Document:

AMENDED
AND RESTATED

    BYLAWS
OF

    SYSTEMS
MANAGEMENT SOLUTIONS, INC.

    (hereinafter
called the “Corporation”)

     

    ARTICLES
I

    

    OFFICES

    

    Section 1.  Registered
Office.   The registered office of the Corporation shall
be in the State of Nevada.

    

    Section 2.  Other
Offices.   The Corporation may also have offices at such
other places both within and without the State of Nevada as the Board of
Directors may from time to time determine.

    

    ARTICLE
II

    

    MEETINGS
OF STOCKHOLDERS

    

    Section 1.  Place of
Meeting.  Meetings of the shareholders for the election of
directors or for any other purpose shall be held at such time and place, either
within or without the State of Nevada, as shall be designated from time to time
by the Board of Directors and stated in the notice of the meeting or in a duly
executed waiver if notice thereof.

    

    Section 2.  Annual
Meetings.  The Annual Meetings of shareholders shall be held on
such date and at such times as shall be designated from time to time by the
Board of Directors and stated in the notice of them meeting, at which meetings
the shareholders shall elect by a plurality vote a Board of Directors, and
transact such other business as may properly be brought before the meeting. At
any annual meeting if the shareholders, only such business shall be conducted as
shall have been properly brought before the meeting in accordance with the
Articles of Incorporation.

    

    Section 3.  Shareholder’s
Meetings.   Special or Annual Meetings of the shareholders
may be called by the Board of Directors, the Chairman of the Board or the
President, or at the request of the holders of at least fifty percent (50%) of
the stock of the Corporation. Upon request in writing to the Secretary by any
person entitled to call a meeting of the shareholders, the Secretary forthwith
shall cause notice to be given to the shareholders entitled to vote that a
meeting will be held at a time requested by the person or persons calling the
meeting. At any meeting of the shareholders, only such business shall be
conducted as shall have been properly brought before the meeting in accordance
with the Articles of Incorporation.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section 4.  Notice of
Meetings.  Written notice of the place, date, and time of all
meetings of the shareholders shall be given, not less than ten (10) nor more
than ninety (90) days before the date on which the meeting is to be held, to
each shareholder entitled to vote at such meeting, except as otherwise provided
herein or as required from time to time by the General Corporation Law of Nevada
or the Articles of Incorporation.

    

    Section 5.  Quorum:
Adjournment.  With respect to any matter, a quorum shall be
present at a meeting of shareholders if the holders of a majority of the shares
entitled to vote on that matter are represented at the meeting in person or by
proxy, unless otherwise provided in the Articles of Incorporation. If a quorum
shall fail to attend any meeting, the chairman of the meeting or the holders of
a majority of the shares of stock entitled to vote who are present, in person or
by proxy, may adjourn the meeting to another place, date or time without notice
other than announcement at the meeting, until a quorum shall be present pr
represented.

    

    When a
meeting is adjourned to another place, date or time, written notice need not be
given of the adjourned meeting if the place, date, and time thereof are
announced at the meeting at which the adjournment is taken; provided, however,
that if the date of any adjourned meeting is more than thirty (30) days after
the date for which the meeting was originally noticed, or if a new record date
is fixed for the adjourned meeting, written notice of the place, date, and time
of the adjourned meeting shall be given in conformity herewith. At any adjourned
meeting, any business may be transacted which might have been transacted at the
original meeting.

    

    Section
6.  Organization.   At every meeting of the
shareholders, the chairman of the board, if there be one, or in case of a
vacancy in the office or absence of the chairman of  the board, one of
the following persons present in order stated shall act as chairman of the
meeting: the vice chairman of the board, if there be one, the president, the
vice presidents in their order of rank or seniority; a chairman designated by
the board of directors or a chairman chosen by the shareholders in the manner
provided in Section 5 of this Article II. The secretary, or in his absence, an
assistant secretary, or in absence of the secretary and the assistant
secretaries, a person appointed by the chairman of the meeting shall act as
secretary.

    

    Section 7.  Proxies and
Voting.  At any meeting of the shareholders, every shareholder
entitled to vote may vote in person or by proxy authorized by an instrument in
writing filed in accordance with the procedure established for the
meeting.

    

    Each
shareholder shall have one vote for every share of stock entitled to vote which
is registered in his name on the record date for the meeting, except as
otherwise provided herein or required by law or the Articles in
Incorporation.

    

    All
voting, including on the election of directors but exception where otherwise
provided herein or required by law or the Articles of Incorporation, may be by a
voice vote; provided, however, that upon demand therefore by a shareholder
entitled to vote or such shareholders proxy, a stock vote shall be taken. Every
stock vote shall be taken by ballots, each of which shall state the name of the
shareholder or proxy voting and such other information as may be required under
the procedure established for the meeting.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    All
elections of directors shall be determined by a plurality of the votes cast by
the holders of shares entitled to vote in the election of directors at a meeting
of shareholders at which quorum is present. Except as otherwise required by law
or the Articles of Incorporation, all matters other than the election of
directors shall be determined by the affirmative vote of the holders of a
majority of the shares entitled to vote on that matter and represented in person
or by proxy at a meeting of shareholders at which a quorum is
present.

    

    Section 8.  Stock
List.  A complete list of shareholders entitled to vote at any
meeting of shareholders, arranged in alphabetical order for each class of stock
and showing the address of each shareholder and the number of shares registered
in such shareholders name, shall be open to the examination of any such
shareholder, for any purpose germane to the meeting, at the registered office or
principal place of business of the Corporation.

    

    The stock
list shall also kept at the place of the meeting during the whole time thereof
and shall b open to the examination of any such shareholder who is present. This
list shall presumptively determine the identity of the shareholder entitled to
vote at the meeting and the number of shares held by each of them.

    

    Section 9.  Inspectors of
Election. In advance of any meeting of shareholders, the Board Directors
may appoint inspectors of election, who need not be shareholders, to act such
meeting or any adjournment thereof. If inspectors of election are not so
appointed, the person presiding at any such meeting may, and on the request of
any shareholder entitled to vote at the meeting and before voting begins shall,
appoint inspectors of election. The number of inspectors shall be either one or
three, as determined, in the case of inspectors appointed upon demand of a
shareholder, by the shareholders in the manner provided in Section 5 of this
Article II, and otherwise by the Board of Directors or person presiding at the
meeting, as the case may be. If any person who is appointed fails to appear or
act, the vacancy may be filled by appointment made by the Board of Directors in
advance of the meeting, or at the meeting by the person presiding at the
meeting. Each inspector, before entering upon the discharge of his duties, shall
take an oath faithfully to execute the duties of inspector at such
meeting.

    

    If
inspectors of election are appointed as aforesaid, they shall determine from the
lists referred to in Section 8 of this Article II the number shares outstanding,
the shares represented at the meeting, the existence of a quorum and the voting
power of shares represented at the meeting, determine the authenticity, validity
and effect of proxies, receive votes or ballots, hear and determine all
challenges and questions in any way arising in connection with the right to vote
or the number of votes which may be cast, count and tabulate all votes or
ballots, determine the results, and do such acts as are proper to conduct the
election or vote with fairness to all shareholders entitled to vote thereat. If
there be three inspectors of election, the decision, act or certificate of two
shall be effective in all respects as the decision, act or certificate of the
inspectors of election.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Unless
waived by vote of the shareholders conducted in the manner which is provided in
Section 5 of this Article, the inspectors shall make a report in writing of any
challenge or question matter which is determined by them, and execute a sworn
certificate of any facts found by them.

    

    ARTICLE
III

    

    BOARD
OF DIRECTORS

    

    Section 1.  Duties and
Powers.  The business of the Corporation shall be managed by or
under the direction of the Board of Directors which may exercise all such powers
of the Corporation and do all such lawful acts and things as are not by law or
by the Articles of Incorporation or by these Bylaws directed or required to be
exercise or done by the shareholders.

    

    Section 2.  Number and Term
in Office.  This Section 2 is subject to the provisions in a
formal certificate of rights, powers and designations relating to the rights of
the holders of one or more series of Preferred Stock or other provisions of the
Corporation’s Articles of Incorporation. The total number of directors
constituting the entire Board of Directors shall be not less than three (3) nor
more than nine (9), with the then authorized number of directors being fixed
from time to time solely by or pursuant to a resolution passed by the Board of
Directors. A director shall hold office until the annual meeting next following
the expiration of his term, as provided in the Articles of Incorporation of the
Corporation, and until his successor shall be elected and shall qualify,
subject, however, to prior death, resignation, retirement, disqualification or
removal from office.

    

    Section
3.  Vacancies.  This Section 3 is subject to the
provisions of the Corporation’s Articles of Incorporation. Vacancies and newly
created directorships resulting from any increase in the authorized member of
directors may be filled only by action of a majority of the Board of Directors
then in office, even if less than a quorum, or by a sole remaining director. Any
director elected to a fill a vacancy not resulting from an increase in the
number of directors shall have the same remaining terms as that of his
predecessor. Any director may resign at any time upon written notice to the
Corporation.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section 4.  Nominations of
Directors; Election.   This Section 4 is subject to the
provisions of the Corporation’s Article of Incorporation. Nominations for the
election of directors may be made by the Board of Directors or a committee
appointed by the Board of Directors, or by any shareholder entitled to vote
generally in the election of directors who complies with the procedures set
forth in this Section 4. Directors shall be at least 21 years of age and need
not ne shareholders. Nominations, other than those made by or at the direction
of the Board of Directors, shall be made pursuant to timely notice in writing to
the Secretary of the Corporation. To be timely, a shareholders notice shall be
delivered to or mailed and received at the principal executive office of the
Corporation not less than 60 days nor more than 90 days prior to the meeting;
provided, however, that in the even less than 70 days’ notice or prior public
disclosure of the date of the meeting is given or made to shareholders, notice
by the shareholders to be timely must be so received not later than the close of
business on the 10th day
following the day on which such notice of the date of the meeting was mailed or
such public disclosure was made. Such shareholder’s notice shall set forth (a)
as to each person whom the shareholder proposes to nominate for election or
re-election as a Director, (i) the name, age, business address and residence
address of such person, (ii) the principal occupation or employment of such
person, (iii) the number of shares of the Corporation which are beneficially
owned by such person, and (iv) any  other information relating to such
person that is required to be disclosed in solicitations of proxies for election
of Directors, or is otherwise required, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended (including without
limitation such persons’ written consent to being named in the proxy statement
as a nominee and to serving as a Director if elected); and (b) as to the
shareholder giving the notice (i) the name and address, as they appear on the
Corporation’s books, of such shareholder and (ii) the number of shares of the
Corporation which are beneficially owned by such shareholder. NO person shall be
eligible for election as Director of the Corporation unless nominated in
accordance with the procedures set forth in this Article. The Chairman of the
meeting shall, if the facts warrant, determine and declare to meeting that a
nomination was not made in accordance with the procedures prescribed herein, and
if he should so determine, he shall so declare to the meeting and the defective
nomination shall be disregarded.

    

    Section 5.  Meetings.
  The Board of Directors of the Corporation may hold meetings,
both regular and special, either within or without the State of Nevada. The
first meeting of each newly-elected Board Directors shall be held immediately
following the Annual Meeting of Stockholders and no notice of such meeting shall
be necessary to be given the newly-elected directors in order legally to
constitute the meeting, provided a quorum shall be present. Regular meetings of
Board of Directors may be held without notice at such time and at such place as
may from time to time to be determined by the Board of Directors. Annual Meeting
of the Board Directors may be called by the Chairman of the Board, the president
or at least two of the directors then in office. Notice thereof stating the
place, date and hour of the meetings shall be given to each director by mail,
telephone or telegram not less than seventy-two (72) hours before the date of
the meeting. Meetings may be held at any time without notice if all the
directors are present or if all those not present waive such notice in
accordance with Section 2 of Article VI of these Bylaws.

    

    Section
6.  Quorum.   Except as may be otherwise
specifically provided by law, the Articles if Incorporation or these Bylaws, at
all meetings of the Board of Directors, a majority of the directors then in
office shall constitute a quorum for the transaction of business. The act of
majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board Directors. If a quorum shall not be present at any
meeting of the Board of Directors, the directors present thereat may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section 7.  Action of Board
Without a Meeting.  Unless otherwise provided by the Articles
if Incorporation or these Bylaws, any action required or permitted to be taken
at any meeting of the Board of Directors of any committee thereof may be taken
without a meeting if all members of the Board of Directors or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the Board of Directors or
committee.

    

    Section
8.  Resignations.   Any director of the
Corporation may resign at any time by giving written notice to the president or
the secretary. Such resignation shall take effect at the date of the receipt of
such notice or at any later time specified therein and unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.

    

    Section
9.  Organization.   At every meeting of the
Board of Directors, the Chairman of the Board, if there be one, or, in the case
of a vacancy in the office or absence of the Chairman of the Board, one of the
following officers present in the order stated shall act as Chairman of the
meeting: the president, the vice presidents in their order of rank and
seniority, or a chairman chosen by a majority of the directors present. The
secretary, or, in his absence, an assistant secretary, or in the absence of the
secretary and the assistant secretaries, any person appointed by the Chairman of
the meeting shall act as secretary.

    

    Section
10.  Committees.   The Board of Directors may,
be resolution passed by a majority of the directors then in office, designate
one or more committees, each committee to consist of one or more of the
directors of the Corporation. The Board Directors may designate one or more
directors as alternate members of any committee, whom may replace any absent or
disqualified member at any meeting of any such committee. In the absence or
disqualification of a member of a committee, and in the absence of a designation
by the Board of Directors of an alternate member to replace the absent or
disqualified from voting, whether or not such members constitute a quorum, may
unanimously appoint another member of the Board Directors to act at the meeting
in the place of any such absent or disqualified member. Any committee, to the
extent allowed by law and provided in the Bylaws or resolution establishing such
committee, shall have and may exercise all the powers and authority of the Board
of Directors in the management if the business affairs if the Corporation, and
may authorize the seal of the Corporation to be affixed to all papers which may
require it. Each committee shall keep regular minutes and reports to the Board
of Directors when required.

    

    Section
11.  Compensation.  Unless otherwise restricted by
the Articles of Incorporation or these Bylaws, the Board of Directors shall have
the authority to fix the compensation of directors. The directors may be paid
their expenses, if any, of attendance at each meeting of the Board of Directors
and may be paid a fixed sum for attendance at each meeting of the Board of
Directors or a stated salary as a director. No such payment shall preclude any
director from serving the Corporation in any other capacity and receiving
compensation therefore. Members of special or standing committees may be allowed
like compensation for attending committee meetings.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section 12. Removal. This
Section 12 is subject to the provisions of the Corporation’s Articles of
Incorporation. Except for such directors, if any, as are elected by the holders
of any series of Preferred Stock separately as a class as provided for or fixed
pursuant to the provisions of the Articles of Incorporation, any director of the
Corporation may be removed from office by the affirmative vote if the holders of
not less than fifty-one percent (51%) of the votes which could be cast by
holders all outstanding shares of the capital stock of the Corporation entitled
to vote generally in the election of directors, considered for this purpose as
one class.

    

    ARTICLE
IV

    

    OFFICERS

    

    Section
1.  General.  The officers of the Corporation shall
be appointed by the Board of Directors and shall consist of a Chairman of the
Board or a President, or both, one or more Vice Presidents, a Treasurer and a
Secretary. The Board of Directors may also choose one or more assistant
secretaries and assistant treasures, and such other officers and agents as the
Board of Directors, in its sole and absolute discretion shall deem necessary or
appropriate as designated by the Board of Directors from time to time. Any
number of offices may be held by the same person, unless the Articles of
Incorporation or these Bylaws provide otherwise.

    

    Section 2.  Election; Term
of Office.  The Board of Directors at its first meeting
held after each Annual Meeting of Stockholders shall elect a Chairman of the
Board or a President, or both, one or more Vice Presidents, a Secretary and a
Treasurer, and may also elect at that meeting or any other meeting, such other
officers and agents as it shall deem necessary or appropriate. Each officer of
the Corporation shall exercise such powers and perform such duties as shall be
determined from time to time by the Board of Directors together with the powers
and duties which are customarily exercised by such officer; and each officer of
the Corporation shall hold office until such officer’s successor is elected and
qualified or until such officer’s earlier resignation or removal. Any officer
may resign at any time, with or without cause, by affirmative vote of a majority
of directors then in office, remove an officer.

    

    Section 3.  Chairman of the
Board.  The Chairman of the Board shall preside at all meetings
of the shareholders and Board of Directors and shall have such other duties and
powers as may be prescribed by the Board of Directors from time to
time.

    

    Section
4.  President.  The President shall be the chief
executive officer of the Corporation, if the Chairman of the Board is not so
designated, and shall have general and active management of the business of the
Corporation and shall see that all orders and resolutions of the Board of
Directors are carried into effect. The President shall have and exercise such
further powers and duties as may be specifically delegated to or vested in the
President from time to time by these Bylaws or the Board of Directors. In the
absence of the Chairman of the Board or in the event of his inability or refusal
to act, or if the Board has not designated a Chairman, the President shall
perform the duties of the Chairman of the Board, and when so acting, shall have
all the powers and be subject to all of the restrictions upon the chairman of
the Board.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section 5.  Vice
President.   In the absence of the President or in the
event of his inability or refusal to act, the Vice President (or in the event
that there be more than one vice president, the vice presidents in the order
designated by the Board of Directors, or in the absence of any designation, then
in the order of their election) shall perform the duties of the President, and
when so acting, shall have all powers of and be subject to all the restrictions
upon the President. The vice presidents shall perform such other duties and have
such other powers as the Board of Directors or the President may from time to
time prescribe.

    

    Section
6.  Secretary.   The Secretary shall attend all
meetings of the Board of Directors and all meetings of the shareholders and
record all the proceedings threat in a book or books to be kept for that
purpose; the Secretary shall also perform like duties for the standing
committees when required. The Secretary shall give, or cause to be given notice
of meetings of the shareholders and Annual Meetings of the Board of Directors,
and shall perform such other duties as may be prescribed by the Board of
Directors or the President. If the Secretary shall be unable or shall refuse to
cause to be given notice of all meetings of the shareholders and Annual Meeting
of the Board Directors, and if there be no Assistant Secretary, then either the
Board of Directors or the President may choose another officer to cause such
notice to be given. The Secretary shall have custody of the seal of the
Corporation and the Secretary or any Assistant Secretary, if there be one, shall
have authority to affix same to any instrument requiring it and when so affixed,
it may be attested to by the signature of the Secretary or by the signature of
any such Assistant Secretary. The Board of Directors may give general authority
to any other officer to affix the seal of the Corporation and to attest to the
affixing by his or her signature. The secretary shall see that all books,
reports, statements, certificates and other documents and records required by
law to be kept or filed are properly kept filed, as the case may
be.

    

    Section
7.  Treasurer.   The Treasurer shall have the
custody of the corporate funds and securities and shall keep complete and
accurate accounts of all receipts and disbursements of the Corporation, and
shall deposit all monies and other valuable effects of the Corporation in its
name and to its credit in such banks and other depositories as may be designated
from time to time by the Board of Directors. The Treasurer shall disburse the
funds of the Corporation, taking proper vouchers and receipts for such
disbursements, and shall render to the Board of Directors, at its regular
meetings, or when the Board of Directors so requires, an account of all his or
her transactions as Treasurer and of the financial condition of the Corporation.
The treasurer shall, when and if required by the Board of Directors, give and
file with the Corporation a bond, in such form and amount and with such surety
or sureties as shall be satisfactory to the Board of Directors, for the faithful
performance of his or her duties as Treasurer. The Treasurer shall have such
other powers and perform such other duties as the Board of Directors or the
President shall from time to time prescribe.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section 8.  Other
Officers.   Such other officers as the Board of Directors
may choose shall perform such duties and have such powers as from time to time
may be assigned to them by the Board of Directors. The Board of Directors may
delegate to any other officer of the Corporation the power to choose such other
officers and to prescribe their respective duties and powers.

    

    Section
9.  Resignations.   Any officer may resign at
any time by giving written notice to the Board of Directors, the Chairman of the
Board, the President or the Secretary shall be deemed to constitute notice to
Corporation. Such resignation shall take effect upon receipt of such notice or
at any later time specified therein; and, unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make it effective.

    

    Section
10.  Removal.   Any officer or agent may be
removed, either with or without cause, at any time by the Board of Directors at
any meeting called for that purpose; provided, however, that the Chairman of the
Board of President may remove any agent or officer appointed by
him.

    

    Section
11.  Vacancies.   Any vacancy among the
officers, whether caused by death, resignation, removal or any other cause,
shall be filled in the manner which is prescribed for election or appointment to
such office.

    

    ARTICLE
V

    

    STOCK

    

    Section 1.  Form of
Certificates.   Every holder of stock in the Corporation
shall be entitled to have a certificate signed, in the name of the Corporation
(i) by the Chairman of the Board or the President or a Vice President and (ii)
by the Treasurer or Secretary of the Corporation, certifying the number of
shares owned by such holder in the Corporation.

    

    Section
2.  Signatures.   Any or all the signatures on
the certificate  may be a facsimile. In case any officer, transfer
agent or registrar before such certificate is issued, it may be issued by the
Corporation with the same effect as if such person were such officer, transfer
agent or registrar at the date of issue.

    

    Section 3.  Lost
Certificates.   The Board of Directors may direct a new
certificate to be issued in place of any certificate therefore issued by the
Corporation alleged to have been lost, stolen or destroyed, upon the making if
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen or destroyed. When authorizing such issue of a new certificate, the
Board of Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate, or such owner’s legal representative, to advertise the same in such
manner as the Board of Directors shall require and/or to give the Corporation a
bond or other indemnity in such sum as it may direct as indemnity against any
claim that may be made against the Corporation with respect to the certificate
alleged to have been lost, stolen destroyed.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
4.  Transfers.   Stock of the Corporation shall
be transferable in the manner prescribed by law and in these Bylaws. Transfers
of stock shall be made on the books of the Corporation only by the person named
in the certificate or by such person’s attorney lawfully constituted in writing
and upon the surrender of the certificate therefore, which shall be cancelled
before a new certificate shall be issued.

    

    Section 5.  Record
Date.   In order that the Corporation may determine the
shareholders entitled to notice of or to vote at any meeting is shareholders or
any adjournment thereof, or entitled to receive a distribution or share
dividend, or in order to make a  determination of shareholders for any
other proper purpose, the Board of Directors may fix, in advance, a record date,
which shall not be more than ninety (90) days and, in the case of a meeting of
shareholders, not less than ten (10) days before the date of such meeting or
event. A determination of shareholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.

    

    Section 6.  Beneficial
Owners.   The Corporation shall be entitled to recognize
the exclusive right of a person registered on its books as the owner of shares
to receive dividends, and to vote as such owner, and to hold liable for calls
and assessments a person registered on its books as the owner of shares, and
shall not be bound to recognize any equitable or other claim to or interest in
such share or shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise provided by
law.

    

    Section 7.  Voting
Securities Owned by the Corporation.   Powers of attorney,
proxies, waivers of notice of meeting, consents and other instruments relating
to securities owned by the Corporation may be executed in the name of and on
behalf of the Corporation by the Chairman of the Board, the President, any Vice
President or the Secretary and any such officer may, in the name of and behalf
of the Corporation take all such action as any such  meeting shall
possess and may exercise any and all rights and powers incident to the ownership
of such securities and which, as the owner thereof, the Corporation might have
exercised and possessed if present. The Board of Directors may, by resolution,
from time to time confer like powers upon any other person or
persons.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    ARTICLE
VI

    

    NOTICES

    

    Section
1.  Notice.   Whenever, under the provisions of
the laws of Nevada or the Articles of Incorporation or these Bylaws, any notice,
request, demand or other communications is required to be or may be given or
made to an officer, director, or registered shareholder, it shall not be
construed to mean that such notice, request, demand or other communication must
be given or made in person, but the same may be given or made by mail,
telegraph, cablegram, telex, or telecopy to such officer, director or registered
shareholder. Any such notice, request, demand or other communication shall be
considered to have been properly given or made, in the case of mail, telegraph
or cable, when deposited in the mail or delivered to the appropriate
office  for telegraph or cable transmission, and in other cases when
transmitted by the party giving or making the same, directed to the officer or
director at his address as it appears on the record of shareholders, or, if the
shareholder shall have filed with the Secretary of the Corporation a written
request that notices to him be mailed to some other address, then directed to
the shareholder at such other address. Notice to directors may also be given in
accordance with Section 5 of Article III hereof.

    

    Whenever,
under the provisions of the laws of the State of Nevada or the Articles of
Incorporation or these Bylaws, any notice, request, demand or other
communication is required to be or may be given or made to the Corporation, it
shall also not be construed to meant hat such notice, request, demand or other
communication must be given or made in person, but the same may be given or made
to the Corporation by mail, telegraph, cablegram, telex, or telecopy. Any such
notice, request, demand or other communication shall be considered to have been
properly given or made, in the case of mail, telegram or cable, when deposited
in the mail or delivered to the appropriate office for telegraph or cable
transmission.

    

    Section 2.  Waivers of
Notice.   Whenever any written notice is required to be
given under the provisions of the Articles of Incorporation, these Bylaws or a
statute, a waiver thereof in writing, signed by the person or persons entitled
to such notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice. Neither the business to be transacted
at, nor the purpose of, any regular or Annual Meeting of the shareholders,
directors, or members of a committee of directors, or members of a committee of
directors need be specified in any written waiver of notice if such meeting.
Attendance of a person, either in person or by proxy at any meeting, without
protesting prior to the conclusion of the meeting the lack of notice of such
meeting, shall constitute a waiver of notice of such meeting.

     

    ARTICLE
VII

    

    GENERAL
PROVISIONS

    

    Section
1.  Dividends.   Dividends upon the capital
stock of the Corporation, subject to applicable law and the provisions of the
Articles of Incorporation, if any, may be declared by the Board of Directors at
any regular or Annual Meeting or by any Committee of the Board of Directors
having such authority at any meeting thereof, and may be paid in cash, in
property, in shares of the capital stock, or in any combination thereof. Before
payment of any dividend, there may be set aside out of any funds of the
Corporation available for dividends such sum or sums as the Board of Directors
from time to time, in its absolute discretion, deems proper as a reserve or
reserves to meet contingencies, or for equalizing dividends, or for any proper
purpose, and the Board of Directors may modify or abolish any such
reserve.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
2.  Disbursements.   All notes, checks, drafts
and orders for the payment of money issued by the Corporation shall be signed in
the name of the Corporation by such officers or such other persons as the Board
of Directors may from time to time designate.

    

    Section 3.  Corporation
Seal.   The corporate seal, if the Corporation shall have
a corporate seal, shall inscribed thereon the name of the Corporation, the year
of its organization and the words “Corporate Seal, Nevada”. The seal may be used
by causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise.

    

    ARTICLE
VIII

    

    INDEMNIFICATION

    

    Section 1.  Mandatory
Indemnification of Directors and Officers.   Each person
who at any time is or was a director or officer of the Corporation, who was, is
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative, arbitrative
or investigative (a “Proceeding,” which shall include any appeal in such a
Proceeding, and any inquiry or investigation that could lead to such a
Proceeding), by reason of the fact that such person  is or was a
director or officer of the Corporation, or is or was a director or officer of
the Corporation serving at the request of the Corporation as a director,
officer, partner, venturer, proprietor, trustee, employee agent or similar
functionary of another foreign or domestic corporation, partnership, joint
venture, sole proprietorship, trust, employee benefit plan or other enterprise
shall be indemnified by the Corporation to the fullest extent authorized by the
General Corporation Law of Nevada as the same exists or any hereafter be amended
from time to time (the “GCLN”), or any other applicable law as may from time to
time to be in effect (but, in the case of any such amendment or enactment, only
to the extent that such amendment or law permits the Corporation to provide
broader indemnification rights than such law prior to such amendment or
enactment permitted the Corporation to provide), against judgments, penalties
(including excise and similar taxes), fines, settlements and reasonable expenses
(including court costs and attorneys’ fees) actually incurred by such person in
connection with such Proceeding. The Corporation’s obligations under this
Section 1 include, but are not limited to, the convening of any meeting, and the
consideration of any matter thereby, required by statue in order to determine
the eligibility of any person for indemnification. Expenses incurred in
defending a Proceeding shall be paid by the Corporation in advance of the final
disposition of such Proceeding to the fullest extent permitted, and only in
compliance with, the GCLN or any other applicable laws as may from time to time
be in effect. The Corporation’s obligation to indemnify or to prepay expenses
under this Section 1 shall arise, and all rights granted hereunder shall vest,
at the time if the occurrence of the transaction or event to which such
proceeding relates was first taken or engaged in (or omitted to be taken or
engaged in), regardless of when such proceeding is first threatened, commenced
or completed. Notwithstanding any other provision of the Articles of
Incorporation or these Bylaws, no action taken by the Corporation, either by
amendment of the Articles of Incorporation or these Bylaws or otherwise, shall
diminish or adversely affect any rights to indemnification or prepayment of
expenses granted under this Section 1 which shall have become vested as
aforesaid prior to the date that such amendment or other corporate action is
taken.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section 2.  Permissive
Indemnification of Employees and Agents.  The rights to
indemnification and prepayment of expenses which are conferred to the
Corporation’s directors and officers by Section 1 of this Article VII may be
conferred upon any employee or agent of the Corporation if, and to the extent,
authorized by its Board of Directors.

    

    Section 3.  Indemnity
Insurance.   The Corporation shall have power to purchase
and maintain insurance on behalf of any person who is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, partner, venturer,
proprietor, trustee, employee, agent or similar functionary of another
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan, or other enterprise, against any liability asserted against him
and incurred by him in any such capacity or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of the GCLN. Without limiting the power of
the Corporation to procure or maintain any kind of insurance or other
arrangement, the Corporation may, for the benefit of persons indemnified by the
Corporation (1) create a trust fund, (2) establish any form of self-insurance,
(3) secure its indemnity obligation by grant of a security interest or other
lien on the assets of the Corporation, or (4) establish a letter of credit,
guaranty or surety arrangement.

    

    ARTICLE
IX

    

    AMENDMENTS

    

    Except as
otherwise specifically stated within an Article to be altered, amended or
repealed these Bylaws may be altered, amended or repealed and new Bylaws may be
adopted at any meeting of the Board of Directors or of the shareholders,
provided notice of the proposed change was given in the notice of the
meeting.

    

    The
undersigned, Chairman and Secretary of the Corporation, hereby certify that the
foregoing By-Laws were adopted by an affirmative vote of 11,581,151____________
Shares of the 15,236,355 shares of the Corporations common stick as of May 17,
2004 and by an affirmative vote of the Directors of the Corporation on this the
14th
day of July, 2004.

     

    
      
        
          
            	 
      	
                    /s/
      Charles T. Phillips

                  
	 
      	
                    Chairman

                  
	 
      	 
      
	 
      	
                    /s/
      Sandra L. Lioney

                  
	 
      	
                    SecretaryUnassociated Document

    EXHIBIT
10.1
 

    Confidential
treatment has been granted to certain parts of this Agreement.  Those
parts have been redacted, marked with ***, and separately filed with the
Commission.

    

    EQUIPMENT PURCHASE AND
PRODUCT SUPPLY AGREEMENT

    

    
      	
              1. 

            	
              PARTIES

            

    

    

    This Equipment Purchase and Product
Supply Agreement (“Agreement”) is entered into by Venture Lighting International,
Inc. (“VLI”), an Ohio corporation with its principal place of business at
32000 Aurora Road, Solon, OH 44139, and Fiberstars, Inc., an Ohio
corporation (“FIBERSTARS”) with its principal place of business at 32000 Aurora
Road, Solon, OH 44139.

    

    
      	
              2. 

            	
              RECITALS

            

    

    

    2.1           FIBERSTARS.  FIBERSTARS
is in the business of supplying fiber optic lighting systems to industry and end
users.  FIBERSTARS is engaged in developing and marketing fiber optic
lighting systems which utilize metal halide arc tubes as a light
source.

    

    2.2           VLI.  VLI
has experience in and is in the business of manufacturing metal halide lamps,
arc tubes and related lighting products.

    

    2.3           Purpose.  FIBERSTARS
and VLI desire to enter into a mutually beneficial commercial relationship
through the purchase of the MACHINE by FIBERSTARS and the engagement of VLI to
produce and supply Products to FIBERSTARS using the MACHINE.

    

    
      	
              3. 

            	
              DEFINITIONS

            

    

    

    3.1           Equipment.  The
various items of component equipment supplied by third party vendors which VLI
has incorporated into the MACHINE and which may hereafter be added to or
incorporated into the MACHINE will be collectively referred to as the
"EQUIPMENT."  The term MACHINE will be inclusive of all
EQUIPMENT.

    

    3.2           Formed
Body.   “Formed Body” shall mean a quartz tube which has
an arc chamber formed in it that is compatible with the MACHINE.  At
the time of this Agreement, only Formed Bodies with “necked” tubes are
compatible with the MACHINE.

    

    3.3           License
Agreement.  Shall mean the License Agreement the form of which
is attached hereto in Exhibit
A.

    

    3.4           Machine.  “MACHINE
shall mean VLI’s used Tipless Low Watt Arc Tube Pinch & Exhaust Machine, as
more particularly described in Exhibit B.

    

    ***
Confidential material has been redacted and separately filed with the
Commission.

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

     

    3.5           Products. “Product”
or “Products” shall mean the metal halide arc tube(s) without an exhaust tip on
the arc chamber(s), for use solely in the “Fiberoptic Field of Use”, as such are
specified and described on the attached Exhibit C.  For
purposes of this section,  “Fiberoptic Field of Use” means lighting
applications or systems (and components of such systems) which include both (A)
a remote light source, and (B) either (i) fiberoptics, or (ii) light pipes, or
(iii) other light guides, for conveying light from the remote source, but
excluding applications in Civilian Transportation (described below), television,
and projection.  Modifications or additions to such description shall
require the mutual agreement of the parties as reflected in an amendment to this
Agreement.  Civilian
Transportation shall mean all passenger automobiles, commercial
(non-military) aircrafts, trucks, motorcycles, and off road vehicles, but
excludes ships, RVs (recreation vehicles), limousines and mining equipment and
other industrial or military vehicles or equipment.

    

    3.6           Product
Specifications.  “Product Specifications” shall mean the
specifications set forth on the attached Exhibit C.

    

    3.7           Technical
Documentation.  Current engineering drawings, technical manuals
and other technical documents describing the operation, maintenance and process
of the MACHINE, sufficient for reasonably trained and qualified FIBERSTARS’
personnel to properly and effectively operate and maintain the MACHINE without
the assistance of VLI, will be collectively referred to as the "TECHNICAL
DOCUMENTATION.”

    

    3.8           Technical
Training.  Training on the use of the MACHINE to produce
Products will be referred to as the “TECHNICAL TRAINING.”

    

    3.9           Technical
Services.  Technical guidance available to FIBERSTARS from VLI
during the installation, trial operations and testing of the MACHINE at a
FIBERSTARS facility, as well as other engineering services, will be collectively
referred to as the "TECHNICAL SERVICES.”

    

    3.10           Term. “Term” shall
have the meaning set forth in Paragraph 9.1 of this Agreement.

    

    3.11           VLI
Technology.  “VLI Technology” shall mean all tangible and
intangible know-how, trade secrets, inventions (patented and unpatented), data,
and other information relating to the design, fabrication, assembly, and
operation of the MACHINE and the processes employed on the MACHINE by VLI to
manufacture Products.

    

    
      	
              4. 

            	
              PURCHASE AND SALE OF
      THE MACHINE

            

    

    

    4.1           Machine.  VLI
hereby agrees to sell, and, subject to acceptance as provided in Section 5.1,
FIBERSTARS hereby agrees to purchase the MACHINE, subject to the terms and
conditions of this Agreement.  The MACHINE is being sold in an “as is”
condition, without any warranty, express or implied, except as provided in
Paragraph 7.

    

    ***
Confidential material has been redacted and separately filed with the
Commission.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

    (a)           Technical
Documentation.  At the time the MACHINE is delivered to
FIBERSTARS’ facility, and FIBERSTARS has paid VLI the license fee if required by
Paragraph 9.4, if any, FIBERSTARS may order the current TECHNICAL DOCUMENTATION
from VLI, and VLI will provide it, at VLI’s then prevailing hourly rates and
reimbursable expense policies, with the total price thereof not to exceed Ten
Thousand Dollars ($10,000.00).  FIBERSTARS shall treat the TECHNICAL
DOCUMENTATION as “VLI Confidential Information”, as such term is defined in
Paragraph 10, and shall restrict its disclosure to third parties in the manner
required by Paragraph 10.

    

    The
TECHNICAL DOCUMENTATION shall be prepared in the English language and shall
refer to the English measurement system normally used by
VLI.  Delivery of TECHNICAL DOCUMENTATION shall require VLI to provide
FIBERSTARS with: two (2) written (paper) sets and one (1) electronic copy (using
Microsoft Word or other mutually agreed upon software)

    

    VLI shall
deliver to FIBERSTARS the TECHNICAL DOCUMENTATION at least fifteen (15) days
prior to delivery of MACHINE under this Agreement.  FIBERSTARS shall
inspect the TECHNICAL DOCUMENTATION for completeness within fifty (50) days
after the date of its receipt, and promptly will advise VLI if FIBERSTARS
discovers that it is not complete.  Notwithstanding the foregoing, if
errors, in the TECHNICAL DOCUMENTATION are discovered, VLI promptly will correct
them, and VLI also will provide up to twenty (20) hours of TECHNICAL SERVICES to
FIBERSTARS via telephone, without charge and designed to overcome any such
inaccuracy so that the period during which FIBERSTARS’ use of the MACHINE is
adversely affected by any such inaccuracy is a short as possible.

    

    At VLI’s
sole discretion, VLI may track the number of hours spent preparing the TECHNICAL
DOCUMENTATION.  If VLI has provided the original version of the
TECHNICAL DOCUMENTATION, two (2) rounds of revisions based on FIBERSTARS’
concerns, and logged at least one hundred forty (140) hours of time preparing
the TECHNICAL DOCUMENTATION, then the TECHNICAL DOCUMENTATION will be deemed
complete upon delivery, even if incomplete
and VLI shall have no further obligations regarding the preparation or revision
of the TECHNICAL DOCUMENTATION.

    

    (b)           Technical
Training.  At the time the MACHINE is delivered to a
FIBERSTARS’ facility, and FIBERSTARS has paid VLI the applicable license fee if
required by Paragraph 9.4, below, VLI will provide, without additional charge,
up to sixty (60) hours of TECHNICAL TRAINING to FIBERSTARS’
personnel.

    

    (c)           Technical
Services.  Upon FIBERSTARS request, VLI shall provide up to
one  hundred sixty (160) hours of on-site TECHNICAL SERVICES to make
the MACHINE operational at VLI’s standard hourly rates, plus actual, reasonable
travel and living expenses.

    

    ***
Confidential material has been redacted and separately filed with the
Commission.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    4.2           Site
Preparation.  The proper and timely construction of the
installation site for the MACHINE at FIBERSTARS’ facility and the process
support services (infrastructure for water, power, etc.) shall be the
responsibility of FIBERSTARS and shall conform to the written infrastructure
requirements provided by VLI.  Within thirty (30) days following its
receipt of Fiberstars’ written notice to VLI of FIBERSTARS’ election to
terminate the bailment and take possession of the MACHINE, VLI will deliver to
FIBERSTARS, in writing, the infrastructure requirements which shall be limited
to the following: Pipe drawings, list of utilities, list of electrical
requirements and physical layout.

    

    4.3           Modification of
Terms.  No addition to or modification of the terms and
conditions of the purchase and sale of the MACHINE, whether contained in a
purchase order or otherwise, shall be binding upon either party unless
specifically agreed to by both parties, in writing.

    

    4.4           Purchase
Price.  The purchase price for the MACHINE and a schedule of
payments of the purchase price are set forth in Exhibit D.

    

    4.5           Form of
Payment.  All payments to be made by FIBERSTARS to VLI for the
purchase of the MACHINE shall be made by wire transfer in U.S. Dollars through
VLI’s bank, as described in written instructions provided by VLI.

    

    4.6           Sale of the Machine by
FIBERSTARS.  During the first seven (7) years following the
Effective Date of this Agreement, (the “Restricted Sale Period”) if FIBERSTARS
receives a bonafide third party offer to purchase the MACHINE from any third
party, then FIBERSTARS shall have the right, subject to a written assignment and
assumption of the License Agreement (and all of FIBERSTARS’ obligations
therunder) approved in writing by VLI, to sell the MACHINE to such third party
only upon compliance with the following:

    

    (i)           FIBERSTARS
will provide a written notice of the proposed transaction to VLI, including
identifying the proposed purchaser and the agreed price;

    

    (ii)           The
proposed sale must provide for the delivery of the MACHINE to such third party
on a date not less than ten (10) months from the date a copy of such offer is
delivered to VLI;

    

    (iii)           VLI
will provide a written notice to FIBERSTARS, either exercising or rejecting this
right of first refusal, not less than forty-five (45) days after the notice of
the foregoing third party purchase offer is delivered to VLI; and

    

    (iv)           If
VLI exercises this right of first refusal, VLI shall purchase the MACHINE from
FIBERSTARS, at a price equal to the lesser of: (A) the price offered by such
third party, or  (B) the sum of the net book value of the MACHINE and
the License Agreement, as reflected in FIBERSTARS’ accounting records,
determined and payable as of the date of the proposed sale.

    

    (v)           If
VLI does not exercise the right of first refusal, their written approval is
required to sell the Machine to the third party.

     

    ***
Confidential material has been redacted and separately filed with the
Commission.

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    Except as
otherwise provided within the provisions of the License Agreement, upon the
expiration of the Restricted Sale Period, FIBERSTARS may sell the MACHINE and
transfer the License, without restriction.

    

    
      	
              5 

            	
              BAILMENT OF THE
      MACHINE

            

    

    

    
      	
            	
              5.1 

            	
              Bailment.

            

    

    

    
      	
               
      

            	
              a)

            	
              The
      MACHINE is being sold “AS IS” condition.  However, certain
      requirements and criteria for performance acceptance tests as described in
      Exhibit E will be
      performed.  Once the acceptable level of performance has been
      achieved, a “Certificate of Acceptance” in the form described on Exhibit F shall be
      signed by both parties.  The passage of title passes from VLI to
      FIBERSTARS at the time/date that the “Certificate of Acceptance” is
      executed.

            

    

    

    
      	
               
      

            	
              b)

            	
              On
      and after the sale date of the MACHINE to FIBERSTARS, VLI agrees to retain
      possession of the MACHINE at a facility owned or operated by VLI, or one
      of its subsidiaries or affiliates, and use the MACHINE for the purpose of
      manufacturing Products for and on behalf of FIBERSTARS for the Term of
      this Agreement, or until the bailment is terminated by FIBERSTARS,
      whichever first occurs.  Title to the MACHINE shall remain
      vested in FIBERSTARS during the period of this
      bailment.  FIBERSTARS shall have the right to inspect the
      MACHINE during VLI’s normal business hours upon delivery of reasonable
      prior notice.  VLI shall not acquire by this Agreement any
      right, title or interest, legal or equitable, in the MACHINE except for
      what is granted under the terms of this
  Agreement.

            

    

    

    5.2           Operational
Costs.  During the period of bailment, VLI shall pay all costs
associated with the use, maintenance and repair of the MACHINE, including but
not limited the replacement of parts, components and equipment as required,
however, all such costs shall be included in the definition of “Full Cost” as
set forth in Paragraph 6.2(a).  VLI shall maintain the MACHINE in good
condition and in accordance with VLI’s standard practices and shall deliver the
MACHINE to FIBERSTARS at FIBERSTARS’ expense at the termination of the bailment
in such condition, normal wear and tear excepted.

    

    5.3           Other Uses of the MACHINE by
VLI.  In exchange for the payment of One Hundred Twenty
Thousand Dollars ($120,000.00) from VLI to FIBERSTARS payable in twenty four
(24) monthly installments of Five Thousand Dollars ($5,000.00) each, VLI shall
have the right, during the first twenty four (24) months after the Effective
Date, to use the MACHINE for its own account and for the account of VLI’s other
customers, in its sole discretion (the “VLI Use”) so long as, and to the extent
that, such VLI Use does not hinder or delay the fulfillment of, or the delivery
of Products pursuant to, Purchase Orders issued by FIBERSTARS pursuant to the
forecast(s) provided by FIBERSTARS to VLI pursuant to Paragraph 6.10.
Notwithstanding the foregoing, in the event this Agreement is terminated for any
reason, on a date prior to twenty four (24) months after the Effective Date,
then VLI shall have no further obligation to make payments
hereunder.

     

    ***
Confidential material has been redacted and separately filed with the
Commission.

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    5.4           Damage to the
MACHINE.  FIBERSTARS shall procure and maintain insurance to
insure the MACHINE at its purchase price for loss or damage occasioned by fire,
theft, negligence or vandalism while the MACHINE is in possession of
VLI.  VLI shall use the proceeds of such insurance if delivered to VLI
by FIBERSTARS to repair, renovate or replace the MACHINE, as directed by
FIBERSTARS.  Any deficiency in the amount of insurance proceeds to
accomplish any such action shall be paid by
FIBERSTARS.  Notwithstanding the foregoing, if the Machine is damaged
or destroyed in whole or in part as a result of the negligence or intentional
misconduct of VLI, its employees, invitees, agents or contractors, VLI shall be
liable to FIBERSTARS in an amount equal to the cost of repairing or replacing
such damage or destruction.

    

    5.5           Termination of
Bailment.  Within thirty (30) days after the expiration or
earlier termination of the Term of this Agreement, VLI shall ship the MACHINE,
at FIBERSTARS’ cost, to a location designated by FIBERSTARS, and shall provide
the TECHNICAL TRAINING as set forth in Paragraph 4.1 and, to the extent
purchased by FIBERSTARS, the TECHNICAL DOCUMENTATION and the TECHNICAL SERVICES
pursuant to the provisions of Paragraph 4.1. Notwithstanding the foregoing, and
without limitation on VLI’s rights under Paragraph 4.6, during the first five
(5) years following the expiration or earlier termination of the Term of this
Agreement, VLI shall have the following rights to purchase the
MACHINE:

    

    (i) a
right of first refusal to purchase the MACHINE at the price set forth in a bona
fide, arms length purchase offer from a third party, which offer must provide
for the delivery of the MACHINE to such third party on a date not less than ten
(10) months from the date a copy of such offer is delivered to VLI. In
connection with the foregoing right of first refusal, VLI will provide a written
notice to FIBERSTARS, either exercising or rejecting such right of first
refusal, not less than 45 days after the notice of the foregoing third party
purchase offer is delivered to VLI; or

    

    (ii) upon
receipt of notification from FIBERSTARS that the MACHINE is no longer needed by
FIBERSTARS for the manufacture of Products, VLI shall have the right to purchase
the MACHINE at its then depreciated book value as reflected in FIBERSTARS’
accounting records.

    

    6.           PURCHASE OF
PRODUCTS

    

    6.1           Purchase and
Sale.  FIBERSTARS agrees to purchase one hundred percent (100%)
of the FIBERSTARS’ Products requirements exclusively from VLI pursuant to the
terms and conditions of this Agreement; provided, however, that if: (a) VLI is
unable to produce  Product(s) which meet the Product Specifications;
or (b) VLI acknowledges its inability to produce a particular Product, or (c)
VLI is unable to meet the agreed upon delivery dates for a particular Purchase
Order, then FIBERSTARS may purchase such specific Product from another source
until such time as VLI advises FIBERSTARS of its ability to produce and deliver
such Product in accordance with the terms and conditions of this
Agreement.

     

    ***
Confidential material has been redacted and separately filed with the
Commission.

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    6.2           Unit
Prices.  The unit price(s) for Products effective from the
Effective Date until June 30, 2007 are set forth in Exhibit G. All unit prices are
and shall be exclusive of taxes, duties, tariffs, freight charges, and in
transit insurance, the payment of which shall be the responsibility of
FIBERSTARS.  Annually, beginning July 1, 2007, the unit prices for
Products on Exhibit G
shall be amended annually (to be  effective on July 1 of the
applicable year through June 30 of the following year) based on the
following:

    

    
      	
               
      

            	
              a)

            	
              The
      annual revised Product prices shall be determined on or before July 1st
      of each year, based on VLI’s current “Full Cost” to manufacture and sell
      each Product to FIBERSTARS (excluding the depreciation expense for the
      MACHINE, which MACHINE shall be owned by FIBERSTARS and used in the
      production of the Products) plus Thirty-Three percent
      (33%) of such full cost of such Product.  For purposes of
      this Agreement, “Full Cost” shall have the meaning set forth on Exhibit H attached
      hereto.

            

    

    

    
      	
               
      

            	
              b)

            	
              On
      or before July 1, of each year, VLI shall establish its “Full
      Cost”.  VLI will review the annual “Full Cost” calculation with
      FIBERSTARS’ financial management.

            

    

    

    
      	
               
      

            	
              c)

            	
              The
      annual revised Product prices shall not be increased during the year
      unless VLI’s material costs have increased by more than five percent (5%)
      during the year.  In the event VLI’s material costs increase by
      more than five percent (5%) during the year, VLI may unilaterally increase
      the Product prices to recoup any material costs above the five percent
      (5%) increase, provided however, that prior to any price increase VLI
      shall first deliver to FIBERSTARS reasonable documentary
      evidence..

            

    

    

    Other
products that may be required by FIBERSTARS during the Term may be added by an
amendment to this Agreement.

    

    6.3           Purchase
Orders.  FIBERSTARS shall initiate each order for Products by
the delivery to VLI of a written purchase order (the “Purchase Order”), setting
forth the quantity to be ordered, the applicable unit price, and requested
delivery date(s).  Acceptable delivery dates are a function of order
quantities and shall be by mutual agreement, negotiated in good faith between
the parties; provided, however: (i) VLI shall commence delivery of Products
ordered by FIBERSTARS pursuant to the “firm” Purchase Order(s) (first four
weeks) under the forecast(s) required under Paragraph 6.10 within thirty (30)
days after receipt of each such Purchase Order; (ii) with regard to any Purchase
Order in excess of the forecasted amounts provided under Paragraph 6.10, VLI
shall use its best efforts to commence delivery of the Products within the
requested delivery time, however, VLI shall have no obligation to deliver such
Products earlier than ninety (90) days after its acceptance of each such
Purchase Order.

     

    ***
Confidential material has been redacted and separately filed with the
Commission.

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    6.4           Acceptance of
Orders.  Each Purchase Order shall be deemed to be an offer by
FIBERSTARS to purchase Products from VLI pursuant to the terms of this
Agreement, to the exclusion of any additional or contrary terms set forth in the
form of Purchase Order or any other document submitted by FIBERSTARS. Any
Purchase Order submitted by FIBERSTARS to VLI shall be subject to written
acceptance by VLI within seven (7) business days after receipt of the Purchase
Order by VLI. In the event VLI fails to respond or reject such Purchase Order
within seven (7) business days after receipt of the Purchase Order by VLI, then
such Purchase Order shall be deemed to be accepted by VLI, however, if any such
Purchase Order is in excess of the most current forecast provided by FIBERSTARS
pursuant to Paragraph 6.10, then such Purchase Order shall be deemed rejected
unless accepted pursuant to a written notice delivered from VLI to
FIBERSTARS.

    

    6.5           Delivery.  Unless
otherwise agreed upon in a writing executed by both VLI and FIBERSTARS, all
deliveries of the Products shall be in VLI’s original packaging and shall be FOB
VLI’s shipping dock.  “Delivery” shall occur and title to the
Products and all risk of damage to or loss of the Products shall pass to
FIBERSTARS upon receipt and/or pick up of the Products at VLI’s shipping dock by
FIBERSTARS or a carrier designated by FIBERSTARS. All in-transit insurance
premiums, freight charges and other expenses of delivery shall be at FIBERSTARS’
expense.    The failure of FIBERSTARS to inspect and reject
nonconforming items via a written notice to VLI within thirty (30) days after
delivery shall be deemed acceptance of such items by FIBERSTARS with full
responsibility for payment.

    

    6.6           Payment.  VLI
will issue to FIBERSTARS an invoice for the Products on the date of
delivery.  FIBERSTARS will pay invoices prepared and delivered in
accordance with this Agreement within forty-five (45) days following date of
invoice.  If FIBERSTARS has a good faith dispute concerning any
portion of an invoice from VLI, FIBERSTARS will, within such forty-five (45) day
period, pay the undisputed portion, deliver a written notice to VLI describing
in reasonable detail the reasons why the invoice is disputed, and may withhold
the disputed portion pending resolution of the dispute in accordance with the
provisions of Paragraph 11.9, below.  If undisputed amounts are paid
when due, VLI agrees that it may not withhold performance of any of its
obligations under this Agreement.  If an undisputed amount or any
disputed amount that is later determined to have been payable is not paid when
due, VLI will provide a written notice thereof to FIBERSTARS, and FIBERSTARS
will pay such amount within thirty (30) additional days following receipt of
such notice.  Any such amounts that are not paid within the foregoing
timeframe shall be “Delinquent”. If any amount is Delinquent, that shall be
deemed a material breach of this Agreement.

    

    6.7           Manufacturing
Process.  The Products shall be manufactured in conformity with
the Product Specifications.  All process changes for manufacturing the
Products may be made at the discretion of VLI without the consent of FIBERSTARS.
The aforementioned Products shall meet the internal quality standard of Products
adopted by VLI.  Should FIBERSTARS decide to fund research and
development for improvements to such process, the details of such funding, the
scope of the research and development, the procedures by which any modifications
are to be incorporated into the process utilized for the manufacture of Products
under this Agreement, and the ownership of such improvements shall all be
documented in a separate agreement between FIBERSTARS and
VLI.  

     

    ***
Confidential material has been redacted and separately filed with the
Commission.

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    6.8           Quality
Assurance.  VLI shall perform quality assurance tests and
inspections as it deems reasonably necessary to screen Products prior to
shipment.  Records of relevant manufacturing parameters and quality
assurance data on a run-by-run basis will be made available to FIBERSTARS upon
request.

    

    6.9           Specification
Changes.  FIBERSTARS and VLI anticipate that it may be
desirable during the term of this Agreement to amend the Product
Specifications.  Such amendments to the Product Specifications shall
be made by mutual agreement of VLI and FIBERSTARS.  If such Product
Specification changes require or allow a change in pricing, such pricing changes
shall be by mutual agreement and shall be reflected in a revision to Exhibit C pursuant to an
amendment to this Agreement.

    

    6.10           Forecasts.  FIBERSTARS
is obligated to continually provide a six (6) month rolling forecast of Product
requirements (by type and quantity) to VLI, such forecast to be
updated  monthly.  All Product requirements forecasted for
the first four (4) weeks of the six (6) month forecast are considered a firm,
non-cancelable Purchase Order.

    

    
      	
              7.

            	
              REPRESENTATIONS AND
      WARRANTIES

            

    

    

    7.1          Intellectual Property
Representation.   Each of the parties represents and
warrants to the other that: (i) it owns all right, title and interest in its own
technology; (ii) its technology does not infringe or constitute a
misappropriation of any intellectual property rights of any third party; and
(iii) it has not entered into any agreement inconsistent with this Agreement or
has not otherwise granted to any third party any rights inconsistent with the
rights granted to the other party under this Agreement.  No rights to
technology or proprietary data are created or transferred by this
Agreement.  VLI’s current technology, processes, equipment (other than
the EQUIPMENT), procedures and technology it may develop during the term of this
Agreement that is not the result of a joint development effort with FIBERSTARS,
is and shall remain the exclusive property of VLI.

    

    7.2          VLI
Warranties.

    

    (a)           VLI
represents and warrants that it will be the owner of the MACHINE on the day of
transfer and the related TECHNICAL DOCUMENTATION free and clear of any and all
liens, claims and encumbrances of any kind.

    

    ***
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Commission.

    
      
         

      

      
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    (b)           With
regard to Products for which product designs have been approved in writing and
released for production by VLI, VLI warrants to FIBERSTARS for a period of six
(6) months from the date of shipment that such Products supplied by VLI under
this Agreement shall conform to their applicable specifications and shall be
free of all defects in materials and workmanship and shall be free of all liens,
security interests and other claims of third parties.  VLI makes no
warranty whatsoever with regard to Products for which product designs have not
been approved in writing and released for production by VLI.

    

    EXCEPT AS
EXPRESSLY SET FORTH IN THE FOREGOING WARRANTIES, VLI MAKES NO OTHER EXPRESS OR
IMPLIED WARRANTIES. VLI SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. IN NO EVENT SHALL VLI BE
LIABLE FOR ANY INCIDENTAL, INDIRECT, CONSEQUENTIAL OR SPECIAL DAMAGES ARISING
OUT OF OR IN CONNECTION WITH THE USE OR PERFORMANCE OF THE MACHINE OR THE
PRODUCTS DELIVERED HEREUNDER.  WITH RESPECT TO ANY PRODUCT PURCHASED
UNDER THIS ORDER AND ALLEGED TO BE THE CAUSE OF ANY LOSS OR DAMAGE TO
FIBERSTARS, THE SUM EQUAL TO THE INVOICED PRICE OF SUCH PRODUCT (OR IF NOT
SEPARATELY PRICED, VLI'S ESTABLISHED SELLING PRICE FOR SUCH ITEM) SHALL BE THE
MAXIMUM CEILING LIMIT ON VLI'S LIABILITY, WHETHER SUCH CLAIM IS FOUNDED IN
CONTRACT OR TORT (INCLUDING NEGLIGENCE, STRICT TORT LIABILITY OR BREACH OF
WARRANTY), ARISING OUT OF OR RESULTING FROM: (I) THIS ORDER OR THE PERFORMANCE
OR BREACH THEREOF, OR (II) THE DESIGN, MANUFACTURE, DELIVERY, SALE, REPAIR,
REPLACEMENT, USE OR FURNISHING OF ANY SUCH PRODUCT(S).

    

    (c)        All
Products which FIBERSTARS considers defective shall be
returned to VLI’s plant, transportation costs prepaid by
FIBERSTARS.  The risk of loss of the Products shipped to VLI on a
warranty claim will be borne by FIBERSTARS.  If Products have been
returned without cause and are still serviceable, FIBERSTARS will be notified
and the Products returned at FIBERSTARS’ expense.  VLI shall bear the
cost of testing and examination, if any, with respect to Products so
returned.  VLI’s sole and exclusive liability and FIBERSTARS’ sole and
exclusive remedy with respect to warranty claims for defective Products under
this Agreement shall be, at VLI’s election, the repair or replacement of any
nonconforming Products, or a credit to FIBERSTARS’ account at the purchase price
plus all applicable freight charges, taxes, duties, tariffs and in-transit
insurance.  These remedies are available only if VLI is notified in
writing by FIBERSTARS within the warranty period of the discovery of
nonconformities, and such nonconformities actually exist and persons not
authorized by VLI have not (a) repaired, worked on, or altered the Products in a
manner that degrades or damages the stability, reliability, or proper operation
of such Products or (b) misused or negligently handled such
Products.

    

    7.3           Indemnification.  Each
party shall indemnify and hold harmless the other party, and its officers,
directors, shareholders, employees and agents, from and against all claims,
damages, losses, liabilities, suits and expenses (including reasonable
attorneys’ fees) arising out of or by reason of any breach by such party of any
of the intellectual property representations made by it in Paragraph 7.1 or any
violation of the License Agreement.

     

    ***
Confidential material has been redacted and separately filed with the
Commission.

    
      
         

      

      
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              8. 

            	
              RIGHTS TO INTELLECTUAL
      PROPERTY

            

    

    

    8.1           Existing Intellectual
Property.  Patents of any country assigned or issued to either
party, which patents claim inventions developed prior to the Effective Date, and
inventions, patentable and unpatentable, that were developed by either party
prior to the Effective Date, the subjects of which are necessary for the
manufacture of Products, shall remain the property of the originating
party.

    

    8.2           New Intellectual
Property.  Unless otherwise expressly set forth in this
Agreement, all intellectual property and all patents throughout the world
resulting from the work performed by VLI during the course of manufacturing the
Products pursuant to the provisions of this Agreement shall be owned exclusively
by VLI, excepting ownership of patents on lighting system(s) designed for the
Fiber Optic Field of Use, which system(s) may or may not utilize Product(s) as
component(s) thereof. However, ownership of intellectual property resulting from
research and development separately funded by FIBERSTARS pursuant to Paragraph
6.7 shall be determined in accordance with the provisions of the separate
agreement for such work entered into after the Effective Date. Notwithstanding
any of the foregoing, any and all patents on Product(s) shall be exclusively
owned by VLI, and the “use” of any such Product(s) by FIBERSTARS shall be
pursuant to license(s) granted from VLI to FIBERSTARS.

    

    
      	
              9. 

            	
              TERM AND
      TERMINATION

            

    

    

    9.1           Term.  Notwithstanding
any other provision of this Agreement, the term of this Agreement (the “Term”)
shall commence, if at all, upon May 1, 2006, between FIBERSTARS and ADLT (the
“Effective Date”) and shall remain in effect for seven (7) years unless earlier
terminated pursuant to the terms of this Paragraph 9.2 or 9.3
below.

    

    9.2          Termination without
Cause.  Upon completion of the first fifteen (15) months of the
Term, FIBERSTARS shall thereafter have the right to unilaterally terminate this
Agreement, without cause, by the delivery of a minimum of nine (9) months’ prior
written notice to VLI. At any time after the Effective Date, VLI shall
thereafter have the right to unilaterally terminate this Agreement, without
cause, by the delivery of a minimum of twenty-four (24) months’ prior written
notice to FIBERSTARS.  In either case, such written notice shall
specifically set forth that the terminating party is exercising its right of
termination without cause pursuant to this Paragraph 9.2.

     

    9.3          Termination for
Cause.  This Agreement may be earlier terminated in accordance
with the following provisions:

     

    (a)           Either
party may terminate this Agreement at any time by the delivery of a written
notice to the other party, which notice shall be effective upon receipt, if the
other party files a petition for any type of bankruptcy, becomes insolvent,
makes an assignment for the benefit of creditors, goes into liquidation, or
becomes the subject of a receivership.

     

    ***
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Commission.

    
      
         

      

      
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    (b)           Either
party may terminate this Agreement by the delivery of written notice to the
other party, which notice shall be effective upon receipt, in the event the
other party is in breach of a material provision of this Agreement and has
failed to cure such breach within sixty (60) days after the date such notice of
breach is received; provided, however, that if the nature of the breach is such
that it cannot reasonably be cured within such sixty (60) day period, the
breaching Party shall not be deemed in breach if it commences the cure within
such sixty (60) day period and thereafter diligently prosecutes the cure to
completion.  The breach of a material provision of this Agreement
shall include, but not be limited to: (i) late or nonpayment of amounts due
under a VLI invoice not subject to a timely dispute; and (ii) a breach of the
confidentiality provisions of Paragraph 10.

     

    (c)           In
the event that VLI becomes a business outside of ADLT, through sale, divestment,
restructuring or any other means, then FIBERSTARS may terminate this Agreement
by the delivery of written notice to VLI.

    

    9.4           Consequences of
Termination.

    

    (a)          Upon
the expiration or earlier termination of this Agreement, all Purchase Orders
then accepted by VLI shall be completed through the delivery of the ordered
Products and the payment of VLI’s invoices.  All technical
information, including but not limited to know-how, provided by one party to the
other during the term of this Agreement shall be returned at the request of the
party who provided such information.

    

    (b)          In
the event of the termination of this Agreement by: (i) VLI pursuant to the
provisions of Paragraph 9.2, or (ii) FIBERSTARS pursuant to the provisions of
Paragraph 9.3(a) or  9.3(b), and upon receipt by
VLI from FIBERSTARS of a license fee in the amount of one thousand dollars
($1,000.00), then VLI shall: (A)
grant to FIBERSTARS  a limited license to use the VLI Technology , as
set forth in Exhibit A
of this Agreement  (the “License Agreement”), (B) transfer the
MACHINE to a facility specified by FIBERSTARS at FIBERSTARS’ expense, (C) supply
FIBERSTARS with a price quote for the delivery and installation (within one
month) at a location designated by FIBERSTARS, of one (1) Krypton cabinet
appropriate for use with the MACHINE, such quote not to exceed One Thousand
Dollars ($1,000.00); (D) VLI shall supply Formed Bodies pursuant to the terms
set forth on Exhibit I
to VLI for the longer of: (1) nine (9) months following termination of this
Agreement; or (2) completion of delivery and installation of a “Bulb Former”
machine (at location designated by FIBERSTARS, pursuant to Subsection 9.4(b)(E);
below; and (E) deliver and install a “Bulb Former” machine, for the manufacture
of Formed Bodies, (which machine shall include bulb former jaws and
burners for each size arc tube, chucks and seals for each size tubing, loading
trays for each size tube) at a location designated by FIBERSTARS, for the price
of Fifty Thousand Dollars ($50,000.00) to be paid by FIBERSTARS to VLI in
advance of installation.  Upon completion of delivery and installation
of the “Bulb Power” machine, VLI shall have no further obligation to supply
formed bodies to FIBERSTARS.  Further, in this event, VLI shall
forfeit its rights to purchase the MACHINE as detailed in Sections 4.6 and 5.5,
however all of VLI’s approval rights regarding the sale and transfer of the
MACHINE to a third party shall remain in effect.

     

    ***
Confidential material has been redacted and separately filed with the
Commission.

    
      
         

      

      
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    (c)          In
the event of the termination of this Agreement by: (i) FIBERSTARS pursuant to
the provisions of Paragraph 9.2, or 9.3(c) or (ii) VLI pursuant to the
provisions of Paragraph 9.3(a) or 9.3(b), and upon receipt by
VLI from FIBERSTARS of both, a license fee in the amount of three thousand
dollars ($3,000.00), and full payment for VLI’s entire remaining inventory of
“finished” Products which were manufactured by VLI pursuant to the forecasts
provided by FIBERSTARS pursuant to Paragraph 6.10, then VLI shall: (A)
grant to FIBERSTARS  a limited license to use the VLI Technology , as
set forth in Exhibit A
of this Agreement  (the License Agreement), (B) transfer the
MACHINE to a facility specified by FIBERSTARS at FIBERSTARS’  expense,
and (C) supply FIBERSTARS with a price quote for the delivery and installation
(within one month) at a location designated by FIBERSTARS, of one (1) Krypton
cabinet appropriate for use with the MACHINE, such quote not to exceed Fifteen
Thousand Dollars ($15,000.00).  Upon completion of the foregoing, VLI
shall have no further obligations hereunder.

    

    (d)           The
parties hereto acknowledge and agree that the grant of a limited license from
VLI to FIBERSTARS in conjunction with the transfer of the MACHINE pursuant to
any of the above paragraphs, will not require payment of any additional “license
fee” or royalty.

    

    
      	
              10. 

            	
              CONFIDENTIALITY

            

    

    

    During the term of this Agreement it is
anticipated that each party will be exposed to proprietary information and
intellectual property concerning the other party’s business, products,
technology, customers, marketing and sales plans, and related information that
is of substantial value to the party owning it, which value would be impaired if
such information were disclosed to others.  This information is
referred to as “Confidential Information.”  “Confidential Information
of FIBERSTARS” includes, but is not limited to, marketing plans for
Products.  “Confidential Information of VLI” includes, but is not
limited to, information concerning the MACHINE and the Products as set forth in
Exhibits B, C, E, G,
and H, marketing
and sales plans, Product designs, machine designs, and technology, processes and
tooling for the manufacture of Products.

    

    For a period of five (5) years
following the termination of this Agreement, each party agrees not to disclose
or otherwise make the other party’s Confidential Information available to third
parties or to make any use of such Confidential Information except as
contemplated in this Agreement.  Each party further agrees to restrict
access to the other party’s Confidential Information to employees who have a
need to know in order to fulfill the provisions of this Agreement and who have
signed confidentiality agreements with their employer.  Each party
shall give notice to the other party of information disclosed to such other
party which the disclosing party deems Confidential Information as follows: all
written confidential information shall be labeled as such; all verbal
Confidential Information shall be reduced to writing and sent to the receiving
party within thirty (30) days after the verbal disclosure. If either party is in
doubt as to whether or not certain information is confidential, it shall request
and receive written clarification from the other party before disclosing such
information.

    

    ***
Confidential material has been redacted and separately filed with the
Commission.

     

    
      
         

      

      
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    Each party will treat and safeguard the
Confidential Information received from the other party, whether verbally or in
writing (provided that it is properly identified as such as provided above), in
the same manner as the receiving party safeguards its own Confidential
Information but in no event using less than reasonable efforts to safeguard such
Confidential Information from disclosure.  The restrictions against
disclosure or unauthorized use of Confidential Information shall not apply
to:

    

    (a)           Information
which, through no breach of the receiving party’s obligations hereunder, is in
the public domain, revealed in published technical articles or other printed
publications, or inherently revealed by products on the market, the sale of
which is not a violation of the terms of this Agreement or subsequent production
contracts or purchase orders;

    

    (b)           Information
already known to the receiving party prior to the date of this Agreement and not
subject to any similar obligation of the receiving party in any other agreement
with the disclosing party, as shown by documentary materials;

    

    (c)           Information
which is or becomes rightfully available to the receiving party from a source
other than the disclosing party, which has no confidentiality obligation to the
disclosing party in respect thereto;

    

    (d)           Information
the receiving party is obligated to produce as a result of a court order;
and

    

    (e)           Information
which, by prior agreement, the disclosing party agrees may be
disclosed.

    

    If the
receiving party intends to rely upon any of the foregoing exceptions in order to
disclose or use Confidential Information for purposes other than those
identified in this Agreement, the receiving party agrees to discuss the basis
for such reliance with the disclosing party prior to any disclosure or
use.

    

    At the request of the disclosing party,
the receiving party shall return to the disclosing party all writing and
documents containing Confidential Information that are in the possession of the
receiving party, except for one copy retained for archival
purposes.  At such time, the receiving party also will make reasonable
efforts to locate and destroy electronic copies of such Confidential
Information, except that one electronic copy also may be retained for archival
purposes.

    

    ***
Confidential material has been redacted and separately filed with the
Commission.

    
      
         

      

      
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                11. 

              	
                MISCELLANEOUS

              

      

    

     

    11.1        Force
Majeure.  If the performance of this Agreement by either party
should be prevented, delayed, restricted, or interfered with by any man-made or
natural catastrophe, including but not limited to strikes or other labor
disturbances (not including strikes or labor disturbances involving the
employees of the party seeking to rely on this provision to excuse
non-performance), embargoes, fire, explosion, acts of war, unforeseeable
government action or inaction, the unavailability of materials supplied by third
parties, or any other circumstance outside the control of the parties, then the
party so affected shall, upon giving prompt notice of the same, be excused from
such performance to the extent of such prevention, delay, restriction, or
interference provided that the party so affected shall use its best efforts to
avoid or remove such causes of nonperformance and promptly resume performance
hereunder when such causes have been removed.  Upon such circumstances
arising, the parties shall promptly consult as to what (if any) modifications to
the terms of the Agreement may be required to arrive at an equitable solution;
and, if such nonperformance appears likely to continue for an extended period of
time and the affected party’s nonperformance appears likely to cause serious
hardship to the other party, such party may terminate this Agreement by giving
thirty (30) days written notice to the other party.

     

    11.2        Assignment.  Neither
Party shall have the right to assign or otherwise transfer its rights and
obligations under this Agreement except with the prior written consent of the
other Party; provided, however, that a successor in interest by merger, by
operation of law, assignment, purchase or otherwise of the entire business of
either Party shall acquire all rights and obligations of such Party. Any
prohibited assignment shall be null and void.  Provided that VLI
provides FIBERSTARS with a minimum of ninety (90) days prior written notice (the
“Relocation Notice”),
VLI shall have the right to: (i) assign this Agreement and to relocate
the MACHINE to an entity in India formed under the laws of India that is owned
and controlled by VLI and/or ADLT; and/or (ii) assign this Agreement and to
relocate the MACHINE to an entity in India formed under the laws of India that
is a joint venture among VLI and/or ADLT and a third party.  In either
case, this Agreement will not be terminated, VLI shall remain fully liable to
FIBERSTARS for the timely and proper performance of the Agreement by such
assignee.

     

    NOTE:
The parties hereto acknowledge and agree that, in the event VLI relocates the
MACHINE to a facility in India (as described above), then VLI shall be obligated
to build up to a six (6) month supply of Products in VLI’s inventory to supply
FIBERSTARS during the transition. Such inventory build up shall be based on a
special written forecast to be delivered to VLI from FIBERSTARS (“Relocation
Forecast”) within ten (10) days after receipt by FIBERSTARS of VLI’s Relocation
Notice (as set forth above).   The Relocation Forecast shall be a
firm, non-cancelable Purchase Order from FIBERSTARS.

     

    11.3        Applicable
law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio, excluding its laws relating to
the conflict of laws and the choice of laws.

    

    11.4        Notice.  Any
notice required to be given under this Agreement shall be in writing and may be
served either by personal delivery, telex, facsimile transmission, telegram,
certified or registered air mail (return receipt requested and postage prepaid)
or express delivery service addressed to the parties respectively at the
following addresses.

    

    ***
Confidential material has been redacted and separately filed with the
Commission.

    
      
         

      

      
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      VLI
or ADLT:

       

      Venture
Lighting International, Inc

      32000
Aurora Road

    

    Solon,
OH  44139

    Attention:  Sabu
Krishnan, President

    Fax:  440-836-7045

    

    FIBERSTARS:

    

    Fiberstars,
Inc.

    32000
Aurora Road

    Solon,
OH  44139

    Attention:
Roger Buelow, Chief Technology Officer

    Fax:  (440)
519-1038

    

    or such
other address, facsimile, or telex number as the parties may later designate by
written notice to each other.  All notices delivered in accordance
with this Paragraph 8.4 shall be effective as of the date of receipt by the
notified party.

    

    11.5        Modifications.  This
Agreement may not be amended, supplemented, released, discharged, abandoned,
changed, or modified in any manner, orally or otherwise, except by an instrument
in writing of concurrent or subsequent date signed by a duly authorized
representative of each of the parties.

    

    11.6        Entire
Agreement.  The terms and provisions set forth in this
Agreement constitute the entire and only agreement between FIBERSTARS and VLI
with respect to this subject matter, and cancel all preexisting agreements,
contracts or understandings between them in respect to the
same.  Headings used in this Agreement are only for convenience and
are not to be used in the interpretation of this Agreement.  The
parties expressly acknowledge and agree that the Master Services Agreement, the
ADLT Development Agreement, the Fiberstars Development Agreement, the
Cross-License Agreement and the Mutual Supply Agreement, each by and between
FIBERSTARS and Advanced Lighting Technologies, Inc. and each dated September 19,
2005 shall not apply to and shall not govern the matters agreed upon
hereunder.

    

    11.7        Severability.  If
any provision of this Agreement, or the application thereof to any person or
circumstance should, for any reason and to any extent, be invalid, unenforceable
or illegal, the remainder of this Agreement and the application of such
provisions to other persons or circumstances shall not be effected thereby, but
rather shall be enforced to the greatest extent permitted by law, and a rapid
remedy sought for the provision found to be at fault.

    

    11.8        No
Partnership.  This Agreement does not create a relationship of
joint venture, employment, partnership, or agency between FIBERSTARS and
VLI.

    

    11.9        Dispute
Resolution.  In the event a dispute, claim or controversy
arises between the parties relating to the validity, interpretation,
performance, termination or breach of this Agreement (collectively, the
“Dispute”) the parties agree to hold a meeting, attended by individuals with
decision-making authority regarding the Dispute, to attempt in good faith to
negotiate a resolution of the Dispute prior to pursuing other available
remedies.  If within thirty (30) days after such meeting, the parties
have not succeeded in negotiating a resolution of the Dispute, the Dispute shall
be resolved through final and binding arbitration at the request of either
party.

     

    ***
Confidential material has been redacted and separately filed with the
Commission.

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

     

    The
arbitration shall be conducted by a single arbitrator in the City of Solon,
Ohio, in accordance with the laws of the State of Ohio, and the then-current
commercial arbitration rules and supplementary procedures for commercial
arbitration of the American Arbitration Association (“AAA”).  The
arbitrator shall be selected by the mutual agreement of the parties, or failing
such agreement, shall be selected according to the relevant AAA
rules.  The parties shall bear the costs of such arbitrator
equally.

    

    The prevailing party in any such
arbitration or in any judicial enforcement or review proceeding shall be
entitled to its reasonable attorneys fees and costs in addition to any other
amount of recovery ordered by such arbitrator or court. Either party may cause
judgment to be entered upon such award in any court of competent
jurisdiction.  The duty of the parties to arbitrate any Dispute
relating to the interpretation or performance of this Agreement or the grounds
for any termination thereof shall survive expiration of this Agreement for any
reason.

    

    11.10      Counterparts.  This
Agreement may be executed in two or more counterparts in the English language,
and each such counterpart shall be deemed an original.

     

    11.11      Waiver.  No
failure by either Party to take any action or assert any right under this
Agreement shall be deemed to be a waiver of such right in the event of the
continuation or repetition of the circumstances giving rise to such
right.

     

    11.12      Attorneys’
Fees.  In the event that any action or proceeding is brought to
enforce or interpret any term, covenant or condition of this Agreement or to
collect damages due to a breach of this Agreement, the prevailing Party in such
action or proceeding (whether after trial or appeal) shall be entitled to
recover from the Party not prevailing its expenses incurred in such action or
proceeding, including reasonable attorneys' fees and all allowable
costs.

     

    11.13      Headings.  The
section and paragraph headings used in this Agreement are for convenience only.
They shall not be used to define, limit or interpret this
Agreement.

    

    
      
        
          
            
              	
                      FIBERSTARS,
      INC.

                    	 
      	
                      VENTURE
      LIGHTING

                      INTERNATIONAL,
      INC.

                    	 
      
	 
      	 
      	 
      	 
      
	
                      By

                    	 
      	 
      	
                      By

                    	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	
                      Title

                    	 
      	 
      	
                      Title

                    	 
      	 
      
	 
      	 
      	 
      	 
      
	
                      Date:  April
      ___, 2006

                    	 
      	
                      Date:  April
      __, 2006

                    	 
      

            

          

        

      

    

     

    ***
Confidential material has been redacted and separately filed with the
Commission.

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    EXHIBIT
A

    LICENSE
AGREEMENT

    

    This
License Agreement (the "License Agreement") is made and entered into as of this
______ day of ___________, 2006 (the “Effective Date”), by and between FIBERSTARS, INC., an Ohio
corporation with its principal place of business at 32000 Aurora Road, Solon,
Ohio 44139 (the "Licensee") and VENTURE LIGHTING INTERNATIONAL,
INC., an Ohio corporation with its principal place of business at 32000
Aurora Road, Solon, Ohio 44139 ("VLI").

    

    
      	
              1. 

            	
              DEFINITIONS

            

    

    

    1.1          VLI
Process.  The proprietary process for use of the MACHINE for
manufacturing LICENSED PRODUCTS, utilizing inventions (patentable and
unpatentable), designs, specifications, manuals, techniques, procedures,
know-how and trade secrets, that are documented in written, electronic or
graphic form and provided to Licensee in the TECHNICAL DOCUMENTATION, as defined
in the SUPPLY CONTRACT (see Section 1.4, below), or otherwise provided to
Licensee in written, electronic or graphic form and labeled as “confidential”,
all of which are necessary for the manufacture or processing of metal halide arc
tubes, will be referred to as the “VLI PROCESS.”

    

    1.2          Licensed
Product.  “LICENSED PRODUCT(S) shall mean metal halide arc
tubes ***, manufactured by means of the VLI PROCESS for use(s) solely and
exclusively within the “Fiberoptic Field of Use” (defined below).

    

    1.3          Machine.  The
VLI *** Arc Tube Pinch & Exhaust machine as sold by VLI to Licensee under
the SUPPLY CONTRACT will be referred to as the “MACHINE”.

    

    1.4          Supply
Contract.  The Equipment Purchase and Product Supply Agreement,
dated______________, 2006, between VLI and Licensee shall be referred to as the
“SUPPLY CONTRACT.”

    

    1.5          Technical
Documentation.  TECHNICAL DOCUMENTATION shall have the meaning
ascribed to it in the SUPPLY CONTRACT.

    

    1.6          Fiberoptic Field of
Use.  Lighting applications or systems (and components of such
systems) which include both:  (A) a remote light source, and (B)
either (i) fiberoptics, or (ii) light pipes, or (iii) other light guides, for
conveying light from the remote source, but excluding applications in Civilian
Transportation, television, and projection.

    

    1.7          Civilian
Transportation.  Civilian Transportation shall mean all
passenger automobiles, commercial (non-military) aircrafts, trucks, motorcycles,
and off-road vehicles, but excludes ships, RV’s (recreation vehicles),
limousines and mining equipment and other industrial or military vehicles or
equipment.

     

    *** Confidential material has been
redacted and separately filed with the Commission.

    
      
         

      

      
        A-1

        
          

        

      

      
         

      

    

     

    
      	
              2. 

            	
              LICENSE

            

    

    

    VLI
hereby grants to Licensee a royalty-free, nonexclusive, worldwide, transferable
(subject to the limitations provided below), irrevocable (except as expressly
provided herein) limited license, with the right (subject to the limitations
provided below) to use the VLI PROCESS to make LICENSED
PRODUCTS.  Licensee acknowledges and agrees that any and all LICENSED
PRODUCTS made or manufactured hereunder, shall be made or manufactured solely
and exclusively for use in the Fiberoptic Field of
Use.  Notwithstanding the foregoing, the following limitations shall
apply to proposed assignment of this License Agreement (which may only occur in
conjunction with an approved sale of the MACHINE) by Licensee:

    

    (a)          During
the period ending five (5) years from the date of this License Agreement, the
assignment of the license granted in this License Agreement shall be subject to
the provisions of Paragraph 4.6 of the SUPPLY CONTRACT.

    

    (b)          During
the period ending five (5) years from the date of this License Agreement, if
Licensee proposes to purchase any one or more additional “*** Arc Tube Pinch
& Exhaust” machines that are the same as, or substantially the same as the
MACHINE, Licensee shall purchase such machine(s) exclusively from VLI or from a
person, firm or corporation authorized by VLI to do so.

    

    (c)          In
any event and at any time after the date of this License Agreement, if Licensee
proposes to purchase a “*** Arc Tube Pinch & Exhaust” machine from a third
party, Licensee may not disclose to such third party any portion of the VLI
PROCESS or the TECHNICAL DOCUMENTATION that is VLI’s Confidential Information,
and Licensee will not allow such third party to examine MACHINE.

    

    (d)          In
any event and at any time after the date of this License Agreement, Licensee is
prohibited from building or manufacturing, or having any third party build or
manufacture (whether as a “work for hire” or otherwise) any “*** Arc Tube Pinch
& Exhaust” machine(s) that are the same as, or substantially the same as the
MACHINE, without first obtaining the prior written approval of VLI.
Notwithstanding any written approval granted by VLI for the building or
manufacture of such a machine, Licensee shall have no right and shall not under
any circumstances, provide to any third party any portion of the VLI PROCESS or
the TECHNICAL DOCUMENTATION.

     

    
      	
              3.

            	
              LICENSE
      FEE

            

    

     

    As full and complete consideration for
all rights granted by VLI and for all representations, warranties and covenants
of VLI under this License Agreement, Licensee shall pay to VLI the applicable
license fee as specified in the SUPPLY CONTRACT, if any.  The parties
acknowledge that there are circumstances where the license fee may be zero
dollars, and other circumstances where the amount of the license fee will vary,
all as more particularly set forth in the SUPPLY CONTRACT.  VLI
acknowledges that, where the license fee is zero, the amounts paid to purchase
MACHINE under the SUPPLY CONTRACT shall constitute complete consideration for
this License Agreement.

     

    *** Confidential material has been
redacted and separately filed with the Commission.

    
      
         

      

      
        A-2

        
          

        

      

      
         

      

    

     

    
      	
              4.

            	
              CONFIDENTIALITY

            

    

    

    The VLI PROCESS shall be deemed to be
“Confidential Information”, as that term is defined in the SUPPLY
CONTRACT.  The provisions of Section 10 of the SUPPLY CONTRACT shall
apply to Confidential Information of the VLI and Licensee, and their successors
and assigns.

    

    
      	
              5. 

            	
              TERM AND
      TERMINATION

            

    

    

    5.1           Term.  This
License Agreement will be effective on the Effective Date and its term shall be
perpetual, unless earlier terminated pursuant to the other provisions of this
Section 5.

    

    5.2           Termination for
Cause.  The grounds for termination of this License Agreement
for “cause” shall be as follows:  A party may terminate this License
Agreement in accordance with the following procedures in the event the other
party fails to cure a material breach of this License
Agreement.  Material breaches of this License Agreement by a party
shall include, but not be limited to:  (i) a material failure of a
party to comply with the confidentiality obligations in Section 4, (ii) the use
of the MACHINE by Licensee (or any successor or assign of Licensee) to
manufacture, make or otherwise produce any goods or products for use outside of
the Fiberoptic Field of Use.  In the event a material breach occurs,
the non-breaching party shall give the breaching party a written notice thereof,
which notice shall contain a reasonably detailed description of the conduct
alleged to give rise to the breach.  The party asserting the breach
may terminate this License Agreement, effective upon delivery of a written
notice of termination to the breaching party, in the event the breach is not
cured within thirty (30) days from the date the initial notice of breach is
delivered.  If, however, the nature of the breach is such that it
cannot reasonably be cured within such thirty (30) day period, the breaching
party shall not be deemed in breach if it commences the cure within such period
and thereafter diligently prosecutes the same to completion.

    

    5.3           Consequences Of Termination
for Cause .  Within ten (10) days after the date of termination
for cause by VLI, Licensee shall deliver to VLI all copies of TECHNICAL
DOCUMENTATION and all other information about the VLI PROCESS provided by VLI to
Licensee in connection with this License Agreement.  A termination of
this License Agreement for cause shall not relieve either party from its
obligations of confidentiality under Section 4 for the period set forth
therein.  A termination of this License Agreement for cause shall not
prejudice the right of either party to recover any sums due or accrued at the
time of such termination, nor shall it prejudice any cause of action or claim of
such party arising out of any breach or default by the other
party.  The provisions of Sections 4, 5, 6, 7 and 8 shall survive the
termination of this License Agreement.

    

    *** Confidential material has been
redacted and separately filed with the Commission.

    
      
         

      

      
        A-3

        
          

        

      

      
         

      

    

     

    
      	
              
                6. 

              

            	
              DISPUTE
      RESOLUTION

            

    

     

    In the
event a dispute, claim or controversy arises between the parties relating to the
validity, interpretation, performance, termination or breach of this License
Agreement (collectively, the “Dispute”) the parties agree to hold a meeting,
attended by individuals with decision-making authority regarding the Dispute, to
attempt in good faith to negotiate a resolution of the Dispute prior to pursuing
other available remedies.  If within thirty (30) days after such
meeting, the parties have not succeeded in negotiating a resolution of the
Dispute, the Dispute shall be resolved through final and binding arbitration at
the request of either party.

    

    The
arbitration shall be conducted by a single arbitrator in the City of Solon,
Ohio, in accordance with the laws of the State of Ohio, and the then-current
commercial arbitration rules and supplementary procedures for commercial
arbitration of the American Arbitration Association (“AAA”).  The
arbitrator shall be selected by the mutual agreement of the parties, or failing
such agreement, shall be selected according to the relevant AAA
rules.  The parties shall bear the costs of such arbitrator
equally.

    

    The prevailing party in any such
arbitration or in any judicial enforcement or review proceeding shall be
entitled to its reasonable attorneys fees and costs in addition to any other
amount of recovery ordered by such arbitrator or court. Either party may cause
judgment to be entered upon such award in any court of competent
jurisdiction.  The duty of the parties to arbitrate any Dispute
relating to the interpretation or performance of this License Agreement or the
grounds for any termination thereof shall survive expiration of this License
Agreement for any reason.

    

    
      	
              7. 

            	
              REPRESENTATIONS AND
      WARRANTIES

            

    

    

    7.1          Intellectual Property
Representation.  VLI represents and warrants to Licensee that:
(i) it owns all right, title and interest in the VLI PROCESS; (ii) its
technology does not infringe or constitute a misappropriation of any
intellectual property rights of any third party; and (iii) it has not entered
into any agreement inconsistent with this License Agreement or has not otherwise
granted to any third party any rights inconsistent with the rights granted to
the other party under this License Agreement.

    

    7.2          Patent
Indemnification.  In the event a claim is brought by a third
party alleging the infringement of its United States patent by the VLI PROCESS,
VLI will defend Licensee against any and all claims, suits, or proceedings
alleging such infringement and will hold harmless and indemnify Licensee against
any costs incurred and any sums paid or awarded with respect thereto as
royalties, penalties or otherwise fixed by settlement or set by final and
non-appealable court judgment or order.  Licensee shall, at its own
cost and expense, have the right to participate in any proceedings or
negotiations; provided, however, that in such event VLI shall have sole control
of the defense of any such action in all negotiations for its settlement or
compromise.  If VLI, at any time, fails to fulfill its defense and
indemnity obligations described above, then upon written notice to VLI from
Licensee, Licensee may, at its option, defend such claims, suits or proceedings,
including taking control thereof, and VLI promptly shall reimburse Licensee for
all reasonable expenditures and costs incurred by Licensee in connection with
such defense, no less often than monthly, as such expenditures and costs are
incurred.  Licensee shall reimburse VLI in the amount of all costs and
expenses recovered in such claims, suits or proceedings.

    

    *** Confidential material has been
redacted and separately filed with the Commission.

    
      
         

      

      
        A-4

        
          

        

      

      
         

      

    

    The
foregoing indemnity obligation excludes claims for infringement that relate to
or arise from: (i) processes and equipment not included within the definition
of, or not falling within the scope of, the VLI PROCESS that is employed by
Licensee in its use of the MACHINE, and (ii) the goods or products made or
processed by Licensee.

    

    In the
event a final injunction is obtained against the use of the infringing VLI
PROCESS, VLI will, at its option and expense: (i) secure for Licensee the right
to continue to use the VLI PROCESS, or (ii) replace or modify the same so it
meets the agreed technical specifications but becomes non-infringing, or (iii)
refund to Licensee all sums paid by Licensee for the License Fee, as well as the
net book value of MACHINE, as reflected on the books and records of Licensee on
the date of the entry of such injunction; and VLI will reimburse Licensee for
all costs and expenses of replacement or modification of the VLI
PROCESS.  If VLI elects to refund to Licensee all sums paid for the
License Fee (if any) and for then-depreciated book value of MACHINE, the
Licensee shall promptly return and surrender to VLI the TECHNICAL DOCUMENTATION,
and all other information about the VLI PROCESS provided from VLI to Licensee in
connection with this License Agreement.

    

    
      	
              8. 

            	
              MISCELLANEOUS

            

    

    

    8.1           Assignment.  The
rights and obligations of the parties under this License Agreement are personal
and may not be assigned or otherwise transferred by either party without the
prior written consent of the other party. Any attempted assignment or transfer
without such consent shall be null and void.  Notwithstanding any
other provision of this License Agreement or of the Supply Contract, any third
party purchaser of the MACHINE must assume all of
Licensee’s obligations and liabilities to VLI under this License Agreement
pursuant to a written assignment and assumption agreement approved in writing by
VLI, or such sale shall be null and void. In the event Licensee sells the
Machine to a third party in connection with a VLI-approved sale in accordance
with the provisions of the Supply Contract, then, in conjunction therewith,
Licensee’s rights and obligations under this License Agreement shall be assigned
by Licensee to such third party purchaser (and all of Licensee’s obligations and
liabilities hereunder shall be assumed by such third party purchaser) in a
writing acceptable to VLI, except that Licensee
shall not transfer the indemnity obligations of VLI (reflected in Section 7.2,
above) to any subsequent purchaser of MACHINE. The parties hereto acknowledge
and agree that in the event of a sale of VLI, or substantially all of VLI’s
assets, to an unrelated third party, this License Agreement and the rights and
obligations of VLI hereunder, may be transferred to such party without the prior
consent of Licensee, to the extent the third party assumes all obligations and
liabilities of VLI hereunder.

    

    8.2           Applicable
Law.  This License Agreement shall be governed by and construed
in accordance with the laws of the State of Ohio.

    

    8.3           Notice.  Any
notice required to be given under this License Agreement shall be in writing and
may be served either by personal delivery, e-mail (return receipt requested),
telefax, telegram, certified or registered air mail (return receipt requested)
postage prepaid or reputable air courier addressed to the parties respectively
at the following addresses:

     

    *** Confidential material has been
redacted and separately filed with the Commission.

    
      
         

      

      
        A-5

        
          

        

      

      
         

      

    

     

    VLI

    Venture
Lighting International, Inc.

    32000
Aurora Road

    Solon,
Ohio 44139

    Attention:
Sabu Krishnan

    Fax: 440
836-7045

    

    LICENSEE

    

    Fiberstars,
Inc.

    32000
Aurora Road

    Solon,
OH  44139

    Attention:
Roger Buelow, Chief Technology Officer

    Fax: 440
519-1038

    

    or such
other address, facsimile number, or e-mail address as Licensee or VLI may later
designate by written notice to the other.  All notices delivered in
accordance with this Paragraph 8.3 shall be effective as of the date of receipt
by the notified party.

    

    8.4           Modifications.  This
License Agreement may not be amended, supplemented, released, discharged,
abandoned, changed or modified in any manner, orally or otherwise, except by an
instrument in writing of concurrent or subsequent date signed by a duly
authorized representative of each of the parties.

    

    8.5           Entire
Agreement.  The terms and provisions set forth in this License
Agreement and in the SUPPLY CONTRACT constitute the entire and only agreement
between the Licensee and VLI with respect to this subject matter, and cancel all
preexisting agreements, contracts or understandings between them in respect to
the same. Headings used in this License Agreement are only for convenience and
are not to be used in the interpretation of this License Agreement. The parties
expressly acknowledge and agree that the Master Services Agreement, the ADLT
Development Agreement, the Fiberstars Development Agreement, the Cross-License
Agreement and the Mutual Supply Agreement, each by and between FIBERSTARS and
Advanced Lighting Technologies, Inc. and each dated September 19, 2005 shall not
apply to and shall not govern the matters agreed upon hereunder.

    

    8.6           Severability.  If
any provision of this License Agreement, or the application thereof to any
person or circumstance should, for any reason and to any extent, be invalid,
unenforceable or illegal, the remainder of this License Agreement and the
application of such provisions to other persons or circumstances shall not be
effected thereby, but rather shall be enforced to the greatest extent permitted
by law, and a rapid remedy sought for the provision found to be at
fault.

    

    8.7           Relationship Of The
Parties.  This License Agreement in no way creates a
relationship of joint venture, employment, partnership or agency between VLI and
Licensee.

    

    *** Confidential material has been
redacted and separately filed with the Commission.

    
      
         

      

      
        A-6

        
          

        

      

      
         

      

    

    8.8           Waiver.  Failure
of either party to insist upon the strict performance of any provision of this
License Agreement or to exercise any right or remedy shall not be deemed a
waiver of any right or remedy.

    

    8.9          Exhibits.  Exhibits
to this License Agreement form an integral and binding part of this License
Agreement.

    

    8.10           Disclaimer.  Except
as expressly provided in this License Agreement and in the SUPPLY CONTRACT, VLI
makes no other representation, grants no warranty, express or implied, and
assumes no responsibility of any kind to Licensee or to any third party
respecting suitability for any purpose or use of any information, data, process,
equipment, patented or unpatented inventions, or trade secrets, disclosed,
furnished, or made available to Licensee.

    

    8.11           Force
Majeure.  The provisions of Section 11.1 of the SUPPLY CONTRACT
are expressly incorporated herein by reference.

     

    IN
WITNESS WHEREOF, each of the parties hereto has caused this License Agreement to
be executed in duplicate by its duly authorized representative.

    

    
      
        
          
            
              	
                      VENTURE
      LIGHTING

                    	
                      FIBERSTARS,
      INC.

                    
	
                      INTERNATIONAL,
      INC.

                    	 
      
	 
      	 
      
	
                      By:

                    	 
      	 
      	
                      By:

                    	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	
                      Title:

                    	 
      	 
      	
                      Title:

                    	 
      	 
      
	 
      	 
      
	
                      Date:  ______________________,
      2006

                    	
                      Date:  _________________________,
      2006

                    

            

          

        

      

    

    

    *** Confidential material has been
redacted and separately filed with the Commission.

    
      
         

      

      
        A-7

        
          

        

      

      
         

      

    

     

    EXHIBIT
B

     

    (Machine)

     

    General
Description: One (1) USED *** Arc Tube Pinch & Exhaust Machine built by
Venture Lighting International, Inc.

    

    
      	
               
      

            	
              ·

            	
              Capabilities

            

    

    
      	
               
      

            	
              o

            	
              Exhaust

            

    

    
      	
               
      

            	
              o

            	
              Dose

            

    

    
      	
               
      

            	
              o

            	
              ***

            

    

    
      	
               
      

            	
              o

            	
              ***

            

    

    
      	
               
      

            	
              o

            	
              Fill

            

    

    
      	
               
      

            	
              o

            	
              ***

            

    

    
      	
               
      

            	
              o

            	
              ***

            

    

    
      	
               
      

            	
              ·

            	
              Support
      Equipment

            

    

    
      	
               
      

            	
              o

            	
              Burners

            

    

    
      	
               
      

            	
              o

            	
              Pinch
      Jaws

            

    

    
      	
               
      

            	
              o

            	
              Exhaust
      Pump

            

    

    
      	
               
      

            	
              o

            	
              ***

            

    

    
      	
               
      

            	
              o

            	
              Dosers
      (Mercury, and Pill)

            

    

    
      	
               
      

            	
              o

            	
              ***

            

    

    
      	
               
      

            	
              ·

            	
              Range
      of Product

            

    

    
      	
               
      

            	
              o

            	
              ***

            

    

    
      	
               
      

            	
              o

            	
              ***

            

    

    

    Machine
Capacity: *** annually on a one (1) shift per day basis.

     

    *** Confidential
material has been redacted and separately filed with the
Commission.

    
      
         

      

      
        B-1

        
          

        

      

      
         

      

    

    EXHIBIT
C

    

    (PRODUCTS & PRODUCT
SPECIFICATIONS)

    

    
      	
              PRODUCT DESCRIPTION

            	 
      	
              SPECIFICATIONS

            
	 
      	 
      	 
      
	
              AT
      50W/NSS/L/2 (EXTERNAL – FIBERSTARS)

            	 
      	
              50
      MOLD4, *** QTZ., *** HALIDE, ***

            
	 
      	 
      	 
      
	
              AT
      50W/NSS/L/1 (EXTERNAL – FIBERSTARS)

            	 
      	
              50
      MOLD4, *** QTZ., *** HALIDE, ***

            
	 
      	 
      	 
      
	
              AT
      68W/DC/L/1 (EXTERNAL – FIBERSTARS)

            	 
      	
              50
      MOLD4, *** QTZ., *** HALIDE, ***

            
	 
      	 
      	 
      
	
              AT
      70W AC

            	 
      	
              50
      MOLD4, 3500K CCT, ***, 70 CRI

            
	 
      	 
      	 
      
	
              AT
      70W AC

            	 
      	
              50
      MOLD 4, 5000K CCT, ***, 80 CRI

            
	 
      	 
      	 
      
	
              AT
      70W AC

            	 
      	
              ***,
      3500K CCT, ***, 70 CRI

            
	 
      	 
      	 
      
	
              AT
      70W AC

            	 
      	
              ***,
      <6500K CCT, ***, 80 CRI

            

    

    

    Specifications
on Addendum to Exhibit C.

     

    *** Confidential
material has been redacted and separately filed with the
Commission.

    
      
         

      

      
        C-1

        
          

        

      

      
         

      

    

     

    EXHIBIT
D

    

    MACHINE SALE PRICE AND
PAYMENT TERMS

    

    
      	 
      	
              Sale
      Price:

            	
              ***

            
	 
      	 
      	 
      
	 
      	
              Payment:

            	
              ***
      upon the execution of this Agreement by FIBERSTARS with the remaining
      balance *** due ten (10) days after date of Certificate of Acceptance is
      executed.

            

    

     

    *** Confidential material has been
redacted and separately filed with the Commission.

     

    
      
         

      

      
        D-1

        
          

        

      

      
         

      

    

    EXHIBIT
E

      MACHINE
PERFORMANCE/ACCEPTANCE CRITERIA

     

    Milestones:

    

    
      	
               
      

            	
              1.

            	
              ADLT
      will provide one “*** Pinch-Exhaust Machine” capable of producing *** arc
      tubes.

            

    

    

    Timeline:
06/30/06

    

    
      	
               
      

            	
              2.

            	
              ADLT
      will provide the required tooling and will demonstrate a process capable
      of producing the following types of arc
tubes:

            

    

    
      	
               
      

            	
              ·

            	
              A
      *** arc tube made with *** quartz tubing and 50 mold 4. To demonstrate
      process capabilitya, ADLT will make two batches of arc tubes per Designs
      of Experiments agreed upon with
Fiberstars.

            

    

    

    
      	
               
      

            	
              ·

            	
              A
      *** arc tube made with *** quartz tubing and *** initial formed bulb
      length. To demonstrate process capabilitya, ADLT will make two batches of
      arc tubes per Designs of Experiments agreed upon with
      Fiberstars.

            

    

    

    a See
Addendum “***
Pinch-Exhaust Machine Process Capability”

    

    Timeline:
06/30/06

     

    *** Confidential material
has been redacted and separately filed with the Commission.

    
      
         

      

      
        E-1

        
          

        

      

      
         

      

    

    Addendum
to EXHIBIT E

    *** Pinch-Exhaust
Machine Process Capability

    

    
      A.
*** Arc
Tube Batches:

    

    
      	
               
      

            	
              ·

            	
              Batch
      A.1 (About 48 Arc Tubes): Design of Experiment made with *** size quartz
      using 50 mold4 *** body design. The arc tubes will be dosed per Table
      1.

            

    

    

    Table 1:
Total 6 cells

    
      
        
          
            
              
                
                  
                    
                      	
                              Factors

                            	 	
                              Level 1

                            	 	
                              Level 2

                            	 	
                              Level 3

                            
	
                              Halide composition

                            	 	
                              ***

                            	 	
                              ***

                            	 	
                              ***

                            
	
                              Halide amount

                            	 	
                              ***

                            	 	
                              ***

                            	 	 
      

                    

                  

                

              

            

          

        

      

    

    

    
      ·   
Batch A.2
(About 8 Arc Tubes): Design of Experiment made with *** size quartz using 50
mold4 *** body design. The arc tubes will be dosed with *** halide dose, *** in
amount.

    

    

    
      B.
*** Arc
Tube Batches:

    

    
      	
               
      

            	
              ·

            	
              Batch
      B.1 (About 144 Arc Tubes): Design of Experiment made with *** size quartz
      using *** initial formed bulb length, *** body design. The arc tubes will
      be dosed per Table 2.

            

    

    

    Table 2:
Total 18 cells

    
      
        
          
            
              
                
                  
                    
                      	
                              Factors

                            	 	
                              Level 1

                            	 	
                              Level 2

                            	 	
                              Level 3

                            
	
                              ***

                            	 	
                              None

                            	 	
                              ***

                            	 	
                              ***

                            
	
                              Dose

                            	 	
                              ***

                            	 	
                              ***

                            	 	
                              ***

                            
	
                              ***

                            	 	
                              ***

                            	 	
                              ***

                            	 	 
      

                    

                  

                

              

            

          

        

      

    

    

    
      	
               
      

            	
              ·

            	
              Batch
      B.2 (About 48 Arc Tubes): Design of Experiment made with *** size quartz
      using *** initial formed bulb length, necked formed body design. The arc
      tubes will be dosed per Table 3. About 8 arc tubes per cell will be made
      and burned on 70W *** Ballasts to 1000 hrs
  interval.

            

    

    

    Table 3:
Total 6 cells

    
      
        
          
            
              
                
                  
                    
                      	
                              Factors

                            	 	
                              Level 1

                            	 	
                              Level 2

                            	 	
                              Level 3

                            
	
                              ***

                            	 	
                              None

                            	 	
                              ***

                            	 	
                              ***

                            
	
                              ***

                            	 	
                              Yes

                            	 	
                              None

                            	 	 
      

                    

                  

                

              

            

          

        

      

    

     

    *** Confidential material has been
redacted and separately filed with the Commission.

     

    
      
         

      

      
        E-2

        
          

        

      

      
         

      

    

    EXHIBIT
F

         Certificate of
Acceptance

    

    DATE:  ___________________________

    

    SELLER: VENTURE
LIGHTING INTERNATIONAL, INC.  (VLI)

    

    
      
        
          
            	
                    BUYER:

                  	
                    FIBERSTARS,
      INC.  (FIBERSTARS)

                  
	 
      	 
      
	
                    CONTRACT  -

                  	
                    EQUIPMENT
      PURCHASE AND PRODUCT SUPPLY AGREEMENT

                  
	 
      	
                    DATED
      _________________________

                  

          

        

      

    

     

    DESCRIPTION
OF MACHINE

    

    
      	 
      	
              (I)

            	
              USED
      *** ARC TUBE PINCH &

            
	 
      	 
      	
              EXHAUST
      MACHINE

            

    

    

    WE HEREBY
CERTIFY THE ACCEPTANCE OF THE ABOVE-REFERENCED MACHINE.

    

    SIGNED BY
AUTHORIZED REPRESENTATIVES OF:

    

    
      
        	 
      	 
      	 
      
	 
      	
                BUYER:  FIBERSTARS,
      INC.

              

      

    

    

    
      
        
          
            	 
      	 
      	 
      
	 
      	
                    SELLER:  VENTURE
      LIGHTING INTERNATIONAL,
INC.

                  

          

        

      

    

     

    *** Confidential material has been
redacted and separately filed with the Commission.

     

    
      
         

      

      
        F-1

        
          

        

      

      
         

      

    

    

    EXHIBIT
G

    UNIT
PRICES FOR PRODUCTS

    

    Price:

    Price is
set at full cost (defined on Exhibit H) plus ***.

     

    Discounts:

    

    A) The first thirty thousand
(30,000) units of Product purchased by FIBERSTARS from VLI shall be priced ***,
so long as: the purchase(s) are completed within twenty-four (24) months
following the Effective Date. All purchases of units of Product completed: (i)
after the first twenty-four (24) months following the Effective Date, or (ii)
within such 24-month period but in excess of such thirty-thousand (30,000) unit
threshold shall be priced at full cost (defined on Exhibit H) ***.

    

    B) Between 1/1/2008 and
12/31/2010, a discount will be applied if any Product described in Appendix X has been developed
by VLI pursuant to specifications.  The discount is listed on the
table below.  The discount listed is taken after the price calculation
of full cost plus *** is made.  Price with discount will be cost plus
*** less the discount.  Once all Products described in Appendix X have been developed
by VLI pursuant to specifications, then the discount is immediately
removed.

    

    
      
        
          
            
              
                	
                        Dates

                      	 	
                        Discount

                      	 	
                        Quantity*

                      
	
                        1/1/2008 – 12/31/2008

                      	 	
                        ***

                      	 	
                        First 20,000 Products

                      
	
                        1/1/2009 – 12/31/2009

                      	 	
                        ***

                      	 	
                        First 30,000 Products

                      
	
                        1/1/2010 – 12/31/2010

                      	 	
                        ***

                      	 	
                        First 40,000 Products

                      

              

            

          

        

      

    

    

    Experimental
Products made as part of experiments by VLI or Fiberstars engineers will be
priced at $*** and ordered in quantities not less than 200 Products for the
entire experiment (counting all Products of all construction
varieties).  Any discounts described above do not apply to
experimental Products.

    

    
      *
Quantity subject to Machine Capacity of *** units annually on a one (1) shift
per day basis.

    

     

    *** Confidential material
has been redacted and separately filed with the Commission.

    
      
         

      

      
        G-1

        
          

        

      

      
         

      

    

    

    EXHIBIT
H

    PRODUCT
FULL COST DEFINITION

    

    The cost to manufacture the Product
will comply with “Generally Accepted Accounting Principles” applied on a
consistent basis as outlined below.  In addition, since the pricing is
based on cost plus basis, VLI must also recover certain costs related in
handling the Product until it is loaded on the truck or until the Product is
picked up at the dock at VLI’s Ohio warehouse.

    

    
      	
               
      

            	
              A.

            	
              Manufacturing
      Costs shall consist of:

            

    

    

    
      	
               
      

            	
              1)

            	
              Raw
      Material/Components reflects the quantity of material times the cost per
      quantity of the identified materials on the “Bill of Materials” including
      duty and brokerage, incoming freight, a factor for scrap of no more than
      ten percent (10%), a factor for miscellaneous supplies, and packaging
      costs.

            

    

    

    
      	
               
      

            	
              2)

            	
              Labor
      reflects the quantity of Direct Labor times the total Direct Labor Costs
      per hour (fully loaded Direct Labor includes wages, overtime, benefits,
      vacation/holiday, training, etc.).

            

    

    

    
      	
               
      

            	
              3)

            	
              Overhead
      and/or costs of operations which shall include, but are not limited to,
      Manufacturing Supervision Wages/Benefits, Manufacturing Engineering
      Wages/Benefits, Receiving, Scheduling, Purchasing, Human Resources,
      Factory Accounting, Information Systems, Quality Assurance and
      Manufacturing, Maintenance, Equipment Depreciation (excluding the MACHINE
      as defined in this Agreement) and Repairs, Insurance, Utilities, Occupancy
      costs.

            

    

    

    
      	
               
      

            	
              B.

            	
              Costs
      Associated with Handling the
Product:

            

    

    

    
      	
               
      

            	
              1)

            	
              These
      costs reflect the related costs for finished product movement in/out of
      the warehouse, freight in, final inspection, order entry, and
      billing.

            

    

     

    *** Confidential material has been
redacted and separately filed with the Commission.

     

    
      
         

      

      
        H-1

        
          

        

      

      
         

      

    

    

    EXHIBIT
I

    (TERMS
OF TEMPORARY PURCHASE & SUPPLY OF FORMED BODIES)

    

    1           Purchase and
Sale.  FIBERSTARS agrees to purchase from VLI, and VLI agrees
to supply to FIBERSTARS, FIBERSTARS’ requirements for Formed Bodies pursuant to
the terms and conditions of this Exhibit I until such time as VLI has delivered
and installed a “Bulb Former” machine at FIBERSTARS’ Solon, Ohio location
pursuant to the terms and conditions of Paragraph 9.4(b) of the Equipment
Purchase and Product Supply Agreement (the “Agreement”) entered into by the
parties.

    

    2           Unit
Prices.  The unit price(s) for Formed Bodies shall be *** per
unit.

    

    3           Purchase
Orders.  FIBERSTARS shall initiate each order for Formed Bodies
by the delivery to VLI of a written purchase order (the “Purchase Order”),
setting forth the quantity to be ordered, the applicable unit price, and
requested delivery date(s).  Acceptable delivery dates are a function
of order quantities and shall be by mutual agreement, negotiated in good faith
between the parties, however: (i) VLI shall commence delivery of Formed Bodies
ordered by FIBERSTARS pursuant to the “firm” Purchase Order(s) (first four
weeks) under the forecast(s) required under Paragraph 10 below within thirty
(30) days after receipt of each such Purchase Order; (ii) with regard to any
Purchase Order in excess of the forecasted amounts provided under Paragraph 10
below, VLI shall use its best efforts to commence delivery of the Formed Bodies
within the requested delivery time, however, VLI shall have no obligation to
deliver such Formed Bodies earlier than ninety (90) days after its acceptance of
each such Purchase Order.

    

    4           Acceptance of
Orders.  Each Purchase Order shall be deemed to be an offer by
FIBERSTARS to purchase Formed Bodies from VLI pursuant to the terms of this
Agreement, to the exclusion of any additional or contrary terms set forth in the
form of Purchase Order or any other document submitted by FIBERSTARS. Any
Purchase Order submitted by FIBERSTARS to VLI shall not be deemed accepted
unless and until VLI has delivered a written notice of VLI’s acceptance to
FIBERSTARS.

    

    5           Delivery.  Unless
otherwise agreed upon in a writing executed by both VLI and FIBERSTARS, all
deliveries of the Formed Bodies shall be in VLI’s original packaging and shall
be FOB VLI’s Ohio shipping dock.  Title to the Formed Bodies and all
risk of damage to or loss of the Formed Bodies shall pass to FIBERSTARS upon
receipt and/or pick up of the Formed Bodies at VLI’s Ohio shipping dock by
FIBERSTARS or a carrier designated by FIBERSTARS. All in-transit insurance
premiums, freight charges and other expenses of delivery shall be at FIBERSTARS’
expense.    The failure of FIBERSTARS to inspect and reject
nonconforming items via a written notice to VLI within thirty (30) days after
delivery shall be deemed acceptance of such items by FIBERSTARS with full
responsibility for payment.

    

    *** Confidential material has been
redacted and separately filed with the Commission.

    
      
         

      

      
        I-1

        
          

        

      

      
         

      

    

    6.           Payment.  VLI
will issue to FIBERSTARS an invoice for the Formed Bodies on the date of
delivery pursuant to Paragraph 5 above.  FIBERSTARS will pay invoices
prepared and delivered in accordance with this Agreement within forty-five (45)
days following date of invoice.  If FIBERSTARS has a good faith
dispute concerning any portion of an invoice from VLI, FIBERSTARS will, within
such forty-five (45) day period, pay the undisputed portion, deliver a written
notice to VLI describing in reasonable detail the reasons why the invoice is
disputed, and may withhold the disputed portion pending resolution of the
dispute in accordance with the provisions of Paragraph 11.9 of the
Agreement.  If undisputed amounts are paid when due, VLI agrees that
it may not withhold performance of any of its obligations under this
Agreement.  If an undisputed amount or any disputed amount that is
later determined to have been payable is not paid when due, VLI will provide a
written notice thereof to FIBERSTARS, and FIBERSTARS will pay such amount within
twenty (20) additional days following receipt of such notice.

    

    7           Manufacturing
Process.  The Formed Bodies shall be manufactured in conformity
with the specifications mutually agreed upon by the parties.  All
process changes for manufacturing the Formed Bodies may be made at the
discretion of VLI without the consent of FIBERSTARS. The aforementioned Formed
Bodies shall meet the internal quality standard of Formed Bodies adopted by
VLI.  

    

    8           Quality
Assurance.  VLI shall perform quality assurance tests and
inspections as it deems reasonably necessary to screen Formed Bodies prior to
shipment. Records of relevant manufacturing parameters and quality assurance
data on a run-by-run basis will be made available to FIBERSTARS upon
request.

    

    9.           Specification
Changes.  FIBERSTARS and VLI anticipate that it may be
desirable during the term of this Agreement to amend the specifications for
Formed Bodies.  Such amendments to shall be made by mutual agreement
of VLI and FIBERSTARS.  If such Product Specification changes require
or allow a change in pricing, such pricing changes shall be by mutual agreement
and shall be reflected in a writing to be attached hereto.

    

    10           Forecasts.  FIBERSTARS
is obligated to continually provide a six (6) month rolling forecast of Formed
Bodies requirements (by type and quantity) to VLI, such forecast to be
updated  monthly.  All Formed Bodies requirements forecasted
for the first four (4) weeks of the six (6) month forecast are considered a
firm, non-cancelable Purchase Order.

    

    11.           Warranty. Formed
Bodies are warranted by VLI pursuant to Paragraphs 7.2(b) and 7.2(c) of the
Agreement.

     

    *** Confidential material
has been redacted and separately filed with the Commission.

    
      
         

      

      
        I-2

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