Document:

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                                                                   EXHIBIT 10.38

                          THIRD MODIFICATION AGREEMENT

DATE:                March 28, 2002

PARTIES: Borrower:   WHITE ELECTRONIC DESIGNS CORPORATION,
                     an Indiana corporation

         Lender:     BANK ONE, NA, a national banking association with
                     its main office in Chicago, Illinois, successor by merger
                     to Bank One, Texas, N.A.

                                    RECITALS:

     A. Lender has extended to Borrower credit ("Loan") in the principal amount
of $12,000,000 pursuant to the Loan and Security Agreement, dated January 7,
2000 ("Loan Agreement"), and evidenced by the Promissory Note, dated June 30,
2000 ("Note"). The unpaid principal of the Loan as of the date hereof is $0.00.
Capitalized terms used herein and not otherwise defined shall have the meanings
given them in the Loan Agreement.

     B. The Loan is secured by, among other things, the Mortgage, Security
Agreement, Assignment of Rents and Fixture Filing, dated January 7, 2000 ("Deed
of Trust"), by Borrower, as trustor, for the benefit of Lender, as beneficiary,
recorded on January 11, 2000, at Document No. 200002196, records of Allen
County, Indiana. The agreements, documents, and instruments securing the Loan
and the Note are referred to individually and collectively as the "Security
Documents."

     C. Lender and Borrower have executed and delivered previously the following
agreements ("Modifications") modifying the terms of the Loan, the Note, the Loan
Agreement, and/or the Security Documents: First Amendment to Loan and Security
Agreement dated as of June 30, 2000 and Second Amendment to Loan and Security
Agreement dated as of June 29, 2001. The Note, the Loan Agreement, the Security
Documents, any arbitration resolution, any environmental certification and
indemnity agreement, and all other agreements, documents, and instruments
evidencing, securing, or otherwise relating to the Loan, as modified in the
Modifications, are sometimes referred to individually and collectively as the
"Loan Documents." Hereinafter, "Note," "Loan Agreement," "Deed of Trust" and
"Security Documents" shall mean such documents as modified in the Modifications.

     D. Unlimited Guaranties guaranteeing repayment of the Loan (the "Guarantee
Agreements") were executed and delivered to Lender by Electronic Designs, Inc.,
a Delaware corporation ("EDI"), and Panelview, Incorporated, an Oregon
corporation ("Panelview") (hereinafter EDI and Panelview together called
"Guarantors").

     E. Administration of the Loan has been transferred by Lender from Dallas,
Texas to Phoenix, Arizona in the state where Borrower has its chief executive
office.

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     F. Borrower has requested that Lender modify the Loan and the Loan
Documents as provided herein. Lender is willing to so modify the Loan and the
Loan Documents, subject to the terms and conditions herein.

                                   AGREEMENT:

     For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Borrower and Lender agree as follows:

SECTION 1.        ACCURACY OF RECITALS; ACKNOWLEDGEMENT.

     1.1 Borrower acknowledges the accuracy of the Recitals.

     1.2 Borrower hereby acknowledges that, as of December 31, 2001, based on
its Investment in Panelview in an amount in excess of $3,000,000, it was not in
compliance with Section 9.11 of the Loan Agreement (the "Covenant
Non-Compliance").

SECTION 2.        MODIFICATION OF LOAN DOCUMENTS; OTHER AGREEMENTS.

     2.1 The following definitions in Section 1.1 of the Loan Agreement are
hereby amended to read as follows:

          "Borrowing Base" means, as of any date, an amount equal to the sum of:
     (a) eighty percent (80%) of Eligible Accounts on such date, PLUS (b) the
     lesser of (i) fifty percent (50%) of the value of Eligible Inventory
     consisting of finished goods, PLUS twenty-five percent (25%) of the value
     of Eligible Inventory consisting of raw materials, (ii) $4,000,000, or
     (iii) the amount outstanding against Eligible Accounts, MINUS (c) the
     Reserve.

          "Collateral" means and includes all of each Borrower's, Panelview's
     and EDI's now owned or hereafter acquired assets, whether tangible or
     intangible, including without limitation all of each of Borrower's,
     Panelview's and EDI's right, title and interest in and to each of the
     following, wherever located and whether now existing or hereafter arising:
     (a) all accounts, (b) all inventory, (c) all equipment, (d) all contract
     rights, (e) all general intangibles, (f) all Intellectual Property, (g) all
     deposit accounts, (h) all investment property, (i) all instruments, (j) all
     chattel paper, (k) all goods, (l) all documents, (m) all insurance and
     certificates of insurance pertaining to any and all items of Collateral,
     (n) all files, correspondence, computer programs, tapes, disks and related
     data processing software which contain information identifying or
     pertaining to any of the Collateral or any Account Debtor or showing the
     amounts thereof or payments thereon or otherwise necessary or helpful in
     the realization thereon or the collection thereof, (o) all cash deposited
     with Lender or any Affiliate thereof, and (p) any and all products and cash
     and non-cash proceeds of the foregoing (including, but not limited to, any
     claims to any items referred to in this definition and any claims against
     third parties for loss of, damage to or destruction of any or

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     all of the Collateral or for proceeds payable under or unearned premiums
     with respect to policies of insurance) in whatever form.

          "Committed Sum" means $8,000,000.

          "Debt Service Coverage Ratio" means, for any period, the ratio of (i)
     consolidated Net Income of Borrower before income taxes for such period,
     plus interest expense and depreciation and amortization expenses for such
     period, less Non-Financed Capital Expenditures for such period, to (ii)
     principal and interest actually paid on Funded Indebtedness during such
     period.

          "Eligible Accounts" shall mean all accounts of each of Borrower,
     Panelview and EDI which are deemed by Lender in the exercise of its sole
     and absolute discretion to be eligible for inclusion in the calculation of
     the Borrowing Base net of any and all interest, finance charges, sales tax,
     fees, returns, discounts, claims, credits, charges, contra accounts,
     exchange contracts or other allowances, offsets and rights of offset,
     deductions, counterclaims, disputes, rejections, shortages or other
     defenses and all credits owed or allowed by Borrower, Panelview or EDI, as
     appropriate, upon any of their respective accounts and further reduced by
     the aggregate amount of all reserves, limits and deductions provided for in
     this definition and elsewhere in this Agreement. Eligible Accounts shall
     not include the following:

               (a) accounts which remain unpaid more than ninety (90) days past
          their invoice dates;

               (b) accounts which are not due and payable within thirty (30)
          days after their invoice dates;

               (c) accounts owing by a single Account Debtor if twenty percent
          (20%) or more of the aggregate balance owing by said Account Debtor is
          ineligible pursuant to clauses (a) or (b) above;

               (d) accounts with respect to which the Account Debtor is an
          Affiliate of Borrower, Panelview or EDI;

               (e) accounts with respect to which the obligation of payment b
          the Account Debtor is or may be conditional for any reason whatsoever
          including, without limitation, accounts arising with respect to goods
          that were (i) not sold on an absolute basis, (ii) sold on a bill and
          hold sale basis, (iii) sold on a consignment sale basis, (iv) sold on
          a guaranteed sale basis, (v) sold on a sale or return basis, or (vi)
          sold on the basis of any other similar understanding;

               (f) Canadian accounts in excess of an aggregate cap of
          $1,500,000, and other accounts with respect to which the Account

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          Debtor is not a resident or citizen of, or otherwise located in, the
          continental United States of America, or with respect to which the
          Account Debtor is not subject to service of process in the continental
          United States of America, unless such accounts are backed in full by
          irrevocable letters of credit or insurance in form and substance
          satisfactory to Lender issued or confirmed by a domestic commercial
          bank acceptable to Lender; provided, however, that such non-Canadian
          accounts shall not exceed $2,500,000 in the aggregate;

               (g) accounts in excess of $100,000 in the aggregate with respect
          to which the Account Debtor is the United States of America or any
          other federal governmental body unless such accounts are duly assigned
          to Lender in compliance with all applicable governmental requirements
          (including, without limitation, the Federal Assignment of Claims Act
          of 1940, as amended, if applicable);

               (h) accounts with respect to which Borrower, Panelview or EDI is
          or may be liable to the Account Debtor for goods sold or services
          rendered by such Account Debtor, but only to the extent of such
          liability to such Account Debtor;

               (i) accounts with respect to which the goods giving rise thereto
          have not been shipped and delivered to and accepted as satisfactory by
          the applicable Account Debtor or with respect to which the services
          performed giving rise thereof have not been completed and accepted as
          satisfactory by the Account Debtor thereon;

               (j) accounts which are not invoiced within FIVE (5) DAYS after
          the shipment and delivery to and acceptance by said Account Debtor of
          the goods giving rise thereto or the performance of the services
          giving rise thereto;

               (k) accounts which are not subject to a first priority perfected
          security interest in favor of Lender;

               (l) that portion of an account balance owed by a single Account
          Debtor which exceeds fifteen percent (15%) of total accounts otherwise
          deemed eligible hereunder; and

               (m) accounts that Lender, in its sole discretion, has determined
          to be ineligible.

          "Eligible Equipment" shall mean, as of any date of determination, all
     equipment owned by and in the possession of Borrower, Panelview or EDI that

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     Lender, in its sole and absolute discretion, deems to be eligible for
     borrowing purposes.

          "Eligible Inventory" means, as at any date of determination, all
     inventory owned by and in the possession of Borrower, Panelview or EDI and
     located in the United States of America that Lender, in its sole and
     absolute discretion, deems to be eligible for borrowing purposes. Without
     limiting the generality of the foregoing, unless otherwise agreed by
     Lender, the following is not Eligible Inventory:

               (a) work-in-process;

               (b) finished goods which do not meet the specifications of the
          purchase order for such goods;

               (c) inventory which Lender determines, in its sole and absolute
          discretion, to be unacceptable for borrowing purposes;

               (d) inventory with respect to which Lender does not have a valid,
          first priority and fully perfected security interest;

               (e) inventory with respect to which there exists any Lien in
          favor of any Person other than Lender;

               (f) packaging and shipping materials, products and labels;

               (g) inventory that is obsolete or returned or repossessed or used
          goods taken in trade;

               (h) inventory produced in violation of the Fair Labor Standards
          Act, in particular provisions contained in Title 29 U.S.C. 215(a)(i);
          and

               (i) inventory located at a location for which Lender does not
          have a valid landlord's or warehouseman's waiver or subordination on
          terms and conditions acceptable to Lender in its sole discretion and
          inventory located at any location other than those listed on SCHEDULE
          5.1(q).

          "Lender's Office" means that office of Lender located at 201 North
     Central Avenue, Phoenix, Arizona 85004, Attention: Commercial Banking
     AZ1-1178 with a mailing address of Post Office Box 71, Phoenix, Arizona
     85001, Attention: Commercial Banking AZ1-1178, or such other office as
     Lender may designate from time to time.

          "Loans" means the Revolving Loan.

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          "Notes" means the Revolving Note.

          "Permitted Investments" means Investments of Borrower in: (a)
     negotiable certificates of deposit issued by Lender, (b) any direct
     obligation of the United States of America or any agency or instrumentality
     thereof which has a remaining maturity at the time of purchase of not more
     than one year and repurchase agreements relating to the same, (c) EDI,
     which shall not exceed at any time outstanding the amount of availability
     resulting from Collateral of EDI as shown on the most recent Borrowing Base
     Report, and (d) Panelview, which shall not exceed $5,000,000 outstanding at
     any time. The amount of the Investments that are outstanding to each of EDI
     and Panelview shall be the remainder of (A) the sum of all disbursements
     to, and other Investments by Borrower in, EDI or Panelview, as appropriate,
     minus (B) all receipts by Borrower of accounts of EDI or Panelview, as
     appropriate.

          "Schedule of Equipment" means a schedule of all equipment of Borrower,
     Panelview and EDI delivered by Borrower to Lender from time to time.

          "Termination Date" means March 28, 2004.

     2.2  Section 1.1 of the Loan Agreement is hereby amended by the deletion of
          the following definition:

          "Permitted Indebtedness"

     2.3  Sections 2.4 and 2.5 of the Loan Agreement are hereby amended to read
          in each case as follows:

          Section 2.4 [Intentionally deleted.]

          Section 2.5 [Intentionally deleted.]

     2.4  Section 2.7 of the Loan Agreement is hereby amended to read as
          follows:

            Section 2.7 Mandatory Prepayment. Upon any sale by Borrower,
          Panelview or EDI of any of its equipment, any and all amounts received
          by Borrower, Panelview or EDI, as appropriate, as proceeds from the
          sale of any such equipment shall be paid, promptly upon receipt by
          Borrower, Panelview or EDI, to Lender, and shall be applied to the
          Revolving Loan.

     2.5  Section 3.1 of the Loan Agreement is hereby amended to read as
          follows:

          Section 3.1 Interest.

               (a) Revolving Loan. Borrower shall pay interest on the unpaid
          principal amount of the Revolving Loan at the rate(s) per annum set
          forth in the Revolving Note in accordance with the terms of the
          Revolving Note.

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               (b) Default Rate. From and after the occurrence of an Event of
          Default, the unpaid principal amount of the Obligations shall bear
          interest until paid in full (or, if earlier, until such Event of
          Default is cured or waived in writing by Lender) at a rate per annum
          equal to the lesser of (A) the Maximum Rate, or (B) the Default Rate,
          payable on demand.

               (c) Computation of Interest. The interest rates provided for in
          Section 3.1(a) shall be computed on the basis of a year of 360 days
          and the actual number of days elapsed.

               (d) Effective Interest Rate. Borrower agrees to an effective rate
          of interest that is the rate stated above plus any additional rate of
          interest resulting from any other charges in the nature of interest
          paid or to be paid by or on behalf of Borrower, or any benefit
          received or to be received by Lender, in connection with the Notes.

     2.6  Section 3.2(a) of the Loan Agreement is hereby amended to read as
          follows:

               (a) Unused Facility Fee. As consideration for Lender's commitment
          hereunder, Borrower shall pay to Lender an unused facility fee equal
          to one fourth of one percent (0.25%) per annum of the average daily
          unused portion of the Committed Sum in effect from time to time,
          payable monthly in arrears. Such fee shall be payable on the first day
          of each month and on the Termination Date.

     2.7  Section 3.4(b) of the Loan Agreement is hereby amended to read as
          follows:

               (b) [Intentionally left blank].

     2.8  Sections 6.2 and 6.4 of the Loan Agreement are hereby amended to read
          as follows:

          Section 6.2 Collection of Accounts.

               (a) Upon the occurrence of an Event of Default, Borrower shall,
          and shall cause EDI to, cause all moneys, checks, notes, drafts and
          other payments relating to or constituting proceeds of accounts, or of
          any other Collateral, to be forwarded to a Lockbox for deposit in (i)
          the Collection Account, if such Lockbox is maintained pursuant to a
          Lockbox agreement with Lender, and (ii) a Blocked Account, if such
          Lockbox is maintained with a Collecting Bank pursuant to a Blocked
          Account Agreement, in accordance with the procedures set out in the
          corresponding Blocked Account Agreement. In particular, upon the
          occurrence of an Event of Default, Borrower shall, and shall cause EDI
          to, (i)

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          advise each Account Debtor to address to a Lockbox specified by Lender
          all remittances with respect to amounts payable on all accounts, and
          (ii) stamp all invoices relating to any such amounts with a legend
          satisfactory to Lender indicating that payment is to be made to
          Borrower or EDI, as appropriate, via such specified Lockbox.

               (b) Upon the occurrence of an Event of Default, Borrower shall
          cause Panelview to cause all moneys, checks, notes, drafts and other
          payments relating to or constituting proceeds of accounts, and of all
          other Collateral provided by Panelview, to be deposited in, or
          forwarded to, the Collection Account not less often than weekly. Upon
          the occurrence of an Event of Default, Borrower shall cause Panelview
          to cause all such proceeds to be deposited in a Blocked Account for
          forwarding to the Collection Account.

               (c) Upon the occurrence of an Event of Default, Borrower and
          Lender shall (and Borrower shall cause EDI to) cause all balances in
          each Blocked Account to be transmitted daily to the Collection Account
          by wire transfer or depository transfer check or Automated Clearing
          House transfer in accordance with the procedures set forth in the
          corresponding Blocked Account Agreement. Deposits in the Collection
          Account that represent proceeds of accounts of Borrower or of EDI
          shall be credited, subject to final payment, to the payment of the
          Obligations TWO DAYS after the date of actual receipt and deposit into
          the Collection Account by Lender. Deposits in the Collection Account
          that represent proceeds of accounts of Panelview shall be credited,
          subject to final payment, to the payment of the Obligations on the
          date of actual receipt and deposit into the Collection Account by
          Lender. The delay in applying funds held in the Collection Account to
          the Obligations shall in all respects be limited so that interest on
          the Obligations is at all times less than interest calculated at the
          Maximum Rate.

               (d) Upon the occurrence of an Event of Default, Borrower shall,
          and shall cause EDI and Panelview to, hold any payments which are
          received by Borrower, EDI or Panelview (including any payment
          evidenced by a promissory note or other instrument) in trust for
          Lender. Borrower shall, and shall cause EDI and Panelview to, cause
          all such payments to be (i) deposited in the Collection Account, or
          (ii) delivered to Lender, as promptly as possible in the exact form
          received, together with any necessary endorsements.

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          Section 6.4 Disputes, Returns and Adjustments.

               (a) Borrower shall, and shall cause Panelview and EDI to, provide
          Lender with prompt written notice of amounts in excess of $100,000
          that are in dispute with respect to any accounts.

               (b) Borrower shall, and shall cause Panelview and EDI to, notify
          Lender promptly of all returns and credits in respect of any account,
          which notice shall specify the accounts affected and be included in
          the Borrowing Base Certificate delivered to Lender in accordance with
          SECTION 8.3(e). Borrower shall, and cause Panelview and EDI to, notify
          Lender promptly of any pending return or credit in excess of $100,000,
          and shall specify the account affected, the related Account Debtor and
          the goods to be returned.

               (c) Borrower, Panelview or EDI may, in the ordinary course of
          business and prior to a Default or an Event of Default, grant any
          extension of time for payment of any account or compromise, compound
          or settle the same for less than the full amount thereof or release
          wholly or partly any Person liable for the payment thereof or allow
          any credit or discount whatsoever thereon; PROVIDED that (i) neither
          Borrower, Panelview nor EDI shall taken any such action that results
          in the reduction of more than five percent (5%) of the amount payable
          with respect to any account or of more than $25,000 with respect to
          all accounts of Borrower, Panelview or EDI, as appropriate, in any
          fiscal year, and (ii) Borrower shall, and shall cause Panelview and
          EDI to, promptly notify Lender (but not less often than ten (10) days
          after the end of each month) of the amount of such adjustments and the
          account(s) affected thereby.

2.9       Article VIII of the Loan Agreement is hereby amended to read as
          follows:

          ARTICLE VIII - FINANCIAL AND COLLATERAL REPORTING

          So long as this Agreement shall be in effect or any of the Obligations
          shall be outstanding, Borrower shall furnish to Lender:

          Section 8.1 Financial Statements.

               (a) Audited Year-End Statements. As soon as available, but in any
          event within one hundred twenty (120) days after the end of each
          fiscal year of Borrower, copies of the audited consolidated and
          consolidating balance sheet of Borrower and its subsidiaries as of the
          end of such fiscal year and the related consolidated and consolidating
          audited statements of income, shareholders' equity and cash flow for
          such fiscal year, in each

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          case setting forth in comparative form the figures for the previous
          year of Borrower and its subsidiaries and certified by independent
          certified public accountants selected by Borrower and acceptable to
          Lender. In addition on or before such date, Borrower shall provide
          Lender with copies of all management reports received from its
          certified public accountants.

               (b) Quarterly Financial Statements. As soon as available, but in
          any event within sixty (60) days after the end of each fiscal quarter
          of Borrower, copies of the unaudited consolidated and consolidating
          balance sheet of Borrower as of the end of such fiscal quarter and the
          related unaudited consolidated and consolidating income statement and
          statement of cash flow for Borrower for such fiscal quarter and for
          the portion of the fiscal year of Borrower through such fiscal
          quarter, certified by the chief financial officer of Borrower as
          presenting fairly the financial condition and results of operations of
          Borrower as of the date thereof and for the periods ended on such
          date, subject to normal year end adjustments.

               (c) Projected Financial Statements. As soon as available, but in
          any event at least thirty (30) days prior to the end of each fiscal
          year of Borrower, forecasted financial statements prepared by
          Borrower, consisting of consolidated and consolidating balance sheets,
          cash flow statements and income statements of Borrower, reflecting
          projected borrowings hereunder and setting forth the assumptions on
          which such forecasted financial statements were prepared, covering the
          one-year period until the next fiscal year end.

          All such financial statements shall be complete and correct in all
          material respects and all such financial statements referred to in
          clauses (a) and (b) shall be prepared in accordance with GAAP (except,
          with respect to interim financial statements, for the omission of
          footnotes) applied consistently throughout the periods reflected
          therein.

          Section 8.2 Compliance Certificate. Within sixty (60) days after the
          end of each fiscal quarter of Borrower, a certificate of Borrower's
          President or chief financial officer in the form of Exhibit B.

          Section 8.3 Collateral Information and Reports.

          (a) Schedules of Accounts. Within thirty (30) days after the end of
          each month if there is an outstanding Revolving Loan balance and no
          later than five (5) days prior to any advance, a Schedule of Accounts
          listing all accounts of Borrower, Panelview and EDI as of the last
          business day of such month setting forth (A)

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          the name of each Account Debtor together with account balances
          detailed by invoice number, amount (and any applicable rebate or
          discount), invoice date and terms, (B) aging of all account setting
          forth accounts thirty (30) days past the invoice date or less,
          accounts over thirty (30) days but less than sixty-one (61) days past
          the invoice date, accounts over sixty (60) days but less than
          ninety-one (91) days past the invoice date, accounts over ninety days
          but less than one hundred twenty-one (121) days past the invoice date
          and accounts over one hundred twenty (120) days past the invoice date,
          and (C) a reconciliation the Schedule of Accounts to the Borrowing
          Base Certificate as of the most recent month end and Borrower's,
          Panelview's and EDI's general ledger as of such month end.

               (b) Schedules of Accounts Payable. Within thirty (30) days after
          the end of each month if there is an outstanding Revolving Loan
          balance and no later than five (5) days prior to any advance, a
          statement of accounts payable of Borrower, Panelview and EDI as of the
          last business day of such month setting forth (A) a detailed aged
          trial balance of all of Borrower's, Panelview's and EDI's respective
          accounts payable, specifying the name of and the balance due to each
          creditor, and (B) a reconciliation to the schedule of accounts payable
          delivered in respect of the next preceding month.

               (c) Schedule of Inventory. Within thirty (30) days after the end
          of each month if there is an outstanding Revolving Loan balance and no
          later than five (5) days prior to any advance, (A) (i) a Schedule of
          Inventory, based upon Borrower's, Panelview's and EDI's perpetual
          inventory, as of the last business day of such month, itemizing and
          describing the kind, type, quantity and location of all inventory of
          Borrower, Panelview and EDI and the cost thereof with a summary of
          inventory by category, (ii) a detailed statement of all inventory that
          is not located on the premises described on Schedule 5.1(o), and (iii)
          an inventory turnover report, in form and substance acceptable to
          Lender, and (B) a reconciliation of the Schedule of Inventory to the
          Borrowing Base Certificate as of the most recent month end and
          Borrower's general ledger as of such month end

               (d) Borrowing Base Certificate. Within thirty (30) days after the
          end of each month if there is an outstanding Revolving Loan balance
          and no later than five (5) days prior to any advance, a Borrowing Base
          Certificate prepared as of the close of business on the last business
          day of such week, along with supporting documentation, in form and
          substance satisfactory to Lender

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          (including but not limited to information on sales, credit,
          collections, adjustments and inventory changes).

               (e) Certification. Each of the schedules and certificates
          delivered to Lender pursuant to this Section 8.3 shall be signed and
          certified by the president, chief financial officer or treasurer of
          Borrower to be true, correct and complete as of the date indicated
          thereon.

               (f) Other Information. Lender may, in its sole discretion, from
          time to time require Borrower to deliver the schedules and
          certificates described in Section 8.3 more or less often and on
          different schedules than specified in such Section. Borrower shall
          also furnish to Lender such other additional information as Lender may
          from time to time request.

     2.10 Section 9.1 of the Loan Agreement is hereby amended to read as
     follows:

          Section 9.1 Financial Covenants.

               (a) Maximum Liabilities to Tangible Net Worth. Permit the ratio
          of Borrower's consolidated total Liabilities to its consolidated
          Tangible Net Worth at any month end to be greater than 1.25 to 1.0.

               (b) Minimum Debt Service Coverage. Permit, as of the last day of
          each fiscal quarter, the ratio of Borrower's consolidated Debt Service
          Coverage Ratio for the twelve consecutive months ending with such
          quarter end, to be less than 1.25 to 1.0.

               (c) Minimum Tangible Net Worth. Permit the consolidated Tangible
          Net Worth of Borrower as of the end of any fiscal quarter to be less
          than $30,000,000 plus the sum of fifty percent (50%) of year to date
          consolidated Net Income (but not net losses) of Borrower.

          In the event that Borrower acquires any additional subsidiaries in
          accordance with SECTION 9.11, the above financial covenants shall be
          calculated solely with reference to the financial statements of
          Borrower, Panelview and EDI without including the financial statements
          or condition of any such additional subsidiaries.

     2.11 Sections 9.2, 9.3 and 9.4 of the Loan Agreement are hereby amended to
     read as follows:

          Section 9.2 Capital Expenditures. Make or incur any Capital
          Expenditures, except that Borrower may make or incur Capital
          Expenditures in

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     any fiscal year in an amount not to exceed, in the aggregate $5,000,000 in
     fiscal year 2002 and $3,000,000 in any fiscal year thereafter.

          Section 9.3 Prohibited Distributions and Payments, Etc. Declare or
     make any Prohibited Distributions or Prohibited Payment.

          Section 9.4 Indebtedness. Except as disclosed on Schedule 5.1(h),
     create, assume, or otherwise become or remain obligated in respect of, or
     permit or suffer to exist or to be created, assumed or incurred or to be
     outstanding any Indebtedness for Money Borrowed.

     2.12 Section 11.4 of the Loan Agreement is hereby amended to read as
     follows:

          Section 11.4 Venue; Service of Process. BORROWER AND LENDER HEREBY
     AGREE THAT THE FEDERAL COURT SITTING IN PHOENIX, ARIZONA OR, AT THE OPTION
     OF LENDER, ANY COURT IN WHICH LENDER SHALL INITIATE LEGAL OR EQUITABLE
     PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER IN
     CONTROVERSY AND WHICH SITS IN A JURISDICTION IN WHICH BORROWER TRANSACTS
     BUSINESS SHALL HAVE NON-EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY
     CLAIMS OR DISPUTES BETWEEN BORROWER AND LENDER, PERTAINING DIRECTLY OR
     INDIRECTLY TO THIS AGREEMENT OR THE LOAN DOCUMENTS OR TO ANY MATTER ARISING
     THEREFROM. Borrower expressly submits and consents in advance to such
     jurisdiction in any action or proceeding commenced in such courts, and
     hereby waives personal service of the summons and complaint or other
     process or papers issued therein and agrees that service of such summons
     and complaint or other process or papers may be made by registered or
     certified mail addressed to Borrower at the address set forth in Section
     11.1(b), which service shall be deemed made upon receipt thereof. All
     parties hereto agree that venue is proper in Maricopa County, Arizona, that
     such county is a convenient forum in which to decide any dispute arising
     hereunder and hereby agree not to assert any argument that such county is
     an inconvenient or improper forum for any such dispute.

     2.13 Section 11.11 of the Loan Agreement is hereby amended to read as
     follows:

          Section 11.11 Governing Law. This Agreement, the Note and all Loan
     Documents shall be construed in accordance with and governed by the law of
     the State of Arizona.

     2.14 The Borrowing Base Certificate is hereby amended to read in the form
     attached hereto as Exhibit "A".

     2.15 Exhibit B (Compliance Certificate) of the Loan Agreement is hereby
     amended to read as attached hereto as Exhibit "B".

     2.16 Schedules 5.1(i), 5.1(o), 5.1(p) and 5.1(r) are hereby amended to read
     as attached hereto as Schedules 5.1(i), 5.1(o), 5.1(p) and 5.1(r).

                                      -13-
<PAGE>
     2.17 All references in the Loan Agreement to "Term Loan" and "Term Note"
     are hereby deleted.

     2.18 All references in the Loan Agreement to "Central time" or to "Dallas,]
     Texas time" are hereby amended to read "Phoenix, Arizona time."

     2.19 Reference to Lender's address in Section 11.1(b) of the Loan Agreement
     and in all other Loan Documents are hereby amended to read as follows:

                  Post Office Box 71
                  Phoenix, Arizona  85001
                  Attention:  Commercial Banking AZ1-1178
                  Facsimile No.:  (602) 221-1502

     2.20 All references in the Loan Documents to "$12,000,000" or "Twelve
     Million and No/100 Dollars" with respect to the Revolving Loan and the
     Revolving Note are hereby amended to read "$8,000,000" and "Eight Million
     and No/100 Dollars," respectively.

     2.21 All Loan Documents are hereby amended to provide that they shall be
     governed by the law of the State of Arizona.

     2.22 The Note is hereby amended as follows:

          (a) The definition of Interest Period in Section 1 of the Note is
     hereby amended to read as follows:

               "Interest Period" shall mean, with respect to any LIBOR Balance,
          a period commencing: (i) on any date which, pursuant to an Interest
          Notice, the principal amount of such LIBOR Balance beings to accrue
          interest at the Adjusted LIBOR Rate, or (ii) the Business Day
          following the last day of the immediately preceding Interest Period in
          the case of a rollover to a successive Interest Period and ending one,
          two, three or six months thereafter as Borrower shall elect in
          accordance with the provisions hereof; provided, that: (A) any
          Interest Period which would otherwise end on a day which is not a
          LIBOR Business Day shall be extended to the next succeeding LIBOR
          Business Day, and (B) any Interest Period which would otherwise end
          after the Maturity Date shall end on the Maturity Date.

          (b) "Maturity Date" is hereby amended from January 7, 2003 to March
     28, 2004.

          (c) "Total Principal Amount" is hereby amended from Twelve Million and
     No/100 Dollars ($12,000,000.00) to Eight Million and No/100 Dollars
     ($8,000,000.00).

     2.23 Each of the Loan Documents is modified to provide that it shall be a
     default or an event of default thereunder if Borrower shall fail to comply
     with any of the covenants of

                                      -14-
<PAGE>

Borrower herein or if any representation or warranty by Borrower herein or by
any guarantor in any related Consent and Agreement of Guarantors is materially
incomplete, incorrect, or misleading as of the date hereof.

     2.24 Each reference in the Loan Documents to any of the Loan Documents is
hereby amended to be a reference to such document as modified herein.

     2.25 Lender hereby waives the Covenant Non-Compliance. Notwithstanding this
or any prior waiver of forbearance, actual or implied, of any nature by Lender,
time is hereby declared to be of the essence hereof, of the Obligations, of the
Loan Agreement and of all Security Documents, and Lender requires, and Borrower
agrees to, strict performance of each and every covenant, condition, provision
and agreement hereof, of the Obligations, of the Loan Agreement and of all
Security Documents.

SECTION 3. RATIFICATION OF LOAN DOCUMENTS AND COLLATERAL.

     The Loan Documents are ratified and affirmed by Borrower and shall remain
in full force and effect as modified herein. Any property or rights to or
interests in property granted as security in the Loan Documents shall remain as
security for the Loan and the obligations of Borrower in the Loan Documents.

SECTION 4. BORROWER REPRESENTATIONS AND WARRANTIES.

     Borrower represents and warrants to Lender:

     4.1 No default or event of default under any of the Loan Documents as
modified herein, nor any event, that, with the giving of notice or the passage
of time or both, would be a default or an event of default under the Loan
Documents as modified herein has occurred and is continuing.

     4.2 There has been no material adverse change in the financial condition of
Borrower or any other person whose financial statement has been delivered to
Lender in connection with the Loan from the most recent financial statement
received by Lender.

     4.3 Each and all representations and warranties of Borrower in the Loan
Documents are accurate on the date hereof.

     4.4 Borrower has no claims, counterclaims, defenses, or set-offs with
respect to the Loan or the Loan Documents as modified herein.

     4.5 The Loan Documents as modified herein are the legal, valid, and binding
obligation of Borrower, enforceable against Borrower in accordance with their
terms.

     4.6 Borrower is validly existing under the laws of the State of its
formation or organization and has the requisite power and authority to execute
and deliver this Agreement and to perform the Loan Documents as modified herein.
The execution and delivery of this Agreement and the performance of the Loan
Documents as modified herein have been duly

                                      -15-
<PAGE>

authorized by all requisite action by or on behalf of Borrower. This Agreement
has been duly executed and delivered on behalf of Borrower.

SECTION 5. BORROWER COVENANTS.

     Borrower covenants with Lender:

     5.1 Borrower shall execute, deliver, and provide to Lender such additional
agreements, documents, and instruments as reasonably required by Lender to
effectuate the intent of this Agreement.

     5.2 Borrower fully, finally, and absolutely and forever releases and
discharges Lender and its present and former directors, shareholders, officers,
employees, agents, representatives, successors and assigns, and their separate
and respective heirs, personal representatives, successors and assigns, from any
and all actions, causes of action, claims, debts, damages, demands, liabilities,
obligations, and suits, of whatever kind or nature, in law or equity of
Borrower, whether now known or unknown to Borrower, and whether contingent or
matured, (i) in respect of the Loan, the Loan Documents, or the actions or
omissions of Lender in respect of the Loan or the Loan Documents and (ii)
arising from events occurring prior to the date of this Agreement.

SECTION 6. CONDITIONS PRECEDENT.

     The agreements of Lender and the modifications contained herein shall not
be binding upon Lender until Lender has executed and delivered this Agreement
and Lender has received, at Borrower's expense, all of the following, all of
which shall be in form and content satisfactory to Lender and shall be subject
to approval by Lender:

     6.1 An original of this Agreement fully executed by the Borrower and all
Guarantors;

     6.2 An updated Schedule of Equipment;

     6.3 If Borrower or any Guarantor is a corporation, limited liability
company, partnership or trust, such resolutions or authorizations and such other
documents as Lender may require relating to the existence and good standing of
that corporation, partnership or trust, and the authority of any person
executing this Agreement or other documents on behalf of that corporation,
limited liability company, partnership or trust; and

     6.4 Payment of all the internal and external costs and expenses incurred by
Lender in connection with this Agreement (including, without limitation, inside
and outside attorneys, appraisal, appraisal review, processing, title, filing,
and recording costs, expenses, and fees).

SECTION 7. INTEGRATION, ENTIRE AGREEMENT, CHANGE, DISCHARGE, TERMINATION, OR
           WAIVER.

     The Loan Documents as modified herein contain the complete understanding
and agreement of Borrower and Lender in respect of the Loan and supersede all
prior representations, warranties, agreements, arrangements, understandings, and
negotiations. No provision of the

                                      -16-
<PAGE>

Loan Documents as modified herein may be changed, discharged, supplemented,
terminated, or waived except in a writing signed by the parties thereto.

SECTION 8. BINDING EFFECT.

     The Loan Documents as modified herein shall be binding upon and shall inure
to the benefit of Borrower and Lender and their successors and assigns and the
executors, legal administrators, personal representatives, heirs, devisees, and
beneficiaries of Borrower, provided, however, Borrower may not assign any of its
right or delegate any of its obligation under the Loan Documents and any
purported assignment or delegation shall be void.

SECTION 9. CHOICE OF LAW.

     This Agreement shall be governed by and construed in accordance with the
laws of the State of Arizona, without giving effect to conflicts of law
principles.

SECTION 10. COUNTERPART EXECUTION.

     This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original and all of which together shall constitute one and
the same document. Signature pages may be detached from the counterparts and
attached to a single copy of this Agreement to physically form one document.

     DATED as of the date first above stated.

                              WHITE ELECTRONIC DESIGNS
                              CORPORATION, an Indiana corporation

                              By:
                                 -----------------------------------------------
                              Name:
                                   ---------------------------------------------
                              Title:
                                    --------------------------------------------

                                                                        BORROWER
                              BANK ONE, NA, a national
                              banking association with
                              its main office in Chicago,
                              Illinois, successor by
                              merger to Bank One, Texas,
                              N.A.

                              By:
                                 -----------------------------------------------
                              Name:
                                   ---------------------------------------------
                              Title:
                                    --------------------------------------------

                                                                          LENDER

                                      -17-
<PAGE>

                       CONSENT AND AGREEMENT OF GUARANTORS

     With respect to the Third Modification Agreement, dated March 28, 2002
("Agreement"), between WHITE ELECTRONIC DESIGNS CORPORATION, an Indiana
corporation ("Borrower"), and BANK ONE, NA, a national banking association with
its main office in Chicago, Illinois, successor by merger to Bank One, Texas,
N.A. ("Lender"), the undersigned (individually and, if more than one,
collectively "Guarantor") agrees for the benefit of Lender as follows:

     1. Guarantor acknowledges (i) receiving a copy of and reading the
Agreement, (ii) the accuracy of the Recitals in the Agreement, and (iii) the
effectiveness of (A) the Guarantee Agreements as modified herein, and (B) any
other agreements, documents, or instruments securing or otherwise relating to
the Guarantee Agreements (including, without limitation, any arbitration
resolution and any environmental certification and indemnity agreement
previously executed and delivered by the undersigned) and the Security Documents
delivered by Guarantor (the "Security Agreements"), as modified herein. The
Guarantee Agreements, the Security Agreements and such other agreements,
documents, and instruments, as modified herein, are referred to individually and
collectively as the "Guarantor Documents."

     2. Guarantor consents to the modification of the Loan Documents and all
other matters in the Agreement.

     3. Guarantor fully, finally, and forever releases and discharges Lender and
its successors, assigns, directors, officers, employees, agents, and
representatives from any and all actions, causes of action, claims, debts,
demands, liabilities, obligations, and suits of whatever kind or nature, in law
or equity, that Guarantor has or in the future may have, whether known or
unknown, (i) in respect of the Loan, the Loan Documents, the Guarantor
Documents, or the actions or omissions of Lender in respect of the Loan, the
Loan Documents, or the Guarantor Documents and (ii) arising from events
occurring prior to the date hereof.

     4. Guarantor agrees that all references, if any, to the Note, the Loan
Agreement, the Deed of Trust, the Security Documents, and the Loan Documents in
the Guarantor Documents shall be deemed to refer to such agreements, documents,
and instruments as modified by the Agreement.

     5. Guarantor reaffirms the Guarantor Documents and agrees that the
Guarantor Documents continue in full force and effect and remain unchanged,
except as specifically modified by this Consent and Agreement of Guarantors. Any
property or rights to or interests in property granted as security in the
Guarantor Documents shall remain as security for the Guarantee Agreements and
the obligations of Guarantor in the Guarantee Agreements.

     6. Guarantor agrees that the Loan Documents, as modified by the Agreement,
and the Guarantor Documents, as modified by this Consent and Agreement of
Guarantors, are the legal, valid, and binding obligations of Borrower and the
undersigned, respectively, enforceable in accordance with their terms against
Borrower and the undersigned, respectively.

<PAGE>

     7. Guarantor agrees that Guarantor has no claims, counterclaims, defenses,
or offsets with respect to the enforcement against Guarantor of the Guarantor
Documents.

     8. Guarantor represents and warrants that there has been no material
adverse change in the financial condition of any Guarantor from the most recent
financial statement received by Lender.

     9. Guarantor waives and agrees not to assert with respect to the Guarantor
Documents: (a) any right to require Lender to proceed against Borrower or any
other guarantor, to proceed against or exhaust any security for the
indebtedness, to pursue any other remedy available to Lender, or to pursue any
remedy in any particular order or manner; (b) demand, diligence, presentment for
payment, protest and demand, and notice of extension, dishonor, protest, demand,
nonpayment and acceptance of the Guarantee Agreements; (c) notice of the
existence, creation or incurring of new or additional indebtedness of Borrower
to Lender; (d) the benefits of any statutory provision limiting the liability of
a surety, including without limitation the provisions of A.R.S. Sections
12-1641, et seq.; (e) any defense arising by reason of any disability or other
defense of Borrower or by reason of the cessation from any cause whatsoever
(other than payment in full) of the liability of Borrower for the indebtedness;
and (f) the benefits of any statutory provision limiting the right of Lender to
recover a deficiency judgment, or to otherwise proceed against any person or
entity obligated for payment of the indebtedness, after any foreclosure or
trustee's sale of any security for the indebtedness.

     10. Guarantor agrees that the Guarantor Documents are hereby modified to
provide that they shall be governed by and construed in accordance with the laws
of the State of Arizona, without giving effect to conflicts of law principles.

     11. Guarantor agrees that this Consent and Agreement of Guarantors may be
executed in one or more counterparts, each of which shall be deemed an original
and all of which together shall constitute one and the same document. Signature
and acknowledgement pages may be detached from the counterparts and attached to
a single copy of this Consent and Agreement of Guarantors to physically form one
document.

         DATED as of the date of the Agreement.

                                  ELECTRONIC DESIGNS, INC., a Delaware
                                  corporation

                                  By:
                                     -----------------------------------------
                                  Name:
                                       ---------------------------------------
                                  Title:
                                        --------------------------------------

                                      -2-
<PAGE>

                                    PANELVIEW, INCORPORATED, an Oregon
                                    corporation

                                    By:
                                       -----------------------------------------
                                    Name:
                                         ---------------------------------------
                                    Title:
                                          --------------------------------------

                                                                       GUARANTOR

                                      -3-
<PAGE>

                                   EXHIBIT "A"

                           BORROWING BASE CERTIFICATE

<PAGE>

                                   EXHIBIT "B"

                             COMPLIANCE CERTIFICATE

         This Compliance Certificate (this "Certificate") is executed and
delivered pursuant to and in accordance with the provisions of that certain Loan
and Security Agreement (as amended from time to time, the "Loan Agreement")
dated as of January 7, 1999, between WHITE ELECTRONIC DESIGNS CORPORATION, AN
INDIANA CORPORATION ("Borrower"), and BANK ONE, NA, A NATIONAL BANKING
ASSOCIATION WITH ITS MAIN OFFICE IN CHICAGO, ILLINOIS SUCCESSOR BY MERGER TO
BANK ONE, TEXAS, N.A. ("Bank"). All capitalized terms used in this Certificate,
if not otherwise defined herein, shall have the respective meanings assigned to
such terms under the Loan Agreement.

         The undersigned hereby represents and warrants to Bank as follows:

1.       Authority. The undersigned is the [president] [chief financial officer]
         of Borrower.

2.       Review. The undersigned has reviewed (a) the activities of Borrower
         during Borrower's fiscal period ending ____________, 200__ (the
         "Subject Fiscal Period"), (b) the financial condition of Borrower as of
         the last day of the Subject Fiscal Period, and (c) the Loan Agreement
         and all of the other Loan Documents.

3.       Compliance. Based upon my review of the financial condition of Borrower
         and the other information and documents described in paragraph 2 above,
         Borrower (a) has observed, performed and fulfilled its obligations and
         covenants contained in the Loan Agreement and the other Loan Documents,
         and (b) no Default or Event of Default has occurred and is continuing
         or, if any Default or Event of Default has occurred, the nature and
         status of such Default or Event of Default is described as follows:
         ______________________________________________________________________
         ______________________________________________________________________

4.       Financial Covenants. The financial information of Borrower that the
         undersigned has provided below demonstrates the Borrower's compliance
         with the financial covenants set forth in the Loan Agreement. All of
         such financial information is true and correct as of the last day of
         the Subject Fiscal Period (unless another date or a specific time
         period is stated). The Subsections specifically referenced below have
         been provided to identify the applicable provision in the Loan
         Agreement which covers the subject financial covenant. All financial
         covenants are calculated on a consolidated basis.

         (a) Maximum Liabilities to Tangible Net Worth. Permit the ratio of
Borrower's consolidated total Liabilities to its consolidated Tangible Net Worth
at any month end to be greater than 1.25 to 1.0.

<PAGE>

<Table>
<S>                        <C>                                                                 <C>
                  (A)      Maximum ratio of Liabilities to Tangible Net Worth
                           permitted under Section 9.1(a) of the Loan Agreement                      1.25 to 1.0

                  (B)      Total Liabilities:                                                  $
                                                                                                ----------------

                  (C)      Net Worth                                                           $
                                                                                                ----------------

                  (D)      All intangible items, amounts due from Affiliates,
                           employees and shareholders and all other items which
                           should properly be treated as intangibles in
                           accordance with GAAP $

                  (E)      Tangible Net Worth (item (C) minus item (D)):                       $
                                                                                                ----------------

                  (F)      Ratio of total Liabilities to Tangible Net Worth
                           (total of item (B) above divided by item (C) above)                        ___ to 1.0

         (b) Minimum Debt Service Coverage. Pursuant to Section 9.1(b) of the Loan Agreement, Borrower shall not
permit, as of the last day of each fiscal quarter, the ratio of Borrower's consolidated Debt Service Coverage
Ratio for the twelve consecutive months ending with such quarter end, to be less 1.25 to 1.0.

                  (A)      Consolidated Net Income of Borrower                                 $
                                                                                                ----------------

                  (B)      Income Taxes                                                        $
                                                                                                ----------------

                  (C)      Interest Expense                                                    $
                                                                                                ----------------

                  (D)      Depreciation and amortization expense                               $
                                                                                                ----------------

                  (E)      Non-Financed Capital Expenditures                                   $
                                                                                                ----------------

                  (F)      Principal and interest paid on Funded Indebtedness                  $
                                                                                                ----------------

                  (G)      Debt Service Coverage Ratio [(A)+(B)+(C)+(D)-(E)/(F)]               $
                                                                                                ----------------

         (c) Tangible Net Worth. Pursuant to Section 9.1(c) of the Loan Agreement, the Borrower shall not permit
the consolidated Tangible Net Worth of Borrower as of the end of any fiscal quarter to be less than $30,000,000
plus the sum of (i) fifty percent (50%) of year to date Net Income, minus (ii) amounts paid to redeem preferred
stock (not to exceed $3,000,000 in the aggregate for all periods), plus (iii) the amount of any additions to net
worth generated by conversion of preferred stock.

                  (A)      Tangible Net Worth (from item (a) (E) above)                        $
                                                                                                ----------------

                  (B)      Fifty percent (50%) of year to date Net Income                      $
                                                                                                ----------------

                  (C)      Amounts paid to redeem preferred stock                              $
                                                                                                ----------------

                  (D)      Additions to net worth generated by conversion of
                           preferred stock                                                     $
                                                                                                ----------------

                  (E)      Sum of (A)+(B)-(C)+(D)                                              $
                                                                                                ----------------
</Table>

                                      -2-
<PAGE>

Dated:
       -----------------------

                                    WHITE ELECTRONIC DESIGNS
                                    CORPORATION

                                    By:
                                       ---------------------------------------
                                            Hamid R. Shokrgozar, President

                                      -3-
<PAGE>

                                 SCHEDULE 5.1(i)

                                   LITIGATION

<PAGE>

                                 SCHEDULE 5.1(o)

                             LOCATIONS OF INVENTORY

<PAGE>

                                 SCHEDULE 5.1(p)

                             LOCATIONS OF EQUIPMENT

<PAGE>

                                 SCHEDULE 5.1(r)

                         CORPORATE AND FACILITIES NAMES

White Electronic Designs Corp.
Electronic Designs Inc.
Panelview, Incorporated<PAGE>
                                                                   EXHIBIT 10.39

                        BUSINESS PURPOSE PROMISSORY NOTE
                    (periodic LIBOR//principal plus interest)

                             Loan Number: 1000111301

Principal Amount $1,958,086.11                             Date: March 12, 2002

THIS NOTE IS EXECUTED TOGETHER WITH THE LOAN AND SECURITY AGREEMENT REFERENCING
THE LOAN NUMBER REFERRED TO ABOVE AND IS EXECUTED AT PORTLAND, OR.
                                                      (City) (State)

         For value received, receipt of which is hereby acknowledged, the
undersigned ("Borrower") promises to pay to the order of BANC ONE LEASING
CORPORATION ("Lender") in lawful money of the United States of America at
Lender's principal office or at such other place as Lender may designate from
time to time, the principal amount set forth above, together with interest
thereon at a rate per annum equal to the Periodic Interest Rate (hereinafter
defined) from the Acceptance Date until this Note is paid in full. Principal
sums disbursed and repaid will not be available for redisbursement. Interest
shall be calculated on a 360 day year basis with each month consisting of 30
days.

         1. If the Acceptance Date is before the Commencement Date, then on the
Commencement Date of the Base Term, Borrower shall pay one installment of
interest only based upon the number of days in the Interim Term.

         2. On the dates stated below during the Base Term, Borrower shall pay
(i) installments of principal in the amounts stated below, plus (ii) interest
due to the date of each such principal installment.

                  (a) Base Term: 72 MONTHS

                  (b) Amount of each installment payment due during the Base
                  Term (includes principal only):

                                    71 Monthly Payments of  $ 20,396.70
                                    1 Final Payment of        $509,920.41

                  (c) The first installment payment during the Base Term shall
                  be paid ONE MONTH after the Commencement Date and all
                  subsequent installment payments shall be paid on the same day
                  of EACH MONTH thereafter until paid in full.

         3. Borrower shall finance a set-up/filing fee in the amount of $375.00.

         4. Certain terms used in this Note are defined as follows.

                  (a) "Periodic Interest Rate" means 3.75% in excess of LIBOR.

                  (b) "Acceptance Date" means the date that Lender accepts this
                  Note by initially disbursing principal hereunder.

                  (c) "Adjustment Date" means (i) the Initial Adjustment Date;
                  (ii) the Commencement Date; and (iii) the same day of each
                  month following the Commencement Date.

                  (d) "Commencement Date" means (i) the same day as the
                  Acceptance Date if the Acceptance Date is the first day of the
                  month or if the Acceptance Date is the 15th day of the month,
                  (ii) the 15th day of the same month as the Acceptance Date if
                  the Acceptance Date is on or after the second day of the month
                  and up to and including the 14th day of the month, or (iii)
                  the first day of the month following the Acceptance Date if
                  the Acceptance Date is on or after the 16th day of the month
                  and up to and including the last day of the month.

                  (e) "Initial Adjustment Date" means (i) the same day as the
                  Acceptance Date if the Acceptance Date is the first day of the
                  month or if the Acceptance Date is the 15th day of the month,
                  (ii) the 15th day of the

<PAGE>

                  previous month if the Acceptance Date is on or after the
                  second day of the month up to and including the 14th day of
                  the month, or (iii) the first day of the month if the
                  Acceptance Date is on or after the 16th day of the month up to
                  and including the last day of the month.

                  (f) "LIBOR" means the London Interbank Offered Rate for 30 day
                  loans as published in the Wall Street Journal on each
                  Adjustment Date during the term hereof; provided that if the
                  Wall Street Journal is not published on a particular day, the
                  rate shall be as published in the most recently preceding
                  published Wall Street Journal or, if the Wall Street Journal
                  has stopped publishing 30-day LIBOR or if the Wall Street
                  Journal has stopped publishing 30-day LIBOR on at least a
                  monthly basis, in a comparable publication as reasonably
                  determined by Lender.

         5. Payments shall be allocated between principal, interest and fees, if
any, in the discretion of Lender. Borrower may not prepay this Note in whole or
in part. Borrower's obligation to pay all installment payments and all other
amounts payable under this Note is absolute and unconditional under any and all
circumstances and shall not be affected by any circumstances of any character
including, without limitation, (a) any setoff, claim, counterclaim, defense or
reduction which Borrower may have at any time against Lender or any other party
for any reason, or (b) any defect in the condition, design or operation of, any
lack of fitness for use of, any damage to or loss of, or any lack of maintenance
or service for any of the Equipment (as defined in the Loan Agreement).

         6. This Note is entitled to the benefits, and is subject to the terms
and requirements of, the Loan Agreement executed by Borrower and Lender, which
Loan Agreement, among other things, (a) provides for the making of the loan
evidenced hereby, and (b) provides for events of default, acceleration and other
remedies. Borrower waives presentment, demand, protest or notice of any kind in
connection with this Note.

         7. THE INTERPRETATION, CONSTRUCTION AND VALIDITY OF THIS NOTE SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF OHIO. LENDER AND BORROWER IRREVOCABLY
CONSENT TO THE JURISDICTION AND VENUE OF ANY STATE OR FEDERAL COURT IN OHIO, AND
WAIVE ALL RIGHTS TO TRIAL BY JURY, IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY ON ANY MATTER WHATSOEVER ARISING
OUT OF, IN CONNECTION WITH OR IN ANY WAY RELATED TO THIS INSTRUMENT.

PANELVIEW,  INCORPORATED
("Borrower")
                                            ------------------------------------
                                            Witness as to Borrower's signature
By:
   ------------------------------------

Title:
      ---------------------------------

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