Unassociated Document


     

    Exhibit
      10.12

    

      QUINTESSENCE
        PHOTONICS CORPORATION

      (A
        Delaware Corporation)

       

      
        	Amount: $6,000,000 	
                Sylmar,
                  California

                 September
                  18, 2006

              


      

      


      SECURED
        PROMISSORY NOTE

       

      For
        value
        received, QUINTESSENCE PHOTONICS CORPORATION, a Delaware corporation
        ("Maker"), promises
        to pay FINISAR CORPORATION ("Payee") the
        principal sum of
        Six
        Million Dollars ($6,000,000.00) with monthly interest on the outstanding
        principal amount
        as
        set forth below.

       

      1. Payment. The
        outstanding principal amount shall be payable as follows:

       

      (a) A
        portion
        of the outstanding principal in the amount of One Million Dollars
        ($1,000,000.00), together with interest thereon at the rate of 9.7% per annum,
        shall be fully
        amortized and payable in thirty-six (36) equal monthly installments, commencing
        on October
        18, 2006, with subsequent installments of such principal and interest payable
        on
        the 18th day of each calendar month, and with the last such installment to
        be
        due and payable on September
        18, 2009 (the "Maturity
        Date"); and

       

      (b) The
        remaining portion of the principal (i) shall be payed in full on the
Maturity
        Date in the amount necessary to repay in full the unpaid principal balance
        hereof and (ii)
        shall accrue interest at the rate of 9.7% per annum and shall be payable
        from
        the date hereof until maturity, in arrears, on the 18th day of each calendar
        month commencing on October 18, 2006,
        and
        on the Maturity Date.

       

      Pursuant
        to the terms above, the monthly installments of principal and interest described
        in
        1(a)
        and 1(b) together shall equal $72,601.17 per month and be payable as set
        forth
        in the schedule
        attached hereto as Exhibit
        A.

       

      All
        payments of interest and principal shall be made in lawful money of the United
        States of
        America at the principal office of Payee, or at such other place Payee may
        from
        time to time designate
        in writing to Maker. The Maker may at any time, without penalty, upon at
        least
        five (5)
        days
        advance written notice to the Payee, prepay in whole or in part the unpaid
        principal sum of
        this
        Note, plus any unpaid accrued interest under this Note. All payments will
        first
        be applied to
        fees
        and expenses due under this Note, then to the repayment of accrued interest
        until all then outstanding
        accrued interest has been paid, and then shall be applied to the repayment
        of
principal.
        Notwithstanding anything herein to the contrary, whenever any payment hereunder
        shall be stated to be due, or whenever any interest payment date or any other
        date specified hereunder
        would otherwise occur, on a day other than a Business Day (as defined below),
        then such
        payment shall be made, and such interest payment date or other date shall
        occur,
        on the next succeeding
        Business Day, and such extension of time shall in such case be included in
        the
        computation of payment of interest hereunder. As used herein, "Business
        Day" means
        a
        day (i)
        other
        than Saturday or Sunday, and (ii) on which commercial banks are open for
        business in California.

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      The
        Maker
        agrees that if for any reason it fails to pay any amount due at the Maturity
        Date
        or
        upon the occurrence of an Event of Default (as defined below), then interest
        shall accrue on
        the
        unpaid balance of this Note at the rate of 18.0% per annum until such Event
        of
        Default is cured.
        Acceptance of such default interest by the Payee shall in no event constitute
        a
        waiver of the
        Maker's default with respect to such overdue amount nor prevent the Payee
        from
        exercising any
        of
        the other rights and remedies granted hereunder. Acceptance by the Payee
        of any
payment
        under this Note after the date that such payment is due shall not constitute
        a
        waiver of the
        right
        to declare a default as herein provided for any failure to so pay.
        Notwithstanding the foregoing,
        if all sums due and owning are paid the Payee shall not have the right to
        foreclose or exercise
        its remedies.

       

      2.
        Security
        Documents,. This
        Note
        is secured by certain collateral (the "Collateral")
        more
        specifically described in that certain Security Agreement, and other documents
        executed in connection
        therewith, dated as of even date herewith between the Maker and the Payee
        (collectively,
        the "Security
        Documents")

       

      3. Representations
        and Warranties. The
        Maker, by executing this Note, hereby represents
        and warrants to the Payee that:

       

      (a)
        Maker
        is
        a corporation duly incorporated, validly existing and in good standing
        under the laws of the State of Delaware and has all requisite corporate power
        and authority
        to carry on its business as now conducted and proposed to be
        conducted;

       

      (b)
        Maker
        has
        the requisite power and authority and the legal right to execute, deliver
        and perform this Note and has taken all necessary action to authorize the
        execution, delivery
        and performance of this Note;

       

      (c)
        This
        Note
        has been duly executed and delivered on behalf of Maker and constitutes
        the legal, valid and binding obligations of Maker, enforceable against Maker
        in
        accordance with its terms, except (i) as limited by applicable bankruptcy,
        insolvency, reorganization,
        moratorium, and other laws of general application affecting enforcement of
        creditors' rights generally, (ii) as limited by laws relating to the
        availability of specific performance, injunctive relief, or other equitable
        remedies and (iii) as limited by applicable federal
        or state securities laws; and

       

      (d) Neither
        the execution and delivery by Maker of this Note or any other agreements
        or instruments in connection herewith to which Maker will be a party, will
        (i)
conflict
        with or violate any provision of the charter or by-laws of Maker, (ii) require
        on the part of Maker any notice to or filing with, or any permit, authorization,
        consent or approval of, any governmental entity (other than the filing of
        UCC
        financing statements in connection with the Security Documents), (iii) conflict
        with, result in a breach of, constitute (with or without due notice
        or
        lapse of time or both) a default under, result in the acceleration of
        obligations under, create in any party the right to terminate, modify or
        cancel,
        or require any notice, consent or waiver
        under, any contract or instrument to which Maker is a party or by which Maker
        is
        bound or
        to
        which any of its assets is subject, (iv) result in the imposition of any
        security interest upon any
        assets of Maker, except for the lien to be granted under the Security Documents
        or (v) violate
        any order, writ, injunction, decree, statute, rule or regulation applicable
        to
        Maker or any of
        its
        properties or assets.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      4.
        Covenants. Until
        such time as the obligations under this Note are paid in full, the Maker
        covenants and agrees that (terms not otherwise defined above or in this Section
        4 shall have
        the
        meanings assigned to such terms in Section 14 below):

       

      (a) It
        shall
        not, directly or indirectly, incur any Indebtedness (other than the Permitted
        Indebtedness) which is senior or pari passu in right of payment to the
        obligations under
        this Note;

       

      (b) It
        shall
        not, without the consent of Payee, amend or supplement the Senior Credit
        Documents to: (i) increase the credit limit or engage in additional borrowings
        under the Senior
        Credit Documents in effect on the date hereof, (ii) amend the maturity date
        of
        the Senior Credit
        Obligations or require the indebtedness evidenced thereby to amortize on
        a basis
        different than
        presently stated in the Senior Credit Documents, (iii) increase the interest
        rate applicable to the Senior Credit Obligations (it being understood that
        the
        restriction set forth in this clause (iii) shall not apply to any application
        of
        the default rate of interest), (iv) add, or make more restrictive,
        any event of default or any covenant in the Senior Credit Documents, or (v)
        accept any
        additional collateral, guaranties or other creditor support (it being understood
        that the restriction set forth in this clause (v) shall not apply to the
        grant
        of a security interest by Maker in favor
        of
        Senior Creditor in certain of Maker's intellectual property upon the occurrence
        of an event
        of
        default under the Senior Credit Documents as contemplated therein);

       

      (c) It
        shall
        furnish to the Payee promptly after execution a copy of any amendment
        to the Senior Credit Documents; and

       

      (d) It
        shall
        be pay the Senior Credit Obligations in accordance with the terms of
        the
        Senior Credit Documents, and such Senior Credit Obligations shall be paid
        in
        full on or before
        May 24, 2007.

       

      5.
        Transferability. This
        Note
        shall inure to and be binding upon the successors and permitted assigns of
        both
        parties; provided,
        however, neither
        party may assign or transfer this Note
        or
        any rights hereunder, nor delegate any of its duties and obligations hereunder,
        without the prior written consent of the other party, which consent shall
        not be
        unreasonably withheld. Notwithstanding
        the foregoing, Payee may assign this Note to a third party as part of a sale
        of
        all or
        substantially all of the assets or stock of Payee to that third party, or
        a sale
        of the relevant business
        line.

       

      6.
        Waiver. Maker
        waives presentment, notice of nonperformance, protest, notice of protest,
        and notice of dishonor. No delay on the part of Payee in exercising any right
        hereunder shall
        operate as a waiver of such right under this Note.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      


      7.
        Amendment. Any
        term
        of this Note may be amended and the observance of any term
        of
        this Note may be waived (either generally or in a particular instance and
        either
retroactively
        or prospectively), with the written consent of the Maker and the
        Payee.

      


      8. Events
        of Default. The
        occurrence of any of the following shall constitute an "Event
        of Default" under
        this Note:

      


      (a)
        Any
        default by the Maker in the payment when due of any principal or interest
        under this Note if such default is not cured by the Maker within ten (10)
        days
        after the Payee
        has
        given the Maker written notice of such default;

      


      (b) Any
        representation or warranty made by the Maker herein shall prove to have
        been
        incorrect in any material respect on or as of the date made and remains
        unremedied (to the extent capable of being remedied) for a period of thirty
        (30)
        days after Payee provides the Maker with written notice of such
        breach;

      


      (c) The
        breach of any covenant or obligation under this Note and the continuation
        of such breach for a period of thirty (30) days after Payee provides the
        Maker
        with written
        notice of such breach;

      


      (d) The
        institution by the Maker of proceedings to be adjudicated as bankrupt
or
        insolvent, or the consent by it to institution of bankruptcy or insolvency
        proceedings against it or the filing by it of a petition or answer or consent
        seeking reorganization or release under the Bankruptcy Reform Act, Title
        11 of
        the United States Code, as amended or recodif ed from time to
        time
        (the `Bankruptcy
        Code"), or
        any
        other applicable federal or state law, or the consent by it to the filing
        of any
        such petition or the appointment of a receiver, liquidator, assignee, trustee,
        or other
        similar official, of the Maker, or of any substantial part of its property,
        or
        the making by it of an assignment for the benefit of creditors, or the taking
        of
        corporate action by the Maker in furtherance
        of any such action;

      


      (e) If,
        within sixty (60) days after the commencement of an action against the Maker
        (and service of process in connection therewith on the Maker) seeking any
        bankruptcy, insolvency, reorganization, liquidation, dissolution or similar
        relief under any present or future statute,
        law or regulation, such action shall not have been resolved in favor of the
        Maker or all orders
        or
        proceedings thereunder affecting the operations or the business of the Maker
        stayed, or if
        the
        stay of any such order or proceeding shall thereafter be set aside, or if,
        within sixty (60) days after the appointment without the consent or acquiescence
        of the Maker of any trustee, receiver
        or liquidator of the Maker or of all or any substantial part of the properties
        of the Maker, such
        appointment shall not have been vacated; or

      


      (f) Any
        event
        of default under the Security Documents shall have occurred and be continuing;
        or any of the Security Documents shall
        for
        any
        reason be revoked or invalidated,
        or otherwise cease to be in full force and effect, or the Maker shall contest
        in
        any manner
        the validity or enforceability thereof, or the Maker shall deny that it has
        any
        further liability
        or obligation thereunder; or the Security Documents for any reason, except
        to
        the extent permitted
        by the terms thereof, shall cease to create a valid
        and
        perfected lien in any of the Collateral
        purported to be covered thereby.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      9. Remedies.
        Upon the
        occurrence and continuance of any Event of Default, the Payee,
        at
        its option, may (i) by notice to the Maker, declare the unpaid principal
        amount
        of this Note, all interest accrued and unpaid hereon and all other amounts
        payable hereunder to be immediately
        due and payable, whereupon the unpaid principal amount of this Note, all
        such
interest
        and all such other amounts shall become immediately due and payable, without
        presentment, demand, protest or further notice of any kind, provided that
        upon
        the occurrence of an
        actual
        or deemed entry of an order for relief with respect to the Maker under the
        Bankruptcy Code,
        the
        result which would otherwise occur only upon giving of notice by the Payee
        to
        the Maker
        as
        specified above shall
        occur
        automatically, without the giving of any such notice; and (ii)
        whether or not the actions referred to in clause (i) have been taken, exercise
        any or all of the Payee's
        rights and remedies under the Security Documents and proceed to enforce all
        other rights
        and remedies available to the Payee under applicable law.

       

      10. Costs
        and Expenses,.
        The
        Maker agrees to pay on demand all the losses, costs, and expenses (including,
        without limitation, attorneys' fees and disbursements) which the Payee
incurs
        in
        connection with enforcement or attempted enforcement of this Note, or the
        protection or
        preservation of the Payee's rights under this Note, whether by judicial
        proceedings or otherwise. Such costs and expenses include, without limitation,
        those incurred in connection with
        any
        workout or refinancing, or any bankruptcy, insolvency, liquidation or similar
        proceedings.

       

      11.
        Savings
        Clause. Maker
        and
        the Payee intend to comply at all times with applicable
        usury laws. If at any time such laws would render usurious any amounts due
        under
this
        Note, then it is the Maker's and the Payee's express intention that the Maker
        not be required to
        pay
        interest on this Note at a rate in excess of the maximum lawful rate, that
        the
        provisions of this
        paragraph shall control over all other provisions of this Note which may
        be in
        apparent conflict
        hereunder, that such excess amount shall be immediately credited to the
        principal balance
        of this Note (or, if this Note has been fully paid, refunded by the Payee
        to the
        Maker), and
        the
        provisions hereof shall be immediately reformed and the amounts thereafter
        decreased, so
        as to
        comply with the then applicable usury law, but so as to permit the recovery
        of
        the fullest amount otherwise due under this Note. Any such crediting or refund
        shall not cure or waive any default by the Maker under this Note. The term
        "applicable law" as used in this Note shall mean the
        laws
        of the State of California as such laws now exist or may be changed or amended
        or come
        into
        effect in the future.

       

      12.
        Notice. All
        notices required or permitted hereunder shall be in writing and shall
be
        deemed
        effectively given: (i) upon personal delivery to the party to be notified,
        (ii)
        when sent by confirmed telex or facsimile if sent during normal business
        hours
        of the recipient, if not, then on the next business day; (iii) five (5) days
        after having been sent by registered or certified mail, return
        receipt requested, postage prepaid; or (iv) one day after deposit with a
        nationally recognized
        overnight courier, specifying next day delivery, with written verification
        of
        receipt. All
        communications shall be addressed to the Payee at the last address furnished
        to
        the Maker by the
        Payee
        in writing or, in the case of the Maker, at the principal offices of the
        Maker,
        or at such other
        address as any party or the Maker may designate by giving at least ten (10)
        days' advance written
        notice to all other parties.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      13. Governing
        Law. This
        Note
        is made in accordance with and shall be construed under
        the
        laws of the State of California, other than the conflicts of law principles
        thereof.

       

      14. Definitions. As
        used
        herein, the following terms shall have the following meanings:

       

      (a) "Indebtedness" means
        all
        liabilities for borrowed money.

       

      (b) "Interereditor
        Agreement" means
        that certain Intercereditor Agreement dated
        as
        of even date herewith by and among the Payee, the Senior Creditor and the
        Maker.

       

      (c) "Permitted
        Indebtedness" means
        (i)
        the Senior Credit Obligations, which obligations
        shall at all times be subject to the Intercreditor Agreement, (ii) Indebtedness
        of
        subsidiaries of the Maker to the Maker, (iii) other Indebtedness described
        on
Schedule 1
        hereto,
        and (iv) Indebtedness renewing, extending the maturity of or refunding or
        refinancing
        in whole or in part Indebtedness otherwise permitted hereunder.

       

      (d) "Senior
        Creditor" means
        (i)
        each of the holders of promissory notes (as amended
        from time to time, the "Senior
        Notes") issued
        pursuant to that certain Loan Agreement
        dated as of May 21, 2004 (as amended from time to time) by and among the
        Maker
        and the persons and entities named therein as "Lenders" (the "Loan
        Agreement") and
        (ii)
        M.U.S.A. Inc., doing business as DBA Money USA, in its capacity as collateral
        agent for the Lenders (the "Senior
        Collateral Agent").

       

      (e)
        "Senior
        Credit Documents" means
        the
        Loan Agreement, the Senior Notes and
        the
        Senior Security Agreement dated as of May 21, 2004 between the Maker and
        the
Senior
        Collateral Agent, all as may be from time to time amended.

       

      (f) "Senior
        Credit Obligations" means
        the
        obligations owed to the Senior Creditor
        pursuant to the Senior Credit Documents.

       

      IN
        WITNESS WHEREOF, the
        undersigned has caused this Promissory Note to be executed
        as of the date first set forth above.

       

      
        	
              	 	 
	 	Maker:
	 	 
	 	
                QUINTESSENCE
                  PHOTONICS CORPORATION

              
	 
 	 
 	 
 
	 	By:  	
                 /s/ George
                  Lintz           
                  

              
	 	Name:
                George Lintz
	 	
                Title:
                  CFO

              


         

      

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      



      SCHEDULE
        1

       

      Permitted
        Indebtedness

       

      1)    
         All
        Indebtedness reflected on the Maker's Balance Sheet dated as of June 30,
        2006.


       

      Schedule
        1