Exhibit 10.9

                                      LEASE



                        ENTERED INTO AS OF JUNE __, 2004


                                     BETWEEN


                   VEECO COMPOUND SEMICONDUCTOR INC., Landlord



                                       AND




                            APA OPTICS, INC., Tenant


<PAGE>
                                      LEASE

     1.   PARTIES.  THIS  LEASE  is  entered  into as of this _____ day of June,
          -------
2004,  by and between Veeco Compound Semiconductor Inc., a Minnesota corporation
(hereinafter  "Landlord"),  and  APA  Optics,  Inc.  a  Minnesota  corporation
(hereinafter  "Tenant").  For good and valuable consideration, the parties agree
to  these  terms as evidenced by their signatures below.  From time to time this
agreement  is  referred  to  below  as  the  "Lease."

     2.   EXHIBITS.  Attached to and made a part of this Lease are the following
          --------
exhibits:

          Exhibit  A.    Site Plan showing the Building, the Leased Premises and
                         the  Common  Areas.

          Exhibit  B.    List of Hazardous Materials to be used by Tenant in the
Leased  Premises.

          Exhibit  C     List  of  all waste materials to be generated by Tenant
                         on the  Leased  Premises.

     3.   DEFINITIONS.  The following terms as used in this Lease shall have the
          -----------
meanings  set  forth  below:

          (a)  "BUILDING":  The  structure  located at 4900 Constellation Drive,
               St.  Paul,  Minnesota  55127,  known  as  the Process Integration
               Center (PIC) and shown on Exhibit A attached hereto, in which the
                                         ---------
               Leased  Premises  are  located.

          (b)  "COMMON  AREAS":  The  space marked as such on Exhibit A attached
                                                              ---------
               hereto  and  located  in  the PIC and available for the common or
               joint  use  and  benefit  of  the  occupants  of  the  Building.

          (c)  "HAZARDOUS MATERIALS":  All substances, materials and wastes that
               are  or  become  regulated  or  classified as hazardous, toxic or
               solid  waste  under  any  Applicable Environmental Law, including
               without  limitation,  oil,  flammable  explosives, asbestos, area
               formaldehyde, radioactive materials or waste, or other hazardous,
               toxic, contaminated or polluting materials, substances or wastes.

          (d)  "APPLICABLE  ENVIRONMENTAL  LAW":  Any  applicable  law, statute,
               ordinance,  order,  rule  or  regulation  relating to or imposing
               liability or standards of conduct concerning any hazardous, toxic
               or  dangerous  waste, substance or materials pertaining to health
               or  the  environment,  including  without  limitation,  the
               Comprehensive  Environmental Response, Compensation and Liability
               Act  of  1980,  as  amended,  and  the  Resource Conservation and
               Recovery  Act  of  1976,  as  amended.


<PAGE>
          (e)  "LEASED  PREMISES":  The  space  marked  as  such  on  Exhibit  A
                                                                      ----------
               attached  hereto  and  located  in  the  PIC. The Leased Premises
               include  four  undesignated  parking  spaces  in  the  Landlord's
               parking  lot.

          (f)  "LANDLORD PREMISES":  That portion of the Building which is not a
               portion  of  the  Leased  Premises  or  the  Common  Areas.

     4.   TERM.  Landlord  hereby leases to Tenant and Tenant hereby leases from
          ----
Landlord  the  Leased  Premises  for a term of three (3) years commencing on the
Rent  Commencement  Date  (as defined in Section 5(a) below).  This Lease may be
terminated  by  either  party  upon  90  days' prior written notice.  The Tenant
agrees  that  prior  to,  or upon, the effective date of the termination of this
Lease,  the  Tenant  will remove all equipment associated with it's business, at
the Tenant's expense, and without disruption to the Landlord's business.  Tenant
agrees  to  the  leave  the Leased Premises in clean and working order, ordinary
wear  and tear excepted, and free of any and all Hazardous Materials (other than
those  which  Tenant  can  prove  were  present  when  Tenant  took possession).

     5.   RENT; SECURITY DEPOSIT.
          -----------------------

          (a)  Tenant  shall pay no rent, and the term shall not commence, until
               the  improvements  described  in  Section  5(d) of this Lease are
               completed  and  the  Tenant  Machine,  as defined in Section 5(d)
               below,  is  ready  for  initial  tool  startup as provided in the
               agreement  between  Landlord  and Tenant for Tenant's purchase of
               the  Tenant  Machine  (the "Rent Commencement Date"). If the Rent
               Commencement  Date  falls  on a day other than the first day of a
               calendar  month,  the rent for that month shall be prorated based
               on  the  actual  number  of  days  in  that  month.

          (b)  Prior  to  commencement  of  Tenant's occupancy, Tenant shall pay
               $28,200  as  a  security  deposit and shall pay the first month's
               rent  ($9,400)  in  advance.  Thereafter,  Tenant  shall  pay the
               monthly  rent  of  $9,400 on or prior to the first of every month
               for  the  term  of  this  Lease.

          (c)  Any  rent  payment due hereunder that is not received by Landlord
               within  5  business days after its due date shall be subject to a
               1%  late fee for each 5 business day period (or fraction thereof)
               this  it  is  late.

          (d)  The Landlord agrees to make the necessary lease hold improvements
               to the clean room area necessary to house the Tenant owned, Veeco
               D180  MOCVD equipment ("Tenant Machine"). Landlord shall complete
               the leasehold improvements in accordance with the requirements of
               applicable  building  codes and shall be responsible for building
               code compliance for real property that houses the Tenant Machine.

     6.   USE.  Tenant  shall  use  the  Leased Premises only for the growth and
          ---
characterization  of  GaN  epitaxial  wafers  using  a  MOCVD reactor, and other
activities directly related thereto.  The Tenant is specifically prohibited from
using  arsine  (AsH3)  or  phosphine  (PH3)  gas within the Landlord's building.


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<PAGE>
     7.   RENOVATIONS.  Landlord  shall  retain  a  contractor  (at  Landlord's
          -----------
expense) to undertake any renovations Landlord deems necessary or appropriate in
order  to  separate  the  Leased  Premises from the Landlord Premises and Common
Areas,  including  without limitation firewalls, dividing walls, cranes/winches,
card-key  readers,  etc., as well as a separate fan and stack for exhausting any
air  emissions,  and for removing all of the foregoing at the end of the term of
the  Lease.

     8.   PEACEFUL  POSSESSION.  So  long as Tenant is not in default under this
          --------------------
Lease  and  subject  to the remainder of this Section 8, Tenant shall have quiet
and  peaceful possession of the Leased Premises, subject to all of the terms and
conditions set forth in this Lease.  Tenant shall designate not more than four (
4) employees who shall have access to the Leased Premises at all times and shall
provide  Landlord  with  written  notice of the names of such employees.  Tenant
shall  perform  suitable  background,  export clearance and other checks of such
employees  to  ensure  their  suitability  to  work in a sensitive area like the
Leased  Premises.  The  four  designated  employees  of Tenant will have 24-hour
access,  7  days per week, to the building, but only the Tenant owned equipment,
common  areas,  and characterization area and equipment.  Any other employees or
other persons associated with Tenant may enter the Leased Premises only with the
prior  written  permission  of  Landlord.  Tenant shall ensure that employees of
Tenant  and  other  persons  associated  with Tenant at the Leased Premises will
communicate  with  Landlord personnel subject to the conditions of Section 20 of
this  Lease.

     9.   COMMON  AREAS.  Subject  to  Section  8 of this Lease, Landlord hereby
          -------------
grants  to  Tenant  and  its representatives, agents, invitees and employees the
non-exclusive  right of use of the Common Areas, subject to reasonable rules and
regulations  for  the  use  thereof  as  may  be prescribed from time to time by
Landlord.

     10.  SIGNS.  Other  than  those approved in writing by Landlord in its sole
          -----
discretion,  Tenant  shall  place  no  signs (portable, mobile or fixed), flags,
posters, or other advertising or promotional materials anywhere within or around
the  exterior  of  the  Building  without first having obtained Landlord's prior
written  approval  of  same.

     11.  REPAIRS;  CLEANING;  DISPOSAL  OF  HAZARDOUS  MATERIALS  WASTE.
          --------------------------------------------------------------

          (a)  Tenant  shall, at its own cost and expense, take good care of and
               make  necessary  repairs  to the interior of the Leased Premises,
               upon  notification  and  approval  of  Landlord.  Landlord  is
               responsible  for  janitorial  services  in  the office and Common
               Areas.  Tenant  shall  be  responsible for janitorial services or
               self-cleaning  in  the  clean  room  housing  the  Tenant's MOCVD
               reactor  (the "Tenant Machine"). Tenant shall maintain the Leased
               Premises at a level of cleanliness and good repair as required by
               Landlord,  ordinary  wear  and  tear  excepted.

          (b)  Tenant  shall  store  and  dispose  of  all  of  Tenant's  waste
               containing  Hazardous  Materials  at  its  own  expense  and  in
               accordance  with applicable laws. Without limiting the foregoing,
               whenever  such  waste  is  transported  through  the Building for
               disposal,  it  shall  be  properly  packaged,  and  an authorized
               employee  of  Landlord  shall  accompany  Tenant's  personnel
               throughout  the process. No Hazardous Materials shall be disposed
               of  in


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<PAGE>
               any  sink,  drain,  toilet or otherwise on the Leased Premises or
               other  premises  of  Landlord.

     12.  MECHANICS'  LIENS.  Should  any  mechanics'  or  other  liens be filed
          -----------------
against  the  Leased  Premises or any part thereof by reason of Tenant's acts or
omissions  or  because of a claim against Tenant, Tenant shall cause the same to
be  cancelled and discharged of record by bond or otherwise within ten (10) days
following  notice  from  Landlord  of  the filing of such lien.  However, in the
event Tenant believes such lien has been wrongfully filed, Tenant shall have the
right  to  defend  itself  against  any such lien so long as Tenant notifies and
indemnifies  Landlord.

     13.  UTILITY CHARGES.  The rent shall include all utility charges, included
          ---------------
water,  CDA,  sewer and septic, electrical, HVAC, and reasonable amounts of pure
H2  and  N2  as  determined  necessary,  by  Landlord, to run a Veeco D180 MOCVD
reactor  in  a  24/7  production  mode.  Unreasonable  amount  of  utilities, as
determined  by  Landlord,  will  be charged to Tenant in addition to the monthly
rent.  In  addition,  Landlord  will supply two office phone lines to be used by
Tenant  for  business  purposes only.  Unreasonable charges to these phone lines
will  be  charged separately to Tenant in addition to the rent.  Tenant will not
have  access to Landlord's computer network.  Landlord will, at Tenant's request
and  expense,  install  two analog phone lines for modem access or two DSL phone
lines  (if  available),  one  in  each office, to be used by Tenant for internet
access,  of  which  the  billing  of  these  lines  will  be  direct  to Tenant.

     14.  INDEMNITY  AND RELATED PROVISIONS.  Tenant will indemnify Landlord and
          ---------------------------------
save  it  harmless  from  and  against  any  and  all  claims, actions, damages,
liability,  expenses  and  attorneys'  fees  in  connection  with  loss of life,
personal injury, and/or damage to property arising from or out of any occurrence
in,  upon,  or  at the Leased Premises, or the occupancy or use by Tenant of the
Leased Premises, or any part thereof, or occasioned wholly or in part by any act
or  omission  of  Tenant, its agents, contractors, employees, servants, lessees,
concessionaires, or invitees, including, without limitation, any and all claims,
actions,  damages,  liability, penalties, assessments, natural resource damages,
response  costs  (such  as the cost of any testing, medical or other monitoring,
cleanup,  or  other  required  response  action)  expenses  and  consultants and
attorneys'  fees  resulting  from  or  in  any  way connected with the presence,
release,  threatened  release, or disposal by Tenant, in on, or under the Leased
Premises  of  any  hazardous substances (as defined in CERCLA), hazardous wastes
(as  defined  in  RCRA),  oils,  radioactive  materials, asbestos in any form or
condition,  any  pollutant  or  contaminant  or  hazardous,  dangerous  or toxic
chemicals,  materials  or  substances  within  the  meaning  of  any  Applicable
Environmental  Law, provided that in the event that both Landlord and Tenant are
at  fault  in  any  respect of any such claim, Tenant shall have no liability to
Landlord  hereunder,  except  to  the  extent of the gross negligence or willful
misconduct  of  Landlord.  In  case  Landlord  shall  be  made  a  party  to any
litigation  commenced  by  or against Tenant, then Tenant shall protect and hold
Landlord  harmless  and shall pay all costs, expenses, and reasonable attorneys'
fees  incurred or paid by Landlord in connection with such litigation. except to
the  extent of the gross negligence or willful misconduct of Landlord, or Tenant
action  against  Landlord  for  any default hereunder or breach of this Lease by
Landlord.

Landlord will indemnify Tenant and save it harmless from and against any and all
claims, actions, damages, liability, expenses and attorneys' fees in connection
with loss of life, personal injury, and/or damage to property arising from or
out of any occurrence in, upon, or at the


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<PAGE>
Landlord Premises, or the occupancy or use by Landlord of the Landlord Premises,
or any part thereof, or occasioned wholly or in part by any act or omission of
Landlord, its agents, contractors, employees, servants, lessees,
concessionaires, or invitees, including, without limitation, any and all claims,
actions, damages, liability, expenses and attorneys' fees resulting from or in
any way connected with the presence, release or disposal, in or under the
Landlord Premises of any hazardous substances (as defined in CERCLA), hazardous
wastes (as defined in RCRA), oils, radioactive materials, asbestos in any form
or condition, any pollutant or contaminant or hazardous, dangerous or toxic
chemicals, materials or substances within the meaning of any Applicable
Environmental Law; provided, that in the event that both Landlord and Tenant are
at fault in respect of any such claim, Landlord shall have no liability to
Tenant hereunder, except to the extent of the gross negligence or willful
misconduct of Tenant.  In case Tenant shall be made a party to any litigation
commenced by or against Landlord , then Landlord shall protect and hold Tenant
harmless and shall pay all costs, expenses, and reasonable attorneys' fees
incurred or paid by Tenant in connection with such litigation. except to the
extent of the gross negligence or willful misconduct of Tenant, or any action by
Landlord against Tenant for any default hereunder or breach of this Lease by
Tenant.

     15.  INSURANCE.
          ---------

          (a)  Landlord shall maintain insurance against fire, vandalism and
               malicious  mischief  and  other  perils  as are from time to time
               commonly included in the type of insurance known as "special form
               coverage"  (or  its  equivalent), insuring the building structure
               for  its  full  insurable  value.

          (b)  During  the Term, at Tenant's sole cost and expense, Tenant shall
               maintain:  (i)  insurance  against  fire, vandalism and malicious
               mischief  and such other perils as are from time to time commonly
               included  in  the  type  of  insurance  known  as  "special  form
               coverage" (or its equivalent) and business interruption, insuring
               Tenant's  fixtures,  furniture,  furnishings, floor coverings and
               other  Tenant improvements, alterations or additions in or to the
               Leased  Premises  for  100%  of  the  full replacement cost; (ii)
               commercial  general  liability  insurance for claims for personal
               injury,  death and property damage for risks occurring in or upon
               or  about  the  Leased  Premises  and  on  any sidewalks directly
               adjacent to the Leased Premises with combined single limits in an
               amount  not  less  than  $6,000,000;  (iii)  in  a  like  amount,
               contractual  liability  insurance  covering  Tenant's  indemnity
               obligations  hereunder;  (iv)  commercial  automobile  liability
               coverage;  $1,000,000  combined  single  limit;  must  indicate
               coverage  for any auto or owned, hired or borrowed, and non-owned
               vehicles;  and  (v) workers' compensation and employers liability
               coverage  of  $500,000  each  accident,  $500,000  disease-policy
               limit,  $500,000 disease - each employee. All such policies shall
               show  Landlord as an additional insured and shall be satisfactory
               to Landlord. All such policies shall contain express endorsements
               that  (i)  such  insurance  may  not be cancelled or amended with
               respect  to  Landlord  without  ten  (10)  days written notice by
               certified  mail  to  Landlord  by the insurance company, and (ii)
               Tenant  and  insurer


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<PAGE>
               waive  their  right  of  subrogation  against  Landlord  and  its
               affiliates. Policies should have minimum AM Best rating of A- and
               a  financial size of VII or higher. Satisfactory evidence of such
               insurance  shall  be  delivered  to  Landlord  prior  to Tenant's
               possession  of  the  Leased  Premises,  and  renewal  policies or
               certificates  shall be delivered to Landlord at least thirty (30)
               days  prior  to  the  expiration  of  any  existing  policies.

          (c)  Tenant  shall  give  Landlord  prompt  written  notice  of  any
               accidents,  casualty, damage or other similar occurrence in or to
               the  Leased  Premises  of  which  Tenant  has  knowledge.

     16.  DAMAGE  BY CASUALTY; CONDEMNATION.  If the Leased Premises are damaged
          ---------------------------------
by  fire,  the  elements  or other casualty, Landlord, at its option, may either
repair all damage and restore the Leased Premises to their condition immediately
prior  to  the  damage  or terminate this Lease by notice to Tenant within sixty
(60)  days  of such casualty.  Rent shall abate during the restoration period if
Tenant  is  precluded  from  doing  business.  If  the  Building  is  damaged or
destroyed  to  an extent of at least 25% of the then respective replacement cost
by  any  cause  whatsoever  (whether  or  not  the Leased Premises are damaged),
Landlord  shall be entitled to terminate this Lease by notice to Tenant given on
or  before 60 days after the occurrence of such casualty.  Tenant shall have the
right  to  terminate  this Lease upon 60 days' written notice to Landlord in the
event  of any casualty which prevents Tenant from full operation of its business
for  more than 60 days, or if Landlord cannot repair the Leased Premises with in
90  days.

     If  the  whole  of  the  Leased Premises shall be condemned or taken either
permanently  or  temporarily for any public or quasi-public use or purpose under
any  statute  or  by  right  of  eminent  domain,  or by private purchase by the
government,  in  lieu  thereof, then in that event, the term of this Lease shall
cease  and  terminate from the date when possession is taken thereunder pursuant
to  such  proceeding  or purchase.  The rent shall be adjusted as of the time of
such termination and any rent prepaid for a period thereafter shall be refunded.
Neither  Landlord nor Tenant shall have any further liability in respect of such
termination.  In  the event a portion of the Leased Premises or a portion of the
Building  shall  be  so taken (even though the Leased Premises may not have been
affected by the taking of some other portion of the Building) Landlord may elect
to  terminate  this  Lease  from  the  date  when possession is taken thereunder
pursuant  to  such  proceeding  or purchase, or Landlord may elect to repair and
restore, at its own expense, the portion not taken and thereafter the rent shall
be  reduced proportionately to the portion of the Leased Premises taken.  If the
portion  of the Leased Premises so taken substantially impairs the usefulness of
the  Leased  Premises  for  the  use  as  provided in Section 6 of this Lease or
exceeds  fifty  percent  (50%)  of  the square foot area of the Leased Premises,
either  party  may  terminate  this Lease on the date when Tenant is required to
yield  possession.  Tenant shall not be entitled to any portion of the award for
the  fee  or leasehold or any element thereof, and the entire award shall belong
to  Landlord,  provided,  however,  Tenant  may apply for reimbursement from the
condemning  authority  for  moving  expenses,  loss  of good will, movable trade
fixtures,  and  equipment provided payment of any such reimbursement or award to
Tenant  shall  not  reduce  the  amount  of  any  condemnation  award that would
otherwise  be  payable  to  Landlord.

     17.  INSURANCE  HAZARDS.  Except  for  the  use as provided in Section 6 of
          ------------------
this Lease, Tenant shall permit no use of the Leased Premises which might render
void,  or  cause  the


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<PAGE>
cancellation  or  rate  increase  of  any insurance carried by Landlord or which
would  increase  the risk of fire or other catastrophe, or which may be a health
or  safety  hazard

     18.  DEFAULT BY TENANT.  The occurrence of any one or more of the following
          -----------------
events  shall  constitute  a  default  and  breach  of  this  Lease  by  Tenant:

          (a)  failure  to  pay  rent  when  due;

          (b)  failure to maintain insurance as required hereunder with Landlord
               listed  as  a  named  insured;

          (c)  failure  to  comply  with  confidentiality, non-disparagement and
               non-solicitation  obligations  hereof;

          (d)  the  appointment  of  a  receiver  to  take  possession of all or
               substantially  all  of the assets of Tenant, a general assignment
               by  Tenant  for  the benefit of creditors, or any action taken or
               suffered  by  Tenant  under  insolvency  or  bankruptcy  laws; or

          (e)  failure  to  comply  with  any  other  provision  of  this Lease.

     If  any  such  default  is  not  cured  within 30 days after written notice
thereof  from  Landlord  to Tenant, Landlord may terminate this Lease and Tenant
shall  immediately  surrender  possession  of  the  Leased Premises to Landlord.
Notwithstanding  the  foregoing, if the default is related to a breach by Tenant
of  its  obligations  under  Sections 11(b) or 27 hereof, Landlord may terminate
this Lease immediately and Tenant shall have no opportunity to cure the default.
In addition, notwithstanding the foregoing, no notice shall be required, no cure
period  shall  be  afforded  and  this Lease shall automatically and immediately
terminate  upon  the  occurrence of the events described in Section 18(d) above.

     If  Landlord  terminates  this Lease because of a default by Tenant, Tenant
shall  immediately  pay  Landlord  all  rent  then  due.

     19.  DEFAULT  BY  LANDLORD.  The  occurrence  of  any  one  or  more of the
          ---------------------
following  events  shall  constitute  a  default  and  breach  of  this Lease by
Landlord:

          (a)  failure  to  comply  with  confidentiality, non-disparagement and
               non-solicitation  provisions  hereof;

          (b)  the  appointment  of  a  receiver  to  take  possession of all or
               substantially all of the assets of Landlord, a general assignment
               by  Landlord for the benefit of creditors, or any action taken or
               suffered  by  Landlord  under  insolvency  or bankruptcy laws; or

          (c)  failure  to  comply  with  any  other  provision  of  this Lease.

     If  any  such  default  is  not  cured  within 30 days after written notice
thereof  from  Tenant  to  Landlord,  Tenant  may  terminate  this  Lease.
Notwithstanding  the  foregoing,  if  the  default  is


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<PAGE>
related  to  a  breach  by  Landlord of its obligations under Section 27 hereof,
Tenant  may  terminate  this  Lease  immediately  and  Landlord  shall  have  no
opportunity  to  cure  the  default.

     20.  CONFIDENTIALITY,  NON-DISPARAGEMENT  AND  NON-SOLICITATION.  Each  of
          ----------------------------------------------------------
Landlord  and  Tenant shall keep confidential any information of whatever nature
it learns about the other party and the business and products of the other party
("Confidential  Information")  by virtue of being in the Building.  Confidential
Information  shall  not  include information that is in the public domain at the
time  of  its  use  or  disclosure  through  no fault of the party receiving the
information  ("Receiving  Party").  If  the  Receiving  Party  is  requested  or
required to disclose any Confidential Information of the other party pursuant to
a  subpoena,  court  order,  statute,  rule,  regulation  or similar requirement
("Legal  Requirement"),  the Receiving Party shall provide prompt notice thereof
to  the  other  party so that the other party may seek an appropriate protective
order or other remedy or waive compliance with the provisions of this Agreement.
If  the  Receiving  Party  is  legally  compelled  to disclose such Confidential
Information,  or if the other party waives compliance with this provision of the
Lease in writing, the Receiving Party may disclose such Confidential Information
in  accordance with, but solely to the extent necessary to comply with the Legal
Requirement.

     Landlord  and  Tenant  shall  not, and shall not permit their employees to,
make  any  negative  or  disparaging  statements  about  the  other party or the
business  or  products  of  the  other  party  to  any  third  party.

     During  the  term,  Tenant  shall  not  solicit  for employment or hire any
employee  of  Landlord or any person employed by Landlord within the previous 90
days.

     During  the  term,  Landlord  shall  not solicit for employment or hire any
person then designated by Tenant pursuant to Section 8 of this Lease as a Tenant
employee  entitled  to access to the Leased Premises or any person designated as
such  within  the  previous  90  days.

     Tenant  shall  acknowledge  that Landlord has on Landlord's premises United
States  government  owned  equipment and is conducting US government research on
behalf  of a government contracting company.  Tenant is strictly prohibited from
access  to  this  equipment, the wafers it produces, any and all data associated
with  the  contract,  including,  but not limited to, characterization data as a
result  of the contract.  Tenant agrees, under penalty of Lease default, that it
will  not  attempt to obtain any information, not matter how trivial, about this
equipment,  wafers,  or  the  contract  in  general.  Tenant  also agrees not to
solicit  verbal  information  about  this contract, in any form, from Landlord's
employees.

     21.  WAFER  CHARACTERIZATION.  During  the  term  of this Lease, Tenant has
          -----------------------
shared  access  and  a  reasonable  right  of  use  to  all  Veeco-owned  wafer
characterization  equipment.  Tenant will be held accountable for repairs to any
equipment  that  is  damaged by improper use or abuse by Tenant or its agents or
employees.  Tenant agrees to receive training on this equipment prior to use and
determined adequate, in writing, by Landlord.  Tenant and Landlord agree to work
together  in  determining  who  has  priority in the use of the characterization
equipment,  with  the  final  determination  being  made  by  Landlord.

     22.  HOLDOVER.  Any  holdover  after  the  expiration  of the term, with or
          --------
without  the  consent of Landlord, shall be construed to be a tenancy from month
to  month  and  shall  otherwise


                                        8
<PAGE>
be on the terms and conditions herein specified so far as applicable except that
the  monthly  rent  shall  be  increased  to  150% of the monthly rent in effect
immediately  prior  to  the  holdover.

     23.  ESTOPPEL  STATEMENTS  AND  LANDLORD'S SUBORDINATION.  Tenant agrees to
          ---------------------------------------------------
complete  and  return to Landlord any reasonable written statements which Tenant
may truthfully make concerning the Leased Premises or this Lease as Landlord may
request.  Such statements are limited to declarations: (a) ratifying this Lease;
(b)  expressing  the  commencement  and termination dates hereof; (c) certifying
that this Lease is in full force and effect and has not been assigned, modified,
supplemented  or  amended (except by such writings as shall be stated); (d) that
all conditions under this Lease to be performed by Landlord have been satisfied,
or  stating  those  unsatisfied conditions claimed by Tenant; and (e) that there
are no defenses or offsets against the enforcement of this Lease by Landlord, or
stating  those  claimed  by  Tenant.

     24.  ASSIGNMENT  AND  SUBLETTING.  Tenant  shall  not  assign this Lease or
          ---------------------------
sublet  the  Leased  Premises  without  Landlord's  prior written consent, which
consent  may be withheld by Landlord in its sole discretion.  Landlord's consent
to  any  assignment or subletting shall not constitute a waiver of the necessity
for  such  consent to any subsequent assignment or subletting.  This prohibition
against  assignment  or  subletting  shall be construed to include a prohibition
against  any  assignment or subletting by operation of law.  Notwithstanding any
consent given by Landlord, Tenant shall remain liable for all of its obligations
herein  unless  released  in  writing  by  Landlord.

     Landlord  may  assign  this  Lease  on  written  notice  to  Tenant.

     25.  WAIVER.  Failure  of  Landlord  or  Tenant  to  insist upon the strict
          ------
performance  of  any  provision or to exercise any option hereunder shall not be
construed as a waiver of the future performance of any such provision or option.
No  provision  of  this  Lease  shall  be deemed to have been waived unless such
waiver  is  in writing and signed by the waiving party.  No payment by Tenant or
receipt  by Landlord of an amount less than the full amount of rent due shall be
deemed  to  be other than on account of the earliest rent then unpaid, nor shall
any  endorsement  or statement on any check or any letter accompanying any check
or payment of rent be deemed an accord and satisfaction, and Landlord may accept
such  check  or  payment  without  prejudice  to Landlord's right to recover the
balance of such rent or pursue any other remedy provided in this Lease.  Neither
acceptance  of the keys nor any other act or thing done by Landlord or any agent
or  employee of Landlord during the Term herein demised shall be deemed to be an
acceptance of a surrender of the Leased Premises, excepting only an agreement in
writing  signed  by  Landlord, accepting or agreeing to accept such a surrender.

     26.  ACCESS  TO  PREMISES.  Upon  24  hours' prior written notice, Landlord
          --------------------
shall  have  the  right  to enter the Leased Premises during reasonable business
hours  to  make  repairs, alterations or improvements (to the Leased Premises or
otherwise  as  Landlord  may  deem  necessary or desirable, or to inspect, or to
exhibit the Leased Premises to prospective purchasers or mortgagees of Building.
In the event of an emergency, Landlord may enter the Leased Premises at any time
without  prior  notice  to  Tenant.

     27.  COMPLIANCE  WITH  LAW;  ENVIRONMENTAL MATTERS.  Tenant will obtain all
          ---------------------------------------------
necessary  permits  and  approvals  for  the  conduct of its business within the
Leased  Premises  and will comply with all Applicable Environmental Laws and all
lawful  requirements


                                        9
<PAGE>
of  any  governmental body, agency or department regarding the use, condition or
operation  of  the  Leased  Premises.

     To  the  extent  that  the  Leased  Premises  will  house  petroleum or any
petroleum  products,  asbestos,  urea formaldehyde, foam insulation or any other
chemical,  material  or  substance, exposure to which may or could pose a health
hazard, the possession and use of such materials will be in accordance with law,
including  any  applicable regulations.  Tenant will not store or use within the
Leased  Premises any hazardous material not listed on Exhibit B and will not use
                                                      ---------
or  store within the Leased Premises any of such materials in quantities greater
than  those  specified on Exhibit B.  In addition, Tenant shall not generate any
                          ---------
waste  products  other  than  such  waste  products  set  forth  on  Exhibit  C.
                                                                     ----------

     To  the  extent  that  the use which Tenant makes or intends to make of the
Leased  Premises  will  result  in  the  manufacturing,  treatment,  refining,
transportation,  generation,  storage,  disposal or other release or presence of
any  hazardous substance or solid waste on the Leased Premises, such use will be
in  accordance  with law, including any applicable regulations.  For purposes of
this  paragraph,  the  terms  "hazardous  substance" and "release" will have the
meanings  specified in CERCLA, and the term "disposal" (or "disposed") will have
the  meaning  specified in RCRA; provided, in the event either CERCLA or RCRA is
amended  so  as to broaden the meaning of any term defined thereby, such broader
meaning  will  apply  subsequent  to  the  effective date of such amendment, and
provided,  further,  to  the  extent  that  the  laws  of the State of Minnesota
establish a meaning for "hazardous substance," "release," or "disposal" which is
broader  than that specified in either CERCLA or RCRA, such broader meaning will
apply;  provided, further, that the term "hazardous substance" will also include
those  listed in the U.S. Department of Transportation Table (49 C.F.R. 172.101)
and  amendments  thereto  from  time  to  time.

     Tenant shall promptly notify Landlord of any violation or alleged violation
of  any  Applicable  Environmental  Laws  of  which  Tenant  becomes  aware.

     Tenant  shall  appoint  one  of  its  employees  to  be  responsible  for
environmental,  health  and  safety  ("EH&S")  matters  on  the Leased Premises.
Tenant  shall  retain  liability  for  any damages or injuries caused by Tenant.
Except  as  provided  in  Section  5(d)  above,  Tenant shall be responsible for
maintaining  compliance  with Applicable Environmental Law respecting the Leased
Premises  and Tenant's activities therein and shall bear all associated costs to
the  extent  they  relate to Tenant's activities on the Leased Premises.  Tenant
shall  pay  its  proportionate  share of the cost of any environmental audits or
reports  required  by  any  governmental  authority to the extent they relate to
Tenant's  activities  on  the  Leased  Premises.  In  the  event of an emergency
situation,  Landlord  may  have  immediate access to the Leased Premises. Tenant
shall  be  responsible  for ensuring toxic material containment, and toward this
end,  shall develop a program for equipment maintenance that eliminates any risk
of  disruption  of  Landlord's  operations.

     Landlord  shall  be  responsible  for  maintaining  compliance  with  all
governmental  regulations  with  respect  to the Landlord Premises to the extent
necessary  to  permit  Tenant to carry on its activities on the Leased Premises,
and  shall  consider  Tenant's  operations  in  its  EH&S  planning.


                                       10
<PAGE>
     28.  PERSONAL  PROPERTY  TAXES.  Tenant  shall be responsible for any taxes
          -------------------------
levied  or  assessed  against personal property, fixtures or furniture placed by
Tenant  on  the  Leased  Premises.

     29.  COMPLIANCE  WITH  APPLICABLE  LAWS.  Tenant  agrees to comply with all
          ----------------------------------
applicable  laws  concerning  its  operations at the Leased Premises, including,
without  limitation,  requirements under ITAR and under U.S. export control laws
relating  to  the  technology  present  at the Leased Premised and in Landlord's
portion  of  the  Building.  If  Tenant  determines  that  an  export license is
required  for  its  personnel  working  at  the  Leased Premises or otherwise in
connection with its activities at the Leased Premises, Tenant shall first obtain
the  written consent of Landlord prior to applying for any such license or other
authority,  which  consent  shall  not  be  unreasonably  withheld  or  delayed.

     30   MISCELLANEOUS  PROVISIONS.
          -------------------------

          (a)  Whenever  the  singular  number  is  used  in this Lease and when
               required  by  the context, the same shall include the plural, and
               the  masculine  gender  shall  include  the  feminine  and neuter
               genders,  and  the word "person" shall include corporation, firm,
               partnership,  association, or any other similar entity. If Tenant
               constitutes  more  than one person, the obligations imposed under
               this  Lease  upon  Tenant  shall  be  joint  and  several.

          (b)  The  marginal  headings or titles to the paragraphs of this Lease
               are  not  a  part of this Lease and shall have no effect upon the
               construction  or  interpretation  of  any  part  of  this  Lease.

          (c)  This  instrument  contains  all  of the agreements and conditions
               made  between  the  parties to this Lease and may not be modified
               orally  or  in  any  other  manner  other than by an agreement in
               writing  signed  by  all  the  parties  to  this  Lease  or their
               respective  successors  in  interest.

          (d)  Time  is of the essence of each term and provision of this Lease.

          (e)  Tenant  warrants  that  it  has  not  had  any  dealings with any
               realtor,  broker,  or agent in connection with the negotiation of
               this  Lease  and agrees to pay and to hold Landlord harmless from
               any cost, expense, or liability for any compensation, commission,
               or  charges claimed by any realtor, broker, or agent with respect
               to  this  Lease  or  the  negotiation  of  this  Lease.

          (f)  All  rights and obligations under this Lease shall bind and inure
               to  the  benefit  of  the successors and permitted assigns of the
               parties  hereto.

          (g)  If  Landlord  incurs  legal fees to enforce any provision of this
               Lease,  Tenant  shall  pay  such  fees  and  any costs associated
               therewith.

          (h)  Tenant  shall,  in  the event any proceedings are brought for the
               foreclosure  of,  or  exercise  of  the  power of sale under, any
               mortgage  or  deed  of trust made by Landlord covering the Leased
               Premises,  attorn  to  the  purchaser


                                       11
<PAGE>
               upon any such foreclosure or sale and recognize such purchaser as
               the  Landlord  under  this  Lease  so  long as Landlord is not in
               default  under  the  Lease.

          (i)  Tenant  agrees that this Lease shall, at the request of Landlord,
               be  subordinate  to  any first mortgage or deed of trust that may
               hereafter  be  placed upon the Leased Premises and to any and all
               advances  to be made thereunder, and to the interest thereon, and
               all  renewals,  replacements and extensions thereof, provided the
               mortgagee  or  trustee  named  in  such mortgage or deed of trust
               shall  agree  to  recognize  the  Lease of Tenant in the event of
               foreclosure  if Tenant is not in default. Tenant also agrees that
               any  mortgagee  or  trustee  may elect to have this Lease a prior
               lien  to  its mortgage or deed of trust, and in the event of such
               election  and  upon  notification by such mortgagee or trustee to
               Tenant  to  that effect, this Lease shall be deemed prior in lien
               to  the  said  mortgage,  or deed of trust, whether this Lease is
               dated prior to or subsequent to the date of said mortgage or deed
               of  trust.  Tenant agrees that, upon the request of Landlord, any
               mortgagee  or  any trustee, it shall execute whatever instruments
               may  be  required  to  carry  out  the  intent of this paragraph.

          (j)  All  notices  must  be  sent  in  writing  to  Landlord  at:

                    Veeco  Compound  Semiconductor  Inc.
                    4900  Constellation  Dr.
                    St.  Paul,  MN  55127
                    Attn:  General  Manager

                    with  a  copy  to:
                    ------------------
                    Veeco  Instruments  Inc.
                    100  Sunnyside  Blvd,  Suite  B
                    Woodbury,  NY  11797
                    Attn:  General  Counsel

               and  to  Tenant  at:

                    APA  Optics,  Inc.
                    2950  NE  84th  Avenue
                    Blaine,  MN  55449
                    Attn:  Dan  Herzog,  Controller

          (n)  This Lease shall be governed by, and construed in accordance with
               the  laws  of  the  State  of  Minnesota.

          (o)  Tenant  agrees  that it shall pay on demand all expenses incurred
               by Landlord in enforcing its rights hereunder, including, but not
               limited to, collection costs and Landlord's reasonable attorneys'
               fees.  In  addition,  when  Tenant  requests Landlord to take any
               action  not  specifically  required


                                       12
<PAGE>
               of  it  hereunder,  Tenant  shall  reimburse  Landlord  for  its
               reasonable  expenses  therefor.

          (p)  LANDLORD  AND TENANT EXPRESSLY DISCLAIM ANY IMPLIED WARRANTY THAT
               THE  LEASED PREMISES ARE SUITABLE FOR TENANTS INTENDED COMMERCIAL
               PURPOSE,  AND  TENANT'S  OBLIGATION  TO PAY RENT HEREUNDER IS NOT
               DEPENDENT  ON  THE  CONDITION  OF  THE  LEASED  PREMISES  OR  THE
               PERFORMANCE BY LANDLORD OF ITS OBLIGATIONS HEREUNDER, AND, EXCEPT
               AS  OTHERWISE  PROVIDED  HEREIN, TENANT SHALL CONTINUE TO PAY THE
               RENT  THROUGHOUT  THE  TERM,  WITHOUT  ABATEMENT,  SETOFF,  OR
               DEDUCTION,  NOTWITHSTANDING  ANY  BREACH  BY  LANDLORD  OF  ITS
               OBLIGATIONS  HEREUNDER,  WHETHER EXPRESS OR IMPLIED. LANDLORD AND
               TENANT  EXPRESSLY  AGREE  AND  ACKNOWLEDGE  THAT  THE  DISCLAIMER
               PROVIDED IN THIS SECTION 30 DOES NOT APPLY TO ANY WARRANTY OF ANY
               TYPE  RESPECTING  THE  SEPARATE AGREEMENT FOR THE PURCHASE OF THE
               TENANT  MACHINE  NOR  TO WHETHER THE LEASEHOLD IMPROVEMENTS TO BE
               INSTALLED  BY  LANDLORD  ARE  ADEQUATE  FOR THE TENANT MACHINE TO
               OPERATE  IN  THE  MANNER PROVIDED FOR IN SAID PURCHASE AGREEMENT.


     IN  WITNESS  WHEREOF,  the parties hereto have hereunto set their hands the
day  and  year  first  written  above.


LANDLORD:                               TENANT:

Veeco Compound Semiconductor Inc.       APA Optics, Inc.


By __________________________________   By _____________________________________
   Its ______________________________      Its _________________________________


                                       13
<PAGE>
                                    EXHIBIT A

    SITE PLAN SHOWING THE BUILDING, THE LEASED PREMISES AND THE COMMON AREAS


<PAGE>
                                EXHIBIT A, CONT.

    SITE PLAN SHOWING THE BUILDING, THE LEASED PREMISES AND THE COMMON AREAS


<PAGE>
<TABLE>
<CAPTION>
                                    EXHIBIT B

     LIST OF HAZARDOUS MATERIALS TO BE USED BY TENANT IN THE LEASED PREMISES

----------------------------------------------------------------------------------------
<S>                                       <C>
1)   SOURCE MATERIALS                     2)   CLEANING MATERIAL
     a)   TMG                                  a)   HNO3
     b)   TEG                                  b)   H2SO4
     c)   TMA                                  c)   HF
     d)   TEA                                  d)   H2O2
     e)   TMI                                  e)   NH4OH
     f)   SiH4 ( 10 ppm in H2 or N2)           f)   IPA
     g)   Si2H6 ( 10 ppm H2 or N2)             g)   Acetone
     h)   CP2Mg                                h)   Methanol
     i)   NH3                                  i)   Ethylene Glycol (coolant for bubblers)
     j)   HCl (gas: 5-15% in H2)
     k)   Fe(C5H5)2 (ferrocene)
     l)   (CH3)2NNH2 (Dimethylhydrazine)
     m)   (C6H5)NHNH2  (Phenylhydrazine)
     n)   CH3-(CH2)2-NH2/C3H9N (n-
          propylamine)
----------------------------------------------------------------------------------------
</TABLE>


<PAGE>
                                    EXHIBIT C

  LIST OF ALL WASTE MATERIALS TO BE GENERATED BY TENANT ON THE LEASED PREMISES

GaN
AlN
AlGaN
InGaN
HNO3      (nitric  acid)
H2SO4     (sulfuric  acid)
HF        (hydrofluoric  acid)
H2O2      (hydrogen  peroxide)
NH4OH     (ammonium  hydroxide)
IPA       (isopropyl  alcohol)
Acetone
Methanol
Ethylene Glycol (coolant for bubblers)
Ammonia
Nitrogen
Hydrogen

SUBSTRATE  MATERIALS
     Si
     Al2O3
     SiC
     ZnO
     GaN
     AlN


<PAGE>