Document:

exv10w2

 

 

Exhibit 10.2

FIRST AMENDMENT TO

SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

          FIRST
AMENDMENT (this “Amendment”), dated as of
December 28, 2006, to the Second
Amended and Restated Registration Rights Agreement, dated as of December 18, 2003 (as previously
amended, supplemented or otherwise modified, the “Agreement”), by and between Allied Waste
Industries, Inc., a Delaware corporation, Apollo Investment Fund IV, L.P., a Delaware limited
partnership, Apollo Investment Fund III, L.P., a Delaware limited partnership, Apollo Overseas
Partners IV, L.P., a Delaware limited partnership, Apollo Overseas Partners III, L.P., a Delaware
limited partnership, Apollo (U.K.) Partners III, L.P., an English limited partnership, Apollo/AW
LLC, a Delaware limited liability company, Blackstone Capital Partners II Merchant Banking Fund
L.P., a Delaware limited partnership, Blackstone Capital Partners III Merchant Banking Fund L.P., a
Delaware limited partnership, Blackstone Offshore Capital Partners II L.P., a Cayman Islands
limited partnership, Blackstone Offshore Capital Partners III L.P., a Cayman Islands limited
partnership, Blackstone Family Investment Partnership II L.P., a Delaware limited partnership,
Blackstone Family Investment Partnership III L.P., a Delaware limited partnership, Greenwich Street
Capital Partners II, L.P., a Delaware limited partnership, GSCP Offshore Fund, L.P., a Cayman
Islands exempted limited partnership, Greenwich Fund, L.P., a Delaware limited partnership,
Greenwich Street Employees Fund, L.P., a Delaware limited partnership, TRV Executive Fund, L.P., a
Delaware limited partnership, DLJMB Funding II, Inc., a Delaware corporation, DLJ Merchant Banking
Partners II, L.P., a Delaware limited partnership, DLJ Merchant Banking Partners II-A, L.P., a
Delaware limited partnership, DLJ Diversified Partners, L.P., a Delaware limited partnership, DLJ
Diversified Partners-A, L.P., a Delaware limited partnership, DLJ Millennium Partners, L.P., a
Delaware limited partnership, DLJ Millennium Partners-A, L.P., a Delaware limited partnership, DLJ
First ESC L.P., a Delaware limited partnership, DLJ Offshore Partners II, C.V., a Netherlands
Antilles limited partnership, DLJ EAB Partners, L.P., a Delaware limited partnership and DLJ ESC
II, L.P., a Delaware limited partnership, Kenneth D. Moelis, Mark Lanigan, Jeffrey Klein and Susan
Schnabel (collectively, the “Shareholders”).

          The Stockholders are parties to the Agreement and they wish to amend the Agreement as
described below in consideration of the promises and for other good and valuable consideration, the
receipt of which is hereby acknowledged:

          1. Defined Terms. Capitalized terms not otherwise defined in this Amendment shall
have the meanings ascribed to them in the Agreement.

          2. Amendment to Section 2.1 (Incidental Rights). Section 2.1 of the Agreement is
hereby amended by inserting the following text at the end of the first paragraph thereof:

Notwithstanding the preceding paragraph, if the Company files an automatic
shelf registration statement on Form S-3ASR or a successor form that becomes
effective upon filing with the SEC (a “WKSI Shelf”) for registration
under the Securities Act of any shares of Subject Securities for sale, for
cash consideration, to the public by the Company or on behalf of one or more
shareholders of the Company, the Apollo/Blackstone Shareholders will be
entitled to include their Registrable Securities in the coverage of such
WKSI Shelf and in any underwritten offerings registered on such WKSI Shelf
that are initiated by the Company or other

 

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Apollo/Blackstone Shareholders (each such offering, a “WKSI Shelf
Takedown”), in each case subject to the other provisions of this
Section 2.1. Notwithstanding anything to the contrary contained in
this Section 2.1, the Company shall not be required to give
Shareholders prior notice of the proposed filing of a WKSI Shelf. The
Company will, however, give the Apollo/Blackstone Shareholders prior written
notice of any proposed WKSI Shelf Takedown, which notice shall be given no
later than (A) the close of business on the third business day preceding the
business day on which “face to face” marketing efforts involving one or more
of officers of the Company relating to the WKSI Shelf Takedown (a
“Roadshow”) commence or (B) 24 hours (or if 24 hours’ notice is not
practicable, such shorter prior as is practicable) to the anticipated
execution of an underwriting agreement relating to the pricing of an
underwritten offering that does not involve a Roadshow (a “Block
Trade”). Each such notice will describe the proposed WKSI Shelf
Takedown, including anticipated size, timing, participants (e.g., the
offerors and underwriters, to the extent known at such time), plan of
distribution and other relevant terms. In order to exercise their
incidental rights under this Section 2.1 in connection with a WKSI
Shelf Takedown, the Apollo/Blackstone Shareholders must request inclusion of
their Registrable Securities in the WKSI Shelf Takedown by a written notice
to the Company no later than (X) one business day after notice of the
commencement of a Roadshow or (Y) within the time period set forth in the
notice in the event of a proposed Block Trade, as the case may be. The
Apollo/Blackstone Shareholders requesting the inclusion of their Registrable
Securities in the WKSI Shelf Takedown pursuant to the immediately preceding
sentence will be required to agree to all applicable terms of such WKSI
Shelf Takedown and enter into the underwriting agreement and other documents
relating thereto. Any Apollo/Blackstone Shareholder (including any
Apollo/Blackstone Shareholder that initiated a WKSI Shelf Takedown pursuant
to Section 2.2 of this Agreement) may withdraw from any proposed
WKSI Shelf Takedown at any time prior to the entering into the underwriting
agreement relating to such WKSI Shelf Takedown. In such a case, if a
prospectus supplement relating to such WKSI Shelf Takedown is not filed with
the SEC, the number of requests for registration permitted under this
Agreement with respect to such Apollo/Blackstone Shareholder will not be
reduced.

          3. Amendment to Section 2.2 (Demand Rights). (a) Section 2.2 of the Agreement is
hereby amended by deleting the following clause in the first paragraph:

provided, that all offerings contemplated by a request for
registration under this Section 2.2 shall be underwritten offerings
involving a distribution of Registrable Shares to the public in which
reasonable efforts are made not to knowingly sell to any single buyer,
acting individually or with others, who after such underwriting will own
more than 9% of the Total Voting Power (as defined in the Shareholders
Agreement) (any such buyer, “Significant Stockholder”), under
circumstances in which it would reasonably be expected to not result in any
person becoming a Significant Stockholder

and substituting the following text in lieu thereof:

 

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“provided, that all offerings contemplated by a request for
registration under this Section 2.2 shall be underwritten offerings
involving a distribution of Registrable Shares to the public in which
reasonable efforts are made not to knowingly sell to any single buyer,
acting individually or with others, who after completion of the distribution
relating to such Registrable Shares will own more than 15% of the Total
Voting Power (as defined in the Shareholders Agreement) (any such buyer, a
“Significant Stockholder”); and provided further, that for
the purpose of the immediately preceding proviso, such underwriter or
Apollo/Blackstone Shareholder may conclusively rely on such buyer’s most
recent filing with the Commission, in whole or in part, disclosing ownership
of Common Stock, whether on any of Schedule 13D, Schedule 13F, Schedule 13G,
Form 3, Form 4 or otherwise, unless such Apollo/Blackstone Shareholder or
underwriter has actual knowledge of greater ownership (including, but not
limited to, knowledge resulting from sales made by such Apollo/Blackstone
Shareholder or its affiliates to that buyer, any of its known affiliates or
to those known to be acting with the buyer, in all such cases subsequent to
the period covered by any such filing with the Commission).

(b) Section 2.2 of the Agreement is hereby further amended by inserting the following sentence
at the end thereof:

Notwithstanding anything to the contrary contained in this Agreement, the
Apollo/Blackstone Shareholders may exercise their demand rights pursuant to
this Section 2.2 to initiate, and to require the Company to
facilitate, a WKSI Shelf Takedown under a WKSI Shelf filed on the Company’s
initiative (including the WKSI Shelf on file as of the date hereof), subject
to all other applicable provisions of this Section 2.2 (for these purposes,
a WKSI Shelf Takedown shall be deemed the filing of a registration statement
so that, among other things, the Company may delay the demanded WKSI Shelf
Takedown in accordance with the third paragraph of this Section 2.2 in
respect of filings of registration statements). In the event the
Apollo/Blackstone Shareholders exercise such demand rights and the WKSI
Shelf Takedown is completed, the number of demand requests available under
Section 2.2 of this Agreement shall be reduced by one (1). An
Apollo/Blackstone Shareholder intending a WKSI Shelf Takedown shall give the
Company at least 24 hours prior written notice of an intended Block Trade or
sales through brokers and at least three business days prior written notice
of all other WKSI Shelf Takedown transactions (provided that such notice
will only be required to describe the intent to execute a Block Trade, the
anticipated timing thereof and any other terms that are known by the
Apollo/Blackstone Shareholders at such time of delivery).

          4. Amendment to Section 2.3 (Shelf Registration Rights). (a) Section 2.3 of the
Agreement is hereby amended by inserting the following text as the new second sentence thereof:

For the avoidance of doubt, the term “Shelf Registration Statement” shall
include any WKSI Shelf.

 

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(b) Section 2.3 of the Agreement is hereby further amended by substituting the following in
place of the second paragraph:

The Company shall use reasonable efforts to cause the Shelf Registration
Statement to be declared effective under the Securities Act and to keep the
Shelf Registration Statement continuously effective under the Securities Act
for a period of six years following its being declared effective (the
“Effectiveness Termination Date”); provided, however, that such
Effectiveness Termination Date shall be increased by the number of days that
the Shelf Registration Statement is delayed or suspended pursuant to this
Section 2.3, and provided further, that the Company may file
multiple Shelf Registration Statements, if necessary, to maintain the
effectiveness of a Shelf Registration Statement for such six year period
(and such multiple filings shall be considered to be part of the one request
under this Section).

(c) Section 2.3 of the Agreement is hereby further amended by deleting the following sentence
in its entirety:

In connection with any sales pursuant to the Shelf Registration Statement,
reasonable efforts shall be made not to knowingly sell to any single buyers,
acting individually or with others, who, after taking account of the sales,
will own more than 9% of the Total Voting Power (as defined in the
Shareholders Agreement)

and substituting the following text in lieu thereof:

In connection with any sales pursuant to the Shelf Registration Statement,
reasonable efforts shall be made not to knowingly sell to any single buyer,
acting individually or with others, who, after completion of the
distribution relating to such sales, will own more than 15% of the Total
Voting Power (as defined in the Shareholders Agreement); provided
that for purposes of this sentence, the underwriter or any Apollo/Blackstone
Shareholder may conclusively rely on such buyer’s most recent filing with
the Commission, in whole or in part, disclosing ownership of Common Stock,
whether on any of Schedule 13D, Schedule 13F, Schedule 13G, Form 3, Form 4
or otherwise, unless such Apollo/Blackstone Shareholder or underwriter has
actual knowledge of greater ownership (including, but not limited to,
knowledge resulting from sales made by such Apollo/Blackstone Shareholder or
its known affiliates to that buyer, any of its known affiliates or to those
known to be acting with the buyer, in all such cases subsequent to the
period covered by any such filing with the Commission).

          5. Amendment to Section 2.4 (Registration Conditions). Section 2.4 of the Agreement
is hereby amended by inserting the following new text at the end thereof:

For the avoidance of doubt, this Section 2.4 shall only apply to a
WKSI Shelf to the extent such terms apply to a registration effected on a
WKSI Shelf.

 

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          6. Amendment to Section 4.3 (Dispositions During Registration). Section 4.3 of the
Agreement is hereby amended by inserting the following new text at the end of the first sentence
thereof:

(such period, the “Lock-up Period”); provided, that with respect to
a WKSI Shelf, the Lock-up Period shall begin on the date of the notice given
by the Company pursuant to Section 2.1 of this Agreement with
respect to a proposed WKSI Shelf Takedown and shall continue for the shorter
of (x) 90 days from the date of the underwriting agreement for such WKSI
Shelf Takedown and (y) any shorter period as may apply to the Company or
other Apollo/Blackstone Shareholders participating in such WKSI Shelf
Takedown.

          7. Waiver of Past Notices. The parties hereto waive all notices pursuant to the
Agreement they may have otherwise been entitled to prior to the date hereof.

          8. Continuing Effect; No Other Amendments. Except as expressly amended pursuant to
this Amendment, the Agreement is and shall continue to be in full force and effect in accordance
with its terms, and this Amendment shall not constitute the consent of any Stockholder or indicate
the willingness of any Shareholder to consent to any other amendment, modification or waiver of
the Agreement.

          9. Counterparts. This Amendment may be executed by one or more of the parties hereto
in any number of separate counterparts (which may include counterparts delivered by facsimile
transmission), and all of said counterparts taken together shall be deemed to constitute one and
the same instrument.

          10. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE.

          11. Termination and Mutual Release. Upon execution of this Amendment by the
undersigned Non-Apollo/Blackstone Shareholders, the undersigned Non-Apollo/Blackstone Shareholders
agree to terminate their respective rights and obligations under this Agreement, which will be of
no further force and effect in all respects with respect to such undersigned Non-Apollo/Blackstone
Shareholders, and the undersigned Non-Apollo/Blackstone Shareholders hereby release the Company and
the other Shareholders of their respective obligations under this Agreement and the Company and the
Apollo/Blackstone Shareholders hereby release the undersigned Non-Apollo/Blackstone Shareholders of
their respective obligations under this Agreement.

          12. Effectiveness. This Amendment shall become effective only upon execution by (a)
the Company and all of the Shareholders of this Amendment and of the First Amendment to the Third
Amended and Restated Shareholders Agreement and (b) all investors party to the Second Amendment to
Amended and Restated Investment Agreement dated as of the date hereof.

 

6

          IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written.

	 	 	 	 	 	 	 	 	 
	 	 	ALLIED WASTE INDUSTRIES, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Name:	 	 	 	 	 
	 

	 	Title:	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	APOLLO INVESTMENT FUND IV, L.P.	 	 
	 	 	APOLLO OVERSEAS PARTNERS IV, L.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	Apollo Advisors IV, L.P.	 	 
	 	 	 	its General Partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	By:
	 Apollo Capital Management IV, Inc.	 	 
	 

	 	 	 	 	its General Partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By	 	 	 	 	 	 
	 	 	 	 	 	 
	 

	 	 	Name:	 	 	 	 
	 

	 	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	APOLLO/AW LLC	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	Apollo Management IV, L.P.	 	 
	 	 	 	its Manager	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	By:
	 AIF IV Management, Inc.	 	 
	 

	 	 	 	 	its General Partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By	 	 	 	 	 	 
	 	 	 	 	 	 
	 

	 	 	Name:	 	 	 	 
	 

	 	 	Title:	 	 	 	 

 

7

	 	 	 	 	 	 	 	 	 
	 	 	APOLLO INVESTMENT FUND III, L.P.	 	 
	 	 	APOLLO OVERSEAS PARTNERS III, L.P.	 	 
	 	 	APOLLO (UK) PARTNERS III, L.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Apollo Advisors II, L.P.	 	 
	 	 	 	 	its General Partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	  Apollo Capital Management II, Inc.	 	 
	 

	 	 	 	 	  its General Partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	BLACKSTONE CAPITAL PARTNERS III	 	 
	 	 	  MERCHANT BANKING FUND L.P.	 	 
	 	 	BLACKSTONE OFFSHORE CAPITAL	 	 
	 	 	  PARTNERS III, L.P.	 	 
	 	 	BLACKSTONE FAMILY INVESTMENT    PARTNERSHIP III L.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Blackstone Management Associates III, L.L.C.	 	 
	 	 	 	 	its General Partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	BLACKSTONE CAPITAL PARTNERS II	 	 
	 	 	  MERCHANT BANKING FUND L.P.	 	 
	 	 	BLACKSTONE OFFSHORE CAPITAL	 	 
	 	 	  PARTNERS II, L.P.	 	 
	 	 	BLACKSTONE FAMILY INVESTMENT    PARTNERSHIP II L.P	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Blackstone Management Associates II, L.L.C.	 	 
	 	 	 	 	its General Partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 	 

 

8

	 	 	 	 	 
	 	GREENWICH STREET CAPITAL PARTNERS, II L.P.

 	 
	 	By:  	Greenwich Street Investments II, L.L.C.
 	 
	 	 	its General Partner 	 
	 	 	 
	 	By  	
 	 
	 	 	Name:  	 	 
	 	 	Title 	 
	 
	 	GSCP OFFSHORE FUND, L.P.

 	 
	 	By:  	Greenwich Street Investments II, L.L.C.
 	 
	 	 	its General Partner 	 
	 	 	 
	 	By  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	GREENWICH FUND, L.P.

 	 
	 	By:  	GREENWICH STREET INVESTMENTS II, L.L.C.
 	 
	 	 	its General Partner 	 
	 	 	 
	 	By  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	GREENWICH STREET EMPLOYEES FUND, L.P.

 	 
	 	By:  	GREENWICH STREET INVESTMENTS II, L.L.C.
 	 
	 	 	its General Partner 	 
	 	 	 
	 	By  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

9

	 	 	 	 	 

	 	 	 	 	 
	 	TRV EXECUTIVE FUND, L.P.

 	 
	 	By:  	GREENWICH STREET INVESTMENTS II, L.L.C.
 	 
	 	 	its General Partner 	 
	 	 	 
	 	By  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	 	 
	 	By:  	                                              GREENWICH STREET INVESTMENTS II, L.L.C.
 	 
	 	 	its General Partner 	 
	 	 	 
	 	By  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	DLJMP FUNDING II, INC.

 	 
	 	By  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	DLJ MERCHANT BANKING PARTNERS II, L.P.

 	 
	 	By:  	DLJ Merchant Banking II, Inc.
 	 
	 	 	Managing General Partner 	 
	 	 	 
	 	By  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

10

	 	 	 	 	 

	 	 	 	 	 
	 	DLJ MERCHANT BANKING PARTNERS II-A, L.P.

 	 
	 	By:  	DLJ Merchant Banking II, Inc.
 	 
	 	 	Managing General Partner 	 
	 	 	 
	 	By  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	DLJ DIVERSIFIED PARTNERS, L.P.

 	 
	 	By:  	DLJ Diversified Partners, Inc.
 	 
	 	 	Managing General Partner 	 
	 	 	 
	 	By  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	DLJ DIVERSIFIED PARTNERS-A, L.P.

 	 
	 	By:  	DLJ Diversified Partners, Inc.
 	 
	 	 	Managing General Partner 	 
	 	 	 
	 	By  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	DLJ MILLENNIUM PARTNERS, L.P.

 	 
	 	By:  	DLJ Merchant Banking II, Inc.
 	 
	 	 	Managing General Partner 	 
	 	 	 
	 	By  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

11

	 	 	 	 	 

	 	 	 	 	 
	 	DLJ MILLENNIUM PARTNERS-A, L.P.

 	 
	 	By:  	DLJ Merchant Banking II, Inc.
 	 
	 	 	Managing General Partner 	 
	 	 	 
	 	By  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	DLJ FIRST ESC L.P.

 	 
	 	By:  	DLJ LBO Plans Management Corporation
 	 
	 	 	General Partner 	 
	 	 	 
	 	By  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	DLJ OFFSHORE PARTNERS II, C.V.

 	 
	 	By:  	DLJ Merchant Banking II, Inc.
 	 
	 	 	Managing General Partner 	 
	 	 	 
	 	By  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	DLJ EAB PARTNERS, L.P.

 	 
	 	By:  	DLJ LBO Plans Management Corporation
 	 
	 	 	General Manager 	 
	 	 	 
	 	By  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

12

	 	 	 	 	 

	 	 	 	 	 	 	 
	 	 	DLJ ESC II L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	DLJ LBO Plans Management Corporation	 	 
	 

	 	 	 	General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	KENNETH D. MOELIS,	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	MARK LANIGAN,	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	JEFFREY KLEIN	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	SUSAN SCHNABEL<PAGE>

                                                                   Exhibit 10.50

                      BUSINESS LOAN AGREEMENT (ASSET BASED)

BORROWER: VIVITAR CORPORATION          LENDER: DBS BANK LTD., LOS ANGELES AGENCY
          520 GRAVES AVE                       445 SOUTH FIGUEROA STREET
          OXNARD, CA 93030                     SUITE 3550
                                               LOS ANGELES, CA 90071

THIS BUSINESS LOAN AGREEMENT (ASSET BASED) DATED DECEMBER 26, 2006, IS MADE AND
EXECUTED BETWEEN VIVITAR CORPORATION ("BORROWER") AND DBS BANK LTD., LOS ANGELES
AGENCY ("LENDER") ON THE FOLLOWING TERMS AND CONDITIONS. BORROWER HAS RECEIVED
PRIOR COMMERCIAL LOANS FROM LENDER OR HAS APPLIED TO LENDER FOR A COMMERCIAL
LOAN OR LOANS OR OTHER FINANCIAL ACCOMMODATIONS, INCLUDING THOSE WHICH MAY BE
DESCRIBED ON ANY EXHIBIT OR SCHEDULE ATTACHED TO THIS AGREEMENT ("LOAN").
BORROWER UNDERSTANDS AND AGREES THAT: (A) IN GRANTING, RENEWING, OR EXTENDING
ANY LOAN, LENDER IS RELYING UPON BORROWER'S REPRESENTATIONS, WARRANTIES, AND
AGREEMENTS AS SET FORTH IN THIS AGREEMENT; (B) THE GRANTING, RENEWING, OR
EXTENDING OF ANY LOAN BY LENDER AT ALL TIMES SHALL BE SUBJECT TO LENDER'S SOLE
JUDGMENT AND DISCRETION; AND (C) ALL SUCH LOANS SHALL BE AND REMAIN SUBJECT TO
THE TERMS AND CONDITIONS OF THIS AGREEMENT. THIS AGREEMENT SHALL APPLY TO ANY
AND ALL PRESENT AND FUTURE LOANS, LOAN ADVANCES, EXTENSION OF CREDIT, FINANCIAL
ACCOMMODATIONS AND OTHER AGREEMENTS AND UNDERTAKINGS OF EVERY NATURE AND KIND
THAT MAY BE ENTERED INTO BY AND BETWEEN BORROWER AND LENDER NOW AND IN THE
FUTURE.

TERM. This Agreement shall be effective as of December 26, 2006, and shall
continue in full force and effect until such time as all of Borrower's Loans in
favor of Lender have been paid in full, including principal, interest, costs,
expenses, attorneys' fees, and other fees and charges, or until June 30, 2007.

LINE OF CREDIT. Lender agrees to make Advances to Borrower from time to time
from the date of this Agreement to the Expiration Date, subject to the
limitation set forth under the paragraph entitled "Other Credit Facilities and
Amount". Within the foregoing limits, Borrower may borrow, partially or wholly
prepay, and reborrow under this Agreement as follows:

     CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make any
     Advance to or for the account of Borrower under this Agreement is subject
     to the following conditions precedent, with all documents, instruments,
     opinions, reports, and other items required under this Agreement to be in
     form and substance satisfactory to Lender:

          (1) Lender shall have received evidence that this Agreement and all
          Related Documents have been duly authorized, executed, and delivered
          by Borrower to Lender.

          (2) Lender shall have received such opinions of counsel, supplemental
          opinions, and documents as Lender may request.

          (3) The security interests in the Collateral shall have been duly
          authorized, created, and perfected with first lien priority and shall
          be in full force and effect.

          (4) All guaranties required by Lender for the credit facility(ies)
          shall have been executed by each Guarantor, delivered to Lender, and
          be in full force and effect.

          (5) Lender, at its option and for its sole benefit, shall have
          conducted an audit of Borrower's Accounts, Inventory, books, records,
          and operations, and Lender shall be satisfied as to their condition.

          (6) Borrower shall have paid to Lender all fees, costs, and expenses
          specified in this Agreement and the Related Documents as are then due
          and payable, including without limitation the following loan fees:
          NONREFUNDABLE OF LOAN FEE OF $35,000.00 AND NONREFUNDABLE OF
          DOCUMENTATION FEE OF $750.00.

          (7) There shall not exist at the time of any Advance a condition which
          would constitute an Event of Default under this Agreement, and
          Borrower shall have delivered to Lender the compliance certificate
          called for in the paragraph below titled "Compliance Certificate."

     MAKING LOAN ADVANCES. Advances under this credit facility, as well as
     directions for payment from Borrower's accounts, may be requested orally or
     in writing by authorized persons. Lender may, but need not, require that
     all oral requests be confirmed in writing. Each Advance shall be
     conclusively deemed to have been made at the request of and for the benefit
     of Borrower (1) when credited to any deposit account of Borrower maintained
     with Lender or (2) when advanced in accordance with the instructions of an
     authorized person. Lender, at its option, may set a cutoff time, after
     which all requests for Advances will be treated as having been requested on
     the next succeeding Business Day.

     CONDITION OF EACH ADVANCE. For each drawdown request or each advance
     request, Borrower must submit the current Borrowing Base certificate,
     Accounts Receivable (including aging) and accounts payable (including
     aging) to Lender at least 1 business day prior to the date of each
     drawdown.

     MANDATORY LOAN REPAYMENTS. If at any time the aggregate principal amount of
     the credit extended hereunder exceeds the limit set forth under the
     paragraph entitled "Other Credit Facilities and Amount", Borrower,
     immediately upon written or oral notice from Lender, shall pay to Lender an
     amount equal to the difference between the aggregate outstanding principal
     balance and the Borrowing Base. On the Expiration Date, Borrower shall pay
     to Lender in full the aggregate unpaid principal amount of all Advances and
     the other credit extent hereunder and then outstanding and all accrued
     unpaid interest, together with all other applicable fees, costs and
     charges, if any, not yet paid.

     LOAN ACCOUNT. Lender shall maintain on its books a record of account in
     which Lender shall make entries for each Advance and such other debits and
     credits as shall be appropriate in connection with the credit facility.
     Lender shall provide Borrower with periodic statements of Borrower's
     account, which statements shall be considered to be correct and
     conclusively binding on Borrower unless Borrower notifies Lender to the
     contrary within thirty (30) days after Borrower's receipt of any such
     statement which Borrower deems to be incorrect.

COLLATERAL. To secure payment of the Primary Credit Facility and performance of
all other Loans, obligations and duties owed by Borrower to Lender, Borrower
(and others, if required) shall grant to Lender Security Interests in such
property and assets as Lender may require. Lender's Security Interests in the
Collateral shall be continuing liens and shall include the proceeds and products
of the Collateral, including without limitation the proceeds of any insurance.
With respect to the Collateral, Borrower agrees and represents and warrants to
Lender:

<PAGE>

     PERFECTION OF SECURITY INTERESTS. Borrower agrees to execute all documents
     perfecting Lender's Security Interest and to take whatever actions are
     requested by Lender to perfect and continue Lender's Security Interests in
     the Collateral. Upon request of Lender, Borrower will deliver to Lender any
     and all of the documents evidencing or constituting the Collateral, and
     Borrower will note Lender's interest upon any and all chattel paper and
     instruments if not delivered to Lender for possession by Lender.
     Contemporaneous with the execution of this Agreement, Borrower will execute
     one or more UCC financing statements and any similar statements as may be
     required by applicable law, and Lender will file such financing statements
     and all such similar statements in the appropriate location or locations.
     Borrower hereby appoints Lender as its irrevocable attorney-in-fact for the
     purpose of executing any documents necessary to perfect or to continue any
     Security Interest. Lender may at any time, and without further
     authorization from Borrower, file a carbon, photograph, facsimile, or other
     reproduction of any financing statement for use as a financing statement.
     Borrower will reimburse Lender for all expenses for the perfection,
     termination, and the continuation of the perfection of Lender's security
     interest in the Collateral. Borrower promptly will notify Lender before any
     change in Borrower's name including any change to the assumed business
     names of Borrower. Borrower also promptly will notify Lender before any
     change in Borrower's Social Security Number or Employer Identification
     Number. Borrower further agrees to notify Lender in writing prior to any
     change in address or location of Borrower's principal governance office or
     should Borrower merge or consolidate with any other entity.

     COLLATERAL RECORDS. Borrower does now, and at all times hereafter shall,
     keep correct and accurate records of the Collateral, all of which records
     shall be available to Lender or Lender's representative upon demand for
     inspection and copying at any reasonable time. With respect to the
     Accounts, Borrower agrees to keep and maintain such records as Lender may
     require, including without limitation information concerning Eligible
     Accounts and Account balances and agings. Records related to Accounts
     (Receivables) are or will be located at 520 Graves Avenue, Oxnard, CA
     93030. With respect to the Inventory, Borrower agrees to keep and maintain
     such records as Lender may require, including without limitation
     information concerning Eligible Inventory and records itemizing and
     describing the kind, type, quality, and quantity of Inventory, Borrower's
     Inventory costs and selling prices, and the daily withdrawals and additions
     to Inventory. Records related to Inventory are or will be located at 520
     Graves Avenue, Oxnard, CA 93030. The above is an accurate and complete list
     of all locations at which Borrower keeps or maintains business records
     concerning Borrower's collateral.

     COLLATERAL SCHEDULES. Concurrently with the execution and delivery of this
     Agreement, Borrower shall execute and deliver to Lender schedules of
     Accounts and Inventory and schedules of Eligible Accounts and Eligible
     Inventory in form and substance satisfactory to the Lender. Thereafter
     supplemental schedules shall be delivered according to the following
     schedule: With respect to Eligible Accounts, schedules shall be delivered
     monthly within 30 days after the end of each calendar month. With respect
     to Eligible Inventory, schedules shall be delivered monthly within 30 days
     after the end of each calendar month.

     REPRESENTATIONS AND WARRANTIES CONCERNING ACCOUNTS. With respect to the
     Accounts, Borrower represents and warrants to Lender: (1) Each Account
     represented by Borrower to be an Eligible Account for purposes of this
     Agreement conforms to the requirements of the definition of an Eligible
     Account; (2) All Account information listed on schedules delivered to
     Lender will be true and correct, subject to immaterial variance; and (3)
     Lender, its assigns, or agents shall have the right at any time and at
     Borrower's expense to inspect, examine, and audit Borrower's records and to
     confirm with Account Debtors the accuracy of such Accounts.

     REPRESENTATIONS AND WARRANTIES CONCERNING INVENTORY. With respect to the
     Inventory, Borrower represents and warrants to Lender: (1) All Inventory
     represented by Borrower to be Eligible Inventory for purposes of this
     Agreement conforms to the requirements of the definition of Eligible
     Inventory; (2) All Inventory values listed on schedules delivered to Lender
     will be true and correct, subject to immaterial variance; (3) The value of
     the Inventory will be determined on a consistent accounting basis; (4)
     Except as agreed to the contrary by Lender in writing, all Eligible
     Inventory is now and at all times hereafter will be in Borrower's physical
     possession and shall not be held by others on consignment, sale on
     approval, or sale or return; (5) Except as reflected in the Inventory
     schedules delivered to Lender, all Eligible Inventory is now and at all
     times hereafter will be of good and merchantable quality, free from
     defects; (6) Eligible Inventory is not now and will not at any time
     hereafter be stored with a bailee, warehouseman, or similar party without
     Lender's prior written consent, and, in such event, Borrower will
     concurrently at the time of bailment cause any such bailee, warehouseman,
     or similar party to issue and deliver to Lender, in form acceptable to
     Lender, warehouse receipts in Lender name evidencing the storage of
     Inventory; and (7) Lender, its assigns, or agents shall have the right at
     any time and at Borrower's expense to inspect and examine the Inventory and
     to check and test the same as to quality, quantity, value, and condition.

     REMITTANCE ACCOUNT. Borrower agrees that Lender may at any time require
     Borrower to institute procedures whereby the payments and other proceeds of
     the Accounts shall be paid by the Account Debtors under a remittance
     account or lock box arrangement with Lender, or Lender's agent, or with one
     or more financial institutions designated by Lender. Borrower further
     agrees that, if no Event of Default exists under this Agreement, any and
     all of such funds received under such a remittance account or lock box
     arrangement shall, at Lender's sole election and discretion, either be (1)
     paid or turned over to Borrower not to exceed 30% of net collected
     proceeds; (2) deposited into one or more accounts for the benefit of
     Borrower (which deposit accounts shall be subject to a security assignment
     in favor of Lender); (3) deposited into one or more accounts for the joint
     benefit of Borrower and Lender (which deposit accounts shall likewise be
     subject to a security assignment in favor of Lender); (4) paid or turned
     over to Lender to be applied to the Indebtedness in such order and priority
     as Lender may determine within its sole discretion; or (5) any combination
     of the foregoing as Lender shall determine from time to time. Borrower
     further agrees that, should one or more Events of Default exist, any and
     all funds received under such a remittance account or lock box arrangement
     shall be paid or turned over to Lender to be applied to the Indebtedness,
     again in such order and priority as Lender may determine within its sole
     discretion.

OTHER CREDIT FACILITIES AND AMOUNT. Revolving credit facilities comprising
issuance of sight Letters of Credit and Working Capital Advances. At no time
shall the aggregate sum of Advances plus Working Capital Advances, plus Letters
of Credit, plus unreimbursed drawing under Letters of Credit exceed the
Borrowing Base. The following credit accommodations are either in place or will
be made available to Borrower:

     LETTER OF CREDIT FACILITY. Subject to the terms of this Agreement, Lender
     will issue sight letters of credit (each a "Letter of Credit") on behalf of
     Borrower.

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

          (2) The commitment by Lender to issue Letters of Credit shall, unless
          earlier terminated in accordance with the terms of this Agreement,
          automatically terminate on the Expiration Date and no Letter of Credit
          shall expire on a date which is more than zero days after the
          Expiration Date.

                                        2

<PAGE>

          (3) Each Letter of Credit shall be in form and substance satisfactory
          to Lender and in favor of beneficiaries satisfactory to Lender,
          provided that Lender 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 Lender, 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. Under no
          circumstances, however, will a Letter of Credit exceed 180 days from
          the issue date.

          (4) Prior to the issuance of each Letter of Credit, and in all events
          prior to any daily cutoff time Lender may have established for
          purposes thereof, Borrower shall deliver to Lender a duly executed
          form of Lender's standard form of application for issuance of letter
          of credit with proper insertions.

LENDER'S RIGHTS UPON DEFAULT. Upon the occurrence of any Event of Default,
Lender may, at its sole and absolute discretion and in addition to any other
remedies available to it under this Agreement or otherwise, require Borrower to
pay immediately to Lender, 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
Lender which is not applied to satisfy draws under any such Letters of Credit or
any other obligations of Borrower to the Lender shall be repaid to Borrower
without interest.

LENDER'S COSTS AND EXPENSES. Borrower shall, upon Lender's request, promptly pay
to and reimburse Lender for all costs incurred and payments made by Lender by
reason of any future assessment, reserve, deposit, or similar requirement or any
surcharge, tax, or fee imposed upon Lender or as a result of Lender's compliance
with any directive or requirement of any regulatory authority pertaining or
relating to any Letter of Credit.

CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial
Advance and each subsequent Advance under this Agreement shall be subject to the
fulfillment to Lender's satisfaction of all of the conditions set forth in this
Agreement and in the Related Documents.

     LOAN DOCUMENTS. Borrower shall provide to Lender the following documents
     for the Loan: (1) the Note; (2) Security Agreements granting to Lender
     security interests in the Collateral; (3) financing statements and all
     other documents perfecting Lender's Security Interests; (4) evidence of
     insurance as required below; (5) guaranties; (6) together with all such
     Related Documents as Lender may require for the Loan; all in form and
     substance satisfactory to Lender and Lender's counsel.

     BORROWER'S AUTHORIZATION. Borrower shall have provided in form and
     substance satisfactory to Lender properly certified resolutions, duly
     authorizing the execution and delivery of this Agreement, the Note and the
     Related Documents. In addition, Borrower shall have provided such other
     resolutions, authorizations, documents and instruments as Lender or its
     counsel, may require.

     FEES AND EXPENSES UNDER THIS AGREEMENT. Borrower shall have paid to Lender
     all fees, costs, and expenses specified in this Agreement and the Related
     Documents as are then due and payable, including without limitation the
     following loan fees: NONREFUNDABLE OF LOAN FEE OF $35,000.00 AND
     NONREFUNDABLE OF DOCUMENTATION FEE OF $750.00.

     REPRESENTATIONS AND WARRANTIES. The representations and warranties set
     forth in this Agreement, in the Related Documents, and in any document or
     certificate delivered to Lender under this Agreement are true and correct.

     NO EVENT OF DEFAULT. There shall not exist at the time of any Advance a
     condition which would constitute an Event of Default under this Agreement
     or under any Related Document.

REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any Indebtedness exists:

     ORGANIZATION. Borrower is a corporation for profit which is, and at all
     times shall be, duly organized, validly existing, and in good standing
     under and by virtue of the laws of the State of California. Borrower is
     duly authorized to transact business in all other states in which Borrower
     is doing business, having obtained all necessary filings, governmental
     licenses and approvals for each state in which Borrower is doing business.
     Specifically, Borrower is, and at all times shall be, duly qualified as a
     foreign corporation in all states in which the failure to so qualify would
     have a material adverse effect on its business or financial condition.
     Borrower has the full power and authority to own its properties and to
     transact the business in which it is presently engaged or presently
     proposes to engage. Borrower maintains its principal office at 520 GRAVES
     AVE, OXNARD, CA 93030. Unless Borrower has designated otherwise in writing,
     this is the principal office at which Borrower keeps its books and records
     including its records concerning the Collateral. Borrower will notify
     Lender prior to any change in the location of Borrower's state of
     organization or any change in Borrower's name. Borrower shall do all things
     necessary to preserve and to keep in full force and effect its existence,
     rights and privileges, and shall comply with all regulations, rules,
     ordinances, statutes, orders and decrees of any governmental or
     quasi-governmental authority or court applicable to Borrower and Borrower's
     business activities.

     ASSUMED BUSINESS NAMES. Borrower has filed or recorded all documents or
     filings required by law relating to all assumed business names used by
     Borrower. Excluding the name of Borrower, the following is a complete list
     of all assumed business names under which Borrower does business: NONE.

     AUTHORIZATION. Borrower's execution, delivery, and performance of this
     Agreement and all the Related Documents have been duly authorized by all
     necessary action by Borrower, do not require the consent or approval of any
     other person, regulatory authority, or governmental body, and do not
     conflict with, result in a violation of, or constitute a default under (1)
     any provision of (a) Borrower's articles of incorporation or organization,
     or bylaws, or (b) any agreement or other instrument binding upon Borrower
     or (2) any law, governmental regulation, court decree, or order applicable
     to Borrower or to Borrower's properties. Borrower has the power and
     authority to enter into the Note and the Related Documents and to grant
     collateral as security for the Loan. Borrower has the further power and
     authority to own and to hold all of Borrower's assets and properties, and
     to carry on Borrower's business as presently conducted.

     FINANCIAL INFORMATION. Each of Borrower's financial statements supplied to
     Lender truly and completely disclosed Borrower's financial condition as of
     the date of the statement, and there has been no material adverse change in
     Borrower's financial condition subsequent to the date of the most recent
     financial statement supplied to Lender. Borrower has no material contingent
     obligations except as disclosed in such financial statements.

     LEGAL EFFECT. This Agreement constitutes, and any instrument or agreement
     Borrower is required to give under this Agreement when delivered will
     constitute legal, valid, and binding obligations of Borrower enforceable
     against Borrower in accordance with their respective terms.

     PROPERTIES. Except as contemplated by this Agreement or as previously
     disclosed in Borrower's financial statements or in writing to Lender and as
     accepted by Lender, and except for property tax liens for taxes not
     presently due and payable, Borrower owns and has good title to all of
     Borrower's properties free and clear of all Security Interests, and has not
     executed any security documents or financing statements relating to such
     properties. All

                                        3

<PAGE>

     of Borrower's properties are titled in Borrower's legal name, and Borrower
     has not used or filed a financing statement under any other name for at
     least the last five (5) years.

     HAZARDOUS SUBSTANCES. Except as disclosed to and acknowledged by Lender in
     writing, Borrower represents and warrants that: (1) During the period of
     Borrower's ownership of the Collateral, there has been no use, generation,
     manufacture, storage, treatment, disposal, release or threatened release of
     any Hazardous Substance by any person on, under, about or from any of the
     Collateral. (2) Borrower has no knowledge of, or reason to believe that
     there has been (a) any breach or violation of any Environmental Laws; (b)
     any use, generation, manufacture, storage, treatment, disposal, release or
     threatened release of any Hazardous Substance on, under, about or from the
     Collateral by any prior owners or occupants of any of the Collateral; or
     (c) any actual or threatened litigation or claims of any kind by any person
     relating to such matters. (3) Neither Borrower nor any tenant, contractor,
     agent or other authorized user of any of the Collateral shall use,
     generate, manufacture, store, treat, dispose of or release any Hazardous
     Substance on, under, about or from any of the Collateral; and any such
     activity shall be conducted in compliance with all applicable federal,
     state, and local laws, regulations, and ordinances, including without
     limitation all Environmental Laws. Borrower authorizes Lender and its
     agents to enter upon the Collateral to make such inspections and tests as
     Lender may deem appropriate to determine compliance of the Collateral with
     this section of the Agreement. Any inspections or tests made by Lender
     shall be at Borrower's expense and for Lender's purposes only and shall not
     be construed to create any responsibility or liability on the part of
     Lender to Borrower or to any other person. The representations and
     warranties contained herein are based on Borrower's due diligence in
     investigating the Collateral for hazardous waste and Hazardous Substances.
     Borrower hereby (1) releases and waives any future claims against Lender
     for indemnity or contribution in the event Borrower becomes liable for
     cleanup or other costs under any such laws, and (2) agrees to indemnify,
     defend, and hold harmless Lender against any and all claims, losses,
     liabilities, damages, penalties, and expenses which Lender may directly or
     indirectly sustain or suffer resulting from a breach of this section of the
     Agreement or as a consequence of any use, generation, manufacture, storage,
     disposal, release or threatened release of a hazardous waste or substance
     on the Collateral. The provisions of this section of the Agreement,
     including the obligation to indemnify and defend, shall survive the payment
     of the Indebtedness and the termination, expiration or satisfaction of this
     Agreement and shall not be affected by Lender's acquisition of any interest
     in any of the Collateral, whether by foreclosure or otherwise.

     LITIGATION AND CLAIMS. No litigation, claim, investigation, administrative
     proceeding or similar action (including those for unpaid taxes) against
     Borrower is pending or threatened, and no other event has occurred which
     may materially adversely affect Borrower's financial condition or
     properties, other than litigation, claims, or other events, if any, that
     have been disclosed to and acknowledged by Lender in writing.

     TAXES. To the best of Borrower's knowledge, all of Borrower's tax returns
     and reports that are or were required to be filed, have been filed, and all
     taxes, assessments and other governmental charges have been paid in full,
     except those presently being or to be contested by Borrower in good faith
     in the ordinary course of business and for which adequate reserves have
     been provided.

     LIEN PRIORITY. Unless otherwise previously disclosed to Lender in writing,
     Borrower has not entered into or granted any Security Agreements, or
     permitted the filing or attachment of any Security Interests on or
     affecting any of the Collateral directly or indirectly securing repayment
     of Borrower's Loan and Note, that would be prior or that may in any way be
     superior to Lender's Security Interests and rights in and to such
     Collateral.

     BINDING EFFECT. This Agreement, the Note, all Security Agreements (if any),
     and all Related Documents are binding upon the signers thereof, as well as
     upon their successors, representatives and assigns, and are legally
     enforceable in accordance with their respective terms.

     COMMERCIAL PURPOSES. Borrower intends to use the Loan proceeds solely for
     business or commercially related purposes.

     EMPLOYEE BENEFIT PLANS. Each employee benefit plan as to which Borrower may
     have any liability complies in all material respects with all applicable
     requirements of law and regulations, and (1) no Reportable Event nor
     Prohibited Transaction (as defined in ERISA) has occurred with respect to
     any such plan, (2) Borrower has not withdrawn from any such plan or
     initiated steps to do so, (3) no steps have been taken to terminate any
     such plan or to appoint a trustee to administer such a plan, and (4) there
     are no unfunded liabilities other than those previously disclosed to Lender
     in writing.

     INVESTMENT COMPANY ACT. Borrower is not an "investment company" or a
     company "controlled" by an "investment company", within the meaning of the
     Investment Company Act of 1940, as amended.

     PUBLIC UTILITY HOLDING COMPANY ACT. Borrower is not a "holding company", or
     a "subsidiary company" of a "holding company", or an "affiliate" of a
     "holding company" or of a "subsidiary company" of a "holding company",
     within the meaning of the Public Utility Holding Company Act of 1935, as
     amended.

     REGULATIONS T AND U. Borrower is not engaged principally, or as one of its
     important activities, in the business of extending credit for the purpose
     of purchasing or carrying margin stock (within the meaning of Regulations T
     and U of the Board of Governors of the Federal Reserve System).

     INFORMATION. All information previously furnished or which is now being
     furnished by Borrower to Lender for the purposes of or in connection with
     this Agreement or any transaction contemplated by this Agreement is, and
     all information furnished by or on behalf of Borrower to Lender in the
     future will be, true and accurate in every material respect on the date as
     of which such information is dated or certified; and no such information is
     or will be incomplete by omitting to state any material fact the omission
     of which would cause the information to be misleading.

     CLAIMS AND DEFENSES. There are no defenses or counterclaims, offsets or
     other adverse claims, demands or actions of any kind, personal or
     otherwise, that Borrower, any Grantor, or any Guarantor could assert with
     respect to the Note, Loan, this Agreement, or the Related Documents.

AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, so long
as this Agreement remains in effect, Borrower will:

     REPAYMENT. Repay the Loan in accordance with its terms and the terms of
     this Agreement.

     NOTICES OF CLAIMS AND LITIGATION. Promptly inform Lender in writing of (1)
     all material adverse changes in Borrower's financial condition, and (2) all
     existing and all threatened litigation, claims, investigations,
     administrative proceedings or similar actions affecting Borrower or any
     Guarantor which could materially affect the financial condition of Borrower
     or the financial condition of any Guarantor. In addition, Borrower shall
     provide Lender with written notice of the occurrence of any Event of
     Default, the occurrence of any Reportable Event under, or the institution
     of steps by Borrower to withdraw from, or the institution of any steps to
     terminate, any employee benefit plan as to which Borrower may have any
     liability.

     FINANCIAL RECORDS. Maintain its books and records in accordance with GAAP,
     applied on a consistent basis, and permit Lender to examine and audit
     Borrower's books and records at all reasonable times.

     FINANCIAL STATEMENTS. Furnish Lender with the following:

                                        4
<PAGE>

          ANNUAL STATEMENTS. As soon as available, but in no event later than
          150 days after the end of each fiscal year, Borrower's balance sheet
          and income statement for the year ended, audited by a certified public
          accountant satisfactory to Lender.

          INTERIM STATEMENTS. As soon as available, but in no event later than
          thirty (30) days after the end of each month, Borrower's balance sheet
          and profit and loss statement for the period ended, prepared by
          Borrower.

          TAX RETURNS. As soon as available, but in no event later than thirty
          (30) days after the applicable filing date for the tax reporting
          period ended, Federal and other governmental tax returns, prepared by
          a certified public accountant satisfactory to Lender.

          ADDITIONAL REQUIREMENTS. (1) Listing Schedule: A listing of Eligible
          Inventory, Eligible Accounts (including aging), dilution reserve
          certificate, account payable (including aging) plus a Certification of
          Borrower's authorized officer (s) to the truthfulness and completeness
          of such listing shall be furnished monthly to Lender within 30 days
          after the end of each calendar month;

          (2) Personal Financial Statement of Mr. Cheng - Chich Huang in form
          and acceptable to Lender.

          (3) Semi-Annual collateral audit.

          (4) Lockbox requirement to be completed within 3 weeks of loan
          closing. 70% of the collection shall be applied to pay down the loan
          outstanding and 30% to be released to Borrower upon their request.

          (5) Borrower shall maintain minimum accounts payable of $5,000,000.00.

          All financial reports required to be provided under this Agreement
          shall be prepared in accordance with GAAP, applied on a consistent
          basis, and certified by Borrower as being true and correct.

     ADDITIONAL INFORMATION. Furnish such additional information and statements,
     as Lender may request from time to time.

     INSURANCE. Maintain fire and other risk insurance, public liability
     insurance, and such other insurance as Lender may require with respect to
     Borrower's properties and operations, in form, amounts, coverage and with
     insurance companies acceptable to Lender. Borrower, upon request of Lender,
     will deliver to Lender from time to time the policies or certificates of
     insurance in form satisfactory to Lender, including stipulations that
     coverage will not be cancelled or diminished without at least thirty (30)
     days prior written notice to Lender. Each insurance policy also shall
     include an endorsement providing that coverage in favor of Lender will not
     be impaired in any way by any act, omission or default of Borrower or any
     other person. In connection with all policies covering assets in which
     Lender holds or is offered a security interest for the Loans, Borrower will
     provide Lender with such lender's loss payable or other endorsements as
     Lender may require.

     INSURANCE REPORTS. Furnish to Lender, upon request of Lender, reports on
     each existing insurance policy showing such information as Lender may
     reasonably request, including without limitation the following: (1) the
     name of the insurer; (2) the risks insured; (3) the amount of the policy;
     (4) the properties insured; (5) the then current property values on the
     basis of which insurance has been obtained, and the manner of determining
     those values; and (6) the expiration date of the policy. In addition, upon
     request of Lender (however not more often than annually), Borrower will
     have an independent appraiser satisfactory to Lender determine, as
     applicable, the actual cash value or replacement cost of any Collateral.
     The cost of such appraisal shall be paid by Borrower.

     GUARANTIES. Prior to disbursement of any Loan proceeds, furnish executed
     guaranties of the Loans in favor of Lender, executed by the guarantor named
     below, on Lender's forms, and in the amount and under the conditions set
     forth in those guaranties.

<TABLE>
<CAPTION>
NAME OF GUARANTOR         AMOUNT
-----------------     --------------
<S>                   <C>
CHENG - CHICH HUANG   $20,000,000.00
</TABLE>

     OTHER AGREEMENTS. Comply with all terms and conditions of all other
     agreements, whether now or hereafter existing, between Borrower and any
     other party and notify Lender immediately in writing of any default in
     connection with any other such agreements.

     LOAN PROCEEDS. Use all Loan proceeds solely for Borrower's business
     operations, unless specifically consented to the contrary by Lender in
     writing.

     TAXES, CHARGES AND LIENS. Pay and discharge when due all of its
     indebtedness and obligations, including without limitation all assessments,
     taxes, governmental charges, levies and liens, of every kind and nature,
     imposed upon Borrower or its properties, income, or profits, prior to the
     date on which penalties would attach, and all lawful claims that, if
     unpaid, might become a lien or charge upon any of Borrower's properties,
     income, or profits.

     PERFORMANCE. Perform and comply, in a timely manner, with all terms,
     conditions, and provisions set forth in this Agreement, in the Related
     Documents, and in all other instruments and agreements between Borrower and
     Lender, and in all other loan agreements now or in the future existing
     between Borrower and any other party. Borrower shall notify Lender
     immediately in writing of any default in connection with any agreement.

     OPERATIONS. Maintain executive and management personnel with substantially
     the same qualifications and experience as the present executive and
     management personnel; provide written notice to Lender of any change in
     executive and management personnel; conduct its business affairs in a
     reasonable and prudent manner.

     ENVIRONMENTAL STUDIES. Promptly conduct and complete, at Borrower's
     expense, all such investigations, studies, samplings and testing as may be
     requested by Lender or any governmental authority relative to any
     substance, or any waste or by-product of any substance defined as toxic or
     a hazardous substance under applicable federal, state, or local law, rule,
     regulation, order or directive, at or affecting any property or any
     facility owned, leased or used by Borrower.

     COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. Comply with all laws,
     ordinances, and regulations, now or hereafter in effect, of all
     governmental authorities applicable to the conduct of Borrower's
     properties, businesses and operations, and to the use or occupancy of the
     Collateral, including without limitation, the Americans With Disabilities
     Act. Borrower may contest in good faith any such law, ordinance, or
     regulation and withhold compliance during any proceeding, including
     appropriate appeals, so long as Borrower has notified Lender in writing
     prior to doing so and so long as, in Lender's sole opinion, Lender's
     interests in the Collateral are not jeopardized. Lender may require
     Borrower to post adequate security or a surety bond, reasonably
     satisfactory to Lender, to protect Lender's interest.

                                       5

<PAGE>

     INSPECTION. Permit employees or agents of Lender at any reasonable time to
     inspect any and all Collateral for the Loan or Loans and Borrower's other
     properties and to examine or audit Borrower's books, accounts, and records
     and to make copies and memoranda of Borrower's books, accounts, and
     records. If Borrower now or at any time hereafter maintains any records
     (including without limitation computer generated records and computer
     software programs for the generation of such records) in the possession of
     a third party, Borrower, upon request of Lender, shall notify such party to
     permit Lender free access to such records at all reasonable times and to
     provide Lender with copies of any records it may request, all at Borrower's
     expense.

     CHANGE OF LOCATION. Immediately notify Lender in writing of any additions
     to or changes in the location of Borrower's businesses.

     TITLE TO ASSETS AND PROPERTY. Maintain good and marketable title to all of
     Borrower's assets and properties.

     NOTICE OF DEFAULT, LITIGATION AND ERISA MATTERS. Forthwith upon learning of
     the occurrence of any of the following, Borrower shall provide Lender with
     written notice thereof, describing the same and the steps being taken by
     Borrower with respect thereto: (1) the occurrence of any Event of Default,
     or (2) the institution of, or any adverse determination in, any litigation,
     arbitration proceeding or governmental proceeding, or (3) the occurrence of
     a Reportable Event under, or the institution of steps by Borrower to
     withdraw from, or the institution of any steps to terminate, any employee
     benefit plan as to which Borrower may have any liability.

     OTHER INFORMATION. From time to time Borrower will provide Lender with such
     other information as Lender may reasonably request.

     EMPLOYEE BENEFIT PLANS. So long as this Agreement remains in effect,
     Borrower will maintain each employee benefit plan as to which Borrower may
     have any liability, in compliance with all applicable requirements of law
     and regulations.

     COMPLIANCE CERTIFICATES. Unless waived in writing by Lender, provide Lender
     within thirty (30) days after the end of each fiscal quarter, with a
     certificate executed by Borrower's chief financial officer, or other
     officer or person acceptable to Lender, certifying that the representations
     and warranties set forth in this Agreement are true and correct as of the
     date of the certificate and further certifying that, as of the date of the
     certificate, no Event of Default exists under this Agreement.

     ENVIRONMENTAL COMPLIANCE AND REPORTS. Borrower shall comply in all respects
     with any and all Environmental Laws; not cause or permit to exist, as a
     result of an intentional or unintentional action or omission on Borrower's
     part or on the part of any third party, on property owned and/or occupied
     by Borrower, any environmental activity where damage may result to the
     environment, unless such environmental activity is pursuant to and in
     compliance with the conditions of a permit issued by the appropriate
     federal, state or local governmental authorities; shall furnish to Lender
     promptly and in any event within thirty (30) days after receipt thereof a
     copy of any notice, summons, lien, citation, directive, letter or other
     communication from any governmental agency or instrumentality concerning
     any intentional or unintentional action or omission on Borrower's part in
     connection with any environmental activity whether or not there is damage
     to the environment and/or other natural resources.

     ADDITIONAL ASSURANCES. Make, execute and deliver to Lender such promissory
     notes, mortgages, deeds of trust, security agreements, assignments,
     financing statements, instruments, documents and other agreements as Lender
     or its attorneys may reasonably request to evidence and secure the Loans
     and to perfect all Security Interests.

LENDER'S EXPENDITURES. If any action or proceeding is commenced that would
materially affect Lender's interest in the Collateral or if Borrower fails to
comply with any provision of this Agreement or any Related Documents, including
but not limited to Borrower's failure to discharge or pay when due any amounts
Borrower is required to discharge or pay under this Agreement or any Related
Documents, Lender on Borrower's behalf may (but shall not be obligated to) take
any action that Lender deems appropriate, including but not limited to
discharging or paying all taxes, liens, security interests, encumbrances and
other claims, at any time levied or placed on any Collateral and paying all
costs for insuring, maintaining and preserving any Collateral. All such
expenditures incurred or paid by Lender for such purposes will then bear
interest at the rate charged under the Note from the date incurred or paid by
Lender to the date of repayment by Borrower. All such expenses will become a
part of the Indebtedness and, at Lender's option, will (A) be payable on demand;
(B) be added to the balance of the Note and be apportioned among and be payable
with any installment payments to become due during either (1) the term of any
applicable insurance policy; or (2) the remaining term of the Note; or (C) be
treated as a balloon payment which will be due and payable at the Note's
maturity.

NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender:

     INDEBTEDNESS AND LIENS. (1) Except for trade debt incurred in the normal
     course of business and indebtedness to Lender contemplated by this
     Agreement, create, incur or assume indebtedness for borrowed money,
     including capital leases, (2) sell, transfer, mortgage, assign, pledge,
     lease, grant a security interest in, or encumber any of Borrower's assets
     (except as allowed as Permitted Liens), or (3) sell with recourse any of
     Borrower's accounts, except to Lender.

     NO ADDITIONAL BORROWING. There shall be no additional borrowing, without
     prior written consent from the Lender.

     CONTINUITY OF OPERATIONS. (1) Engage in any business activities
     substantially different than those in which Borrower is presently engaged,
     (2) cease operations, liquidate, merge, transfer, acquire or consolidate
     with any other entity, change its name, dissolve or transfer or sell
     Collateral out of the ordinary course of business, or (3) pay any dividends
     on Borrower's stock (other than dividends payable in its stock), provided,
     however that notwithstanding the foregoing, but only so long as no Event of
     Default has occurred and is continuing or would result from the payment of
     dividends, if Borrower is a "Subchapter S Corporation" (as defined in the
     Internal Revenue Code of 1986, as amended), Borrower may pay cash dividends
     on its stock to its shareholders from time to time in amounts necessary to
     enable the shareholders to pay income taxes and make estimated income tax
     payments to satisfy their liabilities under federal and state law which
     arise solely from their status as Shareholders of a Subchapter S
     Corporation because of their ownership of shares of Borrower's stock, or
     purchase or retire any of Borrower's outstanding shares or alter or amend
     Borrower's capital structure.

     LOANS, ACQUISITIONS AND GUARANTIES. (1) Loan, invest in or advance money or
     assets to any other person, enterprise or entity, (2) purchase, create or
     acquire any interest in any other enterprise or entity, or (3) incur any
     obligation as surety or guarantor other than in the ordinary course of
     business.

     AGREEMENTS. Borrower will not enter into any agreement containing any
     provisions which would be violated or breached by the performance of
     Borrower's obligations under this Agreement or in connection herewith.

                                       6

<PAGE>

CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower, whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan Advances or to disburse Loan proceeds if:
(A) Borrower or any Guarantor is in default under the terms of this Agreement or
any of the Related Documents or any other agreement that Borrower or any
Guarantor has with Lender; (B) Borrower or any Guarantor dies, becomes
incompetent or becomes insolvent, files a petition in bankruptcy or similar
proceedings, or is adjudged a bankrupt; (C) there occurs a material adverse
change in Borrower's financial condition, in the financial condition of any
Guarantor, or in the value of any Collateral securing any Loan; or (D) any
Guarantor seeks, claims or otherwise attempts to limit, modify or revoke such
Guarantor's guaranty of the Loan or any other loan with Lender.

DEFAULT. Each of the following shall constitute an Event of Default under this
Agreement:

     PAYMENT DEFAULT. Borrower fails to make any payment when due under the
     Loan.

     OTHER DEFAULTS. Borrower fails to comply with or to perform any other term,
     obligation, covenant or condition contained in this Agreement or in any of
     the Related Documents or to comply with or to perform any term, obligation,
     covenant or condition contained in any other agreement between Lender and
     Borrower.

     DEFAULT IN FAVOR OF THIRD PARTIES. Borrower or any Grantor defaults under
     any loan, extension of credit, security agreement, purchase or sales
     agreement, or any other agreement, in favor of any other creditor or person
     that may materially affect any of Borrower's or any Grantor's property or
     Borrower's or any Grantor's ability to repay the Loans or perform their
     respective obligations under this Agreement or any of the Related
     Documents.

     FALSE STATEMENTS. Any warranty, representation or statement made or
     furnished to Lender by Borrower or on Borrower's behalf, or made by
     Guarantor, under this Agreement or the Related Documents in connection with
     the obtaining of the Loan evidenced by the Note or any security document
     directly or indirectly securing repayment of the Note is false or
     misleading in any material respect, either now or at the time made or
     furnished or becomes false or misleading at any time thereafter.

     INSOLVENCY. The dissolution or termination of Borrower's existence as a
     going business, the insolvency of Borrower, the appointment of a receiver
     for any part of Borrower's property, any assignment for the benefit of
     creditors, any type of creditor workout, or the commencement of any
     proceeding under any bankruptcy or insolvency laws by or against Borrower.

     DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related Documents
     ceases to be in full force and effect (including failure of any collateral
     document to create a valid and perfected security interest or lien) at any
     time and for any reason.

     CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
     forfeiture proceedings, whether by judicial proceeding, self-help,
     repossession or any other method, by any creditor of Borrower or by any
     governmental agency against any collateral securing the Loan. This includes
     a garnishment of any of Borrower's accounts, including deposit accounts,
     with Lender. However, this Event of Default shall not apply if there is a
     good faith dispute by Borrower as to the validity or reasonableness of the
     claim which is the basis of the creditor or forfeiture proceeding and if
     Borrower gives Lender written notice of the creditor or forfeiture
     proceeding and deposits with Lender monies or a surety bond for the
     creditor or forfeiture proceeding, in an amount determined by Lender, in
     its sole discretion, as being an adequate reserve or bond for the dispute.

     EXECUTION; ATTACHMENT. Any execution or attachment is levied against the
     Collateral, and such execution or attachment is not set aside, discharged
     or stayed within thirty (30) days after the same is levied.

     CHANGE IN ZONING OR PUBLIC RESTRICTION. Any change in any zoning ordinance
     or regulation or any other public restriction is enacted, adopted or
     implemented, that limits or defines the uses which may be made of the
     Collateral such that the present or intended use of the Collateral, as
     specified in the Related Documents, would be in violation of such zoning
     ordinance or regulation or public restriction, as changed.

     DEFAULT UNDER OTHER LIEN DOCUMENTS. A default occurs under any other
     mortgage, deed of trust or security agreement covering all or any portion
     of the Collateral.

     JUDGMENT. Unless adequately covered by insurance in the opinion of Lender,
     the entry of a final judgment for the payment of money involving more than
     ten thousand dollars ($10,000.00) against Borrower and the failure by
     Borrower to discharge the same, or cause it to be discharged, or bonded off
     to Lender's satisfaction, within thirty (30) days from the date of the
     order, decree or process under which or pursuant to which such judgment was
     entered.

     EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with respect
     to any Guarantor of any of the Indebtedness or any Guarantor dies or
     becomes incompetent, or revokes or disputes the validity of, or liability
     under, any Guaranty of the Indebtedness. In the event of a death, Lender,
     at its option, may, but shall not be required to, permit the Guarantor's
     estate to assume unconditionally the obligations arising under the guaranty
     in a manner satisfactory to Lender, and, in doing so, cure any Event of
     Default.

     CHANGE IN OWNERSHIP. Any change in ownership of the common stock of
     Borrower without prior written consent from the Lender.

     INTER-COMPANY LOAN. There shall not be any inter-company loans to
     subsidiaries or related companies without prior written consent from the
     Lender.

     ADVERSE CHANGE. A material adverse change occurs in Borrower's financial
     condition, or Lender believes the prospect of payment or performance of the
     Loan is impaired.

     RIGHT TO CURE. If any default, other than a default on Indebtedness, is
     curable and if Borrower or Grantor, as the case may be, has not been given
     a notice of a similar default within the preceding twelve (12) months, it
     may be cured if Borrower or Grantor, as the case may be, after receiving
     written notice from Lender demanding cure of such default: (1) cure the
     default within ten (10) days; or (2) if the cure requires more than ten
     (10) days, immediately initiate steps which Lender deems in Lender's sole
     discretion to be sufficient to cure the default and thereafter continue and
     complete all reasonable and necessary steps sufficient to produce
     compliance as soon as reasonably practical.

EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where
otherwise provided in this Agreement or the Related Documents, all commitments
and obligations of Lender under this Agreement or the Related Documents or any
other agreement immediately will terminate (including any obligation to make
further Loan Advances or disbursements), and, at Lender's option, all
Indebtedness immediately will become due and payable, all without notice of any
kind to Borrower, except that in the case of an Event of Default of the type
described in the "Insolvency"

                                       7

<PAGE>

subsection above, such acceleration shall be automatic and not optional. In
addition, Lender shall have all the rights and remedies provided in the Related
Documents or available at law, in equity, or otherwise. Except as may be
prohibited by applicable law, all of Lender's rights and remedies shall be
cumulative and may be exercised singularly or concurrently. Election by Lender
to pursue any remedy shall not exclude pursuit of any other remedy, and an
election to make expenditures or to take action to perform an obligation of
Borrower or of any Grantor shall not affect Lender's right to declare a default
and to exercise its rights and remedies.

ADDITIONAL DOCUMENTS. Borrower shall provide Lender with the following
additional documents:

     CORPORATE RESOLUTION. Borrower has provided or will provide Lender with a
     certified copy of resolutions properly adopted by Borrower's Board of
     Directors, and certified by Borrower's corporate secretary, assistant
     secretary, or other authorized officer, under which Borrower's Board of
     Directors authorized one or more designated officers or employees to
     execute this Agreement, the Note and any and all Security Agreements
     directly or indirectly securing repayment of the same, and to consummate
     the borrowings and other transactions as contemplated under this Agreement,
     and to consent to the remedies following any default by Borrower as
     provided in this Agreement and in any Security Agreements.

     OPINION OF COUNSEL. When required by Lender, Borrower has provided or will
     provide Lender with an opinion of Borrower's counsel certifying to and
     that: (1) Borrower's Note, any Security Agreements and this Agreement
     constitute valid and binding obligations on Borrower's part that are
     enforceable in accordance with their respective terms; (2) Borrower is
     validly existing and in good standing; (3) Borrower has authority to enter
     into this Agreement and to consummate the transactions contemplated under
     this Agreement; and (4) such other matters as may have been requested by
     Lender or by Lender's counsel.

USA PATRIOT ACT NOTICE. Lender hereby notifies the Borrower that pursuant to the
requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001)) (the "Act"), it is required to obtain, verify and record
information that identifies the Borrower, which information includes the name
and address of the Borrower and other information that will allow Lender to
identify the Borrower in accordance with the Act.

RIGHT TO INSPECT. Lender shall have the right, from time to time hereafter to
inspect te books and to check, test and appraise the Collateral in order to
verify Borrower's financial conditions of the amount, quality, value, condition
of, or any other matter relating to the Collateral, provided that there shall be
2 collateral appraisals per year at the Borrower's cost.

JUDICIAL REFERENCE. Judicial Reference; Consent to Jurisdiction. ALL CLAIMS,
CAUSES OF ACTION OR OTHER DISPUTES CONCERNING THIS AGREEMENT OR THE RELATED
DOCUMENTS (EACH A "CLAIM"), INCLUDING ANY AND ALL QUESTIONS OF LAW OR FACT
RELATING THERETO, SHALL, AT THE WRITTEN REQUEST OF ANY PARTY TO THIS AGREEMENT,
BE DETERMINED BY JUDICIAL REFERENCE PURSUANT TO THE CALIFORNIA CODE OF CIVIL
PROCEDURE ("REFERENCE"). THE PARTIES SHALL SELECT A SINGLE NEUTRAL REFEREE, WHO
SHALL BE A RETIRED STATE OR FEDERAL JUDGE. IN THE EVENT THAT THE PARTIES CANNOT
AGREE UPON A REFEREE, THE REFEREE SHALL BE APPOINTED BY THE COURT. THE REFEREE
SHALL REPORT A STATEMENT OF DECISION TO THE COURT. NOTHING IN THIS PARAGRAPH
SHALL LIMIT THE RIGHT OF ANY PARTY AT ANY TIME TO EXERCISE SELF-HELP REMEDIES,
FORECLOSE AGAINST COLLATERAL OR OBTAIN PROVISIONAL REMEDIES. THE PARTIES SHALL
BEAR THE FEES AND EXPENSES OF THE REFEREE EQUALLY UNLESS THE REFEREE ORDERS
OTHERWISE. THE REFEREE SHALL ALSO DETERMINE ALL ISSUES RELATING TO THE
APPLICABILITY, INTERPRETATION, AND ENFORCEABILITY OF THIS PARAGRAPH. THE PARTIES
ACKNOWLEDGE THAT THE CLAIMS WILL NOT BE ADJUDICATED BY A JURY. Subject to the
immediately preceding paragraph, each party hereto hereby irrevocably and
unconditionally (1) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the Related Documents to which it is a
party, or for recognition and enforcement of any judgment in respect thereof, to
the non-exclusive general jurisdiction of the courts of the State of California,
the courts of the United States of America for the Central District of
California, and appellate courts from any thereof; (2) consents that any such
action or proceeding may be brought in such courts and waives any objection that
it may now or hereafter have to the venue of any such action or proceeding in
any such court or that such action or proceeding was brought in an inconvenient
forum and agrees not to plead or claim the same; (3) agrees that service of
process in any such action or proceeding may be effected by mailing a copy
thereof by registered or certified mail (or any substantially similar form of
mail), postage prepaid, to any party at its address set forth herein; (4) agrees
that nothing herein shall affect the right to effect service of process in any
other manner permitted by law or shall limit the right to sue in any other
jurisdiction; and (5) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding referred
to in this subsection any punitive damages.

STANDARD TERMS AND CONDITIONS. An exhibit, titled "STANDARD TERMS AND
CONDITIONS," is attached to this Agreement and by this reference is made a part
of this Agreement just as if all the provisions, terms and conditions of the
Exhibit had been fully set forth in this Agreement.

TRADE SERVICE FEE. An exhibit, titled "TRADE SERVICE FEE SCHEDULE," is attached
to this Agreement and by this reference is made a part of this Agreement just as
if all the provisions, terms and conditions of the Exhibit had been fully set
forth in this Agreement.

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:

     AMENDMENTS. This Agreement, together with any Related Documents,
     constitutes the entire understanding and agreement of the parties as to the
     matters set forth in this Agreement. No alteration of or amendment to this
     Agreement shall be effective unless given in writing and signed by the
     party or parties sought to be charged or bound by the alteration or
     amendment.

     ATTORNEYS' FEES; EXPENSES. Borrower agrees to pay upon demand all of
     Lender's costs and expenses, including Lender's attorneys' fees and
     Lender's legal expenses, incurred in connection with the enforcement of
     this Agreement. Lender may hire or pay someone else to help enforce this
     Agreement, and Borrower shall pay the costs and expenses of such
     enforcement. Costs and expenses include Lender's attorneys' fees and legal
     expenses whether or not there is a lawsuit, including attorneys' fees and
     legal expenses for bankruptcy proceedings (including efforts to modify or
     vacate any automatic stay or injunction), appeals, and any anticipated
     post-judgment collection services. Borrower also shall pay all court costs
     and such additional fees as may be directed by the court.

     BORROWER INFORMATION. Borrower consents to the release of information on or
     about Borrower by Lender in accordance with any court order, law or
     regulation and in response to credit inquiries concerning Borrower.

     CAPTION HEADINGS. Caption headings in this Agreement are for convenience
     purposes only and are not to be used to interpret or define the provisions
     of this Agreement.

     CONSENT TO LOAN PARTICIPATION. Borrower agrees and consents to Lender's
     sale or transfer, whether now or later, of one or more participation
     interests in the Loan to one or more purchasers, whether related or
     unrelated to Lender. Lender may provide, without any limitation whatsoever,
     to any one or more purchasers, or potential purchasers, any information or
     knowledge Lender may have about Borrower or about any other matter

                                       8
<PAGE>

     relating to the Loan, and Borrower hereby waives any rights to privacy
     Borrower may have with respect to such matters. Borrower additionally
     waives any and all notices of sale of participation interests, as well as
     all notices of any repurchase of such participation interests. Borrower
     also agrees that the purchasers of any such participation interests will be
     considered as the absolute owners of such interests in the Loan and will
     have all the rights granted under the participation agreement or agreements
     governing the sale of such participation interests. Borrower further waives
     all rights of offset or counterclaim that it may have now or later against
     Lender or against any purchaser of such a participation interest and
     unconditionally agrees that either Lender or such purchaser may enforce
     Borrower's obligation under the Loan irrespective of the failure or
     insolvency of any holder of any interest in the Loan. Borrower further
     agrees that the purchaser of any such participation interests may enforce
     its interests irrespective of any personal claims or defenses that Borrower
     may have against Lender.

     GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY FEDERAL LAW APPLICABLE TO
     LENDER AND, TO THE EXTENT NOT PREEMPTED BY FEDERAL LAW, THE LAWS OF THE
     STATE OF CALIFORNIA WITHOUT REGARD TO ITS CONFLICTS OF LAW PROVISIONS. THIS
     AGREEMENT HAS BEEN ACCEPTED BY LENDER IN THE STATE OF CALIFORNIA.

     NON-LIABILITY OF LENDER. The relationship between Borrower and Lender
     created by this Agreement is strictly a debtor and creditor relationship
     and not fiduciary in nature, nor is the relationship to be construed as
     creating any partnership or joint venture between Lender and Borrower.
     Borrower is exercising Borrower's own judgment with respect to Borrower's
     business. All information supplied to Lender is for Lender's protection
     only and no other party is entitled to rely on such information. There is
     no duty for Lender to review, inspect, supervise or inform Borrower of any
     matter with respect to Borrower's business. Lender and Borrower intend that
     Lender may reasonably rely on all information supplied by Borrower to
     Lender, together with all representations and warranties given by Borrower
     to Lender, without investigation or confirmation by Lender and that any
     investigation or failure to investigate will not diminish Lender's right to
     so rely.

     NOTICE OF LENDER'S BREACH. Borrower must notify Lender in writing of any
     breach of this Agreement or the Related Documents by Lender and any other
     claim, cause of action or offset against Lender within thirty (30) days
     after the occurrence of such breach or after the accrual of such claim,
     cause of action or offset. Borrower waives any claim, cause of action or
     offset for which notice is not given in accordance with this paragraph.'
     Lender is entitled to rely on any failure to give such notice.

     INDEMNIFICATION OF LENDER. Borrower agrees to indemnify, to defend and to
     save and hold Lender harmless from any and all claims, suits, obligations,
     damages, losses, costs and expenses (including, without limitation,
     Lender's attorneys' fees), demands, liabilities, penalties, fines and
     forfeitures of any nature whatsoever that may be asserted against or
     incurred by Lender, its officers, directors, employees, and agents arising
     out of, relating to, or in any manner occasioned by this Agreement and the
     exercise of the rights and remedies granted Lender under this, as well as
     by: (1) the ownership, use, operation, construction, renovation,
     demolition, preservation, management, repair, condition, or maintenance of
     any part of the Collateral; (2) the exercise of any of Borrower's rights
     collaterally assigned and pledged to Lender hereunder; (3) any failure of
     Borrower to perform any of its obligations hereunder; and/or (4) any
     failure of Borrower to comply with the environmental and ERISA obligations,
     representations and warranties set forth herein. The foregoing indemnity
     provisions shall survive the cancellation of this Agreement as to all
     matters arising or accruing prior to such cancellation and the foregoing
     indemnity shall survive in the event that Lender elects to exercise any of
     the remedies as provided under this Agreement following default hereunder.
     Borrower's indemnity obligations under this section shall not in any way be
     affected by the presence or absence of covering insurance, or by the amount
     of such insurance or by the failure or refusal of any insurance carrier to
     perform any obligation on its part under any insurance policy or policies
     affecting the Collateral and/or Borrower's business activities. Should any
     claim, action or proceeding be made or brought against Lender by reason of
     any event as to which Borrower's indemnification obligations apply, then,
     upon Lender's demand, Borrower, at its sole cost and expense, shall defend
     such claim, action or proceeding in Borrower's name, if necessary, by the
     attorneys for Borrower's insurance carrier (if such claim, action or
     proceeding is covered by insurance), or otherwise by such attorneys as
     Lender shall approve. Lender may also engage its own attorneys at its
     reasonable discretion to defend Borrower and to assist in its defense and
     Borrower agrees to pay the fees and disbursements of such attorneys.

     COUNTERPARTS. This Agreement may be executed in multiple counterparts, each
     of which, when so executed, shall be deemed an original, but all such
     counterparts, taken together, shall constitute one and the same Agreement.

     NO WAIVER BY LENDER. Lender shall not be deemed to have waived any rights
     under this Agreement unless such waiver is given in writing and signed by
     Lender. No delay or omission on the part of Lender in exercising any right
     shall operate as a waiver of such right or any other right. A waiver by
     Lender of a provision of this Agreement shall not prejudice or constitute a
     waiver of Lender's right otherwise to demand strict compliance with that
     provision or any other provision of this Agreement. No prior waiver by
     Lender, nor any course of dealing between Lender and Borrower, or between
     Lender and any Grantor, shall constitute a waiver of any of Lender's rights
     or of any of Borrower's or any Grantor's obligations as to any future
     transactions. Whenever the consent of Lender is required under this
     Agreement, the granting of such consent by Lender in any instance shall not
     constitute continuing consent to subsequent instances where such consent is
     required and in all cases such consent may be granted or withheld in the
     sole discretion of Lender.

     NOTICES. Any notice required to be given under this Agreement shall be
     given in writing, and shall be effective when actually delivered, when
     actually received by telefacsimile (unless otherwise required by law), when
     deposited with a nationally recognized overnight courier, or, if mailed,
     when deposited in the United States mail, as first class, certified or
     registered mail postage prepaid, directed to the addresses shown near the
     beginning of this Agreement. Any party may change its address for notices
     under this Agreement by giving formal written notice to the other parties,
     specifying that the purpose of the notice is to change the party's address.
     For notice purposes, Borrower agrees to keep Lender informed at all times
     of Borrower's current address. Unless otherwise provided or required by
     law, if there is more than one Borrower, any notice given by Lender to any
     Borrower is deemed to be notice given to all Borrowers.

     SEVERABILITY. If a court of competent jurisdiction finds any provision of
     this Agreement to be illegal, invalid, or unenforceable as to any
     circumstance, that finding shall not make the offending provision illegal,
     invalid, or unenforceable as to any other circumstance. If feasible, the
     offending provision shall be considered modified so that it becomes legal,
     valid and enforceable. If the offending provision cannot be so modified, it
     shall be considered deleted from this Agreement. Unless otherwise required
     by law, the illegality, invalidity, or unenforceability of any provision of
     this Agreement shall not affect the legality, validity or enforceability of
     any other provision of this Agreement.

     SOLE DISCRETION OF LENDER. Whenever Lender's consent or approval is
     required under this Agreement, the decision as to whether or not to consent
     or approve shall be in the sole and exclusive discretion of Lender and
     Lender's decision shall be final and conclusive.

     SUBSIDIARIES AND AFFILIATES OF BORROWER. To the extent the context of any
     provisions of this Agreement makes it appropriate, including without
     limitation any representation, warranty or covenant, the word "Borrower" as
     used in this Agreement shall include all of Borrower's subsidiaries and

                                       9

<PAGE>

     affiliates. Notwithstanding the foregoing however, under no circumstances
     shall this Agreement be construed to require Lender to make any Loan or
     other financial accommodation to any of Borrower's subsidiaries or
     affiliates.

     SUCCESSORS AND ASSIGNS. All covenants and agreements by or on behalf of
     Borrower contained in this Agreement or any Related Documents shall bind
     Borrower's successors and assigns and shall inure to the benefit of Lender
     and its successors and assigns. Borrower shall not, however, have the right
     to assign Borrower's rights under this Agreement or any interest therein,
     without the prior written consent of Lender.

     SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Borrower understands and agrees
     that in extending Loan Advances, Lender is relying on all representations,
     warranties, and covenants made by Borrower in this Agreement or in any
     certificate or other instrument delivered by Borrower to Lender under this
     Agreement or the Related Documents. Borrower further agrees that regardless
     of any investigation made by Lender, all such representations, warranties
     and covenants will survive the extension of Loan Advances and delivery to
     Lender of the Related Documents, shall be continuing in nature, shall be
     deemed made and redated by Borrower at the time each Loan Advance is made,
     and shall remain in full force and effect until such time as Borrower's
     Indebtedness shall be paid in full, or until this Agreement shall be
     terminated in the manner provided above, whichever is the last to occur.

     TIME IS OF THE ESSENCE. Time is of the essence in the performance of this
     Agreement.

     WAIVE JURY. TO THE EXTENT PERMITTED BY APPLICABLE LAW, ALL PARTIES TO THIS
     AGREEMENT HEREBY WAIVE THE RIGHT TO ANY JURY TRIAL IN ANY ACTION,
     PROCEEDING, OR COUNTERCLAIM BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY.

DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Agreement. Unless specifically stated to the
contrary, all references to dollar amounts shall mean amounts in lawful money of
the United States of America. Words and terms used in the singular shall include
the plural, and the plural shall include the singular, as the context may
require. Words and terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. Accounting
words and terms not otherwise defined in this Agreement shall have the meanings
assigned to them in accordance with generally accepted accounting principles as
in effect on the date of this Agreement:

     ACCOUNT. The word "Account" means a trade account, account receivable,
     other receivable, or other right to payment for goods sold or services
     rendered owing to Borrower (or to a third party grantor acceptable to
     Lender).

     ACCOUNT DEBTOR. The words "Account Debtor" mean the person or entity
     obligated upon an Account.

     ADVANCE. The word "Advance" means a disbursement of Loan funds made, or to
     be made, to Borrower or on Borrower's behalf under the terms and conditions
     of this Agreement.

     AGREEMENT. The word "Agreement" means this Business Loan Agreement (Asset
     Based), as this Business Loan Agreement (Asset Based) may be amended or
     modified from time to time, together with all exhibits and schedules
     attached to this Business Loan Agreement (Asset Based) from time to time.

     BORROWER. The word "Borrower" means VIVITAR CORPORATION and includes all
     co-signers and co-makers signing the Note and all their successors and
     assigns.

     BORROWING BASE. The words "Borrowing Base" mean (1) The lesser of (a)
     $20,000,000.00 or (b) 80% of the aggregate amount of Eligible Accounts if
     the Dilution Rate is equal or less than 10% or; (2) The lesser of (a)
     $20,000,000.00 or (b) 70% of the aggregate amount of Eligible Accounts if
     the Dilution Rate is greater than 10% but less than 15%, minus the
     aggregate amount of reserves, if any, established by Lender.

     BUSINESS DAY. The words "Business Day" mean a day on which commercial banks
     are open in the State of California.

     C.I.F.. The initials "C.I.F." mean costs, insurance and freight, which
     includes in a lump sum the cost of the goods, insurance and freight to the
     named destination, as provided in the Uniform Commercial Code.

     COLLATERAL. The word "Collateral" means all property and assets granted as
     collateral security for a Loan, whether real or personal property, whether
     granted directly or indirectly, whether granted now or in the future, and
     whether granted in the form of a security interest, mortgage, collateral
     mortgage, deed of trust, assignment, pledge, crop pledge, chattel mortgage,
     collateral chattel mortgage, chattel trust, factor's lien, equipment trust,
     conditional sale, trust receipt, lien, charge, lien or title retention
     contract, lease or consignment intended as a security device, or any other
     security or lien interest whatsoever, whether created by law, contract, or
     otherwise. The word Collateral also includes without limitation all
     collateral described in the Collateral section of this Agreement.

     DILUTION RATE. means, as of any date of determination, a percentage, based
     upon the experience of the previously monthly record, that is the result of
     dividing the Dollar (or Dollar equivalent) amount of (a) total credit memos
     and charge back or other dilutive items with respect to the Accounts of
     Borrower during such period, by (b) Borrower's total sales with respect to
     Accounts during such period.

     ELIGIBLE ACCOUNTS. The words "Eligible Accounts" mean at any time, all of
     Borrower's Accounts which contain selling terms and conditions acceptable
     to Lender. The net amount of any Eligible Account against which Borrower
     may borrow shall exclude all returns, discounts, credits, and offsets of
     any nature. Unless otherwise agreed to by Lender in writing, Eligible
     Accounts do not include:

          (1) Accounts with respect to which the Account Debtor is employee or
          agent of Borrower.

          (2) Accounts with respect to which the Account Debtor is a subsidiary
          of, or affiliated with Borrower or its shareholders, officers, or
          directors.

          (3) Accounts with respect to which goods are placed on consignment,
          guaranteed sale, or other terms by reason of which the payment by the
          Account Debtor may be conditional.

          (4) Accounts with respect to which the Account Debtor is not a
          resident of the United States, except to the extent such Accounts are
          supported by insurance, bonds or other assurances satisfactory to
          Lender.

          (5) Accounts with respect to which Borrower is or may become liable to
          the Account Debtor for goods sold or services rendered by the Account
          Debtor to Borrower.

          (6) Accounts which are subject to dispute, counterclaim, or setoff.

          (7) Accounts with respect to which the goods have not been shipped or
          delivered, or the services have not been rendered, to the Account

                                       10

<PAGE>

          Debtor.

          (8) Accounts with respect to which Lender, in its sole discretion,
          deems the creditworthiness or financial condition of the Account
          Debtor to be unsatisfactory.

          (9) Accounts of any Account Debtor who has filed or has had filed
          against it a petition in bankruptcy or an application for relief under
          any provision of any state or federal bankruptcy, insolvency, or
          debtor-in-relief acts; or who has had appointed a trustee, custodian,
          or receiver for the assets of such Account Debtor; or who has made an
          assignment for the benefit of creditors or has become insolvent or
          fails generally to pay its debts (including its payrolls) as such
          debts become due.

          (10) Accounts with respect to which the Account Debtor is the United
          States government or any department or agency of the United States,
          however, provided, that up to $750,000.00 under the name of AAFES
          shall be permitted as Eligible Accounts.

          (11) Accounts which have not been paid in full within 60 DAYS FROM DUE
          DATE. The entire balance of any Account of any single Account Debtor
          will be ineligible whenever the portion of the Account which has not
          been paid within 60 DAYS FROM DUE DATE is in excess of 25.000% of the
          total amount outstanding on the Account.

          (12) Accounts that fail to satisfy eligible criteria established from
          time to time by Lender.

     ELIGIBLE INVENTORY. The words "Eligible Inventory" mean, at any time, all
     of Borrower's Inventory as defined below, except:

          (1) Inventory which is not owned by Borrower free and clear of all
          security interests, liens, encumbrances, and claims of third parties.

          (2) Inventory which Lender, in its sole discretion, deems to be
          obsolete, unsalable, damaged, defective, or unfit for further
          processing.

          (3) Work in progress.

     ENVIRONMENTAL LAWS. The words "Environmental Laws" mean any and all state,
     federal and local statutes, regulations and ordinances relating to the
     protection of human health or the environment, including without limitation
     the Comprehensive Environmental Response, Compensation, and Liability Act
     of 1980, as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the
     Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499
     ("SARA"), the Hazardous Materials Transportation Act, 49 U.S.C. Section
     1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C.
     Section 6901, et seq., Chapters 6.5 through 7.7 of Division 20 of the
     California Health and Safety Code, Section 25100, et seq., or other
     applicable state or federal laws, rules, or regulations adopted pursuant
     thereto.

     ERISA. The word "ERISA" means the Employee Retirement Income Security Act
     of 1974, as amended from time to time, and including all regulations and
     published interpretations of the act.

     EVENT OF DEFAULT. The words "Event of Default" mean individually,
     collectively, and interchangeably any of the events of default set forth in
     this Agreement in the default section of this Agreement.

     EXPIRATION DATE. The words "Expiration Date" mean the date of termination
     of Lender's commitment to lend under this Agreement.

     GAAP. The word "GAAP" means generally accepted accounting principles.

     GRANTOR. The word "Grantor" means each and all of the persons or entities
     granting a Security Interest in any Collateral for the Loan, including
     without limitation all Borrowers granting such a Security Interest.

     GUARANTOR. The word "Guarantor" means any guarantor, surety, or
     accommodation party of any or all of the Loan, and, in each case,
     Borrower's successors, assigns, heirs, personal representatives, executors
     and administrators of any guarantor, surety, or accommodation party.

     GUARANTY. The word "Guaranty" means the guaranty from Guarantor to Lender,
     including without limitation a guaranty of all or part of the Note.

     HAZARDOUS SUBSTANCES. The words "Hazardous Substances" mean materials that,
     because of their quantity, concentration or physical, chemical or
     infectious characteristics, may cause or pose a present or potential hazard
     to human health or the environment when improperly used, treated, stored,
     disposed of, generated, manufactured, transported or otherwise handled. The
     words "Hazardous Substances" are used in their very broadest sense and
     include without limitation any and all hazardous or toxic substances,
     materials or waste as defined by or listed under the Environmental Laws.
     The term "Hazardous Substances" also includes, without limitation,
     petroleum and petroleum by-products or any fraction thereof and asbestos.

     INDEBTEDNESS. The word "Indebtedness" means the indebtedness evidenced by
     the Note or Related Documents, including all principal and interest
     together with all other indebtedness and costs and expenses for which
     Borrower is responsible under this Agreement or under any of the Related
     Documents.

     INVENTORY. The word "Inventory" means all of Borrower's raw materials, work
     in process, finished goods, merchandise, parts and supplies, of every kind
     and description, and goods held for sale or lease or furnished under
     contracts of service in which Borrower now has or hereafter acquires any
     right, whether held by Borrower or others, and all documents of title,
     warehouse receipts, bills of lading, and all other documents of every type
     covering all or any part of the foregoing. Inventory includes inventory
     temporarily out of Borrower's custody or possession and all returns on
     Accounts.

     LENDER. The word "Lender" means DBS BANK LTD., LOS ANGELES AGENCY, its
     successors and assigns.

     LETTER OF CREDIT. The words "Letter of Credit" mean a letter of credit
     issued by Lender on behalf of Borrower as described in the Letter of Credit
     Facility section of this Agreement.

     LOAN. The word "Loan" means any and all loans and financial accommodations
     from Lender to Borrower whether now or hereafter existing, and however
     evidenced, including without limitation those loans and financial
     accommodations described herein or described on any exhibit or schedule
     attached to this Agreement from time to time, and further including any and
     all subsequent amendments, additions, substitutions, renewals and
     refinancings of any of Borrower's Loans.

     NOTE. The word "Note" means the Note executed by VIVITAR CORPORATION in the
     principal amount of $20,000,000.00 dated December 26, 2006, together with
     all renewals of, extensions of, modifications of, refinancings of,
     consolidations of, and substitutions for the note or credit agreement.

                                       11

<PAGE>

     PERMITTED LIENS. The words "Permitted Liens" mean (1) liens and security
     interests securing Indebtedness owed by Borrower to Lender; (2) liens for
     taxes, assessments, or similar charges either not yet due or being
     contested in good faith; (3) liens of materialmen, mechanics, warehousemen,
     or carriers, or other like liens arising in the ordinary course of business
     and securing obligations which are not yet delinquent; (4) purchase money
     liens or purchase money security interests upon or in any property acquired
     or held by Borrower in the ordinary course of business to secure
     indebtedness outstanding on the date of this Agreement or permitted to be
     incurred under the paragraph of this Agreement titled "Indebtedness and
     Liens"; (5) liens and security interests which, as of the date of this
     Agreement, have been disclosed to and approved by the Lender in writing;
     and (6) those liens and security interests which in the aggregate
     constitute an immaterial and insignificant monetary amount with respect to
     the net value of Borrower's assets.

     PRIMARY CREDIT FACILITY. The words "Primary Credit Facility" mean the
     credit facility described in the Line of Credit section of this Agreement.

     RELATED DOCUMENTS. The words "Related Documents" mean all promissory notes,
     credit agreements, loan agreements, environmental agreements, guaranties,
     security agreements, mortgages, deeds of trust, security deeds, collateral
     mortgages, and all other instruments, agreements and documents, whether now
     or hereafter existing, executed in connection with the Loan.

     SECURITY AGREEMENT. The words "Security Agreement" mean and include without
     limitation any agreements, promises, covenants, arrangements,
     understandings or other agreements, whether created by law, contract, or
     otherwise, evidencing, governing, representing, or creating a Security
     Interest.

     SECURITY INTEREST. The words "Security Interest" mean, individually,
     collectively, and interchangeably, without limitation, any and all types of
     collateral security, present and future, whether in the form of a lien,
     charge, encumbrance, mortgage, deed of trust, security deed, assignment,
     pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel
     trust, factor's lien, equipment trust, conditional sale, trust receipt,
     lien or title retention contract, lease or consignment intended as a
     security device, or any other security or lien interest whatsoever whether
     created by law, contract, or otherwise.

BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT (ASSET BASED) AND BORROWER AGREES TO ITS TERMS. THIS BUSINESS LOAN
AGREEMENT (ASSET BASED) IS DATED DECEMBER 26, 2006.

BORROWER:

VIVITAR CORPORATION

By: /s/ BO-SEN LIU
    ---------------------------------
    BO-SEN LIU, PRESIDENT/SECRETARY
    OF VIVITAR CORPORATION

LENDER:

DBS BANK LTD., LOS ANGELES AGENCY

By: /s/ ANDREW KO
    ---------------------------------
    AUTHORIZED SIGNER

                                       12
<PAGE>

                          STANDARD TERMS AND CONDITIONS

BORROWER: VIVITAR CORPORATION          LENDER: DBS BANK LTD., LOS ANGELES AGENCY
          520 GRAVES AVE                       445 SOUTH FIGUEROA STREET
          OXNARD, CA 93030                     SUITE 3550
                                               LOS ANGELES, CA 90071

THIS STANDARD TERMS AND CONDITIONS IS ATTACHED TO AND BY THIS REFERENCE IS MADE
A PART OF THE BUSINESS LOAN AGREEMENT (ASSET BASED), DATED DECEMBER 26, 2006,
AND EXECUTED IN CONNECTION WITH A LOAN OR OTHER FINANCIAL ACCOMMODATIONS BETWEEN
DBS BANK LTD., LOS ANGELES AGENCY AND VIVITAR CORPORATION.

The following standard terms and conditions are an integral part of the terms of
the facilities.

1.   DBS BANK LTD., LOS ANGELES AGENCY ("THE LENDER") RESERVES THE RIGHT AT ANY
     TIME TO DEMAND IMMEDIATE PAYMENT OF THE WHOLE OR ANY PART OF THE FACILITY
     OUTSTANDING TOGETHER WITH INTEREST AND ALL OTHER MONIES OWING TO DATE
     AND/OR TO DEBIT THE BORROWERS' ACCOUNT WITH INTEREST, COMMISSION, CHARGES,
     FEES, NORMAL BANK CHARGES AND ALL MONIES INCURRED IN CONNECTION WITH THE
     FACILITY AND/OR THE ENFORCEMENT THEREOF.

2    THE BORROWER SHALL GIVE TO LENDER A NOTICE OF A REQUEST FOR BORROWING BY
     TELEPHONE OR FACSIMILE TRANSMISSION NOT LATER THAN 10:00 A.M. ON THE
     FUNDING DATE. ANY NOTICE IN CONNECTION WITH A REQUESTED BORROWING THAT IS
     RECEIVED BY LENDER AFTER 10:00 A.M. ON ANY BUSINESS DAY, OR AT ANY TIME ON
     A DAY THAT IS NOT A BUSINESS DAY, SHALL BE DEEMED RECEIVED BY LENDER ON THE
     NEXT BUSINESS DAY.

3.   IF THE BORROWER GIVES THE LENDER A NOTICE OF REPAYMENT BEFORE 10:00 A.M. ON
     A BUSINESS DAY, AND WIRES THE PAYMENT TO THE LENDER BY 12:00 P.M. ON THE
     SAME BUSINESS DAY, THE PAYMENT SHALL BE APPLIED TO THE CREDIT FACILITY ON
     THE SAME BUSINESS DAY. ANY PAYMENT THAT IS WIRED AND RECEIVED BY THE LENDER
     AFTER 12:00 P.M SHALL BE APPLIED TO THE CREDIT FACILITY ON THE NEXT
     SUCCEEDING BUSINESS DAY.

     ANY PAYMENT BY CHECK THAT IS RECEIVED BY THE LENDER BEFORE 12:00 P.M. ON A
BUSINESS DAY SHALL BE APPLIED TO THE CREDIT FACILITY WHEN THE FUND OF THE CHECK
IS AVAILABLE.

     ANY PAYMENT BY CHECK THAT IS RECEIVED BY THE LENDER AFTER 12:00 P.M. ON A
BUSINESS DAY SHALL BE CONSIDERED AS RECEIPT ON THE FOLLOWING BUSINESS DAY.
PAYMENT SHALL BE APPLIED TO THE CREDIT FACILITY WHEN THE FUND OF THE CHECK IS
AVAILABLE.

THIS STANDARD TERMS AND CONDITIONS IS EXECUTED ON DECEMBER 26, 2006.

BORROWER:

VIVITAR CORPORATION

BY: /s/ BO-SEN LIU
    ---------------------------------
    BO-SEN LIU, PRESIDENT/SECRETARY
    OF VIVITAR CORPORATION

LENDER:

DBS BANK LTD., LOS ANGELES AGENCY

BY: /s/ ANDREW KO
    ---------------------------------
    AUTHORIZED SIGNER

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