Related Party Transactions and Outside Related Director Information

Three-Five Systems, Incorporated (TFSI.PK)

9/28/2005 8K Information

Mr. Silvestri and Mr. Bentovim are both Managing Directors of SKIRITAI Capital LLC in San Francisco, California. SKIRITAI Capital, through its affiliates Leonidas Opportunity Fund L.P. and Leonidas Opportunity Offshore Fund Ltd., currently owns approximately 13% of the outstanding common stock of the Company.

4/1/2005 Proxy Information

Since January 1, 2004, there has not been, nor is there any currently proposed, any transactions or series of similar transactions or relationships with our officers, directors, or holders of more than 5% of our common stock that require disclosure under Item 404 of the Securities and Exchange CommissionŐs Regulation S-K.

4/1/2004 Proxy Information

Kenneth M. Julien was Executive Vice President and Chief Operating Officer of Three-Five Systems, Inc. from August 1992 to April 1993, Vice President, Chief Financial Officer and Secretary of Three-Five Systems or one of its predecessors from May 1988 to August 1992, of Three-Five Systems or one of its predecessors from July 1987 to April 1993 and again from 1996 until May 2003.

Three of our executive officers, Jack Saltich, Jeffrey Buchanan, and Carl Derrington, were indebted to us at the beginning of 2003 for loans in the aggregate amounts (principal and interest) of $47,918, $15,496, and $45,993, respectively, previously made to them to acquire our common stock. These loans bore interest at the rates of between 7.5% and 7.7%. The Compensation Committee reviewed outstanding loans in January, noting that new legislation prevented extensions of loans. After reviewing the salary history of officers who held outstanding loans, these loans were forgiven as to principal and interest together with the amount necessary to cover federal, state, and other taxes due by such officers as a result of such forgiveness or the payment of such taxes. The amounts forgiven were $72,735, $25,969, and $73,078 for Messrs. Saltich, Buchanan, and Derrington, respectively.

3/28/2003 Proxy Information

In January 2001, we loaned Jeffrey D. Buchanan $409,116 for the exercise of stock options that were about to expire. The loan provided Mr. Buchanan the necessary funds to exercise the options, without having to sell the underlying shares. Unlike the ten-year term of our usual stock options, we had issued these options in 1996 with a five-year expiration term. Mr. Buchanan exercised options to acquire 70,000 shares at a price of $5.85 per share. Mr. Buchanan executed a promissory note in connection with the loan. The note was due January 2, 2003 and bore interest at a rate of LIBOR plus 1.5 percentage points, compounded annually. Under a divorce settlement, Mr. Buchanan subsequently transferred 35,000 of such shares to his former spouse, and in connection therewith, his former spouse assumed one-half of his obligations under the note. Subsequent to the transfer, Mr. Buchanan sold 35,000 of such shares and used the proceeds of the sale to repay in full his remaining obligations under the note. In October 2002, we and his former spouse entered into a novation agreement with Mr. Buchanan whereby he was relieved of any further liability on the note as a result of his former spouse having assumed one-half of the obligation under the note. At the time of the novation, $171,323 was owed under the note.