CONSENT, WAIVER AND AMENDMENT AGREEMENT
Exhibit
99.2
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 “April
Creditors”)
of the
Company’s 10% Secured Convertible Debentures due April 16, 2009 (the
“April
2009 Debentures”),
and
the undersigned holders (collectively, the “May
Creditors”)
of the
Company’s 10% Secured Convertible Debentures due May 22, 2009 (the “May
2009 Debentures,”
together with the April 2009 Debentures, each a “Debenture”
and,
collectively, the “Debentures”)
(the
April Creditors and the May Creditors are herein collectively referred to as
the
“Creditors”).
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 extend the Maturity Dates under the Debentures, amend the manner
in
which interest is paid under the Debentures, and amend and waive certain other
provisions of the Debentures, the Securities Purchase Agreement, dated as of
April 16, 2007, relating to the sale and issuance of the April 2009 Debentures
(the “April
Purchase Agreement”),
the
Securities Purchase Agreement, dated as of May 22, 2007, relating to the sale
and issuance of the May 2009 Debentures (the “May
Purchase Agreement”,
together with the April Purchase Agreement, each a “Purchase
Agreement”
and,
collectively, the “Purchase
Agreements”),
the
Registration Rights Agreement dated as of April 16, 2007 relating to
registration rights applicable to the April 2009 Debentures (the “April
Registration Rights Agreement”)
and
the Registration Rights Agreement dated as of May 22, 2007 relating to
registration rights applicable to the May 2009 Debentures (the “May
Registration Rights Agreement”
and,
collectively with the April Registration Rights Agreement, the “Registration
Rights Agreements”),
on
the term set forth herein.
WHEREAS,
pursuant to Section 10(d) of the Debentures and Section 9(e) of the Purchase
Agreements, the provisions of the Debentures and the Purchase Agreements,
respectively, may be amended by a written instrument signed by the Company
and
holders of 67% in principal amount of the then outstanding
Debentures.
WHEREAS,
pursuant to Section 10 of the Registration Rights Agreements, the provisions
of
the Registration Rights Agreements may be amended by a written instrument signed
by the Company and Buyers holding a majority in interest of the Registrable
Securities.
Exhibit
99.2
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.
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, the
Purchase Agreements or the Registration Rights Agreements, as the case
may
be.
1.3 Effective
Date.
This
Agreement shall become effective only if holders holding at least 67% of
the
outstanding principal amount of the April 2009 Debentures and at least
67% of
the outstanding principal amount of the May 2009 Debentures have executed
and
delivered this Agreement to the Company. The “Effective Date” shall mean the
date in which the foregoing condition is satisfied.
2. Consent
and Waivers for the Financing.
2.1 Consent.
Each
Creditor 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 Creditor hereby waives the covenants
and
restrictions set forth in each of Section 4(e)(i), entitled “Lock up of Issuance
of Securities,” and Section 4(e)(ii), entitled “Capital Raising Limitations,” of
the Purchase Agreements.
2.3 Waivers
to Debenture Provisions.
Solely
in connection with the Financing, each Creditor hereby waives (i) any
adjustments to the Conversion Price pursuant to any provisions of Section
3(f)
of the Debentures, including without limitations, Sections 3(f)(i) and
3(f)(ii)
of the Debentures, that may be triggered as a result of Financing; and
(ii) any
and all Events of Default under Section 7 of the Debentures.
Exhibit
99.2
3. Extension
of Maturity Date.
The
parties hereby agree that, immediately upon the Effective Date, and without
any
further action on the part of any Creditor or the Company, each of the
Maturity
Dates of the April 2009 Debentures and May 2009 Debentures is hereby extended
to
May 31, 2011. From and after the Effective Date, all references to “Maturity
Date” in the Debentures shall refer to the May 31, 2011 date.
4. Interest
Payment Deferral.
From
and after the Effective Date, the parties hereby agree 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 and continuing until the Maturity
Date (the “Deferral
Period”).
The
parties agree and acknowledge that, during the Deferral Period, each Debenture
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). Each Creditor 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 4 during the Deferral Period shall
not
constitute an Event of Default under the Debentures.
5. Registration
Statements on Form S-8.
Each of
Section 3(p) of the Registration Rights Agreements and Section 4(t) of
the
Purchase Agreements is hereby amended through the addition of the following
sentence at the end of each such section: “Notwithstanding the foregoing, the
Company may, without restriction, file a registration statement on Form
S-8, or
an amendment to a registration statement on Form S-8, to cover shares issued
pursuant to any “employee” as defined in the instructions to Form S-8, provided
that the aggregate number of shares covered by all such registration statements
on Form S-8 shall not exceed 20% of the total issued and outstanding shares
of
the Company, calculated on a fully diluted basis.”
6. Definition
of Exempt Issuance.
The
definition of “Exempt Issuance” set forth in Section 1(a) of the Purchase
Agreements is hereby amended to delete the numerical limitations on the
number
of shares, options and warrants issuable to consultants and equipment
lessors.
7. Consideration.
In
consideration of the Creditors’ agreements to consent to the Financing, extend
the Maturity Date and defer interest on the Debentures on the terms set
forth
herein, upon the Effective Date, 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, together with an additional fifty percent
(50%)
warrant coverage. The number of additional warrants to be issued, with
respect
to each Debenture, shall be determined by dividing the principal balance
due
under such Debenture by the current conversion price of 0.2561 and multiplying
the quotient by 0.50. The
additional warrants issuable under this Section 7 shall have substantially
the
same terms and conditions, including the same exercise price and expiration
date, as the common stock purchase warrants issuable as part of the Financing.
Upon the Effective Date, each
Creditor hereby consents to the issuance of the common stock and common
stock
warrants under this Section 7 and, to the extent applicable, waives for
all
holders any anti-dilution adjustments or defaults that could otherwise
occur
under the Debentures solely as a result of such issuance.
Exhibit
99.2
8. Representations
and Warranties.
8.1 Duly
Authorized Shares.
The
Company hereby represents and warrants to each Creditor that the shares
of
common stock and common stock issuable upon exercise of the warrants issuable
under Section 7 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.
8.2 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.
Exhibit
99.2
9. Miscellaneous.
9.1 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.
9.2 Governing
Law.
THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW
OF THE
STATE OF NEW YORK.
9.3 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.
9.4 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.
9.5 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.
9.6 Further
Assurances.
Each
party to this Agreement agrees to execute further instruments as may be
necessary or desirable to carry out this Agreement.
*************************
Exhibit
99.2
[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]
Exhibit
99.2
[SIGNATURE
PAGE TO QPC
WAIVER
AGREEMENT]
APRIL
CREDITORS:
Print
Name:
By:
Name:
Title:
Signature
Date:
Address
for Notice:
[SIGNATURE
PAGES CONTINUE]
Exhibit
99.2
[SIGNATURE
PAGE TO QPC
WAIVER
AGREEMENT]
MAY
CREDITORS:
Print
Name:
By:
Name:
Title:
Signature
Date:
Address
for Notice: