Document:

Elantic Semiconductor, Inc. EXHIBIT 10.19

	

	

EXHIBIT 10.19

EXECUTIVE
CHANGE IN
CONTROL
SEVERANCE BENEFITS
AGREEMENT

     THIS
EXECUTIVE CHANGE IN CONTROL SEVERANCE BENEFITS AGREEMENT (the
“AGREEMENT”) is entered into on           
          
          
           between
          
          
          
           (“Executive”) and ELANTEC SEMICONDUCTOR,
INC., a Delaware corporation (the “COMPANY”). This
Agreement is intended to provide Executive with the compensation and benefits
described herein upon the occurrence of specific events. 

     Certain
capitalized terms used in this Agreement are defined in Article VI. 

     The
Company and Executive hereby agree as follows: 

ARTICLE 1
EMPLOYMENT
BY THE COMPANY

     1.1
Executive is currently employed as an executive of the Company. 

     1.2
This Agreement shall remain in full force and effect so long as Executive is
employed by Company; provided, however, that the rights and obligations of the
parties hereto contained in Articles II through VII shall survive Two and One
Half (2-1/2) years following a Covered Termination (as hereinafter defined). 

     1.3
The Company and Executive wish to set forth the compensation and benefits which
Executive shall be entitled to receive in the event that there is a Change in
Control or Executive’s employment with the Company terminates following a
Change in Control under the circumstances described in Article II of this
Agreement. 

     1.4
The duties and obligations of the Company to Executive under this Agreement
shall be in consideration for Executive’s past services to the Company,
Executive’s continued employment with the Company and Executive’s
execution of the general waiver and release described in Section 3.2. 

     1.5
This Agreement shall not supersede or affect any other agreements relating to
Executive’s employment or severance, or a change in control of the Company. 

ARTICLE II
SEVERANCE
BENEFITS

     2.1
Entitlement To Severance Benefits. If Executive’s employment
terminates due to an Involuntary Termination or a Voluntary Termination for Good
Reason within twelve (12) months following a Change in Control, the termination
of employment will be a Covered Termination and the Company shall pay Executive
the compensation and benefits described in this Article II. If Executive’s
employment terminates, but not due to an Involuntary Termination or a Voluntary
Termination for Good Reason within twelve (12) months following a Change in
Control, then the termination of employment will not be a Covered
Termination and Executive will not be entitled to receive any payments or
benefits under this Article II. 

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     Payment
of any benefits described in this Article II shall be subject to the
restrictions and limitations set forth in Article III. 

     2.2
Lump Sum Severance Payment. The Company shall pay to the Executive his
base pay through Date of Covered Termination at the rate in effect at the time
Notice of Termination is given, subject to any applicable withholding of
federal, state or local taxes, plus (i) that portion of your targeted cash bonus
prorated through the Date of Covered Termination, and (ii) all other amounts to
which you are entitled under any compensation plan or practice of the Company at
the time such payments are due. Within thirty (30) days following a Covered
Termination, Executive shall receive a lump sum payment equal to one hundred
percent (100%) of the sum of Annual Base Pay and Annual Bonus at target, subject
to any applicable withholding of federal, state or local taxes. 

     2.3
Stock Options. In accordance with Section 4.3, certain stock options held
by the Executive may become fully vested and exercisable upon a Change in
Control (regardless of whether a Covered Termination occurs) and the period of
time following a Covered Termination may be extended. 

     2.4
Welfare Benefits. Following a Covered Termination, Executive and his
covered dependents will be eligible to continue their Welfare Benefit coverage
under any Welfare Benefit plan or program maintained by the Company on the same
terms and conditions (including cost to Executive) as in effect immediately
prior to the Covered Termination, for the One (1) year following the Covered
Termination. 

     With
respect to any Welfare Benefits provided through an insurance policy, the
Company’s obligation to provide such Welfare Benefits following a Covered
Termination shall be limited by the terms of such a policy; provided that (i)
the Company shall make reasonable efforts to amend such policy to provide the
continued coverage described in this Section 2.4, and (ii) if a policy providing
health benefits is not amended to provide the continued benefits described in
this Section 2.4, the Company shall pay for the cost of comparable replacement
coverage (or Medigap insurance if Executive qualifies for Medicare) until the
end of the One (1) year period following the Covered Termination. 

     The
Company shall reimburse Executive for any income tax liability due as a result
of the provision of Welfare Benefits under this Article II (and as a result of
any payments due under this paragraph) in order to put Executive in the same
after-tax position as if no taxable Welfare Benefits had been provided. 

     This
Section 2.4 is not intended to affect, not does it affect, the rights of
Executive, or Executive’s covered dependents, under any applicable law with
respect to health insurance continuation coverage. 

     2.5
Mitigation. Except as otherwise specifically provided herein, Executive
shall not be required to mitigate damages or the amount of any payment provided
under this Agreement by seeking other employment or otherwise, nor shall the
amount of any payment provided for under this Agreement be reduced by any
compensation earned by Executive as a result of employment by another employer
or by retirement benefits after the date of the Covered Termination, or
otherwise. 

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ARTICLE III
LIMITATIONS
AND CONDITIONS ON BENEFITS

     3.1
Withholding of Taxes. The Company shall withhold appropriate federal,
state or local income and employment taxes from any payments hereunder. 

     3.2
Employee Agreement and Release Prior to receipt of Benefits. Upon the
occurrence of a Covered Termination, and prior to the receipt of any benefits
under this Agreement on account of the occurrence of a Covered Termination,
Executive shall, as of the date of a Covered Termination, execute an employee
agreement and release in the form attached hereto as Exhibit A. Such employee
agreement and release shall specifically relate to all of Executive’s
rights and claims in existence at the time of such execution and shall confirm
Executive’s obligations under the Company’s standard form of
proprietary information agreement. It is understood such employee release and
agreement shall comply with applicable law. In the event Executive does not
execute such release and agreement within the period required by applicable law,
or if Executive revokes such employee agreement and release within the period
permitted by applicable law, no benefits shall be payable under this Agreement
and this Agreement shall be null and void. 

ARTICLE IV
OTHER RIGHTS
AND BENEFITS

     4.1
Nonexclusivity. Nothing in the Agreement shall prevent or limit
Executive’s continuing or future participation in any benefit, bonus,
incentive or other plans, programs, policies or practices provided by the
Company and for which Executive may otherwise qualify, nor shall anything herein
limit or otherwise affect such rights as Executive may have under any stock
option or other agreements with the Company. Except as otherwise expressly
provided herein, amounts which are vested benefits or which Executive is
otherwise entitled to receive under any plan, policy, practice or program of the
Company at or subsequent to the date of a Covered Termination shall be payable
in accordance with such plan, policy, practice or program. 

     4.2
Parachute Payments. In the event that any amount or benefit received or
to be received by Executive pursuant to this Agreement (other than payment
pursuant to this Section 4.2) would constitute an “excess parachute
payment” subject to excise tax under Section 4999 of the Code, the Company
shall pay to Executive the amount of any such excise tax; provided, however,
that no payment shall be made under this Section 4.2 to the extent that it would
reduce Executive’s after-tax income. 

     4.3
Stock Options. Company shall take all actions necessary to amend all
stock option agreements evidencing outstanding stock options and restricted
stock grant agreements granted to Executive: (i) upon a Change in Control to
provide for full accelerated vesting and exercisability of that portion of the
Executive’s outstanding options to purchase Elantec Common Stock (or
securities of the surviving entity that are issuable upon exercise of stock
options following the Change in Control) that would have vested over the
subsequent two (2) years, (ii) to permit Executive to exercise any vested
options and restricted stock following his termination of service to the Company
as an employee or consultant for up to three (3) months (or such longer period
as may currently apply) and (iii) to permit Executive to exercise the options
and restricted stock for at least the twelve (12) months following a Covered
Termination. Notwithstanding the foregoing, the Company shall not amend a stock
option agreement to the extent that an amendment would result in a charge to
earnings for the Company, would adversely affect Executive’s financial
position, or cause Executive to be subject to liability under Section 16(b) of
the Securities Exchange Act of 1934, as amended. 

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     4.4
Indemnity  Agreement. The Indemnity  Agreement  signed by the Executive upon employment with the
Company will remain in full force and effect for 5 years following the Date of Covered Termination. 

ARTICLE V

NON-ALIENATION OF BENEFITS

     No
benefit hereunder shall be subject to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge, and any attempt to so subject a
benefit hereunder shall be void. 

ARTICLE VI
DEFINITIONS

     For
purposes of the Agreement, the following terms shall have the meanings set forth
below: 

     6.1
“Agreement” means this Executive Change in Control Severance Benefits Agreement. 

     6.2
“Annual Base Pay” means Executive’s annual base pay at the
rate in effect during the last regularly scheduled payroll period immediately
preceding (i) the Change in Control or (ii) the Covered Termination, whichever
is greater. 

     6.3
“Annual Bonus” means the Executive’s projected or
estimated annual cash incentive bonus at target for the fiscal year of the
Company in which termination of employment occurs. 

     6.4
“Change in Control” means the consummation of any of the following transactions: 

             (a)  the
stockholders of the Company approve a merger or consolidation of the Company with any
other corporation, other than a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of the
surviving entity) at least fifty percent (50%) of the total voting power represented by
the voting securities of the Company or such surviving entity outstanding immediately
after such merger or consolidation, or the stockholders of the Company approve a plan of
liquidation or dissolution of the Company or an agreement for the sale, lease, exchange
or other transfer or disposition by the Company of all or substantially all (more than
fifty percent (50%)) of the Company's assets; 

             (b)  any
person (as such term is used in Sections 13(d) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)), is or becomes the beneficial owner (within the meaning of
Rule 13d-3 under the Exchange Act) directly or indirectly of 25% or more of the Company's
outstanding Common Stock; or 

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             (c)  a
change in the composition of the Board of Directors of the Company within a three (3)
year period, as a result of which fewer than a majority of the directors are Incumbent
Directors. “Incumbent Directors” shall mean directors who either: 

                          (A)    are
directors of the Company as of the date hereof; 

                          (B)    are
elected, or nominated for election, to the Board of Directors of the Company with the
affirmative votes of at least a majority of the directors of the Company who are
Incumbent Directors described in (A) above at the time of such election or nomination; or 

                          (C)    are
elected, or nominated for election, to the Board of Directors of the Company with the
affirmative votes of at least a majority of the directors of the Company who are
Incumbent Directors described in (A) or (B) above at the time of such election or
nomination. 

     Notwithstanding
the foregoing, “Incumbent Directors” shall not include an individual
whose election or nomination is in connection with an actual or threatened proxy
contest relating to the election of directors to the Company. 

     6.5 “Company” means
Elantec Semiconductor, Inc., a Delaware corporation, and any successor thereto.  

     6.6 “Covered
Termination” means an Involuntary Termination or a Voluntary Termination for Good
Reason within twelve (12) months following a Change in Control. No other event shall be a
Covered Termination for purposes of this Agreement.  

     6.7 “Date
of Covered Termination” means the First Date following the last date of the
executive’s employment with the Company.  

     6.8 “Date
of Notice of Termination” means the date the executive is given notice, either
verbal or written, that his employment with the Company has been or will be terminated.  

     6.9 “Involuntary Termination” means Executive’s dismissal or
discharge by the Company (or, if applicable, by the successor entity) for
reasons other than fraud, misappropriation or embezzlement on the part of
Executive which resulted in material loss, damage or injury to the Company.
Notwithstanding the foregoing, Executive shall not be deemed to have been
terminated for one of these reasons, unless and until there shall have been
delivered to Executive a copy of a resolution, duly adopted by the affirmative
vote of not less than three-quarters of the entire membership of the
Company’s Board of Directors at a meeting of the Board called and held for
the purpose (after reasonable notice to Executive and an opportunity for the
Executive, together with Executive’s counsel, to be heard before the Board
of Directors), finding that in the good faith opinion of the Board of Directors,
Executive was guilty of conduct set forth in the immediately preceding sentence
and specifying the particulars thereof in detail. 

     The
termination of an Executive’s employment would not be deemed to be an
“Involuntary Termination” if such termination occurs as a result of
the death or disability of Executive. 

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     6.10
“Voluntary Termination for Good Reason” means that the
Executive voluntarily terminates his employment after any of the following are
undertaken without Executive’s express written consent: 

             (a)      the
assignment to Executive of any duties or responsibilities which result in any diminution
or adverse change of Executive's position, status or circumstances of employment as in
effect immediately prior to a Change in Control of the Company; any removal of Executive
from or any failure to reelect Executive to any of such positions, except in connection
with the termination of his employment for death, disability, retirement, fraud,
misappropriation, embezzlement or any other voluntary termination of employment by
Executive other than Voluntary Termination for Good Reason; 

             (b)      a
reduction by the Company in Executive's Annual Base Pay or targeted annual cash incentive
bonus in effect at the time; 

             (c)      any
failure by the Company to continue in effect any benefit plan or arrangement, including
incentive plans or plans to receive securities of the Company, in which Executive is
participating at the time of a Change in Control of the Company (hereinafter referred to
as "Benefit Plans"), or the taking of any action by the Company which would adversely
affect Executive's participation in or reduce Executive's benefits under any Benefit
Plans or deprive Executive of any fringe benefit enjoyed by Executive at the time of a
Change in Control of the Company, provided, however, that Executive may not terminate for
Good Reason following a Change in Control of the Company if the Company offers a range of
benefit plans and programs which, taken as a whole, are comparable to the Benefit Plans
as determined in good faith by Executive; 

             (d)      a
relocation of Executive, or the Company's principal executive offices if Executive's
principal office is at such offices, to a location more than fifteen (15) miles from the
location at which Executive performed Executive's duties prior to a Change in Control of
the Company, except for required travel by Executive on the Company's business to an
extent substantially consistent with Executive's business travel obligations at the time
of a Change in Control of the Company; 

             (e)      any
breach by the Company of any provision of this agreement; or 

             (f)      any
failure by the Company to obtain the assumption of this agreement by any successor or
assign of the Company. 

     6.11
“Welfare Benefits” means benefits providing for coverage or
payment in the event of Executive’s death, disability, illness or injury
that were provided to Executive immediately before a Change in Control, whether
taxable or non-taxable and whether funded through insurance or otherwise. 

ARTICLE VII
GENERAL
PROVISIONS

     7.1
Employment Status. This Agreement does not constitute a contract of
employment or impose on Executive any obligation to remain as an employee, or
impose on the Company any obligation (i) to retain Executive as an employee,
(ii) to change the status of Executive as an at-will employee, or (iii) to
change the Company’s policies regarding termination of employment. 

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     7.2
Notices. Any notices provided hereunder must be in writing and such
notices or any other written communication shall be deemed effective upon the
earlier of personal delivery (including personal delivery by telex or facsimile)
or the third day after mailing by first class mail, to the Company at its
primary office location and to Executive at his address as listed in the
Company’s payroll records. Any payments made by the Company to Executive
under the terms of this Agreement shall be delivered to Executive either in
person or at his address as listed in the Company’s payroll records. 

     7.3
Severability. Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provisions had never been contained herein. 

     7.4
Waiver. If either party should waive any breach of any provisions of the
Agreement, he or it shall not thereby be deemed to have waived any preceding or
succeeding breach of the same or any other provision of this Agreement. 

     7.5
Complete Agreement. This Agreement, including Exhibit A and other written
agreements referred to in this Agreement, constitutes the entire agreement
between Executive and the Company and it is the complete, final, and exclusive
embodiment of their agreement with regard to this subject matter. It is entered
into without reliance on any promise or representation other than those
expressly contained herein. 

     7.6
Amendment or Termination of Agreement. This Agreement may be changed or
terminated only upon the mutual written consent of the Company and Executive.
The written consent of the Company to a change or termination of this Agreement
must be signed by an executive officer of the Company after such change or
termination has been approved by the Compensation Committee of the
Company’s Board of Directors. 

     7.7
Counterparts. This Agreement may be executed in separate counterparts,
any one of which need not contain signatures of more than one party, but all of
which taken together will constitute one and the same Agreement. 

     7.8
Headings. The headings of the Articles and sections hereof are inserted
for convenience only and shall not be deemed to constitute a part hereof nor to
affect the meaning thereof. 

     7.9
Successors and Assigns.  This Agreement is intended to bind and inure to
the benefit of and be enforceable by Executive and the Company, and their
respective successors, assigns, heirs, executors and administrators, except that
Executive may not assign any of his duties hereunder and he may not assign any
of his rights hereunder without the written consent of the Company, which
consent shall not be withheld unreasonably. 

     7.10.  Attorney
Fees. If Executive brings any action to enforce his rights hereunder, Executive shall be
entitled to recover his reasonable attorneys' fees and costs incurred in connection with
such action, regardless of the outcome of such action. 

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     7.11  Choice of Law. 
All questions concerning the construction, validity and interpretation of this
Agreement will be governed by the law of the State of California. 

     7.12 
Non-Publication. The parties mutually agree not to disclose publicly the
terms of this Agreement except to the extent that disclosure is mandated by
applicable law. 

     7.13 
Construction of Plan. In the event of a conflict between the text of the
Agreement and any summary, description or other information regarding the
Agreement, the text of the Agreement shall control. 

     IN
WITNESS WHEREOF, the parties have executed this Agreement on the day and
year written above. 

ELANTEC
SEMICONDUCTOR, INC.
a Delaware
Corporation

	

By: /s/ Richard M. Beyer
——————————————

Richard M. Beyer
President and Chief Executive Officer	

By: /s/ Executive's Signature
——————————————

Name:          
Title:          

	

Exhibit A: Employee
Agreement and Release

	

Page 1 of 2 

Exhibit A

Elantec
Semiconductor, Inc.

Employee
Agreement and Release

     I
understand and agree completely to the terms set forth in the foregoing
agreement. 

     I
hereby confirm my obligations under the Company’s standard form of
proprietary information agreement. 

     I
acknowledge that I have read and understand Section 1542 of the California Civil
Code which reads as follows: “A general release does not extend to claims
which the creditor does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have materially affected this
settlement with the debtor.” I hereby expressly waive and relinquish all
rights and benefits under that section and any law of any jurisdiction of
similar effect with respect to my release of any claims I may have against the
Company. 

     Except
as otherwise set forth in this Agreement, I hereby release, acquit and forever
discharge the Company, its parents and subsidiaries, and their officers,
directors, agents, servants, employees, shareholders, successors, assigns and
affiliates, of and from any and all claims, liabilities, demands, causes of
action, costs, expenses, attorneys fees, damages, indemnities and obligations of
every kind and nature, in law, equity, or otherwise, known and unknown,
suspected and unsuspected, disclosed and undisclosed (other than any claim for
indemnification) I may have as a result of any third party action against me
based on my employment with the Company), arising out of or in any way related
to agreements, events, acts or conduct at any time prior to and including the
Effective Date of this Agreement, including but not limited to: all such claims
and demands directly or indirectly arising out of or in any way connected with
my employment with the Company or the termination of that employment, including
but not limited to, claims of intentional and negligent infliction of emotional
distress, any and all tort claims for personal injury, claims or demands related
to salary, bonuses, commissions, stock, stock options, or any other ownership
interests in the Company, vacation pay, fringe benefits, expense reimbursements,
severance pay, or any other form of compensation; claims pursuant to any
federal, state or local law or cause of action including, but not limited to,
the federal Civil Rights Act of 1964, as amended; the federal Age Discrimination
in Employment Act of 1967, as amended (“ADEA”); the federal American
with Disabilities Act of 1990; the California Fair Employment and Housing Act,
as amended; tort law; contract law; wrongful discharge; discrimination; fraud;
defamation; emotional distress; and breach of the implied covenant of good faith
and fair dealing; provided, however, that nothing in this paragraph shall be
construed in any way to release the Company from its obligation to indemnify you
pursuant to the Company’s Indemnification Agreement and to provide you with
continued coverage under the Company’s directors and officers liability
insurance policy to the same extent that it has provided such coverage to
previously departed officers and directors of the Company. 

	

Page 2 of 2 

     I
acknowledge that I am knowingly and voluntarily waiving and releasing any rights
I may have under ADEA. I also acknowledge that the consideration given for the
waiver and release in the preceding paragraph hereof is in addition to anything
of value which I was already entitled. I further acknowledge that I have been
advised by this writing, as required by the ADEA, that: (a) my waiver and
release do not apply to any rights or claims that may arise after the Effective
Date of this Agreement; (b) I have the right to consult with an attorney prior
to executing this Agreement; (c) I have twenty-one (21) days to consider this
Agreement (although I may choose to voluntarily execute this Agreement earlier);
(d) I have seven (7) days following the execution of this Agreement by the
parties to revoke the Agreement; and (e) this Agreement shall not be effective
until the date upon which the revocation period has expired, which shall be the
eighth day after this Agreement is executed by me, provided that the Company has
also executed this Agreement by that date (“Effective Date”). 

			By: ______________________________ 

Date: ______________________________AMENDMENT
                                       TO
                           LOAN AND SECURITY AGREEMENT

     This Amendment to Loan and Security Agreement is entered into as of
February 15, 2001 (the "Amendment"), by and between BANK SINOPAC, LOS ANGELES
BRANCH and FAR EAST NATIONAL BANK (individually, a "Lender" and collectively,
the "Lenders") end INTEGRATED PACKAGING ASSEMBLY CORPORATION, a Delaware
corporation, and OSE, INC., a California corporation (individually a "Borrower"
and collectively, the "Borrowers").

                                    RECITALS

     Borrowers and Lenders are parties to that certain Amended and Restated Loan
and Security Agreement dated as of December 1, 2000, as amended (the
"Agreement"). The parties desire to amend the Agreement in accordance with the
terms of this Amendment.

     NOW, THEREFORE, the parties agree as follows:

     1.   The following definitions are hereby added or shall replace existing
definitions in Section 1.1 of the Agreement as follows:

          "Borrowing Base" means an amount equal to eighty percent (80%) of
Eligible Accounts, as determined by Servicing Agent with reference to the most
recent Borrowing Base Certificates delivered by Borrowers.

          "Eligible Accounts" means those Accounts that arise in the ordinary
course of a Borrower's business that comply with all of such Borrower's
representations and warranties to Lenders set forth in Section 5.4; provided,
that standards of eligibility may be fixed and revised from time to time by
Lenders as a consequence of any Collateral audits done pursuant to Section 6.3
in Lender's reasonable judgment and upon notification thereof to Borrowers in
accordance with the provisions hereof. Unless otherwise agreed to by Lenders,
Eligible Accounts shall not include the following:

          (a) Accounts that the account debtor has failed to pay within ninety
(90) days of invoice date;

          (b) Accounts with respect to which the account debtor is an officer,
employee, or agent of Borrower;

          (c) Accounts with respect to which goods are placed on consignment,
guaranteed sale, sale or return, sale on approval, bill and hold, or other terms
by reason of which the payment by the account debtor may be conditional;

          (d) Accounts with respect to which the account debtor is an Affiliate
of Borrower;

          (e) Accounts with respect to which the account debtor disputes
liability or makes any claim with respect thereto as to which Servicing Agent
believes, in its sole discretion, that there may be a basis for dispute (but
only to the extent of the amount subject to such dispute or claim), or is
subject to any Insolvency Proceeding, or becomes insolvent, or goes out of
business; and

          (f) Accounts the collection of which Servicing Agent reasonably
determines to be doubtful.

          "Revolving Committed Line" means the facility under which Borrowers
may request Advances under Section 2.1.1 in an amount up to Eighteen Million
Dollars ($18,000,000).

          "Revolving Maturity Date" means August 15, 2001.

<PAGE>

     2.   Section 2.11(a) is hereby replaced in its entirety with the following:

          "(a) Subject to and upon the terms and conditions of this Agreement,
each Lender, severally and not jointly, agrees to make Advances to each Borrower
and/or Borrowers in an individual amount not to exceed such Lender's Commitment
and in an aggregate amount not to exceed the lesser of (i) the Borrowing Base or
(ii) the Revolving Committed Line. Subject to the terms and conditions of this
Agreement, amounts borrowed pursuant to this Section 2.1.1 may be repaid and
reborrowed at any time prior to the Revolving Maturity Date."

     3.   Section 2.1.1(s) is hereby added to the Agreement:

          "(g) The Administrative Agent and Borrowers have entered into that
certain Business Loan Agreement dated November 29, 2000, as amended, whereby
Administrative Agent has extended a loan to Borrowers of up to Seven Million
Dollars ($7,000,000) (the "Sinopac Loan"). Borrowers and Lenders agree that all
credit extensions made to Borrowers under the Sinopac Loan shall be considered
Advances under the Revolving Committed Line hereunder and shall he secured by
the Collateral, and the separate Sinopac Loan shall hereby terminate."

     4.   Section 2.1.1(h) is hereby added to the Agreement:

          (h) Lock Box Account. Borrowers shall open and maintain with Servicing
Agent an account (the "Lock Box Account") into which all funds received by
Borrowers from any source shall immediately be deposited. Borrowers shall direct
all account debtors to mail or deliver all checks or other forms of payment for
amounts owing to Borrowers to a post office box designated by Servicing Agent,
over which Servicing Agent shall have exclusive and unrestricted access.
Servicing Agent shall collect the mail delivered to such post office box, open
such mail, and endorse and credit all items to the Lock Box Account. Borrowers
shall direct all account debtors or other persons owing money to Borrowers who
make payments by electronic transfer of funds to wire such funds directly to the
Lock Box Account. Borrowers shall hold in trust for Lenders all amounts that
Borrowers receive despite the directions to make payments to the post office box
or Lock Box Account, and immediately deliver such payments to Servicing Agent in
their original form as received from the account debtor, with proper
endorsements for deposit into the Lock Box Account. Borrowers irrevocably
authorizes Servicing Agent to transfer to the Lock Box Account any funds that
have been deposited into any other accounts or that Lenders have otherwise
received. Borrowers shall not establish or maintain any accounts with any Person
other than Servicing Agent except for accounts opened in the ordinary course of
business from which all funds are transferred on a daily basis to the Lock Box
Account. Lenders shall have all right, tide and interest in all of the items
from time to time in the Lock Box Account and their proceeds. Neither of
Borrowers nor any person claiming through a Borrower shall have any right or
control over the use of, or any right to withdraw any amount from, the Lock Box
Account which shall be under the sole control of Servicing Agent."

     5.   Section 2.2 is hereby replaced in its entirety with the following:

          "Section 2.2 Overadvances. If the aggregate amount of the outstanding
Advances exceeds the lesser of the Committed Revolving Line or the Borrowing
Base at any time, Borrowers shall immediately pay to Servicing Agent, for the
benefit of Lenders, in cash, the amount of such excess."

     6.   Section 2.3(a) is hereby replaced in its entirety with the following:

          "(a) Interest Rate. Except as set forth in Section 2.3(b), any
Advances shall bear interest on the average daily balance thereof, at a per
annum rate equal to the Prime Rate plus one half of one percent (0.50%)."

     7.   Section 5.4 of the Agreement is hereby replaced in its entirety with
the following:

          "Section 5.4 Bona Fide Eligible Accounts. The Eligible Accounts are
bone tide existing obligations. The property and services giving rise to such
Eligible Accounts have been delivered or rendered to the account debtor or to
the account debtor agent for immediate and unconditional acceptance by the
account debtor.

                                       2
<PAGE>

Borrower has not received notice of actual or imminent Insolvency Proceeding of
any account debtor that is included in any Borrowing Base Certificate as an
Eligible Account."

     8.   The following new paragraphs are hereby added to the end of Section
6.3 of the Agreement:

          "Within fifteen (15) days after the last day of each month and
together with any Advance request pursuant to Section 2.1.1, Borrowers shall
each deliver to Servicing Agent a Borrowing Base Certificate signed by a
Responsible Officer in substantially the form of Exhibit F hereto.

          Lenders shall have a right from time to time initially and thereafter
to audit each of Borrower's Accounts and appraise Collateral at such Borrower's
expense, provided that such audits will be conducted no more often than every
twelve (12) months unless an Event of Default has occurred and is continuing."

     9.   Section 6.9 of the Agreement is hereby replaced in its entirety with
the following:

          "6.9 [Intentionally Omitted]."

     10.  Section 6.10 of the Agreement is hereby replaced in its entirety
with the following:

          "6.10 [Intentionally Omitted]."

     11.  As a condition to the effectiveness of this Amendment, Servicing Agent
shall have received, in form and substance satisfactory to Servicing Agent, the
following:

          (a) this Amendment, duly executed by Borrowers;

          (b) a certificate of the Secretary of each Borrower with respect to
incumbency and resolutions authorizing the execution and delivery of this
Amendment;

          (c) a legal opinion duly executed by Borrowers' counsel;

          (d) corporate guarantee and resolutions duly executed by ORIENT
SEMICONDUCTOR ELECTRONICS, LIMITED;

          (e) a nonrefundable loan fee (includes collateral audit fee) of
$90,000 (to be distributed by Servicing Agent to Lenders prorata), outstanding
legal fees, plus any Bank Expenses, including attorneys' fees and expenses,
relating to this Amendment: and

          (f) such other documents, and completion of such other matters, as
Lenders may reasonably deem necessary or appropriate.

     12.   Exhibits A-1 and A-2, and Exhibit D of the Agreement are hereby
replaced in their entirety by the Exhibit A-1 and A-2 and Exhibit D attached
hereto and incorporated therein by this reference.

     13.  Exhibit F attached hereto is hereby added to the Agreement and
incorporated therein by this reference.

     14.  Lenders waive Borrowers' violations of Section 6.9 for the quarters
ending June 30, 2000. September 30, 2000, and December 31, 2000, as such section
was in effect prior to this Amendment Lenders do not waive any other failure by
Borrower to perform its Obligations under the Loan Documents. This waiver is not
a continuing waiver with respect to any failure to perform any Obligation after
the date of this Amendment.

                                       3
<PAGE>

     15.  Borrowers represents and warrants that the representations and
warranties contained in the Agreement are true and correct as of the date of
this Amendment, and that no Event of Default has occurred and is continuing.

     16.  Unless otherwise defined, all initially capitalized terms in this
Amendment shall be as defined in the Agreement. The Agreement, as amended
hereby, shall be and remain in full force and effect in accordance with its
respective terms and hereby is ratified and confirmed in all respects. Except as
expressly set forth herein, the execution, delivery, and performance of this
Amendment shall not operate as a waiver of, or as an amendment of, any right,
power, or remedy of Lenders under the Agreement, as in effect prior to the date
hereof. Borrowers ratify and reaffirm the continuing effectiveness of all
promissory notes, guaranties, security agreements, mortgages, deeds of trust,
environmental agreements, and all other instruments, documents and agreements
entered into in connection with the Agreement.

     IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the
first date above written.

                                       INTEGRATED PACKAGING ASSEMBLY CORPORATION

                                       By: /s/ Vincent R. Lepone
                                           ------------------------------------
                                       Title: Controller/Acting Chief
                                              Financial Officer
                                              ---------------------------------

                                       OSE, INC.

                                       By: /s/ Edmond Tseng
                                           ------------------------------------
                                       Title: President
                                              ---------------------------------

                                       BANK SINOPAC, LOS ANGELES BRANCH

                                       By: /s/
                                           ------------------------------------
                                       Title: Vice President & DGM
                                              ---------------------------------
                                       Maximum Commitment:  $12,000,000
                                       Pro Rata Share: 66.7%

                                       FAR EAST NATIONAL BANK

                                       By: /s/
                                           ------------------------------------
                                       Title: Vice President
                                              ---------------------------------
                                       Maximum Commitment:  $6,000,000
                                       Pro Rata Share: 33.3%

                                       4
<PAGE>

                                    EXHIBIT D
                             COMPLICANCE CERTIFICATE

TO:        FAR EAST NATIONAL BANK, as Servicing Agent

FROM:      INTEGRATED PACKAGING ASSEMBLY CORPORATION and OSE, INC.

     The undersigned authorized officer of Integrated Packaging Assembly
Corporation hereby certifies that in accordance with the terms and conditions of
the Amended and Restated Loan and Security Agreement among each Borrower, Agents
and Lenders (the "Agreement"), (i) each Borrower is in complete compliance for
the period ending _________________ with all required covenants except as noted
below and (ii) all representations and warranties of each Borrower stated in the
Agreement are true and correct in all material respects as of the date hereof.
Attached herewith are the required documents supporting the above certification.
The Officer further certifies that these are prepared in accordance with
Generally Accepted Accounting Principles (GAAP) and are consistently applied
from one period to the next except as explained in an accompanying letter or
footnotes.

Please indicate compliance status by circling Yes/No under "Complies" column.

<TABLE>
<CAPTION>
     Reporting Covenant                         Required                                      Complies
     ------------------                         --------                                     ----------
<S>                                             <C>                                          <C>     <C>
     FYE Financial Statements, 10K              Annually within 15 days of filing            Yes     No
     Quarterly Financial Statements, 10Q        Quarterly within 15 days of filing           Yes     No
     A/R & A/P Agings, Borrowing Base Cert      Monthly within 15 days                       Yes     No
     Guarantor FYE Financial Statements         Annually within 120 days of FYE              Yes     No
     Guarantor Quarterly Financial Statements   Quarterly within 60 days of quarter end      Yes     No
     A/R Audit                                  Initial and Annual                           Yes     No
     Intellectual Property acquired/developed   Reporting (Section 6.8)                      Yes     No
</TABLE>

Comments Regarding Exceptions:  See Attached                 BANK USE ONLY

                                                Received By:
                                                             -------------------
                                                             AUTHORIZED SIGNER
Sincerely,
                                                Date:
--------------------------------                      --------------------------
SIGNATURE
                                                Verified:
--------------------------------                         -----------------------
TITLE                                                    AUTHORIZED SIGNER
                                                Date:
--------------------------------                     ---------------------------
DATE
                                                Compliance Status:   Yes    No

                                       5
<PAGE>

                                    EXHIBIT F
                           BORROWING BASE CERTIFICATE

--------------------------------------------------------------------------------
Borrower:                                     Lenders: BANK SINOFAC, LOS ANGELES
         ----------------------------         BRANCH and FAR EAST NATIONAL BANK

Commitment Amount: $18,000,000
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
ACCOUNTS RECEIVABLE
<S>                                                             <C>             <C>
    1.   Accounts Receivable Book Value as of ________                          $__________
    2.   Additions (please explain on reverse)                                  $__________
    3.   TOTAL ACCOUNTS RECEIVABLE                                              $__________

ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
    4.   Amounts over 90 days due                               $__________
    5.   Demo Accounts                                          $__________
    6.   Intercompany/Employee Accounts                         $__________
    7.   Other (please explain on reverse)                      $__________
    8.   TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS                                   $__________
    9.   Eligible Accounts (#3 minus #8)                                        $__________
    10.  LOAN VALUE OP ACCOUNTS (80% of #9)                                     $__________

BALANCES
    11.  Maximum Loan Amount                                                    $18,000,000
    12.  Total Funds Available [Lesser of #l1 or #10]                           $__________
    13.  Present balance owing on Line of Credit                                $__________
    14.  Outstanding under Sublimits (Letters of Credit)                        $__________
    15.  RESERVE POSITION (#12 minus #13 and #14)                               $__________
</TABLE>
The undersigned represents and warrants that the foregoing is true, complete and
correct,  and that the information  reflected in this Borrowing Base Certificate
complies with the  representations  and  warranties set forth in the Amended and
Restated Loan and Security Agreement between the undersigned and Lenders.

[BORROWER]

------------------------------------

By:
   ---------------------------------
         Authorized Signer

                                       6
<PAGE>

                         CORPORATE RESOLUTIONS TO BORROW

--------------------------------------------------------------------------------
Borrower:         Integrated Packaging Assembly Corporation
--------------------------------------------------------------------------------

     I, the undersigned Secretary or Assistant Secretary of Integrated Packaging
Assembly Corporation (the "Corporation"), HEREBY CERTIFY that the Corporation is
organized and existing under and by virtue of the laws of the State of Delaware.

     I FURTHER CERTIFY that attached hereto as Attachments 1 and 2 are true and
complete copies of the Certificate of Incorporation, as amended and the Bylaws
of the Corporation, each of which is in full force and effect on the date
hereof.

     I FURTHER CERTIFY that at a meeting of the Directors of the Corporation,
duly called and held, at which a quorum was present and voting (or by other duly
authorized corporate action in lieu of a meeting), the following resolutions
were adopted.

     BE IT RESOLVED, that any one (1) of the following named officers,
employees, or agents of this Corporation, whose actual signatures are shown
below:

<TABLE>
<CAPTION>
        NAMES                         POSITIONS                    ACTUAL SIGNATURES

<S>                             <C>                             <C>
Edmond Tseng                    President & CEO                 /s/ Edmond Tseng
--------------------            ---------------------           -----------------------

Vincent R. Lepore               Controller/Acting CFO           /s/ Vincent R. Lepore
--------------------            ---------------------           -----------------------

--------------------            ---------------------           -----------------------

--------------------            ---------------------           -----------------------

--------------------            ---------------------           -----------------------
</TABLE>

acting for an on behalf of this Corporation and as its act and deed be, and they
hereby are, authorized and empowered:

     Borrow Money. To borrow from time to time from the Lenders, on such terms
as may be agreed upon between the officers, employees, or agents and the
Lenders, such sum or sums of money as in their judgment should be borrowed,
without limitation, including such sums as are specified in that certain Amended
and Restated Loan and Security Agreement dated as of December 1, 2000, as
amended by that certain Amendment to Loan and Security Agreement dated
February 15, 2001, as amended from time to time (the "Loan Agreement").

     Execute Loan Agreement. To execute and deliver to Far East National Bank.
as Servicing Agent, Bank Sinopac, Los Angeles Branch, as Administrative Agent,
and the Lenders, the Loan Agreement and the related promissory notes, and also
to execute and deliver one or more renewals, extensions, modifications,
refinancings, consolidations, or substitutions for the Loan Agreement and such
notes, one or more of the notes, or any portion of the notes.

     Grant Security. To grant a security interest to Servicing Agent in the
Collateral described in the Loan Agreement, which security interest shall secure
all of the Corporation's Obligations, as described in the Loan Agreement.

                                       7
<PAGE>

     Negotiate Items. To draw, endorse, and discount with Servicing Agent or
Lenders all drafts, trade acceptances, promissory notes, or other evidences of
indebtedness payable to or belonging to the Corporation or in which the
Corporation may have an interest, and either to receive cash for the same or to
cause such proceeds to be credited to the account of the Corporation with
Servicing Agent or Lenders, or to cause such other disposition of the proceeds
derived therefrom as they may deem advisable.

     Further Acts. In the case of lines of credit, to designate additional or
alternate individuals as being authorized to request advances thereunder, and in
all cases, to do and perform such other acts and things, to pay any and all fees
and costs, and to execute and deliver such other document; and agreements as
they may in their discretion deem reasonably necessary or proper in order to
carry into effect the provisions of these Resolutions.

     BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these
resolutions and performed prior to the passage of these resolutions are hereby
ratified and approved, that these Resolutions shall remain in full force and
effect and each Agent and Lenders may rely on these Resolutions until written
notice of their revocation shall have been delivered to and received by them.
Any such notice shall not affect any of the Corporation's agreements or
commitments in effect at the time notice is given.

     I FURTHER CERTIFY that the officers, employees, and agents named above are
duly elected, appointed, or employed by or for the Corporation, as the case may
be, and occupy the positions set forth opposite their respective names; that the
foregoing Resolutions now stand of record on the books of the Corporation; and
that the Resolutions arc in full force and effect and have not been modified or
revoked in any manner whatsoever.

     IN WITNESS WHEREOF, I have hereunto set my hand on February 15, 2001 and
attest that the signatures set opposite the names listed above are their genuine
signatures.

                                       CERTIFIED TO AND ATTESTED BY:

                                       X  /s/ Vincent R. Lepore
                                          --------------------------------------
                                          Assistant Secretary

--------------------------------------------------------------------------------

                                       8
<PAGE>

                         CORPORATE RESOLUTIONS TO BORROW
--------------------------------------------------------------------------------
Borrower:         OSE, Inc.
--------------------------------------------------------------------------------

     I, the undersigned Secretary or Assistant Secretary of OSE, INC. (the
"Corporation"), HEREBY CERTIFY that the Corporation is organized and existing
under and by virtue of the laws of the State of California.

     I FURTHER CERTIFY that attached hereto as Attachments 1 and 2 are true and
complete copies of the Certificate of Incorporation, as amended and the Bylaws
of the Corporation, each of which is in full force and effect on the date
hereof.

     I FURTHER CERTIFY that at a meeting of the Directors of the Corporation,
duly called and held, at which a quorum was present and voting (or by other duly
authorized corporate action in lieu of a meeting), the following resolutions
were adopted.

     BE IT RESOLVED, that any one (1) of the following named officers,
employees, or agents of this Corporation, whose actual signatures are shown
below:

<TABLE>
<CAPTION>
        NAMES                         POSITIONS                    ACTUAL SIGNATURES
<S>                             <C>                             <C>

Edmond Tseng                    President & CEO                 /s/ Edmond Tseng
--------------------            ---------------------           -----------------------

--------------------            ---------------------           -----------------------

--------------------            ---------------------           -----------------------

--------------------            ---------------------           -----------------------

--------------------            ---------------------           -----------------------
</TABLE>

acting for an on behalf of this Corporation and as its act and deed be, and they
hereby are, authorized and empowered:

     Borrow Money. To borrow from time to time from the Lenders, on such terms
as may be agreed upon between the officers, employees, or agents and the
Lenders, such sum or sums of money as in their judgment should be borrowed,
without limitation, including such sums as are specified in that certain Amended
and Restated Loan and Security Agreement dated as of December 1, 2000, as
amended by that certain Amendment to Loan and Security Agreement dated
February 15, 2001, as amended from time to time (the "Loan Agreement").

     Execute Loan Agreement. To execute and deliver to Far East National Bank,
as Servicing Agent, Bank SinoPac, Los Angeles Branch, as Administrative Agent,
and the Lenders, the Loan Agreement and the related promissory notes, and also
to execute and deliver one or more renewals, extensions, modifications,
refinancings, consolidations, or substitutions for the Loan Agreement and such
notes, one or more of the notes, or any portion of the notes.

     Grant Security. To grant a security interest to Servicing Agent in the
Collateral described in the Loan Agreement, which security interest shall secure
all of the Corporation's Obligations, as described in the Loan Agreement.

     Negotiate Items. To draw, endorse, and discount with Servicing Agent or
Lenders all drafts, trade acceptances, promissory notes, or other evidences of
indebtedness payable to or belonging to the Corporation or in

                                       9
<PAGE>

which the Corporation may have an interest, and either to receive cash for the
same or to cause such proceeds to be credited to the account of the Corporation
with Servicing Agent or Lenders, or to cause such other disposition of the
proceeds derived therefrom as they may deem advisable.

     Further Acts. In the case of lines of credit, to designate additional or
alternate individuals as being authorized to request advances thereunder, and in
all cases, to do and perform such other acts and things, to pay any and all fees
and costs, and to execute and deliver such other documents and agreements as
they may in their discretion deem reasonably necessary or proper in order to
carry into effect the provisions of these Resolutions.

     BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these
resolutions and performed prior to the passage of these resolutions are hereby
ratified and approved, that these Resolutions shall remain in full force and
effect and each Agent and Lenders may rely on these Resolutions until written
notice of their revocation shall have been delivered to and received by them.
Any such notice shall not affect any of the Corporation's agreements or
commitments in effect at the time notice is given.

     I FURTHER CERTIFY that the officers, employees, and agents named above are
duly elected, appointed, or employed by or for the Corporation, as the case may
be, and occupy the positions set forth opposite their respective names; that the
foregoing Resolutions now stand of record on the books of the Corporation; and
that the Resolutions are in full force and effect and have not been modified or
revoked in any manner whatsoever.

     IN WITNESS WHEREOF, I have hereunto set my hand on February 15, 2001 and
attest that the signatures set opposite the names listed above are their genuine
signatures.

                                          CERTIFIED TO AND ATTESTED BY:

                                          X  /s/ Edmond Tseng
                                             -----------------------------------
                                             Secretary

--------------------------------------------------------------------------------

                                       10
<PAGE>

                    INTEGRATED PACKAGING ASSEMBLY CORPORATION
                                 AND OSE, INC.

                            REVOLVING PROMISSORY NOTE

$12,000,000                                                 San Jose, California
                                                               February 15, 2001

     FOR VALUE RECEIVED, INTEGRATED PACKAGING ASSEMBLY CORPORATION, a Delaware
corporation, and OSE, INC., a California corporation (individually a "Borrower"
and collectively, the "Borrowers"), jointly and severally, promise to pay to the
order of Bank SinoPac, Los Angeles Branch (the "Lender") the principal amount of
Twelve Million Dollars ($12,000,000) or, if less, the aggregate amount of
Advances (as defined in the Loan Agreement referred to below) made by Lender to
a Borrower pursuant to the Loan Agreement referred to below outstanding on the
Revolving Maturity Date (as defined in the Loan Agreement referred to below).
All unpaid amounts of principal and interest shall be due and payable in full on
the Revolving Maturity Date.

     Borrowers also promises to pay interest on the unpaid principal amount
hereof from the date hereof until paid at the rates and at the times which shall
be determined in accordance with the provisions of the Loan Agreement.
Notwithstanding any other limitations contained in this Note, Lender does not
intend, to charge and Borrowers shall not be required to pay any interest or
other fees or charges in excess of the maximum permitted by applicable law. Any
payments in excess of such maximum shall be refunded to the a Borrower or
credited against principal.

     All payments of principal and interest in respect of this Note shall be
made in lawful money of the United States of America in same day funds at the
office of Servicing Agent described in the Loan Agreement. Until notified of the
transfer of this Note, each Borrower shall be entitled to deem Lender or such
person who has been so identified by the transferor in writing to the a Borrower
as the holder of this Note, as the owner and bolder of this Note.

     This Note is referred to in, and is entitled to the benefits of, the
Amended and Restated Loan and Security Agreement dated as of December 1, 2000,
and amended by that certain Amendment to Loan and Security Agreement dated
February 15, 2001, and as amended from time to time (the "Loan Agreement") among
the Borrowers, the financial institutions named therein and the Agents. The Loan
Agreement, among other things, (i) provides for the making of advances (the
"Advances") by Lender to a Borrower from time to time in an aggregate amount not
to exceed at any time outstanding the U.S. dollar amounts stated therein, and
(ii) contains provisions for acceleration of the maturity hereof upon the
happening of certain stated events and also for prepayments on account of
principal hereof prior to the maturity hereof upon the terms and conditions
therein specified.

     The terms of this Note are subject to amendment only in the manner provided
in the Loan Agreement.

     No reference herein to the Loan Agreement and no provision of this Note or
the Loan Agreement shall alter or impair the obligation of Borrowers, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the place, at the respective times, and in the currency herein prescribed.

     Borrowers promise to pay all costs and expenses, including reasonable
attorneys' fees, incurred in the collection and enforcement of this Note.
Borrowers hereby consent to renewals and extensions of time at or after the
maturity hereof, without notice, and hereby waives diligence, presentment,
protest, demand and notice of every kind and, to the full extent permitted by
law, the right to plead any statute of limitations as a defense to any demand
hereunder.

     This Note shall be governed by, and construed in accordance with, the laws
of the State of California without giving effect to its choice of law doctrine.

<PAGE>

     This Note shall be governed by, and construed in accordance  with, the laws
of the State of California without giving effect to its choice of law doctrine.

     IN WITNESS  WHEREOF,  each Borrower has caused this Note to be executed and
delivered  by its duly  authorized  officer,  as of the date and the place first
above written.

INTEGRATED PACKAGING ASSEMBLY CORPORATION     OSE, INC.
BY:                                           BY:
      ---------------------------                    ---------------------------
TITLE:                                        TITLE:
      ---------------------------                    ---------------------------

<PAGE>

                   INTEGRATED PACKAGING ASSEMBLY CORPORATION
                                 AND OSE, INC.

                            REVOLVING PROMISSORY NOTE

$6,000,000                                                  San Jose, California
                                                               February 15, 2001

     FOR VALUE RECEIVED,  INTEGRATED PACKAGING ASSEMBLY CORPORATION,  a Delaware
corporation,  and OSE, INC., a California corporation (individually a "Borrower"
and collectively, the "Borrowers"), jointly and severally, promise to pay to the
order of Far East  National  Bank (the  "Lender")  the  principal  amount of Six
Million Dollars  ($6,000,000)  or, if less, the aggregate amount of Advances (as
defined in the Loan  Agreement  referred  to below) made by Lender to a Borrower
pursuant to the Loan  Agreement  referred to below  outstanding on the Revolving
Maturity Date (as defined in the Loan Agreement  referred to below).  All unpaid
amounts  of  principal  and  interest  shall be due and  payable  in full on the
Revolving Maturity Date.

     Borrowers  also  promises to pay  interest on the unpaid  principal  amount
hereof from the date hereof until paid at the rates and at the times which shall
be  determined  in  accordance  with  the  provisions  of  the  Loan  Agreement.
Notwithstanding  any other  limitations  contained in this Note, Lender does not
intend to charge and  Borrowers  shall not be  required.  to pay any interest or
other fees or charges in excess of the maximum  permitted by applicable law. Any
payments  in excess of such  maximum  shall be  refunded  to the a  Borrower  or
credited against principal.

     All  payments of  principal  and  interest in respect of this Note shall be
made in lawful  money of the  United  States of America in same day funds at the
office of Servicing Agent described in the Loan Agreement. Until notified of the
transfer of this Note,  each  Borrower  shall be entitled to deem Lender or such
person who has been so identified by the transferor in writing to the a Borrower
as the holder of this Note, as the owner and holder of this Note.

     This Note is  referred  to in,  and is  entitled  to the  benefits  of, the
Amended and Restated Loan and Security  Agreement  dated as of December 1, 2000,
and amended by that  certain  Amendment  to Loan and  Security  Agreement  dated
February 15, 2001, and as amended from time to time (the "Loan Agreement") among
the Borrowers, the financial institutions named therein and the Agents. The Loan
Agreement,  among other  things,  (i) provides  for the making of advances  (the
"Advances") by Lender to a Borrower from time to time in an aggregate amount not
to exceed at any time  outstanding the U.S.  dollar amounts stated therein,  and
(ii)  contains  provisions  for  acceleration  of the  maturity  hereof upon the
happening  of  certain  stated  events and also for  prepaymerits  on account of
principal  hereof  prior to the  maturity  hereof upon the terms and  conditions
therein specified.

     The  terms  of this  Note are  subject  to  amendment  only in the  manner
provided in the Loan Agreement.

     No reference  herein to the Loan Agreement and no provision of this Note or
the Loan Agreement  shall alter or impair the obligation of Borrowers,  which is
absolute and unconditional, to pay the principal of and interest on this Note at
the place, at the respective times, and in the currency herein prescribed.

     Borrowers  promise  to pay all costs  and  expenses,  including  reasonable
attorneys'  fees,  incurred  in the  collection  and  enforcement  of this Note.
Borrowers  hereby  consent to renewals  and  extensions  of time at or after the
maturity  hereof,  without  notice,  and hereby waives  diligence,  presentment,
protest,  demand and notice of every kind and, to the full extent  permitted  by
law,  the right to plead any statute of  limitations  as a defense to any demand
hereunder.

     This Note shall be governed by, and construed in accordance  with, the laws
of the State of California without giving effect to its choice of law doctrine.

<PAGE>

     This Note shall be governed by, and construed in accordance  with, the laws
of the State of California without giving effect to its choice of law doctrine.

     IN WITNESS  WHEREOF,  each Borrower has caused this Note to be executed and
delivered  by its duly  authorized  officer,  as of the date and the place first
above written.

INTEGRATED PACKAGING ASSEMBLY CORPORATION     OSE, INC.
BY:                                           BY:
      ---------------------------                    ---------------------------
TITLE:                                        TITLE:
      ---------------------------                    ---------------------------

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