Unassociated Document


    WAIVER
      AGREEMENT

    


    This
      WAIVER
      AGREEMENT
      (the
“Agreement”)
      is
      dated as of July __, 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 anticipates that it will not be able to meet the milestone
      Projections set forth in the Debentures for the final six-month Milestone Period
      ending June 30, 2008 (the “Last
      Milestone Period”);

    


    WHEREAS,
      the Debentures provide that, upon the occurrence of a Milestone Failure, the
      Conversion Price of the Debentures shall be reduced to equal to the lesser
      of
      (a) the Conversion Price then in effect or (b) the Market Price as determined
      on
      the date that is five Trading Days after the date the Company files its next
      Form 10-Q with the Securities and Exchange Commission following the end of
      the
      applicable Milestone Period.

    


    WHEREAS,
      the parties hereto desire to enter into this Agreement to waive the requirement
      of the Company to undertake a Conversion Cap Redemption pursuant to Section
      9(a)
      of the Debentures as it relates to any additional shares of Common Stock issued
      or issuable to the Debenture holders upon an adjustment to the Conversion Price
      resulting from (i) a Milestone Failure for the Last Milestone Period under
      Sections 3(f)(iii) and 3(f)(iv) of the Debentures; (ii) any subsequent equity
      financing transaction undertaken by the Company that is consummated on or prior
      to August 31, 2008 and which results in an adjustment in the Conversion Price
      under Section 3(f)(i) of the Debentures; and (iii) any voluntary reduction
      of
      the Conversion Price undertaken by the Company’s Board of Directors prior to the
      effectiveness of any Milestone Adjustment resulting from the Milestone Failure
      for the Last Milestone Period.

    


    WHEREAS,
      the parties hereto further desire to enter into this Agreement to defer the
      payment of interest due under the Debentures on July 1, August 1 and September
      1, 2008 in consideration for the Company’s issuance to the Creditors of three
      shares of common stock for each dollar of deferred interest on the terms and
      conditions set forth herein.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    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; Effectiveness of Waivers.
      

     

    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.

     

    1.3 Effectiveness
      of Waivers.
      The
      waiver of the Conversion Cap Redemption under Section 2 of this Agreement shall
      become effective only if Creditors 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 “Conversion
      Cap Redemption Waiver Effective Date”
shall
      be the date on which the foregoing condition is satisfied. If such condition
      is
      not satisfied for whatever reason, the waivers set forth in Section 2 below
      shall have no force or effect. Notwithstanding the foregoing, the provisions
      of
      Section 3 below shall not be subject to the foregoing condition and shall become
      effective with respect to any Debenture immediately upon the execution and
      delivery of this Agreement by the Company and the holder of such Debenture.
      

     

    2. Waiver
      of Conversion Cap Redemption.
      As of
      the Conversion Cap Redemption Waiver Effective Date, each Creditor hereby waives
      the requirement of the Company to undertake a Conversion Cap Redemption pursuant
      to Section 9(a) of the Debentures as it relates to any additional shares of
      Common Stock issued or issuable to the Debenture holders upon an adjustment
      to
      the Conversion Price resulting from any of the following events (each, an
“Exempt
      Event”):
      (i) a
      Milestone Failure for the Last Milestone Period under Sections 3(f)(iii) and
      3(f)(iv) of the Debentures; (ii) any subsequent equity financing transaction
      undertaken by the Company that is consummated on or prior to August 31, 2008,
      which results in an adjustment in the Conversion Price under Section 3(f)(i)
      of
      the Debentures; and (iii) any voluntary reduction of the Conversion Price
      undertaken by the Company’s Board of Directors prior to the effectiveness of any
      Milestone Adjustment under the Debentures resulting from the Milestone Failure
      for the Last Milestone Period. The parties hereby acknowledge and agree that,
      as
      of the Conversion Cap Redemption Waiver Effective Date, (i) any shares of Common
      Stock issued or issuable to a Holder resulting from any adjustments to the
      Conversion Price following an Exempt Event shall not be counted in determining
      the Fully Diluted Conversion Amount of a Holder under Section 9(a) of the
      Debentures; and (ii) the Company shall not be required to undertake any
      Conversion Cap Redemption with respect to any such shares. 

     

    3. Interest
      Payment Deferral; Common Stock Issuance.
      

     

    3.1 Interest
      Payment Deferral.
      Each
      Creditor hereby agrees to defer the payment of interest due under the Debentures
      on July 1, August 1 and September 1, 2008 (the “Deferral
      Period”).
      The
      amount of interest being deferred under each Debenture shall be added to the
      principal amount due under such Debenture and shall be deemed payable as
      additional principal amount due on the Maturity Date in accordance with the
      terms and conditions of the Debentures. Each Creditor hereby acknowledges and
      agrees that, so long as the Company complies with its obligations under Section
      3.2 below, the failure to pay interest during the Deferral Period shall not
      constitute an Event of Default under the Debentures.

     

    
      
         

      

      
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    3.2 Common
      Stock Issuance.
      In
      consideration for the deferral of payment of interest during the Deferral
      Period, the Company shall issue to each Creditor a number of duly and validly
      issued, fully paid and non-assessable shares of common stock equal to three
      (3)
      shares for each dollar ($1.00) of interest being deferred by such Creditor.
      The
      Company shall deliver such shares of common stock to such Creditor as promptly
      as practicable following the execution and delivery of this Agreement by the
      Company and such Creditor. Each
      Creditor hereby consents to such issuance and, to the extent applicable, waives
      for all Creditors any anti-dilution adjustments or defaults that could otherwise
      occur solely as a result of such issuance.

     

    4. Representations
      and Warranties.
      

     

    4.1 Duly
      Authorized Shares.
      The
      Company hereby represents and warrants to each Creditor that the shares of
      common stock issuable under Section 3.2 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.


     

    4.2 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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    5. Miscellaneous.

     

    5.1 Effect
      of Agreement.
      Except
      as set forth expressly herein, all terms of the Debentures shall be and remain
      in full force and effect. 

     

    5.2 Governing
      Law.
      THIS
      AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF
      THE
      STATE OF NEW YORK.

     

    5.3 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.

     

    5.4 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.

     

    5.5 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.

     

    5.6 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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    [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:

     

    _________________________

     

    _________________________

    
 

    


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      PAGES CONTINUE]

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    


    


    [SIGNATURE
      PAGE TO QPC

    WAIVER
      AGREEMENT]

    


    


    APRIL
      CREDITORS:

    


    Print
      Name: _________________________    

    


    By: _______________________________

    Name:

    Title:

    


    Signature
      Date:                                          

    


    Address
      for Notice:

     

    _________________________

     

    _________________________

    


    


    


    [SIGNATURE
      PAGES CONTINUE]


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    [SIGNATURE
      PAGE TO QPC

    WAIVER
      AGREEMENT]

    


    


    MAY
      CREDITORS:

    


    
      Print
        Name: _________________________    

      


      By: _______________________________

      Name:

      Title:

      


      Signature
        Date:                                          

      


      Address
        for Notice:

       

      _________________________

       

      _________________________