Document:

Exhibit
        10.55

       

    

    SECURED
      TERM NOTE

     

    FOR
      VALUE
      RECEIVED, MODTECH HOLDINGS, INC., a Delaware corporation (the “Company”),
      promises to pay to VALENS OFFSHORE SPV I, LTD., c/o Valens Capital Management,
      LLC, 335 Madison Avenue, 10th
      Floor,
      New York, New York 10017, Fax: 212-541-4410 (the “Holder”)
      or its
      registered assigns or successors in interest, the sum of SIXTY-SIX THOUSAND
      SIX
      HUNDRED TWO and 06/100 DOLLARS ($66,602.06), together with any accrued and
      unpaid interest hereon, on December 28, 2009 (the “Maturity
      Date”)
      if not
      sooner indefeasibly paid in full. 

     

    Capitalized
      terms used herein without definition shall have the meanings ascribed to such
      terms in the Purchase Agreements (as defined in the Amendment and Waiver
      Agreement (the “Amendment
      Agreement”)
      dated
      as of the date hereof among the Company, the Holder, Laurus Master Fund, Ltd.
      (“Laurus”)
      and
      Valens U.S. SPV I, LLC (“Valens
      US”)).

     

    The
      following terms shall apply to this Secured Term Note (this “Note”):

     

    ARTICLE
      I

    CONTRACT
      RATE AND AMORTIZATION

     

    1.1 Contract
      Rate.
      Subject
      to Sections 3.2 and 4.10, interest payable on the outstanding principal amount
      of this Note (the “Principal
      Amount”)
      shall
      accrue at a rate per annum equal to the “prime rate” published in The
      Wall Street Journal
      from
      time to time (the “Prime
      Rate”),
      plus
      two and one half percent (2.5%) (the “Contract
      Rate”).
      The
      Contract Rate shall be increased or decreased as the case may be for each
      increase or decrease in the Prime Rate in an amount equal to such increase
      or
      decrease in the Prime Rate; each change to be effective as of the day of the
      change in the Prime Rate is announced in The Wall Street Journal. The Contract
      Rate shall not at any time be less than eight percent (8%). Interest shall
      be
      (a) calculated on the basis of a 360 day year, and (b) payable monthly, in
      arrears, commencing on March 1, 2008 and then on the first business day of
      each
      consecutive calendar month thereafter through and including the Maturity Date,
      and on the Maturity Date, whether by acceleration or otherwise.

     

    1.2 Contract
      Rate Payments.
      The
      Contract Rate shall be calculated on the last business day of each calendar
      month hereafter (other than for increases or decreases in the Prime Rate which
      shall be calculated and become effective in accordance with the terms of Section
      1.1) until the Maturity Date and shall be subject to adjustment as set forth
      herein.

     

    1.3 Principal
      Payments.
      The
      aggregate principal amount outstanding under this Note at any time (the
“Principal
      Amount”)
      together with any accrued and unpaid interest and any and all other unpaid
      amounts which are then owing by the Company to the Holder under this Note shall
      be due and payable on the Maturity Date.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      II

    REDEMPTION

     

    2.1 Optional
      Redemption in Cash.
      The
      Company may prepay this Note (“Optional
      Redemption”)
      by
      paying to the Holder a sum of money equal to one hundred twenty-four percent
      (124%) (the “Redemption
      Rate”)
      of the
      aggregate amount of (a) the Principal Amount together with accrued but unpaid
      interest hereon, (b) the principal amount outstanding pursuant to that certain
      Secured Term Note dated as of the date hereof, made by the Company in favor
      of
      Laurus, in the original principal amount of $634,414.36 together with accrued
      but unpaid interest thereon (c) the principal amount outstanding pursuant to
      that certain Secured Term Note dated as of the date hereof, made by the Company
      in favor of Valens US, in the original principal amount of $48,983.58 together
      with accrued but unpaid interest thereon (d) the principal amount outstanding
      pursuant to that certain Secured Term Note dated as of December 28, 2006,
      made by the Company in favor of the Holder, in the original principal amount
      of
      $5,000,000 together with accrued but unpaid interest thereon and (e) the
      principal amount outstanding pursuant to that certain Secured Term Note dated
      as
      of October 31, 2006, made by the Company in favor of the Holder, in
      the original principal amount of $13,000,000, together with accrued but unpaid
      interest thereon and any and all other sums due, accrued or payable to the
      Holder arising under this Note, the Purchase Agreements or any other Related
      Agreement (the “Redemption
      Amount”)
      outstanding on the Redemption Payment Date (as defined below). Notwithstanding
      the foregoing, if the Company prepays in full the amounts set forth in items
      (a)
      through (e) above within twelve (12) months of the date hereof, the Redemption
      Rate shall be reduced to one hundred five percent (105%). The Company shall
      deliver to the Holder a written notice of redemption (the “Notice
      of Redemption”)
      specifying the date for such Optional Redemption (the “Redemption
      Payment Date”),
      which
      date shall be within seven (7) business days after the date of the Notice of
      Redemption (the “Redemption
      Period”).
      On
      the Redemption Payment Date, the Redemption Amount must be paid in good funds
      to
      the Holder. In the event the Company fails to pay the Redemption Amount on
      the
      Redemption Payment Date as set forth herein, then such Redemption Notice will
      be
      null and void.

     

    ARTICLE
      III

    EVENTS
      OF DEFAULT

     

    3.1 Events
      of Default.
      The
      occurrence of any of the following events set forth in this Section 3.1 shall
      constitute an event of default (“Event
      of Default”)
      hereunder:

     

    (a) Failure
      to Pay.
      The
      Company fails to pay when due any installment of principal, interest or other
      fees hereon in accordance herewith, or the Company fails to pay any of the
      other
      Obligations (under and as defined in the Security Agreement as reaffirmed under
      and defined in the Reaffrimation and Ratification Agreement dated as of the
      date
      hereof between the Company, the Holder, Laurus and Valens US) when due, and,
      in
      any such case, such failure shall continue for a period of three (3) Business
      Days following the date upon which any such payment was due.

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (b) Breach
      of Covenant.
      The
      Company or any of its Subsidiaries breaches any covenant or any other term
      or
      condition of this Note in any material respect and such breach, if subject
      to
      cure, continues for a period of twenty (20) days after the occurrence
      thereof.

     

    (c) Breach
      of Representations and Warranties.
      Any
      representation, warranty or statement made or furnished by the Company or any
      of
      its Subsidiaries in this Note, the Purchase Agreements or any other Related
      Agreement shall at any time be false or misleading in any material respect
      on
      the date as of which made or deemed made.

     

    (d) Default
      Under Other Agreements.
      The
      occurrence of any default (or similar term) in the observance or performance
      of
      any other agreement or condition relating to any indebtedness or contingent
      obligation of the Company or any of its Subsidiaries in excess of $200,000
      in
      the aggregate (including, without limitation, the indebtedness evidenced by
      the
      Subordinated Debt Documentation) beyond the period of grace (if any), the effect
      of which default is to cause, or permit the holder or holders of such
      indebtedness or beneficiary or beneficiaries of such contingent obligation
      to
      cause, such indebtedness to become due prior to its stated maturity or such
      contingent obligation to become payable;

     

    (e) Default
      Under Subordinated Debt Documentation.
      The
      Company or any of its Subsidiaries shall take or participate in any action
      which
      is prohibited under the provisions of any subordination agreement (each, a
      “Subordination
      Agreement”)
      entered into in connection with any indebtedness (all such indebtedness,
“Subordinated
      Debt”)
      among
      the Company, the Holder, Laurus and/or Valens US and the lender of such
      Subordinated Debt (or make any payment on the Subordinated Debt to a Person
      that
      was not entitled to receive such payments under the provisions of the applicable
      Subordination Agreement.

     

    (f) Material
      Adverse Effect.
      Any
      change or the occurrence of any event which could reasonably be expected to
      have
      a Material Adverse Effect;

     

    (g) Bankruptcy.
      The
      Company or any of its Subsidiaries shall (i) apply for, consent to or
      suffer to exist the appointment of, or the taking of possession by, a receiver,
      custodian, trustee or liquidator of itself or of all or a substantial part
      of
      its property, (ii) make a general assignment for the benefit of creditors,
      (iii) commence a voluntary case under the federal bankruptcy laws (as now or
      hereafter in effect), (iv) be adjudicated a bankrupt or insolvent, (v) file
      a
      petition seeking to take advantage of any other law providing for the relief
      of
      debtors, (vi) acquiesce to, without challenge within ten (10) days of the filing
      thereof, or failure to have dismissed, within thirty (30) days, any petition
      filed against it in any involuntary case under such bankruptcy laws, or (vii)
      take any action for the purpose of effecting any of the foregoing;

     

    (h) Judgments.
      Attachments or levies in excess of $200,000 in the aggregate are made upon
      the
      Company or any of its Subsidiary’s assets or a judgment is rendered against the
      Company’s property involving a liability of more than $500,000 which shall not
      have been vacated, discharged, stayed or bonded within forty (40) days from
      the
      entry thereof;

     

    (i) Insolvency.
      The
      Company or any of its Subsidiaries shall admit in writing its inability, or
      be
      generally unable, to pay its debts as they become due or cease operations of
      its
      present business;

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (j) Change
      of Control.
      A
      Change of Control (as defined below) shall occur with respect to the Company,
      unless Holder shall have expressly consented to such Change of Control in
      writing. A “Change of Control” shall mean any event or circumstance as a result
      of which (i) any “Person” or “group” (as such terms are defined in Sections
      13(d) and 14(d) of the Exchange Act, as in effect on the date hereof), other
      than the Holder, is or becomes the “beneficial owner” (as defined in Rules
      13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of 51%
      or
      more on a fully diluted basis of the then outstanding voting equity interest
      of
      the any Company, (ii) the Board of Directors of the Company shall cease to
      consist of a majority of the Company’s Board of Directors on the date hereof (or
      directors appointed by a majority of the Board of Directors in effect
      immediately prior to such appointment) or (iii) the Company or any of its
      Subsidiaries merges or consolidates with, or sells all or substantially all
      of
      its assets to, any other person or entity;

     

    (k) Indictment;
      Proceedings.
      The
      indictment of the Company or any of its Subsidiaries or any executive officer
      of
      the Company or any of its Subsidiaries under any criminal statute, or
      commencement of criminal or civil proceeding against the Company or any of
      its
      Subsidiaries or any executive officer of the Company or any of its Subsidiaries
      pursuant to which statute or proceeding penalties or remedies sought or
      available include forfeiture of any of the property of the Company or any of
      its
      Subsidiaries;

     

    (l) The
      Purchase Agreements and Related Agreements.
      (i) An
      Event of Default shall occur under and as defined in the Purchase Agreements
      or
      any other Related Agreement, (ii) the Company or any of its Subsidiaries shall
      breach any term or provision of the Purchase Agreements or any other Related
      Agreement in any material respect and such breach, if capable of cure, continues
      unremedied for a period of twenty (20) days after the occurrence thereof, (iii)
      the Company or any of its Subsidiaries attempts to terminate, challenges the
      validity of, or its liability under, the Purchase Agreements or any Related
      Agreement, (iv) any proceeding shall be brought to challenge the validity,
      binding effect of the Purchase Agreements or any Related Agreement or (v) the
      Purchase Agreements or any Related Agreement ceases to be a valid, binding
      and
      enforceable obligation of the Company or any of its Subsidiaries (to the extent
      such persons or entities are a party thereto);

     

    3.2 Default
      Interest.
      Following the occurrence and during the continuance of an Event of Default,
      the
      Company shall pay additional interest on the outstanding principal balance
      of
      this Note in an amount equal to two percent (2%) per month, and all outstanding
      obligations under this Note, the Purchase Agreements and each other Related
      Agreement, including unpaid interest, shall continue to accrue interest at
      such
      additional interest rate from the date of such Event of Default until the date
      such Event of Default is cured or waived.

     

    3.3 Default
      Payment.
      Following the occurrence and during the continuance of an Event of Default,
      the
      Holder, at its option, may demand repayment in full of all obligations and
      liabilities owing by Company to the Holder under this Note, the Purchase
      Agreements and/or any other Related Agreement and/or may elect, in addition
      to
      all rights and remedies of the Holder under the Purchase Agreements and the
      other Related Agreements and all obligations and liabilities of the Company
      under the Purchase Agreements and the other Related Agreements, to require
      the
      Company to make a Default Payment (“Default
      Payment”).
      The
      Default Payment shall be one hundred five percent (105%) of the outstanding
      principal amount of the Note, plus accrued but unpaid interest, all other fees
      then remaining unpaid, and all other amounts payable hereunder. The Default
      Payment shall be applied first to any fees due and payable to the Holder
      pursuant to this Note, the Purchase Agreements, and/or the other Related
      Agreements, then to accrued and unpaid interest due on this Note and then to
      the
      outstanding principal balance of this Note. The Default Payment shall be due
      and
      payable immediately on the date that the Holder has demanded payment of the
      Default Payment pursuant to this Section 3.3.

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      IV

    MISCELLANEOUS

     

    4.1 Issuance
      of New Note.
      Upon
      any partial redemption of this Note, a new note containing the same date and
      provisions of this Note shall, at the request of the Holder, be issued by the
      Company to the Holder for the principal balance of this Note and interest which
      shall not have been paid as of such date. Subject to the provisions of Article
      III of this Note, the Company shall not pay any costs, fees or any other
      consideration to the Holder for the production and issuance of a new
      note.

     

    4.2 Cumulative
      Remedies.
      The
      remedies under this Note shall be cumulative.

     

    4.3 Failure
      or Indulgence Not Waiver.
      No
      failure or delay on the part of the Holder hereof in the exercise of any power,
      right or privilege hereunder shall operate as a waiver thereof, nor shall any
      single or partial exercise of any such power, right or privilege preclude other
      or further exercise thereof or of any other right, power or privilege. All
      rights and remedies existing hereunder are cumulative to, and not exclusive
      of,
      any rights or remedies otherwise available.

     

    4.4 Notices.
      Any
      notice herein required or permitted to be given shall be in writing and shall
      be
      deemed effectively given: (a) upon personal delivery to the party notified,
      (b)
      when sent by confirmed telex or facsimile if sent during normal business hours
      of the recipient, if not, then on the next business day, (c) five days after
      having been sent by registered or certified mail, return receipt requested,
      postage prepaid, or (d) one day after deposit with a nationally recognized
      overnight courier, specifying next day delivery, with written verification
      of
      receipt. All communications shall be sent to the Company at the address provided
      in the Purchase Agreement executed in connection herewith, and to the Holder
      at
      the address provided in the Purchase Agreement for the Holder, with a copy
      to
      Valens Capital Management, LLC, Attn: Portfolio Services, 335 Madison Avenue,
      10th
      Floor,
      New York, New York 10017, facsimile number (212) 541-4410, or at such other
      address as the Company or the Holder may designate by ten days advance written
      notice to the other parties hereto.

     

    4.5 Amendment
      Provision.
      The
      term “Note” and all references thereto, as used throughout this instrument,
      shall mean this instrument as originally executed, or if later amended or
      supplemented, then as so amended or supplemented, and any successor instrument
      as such successor instrument may be amended or supplemented.

     

    4.6 Assignability.
      This
      Note shall be binding upon the Company and its successors and assigns, and
      shall
      inure to the benefit of the Holder and its successors and assigns, and may
      be
      assigned by the Holder in accordance with the requirements of the Purchase
      Agreement. The Company may not assign any of its obligations under this Note
      without the prior written consent of the Holder, any such purported assignment
      without such consent being null and void.

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    4.7 Cost
      of Collection.
      In case
      of any Event of Default under this Note, the Company shall pay the Holder the
      Holder’s reasonable costs of collection, including reasonable attorneys’
fees.

     

    4.8 Governing
      Law, Jurisdiction and Waiver of Jury Trial.

     

    (a) THIS
      NOTE
      SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS
      OF
      THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
      LAW.

     

    (b) THE
      COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR 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 THE COMPANY, ON THE ONE HAND,
      AND THE HOLDER, ON THE OTHER HAND, PERTAINING TO THIS NOTE OR ANY OF THE OTHER
      RELATED AGREEMENTS OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS NOTE
      OR
      ANY OF THE RELATED AGREEMENTS; PROVIDED,
      THAT
      THE COMPANY 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 NOTE SHALL BE DEEMED OR OPERATE TO PRECLUDE THE HOLDER 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 THE
      HOLDER. THE COMPANY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
      JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND THE COMPANY
      HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL
      JURISDICTION, IMPROPER VENUE OR FORUM NON
      CONVENIENS.
      THE
      COMPANY HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER
      PROCESS ISSUED 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 THE COMPANY AT THE ADDRESS SET FORTH IN THE PURCHASE AGREEMENT
      AND
      THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF THE COMPANY’S
      ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER
      POSTAGE PREPAID.

     

    (c) THE
      COMPANY DESIRES THAT ITS 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 COMPANY HERETO WAIVES ALL RIGHTS
      TO
      TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE,
      WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN THE HOLDER AND/OR THE
      COMPANY ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THE
      RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS NOTE, ANY OTHER
      RELATED AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR
      THERETO.

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    4.9 Severability.
      In the
      event that any provision of this Note is invalid or unenforceable under any
      applicable statute or rule of law, then such provision shall be deemed
      inoperative to the extent that it may conflict therewith and shall be deemed
      modified to conform with such statute or rule of law. Any such provision which
      may prove invalid or unenforceable under any law shall not affect the validity
      or enforceability of any other provision of this Note.

     

    4.10 Maximum
      Payments.
      Nothing
      contained herein shall be deemed to establish or require the payment of a rate
      of interest or other charges in excess of the maximum permitted by applicable
      law. In the event that the rate of interest required to be paid or other charges
      hereunder exceed the maximum rate permitted by such law, any payments in excess
      of such maximum rate shall be credited against amounts owed by the Company
      to
      the Holder and thus refunded to the Company.

     

    4.11 Security
      Interest and Guarantee.
      The
      Holder has been granted a security interest (a) in certain assets of the Company
      and its Subsidiaries as more fully described in the Master Security Agreement
      dated as of the date hereof and various mortgages covering the real property
      owned by the Company and (b) in the equity interests of the Company’s
      Subsidiaries pursuant to the Stock Pledge Agreement dated as of the date hereof.
      The obligations of the Company under this Note are guaranteed by certain
      Subsidiaries of the Company pursuant to the Subsidiary Guaranty dated as of
      the
      date hereof.

     

    4.12 Construction.
      Each
      party acknowledges that its legal counsel participated in the preparation of
      this Note and, therefore, stipulates that the rule of construction that
      ambiguities are to be resolved against the drafting party shall not be applied
      in the interpretation of this Note to favor any party against the
      other.

     

    4.13 Registered
      Obligation.
      This
      Note is intended to be a registered obligation within the meaning of Treasury
      Regulation Section 1.871-14(c)(1)(i) and the Company (or its agent) shall
      register this Note (and thereafter shall maintain such registration) as to
      both
      principal and any stated interest. Notwithstanding any document, instrument
      or
      agreement relating to this Note to the contrary, transfer of this Note (or
      the
      right to any payments of principal or stated interest thereunder) may only
      be
      effected by (a) surrender of this Note and either the reissuance by the Company
      of this Note to the new holder or the issuance by the Company of a new
      instrument to the new holder, or (b) transfer through a book entry system
      maintained by the Company (or its agent), within the meaning of Treasury
      Regulation Section 1.871-14(c)(1)(i)(B).

     

    [Balance
      of Page Intentionally Left Blank; Signature Page Follows]

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      the
      Company has caused this Secured Term Note to be signed in its name effective
      as
      of this 29th
      day of
      February, 2008.

    

    
      	 	
              MODTECH
                HOLDINGS, INC.

            
	 	 
	
                

            	
              By: 

            	
              /s/
                Kenneth S. Cragun

            
	 	 	
              Name: 
                Kenneth S. Cragun

            
	 	 	
              Title:   
                Chief Financial Officer

            

    

    

    
      	
              WITNESS:

            
	 
	
              /s/
                Lori Lopez 

            
	
              Lori
                Lopez

            

    

     

    
      
        
        

      

      
        8Exhibit
        10.56

       

    

    SECURED
      TERM NOTE

     

    FOR
      VALUE
      RECEIVED, MODTECH HOLDINGS, INC., a Delaware corporation (the “Company”),
      promises to pay to VALENS U.S. SPV I, LLC, c/o Valens Capital Management, LLC,
      335 Madison Avenue, 10th
      Floor,
      New York, New York 10017, Fax: 212-541-4410 (the “Holder”)
      or its
      registered assigns or successors in interest, the sum of FORTY-EIGHT THOUSAND
      NINE HUNDRED EIGHTY-THREE and 58/100 DOLLARS ($48,983.58), together with any
      accrued and unpaid interest hereon, on December 28, 2009 (the “Maturity
      Date”)
      if not
      sooner indefeasibly paid in full. 

     

    Capitalized
      terms used herein without definition shall have the meanings ascribed to such
      terms in the Purchase Agreements (as defined in the Amendment and Waiver
      Agreement (the “Amendment
      Agreement”)
      dated
      as of the date hereof among the Company, the Holder, Laurus Master Fund, Ltd.
      (“Laurus”)
      and
      Valens Offshore SPV I, Ltd. (“Valens
      Offshore”)).

     

    The
      following terms shall apply to this Secured Term Note (this “Note”):

     

    ARTICLE
      I

    CONTRACT
      RATE AND AMORTIZATION

     

    1.1 Contract
      Rate.
      Subject
      to Sections 3.2 and 4.10, interest payable on the outstanding principal amount
      of this Note (the “Principal
      Amount”)
      shall
      accrue at a rate per annum equal to the “prime rate” published in The
      Wall Street Journal
      from
      time to time (the “Prime
      Rate”),
      plus
      two and one half percent (2.5%) (the “Contract
      Rate”).
      The
      Contract Rate shall be increased or decreased as the case may be for each
      increase or decrease in the Prime Rate in an amount equal to such increase
      or
      decrease in the Prime Rate; each change to be effective as of the day of the
      change in the Prime Rate is announced in The Wall Street Journal. The Contract
      Rate shall not at any time be less than eight percent (8%). Interest shall
      be
      (a) calculated on the basis of a 360 day year, and (b) payable monthly, in
      arrears, commencing on March 1, 2008 and then on the first business day of
      each
      consecutive calendar month thereafter through and including the Maturity Date,
      and on the Maturity Date, whether by acceleration or otherwise.

     

    1.2 Contract
      Rate Payments.
      The
      Contract Rate shall be calculated on the last business day of each calendar
      month hereafter (other than for increases or decreases in the Prime Rate which
      shall be calculated and become effective in accordance with the terms of Section
      1.1) until the Maturity Date and shall be subject to adjustment as set forth
      herein.

     

    1.3 Principal
      Payments.
      The
      aggregate principal amount outstanding under this Note at any time (the
“Principal
      Amount”)
      together with any accrued and unpaid interest and any and all other unpaid
      amounts which are then owing by the Company to the Holder under this Note shall
      be due and payable on the Maturity Date.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      II

    REDEMPTION

     

    2.1 Optional
      Redemption in Cash.
      The
      Company may prepay this Note (“Optional
      Redemption”)
      by
      paying to the Holder a sum of money equal to one hundred twenty-four percent
      (124%) (the “Redemption
      Rate”)
      of the
      aggregate amount of (a) the Principal Amount together with accrued but unpaid
      interest hereon, (b) the principal amount outstanding pursuant to that certain
      Secured Term Note dated as of the date hereof, made by the Company in favor
      of
      Laurus, in the original principal amount of $634,414.36 together with accrued
      but unpaid interest thereon (c) the principal amount outstanding pursuant to
      that certain Secured Term Note dated as of the date hereof, made by the Company
      in favor of Valens Offshore, in the original principal amount of $66,602.06
      together with accrued but unpaid interest thereon (d) the principal amount
      outstanding pursuant to that certain Secured Term Note dated as of December
      28, 2006, made by the Company in favor of the Holder, in the original
      principal amount of $5,000,000 together with accrued but unpaid interest thereon
      and (e) the principal amount outstanding pursuant to that certain Secured Term
      Note dated as of October 31, 2006, made by the Company in favor of the
      Holder, in the original principal amount of $13,000,000, together with accrued
      but unpaid interest thereon and any and all other sums due, accrued or payable
      to the Holder arising under this Note, the Purchase Agreements or any other
      Related Agreement (the “Redemption
      Amount”)
      outstanding on the Redemption Payment Date (as defined below). Notwithstanding
      the foregoing, if the Company prepays in full the amounts set forth in items
      (a)
      through (e) above within twelve (12) months of the date hereof, the Redemption
      Rate shall be reduced to one hundred five percent (105%). The Company shall
      deliver to the Holder a written notice of redemption (the “Notice
      of Redemption”)
      specifying the date for such Optional Redemption (the “Redemption
      Payment Date”),
      which
      date shall be within seven (7) business days after the date of the Notice of
      Redemption (the “Redemption
      Period”).
      On
      the Redemption Payment Date, the Redemption Amount must be paid in good funds
      to
      the Holder. In the event the Company fails to pay the Redemption Amount on
      the
      Redemption Payment Date as set forth herein, then such Redemption Notice will
      be
      null and void.

     

    ARTICLE
      III

    EVENTS
      OF DEFAULT

     

    3.1 Events
      of Default.
      The
      occurrence of any of the following events set forth in this Section 3.1 shall
      constitute an event of default (“Event
      of Default”)
      hereunder:

     

    (a) Failure
      to Pay.
      The
      Company fails to pay when due any installment of principal, interest or other
      fees hereon in accordance herewith, or the Company fails to pay any of the
      other
      Obligations (under and as defined in the Master Security Agreement as reaffirmed
      under and defined in the Reaffirmation and Ratification Agreement dated as
      of
      the date hereof between the Company, the Holder, Laurus and Valens Offshore)
      when due, and, in any such case, such failure shall continue for a period of
      three (3) Business Days following the date upon which any such payment was
      due.

     

    (b) Breach
      of Covenant.
      The
      Company or any of its Subsidiaries breaches any covenant or any other term
      or
      condition of this Note in any material respect and such breach, if subject
      to
      cure, continues for a period of twenty (20) days after the occurrence
      thereof.

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (c) Breach
      of Representations and Warranties.
      Any
      representation, warranty or statement made or furnished by the Company or any
      of
      its Subsidiaries in this Note, the Purchase Agreements or any other Related
      Agreement shall at any time be false or misleading in any material respect
      on
      the date as of which made or deemed made.

     

    (d) Default
      Under Other Agreements.
      The
      occurrence of any default (or similar term) in the observance or performance
      of
      any other agreement or condition relating to any indebtedness or contingent
      obligation of the Company or any of its Subsidiaries in excess of $200,000
      in
      the aggregate (including, without limitation, the indebtedness evidenced by
      the
      Subordinated Debt Documentation) beyond the period of grace (if any), the effect
      of which default is to cause, or permit the holder or holders of such
      indebtedness or beneficiary or beneficiaries of such contingent obligation
      to
      cause, such indebtedness to become due prior to its stated maturity or such
      contingent obligation to become payable;

     

    (e) Default
      Under Subordinated Debt Documentation.
      The
      Company or any of its Subsidiaries shall take or participate in any action
      which
      is prohibited under the provisions of any subordination agreement (each, a
      “Subordination
      Agreement”)
      entered into in connection with any indebtedness (all such indebtedness,
“Subordinated
      Debt”)
      among
      the Company, the Holder, Laurus and/or Valens Offshore and the lender of such
      Subordinated Debt (or make any payment on the Subordinated Debt to a Person
      that
      was not entitled to receive such payments under the provisions of the applicable
      Subordination Agreement.

     

    (f) Material
      Adverse Effect.
      Any
      change or the occurrence of any event which could reasonably be expected to
      have
      a Material Adverse Effect;

     

    (g) Bankruptcy.
      The
      Company or any of its Subsidiaries shall (i) apply for, consent to or
      suffer to exist the appointment of, or the taking of possession by, a receiver,
      custodian, trustee or liquidator of itself or of all or a substantial part
      of
      its property, (ii) make a general assignment for the benefit of creditors,
      (iii) commence a voluntary case under the federal bankruptcy laws (as now or
      hereafter in effect), (iv) be adjudicated a bankrupt or insolvent, (v) file
      a
      petition seeking to take advantage of any other law providing for the relief
      of
      debtors, (vi) acquiesce to, without challenge within ten (10) days of the filing
      thereof, or failure to have dismissed, within thirty (30) days, any petition
      filed against it in any involuntary case under such bankruptcy laws, or (vii)
      take any action for the purpose of effecting any of the foregoing;

     

    (h) Judgments.
      Attachments or levies in excess of $200,000 in the aggregate are made upon
      the
      Company or any of its Subsidiary’s assets or a judgment is rendered against the
      Company’s property involving a liability of more than $500,000 which shall not
      have been vacated, discharged, stayed or bonded within forty (40) days from
      the
      entry thereof;

     

    (i) Insolvency.
      The
      Company or any of its Subsidiaries shall admit in writing its inability, or
      be
      generally unable, to pay its debts as they become due or cease operations of
      its
      present business;

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (j) Change
      of Control.
      A
      Change of Control (as defined below) shall occur with respect to the Company,
      unless Holder shall have expressly consented to such Change of Control in
      writing. A “Change of Control” shall mean any event or circumstance as a result
      of which (i) any “Person” or “group” (as such terms are defined in Sections
      13(d) and 14(d) of the Exchange Act, as in effect on the date hereof), other
      than the Holder, is or becomes the “beneficial owner” (as defined in Rules
      13(d)-3 and 13(d)-5 under the Exchange Act), directly or indirectly, of 51%
      or
      more on a fully diluted basis of the then outstanding voting equity interest
      of
      the any Company, (ii) the Board of Directors of the Company shall cease to
      consist of a majority of the Company’s Board of Directors on the date hereof (or
      directors appointed by a majority of the Board of Directors in effect
      immediately prior to such appointment) or (iii) the Company or any of its
      Subsidiaries merges or consolidates with, or sells all or substantially all
      of
      its assets to, any other person or entity;

     

    (k) Indictment;
      Proceedings.
      The
      indictment of the Company or any of its Subsidiaries or any executive officer
      of
      the Company or any of its Subsidiaries under any criminal statute, or
      commencement of criminal or civil proceeding against the Company or any of
      its
      Subsidiaries or any executive officer of the Company or any of its Subsidiaries
      pursuant to which statute or proceeding penalties or remedies sought or
      available include forfeiture of any of the property of the Company or any of
      its
      Subsidiaries;

     

    (l) The
      Purchase Agreements and Related Agreements.
      (i) An
      Event of Default shall occur under and as defined in the Purchase Agreements
      or
      any other Related Agreement, (ii) the Company or any of its Subsidiaries shall
      breach any term or provision of the Purchase Agreements or any other Related
      Agreement in any material respect and such breach, if capable of cure, continues
      unremedied for a period of twenty (20) days after the occurrence thereof, (iii)
      the Company or any of its Subsidiaries attempts to terminate, challenges the
      validity of, or its liability under, the Purchase Agreements or any Related
      Agreement, (iv) any proceeding shall be brought to challenge the validity,
      binding effect of the Purchase Agreements or any Related Agreement or (v) the
      Purchase Agreements or any Related Agreement ceases to be a valid, binding
      and
      enforceable obligation of the Company or any of its Subsidiaries (to the extent
      such persons or entities are a party thereto);

     

    3.2 Default
      Interest.
      Following the occurrence and during the continuance of an Event of Default,
      the
      Company shall pay additional interest on the outstanding principal balance
      of
      this Note in an amount equal to two percent (2%) per month, and all outstanding
      obligations under this Note, the Purchase Agreements and each other Related
      Agreement, including unpaid interest, shall continue to accrue interest at
      such
      additional interest rate from the date of such Event of Default until the date
      such Event of Default is cured or waived.

     

    3.3 Default
      Payment.
      Following the occurrence and during the continuance of an Event of Default,
      the
      Holder, at its option, may demand repayment in full of all obligations and
      liabilities owing by Company to the Holder under this Note, the Purchase
      Agreements and/or any other Related Agreement and/or may elect, in addition
      to
      all rights and remedies of the Holder under the Purchase Agreements and the
      other Related Agreements and all obligations and liabilities of the Company
      under the Purchase Agreements and the other Related Agreements, to require
      the
      Company to make a Default Payment (“Default
      Payment”).
      The
      Default Payment shall be one hundred five percent (105%) of the outstanding
      principal amount of the Note, plus accrued but unpaid interest, all other fees
      then remaining unpaid, and all other amounts payable hereunder. The Default
      Payment shall be applied first to any fees due and payable to the Holder
      pursuant to this Note, the Purchase Agreements, and/or the other Related
      Agreements, then to accrued and unpaid interest due on this Note and then to
      the
      outstanding principal balance of this Note. The Default Payment shall be due
      and
      payable immediately on the date that the Holder has demanded payment of the
      Default Payment pursuant to this Section 3.3.

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      IV

    MISCELLANEOUS

     

    4.1 Issuance
      of New Note.
      Upon
      any partial redemption of this Note, a new note containing the same date and
      provisions of this Note shall, at the request of the Holder, be issued by the
      Company to the Holder for the principal balance of this Note and interest which
      shall not have been paid as of such date. Subject to the provisions of Article
      III of this Note, the Company shall not pay any costs, fees or any other
      consideration to the Holder for the production and issuance of a new
      note.

     

    4.2 Cumulative
      Remedies.
      The
      remedies under this Note shall be cumulative.

     

    4.3 Failure
      or Indulgence Not Waiver.
      No
      failure or delay on the part of the Holder hereof in the exercise of any power,
      right or privilege hereunder shall operate as a waiver thereof, nor shall any
      single or partial exercise of any such power, right or privilege preclude other
      or further exercise thereof or of any other right, power or privilege. All
      rights and remedies existing hereunder are cumulative to, and not exclusive
      of,
      any rights or remedies otherwise available.

     

    4.4 Notices.
      Any
      notice herein required or permitted to be given shall be in writing and shall
      be
      deemed effectively given: (a) upon personal delivery to the party notified,
      (b)
      when sent by confirmed telex or facsimile if sent during normal business hours
      of the recipient, if not, then on the next business day, (c) five days after
      having been sent by registered or certified mail, return receipt requested,
      postage prepaid, or (d) one day after deposit with a nationally recognized
      overnight courier, specifying next day delivery, with written verification
      of
      receipt. All communications shall be sent to the Company at the address provided
      in the Purchase Agreement executed in connection herewith, and to the Holder
      at
      the address provided in the Purchase Agreement for the Holder, with a copy
      to
      Valens Capital Management, LLC, Attn: Portfolio Services, 335 Madison Avenue,
      10th
      Floor,
      New York, New York 10017, facsimile number (212) 541-4410, or at such other
      address as the Company or the Holder may designate by ten days advance written
      notice to the other parties hereto.

     

    4.5 Amendment
      Provision.
      The
      term “Note” and all references thereto, as used throughout this instrument,
      shall mean this instrument as originally executed, or if later amended or
      supplemented, then as so amended or supplemented, and any successor instrument
      as such successor instrument may be amended or supplemented.

     

    4.6 Assignability.
      This
      Note shall be binding upon the Company and its successors and assigns, and
      shall
      inure to the benefit of the Holder and its successors and assigns, and may
      be
      assigned by the Holder in accordance with the requirements of the Purchase
      Agreement. The Company may not assign any of its obligations under this Note
      without the prior written consent of the Holder, any such purported assignment
      without such consent being null and void.

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    4.7 Cost
      of Collection.
      In case
      of any Event of Default under this Note, the Company shall pay the Holder the
      Holder’s reasonable costs of collection, including reasonable attorneys’
fees.

     

    4.8 Governing
      Law, Jurisdiction and Waiver of Jury Trial.

     

    (a) THIS
      NOTE
      SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS
      OF
      THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
      LAW.

     

    (b) THE
      COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR 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 THE COMPANY, ON THE ONE HAND,
      AND THE HOLDER, ON THE OTHER HAND, PERTAINING TO THIS NOTE OR ANY OF THE OTHER
      RELATED AGREEMENTS OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS NOTE
      OR
      ANY OF THE RELATED AGREEMENTS; PROVIDED,
      THAT
      THE COMPANY 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 NOTE SHALL BE DEEMED OR OPERATE TO PRECLUDE THE HOLDER 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 THE
      HOLDER. THE COMPANY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
      JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND THE COMPANY
      HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL
      JURISDICTION, IMPROPER VENUE OR FORUM NON
      CONVENIENS.
      THE
      COMPANY HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER
      PROCESS ISSUED 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 THE COMPANY AT THE ADDRESS SET FORTH IN THE PURCHASE AGREEMENT
      AND
      THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF THE COMPANY’S
      ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER
      POSTAGE PREPAID.

     

    (c) THE
      COMPANY DESIRES THAT ITS 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 COMPANY HERETO WAIVES ALL RIGHTS
      TO
      TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE,
      WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN THE HOLDER AND/OR THE
      COMPANY ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THE
      RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS NOTE, ANY OTHER
      RELATED AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR
      THERETO.

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    4.9 Severability.
      In the
      event that any provision of this Note is invalid or unenforceable under any
      applicable statute or rule of law, then such provision shall be deemed
      inoperative to the extent that it may conflict therewith and shall be deemed
      modified to conform with such statute or rule of law. Any such provision which
      may prove invalid or unenforceable under any law shall not affect the validity
      or enforceability of any other provision of this Note.

     

    4.10 Maximum
      Payments.
      Nothing
      contained herein shall be deemed to establish or require the payment of a rate
      of interest or other charges in excess of the maximum permitted by applicable
      law. In the event that the rate of interest required to be paid or other charges
      hereunder exceed the maximum rate permitted by such law, any payments in excess
      of such maximum rate shall be credited against amounts owed by the Company
      to
      the Holder and thus refunded to the Company.

     

    4.11 Security
      Interest and Guarantee.
      The
      Holder has been granted a security interest (a) in certain assets of the Company
      and its Subsidiaries as more fully described in the Master Security Agreement
      dated as of the date hereof and various mortgages covering the real property
      owned by the Company and (b) in the equity interests of the Company’s
      Subsidiaries pursuant to the Stock Pledge Agreement dated as of the date hereof.
      The obligations of the Company under this Note are guaranteed by certain
      Subsidiaries of the Company pursuant to the Subsidiary Guaranty dated as of
      the
      date hereof.

     

    4.12 Construction.
      Each
      party acknowledges that its legal counsel participated in the preparation of
      this Note and, therefore, stipulates that the rule of construction that
      ambiguities are to be resolved against the drafting party shall not be applied
      in the interpretation of this Note to favor any party against the
      other.

     

    4.13 Registered
      Obligation.
      This
      Note is intended to be a registered obligation within the meaning of Treasury
      Regulation Section 1.871-14(c)(1)(i) and the Company (or its agent) shall
      register this Note (and thereafter shall maintain such registration) as to
      both
      principal and any stated interest. Notwithstanding any document, instrument
      or
      agreement relating to this Note to the contrary, transfer of this Note (or
      the
      right to any payments of principal or stated interest thereunder) may only
      be
      effected by (a) surrender of this Note and either the reissuance by the Company
      of this Note to the new holder or the issuance by the Company of a new
      instrument to the new holder, or (b) transfer through a book entry system
      maintained by the Company (or its agent), within the meaning of Treasury
      Regulation Section 1.871-14(c)(1)(i)(B).

     

    [Balance
      of Page Intentionally Left Blank; Signature Page Follows]

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      the
      Company has caused this Secured Term Note to be signed in its name effective
      as
      of this 29th
      day of
      February, 2008.

    

    
      	 	
              MODTECH
                HOLDINGS, INC.

            
	 	 
	
                

            	
              By:

            	
              /s/
                Kenneth S. Cragun

            
	 	 	
              Name:
                Kenneth S. Cragun

            
	 	 	
              Title:
                Chief Financial Officer

            

    

     

    
      
        	
                WITNESS:

              
	 
	
                /s/
                  Lori Lopez

              
	
                Lori
                  Lopez

              

        
          
            
            

          

          
            8

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00140-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00140-of-00352.parquet"}]]