Document:

Exhibit
        10.53

    

    February
      29, 2008

     

    Modtech
      Holdings, Inc.

    2830
      Barrett Avenue

    Perris,
      California 92571

    Attention:
      Chief Financial Officer

     

    Amendment
      and Waiver Agreement 

     

    Ladies
      and Gentlemen:

     

    Reference
      is made to (a) the Securities Purchase Agreement dated as of October 31, 2006;
      between Modtech Holdings, Inc. (the “Company”)
      and
      Laurus Master Fund, Ltd. (“Laurus”),
      as
      amended, modified and supplemented (the “First
      Purchase Agreement”);
      (b)
      the Secured Term Note dated October 31, 2006 in the original principal amount
      of
      $13,000,000 made by the Company in favor of Laurus (the “First
      Term Note”);
      (c)
      the Securities Purchase Agreement dated December 28, 2006 between the Company
      and Laurus (the “Second
      Purchase Agreement”
and
      together with the First Purchase Agreement, the “Purchase
      Agreements”);
      (d)
      the Secured Term Note dated December 28, 2006 in the original principal amount
      of $5,000,000 made by the Company in favor of Laurus (the “Second
      Term Note”
      together with the First Term Note, the “Secured
      Term Notes”);
      and
      (e) the Related Agreements (as such term is defined in the Purchase Agreements).
      

     

    Laurus
      has assigned a portion of its rights Purchase Agreements, the Secured Term
      Notes
      and the Related Agreements to Valens Offshore SPV I, Ltd. (“Valens
      Offshore”)
      and
      Valens U.S. SPV I, LLC (“Valens
      US”
      together with Laurus and Valens Offshore each a “Lender”
and
      collectively, the “Lenders”).

     

    Certain
      Events of Default (as such term is defined in the Secured Term Notes) have
      occurred and are continuing and the Company has requested that the Lenders
      waive
      such Events of Default and make certain amendments to the Purchase Agreements
      and the Secured Term Notes. The Lenders are willing to waive such Events of
      Defaults and amend the Purchase Agreements and the Notes on the terms and
      conditions specified herein.

     

    Subject
      to the satisfaction of the conditions precedent set forth in this letter
      agreement and in reliance upon the representations, warranties and covenants
      of
      the Company contained in this letter agreement and any agreements documents
      or
      instruments executed in connection herewith, the Lenders agree to waive the
      Event of Default arising as a result of the Company’s failure for the period
      commencing on December 31, 2007 and ending on February 28, 2008 to comply with
      the Availability Covenant (as such term is defined in the Purchase
      Agreements).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Subject
      to the satisfaction of the conditions precedent set forth in this letter
      agreement and in reliance upon the representations, warranties and covenants
      of
      the Company contained in this letter agreement and any agreements documents
      or
      instruments executed in connection herewith:

     

    1. The
      Availability Covenant contained in the Purchase Agreements is amended to be
      $5,400,000 for the period commencing on March 1, 2008 and ending on March 31,
      2008, $6,600,000 for the period commencing on April 1, 2008 and ending on June
      30, 2008 and $9,000,000 at all times on and after July 1, 2008.

     

    2. In
      addition to the reporting obligations contained in the Purchase Agreements,
      the
      Company shall abide by the following additional reporting obligations:

     

    (a)
       on
      Wednesday of each week, the Company shall deliver to the Lenders a cash flow
      projection prepared by the Company which includes the Company’s best estimate of
      all cash requirements (including interest, fees and principal amortization),
      projected sales and revenues, inventory, accounts payable and accounts
      receivable positions for the period covered thereby together with all supporting
      assumptions and schedules for the thirteen (13) week period covered thereby
      for
      the period commencing on Monday of the following week and for the thirteen
      week
      period thereafter together with a certificate of a responsible officer of the
      Company which shall state that such rolling weekly cash flow projection is
      based
      upon estimates and assumptions all of which the Company believes to be
      reasonable and fair in light of the conditions and facts known to the Company
      as
      of the date thereof and reflect the good faith estimate by the Company of the
      working capital needs of the Company for such period;

     

    (b)
       on
      Wednesday of each week, the Company shall deliver to the Lenders: (i) an
      accounts receivable and accounts payable listing as of the close of business
      of
      the preceding week; (ii) collection reports for the preceding week; and (iii)
      a
      compliance report with respect to the rolling weekly cash flow projection for
      the preceding week which includes a comparison of all categories in such
      projection with actual levels of expenditures and revenues generated for the
      preceding week together with an explanation of all variances from such
      projection; and

     

    (c)
       no
      later
      than fifteen (15) days after the end of each month, the Company shall deliver
      to
      Lenders a report listing all projects of the Company and the profitability
      /
      loss of each such project as of the end of such month.

     

    3. Principal
      payments due under the Secured Term Notes on each of March 1, 2008, April 1,
      2008, May 1, 2008 and June 1, 2008 shall not be required to be made with
      principal payments resuming on July 1, 2008. Notwithstanding anything to the
      contrary set forth in the Secured Term Notes, Section 2.1 of each Secured Term
      Note shall be amended to provide that if the Company prepays fully (i) the
      Secured Terms Notes, (ii) the Additional Secured Term Notes (as defined below)
      and (iii) any other obligations in connection therewith within twelve (12)
      months of the date hereof, the optional redemption rate set forth in Section
      2.1
      shall be reduced to one hundred five percent (105%).

     

    4. No
      later
      than March 10, 2008, the Company shall receive proceeds of at least $1,500,000
      from the issuance of preferred stock of the Company having a coupon not to
      exceed eight percent (8%) per annum and having such other terms and conditions
      acceptable to Lenders. The failure of the foregoing to occur shall constitute
      an
      Event of Default.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    5. In
      consideration of the Lenders entering into this letter agreement, the Company
      shall issue the Additional Term Notes (as defined below).

     

    6. Each
      reference to the term “Warrants” and “Warrant Shares” contained in the Purchase
      Agreements shall include the Additional Warrants (as such term is defined below)
      and shares of common stock of the Company to be issued to any Lender under
      the
      Additional Warrants (the “Additional
      Warrant Shares”).
      Each
      representation, warranty and covenant relating to any Warrant and the Warrant
      Shares contained in the Purchase Agreements shall apply as respects the
      Additional Warrants and the Additional Warrant Shares as of the date of this
      letter agreement and are true and correct as of the date of this letter
      agreement.

     

    7. The
      notice address for each Lender contained in the Purchase Agreements and the
      Related Agreements shall be changed to the notice address set forth below such
      Lender’s signature page at the end of this letter agreement.

     

    This
      letter agreement shall become effective upon receipt by the Lenders, in form
      and
      substance satisfactory to Lenders of: (i) a Secured Term Note made by the
      Company in favor of Valens US in the original principal amount of $48,983.58,
      a
      Secured Term Note made by the Company in favor of Valens Offshore in the
      original principal amount of $66,602.06 and a Secured Term Note made by the
      Company in favor of Laurus in the original principal amount of $634,414.36
      (collectively, the “Additional
      Secured Term Notes”);
      (ii)
      a Common Stock Warrant from the Company in favor of Laurus for 2,537,657 shares
      of the Company’s common stock, a Common Stock Warrant from the Company in favor
      of Valens US for 195,935 shares of the Company’s common stock and a Common Stock
      Warrant from the Company in favor of Valens Offshore for 266,408 shares of
      the
      Company’s common stock (collectively, the “Additional
      Warrants”);
      (iii)
      Registration Rights Agreements in favor of each Lender with respect to the
      Additional Warrants (collectively, the “Additional
      Registration Rights Agreements”);
      (iv)
      a Reaffirmation and Ratification Agreement duly executed by the Company; and
      (v)
      resolutions of the Company’s Board of Director approving and authorizing the
      execution, delivery and performance of this letter agreement and all documents,
      instruments and agreements to be executed and delivered in connection herewith
      certified as of the date of this letter agreement by the Company’s corporate
      secretary or an assistant secretary as being in full force and effect without
      any modification or amendment.

    

    The
      parties hereto agree that the fair market value of the Additional Warrants
      (as reasonably determined by the parties) received in consideration of the
      consents and agreements made by Laurus under this letter agreement is hereby
      designated as interest and, accordingly, shall be treated as a reduction of
      the
      remaining stated principal amount (which reduced principal amount shall be
      treated as the issue price) of the  Obligations for U.S. federal income tax
      purposes under and pursuant to Treasury Regulation Sections 1.1001-3(e)(2)(iii),
      1.1273-2(g)(2)(ii) and 1.1274-2(b)(1). The parties further agree to file all
      applicable tax returns in accordance with such characterization and shall not
      take a position on any tax return or in any judicial or administrative
      proceeding that is inconsistent with such characterization. Notwithstanding
      the
      foregoing, nothing contained herein shall or shall be deemed to modify or impair
      in any manner whatsoever the Obligations from time to time owing to Laurus
      under the Purchase Agreements, the Secured Term Notes, the Additional
      Secured Term Notes and the Related Agreement.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    The
      Company hereby represents and warrants as follows:

     

    (a) This
      letter agreement, the Additional Secured Notes, the Additional Warrants, the
      Additional Registration Rights Agreements, the Purchase Agreement and the
      Related Agreements, as amended hereby, constitute legal, valid and binding
      obligations of the Company and are enforceable against the Company in accordance
      with their respective terms.

     

    (b) Except
      as
      updated by the attached schedules, each of the representations and warranties
      made by or on behalf of the Company and the Lenders in any of the Purchase
      Agreements and the Related Agreements was true and correct when made and in
      all
      material respects is, to the extent not amended hereby, true and correct in
      all
      material respects on and as of the date of this letter agreement with the same
      full force and effect as if each of such representations and warranties had
      been
      made by the Company on the date hereof and in this letter
      agreement.

     

    (c) Upon
      the
      effectiveness of this letter agreement, the Company hereby reaffirms all
      covenants made in the Purchase Agreements and the Related Agreements to the
      extent the same are not amended hereby and agree that all such covenants shall
      be deemed to have been remade as of the effective date of this
      letter.

     

    (f) The
      execution and delivery and performance of this letter agreement by the Company
      will not conflict with or result in a breach of, or require any consent not
      previously obtained under, the organization documents of the Company or any
      applicable governmental rule or any agreement or instrument to which the Company
      is a party or any of its property is bound or to which it is subject, or
      constitute a default under, or result in the acceleration or mandatory
      prepayment of, any indebtedness evidenced by or termination of any such
      agreement or instrument or (except for the Liens created pursuant to the Related
      Agreements) result in the creation or imposition of any Lien upon any property
      of the Company pursuant to the terms of any such agreement or
      instrument.

     

    THIS
      LETTER AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE
      WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND
      PERFORMED IN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING
      CONFLICTS OF LAWS, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
      

     

    [REMAINER
      OF PAGE INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    This
      letter agreement may be executed by the parties hereto in one or more
      counterparts, each of which shall be deemed an original and all of which when
      taken together shall constitute one and the same agreement. Any signature
      delivered by a party by facsimile transmission shall be deemed to be an original
      signature hereto.

     

    Very
      truly yours,

     

    
      	
              LAURUS
                MASTER FUND, LTD.

            
	
              By:
                

            	
              Laurus
                Capital management, LLC, its 

            
	 	
              investment
                manager

            
	 	 
	
              By:

            	
              /s/
                Patrick Regan

            	
            
	
              Name:
                Patrick Regan

            
	
              Title:  
                Authorized Signatory

            
	 
	
              Address
                for Notice:

            
	 
	
              c/o
                Laurus Capital Management, LLC

            
	
              335
                Madison Avenue, 10th Floor

            
	
              New
                York, New York 10017

            
	
              Attn:
                Portfolio Services

            
	 	 
	
              VALENS
                U.S. SPV I, LLC

            
	
              By:
                

            	
              Valens
                Capital Management, LLC, its 

            
	 	
              investment
                manager

            
	 	 
	
              By:
                

            	
              /s/
                Patrick Regan

            	
            
	
              Name:
                Patrick Regan

            
	
              Title:  
                Authorized Signatory

            
	 
	
              Address
                for Notice:

            
	 
	
              c/o
                Valens Capital Management, LLC

            
	
              335
                Madison Avenue, 10th Floor

            
	
              New
                York, New York 10017

            
	
              Attn:
                Portfolio Services

            

    

     

    [ADDITIONAL
      SIGNATURES FOLLOW]

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      
        	
                VALENS
                  OFFSHORE SPV I, LTD.

              
	
                By:
                  

              	
                Valens
                  Capital Management, LLC, its 

              
	 	
                investment
                  manager

              
	 	 
	
                By:
                  

              	
                /s/
                  Patrick Regan

              	
              
	
                Name:
                  Patrick Regan

              
	
                Title:  
                  Authorized Signatory

              
	 
	
                Address
                  for Notice:

              
	 
	
                c/o
                  Valens Capital Management, LLC

              
	
                335
                  Madison Avenue, 10th Floor

              
	
                New
                  York, New York 10017

              
	
                Attn:
                  Portfolio Services

              

      

      

        
          	
                  CONSENTED
                    AND AGREED TO:

                
	 
	
                  MODTECH
                    HOLDINGS INC.

                
	 
	
                  By:
                    

                	
                  /s/
                    Kenneth S. Cragun

                	
                
	
                  Name:
                    Kenneth S. Cragun

                
	
                  Title:
                    Chief Financial Officer

                

        

         

        
          
            
            

          

          
            6Exhibit
        10.54

       

      SECURED
        TERM NOTE

    

     

    FOR
      VALUE
      RECEIVED, MODTECH HOLDINGS, INC., a Delaware corporation (the “Company”),
      promises to pay to LAURUS MASTER FUND, LTD., c/o M&C Corporate Services
      Limited, P.O. Box 309 GT, Ugland House, South Church Street, George Town, Grand
      Cayman, Cayman Islands, Fax: 345-949-8080 (the “Holder”)
      or its
      registered assigns or successors in interest, the sum of SIX HUNDRED THIRTY-FOUR
      THOUSAND FOUR HUNDRED FOURTEEN and 36/100 DOLLARS ($634,414.36), 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, Valens U.S. SPV I, LLC
      (“Valens
      US”)
      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
      Valens US, in the original principal amount of $48,983.58 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, Valens US 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, Valens US 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
      Laurus 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

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