CONSENT, WAIVER AND AMENDMENT AGREEMENT May 2008 and July 2008 Debentures
Exhibit
99.3
May
2008 and July 2008 Debentures
This
CONSENT, WAIVER AND AMENDMENT AGREEMENT
(the
“Agreement”)
is
made as of September __, 2008, by and among QPC Lasers, Inc., a Nevada
corporation (the “Company”),
the
undersigned holders (collectively, the “Creditors”)
of the
Company’s 10% Discount Secured Convertible Debentures due May 15, 2011 ( the
“May
2011 Debentures”)
and
July 8, 2011 (the “July
2011 Debentures”
and,
together with the May 2011 Debentures, the “Debentures”).
RECITALS
WHEREAS,
the Company is seeking to raise additional capital through the offer and sale
of
units of its common stock and common stock purchase warrants in the an aggregate
principal amount of up to $7.5 million on substantially the terms set forth
in
the term sheet attached hereto as Exhibit A (the “Financing”).
WHEREAS,
in connection with the Financing, the parties hereto desire to enter into this
Agreement to amend and waive certain provisions of the Debentures and the
Securities Purchase Agreement, dated as of July 8, 2008, relating to the sale
and issuance of the July 2011 Debentures (the “Purchase
Agreement”).
WHEREAS,
pursuant to Section 9(e) of the Debentures, the provisions of the Debentures
may
be amended or waived by a written instrument signed by the Company and holders
of 67% in principal amount of the then outstanding Debentures (subject to
certain exceptions not relevant hereto).
WHEREAS,
pursuant to Section 5.5 of the Purchase Agreement, the provisions of the
Purchase Agreement may be amended or waived by a written instrument signed
by
the Company and holders of 67% in interest of the securities issued pursuant
to
the Purchase Agreement.
AGREEMENT
NOW,
THEREFORE, in consideration of the mutual covenants herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Incorporation
of Recitals; Definitions; Effective Date.
1.1 Recitals.
The
Recitals are incorporated herein by reference.
Exhibit
99.3
1.2 Definitions.
Capitalized terms used herein and not otherwise defined shall have the
respective meanings ascribed to them as set forth in the Debentures or the
Purchase Agreement, as the case may be.
1.3 Effective
Date.
Sections 3 and 4 of this Agreement shall become effective only if holders
holding at least 67% of the outstanding principal amount of the Debentures
have
executed and delivered this Agreement to the Company. Section 2 of this
Agreement shall become effective only if holders of at least 67% of the
outstanding principal amount of the July 2011 Debentures have executed and
delivered this Agreement to the Company. The “Effective Date” with respect to
Sections 2, 3 and 4 shall mean the date in which the relevant condition set
forth above is satisfied.
2. Consent
and Waivers for the Financing.
2.1 Consent.
Each
holder of a July 2011 Debenture hereby consents to the Financing, it being
understood that the numbers of shares of common stock and common stock warrants
that make up a unit, the purchase price of a unit and the exercise price of
the
warrants being offered for sale pursuant to the term sheet attached hereto
as
Exhibit A may be subject to change. Notwithstanding such changes, upon the
Effective Date, this Agreement, including without limitations the consent
granted hereby, shall remain in full force and effect so long as the number
of
shares of common stock that makes up a seventy-five thousand dollar unit is
within the range of 500,000 to 750,000 shares and the number of common stock
warrants that makes up a unit is within the range of 750,000 to 1,875,000
warrant shares.
2.2 Waivers
to Purchase Agreement Provisions.
Solely
in connection with the Financing, each holder of July 2011 Debentures hereby
waives the restrictions set forth in Section 4.13(a) of the Purchase Agreement
relating to subsequent equity sales.
3. Waiver
of Optional Redemption Rights.
The
Creditors hereby agree to waive, solely with respect to the Financing, the
application of the optional redemption rights set forth in Section 6(b) of
the
Debentures. The parties hereby agree that, upon the Effective Date with respect
to Section 3, no holder of Debentures shall have any optional redemption rights
as a result of the Financing.
4. Waivers
to Debenture Provisions.
Solely
in connection with the Financing, the undersigned hereby waives (i) any
adjustments to the Conversion Price pursuant to any provisions of Section 5(b)
of the Debentures; and (ii) any and all Events of Default under Section 8 of
the
Debentures.
5. Interest
Payment Deferral.
From
and after the Effective Date with respect to Section 2 hereof, the undersigned
hereby agrees to a deferral of the cash payment of interest due under the
Debentures by fifty percent (50%) beginning on the first month following the
Effective Date with respect to Section 2 hereof and continuing until the
Maturity Date (the “Deferral
Period”).
The
undersigned agrees and acknowledges that, during the Deferral Period, the
Debentures held by the undersigned shall continue to accrue interest at a rate
of ten percent (10%) per annum, except that the Company shall only be obligated
to pay out fifty percent (50%) of the accrued interest in cash on a monthly
basis in arrears during the Deferral Period. The remaining fifty percent (50%)
of the interest being deferred under each Debenture during the Deferral Period
(the “Deferred
Interest”)
shall
be added to the principal amount due under such Debenture. The Deferred Interest
shall be deemed payable as additional principal amount due on the Maturity
Date
(as extended hereby). The undersigned hereby acknowledges and agrees that,
so
long as the Company complies with its obligations hereunder, the payment of
interest in the manner set forth in this Section 5 during the Deferral Period
shall not constitute an Event of Default with respect to the Debentures held
by
the undersigned.
2
Exhibit
99.3
6. Consideration
for Deferral of Interest.
In
consideration of the Creditors’ agreements to defer interest on the Debentures
on the terms set forth herein, upon the Effective Date with respect to Section
2
hereof, the Company hereby agrees to issue to each holder of Debentures a number
of duly and validly issued, fully paid and non-assessable shares of common
stock
equal to four (4) shares for each dollar ($1.00) of Deferred Interest. Upon
the
Effective Date with respect to Section 2 hereof, the
undersigned hereby consents to the issuance of the common stock under this
Section 6 and, to the extent applicable, agrees to waive for all holders any
anti-dilution adjustments or defaults that could otherwise occur under the
Debentures solely as a result of such issuance.
7. Representations
and Warranties.
7.1 Duly
Authorized Shares.
The
Company hereby represents and warrants to each Creditor that the shares of
common stock issuable under Section 6 above (the “Securities”)
have
been duly authorized for issuance and, when issued in accordance with the terms
of this Agreement, will be validly issued, fully paid and nonassessable.
7.2 Accredited
Investor Status; Restrictive Legend.
Each
Creditor hereby confirms its status as either (i) an “accredited investor” as
defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities
Act of 1933, as amended (the “Securities
Act”)
or
(ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the
Securities Act. Each Creditor hereby acknowledges and agrees that the Securities
are “restricted securities” and have not been registered under 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 (this representation and warranty not limiting such Creditor’s right
to sell the Securities in compliance with applicable federal and state
securities laws) in violation of the Securities Act or any applicable state
securities law. Each Creditor hereby agrees to the imprinting of a legend on
any
of the Securities in the following form:
THIS
SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.
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Exhibit
99.3
8. Miscellaneous.
8.1 Effect
of Agreement.
Except
as set forth expressly herein, all terms of the Purchase Agreements and the
Debentures shall be and remain in full force and effect.
8.2 Governing
Law.
THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF
THE
STATE OF NEW YORK.
8.3 Counterparts.
This
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute but one
and
the same agreement.
8.4 Binding
Nature.
This
Agreement shall be binding upon and inure to the benefit of the parties hereto,
their respective successors, successors-in-titles, and assigns.
8.5 Entire
Agreement.
This
Agreement reflect the entire agreement between the parties hereto with respect
to the matters set forth herein and therein and supersede any prior agreements,
commitments, drafts, communication, discussions and understandings, oral or
written, with respect thereto.
8.6 Further
Assurances.
Each
party to this Agreement agrees to execute further instruments as may be
necessary or desirable to carry out this Agreement.
*************************
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Exhibit
99.3
[SIGNATURE
PAGE TO QPC WAIVER AGREEMENT]
IN
WITNESS WHEREOF, this Agreement has been duly executed by the parties as of
the
day and year set forth below.
COMPANY:
QPC
LASERS, INC.
_________________________
By:
Title:
Signature
Date:
Address
for Notice:
[SIGNATURE
PAGES CONTINUE]
5
Exhibit
99.3
[SIGNATURE
PAGE TO QPC
WAIVER
AGREEMENT]
MAY
2008 CREDITORS:
Print
Name:
By:
Name:
Title:
Signature
Date:
Address
for Notice:
[SIGNATURE
PAGES CONTINUE]
6
Exhibit
99.3
[SIGNATURE
PAGE TO QPC
WAIVER
AGREEMENT]
JULY
2008 CREDITORS:
Print
Name:
By:
Name:
Title:
Signature
Date:
Address
for Notice:
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