AMENDMENT AGREEMENT
AMENDMENT
AGREEMENT
AMENDMENT AGREEMENT
(this
"
Amendment"),
dated
as of March 31, 2006, by and among Modtech
Holdings, Inc.,
a
Delaware corporation, with headquarters located at 0000 Xxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxx 00000 (the "Company")
and
Amphora
Limited
(the
"Investor").
WHEREAS:
A.
The
Company and the Investor entered into that certain Securities Purchase
Agreement, dated as of December 31, 2004, as amended (the "Securities
Purchase Agreement"),
pursuant to which, among other things, the Investor purchased from the Company
an Amended and Restated Senior Secured Convertible Note dated as of August
5,
2005 (the "Note"),
which
is convertible into shares of the Company's common stock, par value $0.01 per
share (the "Common
Stock"),
in
accordance with the terms thereof.
B.
The
Company and the Investor desire to enter into this Amendment pursuant to which
the Note shall be amended to revise certain terms and conditions set forth
therein.
C.
Capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings ascribed to them in the Note.
NOW,
THEREFORE,
in
consideration of the foregoing recitals and the mutual promises hereinafter
set
forth, the Company and the Investors hereby agree as follows:
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1.
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AMENDMENTS
TO NOTE.
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(a)
Section
9
of the
Note is hereby amended and restated to read in its entirety as
follows:
"(9) HOLDER'S
RIGHT OF OPTIONAL REDEMPTION.
(a) The
Holder shall have the right, in its sole discretion to require that the Company
redeem a portion of this Note (a "Holder
Optional Redemption")
by
delivering written notice thereof (a "Holder
Optional Redemption Notice"
and,
collectively with the Event of Default Redemption Notice, the Change of Control
Redemption Notice and the Mandatory Redemption Notice, the "Redemption
Notices"
and
each a "Redemption
Notice")
to the
Company no later than the August 8th
prior to
any Optional Redemption Date. The Holder Optional Redemption Notice shall
indicate the Conversion Amount the Holder is electing to have redeemed on such
Optional Redemption Date (the "Holder
Optional Redemption Amount");
provided, however, that such Holder Optional Redemption Amount indicated shall
not exceed the applicable Optional Redemption Amount. The portion of this Note
subject to redemption pursuant to this Section 9(a) shall be redeemed by the
Company in cash at a price equal to the Conversion Amount being redeemed (the
"Holder
Optional Redemption Price"
and,
collectively with the Event of Default Redemption Price, the Change of Control
Redemption Price and the Mandatory Redemption Price, the "Redemption
Prices"
and,
each a "Redemption Price");
provided, however, that, only with respect to the First Optional Redemption
Date
and the Second Optional Redemption Date, in the event the Company is prohibited
by the terms of the Current Credit Facility and/or the Intercreditor Agreement
to redeem in cash (and the Company has not otherwise received any necessary
consent of the requisite parties thereunder to take such action) all or any
portion of the Holder Optional Redemption Amount (such amount not able to be
redeemed, the "Optional
Redemption Shortfall Amount"),
the
Company may, at its option, and so long as the Equity Conditions shall have
been
satisfied (or waived in writing by the Holder) during the period from and
including the Company Conversion Notice Due Date through and including the
applicable Optional Redemption Date, satisfy its obligations under this Section
9 with respect to the redemption of all or any portion of such Optional
Redemption Shortfall Amount by delivery of shares of Common Stock to the Holder
(the "Company
Conversion Option").
If
the Company exercises the Company Conversion Option, it shall deliver to the
Holder an irrevocable notice (the "Company
Conversion Notice")
no
later than the August 15th
prior to
the applicable Optional Redemption Date (the "Company
Conversion Notice Due Date")
(A)
stating that the Company is exercising such conversion option, (B) stating
the
portion of the Optional Redemption Shortfall Amount that is the subject of
the
Company Conversion Option (the "Company
Conversion Amount")
and
(C) only with respect to the First Optional Redemption Date and the Second
Optional Redemption Date, certifying that the applicable condition set forth
in
Section 4.3(d) of the Intercreditor Agreement has not been met (the
"Intercreditor
Condition").
In
the event that the Intercreditor Condition has not been met, unless the Company
has in good faith determined that such failure to meet the Intercreditor
Condition does not constitute material, nonpublic information relating to the
Company and its Subsidiaries, the Company shall, prior to or contemporaneously
with the delivery of the relevant Company Conversion Notice, make publicly
available (on a Current Report on Form 8-K or otherwise) the fact that such
condition has not been met for the applicable Optional Redemption Date. If
the
Company determines that no public disclosure is required pursuant to the
foregoing sentence, the Holder shall be allowed to presume that such failure
to
meet the Intercreditor Condition does not constitute material, nonpublic
information relating to the Company and its Subsidiaries. On the day immediately
following the last day of the Company Conversion Measuring Period, the Company
shall provide notice to the Holder of the applicable Company Conversion Price.
Any Company Conversion Amount shall be converted as of the applicable Optional
Redemption Date by dividing such Company Conversion Amount by the Company
Conversion Price.
(b) In
the
event there is an Optional Redemption Shortfall Amount and the Equity Conditions
shall not have been satisfied as required (or waived), the Holder may, at its
option, require the Company to convert all or any portion of the Optional
Redemption Shortfall Amount (such amount, the "Holder
Optional Conversion Amount")
on the
applicable Optional Redemption Date by delivering shares of Common Stock to
the
Holder (the "Holder
Optional Conversion Option").
The
Holder shall state in each Holder Optional Redemption Notice delivered at any
time when the Holder is electing the Holder Optional Conversion Option whether
such Holder will exercise the Holder Optional Conversion Option in the event
there is an Optional Redemption Shortfall Amount. Any Holder Optional Conversion
Amount shall be converted as of the applicable Optional Redemption Date by
dividing such Holder Optional Conversion Amount by the Company Conversion Price.
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(c) Redemptions
required by this Section 9 shall be made in accordance with the provisions
of
Section 13 and any conversions required by this Section upon election by the
Company of the Company Conversion Option or the Holder of the Holder Optional
Conversion Option shall be made in accordance with the provisions of Section
3(c). Notwithstanding anything to the contrary in this Section 9, but subject
to
Section 3(d), until the Holder receives the Redemption Price and/or the shares
deliverable in connection with any Company Conversion Amount or Holder Optional
Conversion Amount, the Holder Optional Redemption Amount may be converted,
in
whole or in part, by the Holder into Common Stock pursuant to Section 3, and
any
such conversion shall reduce the Holder Optional Redemption Amount in the manner
set forth by the Holder in the applicable Conversion Notice."
(b)
Section
15(e)
of the
Note is hereby amended and restated to read in its entirety as
follows:
"(e) Financial
Covenants.
On and
after February 1, 2006, the Company shall satisfy or otherwise comply with
each
of the financial covenants set forth in the Exhibit
II hereto
in
each calendar month. The Company shall (i) provide to the Holder a certificate
certifying compliance with these financial covenants, contemporaneously with
the
delivery of any similar compliance certificate the Company is required to
provide to the lenders or designated agent under the Current Credit Facility,
and (ii) prior to or simultaneously with the delivery to the Holder of any
such
compliance certificate stating that the Company has failed to satisfy any
financial covenant hereunder, publicly disclose such failure."
(c)
Section
17
of the
Note is hereby amended and restated to read in its entirety as
follows:
"REDUCTION
OF LETTER OF CREDIT AMOUNT.
The
Letter of Credit Amount shall be reduced by $5,000,000 if on any Optional
Redemption Date either (a) the holders of the Notes exercise the Holder Optional
Redemption on an Optional Redemption Date for the Aggregate Optional Redemption
Amount or (b) (i) if the Holder Optional Redemption has not been fully exercised
by each Holder on any Optional Redemption Date and (ii) (x) on the First
Optional Redemption Date, the Company has been Profitable for two (2) Calendar
Quarters prior to such First Optional Redemption Date, (y) on the Second
Optional Redemption Date, the Company has been Profitable for two (2) Calendar
Quarters during the period beginning after the First Optional Redemption Date
through the Second Optional Redemption Date, or (z) on the Third Optional
Redemption Date, the Company has been Profitable for one (1) Calendar Quarter
during the period beginning after the Second Optional Redemption Date through
the Third Optional Redemption Date (each of the foregoing (x), (y) and (z),
a
"Profitability
Target").
In
the event that the holders of the Notes exercise the Holder Optional Redemption
for less than the Aggregate Optional Redemption Amount on any Optional
Redemption Date and the Profitability Target for such Optional Redemption Date
has not been met, the Letter of Credit Amount shall be reduced by an amount
equal to the product of (1) $5,000,000, multiplied by (2) a fraction (A) the
numerator of which is the aggregate Conversion Amount redeemed by all holders
on
such Optional Redemption Date and (B) the denominator of which is the Aggregate
Optional Redemption Amount."
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(d)
Section
31(k)
of the
Note is hereby amended and restated to read in its entirety as
follows:
""Company
Conversion Price"
means,
as of any date of determination, that price which shall be computed as 90%
of
the arithmetic average of the Weighted Average Price of the Common Stock during
each of the thirty (30) consecutive Trading Days of the thirty (30) Trading
Day
period commencing on the Trading Day immediately following the Company
Conversion Notice Due Date (such period, the "Company
Conversion Measuring Period")."
(e)
Section
31(m)
of the
Note is hereby amended and restated to read in its entirety as
follows:
""Current
Credit Facility"
means
the Loan and Security Agreement, dated as of March 31, 2006, among the Company,
as borrower, the lenders from time to time party thereto and Bank of America,
N.A., as Agent, together with any amendments, restatements, renewals,
refundings, refinancings or other extensions thereof."
(f)
Section
31(r)
of the
Note is hereby amended and restated to read in its entirety as
follows:
""First
Optional Redemption Date"
means
August 31, 2006; provided,
however, that in the event that the Company shall pay the Optional Redemption
Shortfall Amount in shares of Common Stock, such Optional Redemption Shortfall
Amount shall be due on
September 28, 2006."
(g)
Section
31(v)
of the
Note is hereby amended and restated to read in its entirety as
follows:
""Intercreditor
Agreement"
means
that certain intercreditor agreement dated as of March 31, 2006 among the
Company, Bank of America, N.A., as first lien collateral agent, and Amphora
Limited, as second lien collateral agent."
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(h)
Section
31(mm)
of the
Note is hereby amended and restated to read in its entirety as
follows:
""Second
Optional Redemption Date"
means
August 31, 2007; provided, however, that in the event that the Company shall
pay
the Optional Redemption Shortfall Amount in shares of Common Stock, such
Optional Redemption Shortfall Amount shall be due on October 1, 2007."
(i)
Section
31(rr)
of the
Note is hereby amended and restated to read in its entirety as
follows:
""Third
Optional Redemption Date"
means
September 2, 2008."
(j)
A
new
Section
32
is
hereby added to the Note reading as follows:
"(32) DISCLOSURE.
Upon
receipt or delivery by the Company of any notice in accordance with the terms
of
this Note, unless the Company has in good faith determined that the matters
relating to such notice do not constitute material, nonpublic information
relating to the Company or its Subsidiaries, the Company shall within one
Business Day after any such receipt or delivery publicly disclose such material,
nonpublic information on a Current Report on Form 8-K or otherwise. In the
event
that the Company believes that a notice contains material, nonpublic
information, relating to the Company or its Subsidiaries, the Company shall
indicate to the Holder contemporaneously with delivery of such notice, and
in
the absence of any such indication, the Holder shall be allowed to presume
that
all matters relating to such notice do not constitute material, nonpublic
information relating to the Company or its Subsidiaries."
(k)
Exhibit
II
of the
Note is hereby amended and restated in its entirety by Exhibit
II
attached
hereto.
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2.
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DISCLOSURE
OF AMENDMENT.
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On
or
before 8:30 a.m., New York Time, on the
first
(1st)
Business Day following the Effective Date (as defined below), the Company shall
file a Current Report on Form 8-K describing the terms of this Amendment and
attaching a copy of the form of this Amendment.
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3.
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CONDITIONS
TO EFFECTIVENESS.
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This
Amendment shall not become effective (the "Effective
Date")
until
the satisfaction of each of the following conditions, provided that such
conditions are for the Investor's sole benefit and may be waived by the Investor
at any time in its sole discretion by providing the Company with written notice
thereof:
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(a)
The
Company shall have duly executed this Amendment and delivered the same to the
Investor.
(b)
The
Board
of Directors of the Company shall have adopted resolutions authorizing and
approving this Amendment and the transactions contemplated hereby.
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4.
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MISCELLANEOUS.
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(a)
Expenses.
The
Company shall reimburse the Investor for its reasonable legal expenses incurred
in connection with the
execution of this Amendment and any and all documents executed in connection
therewith.
(b)
Counterparts.
This
Amendment may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party;
provided that a facsimile signature shall be considered due execution and shall
be binding upon the signatory thereto with the same force and effect as if
the
signature were an original, not a facsimile signature.
(c)
Headings.
The
headings of this Amendment are for convenience of reference and shall not form
part of, or affect the interpretation of, this Amendment.
(d)
Severability.
If any
provision of this Amendment shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Amendment in that jurisdiction or
the
validity or enforceability of any provision of this Amendment in any other
jurisdiction.
(e)
No
Third Party Beneficiaries.
This
Amendment is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person.
(f)
Further
Assurances.
Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Amendment and the consummation of the transactions contemplated
hereby.
(g)
No
Strict Construction.
The
language used in this Amendment will be deemed to be the language chosen by
the
parties to express their mutual intent, and no rules of strict construction
will
be applied against any party.
(h)
Governing
Law.
This
Amendment shall be construed and enforced in accordance with, and all questions
concerning the construction, validity, interpretation and performance of this
Amendment shall be governed by, the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or
rule
(whether of the State of New York or any other jurisdictions) that would cause
the application of the laws of any jurisdictions other than the State of New
York.
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(i)
Reaffirmation.
The
Company hereby: (1) confirms and agrees that, except as expressly amended or
modified hereby, the Note, the Securities Purchase Agreement and each other
Transaction Document to which it is a party is, and shall continue to be, in
full force and effect and is hereby ratified and confirmed in all respects,
except that on and after the Amendment Effective Date all references in any
such
Transaction Document to "the Note", "thereto", "thereof", "thereunder" or words
of like import referring to the Note shall mean the Note as amended by this
Amendment; and (ii) confirms and agrees that to the extent that any such
Transaction Document purports to assign or pledge to the Amphora Limited, in
its
capacity as collateral agent (the "Collateral
Agent")
for
the Investor and the holders of the Securities, or to grant to the Collateral
Agent a security interest in or lien on, any collateral as security for the
obligations of the Company from time to time existing in respect of the Note
and
any other Transaction Document, such pledge, assignment and/or grant of the
security interest or lien is hereby ratified and confirmed.
[Signature
Page Follows]
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IN
WITNESS WHEREOF,
the
Investor and the Company have caused their respective signature page to this
Amendment to be duly executed as of the date first written above.
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COMPANY:
MODTECH HOLDINGS,
INC.
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Name:
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| Title | ||
[Signature
Page to Amendment Agreement]
IN
WITNESS WHEREOF,
the
Investor and the Company have caused their respective signature page to this
Amendment to be duly executed as of the date first written above.
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INVESTOR:
AMPHORA LIMITED
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| By: | ||
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Name:
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| Title | ||
[Signature
Page to Amendment Agreement]
EXHIBIT
II
FINANCIAL
COVENANTS
So
long
as any principal of or interest on this Note (whether or not due) shall remain
unpaid or outstanding, the Company shall:
(a) Fixed
Charge Coverage Ratio.
Maintain a Fixed Charge Coverage Ratio of at least the ratio set forth opposite
each period below measured monthly as of the last day of each
month.
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Period
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Minimum
Fixed Charge Coverage Ratio
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Month
ending February 28, 2006 measured on a trailing 2 month
basis
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0.81:1.00
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Month
ending March 31, 2006, measured on a year-to-date basis
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0.99:1.00
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Month
ending April 30, 2006, measured on a year-to-date basis
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1.17:1.00
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Months
ending May 31, 2006 through December 31, 2006, measured on a year-to-date
basis
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1.35:1.00
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Month
ending January 31, 2007 and each month thereafter measured on a trailing
12 month basis
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1.35:1.00
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Capitalized
terms used in this Exhibit
II
and not
otherwise define in this Note shall have the respective meanings ascribed to
them in the Current Credit Facility, as in effect on March 31,
2006.
