**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 IslandsDate
            
            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.









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;




2




(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;




5




(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.




6




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.




7




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.




8




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.




[ *Remainder
      of This Page Intentionally Left Blank* ]





9




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:Name:
              Title:Address:
                  2830 Barrett Avenue
                  Perris, California
                    92571




ACKNOWLEDGED:LAURUS
                MASTER FUND, LTD.By:Name:Title:
              Address:









SCHEDULE
      A




Entity
            
            Jurisdiction
                of
              Formation
            
            Organization
                Identification NumberModtech
                Holdings, Inc.
            
            Delaware
            
            2949031









SCHEDULE
      B




COMMERCIAL
      TORT CLAIMS




None.