MODTECH
      HOLDINGS, INC.

    Exchange
      of Senior Subordinated Secured Convertible Notes

    TERMS
      AND CONDITIONS OF EXCHANGE TRANSACTION

     

    May
      3,
      2006

     

    


    
      	Issuer:	
              Modtech
                Holdings, Inc. (the "Company").

            


    

     

    
      
        	Holder: 	
                
                  Amphora
                    Limited ("Amphora").

                

              


      

       

      
        
          	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 would
otherwise
                      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 trade
confirmation
                      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 Conversion
Limitation
                        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) by
delivering
                        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.

                    

                  

                


        

         

        
          
            	
                    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.

                    

                  


          

        

      

    

     

    
      
        
          	
                  Documentation
                    of Exchange: 

                	
                  
                    The
                      Exchange will by documented on terms reasonably satisfactory
                      to
                      Amphora
                      and the Company.

                  

                


        

      

       

    

    
      	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.


    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      
        	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.


      

       

      
        	
                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.

              
	 	 
	
                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.

              

            
	 	 
	

              By:
                /s/ Dennis L. Shogren

              
                Name:
                  Dennis
                  L. Shogren

                Title:
Chief
                  Financial Officer

              

            	
              By:
                /s/ James G. Glynn 

              
                Name:
                  James G. Glynn

                
                  Title:
                    Authorized
                    Signatory

                

              

            


    

     

     

    
      
        
        

      

      
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