Unassociated Document


    DEVELOPMENT
      AND ROYALTY AGREEMENT

     

    This
      DEVELOPMENT AND ROYALTY AGREEMENT (“Agreement”)
      is
      made as of June __, 2008 (the “Effective
      Date”)
      by and
      among QPC LASERS, INC., a Nevada corporation (“QPC”),
      QUINTESSENCE PHOTONICS CORPORATION, a Delaware corporation and wholly-owned
      subsidiary of QPC (“Quintessence”),
      and,
      a____________ (“Customer”)
      (each
      a “Party”
and
      collectively, the “Parties”).
      

     

    RECITALS

     

    WHEREAS:

     

    QPC
      and
      its wholly-owned subsidiary, Quintessence, are engaged in the business of
      designing and manufacturing lasers in the visible light range for use in the
      projection and display business.

     

    Customer
      is seeking to buy such products and to benefit from the commercialization of
      such products for applications in three dimensional projection and display.
      Customer is prepared to fund a portion of the development costs of such products
      in return for certain purchase rights and royalty rights as set forth in this
      Agreement.

     

    NOW,
      THEREFORE, in consideration of the mutual terms and conditions contained herein,
      the sufficiency and adequacy of which is hereby acknowledged, the Parties agree
      as follows:

     

    AGREEMENT

     

    
      	
              1.

            	
              DEFINITIONS
                AND INTERPRETATION

            


    

     

    
      	
              1.1

            	
              Definitions.
                As used in this Agreement, the following terms shall have the meanings
                set
                forth or as referenced below:

            


    

     

    “Affiliate”
means,
      with respect to any specified Person, any other Person which directly or
      indirectly controls, is controlled by, or is under common control with such
      Person, but only for so long as such control continues to exist. For the
      purposes of this definition, “control” (including the terms “controlled by” and
“under common control with”), with respect to the relationship between or among
      two or more Persons, shall mean the possession, directly or indirectly, of
      the
      power to direct or cause the direction of the affairs or management of a Person,
      whether through the ownership of voting securities, by agreement or
      otherwise.

     

    “Agreement”
has
      the
      meaning set forth in the preamble. 

     

    “Confidential
      Information”
has
      the
      meaning set forth in Section 10.2.

     

    “Customer
      Products”
has
      the
      meaning set forth in Section 3.2 below.

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    “Effective
      Date”
has
      the
      meaning set forth in the preamble.

     

    “Field”
means
      the use of Products for display/projection applications in connection with
      the
      display and projection business. For the avoidance of doubt, the Field expressly
      excludes the use of Products or infrared lasers in connection with medical
      equipment or other medical applications or any military or industrial
      applications. 

     

    “Licensed
      IP”
means
      the intellectual property rights of QPC set forth in Exhibit C relating to
      the
      Products.

     

    "Net
      Revenues”
means
      the gross revenues actually received by QPC or Quintessence for sales of
      Products in the Field within the Territory, but not including separately stated
      charges for (a) sales to Customer, (b) sales and use taxes, excise taxes,
      customs duties and other similar taxes; (c) shipping and insurance charges;
      and (d) the amount of any bad debts, refunds and credits, but only to the
      extent that such bad debts, refunds and credits are actually recognized against
      such gross revenues. 

     

    “Royalty
      Term”
means
      the period commencing on the Effective Date and ending on the earlier of the
      fifth anniversary thereof or the date in which this Agreement has been
      terminated. 

     

    “Party”
and
      “Parties”
have
      the meaning set forth in the preamble.

     

    “Person”
means
      an individual, corporation, partnership, limited liability company, association,
      trust or other entity or organization, including a government or political
      subdivision or an agency or instrumentality thereof.

     

    "Products"
      means
      laser chips and modules intended for use as a light source for laser projection
      display, products and systems.

     

    "Territory"
      means
      worldwide.

     

    “Third
      Party”
means
      any Person other than QPC, QPC’s Affiliates, Customer, and Customer’s
      Affiliates.

     

    
      	
              2.

            	
              DEVELOPMENT
                PAYMENT

            


    

     

    In
      consideration for the purchase rights set forth in Article 3 of this Agreement,
      the royalty rights set forth in Article 4 of this Agreement and the right of
      participation set forth in Section 6.3 of this Agreement, Customer will make
      a
      development payment in accordance with the terms set forth in Exhibit A (the
      “Development
      Payment”).
      The
      Development Payment shall be used to fund the development of the Products.
      QPC
      shall have full control over the engineering and development process. Customer
      shall have no right to a refund of the Development Payment unless QPC notifies
      Customer that it is abandoning development of the Products.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    
      	
              3.

            	
              PURCHASE
                RIGHTS

            


    

     

    
      	
              3.1

            	
              Purchase
                Rights.
                In partial consideration for payment of the Development Payment set
                forth
                in Article 2, so long as Customer is not in material breach of this
                Agreement, during the Royalty Term, QPC hereby agrees to grant Customer
                the right to purchase units of Products directly from QPC at a price
                that
                is no less favorable to Customer than the price offered by QPC to
                any
                Third Party for similar quantities 

            


    

     

    
      	
              3.2

            	
              Purchase
                Terms and License.
                QPC hereby grants to Customer a non-exclusive, non-transferable,
                non-sublicensable right and license to incorporate Products purchased
                from
                QPC as provided hereunder into Customer's own products (the resulting
                product a "Customer
                Product")
                and to sell, have sold, distribute, have distributed, market and
                export
                such Customer Products in the Territory (subject to the restrictions
                in
                Section 10.1). The license granted in this Section 3.2: (a) is not
                sublicensable, but includes the right of Customer to have Third Parties
                carry out the express rights granted herein on Customer's behalf;
                (b) does
                not include the right make, sell, distribute, market or export Products
                on
                a stand-alone basis, or otherwise exploit Products except as expressly
                authorized herein. Customer agrees that it will not use or otherwise
                exploit the Products in any manner except as expressly permitted
                in this
                Agreement and shall not manufacture, market, sell or otherwise distribute
                Customer Products in violation of any applicable laws, regulations
                or
                ordinances. Customer shall not alter or destroy any intellectual
                property
                markings (including without limitation trademarks) on Products or
                their
                packaging. Customer will indemnify, defend and hold harmless QPC,
                its
                Affiliates, and its and their officers, directors, agents, employees,
                against any claims, suits, losses, or damages (including reasonable
                attorneys' fees) arising out of the incorporation of Products into
                Customer Products, and the manufacture, sale, offering for sale,
                distribution or marketing of Customer Products (including, without
                limitation, product liability claims).


            


    

     

    
      	
              4.

            	
              royalty
                payments

            


    

     

    
      	
              4.1

            	
              Royalty
                Payments. 

            


    

     

    
      	 	
              (a)

            	
              In
                partial consideration for payment of the Development Payment set
                forth in
                Article 2, QPC shall pay Customer royalties on Net Revenues during
                the
                Royalty Term at the rates and subject to the terms and conditions
                set
                forth in Exhibit B and this Agreement (collectively, the “Royalty
                Payments”).
                

            


    

     

    
      	 	
              (b)

            	
              Any
                Royalty Payments due under this Agreement shall be payable solely
                in the
                form of shares of unregistered and restricted common stock of QPC
                (the
                “Common
                Stock”).
                For purposes of determining the number of shares of Common Stock
                issuable
                to Customer under this Article 4, the value of a share of Common
                Stock
                shall be fixed at $1.05 per share throughout the Royalty Term, subject
                to
                adjustments for stock dividends and splits as provided in Section
                4.1(d)
                below (as adjusted, the “Share
                Price”).
                The number of shares of Common Stock issuable to Customer shall be
                determined by dividing the Royalty Payment amount due and payable
                hereunder by the Share Price. QPC will not issue any fractional shares
                under this Agreement. As to any fraction of a share that Customer
                would
                otherwise be entitled to receive as a Royalty Payment, QPC shall,
                at its
                election, either pay a cash adjustment in respect of such final fraction
                in an amount equal to such fraction multiplied by the Share Price
                or round
                up to the next whole share. 

            


    

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    
      	 	
              (c)

            	
              Any
                shares of Common Stock issuable as Royalty Payments hereunder shall
                be
                issued to Customer on a quarterly basis in arrears on or prior to
                the
                thirtieth (30th)
                day following the end of the quarter in which Royalty Payments, if
                any,
                are due and payable pursuant to this Article 4; provided, however,
                that
                the first issuance of Common Stock as Royalty Payments hereunder
                shall not
                be due until the thirtieth (30th)
                day following the end of fourth quarter of 2008. Accompanying each
                issuance of shares of Common Stock hereunder, QPC will provide Customer
                a
                royalty report specifying the number of units of the Products sold
                by QPC
                during the applicable royalty period, QPC’s Net Revenues of Products for
                such period, and the royalties, if any, payable with respect to sales
                of
                the Product.

            


    

     

    
      	 	
              (d)

            	
              In
                the event QPC should at any time after the Effective Date fix a record
                date for the effectuation of a split or subdivision of the outstanding
                shares of Common Stock or the determination of holders of Common
                Stock
                entitled to receive a dividend or other distribution payable solely
                in
                additional shares of Common Stock without payment of any consideration
                by
                such holder for the additional shares of Common Stock, then, as of
                such
                record date (or the date of such dividend distribution, split or
                subdivision if no record date is fixed), the Share Price shall be
                appropriately decreased so that the number of shares of Common Stock
                issuable for payment of the Royalty Payments shall be increased in
                proportion to such increase of the aggregate of shares of Common
                Stock
                outstanding. If the number of shares of Common Stock outstanding
                at any
                time after the Effective Date is decreased by a combination of the
                outstanding shares of Common Stock, then, following the record date
                of
                such combination, the Share Price shall be appropriately increased
                so that
                the number of shares of Common Stock issuable for payment of the
                Royalty
                Payments shall be decreased in proportion to such decrease in outstanding
                shares.

            


    

     

    
      	
              4.2

            	
              Taxes.
                QPC may withhold from any royalty or other payment to Customer under
                this
                Agreement any taxes required to be withheld by QPC under the applicable
                laws of the United States or any other country, state, territory
                or
                jurisdiction. 

            


    

     

    
      	
              5.

            	
              PRODUCT
                DEVELOPMENT

            


    

     

    
      	
              5.1

            	
              Deliverable
                Items.
                QPC shall deliver to Customer as of the Effective Date the following
                “Deliverable Items”: (1) Demonstration in QPC’s facility of a single laser
                module which emits 400 mW of Blue light, 400 mW of Green light and
                and 600
                mW Red light; (2) Demonstration in QPC’s facility of three individual
                laser chips emitting 3 watts of Green light, 1 watt of Blue light
                and 6
                watts of Red light and (3) Preliminary design of a module which emits
                6
                watts of Green, 6 watts of Blue, and 12 watts of Red light suitable
                for
                integrating into a three dimensional projection system.
                

            


    

     

    
      	
              5.2

            	
              Use
                of the Product and Deliverable Items.
                Customer shall not make use of the Products or Deliverable Items
                (or any
                portion thereof) except in strict compliance with the provisions
                of this
                Agreement. Customer shall not use or exploit any of the intellectual
                property rights relating to the Product including, without limitation,
                the
                Deliverable Items and other Confidential Information of QPC, in connection
                with the development, use, manufacture, sale or other distribution
                of any
                product or material.

            


    

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    
      	
              5.3

            	
              Ownership.
                QPC and Quintessence shall retain ownership of all intellectual property
                rights in and to the Products and the Deliverable Items (including
                without
                limitation all rights under patent, copyright, trademark, and trade
                secrets), and nothing in this Agreement shall be construed to convey
                any
                intellectual property or other rights in the Products or Deliverable
                Items
                to Customer except for the express licenses set forth
                herein.

            


    

     

    
      	
              6.

            	
              additional
                Obligations, Covenants and
                agreements

            


    

     

    
      	
              6.1

            	
              Non-Compete
                Covenant.
                Without the prior written consent of QPC, which consent may be withheld
                in
                its sole discretion, Customer shall not, nor shall it allow any Affiliate
                or Third Party acting on behalf of or for the benefit of Customer
                or any
                of its Affiliates to, commercialize or promote a product that could
                reasonably be expected to compete with Products in the Territory
                during
                the Royalty Term. 

            


    

     

    
      	
              6.2

            	
              Right
                of Participation. 

            


    

     

    
      	 	
              (a)

            	
              Subject
                to the terms and conditions specified in this Section 6.2, in the
                event
                that QPC or Quintessence elects, in its sole discretion, to form
                a
                separate company to service and otherwise operate its laser display
                and
                projection business, then QPC or Quintessence, as applicable, hereby
                grants to Customer a right of first offer (“Right
                of First Offer”)
                to purchase up to ten percent (10%) of the equity interest in the
                separate
                company (the
                “Separate
                Company”)
                being offered upon its formation on terms and conditions that are
                identical to those offered to other Third Party investors.
                

            


    

     

    
      	 	
              (b)

            	
              If
                either QPC or Quintessence elects to form a Separate Company in accordance
                with Section 6.2(a) above, it shall give Customer written notice
                (the
                “Offer
                Notice”)
                of its intention, describing the amount and type of securities of
                the
                Separate Company to be issued, and the price and terms upon which
                QPC or
                Quintessence proposes to issue the same. Customer shall have fifteen
                (15)
                days from the date of receipt of the Offer Notice to exercise Customer’s
                Right of First Offer to purchase up to ten percent (10%) of the equity
                interest in the Separate Company for the price and upon the terms
                specified in the Offer Notice by delivering written notice (the
                “Right
                of First Offer Election Notice”)
                to QPC or Quintessence, as applicable, and stating therein the quantity
                of
                equity interest in the Separate Company to be
                purchased.

            


    

     

    
      	 	
              (c)

            	
              Settlement
                for the purchase of equity interest in the Separate Company by Customer
                pursuant to this Section 6.2 shall be made in cash within thirty (30)
                days from the Customer’s deemed date of receipt of the Offer Notice;
                provided,
                however,
                that such time period may be extended for purposes of obtaining necessary
                governmental approvals or by mutual agreement between QPC or Quintessence,
                on the one hand, and Customer, on the other. If Customer shall have
                failed
                to deliver to QPC or Quintessence, as applicable, its Right of First
                Offer
                Election Notice within the time periods described in this
                Section 6.2, Customer shall be deemed to have waived its Right of
                First Offer.

            


    

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    
      	 	
              (d)

            	
              Notwithstanding
                the foregoing, either QPC or Quintessence, as applicable, may in
                its sole
                discretion terminate any proposed issuance of equity interest in
                the
                Separate Company in respect of which either one of them has given
                the
                Offer Notice, at any time prior to the consummation thereof. The
                foregoing
                provision shall apply even in the event that Customer shall have
                exercised
                its Rights of First Offer hereunder; provided, however, that no equity
                interest in the Separate Company shall then have been
                issued.

            


    

     

    
      	
              7.

            	
              REPRESENTATIONS
                AND WARRANTIES

            


    

     

    
      	
              7.1

            	
              Representations
                and Warranties of QPC and Quintessence.
                QPC and Quintessence hereby represent and warrant
                that:

            


    

     

    
      	 	
              (a)

            	
              QPC
                is a corporation duly organized, validly existing and in good standing
                under the laws of the state of Nevada. QPC is duly qualified as a
                foreign
                corporation in all jurisdictions in which the failure to so qualify
                would
                have a material adverse effect on QPC and any subsidiaries taken
                as a
                whole. Quintessence is a corporation duly organized, validly existing
                and
                in good standing under the laws of the state of Delaware. Quintessence
                is
                duly qualified as a foreign corporation in all jurisdictions in which
                the
                failure to so qualify would have a material adverse effect on QPC
                and any
                subsidiaries taken as a whole. 

            


    

     

    
      	 	
              (b)

            	
              This
                Agreement and the transactions contemplated hereby have been duly
                and
                validly authorized by QPC and Quintessence and constitute a valid
                and
                binding agreement of QPC and Quintessence, enforceable in accordance
                with
                their respective terms, except to the extent that (i) enforcement
                of each
                of this Agreement may be limited by bankruptcy, insolvency,
                reorganization, moratorium, fraudulent conveyance or other similar
                laws
                now or hereafter in effect relating to creditors’ rights generally, and
                (ii) general principles of equity.

            


    

     

    
      	 	
              (c)

            	
              The
                shares of Common Stock issuable under Article 4 hereof, when issued
                in
                accordance with the terms of this Agreement, will be validly issued,
                fully
                paid and nonassessable, free and clear of all liens imposed by the
                Company
                other than restrictions on transfers imposed by applicable federal
                and
                state securities law. 

            


    

     

    
      	
              7.2

            	
              Representations
                and Warranties of Customer.
                Customer represents and warrants
                that:

            


    

     

    
      	 	
              (a)

            	
              Customer
                is a _______ duly organized, validly existing and in good standing
                under
                the laws of the state of _________. Customer is duly qualified as
                a
                foreign limited liability company in all jurisdictions in which the
                failure to so qualify would have a material adverse effect on Customer
                and
                any subsidiaries taken as a whole. 

            


    

     

    
      	 	
              (b)

            	
              This
                Agreement and the transactions contemplated hereby have been duly
                and
                validly authorized by Customer and constitute a valid and binding
                agreement of Customer, enforceable in accordance with their respective
                terms, except to the extent that (i) enforcement of each of this
                Agreement
                may be limited by bankruptcy, insolvency, reorganization, moratorium,
                fraudulent conveyance or other similar laws now or hereafter in effect
                relating to creditors’ rights generally, and (ii) general principles of
                equity.

            


    

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    
      	 	
              (c)

            	
              Customer
                understands
                that the Common Stock issuable hereunder are “restricted securities” and
                have not been registered under the Securities Act of 1933, as amended
                (the
                “Securities
                Act”)
                or any applicable state securities law and is acquiring the Securities
                as
                principal for its own account and not with a view to or for distributing
                or reselling such Securities or any part thereof in violation of
                the
                Securities Act or any applicable state securities law, has no present
                intention of distributing any of such Securities in violation of
                the
                Securities Act or any applicable state securities law and has no
                direct or
                indirect arrangement or understandings with any other persons to
                distribute or regarding the distribution of such Securities in violation
                of the Securities Act or any applicable state securities law. Customer
                is
                acquiring the Common Stock hereunder in the ordinary course of its
                business. Customer further acknowledges and understands that the
                Common
                Stock issuable hereunder must be held indefinitely unless they are
                subsequently registered under the Securities Act or an exemption
                from such
                registration is available.

            


    

     

    
      	 	
              (d)

            	
              Customer
                is an “accredited investor” as defined in Regulation D promulgated under
                the Securities Act. 

            


    

     

    
      	 	
              (e)

            	
              Customer,
                either alone or together with its representatives, has such knowledge,
                sophistication and experience in business and financial matters so
                as to
                be capable of evaluating the merits and risks of the prospective
                investment in the Common Stock, and has so evaluated the merits and
                risks
                of such investment. Customer acknowledges receipt of the Company’s most
                recent quarterly report on Form 10-Q filed with the Securities and
                Exchange Commission (which report is also available at http://www.sec.gov)
                and has reviewed the risk factors and other matters described therein.
                Customer is able to bear the economic risk of an investment in the
                Securities and, at the present time, is able to afford a complete
                loss of
                such investment.

            


    

     

    
      	 	
              (f)

            	
              Customer
                is not acquiring the Common Stock issuable hereunder as a result
                of any
                advertisement, article, notice or other communication regarding the
                Common
                Stock published in any newspaper, magazine or similar media or broadcast
                over television or radio or presented at any seminar or any other
                general
                solicitation or general
                advertisement.

            


    

     

    
      	
              8.

            	
              TERM
                AND TERMINATION

            


    

     

    
      	
              8.1

            	
              Term;
                Termination.
                This Agreement and the rights granted pursuant to this Agreement
                shall
                commence on the Effective Date and, unless earlier terminated as
                provided
                in this Article 8 shall continue in full force and effect
                until expiration of the Royalty Term. Except as otherwise provided
                in
                Section 8.2 below, upon the expiration or earlier termination of
                this
                Agreement, all rights granted to the Parties hereunder shall terminate,
                and each Party shall be released from all obligations and liabilities
                to
                the other occurring or arising after the date of such termination,
                except
                that Sections 6.1 and 10.2 of this Agreement shall
                survive.

            


    

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    
      	
              8.2

            	
              Termination
                for Breach. 

            


    

     

    
      	 	
              (a)

            	
              By
                QPC or Quintessence:
                Either QPC or Quintessence may terminate this Agreement upon written
                notice to Customer if Customer materially breaches a provision of
                this
                Agreement and fails to correct such breach within thirty (30) days
                following written notice specifying such breach.
                

            


    

     

    
      	 	
              (b)

            	
              By
                Customer:
                Upon the occurrence of an Event of Default (as defined below), Customer
                may at any time, if an Event of Default shall then be continuing,
                by
                written notice to QPC terminate this Agreement. “Event of Default” shall
                mean and include each of the
                following:

            


    

     

    
      	 	
              (i)

            	
              QPC
                shall fail to make any royalty payments when the same become due
                and
                payable to Customer under this Agreement and fails to cure such missed
                payment(s) within thirty (30) days following receipt of written notice
                of
                such non-payment from Customer to
                QPC;

            


    

     

    
      	 	
              (ii)

            	
              Either
                QPC or Quintessence shall fail to perform or comply with any material
                agreement or covenant made by it under this Agreement in any material
                respect and fails to substantially cure such default within sixty
                (60)
                days following receipt of written notice specifying the nature of
                such
                default from Customer to QPC; provided, however, that if such default
                is
                not curable within such 60-day period, an Event of Default shall
                be deemed
                to occur only if QPC or Quintessence, as applicable, has not commenced
                and
                diligently continued during such 60-day period reasonable actions
                to cure
                such breach.

            


    

     

    
      	 	
              (iii)

            	
              Any
                material representation or warranty made by QPC or Quintessence under
                this
                Agreement shall prove to have been untrue or incorrect in any material
                respect when made.

            


    

     

    
      	 	
              (c)

            	
              Effect
                of Termination.
                Subject to the limitations set forth in Section 8.4, any termination
                of
                this Agreement under this Section 8.2 shall not
                affect the right of a Party to sue the other Parties for any damages
                recoverable under applicable law as a result of such
                termination.

            


    

     

    
      	
              8.3

            	
              Option
                to Terminate.
                QPC may elect to terminate this Agreement for any reason at any time
                prior
                to the expiration of the five-year royalty term upon the delivery
                of
                written notice of termination and payment of a termination fee in
                the
                amount of Five Million Dollars ($5,000,000) to Customer. In the event
                of
                such termination, all rights granted to the Parties hereunder shall
                terminate, and each Party shall be released from all obligations
                and
                liabilities to the other occurring or arising after the date of such
                termination; provided, however, that that Sections 6.1 and 10.2;
                and
                provided, further, that any Common Stock issued to Customer under
                this
                Agreement prior to the effective date of termination under this Section
                8.3 shall not be subject to repurchase and shall remain the property
                of
                Customer or its assignees. 

            


    

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    
      	
              8.4

            	
              Limitations
                on Damages.
                Notwithstanding anything to the contrary set forth in this Agreement,
                no
                Party shall be liable to the others under any theory of liability
                for any
                indirect, exemplary, incidental, or consequential damages of any
                kind,
                including, without limitation: (i) for the loss of prospective
                profits, anticipated sales or goodwill, or the interruption of business
                or
                ; (ii)  on account of any expenditures, investments or commitments
                made by either party; or (iii) for any other reason whatsoever based
                upon the result of such expiration or termination.
                

            


    

     

    
      	
              9.

            	
              DISCLAIMERS

            


    

     

    9.1  EXCEPT
      AS
      EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES, AND HEREBY EXPRESSLY
      DISCLAIMS, ANY AND ALL REPRESENTATIONS OR WARRANTIES HEREUNDER, WHETHER EXPRESS
      OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF
      MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE OR NON-INFRINGEMENT,
      OR
      ANY WARRANTIES THAT MAY ARISE FROM COURSE OF PERFORMANCE, COURSE OF DEALING
      OR
      USAGE OF TRADE.

     

    
      	
              10.

            	
              GENERAL

            


    

     

    
      	
              10.1

            	
              Export
                Control.
                Customer agrees to comply fully with all relevant export laws and
                regulations, including, without limitation, the laws and regulations
                of
                the United States and worldwide, as applicable (“Export
                Laws”),
                to assure that the Products (nor any direct product thereof) is (a)
                exported, directly or indirectly, in violation of Export Laws, or
                (b)
                intended to be used for any purposes prohibited by the Export Laws,
                including, without limitation, nuclear, chemical or biological weapons
                proliferation.

            


    

     

    
      	
              10.2

            	
              Confidentiality.
                The Parties hereby acknowledge and agree that this Agreement, the
                Product
                and Deliverable Items, including any portion thereof, modifications
                and
                derivatives thereof, information or materials derived therefrom and
                any
                specifications or documentation relating to the Products or Deliverable
                Items, and other confidential information provided by QPC or Quintessence
                to Customer hereunder, shall constitute “Confidential
                Information”
                under, and be subject to the terms and conditions of, that certain
                Mutual
                Non-Disclosure Agreement, dated June 16, 2008, between QPC and
                Customer.

            


    

     

    
      	
              10.3

            	
              Entire
                Agreement.
                This Agreement (including, without limitation, all Exhibits hereto)
                contains the entire agreement among the Parties with respect to the
                subject matter hereof and supersedes all previous, contemporaneous
                and
                inconsistent agreements, negotiations, representations and promises
                between the Parties, written or oral, regarding the subject matter
                hereof.

            


    

     

    
      	
              10.4

            	
              Headings.
                The headings contained in this Agreement are inserted only as a matter
                of
                convenience and for reference and in no way define, limit or describe
                the
                scope or intent of this Agreement nor in any way affect its terms
                and
                provisions.

            


    

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    
      	
              10.5

            	
              Governing
                Law.
                This Agreement shall be governed by and construed in accordance with
                the
                laws of the State of California, without reference to its conflicts
                of law
                provisions.  

            


    

     

    
      	
              10.6

            	
              Notices.
                All notices hereunder shall be in writing and shall be delivered
                by hand,
                mailed by registered or certified mail (return receipt requested),
                deposited with a reputable, established overnight courier service
                for
                delivery to the intended addressee against receipt, or sent by telecopy
                (confirmed by regular, first-class mail), to the Parties at the following
                addresses (or at such other addresses for a Party as shall be specified
                by
                like notice) and shall be deemed given on the date on which such
                notice is
                received:

            


    

     

    
      	 	
              if
                to QPC:

            	
              QPC
                Lasers, Inc,.

            


    

    15632
      Roxford Street

    Sylmar,
      California 91342

    Attention:
      George Lintz

    Fax:
      331
      4186 5638

     

    and
      a
      copy 

    (which
      shall not 

    
      	 	
              constitute
                notice) to:

            	
              Morrison
                & Foerster LLP

            


    

    555
      West
      Fifth Street, Suite 3500

    Los
      Angeles, California 90013

    Attention:
      Hillel T. Cohn, Esq.

    Fax:
      (213) 892-5454

    


     

    if
      to
      Customer:  

    


    and
      a
      copy 

    (which
      shall not 

    constitute
      notice) to:  

    


    
      	
              10.7

            	
              Assignment.
                Neither QPC nor Customer may assign this Agreement, in whole or in
                part,
                without the prior written consent of the other Party. Notwithstanding
                the
                foregoing, QPC may convey its entire right and interest under this
                Agreement to any successor by way of merger, acquisition or similar
                transaction. Subject to the foregoing, this Agreement shall be binding
                upon and inure to the benefit of each party’s respective successors and
                lawful assigns.

            


    

     

    
      	
              10.8

            	
              Public
                Announcements.
                No Party to this Agreement shall make, or cause to be made, any press
                release or public announcement in respect of this Agreement or otherwise
                communicate with any news media without the prior written consent
                of the
                other Party, and the Parties shall cooperate as to the timing and
                contents
                of any such press release or public announcement. Notwithstanding
                the
                foregoing, QPC shall be free to make such disclosures regarding this
                Agreement as it reasonably determines are required by applicable
                federal
                securities laws.

            


    

     

    
      	
              10.9

            	
              Amendment.
                Any amendment to this Agreement, or any subsequent agreement among
                the
                Parties in respect of the subject matter hereof, shall not be binding
                on
                the Parties unless such amendment or agreement is executed by QPC
                and
                Customer.

            


    

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    
      	
              10.10

            	
              Waiver.
                The failure of a Party to insist upon strict adherence to any term
                of this
                Agreement on any occasion shall not be considered a waiver or deprive
                that
                Party of the right thereafter to insist upon strict adherence to
                that term
                or any other term of this Agreement. Without limitation of the foregoing,
                failure or delay on the part of a Party in exercising a right of
                termination hereunder with respect to any act or event shall not
                be
                construed to prejudice its right of termination for such act or event
                in
                the future or for any subsequent act or event. No waiver shall be
                effective unless it is in writing and is signed by the Party asserted
                to
                have granted such waiver.

            


    

     

    
      	
              10.11

            	
              Severability.
                The provisions of this Agreement shall be deemed severable and the
                invalidity or unenforceability of any provision shall not affect
                the
                validity or enforceability of the other provisions hereof. If any
                provision of this Agreement, or the application thereof to any person
                or
                entity or any circumstance, is found by a governmental authority
                or court
                of competence jurisdiction to be invalid or unenforceable, (i) the
                Parties
                shall amend such provision in accordance to obtain a legal, enforceable
                and valid provision that most nearly effects the Parties’ intent in
                entering into this Agreement and (ii) the remainder of this Agreement
                and
                the application of such provision to other persons, entities or
                circumstances shall not be affected by such invalidity or
                unenforceability, nor shall such invalidity or unenforceability affect
                the
                validity or enforceability of such provision, or the application
                thereof,
                in any other jurisdiction.

            


    

     

    
      	
              10.12

            	
              Counterparts.
                This Agreement may be executed in two or more counterparts (by original
                or
                facsimile signature), each of which shall be deemed an original,
                but all
                of which together shall constitute one and the same
                instrument

            


    

     

    
      	
              10.13

            	
              Relationship
                of the Parties.
                The relationship hereby established between the Parties is and shall
                be
                solely that of independent contractors. Nothing in this Agreement
                is
                intended or shall be deemed to (a) constitute a partnership, agency,
                franchise or joint venture relationship between the Parties hereto,
                (b)
                give any Party hereto the power to direct or control the day-to-day
                activities of the employees of the other Party, (c) cause any employees
                or
                agents of any Party to be deemed to be employees or agents of the
                other
                Party for any purpose, or (d) allow a Party to create or assume any
                obligation on behalf of the other Party, except as expressly provided
                herein. In addition, no Party shall have any power to act for or
                represent
                the other, except as expressly provided in this
                Agreement.

            


    

     

    
      	
              10.14

            	
              Interpretation.
                This Agreement shall be construed without regard to any presumption
                or
                rule requiring construction or interpretation against the Party drafting
                or causing any instrument to be drafted. Words of inclusion shall
                not be
                construed as terms of limitations, so that references to “included”
                matters shall be regarded as non-exclusive, non-characterizing
                illustrations. 

            


    

     

    [Signature
      page follows]

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    


    IN
      WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
      by
      their respective duly authorized representatives as of the date first above
      written. 

     

    
      	QPC LASERS, INC. 	 	 	 
	 	 	 	 	 
	By: 	
            	 	 	
            
	 	
              
Name:	 	 	
            
	 	 	 	 	 
	 	Title:	 	 	
            


    

    
       

      
        	QUINTESSENCE PHOTONICS
                CORPORATION	 	 	 
	 	 	 	 	 
	By: 	
              	 	 	
              
	 	
                
Name:	 	 	
              
	 	 	 	 	 
	 	Title:


      

    

    
      
         

        
          	[CUSTOMER]	 	 	 
	 	 	 	 	 
	By: 	
                	 	 	
                
	 	
                  
Name:	 	 	
                
	 	 	 	 	 
	 	Title:


        

      

    

     

    SIGNATURE
      PAGE TO DEVELOPMENT
      AGREEMENT


     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    


    EXHIBIT
      A

     

    Development
      Payment

     

    Pursuant
      to Section 2 of the Agreement, Customer hereby agrees to make a Development
      Payment in the amount of Two Million Dollars ($2,000,000), which payment shall
      be due as of the Effective Date and payable in the following manner:


     

    
      	
              Payment
                Date

            	 	 	
              Payment
                Amount

            	 
	
              Effective
                Date

            	 	
              $

            	
              150,000

            	 
	
              Ten
                days following the Effective Date

            	 	
              $

            	
              350,000

            	 
	
              August
                31, 2008

            	 	
              $

            	
              500,000

            	 
	
              September
                30, 2008

            	 	
              $

            	
              250,000

            	 
	
              October
                31, 2008

            	 	
              $

            	
              250,000

            	 
	
              November
                30, 2008

            	 	
              $

            	
              250,000

            	 
	
              December
                31, 2008

            	 	
              $

            	
              250,000

            	 


    

    


    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    EXHIBIT
      B

     

    Royalties

     

    Royalty
      Rates.
      Royalty
      Payments due and payable in accordance with the Agreement shall be determined
      as
      follows:

     

    
      	 	
              (a)

            	
              QPC
                shall pay Customer ten percent (10%) of Net Revenues that QPC or
                Quintessence actually receives during the Royalty Term from the sale
                of
                the Products for use in three-dimensional (“3-D”) display/projection
                applications in connection with the 3-D display and projection
                business.

            


    

     

    
      	 	
              (b)

            	
              QPC
                shall pay Customer three percent (10%) of Net Revenues that QPC or
                Quintessence actually receives during the Royalty Term from the sale
                of
                the Products for use in display/projection applications other than
                in 3-D
                display/projection applications.

            


    

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    


    EXHIBIT
      C

     

    Licensed
      IP 

     

    
      	
              COUNTRY

            	
              Application/Publication/Grant
                NO.

            	
              DATE