Document:

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.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    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. 

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    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.

    
 

    *************************

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    [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]

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    [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:

       

      _________________________

       

      _________________________Unassociated Document

    [Puda
      Coal Letterhead]

    

    July
      23,
      2008

    

    

    Ms.
      Qiong
      Wu

    Room
      2-302, Building 5, Shuanghui Zone, 

    Chaoyang
      District, 

    Beijing,
      China 100024

    

    Dear
      Ms.
      Wu:

    

    Puda
      Coal, Inc. (the “Company”)
      is
      pleased to offer you the position of Chief Financial Officer (“CFO”)
      of the
      Company on a full time basis. The board of directors (the “Board”)
      and
      the management team of the Company are impressed with your credentials and
      we
      look forward to your future success in this position.

     

    The
      terms
      of your new position with the Company are as set forth below:

     

    1.    Position.

     

    (a)
      You
      will become the CFO of the Company, working out of the Company’s headquarters
      office in Taiyuan City, Shanxi Province, China or any other location that is
      required for you to fulfill the duties of CFO of the Company. You
      will
      report to the Board and Chief Executive Officer of the Company and perform
      such
      services incident to your position as provided in the bylaws of the Company
      or
      as the Board may direct.

     

    (b)
      You
      agree to the best of your ability and experience that you will at all times
      loyally and conscientiously perform all of the duties and obligations required
      of and from you pursuant to the express and implicit terms hereof, and to the
      reasonable satisfaction of the Company. During the term of your employment,
      you
      further agree that you will devote all of your business time and attention
      to
      the business of the Company, the Company will be entitled to all of the benefits
      and profits arising from or incident to all such work, services and advice,
      you
      will not render commercial or professional services of any nature to any person
      or organization, whether or not for compensation, without the prior written
      consent of the Company, and you will not directly or indirectly engage or
      participate in any business that is competitive in any manner with the business
      of the Company. Nothing in this letter agreement will prevent you from accepting
      speaking or presentation engagements in exchange for honoraria or from serving
      on boards of charitable organizations, or from owning no more than one percent
      (1%) of the outstanding equity securities of a corporation whose stock is listed
      on a national stock exchange.

     

    2.    Start
      Date.
      Subject
      to fulfillment of any conditions imposed by this letter agreement, you commence
      this new position with the Company on July 23, 2008 (the “Start
      Date”).
      

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
          Ms.
            Qiong
            Wu

          July
            23,
            2008

          Page
            2

        

      

    

     

    3.    Compensation.
      You
      will
      be paid a monthly salary of $10,000, which is equivalent to $120,000 on an
      annualized basis (the “Base
      Salary”).
      Your
      salary will be payable monthly
      pursuant
      to the Company’s regular payroll policy. You may also receive an annual bonus
      based on your performance as determined by the compensation committee of the
      Board. In
      addition, you will be entitled to participating in the stock option plan of
      the
      Company if and when the Company adopts such a plan. Your
      compensation will be reviewed annually by the Board and the compensation
      committee of the Board as part of the Company’s executive compensation review
      process. 

     

    4.    Benefits.
      

     

    (a) Insurance
      Benefits.
      You are
      entitled to participating in any or all employee benefits, medical insurances,
      and other benefit plans that the Company has. Such welfare and benefits provided
      to you by the Company shall be subject to (i)
      the
      requirements of the Labor Laws and applicable regulations of the People’s
      Republic of China (ii)
      the
      terms of the applicable plan documents, if any, (iii)
      general
      policy of the Company, if applicable, and (iv)
      the
      discretion of the Board, relevant committees of the Board or any other
      administrator of such plans. 

     

    (b) Vacation;
      Sick Leave.
      You
      are
      entitled to a ten days paid vacation per year.

     

    (c) Expenses
      Reimbursement.
      The
      Company agrees to reimburse you for all reasonable, ordinary and necessary
      expenses properly incurred by you in connection with the performance of your
      duties hereunder, provided that proper vouchers are submitted to the Company
      by
      you evidencing such expenses and the purposes for which the same were incurred.
      

     

    5.    Confidentiality
      and Insider Trading.
      You
      hereby acknowledge that your services to be render under this letter agreement
      are of a special, unique and extraordinary character and, in connection with
      such services, you will have obtained trade secrets and other non-public
      information concerning the Company, any affiliate of the Company and their
      affairs, including but not limited to the business methods, information systems,
      financial data and strategic plans which are unique assets of the Company or
      any
      affiliate of the Company, as the case may be (“Confidential
      Information”),
      the
      use or disclosure of which would cause irreparable harm to the Company. You
      covenant not to, either directly or indirectly, in any manner, utilize or
      disclose to any person, firm, corporation, association or other entity any
      Confidential Information or engage in any illegal insider trading activities
      during your term and thereafter. You further acknowledge that money damages
      are
      not sufficient remedy for your breach of this letter agreement, and that the
      Company shall be entitled, in addition to any and all other remedies available
      to the Company, to the entry of preliminary injunction as a remedy for such
      breach or contemplated breach without the need to post a bond and without proof
      of actual damages. 

    

    6.    Non-Compete;
      Non-Solicitation.
      You
      agree that during your term and for a period of one year commencing on the
      termination of your employment hereunder, you will not without the prior written
      consent of the Company (a) solicit or induce any employee, agent or independent
      contractor of the Company or any affiliate of the Company to terminate his
      relationship with the Company or the Company’s affiliate, or (b) participate in,
      render services to, or become employed by, any business enterprise which is
      engaged in business activities competitive with the business of the Company
      or
      any affiliate of the Company as then conducted or may be determined by the
      Company as potentially competitive with the ongoing business of the Company
      or
      any affiliate of the Company. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
          Ms.
            Qiong
            Wu

          July
            23,
            2008

          Page
            3

        

      

    

    

    7.    At-Will
      Employment.
      Your
      employment with the Company will be on an “at will” basis, meaning that either
      you or the Company may terminate your employment at any time upon 30 days
      written notice for any reason or no reason, without further obligation or
      liability; provided that if your employment with the Company is terminated
      by
      the Company without “cause,” the Company will pay you a severance payment equal
      to three months Base Salary in effect during the year you are terminated. For
      the purposes of this letter, “cause” shall mean: (i) your repeated failure to
      perform one or more of your essential duties and responsibilities to the
      Company, as determined by the Board in its sole discretion, after 10 day written
      notice to you and a chance to cure; (ii) your failure to follow the lawful
      directives of the Board; (iii) your material violation of any Company policy,
      including any provision of Code of Conduct or Code of Ethics of the Company
      then
      in effect, if any; (iv) your commission of any act of fraud, embezzlement,
      dishonesty or any other willful misconduct that in the reasonable judgment
      of
      the Board has caused or is reasonably expected to result in material injury
      to
      the Company; (v) your unauthorized use or disclosure of any Confidential
      Information of the Company or any other party to whom you owe an obligation
      of
      nondisclosure as a result of your relationship with the Company; (vi) your
      conviction of a felony or misdemeanor (other than a traffic offense); (vii)
      your
      willful breach of any of your obligations under any written agreement with
      the
      Company; (viii) your violation of any duties and responsibilities of a principal
      executive officer under the applicable laws, including but not limited to your
      fiduciary duty to the Company under the laws of the State of Florida and your
      responsibilities under the United States federal securities laws.

     

    8.    No
      Conflicting Obligations.
      You
      understand and agree that by accepting this offer of employment, you represent
      to the Company that your performance will not breach any other agreement to
      which you are a party and that you have not, and will not during the term of
      your employment with the Company, enter into any oral or written agreement
      in
      conflict with any of the provisions of this letter agreement or the Company’s
      policies. You are not to bring with you to the Company, or use or disclose
      to
      any person associated with the Company, any confidential or proprietary
      information belonging to any former employer or other person or entity with
      respect to which you owe an obligation of confidentiality under any agreement
      or
      otherwise. The Company does not need and will not use such information and
      we
      will assist you in any way possible to preserve and protect the confidentiality
      of proprietary information belonging to third parties. Also, we expect you
      to
      abide by any obligations to refrain from soliciting any person employed by
      or
      otherwise associated with any former employer and suggest that you refrain
      from
      having any contact with such persons until such time as any non-solicitation
      obligation expires.

     

    9.    True
      Disclosure.
      You
      have represented to the Company that (a) your prior work experience is as
      disclosed to the Company in writing and (b) you are not a party to or otherwise
      bound by any order, decree or judgment. 

     

    10.    Indemnification.
      The
      Company shall indemnify and defend you and hold you harmless, to the full extent
      allowed by the law of the State of Florida, and as provided by, or granted
      pursuant to, any charter provision of the Company, both as to action in your
      official capacity and as to action in another capacity while holding such
      office, except for matters arising out of your gross negligence or willful
      misconduct. 

     

    11.    Entire
      Agreement.
      This
      letter agreement sets forth the entire agreement and understanding between
      you
      and the Company (including any affiliate of the Company) relating to your
      employment and supersedes all prior agreements and discussions between us.
      

     

    12.    Amendment.
      This
      letter may not be modified or amended except by a written agreement, signed
      by
      an officer of the Company, although the Company reserves the right to modify
      unilaterally your compensation, benefits, job title and duties, reporting
      relationships and other terms of your employment. 

     

    13.    Governing
      Law and Dispute Resolution.
      This
      letter agreement shall be interpreted in accordance with, and the rights of
      the
      parties hereto shall be determined by, the laws of New York without reference
      to
      its conflicts of laws principles. Any dispute arising from or in connection
      with
      this contract shall be submitted to China International Economic and Trade
      Arbitration Commission (“CIETAC”)
      in
      Beijing for arbitration, which shall be conducted in accordance with CIETAC’s
      arbitration rules in effect at the time of applying for arbitration. The
      arbitral award is final and binding upon both parties. The parties agree that:
      (a) The venue of arbitration is Beijing. The hearing of arbitration may be
      conducted in Beijing or, to the extent permitted by CIETAC’s arbitration rules,
      any other place as agreed on by the parties as the most convenient place; (b)
      The language to be used during the arbitration proceedings should be Chinese;
      and (c) A one-arbitrator tribunal will be appointed jointly by both parties
      and
      the arbitration should follow the ordinary proceeding. In case the parties
      fail
      to jointly appoint the arbitrator, the arbitrator should be appointed by the
      chairman of CIETAC upon the joint authorization of the parties. The parties
      may
      select the arbitrator from the panel of arbitrators provided by CIETAC, and
      to
      the extent permitted by CIETAC’s arbitration rules, from outside of the panel.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        Ms.
          Qiong
          Wu
          July
            23,
            2008

          Page
            4

        

      

    

     

    We
      are
      all delighted to be able to extend you this offer and look forward to working
      with you. To indicate your acceptance of the Company’s offer, please sign and
      date this letter agreement in the space provided below and return it to me.
      

     

    

      
        	
                Very
                  truly yours,

              	
                ACCEPTED
                  AND AGREED:

              
	 	 
	
                PUDA
                  COAL, INC.

              	
                QIONG
                  WU

              
	/s/
                Liping Zhu	 
	
                By:
                  Liping Zhu

              	
                /s/
                  Qiong Wu

              
	
                Title:
                  President and Chief Executive Officer

              	
                Signature

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