LAURUS MASTER FUND, LTD. c/o Laurus Capital Management, LLC New York, New York 10022
LAURUS
MASTER FUND, LTD.
c/o
Laurus Capital Management, LLC
000
Xxxxx Xxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
December
28, 2006
Modtech
Holdings, Inc.
0000
Xxxxxxx Xxxxxx
Xxxxxx,
Xxxxxxxxxx 00000
Attention:
Chief Financial Officer
Gentlemen:
Reference
is made to (a) the Secured Convertible Term Note (the “Note”)
dated
October 31, 2006 made by Modtech Holdings Inc. (the “Company”)
in
favor of Laurus Master Fund, Ltd. (“Laurus”);
(b)
the Securities Purchase Agreement (the “Purchase
Agreement”)
dated
as of October 31, 2006; (c) the Common Stock Purchase Warrant dated October
31,
2006 made by the Company in favor of Laurus for the purchase of up to 581,395
Shares of Common Stock (as such terms are defined therein) (“Warrant
No. 1”)
and
(d) the Common Stock Purchase Warrant dated October 31, 2006 made by the Company
in favor of Laurus for the purchase of up to 1,540,697 Shares of Common Stock
(as such terms are defined therein) (“Warrant
No. 2”,
and
together with Warrant No. 1, the “Warrants”
and
each, a “Warrant”).
The
Note, the Purchase Agreement and the Warrants are hereinafter collectively
referred to as, the “Documents”
and
each, as a “Document”.
Capitalized terms used herein that are not defined shall have the meaning given
to them in the Note, Purchase Agreement and/or Warrants, as applicable.
The
Company has requested that Laurus amend the Documents and Laurus is willing
to
do so on the terms and conditions set forth below.
In
consideration of Laurus’ agreement to provide additional financial
accommodations to the Company and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree that:
1. the
last
sentence of Section 2.1(a) of the Note is amended and restated in its entirety
to read as follows:
“For
the
purposes hereof, subject to Section 3.6 hereof, the “Fixed Conversion Price”
means $3.57”;
2. effective
upon the Waiver Effective Date (as defined below), Section 3.2 of the Note
is
amended by replacing the percentage “4.99%” in the tenth and twelfth lines
thereof with “9.99%”
3. the
last
sentence of Section 7.3 of the Purchase Agreement is amended and restated in
its
entirety to read as follows:
“The
Stock Acquisition Limitation shall automatically become null and void without
any notice to the Company upon the earlier to occur of the existence of an
Event
of Default (as defined in the Note) at a time when the average closing price
of
the Company’s common stock as reported by Bloomberg, L.P. on the Principal
Market for the immediately preceding five trading days is greater than or equal
to 150% of the then applicable Exercise Price (as defined in any
Warrant)”;
4. effective
upon the Waiver Effective Date, Section 10 of each Warrant is amended by
replacing the percentage “4.99%” in the tenth and twelfth lines thereof with
“9.99%”;
5. the
parties agree that, upon execution of this letter agreement by both parties,
the
Company will be deemed to have received notice from Laurus of Laurus’ waiver of
the 4.99% conversion limitation set forth in Section 3.2 of the Note and in
Section 10 of each of the Warrants, which waivers shall become effective on
the
61st
day
following the date hereof (the “Waiver
Effective Date”);
and
6. not
later
than January 31, 2007, the Company shall deliver to Laurus letters of litigation
counsel to the Company with regard to the status of (a) Bescto
Electric, Inc. dba Best Electric v. Modtech Holdings, Inc.,
in the
Superior Court of California, Xxxxxx Xxxxx Xxxxxx, Xxxxxxxx Xxxxx Xxxx Xx.
X 00
-00000 and (b) Xxxxxxx
Xxxxxxx, Inc. v.
Modtech Holdings, Inc.,
in the
Superior Court of California, Contra Costa County, Superior Court Case No.
C
06-02229, each such letter in form and substance satisfactory to Laurus, the
failure of which shall constitute an “Event of Default” under the Purchase
Agreement and/or any Related Agreement.
Except
as
specifically amended and/or waived herein, the Note, the Purchase Agreement
and
Warrants shall remain in full force and effect, and are hereby ratified and
confirmed. The execution, delivery and effectiveness of this letter agreement
shall not operate as a waiver of any right, power or remedy of Laurus, nor
constitute a waiver of any provision of the Note, the Purchase Agreement or
any
Warrant.
Immediately
after giving effect to this letter agreement, Laurus shall issue a Notice of
Conversion (as defined in the Note) pursuant to which Laurus shall convert
$3,534,300 of the principal indebtedness under such Note. Upon the Waiver
Effective Date, Laurus shall issue a Notice of Conversion (as defined in the
Note) pursuant to which Laurus shall convert the then remaining outstanding
principal indebtedness under such Note (provided that Laurus shall not
beneficially own over 9.99% of the Company’s outstanding common stock upon such
conversion). Laurus shall not, during the period commencing on the date hereof
and ending on the Waiver Effective Date, exercise or convert any of the
Company’s exercisable or convertible securities owned by it nor otherwise
purchase any of the Company’s securities if such exercise, conversion or
purchase, as the case may be, would result in Laurus' inability to convert
the
remaining outstanding principal indebtedness under the Note on the Waiver
Effective Date
This
letter agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective administrators, successors and assigns and shall
be
governed by and construed in accordance with the laws of the State of New
York.
[Remainder
of the page intentionally blank.]
This
letter agreement may be executed by the parties hereto in one or more
counterparts, each of which shall be deemed an original and all of which when
taken together shall constitute one and the same agreement. Any signature
delivered by a party by facsimile transmission shall be deemed to be an original
signature hereto.
| Very truly yours, | ||
| LAURUS MASTER FUND, LTD. | ||
| |
|
|
| By: | /s/ Xxxxx Grin | |
| Its: | Director | |
CONSENTED
AND AGREED TO:
By:
/s/ Xxxxxxx X.
Xxxxxx
Its:
Chief Financial
Officer
