Document:

_______________________

     

    QUINTESSENCE
      PHOTONICS CORPORATION

     

    __________________

     

    LOAN
      AGREEMENT

    __________________

     

    August
      1,
      2005

     

    _______________________

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      TABLE
        OF CONTENTS

       

    

    
      
        	 	 	 	Page	 
	
                1.    Loan

              	 	 	
                1

              	 
	
                1.1

              	 	 	
                Loan

              	 	 	
                1

              	 
	
                1.2

              	 	 	
                Closing

              	 	 	
                1

              	 
	
                1.3

              	 	 	
                Security
                  Agreement

              	 	 	
                1

              	 
	
                2.    Representations,
                  Warranties, and Covenants of the Company

              	 	 	
                1

              	 
	
                2.1

              	 	 	
                Organization,
                  Good Standing and Qualification

              	 	 	
                1

              	 
	
                2.2

              	 	 	
                Authorization

              	 	 	
                2

              	 
	
                2.3

              	 	 	
                Capitalization;
                  Pre-emptive Rights

              	 	 	
                2

              	 
	
                2.4

              	 	 	
                Compliance
                  with Laws and Other Instruments

              	 	 	
                3

              	 
	
                2.5

              	 	 	
                No
                  Breach

              	 	 	
                4

              	 
	
                2.6

              	 	 	
                Governmental
                  Consents

              	 	 	
                4

              	 
	
                2.7

              	 	 	
                Litigation

              	 	 	
                4

              	 
	
                2.8

              	 	 	
                Absence
                  of Certain Changes

              	 	 	
                4

              	 
	
                2.9

              	 	 	
                Tangible
                  Assets and Equipment

              	 	 	
                6

              	 
	
                2.10

              	 	 	
                Indebtedness

              	 	 	
                6

              	 
	
                2.11

              	 	 	
                Liabilities

              	 	 	
                6

              	 
	
                2.12

              	 	 	
                No
                  Dissolution

              	 	 	
                6

              	 
	
                2.13

              	 	 	
                No
                  Material Omissions or Misstatements

              	 	 	
                6

              	 
	
                3.    Representations
                  and Warranties of the Lenders

              	 	 	
                6

              	 
	
                3.1

              	 	 	
                Authorization

              	 	 	
                6

              	 
	
                3.2

              	 	 	
                Purchase
                  Entirely for Own Account

              	 	 	
                7

              	 
	
                3.3

              	 	 	
                Receipt
                  of Information

              	 	 	
                7

              	 
	
                3.4

              	 	 	
                Investment
                  Experience

              	 	 	
                7

              	 
	
                3.5

              	 	 	
                Restricted
                  Securities

              	 	 	
                7

              	 
	
                3.6

              	 	 	
                Legends

              	 	 	
                7

              	 
	
                3.7

              	 	 	
                Accredited
                  Investor

              	 	 	
                8

              	 
	
                3.8

              	 	 	
                Waiver
                  of Right of First Offer

              	 	 	
                8

              	 
	
                3.9

              	 	 	
                Legal
                  Counsel

              	 	 	
                8

              	 
	
                3.10

              	 	 	
                Tax
                  Advisors

              	 	 	
                8

              	 

      

      
        	
                4.   
                  Conversion
                  of Loans

              	 	 	
                8

              	 

      

       

      
        
          
          

        

        
          -i-

          
            

          

        

        
          
          

        

      

      

        TABLE
          OF CONTENTS

        (continued)

         

      

      
        	 	 	 	Page	 
	
                5.  
                  Warrants

              	 	 	
                9

              	 
	
                5.1

              	 	 	
                Sale
                  of Warrants

              	 	 	
                9

              	 
	
                5.2

              	 	 	
                Additional
                  Warrants

              	 	 	
                9

              	 
	
                6.   
                  Covenants
                  of Each Lender And Company

              	 	 	
                9

              	 
	
                6.1

              	 	 	
                Limitations
                  on Transfer of Notes

              	 	 	
                9

              	 
	
                6.2

              	 	 	
                Investors
                  Rights’ Agreement

              	 	 	
                9

              	 
	
                6.3

              	 	 	
                Reservation
                  of Stock

              	 	 	
                9

              	 
	
                6.4

              	 	 	
                Designation
                  of Collateral Agent

              	 	 	
                9

              	 
	
                6.5

              	 	 	
                Expenses

              	 	 	
                10

              	 
	
                6.6

              	 	 	
                Reserve
                  Account

              	 	 	
                10

              	 
	
                6.7

              	 	 	
                Use
                  of Proceeds

              	 	 	
                10

              	 
	
                7.   
                  Events
                  of Default

              	 	 	
                10

              	 
	
                7.1

              	 	 	
                Payments

              	 	 	
                10

              	 
	
                7.2

              	 	 	
                Representations
                  and Warranties

              	 	 	
                10

              	 
	
                7.3

              	 	 	
                Institution
                  of Bankruptcy Proceedings

              	 	 	
                10

              	 
	
                7.4

              	 	 	
                Continuation
                  of Bankruptcy Proceedings

              	 	 	
                10

              	 
	
                7.5

              	 	 	
                Change
                  of Control

              	 	 	
                11

              	 
	
                8.   
                  Conditions
                  to Closing

              	 	 	
                11

              	 
	
                8.1

              	 	 	
                Conditions
                  Precedent to Obligations of Lenders.

              	 	 	
                11

              	 
	
                8.2

              	 	 	
                Conditions
                  Precedent to Obligations of the Company

              	 	 	
                12

              	 
	
                9.   
                  Miscellaneous

              	 	 	
                12

              	 
	
                9.1

              	 	 	
                Successors
                  and Assigns

              	 	 	
                12

              	 
	
                9.2

              	 	 	
                Governing
                  Law

              	 	 	
                13

              	 
	
                9.3

              	 	 	
                Counterparts

              	 	 	
                13

              	 
	
                9.4

              	 	 	
                Titles
                  and Subtitles

              	 	 	
                13

              	 
	
                9.5

              	 	 	
                Notices

              	 	 	
                13

              	 
	
                9.6

              	 	 	
                Entire
                  Agreement

              	 	 	
                13

              	 
	
                9.7

              	 	 	
                Amendment
                  and Waiver

              	 	 	
                13

              	 
	
                9.8

              	 	 	
                Severability

              	 	 	
                13

              	 

      

      
        	
                Schedule
                  A

              	
                
                  - 
                    Schedule of Secured Lenders

                

              

      

       

      
        
          
          

        

        
          -ii-

          
            

          

        

        
          
          

        

      

      

        TABLE
          OF CONTENTS

        (continued)

      

      
        	 	
                Page

              
	
                Schedule
                  B

              	
                - 
                  Schedule of Exceptions

              
	
                Exhibit
                  A

              	
                - 
                  Form of Promissory Note

              
	
                Exhibit
                  B

              	
                - 
                  Form of Security Agreement

              
	
                Exhibit
                  C

              	
                - 
                  Form of Warrant

              
	
                Exhibit
                  D

              	
                - 
                  Risk Factors

              

      

    

     

    
      
        
        

      

      
        -iii-

        
          

        

      

      
        
        

      

    

     

    LOAN
      AGREEMENT

     

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

     

    THE
      PARTIES HEREBY AGREE AS FOLLOWS:

     

    1.  Loan.

     

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

     

    1.2  Closing.
      

     

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

     

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

     

    1.3  Security
      Agreement.
      

     

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

     

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

     

    2.1  Organization,
      Good Standing and Qualification.
      The
      Company is a corporation duly incorporated, validly existing and in good
      standing under the laws of the State of Delaware and has all requisite corporate
      power and authority to carry on its business as now conducted and proposed
      to be
      conducted. The Company is duly qualified to transact business and is in good
      standing in each jurisdiction in which the failure to so qualify would have
      a
      material adverse effect on its business or properties.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    2.2  Authorization.
      All
      corporate actions on the part of the Company, its officers, directors and
      stockholders necessary for the authorization, execution and delivery of this
      Agreement, the performance of all obligations of the Company hereunder and
      the
      authorization, issuance and delivery of the Notes, the Warrants (as defined
      below) and the Security Agreement have been taken. This Agreement constitutes,
      and the Notes, Warrants and Security Agreement when executed and delivered
      in
      accordance with their terms will constitute, valid and legally binding
      obligations of the Company, enforceable in accordance with their respective
      terms except (i) as limited by applicable bankruptcy, insolvency,
      reorganization, moratorium, and other laws of general application affecting
      enforcement of creditors’ rights generally, (ii) as limited by laws relating to
      the availability of specific performance, injunctive relief, or other equitable
      remedies and (iii) as limited by applicable federal or state securities
      laws.

     

    2.3  Capitalization;
      Pre-emptive Rights.
      

     

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

     

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

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

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

     

    2.4  Compliance
      with Laws and Other Instruments.
      

     

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

     

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

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

    4.  Conversion
      of Loans.

     

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

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    5.  Warrants.

     

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

     

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

     

    6.  Covenants
      of Each Lender And Company.
      

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

    7.3  Institution
      of Bankruptcy Proceedings.
      The
      institution by the Company of proceedings to be adjudicated as bankrupt or
      insolvent, or the consent by it to institution of bankruptcy or insolvency
      proceedings against it or the filing by it of a petition or answer or consent
      seeking reorganization or release under the federal Bankruptcy Act, or any
      other
      applicable federal or state law, or the consent by it to the filing of any
      such
      petition or the appointment of a receiver, liquidator, assignee, trustee, or
      other similar official, of the Company, or of any substantial part of its
      property, or the making by it of an assignment for the benefit of creditors,
      or
      the taking of corporate action by the Company in furtherance of any such action;
      

     

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

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

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

     

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

     

    8.  Conditions
      to Closing

     

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

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    9.  Miscellaneous.

     

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

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

    9.5  Notices.
      All
      notices required or permitted hereunder shall be in writing and shall be deemed
      effectively given: (i) upon personal delivery to the party to be notified,
      (ii) when sent by confirmed telex or facsimile if sent during normal
      business hours of the recipient, if not, then on the next business day;
      (iii) five (5) days after having been sent by registered or certified mail,
      return receipt requested, postage prepaid; or (iv) one day after deposit
      with a nationally recognized overnight courier, specifying next day delivery,
      with written verification of receipt. All communications shall be sent to the
      address as set forth on the signature page or Schedule
      A
      hereof
      or at such other address as such party may designate by giving at least ten
      (10)
      days’ advance written notice to the other parties hereto.

     

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

     

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

     

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

     

     

    [SIGNATURE
      PAGE FOLLOWS]

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

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

     

    
      	“COMPANY” 	“LENDERS”
	 	 
	
              Quintessence
                Photonics Corporation

            	
              [Name]

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

            	Title:
              _________________________

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      A

    

    SCHEDULE
      OF SECURED LENDERS

     

    
      
        	Secured
                Lender  	
                Principal
                  Amount of
                  Notes

              

      

    

     

    
      
        
        

      

      
        A-1

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      B

    

    SCHEDULE
      OF EXCEPTIONS

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

    Form
      of Promissory Note

     

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

     

    QUINTESSENCE
      PHOTONICS CORPORATION

    (A
      Delaware Corporation)

     

    
      	Amount: $___________	
              Sylmar,
                California

              August
                1,
                2005

            

    

     

    SECURED
      PROMISSORY NOTE

     

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

     

    1.  Payment.
      Subject
      to Paragraphs 2 and 4 below and unless otherwise extended by the consent of
      the
      Maker and Lenders holding a majority of the aggregate principal amount of the
      Notes then outstanding, the outstanding principal amount and accrued and unpaid
      interest shall be payable as follows: (i) in
      twenty four (24) equal monthly interest-only installments commencing September
      1, 2005 and ending August 1, 2007, and (ii)  the
      remaining outstanding principal amount and accrued and unpaid interest being
      payable in twelve (12) equal monthly installments commencing on September 1,
      2007 and ending August 1, 2008 (as such date may be extended per the terms
      hereof, the “Maturity
      Date”).
      All
      payments of interest and principal shall be in lawful money of the United States
      of America at the principal office of Maker, or at such other place Payee may
      from time to time designate in writing to Maker. The Maker may at any time,
      without penalty, upon at least thirty (30) days advance written notice to the
      Payee, prepay in whole or in part the unpaid principal sum of this Note, plus
      any unpaid accrued interest under this Note. All payments will first be applied
      to the repayment of accrued interest until all then outstanding accrued interest
      has been paid, and then shall be applied to the repayment of principal.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    The
      Maker
      agrees that if for any reason it fails to pay any amount due at the Maturity
      Date or upon the occurrence of an Event of Default, within five (5) business
      days after such date, the Payee shall be entitled to damages for the detriment
      caused thereby, the extent of which damages are extremely difficult and
      impractical to ascertain. The Maker therefore agrees to pay default interest
      on
      such delinquent amount at a per annum rate equal to the prime rate (as published
      in the Wall Street Journal on the date of such Event of Default) plus 2%,
      payable quarterly. Acceptance of such default interest by the Payee shall in
      no
      event constitute a waiver of the Maker’s default with respect to such overdue
      amount nor prevent the Payee from exercising any of the other rights and
      remedies granted hereunder. Acceptance by the Payee of any payment under this
      Note after the date that such payment is due shall not constitute a waiver
      of
      the right to declare a default as herein provided for any failure to so pay.
      Notwithstanding the foregoing, if all sums due and owning are paid the Maker
      shall not have the right to foreclose or exercise its remedies.

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

    7.  Amendment.
      Any
      term of this Note may be amended and the observance of any term of this Note
      may
      be waived (either generally or in a particular instance and either retroactively
      or prospectively), with the written consent of the Maker and the holders of
      not
      less than 50% in the aggregate principal amount of the Notes then
      outstanding.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

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

     

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

     

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

     

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

     

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

     

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

     

     

    [SIGNATURE
      PAGE FOLLOWS]

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    

     

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

    
      	 	 	 
	 	MAKER
	 	 
	 	QUINTESSENCE PHOTONICS CORPORATION
	 
 	 
 	 
 
	 	
              By:

               

              Name:   

            	 
              
              

            
	 	Title:	 
	 	 	 
	 	
            
	 	 

    

     

    
    

    [SIGNATURE
      PAGE TO PROMISSORY NOTE]

     

    
      
        
        

      

      
        6AMERICAN
                  INDUSTRIAL REAL ESTATE
                  ASSOCIATION

              

      

    

    STANDARD
      INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE —
      NET

    (DO
      NOT USE THIS FORM FOR MULTI-TENANT BUILDINGS)

     

    1. Basic
      Provisions (“Basic Provisions”).

     

    1.1 Parties:
      This
      Lease (“Lease”),
      dated
      for reference purposes only, April 30, 2001, is made by and between World Oil
      Corp. (“Lessor”)
      and
      Quintessence Photonics Corporation, a Delaware Corporation (“Lessee”),
      (collectively the “Parties,”
      or
      individually a “Party”).

     

    1.2 Premises:
      That
      certain real property, including all improvements therein or to be provided
      by
      Lessor under the terms of this Lease, and commonly known as 15632 Roxford
      Street, Sylmar, California 91342, located in the County of Los Angeles, State
      of
      California, and generally described as (describe briefly the nature of the
      property and, if applicable, the “Project”,
      If the
      property is located within a Project) approximately 40,320 square feet of
      free-standing building that is part of a larger industrial zoned property and
      including 70 parking spaces as depicted on Exhibit “A” hereto (the “Project”)
(“Premises”).
      (See
      also Paragraph 2)

     

    1.3 Term:
      5 years
      and -0- months (“Original
      Term”)
      commencing June 1, 2001 (“Commencement
      Date”)
      and
      ending May 31, 2006 (“Expiration
      Date”).
      (See
      also Paragraph 3) 

     

    1.4 Early
      Possession;
      upon
      full lease execution (“Early
      Possession Date”).
      (See
      also Paragraphs 3.2 and 3.3)

     

    1.5 Base
      Rent:
      $22,579.20 per month (“Base
      Rent”),
      payable
      on the first day of each month commencing the Commencement Date and thereafter
      on the first day of each month . (See also Paragraph 4) 

     

    R If
      this
      box is checked, there are provisions in this Lease for the Base Rent to be
      adjusted.

     

    1.6 Base
      Rent Paid Upon Execution:
      $22,579.20 as Base Rent for the period June 1, 2001- June 30, 2001.

     

    1.7 Security
      Deposit:
      $112,
      896.00 one
      (1) month shall be applied to Base Rent on the 25th and 37th month of the
      Initial Lease Term provided that Lessee is not then in default under this Lease
      (“Security Deposit”).
      (See
      also Paragraph 5)

     

    1.8 Agreed
      Use:
      development, light manufacturing and sales of advanced active fiber optics
      components (See also Paragraph 6)

     

    1.9 Insuring
      Party:
      Lessor
      is the “Insuring
      Party”
      unless
      otherwise stated herein. (See also Paragraph 8)

     

    1.10 Real
      Estate Brokers:
      (See
      also Paragraph 15)

     

    (a) Representation:
      The
      following real estate brokers (collectively, the “Brokers”)
      and
      brokerage relationships exist in this transaction (check applicable
      boxes):

    

    R 
      Daum
      Commercial Real Estate Services/ CB Richard Ellis, Inc. represents Lessor
      exclusively (“Lessor’s
      Broker”);
      

     

    R Delphi
      Business Properties represents
      Lessee exclusively (“Lessee’s
      Broker”);
      or

     

    o _________________________
      represents both Lessor and Lessee (“Dual
      Agency”).

     

    (b) Payment
      to Brokers:
      Upon
      execution and delivery of this Lease by both Parties, Lessor shall pay to the
      Broker the fee agreed to in their separate written agreement (or if there is
      no
      such agreement, the sum of per separate agreement % of the total Base Rent
      for
      the brokerage services rendered by said Broker).

     

    1.11 Guarantor.
      The
      obligations of the Lessee under this Lease are to be guaranteed by N/A
(“Guarantor”).
      (See
      also Paragraph 37)

     

    1.12 Addenda
      and Exhibits.
      Attached
      hereto is an Addendum or Addenda consisting of Paragraphs 50 through 55 and
      Exhibits A & B, all of which constitute a part of this Lease.

     

    2. Premises.

     

    2.1 Letting.
      Lessor
      hereby leases to Lessee, and Lessee hereby leases from Lessor, the Premises,
      for
      the term, at the rental, and upon all of the terms, covenants and conditions
      set
      forth in this Lease. Unless otherwise provided herein, any statement of size
      set
      forth in this Lease, or that may have been used in calculating rental, is an
      approximation which the Parties agree is reasonable and the rental based thereon
      is not subject to revision whether or not the actual size is more or
      less.

     

    2.2 Condition.
      Lessor
      shall deliver the Premises to Lessee broom clean and free of debris on the
      Commencement Date or the Early Possession Date, whichever first occurs
(“Start
      Date”),
      and, so
      long as the required service contracts described in Paragraph 7.1(b) below
      are
      obtained by Lessee within thirty (30) days following the Start Date, warrants
      that the existing electrical, plumbing, fire sprinkler, lighting, heating,
      ventilating and air conditioning systems (“HVAC”),
      loading
      doors, if any, and all other such elements in the Premises, other than those
      constructed by Lessee, shall be in good operating condition on said date and
      that the structural elements of the roof, bearing walls and foundation of any
      buildings on the Premises (the “Building”) shall be free of
      material defects. If a non-compliance with said warranty exists as of the Start
      Date, Lessor shall, as Lessor’s sole obligation with respect to such matter,
      except as otherwise provided in this Lease, promptly after receipt of written
      notice from Lessee setting forth with specificity the nature and extent of
      such
      non-compliance, rectify same at Lessor’s expense. If, after the Start Date,
      Lessee does not give Lessor written notice of any non-compliance with this
      warranty within: (i) one year as to the surface of the roof and the structural
      portions of the roof, foundations and bearing walls, (ii) six (6) months as
      to
      the HVAC systems, (iii) thirty (30) days as to the remaining systems and other
      elements of the Building, correction of such non-compliance shall be the
      obligation of Lessee at Lessee’s sole cost and expense.

     

    2.3 Compliance.
      Lessor
      warrants that the improvements on the Premises comply with all applicable laws,
      covenants or restrictions of record, building codes, regulations and ordinances
      (“Applicable
      Requirements”)
      in
      effect on the Start Date. See Addendum. Said warranty does not apply to the
      use
      to which Lessee will put the Premises or to any Alterations or Utility
      Installations (as defined in Paragraph 7.3(a)) made or to be made by Lessee.
      NOTE: Lessee is responsible for determining whether or not the zoning is
      appropriate for Lessee’s intended use, and acknowledges that past uses of the
      Premises may no longer be allowed. If the Premises do not comply with said
      warranty, Lessor shall, except as otherwise provided, promptly after receipt
      of
      written notice from Lessee setting forth with specificity the nature and extent
      of such non-compliance, rectify the same at Lessor’s expense. If Lessee does not
      give Lessor written notice of a non-compliance with this warranty within six
      (6)
      months following the Start Date, correction of that non-compliance shall be
      the
      obligation of Lessee at Lessee’s sole cost and expense. If the Applicable
      Requirements are hereafter changed (as opposed to being in existence at the
      Start Date, which is addressed in Paragraph 6.2(e) below) so as to require
      during the term of this Lease the construction of an addition to or an
      alteration of the Building, the remediation of any Hazardous Substance, or
      the
      reinforcement or other physical modification of the Building (“Capital
      Expenditure”),
      Lessor
      and Lessee shall allocate the cost of such work as follows:

    

    
      	 	
              Page
                1 of 12

            	
              Initials

            	
              

            
	 	 	 	 
	
              Ó1997
                - American Industrial Real Estate Association

            	
              REVISED

            	 	
              FORM
                STN-6-2/97E

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (a) Subject
      to Paragraph 2.3(c) below, if such Capital Expenditures are required as a result
      of the specific and unique use of the Premises by Lessee as compared with uses
      by tenants, in general, Lessee shall be fully responsible for the cost thereof,
      provided, however that if such Capital Expenditure is required during the last
      two (2) years of this Lease and the cost thereof exceeds six (6) months’ Base
      Rent, Lessee may instead terminate this Lease unless Lessor notifies Lessee,
      in
      writing, within ten (10) days after receipt of Lessee’s termination notice that
      Lessor has elected to pay the difference between the actual cost thereof and
      the
      amount equal to six (6) months’ Base Rent. If Lessee elects termination, Lessee
      shall immediately cease the use of the Premises which requires such Capital
      Expenditure and deliver to Lessor written notice specifying a termination date
      at least ninety (90) days thereafter, Such termination date shall, however,
      in
      no event be earlier than the last day that Lessee could legally utilize the
      Premises without commencing such Capital Expenditure.

     

    (b) If
      such
      Capital Expenditure is not the result of the specific and unique use of the
      Premises by Lessee (such as, governmentally mandated seismic modifications),
      then Lessor and Lessee shall allocate the obligation to pay for such costs
      pursuant to the provisions of Paragraph 7.1 (c); provided, however, that if
      such
      Capital Expenditure is required during the last two years of this Lease or
      if
      Lessor reasonably determines that it is not economically feasible to pay its
      share thereof, Lessor shall have the option to terminate this Lease upon ninety
      (90) days prior written notice to Lessee unless Lessee notifies Lessor, in
      writing, within ten (10) days after receipt of Lessor’s termination notice that
      Lessee will pay for such Capital Expenditure. If Lessor does not elect to
      terminate, and falls to tender Its share of any such Capital Expenditure, Lessee
      may advance such funds and deduct same, with interest, from Rent until Lessor’s
      share of such costs have been fully paid. If Lessee is unable to finance
      Lessor’s share, or if the balance of the Rent due and payable for the remainder
      of this Lease is not sufficient to fully reimburse Lessee on an offset basis,
      Lessee shall have the right to terminate this Lease upon thirty (30) days
      written notice to Lessor.

     

    (c) Notwithstanding
      the above, the provisions concerning Capital Expenditures are intended to apply
      only to non-voluntary, unexpected, and new Applicable Requirements. If the
      Capital Expenditures are instead triggered by Lessee as a result of an actual
      or
      proposed change in use, change in intensity of use, or modification to the
      Premises then, and in that event, Lessee shall be fully responsible for the
      cost
      thereof, and Lessee shall not have any right to terminate this
      Lease.

     

    2.4 Acknowledgements.
      Lessee
      acknowledges that: (a) It has been advised by Lessor and/or Brokers to satisfy
      itself with respect to the condition of the Premises (including but not limited
      to the electrical, HVAC and fire sprinkler systems, security, environmental
      aspects, and compliance with Applicable Requirements), and their suitability
      for
      Lessee’s intended use; (b) Lessee has made such investigation as it deems
      necessary with reference to such matters and assumes all responsibility therefor
      as the same relate to its occupancy of the Premises; and (c) neither Lessor,
      Lessor’s agents, nor any Broker has made any oral or written representations or
      warranties with respect to said matters other than as set forth in this Lease.
      In addition, Lessor acknowledges that: (a) Broker has made no representations,
      promises or warranties concerning Lessee’s ability to honor the Lease or
      suitability to occupy the Premises; and (b) It is Lessor’s sole responsibility
      to investigate the financial capability and/or suitability of all proposed
      tenants.

     

    2.5 Lessee
      as Prior Owner/Occupant.
      The
      warranties made by Lessor in Paragraph 2 shall be of no force or effect if
      Immediately prior to the Start Date Lessee was the owner or occupant of the
      Premises. In such event, Lessee shall be responsible for any necessary
      corrective work.

     

    3. Term.

     

    3.1 Term.
      The
      Commencement Date, Expiration Date and Original Term of this Lease are as
      specified in Paragraph 1.3.

     

    3.2 Early
      Possession.
      If
      Lessee totally or partially occupies the Premises prior to the Commencement
      Date, the obligation to pay Base Rent shall be abated for the period of such
      early possession. All other terms of this Lease (including, but not limited
      to,
      the obligations to
      pay Real Property Taxes and insurance premiums and
      to
      maintain the Premises) shall, however, be in effect during such period. Any
      such
      early possession shall not affect the Expiration Date.

     

    3.3 Delay
      in Possession.
      Lessor
      agrees to use its best commercially reasonable efforts to deliver possession
      of
      the Premises to Lessee by the Commencement Date. If, despite said efforts,
      Lessor is unable to deliver possession as agreed. Lessor shall not be subject
      to
      any liability therefor, nor shall such failure affect the validity of this
      Lease. Lessee shall not, however, be obligated to pay Rent or perform its other
      obligations until it receives possession of the Premises. If possession is
      not
      delivered within sixty (60) days after the Commencement Date, Lessee may, at
      its
      option, by notice in writing within ten (10) days after the end of such sixty
      (60) day period, cancel this Lease, in which event the Parties shall be
      discharged from all obligations hereunder. If such written notice is not
      received by Lessor within said ten (10) day period, Lessee’s right to cancel
      shall terminate. Except as otherwise provided, if possession is not tendered
      to
      Lessee by the Start Date and Lessee does not terminate this Lease, as aforesaid,
      any period of rent abatement that Lessee would otherwise have enjoyed shall
      run
      from the date of delivery of possession and continue for a period equal to
      what
      Lessee would otherwise have enjoyed under the terms hereof, but minus any days
      of delay caused by the acts or omissions of Lessee. If possession of the
      Premises is not delivered within four (4) months after the Commencement Date,
      this Lease shall terminate unless other agreements are reached between Lessor
      and Lessee, in writing.

     

    3.4 Lessee
      Compliance.
      Lessor
      shall not be required to tender possession of the Premises to Lessee until
      Lessee complies with its obligation to provide evidence of insurance (Paragraph
      8.5). Pending delivery of such evidence, Lessee shall be required to perform
      all
      of its obligations under this Lease from and after the Start Date, including
      the
      payment of Rent, notwithstanding Lessor’s election to withhold possession
      pending receipt of such evidence of insurance. Further, if Lessee is required
      to
      perform any other conditions prior to or concurrent with the Start Date, the
      Start Date shall occur but Lessor may elect to withhold possession until such
      conditions are satisfied.

     

    4. Rent.

     

    4.1. Rent
      Defined.
      All
      monetary obligations of Lessee to Lessor under the terms of this Lease (except
      for the Security Deposit) are deemed to be rent
      (“Rent”).

     

    4.2. Payment
      Lessee
      shall cause payment of Rent to be received by Lessor in lawful money of the
      United States, without offset or deduction (except as specifically permitted
      in
      this Lease), on or before the day on which It is due. Rent for any period during
      the term hereof which is for less than one (1) full calendar month shall be
      prorated based upon the actual number of days of said month. Payment of Rent
      shall be made to Lessor at its address stated herein or to such other persons
      or
      place as Lessor may from time to time designate in writing. Acceptance of a
      payment which is less than the amount then due shall not be a waiver of Lessor’s
      rights to the balance of such Rent, regardless of Lessor’s endorsement of any
      check so stating.

     

    5. Security
      Deposit.
      Lessee
      shall deposit with Lessor upon execution hereof the Security Deposit as security
      for Lessee’s faithful performance of its obligations under this Lease. If Lessee
      fails to pay Rent, or otherwise Defaults under this Lease, Lessor may use,
      apply
      or retain all or any portion of said Security Deposit for the payment of any
      amount due Lessor or to reimburse or compensate Lessor for any liability,
      expense, loss or damage which Lessor may suffer or incur by reason thereof.
      If
      Lessor uses or applies all or any portion of said Security Deposit, Lessee
      shall
      within ten (10) days after written request therefor deposit monies with Lessor
      sufficient to restore said Security Deposit to the full amount required by
      this
      Lease. If the Base Rent increases during the term of this Lease, Lessee shall,
      upon written request from Lessor, deposit additional monies with Lessor so
      that
      the total amount of the Security Deposit shall at all times bear the same
      proportion to the increased Base Rent as the initial Security Deposit bore
      to
      the initial Base Rent. Should the Agreed Use be amended to accommodate a
      material change in the business of Lessee or to accommodate a sublessee or
      assignee, Lessor shall have the right to increase the Security Deposit to the
      extent necessary, in Lessor’s reasonable Judgment, to account for any increased
      wear and tear that the Premises may suffer as a result thereof. If a change
      in
      control of Lessee occurs during this Lease and following such change the
      financial condition of Lessee is, in Lessor’s reasonable judgment significantly
      reduced, Lessee shall deposit such additional monies with Lessor as shall be
      sufficient to cause the Security Deposit to be at a commercially reasonable
      level based on said change in financial condition. Lessor shall not be required
      to keep the Security Deposit separate from its general accounts. Within fourteen
      (14) days after the expiration or termination of this Lease, if Lessor elects
      to
      apply the Security Deposit only to unpaid Rent, and otherwise within thirty
      (30)
      days after the Premises have been vacated pursuant to Paragraph 7.4(c) below,
      Lessor shall return that portion of the Security Deposit not used or applied
      by
      Lessor. No part of the Security Deposit shall be considered to be held in trust,
      to bear interest or to be prepayment for any monies to be paid by Lessee under
      this Lease.

     

    6. Use.

     

    6.1 Use.
      Lessee
      shall use and occupy the Premises only for the Agreed Use, or any other legal
      use which is reasonably comparable thereto, and for no other purpose. Lessee
      shall not use or permit the use of the Premises in a manner that is unlawful,
      creates damage, waste or a nuisance, or that disturbs owners and/or occupants
      of, or causes damage to neighboring properties. Lessor shall not unreasonably
      withhold or delay its consent to any written request for a modification of
      the
      Agreed Use, so long as the same will not impair the structural integrity of
      the
      improvements on the Premises or the mechanical or electrical systems therein,
      is
      not significantly more burdensome to the Premises. If Lessor elects to withhold
      consent, Lessor shall within five (5) business days after such request give
      written notification of same, which notice shall include an explanation of
      Lessor’s objections to the change in use.

    

    
      	 	
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              Ó1997
                - American Industrial Real Estate Association

            	
              REVISED

            	 	
              FORM
                STN-6-2/97E

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      6.2 Hazardous
        Substances.

       

      (a) Reportable
        Uses Require Consent. The term “Hazardous Substance”
as
        used
        in this Lease shall mean any product, substance, or waste whose presence,
        use,
        manufacture, disposal, transportation, or release, either by itself or in
        combination with other materials expected to be on the Premises, is either:
        (i)
        potentially injurious to the public health, safety or welfare, the environment
        or the Premises, (ii) regulated or monitored by any governmental authority,
        or
        (iii) a basis for potential liability of Lessor to any governmental agency
        or
        third party under any applicable statute or common law theory. Hazardous
        Substances shall include, but not be limited to, hydrocarbons, petroleum,
        gasoline, and/or crude oil or any products, by-products or fractions thereof.
        Lessee shall not engage in any activity in or on the Premises which constitutes
        a Reportable Use of Hazardous Substances without the express prior written
        consent of Lessor and timely compliance (at Lessee’s expense) with all
        Applicable Requirements. “Reportable
        Use” shall
        mean (i) the installation or use of any above or below ground storage tank,
        (ii)
        the generation, possession, storage, use, transportation, or disposal of
        a
        Hazardous Substance that requires a permit from, or with respect to which
        a
        report, notice, registration or business plan is required to be filed with,
        any
        governmental authority, and/or (iii) the presence at the Premises of a Hazardous
        Substance with respect to which any Applicable Requirements requires that
        a
        notice be given to persons entering or occupying the Premises or neighboring
        properties. Notwithstanding the foregoing, Lessee may use any ordinary and
        customary materials reasonably required to be used in the normal course of
        the
        Agreed Use, so long as such use is in compliance with all Applicable
        Requirements, is not a Reportable Use, and does not expose the Premises or
        neighboring property to any meaningful risk of contamination or damage or
        expose
        Lessor to any liability therefor. In addition, Lessor may condition its consent
        to any Reportable Use upon receiving such additional assurances as Lessor
        reasonably deems necessary to protect itself, the public, the Premises and/or
        the environment against damage, contamination, injury and/or liability,
        including, but not limited to, the installation (and removal on or before
        Lease
        expiration or termination) of protective modifications (such as concrete
        encasements) and/or increasing the Security Deposit.

       

      (b) Duty
        to inform Lessor. If Lessee
        knows, or has reasonable cause to believe, that a Hazardous Substance has
        come
        to be located in, on, under or about the Premises, other than as previously
        consented to by Lessor, Lessee shall immediately
        give written notice of such fact to Lessor, and provide Lessor with a copy
        of
        any report, notice, claim or other documentation which it has concerning
        the
        presence of such Hazardous Substance.

       

      (c) Lessee
        Remediation. Lessee
        shall not cause or permit any Hazardous Substance to be spilled or released
        in,
        on, under, or about the Premises (including through the plumbing or sanitary
        sewer system) and shall promptly, at Lessee’s expense, take all investigatory
        and/or remedial action reasonably recommended, whether or not formally ordered
        or required, for the cleanup of any contamination of, and for the maintenance,
        security and/or monitoring of the Premises or neighboring properties, that
        was
        caused or materially contributed to by Lessee, or pertaining to or involving
        any
        Hazardous Substance brought onto the Premises during the term of this Lease,
        by
        or for Lessee, or any third party.

       

      (d) Lessee
        Indemnification. Lessee
        shall indemnify, defend and hold Lessor, its agents, employees, lenders and
        ground lessor. If any, harmless from and against any and all loss of rents
        and/or damages, liabilities, judgments, claims, expenses, penalties, and
        attorneys’ and consultants’ fees arising out of or involving any Hazardous
        Substance brought onto the Premises by or for Lessee, or any third party
        (provided, however, that Lessee shall have no liability under this Lease
        with
        respect to underground migration of any Hazardous Substance under the Premises
        from adjacent properties). Lessee’s obligations shall include, but not be
        limited to, the effects of any contamination or injury to person, property
        or
        the environment created or suffered by Lessee, and the cost of investigation,
        removal, remediation, restoration and/or abatement, and shall survive the
        expiration or termination of this Lease. No
        termination, cancellation or release agreement entered into by Lessor and
        Lessee
        shall release Lessee from its obligations under this Lease with respect to
        Hazardous Substances, unless specifically so agreed by Lessor in writing
        at the
        time of such agreement.

       

      (e) Lessor
        Indemnification. Lessor
        and its successors and assigns shall indemnify, defend, reimburse and hold
        Lessee, its employees and lenders, harmless from and against any and all
        environmental damages, including the cost of remediation, which existed as
        a
        result of Hazardous Substances on the Premises prior to the Start Date or
        which
        are caused by the gross negligence or willful misconduct of Lessor, its agents
        or employees. Lessor’s obligations, as and when required by the Applicable
        Requirements, shall include, but not be limited to, the cost of investigation,
        removal, remediation, restoration and/or abatement, and shall survive the
        expiration or termination of this Lease.

       

      (f) Investigations
        and Remediations. Lessor
        shall retain the responsibility and pay far any investigations or remediation
        measures required by governmental entities having jurisdiction with respect
        to
        the existence of Hazardous Substances
        on the
        Premises prior to the Start Date, unless such remediation measure is required
        as
        a result of Lessee’s use (including “Alterations”, as defined in Paragraph
        7.3(a) below) of the Premises, in which event Lessee shall be responsible
        for
        such payment. Lessee shall cooperate fully in any such activities at the
        request
        of Lessor, including allowing Lessor and Lessor’s agents to have reasonable
        access to the Premises at reasonable times in order to carry out Lessor’s
        investigative and remedial responsibilities.

       

      (g) Lessor
        Termination Option. If a
        Hazardous Substance Condition occurs during the term of this Lease, unless
        Lessee
        is
        legally responsible therefor (in which case Lessee shall make the investigation
        and remediation thereof required by the Applicable Requirements and this
        Lease
        shall continue in full force and effect, but subject to Lessor’s rights under
        Paragraph 6.2(d) and Paragraph 13), Lessor may, at Lessor’s option, either (i)
        investigate and remediate such Hazardous Substance Condition, if required,
        as
        soon as reasonably possible at Lessor’s expense, in which event this Lease shall
        continue in full force and effect, or (ii) if the estimated cost to remediate
        such condition exceeds twelve (12) times the then monthly Base Rent or $100,000,
        whichever is greater, give written notice to Lessee, within thirty (30) days
        after receipt by Lessor of knowledge of the occurrence of such Hazardous
        Substance Condition, of Lessor’s desire to terminate this Lease as of the date
        sixty (60) days following the date of such notice. In the event Lessor elects
        to
        give a termination notice, Lessee may, within ten (10) days thereafter, give
        written notice to Lessor of Lessee’s commitment to pay the amount by which the
        cost of the remediation of such Hazardous Substance Condition exceeds an
        amount
        equal to twelve (12) times the then monthly Base Rent or $100,000, whichever
        is
        greater. Lessee shall provide Lessor with said funds or satisfactory assurance
        thereof within thirty (30) days following such commitment. In such event,
        this
        Lease shall continue in full force and effect, and Lessor shall proceed to
        make
        such remediation as soon as reasonably possible after the required funds
        are
        available. If Lessee does not give such notice and provide the required funds
        or
        assurance thereof within the time provided, this Lease shall terminate as
        of the
        date specified in Lessor’s notice of termination.

       

      6.3 Lessee’s
        Compliance with Applicable Requirements. Except
        as
        otherwise provided in this Lease, Lessee shall, at Lessee’s sole expense, fully,
        diligently and in a timely manner, materially comply with all Applicable
        Requirements, the requirements of any applicable fire insurance underwriter
        or
        rating bureau, and the recommendations of Lessor’s engineers and/or consultants
        which relate in any manner to the Premises, without regard to whether said
        requirements are now in effect or become effective after the Start Date.
        Lessee
        shall, within ten (10) days after receipt of Lessor’s written request, provide
        Lessor with copies of all permits and other documents, and other information
        evidencing Lessee’s compliance with any Applicable Requirements specified by
        Lessor, and shall immediately upon receipt, notify Lessor in writing (with
        copies of any documents involved) of any threatened or actual claim, notice,
        citation, warning, complaint or report pertaining to or involving the failure
        of
        Lessee or the Premises to comply with any Applicable Requirements.

       

      6.4 Inspection;
        Compliance. Lessor
        and Lessor’s “Lender” (as defined in Paragraph 30 below) and consultants shall
        have the right to enter into Premises at any time, in the case of an emergency,
        and otherwise at reasonable times, for the purpose of inspecting the condition
        of the Premises and for verifying compliance by Lessee with this Lease. The
        cost
        of any such inspections shall be paid by Lessor, unless a violation of
        Applicable Requirements, or a contamination is found to exist or be imminent,
        or
        the inspection is requested or ordered by a governmental authority. In such
        case, Lessee shall upon request reimburse Lessor for the cost of such
        inspections, so long as such inspection is reasonably related to the violation
        or contamination.

       

      7. Maintenance;
        Repairs, Utility Installations; Trade Fixtures and
        Alterations.

       

      7.1 Lessee’s
        Obligations.

       

      (a) In
        General. Subject
        to the provisions of Paragraph 2.2 (Condition), 2.3 (Compliance), 6.3 (Lessee’s
        Compliance with Applicable Requirements), 7.2 (Lessor’s Obligations), 9 (Damage
        or Destruction), and 14 (Condemnation), Lessee shall, at Lessee’s sole expense,
        keep the Premises, Utility Installations, and Alterations in good order,
        condition and repair (whether or not the portion of the Premises requiring
        repairs, or the means of repairing the same, are reasonably or readily
        accessible to Lessee, and whether or not the need for such repairs occurs
        as a
        result of Lessee’s use, any prior use, the elements or the age of such portion
        of the Premises), including, but not limited to, all equipment or facilities,
        such as plumbing, heating, ventilating, air-conditioning, electrical, lighting
        facilities, boilers, pressure vessels, fire protection system, fixtures,
        walls (interior and exterior), foundations, ceilings, roofs, floors, windows,
        doors, plate glass, skylights, landscaping, driveways, parking lots, fences,
        retaining walls, signs, sidewalks and parkways located in, on, or adjacent
        to
        the Premises. Lessee, in keeping the Premises in good order, condition and
        repair, shall exercise and perform good maintenance practices, specifically
        including the procurement and maintenance of the service contracts required
        by
        Paragraph 7.1(b) below. Lessee’s obligations shall include restorations,
        replacements or renewals when necessary to keep the Premises and all
        Improvements thereon or a part thereof in good order, condition and state
        of
        repair. Lessee shall, during the term of this Lease, keep the exterior
        appearance of the Building in a first-class condition consistent with the
        exterior appearance of other similar facilities of comparable age and size
        in
        the vicinity, including, when necessary, the exterior repainting of the
        Building.

      

      
        	 	
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                  - American Industrial Real Estate
                  Association

              	
                REVISED

              	 	
                FORM
                  STN-6-2/97E

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (b) Service
        Contracts. Lessee
        shall, at Lessee’s sole expense, procure and maintain contracts, with copies to
        Lessor, in customary form and substance for, and with contractors specializing
        and experienced in the maintenance of the following equipment and improvements,
        if any, if and when installed on the Premises: (i) HVAC equipment, (ii) boiler,
        and pressure vessels, (iii) fire extinguishing systems, including fire alarm
        and/or smoke detection, (iv) landscaping and irrigation systems, (v) roof
        covering and drains, (vi) driveways and parking lots, (vii) clarifiers (viii)
        basic utility feed to the perimeter of the Building, and (ix) any other
        equipment if reasonably required by Lessor.

       

      (c) Replacement.
        Subject
        to Lessee’s indemnification of Lessor as set forth in Paragraph 8.7 below, and
        without relieving Lessee of liability resulting from Lessee’s failure to
        exercise and perform good maintenance practices, if the Basic Elements described
        in Paragraph 7.1 (b) cannot be repaired other’ than at a cost which is in excess
        of 50% of the cost of replacing such Basic Elements, then such Basic Elements
        shall be replaced by Lessor, and the cost thereof shall be prorated between
        the
        Parties and Lessee shall only be obligated to pay, each month during the
        remainder of the term of this Lease, on the date on which Base Rent is due,
        an
        amount equal to the product of multiplying the cost of such replacement by
        a
        fraction, the numerator of which is one, and the denominator of which is
        the
        number of months of the useful life of such replacement as such useful life
        is
        specified pursuant to Federal Income tax regulations or guidelines for
        depreciation thereof (including interest on the unamortized balance as is
        then
        commercially reasonable in the judgment of Lessor’s accountants), with Lessee
        reserving the right to prepay its obligation at any time.

       

      7.2 Lessor’s
        Obligations.
        Subject
        to the provisions of Paragraphs 2.2 (Condition), 2.3 (Compliance), 9 (Damage
        or
        Destruction) and 14 (Condemnation), it is intended by the Parties hereto
        that
        Lessor have no obligation, in any manner whatsoever, to repair and maintain
        the
        Premises, or the equipment therein, all of which obligations are intended
        to be
        that of the Lessee. It is the intention of the Parties that the terms of
        this
        Lease govern the respective obligations of the Parties as to maintenance
        and
        repair of the Premises, and they expressly waive the benefit of any statute
        now
        or hereafter in effect to the extent it is inconsistent with the terms of
        this
        Lease.

       

      7.3 Utility
        Installations; Trade Fixtures; Alterations.

       

      (a) Definitions;
        Consent Required. The
        term
“Utility Installations” refers to all floor and window
        coverings, air lines, power panels, electrical distribution, security and
        fire
        protection systems, communication systems, lighting fixtures, HVAC equipment,
        plumbing, and fencing in or on the Premises. The term “Trade
        Fixtures” shall mean Lessee’s machinery and equipment that can be
        removed without doing material damage to the Premises. The term
“Alterations” shall mean any modification of the improvements,
        other than Utility Installations or Trade Fixtures, whether by addition or
        deletion. “Lessee Owned Alterations and/or Utility
        Installations” are defined as Alterations and/or Utility Installations
        made by Lessee that are not yet owned by Lessor pursuant to Paragraph 7.4(a).
        Lessee shall not make any Alterations or Utility Installations to the Premises
        without Lessor’s prior written consent. Lessee may, however, make non-structural
        Utility Installations to the interior of the Premises (excluding the roof)
        without such consent but upon notice to Lessor, as long as they are not visible
        from the outside, do not involve puncturing, relocating or removing the roof
        or
        any existing walls, and the cumulative cost thereof during this Lease as
        extended does not exceed $50,000 in the aggregate or $10,000 in any one
        year.

       

      (b) Consent.
        Any
        Alterations or Utility Installations that Lessee shall desire to make and
        which
        require the consent of the Lessor shall be presented to Lessor in written
        form
        with detailed plans. Consent shall be deemed conditioned upon Lessee’s: (i)
        acquiring all applicable governmental permits, (ii) furnishing Lessor with
        copies of both the permits and the plans and specifications prior to
        commencement of the work, and (iii) compliance with all conditions of said
        permits and other Applicable Requirements in a prompt and expeditious manner.
        Any Alterations or Utility Installations shall be performed in a workmanlike
        manner with good and sufficient materials. Lessee shall promptly upon completion
        furnish Lessor with as-built plans and specifications. For work which costs
        an
        amount equal to the greater of one month’s Base Rent, or $10,000, Lessor may
        condition its consent upon Lessee providing a lien and completion bond in
        an amount equal to one and one-half times the estimated cost of such Alteration
        or Utility Installation and/or upon Lessee’s posting an additional Security
        Deposit with Lessor.

       

      (c) Indemnification.
        Lessee
        shall pay, when due, all claims for labor or materials furnished or alleged
        to
        have been furnished to or for Lessee at or for use on the Premises, which
        claims
        are or may be secured by any mechanic’s or materialmen’s lien against the
        Premises or any interest therein. Lessee shall give Lessor not less than
        ten
        (10) days’ notice prior to the commencement of any work in, on or about the
        Premises, and Lessor shall have the right to post notices of non-responsibility.
        If Lessee shall contest the validity of any such lien, claim or demand, then
        Lessee shall, at its sole expense defend and protect itself, Lessor and the
        Premises against the same and shall pay and satisfy any such adverse judgment
        that may be rendered thereon before the enforcement thereof. If Lessor shall
        require. Lessee shall furnish a surety bond in an amount equal to one and
        one-half times the amount of such contested lien, claim or demand, indemnifying
        Lessor against liability for the same. If Lessor elects to participate in
        any
        such action, Lessee shall pay Lessor’s attorneys’ fees and costs.

       

      7.4 Ownership;
        Removal; Surrender; and Restoration.

       

      (a) Ownership.
        Subject
        to Lessor’s right to require removal or elect ownership as hereinafter provided,
        all Alterations and Utility Installations made by Lessee shall be the property
        of Lessee, but considered a part of the Premises. Lessor may, at any time,
        elect
        in writing to be the owner of all or any specified part of the Lessee Owned
        Alterations and Utility Installations. Unless otherwise instructed per Paragraph
        7.4(b) hereof, all Lessee Owned Alterations and Utility Installations shall,
        at
        the expiration or termination of this Lease, become the property of Lessor
        and
        be surrendered by Lessee with the Premises.

       

      (b) Removal.
        By
        delivery to Lessee of written notice from Lessor not earlier than ninety
        (90) and not later than thirty (30) days prior to the end of the term of
        this
        Lease, Lessor may require that any or all Lessee Owned Alterations or Utility
        Installations be removed by the expiration or termination of this Lease.
        Lessor
        may require the removal at any time of all or any part of any Lessee Owned
        Alterations or Utility Installations made without the required
        consent.

       

      (c) Surrender/Restoration.
        Lessee
        shall surrender the Premises by the Expiration Date or any earlier termination
        date, with all of the improvements, parts and surfaces thereof broom clean
        and
        free of debris, and in good operating order, condition and state of repair,
        ordinary wear and tear excepted. “Ordinary wear and tear” shall not include any
        damage or deterioration that would have been prevented by good maintenance
        practice. Lessee shall repair any damage occasioned by the installation,
        maintenance or removal of Trade Fixtures, Lessee Owned Alterations and/or
        Utility Installations, furnishings, and equipment as well as the removal
        of any
        storage tank installed by or for Lessee, and the removal, replacement, or
        remediation of any soil, material or groundwater contaminated by Lessee.
        Trade
        Fixtures shall remain the property of Lessee and shall be removed by Lessee.
        The
        failure by Lessee to timely vacate the Premises pursuant to this Paragraph
        7.4(c) without the express written consent of Lessor shall constitute a holdover
        under the provisions of Paragraph 26 below.

       

      8. Insurance;
        Indemnity.

       

      8.1 Payment
        For Insurance. Lessee
        shall pay for all insurance required under Paragraph 8 except to the extent
        of
        the cost attributable to liability insurance carried by Lessor under Paragraph
        8.2(b) in excess of $2,000,000 per occurrence. Premiums for policy periods
        commencing prior to or extending beyond the Lease term shall be prorated
        to
        correspond to the Lease term. Payment shall be made by Lessee to Lessor within
        ten (10) days following receipt of an invoice.

       

      8.2 Liability
        Insurance.

       

      (a) Carried
        by Lessee. Lessee
        shall obtain and keep in force a Commercial General Liability Policy of
        insurance protecting Lessee and Lessor against claims for bodily injury,
        personal injury and property damage based upon or arising out of  the
        ownership, use, occupancy or maintenance of the Premises and all areas
        appurtenant thereto. Such insurance shall be on an occurrence basis providing
        single limit coverage in an amount not less than $2,000,000 per occurrence
        with
        an “Additional Insured-Managers or Lessors of Premises
        Endorsement” and contain the“Amendment of the Pollution
        Exclusion Endorsement” for damage caused by heat, smoke or fumes from a
        hostile fire and
        include
        pollution legal liability coverage
        protecting
        Lessor and the premises against damage
        caused
        by
        any release of hazardous substances. Such pollution legal liability
        insurance shall be required as of the commencement
        of Lessee’s
        Operations. The Policy shall not contain any intra-insured exclusions as
        between
        insured persons or organizations, but shall include coverage for liability
        assumed under this Lease as an ‘insured contract’ for the performance of
        Lessee’s indemnity obligations under this Lease. The limits of said insurance
        shall not, however, limit the liability of Lessee nor relieve Lessee of any
        obligation hereunder. All insurance carried by Lessee shall be primary to
        and
        not contributory with any similar insurance carried by Lessor, whose insurance
        shall be considered excess insurance only.

       

      (b) Carried
        by Lessor.
        Lessor
        shall maintain liability insurance as described in Paragraph 8.2(a), in addition
        to, and not in lieu of, the insurance required to be maintained by Lessee.
        Lessee shall not be named as an additional insured therein.

       

      8.3 Property
        Insurance - Building, Improvements and Rental Value.

       

      (a)
        Building and Improvements. The
        Insuring Party shall obtain and keep in force a policy or policies in the
        name
        of Lessor, with loss payable to Lessor, any groundlessor, and to any Lender(s)
        insuring loss or damage to the Premises. The amount of such insurance shall
        be
        equal to the full replacement cost of the Premises, as the same shall exist
        from
        time to time, or the amount required by any Lenders, but in no event more
        than
        the commercially reasonable and available insurable value thereof. If Lessor
        is
        the insuring Party, however, Lessee Owned Alterations and Utility Installations,
        Trade Fixtures, and Lessee’s personal property shall be insured by Lessee under
        Paragraph 8.4 rather than by Lessor. If the coverage is available and
        commercially appropriate, such policy or policies shall insure against all
        risks
        of direct physical loss or damage (except the perils of flood and/or earthquake
        unless required by a Lender), including coverage for debris removal and the
        enforcement of any Applicable Requirements requiring the upgrading, demolition,
        reconstruction or replacement of any portion of the Premises as the result
        of a
        covered loss. Said policy or policies shall also contain an agreed valuation
        provision in lieu of any coinsurance clause, waiver of subrogation, and
        inflation guard protection causing an increase in the annual property insurance
        coverage amount by a factor of not less than the adjusted U.S. Department
        of
        Labor Consumer Price index for All Urban Consumers for the city nearest to
        where
        the Premises are located. If such insurance coverage has a deductible clause,
        the deductible amount shall not exceed $1,000 per occurrence, and Lessee
        shall
        be liable for such deductible amount in the event of an insured
        Loss.

       

      
        	 	
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                Ó1997
                  - American Industrial Real Estate
                  Association

              	
                REVISED

              	 	
                FORM
                  STN-6-2/97E

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

    

    
      (b) Rental
        Value. The
        Insuring Party
        shall obtain and keep in force a policy or policies in the name of Lessor
        with
        loss payable to Lessor and
        any
        Lender, insuring the loss of the full Rent for one (1) year. Said insurance
        shall provide that in the event the Lease is terminated by reason of an
insured
        loss, the period of indemnity for such coverage shall be extended beyond
        the
        date of the completion of repairs or replacement of the Premises, to provide
        for
        one full year’s loss of Rent from the date of any such loss. Said insurance
        shall contain an agreed valuation provision in lieu of any coinsurance
clause,
        and the amount of coverage shall be adjusted annually to reflect the projected
        Rent otherwise payable by Lessee, for the next twelve (12) month period.
        Lessee shall be liable for any deductible amount in the event of such
        loss.

       

      (c) Adjacent
        Premises. If
        the
        Premises are part of a larger building, or of a group of buildings owned
        by
        Lessor which are adjacent to the Premises,
        the Lessee shall pay for any increase in the premiums for the property insurance
        of such building or buildings if said increase is caused by Lessee’s
        acts, omissions, use or occupancy of the Premises.

       

         
        8.4 Lessee’s
        Property/Business interruption insurance.

       

      (a) Property
        Damage. Lessee
        shall obtain and maintain insurance coverage on all of Lessee’s personal
        property, Trade Fixtures, and Lessee Owned Alterations and Utility
        installations. Such insurance shall be full replacement cost coverage with
        a
        deductible of not to exceed $1,000 per occurrence.
        The proceeds from any such insurance shall be used by Lessee for the replacement
        of personal property, Trade Fixtures and Lessee Owned Alterations
        and Utility installations. Lessee shall provide Lessor with written evidence
        that such insurance is
        in
        force.

       

      (b) Business
        Interruption. Lessee
        shall obtain and maintain loss of income and extra expense insurance in amounts
        as will reimburse Lessee
        for direct or indirect loss of earnings attributable to all perils commonly
        insured against by prudent lessees in the business of Lessee or attributable
        to
        prevention of access to the Premises as a result of such perils.

       

      (c) No
        Representation or Adequate Coverage. Lessor
        makes no representation that the limits or forms of coverage of insurance
        specified herein
        are adequate to cover Lessee’s property, business operations or obligations
        under this Lease.

       

      8.5 Insurance
        Policies. Insurance
        required herein shall be by companies duly licensed or admitted to transact
        business in the state where the Premises
        are located, and maintaining during the policy term a “General Policyholders
        Rating” of at least B+, V, as set forth in the most current issue of “Best’s
        insurance Guide”, or such other rating as may be required by a Lender. Lessee
        shall not do or permit to be done anything which invalidates the required
        insurance policies. Lessee shall, prior to the Start Date, deliver to Lessor
        certified copies of policies of such insurance or certificates evidencing
        the
existence
        and amounts of the required insurance. No such policy shall be cancelable
        or
        subject to modification except after thirty (30) days prior written notice
        to
        Lessor. Lessee shall, at least thirty (30) days prior to the expiration of
        such
        policies, furnish Lessor with evidence of renewals or “insurance binders”
evidencing renewal thereof, or Lessor may order such insurance and charge
        the
        cost thereof to Lessee, which amount shall be payable by Lessee to Lessor
        upon
        demand. Such policies shall be for a term of at least one year, or the length
        of
        the remaining term of this Lease, whichever is less. If either Party shall
        fall
        to
        procure and maintain the insurance required to be carried by it, the other
        Party
        may, but shall not be required to, procure and maintain the same.

       

      8.6 Waiver
        of
        Subrogation.
        Without
        affecting any other rights or remedies. Lessee and Lessor each hereby release
        and relieve the other, and waive their entire right to recover damages against
        the other, for loss of or damage to its property arising out of or incident
        to
        the perils required to be insured against herein. The effect of such releases
        and waivers is not limited by the amount of insurance carried or required,
        or by
        any deductibles
        applicable hereto. The Parties agree to have their respective property damage
        insurance carriers waive any right to subrogation
        that
        such companies may have against Lessor or Lessee, as the case may be, so
        long as
        the insurance is not invalidated thereby.

       

      8.7 Indemnity.
        Except
        for Lessor’s gross negligence or willful misconduct, Lessee shall indemnify,
        protect, defend and hold harmless the Premises,
        Lessor and its agents, Lessor’s master or ground lessor, partners and Lenders,
        from and against any and all claims, loss of rents and/or damages, liens,
        judgments, penalties, attorneys’ and consultants’ fees, expenses and/or
        liabilities arising out of, involving, or in connection with, the use and/or
        occupancy
        of the Premises by Lessee. If any action or proceeding is brought against
        Lessor
        by reason of any of the foregoing matters, Lessee shall upon notice defend
        the
        same at Lessee’s expense by counsel reasonably satisfactory to Lessor and Lessor
        shall cooperate with Lessee in such defense. Lessor need
        not
        have first paid any such claim in order to be defended or
        indemnified.

       

      8.8 Exemption
        of Lessor from Liability. Lessor
        shall not be liable for injury or damage to the person or goods, wares,
        merchandise or other property
        of Lessee, Lessee’s employees, contractors, invitees, customers, or any other
        person in or about the Premises, whether such damage or injury is caused
        by
        or results from fire, steam, electricity, gas, water or rain, or from the
        breakage, leakage, obstruction or other defects of pipes, fire sprinklers,
        wires, appliances, plumbing, HVAC or lighting fixtures, or from any other
        cause,
        whether the said injury or damage results from conditions arising upon the
        Premises or
        upon
        other portions of the Building of which the Premises are a part, or from
        other
        sources or places. Lessor shall not be liable for any damages arising
from
        any
        act or neglect of any other tenant of Lessor. Notwithstanding Lessor’s
        negligence or breach of this Lease, Lessor shall under no circumstances be
        liable for injury to Lessee’s business or for any loss of income or profit
        therefrom.

       

      9. Damage
        or
        Destruction.

       

         
        9.1 Definitions.

       

      (a) “Premises
        Partial Damage” shall
        mean damage or destruction to the improvements on the Premises, other than
        Lessee Owned Alterations
        and Utility installations, which can reasonably be repaired in six (6) months
        or
        less from the date of the damage or destruction. Lessor shall notify Lessee
        in
        writing within thirty (30) days from the date of the damage or destruction
        as to
        whether or not the damage is Partial or Total.

       

      (b) “Premises
        Total Destruction” shall
        mean damage or destruction to the Premises, other than Lessee Owned Alterations
        and Utility installations
        and Trade Fixtures, which cannot reasonably be repaired in six (6) months
        or
        less from the date of the damage or destruction. Lessor shall notify Lessee
        in
        writing within thirty (30) days from the date of the damage or destruction
        as to
        whether or not the damage is Partial or Total.

       

      (c) “Insured
        Loss” shall
        mean damage or destruction to improvements on the Premises, other than Lessee
        Owned Alterations and Utility installations
        and Trade Fixtures, which was caused by an event required to be covered by
        the
        insurance described in Paragraph 8.3(a), irrespective of any deductible
        amounts or coverage limits involved.

       

      (d) “Replacement
        Cost” shall
        mean the cost to repair or rebuild the improvements owned by Lessor at the
        time
        of the occurrence to their condition
        existing immediately prior thereto,
        including demolition, debris removal and upgrading required by the operation
        of
        Applicable Requirements, and without
        deduction for depreciation.

       

      (e) “Hazardous
        Substance Condition” shall
        mean the occurrence or discovery of a condition involving the
        presence of, or a contamination by,
        a
        Hazardous Substance as defined in Paragraph 6.2(a), in, on, or under the
        Premises.

       

         
        9.2 Partial
        Damage - Insured Loss. If
        a
        Premises Partial Damage that is an insured Loss occurs, then Lessor shall,
        at
        Lessor’s expense, repair
        such damage (but not Lessee’s Trade Fixtures or Lessee Owned Alterations and
        Utility Installations) as soon as reasonably possible and this Lease
shall
        continue in full force and effect; provided, however, that Lessee shall,
        at
        Lessor’s election, make the repair of any damage or destruction the total cost
        to repair
        of
        which is $10,000
        or less, and, in such event, Lessor shall make any applicable insurance proceeds
        available to Lessee on a reasonable basis for that
        purpose. Notwithstanding the foregoing, if the required insurance was not
        in
        force or the insurance proceeds are not sufficient to effect such repair,
        the
insuring
        Party shall promptly
        contribute the shortage in proceeds (except as to the deductible which is
        Lessee’s responsibility) as and when required to complete
        said repairs. In the event, however, such shortage was due to the fact that,
        by
        reason of the unique nature of the Improvements, full replacement cost insurance
        coverage was not commercially reasonable and available. Lessor shall have
        no
        obligation to pay for the shortage in insurance proceeds or to fully restore
        the
        unique aspects of the Premises unless Lessee provides Lessor with the funds
        to
        cover same, or adequate assurance thereof, within ten (10) days
        following receipt of written notice of such shortage and request therefor.
        If
        Lessor receives said funds or adequate assurance thereof within said ten
        (10)
        day
        period, the party responsible for making the repairs shall complete them
        as soon
        as reasonably possible and this Lease shall remain in full force and
effect.
        If such funds or assurance are not received, Lessor may nevertheless elect
        by
        written notice to Lessee within
        ten (10)
        days thereafter to: (i) make such
        restoration and repair as is commercially reasonable with Lessor paying any
        shortage in proceeds, in which case this Lease shall remain in full force
        and
        effect,
        or have this Lease terminate thirty (30) days thereafter. Lessee shall not
        be
        entitled to reimbursement of any funds contributed by Lessee to repair any
        ,
        such
        damage or destruction. Premises Partial Damage due to flood or earthquake
        shall
        be subject to Paragraph 9.3, notwithstanding that there may be some insurance
        coverage, but the net proceeds of any such insurance shall be made available
        for
        the repairs If made by either Party.

    

    
       

      
        
          	 	
                  Page 5
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                  Initials.

                	
                  

                
	 	 	 	 
	
                  Ó1997
                    - American industrial Real Estate Association

                	
                  REVISED

                	 	
                  FORM
                    STN-6-2/97E

                

        

      
        
          
            
            

          

          
            
            

            
              

            

          

           

        

      

       

         
        9.3 Partial
        Damage - Uninsured Loss. If
        a
        Premises Partial Damage that is not an insured Loss occurs, unless caused
        by a
        negligent or willful
        act of Lessee (in which event Lessee shall make the repairs at Lessee’s
        expense), Lessor may either: (i)
        repair
        such damage as soon as reasonably possible at Lessor’s expense, in which event
        this Lease shall continue in full force and effect, or (ii) terminate this
        Lease
        by giving written notice to Lessee within
        thirty
        (30) days after receipt by Lessor of knowledge of the occurrence of such
        damage.
        Such termination shall be effective sixty (60) days following the date of
        such
        notice. In the event Lessor elects to terminate this Lease, Lessee shall
        have
        the right within
        ten (10)
        days after receipt of the termination notice
        to
        give written notice to Lessor of Lessee’s commitment to pay for the repair of
        such damage without reimbursement from Lessor. Lessee shall provide Lessor
        with
        said funds or satisfactory assurance thereof within thirty (30) days after
        making such commitment. in such event this Lease shall continue
        in full force and effect, and Lessor shall proceed to make such repairs as
        soon
        as reasonably possible after the required funds are available. If Lessee
        does not make the required commitment, this Lease shall terminate as of the
        date
        specified in the termination notice.

       

        
        9.4 Total
        Destruction. Notwithstanding
        any other provision hereof, if a Premises Total Destruction occurs, this
        Lease
        shall terminate sixty (60) days
        following such Destruction. If the damage or destruction was caused by the
        gross
        negligence or willful misconduct of Lessee, Lessor shall have the right
        to
        recover Lessor’s damages from Lessee, except as provided in Paragraph
        8.6.

       

        
        9.5 Damage
        Near End of Term. If
        at any
        time during the last six (6) months of this Lease there is damage for which
        the
        cost to repair exceeds one
        (1)
        month’s Base Rent, whether or not an insured Loss, Lessor may terminate this
        Lease effective sixty (60) days following the date of occurrence of such
        damage by giving a written termination notice to Lessee within thirty (30)
        days
        after the date of occurrence of such damage. Notwithstanding the foregoing,
        If Lessee at that time has an exercisable
        option to extend this Lease or to purchase the Premises, then Lessee may
        preserve this Lease by, (a) exercising
        such option and (b) providing Lessor with any shortage in insurance proceeds
        (or
        adequate assurance thereof) needed to make the repairs on or before the earlier
        of (i) the date which is ten
        days
        after Lessee’s receipt of Lessor’s written notice purporting to terminate this
        Lease, or (ii)
        the day
        prior to the date
        upon
        which such option expires. If Lessee duly exercises such option during such
        period and provides Lessor with funds (or adequate assurance thereof)
        to cover any shortage in insurance proceeds, Lessor shall, at Lessor’s
        commercially reasonable expense, repair such damage as soon as reasonably
        possible
        and this Lease shall continue in full force and effect. If Lessee falls to
        exercise such option and provide such funds or assurance during such period,
        then this Lease shall terminate on the date specified in the termination
        notice
        and Lessee’s option shall be extinguished.

       

        
        9.6 Abatement
        of Rent; Lessee’s Remedies.

       

      (a) Abatement.
        In
        the
        event of Premises Partial Damage or Premises Total Destruction or a
        Hazardous
        Substance Condition for which Lessee
        is
        not responsible under this Lease, the Rent payable by Lessee for the period
        required for the repair, remediation or restoration of such damage shall
        be
        abated
        in proportion to the degree to which Lessee’s use of the Premises is Impaired,
        but not to exceed the proceeds received from the Rental Value insurance.
        All
        other obligations of Lessee hereunder shall be performed by Lessee, and Lessor
        shall have no liability for any such damage, destruction, remediation,
        repair or restoration except as provided herein.

       

      (b) Remedies.
        If
        Lessor
        shall be obligated to repair or restore the Premises and does not commence,
        in a
        substantial and meaningful way, such
        repair or restoration within ninety (90) days after such obligation shall
        accrue, Lessee may, at any time prior to the commencement of such repair
        or
restoration,
        give written notice to Lessor and to any Lenders of which Lessee has actual
        notice, of Lessee’s election to terminate this Lease on a date not less
than
        sixty (60) days following the giving of such
        notice. If Lessee gives such notice and such repair or restoration is not
        commenced within thirty (30) days thereafter,
        this Lease shall terminate as of the date specified in said notice. If the
        repair or restoration is commenced within said thirty (30) days, this Lease
        shall
        continue in full force and effect. “Commence”
        shall
        mean either the unconditional authorization of the preparation of the required
        plans, or the beginning
        of the actual work on the Premises, whichever first occurs.

       

         
        9.7 Termination
        - Advance Payments. Upon
        termination of this Lease pursuant to Paragraph 6.2(g) or Paragraph 9, an
        equitable adjustment shall
        be
        made concerning advance Base Rent and any other advance payments made by
        Lessee
        to Lessor. Lessor shall, in addition, return to Lessee so much
        of
        Lessee’s Security Deposit as has not been, or is not then required to be, used
        by Lessor.

       

        
        9.8 Waive
        Statutes. Lessor
        and Lessee agree that the terms of this Lease shall govern the effect of
        any
        damage to or destruction of the Premises
        with respect to the termination of this Lease and hereby waive the provisions
        of
        any present or future statute to the extent inconsistent herewith. 

       

      10.  
        Real Property Taxes.

       

      10.1  Definition
        of “Real Property Taxes.” As
        used
        herein, the term “Real
        Property Taxes” shall
        include any form of assessment; real estate, general, special, ordinary or
        extraordinary, or rental levy or tax (other than inheritance, personal income
        or
        estate taxes); Improvement bond; and/or license fee
        Imposed upon or levied against any legal or equitable interest of Lessor
        in the
        Premises, Lessor’s right to other income therefrom, and/or Lessor’s business
        of leasing, by any authority having the direct or indirect power to tax and
        where the funds are generated with reference to the Building address and
        where
        the proceeds so generated are to be applied by the city, county or other
        local
        taxing authority of a Jurisdiction within which the Premises are located.
        The
        term
“Real
        Property Taxes” shall
        also include any tax, fee, levy, assessment or charge, or any increase therein,
        imposed by reason of events occurring during
        the term of this Lease, including but not limited to, a change in the ownership
        of the Premises.

       

        
        10.2

       

      (a) Payment
        of Taxes. Lessee
        shall pay the Real Property Taxes applicable to the Premises during the term
        of
        this Lease. Subject to Paragraph
        10.2(b), all such payments shall
        be
        made
        at least ten (10) days prior to any delinquency date. Lessee shall promptly
        furnish Lessor with satisfactory
        evidence that such taxes have been paid. If any such taxes shall cover any
        period of time prior to or after the expiration or termination of this
Lease,
        Lessee’s share of such taxes shall be prorated to cover only that portion of the
        tax bill applicable to the period that this Lease is in effect, and Lessor
        shall
        reimburse Lessee for any overpayment. If Lessee shall fall to pay any required
        Real Property Taxes, Lessor shall have the right to pay the same, and
Lessee
        shall reimburse Lessor therefor upon demand.

       

      (b) Advance
        Payment. In
        the
        event Lessee incurs a late charge on any Rent payment, Lessor may, at Lessor’s
        option, estimate the current Real
        Property Taxes, and require that such taxes be paid in advance to Lessor
        by
        Lessee, either: (i) in a lump sum amount equal to the installment due, at
        least
        twenty (20) days prior to the applicable delinquency date, or (ii) monthly
        in
        advance with the payment of the Base Rent. If Lessor elects to require
payment
        monthly in advance, the monthly payment shall be an amount equal to the amount
        of the estimated installment of taxes divided by the number of months
        remaining before the month in which said installment becomes delinquent.
        When
        the actual amount of the applicable tax bill is known, the amount of
such
        equal monthly advance payments shall be adjusted as required to provide the
        funds needed to pay the applicable taxes. If the amount collected by
Lessor
        is
        insufficient to pay such Real Property Taxes when due, Lessee shall pay Lessor,
        upon demand, such additional sums as are necessary to pay such
        obligations. All monies paid to Lessor under this Paragraph may be intermingled
        with other monies of Lessor and shall not bear interest. in the event of
        a
        Breach
        by Lessee in the performance of Its obligations under this Lease, then any
        balance of funds paid to Lessor under the provisions of this Paragraph may,
        at
        the option of Lessor,
        be
        treated as an additional Security Deposit.

       

      10.3 Joint
        Assessment. If
        the
        Premises are not separately assessed. Lessee’s liability shall be an equitable
        proportion of the Real Property Taxes
        for
        all of the land and Improvements included within the tax parcel assessed,
        such
        proportion to be conclusively determined by Lessor from the respective
        valuations assigned in the assessor’s work sheets or such other information as
        may be reasonably available.

       

      10.4 Personal
        Property Taxes. Lessee
        shall pay, prior to delinquency, all taxes assessed against and levied upon
        Lessee Owned Alterations, Utility
        installations, Trade Fixtures, furnishings, equipment and all personal property
        of Lessee. When possible, Lessee shall cause such property to be assessed
        and
        billed separately from the real property of Lessor. If any of Lessee’s said
        personal property shall be assessed with Lessor’s real property, Lessee
        shall pay Lessor the
        taxes
        attributable to Lessee’s property within ten (10) days after receipt of a
        written statement.

       

      11. Utilities.
        Lessee
        shall pay for all water, gas, heat, light, power, telephone, trash disposal
        and
        other utilities and services supplied to the Premises, together
        with any taxes thereon. If any such services are not separately metered to
        Lessee, Lessee shall pay a reasonable proportion, to be determined by
Lessor,
        of all charges jointly metered.

       

      12. Assignment
        and Subletting.

       

         
        12.1  Lessor’s
        Consent Required.

       

      (a)
        Lessee shall not voluntarily or by operation of law assign, transfer, mortgage
        or encumber (collectively, “assign or
        assignment”) or
        sublet
        all or any part of Lessee’s interest in this Lease or in the Premises without
        Lessor’s prior written consent with the
        exception
        of an assignment or sublet
        resulting from a merger, consolidation, or sale of all or substantially all
        of
        the assets of Lessee, which shall not require Lessor’s prior
        written consent.

      

        
          	 	
                  Page 6
                    of 12

                	
                  Initials

                	
                  

                
	 	 	 	 
	
                  Ó1997
                    - American Industrial Real Estate Association

                	
                  REVISED

                	 	
                  FORM
                    STN-6-2/97E

                

        

      
        
          
            
            

          

          
            
            

            
              

            

          

           

        

      

       

    

    (b) A
      change in the control of Lessee shall constitute an assignment requiring
      consent. The transfer, on a cumulative basis, of twenty five percent (25%)
      or
      more of the voting control of Lessee shall constitute a change in control for
      this purpose.

     

    (c)
      The Involvement of Lessee or its assets in any transaction, or series of
      transactions (by way of merger, sale, acquisition, financing, transfer,
      leveraged buy out or otherwise), whether or not a formal assignment or
      hypothecation of this Lease or Lessee’s assets occurs, which results or will
      result in a reduction of the Net Worth of Lessee by an amount greater than
      twenty five (25%) of such Net Worth as it was represented at the time of the
      execution of this Lease or at the time of the most recent assignment to which
      Lessor has consented, or as it exists immediately prior to said transaction
      or
      transactions constituting such reduction, whichever was or is greater, shall
      be
      considered an assignment of this Lease to which Lessor may withhold its consent.
      “Net
      Worth Lessee”
      shall mean the net worth of Lessee (excluding any guarantors) established under
      generally accepted accounting principles.

     

    (d) An
      assignment or subletting without consent shall, at Lessor’s option, be a Default
      curable after notice per Paragraph 13.1(c), or a noncurable Breach without
      the
      necessity of any notice and grace period. If Lessor elects to treat such
      unapproved assignment or subletting as a noncurable Breach, Lessor may either:
      (i) terminate this Lease, or (ii) upon thirty (30) days written notice, increase
      the monthly Base Rent to one hundred ten percent (110%) of the Base Rent then
      in
      effect. Further, in the event of such Breach and rental adjustment, (i) the
      purchase price of any option to purchase the Premises held by Lessee shall be
      subject to similar adjustment to one hundred ten percent (110%) of the price
      previously in effect, and (ii) all fixed and non-fixed rental adjustments
      scheduled during the remainder of the Lease term shall be increased to One
      Hundred Ten Percent (110%) of the scheduled adjusted rent.

     

    (e) Lessee’s
      remedy for any breach of Paragraph 12.1 by Lessor shall be limited to
      compensatory damages and/or injunctive relief.

     

    12.2 Terms
      and Conditions Applicable to Assignment and Subletting.

     

    (a) Regardless
      of Lessor’s consent, any assignment or subletting shall not: (i) be effective
      without the express written assumption by such assignee or sublessee of the
      obligations of Lessee under this Lease; (ii) release Lessee of any obligations
      hereunder; or (iii) alter the primary liability of Lessee for the payment of
      Rent or for the performance of any other obligations to be performed by
      Lessee.

     

    (b) Lessor
      may accept Rent or performance of Lessee’s obligations from any person other
      than Lessee pending approval or disapproval of an assignment. Neither a delay
      in
      the approval or disapproval of such assignment nor the acceptance of Rent or
      performance shall constitute a waiver or estoppel of Lessor’s right to exercise
      its remedies for Lessee’s Default or Breach.

     

    (c) Lessor’s
      consent to any assignment or subletting shall not constitute a consent to any
      subsequent assignment or subletting.

     

    (d) In
      the
      event of any Default or Breach by Lessee, Lessor may proceed directly against
      Lessee, any Guarantors or anyone else responsible for the performance of
      Lessee’s obligations under this Lease, including any assignee or sublessee,
      without first exhausting Lessor’s remedies against any other person or entity
      responsible therefore to Lessor, or any security held by Lessor.

     

    (e) Each
      request for consent to an assignment or subletting shall be in writing,
      accompanied by information relevant to Lessor’s determination as to the
      financial and operational responsibility and appropriateness of the proposed
      assignee or sublessee, including but not limited to the intended use and/or
      required modification of the Premises, if any, together with a fee of $1,000
      or
      ten percent (10%) of the current monthly Base Rent applicable to the portion
      of
      the Premises which is the subject of the proposed assignment or sublease,
      whichever is greater, as consideration for Lessor’s considering and processing
      said request. Lessee agrees to provide Lessor with such other or additional
      information and/or documentation as may be reasonably requested.

     

    (f) Any
      assignee of, or sublessee under, this Lease shall, by reason of accepting such
      assignment or entering into such sublease, be deemed to have assumed and agreed
      to conform and comply with each and every term, covenant, condition and
      obligation herein to be observed or performed by Lessee during the term of
      said
      assignment or sublease, other than such obligations as are contrary to or
      inconsistent with provisions of an assignment or sublease to which Lessor has
      specifically consented to in writing.

     

    12.3 Additional
      Terms and Conditions Applicable to Subletting.
      The following terms and conditions shall apply to any subletting by Lessee
      of
      all or any part of the Premises and shall be deemed included in all subleases
      under this Lease whether or not expressly incorporated therein:

     

    (a) Lessee
      hereby assigns and transfers to Lessor all of Lessee’s interest in all Rent
      payable on any sublease, and Lessor may collect such Rent and apply same toward
      Lessee’s obligations under this Lease; provided, however, that until a Breach
      shall occur in the performance of Lessee’s obligations, Lessee may collect said
      Rent. Lessor shall not, by reason of the foregoing or any assignment of such
      sublease, nor by reason of the collection of Rent, be deemed liable to the
      sublessee for any failure of Lessee to perform and comply with any of Lessee’s
      obligations to such sublessee. Lessee hereby irrevocably authorizes and directs
      any such sublessee, upon receipt of a written notice from Lessor stating that
      a
      Breach exists in the performance of Lessee’s obligations under this Lease, to
      pay to Lessor all Rent due and to become due under the sublease. Sublessee
      shall
      rely upon any such notice from Lessor and shall pay all Rents to Lessor without
      any obligation or right to inquire as to whether such Breach exists,
      notwithstanding any claim from Lessee to the contrary.

     

    (b) In
      the
      event of a Breach by Lessee, Lessor may, at its option, require sublessee to
      attorn to Lessor, in which event Lessor shall undertake the obligations of
      the
      sublessor under such sublease from the time of the exercise of said option
      to
      the expiration of such sublease; provided, however, Lessor shall not be liable
      for any prepaid rents or security deposit paid by such sublessee to such
      sublessor or for any prior Defaults or Breaches of such sublessor.

     

    (c) Any
      matter requiring the consent of the sublessor under a sublease shall also
      require the consent of Lessor.

     

    (d) No
      sublessee shall further assign or sublet all or any part of the Premises without
      Lessor’s prior written consent.

     

    (e) Lessor
      shall deliver a copy of any notice of Default or Breach by Lessee to the
      sublessee, who shall have the right to cure the Default of Lessee within the
      grace period, if any, specified in such notice. The sublessee shall have a
      right
      of reimbursement and offset from and against Lessee for any such Defaults cured
      by the sublessee.

     

    13. Default;
      Breach; Remedies.

     

    13.1 Default;Breach.
      A “Default” is defined as a failure by the Lessee to comply with or perform any
      of the terms, covenants, conditions or rules under this Lease. A “Breach” is
      defined as the occurrence of one or more of the following Defaults, and the
      failure of Lessee to cure such Default within any applicable grace
      period:

     

    (a) The
      abandonment of the Premises; or the vacating of the Premises without providing
      a
      commercially reasonable level of security, or where the coverage of the property
      insurance described in Paragraph 8.3 is jeopardized as a result thereof, or
      without providing reasonable assurances to minimize potential
      vandalism.

     

    (b) The
      failure of Lessee to make any payment of Rent or any Security Deposit required
      to be made by Lessee hereunder, whether to Lessor or to a third party, when
      due,
      to provide reasonable evidence of insurance or surety bond, or to fulfill any
      obligation under this Lease which endangers or
      threatens life or property, where such failure continues for a period of
three
      (3)
      five (5)
      business days following written notice to Lessee.

     

    (c) The
      failure by Lessee to provide (i) reasonable written evidence of compliance
      with
      Applicable Requirements, (ii) the service contracts, (iii) the rescission of
      an
      unauthorized assignment or subletting, (iv) a Estoppel Certificate, (v) a
      requested subordination, (vi) evidence concerning any guaranty and/or Guarantor,
      (vii) any document requested under Paragraph 42 (easements), or (viii) any
      other
      documentation or information which Lessor may reasonably require of Lessee
      under
      the terms of this Lease, where any such failure continues for a period of ten
      (10) days following written notice to Lessee.

     

    (d) A
      Default
      by Lessee as to the terms, covenants, conditions or provisions of this Lease,
      or
      of the rules adopted under Paragraph 40 hereof, other than those described
      in
      subparagraphs 13.1(a), (b) or (c), above, where such Default continues for
      a
      period of thirty (30) days after written notice; provided, however, that if
      the
      nature of Lessee’s Default is such that more than thirty (30) days are
      reasonably required for its cure, then it shall not be deemed to be a Breach
      if
      Lessee commences such cure within said thirty (30) day period and thereafter
      diligently prosecutes such cure to completion.

     

    (e) The
      occurrence of any of the following events: (i) the making of any general
      arrangement or assignment for the benefit of creditors; (ii) becoming a “debtor”
as defined in 11 U.S.C. § 101 or any successor statute thereto (unless, in the
      case of a petition filed against Lessee, the same is dismissed within sixty
      (60)
      days); (iii) the appointment of a trustee or receiver to take possession of
      substantially all of Lessee’s assets located at the Premises or of Lessee’s
      interest in this Lease, where possession is not restored to Lessee within thirty
      (30) days; or (iv) the attachment, execution or other Judicial seizure of
      substantially all of Lessee’s assets located at the Premises or of Lessee’s
      interest in this Lease, where such seizure is not discharged within thirty
      (30)
      days; provided, however, in the event that any provision of this subparagraph
      13.1 (e) is contrary to any applicable law, such provision shall be of no force
      or effect, and not affect the validity of the remaining provisions.

     

    (f) The
      discovery that any financial statement of Lessee or of any Guarantor given
      to
      Lessor was materially false.

     

    (g) If
      the
      performance of Lessee’s obligations under this Lease is guaranteed: (i) the
      death of a Guarantor; (ii) the termination of a Guarantor’s liability with
      respect to this Lease other than in accordance with the terms of such guaranty;
      (iii) a Guarantor’s becoming insolvent or the subject of a bankruptcy filing;
      (iv) a Guarantor’s refusal to honor the guaranty; or (v) a Guarantor’s breach of
      its guaranty obligation on an anticipatory basis, and Lessee’s failure, within
      sixty (60) days following written notice of any such event, to provide written
      alternative assurance or security, which, when coupled with the then existing
      resources of Lessee, equals or exceeds the combined financial resources of
      Lessee and the Guarantors that existed at the time of execution of this
      Lease.

    

    
      	
            	
               

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              Initials

            	
              

            
	 	 	 	 
	
              Ó1997
                - American Industrial Real Estate
                Association

            	
              REVISED

            	
            	
              FORM
                STN-6-2/97E

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    13.2 Remedies.
      If Lessee fails to perform any of its affirmative duties or
      obligations, within ten (10) days after written notice (or in case of an
      emergency, without notice), Lessor may, at its option, perform such duty or
      obligation on Lessee’s behalf, including but not limited to the obtaining of
      reasonably required bonds, insurance policies, or governmental licenses, permits
      or approvals. The costs and expenses of any such performance by Lessor shall
      be
      due and payable by Lessee upon receipt of invoice therefor. If any check given
      to Lessor by Lessee shall not be honored by the bank upon which it is drawn,
      Lessor, at its option, may require all future payments to be made by Lessee
      to
      be by cashier’s check. In the event of a Breach, Lessor may, with or without
      further notice or demand, and without limiting Lessor in the exercise of any
      right or remedy which Lessor may have by reason of such Breach:

     

    (a) Terminate
      Lessee’s right to possession of the Premises by any lawful means, in which case
      this Lease shall terminate and Lessee shall immediately surrender possession
      to
      Lessor. In such event Lessor shall be entitled to recover from Lessee: (i)
      the
      unpaid Rent which had been earned at the time of termination; (ii) the worth
      at
      the time of award of the amount by which the unpaid rent which would have been
      earned after termination until the time of award exceeds the amount of such
      rental loss that the Lessee proves could have been reasonably avoided; (iii)
      the
      worth at the time of award of the amount by which the unpaid rent for the
      balance of the term after the time of award exceeds the amount of such
      rental loss that the Lessee proves could be reasonably avoided; and (iv) any
      other amount necessary to compensate Lessor for all the detriment proximately
      caused by the Lessee’s failure to perform its obligations under this Lease or
      which in the ordinary course of things would be likely to result therefrom,
      including but not limited to the cost of recovering possession of the Promises,
      expenses of reletting, including necessary renovation and alteration of the
      Premises, reasonable attorneys’ fees, and that portion of any leasing commission
      paid by Lessor in connection with this Lease applicable to the unexpired term
      of
      this Lease. The worth at the time of award of the amount referred to in
      provision (III) of the immediately preceding sentence shall be computed by
      discounting such amount at the discount rate of the Federal Reserve Bank of
      the
      District within which the Premises are located at the time of award plus one
      percent (1%). Efforts by Lessor to mitigate damages caused by Lessee’s Breach of
      this Lease shall not waive Lessor’s right to recover damages under Paragraph 12.
      If termination of this Lease is obtained through the provisional remedy of
      unlawful detainer, Lessor shall have the right to recover in such proceeding
      any
      unpaid Rent and damages as are recoverable therein, or Lessor may reserve the
      right to recover all or any part thereof in a separate suit. If a notice and
      grace period required under Paragraph 13.1 was not previously given, a notice
      to
      pay rent or quit, or to perform or quit given to Lessee under the unlawful
      detainer statute shall also constitute the notice required by Paragraph 13.1.
      In
      such case, the applicable grace period required by Paragraph 13.1 and the
      unlawful detainer statute shall run concurrently, and the failure of Lessee
      to
      cure the Default within the greater of the two such grace periods shall
      constitute both an unlawful detainer and a Breach of this Lease entitling Lessor
      to the remedies provided for in this Lease and/or by said statute.

     

    (b) Continue
      the Lease and Lessee’s right to possession and recover the Rent as it becomes
      due, in which event Lessee may sublet or assign, subject only to reasonable
      limitations. Acts of maintenance, efforts to relet, and/or the appointment
      of a
      receiver to protect the Lessor’s interests, shall not constitute a termination
      of the Lessee’s right to possession.

     

    (c) Pursue
      any other remedy now or hereafter available under the laws or judicial decisions
      of the state wherein the Premises are located. The expiration or termination
      of
      this Lease and/or the termination of Lessee’s right to possession shall not
      relieve Lessee from liability under any indemnity provisions of this Lease
      as to
      matters occurring or accruing during the term hereof or by reason of Lessee’s
      occupancy of the Premises.

     

    13.3 Inducement
      Recapture.
      Any
      agreement for free or abated rent or other charges, or for the giving or paying
      by Lessor to or for Lessee of any cash or other bonus, inducement or
      consideration for Lessee’s entering into this Lease, all of which concessions
      are hereinafter referred to as “Inducement Provisions,” shall
      be deemed conditioned upon Lessee’s full and faithful performance of all of the
      terms, covenants and conditions of this Lease. Upon Breach of this Lease by
      Lessee, any such Inducement Provision shall automatically be deemed deleted
      from
      this Lease and of no further force or effect, and any rent, other charge, bonus,
      inducement or consideration theretofore abated, given or paid by Lessor under
      such an Inducement Provision shall be immediately due and payable by Lessee
      to
      Lessor, notwithstanding any subsequent cure of said Breach by Lessee. The
      acceptance by Lessor of Rent or the cure of the Breach which initiated the
      operation of this paragraph shall not be deemed a waiver by Lessor of the
      provisions of this paragraph unless specifically so stated in writing by Lessor
      at the time of such acceptance.

     

    13.4 Late
      Charges.
      Lessee
      hereby acknowledges that late payment by Lessee of Rent will cause Lessor to
      incur costs not contemplated by this Lease, the exact amount of which will
      be
      extremely difficult to ascertain. Such costs include, but are not limited to,
      processing and accounting charges, and late charges which may be imposed upon
      Lessor by any Lender. Accordingly, if any Rent shall not be received by Lessor
      within five (5) days after such amount shall be due, then, without any
      requirement for notice to Lessee. Lessee shall pay to Lessor a one-time late
      charge equal to ten percent (10%) of each such overdue amount. The Parties
      hereby agree that such late charge represents a fair and reasonable estimate
      of
      the costs Lessor will incur by reason of such late payment. Acceptance of such
      late charge by Lessor shall in no event constitute a waiver of Lessee’s Default
      or Breach with respect to such overdue amount, nor prevent the exercise of
      any
      of the other rights and remedies granted hereunder. In the event that a late
      charge is payable hereunder, whether or not collected, for three (3) consecutive
      installments of Base Rent, then notwithstanding any provision of this Lease
      to
      the contrary. Base Rent shall, at Lessor’s option, become due and payable
      quarterly in advance.

     

    13.5 Interest.
      Any
      monetary payment due Lessor hereunder, other than late charges, not received
      by
      Lessor, when due as to scheduled payments (such as Base Rent) or within thirty
      (30) days following the date on which it was due for non-scheduled payment,
      shall bear interest from the date when due, as to scheduled payments, or the
      thirty-first (31st) day after it was due as to non-scheduled payments. The
      Interest (“Interest”) charged shall be equal to the prime rate
      reported in the Wall Street Journal as published closest prior to the date
      when
      due plus four percent (4%), but shall not exceed the maximum rate allowed by
      law. Interest is payable in addition to the potential late charge provided
      for
      in Paragraph 13.4.

     

    13.6 Breach
      by Lessor.

     

    (a) Notice
      of Breach. Lessor shall not be deemed in breach of this Lease unless
      Lessor falls within a reasonable time to perform an obligation required to
      be
      performed by Lessor. For purposes of this Paragraph, a reasonable time shall
      in
      no event be less than thirty (30) days after receipt by Lessor, and any Lender
      whose name and address shall have been furnished Lessee in writing for such
      purpose, of written notice specifying wherein such obligation of Lessor has
      not
      been performed; provided, however, that if the nature of Lessor’s obligation is
      such that more than thirty (30) days are reasonably required for its
      performance, then Lessor shall not be in breach if performance is commenced
      within such thirty (30) day period and thereafter diligently pursued to
      completion.

     

    (b) Performance
      by Lessee on Behalf of Lessor. In the event that neither Lessor nor
      Lender cures said breach within thirty (30) days after receipt of said notice,
      or if having commenced said cure they do not diligently pursue it to completion,
      then Lessee may elect to cure said breach at Lessee’s expense and offset from
      Rent an amount equal to the greater of one month’s Base Rent or the Security
      Deposit, and to pay an excess of such expense under protest, reserving Lessee’s
      right to reimbursement from Lessor. Lessee shall document the cost of said
      cure
      and supply said documentation to Lessor.

     

    14. Condemnation.
      If the
      Premises or any portion thereof are taken under the power of eminent domain
      or
      sold under the threat of the exercise of said power (collectively
“Condemnation”), this Lease shall terminate as to the part taken as of the date
      the condemning authority takes title or possession, whichever first occurs.
      If
      more than ten percent (10%) of any building portion of the Premises, or more
      than twenty-five percent (25%) of the land area portion of the Premises not
      occupied by any building, is taken by Condemnation, Lessee may, at Lessee’s
      option, to be exercised in writing within ten (10) days after Lessor shall
      have
      given Lessee written notice of such taking (or in the absence of such notice,
      within ten (10) days after the condemning authority shall have taken possession)
      terminate this Lease as of the date the condemning authority takes such
      possession. If Lessee does not terminate this Lease in accordance with the
      foregoing, this Lease shall remain in full force and effect as to the portion
      of
      the Premises remaining, except that the Base Rent shall be reduced in proportion
      to the reduction in utility of the Premises caused by such Condemnation.
      Condemnation awards and/or payments shall be the property of Lessor, whether
      such award shall be made as compensation for diminution in value of the
      leasehold, the value of the part taken, or for severance damages; provided,
      however, that Lessee shall be entitled to any compensation for Lessee’s
      relocation expenses, loss of business goodwill and/or Trade Fixtures, without
      regard to whether or not this Lease is terminated pursuant to the provisions
      of
      this Paragraph. All Alterations and Utility Installations made to the Premises
      by Lessee, for purposes of Condemnation only, shall be considered the property
      of the Lessee and Lessee shall be entitled to any and all compensation which
      is
      payable therefor. In the event that this Lease is not terminated by reason
      of
      the Condemnation, Lessor shall repair any damage to the Premises caused by
      such
      Condemnation.

     

    15. Brokers’
      Fee.

     

    15.1 Additional
      Commission.
      In
      addition to the payments owed pursuant to Paragraph 1.10 above, and unless
      Lessor and the Brokers otherwise agree in writing, Lessor agrees that: (a)
      if
      Lessee exercises any Option, (b) if Lessee acquires any rights to the Premises
      or other premises owned
      by
      Lessor and located within the same Project, if any, within which the
      Premises is located, (c) if Lessee remains in possession of the Premises, with
      the, consent of Lessor, after the expiration of this Lease, or (d) if Base
      Rent
      is increased, whether by agreement or operation of an escalation clause herein,
      then, Lessor shall pay Brokers a fee in accordance with the schedule of said
      Brokers in effect at the time of the execution of this Lease.

    

    
      	
            	
               

              Page 8
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              Initials

            	
              

            
	 	 	 	 
	
              Ó1997
                - American Industrial Real Estate
                Association

            	
              REVISED

            	 	
              FORM
                STN-6-2/97E

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    15.2 Assumption
      of Obligations. Any
      buyer
      or transferee of Lessor’s interest in this Lease shall be deemed to have assumed
      Lessor’s obligation hereunder. Each Broker shall be a third party beneficiary of
      the provisions of Paragraphs 1.10,15, 22 and 31. If Lessor falls to pay to
      a
      Broker any amounts due as and for commissions pertaining to this Lease when
      due,
      then such amounts shall accrue interest. In addition, if Lessor falls to pay
      any
      amounts to Lessee’s Broker when due, Lessee’s Broker may send written notice to
      Lessor and Lessee of such failure and if Lessor falls to pay such amounts within
      ten (10) days after said notice, Lessee shall pay said monies to its Broker
      and
      offset such amounts against Rent. In addition, Lessee’s Broker shall be deemed
      to be a third party beneficiary of any commission agreement entered into by
      and/or between Lessor and Lessor’s Broker.

     

    15.3 Representations
      and Indemnities of Broker Relationships. Lessee
      and Lessor each represent and warrant to the other that it has had no dealings
      with any person, firm, broker
      or
      finder (other than the Brokers, if any) in connection with this Lease, and
      that
      no one other than said named Brokers is entitled to any commission or finder’s
      fee in connection herewith. Lessee and Lessor do each hereby agree to indemnify,
      protect, defend and hold the other harmless from and against liability for
      compensation or charges which may be claimed by any such unnamed broker, finder
      or other similar party by reason of any dealings or actions of the indemnifying
      Party, including any costs, expenses, and/or attorneys’ fees reasonably incurred
      with respect thereto.

     

    16. Estoppel
      Certificates.

     

    (a) Each
      Party (as “Responding
      Party”) shall
      within ten (10) days after written notice from the other Party (the “Requesting
      Party”) execute,
      acknowledge and deliver to the Requesting Party a statement in writing in form
      similar to the then most current “Estoppel
      Certificate” form
      published by the American Industrial Real Estate Association, plus such
      additional information, confirmation and/or statements as may be reasonably
      requested by the Requesting Party.

     

    (b) If
      the
      Responding Party shall fall to execute or deliver the Estoppel Certificate
      within such ten day period, the Requesting Party may execute an Estoppel
      Certificate stating that: (i) the Lease is in full force and effect without
      modification except as may be represented by the Requesting Party, (ii) there
      are no uncured defaults in the Requesting Party’s performance, and (iii) If
      Lessor is the Requesting Party, not more than one month’s Rent has been paid in
      advance. Prospective purchasers and encumbrancers may rely upon the Requesting
      Party’s Estoppel Certificate, and the Responding Party shall be estopped from
      denying the truth of the facts contained in said Certificate.

     

    (c) If
      Lessor
      desires to finance, refinance, or sell the Premises, or any part thereof, Lessee
      and all Guarantors shall deliver to any potential lender or purchaser designated
      by Lessor such financial statements as may be reasonably required by such lender
      or purchaser, including, but not limited to Lessee’s financial statements for
      the past three (3) years. All such financial statements shall be received by
      Lessor and such lender or purchaser in confidence and shall be used only for
      the
      purposes herein set forth.

     

    17. Definition
      of Lessor. The
      term“Lessor”
      as
      used
      herein shall mean the owner or owners at the time in question of the fee title
      to the Premises, or, if this is a sublease, of the Lessee’s interest in the
      prior lease. In the event of a transfer of Lessor’s title or interest in the
      Premises or this Lease, Lessor shall deliver to the transferee or assignee
      (in
      cash or by credit) any unused Security Deposit held by Lessor. Except as
      provided in Paragraph 15, upon such transfer or assignment and delivery of
      the
      Security Deposit, as aforesaid, the prior Lessor shall be relieved of all
      liability with respect to the obligations and/or covenants under this Lease
      thereafter to be performed by the Lessor. Subject to the foregoing, the
      obligations and/or covenants in this Lease to be performed by the Lessor shall
      be binding only upon the Lessor as hereinabove defined. Notwithstanding the
      above, and subject to the provisions of Paragraph 20 below, the original Lessor
      under this Lease, and all subsequent holders of the Lessor’s interest in this
      Lease shall remain liable and responsible with regard to the potential duties
      and liabilities of Lessor pertaining to Hazardous Substances as outlined in
      Paragraph 6 above.

     

    18. Severability.
      The
      invalidity of any provision of this Lease, as determined by a court of competent
      jurisdiction, shall in no way affect the validity of any other provision
      hereof.

     

    19. Days.
      Unless
      otherwise specifically indicated to the contrary, the word “days” as used in
      this Lease shall mean and refer to calendar days.

     

    20. Limitation
      on Liability. Subject
      to the provisions of Paragraph 17 above, the obligations of Lessor under this
      Lease shall not constitute personal obligations of Lessor, the individual
      partners of Lessor or its or their individual partners, directors, officers
      or
      shareholders, and Lessee shall look to the Premises, and to no other assets
      of
      Lessor, for the satisfaction of any liability of Lessor with respect to this
      Lease, and shall not seek recourse against the individual partners of Lessor,
      or
      its or their individual partners, directors, officers or shareholders, or any
      of
      their personal assets for such satisfaction.

     

    21. Time
      of Essence. Time
      is
      of the essence with respect to the performance of all obligations to be
      performed or observed by the Parties under this Lease.

     

    22. No
      Prior or Other Agreements; Broker Disclaimer. This
      Lease contains all agreements between the Parties with respect to any matter
      mentioned herein, and no other prior or contemporaneous agreement or
      understanding shall be effective. Lessor and Lessee each represents and warrants
      to the Brokers that it has made, and is relying solely upon, its own
      investigation as to the nature, quality, character and financial responsibility
      of the other Party to this Lease and as to the nature, quality and character
      of
      the Premises. Brokers have no responsibility with respect thereto or with
      respect to any default or breach hereof by either Party. The liability
      (including court costs and Attorneys’ fees), of any Broker with respect to
      negotiation, execution, delivery or performance by either Lessor or Lessee
      under
      this Lease or any amendment or modification hereto shall be limited to an amount
      up to the fee received by such Broker pursuant to this Lease; provided, however,
      that the foregoing limitation on each Broker’s liability shall not be applicable
      to any gross negligence or willful misconduct of such Broker.

     

    23. Notices.

     

    23.1 Notice
      Requirements. All
      notices required or permitted by this Lease shall be in writing and may be
      delivered in person (by hand or by courier) or may be sent by regular, certified
      or registered mail or U.S. Postal Service Express Mail, with postage prepaid,
      or
      by facsimile transmission, and shall be deemed sufficiently given if served
      in a
      manner specified in this Paragraph 23. The addresses noted adjacent to a Party’s
      signature on this Lease shall be that Party’s address for delivery or mailing of
      notices. Either Party may by written notice to the other specify a different
      address for notice, except that upon Lessee’s taking possession of the Premises,
      the Premises shall constitute Lessee’s address for notice. A copy of all notices
      to Lessor shall be concurrently transmitted to such party or parties at such
      addresses as Lessor may from time to time hereafter designate in
      writing.

     

    23.2 Date
      of Notice. Any
      notice sent by registered or certified mail, return receipt requested, shall
      be
      deemed given on the date of delivery shown on the receipt card, or if no
      delivery date is shown, the postmark thereon. If sent by regular mail the notice
      shall be deemed given forty-eight (48) hours after the same is addressed as
      required herein and mailed with postage prepaid. Notices delivered by United
      States Express Mail or overnight courier that guarantee next day delivery shall
      be deemed given twenty-four (24) hours after delivery of the same to the Postal
      Service or courier. Notices transmitted by facsimile transmission or similar
      means shall be deemed delivered upon telephone confirmation of receipt, provided
      a copy is also delivered via delivery or mail. If notice is received on a
      Saturday, Sunday or legal holiday, it shall be deemed received on the next
      business day.

     

    24. Waivers.
      No
      waiver
      by Lessor of the Default or Breach of any term, covenant or condition hereof
      by
      Lessee, shall be deemed a waiver of any other term, covenant or condition
      hereof, or of any subsequent Default or Breach by Lessee of the same or of
      any
      other term, covenant or condition hereof. Lessor’s consent to, or approval of,
      any act shall not be deemed to render unnecessary the obtaining of Lessor’s
      consent to, or approval of, any subsequent or similar act by Lessee, or be
      construed as the basis of an estoppel to enforce the provision or provisions
      of
      this Lease requiring such consent. The acceptance of Rent by Lessor shall not
      be
      a waiver of any Default or Breach by Lessee. Any payment by Lessee may be
      accepted by Lessor on account of monies or damages due Lessor, notwithstanding
      any qualifying statements or conditions made by Lessee in connection therewith,
      which such statements and/or conditions shall be of no force or effect
      whatsoever unless specifically agreed to in writing by Lessor at or before
      the
      time of deposit of such payment.

     

    25. Recording.
      Either
      Lessor or Lessee shall, upon request of the other, execute, acknowledge and
      deliver to the other a short form memorandum of this Lease for recording
      purposes. The Party requesting recordation shall be responsible for payment
      of
      any fees applicable thereto.

     

    26. No
      Right To
      Holdover.
      Lessee
      has no right to retain possession of the Premises or any part thereof beyond
      the
      expiration or termination of this Lease. In the event that Lessee holds over,
      then the Base Rent shall be increased to one hundred fifty percent (150%) of
      the
      Base Rent applicable during the month immediately preceding the expiration
      or
      termination. Nothing contained herein shall be construed as consent by Lessor
      to
      any holding over by Lessee.

     

    27. Cumulative
      Remedies. No
      remedy
      or election hereunder shall be deemed exclusive but shall, wherever possible,
      be
      cumulative with all other remedies at law or in equity.

     

    28. Covenants
      and Conditions; Construction of Agreement. All
      provisions of this Lease to be observed or performed by Lessee are both
      covenants and conditions. In construing this
      Lease,
      all headings and titles are for the convenience of the Parties only and shall
      not be considered a part of this Lease. Whenever required by the context, the
      singular shall include the plural and vice versa. This Lease shall not be
      construed as if prepared by one of the Parties, but rather according to its
      fair
      meaning as a whole, as If both Parties had prepared it.

     

    29. Binding
      Effect; Choice of Law. This
      Lease shall be binding upon the parties, their personal representatives,
      successors and assigns and be “governed
      by the laws of the State in which the Premises are located. Any litigation
      between the Parties hereto concerning this Lease shall be initiated in the
      county in which the Premises are located.

     

    
      	 	
              Page
                9 of 12

            	
              Initials

            	
              

            
	 	 	 	 
	
              Ó1997
                - American Industrial Real Estate Association

            	
              REVISED

            	 	
              FORM
                STN-6-2/97E

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    30. Subordination;
      Attornment; Non-Disturbance.

     

    30.1 Subordination.
      This
      Lease and any Option granted hereby shall be subject and subordinate to any
      ground lease, mortgage, deed of trust, or other hypothecation or security device
      (collectively, “Security Device”), now or hereafter placed upon
      the Premises, to any and all advances made on the security thereof, and to
      all
      renewals, modifications, and extensions thereof. Lessee agrees that the holders
      of any such Security Devices (In this Lease together referred to as “Lessor’s
      Lender”) shall have no liability or obligation to perform any of the obligations
      of Lessor under this Lease. Any Lender may elect
      to have
      this Lease and/or any Option granted hereby superior to the lien of its Security
      Device by giving written notice thereof to Lessee, whereupon this Lease and
      such
      Options shall be deemed prior to such Security Device, notwithstanding the
      relative dates of the documentation or recordation thereof.

     

    30.2 Attornment.
      Subject
      to the non-disturbance provisions of Paragraph 30.3, Lessee agrees to attorn
      to
      a Lender or any other party who acquires ownership of the Premises by reason
      of
      a foreclosure of a Security Device, and that in the event of such foreclosure,
      such new owner shall not: (i) be liable for any act or omission of any prior
      lessor or with respect to events occurring prior to acquisition of ownership;
      (ii) be subject to any offsets or defenses which Lessee might have against
      any
      prior lessor; or (iii) be bound by prepayment of more than one (1) month’s
      rent.

     

    30.3 Non-Disturbance.
      With
      respect to Security Devices entered into by Lessor after the execution of this
      Lease, Lessee’s subordination of this Lease shall be subject to receiving a
      commercially reasonable non-disturbance agreement (a “Non-Disturbance
      Agreement”) from the Lender which Non-Disturbance Agreement provides
      that Lessee’s possession of the Premises, and this Lease, including any options
      to extend the term hereof, will not be disturbed so long as Lessee is not in
      Breach hereof and attoms to the record owner of the Premises. Further, within
      sixty (60) days after the execution of this Lease, Lessor shall use its
      commercially reasonable efforts to obtain a Non-Disturbance Agreement from
      the
      holder of any pre-existing Security Device which is secured by the Premises.
      In
      the event that Lessor is unable to provide the Non-Disturbance Agreement within
      said sixty (60) days, then Lessee may, at Lessee’s option, directly contact
      Lessor’s lender and attempt to negotiate for the execution and delivery of a
      Non-Disturbance Agreement.

     

    30.4 Self-Executing.
      The
      agreements contained in this Paragraph 30 shall be effective without the
      execution of any further documents; provided, however, that, upon written
      request from Lessor or a Lender in connection with a sale, financing or
      refinancing of the Premises, Lessee and Lessor shall execute such further
      writings as may be reasonably required to separately document any subordination,
      attornment and/or Non-Disturbance Agreement provided for
      herein.

     

    31. Attorneys’
      Fees. If
      any
      Party or Broker brings an action or proceeding involving the Premises to enforce
      the terms hereof or to declare rights hereunder, the Prevailing Party (as
      hereafter defined) in any such proceeding, action, or appeal thereon, shall
      be
      entitled to reasonable attorneys’ fees. Such fees may be awarded in the same
      suit or recovered in a separate suit, whether or not such action or proceeding
      is pursued to decision or Judgment. The term, “Prevailing
      Party” shall include, without limitation, a Party or Broker who
      substantially obtains or defeats the relief sought, as the case may be, whether
      by compromise, settlement, Judgment, or the abandonment by the other Party
      or
      Broker of its claim or defense. The attorneys’ fees award shall not be computed
      in accordance with any court fee schedule, but shall be such as to fully
      reimburse all attorneys’ fees reasonably incurred. In addition, Lessor shall be
      entitled to attorneys’ fees, costs and expenses incurred in the preparation and
      service of notices of Default and consultations in connection therewith, whether
      or not a legal action is subsequently commenced in connection with such Default
      or resulting Breach.

     

    32. Lessor’s
      Access; Showing
      Premises; Repairs. Lessor and Lessor’s agents shall have the right to
      enter the Premises at any time, in the case of an emergency, and otherwise
      at
      reasonable times for the purpose of showing the same to prospective purchasers,
      lenders, or lessees, and making such alterations, repairs, improvements or
      additions to the Premises as Lessor may deem necessary. All such activities
      shall be without abatement of rent or liability to Lessee. Lessor may at any
      time place on the Premises any ordinary “For Sale” signs and Lessor may during
      the last six (6) months of the term hereof place on the Premises any ordinary
      “For Lease” signs. Lessee may at any time place on or about the
      Premises any ordinary “For Sublease” sign. 

     

    33. Auctions.
      Lessee
      shall not conduct, nor permit to be conducted, any auction upon the Premises
      without Lessor’s prior written consent. Lessor shall not be obligated to
      exercise any standard of reasonableness in determining whether to permit an
      auction.

     

    34. Signs.
      Except
      for ordinary “For Sublease” signs, Lessee shall not place any sign upon the
      Premises without Lessor’s prior written consent. All signs must comply with all
      Applicable Requirements.

     

    35. Termination;
      Merger. Unless
      specifically stated otherwise in writing by Lessor, the voluntary or other
      surrender of this Lease by Lessee, the mutual termination or cancellation
      hereof, or a termination hereof by Lessor for Breach by Lessee, shall
      automatically terminate any sublease or lesser estate in the Premises; provided,
      however, that Lessor may elect to continue any one or all existing subtenancies.
      Lessor’s failure within ten (10) days following any such event to elect to the
      contrary by written notice to the holder of any such lesser interest, shall
      constitute Lessor’s election to have such event constitute the termination of
      such interest.

     

    36. Consents.
      Except
      as
      otherwise provided herein, wherever in this Lease the consent of a Party is
      required to an act by or for the other Party, such consent shall not be
      unreasonably withheld or delayed. Lessor’s actual reasonable costs and expenses
      (Including, but not limited to, architects’, attorneys’, engineers’ and other
      consultants’ fees) incurred in the consideration of, or response to, a request
      by Lessee for any Lessor consent, including, but not limited to, consents to
      an
      assignment, a subletting or the presence or use of a Hazardous Substance, shall
      be paid by Lessee upon receipt of an invoice and supporting documentation
      therefor. Lessor’s consent to any act, assignment or subletting shall not
      constitute an acknowledgment that no Default or Breach by Lessee of this Lease
      exists, nor shall such consent be deemed a waiver of any then existing Default
      or Breach, except as may be otherwise specifically stated in writing by Lessor
      at the time of such consent. The failure to specify herein any particular
      condition to Lessor’s consent shall not preclude the imposition by Lessor at the
      time of consent of such further or other conditions as are then reasonable
      with
      reference to the particular matter for which consent is being given. In the
      event that either Party disagrees with any determination made by the other
      hereunder and reasonably requests the reasons for such determination, the
      determining party shall furnish its reasons in writing and in reasonable detail
      within ten (10) business days following such request.

     

    37. Guarantor.

     

    37.1 Execution.
      The
      Guarantors, If any, shall each execute a guaranty in the form most recently
      published by the American Industrial Real Estate Association, and each such
      Guarantor shall have the same obligations as Lessee under this
      Lease.

     

    37.2 Default.
      It
      shall
      constitute a Default of the Lessee if any Guarantor falls or refuses, upon
      request to provide: (a) evidence of the execution of the guaranty, including
      the
      authority of the party signing on Guarantor’s behalf to obligate Guarantor, and
      in the case of a corporate Guarantor, a certified copy of a resolution of its
      board of directors authorizing the making of such guaranty, (b) current
      financial statements, (c) a Tenancy Statement, or (d) written confirmation
      that
      the guaranty is still in effect.

     

    38. Quiet
      Possession. Subject to payment by Lessee of the Rent and performance of
      all of the covenants, conditions and provisions on Lessee’s part to be observed
      and performed under this Lease, Lessee shall have quiet possession and quiet
      enjoyment of the Premises during the term hereof.

     

    39. Options.

     

    39.1 Definition.
      “Option” shall
      mean: (a) the right to extend the term of or renew this Lease or to extend
      or
      renew any lease that Lessee has on other property of Lessor; (b) the right
      of
      first refusal or first offer to lease either the Premises or other property
      of
      Lessor; (c) the right to purchase or the right of first refusal to purchase
      the
      Premises or other property of Lessor.

     

    39.2 Options
      Personal To Original Lessee.Each
      Option granted to Lessee in this Lease is personal to the original Lessee,
      and
      cannot be assigned or exercised by anyone other than said original Lessee and
      or
      a
      successor lessee as
      a
result
      of
      merger, consolidation, or sale of all or
      substantially
      all of the assets of Lessee and
      only
      while the original Lessee is in full possession of the Premises and, if
      requested by Lessor, with Lessee certifying that Lessee has no intention of
      thereafter assigning or subletting.

     

    39.3 Multiple
      Options. In
      the
      event that Lessee has any multiple Options to extend or renew this Lease, a
      later Option cannot be exercised unless the prior Options have been validly
      exercised.

     

    39.4 Effect
      of Default on Options.

     

    (a) Lessee
      shall have no right to exercise an Option: (i) during the period commencing
      with
      the giving of any notice of Default and continuing until said Default is cured,
      (ii) during the period of time any Rent is unpaid (without regard to whether
      notice thereof is given Lessee), (iii) during the time Lessee is in Breach
      of
      this Lease, or (iv) in the event that Lessee has been given three (3) or more
      notices of separate Default, whether or not the Defaults are cured, during
      the
      twelve (12) month period immediately preceding the exercise of the
      Option.

     

    (b) The
      period of time within which an Option may be exercised shall not be extended
      or
      enlarged by reason of Lessee’s inability to exercise an Option because of the
      provisions of Paragraph 39.4(a).

     

    (c) An
      Option
      shall terminate and be of no further force or effect, notwithstanding Lessee’s
      due and timely exercise of the Option, if, after such exercise and prior to
      the
      commencement of the extended term, (i) Lessee falls to pay Rent for a period
      of
      thirty (30) days after such Rent becomes due (without any necessity of Lessor
      to
      give notice thereof), (ii) Lessor gives to Lessee three (3) or more notices
      of
      separate Default during any twelve (12) month period, whether or not the
      Defaults are cured, or (iii) If Lessee commits a Breach of this
      Lease.

    

    
      	 	
              Page
                10 of 12

            	
              Initials

            	
              

            
	 	 	 	 
	
              Ó1997
                - American Industrial Real Estate Association

            	
              REVISED

            	 	
              FORM
                STN-6-2/97E

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      40. Multiple
        Buildings.
        If the
        Premises are a part of a group of buildings controlled by Lessor, Lessee
        agrees
        that it will observe all reasonable rules and regulations which Lessor may
        make
        from time to time for the management, safety, and care of said properties,
        including the care and cleanliness of the grounds and including the parking,
        loading and unloading of vehicles, and that Lessee will pay its fair share
        of
        common expenses incurred in connection therewith.

       

      41. Security
        Measures.
        Lessee
        hereby acknowledges that the rental payable to Lessor hereunder does not
        include
        the cost of guard service or other security measures, and that Lessor shall
        have
        no obligation whatsoever to provide same. Lessee assumes all responsibility
        for
        the protection of the Premises, Lessee, its agents and invitees and their
        property from the acts of third parties.

       

      42. Reservations.
        Lessor
        reserves to itself the right, from time to time, to grant, without the consent
        or joinder of Lessee, such easements, rights and dedications that Lessor
        deems
        necessary, and to cause the recordation of parcel maps and restrictions,
        so long
        as such easements, rights, dedications, maps and restrictions do not
        unreasonably interfere with the use of the Premises by Lessee. Lessee agrees
        to
        sign any documents reasonably requested by Lessor to effectuate any such
        easement rights, dedication, map or restrictions.

       

      43. Performance
        Under Protest.
        If at
        any time a dispute shell arise as to any amount or sum of money to be paid
        by
        one Party to the other under the provisions hereof, the Party against whom
        the
        obligation to pay the money is asserted shall have the right to make payment
        “under protest” and such payment shall not be regarded as a voluntary payment
        and there shall survive the right on the part of said Party to institute
        suit
        for recovery of such sum. If it shall be adjudged that there was no legal
        obligation on the part of said Party to pay such sum or any part thereof,
        said
        Party shall be entitled to recover such sum or so much thereof as it was
        not
        legally required to pay.

       

      44. Authority.
        If
        either Party hereto is a corporation, trust, limited liability company,
        partnership, or similar entity, each individual executing this Lease on behalf
        of such entity represents and warrants that he or she is duly authorized
        to
        execute and deliver this Lease on its behalf. Each Party shall, within thirty
        (30) days after request, deliver to the other Party satisfactory evidence
        of
        such authority.

       

      45. Conflict.
        Any
        conflict between the printed provisions of this Lease and the typewritten
        or
        handwritten provisions shall be controlled by the typewritten or handwritten
        provisions.

       

      46. Offer.
        Preparation of this Lease by either Party or their agent and submission of
        same
        to the other Party shall not be deemed an offer to lease to the other Party.
        This Lease is not intended to be binding until executed and delivered by
        all
        Parties hereto.

       

      47. Amendments.
        This
        Lease may be modified only in writing, signed by the Parties in interest
        at the
        time of the modification. As long as they do not materially change Lessee’s
        obligations hereunder, Lessee agrees to make such reasonable non-monetary
        modifications to this Lease as may be reasonably required by a Lender in
        connection with the obtaining of normal financing or refinancing of the
        Premises.

       

      48. Multiple
        Parties.
        If more
        than one person or entity is named herein as either Lessor or Lessee, such
        multiple Parties shall have Joint and several responsibility to comply with
        the
        terms of this Lease.

       

      49. Mediation
        and Arbitration of Disputes.
        An
        Addendum requiring the Mediation and/or the Arbitration of all disputes between
        the Parties and/or Brokers arising out of this Lease o
        is
þ
        is not
        attached to this Lease.

       

      LESSOR
        AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND
        PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR
        INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT
        THE
        TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE
        AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO
        THE
        PREMISES.

       

      
        	
                ATTENTION:
                  NO
                  REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL
                  REAL
                  ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL SUFFICIENCY,
                  LEGAL
                  EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO
                  WHICH IT
                  RELATES. THE PARTIES ARE URGED TO:

                 

                1.
                  SEEK ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF
                  THIS LEASE.
                  

                2.
                  RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION
                  OF
                  THE PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED
                  TO: THE
                  POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES,
                  THE
                  STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS,
                  AND
                  THE SUITABILITY OF THE PREMISES FOR LESSEE’S INTENDED
                  USE.

                 

                WARNING:
                  IF
                  THE PREMISES IS LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN
                  PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE
                  LAWS OF
                  THE STATE IN WHICH THE PREMISES IS
                  LOCATED.

              

      

      
      

       

      The
        parties hereto have executed this Lease at the place and on the dates specified
        above their respective signatures.

       

      
        	
                Executed
                  at: Los
                  Angeles, California

              	 	
                Executed
                  at: Los
                  Angeles, California

              
	
                On:
                  ________________________________________________

              	 	
                On:
                  5/2/01

              
	 	 	
                 

              
	
                By
                  LESSOR:

              	 	
                By
                  LESSEE:

              
	
                World
                  Oil Corp.

              	 	
                
                  Quintessence
                    Photonics Corporation, a

                

              
	
                 

              	 	Delaware
                Corporation
	 	 	 
	 	 	 
	
                By: 
                  

              	 	
                By: 
                  

              
	
                
                  

                

              	 	
                
                  

                

              
	
                Name
                  Printed: Steven Roth

              	 	
                Name
                  Printed: Jeffrey S. Ungar

              
	
                Title:
                  Executive Vice President

              	 	
                Title:
                  President

              
	 	 	 
	 	 	 
	
                By:
                  

              	 	
                By:
                  

              
	
                
                  

                

              	 	
                
                  

                

              
	
                Name
                  Printed : _____________________________

              	 	
                Name
                  Printed: George Lintz

              
	
                Title:
                  ____________________________________

              	 	
                Title:
                  CFO

              
	
                Address:
                  9302 S. Garfield Ave., Southgate,
                  CA                              
                  

              	 	
                Address:
                  __________________________________

              
	
                90280

              	 	
                                
                  __________________________________

              

      

       

      
        	 	
                Page
                  11 of 12

              	
                Initials

              	
                

              
	 	 	 	 
	
                Ó1997
                  - American Industrial Real Estate Association

              	
                REVISED

              	 	
                FORM
                  STN-6-2/97E

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                Telephone
                  : (562) 928-0100

              	 	
                Telephone
                  : (___) _______________________________

              
	
                Facsimile:
                  (562) 928-3234

              	 	
                Facsimile:
                  (___) _______________________________

              
	
                Federal
                  ID No: ____________________________________

              	 	
                Federal
                  ID No: 95-4833487

              

      

      

      NOTE: 
         These
        forms are often modified to meet the changing requirements of law and industry
        needs. Always write or call to make sure you
        are
        utilizing the most current form: AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION,
        700 So. Flower Street, Suite 600, Los
        Angeles, California 90017. (213) 687-8777. Fax No. (213) 687-8616

      

      
        	 	
                Page
                  12 of 12

              	
                 

              	
                

              
	 	 	 	 
	
                Ó1997
                  - American Industrial Real Estate Association

              	
                REVISED

              	 	
                FORM
                  STN-6-2/97E

              

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

    

    
      
        

        RENT
          ADJUSTMENT(S)

        STANDARD
          LEASE ADDENDUM

        
          

          
            	 	
                    Dated   

                  	
                    April
                      30, 2001

                  
	 	
                    By
                      and Between (Lessor)

                  	
                    World Oil
                      Corp.

                  
	 	 	
                     

                  
	 	 	 
	 	
                                                          
                      (Lessee)

                  	
                    Quintessence
                      Photonics Corporation

                  
	 	 	
                     

                  
	 	 	 
	 	
                    Address
                      Of Premises:

                  	
                    15632
                      Roxford Street, Sylmar, California

                  
	 	 	
                     

                  

          

           

          Paragraph
            50   

        

        
           

          A.         RENT
            ADJUSTMENTS:

        

        
          
            
              
                 

                The
                  monthly rent for each month of the adjustment period(s) specified
                  below shall be
                  increased using the method(s) indicated below:

                 

                (Check
                  Method(s) to be Used and Fill in Appropriately)

                 

                o I.  
                   Cost of Living Adjustment(s)
                  (COLA)

              

            

          

        

        

          
            	
                    a.
                      On (Fill In COLA
                      Dates);_____________________________________________________________________________________________

                     

                    _________________________________________________________________________________________________________________________________________________________________

                     tho
                      Base Rent shall be adjusted by tho change, If any, from tho
                      Base Month
                      specified below, in the Consumer Price Index of the Bureau
                      of Labor
                      Statistics of  the U.S. Department of Labor for (select one): o CP1
                      W (Urban
                      Wage Earners and Clerical Workers) or o CPI U (AII Urban
                      -Consumers),
                      for (Fill in Urban Area):
                      ________________________________________________________________________

                  

          

        

      

    

    All
      Items (1982-19841 = 100), herein referred to as “CPI”.

     

    
      
        	
                
                  b.—The
                    monthly rent payable in accordance with paragraph A.I.a.of this
                    Addendum
                    shall-be calculated as follows: the Base Rent set forth in paragraph-1.5
                    of
                    the attached
                    Lease, shall be multiplied by a fraction the numerator of
                    which
                    shall bo the
                    CPI
                    of the calendar
                    month 2 months prior
                    to
                    the months(s)
                    specified
                    in
                    paragraph A I a above during which the adjustment is to take
                    effect, and
                    the denominator of which shall be the CPI of the calender month
                    which is 2 months prior to (select one): o-the
                    first month of the term of this Lease as set forth in paragraph
                    1,3
                    (“Base
                    Month”) or (fill in Other “Base
                    Month”): __________________________. 
                    The
                    sum so calculated shall constitute the new monthly rent hereunder,
                    but in
                    no
                    event,
                    shall any such-new monthly rent be less than the rent payable
                    for the
                    month immediately preceding the rent
                    adjustment.

                

              

      

    

     

    
      
        c.—In
          the
          event the compilation and/or publication of the CPI
          shall
          be
          transferred to any other governmental department or bureau or agency or
          shall be
          discontinued, then the index most nearly the same as the CPI shall be used
          to
          make such calculation. In the event that the Parties cannot agree on such
          alternative index, then the matter shall be submitted for decision to the
          American Arbitration Association in accordance with the then rules of said
          Association
          and the decision of the arbitrators shall be binding-upon the parties.
          The cost
          of said Arbitration shall be paid equally by the
          parties.

      

      
         

        o
          II.—Market
          Rental
          Value
          Adjustment(s)
          (MRV) 

         

        
          	
                  a.
                    On
                    (Fill
                    In
                    MRV Adjustment Date(s): ______________________________________________________________________________________

                  ___________________________________________________________________________________________________________________________________________

                  the
                    Base Rent
                    shall be adjusted to the “Market Rental Value” of the property as
                    follows:

                

        

      

    

     

    
      1)
        Four
        months prior to each Market
        Rental Value Adjustment Date described above, the Parties shall attempt to
        agree
        upon what the new MRV will be on the adjustment date. If agreement cannot
        be
        reached within thirty days, then;

       

      (a)
        Lessor
        and
        Lessee
        shall
        immediately
        appoint
        a
        mutually acceptable appraiser
        or
        broker
        to
        establish
        the new
        MRV
        within
        the
        next
        30
        days.
        Any
        associated
        costs
        will
        be
        split
        equally
        between
        the
        Parties,
        or

      
         

        (b)
          Both
          Lessor
          and
          Lessee
          shall
          each
          immediately
          make
          a
          reasonable
          determination
          of
          the
          MRV
          and
          submit
          such
          determination,
          in
          writing,
          to
          arbitration
          in
          accordance with tho following
          provisions:

        
           

          (i)  Within
            15
            days
            thereafter,
            Lessor and Lessee shall each select an o appraiser
            or o broker
            (“Consultant”
Check one) of their choice to act as an arbitrator. The two arbitrators
            so
            appointed shall immediately select a third mutually acceptable Consultant
            to act
            as a third arbitrator.

           

          (ii)
            The
            3 arbitrators shall within 30 days of the appointment of the third arbitrator
            reach a decision as to what the actual MRV for the Promises is, and whether
            Lessor’s or Lessee’s submitted MRV
            is
the
            closest thereto. The
            decision of a majority of the arbitrators shall be binding on the Parties.
            The
            submitted MRV which is determined to be the closest to the actual MRV
            shall
            thereafter be used by the Parties.

           

          (iii)
            If either of the Parties falls to appoint an arbitrator within the specified
            15
            days, the arbitrator timely appointed by one of them shall reach a decision
            on
            his or her own, and said decision shall be binding on the
            Parties.

           

          (iv)
            The
            entire
            cost of such
            arbitration-shall
            be
            paid
            by the
            party
            whose
            submitted
            MRV
            is
not
            selected, i.e.
            the
            one
            that
            is
            NOT
            the
closest
            to the actual MRV,
            

           

          2)
            Notwithstanding the foregoing, the new MRV shall not be less than the
            rent
            payable for the month immediately preceding the rent
            adjustment.

        

        
          

          
            	
                    Initials: 
                      ____________________

                  
	           ____________________

          

           

          
            	 	
                    RENT
                      ADJUSTMENT(S)
Page 1 of 2

                  	
                    Initials:

                  	
                    

                  
	 	 	 	 
	
                    ©2000
                      - American Industrial Real Estate Association

                  	
                    REVISED

                  	 	
                    FORM
                      RA-3-8/00E

                  

          

           

        

        
          
          

          
            

          

        

        
          
          

        

        
           

          b.
            Upon
            the
            establishment of each New Market Rental Value;

           

          1)
            the new MRV will become the new “Base Rent” for the purpose of calculating any
            further Adjustments, and

           

          2)
            the first month of each Market Rental Value term shall become the new
“Base
            Month” for the purpose of calculating any further
            Adjustments.

           

          þ   
            III.  Fixed Rental Adjustment(s) (FRA)

           

          The
            Base
            Rent shall be increased to the following amounts on the dates set forth
            below:

           

          
            	
                    On
                      (Fill in FRA Adjustment Date(s)):

                  	 	
                    The
                      New Base Rent shall be:

                  
	 	 	 
	
                    June
                      1,
                      2002

                  	
                  	 	
                    $23,256.58

                  	
                  
	
                    June
                      1,
                      2003

                  	
                  	 	
                    $23,954.27

                  	
                  
	
                    June
                      1,
                      2004

                  	
                  	 	
                    $24,672.90

                  	
                  
	
                    June
                      1,
                      2005

                  	
                  	 	
                    $25,413.09

                  	
                  

          

        

      

    

     

    
      B.      
        NOTICE:

       

      Unless
        specified otherwise herein, notice of any such adjustments, other than Fixed
        Rental Adjustments, shall be made as specified in paragraph 23 of the
        Lease.

       

      C.       
        BROKER’S
        FEE:

       

      The
        Brokers shall be paid a Brokerage Fee for each adjustment specified above
        in
        accordance with paragraph 15 of the Lease.

       

      
        NOTE:
          These forms are often modified to meet changing requirements of law and
          needs of
          the Industry. Always write or call to make sure you are utilizing the most
          current form: AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION, 700 S. Flower
          Street,
          Suite 600, Los Angeles, Calif. 90017

         

        
          
            
              	
                      Initials: 
                        ____________________

                    
	           ____________________

            

             

            
              	 	
                      RENT
                        ADJUSTMENT(S)
Page 2 of 2

                    	
                      Initials:

                    	
                      

                    
	 	 	 	 
	
                      ©2000
                        - American Industrial Real Estate Association

                    	
                      REVISED

                    	 	
                      FORM
                        RA-3-8/00E

                    

            

             

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

          

        

      

    

    

    

    OPTION(S)
      TO EXTEND

    STANDARD
      LEASE ADDENDUM

    

    
      	 	
              Dated   

            	
              April
                30, 2001

            
	 	 	 
	 	
              By
                and Between (Lessor)

            	
              World
                Oil Corp.

            
	 	 	
               

            
	 	 	 
	 	
              (Lessee)

            	
              Quintessence
                Photonics Corporation

            
	 	 	
               

            
	 	 	 
	 	
              Address
                of Premises:

            	
              15632
                Roxford Street, Sylmar, California

            
	 	 	
               

            

    

     

    Paragraph
      51   

     

    A. OPTION(S)
      TO EXTEND:

     

    Lessor
      hereby grants to Lessee the option to extend the term of this Lease for
two
      (2) additional
      sixty
      (60)  month
      period(s) commencing when the prior term expires upon each and all of the
      following terms and conditions:

     

    (i) In
      order
      to exercise an option to extend. Lessee must give written notice of such
      election to Lessor and Lessor must receive the same at least 6 but
      not
      more than 9  months
      prior to the date that the option period would commence, time being of the
      essence. If proper notification of the exercise
      of an option is not given and/or received, such option shall automatically
      expire. Options (if there are more than one) may only be exercised consecutively.

     

    (ii) The
      provisions of paragraph 39, including those relating to Lessee’s Default set
      forth in paragraph 39.4 of this Lease, are conditions of this Option.

     

    (iii) Except
      for the provisions of this Lease granting an option or options to extend the
      term, all of the terms and conditions of this Lease except where
      specifically modified by this option shall apply.

     

    (iv)
      This
      Option is personal to the original Lessee, or
      a
successor
      lessee as a
      result
      of
      a merger, consolidation, or
      sale
      of
      all or substantially
      all of the assets of Lessee and cannot be assigned or exercised by anyone
      other than said original Lessee or
      a
successor
      lessee as
      a
result
      of
      a merger, consolidation, or
      sale
      of all or substantially all of the assets of Lessee and only while the
      original Lessee or a successor lessee
      as
      a result of a merger, consolidation, or sale of all or
      substantially
      all of the assets of Lessee is in full possession of the Premises and
without
      the intention of thereafter assigning or subletting.

     

    (v)
      The
      monthly rent for each month of the option period shall be calculated as follows,
      using the method(s) indicated below: (Check
      Method (s) to be Used and Fill in Appropriately)

    

    
      	o  	
              I. Cost
                of Living Adjustment(s)
                (COLA)

            

    

     

    a.  On
      (Fill
      in
      COLA Dates):
      _____________________________________________________________________________________________________

    ____________________________________________________________________________________________________________________________________________

    the
      Base Rent shall be adjusted by the change, if any, from the Base Month specified
      below, in the Consumer Price Index of the Bureau of Labor Statistics of the
      U.S.
      Department of Labor for (select one): o
      CPI W (Urban Wage Earners and Clerical Workers) or o
      CPI U (All Urban Consumers), for (Fill in Urban Area):

    ____________________________________________________________________________________________________________________________________________
      

    All
      items (1982-1984 - 100), herein referred to as “CPI.”

     

    b.  The
      monthly rent payable in accordance with paragraph A.I.s of this Addendum shall
      be calculated as follows: the Base rent set forth in paragraph 4.5 of the
      attached Lease, shall be multiplied by a fraction the numerator of which shall
      be the CPI if the calendar month 2 months prior to the month(s) specified in
      paragraph A.I.a. above during which the adjustment is to take effect, and the
      denominator of which shall be the CPI of the calendar month which is 2 months
      prior to (select one): o
      the first month of the term of this Lease as set forth in paragraph 1.3 (“Base
      Month”) or o
      (Fill in Other (“Base Month”): ______________________________________. The sum
      so calculated shall constitute the now monthly rent hereunder, but in no event,
      shall any such now monthly rent be less than the rent payable for the month
      immediately preceding the rent adjustment.

     

    c.  In
      the event the compilation and/or publication of the CPI shall be transferred
      to
      any other  governmental department or bureau or agency or shall be
      discontinued, then the index most nearly the same as the CPI shall be used
      to
      make such calculation. In the event that the Parties cannot agree on such
      alternative index, then the matter shall be submitted for decision to the
      American Arbitration Association. In accordance with the then rules of said
      Association and the decision of the arbitrators shall be binding upon the
      parties The cost of said Arbitration shall be paid equally by the
      Parties.

     

    þ
 II. Market
      Rental Value Adjustment(s) (MRV)

    

    
      	
              a. On
                (Fill in MRV Adjustment Date(s)) June
                1, 2006 and June 1, 2011
                ____________________________________________________________________

              ___________________________________________________________________________________________________________________________________________

              the
                Base Rent shall be adjusted to the “Market Rental Value” of the property
                as follows:

            

    

     

    1) Four
      months prior to each Market Rental Value Adjustment Date described above, the
      Parties shall attempt to agree upon what the new MRV will be on the adjustment
      date. If agreement cannot be reached, within thirty days, then:

     

    
      	
              Initials: 
                ____________________

            
	           ____________________

    

     

    
      	 	
              Page
                1 of 2

            	
              Initials:

            	
              

            
	 	 	 	 
	
              ©2000
                - American Industrial Real Estate Association

            	
              REVISED

            	 	
              FORM
                OE-3-8/00E

            

    

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (a) Lessor
      and Lessee shall immediately appoint a mutually acceptable appraiser or broker
      to establish the new MRV within the next 30 days. Any
      associated costs will be split equally between the Parties, or

     

    (b) Both
      Lessor and Lessee shall each immediately make a reasonable determination of
      the
      MRV and submit such determination, in writing, to arbitration in accordance
      with
      the following provisions:

     

    (i) Within
      15
      days thereafter, Lessor and Lessee shall each select an o appraiser or
þ
      broker
(“Consultant” - check one) of their choice
      to
      act as an arbitrator. The two arbitrators so appointed shall Immediately select
      a third mutually acceptable Consultant to act as a third
      arbitrator.

     

    (ii) The
      3
      arbitrators shall within 30 days of the appointment of the third arbitrator
      reach a decision as to what the actual MRV for the Premises is, and whether
      Lessor’s or Lessee’s submitted MRV is the closest thereto. The decision of a
      majority of the arbitrators shall be binding on the Parties.
      The submitted MRV which is determined to be the closest to the actual MRV shall
      thereafter be used by the Parties.

     

    (iii) If
      either
      of the Parties fails to appoint an arbitrator within the specified 15 days,
      the
      arbitrator timely appointed by one of them shall reach
      a
      decision on his or her own, and said decision shall be binding on the
      Parties.

     

    (iv) The
      entire cost of such arbitration shall be paid by the party whose submitted
      MRV
      is not selected, ie. the one that is NOT the closest
      to the actual MRV.

     

    2) Notwithstanding
      the foregoing, the new MRV shall not be less than the rent payable for the
      month
      immediately preceding the rent adjustment.

     

    b. Upon
      the
      establishment of each New Market Rental Value:

     

    1) the
      new
      MRV will become the new “Base Rent” for the purpose of calculating any further
      Adjustments, and

     

    2) the
      first
      month of each Market Rental Value term shall become the new “Base Month” for the
      purpose of calculating any further Adjustments.

    

    
      	
              o
                 III. Fixed
                Rental Adjustment(s) (FRA)

            	 
	 	 
	
              The
                Base shall be increased to the following amounts on the dates set
                forth
                below:

            
	 	 
	
              On
                (Fill in FRA Adjustment Date(s)):

            	
              The
                Now Base Rent shall be:

            
	
              - __________________________________

            	
              $ __________________________________

            
	
              - __________________________________

            	
              $ __________________________________

            
	
              - __________________________________

            	
              $ __________________________________

            
	
              - __________________________________

            	
              $ __________________________________

            

    

     

    B. NOTICE:

     

    Unless
      specified otherwise herein, notice of any rental adjustments, other than Fixed
      Rental Adjustments, shall be made as specified in paragraph 23 of the
      Lease.

     

    C. BROKER’S
      FEE:

     

    The
      Brokers shall be paid a Brokerage Fee for each adjustment specified above in
      accordance with paragraph 15 of the Lease.

     

    NOTE:
      These forms are often modified to meet changing requirements of law and needs
      of
      the Industry. Always write or call to make sure you are utilizing the most
      current form: AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION, 700 S. Flower Street,
      Suite 600, Lob
      Angeles,
      Calif. 90017

     

    
      
        	
                Initials:

              	
                ____________________

              
	 	
                ____________________

              

      

       

    

    
      	 	
              Page
                2 of 2

            	
              Initials

            	
              

            
	 	 	 	 
	
              ©2000
                - American Industrial Real Estate Association

            	
              REVISED

            	 	
              
                FORM
                  OE-3-8/00E

              

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ADDENDUM

     

    ADDENDUM
      TO THAT STANDARD INDUSTRIAL/COMMERCIAL SINGLE-TENANT LEASE
      WITH WORLD OIL CORP. AS “LESSOR” AND QUINTESSENCE PHOTONICS
CORP.,
      AS “LESSEE” FOR THE PREMISES COMMONLY KNOWN AS 15632
      ROXFORD STREET, SYLMAR, CALIFORNIA.

     

    52. LESSOR’S
      IMPROVEMENTS:

     

    Prior
      to
      Lease Commencement Date Lessor, at Lessor’s sole cost and expense, shall
upgrade
      the current electrical system to a 2000 amp, 277/480 volt, 3-phase
      panel.

     

    Lessor
      shall also provide Lessee with an improvement allowance for the installation
      of
lighting
      in the warehouse area. The allowance shall be in an amount not to exceed
$40,320.00
      and shall be solely used for the cost of said lighting. Lessee shall provide
      Lessor
      paid invoices for said work and Lessor shall reimburse Lessee within two (2)
      weeks of
      receipt of bills.

     

    53. LESSEE’S
      IMPROVEMENTS:

     

    Lessor
      consents to Lessee making the following improvements pursuant to Paragraph
      7.3
and
      7.4
      of the Lease at Lessee’s sole cost and expense. All such improvements shall be
done
      in
      accordance with plans and specifications approved by Lessor which shall not
      be
      unreasonably withheld or delayed.

     

    a. Construct
      approximately 1,500 square feet of additional offices adjacent to the
existing
      offices.

     

    b. Construct
      an approximately 4,000 square foot clean room.

     

    c. Construct
      approximately 800 square foot concrete block compressed gas storage room,
      either inside or outside the building, in accordance with all City and County
      applicable
      governmental regulations.

     

    d. Install
      roof mounted HVAC equipment. Said equipment will be screened from public
      view and installed in accordance with all applicable governmental requirements.

     

    e. Install
      some or all of the following equipment outside and adjacent to the building:
      liquid
      nitrogen storage tank, backup power generator, chemical safety storage
module,
      and water chiller(s) pursuant to Exhibit “B”. The final plan to be provided
to
      Lessor
      for review and approval. Said equipment shall be screened from public
view
      and
      installed in accordance with all applicable governmental
      requirements.

     

    54. COMMON
      AREA:

     

    Lessee
      may, subject to any covenants, conditions or restrictions of record
      (“CC&R’s”) and reasonable
      and non-discriminatory rules made by Lessor, use the following areas
(collectively,
      the “Common Area”) in common with Lessor and other Lessees of the Project;
      refuse facilities, landscaped areas, driveways necessary for access to the
      Premises as
      depicted on Exhibit A, the parking depicted on Exhibit A and other common
      facilities designated
      by Lessor from time to time for the common use of all Lessees of the Building
      or
      the
      Project. 

     

    a. Operating
      Expenses. Lessee
      shall pay to Lessor Lessee’s Share of the Operating Expenses
      in each calendar year.

     

    b. Definitions.

     

    
      	
            	(i)	
              “Estimated
                Expenses” for any particular year shall mean Lessor’s estimate
                of
                Operating Expenses for a calendar
                year.

            

    

     

    
      	
            	(ii)	
              “Lessee’s
                Share” shall mean twenty-four and 02/100ths percent (24.02%) which
                is the percentage based on the ratio that the square footage of the
                Building
                is estimated to bear to the aggregate square footage of all of the
                buildings
                to be developed within the Project.

            

    

    

      
        	 	 	 	
                 

                

              

      

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	
            	(iii)	
              “Operating
                Expenses” shall mean all reasonable and necessary expenses incurred by
                Lessor in the operation, maintenance, repair and management of
                the Project, the Common Area and the improvements, including, but
                not
                limited
                to (i) repair, maintenance, utility costs and landscaping of the
                Common
                Area, including, but not limited to, any and all costs of maintenance
                of common driveways, parking areas, walkways, landscaping and other
                costs
                which are allocable to the property under the terms of any CC&R’s
                affecting the property; (ii) insurance premiums for the insurance
                policies
                maintained by Lessor with respect to the Project (excluding any
                rental
                protection or business interruption insurance), including deductibles
                for
                “all-risk” policies (iii) maintenance contracts for heating, ventilation
                and air-conditioning
                systems and elevators, if any; (iv) the amortizable portion of
                the costs of capital improvements made to, or capital assets acquired
                for,
                the
                Project that, in any case, are constructed or acquired after the
                completion
                and occupancy of the respective building within the Project and
                are
                (A) designed to reduce Operating Expenses, (B) reasonably necessary
                for
                the health and safety of the occupants of the Project or (C) required
                under
                any governmental law or regulation, which such costs, or the allocable
                portion thereof attributable to the term of this Lease, shall be
                amortized
                at Lessor’s average cost of funds at the time the improvement is
                placed
                in service over the period determined by Lessor on a straight-line
                basis
                and in compliance with applicable Internal Revenue Service regulations;
                and (v) Property Taxes attributable to the Common Areas. Operating
                Expenses shall also include an administrative fee to Lessor for
                accounting
                and project management services relating to the Project in an amount
                equal to ten percent (10%) of the Operating Expenses (other than
                the
                administrative fee, property taxes and insurance premiums applicable
                to
                the Premises). Operating Expenses shall not include (w) replacement
                of or
                structural
                repairs to the roof, foundation or exterior walls of the building
                and
                other improvements; (x) the cost of repairs or maintenance attributable
                to
                the gross negligence or willful misconduct of Lessor; (y) repairs
                to the
                extent
                covered by insurance proceeds, or paid by Lessee or other third
                parties;
                or (z) alterations solely attributable to lessees of the Project
                other
                than
                Lessee.

            

    

     

    
      	
            	(iv)	
              “Operating
                Expense Adjustment” (or “Adjustment”) shall mean the difference between
                Lessee’s Share of Estimated Expenses and Lessee’s Share of Operating
                Expenses for any calendar year.

            

    

     

    
      	
            	c.	
              Payment.
                On
                or about the last month of each calendar year, or as soon thereafter
                as
                practicable. Lessor shall give Lessee notice of the Estimated Expenses
                for
                the ensuing
                calendar year. Lessee shall pay Lessee’s Share of the Estimated Expenses
                with
                installments of Base Rent in monthly installments of one-twelfth
                (1/12th)
                thereof
                on the first day of each calendar month during such year. If at any
                time
                Lessor determines that Operating Expenses are projected to vary from
                the
                then Estimated
                Expenses by more than ten percent (10%), Lessor may, by notice to
                Lessee,
                revise such Estimated Expenses, and Lessee’s monthly installments for the
                remainder
                of such year shall be adjusted so that by the end of such calendar
                year
                Lessee
                has paid to Lessor Lessee’s Share of the revised Estimated Expenses for
                such
                year.

            

    

     

    
      	
            	d.	
              Adjustment.
                After
                the end of each calendar year, Lessor shall deliver to Lessee a
                statement
                of Lessee’s Share of Operating Expenses for such calendar year,
                accompanied
                by a computation of the Adjustment. If Lessee’s payments are less
                that
                Lessee’s Share, then Lessee shall pay the difference within twenty (20)
                days after
                receipt of such statement. Lessee’s obligation to pay such amount shall
                survive
                the termination of this Lease. If Lessee’s payments exceed Lessee’s Share,
                then
                (provided that Lessee is not in default), Lessor shall credit such
                excess
                amount to
                future installments of Rent for the next calendar year (or, in the
                case of
                the last calendar
                year of the Lease term only, Lessor shall reimburse Lessee for such
                excess
                amount within twenty (20) days following expiration or other termination
                of the
                Lease). If Lessee is
                in
                default, Lessor may, but shall not be required to, credit such
                amount to Rent arrearages.

            

    

    

      
        	 	 	 	
                 

                

              

      

       

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    55.  
      Notwithstanding the provisions of Section 2.3, Lessee acknowledges that the
      Premises may not
      have
      been permitted for the Agreed Use and that Lessee shall be responsible for
      obtaining
      any and all entitlements necessary in order for Lessee to use the Premises
      for
      the Agreed
      Use and, in connection therewith, pay for any and all improvements to the
Premises
      and all fees and/or deposits with respect to the Premises that may be required
      in order
      to
      obtain all such entitlements, including sewer fees and additional parking,
      if
required.

     

    THE
      ABOVE IS HEREBY ACKNOWLEDGED AND AGREED TO:

     

    
      	LESSEE:	 	LESSOR:
	 	 	 
	By:  
              	 	By:   
              
	
              
                

              

            	 	
              
                
 

            
	
              Its:     
                President

            	 	Its:   
              Executive Vice President
	
              
                

              

            	 	
              
                
 

            
	Date:  
              5/2/01	 	Date:   5/3/01
	
              
                

              

            	 	
              
                

              

            
	
               ,
                CFO

            	 	 

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      “A”

     

    Premises
      is Building B

     

    

    

      
        	 	 	 	
                 

                

              

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      “B”

     

    Lessee’s
      Improvements Paragraph 53 e.

     

    

    

      
        	 	 	 	
                 

                

              

      

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ADDENDUM

     

    This
      Addendum dated August 22, 2005, pertains to that original Standard Multi-Tenant
      Industrial Net
      Lease
      dated April 30, 2001 (the “Lease”), by World Oil Corp. (“Lessor”), and
      Quintessence Photonics
      Corporation, a Deleware Corporation (“Lessee”), and pertains to 15632 Roxford
      Street, Sylmar,
      California.

     

    The
      Lease
      shall be amended only to reflect the following terms:

     

    1.3
      Term: The
      undersigned hereby agrees that the Lease term shall be extended from May 31,
      2006
      to
      May 31, 2016.

     

    1.5
      Base Rent and Rental Adjustments: The
      Base
      Rent effective June 1, 2006 shall be $25,413.09.
      The Base Rent shall be abated for the months of September 2005 and August
      2006.

     

    Rental
      Adjustments: The
      monthly rent shall be adjusted for each month of the adjustment period(s)
      specified below using Cost of Living Adjustment(s) (COLA) method.

     

    On
      June
      1, 2008, June 1, 2010, June 1, 2012 and June 1, 2014 the Base Rent shall be
      adjusted by the change
      from the Base Month specified below, in the Consumer Price Index of the Bureau
      of Labor Statistics
      of the U.S. Department of Labor for CPI W (Urban Wage Earners and Clerical
      Workers). All
      Items
      (1982-1984=100), herein referred to as “CPI”.

     

    The
      monthly rent payable shall be calculated as follows: the Base Rent set forth
      above in this Addendum
      shall be multiplied by a fraction, the numerator of which shall be the CPI
      of
      the calendar month
      2
      months prior to June 1, 2006 (April 2006). The sum so calculated shall
      constitute the Base Rent
      hereunder, but in no event, shall any such increase be less than three percent
      (3%) or more than six percent (6%) per
      annum.

     

    In
      the
      event the compilation and/or publication of the CPI shall be transferred to
      any
      other governmental
      department or bureau or agency or shall be discontinued, then the index most
      nearly the
      same
      as the CPI shall be used to make such calculation. In the event that the Parties
      cannot agree on
      such
      alternative index, then the matter shall be submitted for decision to the
      American Arbitration Association
      in accordance with the then rules of said Association and the decision of the
      arbitrators shall be binding upon the parties. The cost of said Arbitration
      shall be paid equally by the Parties.

     

    1.7
      Security Deposit: Lessor
      shall apply $25,413.09 of the existing Security Deposit to Base Rent
      for
      the month of November 2005. The remaining security deposit on file will be
      $42,324.51 after
      the
      credit in November 2005.

     

    51
      Options to Extend: Lessee
      shall have one (1) five-year Fair Market Value option to extend the
      Lease
      term until May 31, 2021 as per the language in Paragraph 51 of the Lease. There
      shall be no
      brokerage fee due on the exercise of the option.

     

    CONSULT
      YOUR ATTORNEY/ADVISORS —
This
      document has been prepared for approval by
      your
      attorney. No representation or recommendation is made by CB Richard Ellis,
      Inc.
      or the American
      Industrial Real Estate Association (AIR) or the agents or employees of this
      document or the
      transaction to which it relates. These are questions for your
      attorney.

     

    In
      any
      real estate transaction it is recommended that you consult with a professional,
      such as a civil engineer,
      industrial hygienist or other person with experience in evaluating the condition
      of the property,
      including the possible presence of asbestos, hazardous materials and underground
      storage tanks.

     

    In
      addition, please be advised that an Owner or Tenant of real property may be
      subject to the Americans
      with Disabilities Act (the ADA), a federal law codified at 42 USC Section 12101
      et seq. Among
      other requirements of the ADA that could apply to your property, Title III
      of
      the ADA requires
      Owners and Tenants of “public accommodations” to remove barriers to access by
      disabled persons
      and provide auxiliary aids and services for hearing, vision or speech impaired
      persons by January
      26, 1992. The regulations under Title III of the ADA are codified at 28 CFR
      Part
      36.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    CB
      Richard Ellis, Inc. recommends that you and your attorney, engineer and/or
      architect review the ADA
      and
      the regulations, and, if appropriate, your proposed lease agreement, to
      determine if this law would
      apply to you, and the nature of the requirement.

     

    THE
      ABOVE IS HEREBY ACKNOWLEDGED AND AGREED TO:

     

    
      	 	 	 
	LESSEE:	LESSOR:
	 	 
 	 
 
	By:             	By:  	
              

            
	
              
                
 

            	
              
                

              

            
	
              Date:           9/1/05

            	Date:	
              9/15/05

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