Document:

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                                                                    EXHIBIT 10.6

                                     EXABYTE
                               SUBLEASE AGREEMENT

         THIS EXABYTE SUBLEASE AGREEMENT ("Agreement") dated and effective this
10th day of August, 1998, ("Effective Date"), between Exabyte Corporation, a
Delaware corporation, having its principal place of business at 1685 38th
Street, Boulder, Colorado 80301, ("Sublessor") and ILX Lightwave Corporation, a
Minnesota corporation, having its principal place of business at 31950 Frontage
Road, Bozeman, MT 59715 ("Sublessee"), also known as the parties, agree as
follows:

WHEREAS, Sublessor is the tenant of the Premises (described as, 4665 Nautilus
Court, Boulder, CO 80302) pursuant to the terms of a Lease dated May 18, 1995
("Lease"), a copy of which is attached hereto as Exhibit A and incorporated
herein by reference; and

WHEREAS, Sublessor desires to sublease to Sublessee a portion of the Premises,
subject to the terms and conditions as contained herein and in the Lease.

NOW, THEREFORE, in consideration of the rent reserved hereunder and the mutual
promises, covenants, warranties, and representations contained herein, Sublessor
and Sublessee agree as follows:

1.       Scope of Agreement

         1.1.     Sublessee shall assume all obligations of the Sublessor in the
                  Lease dated May 18, 1995 as applicable only with respect to
                  the area which is subleased containing 10,560 square feet in
                  the Northwest section of the Premises, which floor plan is
                  attached hereto as Exhibit B ("Subleased Premises") except as
                  otherwise set forth herein. The terms, conditions and
                  respective obligations of Sublessor and Sublessee to each
                  other under this Agreement shall be the terms and conditions
                  of the Lease, except for those provisions of the Lease which
                  are directly contradicted by this Agreement, in which event
                  the terms of this Agreement shall take precedent to the Lease.

         1.2.     During the term of this Agreement, Sublessee hereby expressly
                  assumes and agrees to perform and comply with, each and every
                  obligation of Sublessor as tenant under the Lease. The
                  obligations which Sublessee has assumed under this Section 1.2
                  which are consistent with the terms of this Agreement
                  hereinafter referred to as the "Sublessee's Assumed
                  Obligations" except for Lease section(s) 29w and 31.

         1.3.     Sublessee shall hold Sublessor free and harmless of and from
                  any liability, judgment, costs and damages, claims and
                  demands, including reasonable attorney's fees, arising out of
                  Sublessee's failure to comply with or perform Sublessee's
                  Assumed Obligations as of the Effective Date of this Sublease.
                  Sublessor shall hold Sublessee

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                  free and harmless of and from any liability, judgment, costs,
                  damages, claims and demands, including reasonable attorney's
                  fees, arising out of Sublessor's failure to comply with its
                  obligations as Tenant under the Lease.

         1.4.     Sublessor agrees to do all things necessary on its part, as
                  tenant under the Lease, to maintain the Lease in full force
                  and effect during the entire term of this Agreement, subject
                  to however, to any early termination on the Lease without any
                  fault on the part of Sublessor.

         1.5.     Sublessor represents and warrants to Sublessee that, as of the
                  date hereof, the Lease is in full force and effect and the
                  copy attached is a complete copy, and that no default exists
                  on the part of either party to the Lease, nor does any set of
                  facts or circumstances exist which, with notice or the passage
                  of time, or both, could constitute an event of default.

         1.6.     Sublessor shall have all rights as defined in Section 23 of
                  the Lease in the event of default by Sublessee.

    2.   Term

         This Agreement shall become effective as of the Effective Date above
         upon its execution by the authorized representatives of the parties. In
         the event the improvements specified in Exhibit D are not complete by
         August 17, 1998, Sublessee may, at its option, delay the initial Rent
         payment due hereunder by an amount of days equal to the days
         commencement was delayed. This Agreement shall expire June 30, 2001,
         unless terminated earlier pursuant to the Lease.

    3.   Premises

         3.1.     The parties agree that the Subleased Premises hereunder
                  consists of approximately 10,560 square feet as noted in
                  Exhibit B hereto. As of the Effective Date of this Agreement,
                  Sublessor warrants that the Subleased Premises complies with
                  all restrictive covenants and governmental regulations and
                  Sublessor shall be responsible to complete the improvement
                  specified on Exhibit D, secure and demise such Subleased
                  Premises and cause such to comply with all governmental and
                  quasi-governmental codes, requirements, and permits, etc. Both
                  parties acknowledge that the Subleased Premises shall be taken
                  on an "as-is" basis subject to Sublessor's obligations to
                  complete improvements.

         3.2.     Sublessee shall be responsible for pro-rata portion of the
                  operating expenses as defined in the Lease for the Subleased
                  Premises. As of the Effective Date, such pro-rata share is
                  28.45%.

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         3.3.     Sublessee shall be responsible for contracting for telephone,
                  gas, electric service, janitorial service and trash removal
                  and the expenses thereof. Gas and electric service expenses
                  are metered separately.

         3.4.     Sublessee shall have the right to use its pro rata share of
                  the available surface parking spaces at no additional charge
                  for the term of this Agreement. As of the Effective Date of
                  this Agreement, the quantity of such parking spaces total
                  twenty-eight (28) and shall be designated as Sublessee's.

         3.5.     Sublessor shall make available the equipment and fixtures
                  specified on Exhibit C for Sublessee's use during the terms of
                  this Agreement. Unless a purchase agreement is executed by the
                  Parties, Sublessor retains title and ownership of such
                  equipment. Sublessor represents that the equipment and
                  fixtures are free and clear from any liens.

         3.6.     Sublessor will pay up to $3,000 to Sublessee as a recarpeting
                  allowance upon Sublessee's submitting a receipt for such.

    4.   Insurance

         Sublessee shall be responsible to maintain throughout the term of this
         Agreement, fire and extended coverage insurance for the personal
         property owned by Sublessee. Additionally, throughout the term of this
         Agreement, Sublessee shall maintain commercial general liability
         insurance including minimum limits of coverage as follows: (i) $1
         million per occurrence; (ii) $1 million general aggregate; (iii) $1
         million products/completed operations aggregate limit; (iv) $1 million
         personal injury. Coverage shall be maintained with insurance companies
         acceptable to Sublessor, which acceptance shall not be unreasonably
         withheld. A certificate of insurance shall be provided to Sublessor
         evidencing this coverage and shall provide that this coverage shall not
         be changed, modified, reduced or cancelled without thirty (30) days
         prior written notice to Sublessor. Sublessee insurance shall be
         endorsed to name Sublessor as an additional insured.

    5.   Rent

         5.1.     Sublessee shall pay to Sublessor, as rent for the Premises,
                  the sum of $7.24 per square foot per annum in advance
                  ("Rent"), on the first day of every month during the term of
                  this Sublease. Monthly Rent shall be $6,371.20 ($7.24 x 10,560
                  square feet / 12). The first month's Rent shall be due
                  September 1, 1998. Any increase in the above specified Rent
                  shall be in accordance Section 5b of the Lease.

         5.2.     Late Charge. If any installment of Rent or of the sum due from
                  Sublessee shall not be received by Sublessor within five (5)
                  days said amount is due, then Sublessee shall pay to Sublessor
                  a late charge equal to five percent (5%) of such overdue
                  amount. The parties hereby agree that such late charges
                  represents a fair and reasonable

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                  estimate of the cost that Sublessor will incur by reason of
                  the late payment by Sublessee. Acceptance of such late charges
                  by the Sublessor shall in no event constitute a waiver of
                  Sublessee's default with respect to such overdue amount, nor
                  prevent Sublessor from exercising any of the other rights and
                  remedies granted hereunder.

         5.3.     Additional Rent. If any sum or amount in addition to or in
                  excess of the Rent provided for in Section 5.1 above is due
                  pursuant to the Lease as Rent for the Subleased Premises, then
                  the Sublessee shall promptly pay any such sum or amount, and
                  Sublessee shall Indemnify and hold harmless Sublessor of and
                  from any and all claims, damages, or loses incurred or
                  suffered by Sublessee as a result of or arising out of any
                  failure or refusal on the part of Sublessee to pay any such
                  amount.

                  Sublessee shall be responsible for a pro-rata portion of the
                  operating expenses as specified in Section 3.2 above. Such
                  operating expenses are estimated at $7.15 per square foot per
                  annum. Additional Rental shall be $1,892.00 ($2.15 x 10,560
                  square feet/12). The first month's additional rent shall be
                  due September 1, 1998. Any increase in operating expenses
                  shall be in accordance with Section 7, of the Lease.

         5.4.     The termination of this Sublease by Sublessor or landlord due
                  to default of Sublessor: (a) does not relieve Sublessee of its
                  obligations to pay Rent accrued under this Sublease through
                  the date of termination; (b) does not waive any claim that
                  Sublessor may have against Sublessee, including, without
                  limitation, claims or indemnification as a result of any claim
                  asserted by Sublessor against by any third party relating to
                  Sublessee's use and occupancy of the Premises; and (c) does
                  not waive any right Sublessor may have to collect money
                  judgments against Sublessee that it may have or may obtain in
                  the future as a result of Sublessee's default under this
                  Sublease prior to such termination.

         5.5.     The parties agree the above-specified Rent includes the
                  equipment systems, cubicles, and telephone equipment currently
                  owned by Sublessor as specified as Exhibit C hereto.

    6.   Security Deposit

         6.1.     A security deposit in the amount of one (1) month's Rent shall
                  be required from Sublessee with respect to this Agreement and
                  held in accordance with respect to this Agreement and held in
                  accordance with the Lease. Such security deposit shall be paid
                  to Sublessor upon execution of this Agreement. Upon the
                  expiration of this Sublease, Sublessor shall return such
                  security deposit to Sublessee, provided all Sublessee's
                  obligations under this Sublease have been fulfilled.

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         6.2.     Sublessor shall provide written notice to Sublessee in the
                  event of any default under this Sublease. If Sublessee shall
                  (i) fail to pay the Rent, or any other sum required by this
                  Sublease to be paid to Sublessor at the time or in the manner
                  provided; or (iii) if Sublessee shall, voluntarily or
                  involuntarily, seek the protection of the Bankruptcy Act and
                  such matter is not dismissed within sixty (60) days; or (iv)
                  if default shall be made in any of the other covenants or
                  conditions on Sublessee's part agreed to be performed, and if
                  such failure to pay Rent or such other sum or such default in
                  performance shall continue for more than thirty (30) days
                  after the written notice of default then Sublessee shall be in
                  default. Sublessee expressly recognizes the right of Sublessor
                  and its agents to retain and have a key to the Premises.
                  Sublessor shall abide by Section 20 of the Lease.

         6.3.     Any such termination, refusal, cancellation, retention, entry,
                  or ejection shall in no manner prejudice any claim Sublessor
                  may then or thereafter have against Sublessee for any charges
                  due or other amounts, including collection and reasonable
                  attorney's fees incurred in connection with Sublessor's effort
                  to collect funds owed to it by Sublessee, or for damages for
                  breach of any of the terms and conditions hereof. Sublessee
                  does hereby agree to indemnify and hold Sublessor harmless for
                  any loss, liability, damage, or deficiency (including
                  reasonable attorney's fees and court costs) arising out of or
                  in any way related to any breach by Sublessee of any terms,
                  conditions, or provisions of this Sublease. Sublessor shall in
                  no way be liable to compensate Sublessee for any damages which
                  Sublessee may suffer by reason of such rightful termination,
                  refusal, cancellation, retention, entry, or ejection hereunder
                  or any other action taken by Sublessor pursuant hereto.
                  Sublessor is not and shall not be responsible for any of
                  Sublessee's personal property including, but not limited to,
                  business and financial records and files located in the
                  Premises in the event that Sublessor exercises its rights
                  against Sublessee pursuant hereto. In addition, Sublessor may
                  exercise all or any rights of a Sublessor as from time to time
                  permitted under Colorado law.

         6.4.     If Sublessee shall not remove all effects and personal
                  property belonging to it from the Subleased Premises or
                  Premises at the termination of this Agreement, Sublessor may,
                  at its option, consider such effects and personal property
                  abandoned and dispose of them in any manner that Sublessor
                  sees fit in Sublessor's sole discretion, or, as Sublessor's
                  option, remove all or part of such effects and personal
                  property and store them without liability to Sublessor for
                  loss thereof, and Sublessee shall be liable to Sublessor for
                  all expenses incurred in such removal and storage as
                  additional Rent.

    7.   Indemnification

         7.1.     Sublessee will indemnify and hold Sublessor harmless from and
                  against any loss, damage, or liability occasioned by or
                  resulting from any default hereunder or any

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                  willful or negligent act on the part of Sublessee, its agents,
                  employees, invitees, or persons permitted within the Premises.

         7.2.     Sublessor will indemnify and hold Sublessee harmless from and
                  against any loss, damage, or liability occasioned by or
                  resulting from any default hereunder or any willful or
                  negligent act on the part of Sublessor, its agents, employees,
                  invitees, or persons permitted within the Premises.

         7.3.     Neither Sublessor nor Sublessee shall be liable to the other
                  or to any insurance company (by way of subrogation or
                  otherwise) insuring them for any loss or damage to any
                  property or loss of income deriving therefrom, or losses under
                  Worker's Compensation laws and benefits, even though such
                  losses or damages might have been occasioned by the negligence
                  of the other party, its agents, or employees.

    8.   Rules and Regulations

         Sublessee and Sublessee's agent's, employees, licensees, and invitees
         shall faithfully observe and comply with any reasonable rules and
         regulations set forth by Sublessor or stated in either this Agreement
         or the Lease from time to time governing the Premises. Such rules and
         regulations may apply, but need not be limited to, safety regulations,
         and matters relating to security. Such rules and regulations shall be
         binding upon Sublessee by delivery of a copy thereof to Sublessee. Such
         rules and regulations current as of the Effective Date shall be
         attached hereto as Exhibit B.

    9.   Headings

         Headings, which include the underlined portion following the section
         number, have been used for reference purposes only and shall have no
         operative effect in the construction of the rights or obligations
         pursuant to this Agreement.

    10.  References

         Any reference to a section number shall include all subsections of such
         section.

    11.  Jurisdiction and Venue

         This Agreement shall be construed under and governed by the laws of the
         State of Colorado, and the competent federal courts in the State of
         Colorado shall decide any disputes between the parties with respect to
         this Agreement.

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    12.  Entire Agreement Counterparts

         This Agreement is intended to be the sole and complete statement of the
         obligations of the parties as to the sublease of the Premises and
         supersedes all previous understandings, negotiations and proposals.
         This Agreement may not be altered, amended, rescinded or modified
         except by written agreement between the parties and signed by an
         officer of each party that expressly amends, rescinds, supersedes or
         terminates this Agreement, and that specifically references this
         Agreement.

    13.  Enforcement

         In the event any provisions of this Agreement are declared
         unenforceable by a duly authorized court having jurisdiction, then this
         Agreement with respect to enforceable provisions shall continue in
         force, and all rights and remedies under the remaining enforceable
         provisions shall survive any such judicial declarations, provided this
         Agreement still expresses the general intent of the parties. In the
         event the general intent of the parties cannot be preserved, this
         Agreement shall either be renegotiated or rendered null and void.

    14.  Notices

         Notices and other communications by a party under this Agreement shall
         be given in writing by mail, postage prepaid, certified, recorded, or
         registered and addressed to the parties at their respective addresses
         as set forth below:

         Sublessee:

         ILX Lightwave Corporation
         31950 E. Frontage Road
         Bozeman, MT  59715
         Attn:  Mr. Larry Johnson

         Sublessor:

         Exabyte Corporation
         1685 38th Street
         Boulder, Colorado  80301  U.S.A.
         Attn:  Mr. Stephen F. Smith

         Such notices shall be deemed to have been given upon mailing. Notices
         may also be given by facsimile, if in the case of Sublessee, they are
         sent to the following number: (406) 586-9405, and in the case of
         Sublessor, they are sent to the following number, (303) 417-7142. If
         given by facsimile, notices shall be deemed to have been given on the
         date of

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         transmission. All facsimile notices shall be confirmed by written
         notice mail, as provided above, within five (5) days of the date the
         facsimile is sent.

    15.  Assignment

         This Agreement is not assignable by either party without written
         permission of the other party, which shall not be unreasonably withheld
         or delayed. Sale of stock or assets of the Parties shall not constitute
         assignment. Sublessee may not sublet the Subleased Premises or any part
         thereof, or any right or privilege appurtenant thereto, or suffer any
         other person (the employees, agents, servants and invitees of Sublessee
         excluded) to occupy or use the Subleased Premises without the prior
         written consent of the landlord and Sublessor, which consent shall not
         be unreasonably denied.

    16.  Waiver

         The waiver by Sublessor or Sublessee of any breach of any term
         covenant, or conditions contained herein shall not be deemed to be a
         subsequent waiver of such terms, covenants, or conditions. The
         subsequent acceptance of payment of Basic Rent or Additional Rent shall
         not be deemed a waiver of any preceding breach of payment by Sublessee
         regardless of Sublessor's acknowledgment of such preceding breach at
         the time of acceptance of such payment.

    17.  No Agency Created

         Neither party is a partner, joint venturer, agent, legal
         representative, or employee of the other. Neither party is granted the
         right or authority to assume or create any obligation or
         responsibility, express or implied, on behalf of or in the name of the
         other party or to bind such other party in any manner to anything
         whatsoever.

IN WITNESS WHEREOF, the parties have executed this Agreement by their duly
authorized representatives, effective as of the date first set forth above.

EXABYTE CORPORATION
         ILX LIGHTWAVE  CORPORATION

By:                                   By:
   -------------------------------       ---------------------------------------
    Stephen F. Smith                      Lawrence A. Johnson

Title:                                Title: President/Chief Executive Officer
      ----------------------------          ------------------------------------

Date:                                 Date:
     -----------------------------         -------------------------------------

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<PAGE>   9

                         CONSENT BY LANDLORD TO SUBLEASE

The undersigned Landlord, under the Lease dated May 18, 1995 by Nautilus Court
II Partnership, Ltd. (Landlord) and Exabyte Corporation (Tenant) hereby
acknowledges the Sublease by and between Exabyte Corporation (Sublessor) and ILX
Lightwave Corporation (Sublessee) and by its signature hereon consents to such
Sublease as of the day and year set forth herein below.

Landlord further agrees to give Sublessee written notification within five days
in the event of any default in the Lease by the Tenant. In the event of a
default by the Tenant, the Landlord, at the Sublessee's option, will enter into
a new lease with the Sublessee to remain in the premises for the remainder of
the original Sublease term. The new lease will include substantially the same
terms and conditions of the current Sublease, except for rent which will be at
market rate, to be reasonably determined by the Landlord.

Landlord:

Nautilus Court II Partnership

By:
   ----------------------------------

Title:
      -------------------------------

Date:
     --------------------------------

<PAGE>   10

                             ASSIGNMENT OF SUBLEASE

For value received and effective December 21, 1999, EXABYTE CORPORATION, a
Delaware corporation, Assignor, hereby assigns all its right, title and interest
in and to that certain Sublease Agreement dated August 10, 1998 by and between
EXABYTE CORPORATION, Sublessor, and ILX LIGHTWAVE, a Minnesota corporation,
Sublessee, including a security deposit in the amount of $6,371.20 unto NAUTILUS
COURT II PARTNERSHIP, LTD., a Colorado limited partnership, Assignee, its
successors and assigns. In consideration of this Assignment, said Assignee
hereby assumes and agrees to perform all the covenants and agreements in said
Sublease contained by the Sublessor therein agreed to be made and performed,
including but not limited to the use of the equipment and fixtures by Sublessee
in accordance with Section 3.5 of the Sublease.

ASSIGNOR:                                 ASSIGNEE:

EXABYTE CORPORATION
         NAUTILUS COURT II PARTNERSHIP, LTD.
a Delaware corporation                    a Colorado limited partnership

By:                                       By:
   ---------------------------------         ---------------------------
    Stephen F. Smith                          Valtec Associates, Ltd.
    Vice President and CFO                    by Byron Chrisman, General Partner

CONSENT TO ASSIGNMENT:

The undersigned Sublessee under the Sublease hereby consents to this Assignment
of Sublease as aforesaid.

ILX LIGHTWAVE CORPORATION

By:
   -----------------------------------

Printed Name:
             -------------------------

Title:
      --------------------------------<PAGE>   1
                                                                    EXHIBIT 10.7

PORTIONS OF THIS AGREEMENT ARE SUBJECT TO ARBITRATION UNDER M.C.A. 27-5-101
ET.SEQ.

                                 LEASE AGREEMENT

     1. PARTIES. THIS LEASE AGREEMENT made this 22nd day of December 1992
between ANTHONY WAYNE OIL CORPORATION, hereinafter referred to as LESSOR, and
ILX LIGHTWAVE CORPORATION, hereinafter referred to as LESSEE.

     2. PREMISES. LESSOR hereby leases to LESSEE AND LESSEE leases from LESSOR
for the term and upon the terms and conditions hereinafter set forth, the
premises described as follows:

     Tract B of Certificate of Survey No. 475B Two tracts of land being tracts
     1A and 2A of Certificate of Survey No. 475A, located in the southeast
     one-quarter of section 8 and the southwest one-quarter of section 9,
     township 2 south, range 6 east, M.P.M., Gallatin County, Montana.

TOGETHER WITH the building and other improvements to be constructed thereon as
hereinafter provided, and together with the right to use all adjoining parking
areas, driveways, sidewalks, roads and alleys and means of ingress and egress,
insofar as LESSOR has the power to lease or license and use thereon.

     3. CONSTRUCTION. LESSOR will construct for LESSEE, upon the agreed leased
premises, a building with the mechanicals and landscaping pertinent thereto, in
accordance with certain plans and specifications (Exhibit "A" attached)
therefore prepared by Nick Fullerton Architects PC & Schmit Construction,
Contractor, which bears the written approval of both LESSEE and LESSOR
(hereinafter referred to as the PROJECT). LESSOR agrees to complete the PROJECT
by October 15, 1993, strictly in accordance with the aforesaid plans and
specifications, unless LESSOR and LESSEE agree to changes in such plans and
specifications as they may occur during construction. The LESSOR agrees to
assume the cost incurred for the PROJECT including the cost of the land,
construction of the building and

<PAGE>   2

required landscaping. LESSOR further agrees to guarantee the quality of
workmanship and other materials as provided in the Construction Contract (see
Exhibit "A") for a period of one (1) year after completion, with the exception
of those items covered by a specific manufacturer's warranty may differ from
above.

     4.  TERM. The primary term of this lease shall commence on November 1,
1993, provided that LESSOR has completed the PROJECT and LESSEE has accepted the
PROJECT and shall continue for a period of ten (10) years thereafter, unless
sooner terminated or extended as hereinafter provided. LESSEE shall have and is
hereby granted a total of three (3) successive five (5) year options to extend
the term of this lease beyond the initial term, upon the same covenants and
conditions as herein provided, except as hereinafter specifically set forth. If
LESSEE shall elect to exercise one or more of such options, it shall do so by
giving LESSOR written notice at least ninety (90) days prior to the expiration
of the primary term or the then current extension, and in such notice LESSEE
shall state the date which it elects to extend the term.

     5.  RENT. LESSEE agrees to pay to LESSOR or its designee a monthly rental
of $11,500, payable in monthly installments during the term of this lease.

     (a) In the event the LESSEE shall exercise its options to extend the
primary term of this lease, the monthly rental during the first option period
shall be $12,650; the monthly rental during the second option period shall be
$13.250 and, the monthly rental during the third option period shall be $13,900.

     (b) All rental provided for herein shall be paid in advance on or before
the fifth (5th) day of each month (unless such rental shall be abated or
diminished as provided hereinafter).

     6.  UTILITIES. LESSEE agrees to pay, before delinquency, all utility
charges used by it, including but not limited to gas, electricity, and water.

                                       2
<PAGE>   3

     7.  TAXES. LESSEE agrees to be responsible for all taxes levied upon
personal property, including trade fixtures and inventory, not owned by LESSOR
and kept on leased premises. LESSEE agrees to pay all taxes and assessments,
including RID's OR SID's, levied against the land and building and improvements,
and, upon request, agrees to furnish LESSOR with receipts showing payment
thereof. LESSEE shall have the right to direct LESSOR'S vote for or against any
new SID's or RID's.

     8.  MAINTENANCE. LESSEE agrees to maintain in good repair the outside
walls, roof and floor of the building and the surface of the parking area,
sidewalks and driveways, as well as the structural soundness of the building,
and all underground gas, water and sewer pipes. LESSEE agrees to keep the inside
of the building in good repair including plumbing, electrical, wiring, air
conditioning and heating equipment and those parts of underground gas, water and
sewer pipes as are contained in or are directly beneath the floor of the
building, and paint the exterior walls and be responsible for all glass,
casualty damage, reasonable wear and tear expected.

     9.  HAZARDOUS SUBSTANCE. Except those as currently in use as listed in
Exhibit "B" Hazardous Chemical List, and those considered as common cleaning
products commercially available, LESSEE shall not use any hazardous or toxic
substances without prior written notice to LESSOR. Said notice shall identify
the substance to be used, the area in which the substance is to be used, the
manner in which the substance is to be stored and applied, and the plans to
dispose of any excess. LESSOR has the option of refusing to consent to such use,
storage or disposal of toxic substances, and LESSEE's failure to comply with
such decision shall constitute a default by LESSEE. All hazardous or toxic
materials shall be used strictly in accordance with all applicable laws, rules
and ordinances, and LESSEE shall not allow any hazardous or toxic waste into the
air, ground or water that is not in compliance with said laws or regulations.
LESSEE shall indemnify and hold LESSOR harmless from any claims, liability,
loss, cost or expense

                                       3

<PAGE>   4

(including but without limitation, attorney fees) resulting from hazardous or
toxic wastes placed on the property by LESSEE.

     10. ALTERATIONS. LESSEE shall not make any alterations involving structural
changes after the initial construction of the improvements on the property,
without securing LESSOR'S written consent, which shall not be unreasonably
withheld. Other alterations or additions, such as to signage and
non-weightbearing partitions, may be made by LESSEE in good workmanlike manner
without cost to LESSOR and without LESSOR'S permission. LESSEE shall permit no
liens to attach to the premises by virtue of alterations or additions by LESSEE.

     11. TRADE OR OTHER FIXTURES. LESSEE may install or cause to be installed
such equipment as reasonably necessary for the operation of its business. Such
equipment may be installed prior to acceptance of the improvements and shall
remain personal property, and title hereto shall continue in the owner thereof,
regardless of the manner in which same may be attached or affixed to the
premises. In the event such equipment is subject to a lien or title retention
instrument, the holder of such liens or title retention instrument, shall have
the right and be able to enforce the same as stated therein.

     12. BUILDING EXPANSION. The entire acreage described in paragraph 2 is
reserved for the present or future use of the LESSEE. Without the written
consent of the LESSEE the LESSOR shall not subdivide the property during the
term of this lease or any extension thereof. Should the LESSOR be unable or
unwilling to construct additional facilities as requested by the LESSEE during
the initial term of this lease or any extension thereof, LESSEE may exercise an
option to purchase the property as provided in paragraph 21.

     13. CASUALTY DAMAGE AND INSURANCE. With respect to the building to be
erected on the leased premises, the LESSEE shall procure and maintain in force,
at LESSEE'S expense, a standard fire and extended coverage insurance policy of
the type then commonly purchased by the owners of commercial buildings in the
same area in which the leased

                                       4

<PAGE>   5

premises are situated, in an amount not less than $1,000,000. In the event of
loss by reason of the perils covered under such insurance, proceeds of any
insurance allowance of settlement shall be made available to the LESSEE for the
use for the purpose of repairing, restoring and/or replacing such damaged
building to the extent of such insurance proceeds. If the building cannot be
used during such repairing, restoring or replacing, the rentals reserved to the
LESSOR shall be temporarily abated and the LESSEE shall cause the required
repairing, restoring or replacing to be completed as expeditiously as possible.
In the event of loss by reason of perils covered by said insurance in excess of
the face amount of said insurance policy or of a loss from perils not covered by
said insurance, LESSOR shall have the option of receiving any insurance proceeds
and, at LESSOR'S expense, repairing and restoring said premises to its original
condition, or leaving the premises unrepaired. If the LESSOR elects not to so
repair and restore said premises, then the LESSEE shall have the option to
receive the insurance proceeds, if any, and so repair and restore the premises
at the LESSEE'S expense. In the event that neither the LESSOR nor the LESSEE
elect to repair and report the premises as aforesaid, then the insurance
proceeds shall be payable to the LESSOR and this lease shall thereupon
terminate. The LESSEE agrees to have such insurance as is required to be
procured and maintained by the LESSEE issued in the name of the LESSOR with
LESSEE as an additional insured, with a loss payable to any mortgages designated
by the LESSOR, and to deliver to the LESSOR and the LESSOR'S mortgagor, if any,
appropriate evidence of the existence of such insurance, together with the said
premium receipts therefore, and to keep the same in effect and in full force and
effect throughout the entire term of this lease or extension or renewal thereof.

     14. LIABILITY INSURANCE. LESSEE agrees at LESSEE'S expense to maintain in
force continuously throughout the term of this lease and any extension thereof
public liability insurance covering the leased premises, with limits of ONE
MILLION DOLLARS ($1,000,000.00) for death or injury to one person; FIVE HUNDRED
THOUSAND DOLLARS ($500,000.00) for death or

                                       5

<PAGE>   6

injury to more than one person; and FIFTY THOUSAND DOLLARS ($50,000.00) for
property damage with a $2,000,000.00 COMBINED SINGLE LIMIT, and shall upon
written request of LESSOR, furnish LESSOR a certificate by the insurer that such
insurance is in force. The LESSOR shall be named as an additional insured in
such policies of insurance.

     15.  COMPLIANCE'S WITH LAWS. LESSEE will promptly comply with all
applicable and valid laws, ordinances, and regulations of Federal, State,
County, Municipal or other lawful authority pertaining to the use and occupancy
of the leased premises.

     16.  BANKRUPTCY. Should LESSEE make an assignment for the benefit of
creditors, or be adjudicated bankrupt, such action shall constitute a breach of
this lease for which LESSOR, at its option, may terminate all rights of LESSEE
or its successors in interest under this lease.

     17.  EMINENT DOMAIN. If all of the leased premises is taken under the power
of eminent domain or conveyed under threat of condemnation proceedings, or if
only a part of such premises is so taken or conveyed and LESSEE shall determine
that the remainder is inadequate or unsatisfactory for its purposes, which
determination shall not be arbitrarily or capriciously made, then in either
event, this lease shall terminate effective as of the date LESSEE is required to
give up the right to occupy or use any part of the leased premises. The
termination of this lease as above provided shall not operate to deprive LESSEE
of the right to make claim against the condemning authority for any damage
suffered by LESSEE, but LESSEE shall have no right to make any claim against
LESSOR because of any such termination. If this lease is not terminated as above
provided, LESSOR and LESSEE shall agree upon an equitable reduction of the
rental.

     17a. ARBITRATION. If the parties fail to agree upon such reduction within
sixty (60) days from the date of the final award or payment for the part of the
leased premises so taken or conveyed, LESSOR and LESSEE shall each choose one
arbitrator and the two arbitrators so chosen shall choose a third arbitrator.
The decision of any two of the arbitrators as to the rental

                                       6

<PAGE>   7

reduction, if any, shall be binding on LESSEE and LESSOR and any expense of the
arbitration shall be divided equally between LESSEE and LESSOR.

     18. ATTORNEY'S FEES. If suit is brought to enforce any covenant herein
contained, the parties hereto agree that the losing party shall pay the
prevailing party a reasonable attorney's fee, which shall be fixed by the court,
and court costs.

     19. DEFAULT. In the event LESSEE shall default in the payment of the
monthly rent as provided herein, LESSOR shall promptly so notify LESSEE in
writing, and failure of LESSEE to cure such default within twenty (20) days
after receipt of such notice shall, at the option of the LESSOR, work as a
forfeiture of this lease, or LESSOR may enforce performance in any manner
provided by law, and LESSOR'S agent or attorney shall have the right without
further notice or demand to re-enter and remove all persons from LESSOR'S
property without being deemed guilty of any manner of trespass and without
prejudice to any remedies for arrears of rent or breach of covenant, or LESSOR'S
agent or attorney may resume possession of the property and relet the same for
the remainder of the term at the best rental such agent or attorney can obtain
for the account of LESSEE, who shall pay any deficiency, and LESSOR shall have a
lien as security for such rental upon the fixtures and equipment belonging to
LESSEE which are on the demised premises. In the event LESSEE shall default in
the performance of any of the terms or provisions of this lease other than the
payment of monthly rent, LESSOR shall promptly so notify LESSEE in writing. If
LESSEE shall fail to cure default within twenty (20) days after receipt of such
notice, or if the default is one of such character as to require more than
twenty (20) days to cure and LESSEE shall fail to commence to do so within
twenty (20) days after receipt of such notice and thereafter diligently proceed
to cure such default, then in either such event, LESSOR may cure such default
and such expense shall be added to the rent otherwise due, but any such default
shall not work as a forfeiture of this lease.

                                       7

<PAGE>   8

     In the event LESSOR shall default in the performance of any of the terms or
provisions of this lease, LESSEE shall so promptly notify LESSOR in writing. If
LESSOR shall fail to cure such default within twenty (20) days after receipt of
such notice, or if the default is of such character as to require more than
twenty (20) days to cure and LESSOR shall fail to commence to do so within
twenty (20) days after receipt of such notice and thereafter diligently proceed
to cure such default, then, in either such event LESSEE may cure such default
and such expense shall be deducted from the rent otherwise due or cancel and
terminate this lease.

     20. RIGHT OF FIRST REFUSAL. If during the term of this lease, or any
extension thereof, LESSOR shall receive a bona fide offer to purchase the
demised premises, which offer is acceptable to LESSOR, LESSOR agrees that LESSEE
shall have and is hereby granted an option to purchase the demised property upon
the same terms and provisions. LESSOR agrees immediately after receipt of such
an offer to give LESSEE notice in writing of the terms and provisions thereof,
and that LESSEE may exercise its option to purchase said property at any time
within twenty (20) days after such notice is received by LESSEE. If LESSEE shall
elect to exercise such option it shall do so by giving written notice to LESSOR
within such twenty (20) day period and a contract of sale shall be executed by
the parties and title closed within a reasonable time thereafter. The failure of
LESSEE to exercise the option provided in this article shall in no way relieve
or release LESSOR or its assigns from the terms and effect of the option granted
in paragraph 21.

     21. OPTION TO PURCHASE. Any time after the tenth (10th) lease year, or
earlier as provided in paragraph 12, by notification to LESSOR of LESSEE'S
intentions, LESSEE may exercise an option to purchase the property at a price to
be determined by the average of two MAI appraisals, but in no event may the
purchase price be less than eleven (11) times the annual rental at the time the
option is exercised; provided, however, that written notice of the exercise of
said option, accompanied by an earnest money deposit of TWENTY THOUSAND DOLLARS
($20,000.00) must be given to LESSOR within sixty (60) days of exercise of the
option. Upon

                                       8

<PAGE>   9

receipt of said notice and earnest money by LESSOR, the parties shall execute an
agreement to consummate said sale and the sale shall be closed within a
reasonable time thereafter, but, in all events, not later than one hundred
twenty (120) days of the notice of exercise of the option. Rent is to be
apportioned to date of closing.

     22. LESSOR'S COVENANTS. LESSOR covenants that it has good and marketable
title to the demised premises in fee simple absolute. In the event LESSEE
exercises its option to purchase as described above, LESSOR shall convey the
premises free and clear of all encumbrances except right-of-way, federal patents
and mineral reservations, easements, and building and use restrictions of
record.

     23. QUIET ENJOYMENT. That LESSEE upon paying the rent and performing the
covenants and agreements of this lease shall quietly have, hold and enjoy the
demised premises and all rights granted LESSEE in this lease during the term
thereof and extensions thereto, if any.

     24. SUBORDINATION. LESSEE hereby agrees that its lease-hold interest
hereunder is subordinate to any mortgages now on, or hereafter to be placed on
the premises leased hereunder; provided, as a condition precedent to such
subordination, each such mortgage shall expressly covenant or each mortgage
shall expressly provide that so long as the LESSEE is not in default under said
LEASE AGREEMENT, the LESSEE'S quiet possession of the portion of the premises
leased hereunder shall remain undisturbed, on the terms and conditions stated
herein, whether or not the mortgage is in default and notwithstanding and
foreclosure or other action brought by the holder of the mortgage in connection
therewith.

     25. ASSIGNMENT AND SUBLETTING. LESSEE shall have the right to assign or
sublease the whole or any part of the demised premises, provided that any
assignment or sublease shall be subject to all of the terms and conditions of
this lease and that LESSEE shall remain primarily liable for the payment of the
rent and the performance of the terms and conditions of this lease, unless
LESSOR shall agree otherwise.

                                       9

<PAGE>   10

     26. NOTICES. Any notices required or permitted hereunder shall be in
writing and delivered either in person to the other party or under other party's
authorized agent, or by the United States Certified Mail, Return Receipt
Requested, postage fully prepaid or by fax follow-up by regular mail, to the
addresses set forth hereinafter, or to such other addresses as either party may
designate in writing and deliver as herein provided.

     LESSOR:    ANTHONY WAYNE OIL CORPORATION
                    702 Commerce Building
                    Fort Wayne, Indiana 46802

     LESSEE:        ILX LIGHTWAVE CORPORATION/Attn:
                    Randall T. Dugger
                    P.O. Box 6310
                    Bozeman, Montana 59771

     27. RECORDATION. This lease agreement shall not be filed for public record
by any party hereto, but when the construction of the building and other
improvements is completed as herein provided LESSOR and LESSEE shall execute and
acknowledge a memorandum or short form lease setting forth the parties,
description of the leases premises, term of the lease, options for extension of
the term, if any and other provision hereof, the inclusion of which shall be
mutually agreed upon by LESSOR and LESSEE, which memorandum of short form lease
may be filed for public record by any party hereto. However, at the option of
either party a short form memorandum of lease may be filed by either party at
any time after the execution of this lease agreement.

     28. COMPLETE AGREEMENT. This lease contains a complete expression of the
agreement between the parties and there are no promises, representation or
inducements except such as are herein provided.

                                       10

<PAGE>   11

This lease agreement shall inure to be benefit of and be binding upon the
parties hereto and their respective heirs, legal representatives, successors and
assigns.

EXECUTED BY LESSOR this 28th day of December, 1992

                                    ANTHONY WAYNE OIL CORPORATION, by

                                    -----------------------------------------
                                    Thomas W. Silva, President

EXECUTED BY LESSEE this 22nd day of December, 1992

                                    ILX LIGHTWAVE CORPORATION, by

                                    -----------------------------------------
                                    Lawrence A. Johnson, President/CEO

                                       11

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