**MODTECH      HOLDINGS, INC.**

**Exchange      of Senior Subordinated Secured Convertible Notes**

**TERMS      AND CONDITIONS OF EXCHANGE TRANSACTION**

| **Issuer:** | Modtech                Holdings, Inc. (the "Company"). |
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| **Holder: ** | Amphora                    Limited ("Amphora"). |
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| **Exchange:** | In                      a transaction to take effect as of May 4, 2006, $8,333,333.33                      principal                      amount                      of Senior Subordinated Secured Convertible Notes which wouldotherwise                      be subject to repurchase by the Company at the option of the                      Holder                      on                      August 31, 2006 (the "Notes") shall be exchanged (the "Exchange")                      for a                      number                      of the Company's common shares equal to the sum of (a) the                      quotient                      of                      the principal amount of the Notes divided by the Conversion                      Price of the                      Notes                      in effect as of closing of the Exchange (the "Conversion Shares")                      plus (b)                      the quotient of (x) $1,750,000.00 divided by (y) the price                      at which the                      Holder sells                      400,000 of the Company's common shares pursuant to a tradeconfirmation                      entered into prior to the closing of the Exchange (such sale                      by the                      Holder,                      the "Pre-Exchange Sale", and such quotient of (x) divided by(y),                      "Exchange Shares"), the sale of the common shares by the Holder                      being                      referred                      to as the "Common Stock Sale." The                      Conversion Shares will be delivered                      in accordance with the terms of the Notes as if the conversion                      date                      were                      the date of the closing of the Exchange. The                        Exchange Shares will be issued by the Company in consideration                        for early                        conversion by the Holder. To the extent the Exchange cannot                        be consummated                        in its entirety due to the application of the Maximum Percentage,                        as                        provided in the                        Notes and the Warrant to Purchase Common Stock issued by                        the Company                        to                        Amphora on December 30, 2004 (such circumstance, a "Conversion                        Limitation"),                        the Holder will have the option to effect the remainder of                        the                        Exchange                        in whole or in part at such time or times as such ConversionLimitation                        no longer applies (the amount of Conversion Shares to be                        delivered                        at                        any such time to be determined with reference to the market                        price of the                        Company's                        common shares at such time, as provided in the Notes) bydelivering                        notice of such election to the Company, settlement of which                        will                        occur                        on the third trading day following the Company's receipt                        of Amphora's                        election                        notice. The Notes that are not subject to the Exchange shall                        remain                        outstanding                        and the terms of such Notes shall remain                        unchanged. |
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| **Reduction of  Letter of******Credit                      Amount:**** | The                        Letter of Credit Amount shall be reduced by $5,000,000 in                        accordance with                        the terms of the Note as if the Company had achieved the                        Profitability                        Target on an Optional Redemption                        Date. |
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| **Documentation                    of ******Exchange: **** | The                      Exchange will by documented on terms reasonably satisfactory                      to                      Amphora                      and the Company. |
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| **Regulatory Approvals:** | In the event that any regulatory approval,              stockholder approval or other consents              are required in connection with the Exchange, the Company shall use              its              best efforts to obtain such approvals as quickly as possible following              the              Exchange              and any failure to obtain the requisite approvals to consummate the              Exchange              will result in cash payment to the Holder by the Company of $1,750,000.00              in lieu of delivery of the Exchange              Shares. |
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| **Public                Disclosure:** | Prior to completion of the Exchange,                this                document and the documents associated                with the transaction will not be disclosed to any parties other than                the                Company and its advisors without the prior written consent of Amaranth,                except                as may be required by law or to satisfy regulatory requirements.                Promptly                following execution of this Term Sheet and prior to the Pre-Exchange                Sale                by the Holder, the Company shall file a Current Report on Form 8-K                announcing                the Exchange and describing the material details                thereof. |
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| **Costs                  and Expenses:** | The                  Company will be responsible for all costs and expenses incurred                  by                  Amaranth,                  including all legal fees and disbursements in connection with this                  Term                  Sheet and the documentation and implementation of the transaction                  irrespective                  of whether the transaction contemplated herein closes.                                                                                                                                                  |
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| **Binding                  Obligation:** | This                  document is intended to summarize the terms that will be provided                  in the                  definitive                  documentation relating to the Exchange. This                  document shall be binding                  and irrevocable upon the Company. Amaranth may withdraw or modify                  this                  Agreement at any time prior to the filing by the Company of the                  Current                  Report                  on Form 8-K referred to in "Public Disclosure"                  above. |

| MODTECH                HOLDINGS, INC                                                                                                            | AMPHORA                LIMITED,BY                  AMARANTH ADVISORS L.L.C.                                                                  |
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| By:                /s/ Dennis L. ShogrenName:                  Dennis                  L. ShogrenTitle:Chief                  Financial Officer | By:                /s/ James G. Glynn Name:                  James G. GlynnTitle:                    Authorized                    Signatory |

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