Document:

<PAGE>

                                                                    EXHIBIT 10.3

                          INTERNET COMMERCE CORPORATION
                        RESTRICTED STOCK AWARD AGREEMENT

Name of Recipient:                     Number of Shares:
                  ------------------                    ------------------------

Award Date:                            Vesting Start Date:
           -------------------------                      ----------------------

         THIS AGREEMENT (the "Agreement") is made and entered into as of the
Award Date noted above, by and between Internet Commerce Corporation (the
"Company"), a Delaware corporation, and the individual noted above (the
"Recipient").

                                   WITNESSETH:

         WHEREAS, the Company has adopted the Internet Commerce Corporation 2005
Stock Incentive Plan (the "Plan") for the purpose of securing and retaining the
services of officers, directors, key employees, and consultants of the Company,
and providing incentive to those who are primarily responsible for the
operations of the Company to shape and carry out the long-range plans of the
Company and aiding in its continued growth and financial success; and

         WHEREAS, the Plan achieves such goals by providing the opportunity to
receive compensation which is based upon appreciation in the value of the shares
of the common stock, [par value $.01] ("Common Stock"), of the Company;

         WHEREAS, the Compensation Committee of the Board of Directors of the
Company (the "Committee") has authorized the grant to the Recipient of a
restricted stock award for shares of the Common Stock under the Plan, and the
Company and the Recipient wish to confirm herein the terms, conditions, and
restrictions of the restricted stock award;

         NOW, THEREFORE, in consideration of the premises, the mutual covenants
contained herein, and other good and valuable consideration, the parties hereto
agree:

                                    SECTION 1
                                 AWARD OF SHARES

         1.1 Award of Shares. Subject to the terms, restrictions, limitations,
and conditions stated herein and in the Plan, the Company hereby awards to the
Recipient the number of shares of Common Stock set forth at the beginning of
this Agreement in the box labeled "Number of Shares" (the "Award Shares") under
the Plan.

         1.2 Vesting of Award Shares. Recipient shall become vested in the Award
Shares (after such vesting, "Vested Shares") as follows based upon the
Continuous Service (as defined below)

<PAGE>

of the Recipient from the Vesting Start Date (as specified at the beginning of
this Agreement) to the date of determination:

<Table>
<Caption>
                                VESTING SCHEDULE:
--------------------------------------------------------------------------------
CONTINUOUS SERVICE FROM VESTING START DATE:              PERCENTAGE VESTED:
-------------------------------------------              ------------------
<S>                                              <C>

</Table>

For purposes of this Restricted Stock Award Agreement, "Continuous Service"
means a period of continuous performance of services by the Recipient for the
Company, a parent, or a subsidiary, as determined by the Committee in its sole
and absolute discretion.

Notwithstanding the preceding provisions, the Committee may, in its sole
discretion, accelerate the vesting of the Shares in whole or in part. The Award
Shares that have become vested pursuant to the above provisions are herein
referred to as the "Vested Award Shares" and all Award Shares that are not
Vested Award Shares are sometimes herein referred to as the "Unvested Award
Shares." RECIPIENT ACKNOWLEDGES AND AGREES THAT HE HAS BEEN FULLY ADVISED TO
CONSULT WITH HIS OWN TAX CONSULTANTS REGARDING THE APPLICABILITY OF HIS MAKING A
CODE SECTION 83(B) ELECTION WITH RESPECT TO THE AWARD SHARES.

         1.3 Additional Condition to Award Shares. If the Recipient has received
this grant in respect of the Recipient's employment by the Company, in order to
not forfeit the Award Shares, the Recipient must deliver to the Company, within
the ten-day period (the "Withholding Period") commencing on the date of
occurrence of an event pursuant to which some or all of the Award Shares become
"substantially vested" within the meaning of Section 83 of the Code either a
certified check payable to the Company in the amount of all withholding or other
tax obligations (whether federal, state or local) imposed on the Company by
reason of the vesting of the Award Shares, or the Withholding Election described
in Section 1.4. Upon receipt of payment in full of all withholding tax
obligations, the Company shall cause a certificate representing the Award Shares
that are the Vested Award Shares to be issued and delivered to the Share
Custodian pursuant to the instructions of the Recipient as provided in Section
1.5.

         1.4 Optional Withholding Election. In lieu of paying the withholding
tax obligation in cash, as described in Section 1.3, the Recipient may elect to
have the actual number of Vested Award Shares reduced by the smallest number of
whole shares of Common Stock that, when multiplied by the fair market value of
the Common Stock on the Vesting Date as determined by the Committee, is
sufficient to satisfy the amount of the withholding tax obligations imposed on
the Company by reason of the vesting of the Award Shares (the "Withholding
Election"). The Recipient may make a Withholding Election only if all of the
following conditions are met:

                                       2
<PAGE>

                  (a) the Withholding Election must be made on or prior to the
         end of the Withholding Period by executing and delivering to the
         Company a properly completed Notice of Withholding Election, in
         substantially the form of EXHIBIT A attached hereto;

                  (b) any Withholding Election made will be irrevocable;
         however, the Committee may, in its sole discretion, disapprove and give
         no effect to any Withholding Election; and

                  (c) if the Recipient is required to file beneficial ownership
         reports pursuant to Subsection (a) of Section 16 of the Securities
         Exchange Act of 1934 (the "1934 Act"), at any time during a period in
         which some or all of the Award Shares vest, then either (A) the
         Withholding Election must be made in a manner which does not create
         liability of the Recipient under Section 16 of the 1934 Act or (B) the
         Company shall be entitled to withhold the smallest number of whole
         shares of Common Stock that, when multiplied by the fair market value
         of the Common Stock on the Vesting Date as determined by the Committee,
         is sufficient to satisfy such liability; and

                  (d) If the Recipient is an individual who is, on the relevant
         date, subject to the Company's Insider Trading Policy, then a
         Withholding Election may only be made to the extent that it does not
         violate the Company's Insider Trading Policy.

         1.5 Award Shares Held by the Share Custodian. The Recipient hereby
authorizes and directs the Company to deliver any share certificate issued by
the Company to evidence Award Shares to the Secretary of the Company or such
other officer of the Company as may be designated by the Committee (the "Share
Custodian") to be held by the Share Custodian until all of the Award Shares have
become Vested Award Shares, at which time such certificate shall be promptly
delivered to the Recipient. The Recipient hereby irrevocably appoints the Share
Custodian, and any successor thereto, as the true and lawful attorney-in-fact of
the Recipient with full power and authority to execute any stock transfer power
or other instrument necessary to transfer the Award Shares to the Company
pursuant to this Agreement, in the name, place, and stead of the Recipient. The
term of such appointment shall commence on the Award Date and shall continue
until all of the Award Shares have become Vested Award Shares. Notwithstanding
the foregoing, upon request to the Share Custodian, the Recipient shall be
entitled to the release from such custody arrangement and power of attorney of
any Vested Award Shares for which the amounts required to be paid under Sections
1.3 and 1.4 hereof have been paid. In the event the number of shares of Common
Stock is increased or reduced by changing par value, split-up, stock split,
reverse stock split, reclassification, merger, reorganization, consolidation, or
otherwise, and in the event of any distribution of Common Stock or other
securities of the Company in respect of the Common Stock, the Recipient agrees
that any certificate representing shares of Common Stock or other securities of
the Company issued as a result of any of the foregoing with respect to any Award
Shares held by the Share Custodian shall be delivered to the Share Custodian and
shall be subject to all of the provisions of this Agreement as if initially
purchased thereunder.

         1.6 Rights as Stockholder. During the period that the Share Custodian
holds the shares of Common Stock, the Recipient shall be entitled to all rights
applicable to shares of Common

                                       3
<PAGE>

Stock not so held; provided, however, that Recipient shall not be entitled to
dividends on any Unvested Award Shares on the record date for such dividend.

                                    SECTION 2
                      RESTRICTIONS AND FORFEITURE OF SHARES

         2.1 Forfeiture of Unvested Award Shares. If the Recipient ceases to
meet the requirement for Continuous Service for any reason, as determined by the
Committee in its sole and absolute discretion, all Unvested Award Shares shall
be forfeited to the Company, along with any and all rights or subsequent rights
attached thereto, effective immediately.

         2.2 Restrictions on Transfer of Unvested Award Shares. Without the
prior written consent of the Committee, the granting of which shall be within
the sole and complete discretion of the Committee, no Unvested Award Share may
be in any manner conveyed, pledged, assigned, transferred, hypothecated,
encumbered, or otherwise disposed of by the Recipient, in whole or in part.

                                    SECTION 3
                               GENERAL PROVISIONS

         3.1 Change in Capitalization. If the number of outstanding shares of
the Common Stock shall be increased or decreased by a change in par value,
split-up, stock split, reverse stock split, reclassification, distribution of
common stock dividend, or other similar capital adjustment, an appropriate
adjustment shall be made by the Committee in the number and kind of Award
Shares, such that the Recipient's proportionate interest shall be maintained as
before the occurrence of the event; provided, however, that no fractional shares
shall be issued in making such adjustment. All adjustments made by the Committee
under this Section shall be final, binding, and conclusive.

         3.2 Legends. Each certificate representing any Unvested Award Shares
shall be endorsed with the following legend and the Recipient shall not make any
transfer of the Unvested Award Shares without first complying with the
restrictions on transfer described in such legend:

                             TRANSFER IS RESTRICTED

         THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO FORFEITURE
         PROVISIONS AND RESTRICTIONS ON TRANSFER SET FORTH IN A RESTRICTED STOCK
         AWARD AGREEMENT PURSUANT TO WHICH THESE SECURITIES WERE ISSUED, A COPY
         OF WHICH IS AVAILABLE FROM THE COMPANY.

The Recipient agrees that the Company may also endorse any other legends
required by applicable federal or state securities laws. The Company need not
register a transfer of the Award Shares, and may also instruct its transfer
agent, if any, not to register the transfer of the Award Shares unless the
conditions specified in the foregoing legends are satisfied.

                                       4
<PAGE>

         3.3 Governing Laws. This Agreement shall be construed, administered and
enforced according to the laws of the State of Delaware.

         3.4 Successors. This Agreement shall be binding upon and inure to the
benefit of the heirs, legal representatives, successors, and permitted assigns
of the parties.

         3.5 Notice. Except as otherwise specified herein, all notices and other
communications under this Agreement shall be in writing and shall be deemed to
have been given if personally delivered or if sent by registered or certified
United States mail, return receipt requested, postage prepaid, addressed to the
proposed recipient at the last known address of the recipient. Any party may
designate any other address to which notices shall be sent by giving notice of
the address to the other parties in the same manner as provided herein.

         3.6 Severability. In the event that any one or more of the provisions
or portion thereof contained in this Agreement shall for any reason be held to
be invalid, illegal, or unenforceable in any respect, the same shall not
invalidate or otherwise affect any other provisions of this Agreement, and this
Agreement shall be construed as if the invalid, illegal or unenforceable
provision or portion thereof had never been contained herein.

         3.7 Entire Agreement. Subject to the terms and conditions of the Plan,
this Agreement expresses the entire understanding and agreement of the parties
with respect to the subject matter. Capitalized terms used in this Agreement
without definition shall have the meanings given to them in the Plan. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original but all of which shall constitute one and the same
instrument.

         3.8 Violation. Any transfer, pledge, sale, assignment, or hypothecation
of the Award Shares or any portion thereof in contravention of this Agreement
shall be a violation of the terms of this Agreement and shall be null, void and
without effect ab initio.

         3.9 Headings. Paragraph headings used herein are for convenience of
reference only and shall not be considered in construing this Agreement.

         3.10 Specific Performance. In the event of any actual or threatened
default in, or breach of, any of the terms, conditions and provisions of this
Agreement, the party or parties who are thereby aggrieved shall have the right
to specific performance and injunction in addition to any and all other rights
and remedies at law or in equity, and all such rights and remedies shall be
cumulative.

         3.11 No Employment or Service Rights Created. Neither the establishment
of the Plan nor the award of Award Shares hereunder shall be construed as giving
the Recipient the right to continued employment or service in any capacity with
the Company.

                                       5
<PAGE>

         IN WITNESS WHEREOF, the parties have executed and sealed this Agreement
to be effective as of the Award Date noted above.

INTERNET COMMERCE CORPORATION                RECIPIENT:

By:
    ---------------------------------        -----------------------------------

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

ATTEST:

By:
    ---------------------------------

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

                                       6
<PAGE>

                                    EXHIBIT A

                          INTERNET COMMERCE CORPORATION
                        RESTRICTED STOCK AWARD AGREEMENT

                         Notice of Withholding Election

TO:          Internet Commerce Corporation

FROM:
             --------------------------------------------

RE:          Withholding Election

         This election relates to the Restricted Stock Award identified in
Paragraph 3 below and is made pursuant to Section 1.4 thereof. I hereby certify
that:

         (1)      My correct name and social security number and my current
                  address are set forth at the end of this document.

         (2)      I am (check one, whichever is applicable).

                  [ ]      the original recipient of the Restricted Stock Award.

                  [ ]      the legal representative of the estate of the
                           original recipient of the Restricted Stock Award.

                  [ ]      a legatee of the original recipient of the Restricted
                           Stock Award.

                  [ ]      the legal guardian of the original recipient of the
                           Restricted Stock Award.

         (3)      The Restricted Stock Award pursuant to which this election is
                  made is dated and was issued under the Internet Commerce
                  Corporation 2005 Stock Incentive Plan (the "Plan") in the name
                  of ____________________ for ____________ shares of Common
                  Stock. This election relates to _________________ shares of
                  Common Stock issuable upon vesting of the Award Shares,
                  provided that the numbers set forth above shall be deemed
                  changed as appropriate to reflect stock splits and other
                  adjustments contemplated by the applicable Plan provisions.

         (4)      In connection with any future vesting of the Restricted Stock
                  Award with respect to the Award Shares, I hereby elect to have
                  certain of the shares issuable pursuant to the exercise
                  withheld by the Company for the purpose

<PAGE>

                  of having the value of the shares applied to pay federal,
                  state, and local, if any, taxes arising from the exercise. The
                  shares to be withheld shall have, as of the Tax Date
                  applicable to the exercise, a fair market value equal to the
                  minimum statutory tax withholding requirement under federal,
                  state, and local law in connection with the exercise.

         (5)      This Withholding Election is made prior to the Tax Date and is
                  otherwise properly made pursuant to Section 1.4 of the Plan.

         (6)      I understand that this Withholding Election may not be
                  revised, amended or revoked by me but is subject to the
                  disapproval of the Committee.

         (7)      I further understand that, if this Withholding Election is not
                  disapproved by the Committee, the Company shall withhold from
                  the Vested Award Shares a number of shares of Common Stock
                  having the value specified in Paragraph 4 above.

         (8)      The Plan has been made available to me by the Company, I have
                  read and understand the Plan and I have no reason to believe
                  that any of the conditions therein to the making of this
                  Withholding Election have not been met. Capitalized terms used
                  in this Notice of Withholding Election without definition
                  shall have the meanings given to them in the Plan.

Dated:
      ------------------------------         -----------------------------------
                                             Signature

Taxpayer Identification (Social Security)
Number:

------------------------------------         -----------------------------------
                                             Printed Name:
Address:

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

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

                                       A-2exv10w21

 

Exhibit 10.21

 

 

CREDIT AGREEMENT

by and between

INTERNATIONAL DISPLAYWORKS, INC., a Delaware corporation

and

WELLS FARGO HSBC TRADE BANK, N.A.

Dated as of

March 30, 2005

 

 

Exhibit A
— Addendum to Credit Agreement

Exhibit B — Revolving Credit Facility Supplement

Exhibit C — Collateral/Credit Support Document

 

 

			
	WELLS FARGO HSBC TRADE BANK
	 	CREDIT AGREEMENT

INTERNATIONAL DISPLAYWORKS, INC., a Delaware corporation (“Borrower”), organized under the laws of
the State of Delaware whose chief executive office is located at the address specified after its
signature to this Agreement (“Borrower’s Address”) and WELLS FARGO HSBC TRADE BANK, N.A. (“Trade
Bank”), whose address is specified after its signature to this Agreement, have entered into this
CREDIT AGREEMENT as of March 30, 2005 (“Effective Date”). All references to this
“Agreement” include those covenants included in the Addendum to Agreement (“Addendum”) attached as
Exhibit A hereto.

I. CREDIT FACILITY

     1.1 The Facility. Subject to the terms and conditions of this Agreement, Trade Bank
will make available to Borrower a Revolving Credit Facility (“Facility”) for which a Facility
Supplement (“Supplement”) is attached as Exhibit B hereto. Additional terms for the Facility (and
each subfacility thereof (“Subfacility”)) are set forth in the Supplement. The Facility will be
available from the Closing Date up to and until March 31, 2006 (“Facility Termination Date”).
Collateral and credit support required for the Facility is set forth in Exhibit C hereto.
Definitions for those capitalized terms not otherwise defined are contained in Article 8 below.

     1.2 Credit Extension Limit. The aggregate outstanding amount of all Credit Extensions
may at no time exceed Twenty Million Dollars ($20,000,000) (“Overall Credit Limit”). The aggregate
outstanding amount of all Credit Extensions outstanding at any time under Revolving Credit Facility
may not exceed that amount specified as the “Credit Limit” in the Supplement for the Facility, and
the aggregate outstanding amount of all Credit Extensions outstanding at any time under each
Subfacility (or any subcategory thereof) may not exceed that amount specified as the “Credit
Sublimit” in the Supplement for the Facility. An amount equal to 100% of each unfunded Credit
Extension shall be used in calculating the outstanding amount of Credit Extensions under this
Agreement.

The Subfacility(s) of the Revolving Credit Facility are as follows:

	 	(a)	 	Sight Commercial Letters of Credit/Standby Letters of Credit

	 
	 	(b)	 	Acquistion Subfacility

     1.3

Overadvance. All Credit Extensions made hereunder shall be added to and deemed
part of the Obligations when made. If, at any time and for any reason, the aggregate outstanding
amount of all Credit Extensions made pursuant to this Agreement exceeds the dollar limitation in
Section 1.6, then Borrower shall immediately pay to Trade Bank on demand, in cash, the amount of
such excess.

     1.4 Repayment; Interest and Fees. Each funded Credit Extension shall be repaid by
Borrower, and shall bear interest from the date of disbursement at those per annum rates and such
interest shall be paid, at the times specified in the Supplement, Note or Facility Document.
Borrower agrees to pay to Trade Bank with respect to (a) the Revolving Credit Facility, interest at
a per annum rate equal to (i) the Prime Rate plus .50% as specified in the Note, or (ii) Wells
Fargo’s LIBOR Rate plus 3.0% as specified in the Note, and (b) the Subfacilities, the fees
specified in the Supplement as well as those fees specified in the relevant Facility Document(s).
Interest and fees will be calculated on the basis of a 360 day year, actual days elapsed. Any
overdue payments of principal (and interest to the extent permitted by law) shall bear interest at
a per annum floating rate equal to the Prime Rate plus 5%.

     1.5 Prepayments. Credit Extensions under any Facility may only be prepaid in
accordance with the terms of the Supplement. At the time of any prepayment (including, but not
limited to, any prepayment which is a result of the occurrence of an Event of Default and an
acceleration of the Obligations) Borrower will pay to Trade Bank all interest accrued on the amount
so prepaid to the date of such prepayment and all costs, expenses and fees specified in the Loan
Documents.

     1.6 Borrowing Base. If at any time the aggregate amount of Credit Extentions is equal
to or greater than $12,000,000, then Borrower agrees that it will immediately execute an amendment
to the Agreement, in form and substance acceptable to Trade Bank in its sole and absolute
discretion, which will include, but not be limited to, an accounts
receivable borrowing base formula, to include but not be limited to, an 80% advance
rate against eligible

Page 1

 

accounts receivables and which shall exclude from eligibility all accounts
receivable which are 90 days past due (except for accounts receivable owing by Borrower’s customer
Jabil Circuit Italia which will be considered ineligible if they remain unpaid 120 days or more
after the invoice date.)

II. REPRESENTATIONS AND WARRANTIES

     Borrower represents and warrants to Trade Bank that the following representations and
warranties are true and correct:

     2.1 Legal Status. Borrower is duly organized and existing and in good standing under
the laws of the jurisdiction indicated in this Agreement, and is qualified or licensed to do
business in all jurisdictions in which such qualification or licensing is required and in which the
failure to so qualify or to be so licensed could have a material adverse affect on Borrower.

     2.2 Authorization and Validity. The execution, delivery and performance of this
Agreement, and all other Loan Documents to which Borrower is a party, have been duly and validly
authorized, executed and delivered by Borrower and constitute legal, valid and binding agreements
of Borrower, and are enforceable against Borrower in accordance with their respective terms.

     2.3 Borrower’s Name. The name of Borrower set forth at the end of this Agreement is
its correct name. If Borrower is conducting business under a fictitious business name, Borrower is
in compliance with all laws relating to the conduct of such business under such name.

     2.4 Financial Condition and Statements. All financial statements of Borrower delivered
to Trade Bank have been prepared in conformity with GAAP, and completely and accurately reflect the
financial condition of Borrower (and any consolidated Subsidiaries) at the times and for the
periods stated in such financial statements. Neither Borrower nor any Subsidiary has any material
contingent liability not reflected in the aforesaid financial statement. Since the date of the
financial statements delivered to Trade Bank for the last fiscal period of Borrower to end before
the Effective Date, there has been no material adverse change in the financial condition, business
or prospects of Borrower. Borrower is solvent.

     2.5 Litigation. Except as disclosed in writing to Trade Bank prior to the Effective
Date, there is no action, claim, suit, litigation, proceeding or investigation pending or (to best
of Borrower’s knowledge) threatened by or against or affecting Borrower or any Subsidiary in any
court or before any governmental authority, administrator or agency which may result in (a) any
material adverse change in the financial condition or business of Borrower’s, or (b) any material
impairment of the ability of Borrower to carry on its business in substantially the same manner as
it is now being conducted.

     2.6 No Violation. The execution, delivery, and performance by Borrower of each of the
Loan Documents do not violate any provision of any law or regulation, or contravene any provision
of the Articles of Incorporation or By-Laws of Borrower, or result in a breach of or constitute a
default under any contract, obligation, indenture, or other instrument to which Borrower is a party
or by which Borrower may be bound.

     2.7 Income Tax Returns. Borrower has no knowledge of any pending assessments or
adjustments of its income tax payable with respect to any year.

     2.8 No Subordination. There is no agreement, indenture, contract, or instrument to
which Borrower is a party or by which Borrower may be bound that requires the subordination in
right of payment of any of Borrower’s obligations subject to this Agreement to any other obligation
of Borrower.

     2.9 ERISA. Borrower is in compliance in all material respects with all applicable
provisions of the Employee Retirement Income Security Act of 1974, as amended or recodified from
time to time (“ERISA”); Borrower has not violated any provision of any defined employee pension
benefit plan (as defined in ERISA) maintained or contributed to by Borrower (each, a “Plan”); no
Reportable Event, as defined in ERISA, has occurred and is continuing with respect to any Plan
initiated by Borrower; Borrower has met its minimum funding requirements under ERISA with respect
to each Plan; and each Plan will be able to fulfill its benefit obligations as they come due in accordance
with the Plan documents and under GAAP.

Page 2

 

     2.10 Other Obligations. Except as disclosed in writing to Trade Bank prior to the
Effective Date, neither Borrower nor any Subsidiary are in default of any obligation for borrowed
money, any purchase money obligation or any material lease, commitment, contract, instrument or
obligation.

     2.11 No Defaults. No Event of Default, and event which with the giving of notice or
the passage of time or both would constitute an Event of Default, has occurred and is continuing.

     2.12 Information Provided to Trade Bank. The information provided to the Trade Bank
concerning Borrower’s business is true and correct.

     2.13 Environmental Matters. Except as disclosed by Borrower to Trade Bank in writing
prior to the Effective Date, Borrower (as well as any Subsidiary) is each in compliance in all
material respects with all applicable Federal or state environmental, hazardous waste, health and
safety statutes, and any rules or regulations adopted pursuant thereto, which govern or affect any
Borrower’s or any Subsidiary’s operations and/or properties, including without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Superfund
Amendments and Reauthorization Act of 1986, the Federal Resource Conservation and Recovery Act of
1976, the Federal Toxic Substances Control Act and the California Health and Safety Code, as any of
the same may be amended, modified or supplemented from time to time. None of the operations of
Borrower or of any Subsidiary is the subject of any Federal or state investigation evaluating
whether any remedial action involving a material expenditure is needed to respond to a release of
any toxic or hazardous waste or substance into the environment.

III. CONDITIONS TO EXTENDING FACILITIES

     3.1 Conditions to Initial Credit Extension. The obligation of Trade Bank to make the
first Credit Extension is subject to the fulfillment to Trade Bank’s satisfaction of the following
conditions:

	 	(a)	 	Approval of Trade Bank Counsel. All legal matters relating
to making the Facility available to Borrower must be satisfactory to counsel for
Trade Bank.
	 
	 	(b)	 	Documentation. Trade Bank must have received, in form and
substance satisfactory to Trade Bank, the following documents and instruments
duly executed and in full force and effect:

	 	(1)	 	a corporate borrowing resolution and incumbency
certificate if Borrower is a corporation, a partnership or joint venture
borrowing certificate if Borrower is a partnership or joint venture, and a
limited liability company borrowing certificate if Borrower is a limited
liability company;
	 
	 	(2)	 	the Facility Documents for the Facility, including,
but not limited to, note(s) (“Notes”) for the Revolving Credit Facility,
Trade Bank’s standard Commercial Letter of Credit Agreement or Standby
Letter of Credit Agreement for any letter of credit Facility;
	 
	 	(3)	 	those guarantees, security agreements, deeds of
trust, subordination agreements, intercreditor agreements, factoring
agreements, tax service contracts, and other Collateral Documents required
by Trade Bank to evidence the collateral/credit support specified in the
Supplement;
	 
	 	(4)	 	if an audit or inspection of any books, records or
property is specified in the Supplement for the Facility, an audit or
inspection report from Wells Fargo or another auditor or inspector
acceptable to Trade Bank reflecting values and property conditions
satisfactory to Trade Bank; and
	 
	 	(5)	 	if insurance is required in the Addendum, the
insurance policies specified in the Addendum (or other satisfactory proof
thereof) from insurers acceptable to Trade Bank.

Page 3

 

     3.2 Conditions to Making Each Credit Extension. The obligation of Trade Bank to make
each Credit Extension is subject to the fulfillment to Trade Bank’s satisfaction of the following
conditions:

	 	(a)	 	Representations and Warranties. The representations and
warranties contained in this Agreement, the Facility Documents and the Collateral
Documents will be true and correct on and as of the date of the Credit Extension
with the same effect as though such representations and warranties had been made
on and as of such date;
	 
	 	(b)	 	Documentation. Trade Bank must have received, in form and
substance satisfactory to Trade Bank, the following documents and instruments
duly executed and in full force and effect:

	 	(1)	 	if the Credit Extension is the issuance of a
Commercial Letter of Credit, Trade Bank’s standard Application For
Commercial Letter of Credit or standard Application and Agreement For
Commercial Letter of Credit;
	 
	 	(2)	 	if the Credit Extension is the issuance of a Standby
Letter of Credit, Trade Bank’s standard Application For Standby Letter of
Credit or standard Application and Agreement For Standby Letter of Credit;
	 
	 	(3)	 	if a Borrowing Base Certificate is required for the
Credit Extension, a Borrowing Base Certificate demonstrating compliance
with the requirements for such Credit Extension.

	 	(c)	 	Fees. Trade Bank must have received any fees required by
the Loan Documents to be paid at the time such Credit Extension is made.

IV. AFFIRMATIVE COVENANTS

     Borrower covenants that so long as Trade Bank remains committed to make Credit Extensions to
Borrower, and until payment of all Obligations and Credit Extensions, Borrower will comply with
each of the following covenants: (For purposes of this Article IV, and Article V below, reference
to “Borrower” may also extend to Borrower’s subsidiaries, if so specified in the Addendum.)

     4.1 Punctual Payments. Punctually pay all principal, interest, fees and other
Obligations due under this Agreement or under any Loan Document at the time and place and in the
manner specified herein or therein.

     4.2 Notification to Trade Bank. Promptly, but in no event more than 5 calendar days
after the occurrence of each such event, provide written notice in reasonable detail of each of the
following:

	 	(a)	 	Occurrence of a Default. The occurrence of any Event of
Default or any event which with the giving of notice or the passage of time or
both would constitute an Event of Default;
	 
	 	(b)	 	Borrower’s Trade Names; Place of Business. Any change of
Borrower’s (or any Subsidiary’s) name, trade name or place of business, or chief
executive officer;
	 
	 	(c)	 	Litigation. Any action, claim, proceeding, litigation or
investigation threatened or instituted by or against or affecting Borrower (or
any Subsidiary) in any court or before any government authority, administrator or
agency which may materially and adversely affect Borrower’s (or any Subsidiary’s)
financial condition or business or Borrower’s ability to carry on its business in
substantially the same manner as it is now being conducted;
	 
	 	(d)	 	Uninsured or Partially Uninsured Loss. Any uninsured or
partially uninsured loss through liability or property damage or through fire,
theft or any other cause affecting Borrower’s (or any Subsidiary’s) property in
excess of the aggregate amount required hereunder;
	 
	 	(e)	 	Reports Made to Insurance Companies. Copies of all material
reports made to insurance companies; and

Page 4

 

	 	(f)	 	ERISA. The occurrence and nature of any Reportable Event or
Prohibited Transaction, each as defined in ERISA, or any funding deficiency with
respect to any Plan.

     4.3 Books and Records. Maintain at Borrower’s address books and records in accordance
with GAAP, and permit any representative of Trade Bank, at any reasonable time, to inspect, audit
and examine such books and records, to make copies of them, and to inspect the properties of
Borrower.

     4.4 Tax Returns and Payments. Timely file all tax returns and reports required by
foreign, federal, state and local law, and timely pay all foreign, federal, state and local taxes,
assessments, deposits and contributions owed by Borrower. Borrower may, however, defer payment of
any contested taxes, provided that Borrower (i) in good faith contests Borrower’s obligation to pay
the taxes by appropriate proceedings promptly instituted and diligently conducted, (ii) notifies
Trade Bank in writing of the commencement of, and any material development in, the proceedings,
(iii) posts bonds or takes any other steps required to keep the contested taxes from becoming a
lien upon any of the Collateral, and (iv) makes provision, to Trade Bank’s satisfaction, for
eventual payment of such taxes in the event Borrower is obligated to make such payment.

     4.5 Compliance with Laws. Comply in all material respects with the provisions of all
foreign, federal, state and local laws and regulations relating to Borrower, including, but not
limited to, those relating to Borrower’s ownership of real or personal property, the conduct and
licensing of Borrower’s business, and health and environmental matters.

     4.6 Taxes and Other Liabilities. Pay and discharge when due any and all indebtedness,
obligations, assessments and taxes, both real and personal, including without limitation federal
and state income taxes and state and local property taxes and assessments, except (a) such as
Borrower may in good faith contest or as to which a bona fide dispute may arise, and (b) for which
Borrower has made provision, to Trade Bank’s satisfaction, for eventual payment thereof in the
event that Borrower is obligated to make such payment.

     4.7 Insurance. Maintain and keep in force insurance of the types and in amounts
customarily carried in lines of business similar to that of Borrower, including, but not limited
to, fire, extended coverage, public liability, flood, property damage and workers’ compensation,
with all such insurance to be in amounts satisfactory to Trade Bank and deliver to Trade Bank from
time to time at Trade Bank’s request schedules setting forth all insurance then in effect. All
insurance policies shall name Trade Bank as an additional loss payee, and shall contain a lenders
loss payee endorsement in form reasonably acceptable to Trade Bank. (Upon receipt of the proceeds
of any such insurance, Trade Bank shall apply such proceeds in reduction of the outstanding funded
Credit Extensions and shall hold any remaining proceeds as collateral for the outstanding unfunded
Credit Extensions, as Trade Bank shall determine in its sole discretion, except that, provided no
Event of Default has occurred, Trade Bank shall release to Borrower insurance proceeds with respect
to equipment totaling less than $100,000, which shall be utilized by Borrower for the replacement
of the equipment with respect to which the insurance proceeds were paid, if Trade Bank receives
reasonable assurance that the insurance proceeds so released will be so used.) If Borrower fails to
provide or pay for any insurance, Trade Bank may, but is not obligated to, obtain the insurance at
Borrower’s expense.

     4.8 Further Assurances. At Trade Bank’s request and in form and substance satisfactory
to Trade Bank, execute all documents and take all such actions at Borrower’s expense as Trade Bank
may deem reasonably necessary or useful to perfect and maintain Trade Bank’s perfected security
interest in the Collateral and in order to fully consummate all of the transactions contemplated by
the Loan Documents.

V. NEGATIVE COVENANTS

     Borrower covenants that so long as Trade Bank remains committed to make any Credit Extensions
to Borrower and until all Obligations and Credit Extensions have been paid, Borrower will not:

     5.1 Merge or Consolidation, Transfer of Assets. Merge into or consolidate with any
other entity; make any substantial change in the nature of Borrower’s business as conducted as of
the date hereof; subject to Section 5.4 hereof, acquire all or substantially all of the assets of
any other entity; nor sell, lease, transfer or otherwise dispose of all or a substantial or
material portion of Borrower’s assets except in the ordinary course of its business.

Page 5

 

     5.2 Use of Proceeds. Borrower will not use the proceeds of any Credit Extension except
for the purposes, if any, specified for such Credit Extension in the Supplement covering the
Facility under which such Credit Extension is made.

     5.3 Liens. Mortgage, pledge, grant or permit to exist a security interest in, or lien
upon, all or any portion of Borrower’s assets now owned or hereafter acquired, except any of the
foregoing in favor of Trade Bank or which is existing as of, and disclosed to Trade Bank in writing
prior to, the date hereof.

     5.4 Acquisitions of Assets. Borrower will not acquire any assets or enter into any
other transaction outside the ordinary course of Borrower’s business except acquisitions of
businesses in the same line of business as Borrower (each, an “Acquisition” and collectively,
“Acquisitions”) provided, however, that prior to each proposed Acquisition, Trade Bank must review
and approve, in its sole and absolute discretion, a pro forma balance sheet (to include income
statement and balance sheet), reflecting such acquisition and such other information as Trade Bank
shall reasonably request; and provided further that all Acquisitions permitted hereunder shall not
exceed $10,000,000 in the aggregate prior to the Facility Terminantion Date.

     5.5 Loans and Investments. Borrower will not make any loans or advances to, or
investments in, any person or entity except for accounts receivable created in the ordinary course
of Borrower’s business.

     5.6 Indebtedness For Borrowed Money. Borrower will not incur any indebtedness for
borrowed money, except to Trade Bank and except for indebtedness subordinated to the Obligations by
an instrument or agreement in form acceptable to Trade Bank.

     5.7 Guarantees. Borrower will not guarantee or otherwise become liable with respect to
the obligations of any other person or entity, except for endorsement of instruments for deposit
into Borrower’s account in the ordinary course of Borrower’s business.

     5.8 Dividends and Distributions of Capital of C Corporation. If Borrower is a
corporation, Borrower will not pay or declare any dividends or make any distribution of capital on
Borrower’s stock (except for dividends payable solely in stock of Borrower), nor redeem, retire,
purchase or otherwise acquire, directly or indirectly, any shares of any class of Borrower’s stock
now or hereafter outstanding.

     5.9 Investments in, or Acquisitions of Subsidiaries. Subject to Section 5.4 hereof,
Borrower will not make any investments in, or form or acquire, any subsidiaries.

     5.10 Capital Expenditures. Borrower shall not make any capital expenditures in any
fiscal year, except for an aggregate amount not to exceed $13,000,000, plus the amount of any cash
equity, for the fiscal year ending October 31, 2005.

VI. EVENTS OF DEFAULT AND REMEDIES

     6.1 Events of Default. The occurrence of any of the following shall constitute an
“Event of Default”:

	 	(a)	 	Failure to Make Payments When Due. Borrower’s failure to
pay principal, interest, fees or other amounts when due under any Loan Document.
	 
	 	(b)	 	Failure to Perform Obligations. Any failure by Borrower to
comply with any covenant or obligation in this Agreement or in any Loan Document
(other than those referred to in subsection (a)above), and such default shall
continue for a period of twenty calendar days from the earlier of (i) Borrower’s
failure to notify Trade Bank of such Event of Default pursuant to Section 4.2(a)
above, or (ii) Trade Bank’s notice to Borrower of such Event of Default.
	 
	 	(c)	 	Untrue or Misleading Warranty or Statement. Any warranty,
representation, financial statement, report or certificate made or delivered by
Borrower under any Loan Document is untrue or misleading in any material respect
when made or delivered.

Page 6

 

	 	(d)	 	Defaults Under Other Loan Documents. Any “Event of Default”
occurs under any other Loan Document; any Guaranty is no longer in full force and
effect (or any claim thereof made by Guarantor) or any failure of a Guarantor to
comply with the provisions thereof; or any breach of the provisions of any
Subordination Agreement or Intercreditor Agreement by any party other than the
Trade Bank.
	 
	 	(e)	 	Defaults Under Other Agreements or Instruments. Any
material default in the payment or performance of any obligation, or the
occurrence of any l material event of default, under the terms of any other
agreement or instrument pursuant to which Borrower, any Subsidiary or any
Guarantor or general partner of Borrower has incurred any debt or other material
liability to any person or entity.
	 
	 	(f)	 	Concealing or Transferring Property. Borrower conceals,
removes or transfers any part of its property with intent to hinder, delay or
defraud its creditors, or makes or suffers any transfer of any of its property
which may be fraudulent under any bankruptcy, fraudulent conveyance or similar
law.
	 
	 	(g)	 	Judgments and Levies Against Borrower. The filing of a
notice of judgment lien against Borrower, or the recording of any abstract of
judgment against Borrower, in any county in which Borrower has an interest in
real property, or the service of a notice of levy and/or of a writ of attachment
or execution, or other like process, against the assets of Borrower, or the entry
of a judgment against Borrower.
	 
	 	(h)	 	Event or Condition Impairing Payment or Performance. Any
event occurs or condition arises which Trade Bank in good faith believes impairs
or is substantially likely to impair the prospect of payment or performance by
Borrower of the Obligations, including, but not limited to any material adverse
change in Borrower’s financial condition, business or prospects.
	 
	 	(i)	 	Voluntary Insolvency. Borrower, any Subsidiary or any
Guarantor (i) becomes insolvent, (ii) suffers or consents to or applies for the
appointment of a receiver, trustee, custodian or liquidator of itself or any of
its property, (iii) generally fails to pay its debts as they become due, (iv)
makes a general assignment for the benefit of creditors, or (v) files a voluntary
petition in bankruptcy, or seeks reorganization, in order to effect a plan or
other arrangement with creditors or any other relief under the Bankruptcy Reform
Act, Title 11 of the United States Code, as amended or recodified from time to
time (“Bankruptcy Code”), or under any state or Federal law granting relief to
debtors, whether now or hereafter in effect.
	 
	 	(j)	 	Involuntary Insolvency. Any involuntary petition or
proceeding pursuant to the Bankruptcy Code or any other applicable state or
federal law relating to bankruptcy, reorganization or other relief for debtors is
filed or commenced against Borrower, any Subsidiary or Guarantor, or an order for
relief is entered against it by any court of competent jurisdiction under the
Bankruptcy Code or any other applicable state or federal law relating to
bankruptcy, reorganization or other relief for debtors.
	 
	 	(k)	 	Change in Ownership. Any change in the ownership of
Borrower, any general partner of Borrower or any Guarantor which the Trade Bank
determines, in its sole discretion, may adversely affect the creditworthiness of
Borrower or credit support for the Obligations.

     6.2 Remedies. Upon the occurrence of any Event of Default, or at any time thereafter,
Trade Bank, at its option, and without notice or demand of any kind (all of which are hereby
expressly waived by Borrower), may do any one or more of the following: (a) terminate Trade Bank’s
obligation to make Credit Extensions or to make available to Borrower the Facility or other
financial accommodations; (b) accelerate and declare all or any part of the Obligations to be
immediately due, payable, and performable, notwithstanding any deferred or installment payments
allowed by any instrument evidencing or relating to any Credit Extension; and/or (c) exercise all
its rights, powers and remedies available under the Loan Documents, or accorded by law, including,
but not limited to, the right to resort to any or all Collateral or other security for any of the
Obligations and to exercise any or all of the rights of a beneficiary or secured party pursuant to
applicable law. Notwithstanding the provisions in the foregoing sentence, if any Event of Default
set out in subsections

Page 7

 

(i) and (j) of Section 6.1 above shall occur, then all the remedies
specified in the preceding sentence shall automatically take effect without notice or demand of any
kind (all of which are hereby expressly waived by Borrower) with respect to any and all
Obligations. All rights, powers and remedies of Trade Bank may be exercised at any time by Trade
Bank and from time to time after the occurrence of an Event of Default, are cumulative and not
exclusive, and shall be in addition to any other rights, powers or remedies provided by law or
equity.

VII. GENERAL PROVISIONS

     7.1
Notices. All notices to be given under this Agreement shall be in writing and
shall be given personally or by regular first-class mail, by certified mail return receipt
requested, by a private delivery service which obtains a signed receipt, or by facsimile
transmission addressed to Trade Bank or Borrower at the address indicated after their signature to
this Agreement, or at any other address designated in writing by one party to the other party.
Trade Bank is hereby authorized by Borrower to act on such instructions or notices sent by
facsimile transmission or telecommunications device which Trade Bank believes come from Borrower.
All notices shall be deemed to have been given upon delivery, in the case of notices personally
delivered or delivered by private delivery service, upon the expiration of 3 calendar days
following the deposit of the notices in the United States mail, in the case of notices deposited in
the United States mail with postage prepaid, or upon receipt, in the case of notices sent by
facsimile transmission.

     7.2 Waivers. No delay or failure of Trade Bank in exercising any right, power or
remedy under any of the Loan Documents shall affect or operate as a waiver of such right, power or
remedy; nor shall any single or partial exercise of any such right, power or remedy preclude, waive
or otherwise affect any other or further exercise thereof or the exercise of any other right, power
or remedy. Any waiver, consent or approval by Trade Bank under any of the Loan Documents must be in
writing and shall be effective only to the extent set out in such writing.

     7.3 Benefit of Agreement. The provisions of the Loan Documents shall be binding upon
and inure to the benefit of the respective successors, assigns, heirs, executors, administrators,
beneficiaries and legal representatives of Borrower and Trade Bank; provided, however, that
Borrower may not assign or transfer any of its rights under any Loan Document without the prior
written consent of Trade Bank, and any prohibited assignment shall be void. No consent by Trade
Bank to any assignment shall release Borrower from its liability for the Obligations unless such
release is specifically given by Trade Bank to Borrower in writing. Trade Bank reserves the right
to sell, assign, transfer, negotiate or grant participations in all or any part of, or any interest
in, Trade Bank’s rights and benefits under each of the Loan Documents. In connection therewith,
Trade Bank may disclose any information relating to the Facility, Borrower or its business, or any
Guarantor or its business.

     7.4 Joint and Several Liability. If Borrower consists of more than one person or
entity, the liability of each of them shall be joint and several, and the compromise of any claim
with, or the release of, any one such Borrower shall not constitute a compromise with, or a release
of, any other such Borrower.

     7.5 No Third Party Beneficiaries. This Agreement is made and entered into for the sole
protection and benefit of Borrower and Trade Bank and their respective permitted successors and
assigns, and no other person or entity shall be a third party beneficiary of, or have any direct or
indirect cause of action or claim in connection with, any of the Loan Documents to which it is not
a party.

     7.6 Governing Law and Jurisdiction. This Agreement shall, unless provided differently
in any Loan Document, be governed by, and be construed in accordance with, the internal laws of the
State of California, except to the extent Trade Bank has greater rights or remedies under federal
law whether as a national bank or otherwise. Borrower and Trade Bank (a) agree that all actions and
proceedings relating directly or indirectly to this Agreement shall be litigated in courts located
within California; (b) consent to the jurisdiction of any such court and consent to service of
process in any such action or proceeding by personal delivery or any other method permitted by law;
and (c) waive any and all rights Borrower may have to object to the jurisdiction of any such court
or to transfer or change the venue of any such action or proceeding.

     7.7 Mutual Waiver of Jury Trial. Borrower and Trade Bank each hereby waive the right
to trial by jury in any action or proceeding based upon, arising out of, or in any way relating to,
(a) any Loan Document, (b) any other present or future agreement, instrument or document between
Trade Bank and Borrower, or (c) any conduct, act or omission of Trade Bank or Borrower or any of
their directors, officers, employees, agents, attorneys or any other persons or entities

Page 8

 

affiliated
with Trade Bank or Borrower, which waiver will apply in all of the mentioned cases whether the case
is a contract or tort case or any other case. Borrower represents and warrants that no officer,
representative or agent of Trade Bank has represented, expressly or otherwise, that Trade Bank
would not seek to enforce this waiver of jury trial.

     7.8 Severability. Should any provision of any Loan Document be prohibited by, or
invalid under applicable law, or held by any court of competent jurisdiction to be void or
unenforceable, such defect shall not affect, the validity of the other provisions of the Loan
Documents.

     7.9 Entire Agreement; Amendments. This Agreement and the other Loan Documents are the
final, entire and complete agreement between Borrower and Trade Bank concerning the Credit
Extensions and the Facility; supersede all prior and contemporaneous negotiations and oral
representations and agreements. There are no oral understandings, representations or agreements
between the parties concerning the Credit Extensions or the Facility which are not set forth in the
Loan Documents. This Agreement and the Supplement may not be waived, amended or superseded except
in a writing executed by Borrower and Trade Bank.

     7.10
Collection of Payments. Unless otherwise specified in any Loan Document, other
than this Agreement or any Note, all principal, interest and any fees due to Trade Bank by Borrower
under this Agreement, the Addendum, any Supplement, any Facility Document, any Collateral Document
or any Note, will be paid by Trade Bank having Wells Fargo debit any of Borrower’s accounts with
Wells Fargo and forwarding such amount debited to Trade Bank, without presentment, protest, demand
for reimbursement or payment, notice of dishonor or any other notice whatsoever, all of which are
hereby expressly waived by Borrower. Such debit will be made at the time principal, interest or any
fee is due to Trade Bank pursuant to this Agreement, the Addendum, any Supplement, any Facility
Document, any Collateral Document or any Note.

     7.11 Costs, Expenses and Attorneys’ Fees. Borrower will reimburse Trade Bank for all
costs and expenses, including, but not limited to, reasonable attorneys’ fees and expenses (which
counsel may be Trade Bank or Wells Fargo employees), expended or incurred by Trade Bank in the
preparation and negotiation of this Agreement, the Notes, the Collateral Documents, the Addendum,
and the Facility Documents, in amending this Agreement, the Collateral Documents, the Notes, the
Addendum, or the Facility Documents, in collecting any sum which becomes due Trade Bank on the
Notes, under this Agreement, the Collateral Documents, the Addendum, the Supplement, or any of the
Facility Documents, in the protection, perfection, preservation and enforcement of any and all
rights of Trade Bank in connection with this Agreement, the Notes, any of the Collateral Documents,
the Supplement, any of the Addendum, or any of the Facility Documents, including, without
limitation, the fees and costs incurred in any out-of-court work out or a bankruptcy or
reorganization proceeding.

VIII. DEFINITIONS

     8.1 “Accounts Receivable” means all presently existing and hereafter arising “Rights
to Payment” (as that term is defined in the “Continuing Security Agreement – Rights to Payment and
Inventory” executed by Borrower in favor of Trade Bank) which arise from the sale, lease or other
disposition of Inventory, or from performance of contracts for service, manufacture, construction
or repair, together with all goods returned by Borrower’s customers in connection with any of the
foregoing.

     8.2 “Agreement” means this Agreement and the Addendum attached hereto, as corrected or
modified from time to time by Trade Bank and Borrower.

     8.3 “Banking Day” means each day except Saturday, Sunday and a day specified as a
holiday by federal or California statute.

     8.4 “Closing Date” means the date on which the first Credit Extension is made.

     8.5 “Collateral” means all property securing the Obligations.

     8.6 “Collateral Documents” means those security agreement(s), deed(s) of trust,
guarantee(s), subordination agreement(s), intercreditor agreement(s), and other credit support
documents and instruments required by the Trade Bank to effect the collateral and credit support
requirements set forth in the Supplement with respect to the Facility.

Page 9

 

     8.7
“Credit Extension” means each extension of credit under the Facility (whether
funded or unfunded), including, but not limited to, (a) the issuance of sight or usance commercial
letters of credit or commercial letters of credit supported by back-up letters of credit, (b) the
issuance of standby letters of credit, (c) the issuance of shipping guarantees, (d) the making of
revolving credit working capital loans, (e) the making of loans against imports for letters of
credit, (f) the making of clean import loans outside letters of credit, (g) the making of advances
against export orders, (h) the making of advances against export letters of credit, (i) the making
of advances against outgoing collections, (j) the making of term loans, and (k) the entry into
foreign exchange contracts.

     8.8 “Credit Limit” means, with respect to the any Facility, the amount specified under
the column labeled “Credit Limit” in the Supplement for that related Facility.

     8.9
“Credit Sublimit” means, with respect to any Subfacility, the amount specified
after the name of that Subfacility under the column labeled “Credit Sublimit” in the Supplement for
the related Facility.

     8.10
“Dollars” and “$” means United States dollars.

     8.11 “Facility Documents” means, with respect to the Facility, those documents
specified in the Supplement for the Facility, and any other documents customarily required by Trade
Bank for said Facility.

     8.12 “GAAP” means generally accepted accounting principles, which are applicable to
the circumstances, as of the date of determination, set out in the opinions and pronouncements of
the Accounting Principles Board and the American Institute of Certified Public Accountants and in
the statements and pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of the accounting
profession.

     8.13 “Inventory” has the meaning assigned to such term in the “Continuing Security
Agreement – Rights to Payment and Inventory” executed by Borrower in favor of Trade Bank.

     8.14 “Loan Documents” means this Agreement, the Addendum, the Supplement, the Facility
Documents and the Collateral Documents.

     8.15 “Note” has the meaning specified in Section 3.1(b)(2) above.

     8.16 “Obligations” means (a) the obligation of Borrower to pay principal, interest and
fees on all funded Credit Extensions and fees on all unfunded Credit Extensions, and (b) the
obligation of Borrower to pay and perform when due all other indebtedness, liabilities, obligations
and covenants required under the Loan Documents.

     8.17 “Person” means and includes natural persons, corporations, limited partnerships,
general partnerships, joint stock companies, joint ventures, associations, companies, trusts,
banks, trust companies, land trusts, business trusts or other organizations, whether or not legal
entities, and governments and agencies and political subdivisions thereof.

     8.18 “Prime Rate” means the rate most recently announced by Wells Fargo at its
principal office in San Francisco, California as its “Prime Rate”, with the understanding that the
Prime Rate is one of Wells Fargo’s base rates and serves as the basis upon which effective rates of
interest are calculated for those loans making reference thereto, and is evidenced by the recording
thereof after its announcement in such internal publication or publications as Wells Fargo may
designate. Any change in an interest rate resulting from a change in the Prime Rate shall become
effective as of 12:01 a.m. of the Banking Day on which each change in the Prime Rate is announced
by Wells Fargo.

     8.19 “Subsidiary” means (i) any corporation at least the majority of whose securities
having ordinary voting power for the election of directors (other than securities having such power
only by reason of the happening of a contingency) are at the time owned by Borrower and/or one or
more Subsidiaries, and (ii) any joint venture or partnership in which Borrower and/or one or more
Subsidiaries has a majority interest.

     8.20 “Wells Fargo” means Wells Fargo Bank, N.A.

Page 10

 

IX. ARBITRATION

     9.1 Arbitration. The parties hereto agree, upon demand by any party, to submit to
binding arbitration all claims, disputes and controversies between or among them (and their
respective employees, officers, directors, attorneys, and other agents), whether in tort, contract
or otherwise arising out of or relating to in any way (i) the loan and related loan and security
documents which are the subject of this Agreement and its negotiation, execution,
collateralization, administration, repayment, modification, extension, substitution, formation,
inducement, enforcement, default or termination; or (ii) requests for additional credit.

     9.2 Governing Rules. Any arbitration proceeding will (i) proceed in a location in
California selected by the American Arbitration Association (“AAA”); (ii) be governed by the
Federal Arbitration Act (Title 9 of the United States Code), notwithstanding any conflicting choice
of law provision in any of the documents between the parties; and (iii) be conducted by the AAA, or
such other administrator as the parties shall mutually agree upon, in accordance with the AAA’s
commercial dispute resolution procedures, unless the claim or counterclaim is at least
$1,000,000.00 exclusive of claimed interest, arbitration fees and costs in which case the
arbitration shall be conducted in accordance with the AAA’s optional procedures for large, complex
commercial disputes (the commercial dispute resolution procedures or the optional procedures for
large, complex commercial disputes to be referred to, as applicable, as the “Rules”). If there is
any inconsistency between the terms hereof and the Rules, the terms and procedures set forth herein
shall control. Any party who fails or refuses to submit to arbitration following a demand by any
other party shall bear all costs and expenses incurred by such other party in compelling
arbitration of any dispute. Nothing contained herein shall be deemed to be a waiver by any party
that is a bank of the protections afforded to it under 12 U.S.C. §91 or any similar applicable
state law.

     9.3 No Waiver of Provisional Remedies, Self-Help and Foreclosure. The arbitration
requirement does not limit the right of any party to (i) foreclose against real or personal
property collateral; (ii) exercise self-help remedies relating to collateral or proceeds of
collateral such as setoff or repossession; or (iii) obtain provisional or ancillary remedies such
as replevin, injunctive relief, attachment or the appointment of a receiver, before during or after
the pendency of any arbitration proceeding. This exclusion does not constitute a waiver of the
right or obligation of any party to submit any dispute to arbitration or reference hereunder,
including those arising from the exercise of the actions detailed in sections (i), (ii) and (iii)
of this paragraph.

     9.4 Arbitrator Qualifications and Powers. Any arbitration proceeding in which the
amount in controversy is $5,000,000.00 or less will be decided by a single arbitrator selected
according to the Rules, and who shall not render an award of greater than $5,000,000.00. Any
dispute in which the amount in controversy exceeds $5,000,000.00 shall be decided by majority vote
of a panel of three arbitrators; provided however, that all three arbitrators must actively
participate in all hearings and deliberations. The arbitrator will be a neutral attorney licensed
in the State of California or a neutral retired judge of the state or federal judiciary of
California, in either case with a minimum of ten years experience in the substantive law applicable
to the subject matter of the dispute to be arbitrated. The arbitrator will determine whether or
not an issue is arbitratable and will give effect to the statutes of limitation in determining any
claim. In any arbitration proceeding the arbitrator will decide (by documents only or with a
hearing at the arbitrator’s discretion) any pre-hearing motions which are similar to motions to
dismiss for failure to state a claim or motions for summary adjudication. The arbitrator shall
resolve all disputes in accordance with the substantive law of California and may grant any remedy
or relief that a court of such state could order or grant within the scope hereof and such
ancillary relief as is necessary to make effective any award. The arbitrator shall also have the power to award recovery of all costs
and fees, to impose sanctions and to take such other action as the arbitrator deems necessary to
the same extent a judge could pursuant to the Federal Rules of Civil Procedure, the California
Rules of Civil Procedure or other applicable law. Judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction. The institution and maintenance of an
action for judicial relief or pursuit of a provisional or ancillary remedy shall not constitute a
waiver of the right of any party, including the plaintiff, to submit the controversy or claim to
arbitration if any other party contests such action for judicial relief.

     9.5 Discovery. In any arbitration proceeding discovery will be permitted in
accordance with the Rules. All discovery shall be expressly limited to matters directly relevant
to the dispute being arbitrated and must be completed no later than 20 days before the hearing date
and within 180 days of the filing of the dispute with the AAA. Any requests for an extension of
the discovery periods, or any discovery disputes, will be subject to final determination by the
arbitrator upon a showing that the request for discovery is essential for the party’s presentation
and that no alternative means for obtaining information is available.

Page 11

 

     9.6
Class Proceedings and Consolidations. The resolution of any dispute arising
pursuant to the terms of this Agreement shall be determined by a separate arbitration proceeding
and such dispute shall not be consolidated with other disputes or included in any class proceeding.

     9.7 Payment Of Arbitration Costs And Fees. The arbitrator shall award all costs and
expenses of the arbitration proceeding.

     9.8 Real Property Collateral; Judicial Reference. Notwithstanding anything herein to
the contrary, no dispute shall be submitted to arbitration if the dispute concerns indebtedness
secured directly or indirectly, in whole or in part, by any real property unless (i) the holder of
the mortgage, lien or security interest specifically elects in writing to proceed with the
arbitration, or (ii) all parties to the arbitration waive any rights or benefits that might accrue
to them by virtue of the single action rule statute of California, thereby agreeing that all
indebtedness and obligations of the parties, and all mortgages, liens and security interests
securing such indebtedness and obligations, shall remain fully valid and enforceable. If any such
dispute is not submitted to arbitration, the dispute shall be referred to a referee in accordance
with California Code of Civil Procedure Section 638 et seq., and this general reference agreement
is intended to be specifically enforceable in accordance with said Section 638. A referee with the
qualifications required herein for arbitrators shall be selected pursuant to the AAA’s selection
procedures. Judgment upon the decision rendered by a referee shall be entered in the court in
which such proceeding was commenced in accordance with California Code of Civil Procedure Sections
644 and 645.

     9.9 Miscellaneous. To the maximum extent practicable, the AAA, the arbitrators and
the parties shall take all action required to conclude any arbitration proceeding within 180 days
of the filing of the dispute with the AAA. No arbitrator or other party to an arbitration
proceeding may disclose the existence, content or results thereof, except for disclosures of
information by a party required in the ordinary course of its business or by applicable law or
regulation. If more than one agreement for arbitration by or between the parties potentially
applies to a dispute, the arbitration provision most directly related to the documents between the
parties or the subject matter of the dispute shall control. This Agreement may be amended or
modified only in writing signed by each party hereto. If any provision of this Agreement shall be
held to be prohibited by or invalid under applicable law such provision shall be ineffective only
to the extent of such prohibition or invalidity, without invalidating the remainder of such
provision or any remaining provisions of this Agreement. This arbitration provision shall survive
termination, amendment or expiration of any of the documents or any relationship between the
parties.

     Borrower and Trade Bank have caused this Agreement to be executed by their duly authorized
officers or representatives on the date first written above.

	 	 	 	 	 
	“BORROWER”	 	 
	 
	 	 	 	 
	INTERNATIONAL DISPLAYWORKS, INC.	 	 
	 
	 	 	 	 
	By:
	 		 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Title:
	 		 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Borrower’s Address:	 	 
	599 Menlo Drive, Suite 200	 	 
	Rocklin, CA 95765	 	 

Page 12

 

	 	 	 	 	 
	“LENDER”	 	 
	 
	 	 	 	 
	WELLS FARGO HSBC TRADE BANK,	 	 
	NATIONAL ASSOCIATION	 	 
	 
	By:

	 		 	 
	 

	 	 	 	 
	 

	 	Juan J. Sanchez	 	 
	 

	 	Vice President	 	 
	 
	Lender’s Address:	 	 
	1 Front Street, 21st Floor	 	 
	San Francisco, CA 94111	 	 

Page 13

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