Document:

EXECUTION
        VERSION

    

     

    LICENSE
      AGREEMENT

     

    THIS
      LICENSE AGREEMENT (the
      “Agreement”), dated
      September 16, 2003 (the “Effective Date”), is
      by and
      between QUINTESSENCE
      PHOTONICS CORPORATION, a
      Delaware corporation with its principal
      place of business at 15632 Roxford Street, Sylmar, California 91342 (“Licensor”) and
      FINISAR
      CORPORATION, a
      Delaware corporation with a
      principal
      place of business at 1308 Moffett Park Drive, Sunnyvale, California 94089
(“Licensee”).

    

    RECITALS:

    

      
        	
                A.

              	
                Licensor
                  is the creator and owner of certain Technology and Intellectual
                  Property
                  (as defined
                  in Section
                  1 below), and, upon the Restructuring (as defined below), has the
                  right to
                  grant a license to use,
                  modify, copy, market and sell the Technology and Intellectual Property
                  (each as defined
                  below).

              

      

      

      
        	
                B.

              	
                Licensor
                  owes certain financial obligations to Licensee, as set forth in
                  a Loan and
                  Security Agreement
                  dated November 2, 2001, as amended and restated at January 14,
                  2002, and
                  the documents and instruments referenced therein and entered into
                  thereunder (collectively, the
                  “Loan Agreement”).

              

      

      

      
        	
                C.

              	
                As
                  collateral security for the repayment of the loans described in
                  the Loan
                  Agreement, Licensor also
                  granted to Licensee a security interest in Licensor’s intellectual
                  property (the “Secured
                  IP”),
                  pursuant
                  to that certain Intellectual Property Security Agreement between
                  the
                  parties dated
                  January 14,
                  2002, as amended (the “IP
                  Security Agreement”),
                  which Secured IP included, but was not limited
                  to (i) any and all Copyright (as defined in the IP Security Agreement);
                  (ii) any and all trade secrets,
                  and any and all intellectual property rights in computer software
                  and
                  computer software products
                  now or hereafter existing, created, acquired or held; (iii) any
                  and all
                  design
                  rights which may
                  be available to Licensor now or hereafter existing, created, acquired
                  or
                  held; (iv) any and all Patents
                  (as defined in the IP Security Agreement); (v) any and all Trademarks
                  (as
                  defined in the IP
                  Security
                  Agreement); (vi) any and all claims for damages by way of past,
                  present or
                  future infringement of any of the rights included above, with the
                  right,
                  but not the obligation, to sue
                  for and
                  collect such damages for said use or infringement of the intellectual
                  property rights identified
                  above;
                  (vii) all licenses or other rights to use any of the Copyrights,
                  Patents
                  or Trademarks, and
                  all license
                  fees and royalties arising from such use to the extent permitted
                  by such
                  license or
                  rights; (viii)
                  all amendments, renewals and extensions of any of the Copyrights,
                  Trademarks or
                  Patents; and
                  (ix) all proceeds and products of the foregoing, including without
                  limitation all payments under
                  insurance
                  or any indemnity or warranty payable in respect of any of the
                  foregoing.

              

      

      

      
        	
                D.

              	
                In
                  consideration of the grant of the licenses set forth in this Agreement
                  and
                  certain other
                  releases and
                  consideration as set forth in the written agreements executed by
                  the
                  parties contemporaneously herewith
                  (the “Closing
                  Documents”),
                  Licensee
                  has agreed to (i) convert the unpaid balance owing under
                  the Loan Agreement (after application of certain agreed-upon payments)
                  into shares
                  of preferred
                  stock of Licensor, (ii) cancel and terminate Licensor’s remaining
                  obligations under
                  the Loan
                  Agreement and (iii) terminate the security interest in the Secured
                  IP
                  under and pursuant to the
                  terms
                  of the IP Security Agreement, all as set forth in the Closing Documents
                  (the “Restructuring”).

              

      

      

      
        	
                E.

              	
                As
                  further consideration to Licensee for its agreement to accept shares
                  of
                  Licensor’s preferred
                  stock
                  in partial payment
                  of
                  the balance due under the Loan Agreement, Licensor desires to grant
                  Licensee
                  a license to the Licensed IP (as defined below) on the terms and
                  conditions set forth in this
                  Agreement

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    
      EXECUTION
        VERSION

    

     

    
      	(a)  	
              $5.0
                million if terminated during the first three years following the
                Effective
                Date;

            

    

     

    
      	(b)  	
              $5.5
                million if terminated during the fourth year following the Effective
                Date;
                or

            

    

     

    
      	(c)  	
              $6.0
                million if terminated during the fifth year following the Effective
                Date.

            

    

    
Notwithstanding
      the foregoing, in the event that Licensor pays a Forbearance Fee to Licensee
      pursuant to Section 2.6 above, the applicable Termination Fee set forth above
      shall be reduced by the amount of such Forbearance
      Fee paid.

    

    If
      this
      Agreement is not terminated by Licensor by paying the Termination Fee to
      Licensee by the last day of
      the
      fifth year from the Effective Date, then this Agreement shall continue in
      perpetuity.

    

    Except
      as
      set forth in this Section 4.1, Licensor shall not be entitled to terminate
      this
      Agreement for any reason.
      However, in the event of any breach of this Agreement by Licensee, Licensor
      shall have the right to seek
      damages, injunctive relief and any other remedies (excluding termination of
      this
      Agreement) from a court
      with jurisdiction over such case. Licensee may terminate this Agreement upon
      thirty (30) days prior written notice to Licensor.

    

      
        
          4.2
            Effect
            of Termination. In
            the
            event of termination of this Agreement for any reason,

        

      

      

      	(a)  	
              Licensor
                shall have no further obligation to disclose any updates or modifications
                to
                its Technology or Intellectual Property (including any Derivative
                Works
                created by
                Licensor after the date of termination) to
                Licensee;

            

       

      	(b)  	
              All
                licenses granted to Licensee under this Agreement shall immediately
                terminate, except (i) pursuant to Section 4.2(d) below and (ii) the
                licenses to market, distribute, sell, offer for sale, import and
                export
                and the right to Sublicense shall
                survive for a period of six (6) months (the “Sell-off
                Period”) with
                respect to Licensee’s
                inventory of products commercially released prior to the termination
                of
                this Agreement (excluding any products that are still in development),
                but
                only to the
                extent of those Licensed IP incorporated into Licensee’s commercially
                released
                products prior to the termination of this Agreement; however, upon
                the expiration
                of such Sell-off Period, Licensee shall have no further right or
                license
                whatsoever
                with respect to any Licensed IP.

            

       

      	(c)  	
              All
                Sublicenses granted to End Users with respect to Licensee’s products
                commercially
                released prior to the termination of this Agreement (excluding any
                products
                that are still in development), shall survive the termination of
                this
                Agreement,
                but only to the extent of that Licensed IP incorporated into Licensee’s
                commercially released products prior to the termination of this Agreement,
                and Licensee
                may continue to offer customer support to End Users with respect
                to such
                commercially
                released products;

            

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        EXECUTION
          VERSION

      

       

      	(d)  	
              In
                the event that, prior to the termination of this Agreement, Licensee
                has
                commercially
                released one or more fiber optics products that incorporate any Derivative
                Works developed by Licensee prior to the termination of this Agreement,
                then Licensee may continue to make, have made, use, manufacture,
                market,
                distribute, sell, offer for sale, import and export such fiber optics
                products and
                grant Sublicenses in conjunction therewith, provided that Licensee
                shall
                pay Licensor
                a royalty or license fee as determined below and continue to comply
                with
                all
                of the applicable provisions of this Agreement. Licensor and Licensee
                shall jointly
                determine the amount of the royalty or license fee within 60 days
                of the
                termination
                of this Agreement. If Licensor and Licensee are unable to reach an
                agreement on the amount of the royalty or license fee within such
                60-day
                period, Licensor and Licensee shall engage InteCap or, if InteCap
                is
                unavailable for any reason,
                a reputable accounting firm which has no prior business relationships
                with
                either party and which has expertise in the fiber optics and laser
                technologies field
                (the
                “Independent
                Expert”), to
                recommend a reasonable amount as the royalty or license fee, which
                recommendation shall be considered by the parties in good faith.
                The costs of engaging the Independent Expert shall be shared equally
                by
                Licensor
                and Licensee. The
                recommendation of the Independent Expert shall be non-binding and
                may be
                rejected by either party, provided that such rejection is made
                in good faith. In the event that the recommendation of the Independent
                Expert
                is rejected in good faith by either party, the amount of the royalty
                or
                license fee shall be finally and exclusively determined by arbitration
                held in Los Angeles, California, in accordance with the Commercial
                Rules
                of the American Arbitration Association.
                Judgment upon any award rendered in such arbitration may be entered
                by any court having jurisdiction;

            

       

      	(e)  	
              Each
                party shall return to the other party all Confidential Information
                belonging to the
                other party, except that Licensee may retain Confidential Information
                relating to
                its surviving rights under subsections (b) and (d) above;
                and

            

       

      	(f)  	
              Sections
                2.2, 2.5, 2.6, 4.2, 5, 6, 7.3, 7.4 and 8 shall survive termination
                of this
                Agreement,
                as well as any other provisions that by their terms or sense are
                intended
                to survive.

            

    

    

      5.
        WARRANTIES
        AND INDEMNIFICATION.

      

      5.1 Warranties.
        Licensor
        hereby represents, warrants and covenants to Licensee that, except as may
        be
        disclosed in writing to Licensee and subject to completion of the Restructuring,
        on the Effective Date
        and
        the date of delivery of any Deliverables:

    

    

      
        	 	
                (a)

              	
                Licensor
                  owns all of the Licensed IP and has full power and authority to
                  grant
                  Licensee
                  the rights and licenses granted in this
                  Agreement;

              

      

       

      
        	 	
                (b)

              	
                to
                  Licensor’s Knowledge, (i) the Licensed IP (but excluding any Transferred
                  IP) and
                  Licensor’s
                  Derivative Works are free of any adverse claims, judgments or restrictions
                  (except as set forth herein) and (ii) are not subject to any third
                  party
                  royalty
                  or other material obligations;

              

      

       

      
        	 	
                (c)

              	
                to
                  Licensor’s Knowledge, the Licensed IP (but excluding any Transferred IP)
                  and Licensor’s Derivative Works do not infringe or misappropriate the
                  valid patent, copyright, trademark, trade secrets or other intellectual
                  property rights of any third party,
                  and Licensor has not received any notice or claim to the contrary.
                  While
                  Licensor
                  has not conducted any searches outside of the U.S. with respect
                  to such
                  Licensed
                  IP and Licensor’s Derivative Works, it has no actual knowledge of any
                  adverse
                  claim, judgment, restriction or claim of infringement or misappropriation
                  arising outside the U.S. with respect to such Licensed IP and Licensor’s
                  Derivative Works;

              

      

       

      
        	 	
                (d)

              	
                the
                  Deliverables will be complete and accurate;
                  and

              

      

       

      
        	 	
                (e)

              	
                to
                  Licensor’s Knowledge, no act has been done or omitted to be done by
                  Licensor which
                  has had or could have the effect of impairing or dedicating to
                  the public,
                  or entitling
                  any U.S. or foreign governmental authority or any other Person
                  to cancel,
                  forfeit, modify or consider abandoned, any Licensed IP or Derivative
                  Works, or give
                  any Person any rights with respect
                  thereto.

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    
      EXECUTION
        VERSION

    

     

    5.2 Limitation
      of Warranties. EXCEPT
      AS
      EXPRESSLY SET FORTH HEREIN OR IN ANOTHER
      CLOSING
      DOCUMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES
      OF ANY KIND, WHETHER EXPRESS OR IMPLIED, WITH RESPECT TO ITS TECHNOLOGY,
      INTELLECTUAL PROPERTY OR ITS DERIVATIVE WORKS THEREOF, INCLUDING
      WITHOUT LIMITATION THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR
      A
      PARTICULAR PURPOSE. EXCEPT IN THE EVENT OF FRAUD OR INTENTIONAL
      WRONGDOING AND EXCEPT FOR LICENSEE’S LIABILITY ARISING FROM BREACH
      OF
      CONFIDENTIALITY UNDER SECTION 6 BELOW, IN NO EVENT SHALL LICENSOR OR LICENSEE
      BE
      LIABLE AND EACH PARTY COVENANTS NOT TO BRING ANY CLAIM FOR SPECIAL
      OR CONSEQUENTIAL DAMAGES OR FOR ANY INDIRECT DAMAGES, INCLUDING WITHOUT
      LIMITATION EXEMPLARY DAMAGES, WHETHER OR NOT SUCH DAMAGES WERE FORESEEN
      OR UNFORESEEN.

    

    5.3 Indemnification.

    

      
        	 	
                (a)

              	
                Licensor
                  shall indemnify, defend and hold Licensee and its customers harmless
                  from
                  and
                  against any costs, expenses, liabilities or damages incurred in
                  connection
                  with any or alleged breach of Licensor’s warranties set forth in Section
                  5.1 above.

              

      

       

      
        	 	
                (b)

              	
                With
                  respect to any U.S. infringement claim within the scope of Licensor’s
                  indemnification
                  obligation under Section 5.3(a) above, Licensee shall (i) promptly
                  notify
                  Licensor of such claim, (ii) grant Licensor sole control of the
                  defense
                  and all related
                  settlement negotiations, and (iii) provide Licensor with the assistance,
                  information
                  and authority reasonably necessary to perform the above, at Licensor’s
                  expense.
                  Licensee may, at its option and expense, be represented by separate
                  counsel in
                  any such action. If Licensor fails to assume or perform its
                  indemnification obligations
                  in a reasonable manner, Licensee may assume control of its defense
                  and
                  Licensor
                  shall reimburse Licensee for its reasonable costs and expenses
                  (including
                  attorneys’
                  fees) incurred therein, as well as
                  payment
                  of any damages awarded or any reasonable
                  settlement amounts.

              

      

       

      
        	 	
                (c)

              	
                To
                  the extent any Licensed IP is used or incorporated in a commercially
                  released product
                  of Licensor, if use of such Licensed IP is enjoined or such Licensed
                  IP is
                  believed
                  by Licensor or held by a court or arbitrator to infringe the valid
                  patent,
                  copyright,
                  trademark, trade secrets or other intellectual property rights
                  of any
                  third party
                  arising under the laws of the U.S., Licensor
                  shall promptly use commercially reasonable,
                  good faith efforts, at its election, to obtain a license from such
                  third
                  party whose
                  rights have been infringed, to modify such Licensed IP so it is
                  non-infringing or to provide to Licensee substitute Licensed IP
                  that is
                  non-infringing, without adversely affecting
                  functionality or performance.

              

      

       

      
        	 	
                (d)

              	
                Licensor
                  shall have no liability for infringement to the extent such infringement
                  is based
                  on any
                  Derivative Works created by Licensee (unless such Derivative Works
                  were
                  created at Licensor’s express direction) or the Transferred IP, where such
                  infringement
                  would not have arisen but for the creation of such Derivative Works
                  or
                  Licensee’s
                  applications or perfection of rights under Section 2.5
                  above.

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    
      EXECUTION
        VERSION

    

     

    6.
      CONFIDENTIALITY.

    

    6.1 Use
      and Disclosure. Licensee
      agrees to maintain all trade secrets, source code (if any) and other
confidential
      information included in the Deliverables and Licensed IP, including, without
      limitation, all documentation
      and
      information marked or labeled by Licensor as “confidential,” (collectively,
“Confidential
      Information”) as
      confidential. Licensee shall not disclose the Confidential Information to
any
      Persons except on a need-to-know basis. Licensee shall use reasonable commercial
      efforts to prevent unnecessary
      disclosure of any Confidential Information or trade secrets of Licensor through
      or as a result of Licensee’s patent and/or copyright applications or perfection
      of rights in the Transferred IP under Section 2.5
      above, or through or as a
      result
      of Licensee’s creation, release, publication or distribution of any of its
      Derivative Works. Licensee shall treat the Confidential Information with at
      least the same level of protection
      as it affords its own confidential information of similar sensitivity, but
      not
      less than a reasonable level
      of
      protection. Licensee shall inform its employees and contractors to whom it
      discloses the Confidential
      Information that under this Agreement they are bound by obligations of
      confidentiality. Confidentiality
      obligations shall survive for five (5) years from the date the Confidential
      Information is disclosed
      to Licensee.

    

    6.2 Exceptions. The
      obligations of confidentiality do not apply to the extent that information
      (i)
      is now or
      later
      becomes generally available to the public without fault or breach of Licensee;
      (ii) was rightfully in Licensee’s possession
      prior to
      disclosure by Licensor; (iii) is independently developed by Licensee without
      the
      use of any Confidential Information of Licensor; or (iv) is obtained by Licensee
      from a third party who has
      the
      right to disclose it to Licensee and who, to the Knowledge of Licensee, owes
      no
      obligation of confidentiality
      to Licensor.

    

    6.3 Injunctive
      Relief. Licensee
      acknowledges that Licensor’s Confidential Information is highly valuable to
      Licensor, that any breach of Licensee’s confidentiality obligations with respect
      thereto may severely damage Licensor,
      and
      that monetary damages may not be a sufficient remedy for such breach, and,
      therefore,
      that Licensor is entitled to seek, among any other available remedies, immediate
      injunctive and other
      equitable relief for any such breach.

    

    7.
      PURCHASING
      AND MARKETING.

    

    7.1 Trademarks. Licensor
      grants to Licensee a nonexclusive right and license to use, reproduce and
display
      all Trademarks in connection with Licensee’s marketing and distribution of the
      Licensed IP in
      an ongoing
      manner
      consistent with Licensor’s then-current trademark usage standards. Licensee may
      also develop
      and use its own trademarks and service marks in connection with its products
      or
      services that use or incorporate the Licensed IP, as described in Section 7.2
      below.

    

    7.2 Branding;
      Copyright and Trademark Use. Licensee
      may, in its discretion, private-label any products
      within the scope of the Licensed IP and any Derivative Works created by Licensee
      as a product of Licensee,
      using Licensee’s own brand names, trademarks and service marks. Product
      packaging and documentation for products and services that use or incorporate
      the Licensed IP shall also be designed and produced
      by Licensee, at its sole discretion. However, Licensee shall include, subject
      to
      Licensor’s approval
      as to form, appropriate trademark, copyright and patent notices of Licensor
      in
      the documentation for
      the
      Technology.

    

    7.3 Most
      Favored Purchaser Status. Licensor
      shall offer Licensee “most favored nation” product pricing
      on all products offered or sold by Licensor. Specifically, Licensor agrees
      to
      sell such products to Licensee
      at pricing and terms that are equivalent to or better than the pricing and
      terms
      offered by Licensor to
      other
      purchasers of its products, unless such other purchaser has purchased a
      materially larger quantity of products
      from Licensor. If Licensor
      provides
      any other purchaser of its products with more favorable pricing
      or terms under similar or lesser volumes, Licensor shall promptly notify
      Licensee and the pricing and
      terms
      granted to Licensee will be modified to provide such pricing and terms to
      Licensee, effective as of
      the
      date the more favorable pricing or terms was provided to the third party
      purchaser. This right will be perpetual,
      notwithstanding the termination of this Agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      EXECUTION
        VERSION

    

     

    7.4 Proprietary
      Rights in Trademarks. Licensee
      will not at any time do or cause to be done any act or thing contesting
      or in
      any way impairing or tending to impair Licensor’s rights in and to the
      Trademarks. All use of the Trademarks by Licensee shall inure to the benefit
      of
      Licensor. Licensee will at no time adopt or
      use,
      without Licensor’s prior written consent, any name or mark, either alone or in
      combination with any other
      words or symbols, which is similar to or likely to be confused with the
      Trademarks, unless Licensor consents
      in writing.

    

    8.
      MISCELLANEOUS.

    

    8.1 Entire
      Agreement. This
      Agreement and the related Closing Documents contain the full and entire
agreement
      between
      the parties with respect to its subject matter, and supersedes and replaces
      all
      previous agreements
      or understandings, written or oral, between Licensor and Licensee. No
      modification or amendment
      of this Agreement shall be valid unless in writing and signed by both parties
      hereto.

    

    8.2 Force
      Maieure. Either
      party shall be excused from delays in performing or from any failure to
perform
      any of its
      duties
      under this Agreement to the extent such delays or failures result from causes
      beyond
      the reasonable control of such party; provided, however, that in order to be
      excused from any such delay or failure, such party must promptly notify the
      other of the delay and its cause and must diligently act to
      mitigate such delay to the extent reasonably possible.

    

    8.3 Assignment. The
      benefits of this Agreement shall inure to and be binding upon the successors
      and
assigns
      of both parties.
      However, neither party may assign or transfer this Agreement or any of its
      rights hereunder,
      nor delegate any of its duties and obligations hereunder, without prior written
      consent of the other
      party, which shall not be unreasonably withheld. Notwithstanding the foregoing,
      subject to the limitations
      of Section 2.6 above, Licensee may assign this Agreement to a third party as
      part of a sale of all or
      substantially all of the assets or stock of Licensee to that third party, or
      a
      sale of the relevant business line, and
      provided that such third party agrees to be bound by the terms of this
      Agreement.

    

    8.4 Notice. All
      notices and requests in connection with this Agreement shall be given in writing
      and may
      be
      given by registered or certified mail, commercial delivery service, facsimile
      or
      other customary means of written communication,
      delivered to the addresses set forth above or to such other address as the
      party
      to
      receive the notice or request shall designate by notice to the other party.
      The
      effective date of any notice or request given in connection with this Agreement
      shall be the date on which it is received by the addressee.

    

    8.5 Choice
      of Law and Jurisdiction. This
      Agreement shall be governed by and interpreted in accordance
      with the laws of the State of California, without regard to its conflict of
      laws
      rules. Except as set
      forth
      in Section 4.2(d) above, the parties agree
      to
      the non-exclusive jurisdiction and venue of California state
      and
      federal courts with respect to any action between the parties relating to this
      Agreement. In any such
      legal action, the prevailing party shall be entitled to an award of its
      reasonable costs and attorneys’ fees.

    

    8.6 Waiver. Any
      waiver by a party of any covenant, condition or obligation of the other party
      must be in
      writing and signed by the party asserted to have made the waiver, and any such
      waiver shall not be construed to be a waiver
      of any
      subsequent breach. No failure to exercise any right or power under this
Agreement
      or to insist on strict compliance by the other party shall constitute a waiver
      of the right in the future
      to
      exercise such right or power or to insist on strict compliance.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      EXECUTION
        VERSION

    

     

    8.7 Severability. If
      any
      term of this Agreement is held invalid or unenforceable by a court or
arbitrator
      of competent jurisdiction, such term shall be reduced or otherwise modified
      by
      such court or arbitrator to the minimum extent necessary to make it valid and
      enforceable. If such term cannot be so modified,
      it shall be severed and the parties agree to negotiate in good faith a
      replacement term that approximates,
      to the maximum extent that is legal and valid, the original
      intent of the deleted provision.

    

    8.8 Relationship
      of Parties. Licensor
      and Licensee are acting hereunder as independent contractors and this Agreement
      shall not be construed as authority for either party to act for the other party
      in any agency
      or
      other capacity or to make commitments of any kind for the account of, or on
      behalf of, the other
      party,
      except
      to
      the extent, and for the purposes, expressly provided for and set forth
      herein.

    

    8.9 Compliance
      with United States Export Controls. Both
      parties hereto shall comply with all applicable
      United States export control laws and regulations. Neither party shall export
      any Technology or
      any
      Derivative Works of such Technology, or any products or services that use or
      incorporate such Technology or Derivative Works, from the United States to
      any
      other country except as in compliance with
      the
United
      States export control laws and regulations.

    

    IN
      WITNESS WHEREOF,
      the
      parties hereto have executed this Agreement by their duly authorized
      representatives as of the
      Effective
      Date.

    

    QUINTESSENCE
      PHOTONICS CORPORATION:
      FINISAR
      CORPORATION:

     

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      EXECUTION
        VERSION

    

     

    EXHIBIT
      A

    

    Description
      of Copyrights

    

      
        	
                1.

              	
                List
                  of process equipment and model numbers used for fabrication of
                  optoelectronic chips;

              

      

      

      
        	
                2.

              	
                Printout
                  of equipment settings used during chip fabrication, including gases
                  used,
                  flow rates, pressures
                  and temperatures;

              

      

      

      
        	
                3.

              	
                Printouts
                  of Emcore process recipes for MOCVD growth of epitaxial layers
                  used to
                  grow product;

              

      

      

      
        	
                4.

              	
                Engineering
                  drawings of specialized fixtures such as bar coating
                  jigs;

              

      

      

      
        	
                5.

              	
                Engineering
                  drawings for product packages and
                  components;

              

      

       

      
        
          	
                  6.

                	
                  Description
                    of above processes and fixtures and their role in manufacturing
                    process.

                

        

         

      

    

    Description
      of Patents

     

    
      	
              Title

            	 	
              Application
                Number

            	 
	
              A
                Laser Diode with an Internal Mirror

            	 	 	
              10/163,859

            	 
	
              De-Tuned
                Distributed Feedback Laser Diode

            	 	 	
              60/361,792

            	 
	
              A
                Laser Diode With an Amplification Section
                That has a V in Index of Refraction

            	 	 	
              10/379,027

            	 
	
              A
                Laser Diode With A Low Absorption Diode
                Junction

            	 	 	
              10/378,723

            	 
	
              A
                Laser Diode With An In-Phase Output

            	 	 	
              10/264,593

            	 
	
              Compact,
                High Power Pulsed Laser Source

            	 	 	
              10/417,920

            	 
	
              High
                Performance Vertically Emitting Lasers

            	 	 	
              10/264,534

            	 
	
              Mid-Infrared
                Laser Diode

            	 	 	
              60/449,667

            	 
	
              Mid-Infrared
                Laser Diode

            	 	 	
              60/449,766

            	 

    

     

    Description
      of Trademarks

    

    Licensor
      currently has no registrations or pending applications for any trademarks or
      service marks. As
      Licensor
      currently has no commercially released products, Licensor is not using any
      trademarks or service marks
      in
      connection with any products or services.

    

    “Quintessence
      Photonics Corporation” (QPC) has been in use as Licensor’s corporate name since
December
      2000.QUINTESSENCE
      PHOTONICS CORPORATION

    

    INSTRUCTIONS
      FOR COMPLETION OF DOCUMENTS

    

    REGISTRATION
      RIGHTS AGREEMENT

    

    READ
      THE ENTIRE REGISTRATION RIGHTS AGREEMENT BEFORE
      PROCEEDING.

    

    
      	Page
              10: 	
              Print
                the date you are signing the Agreement on the line that says “Date.” Print
                your address, telephone number, and fax number on the appropriate
                lines.
                Sign your name on the first line under “Individual Investors.” Print your
                name on the second line under “Individual Investors.” If two individuals
                are investing jointly, such as husband and wife, the joint investor
                signs
                their name on the third line and prints their name on the fourth
                line
                under “Individual Investors.” If you are signing on behalf of an entity,
                such as a corporation, partnership, limited liability company, or
                trust,
                print the name of the entity on the line that reads “Name of Entity” under
                “Entity Investors.” Then sign your personal name on the line after “By”
                and print your personal name on the line after “Name” and print your title
                with the entity on the line after “Title” (i.e., President, General
                Partner, Manager, Trustee, Custodian,
                etc.).

            

    

    

    SUBSCRIPTION
      AGREEMENT

    

    
      	
              Item
                I:

            	 	
              Name
                and address information must be provided. Securities will be issued
                in the
                name set forth in this Item and delivered to the address set forth
                in this
                Item. If two people are subscribing jointly, both people must provide
                their names and social security numbers. A telephone number must
                also be
                provided.

            

    

    

    
      	
              Item
                II:

            	 	
              If
                securities are to be held in a different name than the investor and
                sent
                to a different address (i.e., an IRA or other account held at a brokerage
                firm), this Item must be completed. If the securities are to be issued
                and
                delivered directly to the entity listed in Item I, this section need
                not
                be filled in.

            

    

    

    
      	Item
              III:	
               This
                Item needs to be read by the investor, but nothing needs to be written
                here.

            

    

     

    
      
        	Item
                IV:	
                 This
                  Item must be completed by checking the appropriate
                  line.

              

      

       

    

    
      	
              Item
                V:

            	 	
              This
                Item must completed only if you check Item IV(A)(1).
                

            

    

    

    
      	Item
              VI: 	
              This
                Item needs to be read by the investor, but nothing needs to be written
                here.

            

    

    

    
      	Item
              VII: 	
              The
                Patriot Act requires us to collect information on the sources of
                funds.
                Please complete section 1, add the documents requested in section
                2 only
                if funds did not come from an approved country (U.S. is approved),
                complete section 3.

            

    

    

    
      	Item
              VIII: 	
              Add
                the documents requested in this section only if you are wiring
                funds.

            

    

    

    
      	Item
              IX: 	
              The
                Subscription Agreement must be signed and dated
                here.

            

    

    

    
      	
              Item
                X:

            	 	
              Your
                investment advisor or broker must complete this item and sign to
                verify
                that this is a suitable investment, as well as for record keeping
                purposes.

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    PRE-DISPUTE
      ARBITRATION AGREEMENT

    

    
      	 	 	
              Sign
                your name under “Client Signature” and print the date you are signing the
                Agreement on the line that says “Date” on the left column. Print your name
                under “Print Client Name.” If two individuals are investing jointly, such
                as husband and wife, the joint investor signs their name on the right
                column and prints their date under “Client Signature” and “Date” on the
                right column. If you are signing on behalf of an entity, such as
                a
                corporation, partnership, limited liability company, or trust, print
                the
                name of the entity on the line that reads “Print Client Name.” Then sign
                your personal name on the line after “Representative
                Signature.”

            

    

    

    IF
      YOU ARE A U.S. CITIZEN, RESIDENT ALIEN OR A U.S.-BASED
      ENTITY:

    

    
      	 	 	
              If
                you are a U.S. CITIZEN, RESIDENT ALIEN OR AN ENTITY ORGANIZED UNDER
                A
                STATE IN THE UNITED STATES. (i.e., Delaware-organized corporation),
                please
                complete the attached Form W-9 - “Request for Taxpayer Identification
                Number and Certification.” 

            

    

    

    

    IF
      YOU ARE A FOREIGN INVESTOR:

    

    
      	 	 	
              If
                you are a FOREIGN INVESTOR, please complete the attached Form W-8BEN
                “Certificate of Foreign Status of Beneficial Owner for United States
                Tax
                Withholding.” 

            

    

    

    INSTRUCTIONS
      FOR PAYMENTS

    

    Please
      deliver a check (bearing subscriber’s name) payable to “City National Bank -
      Quintessence Photonics Corporation” in the amount of your total subscription
      to:

    

    Brookstreet
      Securities Corporation 

    ATTN:
      Compliance

    2361
      Campus Drive, Suite 210

    Irvine,
      CA 92612

    

    If
      you
      are unable to deliver a check, please wire funds to the escrow agent in the
      amount of your total subscription following these instructions:

    

    CITY
      NATIONAL BANK

    LOS
      ANGELES FED ABA ROUTING # 122 016 066

    C/O
      CITY
      NATIONAL INVESTMENTS #101281469

    FOR
      FURTHER CREDIT TO: 

    ACCOUNT
      NAME: CITY NATIONAL BANK - Quintessence Photonics Corporation

    ACCOUNT
      #
      [__________]

    

    Complete
      the Registration Rights Agreement, Subscription Agreement, the Pre-Dispute
      Arbitration Agreement and applicable tax form and mail or deliver with your
      check or wire information to the address above.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SUBSCRIPTION
      AGREEMENT

    
      	
               

              QUINTESSENCE
                PHOTONICS CORPORATION

               

            

    

     

    Please
      read all instructions and the terms and conditions of this agreement carefully
      before filling out this application. If you need assistance, please contact
      George Lintz, CFO of Quintessence Photonics Corporation (the “Company") at (818)
      986-0000 or Neil Dabney at Brookstreet Securities Corporation at (310)
      230-1044.

     

    
      	
              When the application is complete, mail the application
                and your investment to:

            	
              Brookstreet
                Securities
                Corporation

              ATTN:
                Compliance

              ADDRESS:
                2361 Campus Drive, Suite 210

              Irvine,
                CA 92612

            

    

     

    Make
      checks payable to City National Bank - Quintessence Photonics
      Corporation

    
      o Check
        this box if you are
        sending your subscription funds by wire transfer.

      o Check
        this box if you previously
        invested in this Offering.

    

    
      	
               

              I.    ACCOUNT
                REGISTRATION - Check One

               

            

    

     

    
      
        	 	
                o    Individual
                  

                Account

              	 	
                o    Joint
                  

                Registration

              	 	
                o    Pension
                  or Profit

                Sharing

              	 	
                o    Corporation,
                  Partnership, 

                Trust,
                  Association or 

                Other
                  Entity

              
	 	 	 	 	 	 	 	 
	 	 	 	
                If
                  no box below is checked, we will issue the securities as JTWROS.
                  

              	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	
                o    Joint
                  Tenant
                  with Right of Survivorship 

              	 	
                o    IRA
                  

              	 	 
	 	 	 	 	 	 	 	 
	 	 	 	
                o    Tenants
                  in
                  Common 

              	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	
                o    Tenants
                  by
                  Entirety 

              	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	 	
                o    Community
                  Property 

              	 	 	 	 

      

    

    

      
        	 	 	 	 
	
                Name
                  of APPLICANT, CUSTODIAN, CORPORATION, TRUST or BENEFICIARY

              	 	 	 
	 	 	 	 	 	 	
                 o

              	 	 
	 	
                M
                  or F

              	 	
                Date
                  of Birth

              	 	
                Soc.
                  Sec./Tax ID # 

              	 	
                PLEASE
                  PUT A CHECK NEXT TO THE SOC. SEC. # OR TAX ID. # RESPONSIBLE FOR
                  TAXES. WE
                  WILL REPORT THIS NUMBER TO THE IRS. 

              
	 	 
	
                Name
                  of JOINT TENANT or TRUSTEE (if applicable) 

              	 	 	 	 	 	 
	 	 	 	 	 	 	 o
	 	
                M
                  or F

              	 	
                Date
                  of Birth 

              	 	
                Soc.
                  Sec./Tax ID# 

              	 
	 	 	 	 
	
                Name
                  of ADDITIONAL TRUSTEE (if applicable) 

              	 	
                Date
                  of Trust 

              	 
	 	 	 	 	 	 	 	 	 
	
                Marital
                  Status (please check one)  

              	oSingle	 	o
                Married 	 	o
                Separated 	 	oDivorced	 

      

    

     

    $________________
      Investment Amount                                                     Number
      of Units
      (Number
      of Units X $[______] per Unit; Minimum [________] Units ($[______]) unless
      otherwise approved by the Company)

    

    HOME
      ADDRESS - THIS ADDRESS WILL BE USED FOR MAILING UNLESS YOU INDICATE
      OTHERWISE

    

    
      	 	 	 	 	 	 
	
              Street
                Address

            	 	 	 	
              Unit
                Number 

            	 
	
              City

            	 	
              State

            	 	
              ZIP+4
                 

            	 

    

     

    
      	
              Home
                Phone Number (with Area Code)

            	
              (______)

            	 	
              /
                Fax Number (with Area Code)

            	
              (______)

            	 

    

     

    
      	
              E-mail
                Address: 

            	 	 	 	 	 
	 	 	 	 	 	 
	 	 	
              BUSINESS
                ADDRESS 

            	 	 	 

    

     

    
      	 	 	 	 	 	 
	
              Name
                of Company 

            	 	 	 
	 	 	 	 
	
              Street
                Address

            	 	 	 	
               

            	
               Suite
                Number

            
	
              City

            	 	
              State

            	 	
              ZIP+4

            	 

    

     

    
      	
              Business
                Phone Number (with Area Code)

            	
              (_____)

            	 	
              /
                Fax Number (with Area Code)

            	
              (_____)

            	 

    

     

    
      	
              E-mail
                Address: 

            	 	 	 	 	 

    

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    
      	
               

              II.    ALTERNATIVE
                DISTRIBUTION INFORMATION 

               

            

    

    

    To
      direct distributions to a party other than the registered owner, complete the
      information below. YOU MUST COMPLETE THIS SECTION IF THIS IS AN IRA
      INVESTMENT.

     

    
      	Name
              of Firm (Bank, Brokerage, Custodian): 	 
              

    

     

    
      	Account
              Name: 	 

    

     

    
      	Account
              Number: 	 

    

     

    
      	Representative
              Name:	 

    

     

    
      	Representative
              Phone Number:	 

    

     

    
      	Address:
	 

    

     

    
      	City,
              State ZIP: 	 

    

     

    
      	
               

              III.    SUBSCRIPTION
                AGREEMENT

               

            

    

    

    You
      as an
      individual or you on behalf of the subscribing entity are being asked to
      complete this Subscription Agreement so a determination can be made as to
      whether or not you (it) are qualified to purchase securities under applicable
      federal and state securities laws.

    Your
      answers to the questions contained herein must be true and correct in all
      respects, and a false representation by you may constitute a violation of law
      for which a claim for damages may be made against you.

    Your
      answers will be kept strictly confidential; however, by signing this
      Subscription Agreement, you will be authorizing the Company to present a
      completed copy of this Subscription Agreement to such parties as they may deem
      appropriate in order to make certain that the offer and sale of the Securities
      will not result in a violation of the Securities Act of 1933, as amended, or
      of
      the securities laws of any state.

    This
      Subscription Agreement does not constitute an offer to sell or a solicitation
      of
      an offer to buy securities or any other security.

    All
      questions must be answered.
      If the
      appropriate answer is "None" or "Not Applicable," please state so. Please print
      or type your answers to all questions and attach additional sheets if necessary
      to complete your answers to any item. Please initial any
      correction.

     

    
      

    

    INDIVIDUAL
      SUBSCRIBERS:

    If
      the
      Securities subscribed for are to be owned by more than one person, you
      and the other co-subscriber must each complete a separate Subscription Agreement
      (except if the co-subscriber is your spouse) and sign the Signature Page annexed
      hereto. If your spouse is a co-subscriber, you must indicate your spouse's
      name
      and social security number.

    CORPORATIONS,
      PARTNERSHIPS, PENSION PLANS AND TRUSTS:

    The
      information requested herein relates to the subscribing entity and not to you
      personally (unless otherwise determined in the ACCREDITED INVESTOR STATUS
      section).

    

    
      	
               

              IV.    ACCREDITED
                INVESTOR STATUS

               

            

    

     

    TO
      BE AN ACCREDITED INVESTOR, YOU MUST MEET ONE OF THE FOLLOWING TESTS, PLEASE
      CHECK THE APPROPRIATE SPACES BELOW.

     

    A. INDIVIDUAL
      ACCOUNTS

    I
      certify
      that I am an "accredited investor" because:

    

    1  _______
      I
      had an individual income of more than $200,000 in each of the two most recent
      calendar years, and I reasonably expect to have an individual income in excess
      of $200,000 in the current calendar year; or my spouse and I had joint income
      in
      excess of $300,000 in each of the two most recent calendar years, and we
      reasonably expect to have a joint income in excess of $300,000 in the current
      calendar year (Note:
      Item V, Income Statement, must be completed if you check this option);

    OR

       
      2  _______
      I
      have an individual net worth, or my spouse and I have a joint net worth, in
      excess of $1,000,000 (including home and personal property).

    For
      purposes of this Subscription Agreement, "individual income" means "adjusted
      gross income" as reported for Federal income tax purposes, exclusive of any
      income attributable to a spouse or to property owned by a spouse: (i) the
      amount of any interest income received which is tax-exempt under
      Section 103 of the Internal Revenue Code of 1986, as amended, (the "Code"),
      (ii) the amount of losses claimed as a limited partner in a limited
      partnership (as reported on Schedule E of form 1040), (iii) any
      deduction claimed for depletion under Section 611 et seq. of the Code and
      (iv) any amount by which income from long-term capital gains has been
      reduced in arriving at adjusted gross income pursuant to the provisions of
      Sections 1202 of the Internal Revenue Code as it was in effect prior to
      enactment of the Tax Reform Act of 1986.

    For
      purposes of this Subscription Agreement, "joint income" means, "adjusted gross
      income," as reported for Federal income tax purposes, including any income
      attributable to a spouse or to property owned by a spouse, and increased by
      the
      following amounts: (i) the amount of any interest income received which is
      tax-exempt under Section 103 of the Internal Revenue Code of 1986, as
      amended (the "Code"), (ii) the amount of losses claimed as a limited partner
      in
      a limited partnership (as reported on Schedule E of Form 1040),
      (iii) any deduction claimed for depletion under Section 611
      et seq. of the Code and (iv) any amount by which income from long-term
      capital gains has been reduced in arriving at adjusted gross income pursuant
      to
      the provisions of Section 1202 of the Internal Revenue Code as it was in
      effect prior to enactment of the Tax Reform Act of 1986.

    For
      the
      purposes of the Subscription Agreement, "net worth" means (except as otherwise
      specifically defined) the excess of total assets at fair market value, including
      home and personal property, over total liabilities, including mortgages and
      income taxes on unrealized appreciation of assets.

    

    B. CORPORATIONS,
      PARTNERSHIPS, EMPLOYEE BENEFIT PLANS OR IRAS

    (Please
      provide a copy of the Corporate Resolution authorizing this investment,
      Partnership Agreement, Limited Liability Company Operating Agreement, or Benefit
      Plan, as applicable)

    1  Has
      the
      subscribing entity been formed for the specific purpose of investing in the
      Securities?  ̈ YES  ̈ NO

    If
      your
      answer to question 1 is "No," CHECK whichever of the following statements (a-e)
      is applicable to the subscribing entity. If your answer to question 1 is
      "Yes," the subscribing entity must be able to certify to statement (2)
      below in
      order to qualify as an "accredited investor."

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      	
               

              ACCREDITED
                INVESTOR STATUS - (Continued)

               

            

    

    

    The
      undersigned entity certifies that it is an "accredited investor" because it
      is:

    (a) _______
      an employee benefit plan within the meaning of Title I of the Employee
      Retirement Income Security Act of 1974, provided that the investment decision
      is
      made by a plan fiduciary, as defined in section 3(21) of such Act, and the
      plan fiduciary is a bank, savings and loan association, insurance company or
      registered investment adviser; OR

    (b) _______
      an employee benefit plan within the meaning of Title I of the Employee
      Retirement Income Security Act of 1974 that has total assets in excess of
      $5,000,000; OR

    (c) _______
      each of its shareholders, partners, or beneficiaries meets at least one of
      the
      following conditions described above under Individual
      Accredited Investor Status in
      Section
      A of Item IV above. Please also CHECK the appropriate space in Section A of
      Item
      IV above. (Note:
      Item V, Income Statement, must be completed for each shareholder, partner or
      beneficiary if you are relying upon an income standard by checking option 1
      in
      Section A of Item IV above.) OR

    (d) _______
      the plan is a self directed employee benefit plan and the investment decision
      is
      made solely by a person that meets at least one of the conditions described
      above under Individual
      Accredited Investor Status in
      Section
      A of Item IV above. Please also CHECK the appropriate space in Section A of
      Item
      IV above. (Note:
      Item V, Income Statement, must be completed if you are relying upon an income
      standard by checking option 1 in Section A of Item IV
      above.) OR

    (e) _______
      a
      corporation, a partnership or a Massachusetts or similar business trust with
      total assets in excess of $5,000,000.

    2. If
      the
      answer to Question 1 above is "Yes," please certify the statement below is
      true and correct:

    _______
      The undersigned entity certifies that it is an accredited investor because
      each
      of its shareholder or beneficiaries meets at least one of the conditions
      described above under Individual
      Accredited Investor Status in
      Section
      A of Item IV above. Please also CHECK the appropriate space in Section A of
      Item
      IV above. (Note:
      Item V, Income Statement, must be completed if you are relying upon an income
      standard by checking option 1 in Section A of Item IV
      above.)

    

    C. TRUST
      ACCOUNTS

    (Please
      provide complete copy of the Trust)

    1. Has
      the
      subscribing entity been formed for the specific purpose of investing in the
      Securities? YES  ̈ NO  ̈

    If
      your
      answer to question 1 is "No," CHECK whichever of the following statements
      (a-c) is applicable to the subscribing entity. If your answer to question 1
      is "Yes," the subscribing entity must be able to certify to the statement (c)
      below in order to qualify as an "accredited investor."

    The
      undersigned trustee certifies that the trust is an "accredited investor"
      because:

    (a)_______
      The trust has total assets in excess of $5,000,000 and the investment decision
      has been made by a "sophisticated person" as described in Rule 506(b)(2)(ii)
      promulgated under the Act; OR

    (b)_______
      The trustee making the investment decision on its behalf is a bank (as defined
      in Section 3(a)(2) of the Act), a saving and loan association or other
      institution as defined in Section 3(a)(5)(A) of the Securities Act, acting
      in its fiduciary capacity; OR

    (c)_______
      the grantor(s) of the trust may revoke the trust at any time and regain title
      to
      the trust assets and has (have) retained sole investment control over the assets
      of the trust and the (each) grantor(s) meets at least one of the conditions
      described above under Individual
      Accredited Investor Status.
      Please
      also CHECK the appropriate space in that Section.

    

    D. ANY
      ENTITY (but not an individual person)

    ______
      All
      of
      the equity owners of this entity are accredited investors.
      (If you are checking this option EACH
      owner of the entity must complete Item IV, A, by checking option 1 or 2 or
      both,
      as applicable, and
      complete Item V if you checked option 1 of Item IV, A. Make copies of pages
      2
      and 3 to do this and note each owner’s name on each copy.)

    

    
      	
               

              V.     INCOME
                STATEMENT - (Round off to the nearest $5,000)

               

            

    

     

    ALL
      ACCREDITED INVESTORS RELYING ON AN INCOME STANDARD (YOU ARE RELYING ON AN INCOME
      STANDARD IF YOU CHECKED ITEM IV(A)(1)) MUST COMPLETE THIS SECTION.

    Please
      specify the amount of your:  ̈Individual   
       ̈Joint  
        ̈Trust   
       ̈Beneficiary   
       ̈Shareholder    ̈
      Partner

    income
      (defined in page 2: Accredited Investor Status) in calendar years 2003 and
      2004
      and your projected income for 2005.

    

    
      	 	
               

              2003

            	
               

              $ 
                

            	
               

            
	 	
               

              2004

            	
               

              $  
                

            	
               

            
	 	
               

              2005

            	
               

              $  
                

            	
               

              (projected)

            

    

    

     

    
      	Current occupation:	 	 	 	 	 
	Name
              of Employer: 	 	   	 	 	 
	Position
              or Title:	 	   	 	 	 
	Former employment 	 	
               (if
                current employment is less than five
                years):

            	 	Telephone number 	(       )               -              
	Name
              of Employer:   	 	   	 	Position
              or Title: 	__________________
	Position
              or Title:   	 	   	 	Period
              Employed: 	                        to                         

    

     

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	
               

              VI.    CERTIFICATIONS

               

            

    

    

    I
      understand that investment in the Securities is an illiquid
      investment.
      In
      particular, I recognize that: (i) I must bear the economic risk of investment
      in
      the Securities for an indefinite period of time, since the Securities have
      not
      been registered under the Securities Act of 1933 (the "Securities Act") and
      therefore cannot be sold unless either they are subsequently registered under
      the Securities Act or an exemption from such registration is available and
      a
      favorable opinion of counsel for the Company to that effect is obtained (if
      requested by the Company); and (ii) no established market will exist and it
      is
      possible that no public market for the Securities will develop. I consent to
      the
      affixing by the Company of such legends on certificates representing the
      Securities as any applicable federal or state securities law may require from
      time to time.

    I
      represent and warrant to the Company that: (i) The financial information
      provided in the Subscription Agreement is complete, true and correct; (ii)
      I and
      my Investment Managers, if any, have carefully reviewed and understand the
      risks
      of, and other considerations relating to, a purchase of Securities, including,
      but not limited to, the risks set forth under "Risk
      Factors"
      in the
      Private Placement Memorandum (the “Memorandum”); (iii) I and my Investment
      Managers, if any, have been afforded the opportunity to obtain any information
      necessary to verify the accuracy of any representations or information set
      forth
      in the Memorandum and have had all inquiries to the Company answered, and have
      been furnished all requested materials, relating to the Company and the offering
      and sale of the Securities and anything set forth in the Memorandum; (iv)
      neither I nor my Investment Managers, if any, have been furnished any offering
      literature by the Company or any of its affiliates, associates or agents other
      than the Memorandum, and the documents referenced therein; and (v) I am
      acquiring the Securities for which I am subscribing for my own account, as
      principal, for investment and not with a view to the resale or distribution
      of
      all or any part of the Securities.

    The
      undersigned, if a corporation, partnership, trust or other form of business
      entity, (i) is authorized and otherwise duly qualified to purchase and hold
      the
      Securities, (ii) has obtained such additional tax and other advice that it
      has
      deemed necessary, (iii) has its principal place of business at its residence
      address set forth in this Subscription Agreement, and (iv) has not been formed
      for the specific purpose of acquiring the Securities (although this may not
      necessarily disqualify the subscriber as a purchaser). The persons executing
      the
      Subscription Agreement, as well as all other documents related to the Offering,
      represent that they are duly authorized to execute all such documents on behalf
      of the entity. (If the undersigned is one of the aforementioned entities, it
      agrees to supply any additional written information that may be
      required.)

    All
      of
      the information which I have furnished to the Company and which is set forth
      in
      the Subscription Agreement is correct and complete as of the date of the
      Subscription Agreement. If any material change in this information should occur
      prior to my subscription being accepted, I will immediately furnish the revised
      or corrected information. I further agree to be bound by all of the terms and
      conditions of the Offering described in the Memorandum. I am the only person
      with a direct or indirect interest in the Securities subscribed for by this
      Subscription Agreement. I agree to indemnify and hold harmless the Company
      and
      its officers, directors and affiliates as well as the Company’s placement agents
      and all their officers, directors and affiliates from and against all damages,
      losses, costs and expenses (including reasonable attorneys' fees) that they
      may
      incur by reason of the failure of the undersigned to fulfill any of the terms
      or
      conditions of this Subscription Agreement or by reason of any breach of the
      representations and warranties made by the undersigned herein or in any document
      provided by the undersigned to the Company. This subscription is not
      transferable or assignable by me without the written consent of the Company.
      If
      more than one person is executing this agreement, the obligations of each shall
      be joint and several and the representations and warranties contained in this
      Subscription Agreement shall be deemed to be made by, and be binding upon,
      each
      of these persons and his or her heirs, executors, administrators, successors
      and
      assigns. This subscription, upon acceptance by the Company, shall be binding
      upon my heirs, executors, administrators, successors and assigns. This
      Subscription Agreement shall be construed in accordance with and governed in
      all
      respects by the laws of the State of California.

    I
      certify
      that I, either alone or with my purchaser representative, have such knowledge
      and experience in financial and business matters that I am capable of evaluating
      the merits and risks of this investment.

    I
      understand that the Company plans to enter into a reverse merger transaction
      with publicly-trade company (“Pubco”) after the Offering as described in the
      Memorandum (“Reverse Merger”). The Reverse Merger, if consummated, will result
      in the exchange of the Securities that are owned by the Stockholder for shares
      of the common stock of the Public Co. (the “Exchange Offer”). Substantially all
      Company stockholders have already provided irrevocable proxies and power of
      attorneys to the Company’s Chief
      Executive Officer and Chief Financial Officer (each an “Agent”) and each of
      them, to take all actions necessary to consummate the Reverse Merger, including
      exchange their equity securities for equity securities of Pubco. I further
      understand that the Company has conditioned its acceptance of my subscription
      to
      purchase the Securities upon my willingness to agree to the Reverse Merger
      and
      Exchange Offer. Therefore, I hereby authorized
      and empowered the
      Agents, and each of them,
      to act
      as my attorneys
      and
      proxies
      for the
      purpose of: (i) exchanging the Securities for shares of the Pubco’s common stock
      at the same ratio that all other Company stockholders exchange their equity
      securities for shares of Pubco’s common stock, (ii) executing and delivering
      such documentation and taking such other actions as may be required to effect
      the Reverse Merger taking
      any actions as may be necessary to effectuate the Exchange Offer, including
      but
      not limited to, instructing the transfer agent to cancel the Securities and
      executing, on behalf of me, such documents as may be necessary to effectuate
      the
      exchange if I fail to deliver the stock certificate for cancellation, or fail
      to
      execute any other documentation required to effectuate the exchange, within
      fifteen (15) days after the expiration of the Exchange Offer; and
      (iii)
      voting
      in favor of the adoption, approval, execution and delivery by the Company of
      such agreements, contracts, and documents (including, but not limited to, any
      amendment to the Company’s Certificate of Incorporation, if required) and the
      taking of any other actions requiring stockholder approval as may be required
      or
      deemed appropriate by the Company’s Chief Executive Officer to consummate the
      Reverse Merger and related Exchange Offer. 

    Under
      penalties of perjury, I certify that (1) my taxpayer identification number
      shown in this Subscription Agreement is correct and (2) I am not subject to
      backup withholding because (a) I have not been notified that I am subject
      to backup withholding as a result of a failure to report all interest and
      dividends or (b) the Internal Revenue Service has notified me that I am no
      longer subject to backup withholding. (If you have been notified that you are
      subject to backup withholding and the Internal Revenue Service has not advised
      you that backup withholding has been terminated, strike out item
      (2).)

    I
      hereby
      give power of attorney to the President or Secretary of the Company to execute
      the Registration Rights Agreement on my behalf and further agree to be bound
      by
      the terms of the Registration Rights Agreement in the form contained in the
      Memorandum by executing this Subscription Agreement only.

    The
      undersigned acknowledge that City National Bank is acting solely as Escrow
      Holder in connection with the offering of the Securities and makes no
      recommendation with respect thereto.  City National Bank has made no
      investigation regarding the offering, the Company or any other person or entity
      involved in the offering.

    BY
      SIGNING, I ACKNOWLEDGE THAT I HAVE CAREFULLY REVIEWED THE MEMORANDUM RELATED
      TO
      THIS INVESTMENT AND AM BOUND BY THE TERMS OF THE SUBSCRIPTION AGREEMENT AND
      MEMORANDUM.

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    

    
      	
               

              VII.    PATRIOT
                ACT REQUIREMENTS

               

            

    

    

    The
      Patriot Act requires us to obtain the following information from you to detect
      and prevent the misuse of the world financial system.

    

    
      	
              1.

            	
              In
                the space provided below, please provide details of where
                monies were transferred from
                to
                the Company in relation to your subscription for Securities.
                

            

    

    

    
      	
               

              COUNTRY

            	
               

              NAME
                OF

              BANK/FINANCIAL

              INSTITUTION

            	
               

              CONTACT

              NAME/PHONE

              NUMBER
                AT

              BANK/FINANCIAL

              INSTITUTION

            	
               

              NAME
                OF

              ACCOUNTHOLDER

            	
               

              ACCOUNT

              NUMBER

            
	
               

               

               

               

            	 	 	 	 
	
               

               

               

               

            	 	 	 	 

    

    

    If
      the
      country from which the monies were transferred appears in the Approved Country
      List below, please go to number 3. If the country does not appear, please go
      to
      number 2.

    

    Approved
      Country List

     

    
      	Argentina	Germany	Liechtenstein	Spain
	Australia	Gibraltar	Luxembourg	Switzerland
	Bermuda	Guernsey	Mexico	Turkey
	Belgium	Hong Kong	Netherlands	United Kingdom
	Brazil	Iceland	New Zealand	United States
	British Virgin Islands	Ireland	Norway	 
	Canada	Isle of Man	Panama	 
	Denmark	Italy	Portugal	 
	Finland	Japan	Singapore	 
	France	Jersey	 	 

    

    

    
      	
              2.

            	
              If
                subscription monies were transferred to the Company from any country
                other
                than on the "Approved Country List" (see above), please provide the
                following documentation to the Company (all copies should be in English
                and certified as being "true and correct copies of the original"
                by a
                notary public of the jurisdiction of which you are
                resident).

            

    

    

    
      	 	
              (a)

            	
              For
                Individuals:

            

    

    

    
      	 	
              (i)

            	
              evidence
                of name, signature, date of birth and photographic
                identification

            

    

    

    
      	 	
              (ii)

            	
              evidence
                of permanent address

            

    

    

    
      	 	
              (iii)

            	
              where
                possible, a reference from a bank with whom the individual maintains
                a
                current relationship and has maintained such relationship for at
                least two
                years

            

    

    

    
      	 	
              (b)

            	
              For
                Companies:

            

    

    

    
      	 	
              (i)

            	
              a
                copy of its certificate of incorporation and any change of name
                certificate

            

    

    

    
      	 	
              (ii)

            	
              a
                certificate of good standing

            

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      	
               

              VII.    PATRIOT
                ACT REQUIREMENTS - (Continued)

               

            

    

    

    
      	 	
              (iii)

            	
              a
                register or other acceptable list of directors and
                officers

            

    

    

    
      	 	
              (iv)

            	
              a
                properly authorized mandate of the company to subscribe in the form,
                for
                example, of a certified resolution which includes naming authorized
                signatories

            

    

    

    
      	 	
              (v)

            	
              a
                description of the nature of the business of the
                company

            

    

    

    
      	 	
              (vi)

            	
              identification,
                as described above for individuals, for at least two directors and
                authorized signatories

            

    

    

    
      	 	
              (vii)

            	
              a
                register of members or list of shareholders holding a controlling
                interest

            

    

    

    
      	 	
              (viii)

            	
              identification,
                as described above, for individuals who are beneficial owners of
                corporate
                shareholders which hold 10% or more of the capital share of the
                company

            

    

    

    
      	 	
              (c)

            	
              For
                Partnerships and Unincorporated
                Businesses:

            

    

    

    
      	 	
              (i)

            	
              a
                copy of any certificate of registration and a certificate of good
                standing, if registered

            

    

    

    
      	 	
              (ii)

            	
              identification,
                as described above, for individuals and, where relevant, companies
                constituting a majority of the partners, owners or managers and authorized
                signatories

            

    

    

    
      	 	
              (iii)

            	
              a
                copy of the mandate from the partnership or business authorizing
                the
                subscription in the form, for example, of a certified resolution
                which
                includes naming authorized
                signatories

            

    

    

    
      	 	
              (iv)

            	
              a
                copy of constitutional documents (formation and partnership
                agreements)

            

    

    

    
      	 	
              (d)

            	
              For
                Trustees:

            

    

    

    
      	 	
              (i)

            	
              identification,
                as described above, for individuals or companies (as the case may
                be) in
                respect of the trustees

            

    

    

    
      	 	
              (ii)

            	
              identification,
                as described above for individuals, of beneficiaries, any person
                on whose
                instructions or in accordance with whose wishes the trustee/nominee
                is
                prepared or accustomed to act and the settlor of the
                trust

            

    

    

    
      	 	
              (iii)

            	
              evidence
                of the nature of the duties or capacity of the
                trustee

            

    

    

    
      	
              3.

            	
              The
                Company is also required to verify the source of funds. To this end,
                summarize the underlying source of the funds remitted to us (for
                example,
                where subscription monies were the profits of business (and if so
                please
                specify type of business), investment income, savings,
                etc.).

            

    

    

    

    
      	
               Source
                of Funds

            
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 

    

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    
      	
               

              VIII.     ANTI-MONEY
                LAUNDERING ACT

               

            

    

     

    
      	
               

            	
              WIRING
                FUNDS:
                Due to the Anti-Money Laundering Act, Brookstreet Compliance
                must
                grant approval prior to funds being wired from any account other
                than
                National Financial Services (NFS) or an IRA Custodial
                Account.
                Thus, please adhere to the following procedure:

            

    

     

    
      	 	
              A.

            	
              Complete
                Sections 1 through 3 above, as applicable, utilizing the information
                for
                the bank from which the wire will
                originate.

            

    

     

    
      	 	
              B.

            	
              Attach
                a copy of your “Letter of Instruction” or other wire instructions showing
                your name, financial institution name (where wire will originate),
                account
                number, wire amount, and wire instructions (escrow agent information
                such
                as ABA routing number, escrow account number etc) - this must be
                signed
                and dated.

            

    

     

    
      	 	
              C.

            	
              If
                monies will be wired from an account not matching the name on this
                Subscription Agreement, additional documentation is necessary (please
                contact Brookstreet Compliance @ (800) 297-2578 extension 141 for
                assistance).

            

    

     

    
      	 	
              D.

            	
              Submit
                Subscription Agreement to Compliance for processing and compliance
                approval.

            

    

     

    
      	 	
              E.

            	
              Upon
                notification of approval from Compliance, wire
                funds.

            

    

     

    
      	 	
              F.

            	
              Compliance
                will obtain wire confirmation from escrow agent. If wire confirmation
                does
                NOT show account number of wire origination, additional documentation
                will
                be required.

            

    

     

    WIRING
      FUNDS IN ADVANCE OF COMPLIANCE APPROVAL IS PROHIBITED

    

    
      	
               

              IX.    SIGNATURES

               

            

    

    The
      Subscription Agreement contains various statements and representations by
      subscribers and should be carefully reviewed in its entirety before executing
      this signature page.

    

    I
      hereby
      certify that I have reviewed and am familiar with the terms of the Subscription
      Agreement. This
      Subscription Agreement incorporates by reference all forms of securities to
      be
      purchased. I agree to be bound by all of the terms and conditions of this
      Subscription Agreement and all forms of securities presented to me.

    

    Dated                                                                       

     

    
      	Print name of individual subscriber,
              custodian, corporation, trustee	 	Signature of individual subscriber,
              authorized person, trustee
	 	 	 
	 	 	 
	Print name of co-subscriber, authorized
              person, co-trustee if required by trust instrument	 	Signature of co-subscriber, authorized
              person, co-trustee if required by trust instrument
	 	 	 
	 	 	 

    

    Investment
      Authorization.
      The
      undersigned corporation, partnership, benefit plan or IRA has all requisite
      authority to acquire the Securities hereby subscribed for and to enter into
      the
      Subscription Agreement, and further, the undersigned officer, partner or
      fiduciary of the subscribing entity has been duly authorized by all requisite
      action on the part of such entity to execute these documents on its behalf.
      Such
      authorization has not been revoked and is still in full force and
      effect.

    Check
      Box:   ̈ Yes      ̈ No    o
      Not
      Applicable

    

    CAPACITY
      CLAIMED BY SIGNER:

     

    
      	 ̈ Individual(s)	 	 ̈ Attorney-In-Fact
	 ̈ Partner(s)	 	 ̈ Subscribing
              Witness
	 ̈ Trustee(s)	 	 ̈ Guardian/Conservator

    

    
      	 ̈ Corporate 	 	 	 ̈ Other: 	 
	
              Officer(s)

            	 	 	 	 
	
              
              

            	
              Title(s)

            	 	 	 

    

    
       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

    

    
      	
               

              X. VERIFICATION
                OF INVESTMENT ADVISOR/BROKER

               

            

    

     

    I
      state
      that I am familiar with the financial affairs and investment objectives of
      the
      investor named above and reasonably believe that a purchase of the Securities
      is
      a suitable investment for this investor and that the investor, either
      individually or together with his or her purchaser representative, understands
      the terms of and is able to evaluate the merits of this offering. I
      acknowledge:

    

    (a) that
      I
      have reviewed the Memorandum,  Subscription
      Agreement and forms of securities presented to me, and attachments (if any)
      thereto;

    (b) that
      the
      Subscription Agreement and attachments thereto have been fully completed and
      executed by the appropriate party; and

    (c) that
      the
      subscription will be deemed received by the Company upon acceptance of the
      Subscription Agreement.

     

     

    
      	Broker/Dealer	 	Account Executive
	 	 	 
	(Name of Broker/Dealer)	 	(Signature)
	 	 	 
	 	 	 
	(Street Address of Broker/Dealer
              Office) 	 	(Print Name)
	 	 	 
	 	 	 
	(City
              of
              Broker/Dealer Office)     (State)     (Zip)	 	(Representative
              I.D. Number)
	 	 	 
	(                  
               )                                    
              -                                             	 	 
	(Telephone Number of Broker/Dealer
              Office)	 	(Date)
	 	 	 
	(                  
               )                                    
              -                                             	 	 
	(Fax Number of
              Broker/Dealer Office)	 	(E-mail Address of Account
              Executive)

    

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

       

    Brookstreet
      Securities Corporation

    Pre-Dispute

    Arbitration
      Agreement

    

    

    THIS
      AGREEMENT CONTAINS A PRE-DISPUTE ARBITRATION CLAUSE. BY SIGNING AN ARBITRATION
      AGREEMENT, THE

    PARTIES
      AGREE AS FOLLOWS:

    

    
      	
              (A)

            	
              ALL
                PARTIES TO THIS AGREEMENT ARE GIVING UP THE RIGHT TO SUE EACH OTHER
                IN
                COURT, INCLUDING THE RIGHT TO A TRIAL BY JURY, EXCEPT AS PROVIDED
                BY THE
                RULES OF THE ARBITRATION FORUM IN WHICH A CLAIM IS FILED.
                

            

    

    

    
      	
              (B)

            	
              ARBITRATION
                AWARDS ARE GENERALLY FINAL AND BINDING; A PARTY’S ABILITY TO HAVE A COURT
                REVERSE OR MODIFY AN ARBITRATION AWARD IS VERY
                LIMITED.

            

    

    

    
      	
              (C)

            	
              THE
                ABILITY OF THE PARTIES TO OBTAIN DOCUMENTS, WITNESS STATEMENTS AND
                OTHER
                DISCOVERY IS GENERALLY MORE LIMITED IN ARBITRATION THAN IN COURT
                PROCEEDINGS.

            

    

    

    
      	
              (D)

            	
              THE
                ARBITRATORS DO NOT HAVE TO EXPLAIN THE REASON(S) FOR THEIR
                AWARD.

            

    

    

    
      	
              (E)

            	
              THE
                PANEL OF ARBITRATORS WILL TYPICALLY INCLUDE A MINORITY OF ARBITRATORS
                WHO
                WERE OR ARE AFFILIATED WITH THE SECURITIES
                INDUSTRY.

            

    

    

    
      	
              (F)

            	
              THE
                RULES OF SOME ARBITRATION FORUMS MAY IMPOSE TIME LIMITS FOR BRINGING
                A
                CLAIM IN ARBITRATION. IN SOME CASES, A CLAIM THAT IS INELIGIBLE FOR
                ARBITRATION MAY BE BROUGHT IN
                COURT.

            

    

    

    
      	
              (G)

            	
              THE
                RULES OF THE ARBITRATION FORUM IN WHICH THE CLAIM IS FILED, AND ANY
                AMENDMENTS THERETO, SHALL BE INCORPORATED INTO THIS
                AGREEMENT.

            

    

    

    ALL
      CONTROVERSIES THAT MAY ARISE BETWEEN US (INCLUDING, BUT NOT LIMITED TO
      CONTROVERSIES CONCERNING ANY ACCOUNT, ORDER OR TRANSACTION, OR THE CONTINUATION,
      PERFORMANCE, INTERPRETATION OR BREACH OF THIS OR ANY OTHER AGREEMENT BETWEEN
      US,
      WHETHER ENTERED INTO OR ARISING BEFORE, ON OR AFTER THE DATE THIS ACCOUNT IS
      OPENED) SHALL BE DETERMINED BY ARBITRATION IN ACCORDANCE WITH THE RULES THEN
      PREVAILING OF THE NEW YORK STOCK EXCHANGE, INC. , OR THE NASD, INC., AS I MAY
      DESIGNATE. IF I DO NOT NOTIFY YOU IN WRITING OF MY DESIGNATION WITHIN FIVE
      (5)
      DAYS AFTER I RECEIVE FROM YOU A WRITTEN DEMAND FOR ARBITRATION, THEN I AUTHORIZE
      YOU TO MAKE SUCH DESIGNATION ON MY BEHALF. I UNDERSTAND THAT JUDGMENT UPON
      ANY
      ARBITRATION AWARD MAY BE ENTERED IN ANY COURT OF COMPETENT JURISDICTION.
      CUSTOMER COMPLAINTS SHOULD BE DIRECTED TO: BROOKSTREET SECURITIES CORPORATION,
      COMPLIANCE DEPARTMENT, 2361 CAMPUS DRIVE, SUITE 210, IRVINE, CA 92612. NO PERSON
      SHALL BRING A PUTATIVE OR CERTIFIED CLASS ACTION TO ARBITRATION, NOR SEEK TO
      ENFORCE ANY PREDISPUTE ARBITRATION AGREEMENT AGAINST ANY PERSON WHO HAS
      INITIATED IN COURT A PUTATIVE CLASS ACTION; OR
      WHO IS A MEMBER OF A PUTATIVE CLASS WHO HAS NOT OPTED OUT OF THE CLASS WITH
      RESPECT TO ANY CLAIMS ENCOMPASSED
      BY THE PUTATIVE CLASS ACTION UNTIL: (i) THE CLASS CERTIFICATION IS DENIED;
      OR
      (ii) THE CLASS IS DECERTIFIED;
      OR (iii) THE CUSTOMER IS EXCLUDED FROM THE CLASS BY THE COURT. SUCH FORBEARANCE
      TO ENFORCE AN
      AGREEMENT TO ARBITRATE SHALL NOT CONSTITUTE A WAIVER OF ANY RIGHTS UNDER THIS
      AGREEMENT EXCEPT TO
      THE EXTENT STATED HEREIN.

    

    

    
      	 	 	 
	Client Signature	
              Date

            	 	Client
              Signature  	
              Date

            
	 	 	 
	 	 	 
	Print Client
              Name  	 	Print Client
              Name
	 	 	 
	 	 	 
	Representative
              Signature  	 	Representative
              Signature

    

                                                

     

    
      
        
        

      

      
        9

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