| **CNC Associates, Inc.**

2900 Challenger Place, Oxnard, California                            93030

Tel: 888-350-4262 — Fax: 805-278-8501                                                                                                                                                                                                                                                                 | **LEASE NUMBER**

24530002                                                                                                                                                                             |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **FULL LEGAL NAME AND ADDRESS OF LESSEE**

Pacific Fuel Cell Corp.

131 N. Tustin Ave., Suite 100

Tustin, CA 92780                                                                                                                                                                                                                                                                                               | **SUPPLIER OF EQUIPMENT (COMPLETE                            ADDRESS)**

Allendale Machinery Systems, Inc.

100 Hilltop Road

Ramsey, NJ 07446                                                         |
| **QUANTITY**                                                                        **DESCRIPTION, MODEL & CATALOG                            #, SERIAL OR OTHER IDENTIFICATION** |
|  

**EQUIPMENT**

**LEASTED**

                                                                                                                                                                                                                                                                                                                                                                         |  

See Schedule A attached hereto and made part                            of.                                                                                                                    |
|  

**EQUIPMENT**

**LOCATION IF**

**DIFFERENT**

                                                                                                                                                                                                                                                                                                                                                      |  

STREET ADDRESS4413 Hamann                            Pkwy

                             

CITYWilloughby   STATE  OH    ZIP  44094 |
| **TERMS**                                                                                                                                                                                                                                                                                                                                                                                                         | **AMOUNT OF**

**EACH PAYMENT**                                                                                                                                                                        | **MONTHLY**

**OTHER/SPECIFY** | **TERM OF LEASE**

**(NO. OF MONTHS)** | **NO. OF**

**PAYMENTS** | **ADVANCE RENTALS APPLY TO FIRST AND LAST ___                            MONTHS** | **SECURITY DEPOSIT** |
| **See Schedule “B” Attached**                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                        |  |  |  |  |  |  |  |  |

 

**LEASE RENTAL AGREEMENT**

**TERMS AND CONDITIONS OF LEASE**

1.AGREEMENT TO LEASE. Lessee hereby agrees to lease from Lessor, and            Lessor hereby agrees to lease to Lessee for Leasee’s business use, subject to the            terms and conditions on the face and reverse side of this Lease Rental Agreement            (“Lease”) the personal property described above (which, with all            replacement parts, repairs, additions and accessories thereto, is hereinafter called            “Equipment”), or, if separately scheduled, on the schedule annexed hereto            (marked Schedule “A”) and made part hereof. The parties agree that this            Lease is a “Finance Lease” as defined by Section 2A-104(g) of the Uniform            Commercial Code (“UCC”). Lessee acknowledges either (a) that Lessee has            reviewed and approved any written Supply Contract covering the Equipment purchased from            the Supplier thereof for lease, or (b) that Lessor has informed or advised Lessee, in            writing, either previously or by this Lease, of the following: (i) the identity of the            Supplier, (ii) that Lessee may have rights under the Supply Contract; and (iii) that            Lessee may contact the Supplier for a description of any such rights Lessee may have            under the Supply Contract.

 

2.    SELECTION OF ORDERING THE EQUIPMENT. Lessee,            at its sole option and discretion, has selected the Equipment and the Supplier(s)            thereof and hereby requests Lessor to order the Equipment from the Supplier(s) named            herein, to arrange for delivery to Lessee at Lessee’s expense and to pay for the            Equipment after its delivery to and acceptance by Lessee.

 

3.    DISCLAIMER OF WARRANTIES AND CLAIMS/LIMITATION            OF REMEDIES. There are no warranties by or on behalf of Lessor, and Lessee acknowledges            and agrees by Lessee’s initials below that:

***(a)***     ***Lessor, being neither the manufacturer, nor the Supplier, nor a            dealer in the Equipment, makes NO WARRANTY, express or implied, to anyone as to design,            condition, capacity, performance or any other aspect of the Equipment, or its material            or workmanship. Lessor also disclaims any warranty of merchantability or fitness for            use or purpose, whether arising by operation of law or otherwise. Lessor further            disclaims any liability for loss, damage or injury to Lessee or to any third parties as            a result of any latent or patent defects in the Equipment, whether arising from the            laws of strict liability or otherwise. As to the Lessor, the Lessee leases the            Equipment “as-is”. Lessee acknowledges that Lessor has not recommended the            Supplier(s) of the Equipment. Lessor shall have no obligation to install, maintain, or            service the Equipment, or cause of the same to be performed by any third parties. If            the Equipment is unsatisfactory for any reason, Lessee shall make claim on account            thereof solely against the Supplier and/or manufacturer of the Equipment, and shall            nevertheless pay or continue to pay all rent due under the lease.***

***(b)***     ***As long as Lessee is not deemed to be in default hereunder, Lessor            assigns to Lessee, solely for the purpose of prosecuting such a claim, all the rights            which Lessor may have against the Supplier and/or the manufacturer of the Equipment for            breach of warranty or other representations concerning the            Equipment;***

***(c)***     ***Regardless of any cause, Lessee agrees not to assert any claim or            counterclaim whatsoever against Lessor for loss of anticipatory profits, or any other            indirect, special or consequential damages, nor shall Lessor be responsible for any            damages or costs which may be assessed against Lessee in any action for infringement of            any United States Letters Patent. Lessor makes no warranty as to the treatment of this            Lease for tax or accounting purposes;***

***(d)***     ***Neither the Supplier, nor any of its representatives, agents,            employees, or sales personnel are in any way to be construed as agents of Lessor;            consequently, neither the Supplier, nor any of its representatives, agents, employees,            or sales personnel are authorized to waive or alter any of the terms, conditions, or            provisions of this Lease, or to make any representations whatsoever for or on behalf of            Lessor;***

***(e)***     ***Lessee, by affixing Lessee’s initials hereto, agrees and            acknowledges that Lessor and Lessee have specifically negotiated and agreed to the            terms and conditions of this Paragraph 3.***

 

4.    TERM AND RENT, THIS LEASE IS NON-CANCELLABLE            FOR THE ORIGINAL TERM HEREOF, EXCEPT AS HERIN PROVIDED. The Lease shall commence when            accepted by the Lessor at its principal office in the County of Ventura, State of            California and continue until all of Lessee’s obligations under the Lease have            been performed to the satisfaction of Lessor. Lessee agrees to pay the total rent equal            to the “Amount of Each Payment” multiplied by the number of payments            specified in “No of Payments.” Payments will be made in advance and            periodically as specified in “Terms” and will be considered to be made when            received by Lessor at its principal office in Ventura County, California.            Lessee’s obligation to pay the rentals due hereunder is unconditional. Lessee            shall not set-off, abase, deduct any amount or reduce any payment for any reason. The            first payment shall be due on the date Lessee accepts delivery of the Equipment, and            subsequent payments shall be due on the same day of each succeeding payment period            throughout the remaining term of the Lease. If, for any reason whatsoever, the Lease            the lease does not commence, or the Lessor duly terminates the Lease, Lessor may retain            the advance rental(s) as liquidated damages.

 

5.    SECURITY DEPOSIT. As security for the prompt,            faithful and full payment of the amounts due under this Lease, and Lessee’s            complete performance of all of its obligations under this Lease, and any extension or            renewal hereof, Lessee, if so noted above, has deposited with Lessor the security            amount set forth in the section shown as “Security Deposit.” In the event            that any default shall be made in the performance of any of Lessee’s obligations            to Lessor, whether under this Lease or otherwise, Lessor shall have the right, but            shall not be obligated, to apply the Security Deposit to the curing of such default.            Within 15 days after Lessor mails notice to Lessee that Lessor has applied any portion            of the Security Deposit to the curing of any default, Lessee shall restore said            Security Deposit to the full amount set forth hereinabove. On the expiration or earlier            termination or cancellation of this Lease, or any extension or renewal hereof, Lessor            will return to Lessee any then remaining balance of said Security Deposit, without            interest. The Security Deposit may be commingled with Lessor’s other            funds.

 

| *Lessee’s initials:**__s/GS**___* | *Page 1 of 3* |
|-----------------------------------------|---------------|

 

----

6.    EXPIRATION AND RENEWAL. Unless earlier            terminated or cancelled by Lessor, and provided that Lessee has performed all of its            covenants hereunder to Lessor’s satisfaction, this Lease shall expire upon            expiration of the number of months set forth in “Term of Lease.” At the            expiration of the Lease, Lessee shall return the Equipment to the Lessor in accordance            with Paragraph 7 hereof. At Lessor’s option, this lease may be continued on a            month-to-month basis until 30 days after the Lessee returns the equipment to the            Lessor. In the event the Lease is continued, Lessee shall pay to Lessor rentals in such            periodic amounts as may be agreed upon between Lessor and Lessee at the            time.

 

7.    SURRENDER. By the Lease, Lessee acquires no            ownership rights in the Equipment and has no option to purchase same. Upon the            expiration or earlier termination or cancellation of the Lease, or in the event of a            default, as defined under paragraph 18 hereunder, Lessee, at its sole cost and expense,            shall return the Equipment in good repair, condition and working order, ordinary wear            and tear resulting from proper use thereof alone excepted, by delivering it, packed and            ready for shipment, to such place or carrier as Lessor may designate.

 

8.    OWNERSHIP/PERSONAL PROPERTY. The equipment is,            and shall remain the property of the Lessor, and notwithstanding any trade-in or down            payment made by Lessee or on its behalf, Lessee shall have no right, title, or interest            to the Equipment, except as expressly set forth in this Lease. The Equipment shall            remain personal property even though installed in or attached to real property. The            Equipment is removable from and is not essential to the premises at which the Equipment            is located.

 

9.    LOCATION OF EQUIPMENT. Lessee shall keep the            Equipment at the location specified hereinabove, or if none is specified, at the            Lessee’s address as shown hereinabove, and it shall not be removed without            Lessor’s written consent.

 

10.  CARE AND USE OF EQUIPMENT. Lessee, at it sole cost and            expense, shall at all times maintain and keep the Equipment in good repair, condition            and working order, shall use the Equipment lawfully and shall not alter the Equipment            without Lessor’s prior written consent. If the manufacturer of the Equipment has            provided Lessee with a standard maintenance schedule, such schedule will constitute            minimum maintenance compliance, and, at Lessor’s request, Lessee will furnish            Lessor with evidence of such compliance.

 

11.  INSURANCE, LEINS, TAXES, FEES. Lessee shall provide and            maintain insurance against loss, theft, damage or destruction of the Equipment in an            amount not less than the full replacement value of the Equipment, with loss payable to            Lessor. Lessee shall also provide and maintain comprehensive general all-risk liability            insurance without limitation, insuring Lessor and Lessee, without a severability            interest endorsement, or its equivalent, against any and all loss or liability for all            damages, either to persons or property, or otherwise, which might result from or happen            in connection with the condition, use or operation of the Equipment, with such limits            and with and with an insurer satisfactory to Lessor. Each policy shall expressly            provide that said insurance as to Lessor and its assigns shall not be invalidated by            any act, omission, or neglect of Lessee and cannot be cancelled without 30 days’            prior written notice to Lessor. As to each policy, Lessee shall furnish to Lessor a            certificate of insurance from the Insurer, which certificate shall evidence the            insurance coverage required by this Paragraph. Lessor shall have no obligation to            ascertain the existence of or provide any insurance coverage for the Equipment or for            Lessee’s benefit. In the event that Lessor shall take real property as additional            security to the Lease, Lessee agrees to maintain such fire and other hazard insurance            upon said premises as Lessor shall direct, showing Lessor and/or it assigns as Loss            Payee thereunder. Lessee shall keep the Equipment free and clear of any and all levies,            liens, and encumbrances. Lessee shall pay all charges and taxes (local, state and            federal) which may now or hereafter be imposed upon the ownership, leasing, rental,            sale, purchase, possession, or use of the Equipment, excluding, however, all taxes on            or measured by Lessor’s net income. Lessee shall pay all fees, other than those            for credit investigation, incurred by Lessor on Lessee’s behalf. If Lessee fails            to procure or maintain said insurance, or to pay any of the said fees, charges, or            taxes, Lessor shall have the right but not be obligated, to effect such insurance, or            to pay such fees, charges or taxes. In the event, Lessor shall notify Lessee of such            payment, and Lessee shall repay to Lessor the cost thereof within 15 days after such            notice is mailed to Lessee.

 

12.  LOSS AND DAMAGE. Lessee shall at all times after signing            this Lease bear the entire risk of loss, theft, damage, or destruction of the Equipment            from any cause whatsoever, and no loss, theft, damage, or destruction of the Equipment            shall relieve the Lessee of the obligation of pay rent or to comply with any other            obligation or provision under this lease. In the event of loss, Lessee shall give            immediate written notice of such to Lessor or Lessor’s assignee, if any, but            Lessor shall not by such notice become obligated to make proof of loss to the insurance            company(ies). Each insurance carrier is hereby authorized and directed to make payment            for such loss directly to the Lessor or Lessor’s assignee. In case of any loss,            the amount collected under any policy of insurance on the Equipment, may at            Lessor’s sole option and discretion be used by Lessor to repair or replace the            Equipment, or hold by Lessor t compensate Lessor for diminution in the value of such            Equipment as a result of said loss, or applied by Lessor to Lessee’s obligation            under this Lease.

 

In            furtherance of the assignment of rights contained herein, Lessee hereby appointees            Lessor as Lessee’s attorney-in-fact (hereby granting Lessor a power of attorney            coupled with an interest) to make claim for, receive payment of and execute and endorse            any and all documents, checks, or drafts for loss, damages, or returned premium under            any insurance policy(ies) in favor of Lessee insuring the Equipment, and with the power            also to enter into any agreement on Lessee’s behalf and binding Lessee for            settlement of any claim or claims relating to the Equipment which is the subject of            this Lease.

 

13.  FURTHER ASSURANCES AND SPECIAL POWER OF ATTORNEY. Lessee            shall execute, or otherwise authenticate, or obtain from third parties, and deliver to            Lessor, upon Lessor’s request, such instruments and assurances and other records            as Lessor deems necessary or advisable for the confirmation or perfection of this Lease            or Lessor’s rights hereunder. Lessee further agrees and does hereby appoint            Lessor as Lessee’s true and lawful attorney-in-fact to prepare, execute and file            any and all documents including and without limitation, security agreements and            financing statements, including UCC-1s, in order to give notice of Lessor’s            ownership interest in the Equipment and to sign the name of the Lessee with the same            force and effect as if, in fact, signed by the Lessee. The filing of the financing            statement is made for the express purpose of protecting the interests of the parties            hereto from any unwarranted claims made by any third party. This paragraph shall            survive the termination, cancellation, expiration of this Lease. Lessee’s full            and accurate legal name is first provided as above.

 

14.  INDEMNITY. Lease shall hold Lessor harmless from,            indemnity and defend Lessor against any and all claims, actions, proceedings, costs,            expenses, including attorney’s fees, damages and liability, arising out of,            connected with, or resulting from the Equipment of this Lease, including, without            limitation the manufacture, selection, delivery, possession, use, operation, or return            of the Equipment. This indemnification shall survive the termination, cancellation, or            expiration of this Lease. Lessee waives any immunity Lessee may have under any            industrial insurance act, with regard to the indemnification of Lessor.

 

15.  ASSIGNMENT. ASSIGNMENT BY LESSEE IS PROHIBITED, WITOUT            LESSOR’S PRIOR WRITTEN CONSENT, LESSEE SHALL NOT ASSIGN THIS LEASE OR SUBLEASE            THE EQUIPMENT OR ANY INTEREST THEREIN, OR PLEDGE, HYPOTHECATE, TRANSFER, OR DISPOSE OF            THE EQUIPMENT IN ANY MANNER, OR PERMIT THE EQUIPMENT TO BE USED BY ANYONE OTHER THAN            LESSEE OR LESSEE’S EMPLOYEES. Any assignee of Lessor shall have the rights but            none of the obligations of Lessor under this Lease. Lessee shall recognize and hereby            consents to any assignment of this Lease by Lessor, and shall not assert against the            assignee any defense, counterclaim, or setoff that Lessee may have against            Lessor.

 

16.  SERVICE CHARGES; INTEREST. If Lessee shall fail to make            any payment required by this Lease within 10 days of the due date thereof, Lessee shall            pay to Lessor a service charge of 7% of the amount due; provided, however, that not            more than one such service charge shall be made on any delinquent payment, regardless            of the length of the delinquency. In addition, Lessee shall pay to Lessor any actual            additional expenses incurred by Lessor in collection efforts, including, without            limitation, long-distance telephone charges, and travel expenses. Lessee shall pay to            Lessor interest on any delinquent payment or amount due under this Lease, from the due            date thereof until paid, at the lesser of the maximum rate of interest allowed by law            or 18% per annum.

 

| *Lessee’s                            initials:__**s/GS**__* | Page 2 of 3 |
|-------------------------------------------------------------------|-------------|

 

----

17.  TIME OF ESSENCE. Time is of the essence in this Lease,            and this position shall not be impliedly waived by the acceptance on occasion of late            or defective performance.

 

| 18. | DEFAULT. An Event of Default shall occur hereunder                            if: |
|-----|-----------------------------------------------------------------------------------|

|   | (a) | Lessee fails to pay any installment of rent or other                            payment required hereunder when due and such failure continues for a                            period of 10 days; or |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | Lessee fails to observe, keep, or perform any provision                            of this Lease, and such failure shall continue for a period of 10 days;                            or |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | Lessee has made any false or misleading statement in                            connection with application for, or performance of, this Lease,                            or |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

(d)     The Equipment, or any part thereof,            shall be subject to any lien, levy, seizure, assignment, transfer, bulk transfer,            encumbrance, application, attachment, execution, sublease of sale without prior written            consent of Lessor; or

|   | (e) | Lessee dies or ceases to exist as a going concern;                            or |
|--------|-----|----------------------------------------------------------------------------------|

|   | (f) | Lessee defaults under the terms, provisions, conditions                            of any other agreement Lessee has with the Lessor; or |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------|

(g)     If a petition in bankruptcy,            arrangement, insolvency, or reorganization is filed by or against Lessee, or if Lessee            sells all or a substantial part of Lessee’s assets, or if a majority of            Lessee’s voting stock is transferred; or if Lessee shall make an assignment for            the benefit of creditors; or

|   | (h) | If there shall be a material adverse change in the                            financial or business condition of the Lessee; or |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------|

(i)     Any guarantor of this Lease defaults on            any obligation to Lessor, whether or not under this Lease, or any of the above-listed            events of default occur with respect to any such guarantor.

 

19.  REMEDIES. Upon the occurrence of any Event of Default            hereunder, Lessor, with or without notice to Lessee, shall have the right to exercise            any one or more of the following remedies, concurrently or separately, and without any            election of remedies being deemed to have been made.

(a)     Lessor may enter upon Lessee’s            premises and, without any court order or other process of law, may repossess and remove            the Equipment, or render the Equipment unusable without removal, either with or without            notice to Lessee. Lessee hereby waives any trespass or right of action for damages by            reason of such entry removal, or disabling. Any such repossession shall not constitute            a termination of this Lease, unless Lessor so notifies Lessee in writing.

(b)     Lessor may require Lessee, at            Lessee’s sole cost and expense, to return the Equipment in good repair, ordinary            wear and tear from proper use thereof alone excepted, by delivering it, packed and            ready for shipment, to such place or carrier as Lessor may specify;

|   | (c) | Lessor may cancel or terminate this Lease and may retain                            any and all prior payments paid by for the account of                            Lessee; |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

(d)     Lessor may declare all sums due and to            become due under this Lease and under any other agreement Lessee may have with Lessor            immediately due and payable, without notice or demand to or upon Lessee;

(e)     Lessor may re-lease the Equipment,            without notice to Lessee, to any third party, upon such terms and conditions as Lessor            alone shall determine, or may sell the Equipment without notice to the Lessee, at a            private or public sale, at which the Lessor may be the purchaser;

(f)     Lessor may sue for and recover from            Lessee sum of all unpaid rents and other payments due under this Lease then accrued,            all accelerated future payments due under this Lease, discounted to their present value            at a discount rate of 8% as of the date of default, plus Lessor’s estimate at the            time this lease was entered into of Lessor’s residual interest of the Equipment,            reduced to present value, at a discount rate of 8% as of the date of default, less the            proceeds of disposition, if any of the Equipment.

(g)     Lessor may sue for and recover from            Lessee the sum of all amounts due and to become due under any other agreements between            Lessee and Lessor under the same formula as set forth in subsection (f) of this            Paragraph;

|   | (h) | Lessor may pursue any other remedy available by law, by                            statute, or in equity. |
|--------|-----|-----------------------------------------------------------------------------------------------------------|

No            right or remedy herein conferred upon or reserved to Lessor is exclusive of any other            right or remedy herein, or by law or by equity provided or permitted, but each shall be            cumulative of every other right or remedy given by statute or otherwise, and may be            enforced concurrently therewith or from time to time. No single or partial exercise by            Lessor of any right hereunder shall preclude any other or further exercise of any other            right or remedy.

 

20.  LESSEE REPRESENTATIONS AND COVENANTS. Lessee represents            and covenants with Lessor that all financial and other information furnished to Lessor            in connection with this Lease was at the time of delivery to Lessor, true and correct            in all respects. During the term of this Lease, Lessee shall furnish to Lessor such            interim or annual financial statements as Lessor may request from time to            time.

 

21.  NOTICES. Services of all notices under this Lease shall            be sufficient if given personally or mailed to the intended party at its respective            address as set forth herein, or at such other address as said party may provide in            writing from time to time. Any such notice mailed to said address shall be effective 3            days following the date when deposited in the United States Mail, duly addressed and            with sufficient postage thereon prepaid.

 

22.  ENTIRE AGREEMENT; GOVERNING LAW; VENUE; GENERAL. This            Lease, together with any and all addenda or supplements hereto, contains the entire            agreement between the parties and may not be altered, amended, modified, terminated, or            otherwise changed except by a writing signed by the parties, or as otherwise provided            hereinabove. The parties hereto agree that this Lease is made and executed in the            County of Ventura, State of California. This Lease shall be binding when accepted by            Lessor at its principal office, in the County of Ventura, State of California and shall            be governed by and construed according to the laws of the State of California. Lessee            agrees that all actions of proceedings instituted by Lessee of Lessor hereunder shall            be brought in a court of competent jurisdiction in Ventura County, California. Lessee            shall pay to Lessor all costs and expenses, including attorneys’ fees and Court            costs incurred by Lessor and awarded by the Court in exercising any of Lessor’s            rights or remedies hereunder or enforcing any of the terms or provisions herein.            Furthermore, should Lessor, without fault on Lessor’s part, be made a party to            any litigation instituted by third parties against Lessee or Lessor as a result of            Lessee’s use of the Equipment, Lessee covenants to pay Lessor all costs and            expenses, including reasonable attorneys’ fees, incurred by Lessor in connection            with such litigation. Lessee agrees that Paragraph headings will not affect the            interpretation of the provisions of the Lease. Lessee waives, insofar as permitted by            law, right to trial by jury in any action between the parties. Lessor and Lessee intend            this Lease to be a valid and subsisting legal document and agree that no provision of            the Lease which may be deemed unenforceable shall in any way invalidate any other            provision or provisions of the Lease, all of which shall remain in full force and            effect. This lease shall be binding upon the parties, their heirs, successors, legal            representatives and assigns. The liability of Co-Lessees hereunder shall be joint and            several. Wherever the context so requires herein, the singular number includes the            plural and the plural number includes the singular; masculine terms include feminine            and neuter and vice-versa.

 

THIS            LEASE CANNOT BE CANCELLED BY LESSEE DURING THE INITIAL TERM.

 

| Accepted at Ventura County, California | Pacific Fuel Cell                            Corp.______________________ |
|----------------------------------------|--------------------------------------------------------------------------|

|   | LESSEE (FULL LEGAL NAME) |
|--------|--------------------------|

Date:__JUL 27            2007__________

|   | The Undersigned affirms that he is a duly authorized                            corporate |
|--------|-------------------------------------------------------------------------------------------|

| Lessor: CNC Associates, Inc. | officer, partner, or proprietor of the above-named                            Lessee, or |
|------------------------------|------------------------------------------------------------------------------------------|

|   | has the authority to exercise this Lease on                            Lessee’s behalf. |
|--------|-----------------------------------------------------------------------------------------------|

| By: _______________________________________ | Dated                            __6-12-07_____ |
|---------------------------------------------|-------------------------------------------------|

 

| Title: __Operations                            Manager__________________ | By: __s/George                            Suzuki____________________ |
|--------------------------------------------------------------------------|----------------------------------------------------------------------|

|   | Title: President |
|--------|------------------|

 

                                                                                                            Page 3 of 3

----

 

**AMENDMENT TO LEASE RENTAL AGREEMENT**

 

| Re: | Lease Rental Agreement number**24530002**, dated                            ___JUN 12 2007__,                            between CNA Associates, |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Inc., as Lessor, and**Pacific                            Fuel Cell Corp.**, as Lessee. |
|--------|----------------------------------------------------------------------------------------|

 

Notwithstanding any language in the captioned Lease Rental Agreement            (“Lease”) to the contrary, it is agreed between Lessor and Lessee that,            provided Lessee has performed all of its obligations under the Lease, as provided            therein, then, at the end of the initial term of the Lease, or, when such obligations            shall have been completely performed prior to the end of the initial term thereof,            Lessee may purchase the leased Equipment for the sum of One Hundred and One Dollar            ($101.00) Plus any applicable taxes.

 

Lessee is hereby put on notice that Lessor will make the Equipment            available to sale to Lessee WITHOUT ANY WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED,            INCLUDING, WITHOUT LIMITATION, WARRANTIES AS TO MERCHANTABILITY, OR AS TO FITNESS FOR            ANY PARTICULAR PURPOSE.

 

READ            AND AGREED TO:

 

| LESSOR: ___**CNA Associates,                            Inc.****________** | LESSEE: ___**Pacific Fuel Cell                            Corp.**________ |
|----------------------------------------------------------------------------|---------------------------------------------------------------------------|

 

| By: | ___s/______________________________ | By: | __s/George                            Suzuki___________________ |
|-----|-------------------------------------|-----|-----------------------------------------------------------------|

 

| Title:**Operations                            Manager**______________ | Title:**President**_________________________ |
|-----------------------------------------------------------------------|----------------------------------------------|

 

| Date: _______JUL 27                            2007______________ | Date:                            _____6-12-07______________________ |
|-------------------------------------------------------------------|---------------------------------------------------------------------|

 

 

----

**SCHEDULE “A”**

**EQUIPMENT SCHEDULE**

 

**THIS SCHEDULE**is attached to and made part            of a certain Lease Rental Agreement, number**24530002**, between CNC Associates, Inc., as            Lessor, and**Pacific Fuel Cell Corp.**,            as Lessee.

 

| **QUANTITY** | **EQUPMENT DESCRIPTION** | **SERIAL NUMBER** |
|--------------|--------------------------|-------------------|

 

|   | (1) | HAAS Vertical Machining Center, Model VF-2 | 1058984 |
|--------|-----|--------------------------------------------|---------|

|   | including: |
|--------|------------|

 

|   | (1) | 30,000-rpm Spindle |
|--------|-----|--------------------|

|   | (1) | Visual quick Code Probing System |
|--------|-----|----------------------------------|

 

The            Lessee hereby certified that the description of personal property set forth above            constitutes an accurate account of the Equipment, as such is defined in the Lease            Rental Agreement of which this Schedule is a part.

 

| LESSOR: ___**CNA Associates,                            Inc.****______** | LESSEE: ___**Pacific Fuel Cell                            Corp.**________ |
|--------------------------------------------------------------------------|---------------------------------------------------------------------------|

 

| By: | __s/_____________________________ | By: | __s/George                            Suzuki___________________ |
|-----|-----------------------------------|-----|-----------------------------------------------------------------|

 

| Title:**Operations                            Manager**______________ | Title:**President**_________________________ |
|-----------------------------------------------------------------------|----------------------------------------------|

 

| Date: _______JUL 27                            2007______________ | Date:                            _____6-12-07______________________ |
|-------------------------------------------------------------------|---------------------------------------------------------------------|

 

 

----

**SCHEDULE “B”**

**PAYMENT SCHEDULE**

 

**THIS SCHEDULE**is attached to and made part            of a certain Lease Rental Agreement number**24530002**, dated            __JUN 12 2007__            (“Lease”) between CNC Associates, Inc., as Lessor, and**Pacific Fuel Cell Corp.**, as Lessee. Lessor            and Lessee agree that Lessee is obligated for the original term of the Lease to make            periodic rental payments under the Lease as follows:

 

Thirty (30) days after Lessee accepts the equipment, and for**fifty-nine (59)**successive months            thereafter (for a total of**60**payments), Lessee shall pay Lessor monthly rentals in the amount            of**$1,353.55**each plus any            applicable tax.

 

| LESSOR: ___**CNA Associates,                            Inc.****________** | LESSEE: ___**Pacific Fuel Cell                            Corp.**________ |
|----------------------------------------------------------------------------|---------------------------------------------------------------------------|

 

| By: | __s/_______________________________ | By: | __s/George                            Suzuki___________________ |
|-----|-------------------------------------|-----|-----------------------------------------------------------------|

 

| Title:**Operations                            Manager**______________ | Title:**President**_________________________ |
|-----------------------------------------------------------------------|----------------------------------------------|

 

| Date: _______JUL 27                            2007______________ | Date:                            _____6-12-07______________________ |
|-------------------------------------------------------------------|---------------------------------------------------------------------|

 

 

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**EQUIPMENT AND DELIVERY ACCEPTANCE NOTICE**

 

| Re: | Lease Rental Agreement, number**24530002**, dated                            ______________, between |
|-----|------------------------------------------------------------------------------------------------------|

|   | CNC Associates, Inc., as Lessor and**Pacific Fuel Cell Corp.**, as                            Lessee. |
|--------|-------------------------------------------------------------------------------------------------------|

 

Lessee            hereby acknowledges and affirms that Lessee has received the Equipment exactly as            described under the Lease Rental Agreement and on any Schedule or Schedules annexed            thereto and that the Equipment has been installed, Lessee further acknowledges and            affirms that said Equipment has not been delivered, installed or accepted on a            “trial basis”. Lessee affirms that Lessor has made no representations or            warranties whatsoever as to the Equipment.

 

Lessee            acknowledges and affirms that Lessor is not responsible for any service contracts or            duties to be performed thereunder and that such contracts do not affect Lessee’s            obligation to Lessor under the Lease Rental Agreement.

 

| Date of Acceptance:July 26,                            07 | Lessee:**Pacific Fuel Cell                            Corp.** |
|-----------------------------------------------------------|---------------------------------------------------------------|

 

 

|   | By: ___s/George                            Suzuki_______ |
|--------|----------------------------------------------------------|

 

|   | Title:**President** |
|--------|---------------------|

 

 

| ***Attention******:*** | ***Please retain and do NOT sign this                            document,*** |
|------------------------|-------------------------------------------------------------------------------|

|   | ***until your machine has been                            delivered.*** |
|--------|-------------------------------------------------------------------------|

 

 

**Please fax this document to (805) 278-8501 and mail the original            to**

**2900 Challenger Place, Oxnard, CA 93030.**

 

----

**LESSEE ACKNOWLEDGMENT/ESTOPPEL**

 

| Re: | Lease Rental Agreement, number**24530002**, dated                            __JUN 12 2007__,                            (“Agreement”) between CNC |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Associates, Inc., as Lessor, and**Pacific Fuel Cell Corp.**, as                            Lessee. |
|--------|----------------------------------------------------------------------------------------------------|

 

|   | **LESSEE HEREBY ACKNOWLEDGES THAT:** |
|--------|--------------------------------------|

 

(a)            Lessee, alone and in its sole secretion, has selected the equipment which is the            subject of the Agreement (“Equipment”) and the Supplier thereof,            namely,**Allendale Machinery Systems,            Inc.**; and

 

(b)            Lessor has made no representations, warranties, or promises, written or oral, express            or implied, as to the fitness of the Equipment for any particular purpose, its            merchantability, its potential profitability or cost-saving potential, condition,            quality, durability, or latent or patent defects; and

 

(c)            Any agreement for the installation, service, maintenance, or repair of the Equipment is            a matter between the Supplier of the Equipment and the Lessee; and any failure of said            Supplier to perform or any failure of the equipment to perform shall not be grounds for            Lessee to fail to perform any of its obligations under the Agreement; and

 

(d)            Lessee may have rights as to Equipment warranties from the Supplier specified in            Paragraph “a”, above; and

 

(e)            Neither the Supplier, nor any of its agents, representatives, employees or sales            personnel are in any way to be construed as being agents of Lessor. Consequently, none            of them is in any way authorized to waiver or alter any of the terms, provisions, or            conditions of the Agreement, or to make any representations whatever on behalf of            Lessor with regard to the agreement; and

 

(f)            The Equipment is and shall remain personal property, even though installed in or            attached to real property; and

 

(g)            Lessee warrants and represents that all of the financial and other information            furnished to Lessor for purposes of Lessor’s evaluation of Lessee’s            creditworthiness for this Agreement was true and correct when prepared and furnished            and that there has been no material adverse change in Lessee’s business or            financial condition since such preparation and furnishing. Furthermore, Lessee warrants            and represents that there has been no omission of any information which might have            affected Lessor’s credit evaluation of Lessee’s creditworthiness or            Lessor’s evaluation of any Guarantor’s ability to perform under any            Guaranty to this Agreement; and

 

| s/GS | (h)**Lessee has thoroughly read                            and understood the entire Agreement, this Acknowledgment/ Estoppel and                            any other documents which Lessee has signed with regard to this                            Agreement, or has retained the services of a competent person, such as                            an attorney, who has explained to Lessee all of the terms, conditions                            and provisions of the Agreement and of this                            Acknowledgment/Estoppel.** |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

**LESSEE AFFIRMS ITS ACKNOWLEDGMENT AND FULL UNDERSTANDING THAT THE            AGREEMENT IS NON-CANCELABLE FOR ITS TERM.**

 

| LESSEE: | __**Pacific Fuel Cell                            Corp.**____________ |
|---------|----------------------------------------------------------------------|

 

| By: | __s/George                            Suzuki_______________________ |
|-----|---------------------------------------------------------------------|

 

| Title: | **President**______________________________ |
|--------|---------------------------------------------|

 

| Date: | ____6-12-07                            ___________________________ |
|-------|--------------------------------------------------------------------|

 

----

**DISCLAIMER OF OWNERSHIP**

 

| Re: | Lease Rental Agreement, number**24530002**, dated                            __JUN 12 2007__,                            (“Agreement”) between CNC |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Associates, Inc., as Lessor, and**Pacific Fuel Cell Corp.**, as                            Lessee. |
|--------|----------------------------------------------------------------------------------------------------|

 

The            undersigned is Lessee of certain personal property (Equipment) which is the subject of            the above referenced Lease Rental Agreement (Lease). At Lessee’s request, Lessor            has purchased the Equipment from**Allendale Machinery Systems,            Inc.**, (Vendor). Lessee has paid a deposit, or form of            deposit, to the Vendor as part of one or more of its original purchase orders, prior to            or coincident with Lessee’s proposed to enter into the Lease with Lessor. Having            receive all necessary and properly executed documentation pertinent to said Lease, and            being satisfied that Lessee has met all of the conditions incident to Lessor’s            ratification of the Lease, Lessor has paid to the Vendor: (a) the remaining balance of            the purchase price of the Equipment; or (b) 100% of the purchase price of the            Equipment, it being affirmed by Lessee that the vendor has refunded to Lessee the            deposit(s) herein above mentioned. In either case, in return for such payment to the            Vendor, Lessor has received a Bill of Sale or Invoice from the Vendor conveying a 100%            interest in the Equipment to the Lessor.

 

Lessee hereby affirmatively states that it is satisfied that its            payments under the Lease are based solely on Lessor’s payment to the Vendor and            do not include Lessee’s deposit(s); and Lessee hereby consents to Vendor            transferring the entire ownership of the Equipment to the Lessor. Effective on the            actual transfer of the ownership of the Equipment to Lessor, Lessee disclaims any            ownership interest or rights in the Equipment, save for those the Lessee may have by            virtue of its being Lessee under the Lease.

 

|   | Lessee: __**Pacific Fuel Cell                            Corp.**______________________ |
|--------|----------------------------------------------------------------------------------------|

 

|   | By: ___s/George                            Suzuki______________________________ |
|--------|---------------------------------------------------------------------------------|

 

|   | Title:**President**_____________________________________ |
|--------|----------------------------------------------------------|

 

|   | Date:                            ___6-12-07____________________________________ |
|--------|---------------------------------------------------------------------------------|

 

----

**AMENDMENT TO LEASE**

 

| Re: | Lease Rental Agreement, number**24530002**(“Lease”) |
|-----|-----------------------------------------------------------------|

 

Notwithstanding anything to the contrary in the referenced Lease, Lessee            may prepay the obligation evidenced thereby at any time during its original term            without penalty for so doing; provided, however, that such prepayment may be made            without penalty only if the Lessee has promptly and faithfully performed all of its            obligations under the Lease, including, without limitation, its obligation to remit the            monthly payments under the Lease promptly when due.

 

The            prepayment amount shall be the then outstanding principal amount of the obligation,            plus any other amounts due or accrued at the time such prepayment is made, plus any            applicable taxes.

 

All            other terms, conditions and provisions of the Lease shall remain unchanged and in full            force and effect.

 

| Lessor: CNC Associates, Inc. | Lessee:**Pacific Fuel Cell                            Corp.** |
|------------------------------|---------------------------------------------------------------|

 

| By:                            _s/________________________ | By: __s/George                            Suzuki____________ |
|------------------------------------------------------------|--------------------------------------------------------------|

 

| Title: __Operations                            Manager______ | Title:                            __**President**________________ |
|--------------------------------------------------------------|-------------------------------------------------------------------|

 

| Date: ____JUL 27                            2007__________ | Date:                            ____6-12-07________________ |
|------------------------------------------------------------|--------------------------------------------------------------|

 

 

----

**PERSONAL GUARANTY**

 

This            PERSONAL GUARANTY is entered into on _____JUN 12            2007____, by and between**George            Suzuki**(“Guarantor”) and CNC Associates, Inc.            (“Lessor”). Guarantor offers this PERSONAL GUARANTY as an inducement for            CNCA to enter into Finance/Lease Agreement number 24530002, with            __**Pacific Fuel Cell Corp.**(“Lessee”).

 

To            induce Lessor to enter into the within Lease, the undersigned unconditionally            guarantees to Lessor the prompt payment when due of all of Lessee’s obligations            to Lessor. Lessor shall not be required to proceed against Lessee or the Equipment or            enforce any other remedy before proceeding against the undersigned. Guarantor consents            to any extensions or modification granted to Lessee and the release and/or compromise            of any obligation of Lessee or any other obligors and guarantors without in any way            releasing the undersigned from its obligations hereunder. This is a continuing Guaranty            and shall not be discharged or affected by death of the undersigned, shall bind the            heirs, administrators, representatives, successors and assigns, and may be enforced b y            or for the benefit of any assignee or successor of Lessor. The undersigned agrees and            consents to the Courts of the State of California having jurisdiction in Ventura            County. Any Federal District Court having jurisdiction in said County shall have            jurisdiction and shall be the proper venue for the determination of all controversies            and disputes arising hereunder.

 

Guarantor warrants and represents that Guarantor has an interest,            financial or otherwise, in Lessee, and it is to the benefit of the Guarantor that            Lessee enter into the Finance/Lease Agreement and other Agreements, or any of them,            with Lessor; that Guarantor is and shall remain, familiar with the state of            Lessee’s finances and the operation of Lessee’s business; and that            Guarantor understands that Lessor would be unwilling to enter into the Agreements, or            any of them, with Lessee without this PERSONAL GUARANTY and that CNCA depends upon            Guarantor’s warranties, covenants and representations.

 

This            Guaranty contains the entire agreement between the parties and is may not be altered,            amended, modified, or terminated, except by a writing signed by the parties. Should            either party institute Suit hereunder, the prevailing party shall be entitled to            reasonable attorney fees and costs. No provision of this Guaranty which may be deemed            unenforceable shall in any way invalidate any other provision or provisions of the            Guaranty, all of which shall remain in full force and effect. This Guaranty may be            assigned by Lessor without notice to the Guarantor, but may not be assigned by the            Guarantor. This Guaranty shall inure to the benefit of Lessor, its successors, and            assigns, and shall bind the Guarantor, his/her heirs, representatives, successors and            assigns. Service of all notices regarding this Guaranty shall be sufficient if given            personally or mailed to the intended party at the address as set forth herein, or at            such other address as said party may provide in writing from time to time.

 

| **Guarantor:** | Accepted at Ventura County, California |
|----------------|----------------------------------------|

 

| **George Suzuki** | Date: _____JUL 27                            2007____ |
|-------------------|-------------------------------------------------------|

 

| By: ____s/George                            Suzuki______________________ | CNC Associates, Inc. |
|--------------------------------------------------------------------------|----------------------|

 

| Address: | __131 N. Tustin Ave., Suite                            100_________ | By:                            ___s/________________________________ |
|----------|---------------------------------------------------------------------|----------------------------------------------------------------------|

|   | __Tustin, CA                            92780_________________ |
|--------|----------------------------------------------------------------|

 

| Social Security #:                            ___________________________ | Title: __Operations                            Manager_______________ |
|---------------------------------------------------------------------------|-----------------------------------------------------------------------|

 

 

----

**PERSONAL GUARANTY**

 

This            PERSONAL GUARANTY is entered into on _____JUN 12            2007____, by and between**Ken            Inouye**(“Guarantor”) and CNC Associates, Inc.            (“Lessor”). Guarantor offers this PERSONAL GUARANTY as an inducement for            CNCA to enter into Finance/Lease Agreement number 24530002, with            __**Pacific Fuel Cell Corp.**(“Lessee”).

 

To            induce Lessor to enter into the within Lease, the undersigned unconditionally            guarantees to Lessor the prompt payment when due of all of Lessee’s obligations            to Lessor. Lessor shall not be required to proceed against Lessee or the Equipment or            enforce any other remedy before proceeding against the undersigned. Guarantor consents            to any extensions or modification granted to Lessee and the release and/or compromise            of any obligation of Lessee or any other obligors and guarantors without in any way            releasing the undersigned from its obligations hereunder. This is a continuing Guaranty            and shall not be discharged or affected by death of the undersigned, shall bind the            heirs, administrators, representatives, successors and assigns, and may be enforced b y            or for the benefit of any assignee or successor of Lessor. The undersigned agrees and            consents to the Courts of the State of California having jurisdiction in Ventura            County. Any Federal District Court having jurisdiction in said County shall have            jurisdiction and shall be the proper venue for the determination of all controversies            and disputes arising hereunder.

 

Guarantor warrants and represents that Guarantor has an interest,            financial or otherwise, in Lessee, and it is to the benefit of the Guarantor that            Lessee enter into the Finance/Lease Agreement and other Agreements, or any of them,            with Lessor; that Guarantor is and shall remain, familiar with the state of            Lessee’s finances and the operation of Lessee’s business; and that            Guarantor understands that Lessor would be unwilling to enter into the Agreements, or            any of them, with Lessee without this PERSONAL GUARANTY and that CNCA depends upon            Guarantor’s warranties, covenants and representations.

 

This            Guaranty contains the entire agreement between the parties and is may not be altered,            amended, modified, or terminated, except by a writing signed by the parties. Should            either party institute Suit hereunder, the prevailing party shall be entitled to            reasonable attorney fees and costs. No provision of this Guaranty which may be deemed            unenforceable shall in any way invalidate any other provision or provisions of the            Guaranty, all of which shall remain in full force and effect. This Guaranty may be            assigned by Lessor without notice to the Guarantor, but may not be assigned by the            Guarantor. This Guaranty shall inure to the benefit of Lessor, its successors, and            assigns, and shall bind the Guarantor, his/her heirs, representatives, successors and            assigns. Service of all notices regarding this Guaranty shall be sufficient if given            personally or mailed to the intended party at the address as set forth herein, or at            such other address as said party may provide in writing from time to time.

 

| **Guarantor:** | Accepted at Ventura County, California |
|----------------|----------------------------------------|

 

| **Ken Inouye** | Date: _____JUL 27                            2007____ |
|----------------|-------------------------------------------------------|

 

| By: ____s/Ken                            Inouye_________________________ | CNC Associates, Inc. |
|--------------------------------------------------------------------------|----------------------|

 

| Address: | __131 N. Tustin Ave., Suite                            100_________ | By:                            ___s/________________________________ |
|----------|---------------------------------------------------------------------|----------------------------------------------------------------------|

|   | __Tustin, CA                            92780_________________ |
|--------|----------------------------------------------------------------|

 

| Social Security #:                            ___________________________ | Title: __Operations                            Manager______________ |
|---------------------------------------------------------------------------|----------------------------------------------------------------------|