CONVERSION AND REPURCHASE AGREEMENT
Exhibit
10.1
THIS
CONVERSION AND REPURCHASE AGREEMENT (this “Agreement”)
is
made on October 31, 2006 between Modtech
Holdings, Inc., a Delaware corporation
(the
“Company”),
and
Amphora Limited (the “Investor”).
WHEREAS,
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
a
Senior Secured Convertible Note, dated as of December 31, 2004, which note
was
exchanged for 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. Capitalized terms used herein and not
otherwise defined herein shall have the respective meanings ascribed to them
in
the Note.
WHEREAS,
the Company and the Investor desire to enter into this Conversion and Repurchase
Agreement, pursuant to which, among other things, (i) the Company shall
repurchase $9,746,666 in outstanding principal amount of the Note (the
"Repurchased
Amount")
for
$8,000,000 (the "Repurchase
Price")
and
(ii) the Investor shall elect to convert $7,820,000 outstanding principal amount
(the "Converted
Amount")
into
1,000,000 shares of Common Stock (the "Conversion
Shares").
WHEREAS,
the Company and the Investor also desire to enter into a Registration Rights
Agreement (the "Registration
Rights Agreement")
pursuant to which the Company shall register the Restricted Shares for resale
by
the Investor.
NOW,
THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the adequacy of which is hereby acknowledged, the parties hereto
agree as follows:
Section
1.
Repurchase and Conversion.
(a) Repurchase.
The
Company hereby agrees to repurchase from the Investor the Repurchased Amount,
which amount shall be purchased by the Company in cash at the Repurchase Price.
(b) Conversion.
Prior to
the Closing (as defined below), the Investor shall deliver a Conversion Notice
to the Company reflecting the Investor's election to convert the Converted
Amount into the Conversion Shares on the Closing Date (as defined below) at
a
conversion ratio of 127.87723785.
(c) Closing.
Subject
to the satisfaction or waiver of the conditions set forth in Sections 4 below,
at the closing contemplated by this Agreement (the "Closing"),
the
transactions contemplated hereby shall be deemed consummated. The date and
time
of the Closing (the “Closing
Date”)
shall
be 10:00 a.m., New York City time, on the date hereof, subject to notification
of satisfaction or waiver of the conditions to the Closing set forth in Section
4 below (or such other time and date as is mutually agreed to by the Company
and
the Investor). The Closing shall occur on the Closing Date at the office of
Xxxxxxx Xxxx & Xxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000.
(d) Form
of Payment; Delivery of Shares and Note.
On the
Closing Date, the Company shall (i) pay $5,000,000 of the Repurchase Price
("Initial
Repurchase Payment")
to the
Investor for the Repurchased Amount by wire transfer of immediately available
funds in accordance with the Investor’s written wire instructions and (ii)
deliver to the Investor, in accordance with Section 3(c) of the Note, the
Conversion Shares. The Company shall pay the Repurchase Price, in part, by
allowing the Senior Agent (as defined below) to draw $5,000,000 from the Letter
of Credit with the Letter of Credit Bank (each as defined in the Securities
Purchase Agreement). No later than (5) Business Days after the Closing Date
(the
"Repurchase
Deadline"),
the
Company shall pay to the Investor the remaining $3,000,000 of the Repurchase
Price (the "Balance
Repurchase Payment")
by
wire transfer of immediately available funds in accordance with the wire
instructions previously delivered by the Investor. Following the Investor's
receipt of the full Repurchase Price and the Conversion Shares, the Investor
shall deliver the original Note to the Company for cancellation.
(e) Failure
to Pay Repurchase Price.
In the
event that the Investor does not receive the Balance Repurchase Payment by
the
Repurchase Deadline, the Repurchased Amount hereunder shall be deemed to be
only
$5,000,000 and the outstanding Principal amount under the Note as of such
Repurchase Deadline shall be equal to $4,746,666.
Section
2.
Release of Letter of Credit Funds.
Amphora
Limited, in its capacity as the Senior Agent under, and as defined in the
Securities Purchase Agreement (the "Senior
Agent"),
shall
draw $5,000,000 under the Letter of Credit (the "Letter
of Credit Amount")
in
connection with the payment of the Repurchase Price, which payment shall be
considered a Redemption Event for purposes of the Letter of Credit. On or
immediately prior to the Closing Date, the Senior Agent shall deliver to the
Letter of Credit Bank a drawing certificate, in the form attached to the Letter
of Credit, requesting release of such Letter of Credit Amount by wire transfer
of immediately available funds to the Investor.
Section
3.
Representations And Warranties.
(a) Authorization;
Enforcement; Validity.
The
Company has the requisite power and authority to enter into and perform its
obligations under this Agreement. This Agreement has been duly and validly
executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws from time to time in
effect that affect creditors’ rights generally, and by legal and equitable
limitations on the availability of specific remedies.
(b) No
Conflicts.
The
execution, delivery and performance by the Company of this Agreement and
consummation by the Company of the transactions contemplated by this Agreement
do not and will not: (i) violate the organizational documents of the Company,
(ii) violate any decree or judgment of any court or other governmental authority
applicable to or binding on the Company; (iii) violate any provision of any
federal or state statute, rule or regulation which is applicable to the Company;
or (iv) violate any contract to which the Company or any of its assets or
properties are bound, or conflict with, or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of , any agreement, indenture or instrument to which Company is
a
party.
(c) Approvals;
No Suspensions.
The
Company has obtained all governmental, regulatory or third party consents and
approvals if any, and approval from its stockholders, necessary, if any, to
consummate the transactions contemplated by this Agreement. The
Common
Stock has not have been suspended by the SEC or the Principal Market from
trading on the Principal Market and no suspension have been threatened by the
SEC or the Principal Market either (A) in writing by the SEC or the Principal
Market or (B) by falling below the minimum listing maintenance requirements
of
the Principal Market.
(d) Solvency.
Neither
the Company nor any of its Subsidiaries has taken any steps to seek protection
pursuant to any bankruptcy law nor does the Company have any knowledge or reason
to believe that its creditors intend to initiate involuntary bankruptcy
proceedings or any actual knowledge of any fact that would reasonably lead
a
creditor to do so. The Company and its Subsidiaries, individually and on a
consolidated basis, are not as of the date hereof, and after giving effect
to
the transactions contemplated hereby to occur at the Closing, will not be
Insolvent (as defined below). For purposes of this Section 3(d), "Insolvent"
means,
with respect to any Person (i) the present fair saleable value of such Person's
assets is less than the amount required to pay such Person's total Indebtedness,
(ii) such Person is unable to pay its debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and
matured, (iii) such Person intends to incur or believes that it will incur
debts
that would be beyond its ability to pay as such debts mature or (iv) such Person
has unreasonably small capital with which to conduct the business in which
it is
engaged as such business is now conducted and is proposed to be
conducted
Section
4.
Conditions to Investor's Obligations Hereunder. The
obligations of the Investor to the Company hereunder are subject to the
satisfaction of each of the following conditions,
provided
that
these conditions are for Investor’s sole benefit and may be waived by Investor
at any time in its sole discretion by providing the Company with prior written
consent thereof.
(a) The
Company shall have executed this Agreement and the Registration Rights Agreement
and delivered the same to the Investor.
(b) The
Company shall have delivered the consent of Bank
of
America, N.A.
in the
form attached hereto as Exhibit
A
to the
Investor.
(c) The
Company shall have paid Xxxxxxx Xxxx & Xxxxx LLP the Investor Counsel
Expense.
(d) There
has
been no material adverse change and no material adverse development in the
business, properties, operations, condition (financial or otherwise), results
of
operations or prospects of the Company or its Subsidiaries.
Section
5.
Covenants.
(a) Disclosure
of Transactions and Other Material Information.
(1) On
or
before 8:30 a.m., New York Time, on the
first
(1st)
Business Day following the date of this Agreement, the Company shall have filed
a Current Report on Form 8-K (i) describing the terms of the transactions
contemplated by this Agreement and attaching a copy of this Agreement and (ii)
disclosing any other any material, nonpublic information regarding the Company
or any of its Subsidiaries provided to the Investor (other than as required
by
the immediately succeeding sentence) by the Company or any Subsidiary or any
of
its or their respective officers, directors, employees and agents which had
not
been previously disclosed by the Company. On or before 8:30 a.m., New York
Time,
on the second (2nd)
Business Day following the date of this Agreement, the Company shall have filed
a Current Report on Form 8-K describing
the material terms of the new financing between the Company and Laurus Master
Fund, Ltd.
(2) The
Company shall not, and shall cause each of its Subsidiaries and its and each
of
their respective officers, directors, employees and agents, not to, provide
the
Investor with any material, nonpublic information regarding the Company or
any
of its Subsidiaries from and after the filing of the 8-K Filing with the SEC
without the express written consent of the Investor.
(b) Fees
and Expenses.
At the
Closing, the Company shall reimburse the Investor for its reasonable legal
fees
and expenses in connection with the preparation and negotiation of this
Agreement by paying any such amount to Xxxxxxx Xxxx & Xxxxx LLP (the
"Investor
Counsel Expense").
The
Company shall pay all stamp and other taxes and duties levied in connection
with
the issuance of the Conversion Shares. The Company shall also reimburse the
Investor in an amount up to $10,000 for its reasonable legal fees and expenses
in connection with the preparation and delivery of any opinion of Xxxxxxx Xxxx
& Xxxxx LLP required pursuant to Section 5(c) below.
(c) Removal
of Legends.
The
Company shall use its best efforts, and cooperate in any way with the Investor,
to effectuate the removal of the restrictive legends on the 189,189 shares
(the
"Restricted
Shares")
of
Common Stock issued to the Investor in connection with the partial conversion
on
May 4, 2006 of the Note. On or prior to December 31, 2006, if the Company has
received a opinion from Xxxxxxx Xxxx & Xxxxx LLP, in a form and substance
reasonably acceptable to the Company, opining that the Restricted Shares are
eligible for resale pursuant to Rule 144(k) of the Securities Act of 1933,
as
amended, the Company shall deliver to the Transfer Agent, with a copy to the
Investor, a signed written instruction directing the Transfer Agent to remove
the restrictive legends on the Restricted Shares on December 31, 2006. The
Company shall also register the Restricted Shares on the registration statement
filed by the Company in accordance with the terms of the Registration Rights
Agreement.
Section
6.
Miscellaneous.
(a) Governing
Law; Jurisdiction; Jury Trial.
All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement 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. Each party hereby irrevocably submits to the non-exclusive
jurisdiction of the state and federal courts sitting in The City of New York,
Borough of Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding
is
improper. Each party hereby irrevocably waives personal service of process
and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it
under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
EACH
PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.
(b) Counterparts.
This
Agreement 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 Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement.
(d) Severability.
If any
provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or
the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
(e) No
Third Party Beneficiaries.
This
Agreement 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) No
Strict Construction.
The
language used in this Agreement 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.
(g) Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns in accordance with the terms of the
Securities Purchase Agreement.
(h) 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
Agreement and the consummation of the transactions contemplated
hereby.
(i) Survival.
The
representations and warranties of the Company and the Investor contained herein
and the agreements and covenants set forth herein shall survive the
Closing
(j) Remedies.
The
Investor shall have all rights and remedies set forth in the Transaction
Documents and all rights and remedies which such holders have been granted
at
any time under any other agreement or contract and all of the rights which
such
holders have under any law. Any Person having any rights under any provision
of
this Agreement shall be entitled to enforce such rights specifically (without
posting a bond or other security), to recover damages by reason of any breach
of
any provision of this Agreement and to exercise all other rights granted by
law.
Furthermore, the Company recognizes that in the event that it fails to perform,
observe, or discharge any or all of its obligations under this Agreement, any
remedy at law may prove to be inadequate relief to the Investor. The Company
therefore agrees that the Investor shall be entitled to seek temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages and without posting a bond or other security.
[The
remainder of the page is intentionally left blank]
IN
WITNESS WHEREOF,
the
Company and the Investor have caused their respective signature page to this
Conversion and Repurchase Agreement to be duly executed as of the date first
written above.
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MODTECH
HOLDINGS, INC.
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By:
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Name:
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Title:
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IN
WITNESS WHEREOF,
the
Company and the Investor have caused their respective signature page to this
Conversion and Repurchase Agreement to be duly executed as of the date first
written above.
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AMPHORA
LIMITED
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By:
Amaranth Advisors L.L.C.,
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Its
Trading Advisor
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By:
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Name:
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Title:
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Exhibit
A
Form
of Bank of America, N.A. Consent
