_______________________

     

    QUINTESSENCE
      PHOTONICS CORPORATION

     

    __________________

     

    LOAN
      AGREEMENT

    __________________

     

    August
      1,
      2005

     

    _______________________

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      TABLE
        OF CONTENTS

       

    

    
      
        	 	 	 	Page	 
	
                1.    Loan

              	 	 	
                1

              	 
	
                1.1

              	 	 	
                Loan

              	 	 	
                1

              	 
	
                1.2

              	 	 	
                Closing

              	 	 	
                1

              	 
	
                1.3

              	 	 	
                Security
                  Agreement

              	 	 	
                1

              	 
	
                2.    Representations,
                  Warranties, and Covenants of the Company

              	 	 	
                1

              	 
	
                2.1

              	 	 	
                Organization,
                  Good Standing and Qualification

              	 	 	
                1

              	 
	
                2.2

              	 	 	
                Authorization

              	 	 	
                2

              	 
	
                2.3

              	 	 	
                Capitalization;
                  Pre-emptive Rights

              	 	 	
                2

              	 
	
                2.4

              	 	 	
                Compliance
                  with Laws and Other Instruments

              	 	 	
                3

              	 
	
                2.5

              	 	 	
                No
                  Breach

              	 	 	
                4

              	 
	
                2.6

              	 	 	
                Governmental
                  Consents

              	 	 	
                4

              	 
	
                2.7

              	 	 	
                Litigation

              	 	 	
                4

              	 
	
                2.8

              	 	 	
                Absence
                  of Certain Changes

              	 	 	
                4

              	 
	
                2.9

              	 	 	
                Tangible
                  Assets and Equipment

              	 	 	
                6

              	 
	
                2.10

              	 	 	
                Indebtedness

              	 	 	
                6

              	 
	
                2.11

              	 	 	
                Liabilities

              	 	 	
                6

              	 
	
                2.12

              	 	 	
                No
                  Dissolution

              	 	 	
                6

              	 
	
                2.13

              	 	 	
                No
                  Material Omissions or Misstatements

              	 	 	
                6

              	 
	
                3.    Representations
                  and Warranties of the Lenders

              	 	 	
                6

              	 
	
                3.1

              	 	 	
                Authorization

              	 	 	
                6

              	 
	
                3.2

              	 	 	
                Purchase
                  Entirely for Own Account

              	 	 	
                7

              	 
	
                3.3

              	 	 	
                Receipt
                  of Information

              	 	 	
                7

              	 
	
                3.4

              	 	 	
                Investment
                  Experience

              	 	 	
                7

              	 
	
                3.5

              	 	 	
                Restricted
                  Securities

              	 	 	
                7

              	 
	
                3.6

              	 	 	
                Legends

              	 	 	
                7

              	 
	
                3.7

              	 	 	
                Accredited
                  Investor

              	 	 	
                8

              	 
	
                3.8

              	 	 	
                Waiver
                  of Right of First Offer

              	 	 	
                8

              	 
	
                3.9

              	 	 	
                Legal
                  Counsel

              	 	 	
                8

              	 
	
                3.10

              	 	 	
                Tax
                  Advisors

              	 	 	
                8

              	 


      

      
        	
                4.   
                  Conversion
                  of Loans

              	 	 	
                8

              	 


      

       

      
        
          
          

        

        
          -i-

          
            

          

        

        
          
          

        

      

      

        TABLE
          OF CONTENTS

        (continued)

         

      

      
        	 	 	 	Page	 
	
                5.  
                  Warrants

              	 	 	
                9

              	 
	
                5.1

              	 	 	
                Sale
                  of Warrants

              	 	 	
                9

              	 
	
                5.2

              	 	 	
                Additional
                  Warrants

              	 	 	
                9

              	 
	
                6.   
                  Covenants
                  of Each Lender And Company

              	 	 	
                9

              	 
	
                6.1

              	 	 	
                Limitations
                  on Transfer of Notes

              	 	 	
                9

              	 
	
                6.2

              	 	 	
                Investors
                  Rights’ Agreement

              	 	 	
                9

              	 
	
                6.3

              	 	 	
                Reservation
                  of Stock

              	 	 	
                9

              	 
	
                6.4

              	 	 	
                Designation
                  of Collateral Agent

              	 	 	
                9

              	 
	
                6.5

              	 	 	
                Expenses

              	 	 	
                10

              	 
	
                6.6

              	 	 	
                Reserve
                  Account

              	 	 	
                10

              	 
	
                6.7

              	 	 	
                Use
                  of Proceeds

              	 	 	
                10

              	 
	
                7.   
                  Events
                  of Default

              	 	 	
                10

              	 
	
                7.1

              	 	 	
                Payments

              	 	 	
                10

              	 
	
                7.2

              	 	 	
                Representations
                  and Warranties

              	 	 	
                10

              	 
	
                7.3

              	 	 	
                Institution
                  of Bankruptcy Proceedings

              	 	 	
                10

              	 
	
                7.4

              	 	 	
                Continuation
                  of Bankruptcy Proceedings

              	 	 	
                10

              	 
	
                7.5

              	 	 	
                Change
                  of Control

              	 	 	
                11

              	 
	
                8.   
                  Conditions
                  to Closing

              	 	 	
                11

              	 
	
                8.1

              	 	 	
                Conditions
                  Precedent to Obligations of Lenders.

              	 	 	
                11

              	 
	
                8.2

              	 	 	
                Conditions
                  Precedent to Obligations of the Company

              	 	 	
                12

              	 
	
                9.   
                  Miscellaneous

              	 	 	
                12

              	 
	
                9.1

              	 	 	
                Successors
                  and Assigns

              	 	 	
                12

              	 
	
                9.2

              	 	 	
                Governing
                  Law

              	 	 	
                13

              	 
	
                9.3

              	 	 	
                Counterparts

              	 	 	
                13

              	 
	
                9.4

              	 	 	
                Titles
                  and Subtitles

              	 	 	
                13

              	 
	
                9.5

              	 	 	
                Notices

              	 	 	
                13

              	 
	
                9.6

              	 	 	
                Entire
                  Agreement

              	 	 	
                13

              	 
	
                9.7

              	 	 	
                Amendment
                  and Waiver

              	 	 	
                13

              	 
	
                9.8

              	 	 	
                Severability

              	 	 	
                13

              	 


      

      
        	
                Schedule
                  A

              	
                
                  - 
                    Schedule of Secured Lenders

                

              


      

       

      
        
          
          

        

        
          -ii-

          
            

          

        

        
          
          

        

      

      

        TABLE
          OF CONTENTS

        (continued)


      

      
        	 	
                Page

              
	
                Schedule
                  B

              	
                - 
                  Schedule of Exceptions

              
	
                Exhibit
                  A

              	
                - 
                  Form of Promissory Note

              
	
                Exhibit
                  B

              	
                - 
                  Form of Security Agreement

              
	
                Exhibit
                  C

              	
                - 
                  Form of Warrant

              
	
                Exhibit
                  D

              	
                - 
                  Risk Factors

              


      

    

     

    
      
        
        

      

      
        -iii-

        
          

        

      

      
        
        

      

    

     

    LOAN
      AGREEMENT

     

    THIS
      LOAN
      AGREEMENT (the “Agreement”)
      is
      made as of the first day of August 2005, by and among QUINTESSENCE
      PHOTONICS CORPORATION,
      a
      Delaware corporation (the “Company”),
      and
      the persons and entities named on the Schedule of Lenders attached hereto
      as Schedule A
      (individually, a “Lender”
and
      collectively, the “Lenders”).

     

    THE
      PARTIES HEREBY AGREE AS FOLLOWS:

     

    1.  Loan.

     

    1.1  Loan.
      Subject
      to the terms and conditions of this Agreement and pursuant to the promissory
      notes in the form attached hereto as Exhibit A
      (each a
“Note”
and
      collectively, the “Notes”),
      each
      Lender agrees, severally, to lend to the Company up to the principal amount
      set
      forth opposite such Lender’s name on Schedule A
      hereto
      (each a “Loan”
and
      collectively, the “Loans”)
      up to
      an aggregate principal amount of $3,000,000 (the “Maximum
      Amount”).

     

    1.2  Closing.
      

     

    (a)  The
      Company may, in its discretion, have one or more closings (hereinafter referred
      to each as a “Closing”)
      to
      borrow funds under this Agreement at anytime, provided that the aggregate
      principal amount of all Loans borrowed under this Agreement does not exceed
      the
      Maximum Amount. Any such Closing of Loans shall take place at the offices of
      M.U.S.A Inc. doing business as DBA Money USA (“MUSA”),
      11157
      West Washington Blvd., Culver City, California 90232, at such time and place
      as
      the Company may determine. 

     

    (b)  At
      each
      Closing, (1) the Company shall deliver to each Lender a Note representing the
      principal amount of the Loan set forth opposite such Lender’s name on
Schedule A
      hereto
      and each of the other items set forth in Section
      8.1,
      and (2)
      each Lender shall cause to be delivered to the Company a wire transfer or check
      payable to the Company’s order in the principal amount of the Loan set forth
      opposite such Lender’s name on Schedule
      A
      hereto
      and each of the other items set forth in Section
      8.2.

     

    1.3  Security
      Agreement.
      

     

    The
      Loans
      made to the Company by the Lenders and the indebtedness evidenced by the Notes
      shall be secured pursuant to the terms of a Security Agreement in substantially
      the form attached hereto as Exhibit B
      (the
“Security
      Agreement”).

     

    2.  Representations,
      Warranties, and Covenants of the Company.
      Except
      as set forth on the Schedule of Exceptions attached hereto as Schedule
      B,
      the
      Company hereby represents and warrants to each Lender that:

     

    2.1  Organization,
      Good Standing and Qualification.
      The
      Company 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. The Company is duly qualified to transact business and is in good
      standing in each jurisdiction in which the failure to so qualify would have
      a
      material adverse effect on its business or properties.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    2.2  Authorization.
      All
      corporate actions on the part of the Company, its officers, directors and
      stockholders necessary for the authorization, execution and delivery of this
      Agreement, the performance of all obligations of the Company hereunder and
      the
      authorization, issuance and delivery of the Notes, the Warrants (as defined
      below) and the Security Agreement have been taken. This Agreement constitutes,
      and the Notes, Warrants and Security Agreement when executed and delivered
      in
      accordance with their terms will constitute, valid and legally binding
      obligations of the Company, enforceable in accordance with their respective
      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.

     

    2.3  Capitalization;
      Pre-emptive Rights.
      

     

    (a)  Immediately
      prior to the Closing, the authorized capital stock of the Company consists
      of
      Fifty Million (50,000,000) shares of Common Stock, [Five Million Two Hundred
      Fifty Six Thousand One Hundred Fifty Six (5,256,156)] shares of which are issued
      and outstanding; Three Million Two Hundred Twenty Two Thousand Two Hundred
      Three
      (3,222,203) shares of Series A Preferred Stock, Three Million One Hundred
      Seventy Two Thousand Two Hundred Three (3,172,203) shares of which are issued
      and outstanding; Two Million Six Hundred Seventy Six Thousand Nine Hundred
      Twenty Two (2,676,922) shares of Series B Preferred Stock, Two Million Five
      Hundred Twenty Five Thousand Four Hundred Sixty Eight (2,525,468) shares of
      which are issued and outstanding; and Two Million (2,000,000) shares of Series
      C
      Preferred Stock, One Million Five Hundred Forty Seven Thousand Nine Hundred
      Fifty Seven (1,547,957) shares of which are issued and outstanding. All of
      the
      shares of the Company’s Series A Preferred Stock, Series B Preferred Stock,
      Series C Preferred Stock and Common Stock outstanding immediately prior to
      the
      Closing (i) have been duly and validly authorized and issued, fully paid and
      non-assessable, (ii) have been issued in compliance with all preemptive rights,
      rights of first refusal or similar commitments, and (iii) have been issued
      in
      compliance with applicable state and federal securities laws. 

     

    (b)  Except
      (i) as set forth on Schedules
      2.3(b)
      of the
      Schedule of Exceptions or in this Agreement, (ii) as may be granted pursuant
      to
      this Agreement, the Notes, the Warrants (as defined below), and the Second
      Amended and Restated Investors Rights Agreement, dated October 2004 (the
“Second
      Amended IRA”),
      (iii)
      the conversion privileges of the Preferred Stock, (iv) warrants to acquire
      up to
      Two Million Four Hundred Thirty Seven Thousand Five Hundred (2,437,500) shares
      of Common Stock issued by the Company in connection with its issuance of senior
      secured promissory notes (the “Senior
      Notes”)
      under
      that certain Loan Agreement, dated May 21, 2004, by and among the Company and
      the holders identified therein (the “Senior
      Loan Agreement”),
      (v)
      warrants to acquire up to Three Hundred Twenty Four Thousand Nine Hundred Twenty
      Five (324,925) shares of Common Stock issued to finders in connection with
      the
      Company’s issuance of the Senior Notes, (vi) warrants to acquire up to Eight
      Hundred Forty Thousand (840,000) shares of Common Stock issued by the Company
      to
      certain holders of Senior Notes in connection with the restructuring of the
      terms of the Senior Notes, and (vii) outstanding options to purchase One Million
      Eight Hundred Ninety One Thousand Seven Hundred Fifty (1,891,750) shares of
      Common Stock granted pursuant to the Company’s 2001 Stock Option Plan (the
“Option
      Plan”)
      and an
      additional Six Hundred Sixty Three Thousand Five Hundred Forty Five (663,545)
      shares of Common Stock reserved for issuance thereunder, there are no
      outstanding options, warrants, rights (including conversion or preemptive rights
      or rights of first refusal or similar commitments), proxy or stockholder
      agreements or any other agreements of any kind for the purchase or acquisition
      from the Company of any of its securities. No outstanding option, warrant or
      similar instrument or agreement provides for acceleration of vesting in the
      event of a merger, acquisition, change of control, sale of assets or other
      such
      event. 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (c)  The
      issuance of the Notes (including the shares issuable upon conversion of the
      Notes) and the Warrants (including the shares issuable upon exercise of the
      Warrants and the shares issuable upon conversion of the shares issuable upon
      exercise of the Warrants) (collectively, the “Securities”)
      pursuant to the provisions of this Agreement will not violate any preemptive
      rights or rights of first refusal granted by the Company (except for such rights
      as may have been exercised or waived), and will be free of any liens or
      encumbrances, other than any liens or encumbrances created by or imposed upon
      the holders through no action of the Company; provided,
      however,
      that
      the Securities may be subject to restrictions on transfer under state and/or
      federal securities laws as set forth herein or as otherwise required by such
      laws at the time the transfer is proposed. The shares issuable upon conversion
      of the Notes and exercise of the Warrants shall, at the time of such issuance,
      be duly authorized, validly, fully paid and non-assessable.

     

    2.4  Compliance
      with Laws and Other Instruments.
      

     

    (a)  The
      Company is not, and to its knowledge will not be, in violation or default of
      (i)
      any term of its Third Amended and Restated Certificate of Incorporation (the
      “Restated
      Certificate”)
      or
      Bylaws of the Company or (ii) any judgment, decree, order or writ of any court,
      arbitrator or governmental or regulatory body against or binding upon the
      Company or upon the securities, properties or business of the Company. Except
      for such violations or defaults that would not materially and adversely affect
      the business, assets, liabilities, financial condition, operations or prospects
      of the Company, the Company is not, and to its knowledge will not be, in
      violation of default of (i) any provision of any material mortgage, indenture,
      contract, agreement, lease, instrument or contract to which it is a party or
      to
      its knowledge by which it is bound or by which its business, assets or
      properties may be affected or secured or (ii) any applicable law, statute,
      rule,
      regulation, order or restriction of any government or any instrumentality or
      agency thereof in respect of the conduct of its business or the ownership of
      its
      properties.

     

    (b)  No
      governmental orders, permissions, consents, approvals or authorizations are
      required to be obtained and no registrations or declarations are required to
      be
      filed in connection with the execution and delivery of this Agreement, the
      issuance of Notes and Warrants and the consummation and performance by the
      Company of the transactions contemplated hereby, except such as has been duly
      and validly obtained or filed, or with respect to any filings that must be
      made
      after the Closing, as will be filed in a timely manner.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    2.5  No
      Breach.
      The
      execution, delivery and performance by the Company of this Agreement, and the
      consummation of the transactions contemplated hereby, including the issuance
      and
      delivery of the Notes and Warrants, do not and will not (i) conflict with or
      result in a violation, breach or default of (A) any term of the Restated
      Certificate or Bylaws of the Company, (B) any provision of any material
      mortgage, indenture, contract, agreement, instrument or contract to which the
      Company is party or to its knowledge by which it is bound, (C) any judgment,
      decree, order or writ of any court, arbitrator or governmental or regulatory
      body against or binding upon the Company or upon the securities, properties
      or
      business of the Company, or (D) any applicable law, statute, rule, regulation,
      order or restriction of any government or any instrumentality or agency thereof
      in respect of the conduct of its business or the ownership of its properties,
      or
      (ii) other than as contemplated by the Security Agreement (as defined below),
      result in the creation of any mortgage, pledge, lien, encumbrance or charge
      upon
      any of the properties or assets of the Company or the suspension, revocation,
      impairment, forfeiture or non-renewal of any material permit, license,
      authorization or approval applicable to the Company, its business or operations
      or any of its assets or properties.

     

    2.6  Governmental
      Consents.
      Based
      in part upon the representations and warranties of the Lenders in Section 3
      and on
      each Lender counterpart signature page, no consent, approval, order or
      authorization of, or registration, qualification, designation, declaration
      or
      filing with, any federal, state or local governmental authority on the part
      of
      the Company is required in connection with the consummation of the transactions
      contemplated by this Agreement, except such post-closing filings as may be
      required under applicable federal and state securities laws, which will be
      timely filed within the applicable period therefor.

     

    2.7  Litigation.
      There
      is no action, suit, proceeding or investigation (“Proceeding”)
      pending or, to the Company’s knowledge, currently threatened against the Company
      or currently threatened against any of its directors, officers or employees,
      that questions the validity of this Agreement, the Notes, Warrants or Security
      Agreement (collectively, the “Transaction
      Documents”),
      the
      right of the Company to execute and deliver any such documents, or to consummate
      the transactions contemplated thereby, or which might result, either
      individually or in the aggregate, in any material adverse change in the assets,
      financial condition, affairs or prospects of the Company, or any change in
      the
      current equity ownership of the Company, nor is the Company aware that there
      is
      any basis for, or any facts or circumstances that could give rise to, any of
      the
      foregoing. The Company is not a party, nor is it subject to, the provisions
      of
      any order, writ, injunction, judgment or decree of any court or government
      agency or instrumentality. There is no action, suit, proceeding or investigation
      by the Company currently pending or which the Company intends to initiate.
      

     

    2.8  Absence
      of Certain Changes.
      Except
      as set forth on Schedule
      2.8
      of the
      Schedule of Exceptions, since December 31, 2004, the business and operations
      of
      the Company have been conducted in the ordinary course consistent with past
      practice, and there has not been:

     

    (a)  Any
      resignation or termination of any key officers of the Company;

     

    (b)  Any
      damage, destruction or loss, whether or not covered by insurance, which has
      had
      or is reasonably expected to materially and adversely affecting the properties,
      business or prospects or financial condition of the Company;

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    (c)  Any
      declaration, setting aside, or payment of any dividend or other distribution
      of
      the assets of the Company;

     

    (d)  Any
      debt,
      obligation or liability incurred, assumed or guaranteed by the Company, except
      those for immaterial amounts and for current liabilities incurred
      in the ordinary course of business;

     

    (e)  Any
      sale,
      assignment license (other than licenses to customers in the ordinary course
      of
      the Company’s business) or transfer of any of the Company’s Intellectual
      Property Rights (as defined below);

     

    (f)  Any
      change in any material agreement or arrangements to which the Company is a
      party
      or by which it is bound which could reasonably be expected to materially and
      adversely affect the business, assets, liabilities, financial condition,
      operations or prospects of the Company, including compensation agreements with
      the Company’s employees;

     

    (g)  Any
      joint
      venture, partnership or other such contract or agreement;

     

    (h)  Any
      Significant IP Contract (as defined below);

     

    (i)  Any
      other
      event or condition of any character that, either individually or cumulatively,
      has materially and adversely affected the business, assets, liabilities,
      financial condition, operations or prospects of the Company or, to the Company’s
      knowledge, could reasonably be expected to materially and adversely affect
      the
      business, assets, liabilities, financial condition, operation or prospects
      of
      the Company; or

     

    (j)  Any
      agreement or commitment by the Company to do any of the things described in
      this
Section
      2.8.

     

    For
      purposes of this Agreement, “Intellectual
      Property Rights”
means
      all (i) patents, patent applications, patent disclosures and inventions, (ii)
      trademarks, service marks, trade dress, trade names, logos and corporate names
      and registrations and applications for registration thereof together with all
      of
      the goodwill associated therewith, (iii) copyrights (registered and
      unregistered) and copyrightable works and registrations and applications for
      registration thereof, (iv) mask works and registrations and applications for
      registration thereof, (v) computer software, data, data bases and documentation
      thereof, (vi) trade secrets and other confidential information (including,
      without limitation, ideas, formulas, compositions, inventions (whether
      patentable or unpatentable and whether or not reduced to practice), know-how,
      manufacturing and production processes and techniques, research and development
      information, drawings, specifications, designs, plans, proposals, technical
      data, financial and marketing plans and customer and supplier lists and
      information), (vii) other intellectual property rights and (viii) copies and
      tangible embodiments thereof (in whatever form or medium). For purposes of
      this
      Agreement, “Significant
      IP Contract”
means
      any agreement or arrangement providing for (1) the exclusive licensing of all
      or
      any portion of the Company’s present or future core Intellectual Property
      Rights, (2) technology sharing, co-development or other such agreement or
      arrangement with respect to the Company’s present or future core Intellectual
      Property Rights, (3) non-competition, restrictive covenant or similar agreement
      or arrangement, (4) or right of first refusal or negotiation or similar
      agreement or arrangement with respect to the Company’s business, assets or core
      Intellectual Property Rights. 

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    2.9  Tangible
      Assets and Equipment.
      The
      Company owns outright, leases, or otherwise has the right to use as required
      in
      its business, all of its tangible assets and equipment, and has good and
      marketable title to all such assets and equipment that are owned outright,
      free
      and clear of any liens or encumbrances, except for (a) statutory liens for
      the
      payment of current taxes that are not yet delinquent, and (b) encumbrances
      and
      security interests that arise in the ordinary course of business and do not
      in
      any material respect affect the properties and assets of the Company. With
      respect to the property and assets it leases, the Company is in compliance
      with
      such leases in all material respects and there exists no material default or
      other occurrence or condition that could result in termination of any of such
      leases.

     

    2.10  Indebtedness.
      Except
      for transactions contemplated by this Agreement and the indebtedness,
      liabilities and other obligations of the Company due on the Senior Notes issued
      pursuant to Senior Loan Agreement, the Company is not a borrower or guarantor
      under any other loan instrument nor does the Company have any secured
      indebtedness for money borrowed or credit extended to them.

     

    2.11  Liabilities.
      Schedule
      2.11
      of the
      Schedule of Exceptions sets forth a complete list of all of the Company’s
      Liabilities (as defined below) as of June 30, 2005. For purposes of this
Section
      2.11
      only,
“Liabilities”
shall
      mean all debts, liabilities and obligations, whether accrued or fixed, absolute
      or contingent, matured or unmatured or determined or determinable, except for
      (a) accounts payable, (b) taxes, (c) wages and (d) any other liabilities
      incurred in the ordinary course of business and do not individually exceed
      $100,000.

     

    2.12  No
      Dissolution.
      The
      Company has not taken any corporate action, nor have any other steps been taken,
      either by the Company or by any third party, for the winding up, dissolution,
      administration, reorganization of the Company, or for the appointment of a
      receiver, liquidator, administrator or similar officer (in each case, including
      on a temporary basis) over any or all of the Company’s assets or
      revenues.

     

    2.13  No
      Material Omissions or Misstatements.
      None of
      the representations or warranties of the Company contained in this Agreement
      (including any information disclosed in the Schedules hereto) or any of the
      Transaction Documents or any certificate made or delivered in connection
      herewith, is false or misleading in any material respect or omits to state
      a
      material fact necessary to make the statements, in light of the circumstances
      under which they were made, contained herein or therein not misleading in any
      material respect, nor, to the Company’s knowledge, is there any material fact
      that has not been disclosed to the Lenders that would make such statements
      misleading or that would indicate that a material adverse effect on its business
      or properties is reasonably likely. 

     

    3.  Representations
      and Warranties of the Lenders.
      Each
      Lender represents and warrants that:

     

    3.1  Authorization.
      Such
      Lender has full capacity, power and authority to enter into and perform this
      Agreement, and all actions necessary to authorize the execution, delivery and
      performance of this Agreement has been taken. This Agreement constitutes a
      valid
      and legally binding obligation of such Lender, enforceable in accordance with
      its respective terms, except as the same may be limited by bankruptcy,
      insolvency, moratorium, and other laws of general application affecting the
      enforcement of creditors’ rights generally.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    3.2  Purchase
      Entirely for Own Account.
      The
      Securities will be acquired for investment for such Lender’s own account and the
      account of such Lender’s Affiliates, not as a nominee or agent, and not with a
      view to the resale or distribution of any part thereof (except to such Lender’s
      Affiliates), and that such Lender has no present intention of selling, granting
      any participation in, or otherwise distributing the same except to such Lender’s
      Affiliates. By executing this Agreement, such Lender further represents that
      such Lender does not have any contract, undertaking, agreement or arrangement
      with any person to sell, transfer or grant participations, to such person or
      to
      any third person, with respect to any of the Securities other than such
      contracts, undertakings, agreements or arrangements with such Lender’s
      Affiliates. For purposes of this Agreement, the term “Affiliate” shall have the
      meaning ascribed thereto under Rule 405 of the Securities Act of 1933, as
      amended (the “Securities
      Act”).

     

    3.3  Receipt
      of Information.
      Such
      Lender believes it, he or she has received or has access to all the information
      necessary or appropriate for deciding whether to acquire the Securities. Such
      Lender further represents that such Lender has had an opportunity to ask
      questions and receive answers from the Company regarding the terms and
      conditions of the offering of the Securities. Such Lender also represents that
      such Lender has read and understands the risk factors attached hereto as
Exhibit
      D.

     

    3.4  Investment
      Experience.
      Such
      Lender is an investor in securities of companies in the development stage and
      acknowledges that such Lender is able to fend for itself, herself or himself,
      can bear the economic risk of its, his or her investment and has such knowledge
      and experience in financial or business matters that such Lender is capable
      of
      evaluating the merits and risks of the investment in the Securities. If other
      than an individual, such Lender also represents it has not been organized for
      the purpose of acquiring the Securities. Such Lender further represents that
      the
      information provided on Lender’s counterpart signature page is true and
      accurate.

     

    3.5  Restricted
      Securities.
      Such
      Lender understands that the Securities are characterized as “restricted
      securities” under the federal securities laws inasmuch as they are being
      acquired from the Company in a transaction not involving a public offering
      and
      that under such laws and applicable regulations such securities may be resold
      without registration under the Securities Act only in certain limited
      circumstances. In connection therewith, each lender represents that it is
      familiar with Rule 144 under the Securities Act, as presently in effect, and
      understands the resale limitations imposed thereby and by the Securities
      Act.

     

    3.6  Legends.
      To the
      extent applicable, each certificate or other document evidencing any of the
      Securities shall be endorsed with the legends set forth below and such other
      legends as required by any investors’ rights agreement or similar agreement, and
      each Lender covenants that, except to the extent such restrictions are waived
      by
      the Company, such Lender shall not transfer the Securities represented by any
      such certificate without complying with the restrictions on transfer described
      in the legends endorsed on such certificate:

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    (a)  “THE
      SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
      ACT
      OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR
      HYPOTHECATED ABSENT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR
      COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT, OR UNLESS THE COMPANY
      HAS
      RECEIVED AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL,
      THAT SUCH REGISTRATION IS NOT REQUIRED.”

     

    (b)  Any
      legends required by the laws of the State of California or other applicable
      state laws.

     

    3.7  Accredited
      Investor.
      Each
      Lender (and the Affiliates of such Lender who acquire the Securities) is an
      “accredited investor” as such term is defined in Rule 501(a) of Regulation D of
      the Securities Act.

     

    3.8  Waiver
      of Right of First Offer.
      To the
      extent the right of first offer under Section 3 of that certain Second Amended
      and Restated Investors Rights Agreement, dated October 2004, by and among the
      Company and the signatories thereto (the “ROFR”)
      is
      applicable to the transactions contemplated by this Agreement (including,
      without limitation, the issuance of the Securities), by executing this
      Agreement, each Lender agrees to waive, and does hereby waive, the application
      of the ROFR to the transactions contemplated by this Agreement (the
“Waiver”).
      Each
      Lender covenants and agrees to execute and deliver such other documents or
      instruments as reasonably requested by the Company in order to carry out the
      Waiver.

     

    3.9  Legal
      Counsel.
      Each
      Lender acknowledges that such Lender has had the opportunity to review this
      Agreement, the exhibits and the schedules attached hereto and the transactions
      contemplated by this Agreement with such Lender’s own legal counsel. Each such
      Lender is relying solely on such Lender’s legal counsel and not on any
      statements or representations of the Company or any of the Company’s agents,
      including Morrison & Foerster LLP for legal advice with respect to the
      transactions contemplated by this Agreement.

     

    3.10  Tax
      Advisors.
      Each
      Lender has reviewed with such Lender’s own tax advisors the federal, state and
      local tax consequences of this investment, where applicable, and the
      transactions contemplated by this Agreement. Each such Lender is relying solely
      on such advisors and not on any statements or representations of the Company
      or
      any of its agents and understands that each such Lender (and not the Company)
      shall be responsible for such Lender’s own tax liability that may arise as a
      result of this investment or the transactions contemplated by this
      Agreement.

     

    4.  Conversion
      of Loans.

     

    4.1 Optional
      Conversion.
      So long
      as a Lender’s Loan remains outstanding, the entire outstanding principal and
      accrued and unpaid interest on such Lender’s Loan may be converted (in the sole
      discretion of the Lender as set forth below) into shares of the Company’s Common
      Stock at any time upon the election of such Lender (an “Optional
      Conversion”).
      The
      rights, preferences and privileges of the Common Stock shall be as set forth
      in
      the Restated Certificate. The number of shares of Common Stock into which such
      Loan may be converted is determined by dividing the outstanding principal amount
      plus accrued and unpaid interest due on such Loan by the Common Stock Conversion
      Price. The initial Common Stock Conversion Price shall be $3.75, subject to
      adjustment in accordance with the terms and conditions of the Note.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    5.  Warrants.

     

    5.1  Sale
      of Warrants.
      The
      Company hereby agrees to sell to each Lender, and each Lender hereby agrees
      to
      purchase from the Company a warrant, in substantially the form attached hereto
      as Exhibit
      C
      (a
“Warrant”),
      to
      purchase Twenty Five Thousand (25,000) shares of Common Stock for each $100,000
      loaned to the Company. 

     

    5.2  Additional
      Warrants.
      The
      Company may issue Warrants to acquire up to an additional Two Hundred Fifty
      Thousand (250,000) shares of Common Stock to pay for costs, fees and expenses
      incurred by the Company in connection with the transactions contemplated by
      this
      Agreement. 

     

    6.  Covenants
      of Each Lender And Company.
      

     

    6.1  Limitations
      on Transfer of Notes.
      Each
      Lender covenants and agrees not to transfer the Notes received pursuant to
      this
      Agreement, except to other holders of capital stock of the Company or Affiliates
      of such Lender. Each person to whom the Securities are transferred must, as
      a
      condition precedent to the validity of such transfer, acknowledge in writing
      to
      the Company that such person is bound by the provisions of this
      Agreement.

     

    6.2  Investors
      Rights’ Agreement.
      Upon
      exercise of the Warrants or upon conversion of the Loans, the Lenders shall
      be
      entitled to the piggy-back registration rights set forth under Section 1.3
      of
      the Second Restated IRA (the “Piggy-back
      Registration Rights”),
      but
      shall not be entitled to any demand registration, Form S-3 registration, or
      information and board, preemptive or any other investor rights set forth under
      Second Restated IRA. The Piggy-back Registration Rights shall be subject to
      the
      applicable terms and conditions set forth under the Second Restated IRA,
      including, but not limited to, the market stand-off agreement provisions of
      Section 1.10 thereunder, which terms and conditions are incorporated herein
      by
      reference.

     

    6.3  Reservation
      of Stock.
      The
      Company covenants that so long as any Notes and Warrants are outstanding, the
      Company will reserve from its authorized and unissued capital stock a sufficient
      number of shares to provide for the issuance of the Securities upon the
      conversion of the Notes and exercise of the Warrants and, from time to time,
      will take all steps necessary to amend its Restated Certificate to provide
      sufficient reserves of shares of common stock issuable upon the conversion
      of
      the Notes and exercise of the Warrants. 

     

    6.4  Designation
      of Collateral Agent.
      Each
      Lender irrevocably appoints and authorizes MUSA to act as its collateral agent
      (the “Collateral
      Agent”)
      under
      the Security Agreement, and authorizes the Collateral Agent to take such action
      on such Lender’s behalf and to exercise such powers under the Security Agreement
      and any other documents as are delegated to the Collateral Agent by the terms
      hereof and thereof, together with all such powers as are reasonably incidental
      thereto, and Collateral Agent hereby accepts such appointment.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    6.5  Expenses.
      Each
      party shall pay all costs and expenses, including the payment of any finders’
fees or commissions, it incurs with respect to the Closing of the transaction
      contemplated by this Agreement. 

     

    6.6  Reserve
      Account.
      The
      Company shall set up and maintain a reserve account in the amount of 1% of
      Loans
      (the “Reserve
      Account”).
      The
      Reserve Account shall be maintained by MUSA or such other successor as the
      Collateral Agent and the Company shall mutually agree. The Reserve Account
      shall
      be used to pay the last payment of principal and accrued and unpaid interest
      on
      the Loans or in an Event of Default, to retain legal counsel for the Lenders.
      

     

    6.7  Use
      of
      Proceeds.
      The
      Company may use the proceeds from the issuance of the Notes and Warrants for
      capital expenditures, working capital and general corporate purposes,
      repurchases of its capital stock and to repay debt, and up to 10% of the gross
      proceeds may be used to pay for costs, discounts and fees incurred by the
      Company in connection with the transactions contemplated hereby.

     

    7.  Events
      of Default.
      Upon
      the occurrence of any of the following specified events (each an “Event
      of Default”),
      unless such Event of Default shall have been waived or cured prior to the
      exercise of the remedies set forth below:

     

    7.1  Payments.
      Any
      default by the Company in the payment when due of any principal and unpaid
      accrued interest under any Note if such default is not cured by the Company
      within thirty (30) days after the holder of such Note has given the Company
      written notice of such default;

     

    7.2  Representations
      and Warranties.
      Any
      representation or warranty made by the Company 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 any Lender provides the Company with written notice of such
      breach;

     

    7.3  Institution
      of Bankruptcy Proceedings.
      The
      institution by the Company 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 federal Bankruptcy Act, 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 Company, 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 Company in furtherance of any such action;
      

     

    7.4  Continuation
      of Bankruptcy Proceedings.
      If,
      within sixty (60) days after the commencement of an action against the Company
      (and service of process in connection therewith on the Company) 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 Company or all orders or proceedings
      thereunder affecting the operations or the business of the Company 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 Company of any trustee, receiver or liquidator of the Company or of
      all
      or any substantial part of the properties of the Company, such appointment
      shall
      not have been vacated; or

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    7.5  Change
      of Control.
      The
      consummation of any transaction or series of related transactions that results
      in the holders of record of the Company’s capital stock immediately prior to the
      transaction or transactions holding less than fifty percent (50%) of the voting
      power of the Company immediately after the transaction or transactions,
      including the acquisition of the Company by another entity and any
      reorganization, merger, consolidation or share exchange, or which results in
      the
      sale of all or substantially all of the assets of the Company; provided,
      however, that a Change of Control shall not be deemed to occur if a Successor
      succeeds to the business of the Company. As used herein, “Successor”
means
      (i) any entity that acquires all or substantially all of the assets or stock
      of
      the Company, or that results from the merger of, reorganization of, or
      consolidation with the Company, or otherwise succeeds to substantially all
      of
      the business of the Company, or (ii) in the case of a reverse merger in which
      the Company is the surviving entity, the Company; provided that the holders
      of
      record of the Company’s capital stock, in the aggregate, immediately prior to
      any of the foregoing transaction or series of related transactions shall possess
      at least 50% of the voting stock of such entity (or, in the case of a reverse
      merger, the Company) immediately after the transaction or
      transactions.

     

    Then,
      and
      in any such event, and at any time thereafter, if any events shall be
      continuing, the Lenders holding at least 50% of the aggregate principal amount
      of the Notes then outstanding shall have the option to declare the principal
      amount of the Notes, and all accrued and unpaid interest thereon, to be
      immediately due and payable upon written notice to the Company.

     

    8.  Conditions
      to Closing

     

    8.1  Conditions
      Precedent to Obligations of Lenders.
      The
      obligations of each Lender hereunder at the Closing are subject to the
      fulfillment or written waiver on or prior to the Closing of the following
      conditions:

     

    (a)  Representations
      and Warranties.
      The
      representations and warranties of the Company contained in Section
      2
      shall in
      all material respects be true on and correct when made and as of the date of
      Closing, with the same effect as though such representations and warranties
      had
      been made on and as of the date of Closing (or the date to which it relates
      in
      the case of any representation or warranty which specifically relates to an
      earlier date).

     

    (b)  Covenants.
      The
      Company shall have complied with all covenants, agreements and conditions
      contained in this Agreement required to be performed by the Company on or prior
      to the date of Closing.

     

    (c)  No
      Proceedings.
      No
      Proceedings by or before any court, agency or other governmental body shall
      be
      have been asserted, instituted or threatened by any party to restrain, prohibit
      or invalidate the transactions contemplated by this Agreement.

     

    (d)  Security
      Agreement.
      The
      Security Agreement shall have been executed by the Company and delivered to
      the
      Lenders.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    (e)  Notes.
      A Note
      in the principal amount set forth across from each Lenders’ name on Schedule
      A
      shall
      have been executed by the Company and delivered to such Lender.

     

    (f)  Warrants.
      A
      Warrant shall have been executed by the Company and delivered to each
      Lender.

     

    (g)  UCC-1.
      The
      Collateral Agent shall have received a completed financing statement on Form
      UCC-1 duly executed by Company, and such other instruments, acts, pledges,
      assignments and transfers, as may reasonably be requested by the Collateral
      Agent, to perfect and continue the Collateral Agent’s security interest in the
      assets and properties of the Company pursuant to the Security Agreement.


     

    8.2  Conditions
      Precedent to Obligations of the Company.
      The
      obligations of the Company hereunder at the Closing are subject to the
      fulfillment or written waiver on or prior to the Closing of the following
      conditions:

     

    (a)  Representations
      and Warranties.
      The
      representations and warranties of the Lenders contained in Section
      3
      shall in
      all material respects be true on and correct when made and as of the date of
      Closing, with the same effect as though such representations and warranties
      had
      been made on and as of the date of Closing (or the date to which it relates
      in
      the case of any representation or warranty which specifically relates to an
      earlier date).

     

    (b)  Covenants.
      The
      Lenders shall have complied with all covenants, agreements and conditions
      contained in this Agreement required to be performed by the Lenders on or prior
      to the date of Closing.

     

    (c)  No
      Proceedings.
      No
      Proceedings by or before any court, agency or other governmental body shall
      be
      have been asserted, instituted or threatened by any party to restrain, prohibit
      or invalidate the transactions contemplated by this Agreement.

     

    (d)  Security
      Agreement.
      The
      Security Agreement shall have been executed by the Lenders and delivered to
      the
      Company.

     

    (e)  Deposit
      of Funds.
      Each
      Lender shall cause to be delivered to the Company a wire transfer or check
      payable to the Company’s order in the principal amount of the Loan set forth
      opposite such Lender’s name on Schedule
      A
      hereto.

     

    (f)  Warrants.
      Each
      Lender shall have delivered to the Company (1) a counterpart signature to the
      Warrant(s) and (2) the purchase price for the Warrant(s) as set forth in
Section
      5.1.

     

    9.  Miscellaneous.

     

    9.1  Successors
      and Assigns.
      Except
      as otherwise provided herein, the terms and conditions of this Agreement shall
      inure to the benefit of and be binding upon the respective successors and
      assigns of the parties (including transferees of any securities and any
      Successor of the Company). Nothing in this Agreement, express or implied, is
      intended to confer upon any party other than the parties hereto or their
      respective successors and assigns any rights, remedies, obligations, or
      liabilities under or by reason of this Agreement, except as expressly provided
      in this Agreement.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    9.2  Governing
      Law.
      This
      Agreement shall be governed by and construed under the laws of the State of
      California as applied to agreements among California residents, entered into
      and
      to be performed entirely within California.

     

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

     

    9.4  Titles
      and Subtitles.
      The
      titles and subtitles used in this Agreement are used for convenience only and
      are not to be considered in construing or interpreting this
      Agreement.

     

    9.5  Notices.
      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 sent to the
      address as set forth on the signature page or Schedule
      A
      hereof
      or at such other address as such party may designate by giving at least ten
      (10)
      days’ advance written notice to the other parties hereto.

     

    9.6  Entire
      Agreement.
      This
      Agreement and the other documents delivered pursuant hereto constitute the
      entire agreement among the parties and no party shall be liable or bound to
      any
      other party in any manner by any warranties, representations, or covenants
      except as specifically set forth herein or therein.

     

    9.7  Amendment
      and Waiver.
      Any
      term of this Agreement or any of the Transaction Documents may be amended and
      the observance of any term of this Agreement or the Transaction Documents may
      be
      waived (either generally or in a particular instance and either retroactively
      or
      prospectively), with the written consent of the Company and the holders of
      not
      less than 50% in aggregate principal amount of the Notes then outstanding.
      Any
      waiver or amendment effected in accordance with this section shall be binding
      upon each holder of any Securities purchased under this Agreement at the time
      outstanding, each future holder of all such Securities, and the
      Company.

     

    9.8  Severability.
      If one
      or more provisions of this Agreement are held to be unenforceable under
      applicable law, such provision shall be excluded from this Agreement and the
      balance of the Agreement shall be interpreted as if such provision were so
      excluded and shall be enforceable in accordance with its terms.

     

     

    [SIGNATURE
      PAGE FOLLOWS]

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     


    IN
      WITNESS WHEREOF,
      the
      parties have executed this Loan Agreement as of the date first above
      written.

     

    
      	“COMPANY” 	“LENDERS”
	 	 
	
              Quintessence
                Photonics Corporation

            	
              [Name]

            
	 	 
	By: __________________________	By: __________________________
	Name: ________________________	Name:
              ________________________
	
              Title:
                _________________________

            	Title:
              _________________________


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      A

    


    SCHEDULE
      OF SECURED LENDERS

     

    
      
        	Secured
                Lender  	
                Principal
                  Amount of
                  Notes

              


      

    

     

    
      
        
        

      

      
        A-1

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      B

    


    SCHEDULE
      OF EXCEPTIONS

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

    Form
      of Promissory Note

     

    THE
      SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
      ACT
      OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR
      HYPOTHECATED ABSENT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR
      COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT, OR UNLESS THE COMPANY
      HAS
      RECEIVED AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL,
      THAT SUCH REGISTRATION IS NOT REQUIRED.

     

    QUINTESSENCE
      PHOTONICS CORPORATION

    (A
      Delaware Corporation)

     

    
      	Amount: $___________	
              Sylmar,
                California

              August
                1,
                2005

            


    

     

    SECURED
      PROMISSORY NOTE

     

    For
      value
      received, QUINTESSENCE PHOTONICS CORPORATION, a Delaware corporation
      (“Maker”),
      promises to pay _____________ (“Payee”)
      the
      principal sum of __________________________ ($___________) with monthly
      compounded interest on the outstanding principal amount at the rate of ten
      percent 10% per annum. Interest shall commence with the date hereof and shall
      continue on the outstanding principal until paid in full. This Promissory Note
      (the “Note”)
      is one
      of a series of Promissory Notes (the “Notes”)
      issued
      pursuant to a Loan Agreement (the “Loan
      Agreement”),
      dated
      as of August 1, 2005, among Maker and the lenders listed on Schedule A
      thereto
      (the “Lenders”)
      and is
      subject to the terms and conditions of the Loan Agreement.

     

    1.  Payment.
      Subject
      to Paragraphs 2 and 4 below and unless otherwise extended by the consent of
      the
      Maker and Lenders holding a majority of the aggregate principal amount of the
      Notes then outstanding, the outstanding principal amount and accrued and unpaid
      interest shall be payable as follows: (i) in
      twenty four (24) equal monthly interest-only installments commencing September
      1, 2005 and ending August 1, 2007, and (ii)  the
      remaining outstanding principal amount and accrued and unpaid interest being
      payable in twelve (12) equal monthly installments commencing on September 1,
      2007 and ending August 1, 2008 (as such date may be extended per the terms
      hereof, the “Maturity
      Date”).
      All
      payments of interest and principal shall be in lawful money of the United States
      of America at the principal office of Maker, 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 thirty (30) 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 the repayment of accrued interest until all then outstanding accrued interest
      has been paid, and then shall be applied to the repayment of principal.


     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    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, within five (5) business
      days after such date, the Payee shall be entitled to damages for the detriment
      caused thereby, the extent of which damages are extremely difficult and
      impractical to ascertain. The Maker therefore agrees to pay default interest
      on
      such delinquent amount at a per annum rate equal to the prime rate (as published
      in the Wall Street Journal on the date of such Event of Default) plus 2%,
      payable quarterly. 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 Maker
      shall not have the right to foreclose or exercise its remedies.

     

    2.  Security
      Agreement.
      This
      Note and the indebtedness evidenced hereby is secured pursuant to the terms
      of
      that certain Security Agreement, dated as of August 1, 2005 (the “Security
      Agreement”)
      among
      the Maker, the Lenders, and M.U.S.A. Inc. doing business as DBA Money USA,
      as
      collateral agent for the secured parties identified therein (in such capacity,
      the “Collateral
      Agent”).
      Collateral Agent, on behalf of the Lenders, is entitled to the rights and
      remedies set forth in the Security Agreement. The indebtedness evidenced by
      the
      Notes shall be paid by the Maker pari
      passu pursuant
      to the terms hereof and thereof.

     

    3.  Optional
      Conversion.
      So long
      as a Payee’s Note remains outstanding, the entire outstanding principal and
      accrued and unpaid interest on such Payee’s Note may be converted (in the sole
      discretion of the Payee as set forth below) into shares of the Maker’s Common
      Stock (the “Common
      Stock”)
      at any
      time upon the election of such Payee (an “Optional
      Conversion”).
      The
      rights, preferences and privileges of the Common Stock shall be as set forth
      in
      the Maker’s Third Amended and Restated Certificate of Incorporation. The number
      of shares of Common Stock into which such Note may be converted is determined
      by
      dividing the outstanding principal amount plus accrued and unpaid interest
      due
      on such Note by the Common Stock Conversion Price. The initial Common Stock
      Conversion Price shall be $3.75, as adjusted for any stock split or dividends.
      

     

    In
      the
      event the Company or its Successor (as defined below), at any time, from time
      to
      time, after the date of issuance of this Note and prior to the payment in full
      of this Note or within twelve months after the effective date of the Optional
      Conversion, as applicable, shall issue and sell shares of its equity securities
      (an “Equity
      Financing”),
      in
      one or a series of transactions, to investors for aggregate proceeds to the
      Maker of not less than One Million Dollars ($1,000,000) at a price less than
      $3.75 per share, as adjusted for stock splits and stock dividends, the initial
      Common Stock Conversion Price shall be decreased to equal the lowest per share
      price received by the Company in the Equity Financing. Notwithstanding the
      foregoing, in no event shall the Common Stock Conversion Price be less than
      $0.90 per share as adjusted. 

     

    As
      used
      herein, “Successor”
means
      (i) any entity that acquires all or substantially all of the assets or stock
      of
      the Maker, or that results from the merger of, reorganization of, or
      consolidation with the Maker, or otherwise succeeds to substantially all of
      the
      business of the Maker, or (ii) in the case of a reverse merger in which the
      Maker is the surviving entity, the Maker; provided that the holders of record
      of
      the Maker’s capital stock, in the aggregate, immediately prior to any of the
      foregoing transaction or series of related transactions shall possess at least
      50% of the voting stock of such entity (or, in the case of a reverse merger,
      the
      Maker) immediately after the transaction or transactions.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    4.  Optional
      Extension.
      Payee
      has a one-time option (an “Extension
      Option”)
      to
      extend the term of this Note in accordance with the provisions of this Section
      4. Payee may exercise the Extension Option by giving written notice (the
“Extension
      Notice”)
      to
      Maker at any time after the date hereof and prior to the payment in full of
      this
      Note or the effective date of the Optional Conversion, as applicable. The
      Extension Notice shall specify the effective date (the “Effective
      Date”)
      of the
      extended term (the “Extended
      Term”);
      provided that the Effective Date shall not be less than fifteen (15) nor more
      than thirty (30) after the date of the Extension Notice. The Extended Term
      shall
      commence on the Effective Date and expire three (3) years after the Effective
      Date. Upon Payee’s exercise of the Extension Option, the remaining outstanding
      principal amount and accrued and unpaid interest due on this Note as of the
      Effective Date shall be payable as follows: (i) in
      twenty four (24) equal monthly interest-only installments commencing on the
      first monthly anniversary of the Effective Date, and (ii)  the remaining
      outstanding principal amount and accrued and unpaid interest being payable
      in
      twelve (12) equal monthly installments commencing on the first monthly
      anniversary after the date of the last interest-only installment payable
      pursuant to the preceding clause (i). 

     

    If
      Payee
      exercises the Extension Option, or if Maker prepays the Notes prior to July
      31,
      2006, then Maker shall issue to Payee warrants to acquire an additional Twenty
      Six Thousand Six Hundred and Sixty Six (26,666) shares of Common Stock
for
      each
      $100,000 loaned to Maker. Such warrants shall be in the form, and subject to
      the
      same terms and conditions, of the warrants, dated of even date, issued in
      connection with this Note, except that the expiration date of such warrants
      shall be 5:00 p.m. Pacific time on August 1, 2015. 

     

    5.  Transferability.
      This
      Note is nontransferable, except to other holders of the capital stock of Maker
      or affiliates (as that term is defined in Rule 405 of Securities Act of 1933,
      as
      amended) of the Payee. Subject to the foregoing, this Note may be transferred
      only in compliance with the provisions of the Loan Agreement, applicable federal
      and state securities laws and only upon surrender of this original Note to
      the
      Maker for registration of transfer, duly endorsed, or accompanied by a duly
      executed written instrument of transfer in form satisfactory to the Maker.
      Thereupon, a new promissory note for like principal amount and interest will
      be
      issued to, and registered in the name of, the transferee. Interest and principal
      are payable only to the registered holder of the Note. The Payee agrees to
      provide a form W-9 to the Maker on request.

     

    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. 

     

    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 holders of
      not
      less than 50% in the aggregate principal amount of the Notes then
      outstanding.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    8.  Assignment.
      This
      Note shall inure to the benefit of and bind the successors, permitted assigns,
      heirs, executors, and administrators of the parties hereto, including any
      Successor to the Maker.

     

    9.  Events
      of Default.
      In case
      an Event of Default (as defined in the Loan Agreement) shall occur and be
      continuing, the principal and accrued interest on this Note may be declared
      to
      be due and payable in the manner and with the effect provided in the Loan
      Agreement.

     

    10.  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.

     

    11.  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.

     

    12.  Loan
      Agreement.
      This
      Note incorporates by reference all the terms of the Loan Agreement.

     

    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.

     

     

    [SIGNATURE
      PAGE FOLLOWS]

     

    
      
        
        

      

      
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    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:

               

              Name:   

            	 
              
              

            
	 	Title:	 
	 	 	 
	 	
            
	 	 


    

     

    
    

    [SIGNATURE
      PAGE TO PROMISSORY NOTE]

     

    
      
        
        

      

      
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