Document:

2004 Stock Incentive Plan

    Exhibit
      10.8

     

    2004
      STOCK INCENTIVE PLAN

    OF

    DESERT
      CAPITAL REIT, INC.

     

    1.  Purpose.

     

    The
      purpose of this Plan is to benefit the Company’s stockholders by encouraging
      high levels of performance by individuals who are key to the success of the
      Company and to enable the Company to attract, motivate and retain talented
      and
      experienced individuals essential to its continued success. This is to be
      accomplished by providing such individuals an opportunity to obtain or increase
      their proprietary interest in the Company’s performance and by providing such
      individuals with additional incentives to remain with the Company.

     

    2.  Definitions.

     

    The
      following terms, as used herein, shall have the meaning specified:

     

    (a)  “Affiliate”
      means any corporation or other entity that directly, or indirectly through
      one
      or more intermediaries, controls, or is controlled by, or is under common
      control with, the Company or by another Affiliate of the Company within the
      meaning of Rule 12b-2 promulgated under the Securities Exchange Act of 1934,
      as
      amended.

     

    (b)  “Award”
      means an award granted pursuant to Section
      6.

     

    (c)  “Board”
      means the Board of Directors of the Company, as it may be comprised from time
      to
      time.

     

    (d)  “Change
      in Control” means the occurrence of any of the following:

     

    (1)  at
      any
      time during any 12-month period, the Board of Directors of the Company in office
      at the beginning of such period shall have ceased to constitute a majority
      of
      the Board without the approval of the nomination of such directors by a majority
      of the Board consisting of directors who were serving at the beginning of such
      period;

     

    (2)  any
      person (as defined in Section 13(d)(3) or Section 14(d)(2) of the Exchange
      Act)
      (other than the Company, any of its subsidiaries or any trustee, fiduciary
      or
      other person holding securities under any employee share ownership plan or
      any
      other employee benefit plan of the Company or any of its subsidiaries), together
      with its affiliates and associates (as such terms are defined in Rule 12b-2
      under the Exchange Act) shall have become the beneficial owner (as defined
      in
      Rule 13d-3 of the Exchange Act) of securities representing 25% or more of the
      combined voting power of the Voting Shares;

     

    (3)  the
      Company shall have filed a schedule, report or proxy statement with the
      Securities and Exchange Commission pursuant to the Exchange Act disclosing
      that
      a change in control of the Company has occurred;

     

    (4)  a
      merger
      or consolidation of the Company shall have been consummated, other than (x)
      a
      merger or consolidation that would result in the Voting Shares outstanding
      immediately prior thereto continuing to represent (either by remaining
      outstanding or by being converted into voting securities of the surviving
      entity) at least 50% of the combined voting power of the voting securities
      of
      the surviving entity or (y) a merger or consolidation effected to implement
      a
      recapitalization of the Company (or similar transaction) in which no person
      acquires more than 50% of the Voting Shares;

     

    (5)  any
      person, other than a subsidiary of the Company, shall have acquired more than
      50% of the combined assets of the Company and its subsidiaries; or

     

    (6)  the
      stockholders of the Company shall have approved the complete liquidation or
      dissolution of the Company. 

     

    (e)  “Code”
      means the Internal Revenue Code of 1986, as amended from time to
      time.

     

    (f)  “Committee”
      means a committee appointed pursuant to Section
      3(a)
      or, if
      no such Committee is appointed, the Board.

     

    (g)  “Common
      Stock” means the common stock of the Company, par value $0.01 per
      share.

     

    (h)  “Company”
      means Desert Capital REIT, Inc.

     

    (i)  “Director”
      means any person who shall from time to time serve as a member of the Board
      of
      Directors of the Company or any Affiliate.

     

    (j)  “Dividend
      Equivalent Right” means an Award granted pursuant to Section 6(c).

     

    (k)  “Effective
      Date” means the date this Plan was originally adopted by the Board, unless
      otherwise specified by the Board.

     

    (l)  “Election
      Date” means the date an Independent Director is first elected to the
      Board.

     

    (m)  “Exchange
      Act” means the Securities Exchange Act of 1934, as amended from time to
      time.

     

    (n)  “Fair
      Market Value” means the closing price of the relevant security as reported on
      the composite tape of New York Stock Exchange issues (or such other reporting
      system as shall be selected by the Committee) on the relevant date, or if no
      sale of the security is reported for such date, the next following day for
      which
      there is a reported sale. The Committee shall determine the Fair Market Value
      of
      any security that is not publicly traded, using such criteria as it shall
      determine, in its sole discretion, to be appropriate for such valuation;
      provided, however, that the Fair Market Value of the Common Stock for a period
      of six months from the Effective Date shall not be less than $10.00 per
      share.

     

    (o)  “Independent
      Director” means any Director who is (i) (A) a “non-employee director” within the
      meaning of Rule 16b3(b)(3)(i) of the Exchange Act, and (B) an “outside director”
within the meaning of Code Section 162(m) and the regulations promulgated
      thereunder, and (ii) who is not an employee of the Company or any Affiliate;
      provided, that a Director who is (x) a Director or (y) a consultant, or both,
      but is not an employee, also may be an Independent Director.

     

    (p)  “Insider”
      means any person who is subject to Section 16.

     

    (q)  “ISO”
      means an incentive stock option within the meaning of Code Section
      422.

     

    (r)  “Maryland
      Act” means the Maryland General Corporation Law, as amended from time to
      time.

     

    (s)  “NQO”
      means a stock option that is not within the meaning of Code Section
      422.

     

    (t)  “Option”
      means any option granted pursuant to Section
      6(a)(1).

     

    (u)  “Outstanding
      Shares” means, with respect to any date, the total of the number of Shares
      outstanding, plus (ii) the number of Shares reserved for issuance upon
      conversion of securities convertible into or exchangeable for Shares, plus
      (iii)
      the number of Shares, if any, held as “treasury stock” by the Company, each as
      on such date.

     

    (v)  “Participant”
      means any person who has been granted an Award pursuant to this
      Plan.

     

    (w)  “Restricted
      Shares” means the Shares issued as a result of a Restricted Share
      Award.

     

    (x)  “Restricted
      Share Award” means a grant of the right to purchase Shares pursuant to
Section
      6(b).
      Such
      Shares, when and if issued, shall be subject to such transfer restrictions
      and
      risk of forfeiture as the Committee shall determine at the time the Award is
      granted, until such specific conditions are met. Such conditions may be based
      on
      continuing employment or achievement of pre-established performance objectives,
      or both.

     

    (y)  “Rights”
      means an Award granted pursuant to Section
      6.

     

    (z)  “Section
      16” means Section 16 of the Exchange Act or any successor regulation and the
      rules promulgated thereunder by the Securities and Exchange Commission, as
      they
      may be amended from time to time.

     

    (aa)  “Securities
      Act” means the Securities Act of 1933, as amended from time to
      time.

     

    (bb)  “Shares”
      means the shares of Common Stock.

     

    3.  Administration
      and Interpretation.

     

    (a)  Administration.
      This
      Plan shall be administered by a Committee, which shall consist of three or
      more
      Independent Directors. The Board may from time to time remove and appoint
      members of the Committee in substitution for, or in addition to, members
      previously appointed and may fill vacancies, however caused, in the Committee.
      The Committee may prescribe, amend and rescind rules and regulations for
      administration of this Plan and shall have full power and authority to construe
      and interpret this Plan. A majority of the members of the Committee shall
      constitute a quorum, and the act of a majority of the members present at a
      meeting or the acts of a majority of the members evidenced in writing shall
      be
      the acts of the Committee. The Committee may correct any defect or any omission
      or reconcile any inconsistency in this Plan or in any Award or grant made
      hereunder in the manner and to the extent it shall deem desirable.

     

    The
      Committee shall have the full and exclusive right to grant all Awards under
      this
      Plan, which may be Options, Restricted Share Awards and Dividend Equivalent
      Rights. In granting Awards, the Committee shall take into consideration the
      contribution the individual has made or may make to the success of the Company
      or its Affiliates and such other factors as the Committee shall determine.
      The
      Committee shall periodically determine the Participants in this Plan and the
      nature, amount, pricing, time and other terms of Awards to be made to such
      individuals, subject to the other terms and provisions of this Plan. The
      Committee shall also have the authority to consult with and receive
      recommendations from officers of and other individuals associated with the
      Company and its Affiliates with regard to these matters. In no event shall
      any
      individual, his or her legal representative, heirs, legatees, distributees
      or
      successors have any right to participate in this Plan except to such extent,
      if
      any, as the Committee shall determine.

     

    The
      Committee may from time to time in granting Awards under this Plan prescribe
      such other terms and conditions concerning such Awards as it deems appropriate,
      including, without limitation, the achievement of specific goals established
      by
      the Committee, provided that such terms and conditions are not more favorable
      to
      any individual than those expressly set forth in this Plan.

     

    The
      Committee may delegate to the officers of or individuals associated with the
      Company the authority to execute and deliver such instruments and documents,
      to
      do all such acts and things, and to take all such other steps deemed necessary,
      advisable or convenient for the effective administration of this Plan in
      accordance with its terms and purpose, except that the Committee may not
      delegate any discretionary authority with respect to substantive decisions
      or
      functions regarding this Plan or Awards hereunder as these relate to Insiders,
      including, without limitation, decisions regarding the timing, eligibility,
      pricing, amount or other material term of such Awards.

     

    (b)  Interpretation.
      The
      Committee shall have the power to interpret and administer this Plan. All
      questions of interpretation with respect to this Plan, the number of Shares
      or
      other securities granted hereunder, and the terms of any Award shall be
      determined by the Committee and its determination shall be final and conclusive
      upon all parties in interest. In the event of any conflict between an Award
      and
      this Plan, the terms of this Plan shall govern. It is the intent of the Company
      that this Plan and Awards hereunder satisfy and be interpreted in a manner
      that,
      in the case of Participants who are or may be Insiders, satisfies the applicable
      requirements of Rule 16b-3 of the Exchange Act, so that such persons will
      be entitled to the benefits of Rule 16b-3 or other exemptive rules under Section
      16 and will not be subjected to liability thereunder. If any provision of this
      Plan or of any Award would otherwise frustrate or conflict with the intent
      expressed in this Section
      3(b),
      that
      provision to the extent possible shall be interpreted and deemed amended so
      as
      to avoid such conflict. To the extent of any remaining irreconcilable conflict
      with such intent, the provision shall be deemed void as applicable to
      Insiders.

     

    (c)  Limitation
      on Liability.
      Neither
      the Committee nor any member thereof shall be liable for any act, omission,
      interpretation, construction or determination made in connection with this
      Plan
      in good faith, and the members of the Committee shall be entitled to
      indemnification and reimbursement by the Company in respect of any claim, loss,
      damage or expense (including counsel fees) arising therefrom to the full extent
      permitted by law. The members of the Committee shall be named as insureds under
      any directors and officers (or similar) liability insurance coverage which
      the
      Company may have in effect from time to time.

     

    4.  Eligibility.

     

    (a)  Eligible
      Persons.
      The
      class of persons who are potential recipients of Awards granted under this
      Plan
      consist of the (i) Independent Directors, (ii) Directors, (iii) officers of
      the Company or any Affiliate and (iv) an individual consultant or advisor
      who renders or has rendered bona fide services (other than services in
      connection with the offering or sale of securities of the Company in a
      capital-raising transaction or as a market maker or promoter of the Company’s
      securities) to the Company and who is selected to participate in this Plan
      by
      the Committee; provided, however, that a person who is otherwise an eligible
      Participant under clause (iv) above may participate in this Plan only if
      such participation would not adversely affect either the Corporation’s
      eligibility to use Form S-8 to register under the Securities Act, the
      offering of Shares issuable under this Plan by the Company or the Company’s
      compliance with any other applicable laws. The Independent Directors, Directors,
      officers and consultants to whom Awards are granted under this Plan, and the
      number of Shares subject to each such Award, shall be determined by the
      Committee in its sole discretion, subject, however, to the terms and conditions
      of this Plan.

     

    (b)  Ownership
      Limit.
      Notwithstanding anything else contained herein or in any Award hereunder to
      the
      contrary, no Person may receive Shares upon the grant, exercise or payment
      of an
      Award to the extent that it will cause such Person to Beneficially Own or
      Constructively Own Capital Stock in excess of the Aggregate Stock Ownership
      Limit. If a Person would be entitled to receive or acquire Shares but for the
      limitation of the preceding sentence, the Company shall have the right to
      deliver to the person, in lieu of Shares, a check or cash in the amount equal
      to
      the Fair Market Value of the Shares otherwise deliverable, subject to any
      applicable tax withholding or other authorized deductions. For purposes of
      this
      limitation, the terms “Person,” “Beneficially Own,” “Constructively Own,”
“Capital Stock,” and “Aggregate Stock Ownership Limit” are used as defined in
      the Company’s Articles of Incorporation.

     

    5.  Shares
      Subject to Grants Under this Plan.

     

    (a)  Limitation
      on Number of Shares.
      The
      Shares subject to grants of Awards shall be authorized but unissued Shares,
      Shares purchased in the open market or privately and such Shares, if any, held
      as “treasury stock” by the Company. Subject to adjustment as hereinafter
      provided, the aggregate number of Shares with respect to which Awards may be
      granted under this Plan shall not exceed the greater of 1,000,000 or 4.9% of
      the
      then outstanding shares of Common Stock; provided, however, that the maximum
      number of Shares issuable pursuant to ISOs granted under the Plan shall be
      1,000,000.

     

    (b)  Shares
      No Longer Subject to Awards.
      Shares
      ceasing to be subject to an Award because of the exercise of an Option or Right
      or the vesting of an Award shall no longer be subject to any further grant
      under
      this Plan. However, if any outstanding Option or Right, in whole or in part,
      expires or terminates unexercised or is canceled or if any Award, in whole
      or in
      part, expires or is terminated or forfeited, for any reason prior to the
      expiration of ten (10) years from the Effective Date, the Shares allocable
      to
      the unexercised, terminated, canceled or forfeited portion of such Award may
      again be made the subject of grants under this Plan; provided, however, that,
      with respect to any Option or Rights granted to any Participant who is a
“covered person” as defined in Code Section 162(m) and the regulations
      promulgated thereunder that is canceled, the number of Shares subject to such
      Option and/or Rights shall continue to count against the maximum number of
      Shares which may be the subject of Options and for Rights granted to such
      Participant.

     

    For
      the
      purposes of computing the total number of Shares granted under this Plan, the
      following rules shall apply to Awards payable in Shares:

     

    (1)  each
      Option shall be deemed to be the equivalent of the maximum
      number
      of Shares that may be issued upon exercise of the particular Option;
      and

     

    (2)  where
      the
      number of Shares available under the Award is variable on the date it is
      granted, the number of Shares shall be deemed to be the maximum number of Shares
      that could be received under that particular Award.

     

    (c)  Adjustments
      of Aggregate Number of Shares.
      The
      aggregate number of Shares stated in Section
      5(a)
      shall be
      subject to appropriate adjustment, from time to time, in accordance with the
      provisions of Section
      7
      hereof.

     

    6.  Awards.

     

    (a)  Options
      and Rights.

     

    (1)  Grants
      of Options.
      Options
      granted under this Plan may be either ISOs or NQOs. At the time an Option is
      granted, the Committee may, in its discretion, designate whether an Option
      shall
      be an ISO. No Option which is intended to qualify as an ISO shall be granted
      under this Plan to any individual who, at the time of such grant, is not an
      officer of the Company or an Affiliate.

     

    Notwithstanding
      any other provision of this Plan to the contrary, to the extent that the
      aggregate Fair Market Value (determined at the date an Option is granted) of
      the
      Shares with respect to which an Option intended to be an ISO (and any other
      ISO
      granted to the holder under this Plan or any other plans of the Company or
      an
      Affiliate) first becomes exercisable during any calendar year exceeds $100,000,
      the portion of such Option which would exceed the $100,000 limitation shall
      be
      treated as an NQO. Options with respect to which no designation is made by
      the
      Committee shall be deemed to be ISOs to the extent that the $100,000 limitation
      described in the preceding sentence is met. This paragraph shall be applied
      by
      taking Options into account in the order in which they are granted.

     

    No
      ISO
      shall be granted to any person who, at the time of the grant, owns Shares
      possessing more than 10% of the total combined voting power of the Company
      or
      any Affiliate, unless (i) on the date such ISO is granted, the Option price
      is
      at least 110% of the Fair Market Value per Share subject to the ISO and (ii)
      such ISO by its terms is not exercisable after the expiration of five years
      from
      the date such ISO is granted.

     

    The
      purchase price per Share pursuant to the exercise of any Option shall be fixed
      by the Committee at the time of grant; provided, however, that the purchase
      price per Share (regardless of whether such Option is an ISO or an NQO) shall
      not be less than the Fair Market Value of a Share on the date on which the
      Option is granted. In addition, the Committee shall designate the number of
      Shares, the terms and conditions (which may include, without limitation, the
      achievement of specific goals), with respect to Options granted under this
      Plan.
      Options may be granted by the Committee to any eligible person at any time
      and
      from time to time.

     

    As
      a
      condition to the grant of an Option, the Participant shall enter into an Option
      Agreement with the Company upon such terms as the Committee may, in its
      discretion, require. 

     

    (2)  Payment
      of Option Exercise Price.
      Upon
      exercise of an Option, the full Option exercise price for the Shares with
      respect to which the Option is being exercised shall be payable to the Company,
      by means of any lawful consideration as determined by the Committee, including,
      without limitation, one or a combination of the following methods:

     

    
      	·  	
              services
                rendered by the recipient of such
                Award;

            

    

    
      	·  	
              cash,
                check payable to the order of the Company, or electronic funds
                transfer;

            

    

    
      	·  	
              notice
                and third party payment in such manner as may be authorized by the
                Committee;

            

    

    
      	·  	
              the
                delivery of previously owned shares of Common
                Stock;

            

    

    
      	·  	
              by
                a reduction in the number of Shares otherwise deliverable pursuant
                to the
                Award;

            

    

    
      	·  	
              by
                delivery of one or more promissory notes from the Participant, provided
                that any such note shall be subject to terms and conditions established
                by
                the Committee and the requirements of applicable law;
                or

            

    

    
      	·  	
              subject
                to such procedures as the Committee may adopt, pursuant to a “cashless
                exercise” with a third party who provides financing for the purposes of
                (or who otherwise facilitates) the purchase or exercise of
                awards.

            

    

     

    In
      no
      event shall any Shares newly-issued by the Company be issued for less than
      the
      minimum lawful consideration for such Shares or for consideration other than
      consideration permitted by applicable state law. In the event that the Committee
      allows a Participant to exercise an Award by delivering shares of Common Stock
      previously owned by such Participant and unless otherwise expressly provided
      by
      the Committee, any Shares delivered which were initially acquired by the
      Participant from the Company (upon exercise of an Option or otherwise) must
      have
      been owned by the Participant at least six months as of the date of delivery.
      Shares of Common Stock used to satisfy the exercise price of an Option shall
      be
      valued at their Fair Market Value on the date of exercise. The Company will
      not
      be obligated to deliver any Shares unless and until it receives full payment
      of
      the exercise or purchase price therefor and any related withholding obligations
      under Section 11 hereof and any other conditions to exercise or purchase
      have been satisfied. Unless otherwise expressly provided in the applicable
      Award
      agreement, the Committee may at any time eliminate or limit a Participant’s
      ability to pay the purchase or exercise price of any Award or Shares by any
      method other than cash payment to the Company. In addition to the foregoing
      methods of payment, the full Option purchase price for Shares with respect
      to
      which the Option is being exercised may be payable to the Company by such other
      methods as the Committee may permit from time to time.

     

    (3)  Term.
      The
      term of each Option and Right shall be determined by the Committee at the date
      of grant; provided, however, that each Option that is an ISO shall,
      notwithstanding anything in this Plan to the contrary, expire not more than
      ten
      years from the date the Option is granted (or five years from the date of grant
      to the extent required under Section
      6(a)(1))
      or, if
      earlier, the date specified in the certificate evidencing the grant of such
      Option. An Option that is an NQO shall expire not more than ten years from
      the
      date the Option is granted, or if earlier, the date specified in the Option
      Agreement.

     

    (4)  Termination
      of Employment or Relationship.
      In the
      event that a Participant’s employment or relationship with the Company and its
      Affiliates shall terminate, for reasons other than (i) retirement pursuant
      to a
      retirement plan or policy of the Company or one of its Affiliates
      (“retirement”), (ii) permanent disability as determined by the Committee based
      on the opinion of a physician selected or approved by the Committee (“permanent
      disability”) or (iii) death, the Participant’s Options and Rights shall be
      exercisable by him or her, subject to subsection (3) above, only within 90
      business days after such termination, but only to the extent the Option or
      Right
      was exercisable immediately prior to such termination.

     

    If
      a
      Participant shall retire, become permanently disabled or die while entitled
      to
      exercise an Option or Rights, the Participant or, if applicable, the
      Participant’s estate, personal representative or beneficiary, as the case may
      be, shall have the right, subject to the provisions of subsection (3) above,
      to
      exercise the Option or Rights at any time within one year from the date of
      the
      Participant’s retirement, permanent disability or death.

     

    Whether
      any termination is due to retirement or permanent disability, and whether an
      authorized leave of absence on military or government service or for other
      reasons shall constitute a termination for the purpose of this Plan, shall
      be
      determined by the Committee.

     

    If
      the
      employment, consulting arrangement or service of any Participant with the
      Company or an Affiliate shall be terminated because of the Participant’s
      violation of the duties of such employment, consulting arrangement or service
      with the Company or an Affiliate as he or she may from time to time have, the
      existence of which violation shall be determined by the Committee in its sole
      discretion (which determination by the Committee shall be conclusive), all
      unexercised Options and Rights of such Participant shall terminate immediately
      upon such termination of such Participant’s employment, consulting arrangement
      or service with the Company and all Affiliates, and a Participant whose
      employment, consulting arrangement or service with the Company and Affiliates
      is
      so terminated, shall have no right after such termination to exercise any
      unexercised Option or Rights he or she might have exercised prior to termination
      of his or her employment, consulting arrangement or service with the Company
      and
      Affiliates.

     

    (5)  Options
      Granted by Other Corporations.
      Options
      may be granted under this Plan from time to time in substitution for stock
      options held by employees and directors of corporations who become key employees
      or Directors or directors of the Company or of any Affiliate as a result of
      any
“corporate transaction” as defined in the Treasury Regulations promulgated under
      Code Section 424.

     

    (b)  Restricted
      Share Awards.

     

    (1)  Awards
      of Restricted Shares.
      Restricted Share Awards may be awarded by the Committee to any individual
      eligible to receive the same, at any time and from time to time before the
      expiration of ten years from the Effective Date. In addition, and without
      limiting the generality of the foregoing, the Committee may grant to any
      individual who is entitled to receive a bonus, a Restricted Share Award with
      respect to Shares having a Fair Market Value on the date of the grant of such
      Restricted Share Award equal to a specified percentage determined by the
      Committee of the amount of such individual’s bonus, provided that such
      individual has made an irrevocable election, at least six months prior to the
      date of the grant of such Restricted Share Award, to receive such Restricted
      Share Award in lieu of such bonus.

     

    (2)  Purchase
      Price under Restricted Share Awards.
      The
      purchase price of Restricted Shares to be purchased pursuant to a Restricted
      Share Award shall be fixed by the Committee at the time of the grant of the
      Restricted Share Award; provided, however, that such purchase price shall not
      be
      less than the par value per share of the Shares subject to the Restricted Share
      Award. The Committee shall specify, within its discretion, the time and manner
      in which payment of such purchase price shall be paid.

     

    (3)  Description
      of Restricted Shares.
      All
      Restricted Shares purchased by an eligible person shall be subject to the
      following conditions:

     

    (A)  Restricted
      Shares shall be subject to such restrictions, terms and conditions as the
      Committee may establish, which may include, without limitation, “lapse” and
“non-lapse” restrictions (as such terms are defined in regulations promulgated
      under Code Section 83) and the achievement of specific goals;

     

    (B)  the
      Restricted Shares may not be sold, exchanged, pledged, transferred, assigned
      or
      otherwise encumbered or disposed of until the terms and conditions set by the
      Committee at the time of the grant of the Restricted Share Award have been
      satisfied;

     

    (C)  each
      certificate representing Restricted Shares issued pursuant to this Plan shall
      bear a legend making appropriate reference to the following:

     

    “The
      Shares represented by this certificate have been issued pursuant to the terms
      of
      the 2004 Stock Incentive Plan of Desert Capital REIT, Inc. and may not be sold,
      pledged, transferred, assigned or otherwise encumbered in any manner except
      as
      is set forth in the terms of such award dated    .”

    ;
      and

    

    (D)  except
      as
      permitted by the Committee, no Restricted Shares granted pursuant to this Plan
      shall be subject to vesting requirements over a period of less than three
      years.

     

    If
      a
      certificate representing Restricted Shares is issued to an individual (whether
      or not escrowed as provided below), the individual shall be the record owner
      of
      such Shares and shall have all the rights of a stockholder with respect to
      such
      Shares (unless the Restricted Share Award specifically provides otherwise),
      including the right to vote and the right to receive dividends made or paid
      with
      respect to such Shares.

     

    In
      order
      to enforce the restrictions, terms and conditions that may be applicable to
      a
      Participant’s Restricted Shares, the Committee may require the Participant, upon
      the receipt of a certificate or certificates representing such Shares, or at
      any
      time thereafter, to deposit such certificate or certificates, together with
      stock powers and other instruments of transfer, appropriately endorsed in blank,
      with the Company or an escrow agent designated by the Company under an escrow
      agreement, which may be a part of a Restricted Share Award, in such form as
      shall be determined by the Committee.

     

    After
      the
      satisfaction of the terms and conditions set by the Committee with respect
      to
      Restricted Shares issued to an individual, and provided the Restricted Shares
      are not subject to a non-lapse restriction, a new certificate, without the
      legend set forth above, for the number of Shares that are no longer subject
      to
      such restrictions, terms and conditions shall be delivered to the individual.
      If
      such terms and conditions are satisfied as to a portion, but fewer than all,
      of
      such Shares, the remaining Shares issued with respect to such Award shall either
      be reacquired by the Company or, if appropriate under the terms of the award
      applicable to such Shares, shall continue to be subject to the restrictions,
      terms and conditions set by the Committee at the time of Award.

     

    (4)  Termination
      of Employment or Relationship.
      If the
      employment or relationship with the Company and its Affiliates of a holder
      of a
      Restricted Share Award is terminated for any reason before satisfaction of
      the
      terms and conditions for the vesting (within the meaning of Code Section 83)
      of
      all Shares subject to the Restricted Share Award, the number of Restricted
      Shares not theretofore vested shall be reacquired by the Company and forfeited,
      and the purchase price paid for such forfeited Shares by the holder shall be
      returned to the holder. If Restricted Shares issued shall be reacquired by
      the
      Company and forfeited as provided above, the individual, or in the event of
      his
      or her death, his or her personal representative, shall forthwith deliver to
      the
      Secretary of the Company the certificates representing such Shares, accompanied
      by such instrument of transfer, if any, as may reasonably be required by the
      Company.

     

    (c)  Dividends
      and Dividend Equivalents.
      

     

    (1)  General.
      The
      Committee shall have the authority to grant Dividend Equivalent Rights to
      Participants upon such terms and conditions as it shall establish, subject
      in
      all events to the following limitations and provisions of general application
      set forth in this Plan. Each Dividend Equivalent Right shall entitle a holder
      to
      receive, for a period of time to be determined by the Committee, a payment
      equal
      to the quarterly dividend declared and paid by the Company on one Share. If
      the
      right relates to a specific Option, the period shall not extend beyond the
      earliest of the date the Option is exercised, or the expiration date set forth
      in the Option.

     

    (2)  Rights
      and Options. Each
      right may relate to a specific Option granted under this Plan and may be granted
      to the Participant either concurrently with the grant of such Option or at
      such
      later time as determined by the Committee, or each right may be granted
      independent of any Option.

     

    (3)  Payments.
      The
      Committee shall determine at the time of grant whether payment pursuant to
      a
      right shall be immediate or deferred and if immediate, the Company shall make
      payments pursuant to each right concurrently with the payment of the quarterly
      dividend to holders of Common Shares. If deferred, the payments shall not be
      made until a date or the occurrence of an event specified by the Committee
      and
      then shall be made within 30 days after the occurrence of the specified date
      or
      event, unless the right is forfeited under the terms of the Plan or applicable
      Award Agreement.

     

    (4)  Termination
      of Employment.
      In the
      event of Employment Termination, any Dividend Equivalent Right held by such
      Participant on the date of Employment Termination shall be forfeited, unless
      otherwise expressly provided in the Award Agreement.

     

    (d)  Consideration
      for Awards.
      Subject
      to the requirements of the Maryland Act, the Company shall obtain such
      consideration for the grant of an Award under this Section
      6
      as the
      Committee in its discretion may determine.

     

    7.  Adjustment
      Provisions.

     

    If,
      prior
      to the complete exercise of any Option, or prior to the expiration or lapse
      of
      all of the restrictions and conditions imposed pursuant to a Restricted Share
      Award, there shall be declared and paid a dividend upon the Shares or if the
      Shares shall be split up, converted, exchanged, reclassified or in any way
      substituted for, then (i) in the case of an Option, the Option, to the extent
      that it has not been exercised, shall entitle the holder thereof upon the future
      exercise of the Option to such number and kind of securities or cash or other
      property subject to the terms of the Option to which he or she would have been
      entitled had he or she actually owned the Shares subject to the unexercised
      portion of the Option at the time of the occurrence of such dividend, split-up,
      conversion, exchange, reclassification or substitution, and the aggregate
      purchase price upon the future exercise of the Option shall be the same as
      if
      the originally optioned Shares were being purchased thereunder; (ii) in the
      case
      of Restricted Shares issued pursuant to a Restricted Share Award, the holder
      of
      such Award shall receive, subject to the same restrictions and other conditions
      of such Award as determined pursuant to the provisions of Section
      6(b),
      the
      same securities or other property as are received by the holders of Shares
      pursuant to such dividend, split-up, conversion, exchange, reclassification
      or
      substitution; and (iii) in the case of a Dividend Equivalent Right, the holder
      of such Dividend Equivalent Right shall receive, the same securities or other
      property as are received by the holders of Shares pursuant to such dividend,
      and
      in the case of a split-up, conversion, exchange, reclassification or
      substitution, the Dividend Equivalent Right shall be adjusted, as the Committee
      determines consistent with the terms of such split-up, conversion, exchange,
      reclassification or substitution. Any fractional Shares or securities payable
      upon the exercise of the Option as a result of such adjustment shall be payable
      in cash based upon the Fair Market Value of such Shares or securities at the
      time of such exercise. If any such event should occur, the number of Shares
      with
      respect to which Awards remain to be issued, or with respect to which Awards
      may
      be reissued, shall be adjusted in a similar manner.

     

    Notwithstanding
      any other provision of this Plan, in the event of a recapitalization, merger,
      consolidation, rights offering, separation, reorganization or liquidation,
      or
      any other change in the corporate structure or outstanding Shares, the Committee
      may make such equitable adjustments to the number of Shares and the class of
      shares available hereunder or to any outstanding Awards as it shall deem
      appropriate to prevent dilution or enlargement of rights.

     

    8.  Acceleration.

     

    Notwithstanding
      any other provision of this Plan to the contrary, all or any part of any
      remaining unexercised Options granted to any person may be exercised in the
      following circumstances (but in no event during the six month period commencing
      on the date granted) and all or any part of any other Award not theretofore
      vested shall vest: (i) with respect to Options only, immediately upon (but
      prior
      to the expiration of the term of the Option) retirement, (ii) subject to the
      provisions of Section
      6,
      upon
      the permanent disability or death of the holder, or (iii) upon a Change in
      Control. 

     

    9.  Change
      in Control.

     

    Should
      a
      Change in Control occur, then at the discretion of the Committee, all or any
      part of any remaining unexercised Options granted to any person hereunder may
      be
      repurchased. The repurchase price shall be an amount equal to the excess of
      (i)
      the Fair Market Value of the Share(s) subject to the Option(s) over (ii) the
      purchase price per Share, as set forth in the Option Agreement. The repurchase
      of such Options is specifically approved by the Board and, if necessary to
      exempt such surrender from Section 16(b) of the Exchange Act, the Board shall
      take any additional action necessary for such approval to comply with the
      requirements of Rule 16b-3(e) promulgated under the Exchange
      Act.

     

    10.  Participant’s
      Agreement.

     

    If,
      at
      the time of the exercise of any Option or the granting or vesting of an Award,
      in the opinion of counsel for the Company, it is necessary or desirable, in
      order to comply with any then applicable laws or regulations relating to the
      sale of securities, that the individual exercising the Option or receiving
      the
      Award shall agree to hold any Shares issued to the individual for investment
      and
      without any present intention to resell or distribute the same and that the
      individual will dispose of such Shares only in compliance with such laws and
      regulations, the individual will, upon the request of the Company, execute
      and
      deliver to the Company a further agreement to such effect.

     

    11.  Withholding
      Taxes.

     

    No
      Award
      may be exercised and no distribution of Shares or cash pursuant to an Award
      may
      be made under this Plan until appropriate arrangements have been made by the
      holder with the Company for the payment of any amounts that the Company may
      be
      required to withhold with respect thereto, which arrangements may include the
      tender of previously owned Shares or the withholding of Shares issuable pursuant
      to such Award.

     

    12.  Termination
      of Authority to Make Grant.

     

    No
      Awards
      will be granted pursuant to this Plan after the expiration of ten years from
      the
      Effective Date.

     

    13.  Amendment
      and Termination.

     

    The
      Board
      may from time to time and at any time alter, amend, suspend, discontinue or
      terminate this Plan or, with the consent of an affected holder, any outstanding
      Awards hereunder, provided, however, that no such action of the Board may,
      without the approval of the shareholders of the Company, alter the provisions
      of
      this Plan or outstanding Awards so as to (i) increase the maximum number of
      Shares which may be subject to Awards under this Plan (except as provided in
      Section
      5(b));
      or
      (ii) change the class of persons eligible to receive Awards; or (iii) amend
      this
      Plan in any manner that would require stockholder approval under Rule 16b-3
      of
      the Exchange Act or under Code Section 162(m); or (iv) reduce the purchase
      price
      on an outstanding Option.

     

    14.  Preemption
      by Applicable Laws and Regulations.

     

    Notwithstanding
      anything in this Plan to the contrary, if, at any time specified herein for
      the
      making of any determination or payment, or the issuance or other distribution
      of
      Shares, any law, regulation or requirement of any governmental authority having
      jurisdiction in the premises shall require either the Company or the Participant
      (or the Participant’s beneficiary), as the case may be, to take any action in
      connection with any such determination, payment, issuance or distribution,
      the
      issuance or distribution of such Shares or the making of such determination
      or
      payment, as the case may be, shall be deferred until such action shall have
      been
      taken.

     

    15.  Miscellaneous.

     

    (a)  No
      Employment Contract.
      Nothing
      contained in this Plan shall be construed as conferring upon any Participant
      the
      right to continue in the employ, or as a Director or officer of or consultant
      to, of the Company or any Affiliate.

     

    (b)  Employment
      or Service with Affiliates.
      Employment by, or service for, the Company for the purpose of this Plan shall
      be
      deemed to include employment by, or service for, any Affiliate.

     

    (c)  No
      Rights as a Stockholder.
      A
      Participant shall have no rights as a stockholder with respect to Shares covered
      by the Participant’s Award until the date of the issuance of such Shares to the
      Participant pursuant thereto. No adjustment will be made for dividends or other
      distributions or rights for which the record date is prior to the date of such
      issuance.

     

    (d)  Transfer
      Restrictions.

     

    (1)  Limitations
      on Exercise and Transfer.
      Unless
      otherwise expressly provided in (or pursuant to) this Section 15(d),
      by
      applicable law and by the Award agreement, as the same may be amended,
      (A) all Awards are non-transferable and shall not be subject in any manner
      to sale, transfer, anticipation, alienation, assignment, pledge, encumbrance
      or
      charge; (B) Awards shall be exercised only by the Participant; and
      (C) amounts payable or Shares issuable pursuant to any Award shall be
      delivered only to (or for the account of) the Participant.

     

    (2)  Exceptions
      to Limits on Transfer.
      The
      exercise and transfer restrictions in Section 15(d)
      shall
      not apply to:

     

    
      	(A)  	
              transfers
                to the Company,

            

    

     

    
      	(B)  	
              the
                designation of a beneficiary to receive benefits in the event of
                the
                participant’s death or, if the participant has died, transfers to or
                exercise by the participant’s beneficiary, or, in the absence of a validly
                designated beneficiary, transfers by will or the laws of descent
                and
                distribution,

            

    

     

    
      	(C)  	
              transfers
                by gift to “immediate family” as that term is defined in
                Rule 16a-1(e) promulgated under the Exchange Act or trusts for the
                benefit thereof,

            

    

     

    
      	(D)  	
              if
                the Participant has suffered a disability, permitted transfers or
                exercises on behalf of the Participant by his or her legal representative,
                or

            

    

     

    
      	(E)  	
              the
                authorization by the Committee of “cashless exercise” procedures with
                third parties who provide financing for the purpose of (or who otherwise
                facilitate) the exercise of Awards consistent with applicable laws
                and the
                express authorization of the
                Committee.

            

    

     

    Notwithstanding
      the foregoing or anything in Section 15(d),
      ISOs
      and Restricted Stock Awards shall be subject to any and all additional transfer
      restrictions under the Code to the extent necessary to maintain the intended
      tax
      consequences of such awards. Notwithstanding clause (C) above but subject to
      compliance with all applicable laws, any contemplated transfer by gift to
“immediate family” as referenced in clause (C) above is subject to the condition
      precedent that the transfer be approved by the Committee in order for it to
      be
      effective.

     

    (e)  Governing
      Law; Construction.
      All
      rights and obligations under this Plan shall be governed by, and this Plan
      shall
      be construed in accordance with, the laws of the State of Maryland, without
      regard to the principles of conflicts of laws. Titles and headings to Sections
      herein are for purposes of reference only, and shall in no way limit, define
      or
      otherwise affect the meaning or interpretation of any provisions of this
      Plan.Exhibit
      10.1

     

    CONVERSION
      AND REPURCHASE AGREEMENT

     

    THIS
      CONVERSION AND REPURCHASE AGREEMENT (this “Agreement”)
      is
      made on October 31, 2006 between Modtech
      Holdings, Inc., a Delaware corporation
      (the
“Company”),
      and
      Amphora Limited (the “Investor”).

     

    WHEREAS,
      the Company and the Investor entered into that certain Securities Purchase
      Agreement, dated as of December 31, 2004, as amended (the "Securities
      Purchase Agreement"),
      pursuant to which, among other things, the Investor purchased from the Company
      a
      Senior Secured Convertible Note, dated as of December 31, 2004, which note
      was
      exchanged for an Amended and Restated Senior Secured Convertible Note dated
      as
      of August 5, 2005 (the "Note"),
      which
      is convertible into shares of the Company's common stock, par value $0.01 per
      share (the "Common
      Stock"),
      in
      accordance with the terms thereof. Capitalized terms used herein and not
      otherwise defined herein shall have the respective meanings ascribed to them
      in
      the Note.

     

    WHEREAS,
      the Company and the Investor desire to enter into this Conversion and Repurchase
      Agreement, pursuant to which, among other things, (i) the Company shall
      repurchase $9,746,666 in outstanding principal amount of the Note (the
      "Repurchased
      Amount")
      for
      $8,000,000 (the "Repurchase
      Price")
      and
      (ii) the Investor shall elect to convert $7,820,000 outstanding principal amount
      (the "Converted
      Amount")
      into
      1,000,000 shares of Common Stock (the "Conversion
      Shares").
      

     

    WHEREAS,
      the Company and the Investor also desire to enter into a Registration Rights
      Agreement (the "Registration
      Rights Agreement")
      pursuant to which the Company shall register the Restricted Shares for resale
      by
      the Investor. 

     

    NOW,
      THEREFORE, in consideration of the foregoing and for other good and valuable
      consideration, the adequacy of which is hereby acknowledged, the parties hereto
      agree as follows: 

     

    Section
      1.
      Repurchase and Conversion.

     

    (a)  Repurchase.
      The
      Company hereby agrees to repurchase from the Investor the Repurchased Amount,
      which amount shall be purchased by the Company in cash at the Repurchase Price.
      

     

    (b)  Conversion.
      Prior to
      the Closing (as defined below), the Investor shall deliver a Conversion Notice
      to the Company reflecting the Investor's election to convert the Converted
      Amount into the Conversion Shares on the Closing Date (as defined below) at
      a
      conversion ratio of 127.87723785. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c)  Closing.
      Subject
      to the satisfaction or waiver of the conditions set forth in Sections 4 below,
      at the closing contemplated by this Agreement (the "Closing"),
      the
      transactions contemplated hereby shall be deemed consummated. The date and
      time
      of the Closing (the “Closing
      Date”)
      shall
      be 10:00 a.m., New York City time, on the date hereof, subject to notification
      of satisfaction or waiver of the conditions to the Closing set forth in Section
      4 below (or such other time and date as is mutually agreed to by the Company
      and
      the Investor). The Closing shall occur on the Closing Date at the office of
      Schulte Roth & Zabel LLP, 919 Third Avenue, New York, New York
      10022.

     

    (d)  Form
      of Payment; Delivery of Shares and Note.
      On the
      Closing Date, the Company shall (i) pay $5,000,000 of the Repurchase Price
      ("Initial
      Repurchase Payment")
      to the
      Investor for the Repurchased Amount by wire transfer of immediately available
      funds in accordance with the Investor’s written wire instructions and (ii)
      deliver to the Investor, in accordance with Section 3(c) of the Note, the
      Conversion Shares. The Company shall pay the Repurchase Price, in part, by
      allowing the Senior Agent (as defined below) to draw $5,000,000 from the Letter
      of Credit with the Letter of Credit Bank (each as defined in the Securities
      Purchase Agreement). No later than (5) Business Days after the Closing Date
      (the
      "Repurchase
      Deadline"),
      the
      Company shall pay to the Investor the remaining $3,000,000 of the Repurchase
      Price (the "Balance
      Repurchase Payment")
      by
      wire transfer of immediately available funds in accordance with the wire
      instructions previously delivered by the Investor. Following the Investor's
      receipt of the full Repurchase Price and the Conversion Shares, the Investor
      shall deliver the original Note to the Company for cancellation.

     

    (e)  Failure
      to Pay Repurchase Price.
      In the
      event that the Investor does not receive the Balance Repurchase Payment by
      the
      Repurchase Deadline, the Repurchased Amount hereunder shall be deemed to be
      only
      $5,000,000 and the outstanding Principal amount under the Note as of such
      Repurchase Deadline shall be equal to $4,746,666.

     

    Section
      2.
      Release of Letter of Credit Funds.
      Amphora
      Limited, in its capacity as the Senior Agent under, and as defined in the
      Securities Purchase Agreement (the "Senior
      Agent"),
      shall
      draw $5,000,000 under the Letter of Credit (the "Letter
      of Credit Amount")
      in
      connection with the payment of the Repurchase Price, which payment shall be
      considered a Redemption Event for purposes of the Letter of Credit. On or
      immediately prior to the Closing Date, the Senior Agent shall deliver to the
      Letter of Credit Bank a drawing certificate, in the form attached to the Letter
      of Credit, requesting release of such Letter of Credit Amount by wire transfer
      of immediately available funds to the Investor. 

     

    Section
      3.
      Representations And Warranties. 

     

    (a)  Authorization;
      Enforcement; Validity.
      The
      Company has the requisite power and authority to enter into and perform its
      obligations under this Agreement. This Agreement has been duly and validly
      executed and delivered by the Company and constitutes the legal, valid and
      binding obligation of the Company, enforceable in accordance with its terms,
      except as such enforceability may be limited by applicable bankruptcy,
      insolvency, moratorium, reorganization or similar laws from time to time in
      effect that affect creditors’ rights generally, and by legal and equitable
      limitations on the availability of specific remedies.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b)  No
      Conflicts.
      The
      execution, delivery and performance by the Company of this Agreement and
      consummation by the Company of the transactions contemplated by this Agreement
      do not and will not: (i) violate the organizational documents of the Company,
      (ii) violate any decree or judgment of any court or other governmental authority
      applicable to or binding on the Company; (iii) violate any provision of any
      federal or state statute, rule or regulation which is applicable to the Company;
      or (iv) violate any contract to which the Company or any of its assets or
      properties are bound, or conflict with, or constitute a default (or an event
      which with notice or lapse of time or both would become a default) under, or
      give to others any rights of termination, amendment, acceleration or
      cancellation of , any agreement, indenture or instrument to which Company is
      a
      party. 

     

    (c)  Approvals;
      No Suspensions.
      The
      Company has obtained all governmental, regulatory or third party consents and
      approvals if any, and approval from its stockholders, necessary, if any, to
      consummate the transactions contemplated by this Agreement. The
      Common
      Stock has not have been suspended by the SEC or the Principal Market from
      trading on the Principal Market and no suspension have been threatened by the
      SEC or the Principal Market either (A) in writing by the SEC or the Principal
      Market or (B) by falling below the minimum listing maintenance requirements
      of
      the Principal Market.

     

    (d)  Solvency.
      Neither
      the Company nor any of its Subsidiaries has taken any steps to seek protection
      pursuant to any bankruptcy law nor does the Company have any knowledge or reason
      to believe that its creditors intend to initiate involuntary bankruptcy
      proceedings or any actual knowledge of any fact that would reasonably lead
      a
      creditor to do so. The Company and its Subsidiaries, individually and on a
      consolidated basis, are not as of the date hereof, and after giving effect
      to
      the transactions contemplated hereby to occur at the Closing, will not be
      Insolvent (as defined below). For purposes of this Section 3(d), "Insolvent"
      means,
      with respect to any Person (i) the present fair saleable value of such Person's
      assets is less than the amount required to pay such Person's total Indebtedness,
      (ii) such Person is unable to pay its debts and liabilities, subordinated,
      contingent or otherwise, as such debts and liabilities become absolute and
      matured, (iii) such Person intends to incur or believes that it will incur
      debts
      that would be beyond its ability to pay as such debts mature or (iv) such Person
      has unreasonably small capital with which to conduct the business in which
      it is
      engaged as such business is now conducted and is proposed to be
      conducted

     

    Section
      4.
      Conditions to Investor's Obligations Hereunder. The
      obligations of the Investor to the Company hereunder are subject to the
      satisfaction of each of the following conditions,
      provided
      that
      these conditions are for Investor’s sole benefit and may be waived by Investor
      at any time in its sole discretion by providing the Company with prior written
      consent thereof.

     

    (a)  The
      Company shall have executed this Agreement and the Registration Rights Agreement
      and delivered the same to the Investor.

     

    (b)  The
      Company shall have delivered the consent of Bank
      of
      America, N.A.
      in the
      form attached hereto as Exhibit
      A
      to the
      Investor.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c)  The
      Company shall have paid Schulte Roth & Zabel LLP the Investor Counsel
      Expense.

     

    (d)  There
      has
      been no material adverse change and no material adverse development in the
      business, properties, operations, condition (financial or otherwise), results
      of
      operations or prospects of the Company or its Subsidiaries.

     

    Section
      5.
      Covenants.

     

    (a)  Disclosure
      of Transactions and Other Material Information.
      

     

    (1)  On
      or
      before 8:30 a.m., New York Time, on the
      first
      (1st)
      Business Day following the date of this Agreement, the Company shall have filed
      a Current Report on Form 8-K (i) describing the terms of the transactions
      contemplated by this Agreement and attaching a copy of this Agreement and (ii)
      disclosing any other any material, nonpublic information regarding the Company
      or any of its Subsidiaries provided to the Investor (other than as required
      by
      the immediately succeeding sentence) by the Company or any Subsidiary or any
      of
      its or their respective officers, directors, employees and agents which had
      not
      been previously disclosed by the Company. [redacted]

     

    (2)  The
      Company shall not, and shall cause each of its Subsidiaries and its and each
      of
      their respective officers, directors, employees and agents, not to, provide
      the
      Investor with any material, nonpublic information regarding the Company or
      any
      of its Subsidiaries from and after the filing of the 8-K Filing with the SEC
      without the express written consent of the Investor.

     

    (b)  Fees
      and Expenses.
      At the
      Closing, the Company shall reimburse the Investor for its reasonable legal
      fees
      and expenses in connection with the preparation and negotiation of this
      Agreement by paying any such amount to Schulte Roth & Zabel LLP (the
      "Investor
      Counsel Expense").
      The
      Company shall pay all stamp and other taxes and duties levied in connection
      with
      the issuance of the Conversion Shares. The Company shall also reimburse the
      Investor in an amount up to $10,000 for its reasonable legal fees and expenses
      in connection with the preparation and delivery of any opinion of Schulte Roth
      & Zabel LLP required pursuant to Section 5(c) below.

     

    (c) Removal
      of Legends.
      The
      Company shall use its best efforts, and cooperate in any way with the Investor,
      to effectuate the removal of the restrictive legends on the 189,189 shares
      (the
      "Restricted
      Shares")
      of
      Common Stock issued to the Investor in connection with the partial conversion
      on
      May 4, 2006 of the Note. On or prior to December 31, 2006, if the Company has
      received a opinion from Schulte Roth & Zabel LLP, in a form and substance
      reasonably acceptable to the Company, opining that the Restricted Shares are
      eligible for resale pursuant to Rule 144(k) of the Securities Act of 1933,
      as
      amended, the Company shall deliver to the Transfer Agent, with a copy to the
      Investor, a signed written instruction directing the Transfer Agent to remove
      the restrictive legends on the Restricted Shares on December 31, 2006. The
      Company shall also register the Restricted Shares on the registration statement
      filed by the Company in accordance with the terms of the Registration Rights
      Agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Section
      6.
      Miscellaneous.

     

    (a)  Governing
      Law; Jurisdiction; Jury Trial.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Agreement shall be governed by the internal laws of the State of New
      York, without giving effect to any choice of law or conflict of law provision
      or
      rule (whether of the State of New York or any other jurisdictions) that would
      cause the application of the laws of any jurisdictions other than the State
      of
      New York. Each party hereby irrevocably submits to the non-exclusive
      jurisdiction of the state and federal courts sitting in The City of New York,
      Borough of Manhattan, for the adjudication of any dispute hereunder or in
      connection herewith or with any transaction contemplated hereby or discussed
      herein, and hereby irrevocably waives, and agrees not to assert in any suit,
      action or proceeding, any claim that it is not personally subject to the
      jurisdiction of any such court, that such suit, action or proceeding is brought
      in an inconvenient forum or that the venue of such suit, action or proceeding
      is
      improper. Each party hereby irrevocably waives personal service of process
      and
      consents to process being served in any such suit, action or proceeding by
      mailing a copy thereof to such party at the address for such notices to it
      under
      this Agreement and agrees that such service shall constitute good and sufficient
      service of process and notice thereof. Nothing contained herein shall be deemed
      to limit in any way any right to serve process in any manner permitted by law.
      EACH
      PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
      REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
      CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
      HEREBY. 

     

    (b)  Counterparts.
      This
      Agreement may be executed in two or more identical counterparts, all of which
      shall be considered one and the same agreement and shall become effective when
      counterparts have been signed by each party and delivered to the other party;
      provided that a facsimile signature shall be considered due execution and shall
      be binding upon the signatory thereto with the same force and effect as if
      the
      signature were an original, not a facsimile signature.

     

    (c)  Headings.
      The
      headings of this Agreement are for convenience of reference and shall not form
      part of, or affect the interpretation of, this Agreement.

     

    (d)  Severability.
      If any
      provision of this Agreement shall be invalid or unenforceable in any
      jurisdiction, such invalidity or unenforceability shall not affect the validity
      or enforceability of the remainder of this Agreement in that jurisdiction or
      the
      validity or enforceability of any provision of this Agreement in any other
      jurisdiction.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (e)  No
      Third Party Beneficiaries.
      This
      Agreement is intended for the benefit of the parties hereto and their respective
      permitted successors and assigns, and is not for the benefit of, nor may any
      provision hereof be enforced by, any other Person.

     

    (f)  No
      Strict Construction.
      The
      language used in this Agreement will be deemed to be the language chosen by
      the
      parties to express their mutual intent, and no rules of strict construction
      will
      be applied against any party.

     

    (g)  Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their respective successors and assigns in accordance with the terms of the
      Securities Purchase Agreement.

     

    (h)  Further
      Assurances.
      Each
      party shall do and perform, or cause to be done and performed, all such further
      acts and things, and shall execute and deliver all such other agreements,
      certificates, instruments and documents, as the other party may reasonably
      request in order to carry out the intent and accomplish the purposes of this
      Agreement and the consummation of the transactions contemplated
      hereby.

     

    (i)  Survival.
      The
      representations and warranties of the Company and the Investor contained herein
      and the agreements and covenants set forth herein shall survive the
      Closing

     

    (j)  Remedies.
      The
      Investor shall have all rights and remedies set forth in the Transaction
      Documents and all rights and remedies which such holders have been granted
      at
      any time under any other agreement or contract and all of the rights which
      such
      holders have under any law. Any Person having any rights under any provision
      of
      this Agreement shall be entitled to enforce such rights specifically (without
      posting a bond or other security), to recover damages by reason of any breach
      of
      any provision of this Agreement and to exercise all other rights granted by
      law.
      Furthermore, the Company recognizes that in the event that it fails to perform,
      observe, or discharge any or all of its obligations under this Agreement, any
      remedy at law may prove to be inadequate relief to the Investor. The Company
      therefore agrees that the Investor shall be entitled to seek temporary and
      permanent injunctive relief in any such case without the necessity of proving
      actual damages and without posting a bond or other security.

     

    [The
      remainder of the page is intentionally left blank]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF,
      the
      Company and the Investor have caused their respective signature page to this
      Conversion and Repurchase Agreement to be duly executed as of the date first
      written above.

     

    
      	 	 	 
	 	MODTECH
              HOLDINGS, INC.
	 
 	 
 	 
 
	 	By:  	/s/ 
	 	
              
Name:

	 	Title 

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    IN
      WITNESS WHEREOF,
      the
      Company and the Investor have caused their respective signature page to this
      Conversion and Repurchase Agreement to be duly executed as of the date first
      written above.

     

    
      	 	AMPHORA
              LIMITED 
	 	 	By: Amaranth Advisors L.L.C.,
	 	 	
              Its
                Trading Advisor

            
	 	 
	 	 
	 	By:  	/s/ 
	 	
              
Name:
	 	Title 

    

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Exhibit
      A

     

    Form
      of Bank of America, N.A. Consent

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