EXHIBIT 10.40

 
MODTECH HOLDINGS, INC. AND CERTAIN OF ITS SUBSIDIARIES
MASTER SECURITY AGREEMENT
 
To:
 
Laurus Master Fund, Ltd.
c/o M&C Corporate Services Limited
P.O. Box 309 GT
Ugland House
South Church Street
George Town
Grand Cayman, Cayman Islands
     
Date
 
October 31, 2006

 
To Whom It May Concern:
 
1. To secure the payment of all Obligations (as hereafter defined), Modtech
Holding, Inc., a Delaware corporation (the “Company”), each of the other
undersigned parties (other than Laurus Master Fund, Ltd., (“Laurus”)) and each
other entity that is required to enter into this Master Security Agreement (each
an “Assignor” and, collectively, the “Assignors”) hereby assigns and grants to
Laurus a continuing security interest in all of the following property now owned
or at any time hereafter acquired by such Assignor, or in which such Assignor
now has or at any time in the future may acquire any right, title or interest
(the “Collateral”): all cash, cash equivalents, accounts, accounts receivable,
deposit accounts (including, without limitation, (x) the Restricted Account (the
“Restricted Account”) maintained at North Fork Bank (Account Name: Modtech
Holdings, Inc., Account Number: 270-405-8763) referred to in the Restricted
Account Agreement) and (y) Lockbox Deposit Accounts), inventory, equipment,
goods, fixtures, documents, instruments (including, without limitation,
promissory notes), contract rights, commercial tort claims set forth on Exhibit
B to this Master Security Agreement, general intangibles (including, without
limitation, payment intangibles and an absolute right to license on terms no
less favorable than those current in effect among such Assignor’s affiliates),
chattel paper, supporting obligations, investment property (including, without
limitation, all partnership interests, limited liability company membership
interests and all other equity interests owned by any Assignor),
letter-of-credit rights, trademarks, trademark applications, tradestyles,
patents, patent applications, copyrights, copyright applications and other
intellectual property in which such Assignor now has or hereafter may acquire
any right, title or interest, all proceeds and products thereof (including,
without limitation, proceeds of insurance) and all additions, accessions and
substitutions thereto or therefor. In the event any Assignor wishes to finance
the acquisition in the ordinary course of business of any hereafter acquired
equipment and has obtained a written commitment from an unrelated third party
financing source to finance such equipment, Laurus shall release its security
interest on such hereafter acquired equipment so financed by such third party
financing source. Except as otherwise defined herein, all capitalized terms used
herein shall have the meanings provided such terms in the Securities Purchase
Agreement referred to below. All items of Collateral which are defined in the
UCC shall have the meanings set forth in the UCC.  For purposes hereof, the term
"UCC"  means the Uniform Commercial Code as the same may, from time to time, be
in effect in the State of New York; provided, that in the event that, by reason
of mandatory provisions of law, any or all of the attachment, perfection or
priority of, or remedies with respect to, Laurus' security interest in any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, the term “UCC” shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions of this Agreement relating to such attachment, perfection,
priority or remedies and for purposes of definitions related to such provisions;
provided further, that to the extent that the UCC is used to define any term
herein and such term is defined differently in different Articles or Divisions
of the UCC, the definition of such term contained in Article or Division 9 shall
govern.
 

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2. The term “Obligations” as used herein shall mean and include all debts,
liabilities and obligations owing by each Assignor to Laurus arising under, out
of, or in connection with: (i) that certain Securities Purchase Agreement dated
as of the date hereof by and between the Company and Laurus (the “Securities
Purchase Agreement”) and (ii) the Related Agreements referred to in the
Securities Purchase Agreement (the Securities Purchase Agreement and each
Related Agreement, as each may be amended, modified, restated or supplemented
from time to time, collectively, the “Documents”), and in connection with any
documents, instruments or agreements relating to or executed in connection with
the Documents or any documents, instruments or agreements referred to therein or
otherwise, and in connection with any other indebtedness, obligations or
liabilities of each such Assignor to Laurus, whether now existing or hereafter
arising, direct or indirect, liquidated or unliquidated, absolute or contingent,
due or not due and whether under, pursuant to or evidenced by a note, agreement,
guaranty, instrument or otherwise, including, without limitation, obligations
and liabilities of each Assignor for post-petition interest, fees, costs and
charges that accrue after the commencement of any case by or against such
Assignor under any bankruptcy, insolvency, reorganization or like proceeding
(collectively, the “Debtor Relief Laws”) in each case, irrespective of the
genuineness, validity, regularity or enforceability of such Obligations, or of
any instrument evidencing any of the Obligations or of any collateral therefor
or of the existence or extent of such collateral, and irrespective of the
allowability, allowance or disallowance of any or all of the Obligations in any
case commenced by or against any Assignor under any Debtor Relief Law.
 
3. Each Assignor hereby jointly and severally represents, warrants and covenants
to Laurus that:
 
(a) it is a corporation, partnership or limited liability company, as the case
may be, validly existing, in good standing and formed under the respective laws
of its jurisdiction of formation set forth on Schedule A, and each Assignor will
provide Laurus thirty (30) days’ prior written notice of any change in any of
its respective jurisdiction of formation;
 
(b) its legal name is as set forth in its Certificate of Incorporation or other
organizational document (as applicable) as amended through the date hereof and
as set forth on Schedule A, and it will provide Laurus thirty (30) days’ prior
written notice of any change in its legal name;
 
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(c) its organizational identification number (if applicable) is as set forth on
Schedule A hereto, and it will provide Laurus thirty (30) days’ prior written
notice of any change in its organizational identification number;
 
(d) it is the lawful owner of its Collateral and it has the sole right to grant
a security interest therein and will defend the Collateral against all claims
and demands of all persons and entities;
 
(e) other than Permitted Encumbrances, it will keep its Collateral free and
clear of all attachments, levies, taxes, liens, security interests and
encumbrances of every kind and nature (“Encumbrances”), except (i) Encumbrances
securing the Obligations and (ii) Encumbrances securing indebtedness of each
such Assignor not to exceed $50,000 in the aggregate for all such Assignors so
long as all such Encumbrances are removed or otherwise released to Laurus’
satisfaction within ten (10) days of the creation thereof; for the purposes
hereof, Permitted Encumbrances shall mean (A) “Permitted Encumbrances” means (1)
Encumbrances of carriers, warehousemen, artisans, bailees, mechanics and
materialmen incurred in the ordinary course of business securing sums(x) not
overdue or (y) being diligently contested in good faith provided that adequate
reserves with respect thereto are maintained on the books of the applicable
Company in conformity with GAAP (as defined in the Securities Purchase
Agreement) and provided, further that the Encumbrance shall have no effect on
the priority of Encumbrances in favor of Laurus or the value of the assets in
which Laurus has any Encumbrance; (2) Encumbrances incurred in the ordinary
course of business in connection with workmen’s compensation, unemployment
insurance or other forms of governmental insurance or benefits, relating to
employees, securing sums (x) not overdue or (y) being diligently contested in
good faith provided that adequate reserves with respect thereto are maintained
on the books of the applicable Company in conformity with GAAP and provided,
further that the Encumbrance shall have no effect on the priority of
Encumbrances in favor of Laurus or the value of the assets in which Laurus has
any Encumbrance; (3) Encumbrances in favor of Laurus; (4) Encumbrances for taxes
(x) not yet due or (y) being diligently contested in good faith by appropriate
proceedings, provided that adequate reserves with respect thereto are maintained
on the books of the applicable Company in conformity with GAAP and provided,
further that the Encumbrance shall have no effect on the priority of
Encumbrances in favor of Laurus or the value of the assets in which Laurus has
any Encumbrance; and (5) Purchase Money Liens securing Purchase Money
Indebtedness in an amount not to exceed $200,000; (B) “Purchase Money
Indebtedness” means (1) any indebtedness incurred for the payment of all or any
part of the purchase price of any fixed asset, (2) any indebtedness incurred for
the sole purpose of financing or refinancing all or any part of the purchase
price of any fixed asset, and (3) any renewals, extensions or refinancings
thereof (but not any increases in the principal amounts thereof outstanding at
that time); and (C) “Purchase Money Liens” means any Encumbrance upon any fixed
assets that secures the Purchase Money Indebtedness related thereto but only if
such Encumbrance shall at all times be confined solely to the asset the purchase
price of which was financed or refinanced through the incurrence of the Purchase
Money Indebtedness secured by such Encumbrance and only if such Encumbrance
secures only such Purchase Money Indebtedness.
 
(f) it will, at its and the other Assignors’ joint and several cost and expense
keep the Collateral in good state of repair (ordinary wear and tear excepted)
and will not waste or destroy the same or any part thereof other than ordinary
course discarding of items no longer used or useful in its or such other
Assignors’ business;
 
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(g) it will not, without Laurus’ prior written consent, sell, exchange, lease or
otherwise dispose of any Collateral, whether by sale, lease or otherwise, except
for the sale of inventory in the ordinary course of business, obsolete inventory
and for the disposition or transfer in the ordinary course of business during
any fiscal year of obsolete and worn-out equipment or equipment no longer
necessary for its ongoing needs, having an aggregate fair market value of not
more than $75,000 and only to the extent that:
 
(i) the proceeds of each such disposition are used to acquire replacement
Collateral which is subject to Laurus’ first priority perfected security
interest, or are used to repay the Obligations or to pay general corporate
expenses; or
 
(ii) following the occurrence of an Event of Default which continues to exist
the proceeds of which are remitted to Laurus to be held as cash collateral for
the Obligations;
 
(h) it will insure or cause the Collateral to be insured in Laurus’ name (as an
additional insured and loss payee) against loss or damage by fire, theft,
burglary, pilferage, loss in transit and such other hazards as Laurus shall
reasonably specify in amounts and under policies by insurers reasonably
acceptable to Laurus and all premiums thereon shall be paid by such Assignor and
the policies delivered to Laurus. If any such Assignor fails to do so, Laurus
may procure such insurance and the cost thereof shall be promptly reimbursed by
the Assignors, jointly and severally, and shall constitute Obligations;
 
(i) it will at all reasonable times allow Laurus or Laurus’ representatives free
access to and the right of inspection of the Collateral;
 
(j) such Assignor (jointly and severally with each other Assignor) hereby
indemnifies and saves Laurus harmless from all loss, costs, damage, liability
and/or expense, including reasonable attorneys’ fees, that Laurus may sustain or
incur to enforce payment, performance or fulfillment of any of the Obligations
and/or in the enforcement of this Master Security Agreement or in the
prosecution or defense of any action or proceeding either against Laurus or any
Assignor concerning any matter growing out of or in connection with this Master
Security Agreement, and/or any of the Obligations and/or any of the Collateral
except to the extent caused by Laurus’ own gross negligence or willful
misconduct (as determined by a court of competent jurisdiction in a final and
nonappealable decision);
 
(k) all commercial tort claims (as defined in the Uniform Commercial Code as in
effect in the State of New York) held by any Assignor are set forth on Schedule
C to this Master Security Agreement; each Assignor hereby agrees that it shall
promptly, and in any event within five (5) Business Days after the same is
acquired by it, notify Laurus of any commercial tort claim acquired by it and
unless otherwise consented to in writing by Laurus, it shall enter into a
supplement to this Master Security Agreement granting to Laurus a security
interest in such commercial tort claim, securing the Obligations; and
 
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(l) On or prior to the Closing Date (or such later date as may be agreed by
Laurus in writing), each Assignor will (x) irrevocably direct all of its present
and future Account Debtors (as defined below) and other persons or entities
obligated to make payments constituting Collateral to make such payments
directly to the lockboxes maintained by such Assignor (the “Lockboxes”) with
Bank of America, N.A. or such other financial institution accepted by Laurus in
writing as may be selected by the Company (the “Lockbox Bank”) (each such
direction pursuant to this clause (x), a “Direction Notice”) and (y) provide
Laurus with copies of each Direction Notice, each of which shall be agreed to
and acknowledged by the respective Account Debtor. The Lockbox Bank shall agree
to deposit the proceeds of such payments immediately upon receipt thereof in
that certain deposit account maintained at the Lockbox Bank and evidenced by the
account name of Modtech Holdings, Inc. and the account number of 14962-02541, or
such other deposit account accepted by Laurus in writing (the “Lockbox Deposit
Account”). On or prior to the Closing Date, the Company shall and shall cause
the Lockbox Bank to enter into all such documentation acceptable to Laurus
pursuant to which, among other things, the Lockbox Bank agrees to, following
notification by Laurus (which notification Laurus shall only give following the
occurrence and during the continuance of an Event of Default), comply only with
the instructions or other directions of Laurus concerning the Lockbox and the
Lockbox Deposit Account. All of each Assignor’s invoices, account statements and
other written or oral communications directing, instructing, demanding or
requesting payment of any Account (as hereinafter defined) of any such Assignor
or any other amount constituting Collateral shall conspicuously direct that all
payments be made to the Lockbox or such other address as Laurus may direct in
writing. If, notwithstanding the instructions to Account Debtors, any Assignor
receives any payments, such Assignor shall immediately remit such payments to
the Lockbox Deposit Account in their original form with all necessary
endorsements. Until so remitted, the Assignors shall hold all such payments in
trust for and as the property of Laurus and shall not commingle such payments
with any of its other funds or property. For the purpose of this Master Security
Agreement, (x) “Accounts” shall mean all “accounts”, as such term is defined in
the UCC as in effect in the State of New York on the date hereof, now owned or
hereafter acquired by any Assignor and (y) “Account Debtor” shall mean any
person or entity who is or may be obligated with respect to, or on account of,
an Account.
 
4. The occurrence of any of the following events or conditions shall constitute
an “Event of Default” under this Master Security Agreement:
 
(a) any covenant or any other term or condition of this Master Security
Agreement is breached in any material respect and such breach, to the extent
subject to cure, shall continue without remedy for a period of twenty (20) days
after the occurrence thereof;
 
(b) any representation or warranty, or statement made or furnished to Laurus
under this Master Security Agreement by any Assignor or on any Assignor’s behalf
should prove to any time be false or misleading in any material respect on the
date as of which made or deemed made;
 
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(c) the loss, theft, substantial damage, destruction, sale or encumbrance to or
of any of the Collateral (except as may be expressly permitted by Section 3(e)
and Section 3(g) or the making of any levy, seizure or attachment thereof or
thereon except to the extent:
 
(i) such loss is covered by insurance proceeds which are used to replace the
item or repay Laurus; or
 
(ii) said levy, seizure or attachment does not secure indebtedness in excess of
$200,000 in the aggregate for all Assignors and such levy, seizure or attachment
has been vacated, discharged, stayed or bonded within forty (40) days of the
creation or the assertion thereof;
 
(d) an Event of Default shall have occurred under and as defined in any
Document.
 
5. Upon the occurrence of any Event of Default and at any time thereafter,
Laurus may declare all Obligations immediately due and payable and Laurus shall
have the remedies of a secured party provided in the UCC as in effect in the
State of New York, this Agreement and other applicable law. Upon the occurrence
of any Event of Default and at any time thereafter, Laurus will have the right
to take possession of the Collateral and to maintain such possession on any
Assignor’s premises or to remove the Collateral or any part thereof to such
other premises as Laurus may desire. Upon Laurus’ request, each Assignor shall
assemble or cause the Collateral to be assembled and make it available to Laurus
at a place designated by Laurus. If any notification of intended disposition of
any Collateral is required by law, such notification, if mailed, shall be deemed
properly and reasonably given if mailed at least ten (10) days before such
disposition, postage prepaid, addressed to the applicable Assignor either at
such Assignor’s address shown herein or at any address appearing on Laurus’
records for such Assignor. Any proceeds of any disposition of any of the
Collateral shall be applied by Laurus to the payment of all expenses in
connection with the sale of the Collateral, including reasonable attorneys’ fees
and other legal expenses and disbursements and the reasonable expenses of
retaking, holding, preparing for sale, selling, and the like, and any balance of
such proceeds may be applied by Laurus toward the payment of the Obligations in
such order of application as Laurus may elect, and each Assignor shall be liable
for any deficiency. For the avoidance of doubt, following the occurrence and
during the continuance of an Event of Default, Laurus shall have the immediate
right to withdraw any and all monies contained in any deposit account in the
name of any Assignor and controlled by Laurus and apply same to the repayment of
the Obligations (in such order of application as Laurus may elect). The parties
hereto each hereby agree that the exercise by any party hereto of any right
granted to it or the exercise by any party hereto of any remedy available to it
(including, without limitation, the issuance of a notice of redemption,
a borrowing request and/or a notice of default), in each case, hereunder, under
the Securities Purchase Agreement or under any other Related Agreement which has
been publicly filed with the SEC shall not constitute confidential information
and no party shall have any duty to the other party to maintain such information
as confidential.
 
6. If any Assignor defaults in the performance or fulfillment of any of the
terms, conditions, promises, covenants, provisions or warranties on such
Assignor’s part to be performed or fulfilled under or pursuant to this Master
Security Agreement, Laurus may, at its option without waiving its right to
enforce this Master Security Agreement according to its terms, immediately or at
any time thereafter and without notice to any Assignor, perform or fulfill the
same or cause the performance or fulfillment of the same for each Assignor’s
joint and several account and at each Assignor’s joint and several cost and
expense, and the cost and expense thereof (including reasonable attorneys’ fees)
shall be added to the Obligations and shall be payable on demand with interest
thereon at the highest rate permitted by law, or, at Laurus’ option, debited by
Laurus from any other deposit accounts in the name of any Assignor and
controlled by Laurus.
 
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7. Each Assignor appoints Laurus, any of Laurus’ officers, employees or any
other person or entity whom Laurus may designate as such Assignor’s attorney,
with power to execute such documents in each such Assignor’s behalf and to
supply any omitted information and correct patent errors in any documents
executed by any Assignor or on any Assignor’s behalf; to file financing
statements against such Assignor covering the Collateral (and, in connection
with the filing of any such financing statements, describe the Collateral as
“all assets and all personal property, whether now owned and/or hereafter
acquired” (or any substantially similar variation thereof)); to sign such
Assignor’s name on public records; and to do all other things Laurus deem
necessary to carry out this Master Security Agreement. Each Assignor hereby
ratifies and approves all acts of the attorney and neither Laurus nor the
attorney will be liable for any acts of commission or omission, nor for any
error of judgment or mistake of fact or law other than gross negligence or
willful misconduct (as determined by a court of competent jurisdiction in a
final and non-appealable decision). This power being coupled with an interest,
is irrevocable so long as any Obligations remains unpaid.
 
8. No delay or failure on Laurus’ part in exercising any right, privilege or
option hereunder shall operate as a waiver of such or of any other right,
privilege, remedy or option, and no waiver whatever shall be valid unless in
writing, signed by Laurus and then only to the extent therein set forth, and no
waiver by Laurus of any default shall operate as a waiver of any other default
or of the same default on a future occasion. Laurus’ books and records
containing entries with respect to the Obligations shall be admissible in
evidence in any action or proceeding, shall be binding upon each Assignor for
the purpose of establishing the items therein set forth and shall constitute
prima facie proof thereof. Laurus shall have the right to enforce any one or
more of the remedies available to Laurus, successively, alternately or
concurrently. Each Assignor agrees to join with Laurus in executing such
documents or other instruments to the extent required by the UCC in form
satisfactory to Laurus and in executing such other documents or instruments as
may be required or deemed necessary by Laurus for purposes of affecting or
continuing Laurus’ security interest in the Collateral.
 
9. The Assignors shall jointly and severally pay all of Laurus’ out-of-pocket
costs and expenses, including reasonable fees and disbursements of in-house, or
outside counsel and appraisers, in connection with the preparation, execution
and delivery of the Documents, and of outside counsel and appraisers in
connection with the prosecution or defense of any action, contest, dispute, suit
or proceeding concerning any matter in any way arising out of, related to or
connected with any Document. The Assignors shall also jointly and severally pay
all of Laurus’ reasonable fees, charges, out-of-pocket costs and expenses,
including fees and disbursements of counsel and appraisers, in connection with
(a) the preparation, execution and delivery of any waiver, any amendment thereto
or consent proposed or executed in connection with the transactions contemplated
by the Documents, (b) Laurus’ obtaining performance of the Obligations under the
Documents, including, but not limited to the enforcement or defense of Laurus’
security interests, assignments of rights and liens hereunder as valid perfected
security interests, (c) any attempt to inspect, verify, protect, collect, sell,
liquidate or otherwise dispose of any Collateral, (d) not more than one time per
year, any appraisal or re-appraisal of any property (real or personal) pledged
to Laurus by any Assignor as Collateral for, or any other Person as security
for, the Obligations hereunder (provided, upon the occurrence of an Event of
Default, Assignors shall be obligated to pay the costs and expenses of any and
all additional such appraisals and re-appraisals as are deemed necessary by
Laurus in its reasonable discretion) and (e) any consultations in connection
with any of the foregoing. The Assignors shall also jointly and severally pay
Laurus’ customary bank charges for all bank services (including wire transfers)
performed or caused to be performed by Laurus for any Assignor at any Assignor’s
request or in connection with any Assignor’s loan account (if any) with Laurus.
All such costs and expenses together with all filing, recording and search fees,
taxes and interest payable by the Assignors to Laurus shall be payable on demand
and shall be secured by the Collateral. If any tax by any nation or government,
any state or other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government (each, a “Governmental
Authority”) is or may be imposed on or as a result of any transaction between
any Assignor, on the one hand, and Laurus on the other hand, which Laurus is or
may be required to withhold or pay (other than (x) any tax based on or measured
by net income or otherwise in the nature of a net income tax, including without
limitation any franchise tax or any similar tax based on capital, net worth or
comparable basis measurement), the Assignors hereby jointly and severally
indemnify and hold Laurus harmless in respect of such taxes, and the Assignors
will repay to Laurus the amount of any such taxes which shall be charged to the
Assignors’ account; and until the Assignors shall furnish Laurus with indemnity
therefor (or supply Laurus with evidence satisfactory to it that due provision
for the payment thereof has been made), Laurus may hold without interest any
balance standing to each Assignor’s credit (if any) and Laurus shall retain its
liens in any and all Collateral.
 
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10. THIS MASTER SECURITY AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAWS. All of the rights, remedies, options, privileges and
elections given to Laurus hereunder shall inure to the benefit of Laurus’
successors and assigns. The term “Laurus” as herein used shall include Laurus,
any parent of Laurus’, any of Laurus’ subsidiaries and any co-subsidiaries of
Laurus’ parent, whether now existing or hereafter created or acquired, and all
of the terms, conditions, promises, covenants, provisions and warranties of this
Agreement shall inure to the benefit of each of the foregoing, and shall bind
the representatives, successors and assigns of each Assignor.
 
11. Each Assignor hereby consents and agrees that the state of federal courts
located in the County of New York, State of New York shall have exclusive
jurisdiction to hear and determine any claims or disputes between Assignor, on
the one hand, and Laurus, on the other hand, pertaining to this Master Security
Agreement or to any matter arising out of or related to this Master Security
Agreement, provided, that Laurus and each Assignor acknowledges that any appeals
from those courts may have to be heard by a court located outside of the County
of New York, State of New York, and further provided, that nothing in this
Master Security Agreement shall be deemed or operate to preclude Laurus from
bringing suit or taking other legal action in any other jurisdiction to collect,
the Obligations, to realize on the Collateral or any other security for the
Obligations, or to enforce a judgment or other court order in favor of Laurus.
Each Assignor expressly submits and consents in advance to such jurisdiction in
any action or suit commenced in any such court, and each Assignor hereby waives
any objection which it may have based upon lack of personal jurisdiction,
improper venue or forum non conveniens. Each Assignor hereby waives personal
service of the summons, complaint and other process issues in any such action or
suit and agrees that service of such summons, complaint and other process may be
made by registered or certified mail addressed to such assignor at the address
set forth on the signature lines hereto and that service so made shall be deemed
completed upon the earlier of such Assignor’s actual receipt thereof or three
(3) days after deposit in the U.S. mails, proper postage prepaid.
 
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The parties desire that their disputes be resolved by a judge applying such
applicable laws. Therefore, to achieve the best combination of the benefits of
the judicial system and of arbitration, the parties hereto waive all rights to
trial by jury in any action, suite, or proceeding brought to resolve any
dispute, whether arising in contract, tort, or otherwise between Laurus, and/or
any Assignor arising out of, connected with, related or incidental to the
relationship established between them in connection with this Master Security
Agreement or the transactions related hereto.
 
12. It is understood and agreed that any person or entity that desires to become
an Assignor hereunder, or is required to execute a counterpart of this Master
Security Agreement after the date hereof pursuant to the requirements of any
Document, shall become an Assignor hereunder by (x) executing a Joinder
Agreement in form and substance satisfactory to Laurus, (y) delivering
supplements to such exhibits and annexes to such Documents as Laurus shall
reasonably request and (z) taking all actions as specified in this Master
Security Agreement as would have been taken by such Assignor had it been an
original party to this Master Security Agreement, in each case with all
documents required above to be delivered to Laurus and with all documents and
actions required above to be taken to the reasonable satisfaction of Laurus.
 
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13. All notices from Laurus to any Assignor shall be sufficiently given if given
in accordance with the requirements set forth in Section 11.8 of the Securities
Purchase Agreement and if mailed or delivered to such Assignor’s address set
forth below.
 

       
Very truly yours,
MODTECH HOLDING, INC.
 
   
   
  By:      

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Name:

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Title:   

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Address: 2830 Barrett Avenue
   Perris, California 92571

 

        ACKNOWLEDGED:      
LAURUS MASTER FUND, LTD.
 
   
   
  By:    

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Name:
 
Title:
Address:

 

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SCHEDULE A
 
Entity
 
Jurisdiction of
Formation
 
Organization Identification Number
Modtech Holdings, Inc.
 
Delaware
 
2949031

 

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SCHEDULE B
 
COMMERCIAL TORT CLAIMS
 
None.
 

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