Document:

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                                                                   Exhibit 10.37

CONFIDENTIAL                                                      March 30, 2005

                               PURCHASE AGREEMENT

                                  BY AND AMONG

                        INTERNATIONAL DISPLAYWORKS, INC.,

                 INTERNATIONAL DISPLAYWORKS (HONG KONG) LIMITED,

                                       AND

                            THREE FIVE SYSTEMS, INC.,

                            TFS INTERNATIONAL, LTD.,

                     THREE-FIVE SYSTEMS (BEIJING) CO., LTD.

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CONFIDENTIAL                                                      March 30, 2005

                                                 TABLE OF CONTENTS

1. Definitions...............................................................1

2. Basic Transaction.........................................................5
         (a) Purchase and Sale of Assets.....................................5
         (b) Purchase Price..................................................5
         (c) Additional Payments and Adjustments.............................5
         (d) The Closing.....................................................7
         (e) Deliverables at the Closing.....................................7

3. Representations and Warranties of TFS.....................................8
         (a) Organization , Qualification, and Corporate Power...............8
         (b) Capitalization..................................................8
         (c) Authorization of Transaction....................................8
         (d) Noncontravention................................................8
         (e) Filings with the SEC............................................9
         (f) Financial Statements............................................9
         (g) Events Subsequent to Most Recent Fiscal Quarter End.............9
         (h) Undisclosed Liabilities and Litigation.........................10
         (i) Brokers' Fees..................................................11
         (j) Disclosure.....................................................11
         (k) Tax Matters....................................................11
         (l) Real Property..................................................11
         (m) Intellectual Property..........................................12
         (n) Contracts......................................................13
         (o) Accounts Receivable............................................13
         (p) Insurance......................................................13
         (q) Employees......................................................14
         (r) Employee Benefits..............................................14
         (s) Compliance with Laws...........................................14
         (t) Designated Assets..............................................14
         (u) Inventory......................................................14
         (v) Inter-Company Obligations......................................15
         (w) Liens and Encumbrances.........................................15
         (x) Loans and Indebtedness.........................................15
         (y) Customers......................................................15
         (z) Products.......................................................15
         (aa) Title to Assets...............................................15

4. Representations and Warranties of IDW....................................15
         (a) Organization...................................................15
         (b) Authorization of Transaction...................................15
         (c) Noncontravention...............................................15
         (d) Brokers' Fees..................................................16
         (e) Disclosure.....................................................16
         (f) Filings with the SEC...........................................16
         (g) Financial Statements...........................................16

5. Additional Covenants and Agreements......................................16
         (a) All Parties....................................................16
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CONFIDENTIAL                                                      March 30, 2005

         (b) TFS, TFSI and TFSB.............................................16
         (c) TFSB...........................................................17
         (d) IDW............................................................19

6. Conditions to Obligations to Close.......................................20
         (a) Conditions to Obligation of IDW and IDW HK.....................20
         (b) Conditions to Obligations of TFS, TFSB and TFSI................21

7. Post-Closing Covenants...................................................21
         (a)General.........................................................21
         (b) Litigation Support.............................................21
         (c) Transition.....................................................22

8. Remedies for Breaches of This Agreement..................................23
         (a) Survival of Representations and Warranties.....................23
         (b) Indemnification Provisions for Benefit of IDW and IDW HK.......23
         (c) Indemnification Provisions for Benefit of TFS, TFSB and TFSI...23

9. Taxes....................................................................23

10. Termination.............................................................24
         (a)Termination of Agreement........................................24
         (b) Effect of Termination..........................................24

11. Miscellaneous...........................................................24
         (a) Press Releases and Public Announcements........................24
         (b) No Third Party Beneficiaries...................................25
         (c) Entire Agreement...............................................25
         (d) Succession and Assignment......................................25
         (e) Counterparts...................................................25
         (f) Headings.......................................................25
         (g) Notices........................................................25
         (h) Governing Law..................................................26
         (i)Amendments and Waivers..........................................26
         (j) Severability...................................................26
         (k) Expenses.......................................................26
         (l) Construction...................................................26
         (m) Incorporation of Exhibits and Schedules........................26
         (n) Further Assurances.............................................26

Exhibit A - List of Designated Assets
Exhibit B - Form of Opinion of TFS, TFSI and TFSB Counsel

Schedule 1 - Earn-Out: Identified TFT Business
Schedule 2 - Earn-Out: Identified STN and TFT Business

Disclosure Schedule - Exceptions to Representations and Warranties

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CONFIDENTIAL                                                      March 30, 2005

                               PURCHASE AGREEMENT

     This Purchase  Agreement (this "Agreement") is entered into as of March 30,
2005 (the "Effective Date"), by and among  International  Displayworks,  Inc., a
Delaware corporation ("IDW");  International Displayworks (Hong Kong) Limited, a
Hong  Kong  corporation  and a  wholly  owned  subsidiary  of  IDW  ("IDW  HK");
Three-Five Systems,  Inc., a Delaware  corporation  ("TFS");  TFS International,
Ltd., a company  formed under the laws of Bermuda and a wholly owned  subsidiary
of TFS ("TFSI");  and Three-Five Systems (Beijing) Co., Ltd., a corporate entity
formed under the laws of the People's Republic of China (the "PRC") and a wholly
owned subsidiary of TFSI ("TFSB"). IDW, IDW HK, TFS, TFSB, and TFSI are referred
to individually herein as a "Party" and collectively herein as the "Parties."

                                    RECITALS

     WHEREAS, TFSB is a wholly foreign-owned enterprise established and lawfully
existing  under the laws of the PRC. It has a registered  capital of Six Million
Two Hundred and Ninety-Three Thousand and Three Hundred and Ninety United States
Dollars (US$ 6,293,390).  TFSI has contributed one hundred percent (100%) of the
equity  interest in TFSB, and is the lawful owner of one hundred  percent (100%)
of the registered capital of TFSB.

     WHEREAS, this Agreement contemplates a transaction in which IDW through IDW
HK will purchase  from TFS and TFSI,  and TFS and TFSI will sell and transfer to
IDW and IDW HK, 100% of the  registered  capital of TFSB and cause or effect the
transfer of certain assets of TFS Manila.

                                    AGREEMENT

     Now,  therefore,  in  consideration of the premises and the mutual promises
herein  made,  and in  consideration  of the  representations,  warranties,  and
covenants herein contained, the Parties agree as follows.

         1.       Definitions

     "Adverse  Consequences" means all actions,  suits,  proceedings,  hearings,
investigations,  charges, complaints,  claims, demands, injunctions,  judgments,
orders, decrees, rulings,  damages, dues, penalties,  fines, costs, amounts paid
in settlement,  Liabilities,  obligations,  Taxes, liens, losses,  expenses, and
fees, including court costs and reasonable attorneys' fees and expenses.

     "Affiliates"  has the  meaning  set forth in Rule 12b-2 of the  regulations
promulgated under the Securities Exchange Act.

     "Affiliated  Group" means any affiliated  group within Code Section 1504(a)
or any similar group defined under similar provision of state,  local or foreign
law.

     "Approval  Authorities"  means the Beijing  Municipal  Bureau of  Commerce,
Changping  District being the PRC governmental  authority  authorized to approve
the transfer of registered capital in a foreign invested enterprise  established
in such district.

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CONFIDENTIAL                                                      March 30, 2005

     "Basis" means any past or present fact,  situation,  circumstance,  status,
condition,  activity,  practice,  plan,  occurrence,  event,  incident,  action,
failure  to act,  or  transaction  that  forms or could  form the  basis for any
specified consequence.

     "Best  Efforts"  means  the  efforts  that a  prudent  Person  desirous  of
achieving a result would use in similar circumstances to ensure that such result
is achieved  as  expeditiously  as  possible."Change  of Control"  means (i) the
direct  or  indirect  sale  of  or  exchange  in  a  single  series  of  related
transactions by the  stockholders of TFS of more than fifty percent (50%) of the
voting stock of TFS; (ii) a merger or  consolidation in which TFS is a party; or
(iii) the sale,  exchange or transfer of all or substantially  all of the assets
of TFS, in each case wherein the  stockholders  of TFS  immediately  before such
transaction or single series of related  transactions do not retain  immediately
after  such   transaction   or  single  series  of  related   transactions,   in
substantially  the same  proportions as their ownership of shares of TFS' voting
stock   immediately   before  such  transaction  or  single  series  of  related
transactions, direct or indirect beneficial ownership of more than fifty percent
(50%) of the total combined voting power of the outstanding  voting stock of TFS
or the corporation or corporations to which the assets of TFS were  transferred,
as the case may be.

     "Closing" has the meaning set forth in Section 2(d) below.

     "Closing Date" has the meaning set forth in Section 2(d) below.

     "Code" means the Internal Revenue Code of 1986, as amended.

     "Confidential  Information" means any information concerning the businesses
and affairs of TFSB that is not already generally available to the public.

     "Continuing Business" means, for the purpose of tracking the Earn-Out,  the
business of TFSB that was acquired pursuant to this Agreement.

     "Control"  (including the terms  "Controlled  by" and "under common Control
with"),  with respect to the relationship  between or among two or more Persons,
means the possession,  directly or indirectly or as trustee or executor,  of the
power to direct or cause the direction of the affairs or management of a Person,
whether through the ownership of voting securities,  as trustee or executor,  by
contract or otherwise, including, without limitation, the ownership, directly or
indirectly,  of securities  having the power to elect a majority of the board of
directors or similar body governing the affairs of such Person.

     "Controlled Group" has the meaning set forth in Code Section 1563.

     "Designated  Assets" means all right,  title, and interest in and to all of
the assets of Three-Five  Systems,  Pacific,  Inc. or TFS-Manila as set forth in
Exhibit A, unless owned by TFSB.

     "Disclosure Schedule" has the meaning set forth in Section 3 below.

     "Earn-Out" has the meaning set forth in Section 2(c)(i) below.

     "Earn-Out Payment" has the meaning set forth in Section 2(c)(i) below.

     "Employee Benefit Plan" means any (a) nonqualified deferred compensation or
retirement plan or arrangement,  (b) qualified defined  contribution  retirement

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plan or  arrangement  which is an Employee  Pension  Benefit Plan, (c) qualified
defined  benefit  retirement  plan or arrangement  which is an Employee  Pension
Benefit Plan (including any Multiemployer Plan), or (d) Employee Welfare Benefit
Plan or material fringe benefit or other retirement, bonus, or incentive plan or
program.

     "Employee  Pension Benefit Plan" has the meaning set forth in ERISA Section
3(2).

     "Employee  Welfare Benefit Plan" has the meaning set forth in ERISA Section
3(1).

     "ERISA"  means the Employee  Retirement  Income  Security  Act of 1974,  as
amended.

     "Exchange Act" means the Securities Exchange Act of 1934, as amended.

     "GAAP" means United States generally accepted  accounting  principles as in
effect from time to time.

     "Intellectual  Property"  means (a) all inventions  (whether  patentable or
unpatentable and whether or not reduced to practice),  all improvements thereto,
and all patents, patent applications, and patent disclosures,  together with all
reissuances,  continuations,  continuations-in-part,  revisions, extensions, and
reexaminations  thereof, (b) all trademarks,  service marks, trade dress, logos,
trade names, and corporate names,  together with all translations,  adaptations,
derivations,  and  combinations  thereof and including  all goodwill  associated
therewith,  and all  applications,  registrations,  and  renewals in  connection
therewith,  (c) all copyrightable  works, all copyrights,  and all applications,
registrations,  and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all trade
secrets and confidential  business  information  (including ideas,  research and
development,  know-how,  formulas,  compositions,  manufacturing  and production
processes and techniques,  technical data,  designs,  drawings,  specifications,
customer  and supplier  lists,  pricing and cost  information,  and business and
marketing plans and proposals),  (f) all computer  software  (including data and
related documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium) of TFSB.

     "Knowledge"  means  actual  or  constructive   knowledge  after  reasonable
investigations. In the case of TFS, "Knowledge" shall be deemed to be the entity
and collective knowledge of the senior officers,  managers and directors of TFS,
TFSB and TFSI. In the case of IDW,  "Knowledge" shall be deemed to be the entity
and collective  knowledge of the senior officers,  managers and directors of IDW
and IDW HK.

     "Law"  means any  federal,  state,  local,  foreign,  multinational,  stock
exchange or securities market statute, law, ordinance,  regulation,  rule, code,
governmental   order,   governmental   approval,   decree,   treaty,   decision,
constitution or other requirement or rule of law.

     "Liability" means any liability (whether known or unknown, whether asserted
or unasserted,  whether  absolute or contingent,  whether  accrued or unaccrued,
whether liquidated or unliquidated,  and whether due or to become due) including
any liability for Taxes.

     "Material  Adverse  Effect"  means any  effect or change  that would be (or
could reasonably be expected to be) materially adverse to the business,  assets,
condition (financial or otherwise),  operating results,  operations, or business
prospects of TFSB, or to the ability of TFS, TFSI and TFSB to consummate  timely
the transactions  contemplated hereby (regardless of IDW or IDW HK has knowledge
of such effect or change on the date hereof).

     "Most Recent  Financial  Statements"  has the meanings set forth in Section
3(f).

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CONFIDENTIAL                                                      March 30, 2005

     "Most  Recent  Fiscal  Quarter  End" has the  meanings set forth in Section
3(g).

     "Multiemployer Plan" has the meaning set forth in ERISA Section 3(37).

     "Off-Set Date" has the meaning set forth in Section 2(c)(ii) below.

     "Off-Set Payment" has the meaning set forth in Section 2(c)(ii) below.

     "Ordinary  Course of  Business"  means  the  ordinary  course  of  business
consistent with past custom and practice (including with respect to quantity and
frequency) as it relates to the business and operations of TFSB.

     "Person" means an individual, a partnership, a corporation, an association,
a joint stock company, a trust, a joint venture, an unincorporated organization,
or a governmental  entity (or any department,  agency, or political  subdivision
thereof).

     "PRC" means the People's Republic of China.

     "SEC" means the Securities and Exchange Commission.

     "Securities Act" means the Securities Act of 1933, as amended.

     "Securities  Exchange  Act" means the  Securities  Exchange Act of 1934, as
amended.

     "Security Interest" means any mortgage, pledge, lien, encumbrance,  charge,
or other  security  interest,  other  than (a)  mechanic's,  materialman's,  and
similar liens, (b) liens for taxes not yet due and payable or for taxes that the
taxpayer  is  contesting  in good faith  through  appropriate  proceedings,  (c)
purchase  money liens and liens  securing  rental  payments  under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.

     "Subsidiary"  or  "Subsidiaries"  means,  with  respect to any Person,  any
corporation,  limited  liability  company,  partnership,  association,  or other
business entity of which a majority of the total voting power of shares of stock
or other similar ownership interest is at the time owned or controlled, directly
or indirectly,  by that Person or one or more  Subsidiaries  of that Person or a
combination  thereof.  The term  "Subsidiary"  shall include all Subsidiaries of
such Subsidiary.

     "Tax" or "Taxes" means any federal,  state, local, or foreign income, gross
receipts,  license, payroll,  employment,  excise, severance, stamp, occupation,
premium,  windfall  profits,  environmental  (including taxes under Code Section
59A), customs duties, capital stock,  franchise,  profits,  withholding,  social
security  (or  similar),  unemployment,   disability,  real  property,  personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.

     "Tax Return" means any return,  declaration,  report,  claim for refund, or
information  return or statement  relating to Taxes,  including  any schedule or
attachment thereto, and including any amendment thereof.

     "TFSB Transferred Interest" means the TFSI-owned one hundred percent (100%)
of the paid-up registered capital equity interest in TFSB, as well as all rights

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CONFIDENTIAL                                                      March 30, 2005

and contracts  pertaining to such one hundred percent (100%)  interest,  legally
obtained  by TFSI  and to be  transferred  by TFSI  to IDW HK  pursuant  to this
Agreement.

     2.    Basic Transaction.
           -----------------

          (a) The Purchase.  On and subject to the terms and  conditions of this
Agreement,  TFS shall cause to be transferred to IDW HK, and IDW shall cause IDW
HK to acquire the TFSB Transferred Interest and the Designated Assets.

               (i) Designated Assets. It shall be the sole responsibility of TFS
          (A) to suitably  package the  Designated  Assets for shipping;  (B) to
          complete and provide all shipping documents for the Designated Assets,
          which shall include a list of shipped items  corresponding  to all the
          items set forth in Exhibit A; and (C) to deliver the Designated Assets
          with the required shipping documents to a freight forwarder designated
          by IDW.  IDW  shall  bear the sole cost and risk of  transferring  the
          Designated  Assets from  Manila to IDW HK,  which  includes  any taxes
          associated with the transfer of the Designated Assets.

               (ii)  Taxes.  Except as set forth above in Section  2(a)(i),  TFS
          shall  be  responsible  for  payment  of  all  taxes  relating  to the
          transactions contemplated in this Agreement,  which shall, include but
          not be limited to, all sales,  transfer  and use taxes  arising out of
          and relating to the transactions  contemplated in this Agreement.  TFS
          shall pay its portion,  prorated as of the Closing  Date, of all Taxes
          of TFSB's  business.  IDW shall not be  responsible  for any business,
          occupation,  withholding,  or  similar  tax,  or any Taxes of any kind
          related to any period before the Closing Date.

          (b) Purchase  Price.  All money referred to in this Agreement shall be
in US Dollars.  Subject to the satisfaction or waiver of all closing  conditions
set forth under Section 6, which shall include,  but not limited to, the receipt
of confirmation  of TFS'  submission of applications  for increase in registered
capital and transfer of registered capital in a foreign invested enterprise with
the Approval  Authorities (the "Transfer"), IDW will initiate wire to deliver to
Greenberg Traurig LLP (the "Escrow Agent") an aggregate of Eight Million Dollars
($8,000,000)(the "Closing Payment"), payable to the Escrow Agent's client escrow
account.  Pursuant to the terms and conditions of the escrow  agreement  entered
into  contemporaneously  herewith,  the Escrow Agent will receive and hold funds
tendered by IDW until the  applications  for the  Transfer  are  approved by the
Approval  Authorities.  Upon receipt of the approval of Transfer by the Approval
Authorities,  as evidenced by the Approval  Authorities'  issuance of an amended
Approval  certificate  confirming the change in ownership of TFSB (the "Approval
Certificate"), the Escrow Agent will immediately disburse the Closing Payment to
TFS. In the event such  approval of the  Transfer  is not  obtained,  the Escrow
Agent will release and immediately disburse the Closing Payment to IDW.

          (c) Additional  Payments and  Adjustments.  Subject to Section 7(e) of
this Agreement:

               (i) Earn-Out.  IDW shall pay TFS an earn-out  amount based on the
          revenues  received by IDW or IDW HK (the "Earn-Out  Amount"),  if any,
          determined  at the  time,  and in the  manner  as set  forth  in  this
          Agreement.

                    (A) From  April 1,  2005 to March 31,  2006  (the  "Earn-Out
               Period"), TFS shall be eligible to receive the following Earn-Out
               Amount:

                         (1)  If  the  revenue  derived  by  IDW  or  one of its
                    affiliates from the designated  customer on the products set

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                    forth on Schedule 1 (regardless of the originating  shipment
                    point) is at least $50.4  million for the  Earn-Out  Period,
                    IDW shall pay TFS an amount  equal to the product of (i) 60%
                    of the gross profits on the products sold to such  customer,
                    with such gross profits to be determined based on the amount
                    of  gross  profit  to be  earned  by TFSB  in the  contracts
                    between  such  designated  customer  and  TFSB  and (ii) the
                    revenue  received  from such customer  under such  contracts
                    during the  Earn-Out  Period.  The range is  expected  to be
                    between 3.6% and 4.8% of such revenue; and

                         (2)  If  the  revenue  derived  by IDW HK or one of its
                    affiliates  from  all  other  business  from the STN and TFT
                    business  as set  forth  in  Schedule  2 minus  all  revenue
                    defined in Section 2(c)(i)(A)(1),  is at least $33.6 million
                    during the Earn-Out Period, then in such an event, IDW shall
                    pay TFS an amount equal to 7.2% of the revenue received from
                    such business during the Earn-Out Period.

                    (B)  The  payment  of the  Earn-Out  Amount  (the  "Earn-Out
               Payment"),  if any,  shall be paid in the form of common stock of
               IDW,  based  on the  trailing  five  day  average  closing  price
               preceding  March 31, 2006. The Earn-Out  Payment shall be due and
               payable on May 1, 2006.

                    (C) IDW agrees to register  the shares of common  stock that
               may be issued to TFS in the future  pursuant  to Section  2(c)(i)
               provisions pursuant to piggy-back registration rights on the next
               registration statement on Form S-3 to be filed by IDW, subject to
               investment  banker or underwriter  discretion not to include such
               shares.   If  not  included   under  the   foregoing   piggy-back
               registration  statement  rights by March 1,  2006,  then IDW will
               prepare and file a separate  registration  statement  on Form S-3
               and make reasonable efforts to cause such registration  statement
               to be declared  effective within 30 days of April 1, 2006, and in
               either case shall  maintain  such  registration  statement  for a
               period of a least ninety (90) days  following the issuance of any
               shares  pursuant  to the  Earn-Out.  IDW will  notify  TFS of the
               registration of such shares of common stock and shall provide TFS
               with  the   prospectus   following  the  order   declaring   such
               registration statement effective.

               (ii) Off-Set.

                         (1)  Accounts  Receivable  and  Account  Payable;   TFS
                    Guarantee.  On the  Closing  Date,  a schedule  listing  the
                    accounts   receivable  by  customer   detail  (the  "Closing
                    Accounts Receivable"), the accrued liabilities (the "Closing
                    Accrued  Liabilities") and the accounts payable balance (the
                    "Closing  Accounts  Payable  Balance") shall be delivered by
                    TFS to IDW.  Ninety  (90)  days from the  Closing  Date (the
                    "Off-Set   Date"),   if  the  amounts  of  Closing  Accounts
                    Receivable  collected  by IDW  exceed the  Closing  Accounts
                    Payable Balance, Accrued Liabilities and any bad debts, then
                    there shall be an increase  to the  Purchase  Price equal to
                    such excess (the  "Off-Set  Payment").  The Off-Set  Payment
                    shall  be paid to TFS  within  thirty  (30)  days  from  the
                    Off-Set Date. If on the Off-Set Date,  the amount of Closing
                    Accounts  Receivable  collected  by IDW  is  less  than  the
                    Closing Accounts Payable  Balance,  Accrued  Liabilities and
                    the bad debts (the  "Deficiencies"),  then TFS shall pay IDW
                    an amount equal to the Deficiencies  within thirty (30) days
                    from the Off-Set Date. Upon IDW's receipt of the payment for
                    the  Deficiencies,   ownership  and  collectibility  of  any
                    Closing Accounts Receivable  uncollected on the Off-Set Date
                    shall be transferred to TFS within thirty (30) days from the
                    Off-Set Date.

                         (2) Warranty  and RMA. If there are any claims  arising

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                    out  of  a  warranty  or  return  merchandise  authorization
                    ("RMA") policy for any products shipped prior to the Closing
                    Date during the ninety (90) day period following the Closing
                    Date and such claim exceeds $25,000 per customer, TFS agrees
                    that IDW and IDW HK may deduct such amounts from the Off-Set
                    Payment, Inventory Payment or Earn-Out Payment.

               (iii)  Inventory  Payment.  All inventory shall be transferred to
          IDW at Closing and all transferred  inventory shall be tracked by IDW.
          Under  no  circumstances  shall  IDW be  obligated  to use  any of the
          transferred  inventory.   In  the  event,  IDW  uses  the  transferred
          inventory it may use such inventory without any payment to TFS so long
          as the  value  of the  used  inventory  does  not  exceed  $2  million
          ("Initial Inventory"). The inventory shall be valued at the book value
          of the inventory on the Closing Date (the "Book Value").  For any used
          inventory  in excess of the Initial  Inventory,  IDW shall pay TFS for
          the used  inventory at the Book Value.  Commencing on the Closing Date
          and terminating  one (1) year from the Closing Date (the  "Anniversary
          Date"), IDW shall track the inventory used during each ninety (90) day
          period.  After each  ninety (90) day period,  IDW shall  identify  the
          amount of  inventory  used  during  such  period,  if any,  and make a
          payment  to TFS  for any  used  inventory  in  excess  of the  Initial
          Inventory ("Inventory Payment"). At the end of the one year period, at
          the election of TFS,  IDW will ship and transfer all unused  inventory
          to TFS at TFS sole expense.

          (d)  The  Closing.   Following  the  satisfaction  or  waiver  of  all
     conditions to the obligations of the Parties to consummate the transactions
     contemplated  hereby  (other than  conditions  with  respect to actions the
     respective  Parties will take at the Closing  itself) or such other date as
     the  Parties  may  mutually  determine,  the  closing  of the  transactions
     contemplated  by this  Agreement  (the  "Closing")  shall take place at the
     offices of Bartel Eng & Schroder in Sacramento,  California,  commencing at
     9:00 a.m. local time on April 8, 2005 (the "Closing Date").

          (e) Deliverables at the Closing. At the Closing:

               (i) TFS, TFSB and TFSI will deliver to IDW and IDW HK:

                    (A) All the various certificates,  instruments and documents
               referred to in Section 6(a) below;

                    (B)  All  the  capital   contribution   verification  report
               representing  all of the TFSB Transferred  Interest,  endorsed in
               blank  or  accompanied  by  duly  executed  assignment  documents
               evidencing such transfer, if so requested by IDW or IDW HK,

                    (C)  Applications  for  Transfers  dated and filed  with the
               Approval Authorities no later than April 6, 2005,

                    (D) All duly executed  assignment  documents  evidencing the
               transfer  of any  and  all  outstanding  inter-company  loans  or
               obligations of TFSB to IDW, satisfactory in form and substance to
               IDW; and

                    (E)  An  executed  Assignment  and  Bill  of  Sale  for  the
               Designated Assets.

               (ii) IDW and IDW HK will deliver to TFS, TFSB and TFSI:

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CONFIDENTIAL                                                      March 30, 2005

                    (A) All the various certificates,  instruments and documents
               referred to in Section 6(b) below; and

                    (B) The  Closing  Payment in the manner set forth in Section
               2(b).

                         3.  Representations  and  Warranties  of  TFS.  TFS  as
                    expressly provided below, represents and warrants to IDW and
                    IDW HK that the  statements  contained in this Section 3 are
                    true, correct and complete as of the date of this Agreement,
                    except as set forth in the disclosure schedule  accompanying
                    this Agreement and initialed by the Parties (the "Disclosure
                    Schedule").  The  Disclosure  Schedule  will be  arranged in
                    paragraphs   corresponding  to  the  lettered  and  numbered
                    paragraphs contained in this Section 3.

          (a)  Organization,  Qualification,  and Corporate Power.  Each of TFS,
     TFSI, and TFSB is a corporation duly organized,  validly  existing,  and in
     good standing under the laws of the jurisdiction of its incorporation. Each
     of TFS, TFSI and TFSB is duly authorized to conduct business and is in good
     standing under the laws of each  jurisdiction  where such  qualification is
     required and where the failure to so qualify would have a Material  Adverse
     Effect on TFSB  considered  as a whole.  Each of TFS, TFSI and TFSB has the
     corporate  power and  authority to carry on the  businesses  in which it is
     engaged and to own and use the properties owned and used by it.

          (b) Capitalization.  TFSI has made its capital contribution to TFSB in
     cash in full, and a qualified capital verification institution has issued a
     capital  contribution  verification  report thereof. No other share or loan
     capital has been issued or allotted.  TFSI is the sole legal,  rightful and
     beneficial owner of the TFSB Transferred  Interest and the TFSB Transferred
     Interest is not  encumbered  or subject to any court  order or  enforcement
     action by any  authority.  TFSI is the sole legal,  rightful and beneficial
     owner of the TFSB Transferred Interest and the TFSB Transferred Interest is
     not and will not be encumbered  by any security in the form of  guarantees,
     pledges,  any third party  interests or any other Liens;  and TFSI can duly
     and  validly  transfer  the TFSB  Transferred  Interest  to IDW HK.  TFSI's
     transfer of the TFSB Transferred Interest is not subject to any third party
     consent  other than the  approval of the Approval  Authority.  There are no
     agreements or  arrangements  which provide for the present or future issue,
     allotment  or  transfer of or grant to any Person the right to call for the
     issue,  allotment  or  transfer of any share,  interest or loan  capital of
     TFSB.

          (c)  Authorization of Transaction.  Each of TFSB, TFSI and TFS has the
     corporate  power and authority to execute and deliver this Agreement and to
     perform its obligations  hereunder.  This Agreement and the consummation by
     each of TFSB,  TFSI and TFS of the  transactions  contemplated  hereby have
     been duly  authorized by its Board of Directors and by its  shareholders to
     the extent required by applicable  law, and no other corporate  proceedings
     are necessary by TFSB or TFSI to authorize  this Agreement or to consummate
     the  transactions  contemplated.  This  Agreement has been duly and validly
     executed  by each of  TFSB,  TFSI and TFS and  constitutes  the  valid  and
     legally  binding  obligation of each of them,  enforceable  against each of
     them in accordance with its terms,  except as enforceability may be limited
     by  bankruptcy,  insolvency,  reorganization,  moratorium  or similar  laws
     affecting creditor's rights generally and by principles of equity.

          (d)  Noncontravention.  Neither the execution and the delivery of this
     Agreement,  nor the consummation of the transactions  contemplated  hereby,
     will (i) violate any constitution,  statute,  regulation, rule, injunction,
     judgment,  order,  decree,  ruling,  charge,  or other  restriction  of any
     government,  governmental  agency,  or court to which any of TFSB, TFSI and
     TFS is subject or any provision of the charter,  memorandum of association,
     bylaws or by-laws of TFSB,  TFSI or TFS or (ii) conflict with,  result in a
     breach of,  constitute  a default  under,  result in the  acceleration  of,
     create in any party the right to accelerate,  terminate, modify, or cancel,
     that would have a Material  Adverse  Effect or require any notice where the
     failure to provide notice would have such a Material Adverse Effect,  under
     any agreement,  contract, lease, license,  instrument, or other arrangement
     to which  TFSB,  TFSI or TFS is a party or by which it is bound or to which
     any of its assets is subject (or result in the  imposition  of any Security
     Interest  upon  any of its  assets).  Other  than in  connection  with  the
     provisions of the Securities  Exchange Act and the state  securities  laws,
     TFSB,  TFSI or TFS does not need to give any  notice  to,  make any  filing
     with, or obtain any authorization,  consent,  or approval of any government
     or  governmental  agency  in  order  for  the  Parties  to  consummate  the
     transactions contemplated by this Agreement.

                                       8
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CONFIDENTIAL                                                      March 30, 2005

     lease, license, instrument, or other arrangement to which TFSB, TFSI or TFS
     is a party or by which it is bound or to which any of its assets is subject
     (or  result in the  imposition  of any  Security  Interest  upon any of its
     assets).  Other than in connection  with the  provisions of the  Securities
     Exchange Act and the state securities laws, TFSB, TFSI or TFS does not need
     to give any notice to, make any filing with,  or obtain any  authorization,
     consent,  or approval of any government or governmental agency in order for
     the Parties to consummate the transactions contemplated by this Agreement.

          (e) Filings  with the SEC. To the  Knowledge  of TFS, TFS has made all
     filings with the SEC that is has been required to make under the Securities
     Act  and  the  Securities  Exchange  Act  (collectively,  the  "TFS  Public
     Reports").  None of the TFS Public Reports,  as of their respective  dates,
     contained  any untrue  statement  of a material  fact or omitted to state a
     material fact  necessary in order to make the statements  made therein,  in
     light of the circumstances under which they were made, not misleading.

          (f)  Financial  Statements.  TFSB  has  delivered  to IDW and IDW HK a
     preliminary version of its financial  statements as of February 28, 2005 as
     they  relate  to  TFSB  (the  "Most  Recent  Financial  Statements").  Such
     preliminary   financial   statements   (including  the  related  notes  and
     schedules),   and  all  other  financial  statements  provided  under  this
     Agreement  have  been  prepared  in  accordance  with  GAAP  applied  on  a
     consistent basis throughout the periods covered thereby, present fairly the
     financial  condition of TFSB as of the  indicated  dates and the results of
     operations of TFSB for the indicated  periods,  and are consistent with the
     books and records of TFSB, provided,  however,  that the interim statements
     are subject to normal  year end  adjustments  (which will not be  material,
     individually or in the aggregate).

          (g)  Events  Subsequent  to Most  Recent  Fiscal  Quarter  End.  Since
     February 28, 2005 (the "Most Recent  Fiscal  Quarter  End"),  there has not
     been any material  adverse  change in the  business,  financial  condition,
     operations,  results of operations,  or future  prospects of TFSB.  Without
     limiting the generality of the foregoing, since that date:

          (i) TFSB has not sold, leased,  transferred, or assigned any of TFSB's
     assets, tangible or intangible,  other than for a fair consideration in the
     Ordinary Course of Business;

          (ii) TFSB has not entered  into any  agreement,  contract,  lease,  or
     license (or series of related agreements,  contracts, leases, and licenses)
     outside the Ordinary Course of Business;

          (iii) TFSB has not accelerated, terminated, modified, or cancelled any
     agreement,  contract,  lease, or license (or series of related  agreements,
     contracts,  leases, and licenses) to which TFSB is a party or by which TFSB
     is bound;

          (iv)  TFSB  has not  imposed  any  Security  Interest  upon any of its
     assets,  tangible  or  intangible,  and TFS has not  imposed  any  Security
     Interest upon any of the Designated Assets;

          (v) TFS had not made any  capital  investment  in, any loan to, or any
     acquisition  of the  securities  or  assets of TFSB (or  series of  related
     capital investments, loans, and acquisitions);

          (vi) TFSB has not issued any note,  bond,  or other debt  security  or
     created,  incurred,  assumed,  or guaranteed any  indebtedness for borrowed
     money or capitalized  lease  obligation  either involving more than $10,000
     singly or $100,000 in the aggregate;

          (vii)  TFSB has not  delayed or  postponed  the  payment  of  accounts
     payable and other Liabilities outside the Ordinary Course of Business;

                                       9
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CONFIDENTIAL                                                      March 30, 2005

          (viii) TFSB has not cancelled,  compromised,  waived,  or released any
     right or claim (or series of related rights and claims) that is material to
     its business;

          (ix) TFSB has not  granted  any  license or  sublicense  of any rights
     under or with respect to any TFSB Intellectual Property;

          (x) TFSB has not issued,  sold,  or  otherwise  disposed of any of its
     capital  stock,  or  granted  any  options,  warrants,  or other  rights to
     purchase or obtain (including upon conversion,  exchange,  or exercise) any
     of its capital stock, except for the capital stock held by TFSI;

          (xi) TFSB has not  declared,  set aside,  or paid any dividend or made
     any  distribution  with respect to its capital stock (whether in cash or in
     kind) or  redeemed,  purchased,  or  otherwise  acquired any of its capital
     stock;

          (xii)  TFSB  has not  made any loan  to,  or  entered  into any  other
     transaction with, any of its directors, officers, and employees;

          (xiii) TFSB has not entered into any employment contract or collective
     bargaining  agreement,  written  or  oral,  or  modified  the  terms of any
     existing such contract or agreement;

          (xiv) TFSB has not  adopted,  amended,  modified,  or  terminated  any
     bonus, profit sharing,  incentive,  severance,  or other plan, contract, or
     commitment for the benefit of any of its directors, officers, and employees
     (or taken any such action with respect to any other Employee Benefit Plan);

          (xv) TFSB has not experienced any material damage, destruction or loss
     (whether or not covered by insurance ) to its property; and

          (xvi)  there  has not  been  any  other  material  occurrence,  event,
     incident,  action,  failure to act, or  transaction  outside  the  Ordinary
     Course of Business involving TFSB.

     (h) Undisclosed Liabilities and Litigation.  TFSB has no material Liability
except for (i)  liabilities  set forth in the balance sheet dated as of the Most
Recent Financial Statements and (ii) liabilities that have arisen after the Most
Recent  Financial  Statements,  all of which occurred in the Ordinary  Course of
Business  (none of which  results  from,  arises out of,  relates  to, is in the
nature of, or was caused by any breach of contract,  breach of  warranty,  tort,
infringement,  or violation of law).  TFSB is not the subject of or involved in,
any  civil,  criminal  or  administrative  actions,  suits,  claims,   hearings,
investigations  or  proceedings,  whether  pending or threatened,  or that could
result in any claims against, or obligations or liabilities of TFSB. TFSB has no
outstanding judgments, decrees, injunctions or orders of any governmental entity
or arbitrator.

     (i) Brokers'  Fees.  TFSB does not have any  liability or obligation to pay
any fees or  commissions  to any broker,  finder,  or agent with  respect to the
transactions contemplated by this Agreement.

     (j)  Disclosure.  The  schedules,  certificates,  and  any  and  all  other
statements and information,  whether furnished in written or electronic form, to
IDW and IDW HK or their  representatives  by or on behalf of any of TFS, TFSI or
TFSB in connection with the  negotiation of this Agreement and the  transactions
contemplated hereby do not contain any material  misstatement of fact or omit to
state a material  fact or any fact  necessary to make the  statements  contained
therein not misleading.

     (k) Tax Matters.

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CONFIDENTIAL                                                      March 30, 2005

          (i) TFSB has filed all Tax Returns that it was  required to file.  All
     such Tax Returns were correct and complete in all material  respects.  TFSB
     has (whether or not shown on any Tax Return) paid all Taxes  required to be
     paid  (except  where the  failure to pay the same would not have a Material
     Adverse Effect).  TFSB currently is not the beneficiary of any extension of
     time within which to file any Tax Return. No claim has ever been made by an
     authority in a jurisdiction where TFSB does not file Tax Returns that it is
     or may be subject to taxation by that  jurisdiction.  There are no Security
     Interests on the Designated  Assets or any of the assets of TFSB that arose
     in connection with any failure (or alleged failure) to pay any Tax.

          (ii)  TFSB has  withheld  and paid all  Taxes  required  to have  been
     withheld  and  paid  in  connection  with  amounts  paid  to any  employee,
     independent  contractor,  creditor,  stockholder,  or other  third party as
     required under the applicable laws.

          (iii) TFS has no  Knowledge  of any  pending  or  proposed  assessment
     against TFSB for additional Taxes for any period for which Tax Returns have
     been filed.  There is no dispute or claim  concerning  any Tax Liability of
     TFSB either (A) claimed or raised by any  authority  in writing  (including
     any  audit of any Tax  Return)  or (B)  known to TFS  based  upon  personal
     contact with any agent of such authority.

          (iv) TFSB has not waived  any  statute  of  limitations  in respect of
     Taxes or agreed to any  extension of time with respect to a Tax  assessment
     or deficiency.

          (v) TFSB is not a party to any Tax  allocation  or sharing  agreement.
     TFSB (A) has not been a member of an Affiliated Group filing a consolidated
     federal  income Tax Return  (other than a group the common  parent of which
     was TFS) or (B) has no  Liability  for the Taxes of any  Person  under Reg.
     Section  1.1502 6 (or any similar  provision  of state,  local,  or foreign
     law), as a transferee or successor, by contract, or otherwise.

          (vi) The Most Recent Financial  Statements reflect an adequate reserve
     for all current Taxes payable by TFSB.

     (l) Real Property.

          (i) TFSB is the  sole  and  exclusive  holder  of the land use  rights
     approval certificate No. 1998 (032), issued by the Changping Municipal Land
     and Natural  Resources  Administration  Bureau in 2001 with  respect to the
     Site (the "Site Land Use Rights Certificate") and listed on Section 3(l)(i)
     of the Disclosure Schedule.

          (ii) Except as noted on Section  3(l)(ii) of the Disclosure  Schedule,
     with respect to each such parcel of real property under lease by TFSB:

               (A) the lease or  sublease  is in full  force and effect and TFSB
          has a valid leasehold interest in the property subject to such lease;

               (B)  TFSB  is not in  breach  or  default  under  such  lease  or
          sublease,  and no event has  occurred  that,  with  notice or lapse of
          time,  would  constitute  a  breach  or  default  by  TFSB  or  permit
          termination, modification, or acceleration thereunder;

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CONFIDENTIAL                                                      March 30, 2005

               (C) TFS has no  Knowledge  of any  breach or default by any other
          party to any such lease or sublease;

               (D) no party to the lease or sublease has notified TFSB, TFSI and
          TFS that it has repudiated any provision thereof;

               (E)  TFSB has not  assigned,  transferred,  conveyed,  mortgaged,
          deeded in trust,  or  encumbered  any  interest  in the  leasehold  or
          subleasehold;

               (F) all facilities  leased or subleased  thereunder have received
          all  approvals of  governmental  authorities  (including  licenses and
          permits) required in connection with the operation thereof by TFSB and
          have  been  operated  and  maintained  by  TFSB  in  accordance   with
          applicable laws, rules and regulations;

               (G) all  facilities  leased or subleased  thereunder are supplied
          with utilities and other services  necessary for the operation of said
          facilities; and

               (H) the lease or  sublease  will  continue  to be  legal,  valid,
          binding,  enforceable  and in full force and effect on identical terms
          following the  consummation  of the  transaction  contemplated in this
          Agreement.

     (m) Intellectual Property.

               (i)  TFSB  owns or has the  right  to use  pursuant  to  license,
          sublicense,   agreement,   or  permission  all  Intellectual  Property
          necessary  for the  operation of the  businesses  of TFSB as presently
          conducted and as presently  proposed to be conducted,  which includes,
          but is not limited to, the  software  and  hardware and other forms of
          Intellectual  Property  used by TFSB'  engineers.  TFSB has  taken all
          necessary  action to maintain  and protect  each item of  Intellectual
          Property that it owns or uses and the consummation of the transactions
          contemplated hereby will not materially alter the terms and conditions
          of such ownership or use.

               (ii) TFSB has not received notice of, nor does TFS have Knowledge
          of any facts that would indicate the likelihood of, any  interference,
          infringement or misappropriation of its Intellectual  Property, or any
          conflict with the Intellectual  Property rights of third parties, and,
          TFSB has not received  during the past three years any written charge,
          complaint,  claim,  demand or notice  alleging any such  interference,
          infringement or  misappropriation  (including any claim that TFSB must
          license or refrain from using any Intellectual  Property rights of any
          third party).

               (iii) Section  3(m)(iii) of the  Disclosure  Schedule  identifies
          each  patent or  registration  which has been  issued to TFSB and each
          trade name or  unregistered  trademark used by TFSB in connection with
          any of its  businesses.  With  respect  to each  item of  Intellectual
          Property  required  to be  identified  in  Section  3(m)(iii)  of  the
          Disclosure Schedule:

                    (A) TFSB rightfully possesses all right, title, and interest
               in and to the  item,  free and  clear of any  Security  Interest,
               license, or other restriction and has paid for all such rights;

                    (B) the item is not subject to any  outstanding  injunction,
               judgment, order, decree, ruling, or charge;

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CONFIDENTIAL                                                      March 30, 2005

                    (C) no action,  suit,  proceeding,  hearing,  investigation,
               charge,  complaint,  claim, or demand is pending or is threatened
               which challenges the legality, validity, enforceability,  use, or
               ownership of the item; and

                    (D) TFSB does not have any agreement to indemnify any Person
               for or against any interference, infringement or misappropriation
               with respect to the item.

               (iv)  to  the   Knowledge  of  TFS,  the   consummation   of  the
          transactions contemplated hereby will not result in the termination or
          any impairment of the Intellectual Property of TFSB.

     (n) Contracts.  Section 3(n) of the Disclosure Schedule lists the following
contracts and other agreements to which TFSB is a party:

               (i) any  agreement  (or  group  of  related  agreements)  for the
          purchase  or sale of more than  $25,000  per  annum of raw  materials,
          commodities,  supplies,  products,  or other personal property, or for
          the furnishing or receipt of services,  the  performance of which will
          extend over a period of more than one year,  result in a material loss
          to TFSB;

               (ii) any agreement concerning a partnership or joint venture;

               (iii) any agreement (or group of related  agreements) under which
          it has created, incurred,  assumed, or guaranteed any indebtedness for
          borrowed money, or any capitalized lease obligation, or under which it
          has  imposed a Security  Interest  on any of its  assets,  tangible or
          intangible;

               (iv) any agreement concerning noncompetition;

               (v) any profit  sharing,  stock  option,  stock  purchase,  stock
          appreciation, deferred compensation, severance, or other material plan
          or  arrangement  for the benefit of its  current or former  directors,
          officers, and employees;

               (vi) any collective bargaining agreement;

               (vii) any  agreement  under  which it has  advanced or loaned any
          amount to any of its directors,  officers,  and employees  outside the
          Ordinary Course of Business;

               (viii) any  agreement  providing  for  payments  between or among
          TFSB, TFSI and TFS; and

               (ix) any agreement  under which the  consequences of a default or
          termination  could have a  Material  Adverse  Effect on the  business,
          financial  condition,  operations,  results of  operations,  or future
          prospects of TFSB.

     (o) Accounts Receivable. [Omitted]

     (p) Insurance.  The Disclosure Schedule, under the caption referencing this
3(p), lists and briefly  describes each insurance policy maintained with respect
to the Designated Assets, and the properties, assets and operations of TFSB. All
of such insurance policies are in full force and effect and are issued by

                                       13
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CONFIDENTIAL                                                      March 30, 2005

insurers of  recognized  responsibility.  TFSB is not in default with respect to
its  obligations  under any of such  insurance  policies.  TFSB has been covered
during  the past five  years by  insurance  in scope and  amount  customary  and
reasonable for the businesses in which it has engaged during the  aforementioned
period.

     (q) Employees.  TFS does not have Knowledge of any executive, key employee,
or group of employees that has plans to terminate  employment with TFSB. TFSB is
not a party to or  bound  by any  collective  bargaining  agreement,  nor has it
experienced any strikes, grievances, formal claims of unfair labor practices, or
other collective  bargaining  disputes.  TFSB has not committed any unfair labor
practice.

     (r) Employee Benefits.

          (i)  Section  3(r) of the  Disclosure  Schedule  lists  each  Employee
     Benefit  Plan that  TFSB  maintains,  to which  TFSB  contributes,  or with
     respect to which TFSB has any material Liability or potential Liability.

               (A) Each such  Employee  Benefit  Plan (and each  related  trust,
          insurance  contract,   or  fund)  has  been  maintained,   funded  and
          administered  in accordance  with the terms of such  Employee  Benefit
          Plan and complies in form and in  operation  in all material  respects
          with the  applicable  requirements  of  ERISA,  the  Code,  and  other
          applicable laws.

               (B) All contributions  (including all employer  contributions and
          employee salary reduction  contributions)  that are due have been made
          within  the time  period  prescribed  by ERISA to each  such  Employee
          Benefit  Plan  that  is an  Employee  Pension  Benefit  Plan  and  all
          contributions for any period ending on or before the Closing Date that
          are not yet due have been made to each such Employee  Pension  Benefit
          Plan or accrued in  accordance  with the past  custom and  practice of
          TFSB.  All  premiums or other  payments  for all periods  ending on or
          before  the  Closing  Date have been  paid with  respect  to each such
          Employee Benefit Plan which is an Employee Welfare Benefit Plan.

               (C) Each such Employee  Benefit Plan that is intended to meet the
          requirements  of a  "qualified  plan"  under Code  Section  401(a) has
          received a determination  from the Internal  Revenue Service that such
          Employee Benefit Plan is so qualified,  and nothing has occurred since
          the  date  of such  determination  that  could  adversely  affect  the
          qualified status of any such Employee Benefit Plan.

     (s) Compliance with Laws. Except as noted in Section 3(l), TFSB is, and has
been,  in  material  compliance  with all  laws,  statutes,  ordinances,  rules,
regulations, licenses and permits of any governmental entity, including all laws
relating to environment,  health and safety, the violation of which would have a
Material Adverse Effect.

     (t) Designated  Assets. TFS has full authority to cause the transfer of the
Designated  Assets to IDW HK  pursuant  to this  Agreement  without  any further
consent or action  being  required  by any other  party.  Upon  transfer  of the
Designated  Assets,  IDW HK will own and have good and  marketable  title to the
Designated  Assets,  free and  clean  of all  debts,  Liabilities,  obligations,
claims, liens, Security Interest and encumbrances of any kind.

     (u) Inventory.  The Initial Inventory of TFSB consists of raw materials and
supplies,  manufactured  and  purchased  parts,  goods in process,  and finished
goods,  all of which is  merchantable  and fit for the  purpose for which it was
procured or manufactured,  and none of which is slow-moving,  obsolete, damaged,
or defective, subject only to the reserve for inventory writedown set forth on

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CONFIDENTIAL                                                      March 30, 2005

the face of the Most Recent  Balance Sheet (rather than in any notes thereto) as
adjusted for the passage of time through the Closing Date in accordance with the
past custom and practice of TFSB.

     (v)  Inter-Company  Obligations.  As  of  the  Closing,  there  will  be no
inter-company obligations, including but not limited to any outstanding loans or
contractual   arrangements  between  or  among  TFSB,  TFSI  or  TFE,  or  their
affiliates.

     (w) Liens and  Encumbrances.  Except  as set forth in  Section  3(w) of the
Disclosure  Schedule,  there are no Security  Interest on any of the  Designated
Assets or the assets of TFSB.

     (x) Loans and Indebtedness.  All loans and debts owed to TFSB are valid and
collectible.

     (y) Customers. There are no pending disputes or threatened disputes between
TFSB and its top ten customers.

     (z) Products.  There are no pending disputes or threatened disputes between
TFSB and any Person or entity relating to its products, operations,  business or
otherwise.  In addition,  there are issues or pending  claims  relating to TFSB'
warranties or defective products.

     (aa) Title to Assets.  Except as noted in Section  3(l),  TFSB has good and
marketable title to, or a valid leasehold interest in, the properties and assets
used by TFSB,  located on its  premises,  or shown on the Most Recent  Financial
Statements or acquired  after the date  thereof,  free and clear of all Security
Interests.

     4.  Representations  and  Warranties of IDW. IDW represents and warrants to
TFS that the statements  contained in this Section 4 are correct and complete as
of the date of this Agreement,  except as set forth in the Disclosure  Schedule.
The  Disclosure  Schedule  will be arranged in paragraphs  corresponding  to the
numbered and lettered paragraphs contained in this Section 4.

     (a)  Organization.  Each of IDW and IDW HK is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
incorporation.

     (b) Authorization of Transaction. Each of IDW and IDW HK has full power and
authority  (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder. The execution, delivery
and performance of this Agreement by IDW and IDW HK and the  consummation of the
transactions  contemplated  hereby  and  thereby  have  been  duly  and  validly
authorized by all requisite corporate action, and no other corporate proceedings
on their part are necessary to authorize the execution, delivery and performance
of this  Agreement.  This  Agreement has been duly executed and delivered by IDW
and  IDW  HK  and  constitutes  their  valid  and  legally  binding  obligation,
enforceable  in  accordance  with its  terms,  except as  enforceability  may be
limited by bankruptcy,  insolvency,  reorganization,  moratorium or similar laws
affecting creditor's rights generally and by principles of equity.

     (c)  Noncontravention.  Neither  the  execution  and the  delivery  of this
Agreement,  nor the consummation of the transactions  contemplated  hereby, will
violate any  constitution,  statute,  regulation,  rule,  injunction,  judgment,
order,  decree,   ruling,  charge,  or  other  restriction  of  any  government,
governmental  agency,  or court to which  either IDW or IDW HK is subject or any
provision  of the  charter  or  bylaws of either  IDW or IDW HK.  Other  than in
connection  with the  provisions  of the  Securities  Exchange Act and the state
securities  laws,  neither  IDA nor IDW HK needs to give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any government
or governmental  agency in order for the Parties to consummate the  transactions
contemplated by this Agreement.

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     (d) Brokers'  Fees.  Neither IDW nor IDW HK has any liability or obligation
to pay any fees or commissions to any broker,  finder,  or agent with respect to
the  transactions  contemplated  by this  Agreement for which TFS, TFSB, or TFSI
could become liable or obligated.

     (e)  Disclosure.  The  schedules,  certificates,  and  any  and  all  other
statements   and   information   furnished  to  TFS,   TFSB  or  TFSI  or  their
representatives  by or on  behalf  of  IFW  or IDW  HK in  connection  with  the
negotiation of this Agreement and the  transactions  contemplated  hereby do not
contain any material  misstatement  of fact or omit to state a material  fact or
any fact necessary to make the statements contained therein not misleading.

     (f) Filings with the SEC. To the Knowledge of IDW, IDW has made all filings
with the SEC that is has been required to make under the  Securities Act and the
Securities  Exchange Act (collectively,  the "IDW Public Reports").  None of the
IDW Public Reports, as of their respective dates, contained any untrue statement
of a material  fact or omitted to state a material  fact  necessary  in order to
make the statements made therein, in light of the circumstances under which they
were made, not misleading.

     (g)  Financial  Statements.  IDW has  delivered  to TFS,  TFSB  and  TFSI a
preliminary  version of its Most Recent Financial  Statements.  Such preliminary
financial  statements(including the related notes and schedules),  and all other
financial  statements  provided  under  this  Agreement  have been  prepared  in
accordance  with GAAP  applied on a  consistent  basis  throughout  the  periods
covered  thereby,  present  fairly the  financial  condition of IDW HK as of the
indicated  dates  and the  results  of  operations  of IDW HK for the  indicated
periods,  and are  consistent  with the books and  records of IDW HK,  provided,
however,  that the interim statements are subject to normal year end adjustments
(which will not be material, individually or in the aggregate).

     5. Covenants and  Agreements.  The Parties agree as follows with respect to
the period from and after the execution of this Agreement and the Closing Date.

          (a) All Parties.

               (i) Each of the Parties will use its  reasonable  Best Efforts to
          take all action and to do all things  necessary,  proper, or advisable
          in  order  to  consummate   and  make   effective   the   transactions
          contemplated  by  this  Agreement  (including  satisfaction,  but  not
          waiver, of the closing conditions set forth in Section 6 below).

               (ii) Each Party will give prompt  written notice to the others of
          any material  adverse  development  causing a breach of any of its own
          representations  and  warranties  in Section 3 or Section 4 above,  as
          applicable.  No  disclosure  by any Party  pursuant to this Section 5,
          however,  shall  be  deemed  to  amend or  supplement  the  Disclosure
          Schedule  or to  prevent  or cure any  misrepresentation  or breach of
          warranty.

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CONFIDENTIAL                                                      March 30, 2005

          (b) TFS,  TFSI and TFSB.  In  addition to the  covenants  set forth in
     subsection (a),

               (i) Cooperation.  TFS, TFSB and TFSI shall cooperate with IDW and
          IDW HK and provide all additional  materials and documents  reasonably
          requested by IDW and IDW HK in connection with its due diligence.

               (ii) Access.  TFS,  TFSI and TFSB shall permit IDW and IDW HK and
          its respective  representatives  to have reasonable  access to, and to
          examine and make copies of the books and records of TFSB for  purposes
          of conducting due diligence.  (iii) Engagement Letter.  Subject to the
          satisfaction  of IDW,  IDW shall have  received a proposed  engagement
          letter  between  IDW and the law firm of Baker &  McKenzie  ("Baker  &
          McKenzie")  pursuant to which Baker & McKenzie  shall agree to provide
          legal  services  necessary  to  rectify  the  current  land use rights
          certificate issue to the satisfaction of IDW, such as by obtaining the
          issuance  of a proper  land use  rights  certificate  for the  Beijing
          facility as  disclosed  under  Section  3(l) (the "Land Use Issue") at
          TFS'  sole  expense  as  provided  in  this  Agreement.  The  proposed
          engagement letter will be satisfactory in form and substance to IDW.

               (iii) Engagement Letter.  Subject to the satisfaction of IDW, IDW
          shall have received a proposed  engagement  letter between IDW and the
          law firm of Baker & McKenzie  ("Baker &  McKenzie")  pursuant to which
          Baker & McKenzie  agree to provide  legal  services for two years with
          regard to remedying the current land use rights  certificate  issue to
          the satisfaction of IDW, such as by obtaining the issuance of a proper
          land use rights  certificate  for the Beijing  facility  as  disclosed
          under Section 3(l) (the "Land Use Issue"). TFS has agreed to pay up to
          $200,000 of Baker & McKenzie's fees as provided in this Agreement. The
          proposed  engagement letter will be satisfactory in form and substance
          to IDW.

          (c) TFSB. In addition to the covenants  set forth in  subsections  (a)
     and (b), TFSB agrees as follows:

               (i) Notices and Consents.  TFSB will obtain all required consents
          necessary to consummate the transactions  contemplated  herein,  which
          shall  include,  but  not  be  limited  to,  obtaining  the  necessary
          approvals  from the Approval  Authorities  and amending the  incorrect
          name of the  shareholder  in the  TFSB  articles  of  association  and
          business  license.  TFSB will use its Best Efforts to obtain any other
          third-party   consents   reasonably   necessary  to   consummate   the
          transactions contemplated herein.

               (ii)  Preservation  of  Business.  TFSB will use its Best Efforts
          keep its business and properties  substantially intact,  including its
          present  operations,  physical  facilities,  working  conditions,  and
          relationships  with  lessors,  licensors,  suppliers,  customers,  and
          employees.

               (iii) Operation of Business. Without the prior written consent of
          IDW and IDW HK, TFSB will not engage in any practice, take any action,
          or enter into any transaction outside the Ordinary Course of Business.
          TFSB will not engage in any  activity or take any  actions  that could
          have a  Material  Adverse  Effect  on the  business  of TFSB.  Without
          limiting the generality of the foregoing:

                    (A) TFSB  will not  authorize  or effect  any  change in its
               articles  of  association,  excepting  those set forth in Section
               5(c)(i);

                    (B) TFSB  will not  grant any  options,  warrants,  or other
               rights to purchase  or obtain any of its capital  stock or issue,
               sell,  or otherwise  dispose of any of its capital  stock (except
               upon the conversion or exercise of options,  warrants,  and other
               rights currently outstanding);

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CONFIDENTIAL                                                      March 30, 2005

                    (C) TFSB will not split,  combine,  subdivide or  reclassify
               any TFSB's  outstanding  registered  capital  stock or registered
               capital;

                    (D)  TFSB  will  not  make  any   acquisition   by   merger,
               consolidation or otherwise, or material disposition of inventory,
               supplies and  products,  of assets or  securities,  or permit any
               assets to become  subject to any material  lien,  encumbrance  or
               Security Interest outside the Ordinary Course of Business;

                    (E) TFSB  will not pay or  agree  to pay or  accelerate  the
               payment of any pension,  retirement  allowance or other  employee
               benefit  not  required  or  contemplated  by any of the  existing
               Employee Benefit Plans;

                    (F) TFSB will not declare, set aside, or pay any dividend or
               distribution  with  respect to its  capital  stock or  registered
               capital (whether in cash or in kind), or redeem,  repurchase,  or
               otherwise acquire any of its capital stock or registered capital;

                    (G) TFSB  will not  issue  any  note,  bond,  or other  debt
               security or create,  incur, assume, or guarantee any indebtedness
               for borrowed money or capitalized  lease  obligation  outside the
               Ordinary Course of Business;

                    (H) TFSB will not impose any Security  Interest  upon any of
               its assets outside the Ordinary Course of Business;

                    (I) TFSB will not make any capital  investment  in, make any
               loan to, or acquire the  securities or assets of any other Person
               outside the Ordinary Course of Business;

                    (J)  TFSB  will not make any  change  in  employment  terms,
               including  any  increases  in   compensation,   for  any  of  its
               directors, officers, and employees outside the Ordinary Course of
               Business;

                    (K) TFSB will not make any capital  expenditures outside the
               Ordinary Course of Business;

                    (L) TFSB will not hire any  employees  outside the  Ordinary
               Course of Business;

                    (M)  TFSB  will  not  make  or  effect  any   corporate   or
               operational changes outside the Ordinary Course of Business;

                    (N) TFSB will not  transfer  any of its assets  without  the
               prior  written  consent  of IDW and IDW HK outside  the  Ordinary
               Course of Business;

                    (O) TFSB will not have incur additional  liabilities outside
               the Ordinary Course of Business;

                    (P) TFSB will  permit  representatives  of IDW and IDW HK to
               have full access at all reasonable  times,  and in a manner so as
               not to interfere with the normal business  operations of TFSB, to

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CONFIDENTIAL                                                      March 30, 2005

               all premises,  properties,  personnel,  books, records (including
               Tax records),  contracts,  and documents of or pertaining to each
               of  TFSB.  Each of IDW and IDW HK will  treat  and  hold any such
               information  it  receives  from TFSB in the course of the reviews
               contemplated   by  this  Section   5(c)(iii)(P)  as  Confidential
               Information; and

                    (Q) All  inter-company  loans and debts of TFSB  shall  have
               been paid in full or transferred to IDW at IDW's election.

                    (R) All inter-company arrangements and agreements between or
               among TFS, TFSB and TFSI will be cancelled, terminated or void in
               full, without any outstanding obligations remaining.

                    (S)  All  outstanding   employment  offers  will  have  been
               rescinded or  otherwise  withdrawn  without any Material  Adverse
               Effect to the business TFSB without any  outstanding  obligations
               remaining.

                    (T)  Applications  for the Transfer will be submitted to the
               Approval  Authorities and such  applications  will be approved by
               the Approval Authorities.

          (d) IDW. In addition to the  covenants set forth in  subsections  (a),
     IDW agrees as follows:

               (i) Conduct of Business During Earn-Out Period.  IDW acknowledges
          and agrees  that the  ability of the  Continuing  Business to meet the
          conditions for the Earn-Out  Payment and the ability of the parties to
          calculate  fairly  and  measure  the  performance  of  the  Continuing
          Business  relative to such  Earn-Out  during the Earn-Out  Period will
          depend  to  a  significant  degree  upon  maintaining  the  Continuing
          Business.  IDW  agrees to act in good  faith at all times  during  the
          Earn-Out  Period.  To the extent such actions and  performance of such
          covenants  shall not have a Material  Adverse Effect or be expected to
          have a Material Adverse Effect on the Continuing Business,  during the
          Earn-Out Period IDW agrees to use its reasonable Best Efforts:

                    (A) To enable the Continuing Business to achieve the earnout
               targets as  contemplated  under this Agreement to the extent that
               the  demand  for  the  products  does  not  exceed  the  capacity
               purchased  under  this  Agreement.  In no  event  shall,  IDW  be
               required  to  make  any  capital  expenditures  to  produce  such
               additional quantities.

                    (B) To maintain  the  employees  or to engage  employees  of
               comparable   skill  and  experience  to  conduct  the  Continuing
               Business  in a manner  that is  consistent  with  IDW's  business
               processes.

                    (C) To encourage and facilitate  the growth and  development
               of the business through corporate synergies,  which shall include
               (1)  promoting  and  marketing  the  products and services of the
               Continuing  Business;  (2) encouraging its sales force to promote
               and sell the products and  services of the  Continuing  Business;
               and (3)  permitting  reasonable  opportunities  for  employees or
               consultants of the Continuing  Business to train and  communicate
               with its staff and that of its affiliates to provide customer and
               sales support.

                    (D) To maintain  separate  schedules and records relating to
               the  Continuing  Business in order to allow  verification  of the
               results of the operations of the Continuing  Business  throughout
               the Earn-Out Period for purposes of calculating the Earn-Out.

                    (E) To not accelerate or delay the recognition of revenue or
               expense,  or accelerate  or delay  investment in working or fixed
               capital, but shall account of such items in accordance with GAAP.

                    (F) To not terminate, hinder, obstruct or adversely alter in
               any respect any  arrangements,  written  agreements,  or business
               relationships  in effect as of the Closing  Date between TFSB and
               its suppliers  and/or  agents,  to the extent that to do so would
               not have a Material Adverse Effect on the Continuing Business.

                                       19
<PAGE>

               (ii). No Assignment and  Termination.  All covenants set forth in
          Section  5(d)(i)  shall  not be  assignable  and  shall  automatically
          terminate upon the earlier  occurrence of any of the following:  (A) a
          Change of Control of TFS, (B) any  assignment of the rights to receive
          proceeds from the Earn-Out, or (C) termination of the Earn-Out Period.

               (iii).  Post-Approval  Work. After TFSB has obtained the approval
          for  the  Transfer  from  the  Approval   Authorities,   IDW  will  be
          responsible  for undertaking  all  post-approval  work relating to the
          filing  of  a  new  charter   (articles  of  association   documents),
          designating  new  board  members  and  application  for  amending  the
          business   license  in  order  to  reflect  the  consummation  of  the
          transactions contemplated herein.

     6. Conditions to Obligation to Close.

          (a) Conditions to Obligation of IDW and IDW HK. The obligation of each
     of IDW and IDW HK to consummate the  transactions  to be performed by it in
     connection  with the Closing is subject to  satisfaction  of the  following
     conditions:

               (i) All  material  third-party  consents  specified  in Section 5
          above shall been obtained;

               (ii) The  representations  and  warranties set forth in Section 3
          above shall be true and correct in all  material  respects on the date
          of the execution of this  Agreement,  the period between the execution
          of this  Agreement to the Closing  Date,  and at and as of the date of
          the Closing Date;

               (iii) All covenants  set forth in Section 5 shall been  performed
          in all material respects through the Closing Date;

               (iv)  No  action,   suit,  or  proceeding  shall  be  pending  or
          threatened before any court or quasi-judicial or administrative agency
          of any federal,  state,  local, or foreign  jurisdiction or before any
          arbitrator wherein an unfavorable injunction, judgment, order, decree,
          ruling,  or  charge  would  (A)  prevent  consummation  of  any of the
          transactions  contemplated  by this  Agreement or (B) cause any of the
          transactions  contemplated by this Agreement to be rescinded following
          consummation (and no injunction,  judgment,  order, decree, ruling, or
          charge shall be in effect);

               (v) IDW and IDW HK shall have received a certificate  from TFS to
          the  effect   that  each  of  the   conditions   specified   above  in
          Section 6(a)(i)-(iv) is satisfied in all respects;

               (vi) IDW and IDW HK shall have received from counsel to TFS, TFSB
          and TFSI an opinion  substantially in the form as set forth in Exhibit
          B attached  hereto,  and satisfactory in form and substance to IDW and
          IDW HK, addressed to IDW and IDW HK, and dated as of the Closing Date;

               (vii)  IDW and  IDW HK  shall  have  received  the  resignations,
          effective  as of the  Closing,  of each  director and officer of TFSB,
          other than those  whom IDW or IDW HK shall have  specified  in writing
          prior to the Closing; and

               (viii)  all  actions  to be  taken  by  TFS  in  connection  with
          consummation of the transactions  contemplated hereby,  including, but
          not  limited to, all  necessary  actions to  transfer  the  Designated
          Assets to IDW, and all certificates,  opinions, instruments, and other
          documents required to effect the transactions contemplated hereby will
          be reasonably satisfactory in form and substance to IDW and IDW HK.

                                       20
<PAGE>
CONFIDENTIAL                                                      March 30, 2005

IDW and IDW HK may waive any  condition  specified  in this Section 6(a) if they
execute a writing so stating at or prior to the Closing.

          (b)  Conditions to Obligation of TFS, TFSB and TFSI. The obligation of
     each of TFS, TFSB and TFI to consummate the transactions to be performed by
     it in  connection  with the  Closing  is  subject  to  satisfaction  of the
     following conditions:

               (i) The  representations  and  warranties  set forth in Section 4
          above shall be true and correct in all material  respects at and as of
          the Closing Date;

               (ii) All covenants set forth in Section 5 shall been performed in
          all material respects through the Closing Date;

               (iii)  No  action,  suit,  or  proceeding  shall  be  pending  or
          threatened before any court or quasi-judicial or administrative agency
          of any federal,  state,  local, or foreign  jurisdiction or before any
          arbitrator wherein an unfavorable injunction, judgment, order, decree,
          ruling,  or  charge  would  (A)  prevent  consummation  of  any of the
          transactions  contemplated by this Agreement,  or (B) cause any of the
          transactions  contemplated by this Agreement to be rescinded following
          consummation;

               (iv) TFS shall have received a certificate from IDW to the effect
          that each of the conditions  specified above in Section  6(b)(i)-(iii)
          is satisfied in all respects; and

               (v) All actions to be taken by IDW and IDW HK in connection  with
          consummation  of  the   transactions   contemplated   hereby  and  all
          certificates,  opinions,  instruments, and other documents required to
          effect  the  transactions  contemplated  hereby  will  be  reasonable,
          satisfactory in form and substance to TFS, TFSB and TFSI.

TFS, TFSB or TFSI may waive any  condition  specified in this Section 6(b) if it
executes a writing so stating at or prior to the Closing.

     7. Post-Closing Covenants. The Parties agree as follows with respect to the
period following the Closing.

          (a) General.  In case at any time after the Closing any further action
     is necessary or desirable to carry out the purposes of this Agreement, each
     of the Parties will take such further  action  (including the execution and
     delivery of such  further  instruments  and  documents)  as any other Party
     reasonably may request,  all at the sole cost and expense of the requesting
     Party (unless the requesting Party is entitled to indemnification  therefor
     under Section 8). TFS, TFSB and TFSI  acknowledge  and agree that, from and
     after the  Closing,  IDW and IDW HK will be entitled to  possession  of all
     corporate  records,  documents,  books,  records  (including  Tax records),
     agreements, and financial data of any sort relating to TFSB, provided that,

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CONFIDENTIAL                                                      March 30, 2005

     following the Closing, upon reasonable notice to IDW and coordination,  TFS
     shall be provided  with  reasonable  access  thereto and  permitted to make
     copies thereof at its expense.

          (b)  Litigation  Support.  In the  event  and for so long as any Party
     actively is contesting or defending against any action,  suit,  proceeding,
     hearing,  investigation,  charge, complaint, claim, or demand in connection
     with (i) any  transaction  contemplated  under this  Agreement  or (ii) any
     fact, situation, circumstance, status, condition, activity, practice, plan,
     occurrence,  event, incident,  action, failure to act, or transaction on or
     prior to the Closing Date  involving  TFSB,  each of the other Parties will
     cooperate with it and its counsel in the contest or defense, make available
     their  personnel,  and provide such testimony and access to their books and
     records as shall be  necessary in  connection  with the contest or defense,
     all at the sole cost and  expense  of the  contesting  or  defending  Party
     (unless the  contesting or defending  Party is entitled to  indemnification
     under Section 8).

          (c)  Transition.  TFS,  TFSB and TFSI will not take any action that is
     designed  or  intended  to have the  effect  of  discouraging  any  lessor,
     licensor,  customer,  supplier,  or other  business  associate of TFSB from
     maintaining the same business  relationships with TFSB after the Closing as
     it maintained with TFSB prior to the Closing. TFS, TFSB and TFSI will refer
     all customer inquiries relating to the businesses of TFSB to IDW and IDW HK
     from and after the Closing.

          (d) Legal  Expenses.  IDW and Baker & McKenzie shall have entered into
     the proposed  engagement letter as set forth under Section 5(b)(iii) in the
     form and substance satisfactory to IDW. In connection therewith, TFS agrees
     that it shall undertake all  responsibilities  to pay for any and all legal
     fees  associated with the Land Use Issue until such Land Use Issue has been
     successfully  resolved,  so long as such legal fees do not exceed $200,000.
     The  receipt  of a proper  permit  and a charge of fines not  exceeding  an
     aggregate of $50,000,  shall deem the Land Use Issue successfully resolved.
     Immediately  following  the  Closing,  TFS will  deposit  an  aggregate  of
     $200,000  with  Baker &  McKenzie  which  shall  be  reserved  and used for
     prepayment of such legal services.

          (e) Hold-Back Amount. IDW shall hold back an aggregate of $50,000 from
     any Inventory  Payment or Earn-Out  Payment (the "Hold-Back  Amount").  The
     Hold-Back  Amount  shall be reserved and used solely for the payment of any
     fines that IDW or TFSB,  after its transfer to IDW, may incur in connection
     with the Land Use Issue ("Fine Reserve Account").  In the event that IDW or
     TFSB, after its transfer to IDW, is found liable for any fines,  such fines
     shall be paid from the Fine Reserve  Account.  To the extent that the fines
     are less than the Fine Reserve Amount,  the remaining balance shall be paid
     to TFS.

          (f) Not to  Compete.  For a period of two (2) years from and after the
     Closing Date, TFS or TFSI will not compete with the Continuing  Business by
     engaging  directly or indirectly in any business that TFSB  conducted as of
     the Closing Date in any of the geographic  area in which TFSB conducts that
     business as of the Closing Date,  provided  however,  that that no owner of
     less than 20% of the  outstanding  stock of a publicly  traded  corporation
     shall be deemed to engage solely by reason thereof in any of its businesses
     For purposes of this  Agreement,  the phrase  "compete with the  Continuing
     Business," or the substantial equivalent thereof, means that the respective
     entity  directly  or  indirectly  owns,  manages,  operates,  controls,  or
     participates  in the  ownership,  management,  operation  or control of, or
     works for or  provides  consulting  services  to, or permits the use of its
     name by, or lends  money to, any  business  or  activity  which is or which
     becomes,  at the time of the acts or  conduct in  question,  engaged in the
     assembly  of LCD modules  less than seven  inches on the  diagonal  ("Small
     LCDs").  For purposes of this  definition,  the purchase of completed Small
     LCDs to be further  integrated into a larger subsystem or product shall not
     be deemed a  competitive  activity.  If the final  judgment of the court of
     competent  jurisdiction declares that any term or provision of this Section
     7(e) is invalid or  unenforceable,  the Parties agree that the court making
     the

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CONFIDENTIAL                                                      March 30, 2005

     determination  of  invalidity or  unenforceability  shall have the power to
     reduce the scope,  duration,  or area of the term or  provision,  to delete
     specific words or phrases,  or to replace any invalid or unenforceable term
     or provision  with a term or provision  that is valid and  enforceable  and
     that  comes  closest  to  expressing   the  intention  of  the  invalid  or
     unenforceable term or provision, and this Agreement shall be enforceable as
     so modified  after the expiration of the time within which the judgment may
     be appealed

          (g)  Upon  receipt  of  the  approval  of  Transfer  by  the  Approval
     Authorities,  IDW will direct the Escrow Agent to immediately  disburse the
     Closing Payment to TFS.

          (h) IDW or IDW HK will only use the name  "TFS" or "TFSB" in China for
     a period of six (6) months or as  reasonably  necessary to effect  existing
     commercial  requirements,  resolve  the Land Use  Issue  and  effect a name
     change of TFSB.

          (i) Pending  approval of the applications for Transfer by the Approval
     Authorities,  IDW will be  designated  as an  operating  agent of TFSB.  In
     connection therewith,  TFSB appoints the IDW as its attorney-in-fact,  with
     full  authority  in the place and stead of TFSB and in the name of the TFSB
     or otherwise,  from time to time in IDW's discretion to take any action and
     to execute any  instrument  which IDW may deem  necessary  or  advisable to
     accomplish  the day to day  operations  of TFSB  commencing  on the Closing
     Date, including,  without limitation,  to receive,  endorse and collect all
     instruments  made payable to TFSB,  to receive all revenues for activity of
     TFSB, to pay all  liabilities  of TFSB accruing after the Closing Date. All
     such  revenues  shall  belong to IDW and all  expenses  accruing  after the
     Closing Date shall be the  obligations  of IDW.  Pending such  approval IDW
     will operate TFSB consistent  with Section  5(c)(iii);  provided,  however,
     such other actions may be taken with the consent of TFS which consent shall
     not be unreasonably  withheld.  The foregoing shall terminate and IDW shall
     be deemed  the owner and  operator  upon  receipt  of the  approval  of the
     Transfer from the Approval Authorities.

     8. Remedies for Breaches of This Agreement.

          (a)  Survival of  Representations  and  Warranties.  Unless  expressly
     stated otherwise herein, all of the  representations  and warranties of the
     Parties  contained in this Agreement  shall survive the Clos+ing  hereunder
     (even  if  the   damaged   Party   knew  or  had  reason  to  know  of  any
     misrepresentation or breach of warranty or covenant at the time of Closing)
     and  shall  continue  in full  force and  effect  for a period of three (3)
     months from the Closing Date.

          (b)  Indemnification  Provisions for Benefit of IDW and IDW HK. In the
     event TFS, TFSB and TFSI breaches any of its  representations,  warranties,
     then TFS,  TFSB and TFSI agree to indemnify IDW and IDW HK from and against
     the entirety of any Adverse Consequences IDW or IDW HK may suffer resulting
     from the breach (or the alleged  breach).  In the event of a breach by TFS,
     TFSB or TFSI,  IDW's  sole  remedy  shall be to offset  the  amount of such
     damages  incurred by IDW or IDW HK(as a result of such breach)  against the
     amount  owed and due to TFS and TFSI under the  provisions  set forth under
     Section  2(c)(i)  relating to the  Earn-Out  Payment and Section  2(c)(iii)
     relating to the Inventory Payment.

               In addition, TFS, TFSB and TFSI agree to indemnify IDW and IDW HK
          from and against the entirety of any Adverse  Consequences  IDW or IDW
          HK may suffer  resulting  from,  arising out of,  relating  to, in the
          nature of, or caused by the operations of TFSB prior to the Closing.

          (c)  Indemnification  Provisions for Benefit of TFS, TFSB and TFSI. In
     the event IDW or IDW HK breaches  any of its  representations,  warranties,
     and covenants contained herein, then IDW and IDW HK agree to indemnify TFS,
     TFSB or TFSI from and against the entirety of any Adverse Consequences TFS,
     TFSB or TFSI may suffer  resulting from the breach (or the alleged breach),
     provided, however, IDW or IDW HK shall have no obligation to indemnify TFS,
     TFSB or TFSI in excess of Two Million Dollars ($2,000,000),  which shall be
     the aggregate threshold.

               In  addition,  IDW and IDW HK agrees to indemnify  TFS,  TFSB and
          TFSI from and against the  entirety of any Adverse  Consequences  TFS,
          TFSB and TFSI may suffer resulting from,  arising out of, relating to,
          in the  nature  of,  or  caused by the  operations  of TFSB  after the
          Closing.

     9. Taxes.

          (a) TFS shall  reimburse IDW for any Taxes of TFSB paid by IDW for any
     and all period  ending on or prior to the  Closing  Date to the extent such
     Taxes are not reflected in the reserve for Tax  Liability  shown on balance
     sheet as of the Closing Date.

                                       23
<PAGE>
CONFIDENTIAL                                                      March 30, 2005

          (b) All transfer,  documentary,  sales,  use, stamp,  registration and
     other such Taxes and fees  (including any penalties and interest)  incurred
     in  connection  with  this  Agreement,  including  but not  limited  to the
     transfer of the Designated Assets,  shall be paid by TFS when due, and TFS,
     in its sole  expense,  shall  file all  necessary  Tax  Returns  and  other
     documentation with respect to all such transfer,  documentary,  sales, use,
     stamp, registration and other Taxes and fees.

          (c) To the extent  that IDW has paid for any Taxes or is  entitled  to
     any reimbursements  under Section 9(a) or (b), such amounts may be deducted
     from the Off-Set Payment, Inventory Payment or Earn-Out Payment.

     10. Termination.

          (a)  Termination  of Agreement.  Any of the Parties may terminate this
     Agreement  with  the  prior  authorization  of its  board of  directors  as
     provided below:

               (i) the Parties may terminate  this  Agreement by mutual  written
          consent at any time prior to the Closing;

               (ii)  IDW and  IDW HK may  terminate  this  Agreement  by  giving
          written  notice  to TFS at any time  prior to the  Closing  (A) in the
          event TFS has  breached  any  material  representation,  warranty,  or
          covenant  contained in this Agreement in any material respect,  IDW or
          IDW HK has  notified TFS of the breach,  and the breach has  continued
          without  cure for a period  of three  (3) days  after  the  notice  of
          breach,  or (B) if the Closing shall not have  occurred,  by reason of
          the  failure of any  condition  precedent  under  Section  6(a) hereof
          (unless the failure results primarily from IDW or IDW HK breaching any
          representation, warranty, or covenant contained in this Agreement); or

               (iii) TFS, TFSI and TFSB may terminate  this  Agreement by giving
          written  notice  to IDW at any time  prior to the  Closing  (A) in the
          event  IDW  or  IDW  HK  has  breached  any  material  representation,
          warranty,  or covenant  contained  in this  Agreement  in any material
          respect,  TFS, TFSI or TFSB has notified IDW and IDW HK of the breach,
          and the breach has  continued  without  cure for a period of three (3)
          days after the notice of breach or (B) if the  Closing  shall not have
          occurred by reason of the  failure of any  condition  precedent  under
          Section 6(b) hereof  (unless the failure  results  primarily from TFS,
          TFSI or TFSB  breaching  any  representation,  warranty,  or  covenant
          contained in this Agreement).

          (b) Effect of  Termination.  If any Party  terminates  this  Agreement
     pursuant to Section 10(a) above,  all rights and obligations of the Parties
     hereunder shall  terminate  without any Liability of any Party to any other
     Party (except for any  liability of any Party then in breach),  except that
     Sections 11(a), 11(h) and 11(k) shall survive such termination.

     11. Miscellaneous.

          (a) Press Releases and Public Announcements.  No Party shall issue any
     press  release  or make any public  announcement  relating  to the  subject
     matter of this  Agreement  without the prior written  approval of the other
     Parties;  provided,  however, that any Party may make any public disclosure
     it believes in good faith is required by  applicable  law or any listing or
     trading agreement concerning its publicly-traded  securities (in which case
     the  disclosing  Party will use its Best  Efforts to advise the other Party
     prior to making the disclosure).

                                       24
<PAGE>
CONFIDENTIAL                                                      March 30, 2005

          (b) No Third-Party Beneficiaries. Except as otherwise provided in this
     Agreement,  this Agreement shall not confer any rights or remedies upon any
     Person other than the Parties and their respective successors and permitted
     assigns.

          (c) Entire Agreement. This Agreement (including the documents referred
     to  herein)   constitutes  the  entire  agreement  among  the  Parties  and
     supersedes any prior understandings,  agreements,  or representations by or
     among the Parties,  written or oral,  to the extent they related in any way
     to the subject matter hereof.

          (d) Succession and  Assignment.  Except as otherwise  provided in this
     Agreement, this Agreement shall be binding upon and inure to the benefit of
     the Parties  named herein and their  respective  successors  and  permitted
     assigns.  No Party may assign  either this  Agreement or any of its rights,
     interests,  or obligations  hereunder without the prior written approval of
     the other Parties.

          (e)  Counterparts.  This  Agreement  may be  executed  in one or  more
     counterparts  (including  by means  of  facsimile),  each of which  will be
     deemed an original but all of which  together will  constitute  one and the
     same  instrument.  The signature  page of any  counterpart  may be detached
     therefrom  without  impairing the legal effect of the signature(s)  thereon
     provided such signature page is attached to any other counterpart identical
     thereto having additional signature pages executed by the other Parties.

          (f) Headings.  The section  headings  contained in this  Agreement are
     inserted for  convenience  only and shall not affect in any way the meaning
     or interpretation of this Agreement.

          (g)  Notices.  All  notices,  requests,  demands,  claims,  and  other
     communications  hereunder will be in writing. Any notice, request,  demand,
     claim, or other communication  hereunder shall be deemed duly given if (and
     then two business days after) it is sent by  registered or certified  mail,
     return receipt  requested,  postage prepaid,  and addressed to the intended
     recipient as set forth below:

            If to TFS, TFSI or TFSB            Three-Five Systems, Inc.
                                               1600 N. Desert Drive
                                               Tempe, AZ 85281
                                               Attn: Jack Saltich, CEO

            Copy to:                           Greenberg Traurig LLP
                                               2375 East Camelback Road
                                               Phoenix, Arizona 85016
                                               Attn:  Robert Kant, Esq.

            If to IDW or IDW HK:               International Displayworks, Inc.
                                               599 Menlo Dr. Suite 200
                                               Rocklin, CA 95765
                                               Attn:  Tom Lacey, CEO

            Copy to:                           Bartel Eng & Schroder
                                               1331 Garden Hwy, Suite 300
                                               Sacramento, CA 95833
                                               Attn:  David Adams, Esq.

                                       25
<PAGE>
CONFIDENTIAL                                                      March 30, 2005

Any Party may send any notice,  request,  demand,  claim, or other communication
hereunder  to the  intended  recipient  at the address set forth above using any
other means (including personal delivery,  expedited courier, messenger service,
telecopy,  telex,  ordinary  mail,  or  electronic  mail),  but no such  notice,
request, demand, claim, or other communication shall be deemed to have been duly
given  unless and until it actually is received by the intended  recipient.  Any
Party may change the address to which notices,  requests,  demands,  claims, and
other  communications  hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.

          (h) Governing Law. This  Agreement  shall be governed by and construed
     in  accordance  with the  domestic  laws of the State of  Delaware  without
     giving  effect to any choice or conflict of law  provision or rule (whether
     of the State of  Delaware or any other  jurisdiction)  that would cause the
     application  of the  laws of any  jurisdiction  other  than  the  State  of
     Delaware.

          (i)  Amendments  and Waivers.  No  amendment of any  provision of this
     Agreement  shall be valid unless the same shall be in writing and signed by
     all  of  the   Parties.   No   waiver   by  any   Party  of  any   default,
     misrepresentation,  or breach of warranty or  covenant  hereunder,  whether
     intentional  or not,  shall be deemed to extend to any prior or  subsequent
     default, misrepresentation,  or breach of warranty or covenant hereunder or
     affect in any way any rights  arising by virtue of any prior or  subsequent
     such occurrence.

          (j)  Severability.  Any term or  provision of this  Agreement  that is
     invalid or  unenforceable  in any situation in any  jurisdiction  shall not
     affect the validity or enforceability of the remaining terms and provisions
     hereof or the validity or enforceability of the offending term or provision
     in any other situation or in any other jurisdiction.

          (k) Expenses. Each of the Parties will bear its own costs and expenses
     (including  legal  fees and  expenses)  incurred  in  connection  with this
     Agreement and the transactions contemplated hereby.

          (l)  Construction.  The  Parties  have  participated  jointly  in  the
     negotiation  and drafting of this  Agreement.  In the event an ambiguity or
     question  of intent  or  interpretation  arises,  this  Agreement  shall be
     construed as if drafted jointly by the Parties and no presumption or burden
     of proof shall arise  favoring  or  disfavoring  any Party by virtue of the
     authorship of any of the provisions of this Agreement. Any reference to any
     federal,  state,  local,  or foreign statute or law shall be deemed also to
     refer to all rules  and  regulations  promulgated  thereunder,  unless  the
     context  otherwise  requires.  The word  "including"  shall mean  including
     without limitation.

          (m)  Incorporation  of  Exhibits  and  Schedules.   The  Exhibits  and
     Schedules identified in this Agreement are incorporated herein by reference
     and made a part hereof.

          (n)  Further  Assurances.  All  parties  agree  that on and  after the
     Closing,  they shall take all appropriate  action and execute any documents
     and  instruments  or  conveyances  of any  kind  which  may  be  reasonable
     necessary or advisable to carry out the provisions of this agreement.

                   (Balance of Page Intentionally Left Blank)

                                       26
<PAGE>
CONFIDENTIAL                                                      March 30, 2005

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

                             International Displayworks, Inc.
                             a Delaware corporation

                             By: /s/ Thomas A. Lacey
                                ------------------------------------------------
                             Name: Thomas Lacey
                             Title: Chief Executive Officer

                             International Displayworks (Hong Kong) Limited,
                             a Hong Kong corporation

                             By: /s/ Thomas A. Lacey
                                ------------------------------------------------
                             Name: Thomas Lacey
                             Title: Chief Executive Officer

                             Three-Five Systems, Inc.,
                             a Delaware corporation

                             By:  /s/ Jack L. Saltich
                                  ----------------------------------------------
                             Name: Jack L. Saltich
                                  ----------------------------------------------
                             Title: President and CEO
                                   ---------------------------------------------

                             TFS International, Ltd.
                             a corporate entity formed under the laws of Bermuda

                             By:  /s/ Jack L. Saltich
                                  ----------------------------------------------
                             Name: Jack L. Saltich
                                  ----------------------------------------------
                             Title: President and CEO
                                  ----------------------------------------------

                             Three-Five Systems (Beijing) Co., Ltd.,
                             a corporate entity formed under the laws of
                             the People's Republic of China

                             By:   /s/ Jack L. Saltich
                                   ---------------------------------------------
                             Name:  Jack L. Saltich
                                   ---------------------------------------------
                             Title: President and CEO
                                   ---------------------------------------------Exhibit 10.1

Exhibit 10.1

HIGH GRADE MINING CORP. 

2005 NONQUALIFIED STOCK OPTION PLAN 

ARTICLE I 

Purpose of Plan 

This 2005 NONQUALIFIED STOCK OPTION PLAN (the "Plan") of HIGH GRADE MINING CORP. (the "Company") for persons employed or associated with the Company, including without limitation any employee, director, general partner, officer, attorney, accountant, consultant or advisor, is intended to advance the best interests of the Company by providing additional incentive to those persons who have a substantial responsibility for its management, affairs, and growth by increasing their proprietary interest in the success of the Company, thereby encouraging them to maintain their relationships with the Company.  Further, the availability and offering of Stock Options under the Plan supports and increases the Company's ability to attract, engage and retain individuals of exceptional talent upon whom, in large measure, the sustained progress growth and profitability of the Company for the shareholders depends. 

ARTICLE II 

Definitions 

For Plan purposes, except where the context might clearly indicate otherwise, the following terms shall have the meanings set forth below:  

"Board" shall mean the Board of Directors of the Company.

"Code" shall mean the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.

"Committee" shall mean the Compensation Committee, or such other committee appointed by the Board, which shall be designated by the Board to administer the Plan.  The Company shall be composed of two or more persons as from time to time are appointed to serve by the Board and may be members of the Board or the entire Board. 

"Common Shares" shall mean the Company's Common Shares $0.001 par value per share, or, in the event that the outstanding Common Shares are hereafter changed into or exchanged for different shares or securities of the Company, such other shares or securities.

"Company" shall mean HIGH GRADE MINING CORP., a Nevada corporation, and any parent or subsidiary corporation of HIGH GRADE MINING CORP., as such terms are defined in Section 425(e) and 425(f), respectively of the Code.  

 

1

"Optionee" shall mean any person employed or associated with the affairs of the Company who has been granted one or more Stock Options under the Plan.

"Stock Option" or "NQSO" shall mean a stock option granted pursuant to the terms of the Plan.

"Stock Option Agreement" shall mean the agreement between the Company and the Optionee under which the Optionee may purchase Common Shares hereunder. 

ARTICLE III  

Administration of the Plan 

	The Committee shall administer the plan and accordingly, it shall have full power to grant Stock Options, construe and interpret the Plan, establish rules and regulations and perform all other acts, including the delegation of administrative responsibilities, it believes reasonable and proper. 

	The determination of those eligible to receive Stock Options, and the amount, price, type and timing of each Stock Option and the terms and conditions of the respective stock option agreements shall rest in the sole discretion of the Committee, subject to the provisions of the Plan. 

	The Committee may cancel any Stock Options awarded under the Plan if an Optionee conducts himself in a manner which the Committee determines to be inimical to the best interest of the Company and its shareholders as set forth more fully in paragraph 8 of Article X of the Plan.

	The Board, or the Committee, may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any granted Stock Option, in the manner and to the extent it shall deem necessary to carry it into effect. 

	Any decision made, or action taken, by the Committee or the Board arising out or in connection with the interpretation and administration of the Plan shall be final and conclusive. 

	Meetings of the Committee shall be held at such times and places as shall be determined by the Committee.  A majority of the members of the Committee shall constitute a quorum for the transaction of business, and the vote of a majority of those members present at any meeting shall decide any question brought before that meeting.  In addition, the Company may take any action otherwise proper under the Plan by the affirmative vote, taken without a meeting, of a majority of its members. 

	No member of the Committee shall be liable for any act or omission of any other member of the Committee or for any act or omission on his own part, including, but not limited to, the exercise of any power or discretion given to him under the Plan except those resulting form his own gross negligence or willful misconduct.

 

2

	The Company, through its management, shall supply full and timely information to the Committee on all matters relating to the eligibility of Optionees, their duties and performance, and current information on any Optionee's death, retirement, disability or other termination of association with the Company, and such other pertinent information as the Committee may require.  The Company shall furnish the Committee with such clerical and other assistance as is necessary in the performance of its duties hereunder. 

ARTICLE IV 

Shares Subject to the Plan 

	The total number of shares of the Company available for grants of Stock Options under the Plan shall be 10,000,000 Common Shares, subject to adjustment as herein provided, which shares may be either authorized but unissued or reacquired Common Shares of the Company.

	If a Stock Option or portion thereof shall expire or terminate for any reason without having been exercised in full, the unpurchased shares covered by such NQSO shall be available for future grants of Stock Options.

ARTICLE V 

Stock Option Terms and Conditions 

	Consistent with the Plan's purpose, Stock Options may be granted to any person who is performing or who has been engaged to perform services of special importance to management in the operation, development and growth of the Company.

	Determination of the option price per share for any stock option issues hereunder shall rest in the sole and unfettered discretion of the Committee. 

	All Stock Options granted under the Plan shall be evidenced by agreements which shall be subject to applicable provisions of the Plan, and such other provisions as the Committee may adopt, including the provisions set forth in paragraphs 2 through 11 of this Article V.

	All Stock Options granted hereunder must be granted within ten years from the date this Plan is adopted. 

	No Stock Option granted hereunder shall be exercisable after the expiration of ten years from the date such NQSO is granted.  The Committee, in its discretion, may provide that an option shall be exercisable during such ten year period or during any lesser period of time.  The Committee may establish installment exercise terms for a Stock Option such that the NQSO becomes fully exercisable in a series of cumulating portions.  If an Optionee shall not, in any given installment period, purchase all the Common Shares which such Optionee is entitled to purchase within such installment period, such Optionee's right to purchase any Common Shares not purchased in such installment period shall continue until the expiration or sooner termination of such NQSO.  The Committee may also accelerate the exercise of any NQSO. 

 

3

	A Stock Option, or portion thereof, shall be exercised by deliver of (i) a written notice of exercise to the Company specifying the number of Common Shares to be purchased, and (ii) payment of the full price of such Common Shares, as fully set forth in paragraph 7 of this Article V.  No NQSO or installment thereof shall be reusable except with respect to whole shares, and fractional share interests shall be disregarded.  Not less than 100 Common Shares  may be purchased at one time unless the number purchased is the total number at the time available for purchase under the NQSO.  Until the Common Shares represented by an exercised NQSO are issued to an Optionee, he shall have none of the rights of a shareholder.

	The exercise price of a Stock Option, or portion thereof, may be paid: 

A.   In United States dollars, in cash or by cashier's check, certified check, bank draft or money order, payable to the order of the Company in an amount equal to the option price; or,      

B.   At the discretion of the Committee, through the delivery of fully paid and nonassessable Common Shares, with an aggregate fair market value (determined as the average of the highest and lowest reported sales prices on the Common Shares as of the date of exercise of the NQSO, as reported by such responsible reporting service as the Committee may select, or if there were not transactions in the Common Shares on such day, then the last preceding day on which transactions took place), as of the date of the NQSO exercise equal to the option price, provided such tendered shares, or any derivative security resulting in the issuance of Common Shares, have been owned by he Optionee for at least 30 days prior to such exercise; or, 

C.   By a combination of both A and B above. 

	The Committee shall determine acceptable methods for tendering Common Shares as payment upon exercise of a Stock Option and may impose such limitations and prohibitions on the use of Common Shares to exercise an NQSO as it deems appropriate. 

	With the Optionee's consent, the Committee may cancel any Stock Option issued under this Plan and issue a new NQSO to such Optionee. 

	Except by will, the laws of descent and distribution, or with the written consent of the Committee, no right or interest in any Stock Option granted under the Plan shall be assignable or transferable, and no right or interest of any Optionee shall be liable for, or subject to, any lien, obligation or liability of the Optionee.  Upon petition to, and thereafter with the written consent of the Committee, an Optionee may assign or transfer all or a portion of the Optionee's rights and interest in any stock option granted hereunder.  Stock Options shall be exercisable during the Optionee's lifetime only by the Optionee or assignees, or the duly appointed legal representative of an incompetent Optionee, including following an assignment consented to by the Committee herein. 

 

 

4

	No NQSO shall be exercisable while there is outstanding any other NQSO which was granted to the Optionee before the grant of such option under the Plan or any other plan which gives the right to the Optionee to purchase stock in the Company or in a corporation which is a parent corporation (as defined in Section 425(e) of the Code) of the Company, or any predecessor corporation of any of such corporations at the time of the grant.  An NQSO shall be treated as outstanding until it is either exercised in full or expires by reason of lapse of time. 

	Any Optionee who disposes of Common Shares acquired on the exercise of a NQSO by sale or exchange either (i) within two years after the date of the grant of the NQSO under which the stock was acquired, or (ii) within one year after the acquisition of such Shares, shall notify the Company of such disposition and of the amount realized upon such disposition.  The transfer of Common Shares may also be restricted by applicable provisions of the Securities Act of 1933, as amended.

ARTICLE VI  

Adjustments or Changes in Capitalization 

	In the event that the outstanding Common Shares of the Company are hereafter changed into or exchanged for a different number of kinds of shares or other securities of the Company by reason of merger, consolidation, other reorganization, recapitalization, reclassification, combination of shares, stock split-up or stock dividend:

A.   Prompt, proportionate, equitable, lawful and adequate adjustment shall be made of the aggregate number and kind of shares subject to Stock Options which may be granted under the Plan, such that the Optionee shall have the right to purchase such Common Shares as may be issued in exchange for the Common Shares purchasable on exercise of the NQSO had such merger, consolidation, other reorganization, recapitalization, reclassification, combination of shares, stock split-up or stock dividend not taken place;

B.   Rights under unexercised Stock Options or portions thereof granted prior to any such change, both as to the number or kind of shares and the exercise price per share, shall be adjusted appropriately, provided that such adjustments shall be made without change in the total exercise price applicable to the unexercised portion of such NQSO's but by an adjustment in the price for each share covered by such NQSO's; or, 

C.   Upon any dissolution or liquidation of the Company or any merger or combination in which the Company is not a surviving corporation, each outstanding Stock Option granted hereunder shall terminate, but the Optionee shall have the right, immediately prior to such dissolution, liquidation, merger or combination, to exercise his NQSO in whole or in part, to the extent that it shall not have been exercised, without regard to any installment exercise provisions in such NQSO. 

 

 

5

	The foregoing adjustment and the manner of application of the foregoing provisions shall be determined solely by the Committee, whose determination as to what adjustments shall be made and the extent thereof, shall be final, binding and conclusive.  No fractional Shares shall be issued under the Plan on account of any such adjustments.    

ARTICLE VII

Merger, Consolidation or Tender Offer 

	If the Company shall be a party to a binding agreement to any merger, consolidation or reorganization or sale of substantially all the assets of the Company, each outstanding Stock Option shall pertain and apply to the securities and/or property which a shareholder of the number of Common Shares of the Company subject to the NQSO would be entitled to receive pursuant to such merger, consolidation or reorganization or sale of assets.

	In the event that: 

A.   Any person other than the Company shall acquire more than 20% of the Common Shares of the Company through a tender offer, exchange offer or otherwise; 

B.   A change in the "control" of the Company occurs, as such term is defined in Rule 405 under the Securities Act of 1933; 

C.   There shall be a sale of all or substantially all of the assets of the Company;  any then outstanding Stock Option held by an Optionee, who is deemed by the Committee to be a statutory officer ("insider") for purposes of Section 16 of the Securities Exchange Act of 1934 shall be entitled to receive, subject to any action by the Committee revoking such an entitlement as provided for below, in lieu of exercise of such Stock Option, to the extent that it is then exercisable, a cash payment in an amount equal to the difference between the aggregate exercise price of such NQSO, or portion thereof, and, (i) in the event of an offer or similar event, the final offer price per share paid for Common Shares, or such lower price as the Committee may determine to conform an option to preserve its Stock Option status, times the number of Common Shares covered by the NQSO or portion thereof, or (ii) in the case of an event covered by B or C above, the aggregate fair market value of the Common Shares covered by the Stock Option, as determined by the Committee at such time. 

	Any payment which the Company is required to make pursuant to paragraph 2 of this Article VII, shall be made within 15 business days, following the event which results in the Optionee's right to such payment.  In the event of a tender offer in which fewer than all the shares which are validity tendered in compliance with such offer are purchased or exchanged, then only  that portion of the shares covered by an NQSO as results from multiplying such shares by a fraction, the numerator of which is the number of Common Shares acquired purchase to the offer and the denominator of which is the number of Common Shares tendered in compliance with such offer, shall be used to determine the payment thereupon.  To the extent that all or any portion of a Stock Option shall be affected by this provision, all or such portion of the NQSO shall be terminated.

 

6

	Notwithstanding paragraphs 1 and 3 of this Article VII, the Company may, by unanimous vote and resolution, unilaterally revoke the benefits of the above provisions; provided, however, that such vote is taken no later than ten business days following public announcement of the intent of an offer of the change of control, whichever occurs earlier. 

ARTICLE VIII 

Amendment and Termination of Plan 

	The Board may at any time, and from time to time, suspend or terminate the Plan in whole or in part or amend it from time to time in such respects as the Board may deem appropriate and in the best interest of the Company. 

	No amendment, suspension or termination of this Plan shall, without the Optionee's consent, alter or impair any of the rights or obligations under any Stock Option theretofore granted to him under the Plan.

	The Board may amend the Plan, subject to the limitations cited above, in such manner as it deems necessary to permit the granting of Stock Options meeting the requirements of future amendments or issued regulations, if any, to the Code. 

	No NQSO may be granted during any suspension of the Plan or after termination of the Plan. 

ARTICLE IX 

Government and Other Regulations 

The obligation of the Company to issue, transfer and deliver Common Shares for Stock Options exercised under the Plan shall be subject to all applicable laws, regulations, rules, orders and approval which shall then be in effect and required by the relevant stock exchanges on which the Common Shares are traded and by government entities as set forth below or as the Committee in its sole discretion shall deem necessary or advisable.  Specifically, in connection with the Securities Act of 1933, as amended, upon exercise of any Stock Option, the Company shall not be required to issue Common Shares unless the Committee has received evidence satisfactory to it to the effect that the Optionee will not transfer such shares except pursuant to a registration statement in effect under such Act or unless an opinion of counsel satisfactory to the Company has been received by the Company to the effect that such registration is not required.  Any determination in this connection by the Committee shall be final, binding and conclusive.  The Company may, but shall in no event be obligated to take any other affirmative action in order to cause the exercise of a Stock Option or the issuance of Common Shares purchase thereto to comply with any law or regulation of any government authority. 

 

 

 

7

ARTICLE X 

Miscellaneous Provisions 

	No person shall have any claim or right to be granted a Stock Option under the Plan, and the grant of an NQSO under the Plan shall not be construed as giving an Optionee the right to be retained by the Company.  Furthermore, the Company expressly reserves the right at any time to terminate its relationship with an Optionee with or without cause, free from any liability, or any claim under the Plan, except as provided herein, in an option agreement, or in any agreement between the Company and the Optionee. 

	Any expenses of administering this Plan shall be borne by the Company.

	The payment received from Optionee from the exercise of Stock Options under the Plan shall be used for the general corporate purposes of the Company.

	The place of administration of the Plan shall be in the State of Nevada, and the validity, contraction, interpretation, administration and effect of the Plan and its rules and regulations, and rights relating to the Plan, shall be determined solely in accordance with the laws of the State of Nevada.

	Without amending the Plan, grants may be made to persons who are foreign nationals or employed outside the United States, or both, on such terms and conditions, consistent with the Plan's purpose, different from those specified in the Plan as may, in the judgment of the Committee, be necessary or desirable to create equitable opportunities given differences in tax laws in other countries.

	In addition to such other rights of indemnification as they may have as members of the Board or Committee, the members of the Committee shall be indemnified by the Company against all costs and expenses reasonably incurred by them in connection with any action, suite or proceeding to which they or any of them may be party by reason of any action taken or failure to act under or in connection with the Plan or any Stock Option granted thereunder, an against all amount paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except a judgment based upon a finding of bad faith; provided that upon the institution of any such action, suit or proceeding a Committee member shall in writing, give the Company notice thereof and an opportunity, at its own expense, to handle and defend the same before such Committee member undertakes to handle and defend it on his own behalf.

	Stock Options may be granted under this Plan form time to time, in substitution for stock options held by employees of other corporations who are about to become employees of the Company as the result of a merger or consolidation of the employing corporation with the Company or the acquisition by the Company of the assets of the employing corporation or the acquisition by the Company of stock of the employing corporation as a result of which it become a subsidiary of the Company.  The terms and conditions of such substitute stock options so granted my vary from the terms and conditions set forth in this Plan to such extent as the Board of Director of the Company at

 

8

the time of grant may deem appropriate to conform, in whole or in part, to the provisions of the stock options in substitution for which they are granted, but no such variations shall be such as to affect the status of any such substitute stock options as a stock option under Section 422A of the Code.

	Notwithstanding anything to the contrary in the Plan, if the Committee finds by a majority vote, after full consideration of the facts presented on behalf of both the Company the Optionee, that the Optionee has been engaged in fraud, embezzlement, theft, commission of a felony or proven dishonesty in the course of his association with the Company or any subsidiary corporation which damaged the Company or any subsidiary corporation, or for disclosing trade secrets of the Company or any subsidiary corporation, the Optionee shall forfeit all unexercised Stock Options and all exercised NQSO's under which the Company has not yet delivered the certificates and which have been earlier granted the Optionee by the Committee.  The decision of the Committee as to the case of an Optionee's discharge and the damage done to the Company shall be final.  No decision of the Committee, however, shall affect the finality of the discharge of such Optionee by the Company or any subsidiary corporation in any manner.  Further, if Optionee voluntarily terminates employment with the Company, the Optionee shall forfeit all unexercised stock options.

ARTICLE XI 

Written Agreement

Each Stock Option granted hereunder shall be embodied in a written Stock Option Agreement which shall be subject to the terms and conditions prescribed above and shall be signed by the Optionee and by the President or any Vice President of the Company, for and in the name and on behalf of the Company.  Such Stock Option Agreement shall contain such other provisions as the Committee, in its discretion shall deem advisable. 

ARTICLE XII 

Effective Date 

This Plan shall become unconditionally effective as of the effective date of approval of the Plan by the Board of Directors of the Company.  No Stock Option may be granted later than ten (10) years from the effective date of the Plan; provided, however, that the Plan and all outstanding Stock Options shall remain in effect until such NQSO's have expired or until such options are cancelled. 

 

 

 

 

9

	
Number of Shares: _______________
	
Date of Grant: _______________       

NONQUALIFIED STOCK OPTION AGREEMENT 

AGREEMENT made this _____ day of __________________, 200___, between ____________________________ (the "Optionee"), and HIGH GRADE MINING CORP., a Nevada corporation (the "Company").

1.   Grant of Option.   The Company, pursuant to the provisions of the 2005 High Grade Mining Corp. Nonqualified Stock Option Plan (the "2005 Plan"), set forth as Attachment A hereto, hereby grants to the Optionee, subject to the terms and conditions set forth or incorporated herein, an Option and Purchase from the Company all or any part of an aggregate of _______________ Common Shares, as such Common Shares are now constituted, at the purchase price of $_______________ per share.  The provisions of the 2005 Plan governing the terms and conditions of the Option granted hereby are incorporated in full herein by reference. 

2.   Exercise.   The Option evidenced hereby shall be exercisable in whole or in part (but only in multiples of 100 Shares unless such exercise is as to the remaining balance of this Option) on or after __________________, 20___ and on or before _________________, 20___, provided that the cumulative number of Common Shares as to which this Option may be exercised (except as provided in paragraph 1 of Article VI of this 2005 Plan) shall not exceed the following amounts:     

	
Cumulative Number of Shares
	
Prior to Date (Not Inclusive of) 

	 	 
	 	 
	 	 

The Option evidenced hereby shall be exercisable by the deliver to and receipt by the Company of (i) a written notice of election to exercise, in the form set forth in Attachment B hereto, specifying the number of shares to be purchased; (ii) accompanied by payment of the full purchase price thereof in case or certified check payable to the order of the Company, or by fully-paid and nonassessable Common Shares of the Company properly endorsed over to the Company, or by a combination thereof; and, (iii) by return of this Stock Option Agreement for endorsement of exercise by the Company on Schedule I hereof.  In the event fully paid and nonassessable Common Shares are submitted as whole or partial payment for Shares to be purchased hereunder, such Common Shares will be valued at their Fair Market Value (as defined in the 2005 Plan) on the date such Shares are received by the Company and applied to payment of the exercise price. 

 

 

 

 

 

10

3.   Transferability.   The Option evidenced hereby is NOT assignable or transferable by the Optionee other than by the Optionee's will, by the laws of descent and distribution, as provided in paragraph 9 of Article V of the 2005 Plan.  The Option shall be exercisable only by the Optionee during his lifetime. 

	 	
HIGH GRADE MINING CORP. 

	 
	 
	 
	 	
BY: 
	
______________________________  

	 	 	
Robert M. Baker, President  

	 
	
ATTEST: 

	 
	
________________________________________ 

	
Secretary 

Optionee hereby acknowledges receipt of a copy of the 2005 Plan, attached hereto and accepts this Option subject to each and every term and provision of such Plan.  Optionee hereby agrees to accept as binding,  conclusive and final, all decisions or interpretations of the Compensation Committee of the Board of Directors administering the 2005 Plan on any questions arising under such Plan.  Optionee recognizes that if Optionee's employment with the Company or any subsidiary thereof shall be terminated with cause, or by the Optionee, all of the Optionee's rights hereunder shall thereupon terminate; and that, pursuant to paragraph 10 of Article V of the 2005 Plan, this Option may not be exercised while there is outstanding to Optionee any unexercised Stock Option, granted to Optionee before the date of grant of this Option, to purchase Common Shares of the Company or any parent or subsidiary thereof.  

	
Dated: _________________________________  

	 
	 
	 
	 	
___________________________________  

	 	
Optionee 

	 
	 	
___________________________________ 

	 	
Type or Print Name 

	 
	 	
___________________________________ 

	 	
Address 

	 
	 	
___________________________________ 

	 	
Social Security No.

 

 

 

11

Attachment B 

Date:

Secretary, 

HIGH GRADE MINING CORP. 

885 Pyford Road 

West Vancouver, British Columbia  

Canada V7S 2A2

Dear Sir: 

In accordance with paragraph 2 of the Nonqualified Stock Option Agreement evidencing the Option granted to me on _____________________ under the 2005 High Grade Mining Corp. Nonqualified Stock Option Plan, I hereby elect to exercise this Option to the extent of __________________ Common Shares. 

Enclosed are (i) Certificate(s) No.(s) ____________________ representing fully-paid common shares of High Grade Mining Corp. endorsed to the Company with signature guaranteed, and/or a certified check payable to the order of High Grade Mining Corp. in the amount of $_______________ as the balance of the purchase price of $______________ for the Shares which I have elected to purchase and (ii) the original Stock Option Agreement for endorsement by the Company as to exercise on Schedule I thereof.  I acknowledge that the Common Shares (if any) submitted as part payment for the exercise price due hereunder will be valued by the Company at their Fair Market Value (as defined in the 2005 Plan) on the date this Option exercise is effected by the Company.  In the event I hereafter sell any Common Shares issued pursuant to this option exercise within one year from the date of exercise or within two years after the date of grant of this Option, I agree to notify the Company promptly of the amount of taxable compensation realized by me by reason of such sale for federal income tax purposes. 

When the certificate for Common Shares which I have elected to purchase has been issued, please deliver it to me, along with my endorsed Stock Option Agreement in the event there remains an unexercised balance of Shares under the Option, at the following address:

Include Optionee's address here.                                

 

	 	
__________________________________ 

	 	
Signature of Optionee 

	 
	 	
__________________________________ 

	 	
Type or Print Name 

 

 

 

12

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