Document:

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                                                                    EXHIBIT 10.8

                            THREE-FIVE SYSTEMS, INC.
                   AMENDED AND RESTATED 1998 STOCK OPTION PLAN
               (AS AMENDED AND RESTATED THROUGH FEBRUARY 8, 2002)

         1. ADOPTION. On January 29, 1997, the Board of Directors (the "Board")
of Three-Five Systems, Inc., a Delaware corporation (the Company"), adopted the
1998 Stock Option Plan (the "Original Plan"). The stockholders of the Company
approved the Original Plan on April 23, 1998. On January 28, 1999, the Board
amended the Original Plan in order to increase the number of available shares
for issuance under the Plan by 250,000 shares. Such amendments were approved by
the stockholders of the Company at the annual meeting on April 22, 1999. On
April 22, 1999, the Board again amended and restated the Plan in order to
provide for a restriction as to the repricing of shares issued under the Plan.
On February 1, 2001, the Plan was restated to account for stock dividends
declared by the Company in December 1999 and April 2000. Such additional
amendments and restatements did not require stockholder approval. On February 8,
2002 the Board amended the plan to increase the number of shares available for
issuance under the plan to 1,600,000, and the stockholders approved such
amendment on May 3, 2002. This amended and restated plan, fully incorporating
the revisions made on April 22, 1999, February 1, 2001, and February 8, 2002, is
referred to herein as the "Revised Plan." The Revised Plan shall be known as the
Three-Five Systems, Inc. Amended and Restated 1998 Stock Option Plan (the
"Plan"). When applicable, the term "Plan" shall include the Original Plan, as
previously amended, and/or the Revised Plan.

         2. PURPOSE. The purpose of this 1998 Stock Option Plan (the "Plan") is
to attract, retain and motivate employees, independent contractors and
non-employee board members by providing them with the opportunity to acquire a
proprietary interest in the Company and to link their interests and efforts to
the long-term interests of the Company's stockholders.

         3. PLAN ADMINISTRATION

         3.1 IN GENERAL. The Plan shall be administered by the Company's Board
of Directors (the "Board"). Except for the power to amend the Plan as provided
in Section 12, the Board, in its sole discretion, may delegate its authority and
duties under the Plan to one or more committees appointed by the Board, under
such conditions and limitations as the Board may from time to time establish.
The Board and/or any committee that has been delegated the authority to
administer the Plan shall be referred to as the "Plan Administrator." Except as
otherwise explicitly set forth in the Plan, the Plan Administrator shall have
the authority, in its discretion, to determine all matters relating to options
granted under the Plan, including selection of the individuals to be granted
options, the type of options granted, the number of shares of the Company's
Common Stock ("Common Stock") subject to an option, vesting conditions, and any
and all other terms, conditions, restrictions and limitations, if any, of an
option. Notwithstanding the foregoing, no options granted under the Plan shall
have a vesting period of less than one year from the date of grant. All
decisions made by the Plan Administrator pursuant to the Plan and related orders
and resolutions shall be final and conclusive.

         3.2 RULE 16B-3 AND CODE SECTION 162(M). Notwithstanding any provision
of this Plan to the contrary, only the Board or a committee composed of two or
more or Non-Employee Directors may make determinations regarding grants of
options to officers, directors and 10% stockholders of the Company
("Affiliates"). (The term "Non-Employee Directors shall satisfy the meaning set
forth in Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as
amended). The Plan Administrator shall have the authority and discretion to
determine the extent to which option grants will conform to the requirements of
Section 162(m) Internal Revenue Code of 1986, as amended (the "Code"), and to
take such action, establish such procedures, and impose such restrictions as the
Plan Administrator determines to be necessary or appropriate to conform to such
requirements.

         4. ELIGIBILITY. Any employee of the Company (the term "employee" shall
include a person who has signed an agreement to become an employee) shall be
eligible to receive Incentive Stock Options and/or Nonqualified Stock Options
(as such terms are defined in Section 6.1). An independent contractor or
non-employee board member shall be eligible to receive only Nonqualified Stock
Options. For purposes of this Section 4, "Company" includes any parent or
subsidiary of the Company as defined in Section 424 of the Code.

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         5. SHARES SUBJECT TO THE PLAN

         5.1 NUMBER AND SOURCE. The stock offered under the Plan shall be shares
of Common Stock and may be unissued shares or shares now held or subsequently
acquired by the Company as treasury shares, as the Plan Administrator may from
time to time determine. Any shares subject to an option granted under the Plan
that is forfeited, terminated or cancelled shall again be available for the
granting of options under the Plan. Subject to adjustment as provided in Section
5.2 (and taking into account the stock dividend declared by the Company in
December 1999 and April 2001, the aggregate number of shares of Common Stock
that may be issued under the Plan shall not exceed 1,600,000 (as adjusted to
reflect the Company's 1999 and 2002 stock splits). The aggregate number of
shares of Common Stock that may be covered by options granted to any one
individual in any year shall not exceed 275,000.

         5.2 CAPITAL ADJUSTMENTS. The aggregate numbers and type of shares
available for options under the Plan, the maximum number and type of shares that
may be subject to options to any individual under the Plan, the number and kind
of shares covered by each outstanding option, and the exercise price per share
(but not the total price) for stock options outstanding under the Plan shall all
be proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from any split-up, combination or exchange of
shares, consolidation, spin-off or recapitalization of shares or any like
capital adjustment or the payment of any stock dividend.

         5.3 MERGERS, ETC. If the Company is the surviving corporation in any
merger or consolidation, any option granted under the Plan shall pertain to and
apply to the securities to which a holder of the number of shares of Common
Stock subject to the option would have been entitled prior to the merger or
consolidation. A dissolution or liquidation of the Company shall cause every
option outstanding under this Plan to terminate. A merger or consolidation in
which the Company is not the surviving corporation shall also cause every option
outstanding under this Plan to terminate, but each optionholder shall have the
right, immediately prior to such merger or consolidation in which the Company is
not a surviving corporation, to exercise vested options in whole or in part,
subject to the other provisions of this Plan and the applicable option
agreement.

         6. STOCK OPTIONS

         6.1 GRANT. The Plan Administrator may grant stock options, designated
as either "Incentive Stock Options" which comply with the provisions of Section
422 of the Code or any successor statutory provision, or "Nonqualified Stock
Options" The price at which shares may be purchased upon exercise of a
particular option shall be determined by the Plan Administrator; however, the
exercise price of any stock option shall not be less than 100% of the Fair
Market Value of such shares on the date such option is granted (110% if options
are intended to be Incentive Stock Options and are granted to a stockholder who
at the time the option is granted owns or is deemed to own stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company). For purposes of the Plan, "Fair Market Value" as to a particular day
equals the closing price for the Common Stock on the New York Stock Exchange as
reported in the Wall Street Journal or in such other source as the Plan
Administrator deems reliable. If there is no reported sale of Common Stock on
the New York Stock Exchange on the date in question, then Fair Market Value
shall be the closing selling price on the New York Stock Exchange on the last
preceding date for which an actual reported sale exists. The Plan Administrator
shall set the term of each stock option, but no stock option shall be
exercisable more than 10 years after the date such option is granted and, to the
extent the aggregate Fair Market Value (determined as of the date the option is
granted) of Common Stock with respect to which Incentive Stock Options granted
to a particular individual become exercisable for the first time during any
calendar year (under the Plan and all other stock option Plans of the Company)
exceeds $100,000 (or such corresponding amount as may be set by the Code) such
options shall be treated as Nonqualified Stock Options. An optionholder and the
Plan Administrator can agree at any time to convert an Incentive Stock Option to
a Nonqualified Stock Option.

         6.2 NO REPRICING WITHOUT STOCKHOLDER APPROVAL. No Stock Options granted
to any optionholder under the Plan may be repriced without the approval of the
stockholders of the Company ("Repricing") within 12 months of such repricing.
Stockholder approval shall be evidenced by the affirmative vote of the holders

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of the majority of the shares of the Company's Common Stock present and person
by proxy and voting at the meeting. For purposes of this Agreement, "Repricing"
shall mean that situation in which new options are issued to an optionholder in
place of cancelled options and which would be reportable in the repricing table
of the annual proxy.

         6.3 INDIVIDUAL STOCK OPTION AGREEMENTS. Options granted under the Plan
shall be evidenced by option agreements in such form and content as the Plan
Administrator from time to time approves, which agreements shall substantially
comply with and be subject to the terms of the Plan. The option agreements may
contain other provisions or conditions as the Plan Administrator deems necessary
or appropriate to effectuate the sense and purpose of the Plan and may be
amended from time to time in accordance with the terms thereof.

         7. OPTION EXERCISE

         7.1 PRECONDITION TO STOCK ISSUANCE. No shares shall be delivered
pursuant to the exercise of any stock option, in whole or in part, until
qualified for delivery under such securities laws and regulations as may be
deemed by the Plan Administrator to be applicable thereto and until, in the case
of the exercise of an option, payment in full of the option price thereof (in
cash or stock as provided in Section 7.2) is received by the Company. No holder
of an option, or any legal representative, legatee or distributee shall be or be
deemed to be a holder of any shares subject to such option or right unless and
until such shares are issued. No option may at any time be exercised with
respect to a fractional share.

         7.2 FORM OF PAYMENT. An optionholder may exercise a stock option using
as the form of payment (a) cash or cash equivalent, (b) stock-for-stock payment
(as described below) (c) any combination of the above, or (d) such other means
as the Plan Administrator may approve. Any optionholder who owns Common Stock
may use such shares, the value of which shall be as the Fair Market Value on the
date the stock option is exercised, as a form of payment to exercise stock
options under the Plan. The Plan Administrator, in its discretion, may restrict
or rescind the right to use stock-for-stock payment. A stock option may be
exercised in such manner only by tendering (actually or by attestation) to the
Company whole shares of Common Stock having a Fair Market Value equal to or less
than the aggregate exercise price. The Plan Administrator may permit an
optionholder to elect to pay the exercise price of a stock option by authorizing
a third party to sell shares of Common Stock (or a sufficient portion of the
shares) acquired upon exercise of the stock option and remit to the Company a
sufficient portion of the sale proceeds to pay the entire exercise price plus
any tax withholding resulting from such exercise. If an option is exercised by
surrender of stock having a Fair Market Value less than the aggregate exercise
price, the optionholder must pay the difference in cash.

         8. TRANSFERABILITY. Any Incentive Stock Option granted under the Plan
shall, during the recipient's lifetime, be exercisable only by such recipient
and shall not be assignable or transferable by such recipient other than by will
or the laws of descent and distribution. Except as specifically allowed by the
Plan Administrator, a Nonqualified Stock Option granted under the Plan or any of
the rights and privileges conferred thereby shall not be assignable or
transferable by the optionholder other than by will or the laws of descent and
distribution and such option shall be exercisable during the optionholder's
lifetime only by the optionholder.

         9. WITHHOLDING TAXES; OTHER DEDUCTIONS. The Company shall have the
right to deduct from any settlement of an option granted under the Plan,
including the delivery or vesting of shares, (a) an amount sufficient to cover
withholding as required by law for any federal, state or local taxes, and (b)
any amounts due from the recipient of such option to the Company or to any
subsidiary of the Company or to take such other action as may be necessary to
satisfy any such withholding or other obligations, including withholding from
any other cash amounts due or to become due from the Company to such recipient
an amount equal to such taxes or obligations.

         10. TERMINATION OF SERVICES. The terms and conditions under which an
option may be exercised following termination of an optionholder's employment or
independent contractor relationship with the company shall be determined by the
Plan Administrator; provided, however, that Incentive Stock Options shall not be
exercisable at any time after the earliest of the date that is (a) three months
after termination of employment, unless due to death or Disability (as defined
in Section 22(e)(3) of the Code); (b) one year after termination of employment
due to death or Disability.

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         11. TERM OF THE PLAN. The Plan shall become effective as of January 29,
1998, and shall remain in full force and effect through January 28, 2008, unless
sooner terminated by the Board. After the Plan is terminated, no future options
may be granted, but options previously granted shall remain outstanding in
accordance with their applicable terms and conditions and the Plan's terms and
conditions.

         12. PLAN AMENDMENT. The Board may amend, suspend or terminate the Plan
at any time; provided that no such amendment shall be made without the approval
of the Company's stockholders if such approval is: (a) required to comply with
Section 422 of the Code with respect to Incentive Stock options; (b) required
for purposes of Section 162(m) of the Code; (c) required to comply with New York
Stock Exchange rules and regulations; (d) required to comply with SEC or state
rules and regulations; (e) to increase the number of shares available for
issuance under the Plan; (f) to reduce the minimum exercise price of an option
below Fair Market Value on the date of grant; or (g) to allow Repricings without
stockholder approval.

         13. APPROVAL BY STOCKHOLDERS. The Original Plan and all amendments
requiring stockholder approval shall be submitted to the stockholders of the
Company for their approval at a regular meeting to be held within 12 months
after adoption by the Board. Stockholder approval shall be evidenced by the
affirmative vote of the holder of a majority of the shares of the Company's
Common Stock present in person or by proxy and voting at the meeting.

                                THREE-FIVE SYSTEMS, INC.

                                By:   /s/ Jack L. Saltich
                                      ------------------------------------------
                                Name: Jack L. Saltich

                                Its:  President and Chief Executive Officer

ATTESTED BY:

/s/ Jeffrey D. Buchanan
-----------------------
Secretary

                                       4<PAGE>
                                                                   EXHIBIT 10.13

                          SECOND MODIFICATION AGREEMENT

      BY THIS SECOND MODIFICATION AGREEMENT, made and entered into and effective
as of September 30, 2001, THREE-FIVE SYSTEMS, INC., a Delaware corporation (the
"Company"), all present and future Subsidiaries of the Company (with the
Company, the "Borrower"), the banks listed from time to time in the Credit
Agreement (defined below) (the "Banks"), and COMERICA BANK-CALIFORNIA, successor
by merger to Imperial Bank, a California banking corporation, as administrative
agent for the Banks (in such capacity, the "Agent") and as Issuing Bank, confirm
and agree as follows:

SECTION 1. RECITALS.

      1.1 Borrower, the Banks and the Agent entered into a Credit Agreement
dated January 21, 2000 (as amended from time to time, the "Credit Agreement"),
which as amended provides for a revolving line of credit (the "RLC") by the
Banks to Borrower in the amount of $15,000,000.00 upon the terms and conditions
contained therein. The Credit Agreement was previously amended by that
Modification Agreement dated as of February 1, 2001. All undefined capitalized
terms used herein shall have the meaning given them in the Credit Agreement.

      1.2 The RLC is evidenced by Revolving Promissory Notes executed by
Borrower in the aggregate amended principal amount of $15,000,000.00 (the "RLC
Notes").

      1.3 Borrower, the Banks and the Agent desire to modify the Credit
Agreement and the other Credit Documents as set forth herein.

SECTION 2. MODIFICATION OF CREDIT DOCUMENTS.

      2.1 Section 1.1 of the Credit Agreement is hereby amended by the addition
of the following definition:

            "Liquidity" means the sum of Borrower's consolidated cash balances
            and/or cash equivalent balances, and its short-term and long-term
            investments classified as available for sale as defined by GAAP and
            as described in the Borrower's filings with the Securities and
            Exchange Commission.

      2.2 Section 8.11 of the Credit Agreement is hereby amended to read as
follows:

            8.11 Financial Covenants. Unless otherwise agreed to by the Agent in
            writing, it will not permit on a consolidated basis its Liquidity to
            be less than $80,000,000.00 at the end of any fiscal quarter,
            commencing with that fiscal quarter ending September 30, 2001.

SECTION 3. OTHER MODIFICATIONS, RATIFICATIONS AND AGREEMENTS.

      3.1 All references to the Credit Agreement and the RLC Notes in the Credit
Documents and the other Credit Documents are hereby amended to refer to the
Credit Agreement and the RLC Notes as hereby amended.

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      3.2 Borrower acknowledges that the indebtedness evidenced by the RLC Notes
is just and owing, that the aggregate balance thereof is in the amount of $0 as
of September 30, 2001, and Borrower agrees to pay the indebtedness evidenced by
the RLC Notes, according to the terms thereof, as herein modified.

      3.3 Borrower hereby reaffirms to the Banks each of the representations,
warranties, covenants and agreements of Borrower set forth in the RLC Notes, the
Credit Agreement and all other Credit Documents, with the same force and effect
as if each were separately stated herein and made as of the date hereof.

      3.4 Borrower hereby ratifies, reaffirms, acknowledges, and agrees that the
RLC Notes, the Credit Agreement and the other Credit Documents represent valid,
enforceable and collectible obligations of Borrower, and that there are no
existing claims, defenses, personal or otherwise, or rights of setoff whatsoever
with respect to any of these documents or instruments. In addition, Borrower
hereby expressly waives, releases and absolutely and forever discharges the
Agent, the Banks and their present and former shareholders, directors, officers,
employees and agents, and their separate and respective heirs, personal
representatives, successors and assigns, from any and all liabilities, claims,
demands, damages, action and causes of action, whether known or unknown and
whether contingent or matured, that Borrower may now have, or has had prior to
the date hereof, or that may hereafter arise with respect to acts, omissions or
events occurring prior to the date hereof and, without limiting the generality
of the foregoing, from any and all liabilities, claims, demands, damages,
actions and causes of action, known or unknown, contingent or matured, arising
out of, or in any way connected with, the RLC. Borrower further acknowledges and
represents that, except as acknowledged above, no event has occurred and no
condition exists that, after notice or lapse of time, or both, would constitute
a default under this Agreement, the RLC Notes, the Credit Agreement or any other
Credit Document. The preceding representation shall be to the actual knowledge
of Borrower with respect to default by the Banks.

      3.5 All terms, conditions and provisions of the RLC Notes, the Credit
Agreement and the other Credit Documents are continued in full force and effect
and shall remain unaffected and unchanged except as specifically amended hereby.
The RLC Notes, the Credit Agreement and the other Credit Documents, as amended
hereby, are hereby ratified and reaffirmed by Borrower, and Borrower
specifically acknowledges the validity and enforceability thereof.

SECTION 4. GENERAL.

      4.1 This Agreement in no way acts as a release or relinquishment of those
rights securing payment of the RLC.

      4.2 The modifications contained herein shall not be binding upon the Agent
and the Banks until the Agent shall have received all of the following:

            (a) An original of this Agreement fully executed by the Borrower and
      the Banks; and

            (b) Such other documents as the Agent and the Banks may reasonably
      require.

      4.3 Borrower shall execute and deliver such additional documents and do
such other acts as Lender may reasonably require to fully implement the intent
of this Agreement.

      4.4 Borrower shall pay all costs and expenses, including, but not limited
to, reasonable attorneys' fees incurred by the Agent and the Banks in connection
herewith, whether or not all of the conditions described in Paragraph 4.2 above
are satisfied. The Banks, at their option, but without any

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obligation to do so, may advance funds to pay any such costs and expenses that
are the obligation of the Borrower, and all such funds advanced shall bear
interest at the highest rate provided in the RLC Notes, shall be due and payable
upon demand.

      4.5 Notwithstanding anything to the contrary contained herein or in any
other instrument executed by Borrower, the Banks or the Agent, or in any other
action or conduct undertaken by Borrower, the Banks or the Agent on or before
the date hereof, the agreements, covenants and provisions contained herein shall
constitute the only evidence of the Banks' consent to modify the terms and
provisions of the RLC Notes, the Credit Agreement or any other Credit Documents.
Accordingly, no express or implied consent to any further modifications
involving any of the matters set forth in this Agreement or otherwise shall be
inferred or implied by the Banks' or the Agent's execution of this Agreement.
Further, the Banks' execution of this Agreement shall not constitute a waiver
(either express or implied) of the requirement that any further modification of
the RLC or of the RLC Notes, the Credit Agreement or any other Credit Document
shall require the express written approval of the Banks; no such approval
(either express or implied) has been given as of the date hereof.

      4.6 Notwithstanding any prior forbearance, actual or implied, of any
nature by the Banks, time is hereby declared to be of the essence hereof, of the
RLC, of the RLC Notes, of the Credit Agreement and of all Credit Documents, and
the Banks require, and Borrower agrees to, strict performance of each and every
covenant, condition, provision and agreement hereof, of the RLC Notes, of the
Credit Agreement and of all other Credit Documents.

      4.7 This Agreement shall be binding upon, and shall inure to the benefit
of, the parties hereto and their heirs, personal representatives, successors and
assigns.

      4.8 This Agreement is made for the sole protection and benefit of the
parties hereto, and no other person or entity shall have any right of action
hereon.

      4.9 This Agreement shall be governed by and construed according to the
laws of the State of Arizona.

      IN WITNESS WHEREOF, these presents are executed as of the date indicated
above.

                                       THREE-FIVE SYSTEMS, INC., a Delaware
                                       corporation

                                       By:     /s/ Jeffrey D. Buchanan
                                          ------------------------------------
                                       Name:   Jeffrey D. Buchanan
                                            ----------------------------------
                                       Title:  Executive VP, CFO
                                             ---------------------------------

                                                                       COMPANY

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                                       THREE-FIVE SYSTEMS, (BEIJING), LTC., a
                                       wholly foreign owned enterprise organized
                                       under the laws of the People's Republic
                                       of China.

                                       By:     /s/ Jeffrey D. Buchanan
                                          ------------------------------------
                                       Name:   Jeffrey D. Buchanan
                                            ----------------------------------
                                       Title:  Director
                                             ---------------------------------

                                       THREE-FIVE SYSTEMS PACIFIC, INC., a
                                       Philippine corporation

                                       By:     /s/ Jeffrey D. Buchanan
                                          ------------------------------------
                                       Name:   Jeffrey D. Buchanan
                                            ----------------------------------
                                       Title:  Director
                                             ---------------------------------

                                       THREE-FIVE SYSTEMS LIMITED, a corporation
                                       organized under the laws of the United
                                       Kingdom.

                                       By:     /s/ Jeffrey D. Buchanan
                                          ------------------------------------
                                       Name:   Jeffrey D. Buchanan
                                            ----------------------------------
                                       Title:  Director
                                             ---------------------------------

                                                                  CO-BORROWERS

                                       COMERICA BANK-CALIFORNIA, successor by
                                       merger to Imperial Bank, a California
                                       banking corporation

                                       By:     /s/ Ronald J. Castro, Jr.
                                          ------------------------------------
                                       Name:   Ronald J. Castro, Jr.
                                            ----------------------------------
                                       Title:  Vice President
                                             ---------------------------------

                                                                AGENT AND BANK

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