Document:

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                                                                    Exhibit 10.1

[LOGO OF SANWA BANK]

                               CREDIT AGREEMENT

                               (LINE OF CREDIT)

                                  (TERM LOAN)

     This Agreement (the "Agreement") is made and entered into as of February
27, 2001, by and between SANWA BANK CALIFORNIA (the "Bank") and OSI SYSTEMS,
INC. (the "Borrower"), on the terms and conditions that follow:

                                    SECTION

                                       1

                                  DEFINITIONS

1.1     Certain Defined Terms:  Unless elsewhere defined in this Agreement, the
        following terms shall have the following meanings (such meanings to be
        generally applicable to the singular and plural forms of the terms
        defined):

        1.1.1   "Acceptance Facility":  shall mean the credit facility described
                as such in Section 2.

        1.1.2   "Advance":  shall mean an advance to the Borrower under the
                credit facility (ies) described in Section 2.

        1.1.3   "Applicable Margin": shall mean the following interest rate
                percentage based upon the Funded Debt Ratio provided for in
                Section 6.2(iv) then in effect.

<TABLE>
<CAPTION>
                 Funded Debt Ratio               Applicable Margin for LIBOR        Applicable Margin for
                                                 or Fixed Rate:                     Reference Rate:
                 <S>                             <C>                                <C>
                 Less than 2 to 1                1.50%                              0%
                 Between 2.49 and 2 to 1         2.00%                              .125%
                 Between 2.99 and 2.50 to 1      2.50%                              .25%
                 3.00 to 1 or greater            3.00%                              .50%
</TABLE>

                                      -1-
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        1.1.4   "Business Day":  shall mean a day, other than a Saturday or
                Sunday, on which commercial banks are open for business in
                California.

        1.1.5   "Close-Out Date":  shall mean the Business Day on which the Bank
                closes out and liquidates an FX Transaction.

        1.1.6   "Closing Value":  has the meaning given to it in Section 8.6(i)
                hereof.

        1.1.7   "Closing Gain" and "Closing Loss":  shall mean the amount
                determined in accordance with Section 8.6(ii) hereof.

        1.1.8   "Collateral":  shall mean the property described in Section 3,
                together with any other personal or real property in which the
                Bank may be granted a lien or security interest to secure
                payment of the Obligations.

        1.1.9   "Credit Percentage":  shall mean 15%.

        1.1.10  "Current Liabilities": shall mean current liabilities as
                determined in accordance with generally accepted accounting
                principles, including any negative cash balance on the
                Borrower's financial statement.

        1.1.11  "Debt":  shall mean all liabilities of the Borrower less
                Subordinated Debt, if any.

        1.1.12  "EBITDA":  shall mean earnings exclusive of extraordinary gains
                and before deductions for interest expense, taxes, depreciation
                and amortization expense.

        1.1.13  "Effective Tangible Net Worth": shall mean the Borrower's stated
                net worth plus Subordinated Debt but less all intangible assets
                of the Borrower (i.e., goodwill, trademarks, patents,
                copyrights, organization expense, and similar intangible items
                including, but not limited to, investments in and all amounts
                due from affiliates, officers or employees).

        1.1.14  "Environmental Claims": shall mean all claims, however asserted,
                by any governmental authority or other person alleging potential
                liability or responsibility for violation of any Environmental
                Law or for Discharge or injury to the environment or threat to
                public health, personal injury (including sickness, disease or
                death), property damage, natural resources damage, or otherwise
                alleging liability or responsibility for damages (punitive or
                otherwise), cleanup, removal, remedial or response costs,
                restitution, civil or criminal penalties, injunctive relief, or
                other type of relief, resulting from or based upon (a) the
                presence, placement, discharge, emission or release (including
                intentional and unintentional, negligent and non-negligent,
                sudden or non-sudden, accidental or non-accidental placement,
                spills, leaks, Discharges, emissions or releases) of any
                Hazardous Material at, in, or from property, whether or not
                owned by the Borrower, or (b) any other circumstances forming
                the basis of any violation, or alleged violation, of any
                Environmental Law.

        1.1.15  "Environmental Laws": shall mean all federal, state or local
                laws, statutes, common law duties, rules, regulations,
                ordinances and codes, together with all administrative orders,
                directed duties, requests, licenses, authorizations and permits
                of, and agreements with, any governmental authorities, in each
                case relating to environmental, health, safety and land use
                matters; including the Comprehensive Environmental Response,
                Compensation and Liability Act of 1980 ("CERCLA"), the Clean Air
                Act, the Federal Water Pollution Control Act of 1972, the Solid
                Waste Disposal Act, the Federal Resource Conservation and
                Recovery Act, the Toxic Substances Control Act, the Emergency
                Planning and Community Right-to-Know Act, the California
                Hazardous Waste Control Law, the California Solid Waste
                Management, Resource, Recovery and Recycling Act, the California
                Water Code and the California Health and Safety Code.

                                      -2-
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        1.1.16  "Environmental Permits": shall have the meaning provided in
                Section 5.11 hereof.

        1.1.17  "ERISA": shall mean the Employee Retirement Income Security Act
                of 1974, as amended from time to time, including (unless the
                context otherwise requires) any rules or regulations promulgated
                thereunder.

        1.1.18  "Event of Default": shall have the meaning set forth in Section
                7.

        1.1.19  "Expiration Date of Line of Credit": shall mean November 30,
                2002, or the date of termination of the Bank's commitment to
                lend under this Agreement pursuant to Section 8, whichever shall
                occur first.

        1.1.20  "Expiration Date of Term Loan": shall mean December 31, 2005 or
                the date of termination of the Bank's commitment to lend under
                this Agreement pursuant to Section 8, whichever shall occur
                first.

        1.1.21  "Fed Funds Balance": shall have the respective meaning as it is
                defined for each facility under Section 2, hereof if applicable.

        1.1.22  "Fed Funds Rate": shall have the respective meaning as it is
                defined for each facility under Section 2, hereof if applicable.

        1.1.23  "Fixed Rate Advance": shall have the respective meaning as it is
                defined for each facility under Section 2, hereof if applicable.

        1.1.24  "Fixed Rate Balance": shall have the respective meaning as it is
                defined for each facility under Section 2, hereof if applicable.

        1.1.25  "Fixed Rate": shall have the respective meaning as it is defined
                for each facility under Section 2, hereof if applicable.

        1.1.26  "Foreign Currency": shall mean any legally traded currency other
                than US dollars and which may be transferred by paperless wire
                transfer or cash and in which the Bank regularly trades.

        1.1.27  "Foreign Subsidiary": shall mean a corporate entity that is not
                organized or created in the United States, including only the
                States and District of Columbia, or under the law of the United
                States or of any state or territory.

        1.1.28  "Foreign Exchange Sub-Facility": shall mean the credit facility
                described as such in Section 2.

        1.1.29  "Funded Debt": shall mean all Indebtedness for borrowed money.

        1.1.30  "FX Risk Liability": shall mean the product of (a) the Credit
                Percentage, times (b) the aggregate of the Notional Values of
                all FX Transactions outstanding, net of any Offsetting
                Transactions.

        1.1.31  "FX Limit":  shall mean $4,500,000.00.

        1.1.32  "FX Transaction": shall mean any transaction between the Bank
                and the Borrower pursuant to which the Bank has agreed to sell
                to or to purchase from the Borrower a Foreign Currency of an
                agreed amount at an agreed price in US dollars or such other
                agreed upon Foreign Currency, deliverable and payable on an
                agreed date.

                                      -3-
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        1.1.33  "Hazardous Materials": shall mean all those substances which are
                regulated by, or which may form the basis of liability under,
                any Environmental Law, including all substances identified under
                any Environmental Law as a pollutant, contaminant, hazardous
                waste, hazardous constituent, special waste, hazardous
                substance, hazardous material, or toxic substance, or petroleum
                or petroleum derived substance or waste.

        1.1.34  "Indebtedness": shall mean, with respect to the Borrower, (i)
                all indebtedness for borrowed money or for the deferred purchase
                price of property or services in respect of which the Borrower
                is liable, contingently or otherwise, as obligor, guarantor or
                otherwise, or in respect of which the Borrower otherwise assures
                a creditor against loss and (ii) obligations under leases which
                shall have been or should be, in accordance with generally
                accepted accounting principles, reported as capital leases in
                respect of which the Borrower is liable, contingently or
                otherwise, or in respect of which the Borrower otherwise assures
                a creditor against loss.

        1.1.35  "Interest Period": shall have the respective meaning as it is
                defined for each facility under Section 2, hereof.

        1.1.36  "Letter of Credit Facility": shall mean the credit facility
                described as such in Section 2.

        1.1.37  "LIBOR Advance": shall have the respective meaning as it is
                defined for each facility under Section 2, hereof.

        1.1.38  "LIBOR Balance": shall have the respective meaning as it is
                defined for each facility under Section 2, hereof.

        1.1.39  "LIBOR Interest Period": shall have the respective meaning as it
                is defined for each facility under Section 2, hereof.

        1.1.40  "LIBOR Rate": shall have the respective meaning as it is defined
                for each facility under Section 2, hereof.

        1.1.41  "Line of Credit": shall mean the credit facility described as
                such in Section 2.

        1.1.42  "Notional Value": shall mean the US Dollar equivalent of the
                price at which the Bank agreed to purchase or sell to the
                Borrower a Foreign Currency.

        1.1.43  "Obligations": shall mean all amounts owing by the Borrower to
                the Bank pursuant to this Agreement including, but not limited
                to, the unpaid principal amount of Advances.

        1.1.44  "Offsetting Transaction": shall mean a FX Transaction to
                purchase a Foreign Currency and a FX Transaction to sell the
                same Foreign Currency , each with the same Settlement Date and
                designated as an Offsetting Transaction at the time of entering
                into the FX Transaction.

        1.1.45  "Ordinary Course of Business": shall mean, with respect to any
                transaction involving the Borrower or any of its subsidiaries or
                affiliates, the ordinary course of the Borrower's business, as
                conducted by the Borrower in accordance with past practice and
                undertaken by the Borrower in good faith and not for the purpose
                of evading any covenant or restriction in this Agreement or in
                any other document, instrument or agreement executed in
                connection herewith.

        1.1.46  "Permitted Liens": shall mean: (i) liens and security interests
                securing indebtedness owed by the Borrower to the Bank; (ii)
                liens for taxes, assessments or similar charges not yet due;
                (iii) liens of materialmen, mechanics, warehousemen, or carriers
                or other like liens

                                      -4-
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                arising in the Ordinary Course of Business and securing
                obligations which are not yet delinquent; (iv) purchase money
                liens or purchase money security interests upon or in any
                property acquired or held by the Borrower in the Ordinary Course
                of Business to secure Indebtedness outstanding on the date
                hereof or permitted to be incurred herein; (v) liens and
                security interests which, as of the date hereof, have been
                disclosed to and approved by the Bank in writing; and (vi) those
                liens and security interests which in the aggregate constitute
                an immaterial and insignificant monetary amount with respect to
                the net value of the Borrower's assets.

        1.1.47  "Reference Rate": shall mean an index for a variable interest
                rate which is quoted, published or announced by Bank as its
                reference rate and as to which loans may be made by Bank at,
                above or below such rate.

        1.1.48  "Settlement Date": shall mean the Business Day on which the
                Borrower has agreed to (a) deliver the required amount of
                Foreign Currency, or (b) pay in US dollars the agreed upon
                purchase price of the Foreign Currency.

        1.1.49  "Subordinated Debt": shall mean such liabilities of the Borrower
                which have been subordinated to those owed to the Bank in a
                manner acceptable to the Bank.

        1.1.50  "Term Applicable Margin": shall mean the following interest rate
                percentages based upon the Funded Debt Ratio provided for in
                Section 6.2 (iv) then in effect:

<TABLE>
<CAPTION>
                Funded Debt Ratio             Applicable Margin for LIBOR,     Applicable Margin for
                                              Fixed Rate or Fed Funds:         Reference Rate:
                <S>                           <C>                              <C>
                Less than 2 to 1              1.75%                            .25%
                Between 2.49 and 2 to 1       2.25%                            .375%
                Between 2.99 and 2.50 to 1    2.75%                            .50%
                3.00 to 1 or greater          3.25%                            .75%
</TABLE>

        1.1.51  "Term Loan and Line Account": shall have the meaning provided in
                Section 2.66 hereof.

        1.1.52  "Variable Rate Advance": shall have the respective meaning as it
                is defined for each facility under Section 2, hereof.

        1.1.53  "Variable Rate": shall have the respective meaning as it is
                defined for each facility under Section 2, hereof.

1.2     Accounting Terms: All references to financial statements, assets,
        liabilities, and similar accounting items not specifically defined
        herein shall mean such financial statements or such items prepared or
        determined in accordance with generally accepted accounting principles
        consistently applied and, except where otherwise specified, all
        financial data submitted pursuant to this Agreement shall be prepared in
        accordance with such principles.

1.3     Other Terms: Other terms not otherwise defined shall have the meanings
        attributed to such terms in the California Uniform Commercial Code.

                                      -5-
<PAGE>

                                   SECTION

                                       2

                               CREDIT FACILITIES

2.1        THE LINE OF CREDIT

        2.1.1   The Line of Credit: On terms and conditions as set forth herein,
                the Bank agrees to make Advances to the Borrower from time to
                time from the date hereof to the Expiration Date, provided the
                aggregate amount of such Advances outstanding at any time does
                not exceed $12,000,000.00 (the "Line of Credit"). Within the
                foregoing limits, the Borrower may borrow, partially or wholly
                prepay, and reborrow under this Section 2.1. Proceeds of the
                Line of Credit shall be used for general working capital
                purposes.

        2.1.2   Making Line Advances: Each Advance shall be conclusively deemed
                to have been made at the request of and for the benefit of the
                Borrower (i) when credited to any deposit account of the
                Borrower maintained with the Bank or (ii) when paid in
                accordance with the Borrower's written instructions. Subject to
                the requirements of Section 4 and provided such request is made
                in a timely manner as provided in Section 2.1.5 below, Advances
                shall be made by the Bank under the Line of Credit.

        2.1.3   Repayment: On the Expiration Date of the Line of Credit, the
                Borrower hereby promises and agrees to pay to the Bank in full
                the aggregate unpaid principal amount of all Advances then
                outstanding, together with all accrued and unpaid interest
                thereon.

        2.1.4   Interest on Advances: Interest shall accrue from the date of
                each Advance under the Line of Credit at one of the following
                rates, as quoted by the Bank and as elected by the Borrower
                below:

                (i)   Variable Rate Advances: A variable rate per annum
                      ----------------------
                      equivalent to the Reference Rate plus the Applicable
                      Margin (the "Variable Rate"). Interest shall be adjusted
                      concurrently with any change in the Reference Rate. An
                      Advance based upon the Variable Rate is hereinafter
                      referred to as a "Variable Rate Advance".

                (ii)  Fixed Rate Advances: A fixed rate per annum quoted by the
                      -------------------
                      Bank for 30, 60, 90 or 180 days or for such other period
                      of time that the Bank may quote and offer (provided that
                      any such period of time does not extend beyond the
                      Expiration Date) (the "Interest Period") for Advances in
                      the minimum amount of $100,000.00. Such interest rate
                      shall be a percentage equal to the Applicable Margin plus
                      the rate which the Bank determines in its sole and
                      absolute discretion to be equal to the Bank's cost of
                      acquiring funds (adjusted for any and all assessments,
                      surcharges and reserve requirements pertaining to the
                      borrowing or purchase by the Bank of such funds) in an
                      amount approximately equal to the amount of the relevant
                      Advance and for a period of time approximately equal to
                      the relevant Interest Period (the "Fixed Rate"). Advances
                      based upon the Fixed Rate are hereinafter referred to as
                      "Fixed Rate Advances".

                (iii) LIBOR Advances: A fixed rate quoted by the Bank for one
                      --------------
                      week, 1, 2, 3, or 6 months or for such other period of
                      time that the Bank may quote and offer (provided that any
                      such period of time does not extend beyond the Expiration
                      Date) (the "LIBOR Interest Period") for Advances in the
                      minimum amount of $100,000.00. Such interest rate shall be
                      a percentage equal to the Applicable Margin plus the
                      Bank's LIBOR Rate which is that rate determined by the
                      Bank's Treasury Desk as being the arithmetic mean (rounded
                      upwards, if necessary, to

                                      -6-
<PAGE>

                the nearest whole multiple of one-sixteenth of one percent
                (1/16%)) of the U. S. dollar London Interbank Offered Rates for
                such period appearing on page 3750 (or such other page as may
                replace page 3750) of the Telerate screen at or about 11:00 a.m.
                (London time) on the second Business Day prior to the first days
                of such period (adjusted for any and all assessments, surcharges
                and reserve requirements) (the "LIBOR Rate"). An Advance based
                upon the LIBOR Rate is hereinafter referred to as a "LIBOR
                Advance".

                Interest on any Advance shall be computed on the basis of 360
                days per year, but charged on the actual number of days elapsed.

                The Borrower hereby promises and agrees to pay interest in
                arrears on all Advances on the first calendar day of each month.

                If interest is not paid as and when it is due, it shall be added
                to the principal, become and be treated as a part thereof, and
                shall thereafter bear like interest.

2.1.5   Notice of Borrowing: Upon written or telephonic notice which shall be
        received by the Bank at or before 2:00 p.m. (California time) on a
        Business Day, the Borrower may borrow under the Line of Credit by
        requesting:

        (i)     A Variable Rate Advance or Fixed Rate Advance: A Variable Rate
                ---------------------------------------------
                Advance or Fixed Rate Advance may be made on the day notice is
                received by the Bank; provided, however, that if the Bank shall
                not have received notice at or before 2:00 p.m. on the day such
                Advance is requested to be made, such Variable Rate Advance or
                Fixed Rate Advance may, at the Bank's option, be made on the
                next Business Day.

        (ii)    A LIBOR Advance: Notice of any LIBOR Advance shall be received
                ---------------
                by the Bank no later than two Business Days prior to the day
                (which shall be a Business Day) on which the Borrower requests
                such LIBOR Advance to be made.

2.1.6   Notice of Election to Adjust Interest Rate: Upon telephonic notice which
        shall be received by the Bank at or before 2:00 p.m. (California time)
        on a Business Day, the Borrower may elect:

        (i)     That interest on a Variable Rate Advance shall be adjusted to
                accrue at the Fixed Rate; provided, however, that such notice
                shall be received by the Bank no later than 2:00 p.m. on the
                Business Day on which the Borrower requests that interest be
                adjusted to accrue at the Fixed Rate.

        (ii)    That interest on a Variable Rate Advance shall be adjusted to
                accrue at the LIBOR Rate; provided, however, that such notice
                shall be received by the Bank no later than two Business Days
                prior to the Business Day on which the Borrower requests that
                interest be adjusted to accrue at the LIBOR Rate.

        (iii)   That interest on a Fixed Rate Advance shall continue to accrue
                at a newly quoted Fixed Rate or shall be adjusted to commence to
                accrue at the Variable Rate; provided, however, that such notice
                shall be received by the Bank no later than 2:00 p.m. on the
                last day of the Interest Period pertaining to such Fixed Rate
                Advance. If the Bank shall not have received notice (as
                prescribed herein) of the Borrower's election that interest on
                any Fixed Rate Advance shall continue to accrue at the newly
                quoted Fixed Rate as the case may be the Borrower shall be
                deemed to have elected that interest thereon shall be adjusted
                to accrue at the

                                      -7-
<PAGE>

                Variable Rate upon the expiration of the relevant Interest
                Period pertaining to such Advance.

        (iv)    That interest on a Fixed Rate Advance shall accrue at a newly
                quoted LIBOR Rate or interest on a LIBOR Advance shall continue
                to accrue at a newly quoted Fixed Rate or LIBOR Rate or shall be
                adjusted to commence to accrue at the Variable Rate; provided,
                however, that such notice shall be received by the Bank no later
                than two Business Days prior to the last day of the relevant
                Interest Period or LIBOR Interest Period, as applicable. If the
                Bank shall not have received notice as prescribed herein of the
                Borrower's election that interest on any Fixed Rate Advance
                shall accrue interest at a newly quoted LIBOR Rate or at a newly
                quoted Fixed Rate pursuant to subparagraph (iii) hereinabove; or
                any LIBOR Advance shall continue to accrue at the newly quoted
                Fixed Rate or LIBOR Rate as the case may be, the Borrower shall
                be deemed to have elected that interest thereon shall be
                adjusted to accrue at the Variable Rate upon the expiration of
                the relevant Interest Period or LIBOR Interest Period pertaining
                to such Advance.

2.1.7   Prepayment: The Borrower may prepay any Advance in whole or in part, at
        any time and without penalty, provided, however, that: (i) any partial
        prepayment shall first be applied at the Bank's option, to accrued and
        unpaid interest and next to the outstanding principal balance; and (ii)
        during any period of time in which interest is accruing on any Advance
        on the basis of the LIBOR Rate or Fixed Rate, no prepayment shall be
        made except on a day which is the last day of the LIBOR Interest Period
        or Interest Period pertaining thereto. If the whole or any part of any
        LIBOR Advance or Fixed Rate Advance is prepaid by reason of acceleration
        or otherwise (except as described hereinabove), the Borrower shall, upon
        the Bank's request, promptly pay to and indemnify the Bank for all
        costs, expenses and any loss ( excluding loss of profit on any margin)
        actually incurred by the Bank and any loss (including loss of profit
        resulting from the re-employment of funds) deemed sustained by the Bank
        as a consequence of such prepayment and provided further, that any
        prepayment hereunder shall not be deemed to be an event of default.

        The Bank shall be entitled to fund all or any portion of its Advances in
        any manner it may determine in its sole discretion, but all calculations
        and transactions hereunder shall be conducted as though the Bank
        actually funded all Advances through the purchase of dollar deposits
        bearing interest at the same rate as U.S. Treasury securities in the
        amount of the relevant Advance and in maturities corresponding to the
        date of such purchase to the Expiration Date hereunder.

2.1.8   Indemnification for LIBOR Rate or Fixed Rate Costs: During any period of
        time in which interest on any Advance is accruing on the basis of the
        LIBOR Rate or Fixed Rate, the Borrower shall, withing 15 days of the
        Bank's written request, which request shall explain in reasonable detail
        the reason for such costs or payments, promptly pay to and reimburse the
        Bank for all costs incurred and payments made by the Bank by reason of
        any future assessment, reserve, deposit or similar requirement or any
        surcharge, tax or fee imposed upon the Bank or as a result of the Bank's
        compliance with any directive or requirement of any regulatory authority
        pertaining or relating to funds used by the Bank in quoting and
        determining the LIBOR Rate or Fixed Rate. Bank shall use its best
        efforts to provide Borrower in advance, with an estimate or any such
        costs which may potentially be incurred hereunder.

2.1.9   Conversion from LIBOR Rate or Fixed Rate to Variable Rate: In the event
        that the Bank shall at any time determine that the accrual of interest
        on the basis of the LIBOR Rate or Fixed Rate (i) has become infeasible
        because the Bank is unable to determine the LIBOR Rate or Fixed Rate due
        to the unavailability of U.S. Dollar deposits, contracts or certificates
        of deposit in an amount approximately equal to the amount of the
        relevant

                                      -8-
<PAGE>

                Advance and for a period of time approximately equal to the
                relevant LIBOR Interest Period or Interest Period as the case
                may be or (ii) is or has become unlawful by reason of the Bank's
                compliance with any new law, rule, regulation, guideline or
                order, or any new interpretation of any present law, rule,
                regulation guideline or order, then the Bank shall promptly give
                telephonic notice thereof (confirmed in writing) to the
                Borrower, in which event any Advance bearing interest at either
                the LIBOR Rate or Fixed Rate as the case may be shall be deemed
                to be a Variable Rate Advance and interest shall thereupon
                immediately accrue at the Variable Rate and shall continue at
                such rate until the Bank determines that the LIBOR Rate or Fixed
                Rate is no longer infeasible or unlawful.

2.2       THE TERM LOAN

        2.2.1   The Term Loan: On terms and conditions as set forth herein, the
                Bank agrees to lend to the Borrower in one drawing, upon the
                Borrower's request therefore made prior to February 1, 2001, up
                to the maximum amount of $10,500,000.00 (the "Term Loan").
                Proceeds of the Term Loan shall be used to refinance existing
                Indebtedness.

        2.2.2   Making the Term Loan: The Term Loan shall be conclusively deemed
                to have been made at the request of and for the benefit of the
                Borrower (i) when credited to any deposit account of the
                Borrower maintained with the Bank or (ii) when paid in
                accordance with the Borrower's written instructions.

        2.2.3   Repayment: The Borrower hereby promises and agrees to pay
                principal monthly on the first day of each month in 47
                installments of $218,750.00, commencing on February 1, 2001. On
                the Expiration Date of the Term Loan, the Borrower hereby
                promises and agrees to pay to the Bank the entire unpaid
                principal balance, together with accrued and unpaid interest.

                Each payment received by the Bank shall, at the Bank's option,
                be applied to pay interest then due and unpaid under the Term
                Loan and the remainder thereof (if any) shall be applied to pay
                principal on the Term Loan.

        2.2.4   Interest: Interest shall accrue on the Term Loan at one of the
                following rates, as quoted by the Bank and as elected by the
                Borrower below:

                (i)   Variable Rate Balances: A variable rate per annum
                      ----------------------
                      equivalent to the Reference Rate plus the Term Applicable
                      Margin (the "Variable Rate"). Interest shall be adjusted
                      concurrently with any change in the Reference Rate. The
                      Term Loan based upon the Variable Rate is hereinafter
                      referred to as a "Variable Rate Balance".

                (ii)  Fixed Rate Balances: A fixed rate per annum quoted by the
                      -------------------
                      Bank for 30, 60, 90 or 180 days or for such other period
                      of time that the Bank may quote and offer (provided that
                      any such period of time does not extend beyond the
                      Expiration Date) for the entire amount of the Term Loan.
                      Such interest rate shall be a percentage equal to the Term
                      Applicable Margin plus the rate which the Bank determines
                      in its sole and absolute discretion to be equal to the
                      Bank's cost of acquiring funds (adjusted for any and all
                      assessments, surcharges and reserve requirements
                      pertaining to the borrowing or purchase by the Bank of
                      such funds) in an amount approximately equal to the amount
                      of the Term Loan and for a period of time approximately
                      equal to the relevant Interest Period (the "Fixed Rate").
                      The Term Loan bearing interest at the Fixed Rate is
                      hereinafter referred to as "Fixed Rate Balances".

                                      -9-
<PAGE>

          (iii)  LIBOR Balance: A fixed rate quoted by the Bank for one week, 1,
                 -------------
                 2, 3, or 6 months or for such other period of time that the
                 Bank may quote and offer (provided that any such period of time
                 does not extend beyond the Expiration Date) (the "LIBOR
                 Interest Period") for the entire amount of the Term Loan. Such
                 interest rate shall be a percentage equal to the Term
                 Applicable Margin plus the Bank's LIBOR Rate which is that rate
                 determined by the Bank's Treasury Desk as being the arithmetic
                 mean (rounded upwards, if necessary, to the nearest whole
                 multiple of one-sixteenth of one percent (1/16%)) of the U. S.
                 dollar London Interbank Offered Rates for such period appearing
                 on page 3750 (or such other page as may replace page 3750 of
                 the Telerate screen at or about 11:00 a.m. (London time) on the
                 second Business Day prior to the first days of such period
                 (adjusted for any and all assessments, surcharges and reserve
                 requirements) (the "LIBOR Rate"). The Term Loan based upon the
                 LIBOR Rate is hereinafter referred to as a "LIBOR Balance".

          (iv)   Fed Funds Balances: The rate per annum set forth in the daily
                 ------------------
                 statistical release designated as the Composite 3:30 p.m.
                 Quotations for U.S. Government Securities, or any successor
                 publication, published by the Federal Reserve Bank of New York
                 (including as such successor, the "Composite 3:30 p.m.
                 Quotations") for such previous day under the caption "Federal
                 Funds Effective Rate" plus the Term Applicable Margin
                 (hereinafter referred to as the "Fed Funds Rate". If on any
                 relevant day the appropriate rate for such previous day is not
                 yet published in the Composite 3:30 p.m. Quotations, the rate
                 for such previous day will be the arithmetic mean of the rates
                 for the last transaction in overnight Federal funds arranged
                 prior to 9:00 a.m. (New York City time) on that day by each of
                 three (3) leading brokers of Federal funds transactions in New
                 York City, selected by the Bank. The Term Loan or a portion
                 thereof based upon the Fed Funds Rate is hereinafter referred
                 to as a "Fed Funds Balance".

          Interest shall be computed on the basis of 360 days per year, but
          charged on the actual number of days elapsed.

          The Borrower hereby promises and agrees to pay interest in arrears on
          the Term Loan on the first calendar day of each month.

          If interest is not paid as and when it is due, it shall be added to
          the principal, become and be treated as a part thereof, and shall
          thereafter bear like interest.

2.2.5     Notice of Borrowing. Upon telephonic notice which shall be received by
          the Bank at or before 2:00 p.m. (California time) on a Business Day,
          the Borrower may draw under the Term Loan by requesting:

          (i)    A Variable Rate Balance, Fed Funds Balance or Fixed Rate
                 Balance: A Variable Rate Balanc, Fed Funds Balance or Fixed
                 Rate Balance may be made on the day notice is received by the
                 Bank; provided, however, that if the Bank shall not have
                 received notice at or before 2:00 p.m. on the day such drawing
                 is requested to be made, such Variable Rate Balance, Fed Funds
                 Balance or Fixed Rate Balance may, at the Bank's option, be
                 made on the next Business Day.

          (ii)   A LIBOR Balance: Notice of any LIBOR Balance shall be received
                 by the Bank no later than two business days prior to the day
                 (which shall be a business day) on which the Borrower requests
                 such LIBOR Balance to be made.

2.2.6     Notice of Election to Adjust Interest Rate: Upon telephonic notice
          which shall be received by the Bank at or before 2:00 p.m. (California
          time) on a Business Day, the

                                      -10-
<PAGE>

        Borrower may elect:

        (i)     That interest on a Variable Rate Balance shall be adjusted to
                accrue at the Fixed Rate; provided, however, that such notice
                shall be received by the Bank no later than 2:00 p.m. on the
                Business Day on which the Borrower requests that interest be
                adjusted to accrue at the Fixed Rate.

        (ii)    That interest on a Variable Rate Balance shall be adjusted to
                accrue at the LIBOR Rate; provided, however, that such notice
                shall be received by the Bank no later than two Business Days
                prior to the Business Day on which the Borrower requests that
                interest be adjusted to accrue at the LIBOR Rate.

        (iii)   That interest on a Fed Funds Balance shall be adjusted to accrue
                at the Fixed Rate; provided, however, that such notice shall be
                received by the Bank no later than 2:00 p.m. on the Business Day
                on which the Borrower requests that interest be adjusted to
                accrue at the Fixed Rate.

        (iv)    That interest on a Fed Funds Balance shall be adjusted to accrue
                at the LIBOR Rate; provided, however, that such notice shall be
                received by the Bank no later than two Business Days prior to
                the Business Day on which the Borrower requests that interest be
                adjusted to accrue at the LIBOR Rate.

        (v)     That interest on a Fixed Rate Advance shall continue to accrue
                at a newly quoted Fixed Rate or shall be adjusted to commence to
                accrue at the Variable Rate or the Fed Funds Rate; provided,
                however, that such notice shall be received by the Bank no later
                than 2:00 p.m. on the last day of the Interest Period pertaining
                to such Fixed Rate Balance. If the Bank shall not have received
                notice (as prescribed herein) of the Borrower's election that
                interest on any Fixed Rate Balance shall continue to accrue at
                the newly quoted Fixed Rate as the case may be the Borrower
                shall be deemed to have elected that interest thereon shall be
                adjusted to accrue at the Variable Rate upon the expiration of
                the relevant Interest Period.

        (vi)    That interest on a Fixed Rate Advance shall accrue at a newly
                quoted LIBOR Rate or interest on a LIBOR Balance shall continue
                to accrue at a newly quoted Fixed Rate or LIBOR Rate or shall be
                adjusted to commence to accrue at the Variable Rate or Fed Funds
                Rate; provided, however, that such notice shall be received by
                the Bank no later than two Business Days prior to the last day
                of the relevant Interest Period or LIBOR Interest Period, as
                applicable. If the Bank shall not have received notice as
                prescribed herein of the Borrower's election that interest on
                any Fixed Rate Balance shall accrue interest at a newly quoted
                LIBOR Rate or at a newly quoted Fixed Rate pursuant to
                subparagraph (iii) hereinabove; or any LIBOR Balance shall
                continue to accrue at the newly quoted Fixed Rate or LIBOR Rate
                as the case may be, the Borrower shall be deemed to have elected
                that interest thereon shall be adjusted to accrue at the
                Variable Rate upon the expiration of the relevant Interest
                Period or LIBOR Interest Period.

2.2.7   Prepayment. The Borrower may prepay the Term Loan in whole or in part,
        at any time and without penalty, provided, however, that: (i) any
        partial prepayment shall first be applied at the Bank's option, to
        accrued and unpaid interest and next to the outstanding principal
        balance; and (ii) during any period of time in which interest is
        accruing on any Balance on the basis of the LIBOR Rate or Fixed Rate, no
        prepayment shall be made except on a day which is the last day of the
        LIBOR Interest Period or Interest Period pertaining thereto. If the
        whole or any part of the Term Loan is prepaid by reason of acceleration
        or otherwise, (except as described hereinabove) the Borrower shall, upon
        the Bank's request, promptly pay to and indemnify the Bank for all
        costs, expenses and any loss (excluding loss of profit

                                      -11-
<PAGE>

                on any margin actually incurred by the Bank and any loss
                (including loss of profit resulting from the re-employment of
                funds) deemed sustained by the Bank as a consequence of such
                prepayment, and provided further, that any prepayment hereunder
                shall not be deemed to be an event of default.

                The Bank shall be entitled to fund all or any portion of the
                Term Loan in any manner it may determine in its sole discretion,
                but all calculations and transactions hereunder shall be
                conducted as though the Bank actually funded the Term Loan
                through the purchase of dollar deposits bearing interest at the
                same rate as U.S. Treasury securities in the amount of the Term
                Loan and in maturities corresponding to the date of such
                purchase to the Expiration Date hereunder.

        2.2.8   Indemnification for LIBOR Rate or Fixed Rate Costs. During any
                period of time in which interest on the Term Loan is accruing on
                the basis of the LIBOR Rate or Fixed Rate, the Borrower shall,
                within 15 days of the Bank's written request, which request
                shall explain in reasonable detail the reason for such costs or
                payments, promptly pay to and reimburse the Bank for all costs
                incurred and payments made by the Bank by reason of any future
                assessment, reserve, deposit or similar requirement or any
                surcharge, tax or fee imposed upon the Bank or as a result of
                the Bank's compliance with any directive or requirement of any
                regulatory authority pertaining or relating to funds used by the
                Bank in quoting and determining the LIBOR Rate or Fixed Rate.
                Bank shall use its best efforts to provide Borrower, in advance,
                with an estimate of any such costs which may potentially be
                incurred hereunder.

        2.2.9   Conversion from LIBOR Rate or Fixed Rate to Variable Rate. In
                the event that the Bank shall at any time determine that the
                accrual of interest on the basis of the LIBOR Rate or Fixed Rate
                (i) has become infeasible because the Bank is unable to
                determine the LIBOR Rate or Fixed Rate due to the unavailability
                of U.S. Dollar deposits, contracts or certificates of deposit in
                an amount approximately equal to the amount the Term Loan and
                for a period of time approximately equal to the relevant LIBOR
                Interest Period or Interest Period as the case may be or (ii) is
                or has become unlawful by reason of the Bank's compliance with
                any new law, rule, regulation, guideline or order, or any new
                interpretation of any present law, rule, regulation guideline or
                order, then the Bank shall promptly give telephonic notice
                thereof (confirmed in writing) to the Borrower, in which event
                the LIBOR Balance or Fixed Rate Balance as the case may be shall
                be deemed to be a Variable Rate Balance and interest shall
                thereupon immediately accrue at the Variable Rate and shall
                continue at such rate until the Bank determines that the LIBOR
                Rate or Fixed Rate is no longer infeasible or unlawful.

2.3        LETTER OF CREDIT SUB-FACILITY

        2.3.1   Letter of Credit Sub-Facility: The Bank agrees to issue
                commercial and/or standby letters of credit (each a "Letter of
                Credit") on behalf of the Borrower of up to $10,000,000.00. At
                no time, however, shall the total principal amount of all
                Advances outstanding under the Line of Credit, together with the
                total face amount of all Letters of Credit outstanding, less any
                partial draws paid by the Bank, exceed the Line of Credit.

                (i)   Upon the Bank's request, the Borrower shall promptly pay
                      to the Bank issuance fees and such other fees,
                      commissions, costs and any out-of-pocket expenses charged
                      or incurred by the Bank with respect to any Letter of
                      Credit.

                (ii)  The commitment by the Bank to issue Letters of Credit
                      shall, unless earlier terminated in accordance with the
                      terms of the Agreement, automatically terminate on the
                      Expiration Date of the Line of Credit and no Letter of
                      Credit shall expire on a

                                      -12-
<PAGE>

                       date which is 180 days after the Expiration Date or as
                       negotiated by the Borrower and the Bank.

                (iii)  Each Letter of Credit shall be in form and substance
                       satisfactory to the Bank and in favor of beneficiaries
                       satisfactory to the Bank, provided that the Bank may
                       refuse to issue a Letter of Credit due to the nature of
                       the transaction or its terms or in connection with any
                       transaction where the Bank, due to the beneficiary or the
                       nationality or residence of the beneficiary, would be
                       prohibited by any applicable law, regulation or order
                       from issuing such Letter of Credit.

                (iv)   Prior to the issuance of each Letter of Credit, but in no
                       event later than 10:00 a.m. (California time) on the day
                       such Letter of Credit is to be issued (which shall be a
                       Business Day), the Borrower shall deliver to the Bank a
                       duly executed form of the Bank's standard form of
                       application for issuance of a Letter of Credit with
                       proper insertions.

                (v)    The Borrower shall, upon the Bank's request, promptly pay
                       to and reimburse the Bank for all costs incurred and
                       payments made by the Bank by reason of any future
                       assessment, reserve, deposit or similar requirement or
                       any surcharge, tax or fee imposed upon the Bank or as a
                       result of the Bank's compliance with any directive or
                       requirement of any regulatory authority pertaining or
                       relating to any Letter of Credit.

     In the event that the Borrower fails to pay any drawing under any Letter of
     Credit or the balances in the depository account or accounts maintained by
     the Borrower with Bank are insufficient to pay such drawing, without
     limiting the rights of Bank hereunder or waiving any Event of Default
     caused thereby, Bank may, and Borrower hereby authorizes Bank to create an
     Advance bearing interest at the rate or rates provided in Section 9.2
     hereof to pay such drawing.

2.4     ACCEPTANCE SUB-FACILITY

     2.4.1      Acceptance Sub- Facility: The Borrower may from time to time
                request the Bank to accept one or more drafts drawn on the Bank
                for the account of the Borrower (each an "Acceptance") of up to
                $5,000,000.00. At no time, however, shall the total principal
                balance of all Acceptances outstanding, together with the total
                face amount of all outstanding Letters of Credit less any
                partial draws paid by the Bank, exceed the sum of $10,000,000.00
                and, together with the total principal balance of all Advances
                outstanding under the Line of Credit, exceed the Line of Credit.

                (i)    Requests for Acceptances. Each request for an Acceptance
                       shall be made in writing or by telephone confirmed in
                       writing (each a "Request"), shall be irrevocable, and
                       shall involve one or more drafts as described below. Each
                       Request shall be delivered or communicated to the Bank no
                       later than 10:00 a.m. (California time) on the day (which
                       shall be a business day) on which the creation of an
                       Acceptance is requested. By making any such Request, the
                       Borrower agrees that all matters relating to each such
                       Acceptance shall be governed hereby and the Borrower
                       restates all warranties and representations made by the
                       Borrower herein as if made on the date of the Request and
                       on the date that the Acceptance is created.

                (ii)   Acceptances. Each Acceptance shall be created upon a
                       Request by the Bank's acceptance of a draft in form and
                       substance satisfactory to the Bank (each a "Draft"). Each
                       Draft shall: (i) be drawn on the Bank by or on behalf or
                       for the account of the Borrower in accordance with the
                       provisions hereof ; (ii) have a minimum face amount of
                       $100,000.00; (iii) be for the purpose of financing only

                                      -13-
<PAGE>

                      those transactions permitted by Subsection 7 of Section 13
                      of the Federal Reserve Act, as amended from time to time;
                      and (iv) mature not more than 180 days after the date
                      thereof (provided that, if such date is not a Business
                      Day, the maturity shall be extended to the next succeeding
                      Business Day). However, no Draft shall mature more than 90
                      days after the Expiration Date of Acceptances. The
                      Borrower hereby warrants that any Acceptances relating to
                      the importation or exportation of goods or relating to the
                      domestic shipment of goods shall: (i) not have a term in
                      excess of the period of time which is usual and reasonably
                      necessary to finance transactions of the character of the
                      underlying import or export transaction or the underlying
                      domestic shipment; (ii) not, together with all other
                      Acceptances relating to any such shipment, have an
                      aggregate face amount exceeding the CIF value of such
                      shipment; and (iii) not be created more than 30 days after
                      the date of shipment of goods to which such Acceptance
                      relates. Acceptances relating to the storage of goods
                      shall be subject to the further conditions that: (i) at
                      the time such Acceptance is created, the goods being
                      stored are covered by a warehouse receipt issued by a
                      bonded warehouse independent of the Borrower and
                      acceptable to the Bank; (ii) the goods covered by the
                      warehouse receipt are readily marketable staples (as such
                      term is defined in Section 13 of the Federal Reserve Act
                      by the Board of Governors of the Federal Reserve System or
                      by Federal Reserve Bulletins) held pending a reasonably
                      immediate sale, distribution or shipment; and (iii) the
                      face amount of the Acceptance relating to such goods does
                      not exceed the fair market value of the goods.

              (iii)   Acceptance Liability. The Borrower is obligated, and
                      hereby unconditionally promises and agrees, to pay the
                      Bank, on the maturity date of each Acceptance or on such
                      earlier date as may be required pursuant hereto, the face
                      amount of each such Acceptance.

              (iv)    Acceptance Commissions. The Borrower agrees, upon
                      acceptance by the Bank of each Draft and as a condition
                      precedent to such Acceptance, to pay to the Bank a fee
                      (the "Commission") in an amount equal to 1.5% per annum of
                      the face amount of each Acceptance calculated on the basis
                      of 360 days per year for the actual number of days
                      (including the first day but excluding the last day)
                      during the period which is for the term of the Draft.

              (v)     Discount of Acceptances. The Bank agrees to discount any
                      Acceptance that is created and presented to it for
                      discount at a rate quoted by the Bank at the time the
                      Acceptance is presented to the Bank for discount and for a
                      similar dollar amount and a similar maturity as the Draft
                      being presented to the Bank by the Borrower for acceptance
                      (the "Acceptance Discount Rate"). On the date any such
                      Acceptance is presented for discount, the Bank shall: (i)
                      cause the aggregate discounted amount (less any Commission
                      then payable by the Borrower to the Bank hereunder) to be
                      made available to the Borrower by crediting such amount to
                      the Borrower's demand deposit account maintained with the
                      Bank, and (ii) advise the Borrower of the Acceptance
                      Discount Rate at which the Bank discounted such
                      Acceptance. The Bank shall have the right, in its sole
                      discretion, to sell, rediscount, hold or otherwise deal
                      with or dispose of any such Acceptance discounted by it.

              (vi)    Acceptance Collateral. Each Draft accepted by the Bank
                      shall be secured by a security interest in the goods (as
                      defined in the California Uniform Commercial Code)
                      involved in the transaction out of which the Acceptance
                      arose to the extent that such a security interest is
                      either required by the Bank or in order that the relevant
                      Acceptance conform to the requirements of Section 13 of
                      the Federal Reserve Act.

                                      -14-
<PAGE>

                (vii)  Future Assessments. The Borrower shall, within 15 days of
                       the Bank's written request, promptly pay to and reimburse
                       the Bank for all costs incurred and payments made by the
                       Bank by reason of any future assessment, reserve, deposit
                       or similar requirement or any surcharge, tax or fee
                       imposed upon the Bank or as a result of the Bank's
                       compliance with any directive or requirement of any
                       regulatory authority pertaining or relating to any
                       Acceptance. Bank shall use its best efforts to provide
                       Borrower in advance with an estimate of any such costs
                       which may potentially be incurred hereunder.

2.5        FOREIGN EXCHANGE SUB-FACILITY

        2.5.1   Foreign Exchange Sub-Facility: The Bank agrees to enter into FX
                Transactions with the Borrower, at the Borrower's request
                therefor made prior to the Expiration Date, provided however,
                that at no time shall the aggregate FX Risk Liability of the
                Borrower exceed the FX Limit, and provided further, at no time
                shall the aggregate FX Risk Liability combined with the total
                face amount of all Letters of Credit outstanding, less any
                partial draws paid by the Bank, together with the total
                principal balance of all Acceptances outstanding, together with
                the total principal amount of all outstanding Advances, exceed
                the Line of Credit. Each FX Transaction shall be used to hedge
                the Borrower's foreign exchange exposure.

                (i)    Requests. Each request for a FX Transaction shall be made
                       by telephone to the Bank's Treasury Department
                       ("Request"), shall specify the Foreign Currency to be
                       purchased or sold, the amount of such Foreign Currency
                       and the Settlement Date. Each Request shall be
                       communicated to the Bank no later than 3:00 p.m.
                       California time on the Business Day on which the FX
                       Transaction is requested.

                (ii)   Tenor. No FX Transaction shall have a Settlement Date
                       which is more than 365 days after the date of entry into
                       such FX Transaction, and provided further, no FX
                       Transaction shall expire on a date which is after the
                       Expiration Date.

                (iii)  Availability. Bank may refuse to enter into a FX
                       Transaction with the Borrower where the Bank, at its sole
                       discretion, determines that (1) the requested Foreign
                       Currency is unavailable, or (2) the Bank is not then
                       dealing in the requested Foreign Currency, or (3) the
                       Bank would be prohibited by any applicable law, rule,
                       regulation or order from purchasing such Foreign
                       Currency.

                (iv)   Payment. Payment is due on the Settlement Date of the
                       relevant FX Transaction. The Bank is hereby authorized by
                       the Borrower to charge the full settlement price of any
                       FX Transaction against the depository account or accounts
                       maintained by the Borrower with the Bank on the
                       Settlement Date. In the event that the Borrower fails to
                       pay the settlement price of any FX Transaction on the
                       Settlement Date or the balances in the depository account
                       or accounts maintained with Bank are insufficient to pay
                       the settlement price, without limiting the rights of Bank
                       hereunder or waiving any Event of Default caused thereby,
                       Bank may, and Borrower hereby authorizes Bank to, create
                       an Advance bearing interest at the Variable Rate to pay
                       the settlement price on the Settlement Date.

                (v)    Increased Costs. Borrower shall within 15 days of the
                       Bnak's written request, promptly pay to and reimburse the
                       Bank for all costs incurred and payments made by the Bank
                       by reason of any assessment, reserve, deposit, capital
                       maintenance or similar requirement or any surcharge, tax
                       or fee imposed upon the Bank or as a result of the Bank's
                       compliance with any directive or requirement of any
                       regulatory authority pertaining or relating to any FX
                       Transaction. Bank shall use its best effort to provide
                       Borrower, in advance, with an estimate of any such costs
                       which may potentially be incurred hereunder

                                      -15-
<PAGE>

                (vi)   Impossibility of Performance. In the event that the
                       Borrower or the Bank cannot perform under a FX
                       Transaction due to force majeure or an act of State or it
                       becomes unlawful or impossible to perform, all in the
                       good faith judgement of the Borrower or the Bank, then
                       upon notice to the other party, the Borrower or the Bank
                       may require the close-out and liquidation of the affected
                       FX Transaction in accordance with the provisions of this
                       Agreement.

2.6     Term Loan and Line Account: The Bank shall maintain on its books a
        record of account in which the Bank shall make entries for each Advance,
        the Term Loan and such other debits and credits as shall be appropriate
        in connection with the Line of Credit and the Term Loan (the "Term Loan
        and Line Account"). The Bank shall provide the Borrower with a statement
        of the Borrower's Term Loan and Line Account, which statement shall be
        considered to be correct and conclusively binding on the Borrower unless
        the Borrower notifies the Bank to the contrary within 30 days after the
        Borrower's receipt of any such statement which it deems to be incorrect.

2.7     Authorization to Charge Account(s): The Borrower hereby authorizes the
        Bank to charge, from time to time, against any or all of the Borrower's
        deposit accounts with the Bank any amount so due under this Agreement,
        including, but not limited to, account # 261535176maintained with the
        Bank's Rosemead Branch.

2.8     Payments: If any payment required to be made by the Borrower hereunder
        becomes due and payable on a day other than a Business Day, the due date
        thereof shall be extended to the next succeeding Business Day and
        interest thereon shall be payable at the then applicable rate during
        such extension. All payments required to be made hereunder shall be made
        to the office of the Bank designated for the receipt of notices herein
        or such other office as Bank shall from time to time designate.

2.9     Late Payment: In addition to any other rights the Bank may have
        hereunder, if any payment of principal or interest or any portion
        thereof, under this Agreement is not paid within 5 days of when due, a
        late payment charge equal to five percent (5%) of such past due payment
        may be assessed and shall be immediately payable.

                                    SECTION

                                       3

                                  COLLATERAL

3.1     The Collateral: To secure payment and performance of all the Borrower's
        Obligations under this Agreement and all other liabilities, loans,
        guarantees, covenants and duties owed by the Borrower to the Bank,
        whether or not evidenced by this or by any other agreement, absolute or
        contingent, due or to become due, now existing or hereafter and
        howsoever created, the Borrower hereby grants the Bank a security
        interest in and to all of the following property ("Collateral"):

                (i)    Equipment. All goods now owned or hereafter acquired by
                       the Borrower or in which the Borrower now has or may
                       hereafter acquire any interest including, but not limited
                       to, all machinery, equipment, furniture, furnishings,
                       fixtures, tools, supplies and motor vehicles of every
                       kind and description, and all additions, accessions,
                       improvements, replacements and substitutions thereto and
                       thereof (the "Equipment") , but excluding the goods of
                       any Foreign Subsidiary,.

                (ii)   Inventory. All inventory now owned or hereafter acquired
                       by the Borrower, including, but not limited to, all raw
                       materials, work in process, finished goods, merchandise,
                       parts and supplies of every kind and description,
                       including inventory temporarily out of the Borrower's
                       custody or possession, together with all returns

                                      -16-
<PAGE>

                       on accounts (the "Inventory") but excluding the inventory
                       of any Foreign Subsidiary,.

                (iii)  Accounts. All accounts, contract rights and general
                       intangibles now owned or hereafter created or acquired by
                       the Borrowerincluding, but not limited to, all
                       receivables, goodwill, trademarks, trademark
                       applications, trade styles, trade names, patents, patent
                       applications, copyrights and copyright applications,
                       customer lists, business records and computer programs,
                       tapes, disks and related data processing software that at
                       any time evidence or contain information relating to any
                       of the Collateral ,but excluding the accounts, contract
                       rights and general intangibles of any Foreign
                       Subsidiary,.

                (iv)   Documents. All documents, instruments and chattel paper
                       now owned or hereafter acquired by the Borrower,
                       including, but not limited to, warehouse and other
                       receipts, bills of sale and bills of lading, but
                       excluding the documents, instruments and chattel paper of
                       any Foreign Subsidiary or any document or instrument that
                       derives its value by reference to either the stock of or
                       the assets of, a Foreign Subsidiary.

                (v)    Monies. All monies, deposit accounts, certificates of
                       deposit and securities of the Borrower now or hereafter
                       in the Bank's or its agents' possession, excluding any
                       interest in accounts and securities of any Foreign
                       Subsidiary.

The Bank's security interest in the Collateral shall be a continuing lien and
shall include the proceeds and products of the Collateral including, but not
limited to, the proceeds of any insurance thereon.

The security interest granted to Bank in the Collateral shall not secure or be
deemed to secure any Indebtedness of the Borrower to the Bank which is, at the
time of its creation, subject to the provisions of any state or federal consumer
credit or truth-in-lending disclosure statutes.

                                    SECTION

                                       4

                             CONDITIONS PRECEDENT

4.1     Conditions Precedent to the Initial Advance: The obligation of the Bank
        to make the initial Advance and the first extension of credit to or on
        account of the Borrower hereunder is subject to the conditions precedent
        that the Bank shall have received before the date of such initial
        Advance and such first extension of credit all of the following, in form
        and substance satisfactory to the Bank:

                (i)    Authority to Borrow. Evidence that the execution,
                       delivery and performance by the Borrower of this
                       Agreement and any document, instrument or agreement
                       required hereunder have been duly authorized.

                (ii)   Guarantors. Continuing guaranties in favor of the Bank
                       executed by the following, together with evidence that
                       the execution, delivery and performance by any guarantor
                       has been duly authorized: UDT Sensors, Inc., Rapiscan
                       Security Products, Inc., Metorex Security Products, Inc.,
                       Silicon Microstructures, Inc., Aristo Medical Products,
                       Inc., OSI Fibercom, Inc., Osteometer, USA Inc. and Ferson
                       Optics, Inc..

                                      -17-
<PAGE>

                (iii)  Fees. A fee of $75,000.00, which includes payment of all
                       of the Bank's out-of-pocket expenses in connection with
                       the preparation and negotiation of this Agreement.

                (iv)   Financing Statements. Executed UCC-1 financing
                       statement(s) describing the Collateral, which have been
                       filed with the Secretary of State or the county recorder
                       as a lien of first priority.

                (v)    Miscellaneous. Such other evidence as the Bank may
                       request to establish the consummation of the transaction
                       contemplated hereunder and compliance with the conditions
                       of this Agreement.

4.2     Conditions Precedent to All Advances: The obligation of the Bank to make
        each Advance and each other extension of credit to or on account of the
        Borrower (including the initial Advance and the first extension of
        credit) shall be subject to the further conditions precedent that, on
        the date of each Advance or each extension of credit and after the
        making of such Advance or extension of credit:

                (i)    Subsequent Approvals. The Bank shall have received such
                       supplemental approvals, opinions or documents as the Bank
                       may reasonably request.

                (ii)   Representations and Warranties. The representations
                       contained in Section 5 and in any other document,
                       instrument or certificate delivered to the Bank hereunder
                       are true, correct and complete.

                (iii)  Event of Default. No event has occurred and is continuing
                       which constitutes, or with the lapse of time or giving of
                       notice or both, would constitute an Event of Default.

                (iv)   Collateral. The security interest in the Collateral has
                       been duly authorized, created and perfected with first
                       priority and is in full force and effect.

The Borrower's acceptance of the proceeds of any loan, advance or extension of
credit or the Borrower's execution of any document or instrument evidencing or
creating any Obligation hereunder shall be deemed to constitute the Borrower's
representation and warranty that all of the above statements are true and
correct.

                                    SECTION

                                       5

                        REPRESENTATIONS AND WARRANTIES

        The Borrower hereby makes the following representations and warranties
to the Bank, which representations and warranties are continuing:

5.1     Status: The Borrower is a corporation duly organized and validly
        existing under the laws of the state of California and is properly
        licensed and is qualified to do business and in good standing in, and,
        where necessary to maintain the Borrower's rights and privileges, has
        complied with the fictitious name statute of every jurisdiction in which
        the Borrower is doing business.

5.2     Authority: The execution, delivery and performance by the Borrower of
        this Agreement and any instrument, document or agreement required
        hereunder have been duly authorized and do not and will not: (i) violate
        any provision of any law, rule, regulation, order, writ, judgment,
        injunction, decree, determination or award presently in effect having
        application to the Borrower; (ii) result in a breach

                                      -18-
<PAGE>

        of or constitute a default under any material indenture or loan or
        credit agreement or other material agreement, lease or instrument to
        which the Borrower is a party or by which it or its properties may be
        bound or affected; or (iii) require any consent or approval of its
        stockholders or violate any provision of its articles of incorporation
        or by-laws.

5.3     Legal Effect: This Agreement constitutes, and any instrument, document
        or agreement required hereunder when delivered hereunder will
        constitute, legal, valid and binding obligations of the Borrower
        enforceable against the Borrower in accordance with their respective
        terms.

5.4     Fictitious Trade Styles: There are no fictitious trade styles used by
        the Borrower in connection with its business operations. The Borrower
        shall notify the Bank not less than 30 days prior to effecting any
        change in the matters described herein or prior to using any other
        fictitious trade style at any future date, indicating the trade style
        and state(s) of its use.

5.5     Financial Statements: All financial statements, information and other
        data which may have been or which may hereafter be submitted by the
        Borrower to the Bank are true, accurate and correct and have been or
        will be prepared in accordance with generally accepted accounting
        principles consistently applied and accurately represent the financial
        condition or, as applicable, the other information disclosed therein.
        Since the most recent submission of such financial information or data
        to the Bank, the Borrower represents and warrants that no material
        adverse change in the Borrower's financial condition or operations has
        occurred which has not been fully disclosed to the Bank in writing.

5.6     Litigation: Except as have been disclosed to the Bank in writing, there
        are no actions, suits or proceedings pending or, to the knowledge of the
        Borrower, threatened against or affecting the Borrower or the Borrower's
        properties before any court or administrative agency which, if
        determined adversely to the Borrower, would have a material adverse
        effect on the Borrower's financial condition or operations or on the
        Collateral.

5.7     Title to Assets: The Borrower has good and marketable title to all of
        its assets (including, but not limited to, the Collateral) and the same
        are not subject to any security interest, encumbrance, lien or claim of
        any third person except for Permitted Liens.

5.8     ERISA: If the Borrower has a pension, profit sharing or retirement plan
        subject to ERISA, such plan has been and will continue to be funded in
        accordance with its terms and otherwise complies with and continues to
        comply with the requirements of ERISA.

5.9     Taxes: The Borrower has filed all tax returns required to be filed and
        paid all taxes shown thereon to be due, including interest and
        penalties, other than such taxes which are currently payable without
        penalty or interest or those which are being duly contested in good
        faith.

5.10    Margin Stock. The proceeds of any loan or advance hereunder will not be
        used to purchase or carry margin stock as such term is defined under
        Regulation U of the Board of Governors of the Federal Reserve System.

5.11    Environmental Compliance. The operations of the Borrower comply, and
        during the term of this Agreement will at all times comply, in all
        respects with all Environmental Laws; the Borrower has obtained all
        licenses, permits, authorizations and registrations required under any
        Environmental Law ("Environmental Permits") and necessary for its
                            ---------------------
        ordinary course operations, all such Environmental Permits are in good
        standing, and the Borrower is in compliance with all material terms and
        conditions of such Environmental Permits; neither the Borrower nor any
        of its present property or operations is subject to any outstanding
        written order from or agreement with any governmental authority nor
        subject to any judicial or docketed administrative proceeding,
        respecting any Environmental Law, Environmental Claim or Hazardous
        Material; there are no Hazardous Materials or other conditions or
        circumstances existing, or arising from operations prior to the date

                                      -19-
<PAGE>

        of this Agreement, with respect to any property of the Borrower that
        would reasonably be expected to give rise to Environmental Claims;
        provided, however, that with respect to property leased from an
        --------
        unrelated third party, the foregoing representation is made to the best
        knowledge of the Borrower. In addition, (i) the Borrower does not have
        any underground storage tanks that are not properly registered or
        permitted under applicable Environmental Laws, or that are leaking or
        disposing of Hazardous Materials off-site, and (ii) the Borrower has
        notified all of their employees of the existence, if any, of any health
        hazard arising from the conditions of their employment and have met all
        notification requirements under Title III of CERCLA and all other
        Environmental Laws.

                                    SECTION

                                       6

                                   COVENANTS

The Borrower covenants and agrees that, during the term of this Agreement, and
so long thereafter as the Borrower is indebted to the Bank under this Agreement,
the Borrower will, unless the Bank shall otherwise consent in writing:

6.1     Reporting and Certification Requirements: Deliver or cause to be
        delivered to the Bank in form and detail satisfactory to the Bank:

                (i)    Not later than 105 days after the end of each of the
                       Borrower's fiscal years, a copy of the annual audited
                       financial report of the Borrower for such year, prepared
                       by a firm of certified public accountants acceptable to
                       Bank and accompanied by an unqualified opinion of such
                       firm, a copy of the Borrower's Securities and Exchange
                       Commission Form 10-K, and a copy of the Borrower's
                       financial projections for the upcoming 3 years.

                (ii)   Not later than 50 days after the end of each fiscal
                       quarter, the Borrower's financial statement as of the end
                       of such period and a copy of the Borrower's Securities
                       and Exchange Commission Form 10-Q.

                (iii)  Concurrently with the delivery of the financial reports
                       required hereunder and following any acquistion permitted
                       under Section 6.4 or stock repurchase under Section 6.10,
                       a compliance certificate stating that the Borrower is in
                       compliance with all covenants contained herein and that
                       no Event of Default or potential Event of Default has
                       occurred or is continuing, and certified to by the chief
                       financial officer of the Borrower.

                (iv)   Promptly upon the Bank's request, such other information
                       pertaining to the Borrower, the Collateral or any
                       guarantor hereunder as the Bank may reasonably request.

6.2     Financial Condition: The Borrower promises and agrees, during the term
        of this Agreement and until payment in full of all of the Borrower's
        Obligations, the Borrower will maintain at all times:

                (i)    Net Worth: A minimum Effective Tangible Net Worth of at
                       least $50,000,000.00.

                (ii)   Quick Ratio: A ratio of the sum of cash, cash equivalents
                       and accounts receivable to Current Liabilities of not
                       less than 1.00 to 1.

                (iii)  Quarterly Losses: Profitability by not allowing any
                       quarterly losses.

                                      -20-
<PAGE>

                (iv)   Funded Debt Ratio: A ratio of Funded Debt to EBITDA of
                       not more than 3.25 to 1 through March 31, 2001, 3.00 to 1
                       at the end of each fiscal quarter through March 31, 2002
                       and 2.50 to 1 at the end of each fiscal quarter
                       thereafter, with EBITDA based upon the immediately
                       preceding three fiscal quarters and the current quarter
                       just ended.

                (v)    Debt Coverage Ratio. A ratio of EBITDA to the sum of
                       interest expense and the current portion of long term
                       Debt of not less than 1.5 to 1, measured at the end of
                       each fiscal quarter based upon the immediately preceding
                       three fiscal quarters and the current quarter just ended.

6.3     Preservation of Existence; Compliance with Applicable Laws: Maintain and
        preserve its existence and all rights and privileges now enjoyed; and
        conduct its business and operations in accordance with all applicable
        laws, rules and regulations.

6.4     Merge or Consolidate: Not liquidate or dissolve, merge or consolidate
        with or into, or acquire any other business organization, other than
        cash acquisitions of up to $500,000.00 in any one fiscal year and stock
        acquisitions of up to $1,000,000.00 in any one fiscal year.

6.5     Maintenance of Insurance: Keep and maintain the Collateral insured for
        not less than its full replacement value against all risks of loss and
        damage and maintain insurance in such amounts and covering such risks as
        is usually carried by companies engaged in similar businesses and owning
        similar properties in the same general areas in which the Borrower
        operates and maintain such other insurance and coverages as may be
        required by the Bank. All such insurance shall be in form and amount and
        with companies satisfactory to the Bank.

        With respect to insurance covering properties in which the Bank
        maintains a security interest or lien, such insurance shall name the
        Bank as loss payee pursuant to a loss payable endorsement satisfactory
        to the Bank and shall not be altered or canceled except upon 10 days'
        prior written notice to the Bank. Upon the Bank's request, the Borrower
        shall furnish the Bank with the original policy or binder of all such
        insurance.

6.6     Maintenance of Collateral and Other Properties: Except for Permitted
        Liens, keep and maintain the Collateral free and clear of all levies,
        liens, encumbrances and security interests (including, but not limited
        to, any lien of attachment, judgment or execution) and defend the
        Collateral against any such levy, lien, encumbrance or security
        interest; comply with all laws, statutes and regulations pertaining to
        the Collateral and its use and operation; execute, file and record such
        statements, notices and agreements, take such actions and obtain such
        certificates and other documents as necessary to perfect, evidence and
        continue the Bank's security interest in the Collateral and the priority
        thereof; maintain accurate and complete records of the Collateral which
        show all sales, claims and allowances; and properly care for, house,
        store and maintain the Collateral in good condition, free of misuse,
        abuse and deterioration, other than normal wear and tear. The Borrower
        shall also maintain and preserve all its properties in good working
        order and condition in accordance with the general practice of other
        businesses of similar character and size, ordinary wear and tear
        excepted.

6.7     Payment of Obligations and Taxes: Make timely payment of all assessments
        and taxes and all of its liabilities and obligations including, but not
        limited to, trade payables, unless the same are being contested in good
        faith by appropriate proceedings with the appropriate court or
        regulatory agency. For purposes hereof, the Borrower's issuance of a
        check, draft or similar instrument without delivery to the intended
        payee shall not constitute payment.

6.8     Inspection Rights and Accounting Records: The Borrower will maintain
        adequate books and records in accordance with generally accepted
        accounting principles consistently applied and in a manner otherwise
        acceptable to Bank, and, at any reasonable time and from time to time,
        permit

                                      -21-
<PAGE>

        the Bank or any representative thereof to examine and make copies of the
        records and visit the properties of the Borrower and discuss the
        business and operations of the Borrower with any employee or
        representative thereof. If the Borrower shall maintain any records
        (including, but not limited to, computer generated records or computer
        programs for the generation of such records) in the possession of a
        third party, the Borrower hereby agrees to notify such third party to
        permit the Bank free access to such records at all reasonable times and
        to provide the Bank with copies of any records which it may request, all
        at the Borrower's expense, the amount of which shall be payable
        immediately upon demand.

6.9     Payment of Dividends: Not declare or pay any dividends on any class of
        stock now or hereafter outstanding except dividends payable solely in
        the Borrower's capital stock.

6.10    Redemption or Repurchase of Stock: Not redeem or repurchase any class of
        the Borrower's stock now or hereafter outstanding, except stock in an
        amount of up to $2,000,000.00 in the aggregate.

6.11    Additional Indebtedness: Not, after the date hereof, create, incur or
        assume, directly or indirectly, any additional Indebtedness other than
        (i) Indebtedness owed or to be owed to the Bank or (ii) Indebtedness to
        trade creditors incurred in the Ordinary Course of Business or (iii)
        Indebtedness owed or to be owed to Wells Fargo HSBC Trade Bank of up to
        $500,000.00 or (iv) Indebtedness owed to Foreign Subsidiaries or (v)
        Indebtedness for equipment financing of up to $1,500,000.00 through June
        30, 2001 and $2,500,000 in any one fiscal year thereafter.

6.12    Loans: Not make any loans or advances or extend credit to any third
        person, including, but not limited to, directors, officers,
        shareholders, partners, employees, affiliated entities and subsidiaries
        of the Borrower, except for credit extended in the Ordinary Course of
        Business as presently conducted and except up to $350,000.00 in the
        aggregate.

6.13    Liens and Encumbrances: Not create, assume or permit to exist any
        security interest, encumbrance, mortgage, deed of trust, or other lien
        (including, but not limited to, a lien of attachment, judgment or
        execution) affecting any of the Borrower's properties, or execute or
        allow to be filed any financing statement or continuation thereof
        affecting any of such properties, except for Permitted Liens or as
        otherwise provided in this Agreement, and except liens and security
        interests associated with Indebtedness of up to $1,500,000.00 through
        June 30, 2001 and $2,500,000 in any one fiscal year thereafter.

6.14    Transfer Assets: Not, after the date hereof, sell, contract for sale,
        convey, transfer, assign, lease or sublet, any of its assets (including,
        but not limited to, the Collateral) except in the Ordinary Course of
        Business and, then, only for full, fair and reasonable consideration.

6.15    Change in Nature of Business: Not make any material change in its
        financial structure or the nature of its business as existing or
        conducted as of the date hereof.

6.16    Compensation of Employees: Compensate its employees for services
        rendered at an hourly rate at least equal to the minimum hourly rate
        prescribed by any applicable federal or state law or regulation.

6.17    Capital Expense: Not make any fixed capital expenditure or any
        commitment therefor, including, but not limited to, incurring liability
        for leases which would be, in accordance with generally accepted
        accounting principles, reported as capital leases, or purchase any real
        or personal property in an aggregate amount exceeding $5,000,000.00 in
        any one fiscal year.

6.18    Notice: Give the Bank prompt written notice of any and all (i) Events of
        Default; (ii) litigation, arbitration or administrative proceedings to
        which the Borrower is a party and in which the claim or liability
        exceeds $500,000.00 or which affects the Collateral; (iii) other matters
        which have resulted

                                      -22-
<PAGE>

        in, or might result in a material adverse change in the Collateral or
        the financial condition or business operations of the Borrower, and (iv)
        any enforcement, cleanup, removal or other governmental or regulatory
        actions instituted, completed or threatened against the Borrower or any
        of its properties.

6.19    Environmental Compliance: The Borrower shall conduct its operations and
        keep and maintain all of its property in compliance with all
        Environmental Laws and, upon the written request of the Bank, the
        Borrower shall submit to the Bank, at the Borrower's sole cost and
        expense, at reasonable intervals, a report providing the status of any
        environmental, health or safety compliance, hazard or liability.

6.20    Inventory:

                (i)    Except as provided herein below, the Borrower's inventory
                       shall, at all times, be in the Borrower's physical
                       possession, shall not be held by others on consignment,
                       sale on approval, or sale or return and shall be kept
                       only at: : 12515,12525,12533,and 12605 Chadron Ave,
                       Hawthorne, California 90250; 3232 West El Segundo Blvd.,
                       Hawthorne, California 90250; 2006 Government Street,
                       Ocean Springs, Mississippi 39564; 9305 W. National, West
                       Allis, Wisconsin 53227; 250 Phillips Boulevard, Ewing,
                       New Jersey, 08618; 630 Brea Canyon Rd., Walnut, CA 91789
                       and 46583 Fremont Boulevard, Fremont, California 94538,
                       except in the ordinary course of business.

                (ii)   The inventory shall not at any time or times hereafter be
                       stored with a bailee, warehouseman or similar party
                       without the Bank's prior written consent and, in such
                       event, the Borrower will concurrently therewith cause any
                       such bailee, warehouseman or similar party to issue and
                       deliver to the Bank, in form acceptable to the Bank,
                       warehouse receipts in the Bank's name evidencing the
                       storage of inventory.

                (iii)  At any reasonable time and from time to time, allow Bank
                       to have the right, upon demand, to inspect and examine
                       inventory and to check and test the same as to quality,
                       quantity, value and condition and the Borrower agrees to
                       reimburse the Bank for the Bank's reasonable costs and
                       expenses in so doing.

6.21    Location and Maintenance of Equipment.:

                (i)    The Equipment shall at all times be in the Borrower's
                       physical possession, shall not be held for sale or lease,
                       and shall be kept only at the following location(s):
                       12515,12525,12533,and 12605 Chadron Ave, Hawthorne,
                       California 90250; 3232 West El Segundo Blvd., Hawthorne,
                       California 90250; 2006 Government Street, Ocean Springs,
                       Mississippi 39564; 9305 W. National, West Allis,
                       Wisconsin 53227; 250 Phillips Boulevard, Ewing, New
                       Jersey, 08618; 630 Brea Canyon Rd., Walnut, CA 91789 and
                       46583 Fremont Boulevard, Fremont, California 94538.
                       except in the ordinary course of subiness.

                       The Borrower shall not secrete, abandon or remove, or
                       permit the removal of, the Equipment, or any part
                       thereof, from the location(s) shown above or remove or

                                      -23-
<PAGE>

                       permit to be removed any accessories now or hereafter
                       placed upon the Equipment.

                (ii)   Upon the Bank's demand, the Borrower shall immediately
                       provide the Bank with a complete and accurate description
                       of the Equipment including, as applicable, the make,
                       model, identification number and serial number of each
                       item of Equipment. In addition, the Borrower shall
                       immediately notify the Bank of the acquisition of any new
                       or additional Equipment or the replacement of any
                       existing Equipment and shall supply the Bank with a
                       complete description of any such additional or
                       replacement Equipment.

                (iii)  The Borrower shall, at the Borrower's sole cost and
                       expense, keep and maintain the Equipment in a good state
                       of repair and shall not destroy, misuse, abuse, illegally
                       use or be negligent in the care of the Equipment or any
                       part thereof. The Borrower shall not remove, destroy,
                       obliterate, change, cover, paint, deface or alter the
                       name plates, serial numbers, labels or other
                       distinguishing numbers or identification marks placed
                       upon the Equipment or any part thereof by or on behalf of
                       the manufacturer, any dealer or rebuilder thereof, or the
                       Bank. The Borrower shall not be released from any
                       liability to the Bank hereunder because of any injury to
                       or loss or destruction of the Equipment. The Borrower
                       shall allow the Bank and its representatives free access
                       to and the right to inspect the Equipment at all times
                       during normal business hours and upon reasonable notice
                       and shall comply with the terms and conditions of any
                       leases covering the real property on which the Equipment
                       is located and any orders, ordinances, laws, regulations
                       or rules of any federal, state or municipal agency or
                       authority having jurisdiction of such real property or
                       the conduct of the business of the persons having control
                       or possession of the Equipment.

                (iv)   The Equipment is not now and shall not at any time
                       hereafter be so affixed to the real property on which it
                       is located as to become a fixture or a part thereof. The
                       Equipment is now and shall at all times hereafter be and
                       remain personal property of the Borrower.

                                    SECTION

                                       7

                               EVENTS OF DEFAULT

        Any one or more of the following described events shall constitute an
        event of default (an "Event of Default") under this Agreement:

7.1     Non-Payment: Any Borrower shall fail to pay the principal amount of any
        Obligations when due or interest on the Obligations within 5 days of
        when due.

7.2     Performance Under This Agreement: The Borrowers or any Guarantor shall
        fail in any material respect to perform or observe any term, covenant or
        agreement contained in this Agreement or in any document, instrument or
        agreement relating to this Agreement or any other document or agreement
        executed by the Borrowers or any Guarantor with or in favor of Bank and
        any such failure shall continue unremedied for more than 30 days after
        the occurrence thereof.

7.3     Representations and Warranties; Financial Statements: Any representation
        or warranty made by the Borrower under or in connection with this
        Agreement or any financial statement given by the Borrower or any
        guarantor shall prove to have been incorrect in any material respect
        when made or given or when deemed to have been made or given.

                                      -24-
<PAGE>

7.4     Other Agreements: If there is a default under any agreement to which
        Borrower is a party with Bank or with a third party or parties resulting
        in a right by the Bank or by such third party or parties, whether or not
        exercised, to accelerate the maturity of any Indebtedness in an amount
        in excess of $250,000.00.

7.5     Insolvency: The Borrower or any guarantor shall: (i) become insolvent or
        be unable to pay its debts as they mature; (ii) make an assignment for
        the benefit of creditors or to an agent authorized to liquidate any
        substantial amount of its properties and assets; (iii) file a voluntary
        petition in bankruptcy or seeking reorganization or to effect a plan or
        other arrangement with creditors; (iv) file an answer admitting the
        material allegations of an involuntary petition relating to bankruptcy
        or reorganization or join in any such petition; (v) become or be
        adjudicated a bankrupt; (vi) apply for or consent to the appointment of,
        or consent that an order be made, appointing any receiver, custodian or
        trustee, for itself or any of its properties, assets or businesses; or
        (vii) in an involuntary proceeding, any receiver, custodian or trustee
        shall have been appointed for all or substantial part of the Borrower's
        or guarantor's properties, assets or businesses and shall not be
        discharged within 30 days after the date of such appointment.

7.6     Execution: Any writ of execution or attachment or any judgment lien
        shall be issued against any property of the Borrower in an amount in
        excess of $250,000.00 and shall not be discharged or bonded against or
        released within 30 days after the issuance or attachment of such writ or
        lien.

7.7     Revocation or Limitation of Guaranty: Any guaranty shall be revoked or
        limited or its enforceability or validity shall be contested by any
        guarantor, by operation of law, legal proceeding or otherwise or any
        guarantor who is a natural person shall die.

7.8     Suspension: The Borrower shall voluntarily suspend the transaction of
        business or allow to be suspended, terminated, revoked or expired any
        permit, license or approval of any governmental body necessary to
        conduct the Borrower's business as now conducted.

7.10    Impairment of Collateral. There shall occur any injury or damage to all
        or substantially all of the Collateral or all or substantially all of
        the Collateral shall be lost, stolen or destroyed.

                                    SECTION

                                       8

                              REMEDIES ON DEFAULT

Upon the occurrence of any Event of Default, the Bank may, at its sole and
absolute election, without demand and only upon such notice as may be required
by law:

8.1     Acceleration: Declare any or all of the Borrower's indebtedness owing to
        the Bank, whether under this Agreement or any other document, instrument
        or agreement, immediately due and payable, whether or not otherwise due
        and payable.

8.2     Cease Extending Credit: Cease making Advances or otherwise extending
        credit to or for the account of the Borrower under this Agreement or
        under any other agreement now existing or hereafter entered into between
        the Borrower and the Bank.

                                      -25-
<PAGE>

8.3     Termination: Terminate this Agreement as to any future obligation of the
        Bank without affecting the Borrower's obligations to the Bank or the
        Bank's rights and remedies under this Agreement or under any other
        document, instrument or agreement.

8.4     Letters of Credit: Require the Borrower to pay immediately to the Bank,
        for application against drawings under any outstanding Letters of
        Credit, the outstanding principal amount of any such Letters of Credit
        which have not expired. Any portion of the amount so paid to the Bank
        which is not applied to satisfy draws under any such Letters of Credit
        or any other obligations of the Borrower to the Bank shall be repaid to
        the Borrower without interest.

8.5     Acceptances: Require the Borrower to pay immediately to the Bank, for
        application against outstanding Acceptances, the outstanding principal
        amount of any such Acceptances which have not matured. Any portion of
        the amount so paid to the Bank which is not applied to repayments on any
        such matured Acceptances or any other obligations of the Borrower to the
        Bank shall be repaid to the Borrower.

8.6     Close-Out and Liquidation: Close-out and liquidate each outstanding FX
        Transaction so that each FX Transaction is canceled in accordance with
        the following:

                (i)    Closing Value. The Bank shall calculate value of such
                       canceled FX Transaction by converting (1) in the case of
                       a FX Transaction whose Settlement Date is the same as or
                       later than the Close-Out Date, the amount of Foreign
                       Currency into US dollars at a rate of exchange at which
                       the Bank can buy or sell US dollars with or against the
                       Foreign Currency for delivery on the Settlement Date of
                       the relevant FX Transaction; or (2) in the case of a FX
                       Transaction whose Settlement Date precedes the Close-Out
                       Date, the amount of the Foreign Currency adjusted by
                       adding interest with respect thereto at the Variable Rate
                       from the Settlement Date to the Close-Out Date, into US
                       Dollars at a rate of exchange at which the Bank can buy
                       or sell US dollars with or against the Foreign Currency
                       for delivery on the Close-Out Date.

                (ii)   Closing Gain or Loss. (1) For a FX Transaction for which
                       the Bank agreed to purchase a Foreign Currency, the
                       amount by which the Closing Value exceeds the Notional
                       Value shall be a Closing Loss and the amount by which the
                       Closing Value is less than the Notional Value shall be a
                       Closing Gain; and (2) For a FX Transaction for which the
                       Bank agreed to sell a Foreign Currency, the amount by
                       which the Closing Value exceeds the Notional Value shall
                       be a Closing Gain and the amount by which the Closing
                       Value is less than the Notional Value shall be a Closing
                       Loss.

                (iii)  Net Present Value. The Closing Gain or Closing Loss for
                       each Settlement Date falling after the Close-out Date
                       will be discounted by the Bank to it net present value.

                (iv)   Payment. To the extent that the net amount of the
                       aggregate Closing Gains exceeds the Closing Losses, such
                       amount shall be payable by the Bank to the Borrower. To
                       the extent that the aggregate net amount of the Closing
                       Losses exceeds the Closing Gains, such amount shall be
                       payable by the Borrower to the Bank.

8.7     Protection of Security Interest: Make such payments and do such acts as
        the Bank, in its sole judgment, considers necessary and reasonable to
        protect its security interest or lien in the Collateral. The Borrower
        hereby irrevocably authorizes the Bank to pay, purchase, contest or
        compromise any encumbrance, lien or claim which the Bank, in its sole
        judgment, deems to be prior or superior to its security interest.
        Further, the Borrower hereby agrees to pay to the Bank, upon

                                      -26-
<PAGE>

        demand therefor, all expenses and expenditures (including attorneys'
        fees) incurred in connection with the foregoing.

8.8     Foreclosure: Enforce any security interest or lien given or provided for
        under this Agreement or under any security agreement, mortgage, deed of
        trust or other document, in such manner and such order, as to all or any
        part of the properties subject to such security interest or lien, as the
        Bank, in its sole judgment, deems to be necessary or appropriate and the
        Borrower hereby waives any and all rights, obligations or defenses now
        or hereafter established by law relating to the foregoing. In the
        enforcement of its security interest or lien, the Bank is authorized to
        enter upon the premises where any Collateral is located and take
        possession of the Collateral or any part thereof, together with the
        Borrower's records pertaining thereto, or the Bank may require the
        Borrower to assemble the Collateral and records pertaining thereto and
        make such Collateral and records available to the Bank at a place
        designated by the Bank. The Bank may sell the Collateral or any portions
        thereof, together with all additions, accessions and accessories
        thereto, giving only such notices and following only such procedures as
        are required by law, at either a public or private sale, or both, with
        or without having the Collateral present at the time of the sale, which
        sale shall be on such terms and conditions and conducted in such manner
        as the Bank determines in its sole judgment to be commercially
        reasonable. Any deficiency which exists after the disposition or
        liquidation of the Collateral shall be a continuing liability of the
        Borrower to the Bank and shall be immediately paid by the Borrower to
        the Bank.

8.9     Non-Exclusivity of Remedies: Exercise one or more of the Bank's rights
        set forth herein or seek such other rights or pursue such other remedies
        as may be provided by law, in equity or in any other agreement now
        existing or hereafter entered into between the Borrower and the Bank, or
        otherwise.

8.10    Application of Proceeds: All amounts received by the Bank as proceeds
        from the disposition or liquidation of the Collateral shall be applied
        to the Borrower's indebtedness to the Bank as follows: first, to the
        costs and expenses of collection, enforcement, protection and
        preservation of the Bank's lien in the Collateral, including court costs
        and reasonable attorneys' fees, whether or not suit is commenced by the
        Bank; next, to those costs and expenses incurred by the Bank in
        protecting, preserving, enforcing, collecting, liquidating, selling or
        disposing of the Collateral; next, to the payment of accrued and unpaid
        interest on all of the Obligations; next, to the payment of the
        outstanding principal balance of the Obligations; and last, to the
        payment of any other indebtedness owed by the Borrower to the Bank. Any
        excess Collateral and excess proceeds existing after the disposition or
        liquidation of the collateral will be returned or paid by the Bank to
        the Borrower.

                                    SECTION

                                       9

                                 MISCELLANEOUS

9.1     Amounts Payable on Demand: If the Borrower shall fail to pay on demand
        any amount so payable under this Agreement, the Bank may, at its option
        and without any obligation to do so and without waiving any default
        occasioned by the Borrower having so failed to pay such amount, create
        an Advance under this Agreement in an amount equal to the amount so
        payable, which Advance shall thereafter bear interest as provided
        hereunder.

9.2     Default Interest Rate: If an Event of Default, or an event which, with
        notice or passage of time could become an Event of Default, has occurred
        or is continuing, the Borrower shall pay to the Bank interest on any
        Indebtedness or amount payable under this Agreement at a rate which is
        3% in excess of the rate or rates then in effect under this Agreement.

                                      -27-
<PAGE>

9.3     Reliance and Further Assurances: Each warranty, representation,
        covenant, obligation and agreement contained in this Agreement shall be
        conclusively presumed to have been relied upon by the Bank regardless of
        any investigation made or information possessed by the Bank and shall be
        cumulative and in addition to any other warranties, representations,
        covenants and agreements which the Borrower now or hereafter shall give,
        or cause to be given, to the Bank. Borrower agrees to execute all
        documents and instruments and to perform such acts as the Bank may
        reasonably deem necessary to confirm and secure to the Bank all rights
        and remedies conferred upon the Bank by this agreement and all other
        documents related thereto.

9.4     Attorneys' Fees: Borrower shall pay to the Bank all costs and expenses,
        including but not limited to reasonable attorneys fees, incurred by Bank
        in connection with the enforcement, including any bankruptcy, appeal or
        the enforcement of any judgment or any refinancing or restructuring of
        this Agreement or any document, instrument or agreement executed with
        respect to, evidencing or securing the indebtedness hereunder.

9.5     Notices: All notices, payments, requests, information and demands which
        either party hereto may desire, or may be required to give or make to
        the other party hereto, shall be given or made to such party by hand
        delivery or through deposit in the United States mail, postage prepaid,
        or by facsimile delivery, or to such other address as may be specified
        from time to time in writing by either party to the other.

        To the Borrower:                         To the Bank:

        OSI SYSTEMS, INC.                        SANWA BANK CALIFORNIA
        12525 Chadron Ave.                       Rosemead Office (CBC)
        Hawthorne, CA 90250                      9000 East Valley Boulevard
        Attn:  Ajay Mehra                        Rosemead, CA 91770
        FAX:  (   )    -                         Attn:  Gregg M. Hessick
                                                 FAX:  (626) 315-5751
        With a copy to:

        Richman, Mann Chizever, Phillips & Duboff, P.C.
        Attn: Allan B. Duboff, Esq.
        9601 Wilshire Blvd., Penthouse
        Beverly Hills, CA 90210
        FAX (310) 274-2831

9.6     Waiver: Neither the failure nor delay by the Bank in exercising any
        right hereunder or under any document, instrument or agreement mentioned
        herein shall operate as a waiver thereof, nor shall any single or
        partial exercise of any right hereunder or under any other document,
        instrument or agreement mentioned herein preclude other or further
        exercise thereof or the exercise of any other right; nor shall any
        waiver of any right or default hereunder, or under any other document,
        instrument or agreement mentioned herein, constitute a waiver of any
        other right or default or constitute a waiver of any other default of
        the same or any other term or provision.

9.7     Conflicting Provisions: To the extent the provisions contained in this
        Agreement are inconsistent with those contained in any other document,
        instrument or agreement executed pursuant hereto, the terms and
        provisions contained herein shall control. Otherwise, such provisions
        shall be considered cumulative.

9.8     Binding Effect; Assignment: This Agreement shall be binding upon and
        inure to the benefit of the Borrower and the Bank and their respective
        successors and assigns, except that the Borrower shall not have the
        right to assign its rights hereunder or any interest herein without the
        prior written consent of the Bank. The Bank may sell, assign or grant
        participation in all or any portion of its

                                      -28-
<PAGE>

        rights and benefits hereunder. The Borrower agrees that, in connection
        with any such sale, grant or assignment, the Bank may deliver to the
        prospective buyer, participant or assignee financial statements and
        other relevant information relating to the Borrower and any guarantor.

9.9     Jurisdiction: This Agreement, any notes issued hereunder, the rights of
        the parties hereunder to and concerning the Collateral, and any
        documents, instruments or agreements mentioned or referred to herein
        shall be governed by and construed according to the laws of the State of
        California without regard to conflict of law principles, to the
        jurisdiction of whose courts the parties hereby submit.

9.10    Waiver of Jury Trial: THE BORROWER AND THE BANK EACH WAIVE THEIR
        RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION
        BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER
        LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN
        ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF
        THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO
        CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE BORROWER AND THE BANK
        EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A
        COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES
        FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED
        BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER
        PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY
        OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY
        PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
        AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND
        THE OTHER LOAN DOCUMENTS.

9.11    Telephone Recording: The Borrower agrees that the Bank may
        electronically record all telephone conversations between the Borrower
        and the Bank with respect to any FX Transaction and that any such
        recording may be submitted in evidence in any arbitration or other legal
        proceeding. Such recording shall be deemed to be conclusive evidence as
        to the terms of any FX Transaction in the event of a dispute.

9.12    Counterparts: This Agreement may be executed in any number of
        counterparts and all such counterparts taken together shall be deemed to
        constitute one and the same instrument.

9.13    Headings: The headings herein set forth are solely for the purpose of
        identification and have no legal significance.

9.14    Entire Agreement and Amendments: This Agreement and all documents,
        instruments and agreements mentioned herein constitute the entire and
        complete understanding of the parties with respect to the transactions
        contemplated hereunder. All previous conversations, memoranda and
        writings between the parties pertaining to the transactions contemplated
        hereunder not incorporated or referenced in this Agreement or in such
        documents, instruments and agreements are superseded hereby. This
        Agreement may be amended only by an instrument in writing signed by the
        Borrower and the Bank.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first hereinabove written.

                                      -29-
<PAGE>

BANK:                                        BORROWER:

SANWA BANK CALIFORNIA                        OSI SYSTEMS, INC.

BY: /s/ Gregg M. Hessick                     BY:  /s/ Ajay Mehra
   ------------------------------------         -------------------------------
NAME: Gregg M. Hessick,                      NAME: Ajay Mehra,
      Vice President                               Chief Financial Officer

                                      -30-<PAGE>

                                                                    EXHIBIT 10.1

THESE SECURITIES AND THE SECURITIES ISSUABLE UPON THEIR EXERCISE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED UNLESS
COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT, OR AN OPINION OF
COUNSEL SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY SUCH TRANSFER IS
EXEMPT FROM SUCH REGISTRATION.

                              PCSUPPORT.COM, INC.
                                    WARRANT
                        FOR THE PURCHASE OF COMMON STOCK

     1.  Issuance.  For value received, the receipt of which is hereby
         --------
acknowledged by PCSupport.com, Inc., a Nevada corporation (the "Company"),
Meditor Capital Management (Bermuda) Limited, or registered assigns (the
"Holder"), is hereby granted the right to purchase, at any time until January
11, 2004 (the "Expiration Date"), SEVEN HUNDRED THOUSAND (700,000) fully paid
and nonassessable shares of the Company's common stock, par value $.001 (the
"Common Stock"), at the exercise price of $1.00 per share (the "Exercise
Price").

     2.  Procedure for Exercise.  Upon surrender of this Warrant with the
         ----------------------
annexed Notice of Exercise Form duly executed, together with payment of the
Exercise Price for the shares of Common Stock purchased, the Holder shall be
entitled to receive a certificate or certificates for the shares of Common Stock
so purchased.

     3.  Reservation of Shares.  The Company hereby agrees that at all times
         ---------------------
during the term of this Warrant there shall be reserved for issuance upon
exercise of this Warrant such number of shares of its Common Stock as shall be
required for issuance upon exercise of this Warrant (the "Warrant Shares").

     4.  Mutilation or Loss of Warrant.  Upon receipt by the Company of evidence
         -----------------------------
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and (in the case of loss, theft or destruction) receipt of reasonably
satisfactory indemnification, and (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will execute and deliver a new warrant
of like tenor and date and any such lost, stolen, destroyed or mutilated Warrant
shall thereupon become void.

     5.  No Rights as Shareholder.  The Holder shall not, by virtue hereof, be
         ------------------------
entitled to any rights of a shareholder of the Company, either at law or in
equity, and the rights of the Holder are limited to those expressed in this
Warrant and are not enforceable against the Company except to the extent set
forth herein.

     6.  Effect of Certain Transactions
         ------------------------------

         6.1  Adjustments for Stock Splits, Stock Dividends Etc.  If the number
              -------------------------------------------------
of outstanding shares of Common Stock of the Company are increased or decreased
by a stock split, reverse stock split, stock dividend, stock combination,
recapitalization or the like, the Exercise Price and the number of shares
purchasable pursuant to this Warrant shall be adjusted proportionately so that
the ratio of (i) the aggregate number of shares purchasable by exercise of this
Warrant to (ii) the total number of shares outstanding immediately following
such stock split, reverse stock split, stock dividend, stock combination,
recapitalization or the like shall remain
<PAGE>

unchanged, and the aggregate purchase price of shares issuable pursuant to this
Warrant shall remain unchanged.

         6.2  Expiration Upon Certain Transactions.  If at any time the Company
              ------------------------------------
engages in a merger or consolidation of the Company in which the Company will
not survive and in which holders of the Company's Common Stock will receive
consideration at or above the Exercise Price, as adjusted, then this Warrant
will terminate 10 days from the Holder's receipt of written notice ("Notice")
from the Company of the completion of such a transaction.  The Notice will
inform the Holder that the Warrant will terminate 10 days from the Holder's
receipt of the Notice.  The Holder may exercise this Warrant within the 10-day
period pursuant to Section 2.

         6.3  Adjustments for Reorganization, Mergers, Consolidations or Sales
              ----------------------------------------------------------------
of Assets.  If at any time there is a capital reorganization of the Common Stock
---------
(other than a recapitalization, combination, or the like provided for elsewhere
in this Section 6) or merger or consolidation of the Company with another
corporation (other than one covered by Section 6.2), or the sale of all or
substantially all of the Company's properties and assets to any other person,
then, as a part of such reorganization, merger, consolidation or sale, provision
shall be made so that the Holder shall thereafter be entitled to receive upon
exercise of this Warrant (and only to the extent this Warrant is exercised), the
number of shares of stock or other securities or property of the Company, or of
the successor corporation resulting from such merger or consolidation or sale,
to which a holder of Common Stock, or other securities, deliverable upon the
exercise of this Warrant would otherwise have been entitled on such capital
reorganization, merger, consolidation or sale.  In any such case, appropriate
adjustments shall be made in the application of the provisions of this Section 6
(including adjustment of the Exercise Price then in effect and number of Warrant
Shares purchasable upon exercise of this Warrant) which shall be applicable
after such events.

     7.  Transfer to Comply with the Securities Act.  This Warrant has not been
         ------------------------------------------
registered under the Securities Act of 1933, as amended, (the "Securities Act")
and has been issued to the Holder for investment and not with a view to the
distribution of either the Warrant or the Warrant Shares.  Neither this Warrant
nor any of the Warrant Shares or any other security issued or upon exercise of
this Warrant may be sold, transferred, pledged or hypothecated in the absence of
an effective registration statement under the Act relating to such security or
an opinion of counsel satisfactory to the Company that registration is not
required under the Act.  Each certificate for the Warrant, the Warrant Shares
and any other security issued or issuable upon exercise of this Warrant shall
contain a legend in form and substance satisfactory to counsel for the Company,
setting forth the restrictions on transfer contained in this Section.

     8.  Registration Rights.
         -------------------

         8.1  The Company shall use its commercially reasonable best efforts to
effect the registration of the Warrant Shares, at the earlier of the following
events: (i) the registration of the shares of Common Stock to be issued as part
of the "Nasdaq Financing," as defined in the engagement letter dated as of March
21, 2000 by and between the Company and ICE Holdings North America, LLC; or (ii)
the acquisition of all of the Warrant Shares by the Holder.  Unless and until
the Nasdaq Financing occurs or the Holder acquires all of the Warrant Shares,
the Company shall have no obligation whatsoever to register the Warrant Shares.

                                       2
<PAGE>

         8.2  If and whenever the Company is under an obligation pursuant to the
provisions of this Agreement to use its commercially reasonable best efforts to
effect the registration of any Warrant Shares, the Company shall, as
expeditiously as practicable:

     (a) use its commercially reasonable best efforts to cause a registration
statement that registers such Warrant Shares to become and remain effective for
a period of two years or until all of such Warrant Shares have been disposed of
(if earlier) (it being understood that the Company may discontinue any
registration);

     (b) furnish, at least five business days before filing a registration
statement that registers such Warrant Shares, a prospectus relating thereto or
any amendments or supplements relating to such a registration statement or
prospectus, to one counsel selected by the Holder (the "Holder's Counsel"),
copies of all such documents proposed to be filed (it being understood that such
five business-day period need not apply to successive drafts of the same
document proposed to be filed so long as such successive drafts are supplied to
the Holder's Counsel in advance of the proposed filing by a period of time that
is customary and reasonable under the circumstances);

     (c) prepare and file with the Securities and Exchange Commission (the
"Commission") such amendments and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective for at least a period of two years or until all
of such Warrant Shares have been disposed of (if earlier) and to comply with the
provisions of the Securities Act with respect to the sale or other disposition
of such Warrant Shares (it being understood that the Company may discontinue any
registration);

     (d) notify in writing the Holder's Counsel promptly (i) of the receipt by
the Company of any notification with respect to the issuance by the Commission
of any stop order suspending the effectiveness of such registration statement or
prospectus or any amendment or supplement thereto or the initiation or
threatening of any proceeding for that purpose and (ii) of the receipt by the
Company of any notification with respect to the suspension of the qualification
of such Warrant Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purposes;

     (e) use its commercially reasonable best efforts to register or qualify
such Warrant Shares under such other securities or blue sky laws of such
jurisdictions as the Holder reasonably requests and do any and all other acts
and things which may be reasonably necessary or advisable to enable the Holder
to consummate the disposition in such jurisdictions of the Warrant Shares owned
by the Holder; provided, however, that the Company will not be required to
               --------  -------
qualify generally to do business, subject itself to general taxation or consent
to general service of process in any jurisdiction where it would not otherwise
be required to do so but for this paragraph (e) or to provide any material
undertaking or make any changes in its bylaws or Articles of Incorporation which
the Board of Directors determines to be contrary to the best interests of the
Company;

     (f) furnish to the Holder such number of copies of a summary prospectus, if
any, or other prospectus, including a preliminary prospectus, in conformity with
the requirements of the Securities Act, and such other documents as the Holder
may reasonably request in order to facilitate the public sale or other
disposition of such Warrant Shares;

     (g) use its commercially reasonable best efforts to cause such Warrant
Shares to be registered with or approved by such other governmental agencies or
authorities as may be

                                       3
<PAGE>

necessary by virtue of the business and operations of the Company to enable the
Holder holding such Warrant Shares to consummate the disposition of such Warrant
Shares;

     (h) notify the Holder on a timely basis at any time when a prospectus
relating to such Warrant Shares is required to be delivered under the Securities
Act within the appropriate period mentioned in subparagraph (a) of this Section
8.2, of the happening of any event as a result of which the prospectus included
in such registration statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances then existing and, at the request of the Holder, prepare
and furnish to the Holder a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the offerees of such shares, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing;

     (i) subject to the execution of confidentiality agreements in form and
substance satisfactory to the Company, make available upon reasonable notice and
during normal business hours, for inspection by the Holder, any underwriter
participating in any disposition pursuant to such registration statement and any
attorney, accountant or other agent retained by the Holder or underwriter
(collectively, the "Inspectors"), all pertinent financial and other records,
pertinent corporate documents and properties of the Company (collectively, the
"Records"), as shall be reasonably necessary to enable them to exercise their
due diligence responsibility, and cause the Company's officers, directors and
employees to supply all information (together with the Records, the
"Information") reasonably requested by any such Inspector in connection with
such registration statement.  Any of the Information which the Company
determines in good faith to be confidential, and of which determination the
Inspectors are so notified, shall not be disclosed by the Inspectors unless (i)
the disclosure of such Information is necessary to avoid or correct a
misstatement or omission in the registration statement, (ii) the release of such
Information is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction or (iii) such Information has been made generally
available to the public; the Holder agrees that he/she/it will, upon learning
that disclosure of such Information is sought in a court of competent
jurisdiction, give notice to the Company and allow the Company, at the Company's
expense, to undertake appropriate action to prevent disclosure of the
Information deemed confidential;

     (j) use its commercially reasonable best efforts to obtain from its
independent certified public accountants "cold comfort" letters in customary
form and at customary times and covering matters of the type customarily covered
by cold comfort letters;

     (k) use its commercially reasonable best efforts to obtain from its counsel
an opinion or opinions in customary form;

     (l) issue to any underwriter to which the Holder may sell shares in such
offering certificates evidencing such Warrant Shares;

     (m) otherwise use its commercially reasonable best efforts to comply with
all applicable rules and regulations of the Commission and make available to the
Holder, as soon as reasonably practicable, earnings statements (which need not
be audited) covering a period of 12 months beginning within three months after
the effective date of the registration statement, which earnings statements
shall satisfy the provisions of Section 11(a) of the Securities Act; and

                                       4
<PAGE>

     (n) use its commercially reasonable best efforts to take all other steps
necessary to effect the registration of such Warrant Shares contemplated hereby.

     Each holder of the Warrant Shares, upon receipt of any notice from the
Company of any event of the kind described in Section 8.2(h) hereof, shall
forthwith discontinue disposition of the Warrant Shares pursuant to the
registration statement covering such Warrant Shares until such holder's receipt
of the copies of the supplemented or amended prospectus contemplated by Section
8.2(h) hereof, and, if so directed by the Company, such holder shall deliver to
the Company all copies, other than permanent file copies then in such holder's
possession, of the prospectus covering such Warrant Shares at the time of
receipt of such notice.

     9.  Notices.  Any notice or other communication required or permitted
         -------
hereunder shall be in writing and shall be delivered personally or sent by
certified, registered or express mail, postage pre-paid. Any such notice shall
be deemed given when so delivered personally, or if mailed, two days after the
date of deposit in the United States mails, as follows:

         If to the Company, to:

              PCSupport.com, Inc.
              3605 Gilmore Way, Suite 300
              Burnaby, British Columbia, Canada V5G 4X5
              Attention:  David W. Rowat, Vice President and Chief
              Financial Officer

         With a copy to:

              Troy & Gould Professional Corporation
              1801 Century Park East, 16th Floor
              Los Angeles, CA 90067
              Attention:  Sanford J. Hillsberg, Esq.

         If to the Holder, to:

              Meditor Capital Management (Bermuda) Limited
              79 Front Street
              Hamilton, Bermuda
              Attention: Ms. S. Shakerchi

         With a copy to:

              Meditor Capital Management Limited
              37th Floor, Tower 42
              25 Old Broad Street
              London, UK EC2N 1HQ
              Attention: Mr. P. Gartside

Any party may designate another address or person for receipt of notices
hereunder by notice given to the other parties in accordance with this Section.

                                       5
<PAGE>

     10.  Supplements and Amendments; Whole Agreement.  This Warrant may be
          -------------------------------------------
amended or supplemented only by an instrument in writing signed by the parties
hereto. This Warrant contains the full understanding of the parties hereto with
respect to the subject matter hereof, and there are no representations,
warranties, agreements or understandings other than expressly contained herein.

     11.  Governing Law.  This Warrant shall be deemed to be a contract made
          -------------
under the laws of the State of Nevada and for all purposes shall be governed by
and construed in accordance with the laws of such State applicable to contracts
to be made and performed entirely within such State.

     12.  Counterparts.  This Warrant may be executed in any number of
          ------------
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.

     13.  Descriptive Headings.  Descriptive headings of the several Sections
          --------------------
of this Warrant are inserted for convenience only and shall not control or
affect the meaning or construction of any of the provisions hereof.

     14.  Assignability.  This Warrant or any part thereof may be hereafter
          -------------
assigned by the Holder to any accredited investor executing documents reasonably
required by the Company. Any such assignment shall be binding on the Company and
shall inure to the benefit of any such assignee.

                           [Signature page follows.]

                                       6
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of
January 11, 2001.

                              PCSUPPORT.COM, INC.

                              By:     /s/ David W. Rowat
                                  ----------------------------------------------

                              Name: David W. Rowat
                              Title:  Vice President and Chief Financial Officer

                                       7
<PAGE>

                         NOTICE OF EXERCISE OF WARRANT

     The undersigned hereby irrevocably elects to exercise the right,
represented by the Warrant dated as of _______________________________ to
purchase _____________ shares of the Common Stock of PCSupport.com, Inc., and
tenders herewith payment in accordance with Section 2 of the Common Stock
Purchase Warrant.

     Please deliver the stock certificate to:
     _______________________________________________
     _______________________________________________
     _______________________________________________

Dated:_____________________________

By:________________________________

                                       8

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