Document:

Exhibit
        10.1

       

    

    

    

    

    CONSULTING
      AGREEMENT

    POC
      #28-0145

    

    This
      Consulting Agreement (hereinafter referred to as the “Agreement”) is entered
      into on this 15th day of August, 2008 between Precision Optics Corporation,
      Inc., a Massachusetts Corporation (hereinafter referred to as "POCI") and Mr.
      Jack P. Dreimiller (hereinafter referred to as "Consultant").

    

    WHEREAS,
      POCI desires to engage the services of Consultant to serve as its Senior Vice
      President, Finance, Chief Financial Officer and Clerk as an independent
      contractor and not as an employee and Consultant has agreed to perform these
      services for POCI. 

    

    THEREFORE,
      it is agreed as follows: 

     

    
      	1.	
              Position
                and Services.
                Consultant shall serve as POCI’s Senior Vice President, Finance, Chief
                Financial Officer and Clerk on a part-time basis, for an average
                of two to
                three days per week. Consultant will report to POCI’s Chief Executive
                Officer. Consultant agrees to faithfully and to the best of his ability
                perform the duties required by this position and such additional
                duties as
                may be reasonably assigned by the Chief Executive Officer or POCI’s board
                of directors. Such duties shall include, but not be limited to, managing
                the audit of POCI’s year end financials and signing the Sarbanes-Oxley
                certification for POCI’s annual report as the principal accounting
                officer. 

            

    

    

    
      	
              2.

            	
              Period
                of Performance.
                Consultant's services shall commence on August 18, 2008 and shall
                continue
                until February 18, 2009 unless otherwise terminated according to
                the
                provisions of paragraph 4. Following February 18, 2009, this Agreement
                shall automatically continue on a month to month basis on the same
                terms
                unless terminated by either party with 30 days notice. Notwithstanding
                the
                foregoing, Consultant will begin training and transitioning into
                the
                positions described in paragraph 1 beginning August 13, 2008.
                

            

    

    

    
      	
              3.

            	
              Compensation.
                As compensation for the services provided by Consultant, POCI agrees
                to
                pay Consultant at a rate of $1,384.62 per week commencing August
                18, 2008.
                Compensation during the transition period of August 13, 2008 until
                August
                17, 2008 will be $1,384.62. Consultant will not receive any benefits
                including, but not limited to, health insurance, life insurance,
                vacation
                or sick time.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              4.

            	
              Termination.
                Either party may terminate this Agreement by providing 30 calendar
                days
                written notice to the other party. Consultant shall be paid for all
                work
                performed and accepted by POCI prior to the termination of this
                Agreement.

            

    

     

    
      	
              5.

            	
              Indemnification.
                Consultant shall be indemnified by POCI to the full extent provided
                in
                POCI’s By-laws in his role as Chief Financial Officer.

            

    

     

    
      	
              6.

            	
              Rights
                to Materials.
                The written reports and other written materials furnished by Consultant
                to
                POCI in connection with the performance of consulting services hereunder
                shall remain the exclusive property of POCI. Therefore, Consultant
                agrees
                to promptly return, following the termination of this Agreement or
                upon
                earlier request by POCI, any written materials in Consultant’s possession
                supplied by POCI in conjunction with Consultant’s services under this
                Agreement or generated by Consultant in performance of consulting
                services
                under this Agreement.

            

    

    

    
      	
              7.

            	
              Confidentiality.
                In connection with his performance of consulting services hereunder,
                Consultant will have access to confidential information, records,
                data,
                customer lists, lists of product sources, specifications, trade secrets
                and other information which is not generally available to the public
                and
                which POCI and Consultant hereby agree is proprietary information
                of POCI
                (“Confidential Information”). During and after the performance of
                consulting services hereunder, Consultant shall not, directly or
                indirectly, disclose the Confidential Information to any person or
                use any
                Confidential Information, except as is required in the course of
                performing duties under this Agreement or with the prior written
                consent
                of POCI. All Confidential Information as well as records, files,
                memoranda, reports, plans, drawings, documents, models, equipment
                and the
                like, including copies thereof, relating to POCI’s business, which
                Consultant shall prepare or use or come into contact with, shall
                be and
                remain POCI’s sole property, and upon termination of this Agreement,
                Consultant shall return all such materials to POCI as set forth in
                paragraph 6.

            

    

    

    
      	
              8.

            	
              Business
                Opportunities.
                Consultant shall not take any business opportunity Consultant learns
                about
                in the course of performing services under this Agreement unless
                first
                disclosing the business opportunity to POCI.

            

    

    

    
      	
              9.

            	
              Insider
                Trading.
                By executing this Agreement, Consultant acknowledges that he is expressly
                prohibited from purchasing or selling securities of POCI based on
                any
                material non-public information obtained during the course of performing
                consulting services for POCI. In addition, Consultant is prohibited
                from
                informing, or “tipping,” any other person about such material information.
                Consultant also agrees not to trade in the Company’s stock from the
                15th
                day of the third month in any quarter (i.e. March, June, September,
                December) until 48 hours after the financial results for the quarter
                are
                officially released.

            

    

    

    
      	
              10.

            	
              Governing
                Law.
                This Agreement shall be governed and construed in accordance with
                the laws
                of the Commonwealth of Massachusetts. Each of the parties hereto
                irrevocably submits to the exclusive jurisdiction of the courts located
                in
                Massachusetts for the purposes of any suit, action or other proceeding
                contemplated hereby or any transaction contemplated
                hereby.

            

    

    

    
      	
              11.

            	
              Arbitration.
                Any controversy or claim arising out of or relating to this Agreement,
                or
                breach thereof, shall be settled by binding arbitration in Boston,
                Massachusetts in accordance with the expedited procedures of the
                Rules of
                the American Arbitration Association, and judgment upon the award
                may be
                rendered by the arbitrator and may be entered in any court having
                jurisdiction thereof.

            

    

    

    
      	
              12.
                

            	
              Compliance
                with Other Laws and Regulations.
                Consultant agrees to comply with all applicable laws and regulations
                of
                the United States of America while performing services for
                POCI.

            

    

    

    
      	
              13.

            	
              Foreign
                Corrupt Practices Act.
                Consultant will be familiar with and comply with the provisions of
                the
                United States Foreign Corrupt Practices Act, including any amendments
                which may be effected during the term hereof. In particular, in carrying
                out services under this Agreement, Consultant will not make or offer
                to
                make the unlawful payment of money or anything else of value
                to:

            

    

    

    
      	
            	(a)	
              any
                government official of any country,

            

    

    
      	
            	(b)	
              any
                political party of any country,

            

    

    
      	
            	(c)	
              any
                candidate of any political party of any country,
                or

            

    

    
      	
            	(d)	
              any
                other person, while knowing or having reason to know, that such person
                will make an unlawful payment to a government official, a political
                party,
                or a candidate of a political party of any
                country.

            

    

     

    Any
      breach of this paragraph will result in the termination of this Agreement and
      will entitle POCI to the return of any amounts paid hereunder to
      Consultant. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      	
              14.

            	
              Complete
                Integration.
                This Agreement replaces all previous agreements between POCI and
                Consultant, if any, and the discussions relating to the subject matters
                hereof and constitutes the entire agreement between POCI and Consultant
                with respect to the subject matter of this Agreement. This Agreement
                may
                not be modified in any way by any verbal statement, representation
                or
                agreement made by any employee, officer or representative of POCI,
                or by
                any by any written agreement unless it is signed by an officer of
                POCI and
                by Consultant. 

            

    

    

    
      	
              15.

            	
              Severability.
                In the event that any provision of any paragraph of this Agreement
                shall
                be deemed to be invalid or unenforceable for any reason whatsoever,
                it is
                agreed such invalidity or unenforceability shall not affect any other
                provision of such paragraph or of this Agreement, and the remaining
                terms,
                covenants, restrictions or provisions in such paragraph and in this
                Agreement shall remain in full force and effect and any court of
                competent
                jurisdiction may so modify the objectionable provision as to make
                it
                valid, reasonable and enforceable.

            

    

    

    
      	
              16.
                

            	
              Counterparts.
                This Agreement may be executed in counterparts, and each counterpart
                shall
                have the same force and effect as an original and shall constitute
                an
                effective, binding agreement on the part of each of the
                undersigned.

            

    

    

    
      	
              17.

            	
              Notices.
                Any notice or payments given by one party to the other shall be in
                writing
                and deemed to have been properly given or paid if deposited with
                the
                United States Postal Service, registered or certified mail, addressed
                as
                below.

            

    

     

    

    IN
      WITNESS WHEREOF, the parties have executed this Agreement on the respective
      dates set forth below.

     

    
      	PRECISION OPTICAL
              CORPORATION:	CONSULTANT: Jack P.
              Dreimiller
	22 East Broadway	252 Massapoag Ave.
	Gardner, MA 01440	North Easton, MA 02356
	 	 
	By:  /s/Richard
              E. Forkey	By:  /s/Jack
              P. Dreimiller
	
              Richard
                E. Forkey

            	
              Jack
                P. Dreimiller

            
	
              Its:
                Chief Executive Officer

            	 
	 	 
	Date: August
              15, 2008	Date: August 15,
              2008DEVELOPMENT
      AND ROYALTY AGREEMENT

     

    This
      DEVELOPMENT AND ROYALTY AGREEMENT (“Agreement”)
      is
      made as of June __, 2008 (the “Effective
      Date”)
      by and
      among QPC LASERS, INC., a Nevada corporation (“QPC”),
      QUINTESSENCE PHOTONICS CORPORATION, a Delaware corporation and wholly-owned
      subsidiary of QPC (“Quintessence”),
      and,
      a [REDACTED]1 
      (“Customer”)
      (each
      a “Party”
and
      collectively, the “Parties”).
      

     

    RECITALS

     

    WHEREAS:

     

    QPC
      and
      its wholly-owned subsidiary, Quintessence, are engaged in the business of
      designing and manufacturing lasers in the visible light range for use in the
      projection and display business.

     

    Customer
      is seeking to buy such products and to benefit from the commercialization of
      such products for applications in three dimensional projection and display.
      Customer is prepared to fund a portion of the development costs of such products
      in return for certain purchase rights and royalty rights as set forth in this
      Agreement.

     

    NOW,
      THEREFORE, in consideration of the mutual terms and conditions contained herein,
      the sufficiency and adequacy of which is hereby acknowledged, the Parties agree
      as follows:

     

    AGREEMENT

     

    
      	
              1.

            	
              DEFINITIONS
                AND INTERPRETATION

            

    

     

    1.1 Definitions.
      As used
      in this Agreement, the following terms shall have the meanings set forth or
      as
      referenced below:

     

    “Affiliate”
means,
      with respect to any specified Person, any other Person which directly or
      indirectly controls, is controlled by, or is under common control with such
      Person, but only for so long as such control continues to exist. For the
      purposes of this definition, “control” (including the terms “controlled by” and
“under common control with”), with respect to the relationship between or among
      two or more Persons, shall mean the possession, directly or indirectly, of
      the
      power to direct or cause the direction of the affairs or management of a Person,
      whether through the ownership of voting securities, by agreement or
      otherwise.

     

    “Agreement”
has
      the
      meaning set forth in the preamble. 

     

    “Confidential
      Information”
has
      the
      meaning set forth in Section 10.2.

     

    
      
        
1
        NOTE:
        The Company has requested confidential treatment for the redacted information.
        A
        complete copy of this Agreement has been filed separately with the Securities
        and Exchange Commission. 

    

     

    
      
        
        

      

      
         

        
          

        

      

      
        
        

      

       

    

    “Customer
      Products”
has
      the
      meaning set forth in Section 3.2 below.

     

    “Effective
      Date”
has
      the
      meaning set forth in the preamble.

     

    “Field”
means
      the use of Products for display/projection applications in connection with
      the
      display and projection business. For the avoidance of doubt, the Field expressly
      excludes the use of Products or infrared lasers in connection with medical
      equipment or other medical applications or any military or industrial
      applications. 

     

    “Licensed
      IP”
means
      the intellectual property rights of QPC set forth in Exhibit C relating to
      the
      Products.

     

    "Net
      Revenues”
means
      the gross revenues actually received by QPC or Quintessence for sales of
      Products in the Field within the Territory, but not including separately stated
      charges for (a) sales to Customer, (b) sales and use taxes, excise taxes,
      customs duties and other similar taxes; (c) shipping and insurance charges;
      and (d) the amount of any bad debts, refunds and credits, but only to the
      extent that such bad debts, refunds and credits are actually recognized against
      such gross revenues. 

     

    “Royalty
      Term”
means
      the period commencing on the Effective Date and ending on the earlier of the
      fifth anniversary thereof or the date in which this Agreement has been
      terminated. 

     

    “Party”
and
      “Parties”
have
      the meaning set forth in the preamble.

     

    “Person”
means
      an individual, corporation, partnership, limited liability company, association,
      trust or other entity or organization, including a government or political
      subdivision or an agency or instrumentality thereof.

     

    "Products"
      means
      laser chips and modules intended for use as a light source for laser projection
      display, products and systems.

     

    "Territory"
      means
      worldwide.

     

    “Third
      Party”
means
      any Person other than QPC, QPC’s Affiliates, Customer, and Customer’s
      Affiliates.

     

    
      	
              2.

            	
              DEVELOPMENT
                PAYMENT

            

    

     

    In
      consideration for the purchase rights set forth in Article 3 of this Agreement,
      the royalty rights set forth in Article 4 of this Agreement and the right of
      participation set forth in Section 6.3 of this Agreement, Customer will make
      a
      development payment in accordance with the terms set forth in Exhibit A (the
      “Development
      Payment”).
      The
      Development Payment shall be used to fund the development of the Products.
      QPC
      shall have full control over the engineering and development process. Customer
      shall have no right to a refund of the Development Payment unless QPC notifies
      Customer that it is abandoning development of the Products.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

       

    

    
      	
              3.

            	
              PURCHASE
                RIGHTS

            

    

     

    3.1 Purchase
      Rights.
      In
      partial consideration for payment of the Development Payment set forth in
      Article 2, so long as Customer is not in material breach of this Agreement,
      during the Royalty Term, QPC hereby agrees to grant Customer the right to
      purchase units of Products directly from QPC at a price that is no less
      favorable to Customer than the price offered by QPC to any Third Party for
      similar quantities 

     

    3.2 Purchase
      Terms and License.
      QPC
      hereby grants to Customer a non-exclusive, non-transferable, non-sublicensable
      right and license to incorporate Products purchased from QPC as provided
      hereunder into Customer's own products (the resulting product a "Customer
      Product")
      and to
      sell, have sold, distribute, have distributed, market and export such Customer
      Products in the Territory (subject to the restrictions in Section 10.1). The
      license granted in this Section 3.2: (a) is not sublicensable, but includes
      the
      right of Customer to have Third Parties carry out the express rights granted
      herein on Customer's behalf; (b) does not include the right make, sell,
      distribute, market or export Products on a stand-alone basis, or otherwise
      exploit Products except as expressly authorized herein. Customer agrees that
      it
      will not use or otherwise exploit the Products in any manner except as expressly
      permitted in this Agreement and shall not manufacture, market, sell or otherwise
      distribute Customer Products in violation of any applicable laws, regulations
      or
      ordinances. Customer shall not alter or destroy any intellectual property
      markings (including without limitation trademarks) on Products or their
      packaging. Customer will indemnify, defend and hold harmless QPC, its
      Affiliates, and its and their officers, directors, agents, employees, against
      any claims, suits, losses, or damages (including reasonable attorneys' fees)
      arising out of the incorporation of Products into Customer Products, and the
      manufacture, sale, offering for sale, distribution or marketing of Customer
      Products (including, without limitation, product liability claims).

     

    
      	
              4.

            	
              ROYALTY
                PAYMENTS

            

    

     

    4.1 Royalty
      Payments.
      

     

    
      	 	
              (a)

            	
              In
                partial consideration for payment of the Development Payment set
                forth in
                Article 2, QPC shall pay Customer royalties on Net Revenues during
                the
                Royalty Term at the rates and subject to the terms and conditions
                set
                forth in Exhibit B and this Agreement (collectively, the “Royalty
                Payments”).
                

            

    

     

    
      	 	
              (b)

            	
              Any
                Royalty Payments due under this Agreement shall be payable solely
                in the
                form of shares of unregistered and restricted common stock of QPC
                (the
                “Common
                Stock”).
                For purposes of determining the number of shares of Common Stock
                issuable
                to Customer under this Article 4, the value of a share of Common
                Stock
                shall be fixed at $1.05 per share throughout the Royalty Term, subject
                to
                adjustments for stock dividends and splits as provided in Section
                4.1(d)
                below (as adjusted, the “Share
                Price”).
                The number of shares of Common Stock issuable to Customer shall be
                determined by dividing the Royalty Payment amount due and payable
                hereunder by the Share Price. QPC will not issue any fractional shares
                under this Agreement. As to any fraction of a share that Customer
                would
                otherwise be entitled to receive as a Royalty Payment, QPC shall,
                at its
                election, either pay a cash adjustment in respect of such final fraction
                in an amount equal to such fraction multiplied by the Share Price
                or round
                up to the next whole share. 

            

    

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (c)

            	
              Any
                shares of Common Stock issuable as Royalty Payments hereunder shall
                be
                issued to Customer on a quarterly basis in arrears on or prior to
                the
                thirtieth (30th)
                day following the end of the quarter in which Royalty Payments, if
                any,
                are due and payable pursuant to this Article 4; provided, however,
                that
                the first issuance of Common Stock as Royalty Payments hereunder
                shall not
                be due until the thirtieth (30th)
                day following the end of fourth quarter of 2008. Accompanying each
                issuance of shares of Common Stock hereunder, QPC will provide Customer
                a
                royalty report specifying the number of units of the Products sold
                by QPC
                during the applicable royalty period, QPC’s Net Revenues of Products for
                such period, and the royalties, if any, payable with respect to sales
                of
                the Product.

            

    

     

    
      	 	
              (d)

            	
              In
                the event QPC should at any time after the Effective Date fix a record
                date for the effectuation of a split or subdivision of the outstanding
                shares of Common Stock or the determination of holders of Common
                Stock
                entitled to receive a dividend or other distribution payable solely
                in
                additional shares of Common Stock without payment of any consideration
                by
                such holder for the additional shares of Common Stock, then, as of
                such
                record date (or the date of such dividend distribution, split or
                subdivision if no record date is fixed), the Share Price shall be
                appropriately decreased so that the number of shares of Common Stock
                issuable for payment of the Royalty Payments shall be increased in
                proportion to such increase of the aggregate of shares of Common
                Stock
                outstanding. If the number of shares of Common Stock outstanding
                at any
                time after the Effective Date is decreased by a combination of the
                outstanding shares of Common Stock, then, following the record date
                of
                such combination, the Share Price shall be appropriately increased
                so that
                the number of shares of Common Stock issuable for payment of the
                Royalty
                Payments shall be decreased in proportion to such decrease in outstanding
                shares.

            

    

     

    4.2 Taxes.
      QPC may
      withhold from any royalty or other payment to Customer under this Agreement
      any
      taxes required to be withheld by QPC under the applicable laws of the United
      States or any other country, state, territory or jurisdiction. 

     

    
      	
              5.

            	
              PRODUCT
                DEVELOPMENT

            

    

     

    5.1 Deliverable
      Items.
      QPC
      shall deliver to Customer as of the Effective Date the following “Deliverable
      Items”: (1) Demonstration in QPC’s facility of a single laser module which emits
      400 mW of Blue light, 400 mW of Green light and and 600 mW Red light; (2)
      Demonstration in QPC’s facility of three individual laser chips emitting 3 watts
      of Green light, 1 watt of Blue light and 6 watts of Red light and (3)
      Preliminary design of a module which emits 6 watts of Green, 6 watts of Blue,
      and 12 watts of Red light suitable for integrating into a three dimensional
      projection system. 

     

    5.2 Use
      of
      the Product and Deliverable Items.
      Customer
      shall not make use of the Products or Deliverable Items (or any portion thereof)
      except in strict compliance with the provisions of this Agreement. Customer
      shall not use or exploit any of the intellectual property rights relating to
      the
      Product including, without limitation, the Deliverable Items and other
      Confidential Information of QPC, in connection with the development, use,
      manufacture, sale or other distribution of any product or material.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

       

    

    5.3 Ownership.
      QPC and
      Quintessence shall retain ownership of all intellectual property rights in
      and
      to the Products and the Deliverable Items (including without limitation all
      rights under patent, copyright, trademark, and trade secrets), and nothing
      in
      this Agreement shall be construed to convey any intellectual property or other
      rights in the Products or Deliverable Items to Customer except for the express
      licenses set forth herein.

     

    
      	
              6.

            	
              ADDITIONAL
                OBLIGATIONS, COVENANTS AND
                AGREEMENTS

            

    

     

    6.1 Non-Compete
      Covenant.
      Without
      the prior written consent of QPC, which consent may be withheld in its sole
      discretion, Customer shall not, nor shall it allow any Affiliate or Third Party
      acting on behalf of or for the benefit of Customer or any of its Affiliates
      to,
      commercialize or promote a product that could reasonably be expected to compete
      with Products in the Territory during the Royalty Term. 

     

    6.2 Right
      of Participation.
      

     

    
      	 	
              (a)

            	
              Subject
                to the terms and conditions specified in this Section 6.2, in the
                event
                that QPC or Quintessence elects, in its sole discretion, to form
                a
                separate company to service and otherwise operate its laser display
                and
                projection business, then QPC or Quintessence, as applicable, hereby
                grants to Customer a right of first offer (“Right
                of First Offer”)
                to purchase up to ten percent (10%) of the equity interest in the
                separate
                company (the
                “Separate
                Company”)
                being offered upon its formation on terms and conditions that are
                identical to those offered to other Third Party investors.
                

            

    

     

    
      	 	
              (b)

            	
              If
                either QPC or Quintessence elects to form a Separate Company in accordance
                with Section 6.2(a) above, it shall give Customer written notice
                (the
                “Offer
                Notice”)
                of its intention, describing the amount and type of securities of
                the
                Separate Company to be issued, and the price and terms upon which
                QPC or
                Quintessence proposes to issue the same. Customer shall have fifteen
                (15)
                days from the date of receipt of the Offer Notice to exercise Customer’s
                Right of First Offer to purchase up to ten percent (10%) of the equity
                interest in the Separate Company for the price and upon the terms
                specified in the Offer Notice by delivering written notice (the
                “Right
                of First Offer Election Notice”)
                to QPC or Quintessence, as applicable, and stating therein the quantity
                of
                equity interest in the Separate Company to be
                purchased.

            

    

     

    
      	 	
              (c)

            	
              Settlement
                for the purchase of equity interest in the Separate Company by Customer
                pursuant to this Section 6.2 shall be made in cash within thirty (30)
                days from the Customer’s deemed date of receipt of the Offer Notice;
                provided,
                however,
                that such time period may be extended for purposes of obtaining necessary
                governmental approvals or by mutual agreement between QPC or Quintessence,
                on the one hand, and Customer, on the other. If Customer shall have
                failed
                to deliver to QPC or Quintessence, as applicable, its Right of First
                Offer
                Election Notice within the time periods described in this
                Section 6.2, Customer shall be deemed to have waived its Right of
                First Offer.

            

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (d)

            	
              Notwithstanding
                the foregoing, either QPC or Quintessence, as applicable, may in
                its sole
                discretion terminate any proposed issuance of equity interest in
                the
                Separate Company in respect of which either one of them has given
                the
                Offer Notice, at any time prior to the consummation thereof. The
                foregoing
                provision shall apply even in the event that Customer shall have
                exercised
                its Rights of First Offer hereunder; provided, however, that no equity
                interest in the Separate Company shall then have been
                issued.

            

    

     

    
      	
              7.

            	
              REPRESENTATIONS
                AND WARRANTIES

            

    

     

    7.1 Representations
      and Warranties of QPC and Quintessence.
      QPC and
      Quintessence hereby represent and warrant that:

     

    
      	 	
              (a)

            	
              QPC
                is a corporation duly organized, validly existing and in good standing
                under the laws of the state of Nevada. QPC is duly qualified as a
                foreign
                corporation in all jurisdictions in which the failure to so qualify
                would
                have a material adverse effect on QPC and any subsidiaries taken
                as a
                whole. Quintessence is a corporation duly organized, validly existing
                and
                in good standing under the laws of the state of Delaware. Quintessence
                is
                duly qualified as a foreign corporation in all jurisdictions in which
                the
                failure to so qualify would have a material adverse effect on QPC
                and any
                subsidiaries taken as a whole. 

            

    

     

    
      	 	
              (b)

            	
              This
                Agreement and the transactions contemplated hereby have been duly
                and
                validly authorized by QPC and Quintessence and constitute a valid
                and
                binding agreement of QPC and Quintessence, enforceable in accordance
                with
                their respective terms, except to the extent that (i) enforcement
                of each
                of this Agreement may be limited by bankruptcy, insolvency,
                reorganization, moratorium, fraudulent conveyance or other similar
                laws
                now or hereafter in effect relating to creditors’ rights generally, and
                (ii) general principles of equity.

            

    

     

    
      	 	
              (c)

            	
              The
                shares of Common Stock issuable under Article 4 hereof, when issued
                in
                accordance with the terms of this Agreement, will be validly issued,
                fully
                paid and nonassessable, free and clear of all liens imposed by the
                Company
                other than restrictions on transfers imposed by applicable federal
                and
                state securities law. 

            

    

     

    7.2 Representations
      and Warranties of Customer.
      Customer represents and warrants that:

     

    
      	 	
              (a)

            	
              Customer
                is a _______ duly organized, validly existing and in good standing
                under
                the laws of the state of _________. Customer is duly qualified as
                a
                foreign limited liability company in all jurisdictions in which the
                failure to so qualify would have a material adverse effect on Customer
                and
                any subsidiaries taken as a whole. 

            

    

     

    
      	 	
              (b)

            	
              This
                Agreement and the transactions contemplated hereby have been duly
                and
                validly authorized by Customer and constitute a valid and binding
                agreement of Customer, enforceable in accordance with their respective
                terms, except to the extent that (i) enforcement of each of this
                Agreement
                may be limited by bankruptcy, insolvency, reorganization, moratorium,
                fraudulent conveyance or other similar laws now or hereafter in effect
                relating to creditors’ rights generally, and (ii) general principles of
                equity.

            

    

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (c)

            	
              Customer
                understands that the Common Stock issuable hereunder are “restricted
                securities” and have not been registered under the Securities Act of 1933,
                as amended (the “Securities
                Act”)
                or any applicable state securities law and is acquiring the Securities
                as
                principal for its own account and not with a view to or for distributing
                or reselling such Securities or any part thereof in violation of
                the
                Securities Act or any applicable state securities law, has no present
                intention of distributing any of such Securities in violation of
                the
                Securities Act or any applicable state securities law and has no
                direct or
                indirect arrangement or understandings with any other persons to
                distribute or regarding the distribution of such Securities in violation
                of the Securities Act or any applicable state securities law. Customer
                is
                acquiring the Common Stock hereunder in the ordinary course of its
                business. Customer further acknowledges and understands that the
                Common
                Stock issuable hereunder must be held indefinitely unless they are
                subsequently registered under the Securities Act or an exemption
                from such
                registration is available.

            

    

     

    
      	 	
              (d)

            	
              Customer
                is an “accredited investor” as defined in Regulation D promulgated under
                the Securities Act. 

            

    

     

    
      	 	
              (e)

            	
              Customer,
                either alone or together with its representatives, has such knowledge,
                sophistication and experience in business and financial matters so
                as to
                be capable of evaluating the merits and risks of the prospective
                investment in the Common Stock, and has so evaluated the merits and
                risks
                of such investment. Customer acknowledges receipt of the Company’s most
                recent quarterly report on Form 10-Q filed with the Securities and
                Exchange Commission (which report is also available at http://www.sec.gov)
                and has reviewed the risk factors and other matters described therein.
                Customer is able to bear the economic risk of an investment in the
                Securities and, at the present time, is able to afford a complete
                loss of
                such investment.

            

    

     

    
      	 	
              (f)

            	
              Customer
                is not acquiring the Common Stock issuable hereunder as a result
                of any
                advertisement, article, notice or other communication regarding the
                Common
                Stock published in any newspaper, magazine or similar media or broadcast
                over television or radio or presented at any seminar or any other
                general
                solicitation or general
                advertisement.

            

    

     

    
      	
              8.

            	
              TERM
                AND TERMINATION

            

    

     

    8.1 Term;
      Termination.
      This
      Agreement and the rights granted pursuant to this Agreement shall commence
      on
      the Effective Date and, unless earlier terminated as provided in this Article
      8
      shall continue in full force and effect
      until
      expiration of the Royalty Term. Except as otherwise provided in Section 8.2
      below, upon the expiration or earlier termination of this Agreement, all rights
      granted to the Parties hereunder shall terminate, and each Party shall be
      released from all obligations and liabilities to the other occurring or arising
      after the date of such termination, except that Sections 6.1 and 10.2 of this
      Agreement shall survive.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    8.2 Termination
      for Breach.
      

     

    
      	 	
              (a)

            	
              By
                QPC or Quintessence:
                Either QPC or Quintessence may terminate this Agreement upon written
                notice to Customer if Customer materially breaches a provision of
                this
                Agreement and fails to correct such breach within thirty (30) days
                following written notice specifying such breach.
                

            

    

     

    
      	 	
              (b)

            	
              By
                Customer:
                Upon the occurrence of an Event of Default (as defined below), Customer
                may at any time, if an Event of Default shall then be continuing,
                by
                written notice to QPC terminate this Agreement. “Event of Default” shall
                mean and include each of the
                following:

            

    

     

    
      	 	
              (i)

            	
              QPC
                shall fail to make any royalty payments when the same become due
                and
                payable to Customer under this Agreement and fails to cure such missed
                payment(s) within thirty (30) days following receipt of written notice
                of
                such non-payment from Customer to
                QPC;

            

    

     

    
      	 	
              (ii)

            	
              Either
                QPC or Quintessence shall fail to perform or comply with any material
                agreement or covenant made by it under this Agreement in any material
                respect and fails to substantially cure such default within sixty
                (60)
                days following receipt of written notice specifying the nature of
                such
                default from Customer to QPC; provided, however, that if such default
                is
                not curable within such 60-day period, an Event of Default shall
                be deemed
                to occur only if QPC or Quintessence, as applicable, has not commenced
                and
                diligently continued during such 60-day period reasonable actions
                to cure
                such breach.

            

    

     

    
      	 	
              (iii)

            	
              Any
                material representation or warranty made by QPC or Quintessence under
                this
                Agreement shall prove to have been untrue or incorrect in any material
                respect when made.

            

    

     

    
      	 	
              (c)

            	
              Effect
                of Termination.
                Subject to the limitations set forth in Section 8.4, any termination
                of
                this Agreement under this Section 8.2 shall not affect the right
                of a
                Party to sue the other Parties for any damages recoverable under
                applicable law as a result of such
                termination.

            

    

     

    8.3 Option
      to Terminate.
      QPC may
      elect to terminate this Agreement for any reason at any time prior to the
      expiration of the five-year royalty term upon the delivery of written notice
      of
      termination and payment of a termination fee in the amount of Five Million
      Dollars ($5,000,000) to Customer. In the event of such termination, all rights
      granted to the Parties hereunder shall terminate, and each Party shall be
      released from all obligations and liabilities to the other occurring or arising
      after the date of such termination; provided, however, that that Sections 6.1
      and 10.2; and provided, further, that any Common Stock issued to Customer under
      this Agreement prior to the effective date of termination under this Section
      8.3
      shall not be subject to repurchase and shall remain the property of Customer
      or
      its assignees. 

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

       

    

    8.4 Limitations
      on Damages.
      Notwithstanding anything to the contrary set forth in this Agreement, no Party
      shall be liable to the others under any theory of liability for any indirect,
      exemplary, incidental, or consequential damages of any kind, including, without
      limitation: (i) for the loss of prospective profits, anticipated sales or
      goodwill, or the interruption of business or ; (ii)  on account of any
      expenditures, investments or commitments made by either party; or (iii) for
      any other reason whatsoever based upon the result of such expiration or
      termination. 

     

    
      	
              9.

            	
              DISCLAIMERS

            

    

     

    9.1
      EXCEPT
      AS
      EXPRESSLY SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES, AND HEREBY EXPRESSLY
      DISCLAIMS, ANY AND ALL REPRESENTATIONS OR WARRANTIES HEREUNDER, WHETHER EXPRESS
      OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF
      MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE OR NON-INFRINGEMENT,
      OR
      ANY WARRANTIES THAT MAY ARISE FROM COURSE OF PERFORMANCE, COURSE OF DEALING
      OR
      USAGE OF TRADE.

     

    
      	
              10.

            	
              GENERAL

            

    

     

    10.1 Export
      Control.
      Customer agrees to comply fully with all relevant export laws and regulations,
      including, without limitation, the laws and regulations of the United States
      and
      worldwide, as applicable (“Export
      Laws”),
      to
      assure that the Products (nor any direct product thereof) is (a) exported,
      directly or indirectly, in violation of Export Laws, or (b) intended to be
      used
      for any purposes prohibited by the Export Laws, including, without limitation,
      nuclear, chemical or biological weapons proliferation.

     

    10.2 Confidentiality.
      The
      Parties hereby acknowledge and agree that this Agreement, the Product and
      Deliverable Items, including any portion thereof, modifications and derivatives
      thereof, information or materials derived therefrom and any specifications
      or
      documentation relating to the Products or Deliverable Items, and other
      confidential information provided by QPC or Quintessence to Customer hereunder,
      shall constitute “Confidential
      Information”
under,
      and be subject to the terms and conditions of, that certain Mutual
      Non-Disclosure Agreement, dated June 16, 2008, between QPC and
      Customer.

     

    10.3 Entire
      Agreement.
      This
      Agreement (including, without limitation, all Exhibits hereto) contains the
      entire agreement among the Parties with respect to the subject matter hereof
      and
      supersedes all previous, contemporaneous and inconsistent agreements,
      negotiations, representations and promises between the Parties, written or
      oral,
      regarding the subject matter hereof.

     

    10.4 Headings.
      The
      headings contained in this Agreement are inserted only as a matter of
      convenience and for reference and in no way define, limit or describe the scope
      or intent of this Agreement nor in any way affect its terms and
      provisions.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

       

    

    10.5 Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of California, without reference to its conflicts of law provisions.
       

     

    10.6 Notices.
      All
      notices hereunder shall be in writing and shall be delivered by hand, mailed
      by
      registered or certified mail (return receipt requested), deposited with a
      reputable, established overnight courier service for delivery to the intended
      addressee against receipt, or sent by telecopy (confirmed by regular,
      first-class mail), to the Parties at the following addresses (or at such other
      addresses for a Party as shall be specified by like notice) and shall be deemed
      given on the date on which such notice is received:

    

      
        	
                if
                  to QPC:

              	 	
                QPC
                  Lasers, Inc,.

              
	 	 	
                15632
                  Roxford Street

              
	 	 	
                Sylmar,
                  California 91342

              
	
                 

              	 	
                
                  Attention:
                    George Lintz

                

              
	
                 

              	 	
                Fax: 331
                  4186 5638

              
	 	 	 
	
                and
                  a copy 

              	 	 
	
                (which
                  shall not 

              	 	 
	
                constitute
                  notice) to:

              	 	
                Morrison
                  & Foerster LLP

              
	 	 	
                555
                  West Fifth Street, Suite 3500

              
	 	 	
                Los
                  Angeles, California 90013

              
	 	 	
                Attention:
                  Hillel T. Cohn, Esq.

              
	 	 	
                Fax:
                  (213) 892-5454

              
	 	 	 
	
                if
                  to Customer:

              	 	
                [REDACTED]2 

              
	 	 	 
	
                and
                  a copy 

              	 	 
	
                (which
                  shall not 

              	 	 
	
                constitute
                  notice) to:

              	 	 

      

      
        
          
            

            

          

        

      

    

    10.7 Assignment.
      Neither
      QPC nor Customer may assign this Agreement, in whole or in part, without the
      prior written consent of the other Party. Notwithstanding the foregoing, QPC
      may
      convey its entire right and interest under this Agreement to any successor
      by
      way of merger, acquisition or similar transaction. Subject to the foregoing,
      this Agreement shall be binding upon and inure to the benefit of each party’s
      respective successors and lawful assigns.

     

    10.8 Public
      Announcements.
      No
      Party to this Agreement shall make, or cause to be made, any press release
      or
      public announcement in respect of this Agreement or otherwise communicate with
      any news media without the prior written consent of the other Party, and the
      Parties shall cooperate as to the timing and contents of any such press release
      or public announcement. Notwithstanding the foregoing, QPC shall be free to
      make
      such disclosures regarding this Agreement as it reasonably determines are
      required by applicable federal securities laws.

     

    
      
        
          

        

      

      2 NOTE:
        The Company has requested confidential treatment for the redacted information.
        A
        complete copy of this Agreement has been separately filed with the Securities
        and Exchange Commission. 

    

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

       

    

    10.9 Amendment.
      Any
      amendment to this Agreement, or any subsequent agreement among the Parties
      in
      respect of the subject matter hereof, shall not be binding on the Parties unless
      such amendment or agreement is executed by QPC and Customer.

     

    10.10 Waiver.
      The
      failure of a Party to insist upon strict adherence to any term of this Agreement
      on any occasion shall not be considered a waiver or deprive that Party of the
      right thereafter to insist upon strict adherence to that term or any other
      term
      of this Agreement. Without limitation of the foregoing, failure or delay on
      the
      part of a Party in exercising a right of termination hereunder with respect
      to
      any act or event shall not be construed to prejudice its right of termination
      for such act or event in the future or for any subsequent act or event. No
      waiver shall be effective unless it is in writing and is signed by the Party
      asserted to have granted such waiver.

     

    10.11 Severability.
      The
      provisions of this Agreement shall be deemed severable and the invalidity or
      unenforceability of any provision shall not affect the validity or
      enforceability of the other provisions hereof. If any provision of this
      Agreement, or the application thereof to any person or entity or any
      circumstance, is found by a governmental authority or court of competence
      jurisdiction to be invalid or unenforceable, (i) the Parties shall amend such
      provision in accordance to obtain a legal, enforceable and valid provision
      that
      most nearly effects the Parties’ intent in entering into this Agreement and (ii)
      the remainder of this Agreement and the application of such provision to other
      persons, entities or circumstances shall not be affected by such invalidity
      or
      unenforceability, nor shall such invalidity or unenforceability affect the
      validity or enforceability of such provision, or the application thereof, in
      any
      other jurisdiction.

     

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

     

    10.13 Relationship
      of the Parties.
      The
      relationship hereby established between the Parties is and shall be solely
      that
      of independent contractors. Nothing in this Agreement is intended or shall
      be
      deemed to (a) constitute a partnership, agency, franchise or joint venture
      relationship between the Parties hereto, (b) give any Party hereto the power
      to
      direct or control the day-to-day activities of the employees of the other Party,
      (c) cause any employees or agents of any Party to be deemed to be employees
      or
      agents of the other Party for any purpose, or (d) allow a Party to create or
      assume any obligation on behalf of the other Party, except as expressly provided
      herein. In addition, no Party shall have any power to act for or represent
      the
      other, except as expressly provided in this Agreement.

     

    10.14 Interpretation.
      This
      Agreement shall be construed without regard to any presumption or rule requiring
      construction or interpretation against the Party drafting or causing any
      instrument to be drafted. Words of inclusion shall not be construed as terms
      of
      limitations, so that references to “included” matters shall be regarded as
      non-exclusive, non-characterizing illustrations. 

     

    [Signature
      page follows]

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
      by
      their respective duly authorized representatives as of the date first above
      written. 

    

      
        	
                QPC
                  LASERS, INC.

              
	 	 
	
                By:

              	  
	 	
                Name:

              
	 	
                Title:

              
	 	 
	
                QUINTESSENCE
                  PHOTONICS CORPORATION

              
	 	 
	
                By:

              	 
	 	
                Name:

              
	 	
                Title:

              
	 	 
	
                [REDACTED]3

              
	 	 
	
                By:

              	  
	
                 

              	
                Name:

              
	
                 

              	
                Title:

              

      

       

        
          

        

      

      3
        NOTE:
        The Company has requested confidential treatment for the redacted information.
        A
        complete copy of this Agreement has been separately filed with the Securities
        and Exchange Commission. 

       

      SIGNATURE
        PAGE TO DEVELOPMENT
        AGREEMENT

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

     

    Development
      Payment

     

    Pursuant
      to Section 2 of the Agreement, Customer hereby agrees to make a Development
      Payment in the amount of Two Million Dollars ($2,000,000), which payment shall
      be due as of the Effective Date and payable in the following manner:

    

      
        	
                Payment Date

              	 	
                Payment Amount

              	 
	
                Effective
                  Date

              	 	
                $

              	
                150,000

              	 
	
                Ten
                  days following the Effective Date

              	 	
                $

              	
                350,000

              	 
	
                August
                  31, 2008

              	 	
                $

              	
                500,000

              	 
	
                September
                  30, 2008

              	 	
                $

              	
                250,000

              	 
	
                October
                  31, 2008

              	 	
                $

              	
                250,000

              	 
	
                November
                  30, 2008

              	 	
                $

              	
                250,000

              	 
	
                December
                  31, 2008

              	 	
                $

              	
                250,000

              	 

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      B

     

    Royalties

     

    Royalty
      Rates.
      Royalty
      Payments due and payable in accordance with the Agreement shall be determined
      as
      follows:

     

    
      	 	
              (a)

            	
              QPC
                shall pay Customer ten percent (10%) of Net Revenues that QPC or
                Quintessence actually receives during the Royalty Term from the sale
                of
                the Products for use in three-dimensional (“3-D”) display/projection
                applications in connection with the 3-D display and projection
                business.

            

    

     

    
      	 	
              (b)

            	
              QPC
                shall pay Customer three percent (10%) of Net Revenues that QPC or
                Quintessence actually receives during the Royalty Term from the sale
                of
                the Products for use in display/projection applications other than
                in 3-D
                display/projection applications.

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