND MARKING                      3                     PART IV - REPRESENTATIONS AND INSTRUCTIONS
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   X        E    INSPECTION AND ACCEPTANCE                  3                       REPRESENTATIONS, CERTIFICATIONS AND
                                                                               K    OTHER STATEMENTS OF OFFERORS
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   X        F    DELIVERIES OR PERFORMANCE                  3
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   X        G    CONTRACT ADMINISTRATION DATA               4                  L    INSTRS., CONDS., AND NOTICES TO OFFERORS
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   X        H    SPECIAL CONTRACT REQUIREMENTS              4-6                M    EVALUATION FACTORS FOR AWARD
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                                     CONTRACTING OFFICER WILL COMPLETE ITEM 17 OR 18 AS APPLICABLE
--------------------------------------------------------------------- ------------------------------------------------------------
17. [X]  CONTRACTOR'S NEGOTIATED AGREEMENT Contractor is required     18.  [  ]  AWARD (Contractor is not required to sign this
to sign this document and return ___ copies to issuing office.)       document.)  Your offer on Solicitation Number
Contractor agrees to furnish and deliver all items or perform all     _____________________________________________ including the
the services set forth or otherwise identified above and on any       additions or charges made by you which additions or changes
continuation sheets for the consideration stated herein.  The         are set forth in full above, is hereby accepted as to the
rights and obligations of the parties to this contract shall be       items listed above and on any continuation sheets.  This
subject to and governed by the following documents:  (a) this         award consummates the contract which consists of the
award/contract, (b) the solicitation, if any, and (c) such            following documents: (a) the Government's solicitation and
provisions, representations, certifications, and specifications,      (b) this award/contract.  No further contractual document is
are attached or incorporated by reference herein.                     your offer, and necessary.
(Attachments are listed herein.)
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19A.  NAME AND TITLE OF SIGNER      (Type or print)                   20A.  NAME AND TITLE OF CONTRACTING OFFICER

/s/ John Grant, VP & General Counsel                                  PATSY S. ASHE/GRANTS/CONTRACTING OFFICER
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19B.  NAME OF CONTRACTOR                  19C.  DATE SIGNED           20B.  UNITED STATES OF AMERICA          20C.  DATE SIGNED

LIQUIDMETAL TECHNOLOGIES                                              BY    /s/ Patsy S. Ashe                       17-Sep-2001
                                                                         ---------------------------------
                                                                        (Signature of Contracting Officer)
BY:   /s/ John Grant
----------------------------------------
(Signature of person authorized to sign)
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</TABLE>

<PAGE>
                                                                DAAD19-01-C-0078

                                                                     Page 2 of 8

<TABLE>
<S>                <C>                                                            <C>                <C>
SECTION B          Supplies or Services and Prices

ITEM NO 0001       SUPPLIES/SERVICES                         UNIT
                                                             Dollars,
                                                             U.S.
                   CONTRACT AWARD

                   COST-Non-personal services and materials to perform research
                   as specified in the proposal (42477-MS) titled "Refractory
                   Amorphous Metals and Composites". The proposal is hereby
                   incorporated by reference into this contract and the
                   performance period is specified in Section F. Base period of
                   performance is seven months.

                                                                                  ESTIMATED COST     $249,962.00
                   ACRN AA Funded Amount                                                             $249,962.00

ITEM NO 0002       SUPPLIES/SERVICES                         UNIT
                                                             Dollars,
                                                             U.S.
                   OPTION ONE
                   COST

                                                                                  ESTIMATED COST     $177,977.00

ITEM NO 0003       SUPPLIES/SERVICES                         UNIT
                                                             Dollars,
                                                             U.S.
                   OPTION TWO
                   COST
                                                                                  ESTIMATED COST     $821,974.00

ITEM NO 0004       SUPPLIES/SERVICES                         UNIT
                                                             Dollars,
                                                             U.S.
                   OPTION THREE
                   COST
                                                                                  ESTIMATED COST     $749,931.00
</TABLE>

B.1 The type of contract is Cost No Fee.

B.2 The estimated cost for performance of this contract is as follows:

                   Estimated Cost              $249,962
                   Fee                               -0-
                   Total Cost and Fee          $249,962

                  The final price of this contract shall be the total of all
                  costs determined reimbursable in accordance with the general
                  provision of the contact entitled "Allowable Cost and Payment"
                  but not exceeding the estimated cost plus the fixed fee, if
                  any, both of which are specified above.
<PAGE>
                                                                DAAD19-01-C-0078

                                                                     Page 3 of 8

SECTION C         Descriptions and Specifications

C.1               The research to be performed under this contact will be in
                  accordance with details in the contractor s proposal and
                  modifications thereto, if any, described below. (A copy of the
                  proposal is on file at the Army Research Office.)

                  Proposal Title: REFRACTORY AMORPHOUS METALS AND COMPOSITES

                  Proposal No: 42477-MS
                  Proposal/Modification Date(s): 26 October 2000 cost proposals
                  revised 19 March 2001, 30 August
                  2001 and 5 September 2001
                  Principal Investigator: Dr. Atakan Peker

C.2               The report called for under this contract shall be prepared in
                  accordance with ARO Form 18, U.S. Army Research Office
                  Reporting Instructions, located at:
                  www.aro.army.mil/forms/forms2.htm#fm18. The ARO technical
                  representative requires a brief monthly report on the status
                  of the project. Email is acceptable for these reports and
                  encouraged. The email address is mullins@aro.arl.army.mil.
                  Other reports including the final will follow normal ARO
                  requirements.

SECTION D         Packaging and Marking

D.1               Reports delivered under this contract shall be afforded the
                  degree of packaging (preservation and packing) required to
                  prevent damages due to the hazards of shipment and handing.

SECTION E         Inspection and Acceptance

E.1               The contractor will submit all scientific reports to the
                  office specified in ARO Form 18 located at
                  www.aro.army.mil/forms/forms2.htm#fm18 for inspection and
                  acceptance. This contract takes precedence for email address
                  identified in ARO Form 18.

SECTION F         Deliveries or Performance

F.1               Research called for by this contract shall be performed during
                  the period 12 September 2001 - 11 April 2002. This contract
                  also contains three option periods: The first option period is
                  for 5 months, 12 April 2002 - 11 September 2002, and two
                  options for one year periods of 12 September 2002 - 11
                  September 2003 and 12 September 2003 - 11 September 2004
                  which the Government may unilaterally exercise (refer to FAR
                  52.217-8, Section 1).

F.2               Reports called for by this contract shall be submitted
                  electronically in PDF format when possible. You may download
                  the electronic form SF298 and SF298 continuation sheet from
                  the ARO's home page at www.aro.army.mil/forms/forms2.htm#fm18.
                  The forms were created in MS Word and MS Word 97. Refer to ARO
                  Form 18 for specific reporting requirements for each type of
                  report. If you are not able to submit reports electronically,
                  you should submit as indicated in ARO Form 18. The use of
                  color in reports is discouraged for both electronic documents
                  and hard copy documents.

SECTION G         Contract Administration Data

G.1               Delegation of Administrative Functions:

                  a.       The Army Research Office (ARO) retains all contact
                  administration functions.

                  b.       A pre-payment audit is required on the first invoice
                  and/or voucher to test the validation of the accounting system
                  and to assure that the system has been properly implemented.

<PAGE>
                                                                DAAD19-01-C-0078

                                                                     Page 4 of 8

                  c.       All vouchers, both interim and final, shall be
                  submitted for approval to the following office:

                           Defense Contract Audit Agency
                           Santa Ana Branch Office
                           3 Hutton Centre Drive, Suite 750
                           Santa Ana, California 92707-5704
                       Phone Number:(714) 435-2200
                       FAX          (714) 435-2280
                       E-mail Address        dcaa-fao4l8l@dcaa.mil

G.2               Payment Information and Inquiries: The Contractor should
                  contact the DFAS Office indicated in Block 12 of the SF 26 for
                  information or inquiries regarding payments on this contract.
                  Telephonic inquires may be made on 1-888-332-7742 or
                  electronic inquiries on
                  http://www.dfas.niij/money/vendor/index.htm. In the event DFAS
                  cannot answer the Contractor's inquiry, the Contracting
                  Officer may be contacted for assistance.

G.3               Contracting Officer's Representative (COR)

                  Dr. William Mullins
                  135 Army Research Office
                  4300 South Miami Boulevard
                  P. O. Box 12211
                  Research Triangle Park, NC 27709-2211
                  Voice:   (919) 549-4286
                  FAX: (919) 549-4310
                  Email: mullins@aro.arl.army.mil

G.4               Invoicing. The government shall make payments to the
                  Contractor when requested as work progresses, but not more
                  often that once every 2 weeks, in the amounts determined to be
                  allowable by DCAA in accordance with SubPart 31.2 of the
                  Federal Acquisition Regulation in effect on the date of this
                  contract and terms of the contract.

G.5               ACCOUNTING AND APPROPRIATION DATA

<TABLE>
                  <S>  <C>
                  AA:971040013011RPAROD1Y10L314000255Y1XYR011AR42477MS00001XYR01S18129
                  </TABLE>
                  AMOUNT:  $249,962.00

SECTION H         Special Contract Requirements

H.1               Acknowledgment of Sponsorship

                  a. The contractor agrees that in the release of information
                  relating to this contract, such release shall include a
                  statement to the effect that the project or effort depicted
                  was or is sponsored by the U.S. Army Research Office, and that
                  the content of the information does not necessarily reflect
                  the position or the policy of the Government, and no official
                  endorsement should be inferred.

                  b. For the purpose of this provision, "information" includes
                  news releases, articles, manuscripts, brochures,
                  advertisements, still and motion pictures, speeches, trade
                  association proceedings, symposia, etc.

                  c. The contractor further agrees to include this provision if
                  any subcontract awarded as a result of this contract.
<PAGE>
                                                                DAAD19-01-C-0078

                                                                     Page 5 of 8

H.2               Publications

                  Publication of results of the research project in appropriate
                  professional journals is encouraged as an important method of
                  recording and reporting scientific information. One copy of
                  each paper planned for publication will be submitted to the
                  Contracting Officer's Representative simultaneously with its
                  submission for publication. Following publication, copies of
                  published papers shall be submitted to the Contacting
                  Officer's representative, or to the other addresses in
                  quantities publication. Following publication, copies of
                  published papers shall be submitted to the Contracting
                  Officer's Representative, or to the other addressees in
                  quantities as may be directed by the Contracting Officer.

H.3               The contractor is to note acknowledgements in publications or
                  other media that support is from DARPA as well as
                  technical/contact support from ARO.

H.4               Research Responsibility

                  a. The contractor shall bear responsibility for the conduct of
                  the research specified in the contractor's proposal identified
                  in the contract. The contractor will exercise judgment in
                  obtaining the stated research objectives within the limits of
                  the terms and conditions of the contract; provided, however,
                  that the contractor will obtain the contracting officer's
                  approval to change the Statement of Work. Consistent with the
                  foregoing the contractor shall conduct the work as set forth
                  in his proposal and accepted by the contract award.

                  b. The principal investigator identified in the proposal shall
                  be continuously responsible for the conduct of the research
                  project, and shall be closely involved with the research
                  efforts.

                  c. The contractor shall advise the contacting officer if the
                  principal investigator(s) identified in the contract plan to
                  devote less effort to the work than set forth in the proposal.

                  d. The contractor shall obtain the contacting officer's
                  approval prior to changing the principal investigator's
                  identified in the proposal.

H.5               Restriction on Printing

                  The Government authorizes the reproduction of reports, data or
                  other written material, if required, provided the material
                  produced does not exceed 5,000 production units of any page,
                  and items consisting of multiple pages do not exceed 25,000
                  production units in the aggregate. The contractor shall obtain
                  the express prior written authorization of the contracting
                  officer to reproduce material in excess of the quantities
                  cited above.

H.6               Approved Accounting System

                  The contractor shall, as a condition of this contract,
                  establish and have in place an approved accounting system
                  prior to the end this seven months performance period. As a
                  minimum, the system shall be considered adequate for
                  determining, allocating and accumulating costs applicable to
                  this cost reimbursement contract.

<PAGE>
                                                                DAAD19-01-C-0078

                                                                     Page 6 of 8

                           PART II GENERAL PROVISIONS
                          SECTION I - Contract Clauses

I.   FEDERAL ACQUISITION REGULATION (48 CFR CHAPTER 1) CLAUSES

FAR 52.252-2 Clauses Incorporated by Reference (FEB 1998)

This contract incorporates one or more clauses by reference, with the same force
and effect as if they were given in full text. Upon request. the Contracting
Officer will make their full text available. Also, the full text of a clause may
be accessed electronically at this address:
http://farsite.hill.af.mil/vffar1.htm. The DFARS is available electronically via
the World Wide Web at http://www.acq.osd.mil/dp/dfars.htm1.

CLAUSES INCORPORATED BY REFERENCE:

<TABLE>
<C>                 <C>                                                                  <C>
52.203-3            Gratuities                                                           APR 1984
52.203-5            Covenant Against Contingent Fees                                     APR 1984
52.203-6            Restrictions On Subcontractor Sales To The Government                JUL 1995
52.203-7            Anti-Kickback Procedures                                             JUL 1995
52.203-8            Cancellation, Rescission, and Recovery of Funds for Illegal or       JAN 1997
                    Improper Activity
52.203-10           Price Or Fee Adjustment For Illegal Or Improper Activity             JAN 1997
52.230-12           Limitation On Payments To Influence Certain Federal Transactions     JUN 1997
52.204-4            Printing/Copying Double-Sided on Recycled Paper                      JUN 1996
52.209-6            Protecting the Government's Interest When Subcontracting With        JUL 1995
                    Contractors Debarred, Suspended, or Proposed for Debarment
52.215-8            Order of Precedence--Uniform Contract Format                         OCT 1997
52.215-10           Price Reduction for Defective Cost or Pricing Data                   OCT 1997
52.215-12           Subcontractor Cost or Pricing Data                                   OCT 1997
52.215-14           Integrity of Unit Prices                                             OCT 1997
52.215-15           Pension Adjustments and Asset Reversions                             DEC 1998
52.215-17           Waiver of Facilities Capital Cost of Money                           OCT 1997
52.215-18           Reversion or Adjustment of Plans for Postretirement Benefits (PRB)   OCT 1997
                    Other than Pensions
52.215-19           Notification of Ownership Changes                                    OCT 1997
52.215-21           Requirements for Cost or Pricing Data or Information Other Than      OCT 1997
                    Cost or Pricing Data--Modifications
52.216-7            Allowable Cost And Payment                                           MAR 2000
52.216-11           Cost Contract-No Fee                                                 APR 1984
52.217-8            Option to Extend Services                                            NOV 1999
52-217-9            Option to Extend the Term of the Contract                            NOV 1999
52.219-8            Utilization of small Business Concerns                               OCT 1999
52.222-2            Payment for Overtime Premiums (Insert "0")                          JULY 1999
52.222-3            Convict Labor                                                        AUG 1996
52.222-21           Prohibition Of Segregated Facilities                                 FEB 1999
52.222-26           Equal Opportunity                                                    FEB 1999
52.222-29           Notification Of Visa Denial                                          FEB 1999
52.222-35           Affirmative Action For Disabled Veterans And Veterans of the         JUN 1998
                    Vietnam Era
52.222-36           Affirmative Action For Workers With Disabilities                     JUN 1998
52.222-37           Employment Reports On Disabled Veterans And Veterans Of The          JAN 1999
                    Vietnam Era
52.223-3            Hazardous Material Identification and Material Safety Data           JAN 1997
52.223-6            Drug Free Workplace                                                  JAN 1997
52.223-14           Toxic Chemical Release Reporting                                     OCT 2000
52.227-1 Alt I      Authorization And Consent (Jul 1995) - Alternate I                   APR 1984
</TABLE>
<PAGE>
                                                                DAAD19-01-C-0078

                                                                     Page 7 of 8

<TABLE>
<S>                 <C>                                                                  <C>
52.227-2            Notice And Assistance Regarding Patent And Copyright Infringement    AUG 1996
52.227-11           Patent Rights-Retention by the Contractor (Short Form)               JUN 1997
52.228-7            Insurance--Liability To Third Persons                                MAR 1996
52.232-9            Limitation On Withholding Of Payments                                APR 1984
52.232-20           Limitation Of Cost                                                   APR 1984
52.232-23           Assignment Of Claims                                                 JAN 1986
52.232-25           Prompt Payment                                                       JUN 1997
52.232-33           Payment by Electronic Funds Transfer--Central Contractor             MAY 1999
                    Registration
52.233-1            Disputes                                                             DEC 1998
52.233-3  I         Protest After Award (AUG 1996) Alternate I                           JUN 1985
52.242-1            Notice of Intent to Disallow Costs                                   APR 1984
52.242-3            Penalties for Unallowable Costs                                      OCT 1995
52.242-13           Bankruptcy                                                           JUL 1995
52.243-2 Alt V      Changes--Cost-Reimbursement (Aug 1987) - Alternate V                 APR 1984
52.244-2 Alt I      Subcontracts (Aug 1998) - Alternate I                                AUG 1998
52.244-5            Competition In Subcontracting                                        DEC 1996
52.244-6            Subcontractors for Commercial Items                                  MAY 2001
52.245-5            Government Property (Cost-Reimbursement Time-And-Materials, Or       JAN 1986
                    Labor Hour Contracts)
52.246-8            Inspection Of Research And Development Cost Reimbursement            APR 1984
52.246-25           Limitation Of Liability--Services                                    FEB 1997
52.247-1            Commercial Bill Of Lading Notations                                  APR 1984
52.247-63           Preference for U.S. Flag Air Carriers                                JAN 1997
52.249-6            Termination (Cost Reimbursement)                                     SEP 1996
252.201-7000        Contracting Officer's Representative                                 MAR 1999
252.203-7001        Prohibition On Persons Convicted of Fraud or Other                   MAR 1999
                    Defense-Contract-Related Felonies
252.204-7000        Disclosure of Information                                            DEC 1991
252.204-7003        Control of Government Personnel Work Product                         APR 1992
252.204-7004        Required Central Contractor Registration                             MAR 2000
252.205-7000        Provisions of Information to Cooperative Agreement Holders           DEC 1991
252.209-7000        Acquisition From Subcontractors Subject To On-Site Inspection        NOV 1995
                    Under The Intermediate Range Nuclear Forces (INF) Treaty
252.209-7003        Compliance with Veterans' Employment Reporting Requirements          MAR 1998
252.209-7004        Subcontracting With Firms That Are Owned or Controlled By The        MAR 1998
                    Government of a Terrorist Country
252.215-7000        Pricing Adjustments                                                  DEC 1991
252.215-7002        Cost Estimating System Requirements                                  OCT 1998
252.219-7003        Small, Small Disadvantage Business an Women-Owned Small Business     APR 1996
                    Subcontracting Plan (DoD Contracts)
252.225-7001        Buy American Act And Balance Of Payments Program                     MAR 1998
252.225-7009        Duty-Free Entry--Qualifying Country Supplies (End Products and       MAR 1998
                    Components)
252.225-7012        Preference for Certain Domestic Commodities                          AUG 2000
252.225-7026        Reporting of Contract Performance Outside the United States          JUN 2000
252.225-7031        Secondary Arab Boycott Of Israel                                     JUN 1992
252.227-7013        Rights in Technical Data--Noncommercial Items                        NOV 1995
252.227-7016        Rights in Bid or Proposal Information                                JUN 1995
252.227-7030        Technical Data--Withholding Of Payment                               MAR 2000
252.227-7034        Patents--Subcontracts                                                APR 1984
252.227-7036        Declaration of Technical Data Conformity                             JAN 1997
252.227-7037        Validation of Restrictive Markings on Technical Data                 SEP 1999
252.227-7039        Patents-- Reporting Of Subject Inventions                            APR 1990
</TABLE>

<PAGE>
                                                                DAAD19-01-C-0078

                                                                     Page 8 of 8

<TABLE>
<S>                 <C>                                                                  <C>
252.231-7000        Supplemental Cost Principles                                         DEC 1991
252.235-7004        Options to Extend the Term of the Contract                           DEC 1991
252.235-7010        Acknowledgment of Support and Disclaimer                             MAY 1995
252.242-7004        Material Management And Accounting System                            SEP 1996
252.243-7002        Requests for Equitable Adjustment                                    MAR 1998
252.245-7001        Reports Of Government Property                                       MAY 1994
252.247-7023        Transportation of Supplies by Sea                                    MAR 2000
252.242-7000        Postaward Conference                                                 DEC 1991
</TABLE>

**** A FINAL PATENT REPORT (DD FORM 882) IS REQUIRED TO BE SUBMITTED WITHIN
SIXTY (60) DAYS AFTER COMPLETION OF THE CONTRACT.****

Corporate Status: Corporation incorporated under the laws of the state of CA
Taxpayer Identification Number: 33-0264467<PAGE>

                                                                    EXHIBIT 10.3

                   AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

                                STANDARD SUBLEASE

                 (LONG-FORM TO BE USED WITH PRE-1996 AIR LEASES)

         1. PARTIES. This Sublease, dated, for reference purposes only, December
18, 2000, is made by and between The L.L. Knickerbocker Company, Inc.
("Sublessor") and Liquidmetal Technologies, Inc., a California Corporation
("Sublessee").

         2. PREMISES. Sublessor hereby subleases to Sublessee and Sublessee
hereby subleases from Sublessor for the term, at the rental, and upon all of the
conditions set forth herein, that certain real property, including all
improvements therein, and commonly known by the street address of 25800
Commercentre Drive, Lake Forest located in the County of Orange, State of
California and generally described as (describe briefly the nature of the
property) an approximately 25,379 square foot portion of a larger approximately
50,518 square foot office/warehouse building, outlined in Exhibit "A" attached.

         3. TERM.

                  3.1. TERM. The term of this Sublease shall be for Seventy-six
(76) months and twenty five (25) days commencing on February 1, 2001 and ending
on June 25, 2007 unless sooner terminated pursuant to any provision hereof.

                  3.2. DELAY IN COMMENCEMENT. Sublessor agrees to use its
commercially reasonable efforts to deliver possession of the Premises by the
commencement date. If, despite said efforts, Sublessor is unable to deliver
possession as agreed, Sublessor shall not be subject to any liability therefor,
nor shall such failure affect the validity of this Sublease. Sublessee shall
not, however, be obligated to pay Rent or perform its other obligations until it
receives possession of the Premises. If possession is not delivered within sixty
days after the commencement date, Sublessee may, at its option, by notice in
writing within ten days after the end of such sixty day period, cancel this
Sublease, in which event the Parties shall be discharged from all obligations
hereunder. If such written notice is not received by Sublessor within said ten
day period, Sublessee's right to cancel shall terminate. Except as otherwise
provided, if possession is not tendered to Sublessee when required and Sublessee
does not terminate this Sublease, as aforesaid, any period of rent abatement
that Sublessee would otherwise have enjoyed shall run from the date of delivery
of possession and continue for a period equal to what Sublessee would otherwise
have enjoyed under the terms hereof, but minus any days of delay caused by the
acts or omissions of Sublessee. If possession is not delivered within 120 days
after the commencement date, this Sublease shall automatically terminate unless
the Parties agree, in writing, to the contrary.

         4. RENT.

                  4.1. BASE RENT. Sublessee shall pay to Sublessor as Base Rent
for the Premises equal monthly payments of $15,989.00 plus 50.27% of the monthly
triple net/CAM charges for 25800 Commercentre in advance, on the 1st day of each
month of the term hereof. Sublessee shall pay Sublessor upon the "TENDER OF
POSSESSION" (as defined in the Addendum)

<PAGE>

$15,936.00 as Base Rent for the first month of the term, subject to the
provisions of Paragraph 13 of the Addendum. Base Rent for any period during the
term hereof which is for less than one month shall be a pro rata portion of the
monthly installment.

                  4.2. RENT DEFINED. All monetary obligations of Sublessee to
Sublessor under the terms of this Sublease (except for the Security Deposit) are
deemed to be rent ("RENT"). Rent shall be payable in lawful money of the United
States to Sublessor at the address stated herein or to such other persons or at
such other places as Sublessor may designate in writing.

         5. SECURITY DEPOSIT. Sublessee shall deposit with Sublessor upon Tender
of Possession $17,258.00 as security for Sublessee's faithful performance of
Sublessee's obligations hereunder. If Sublessee fails to pay Rent or other
charges due hereunder, or otherwise defaults with respect to any provision of
this Sublease, Sublessor may use, apply or retain all or any portion of said
deposit for the payment of any Rent or other charge in default or for the
payment of any other sum to which Sublessor may become obligated by reason of
Sublessee's default, or to compensate Sublessor for any loss or damage which
Sublessor may suffer thereby. If Sublessor so uses or applies all or any portion
f said deposit, Sublessee shall within ten days after written demand therefor
forward to Sublessor an amount sufficient to restore said Deposit to the full
amount provided for herein and Sublessee's failure to do so shall be a material
breach of this Sublease. Sublessor shall not be required to keep said Deposit
separate from its general accounts. If Sublessee performs all of Sublessee's
obligations hereunder, said Deposit, or so much thereof as has not therefore
been applied by Sublessor, shall be returned, without payment of interest to
Sublessee (or at Sublessor's option, to the last assignee, if any, of
Sublessee's interest hereunder) at the expiration of the term hereof, and after
Sublessee has vacated the Premises. No trust relationship is created herein
between Sublessor and Sublessee with respect to said Security Deposit.

         6. USE.

                  6.1. AGREED USE. The Premises shall be used and occupied only
for sales and distribution of golf equipment, research and development, assembly
and light manufacturing, office and related comparable uses and for no other
purpose.

                  6.2. COMPLIANCE. To Sublessor's actual knowledge the
improvements on the Premises comply as of the date hereof with all applicable
covenants or restrictions of record and applicable building codes, regulations
and ordinances ("APPLICABLE REQUIREMENTS" as of the date hereof) in effect on
the commencement date. NOTE: Sublessee is responsible for determining whether or
not the zoning is appropriate for its intended use, and acknowledges that past
uses of the Premises may no longer be allowed.

                  6.3. ACCEPTANCE OF PREMISES AND LESSEE. Sublessee acknowledges
that:

                           (a) It has been advised by Brokers to satisfy itself
                  with respect to the condition of the Premises (including but
                  not limited to the electrical, HVAC and fire sprinkler
                  systems, security, environmental aspects, and compliance with
                  Applicable Requirements), and their suitability for
                  Sublessee's intended use,

                                       2

<PAGE>

                           (b) Sublessee has made such investigation as it deems
                  necessary with reference to such matters and assumes all
                  responsibility therefor as the same relate to its occupancy of
                  the Premises, and

                           (c) Neither Sublessor, Sublessor's agents, nor any
                  Broker has made any oral or written representations or
                  warranties with respect to said matters other than as set
                  forth in this Sublease.

                           (d) In addition, Sublessor acknowledges that:

                                    (i) Broker has made no representations,
                           promises or warranties concerning Sublessee's ability
                           to honor the Sublease or suitability to occupy the
                           Premises, and

                                    (ii) It is Sublessor's sole responsibility
                           to investigate the financial capability and/or
                           suitability of all proposed tenants.

         7. MASTER LEASE.

                  7.1. Sublessor is the lessee of the Premises by virtue of a
lease, hereinafter the "MASTER LEASE", a copy of which is attached hereto marked
Exhibit 1, wherein Security Capital Industrial Trust is the lessor, hereinafter
the "MASTER LESSOR".

                  7.2. This Sublease is and shall be at all times subject and
subordinate to the Master Lease.

                  7.3. The terms, conditions and respective obligations of
Sublessor and Sublessee to each other under this Sublease shall be the terms and
conditions of the Master Lease except for those provisions of the Master Lease
which are directly contradicted by this Sublease in which event the terms of
this Sublease document shall control over the Master Lease. Therefore, for the
purposes of this Sublease, wherever in the Master Lease the word "LESSOR" is
used it shall be deemed to mean the Sublessor herein and wherever in the Master
Lease the word "LESSEE" is used it shall be deemed to mean the Sublessee herein.

                  7.4. During the term of this Sublease and for all periods
subsequent for obligations which have arisen prior to the termination of this
Sublease, Sublessee does hereby expressly assume and agree to perform and comply
with, for the benefit of Sublessor and Master Lessor, each and every obligation
of Sublessor under the Master Lease with respect to the Premises except for the
following paragraphs which are excluded therefrom and/or the following
paragraphs shall not apply to or benefit Sublessee: 40, 41, Addendum One,
Addendum Two, Exhibit 1, and Addendum Three.

                  7.5. The obligations that Sublessee has assumed under
paragraph 7.4 hereof are hereinafter referred to as the "SUBLESSEE'S ASSUMED
OBLIGATIONS". The obligations that Sublessee has not assumed under paragraph 7.4
hereof including the obligations with respect to Sublessor's retrained space are
hereinafter referred to as the "SUBLESSOR'S REMAINING OBLIGATIONS".

                                       3

<PAGE>

                  7.6. Sublessee shall hold Sublessor free and harmless from all
liability, judgments, costs, damages, claims or demands, including reasonable
attorneys fees, arising out of Sublessee's failure to comply with or perform
Sublessee's Assumed Obligations, Sublessee's obligations under this Sublease, or
Sublessee's activities on the Premises.

                  7.7. Sublessor represents to Sublessee that, to Sublessor's
actual knowledge, the Master Lease is in full force and effect and that no
default exists on the part of Sublessor or Master Lessor.

         8. ASSIGNMENT OF SUBLEASE AND DEFAULT.

                  8.1. Sublessor hereby assigns and transfers to Master Lessor
the Sublessor's interest in this Sublease, subject however to the provisions of
Paragraph 8.2 hereof.

                  8.2. Master Lessor, by executing this document, agrees that
until a Default shall occur in the performance of Sublessor's Obligations under
the Master Lease, that Sublessor may receive, collect and enjoy the Rent
accruing under this Sublease. However, if Sublessor shall Default in the
performance of its obligations to the Master Lessor then Master Lessor may, at
its option, receive and collect, directly from Sublessee, all Rent owing and to
be owed under this Sublease. Master Lessor shall not, by reason of this
assignment of the Sublease nor by reason of the collection of the Rent from the
Sublessee, be deemed liable to Sublessee for any failure of the Sublessor to
perform and comply with Sublessor's Remaining Obligations.

                  8.3. Sublessor hereby irrevocably authorizes and directs
Sublessee upon receipt of any written notice from the Master Lessor stating that
a Default exists in the performance of Sublessor's obligation sunder the Master
Lease, to pay to Master Lessor the Rent due and to become due under the
Sublease. Sublessor agrees that Sublessee shall have the right to rely upon any
such statement and request from Master Lessor, and that Sublessee shall pay such
Rent to Master Lessor without any obligation or right to inquire as to whether
such Default exists and notwithstanding any notice from or claim from Sublessor
to the contrary and Sublessor shall have no right or claim against Sublessee for
any such Rent so paid by Sublessee.

                  8.4. No changes or modifications shall be made to this
Sublease without the consent of Master Lessor.

         9. CONSENT OF MASTER LESSOR.

                  9.1. In the event that the Master Lease requires that
Sublessor obtain the consent of Master Lessor to any subletting by Sublessor
then, this Sublease shall not be effective unless, within ten days of the date
hereof, Master Lessor signs this Sublease thereby giving its consent to this
Subletting.

                  9.2. In the event that the obligations of the Sublessor under
the Master Lease have been guaranteed by third parties then neither this
Sublease, nor the Master Lessor's consent, shall be effective unless, within 10
days of the date hereof, said guarantors sign this Sublease thereby giving their
consent to this Sublease.

                  9.3. In the event that Master Lessor does give such consent
then:

                                       4

<PAGE>

                           (a) Such consent shall not release Sublessor of its
                  obligations or after the primary liability of Sublessor to pay
                  the Rent and perform and comply with all of the obligations of
                  Sublessor to be performed under the Master Lease.

                           (b) The acceptance of Rent by Master Lessor from
                  Sublessee or any one else liable under the Master Lease shall
                  not be deemed a waiver by Master Lessor of any provisions of
                  the Master Lease.

                           (c) The consent to this Sublease shall not constitute
                  a consent to any subsequent subletting or assignment.

                           (d) In the event of any Default of Sublessor under
                  the Master Lease, Master Lessor may proceed directly against
                  Sublessor, any guarantors or anyone else liable under the
                  Master Lease or this Sublease without first exhausting Master
                  Lessor's remedies against any other person or entity liable
                  thereon to Master Lessor.

                           (e) Master Lessor may consent to subsequent
                  sublettings and assignments of the Master Lease or this
                  Sublease or any amendments or modifications thereto without
                  notifying Sublessor or anyone else liable under the Master
                  Lease and without obtaining their consent and such action
                  shall not relieve such persons from liability.

                           (f) In the event that Sublessor shall Default in its
                  obligations under the Master Lease, then Master Lessor, at its
                  option and without being obligated to do so, may require
                  Sublessee to attorn to Master Lessor in which event Master
                  Lessor shall undertake the obligations of Sublessor under this
                  Sublease from the time of the exercise of said option to
                  termination of this Sublease but Master Lessor shall not be
                  liable for any prepaid Rent nor any Security Deposit paid by
                  Sublessee, nor shall Master Lessor be liable for any other
                  Defaults of the Sublessor under the Sublease.

                  9.4. The signatures of the Master Lessor and any Guarantors of
Sublessor at the end of this document shall constitute their consent to the
terms of this Sublease.

                  9.5. Master Lessor acknowledges that, to the best of Master
Lessor's knowledge, no Default presently exists under the Master Lease of
obligations to be performed by Sublessor and that the Master Lease is in full
force and effect.

                  9.6. In the event that Sublessor Defaults under its
obligations to be performed under the Master Lease by Sublessor, Master Lessor
agrees to deliver to Sublessee a copy of any such notice of default. Sublessee
shall have the right to cure any Default of Sublessor described in any notice of
default within ten days after service of such notice of default on Sublessee. If
such Default is cured by Sublessee then Sublessee shall have the right of
reimbursement and offset from and against Sublessor.

                                       5

<PAGE>

         10. BROKERS FEE.

                  10.1. Upon execution hereof by all parties, Sublessor shall
pay to Voit Commercial Brokerage, a licensed real estate broker ("BROKER"), a
fee as set forth in a separate agreement between Sublessor and Broker, or in the
event there is no such separate agreement, the sum of $_____________, per
separate agreement, for brokerage services rendered by Broker to Sublessor in
this transaction.

                  10.2. Sublessor agrees that if Sublessee exercises any option
or right of first refusal as granted by Sublessor herein, either to extend the
term of this Sublease, to renew this Sublease, or to purchase the Premises, then
Sublessor shall pay to Broker a fee in accordance with the schedule of Broker in
effect at the time of the execution of this Sublease. Notwithstanding the
foregoing, Sublessor's obligation under this Paragraph 10.2 is limited to a
transaction in which Sublessor is acting as a Sublessor, lessor or seller.

                  10.3. Any fee due from Sublessor hereunder shall be due and
payable upon the exercise of any option to extend or renew, upon the execution
of any new lease, or, in the event of a purchase, at the close of escrow.

                  10.4. Any transferee of Sublessor's interest in this Sublease,
or of Master Lessor's interest in the Master Lease, by accepting an assignment
thereof, shall be deemed to have assumed the respective obligations of Sublessor
or Master Lessor under this Paragraph 10. Broker shall be deemed to be a
third-party beneficiary of this paragraph 10.

         11. ATTORNEY'S FEES. If any party or the Broker named herein brings an
action to enforce the terms hereof or to declare rights hereunder, the
prevailing party in any such action, on trial and appeal, shall be entitled to
his reasonable attorney's fees to be paid by the losing party as fixed by the
Court.

         12. ADDITIONAL PROVISIONS. [If there are no additional provisions, draw
a line from this point to the next printed word after the space left here. If
there are additional provisions place the same here.] The Addendum to this
Sublease, Exhibit 1 (Master Lease), Exhibit 2 (Schedule of Furniture), and
Exhibit 3 (Location of Demising Wall), are hereby incorporated into this
Sublease by this reference.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]

                                       6

<PAGE>

ATTENTION: NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN
INDUSTRIAL REAL ESTATE ASSOCIATION OR BY ANY REAL ESTATE BROKER AS TO THE LEGAL
SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS SUBLEASE OR THE
TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE URGED TO:

1.       SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS
         SUBLEASE.

2.       RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION
         OF THE PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED
         TO: THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE
         PROPERTY, THE STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND
         OPERATING SYSTEMS, AND THE SUITABILITY OF THE PREMISES FOR SUBLESSEE'S
         INTENDED USE.

WARNING: IF THE SUBJECT PROPERTY IS LOCATED IN A STATE OTHER THAN CALIFORNIA,
CERTAIN PROVISIONS OF THE SUBLEASE MAY NEED TO BE REVISED TO COMPLY WITH THE
LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED.

Executed at:                             The L.L. Knickerbocker Company, Inc.
             -------------------------

On:                                      By:
    ----------------------------------       -----------------------------------

Address:                                 By:
         -----------------------------       -----------------------------------
                                             "Sublessor" (Corporate Seal)

Executed at:                             Liquidmetal Technologies, Inc.,
             -------------------------   a California Corporation

On:                                      By:
    ----------------------------------       -----------------------------------

Address:                                 By:
         -----------------------------       -----------------------------------
                                             "Sublessor" (Corporate Seal)

Executed at:                             Security Capital Industrial
             -------------------------   Trust/Prologis

On:                                      By:
    ----------------------------------       -----------------------------------

Address:                                 By:
         -----------------------------       -----------------------------------
                                             "Master Lessor" (Corporate Seal)

                                       7

<PAGE>

                                   ADDENDUM TO
                                STANDARD SUBLEASE
                             DATED DECEMBER 18, 2000

         THIS ADDENDUM TO STANDARD SUBLEASE is made by and between THE L.L.
KNICKERBOCKER COMPANY, INC. ("SUBLESSOR") AND LIQUIDMETAL TECHNOLOGIES, INC., A
CALIFORNIA CORPORATION ("SUBLESSEE") as of the date set forth on the first page
of that certain American Industrial Real Estate Association Standard Sublease
(long-form to be used with pre-1998 AIR leases) (the "SUBLEASE") between
Sublessor and Sublessee to which this Addendum is attached and incorporated. The
terms, covenants and conditions set forth herein are intended to and shall have
the same force and effect as if set forth at length in the body of the Sublease.
To the extent that the provisions of this Addendum are inconsistent with any
provisions of the Sublease, the provisions of this Addendum shall supersede and
control.

13.

         13.1     DEPOSITS; LETTER OF CREDIT:

                  (a) Upon mutual execution and delivery of this Sublease by the
                  parties hereto, Sublessee shall deposit with Voit Commercial
                  Brokerage ("VOIT") the sum of $50,000 (the "DEPOSIT") in
                  immediately available funds. The Deposit consists of the
                  following:

                        Security Deposit                $17,258.00
                        Base Rent (February)            $15,989.00
                        TI deposit                      $15,989.00
                                                        ----------
                        TOTAL                           $50,000.00

                  (b) Voit shall deposit the Deposit in an interest-bearing
                  account and shall hold the Deposit in trust for the benefit of
                  Sublessee. If there is no Tender of Possession on or prior to
                  February 15, 2000, then Voit shall, upon Sublessee's demand
                  and upon Sublessee's vacation of the Premises, return the
                  Deposit and any interest earned thereon to Sublessee. If
                  Sublessee does not elect to demand the return of the Deposit
                  and does not vacate the Premises on or before February 20,
                  2000, then, without further action of the parties, Voit shall
                  immediately pay the Base Rent portion of the Deposit (i.e.,
                  $15,989.00) to Sublessor and such Base Rent shall be deemed
                  fully earned by Sublessor upon such payment. If there is
                  Tender of Possession on or prior to February 15, 2000, then,
                  without further action of the parties, (I) the Deposit shall
                  become the property of Sublessor, and (ii) Voit shall
                  immediately pay the Deposit and any interest earned thereon to
                  Sublessor. At no time shall Voit have or be deemed to have an
                  equitable ownership or security interest in the Deposit.

                                       8

<PAGE>

                  (c) In addition, upon the Tender of Possession, Sublessee
                  shall provide to Sublessor a letter of credit (the "LETTER OF
                  CREDIT") in form and from either Union Bank or another
                  financial institution satisfactory to Sublessor in Sublessor's
                  sole and absolute discretion, naming Sublessor as beneficiary,
                  to secure Sublessee's payment obligations with respect to the
                  Sublease Improvements (defined below in paragraph 13.2) and
                  the first month's CAM charges. The Letter of Credit shall be
                  issued for a period of one year, and shall be in the amount of
                  $36,546.00 (the sum of $3,299.00 (February CAM charges) and
                  $33,246.00 (portion of Sublessee's payment towards Sublease
                  Improvements). Sublessor shall have the right to draw on the
                  Letter of Credit (i) upon a default by Sublessee under its
                  payment obligations with respect to the Sublease Improvements
                  or (ii) in the amounts and at the times set forth below in
                  paragraph 13.2 (i.e., upon a Funding Shortfall (if any) and
                  upon Completion of the Sublease Improvements, each as defined
                  in paragraph 13.2). No such draw under the foregoing clause
                  (i) shall cure or constitute a waiver by Sublessor of the
                  relevant event of default, or be deemed to fix or determine
                  the amounts to which Sublessor is entitled to recover under
                  the Sublease, or be deemed to limit or waive Sublessor's
                  rights to pursue any other remedies provided hereunder or
                  applicable law.

         13.2     SUBLEASE IMPROVEMENTS:

                  (a) Subject to the provisions of the Master Lease and the
                  Sublease and to the performance by Sublessee of its deposit
                  and reimbursement obligations set forth below, Sublessor shall
                  divide the building by locating a demising wall (the "Demising
                  Wall") as per Exhibit 3 to the Sublease and add restrooms to
                  the side of the building to be retained by Sublessor
                  (collectively, the "Sublease Improvements"). Sublessor shall
                  have direct access to the existing restrooms located in the
                  Premises until the new restrooms are completed. Sublessor
                  shall construct the Demising Wall in accordance with
                  applicable laws and building codes, and pursuant to plans and
                  specifications approved by Master Lessor and the City of Lake
                  Forest. Sublessor agrees to construct the Demising Wall as
                  soon as is reasonably possible after Tender of Possession and
                  obtaining the foregoing approvals. Warehouse racking shall
                  remain in the Premises for the term of the Sublease. Sublessee
                  shall not at any time have any ownership interest in the
                  Sublease Improvements.

                  (b) Sublessee has agreed to pay Sublessor, subject to
                  Sublessor's reimbursement to Sublessee by means of rent
                  credits as set forth below, $100,000.00 ("Sublessee's
                  Contribution") towards the Sublease Improvements to be
                  provided by Sublessor, such payment to be made as follows:

                    o    $16,753 upon Tender of Possession. This sum had been
                         included as a portion of the Deposit delivered to Voit
                         and shall be paid to Sublessor, along with the balance
                         of the Deposit, immediately upon Tender of Possession,
                         and Sublessee shall not object to or interfere with the
                         payment of same to Sublessor provided the Tender of
                         Possession has occurred.

                                       9

<PAGE>

                    o    $25,000.00 immediately upon the later of
                         (i) February 1, 2000 or (ii) Tender of Possession
                         and commencement of the Sublease Improvements.

                    o    $25,000.00 immediately upon a cash shortfall (the
                         "Funding Shortfall") such that the sum(s) previously
                         released or paid to Sublessor are not sufficient to
                         allow Sublessor to timely pay for the costs of the
                         Sublease Improvements as .the same become due;
                         provided, however, that under no circumstances shall a
                         Funding Shortfall exist unless Sublessor has obtained
                         from the contractor(s) or subcontractor(s) requesting
                         payment commercially appropriate and reasonable payment
                         requests, including conditional lien releases covering,
                         the work for which payment is requested together with
                         unconditional lien releases for all work previously
                         paid for.

                    o    Sublessor shall be entitled to draw on the Letter of
                         Credit (i) to the extent and when there is a Funding
                         Shortfall and (ii) upon completion of the Sublease
                         Improvements and final inspection and approval of same
                         by the City of Lake Forest and upon receipt by
                         Sublessor of unconditional lien releases for all work
                         previously paid for and conditional lien releases for
                         the balance of the Sublease Improvements work
                         ("Completion").

         13.3     RENT CREDITS: Provided Sublessee is not, at the relevant time,
                  in material default of its obligations under the Sublease,
                  Sublessee shall be entitled to recoup Sublessee's Contribution
                  via a monthly rent credit not to exceed $10,000.00 per month,
                  commencing on April 1, 2000, and continuing each month
                  thereafter until such time as Sublessee's Contribution (i.e.,
                  $100,000.00) has been fully credited by such monthly rent
                  credits. In addition, a material default by Sublessee of its
                  monetary obligations under the Sublease, if not cured within
                  fifteen (15) days of receipt from Sublessor of written notice
                  to cure such default, shall terminate Sublessor's obligations
                  to extend any further rent credits to Sublessee, and shall
                  terminate any further fights, whether legal or equitable,
                  Sublessee may have with respect to recouping Sublessee's
                  Contribution or any portion thereof.

         13.4     CARPET CREDIT: Sublessor shall pay to Sublessee a carpet
                  allowance of $4,000.00, which allowance shall be paid upon
                  receipt of evidence reasonably satisfactory to Sublessor that
                  Sublessee has used such allowance to install new floor
                  covering in the Premises and that such floor covering has been
                  installed. Sublessor may elect to pay such carpet allowance
                  through a one-time reduction in Rent., to be credited against
                  Rent for the next full month following the time Sublessor
                  becomes obligated to pay such carpet allowance.

14.      OCCUPANCY/UTILITIES: As used herein and in the Sublease, the term
         "Tender of Possession" shall mean delivering possession of the Premises
         to Sublessee immediately following mutual execution and delivery of the
         Sublease, receipt of insurance binder

                                       10

<PAGE>

         from Sublessee, and receipt of Master Lessor and Bankruptcy Court
         approval. Prior to the Tender of Possession, Sublessee shall be
         entitled to occupy and use the Premises, subject to the payment of the
         February Base Rent from the Deposit at the time and under the
         conditions set forth in paragraph 13.1(b) above, and further subject to
         Sublessee's indemnification obligations set forth in paragraph 29
         below. Sublessor shall at its expense install a sub meter or check
         meter so as to permit the parties to allocate utility costs between the
         Premises and Sublessor's remaining space; until such installation,
         utility costs will be prorated on a 50/SO basis.

15.      RENT INCREASE: On July 1, 2002 the monthly rent due shall increase to
         $17,203.00, (plus monthly triple net] C.A.M. charges) for the remainder
         of the term. The rent due on June 1, 2007 will be $14,582.00 (25 days
         rent), because the sublease expires on June 25, 2007.

16.      Sublessee understands that Sublessor is not in a position to render any
         of the services or perform any of the obligations required of Master
         Lessor by the terms of the Master Lease. Therefore, notwithstanding
         anything to the contrary in this Sublease, the performance by Sublessor
         of its obligations under this Sublease is and shall be conditioned on
         performance by the Master Lessor of its corresponding obligations under
         the Master Lease, and Sublessor shall not be liable to Sublessee for
         any default of the Master Lessor under the Master Lease. Sublessee
         shall not have any claim against Sublessor based on Master Lessor's
         failure or refusal to comply with any of the provisions of the Master
         Lease unless such failure or refusal is a result of Sublessor's willful
         act or failure to act, and Sublessor covenants to perform Sublessor's
         Remaining Obligations during the term of the Master Lease. Despite the
         Lessor's failure or refusal to comply with any of those provisions of
         the Master Lease, this Sublease will remain in full force and effect
         and Sublessee will pay the base rent and additional rent and all other
         charges provided for in this Sublease without any abatement, deduction
         or setoff.

17.      Whenever the consent of the Master Lessor is required under the Master
         Lease, and whenever the Master Lessor fails to perform its obligations
         under the Master Lease, in each case to the extent that such consent or
         such failure affects or involves the Premises, Sublessor agrees to use
         its reasonable good-faith efforts to obtain at Sublessee's sole cost
         and expense such consent or performance on behalf of Sublessee.

18.      [deleted by pates]

19.      If the event the Master Lease is canceled or terminated for any reason,
         or involuntarily surrendered by operation of law prior to the
         expiration date of this Sublease, Sublessee agrees, at the sole option
         of Master Lessor, to attorn to Master Lessor for the balance of the
         Term of this Sublease and on the then executory terms of this Sublease.
         Such attornment shall be evidenced by an agreement in the form and
         substance reasonably satisfactory to Master Lessor. Sublessee shall
         execute and deliver such an agreement at any time within ten (10)
         business days after request by Master Lessor. Sublessee waives the
         provisions of any law now or later in effect that may provide Sublessee
         any rights to terminate this Sublease or to surrender possession of the
         sublease premises in the event any proceeding is brought by Master
         Lessor to terminate the Master Lease.

                                       11

<PAGE>

20.      Under no circumstances shall Sublessor be required to extend the term
         of the Master Lease pursuant to any option or extension right contained
         in that Master Lease.

21.      Sublessee shall carry insurance in the amounts and otherwise in
         accordance with the provisions of the Master Lease, except that
         Sublessor shall also be named as an additional insured in addition to
         Master Lessor, where applicable.

22.      Each party to this Sublease will, from time to time as requested by the
         other party and not less than ten (10) days' prior written notice,
         execute, acknowledge and deliver to the other party, a statement in
         writing certifying that the Sublease is unmodified and in full force
         and effect (or if there have been modifications, that the Sublease is
         in full force and effect as modified and stating the modifications).
         Such statement will certify the dates to which base rent, additional
         rent and any other charges have been paid, and will also state whether,
         to the knowledge of the person signing she certificate, the other party
         is in default beyond any applicable grace period provided in this
         Sublease in the performance of any of its obligations' under this
         Sublease. It is intended that such a statement may be relied on by
         others with whom the party requesting that certificate may be dealing.

23.      In addition to, and without diminishing, any other general or express
         obligations of Sublessee under the Sublease, including the obligation
         to perform and abide by the covenants and restrictions set forth in the
         Master Lease, as between Sublessee and Sublessor, Sublessee covenants
         and agrees not to cause or permit any Hazardous Material (as defined in
         the Master Lease) to be brought upon, stored, used, handled, generated,
         released or disposes of on, in, under or about the Premises, Building
         (as defined in the Master Lease), or any portion thereof, by Sublessee,
         its agents, employees, subsublessees, assignees, licensees, contractors
         or invitees (collectively, "Sublessee's Parties"), without the prior
         written consent of Sublessor, which consent Sublessor may withhold in
         its sole and absolute discretion. Upon the expiration or earlier
         termination of this Sublease but subject to Sublessor's right to
         oversee remediation described below, Sublessee agrees to promptly
         remove from the Premises or Building, at its sole cost and expense, any
         and all Hazardous Materials, including any equipment or systems
         containing Hazardous Materials which are installed, brought upon,
         stored, used, generated or released upon, in, under or about the
         Premises or the Building, or any portion thereof, by Sublessee or any
         of Sublessee's Parties (i.e., Sublessee shall not be responsible for
         removing any Hazardous Material on the Premises which existed prior to
         Sublessee's entry onto the Premises or which was installed, brought
         upon, stored, used, generated or released upon or released by any
         person or entity other than the Sublessee's Parties). To the fullest
         extent permitted by law, Sublessee agrees to promptly indemnify,
         protect, defend and hold harmless Sublessor and Sublessor's partners,
         officers, directors, employees, agents, successors and assigns
         (collectively, "Sublessor Indemnified Parties") from and against any
         and all claims, damages, judgments, suits, causes of action, losses,
         liabilities, penalties, fines, expenses and costs (including, without
         limitation, clean-up, removal, remediation and restoration costs, sums
         paid in settlement of claims, attorneys' fees, consultant fees and
         expert fees and court costs) which arise or result from the presence of
         Hazardous Materials on, in, under or about the Premises or Building, or
         any other portion thereof but only to the extent that they are caused
         or knowingly permitted by Sublessee or any of Sublessee's Parties.
         Sublessee agrees to promptly notice Sublessor of any release

                                     12

<PAGE>

         or suspected release of Hazardous Materials at the Premises or Building
         of which Sublessee becomes aware of during the Term of this Sublease,
         whether caused by Sublessee or any other persons or entities. In the
         event of any release of Hazardous Materials caused or knowingly
         permitted by Sublessee or any of Sublessee's Parties, Sublessor shall
         have the right, but not the obligation, to cause Sublessee to
         immediately take all steps Sublessor reasonably deems necessary or
         appropriate to remediate such release and prevent any similar future
         release. In the event that any act or omission of Sublessee, any
         Sublessee Party, or any agent, contractor, employer, affiliate or
         invitee of either of the same shall cause or result in any release of
         any Hazardous Substance (including, without limitation, the groundwater
         and subsurface soils under the Building or surrounding property), the
         Building or the environment or contamination of any of the same by any
         Hazardous Substance (collectively, a "Sublessee Release"), Sublessor
         may require (a) that Sublessor shall exclusively conduct in good faith
         all investigatory, scoping and planning activities with respect to such
         Sublessee Release; the preparation and negotiation (with the relevant
         governmental authorities) of any action plan or remediation plan
         required, necessary or convenient with respect to such Sublessee
         Release in order to comply with all Applicable Requirements (as defined
         in the Master Lease) or to otherwise restore the affected portion of
         the Premises (and/or the Building or surrounding property) to its
         condition immediately prior to such Sublessee Release, all as
         determined in good faith by Sublessor; the selection of all consultants
         and contractors to investigate the need for, scope, perform and monitor
         any such remediation or abatement of such Sublessee Release; and all
         other matters relating to the investigation and remediation of any such
         Sublessee Release, or (b) that Sublessee shall perform such of the
         activities as described in the preceding clause (a) with respect to the
         Sublessee Release in question as Sublessor shall designate, and in all
         cases Sublessee shall reimburse Sublessor for all reasonable costs and
         expenses from time to time incurred or expended by Sublessor under this
         paragraph within ten (10) days of Sublessor's written demand therefor,
         or at Sublessor's election bear such costs and expenses directly. The
         provisions of this paragraph will survive the expiration or earlier
         termination of this Sublease.

24.      This Sublease shall be governed by and construed solely pursuant to the
         laws of the State of California, without giving effect to choice of law
         principles thereunder.

25.      Except as otherwise provided in the Master Lease and this Sublease, all
         of the covenants, conditions and provisions of this Sublease shall be
         binding upon and shall inure to the benefit of the parties hereto and
         their respective heirs, personal representatives, successors and
         assigns.

26.      The words "Sublessor" and "Sublessee" as used herein shall include the
         plural as well as the singular. Words used in any gender include other
         genders. The paragraph headings of this Sublease are not a part of this
         Sublease and shall have no effect upon the construction or
         interpretation of any part hereof Time is of the essence with respect
         to the performance of every provision of this Sublease.

27.      This Sublease constitutes and is intended by the parties to be a final,
         complete and exclusive statement of their entire agreement with respect
         to the subject matter hereof

                                       13

<PAGE>

         This Sublease supersedes any and all prior and contemporaneous
         agreements and understandings of any kind relating to the subject
         matter of this Sublease. There are no other agreements, understandings,
         representations, warranties, or statements, either oral or in written
         form, concerning the subject matter of this Sublease. No alteration,
         modification, amendment or interpretation of this Sublease shall be
         binding on the parties unless contained in a writing which is signed by
         both parties. The provisions of this Sublease shall be considered
         separable such that if any provision or part of this Sublease is ever
         held to be invalid, void or illegal under any law or ruling, all
         remaining provisions of this Sublease shall remain in full force and
         effect to the maximum extent permitted by law.

28.      Sublessee shall not record this Sublease or a short form memorandum
         thereof without the consent of Sublessor. This Sublease may be executed
         in one or more counterparts, each of which shall constitute an original
         and all of which shall be one and the same agreement.

29.      This Sublease is subject to Bankruptcy Court approval and Sublessee
         agrees to use reasonable efforts to obtain such approval as soon as
         practicable following execution of this Sublease by all parties and
         approval thereof by Master Lessor. The Bankruptcy Court shall not be
         deemed to have approved this Sublease unless and until the Bankruptcy
         Court has determined that any deposits and letters of credit initially
         made or issued in connection with this Sublease are not subject to the
         claims of Sublessor's pre-petition creditors. If the Bankruptcy Court
         does not approve this Sublease, then this Sublease shall terminate,
         except that Sublessee shall nonetheless indemnify, defend and hold
         harmless Sublessor from and against any and all claims, damages,
         judgments, suits, causes of action, losses, liabilities, penalties,
         fines, expenses and costs (including reasonable attorneys' fees,
         consultant fees and expert fees and court costs) which arise or result
         from Sublessee's or its agents', contractors', or representatives'
         activities on, in or about the Premises prior to Tender of Possession.
         The indemnification provisions in the preceding sentence shall survive
         the termination of the Sublease.

30.      The furniture in the office as outlined in Exhibit 2 to the Sublease
         shall be the property of the Sublessee; however, if, within seven (7)
         years of the Commencement Date, Sublessee is evicted or otherwise
         vacates the Premises due to a default by Sublessee under this sublease,
         such furniture will, without further action of the parties hereto,
         become the property of the Sublessor, without any compensation to
         Sublessee therefor.

                            [SIGNATURE PAGE FOLLOWS.]

                                       14

<PAGE>

AGREED AND ACCEPTED:

SUBLESSOR:  THE L.L. KNICKERBOCKER COMPANY, INC.

By:                                      Date:
    ---------------------------------          ---------------------------------

SUBLESSEE:  LIQUIDMETAL TECHNOLOGIES, INC., a California corporation

By:                                      Date:
    ---------------------------------          ---------------------------------

         By its signature below the undersigned agrees to be bound by and act in
accordance with the terms of paragraph 13.1(b) of this Addendum, and the
individual executing on behalf of the undersigned represents and warrants to
Sublessor and Sublessee that such individual is authorized to bind the
undersigned to the provisions of such paragraph 13.1(b).

VOIT COMMERCIAL BROKERAGE, a
                             -------------------------------

By:                                      Date:
    ---------------------------------          ---------------------------------

                                       15

<PAGE>

                            FURNITURE PANEL INVENTORY

   SIZE      QTY                                           SIZE             QTY
-----------  ---                                         ---------         -----
PANELS                FURNITURE
24" X 42"      4      Conference Chairs (wood)                               5
24" x 54"     13      Big Black Chair                                        1
24" x 66"     11      Reception Chairs                                       4
24" x 65" W    7      Executive Chairs                                       4
30" x 42"      9      Manager Desks                      6' x 8'8"          15
30" x 54"     17      Book shelf for credenza                                1
30" x 66"      6      Grey Desks                         5' x 3'             3
30" x 66" W    9      U Desk                             5' x 8'             1
                      Desk Credenzas                     5' x 3'            15
36" x 42"      2
36" x 66"      1      Cylinder table                                         1
36" x 66" W    2      Corner Computer Table                                  1
                      Reception Table                                        1
48' x 30"      5      Round Conference Table                                 1
48" x 65"     45

                      ELECTRONICS
60" x 30"      1      Blk Computer Monitor               24"                 1
60" x 36"      6
60" x 66"      6      TV                                 14"                 4
                      TV                                 21"                 4

SHELVES
16" x 36"     11      TV w/cassette                      17"                 1
Lamps          9      VHS Cassette Players                                   2

                      WAREHOUSE RACKING
                      Racks                              18' X 3.5'         52
                      Orange Beam                        8' long            102
                      Racks (not earthquake approved)                       12
                      Beams (not earthquake approved)                     20 prs

                                       16

<PAGE>

                                   ADDENDUM TO
                                STANDARD SUBLEASE
                             DATED DECEMBER 18, 2000

THIS ADDENDUM TO STANDARD SUBLEASE IS MADE BY AND BETWEEN THE L.L. KNICKERBOCKER
COMPANY, INC., ("SUBLESSOR") AND LIQUIDMETAL TECHNOLOGIES, INC., A CALIFORNIA
CORPORATION ("SUBLESSEE") AS OF THE DATE SET FORTH ON THE FIRST PAGE OF THAT
CERTAIN AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OF REAL ESTATE STANDARD
SUBLEASE (LONG-FORM TO BE USED WITH PRE-1998 AIR LEASES) (THE "SUBLEASE")
BETWEEN SUBLESSOR AND SUBLESSEE TO WHICH THIS ADDENDUM IS ATTACHED AND
INCORPORATED. THE TERMS, COVENANTS AND CONDITIONS SET FORTH HEREIN ARE INTENDED
TO AND SHALL HAVE THE SAME FORCE AND EFFECT AS IF SET FORTH AT LENGTH IN THE
BODY OF THE SUBLEASE. TO THE EXTENT THAT THE PROVISIONS OF THIS ADDENDUM ARE
INCONSISTENT WITH ANY PROVISIONS OF THE SUBLEASE, THE PROVISIONS OF THIS
ADDENDUM SHALL SUPERSEDE AND CONTROL.

31. As per the Master Lessor's request for an additional $15,000 Security
Deposit to restore the premises to a single tenant building, it is hereby agreed
that the L.L. Knickerbocker Company, Inc., will provide $5,000 and Liquid Metal
Technologies, Inc., will provide $10,000. Said monies shall be due to Master
Lessor upon tender of possession pursuant to Paragraph 13.1(b) of Addendum to
Standard Sublease dated December 19, 2000. The L.L. Knickerbocker Company will
credit $10,000 against the monthly rent obligation of Liquidmetal Technologies
as follows:

                             May 1, 2001    - $2,500
                             June 1, 2001   - $2,500
                             July 1, 2001   - $2,500
                             August 1, 2001 - $2,500

The aforementioned credits shall be in addition to the rent credits described in
Paragraph 13.3 of the Standard Sublease Document.

SUBLESSOR:  THE L.L. KNICKERBOCKER COMPANY, INC.

By:                                      Date:
   ----------------------------------          ---------------------------------

SUBLESSEE:  LIQUIDMETAL TECHNOLOGIES, INC.

By:                                      Date:
   ----------------------------------          ---------------------------------

                                       17

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