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Line of Credit Agreement - Sanwa Bank of California and ATG Inc.

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                           LINE OF CREDIT AGREEMENT


This line of Credit Agreement ("Agreement") is made and entered into this 1st 
day of July, 1998 by and between SANWA BANK OF CALIFORNIA (the "Bank") and ATG 
INC. (the "Borrower").

                                   SECTION 1

                                  DEFINITIONS

1.01. CERTAIN DEFINED TERMS. Unless elsewhere defined in this Agreement the
following terms shall have the following meanings (such meanings to be generally
applicable to the singular and plural forms of the terms defined):

     A.   "ADVANCE" shall mean an advance to the Borrower under any line of
     credit facility or similar facility provided for in Section II of this
     Agreement which provides for draws by the Borrower against an established
     credit line.

     B.   "BUSINESS DAY" shall mean a day, other than a Saturday or Sunday, on 
     which commercial banks are open for business in California.

     C.   "COLLATERAL" shall mean the property in which the Bank is granted a
     security interest pursuant to provisions of the section herein entitled
     "Collateral" together with any other personal or real property in which the
     Bank may be granted a lien or security interest to secure payment of the
     Obligations.

     D.   "DEBT" shall mean all liabilities of the Borrower less Subordinated 
     Debt.

     E.   "EFFECTIVE TANGIBLE NET WORTH" shall mean the Borrower's stated net
     worth plus Subordinated Debt but less all intangible assets of the Borrower
     (i.e., goodwill, trademarks, patents, copyrights, organization expense and
     similar intangible items).

     F.   "ENVIRONMENTAL CLAIMS" shall mean all claims, however asserted, by any
     governmental authority or other person alleging potential liability or
     responsibility for violation of any Environmental Law or for release or
     injury to the environment or threat to public health, personal injury
     (including sickness, disease or death), property damage, natural resources
     damage, or otherwise alleging liability or responsibility for damages
     (punitive or otherwise), cleanup, removal, remedial or response costs,
     restitution, civil or criminal penalties, injunctive relief, or other type
     of relief, resulting from or based upon (i) the presence, placement,
     discharge, emission or release (including intentional, and unintentional,
     negligent and non-negligent, sudden or non-sudden, accidental or non-
     accidental placement, spills, leaks, discharges, emission or releases) of
     any Hazardous Materials at, in or from property owned, operated or
     controlled by the Borrower, or (ii) any other circumstances forming the
     basis of any violation, or alleged violation, of any Environmental Law.

     G.   "ENVIRONMENTAL LAWS" shall mean all federal, state or local laws,
     statutes, common law duties, rules, regulations, ordinances and codes,
     together with all administrative orders, directed duties, requests,
     licenses, authorizations and permits of, and agreements with, any
     governmental authorities, in each case relating to environmental health,
     safety and land use matters: including the Comprehensive Environmental
     Response, Compensation and Liability Act of 1980 ("CERCLA"), the Clean Air
     Act, the Federal Water Pollution Control Act of 1972, the Solid Waste
     Disposal Act, the Federal Resource Conservation and Recovery Act, the Toxic
     Substances Control Act, the Emergency Planning and Community Right-to-Know
     Act, the California Hazardous Waste Control Law, the California Solid Waste
     Management, Resource, Recovery and Recycling Act, the California Water Code
     and the California Health and Safety Code.
     
     H.   "ERISA" shall mean the Employee Retirement Income Security Act of
     1974, as amended from time to time, including (unless the context otherwise
     requires) any rules or regulations promulgated thereunder.

     I.   "EVENT OF DEFAULT" shall have the meaning set forth in section herein 
     entitled "Events of Default".

     J.   "HAZARDOUS MATERIALS" shall mean all those substances which are
     regulated by, or which may form the basis of liability under any
     Environmental Law, including all substances identified under any
     Environmental Law as a pollutant, contaminant, hazardous waste, hazardous
     constituent, special waste, hazardous substance, hazardous material, or
     toxic substance, or petroleum or petroleum derived substance or waste. 

     K.   "INDEBTEDNESS" shall mean, with respect to the Borrower, (i) all
     indebtedness for borrowed money or for the deferred purchase price of
     property or services in respect of which the Borrower is liable,
     contingently or otherwise, as obligor, guarantor or otherwise, or in
     respect of which the Borrower accounting principles, reported as capital
     leases in respect of which the Borrower is liable, contingently or
     otherwise, or in respect of which the Borrower otherwise assures a creditor
     against loss.

     L.   "OBLIGATIONS" shall mean all amounts owing by the Borrower to the Bank
     pursuant to this Agreement including, but not limited to, the unpaid
     principal amount of Advances.

     M.   "PERMITTED LIENS" shall mean: (i) liens and security interests
     securing indebtedness owned by the Borrower to the Bank: (ii) liens for
     taxes, assessments or similar charges either not yet due or being contested
     in good faith, provided proper reserves are maintained therefor in
     accordance with generally accepted accounting procedure; (iii) liens of
     materialmen, mechanics, warehousemen, or carriers or other like liens
     arising in the ordinary course of business and securing obligations which
     are not yet delinquent; (iv) purchase money liens or purchase money
     security interests upon or in any property acquired or held by the Borrower
     in the ordinary course of business to secure Indebtedness outstanding on
     the date hereof or permitted to be incurred pursuant to this Agreement; (v)
     liens and security interests which, as of the date hereof, have been
     disclosed to an approved by the Bank in writing; and (vi) those liens and
     security interests which in the aggregate constitute an immaterial and
     insignificant monetary amount with respect to the net value of the
     Borrower's assets.

     N.  "REFERENCE RATE" shall mean an index for a variable interest rate which
     is quoted, published or announced from time to time by the Bank as its
     reference rate and as to which loans may be the Bank at, below or above
     reference rate.

     O.  "SUBORDINATED DEBT" shall mean such liabilities of the Borrower which
     have been subordinated to those owned to the Bank in a manner acceptable
     to the Bank.

1.02. ACCOUNTING TERMS. All references to financial statements, assets, 
liabilities, and similar accounting items not specifically defined herein shall 
mean such 


                                      (i)































 













 



























































    
<PAGE>
 

financial statements or such items prepared or determined in accordance with 
generally accepted accounting principles consistently applied and, except where 
otherwise specified, all financial data submitted pursuant to this Agreement 
shall be prepared in accordance with such principles.

1.03  OTHER TERMS. Other terms not otherwise defined shall have the meanings 
attributed to such terms in the California Uniform Commercial Code.

                                  SECTION II
                               CREDIT FACILITIES

2.01  COMMITMENT TO LEND. Subject to the terms and conditions of this Agreement 
and so long as no Event of Default occurs, the Bank agrees to extend to the 
Borrower the credit accommodations that follow.

2.02  LINE OF CREDIT FACILITY. The Bank agrees to make loans and Advances to the
Borrower, upon the Borrower's request therefor made prior to the Expiration Date
(as defined below in this Section 2.02), up to a total principal amount from 
time to time outstanding of not more than $8,000,000.00. Within the foregoing 
limits, the Borrower may borrow, partially or wholly prepay, and reborrow under 
this Line of Credit facility.

     A.   PURPOSE. Advances made under this Line of Credit shall be used to
     renew any outstanding principal balance owing on an existing loan with the
     Bank and provide additional funds for the working capital needs of the
     Borrower.

     B.   INTEREST RATE. Interest shall accrue on the outstanding principal
     balance of Advances under this Line of Credit at a variable rate equal to
     the Bank's Reference Rate, per annum, as it may change from time to time.
     (Such rate is referred to in this Section 2.02 as the "Variable Rate".) The
     Variable Rate shall be adjusted concurrently with any change in the
     Reference Rate. Interest shall be calculated on the basis of 360 days per
     year but charged on the actual number of days elapsed.

     C.   PAYMENT OF INTEREST. The Borrower hereby promises and agrees to pay
     interest monthly on the last day of each month, commencing on July 31,
     1998.

     D.   REPAYMENT OF PRINCIPAL. Unless sooner due in accordance with the terms
     of this Agreement, on June 30, 1999 the Borrower hereby promises and agrees
     to pay to the Bank in full the aggregate unpaid principal balance of all
     Advances then outstanding, together with all accrued and unpaid interest
     thereon.

     Any payment received by the Bank shall, at the Bank's option, first be
     applied to pay any late fees or other fees then due and unpaid, and then to
     interest then due and unpaid and the remainder thereof (if any) shall be
     applied to reduce principal.

     E.   LATE FEE. If any regularly scheduled payment of principal and/or
     interest (exclusive of the final payment upon maturity), or any portion
     thereof, under this Line of Credit is not paid within ten (10) calendar
     days after it is due, a late payment charge equal to five percent (5%) of
     such past due payment may be assessed and shall be immediately payable.

     F.   MAKING LINE ADVANCES/NOTICE OF BORROWING. Each Advance made hereunder
     shall be conclusively deemed to have been made at the request of and for
     the benefit of the Borrower (i) when credited to any deposit account of the
     Borrower maintained with the Bank or (ii) when paid in accordance with
     the Borrower's written instructions. Subject to any other requirements set
     forth in this Agreement. Advances shall be made by the Bank upon telephonic
     or written notice received from the Borrower in form acceptable to the
     Bank, which notice shall be received not later than 2:00 p.m. (California
     Time) on the date specified for such Advance, which date shall be a
     Business Day. Requests for Advances received after such time may, at the
     Bank's option, be deemed to be a request for an Advance to be made on the
     next succeeding Business Day.

     G.   FACILITY FEES. The following fees for this facility shall be paid in
     cash upon execution of this Agreement or prior to funding of this facility:
     Loan Fees in the amount of $15,000.00

     H.   EXPIRATION OF THE LINE OF CREDIT FACILITY. Unless earlier terminated
     in accordance with the terms of this Agreement, the Bank's commitment to
     make Advances to the Borrower hereunder shall automatically expire on June
     30, 1999 (the "Expiration Date"), and the Bank shall be under no further
     obligation to advance any monies thereafter.

     I.   LINE ACCOUNT. The Bank shall maintain on its books a record of account
     in which the Bank shall make entries for each Advance and such other debits
     and credits as shall be appropriate in connection with the Line of Credit
     facility (the "Line Account"). The Bank shall provide the Borrower with a
     monthly statement of the Borrower's Line Account, which statement shall be
     considered to be correct and conclusively binding on the Borrower unless
     the Bank is notified by the Borrower to the contrary within thirty (30)
     days after the Borrower's receipt of any such statement which is deemed to
     be incorrect.

     J.   AMOUNTS PAYABLE ON DEMAND. If the Borrower fails to pay on demand any
     amount so payable under this Agreement, the Bank may, at its option and
     without any obligation to do so and without waiving any default occasioned
     by the Borrower's failure to pay such amount, create an Advance in an
     amount equal to the amount so payable, which Advance shall thereafter bear
     interest as provided under this Line of Credit facility.

     In addition, the Borrower hereby authorizes the Bank, if and to the extent
     payment owed to the Bank under this Line of Credit facility is not made
     when due, to charge, from time to time, against any or all of the deposit
     accounts maintained by the Borrower with the Bank any amount so due.

                                  SECTION III
                                  COLLATERAL

3.01. GRANT OF SECURITY INTEREST. To secure payment and performance of all of 
the Borrower's Obligations under this Agreement and the performance of all the 
terms, covenants and agreements contained in this Agreement (and any and all 
modifications, extensions and renewals of the Agreement) and in any other 
document, instrument or agreement evidencing or related to the Obligations or 
the Collateral, and also to secure all other liabilities, loans, guarantees, 
covenants and duties owed by the Borrower to the Bank, whether or not evidenced 
by this or by any other agreement, absolute or contingent, due or to become due,
now existing or hereafter and howsoever created, the Borrower hereby grants to 
the Bank a security interest in and to all of the following property:

     A.   EQUIPMENT. All goods and equipment ("Equipment") now owned or
     hereafter acquired by the Borrower or in which the Borrower now has or may
     hereafter acquire any interest including, but not limited to, all
     machinery, furniture, furnishings, fixtures, tools, supplies and motor
     vehicles of every kind and description and all additions, accessions,
     improvements, replacements and substitutions thereto and thereof.

     B.   INVENTORY. All inventory ("Inventory") now owned or hereafter acquired
     by the Borrower including, but not limited to, all raw materials, work in
     process, finished goods, merchandise, parts and supplies of every kind and
     description, including inventory temporarily out of the Borrower's custody
     or possession, together with all returns on accounts.

     C.   ACCOUNTS AND CONTRACT RIGHTS. All accounts and contract rights now
     owned or hereafter created or acquired by the Borrower, including but not
     limited to, all receivables and all rights and benefits due to the Borrower
     under any contract or agreement.

     D.   GENERAL INTANGIBLES. All general intangibles now owned or hereafter
     created or acquired by the Borrower, including but not limited to,
     goodwill.

                                      (2)



<PAGE>
 
     trademarks, trade styles, trade names, patents, patent applications, 
     software, customer lists and business records.

     E.   CHATTEL PAPER AND DOCUMENTS. All documents, instruments and chattel 
     paper now owned or hereafter acquired by the Borrower.

     F.   MONIES AND OTHER PROPERTY IN POSSESSION. All monies, and property of
     the Borrower now or hereafter in the possession of the Bank or the Bank's
     agents, or any one of them, including, but not limited to, all deposit
     accounts, certificates of deposit, stocks, bonds, indentures, warrants,
     options and other negotiable and non-negotiable securities and instruments,
     together with all stock rights, rights to subscribe, liquidating dividends,
     cash dividends, payments, dividends paid in stock, new securities or other
     property to which the Borrower may become entitled to receive on account of
     such property.

3.02. CONTINUING LIEN & PROCEEDS. The Bank's security interest in the Collateral
shall be a continuing lien and shall include all proceeds and products of the 
Collateral including, but not limited to, the proceeds of any insurance thereon 
as well as all accounts, contract rights, documents, instruments and chattel 
paper resulting from the sale or disposition of any Equipment.

3.03  EXCLUSION OF CONSUMER DEBT. The Obligations and performance secured hereby
shall not include any indebtedness of the Borrower incurred for personal, family
or household purposes except to the extent any disclosure required under any 
consumer protection law (including but not limited to the Truth in Lending Act) 
or any regulation thereto, as now existing or hereafter amended, is or has been 
given.

                                  SECTION IV
                             CONDITIONS PRECEDENT

4.01. CONDITIONS PRECEDENT TO THE INITIAL EXTENSION OF CREDIT AND/OR FIRST 
ADVANCE. The obligation of the Bank to make the initial extension of credit 
and/or the first Advance hereunder is subject to the conditions precedent that 
the Bank shall have received before the date of such extension of credit and/or 
the first Advance all of the following, in form and substance satisfactory to 
the Bank:

     A.   AUTHORITY TO BORROW. Evidence relating to the duly given approval and
     authorization of the execution, delivery and performance of this Agreement,
     all other documents, instruments and agreements required under this
     Agreement and all other actions to be taken by the Borrower hereunder or
     thereunder.

     B.   GUARANTOR. A continuing guaranty in favor of the Bank, in form and
     substance satisfactory to the Bank, executed by ATG Richland Corporation
     (the "Guarantor"), together with evidence that the execution, delivery and
     performance of the Guaranty by the Guarantor has been duly authorized.

     C.   LOAN FEES. Evidence that any required loan fees and expenses as set
     forth above with respect to each credit facility have been paid or provided
     for by the Borrower.

     D.   AUDIT. The opportunity to conduct an audit of the Borrower's books,
     records and operations and the Bank shall be satisfied as to the condition
     thereof.

     E.   MISCELLANEOUS DOCUMENTS. Such other documents, instruments, agreements
     and opinions as are necessary, or as the Bank may reasonably require, to
     consummate the transactions contemplated under this Agreement, all fully 
     executed.

4.02. CONDITIONS PRECEDENT TO ALL EXTENSIONS OF CREDIT AND/OR ADVANCES. The 
obligation of the Bank to make any extensions of credit and/or each Advance to 
or on account of the Borrower (including the initial extension of credit and/or 
the first Advance) shall be subject to the further conditions precedent that, as
of the date of each extension of credit or Advance and after the making of such 
extension of credit or Advance:

     A.   REPRESENTATIONS AND WARRANTIES. The representations and warranties set
     forth in the Section entitled "Representations and Warranties" herein and
     in any other document, instrument, agreement or certificate delivered to
     the Bank hereunder are true and correct.

     B.   COLLATERAL. The security interest in the Collateral has been duly
     authorized, created and perfected with first priority and is in full force
     and effect and the Bank has been provided with satisfactory evidence of all
     filings necessary to establish such perfection and priority.

     C.   EVENT OF DEFAULT. No event has occurred and is continuing which
     constitutes, or with the lapse of time or giving of notice or both, would
     constitute an Event of Default.

     D.   SUBSEQUENT APPROVALS, ETC. The Bank shall have received such
     supplemental approvals, opinions or documents as the Bank may reasonably
     request.

4.03. REAFFIRMATION OF STATEMENTS. For the purposes hereof, the Borrower's 
acceptance of the proceeds of any extension of credit and the Borrower's 
execution of any document or instrument evidencing or creating any Obligation 
hereunder shall each be deemed to constitute the Borrower's representation and 
warranty that the statements set forth above in this Section are true and 
correct.

                                   SECTION V
                        REPRESENTATIONS AND WARRANTIES

The Borrower hereby makes the following representations and warranties to the 
Bank, which representations and warranties are continuing:

5.01. STATUS. The Borrower is a corporation duly organized and validly existing
under the laws of the State of California and is properly licensed, qualified to
do business and in good standing in, and, where necessary to maintain the
Borrower's rights and privileges, has complied with the fictitious name statute
of every jurisdiction in which the Borrower is doing business.

5.02. AUTHORITY. The execution, delivery and performance by the Borrower of this
Agreement and any instrument, document or agreement required hereunder have been
duly authorized and do not and will not: (i) violate any provision of any law, 
rule, regulation, writ, judgment or injunction presently in effect affecting the
Borrower; (ii) require any consent or approval of the stockholders of the 
Borrower or violate any provision of the articles of incorporation or by-laws of
the Borrower; or (iii) result in a breach of or constitute a default under any 
material agreement to which the Borrower is a party or by which it or its 
properties may be bound or affected.

5.03. LEGAL EFFECT. This Agreement constitutes, and any document, instrument or 
agreement required hereunder when delivered will constitute, legal, valid and 
binding obligations of the Borrower enforceable against the Borrower in 
accordance with their respective terms.

5.04. FICTITIOUS TRADE STYLES. The Borrower currently uses no fictitious trade
styles in connection with its business operations.The Borrower shall notify the
Bank within thirty (30) days of the use of any fictitious trade style at any
future date, indicating the trade style and state(s) of its use.

5.05. FINANCIAL STATEMENTS. All financial statements, information and other data
which may have been and which may hereafter be submitted by the Borrower to the 
Bank are true, accurate and correct and have been and will be prepared in 
accordance with generally accepted accounting principles consistently applied 
and accurately represent the Borrower's financial condition and, as applicable, 
the other information disclosed therein. Since the most recent submission of any
such financial statement, information or other data to the Bank, the Borrower 
represents and warrants that no material adverse change in the Borrower's 
financial condition or operations has occurred which has not been fully 
disclosed to the Bank in writing.

                                      (3)



<PAGE>
 
5.06.     LITIGATION. Except as have been disclosed to the Bank in writing,
there are no actions, suits or proceedings pending or, to the knowledge of the
Borrower, threatened against or affecting the Borrower or the Borrower's
properties before any court or administrative agency which, if determined
adversely to the Borrower, would have a material adverse effect on the
Borrower's financial condition, operations or the Collateral.

5.07.     TITLE TO ASSETS. The Borrower has good and marketable title to all of 
its assets (including, but not limited to, the Collateral) and the same are not
subject to any security interest, encumbrance, lien or claim of any third person
except for Permitted Liens.

5.08.     ERISA. If the Borrower has a pension, profit sharing or retirement 
plan subject to ERISA, such plan has been and will continue to be funded in 
accordance with its terms and otherwise complies with and continues to comply 
with the requirements of ERISA.

5.09.     TAXES. The Borrower has filed all tax returns required to be filed and
paid all taxes shown thereon to be due, including interest and penalties, other 
than taxes which are currently payable without penalty or interest or those 
which are being duly contested in good faith.

5.10.     ENVIRONMENTAL COMPLIANCE. The operations of the Borrower comply, and
during the term of this Agreement will at all times comply, in all respects with
all Environmental Laws; the Borrower has obtained licenses, permits,
authorizations and registrations required under any Environmental Law
("Environmental Permits") and necessary for its ordinary operations, all such
Environmental Permits are in good standing, and the Borrower is in compliance
with all material terms and conditions of such Environmental Permits; neither
the Borrower nor any of its present properties or operations are subject to any
outstanding written order from or agreement with any governmental authority nor
subject to any judicial or docketed administrative proceeding, respecting any
Environmental Law, Environmental Claim or Hazardous Material; there are no
Hazardous Materials or other conditions or circumstances existing, or arising
from operations prior to the date of this Agreement, with respect to any
property of the Borrower that would reasonably be expected to give rise to
Environmental Claims; provided however, that with respect to property leased
from an unrelated third party, the foregoing representation is made to the best
knowledge of the Borrower. In addition, (i) the Borrower does not have or
maintain any underground storage tanks which are not properly registered or
permitted under applicable Environmental Laws or which are leaking or disposing
of Hazardous Materials off-site, and (ii) the Borrower has notified all of its
employees of the existence, if any, of any health hazard arising from the
conditions of their employment and have met all notification requirements under
Title III of CERCLA and all other Environmental Laws.

                                  SECTION VI

                                   COVENANTS

The Borrower covenants and agrees that, during the term of this Agreement, and 
so long thereafter as the Borrower is indebted to the Bank under this Agreement,
the Borrower shall, unless the Bank otherwise consents in writing:

6.01.     PRESERVATION OF EXISTENCE; COMPLIANCE WITH APPLICABLE LAWS. Maintain 
and preserve its existence and all rights and privileges now enjoyed; not 
liquidate or dissolve, merge or consolidate with or into, or acquire any other 
business organization; and conduct its business in accordance with all 
applicable laws, rules and regulations.

6.02.     MAINTENANCE OF INSURANCE. Maintain insurance in such amounts and 
covering such risks as is usually carried by companies engaged in similar 
businesses and owning similar properties in the same general areas in which the 
Borrower operates and maintain such other insurance and coverages as may be 
required by the Bank. All such insurance shall be in form and amount and with 
companies satisfactory to the Bank. With respect to insurance covering 
properties in which the Bank maintains a security interest or lien, such 
insurance shall be in an amount not less than the full replacement value 
thereof, at the Bank's request, shall name the Bank as loss payee pursuant to a 
loss payable endorsement satisfactory to the Bank and shall not be altered or 
canceled except upon ten (10) days' prior written notice to the Bank. Upon the 
Bank's request, the Borrower shall furnish the Bank with the original policy or 
binder of all such insurance.

6.03.     MAINTENANCE OF COLLATERAL AND OTHER PROPERTIES. Except for Permitted 
Liens, the Borrower shall keep and maintain the Collateral free and clear of all
levies, liens, encumbrances and security interests (including but not limited 
to, any lien of attachment, judgement or execution) and defend the Collateral 
against any such levy, lien, encumbrance or security interest; comply with all 
laws, statutes and regulations pertaining to the collateral and it use and 
operation; execute, file and record such statements, notices and agreements, 
take such actions and obtain such certificates and other documents as necessary 
to perfect, evidence and continue the Bank's security interest in the Collateral
and the priority thereof; maintain accurate and complete records of the 
collateral which show all sales, claims and allowances; and properly care for, 
house, store and maintain the Collateral in good condition, free of misuse, 
abuse and deterioration, other than normal wear and tear. The Borrower shall 
also maintain and preserve all its properties in good working order and 
condition in accordance with the general practice of other businesses of similar
character and size, ordinary wear and tear excepted.

6.04.     LOCATION AND MAINTENANCE OF EQUIPMENT.

          A.   LOCATION. The Equipment shall at all time be in the Borrower's
          physical possession, shall not be held for sale or lease and shall be
          kept only at the following location(s): 47375 Fremont Boulevard,
          Fremont, CA 94538.

          The Borrower shall not secrete, abandon or remove, or permit the
          removal of, the Equipment, or any part thereof, from the location(s)
          shown above or remove or permit to be removed any accessories now or
          hereafter placed upon the Equipment.

          B.   EQUIPMENT SCHEDULES. Upon the Bank's demand, the Borrower shall
          immediately provide the Bank with a complete and accurate description
          of the Equipment including, as applicable, the make, model,
          identification number and serial number of each item of Equipment. In
          addition, the Borrower shall immediately notify the Bank of the
          acquisition of any new or additional Equipment or the replacement of
          any existing Equipment and shall supply the Bank with a complete
          description of any such additional or replacement Equipment.

          C.   MAINTENANCE OF EQUIPMENT. The Borrower shall, at the Borrower's
          sole cost and expense, keep and maintain the Equipment in a good state
          of repair and shall not destroy, misuse, abuse, illegally use or be
          negligent in the care of the Equipment or any part thereof. The
          Borrower shall not remove, destroy, obliterate, change, cover, paint,
          deface or alter the name plates, serial numbers, labels or other
          distinguishing numbers or identification marks placed upon the
          Equipment or any part thereof by or on behalf of the manufacturer, any
          dealer or rebuilder thereof, or the Bank. The Borrower shall not be
          released from any liability to the Bank hereunder because of any
          injury to or loss or destruction of the Equipment. The Borrower shall
          allow the Bank and its representatives free access to and the right to
          inspect the Equipment at all times and shall comply with the terms and
          conditions of any leases covering the real property on which the
          Equipment is located and any orders, ordinances, laws, regulations or
          rules of any federal, state or municipal agency or authority having
          jurisdiction of such real property or the conduct of business of the
          persons having control or possession of the Equipment.

          D.   FIXTURES. The Equipment is not now and shall not at any time
          hereafter be so affixed to the real property on which it is located as
          to become a fixture or a part thereof. The Equipment is now and shall
          at all times hereafter be and remain personal property of the
          Borrower.

6.05.     LOCATION AND QUALITY OF INVENTORY. The Inventory (i) is now and shall 
at all times hereafter be of good and merchantable quantity and free from 
defects; (ii) is not now and shall not at any time hereafter be stored with a 
bailee, warehouseman or similar party without the Bank's prior written consent 
and, in such event the Borrower will concurrently therewith cause any such 
bailee, warehouseman or similar party to issue and deliver to the Bank, in form 
acceptable to the Bank warehouse receipts in the Bank's name evidencing the 
storage of inventory; (iii) shall at all times (except as otherwise permitted by
this section) be in the Borrower's

                                      (4)
<PAGE>
 
physical possession; (iv) shall not be held by others on consignment, sale on 
approval, or sale or return; and (v) shall be kept only at the following 
locations(s): 47375 Fremont Boulevard, Fremont, CA 94538.

6.06.  PAYMENT OF OBLIGATIONS AND TAXES. Make timely payment of all assessments
and taxes and all of its liabilities and obligations including, but not limited
to, trade payables, unless the same are being contested in good faith by
appropriate proceedings with the appropriate court or regulatory agency. For
purposes hereof, the Borrower's issuance of a check, draft or similar instrument
without delivery to the intended payee shall not constitute payment.

6.07.  INSPECTION RIGHTS. At any reasonable time and from time to time permit 
the Bank or any representative thereof to examine and make copies of the records
and visit the properties of the Borrower and to discuss the business and 
operations of the Borrower with any employee or representative thereof. If the 
Borrower now or at any time hereafter maintains any records (including, but not 
limited to, computer generated records and computer programs for the generation 
of such records) in the possession of a third party, the Borrower hereby agrees 
to notify such third party to permit the Bank free access to such records at all
reasonable times and to provide the Bank with copies of any records it may 
request, all at the Borrower's expense, the amount of which shall be payable 
immediately upon demand. In addition, the Bank may, at any reasonable time and 
from time to time, conduct inspections and audits of the Collateral and the 
Borrower's accounts payable, the cost and expenses of which shall be paid by the
Borrower to the Bank upon demand.

6.08.  REPORTING REQUIREMENTS. Deliver or cause to be delivered to the Bank in 
form and detail satisfactory to the Bank:

       A.  ANNUAL STATEMENTS. Not later than 120 days after the end of each of
       the Borrower's fiscal years, a copy of the annual financial report of the
       Borrower for such year, which report shall be a CPA audited report.

       B.  RECEIVABLES AND PAYABLES AGINGS. Not later than 45 days after the end
       of each fiscal quarter, an aging of accounts receivable and an aging of
       accounts payable.

       C.  INTERIM STATEMENTS. Not later than 45 days after the end of each of
       the first three fiscal quarters of the Borrower, a copy of the Borrower's
       financial statement as of the end of such fiscal quarter.

       D.  OTHER INFORMATION. Promptly upon the Bank's request, such other
       information pertaining to the Borrower, the Collateral, or any Guarantor
       as the Bank may reasonably request.

6.09.  PAYMENT OF DIVIDENDS. The Borrower shall not declare or pay any dividends
on any class of its stock now or hereafter outstanding except dividends payable
solely in the corporation's capital stock.

6.10.  REDEMPTION OR REPURCHASE OF STOCK. The Borrower shall not redeem or 
repurchase any class of its corporate stock now or hereafter outstanding.

6.11.  ADDITIONAL INDEBTEDNESS. Not, after the date hereof, create, incur or 
assume, directly or indirectly, any liability or indebtedness other than (i) 
indebtedness owned or to be owed to the Bank, (ii) indebtedness to trade 
creditors incurred in the ordinary course of the Borrower's business, or (iii) 
additional indebtedness up to an aggregate amount not exceeding $2,000,000.00 in
any one fiscal year.

6.12.  LOANS. Not make any loans or advances or extend credit to any third 
person, including, but not limited to, directors, officers, shareholders, 
partners, employees, affiliated entities or subsidiaries of the Borrower, except
for credit extended in the ordinary course of the Borrower's business as 
presently conducted and except loans up to an aggregate amount not exceeding 
$500,000,00 in any one fiscal year.

6.13.  LIENS AND ENCUMBRANCES. Not create, assume or permit to exist any 
security interest, encumbrance, mortgage, deed of trust or other lien 
(including, but not limited to, a lien of attachment, judgment or execution) 
affecting any of the Borrower's properties, or execute or allow to be filed any 
financing statement or continuation thereof affecting any such properties, 
except for Permitted Liens or as otherwise provided in this Agreement and except
for liens or encumbrances up to an aggregate amount not exceeding $2,000,000.00 
in any one fiscal year.

6.14.  TRANSFER ASSETS. Not sell, contract for sale, transfer, convey, assign, 
lease or sublet any assets of the Borrower, including, but not limited to, the 
Collateral, except in the ordinary course of business as presently conducted by 
the Borrower, and then, only for full, fair and reasonable consideration.

6.15.  CHANGE IN THE NATURE OF BUSINESS. Not make any material change in the 
Borrower's financial structure or in the nature of the Borrower's business as 
existing or conducted as of the date of this Agreement.

6.16.  FINANCIAL CONDITION. Maintain at all times:

       A.  NET WORTH. A minimum Effective Tangible Net Worth of not less than
       $20,000,000.00 plus 75% of the next proceeds from any sale of stock to
       the public through a public offering.

       B.  DEBT TO NET WORTH RATIO. A Debt to Effective Tangible Net Worth ratio
       of not more than 1.00 to 1.00.

       C.  QUICK RATIO. A ratio of the sum of cash, cash equivalents and
       accounts receivable less unbilled receivables to current liabilities of
       not less than 1.30 to 1.00.

       D.  DEBT SERVICE COVERAGE RATIO. A Debt Service Coverage Ratio (which is
       defined herein as the sum of net profit after tax plus depreciation,
       amortization and term interest expense less dividends, distributions and
       withdrawals divided by the current portion long term debt plus term
       interest expense) of not less than 1.05 to 1.00, measured at each fiscal
       year end.

       E.  PROFITABILITY. The Borrower shall not show a net loss in any two 
       consecutive fiscal quarters.

6.17.  COMPENSATION OF EMPLOYEES. Compensate the employees of the Borrower for 
services rendered at an hourly rate at least equal to the minimum hourly rate 
prescribed by any applicable federal or state law or regulation.

6.18.  CAPITAL EXPENSES. Not make any fixed capital expenditure or any 
commitment therefor, including, but not limited to, incurring liability for uses
which would be, in accordance with generally accepted accounting principles, 
reported as capital leases, or purchase any real or personal property except for
expenditures in an aggregate amount not exceeding $5,000,000.00 in any one 
fiscal year.

6.19.  ENVIRONMENTAL COMPLIANCE. The Borrower shall:

       A.  Conduct the Borrower's operations and keep and maintain all of its 
       properties in compliance with all Environmental Laws.

       B.  Give prompt written notice to the Bank, but in no event later than 10
       days after becoming aware, of the following: (i) any enforcement,
       cleanup, removal or other governmental or regulatory actions instituted,
       completed or threatened against the Borrower or any of its affiliates or
       any of its respective properties pursuant to any applicable Environmental
       Laws, (ii) all other Environmental Claims, and (iii) any environmental or
       similar condition on any real property adjoining or in the vicinity of
       the property of the Borrower or its affiliates that could reasonably be
       anticipated to cause such property or any part thereof to be subject to
       any restrictions on the ownership, occupancy, transferability or use of
       such property under any Environmental Laws.

       C.  Upon the written request of the Bank, the Borrower shall submit to
       the Bank, at its sole cost and expense, at reasonable intervals, a report
       providing an

                                      (5)
<PAGE>
 
       update of the status any environmental, health or safety compliance,
       hazard or liability issue identified in any notice required pursuant to
       this Section. 

       D.  At all times indemnify and hold harmless the Bank from and against
       any and all liability arising out of any Environmental Claims.

6.20.  NOTICE. Give the Bank prompt written notice of any and all (i) Events of
Default; (ii) litigation, arbitration or administrative proceedings to which the
Borrower is a party and in which the claim or liability exceeds $100,000.00 or
which affects the Collateral; (iii) any change in the place of business of the
Borrower or the acquisition of more than one place of business by the Borrower;
(iv) any proposed or actual change in the name, identity or business nature of
the Borrower: (v) any change in the location of the Equipment or Inventory; and
(vi) other matters which have resulted in, or might result in a material adverse
change in the Collateral or the financial condition or business operations of
the Borrower.

                                  SECTION VII

                               EVENTS OF DEFAULT

Any one or more of the following described events shall constitute an event of 
default under this Agreement:

7.01.   NON-PAYMENT. The Borrower shall fail to pay any Obligations within 10 
days of when due.

7.02.   PERFORMANCE UNDER THIS AND OTHER AGREEMENTS. The Borrower shall fail in
any material respect to perform or observe any term, covenant or agreement
contained in this Agreement or in any document, instrument or agreement
evidencing or relating to any indebtedness of the Borrower (whether owed to the
Bank or third persons), and any such failure (exclusive of the payment of money
to the Bank under this Agreement or under any other document, instrument,
instrument or agreement, which failure shall constitute and be an immediate
Event of Default if not paid when due or when demanded to be due) shall continue
for more than 30 days after written notice from the Bank to the Borrower of the
existence and character of such Event of Default.

7.03.   REPRESENTATIONS AND WARRANTIES; FINANCIAL STATEMENTS. Any representation
or warranty made by the Borrower under or in connection with this Agreement or
any financial statement given by the Borrower or any Guarantor shall prove to
have been incorrect in any material respect when made or given or when deemed to
have been made or given.

7.04.   INSOLVENCY. The Borrower or any Guarantor shall: (i) become insolvent or
be unable to pay its debts as they mature; (ii) make an assignment fir the
benefit of creditors or to an agent authorized to liquidate any substantial
amount of its properties or assets; (iii) file a voluntary petition in
bankruptcy or seeking reorganization or to effect a plan or other arrangement
with creditors; (iv) file an answer admitting the material allegations of an
involuntary petition relating to bankruptcy or reorganization or join in any
such petition; (v) become or be adjudicated a bankrupt; (vi) apply for or
consent to the appointment of, or consent that an order be made, appointing any
receiver, custodian or trustee for itself or any of its properties, assets or
businesses ; or (vii) any receiver, custodian or trustee shall have been
appointed for all or a substantial part of its properties, assets or businesses
and shall not be discharged within 30 days after the date of such appointment.

7.05.   EXECUTION. Any writ of execution or attachment or any judgment lien 
shall be issued against any property of the Borrower and shall not be discharged
or bonded against or released within 30 days after the issuance or attachment of
such writ or lien.

7.06.   REVOCATION OR LIMITATION OR GUARANTY. Any Guaranty shall be revoked or 
limited or its enforceability or validity shall be contested by any Guarantor, 
by operation of law, legal proceeding or otherwise or any Guarantor who is a 
natural person shall die.

7.07.   SUSPENSION. The Borrower shall voluntarily suspend the transaction of 
business or allow to be suspended, terminated, revoked or expired any permit, 
license or approval of any governmental body necessary to conduct the Borrower's
business as now conducted.

7.08.   CHANGE IN OWNERSHIP. There shall occur a sale, transfer, disposition or 
encumbrance (whether voluntary or involuntary), or an agreement shall be entered
into to do so, with respect to more than 10% of the issued and outstanding
capital stock of the Borrower.

7.09. IMPAIRMENT OF COLLATERAL. There shall occur any injury or damage to all or
any part of the Collateral or all or any part of the Collateral shall be lost, 
stolen or destroyed, which changes cause the Collateral, in the sole and 
absolute judgement of the Bank, to become unacceptable as to character and 
value.

                                 SECTION VIII

                              REMEDIES ON DEFAULT

Upon the occurrence of any Event of Default, the Bank may, at its sole election,
without demand and upon only such notice as may be required by law:

8.01.   ACCELERATION. Declare any or all of the Borrower's indebtedness owing to
the Bank, whether under this Agreement or under any other document, instrument
or agreement, immediately due and payable, whether or not otherwise due and
payable.

8.02.   CEASE EXTENDING CREDIT. Cease making Advances or otherwise extending
credit to or for the account of the Borrower under this Agreement or under any
other agreement now existing or hereafter entered into between the Borrower and
the Bank.

8.03.   TERMINATION. Terminate this Agreement as to any future obligation of the
Bank without affecting the Borrower's obligations to the Bank or the Bank's 
rights and remedies under this Agreement or under any other document, instrument
or agreement.

8.04.   SEGREGATE COLLECTIONS. Require the Borrower to segregate all collections
and proceeds of the Collateral so that they are capable of identification and to
deliver such collections and proceeds to the Bank, in kind, without commingling,
at such times and in such manner as required by the Bank.

8.05.   RECORDS OF COLLATERAL. Require the Borrower to periodically deliver to 
the Bank records and schedules showing the status, condition and location of the
Collateral and such contracts or other matters which affect the Collateral. In 
connection herewith, the Bank may conduct such audits or other examination of 
such records, including, but not limited to, verification of balances owing by 
any account debtor of the Borrower, as the Bank, in its sole and absolute 
discretion, deems necessary.

8.06.   NOTIFICATION OF ACCOUNT DEBTORS.
        A.   Notify any or all of the Borrower's Account Debtors, or any buyers
        or transferees of the Collateral or other persons of the Bank's interest
        in the Collateral and the proceeds thereof and instruct such person(s)
        to thereafter make any payment due the Borrower directly to the Bank.

        B.   The Borrower hereby irrevocably and unconditionally appoints the
        Bank as its attorney-in-fact to: (i) endorse the Borrower's name on any
        notes, acceptances, checks, drafts, money orders or other evidence of
        payment that may come into the Bank's possession; (ii) sign the
        Borrower's name on any invoice or bill of lading relating to any of the
        Collateral; (iii) notify post office authorities to change the address
        for delivery of mail addressed to the Borrower to such address as the
        Bank may designate and take possession of and open mail addressed to the
        Borrower and remove therefrom, proceeds of and payments on the
        Collateral; and (iv) demand, receive and endorse payment and give
        receipts, releases and satisfactions for and sue for all money payable
        to the

                                              (6)

<PAGE>
 
      Borrower. All of the preceding may be done either in the name of the Bank
      or in the name of the Borrower with the same force and effect as the
      Borrower could have done had this Agreement not been entered into.

      C.  Require the Borrower to indicate on the face of all invoices (or such
      other documentation as may be specified by the Bank relating to the sale,
      delivery or shipment of goods giving rise to the account) that the account
      has been assigned to the Bank and that all payments are to be made
      directly to the Bank at such address as the Bank may designate.

8.07. COMPROMISE. Grant extensions, compromise claims and settle any account for
less than the amount owing thereunder, all without notice to the Borrower or any
obligor on or guarantor of the Obligations.

8.08. PROTECTION OF SECURITY INTEREST. Make such payments and do such acts as
the Bank, in its sole judgement, considers necessary and reasonable to protect
its security interest or lien in the Collateral. The Borrower hereby irrevocably
authorizes the Bank to pay, purchase, contest or compromise any encumbrance,
lien or claim which the Bank, in its sole judgement, deems to be prior or
superior to its security interest. Further, the Borrower hereby agrees to pay to
the Bank, upon demand therefor, all expenses and expenditures (including
attorneys' fees) incurred in connection with the foregoing.

8.09. FORECLOSURE. Enforce any security interest or lien given or provided for
under this Agreement or under any security agreement, mortgage, deed of trust or
other document relating to the Collateral, in such manner and such order, as to
all or any part of the Collateral, as the Bank, in its sole judgment, deems to
be necessary or appropriate and the Borrower hereby waives any and all rights,
obligations or defenses now or hereafter established by law relating to the
foregoing. In the enforcement of its security interest or lien, the Bank
authorized to enter upon the premises where any Collateral is located and take
possession of the Collateral or any part thereof, together with the Borrower's
records pertaining thereto, or the Bank may require the Borrower to assemble the
Collateral and records pertaining thereto and make such Collateral and records
available to the Bank at a place designated by the Bank. The Bank may sell the
Collateral or any portions thereof, together with all additions, accessions and
accessories thereto, giving only such notices and following only such procedures
as are required by law, at either a public or private sale, or both, with or
without having the Collateral present at the time of sale, which sale shall be
on such terms and conditions and conducted in such manner as the Bank determines
in its sole judgment to be commercially reasonable. Any deficiency which exists
after the disposition or liquidation of the Collateral shall be a continuing
liability of any obligor on or any guarantor of the Obligations and shall be
immediately paid to the Bank.

8.10. APPLICATION OF PROCEEDS. All amounts received by the Bank as proceeds from
the disposition or liquidation of the Collateral shall be applied to the
Borrower's indebtedness to the Bank as follows: first, to the costs and expenses
of collection, enforcement, protection and preservation of the Bank's lien in
the Collateral, including court costs and reasonable attorneys' fees, whether or
not suit is commenced by the Bank; next, to those costs and expenses incurred by
the Bank in protecting, preserving, enforcing, collecting, selling or disposing
of the Collateral; next, to the payment of accrued and unpaid interest on all of
the Obligations; next, to the payment of the outstanding principal balance of
the Obligations; and last, to the payment of any other indebtedness owed by the
Borrower to the Bank. Any excess Collateral or excess proceeds existing after
the disposition or liquidation of the Collateral will be returned or paid by the
Bank to the Borrower.

8.11. NON-EXCLUSIVITY OF REMEDIES. Exercise one or more of the Bank's rights set
forth herein or seek such other rights or pursue such other remedies as may be
provided by law, in equity or in any other agreement now existing or hereafter
entered into between the Borrower and the Bank, or otherwise.

                                  SECTION IX

                           MISCELLANEOUS PROVISIONS

9.01. DEFAULT INTEREST RATE.  If an Event of Default has occurred and is 
continuing, the Bank, at its option, may require the Borrower to pay to the Bank
interest on any Indebtedness or amount payable under this Agreement at a rate 
which is 3% in excess of the rate or rates otherwise then in effect under this 
Agreement.
 
9.02. RELIANCE.  Each warranty, representation, covenant and agreement contained
in this Agreement shall be conclusively presumed to have been relied upon by the
Bank regardless of any investigation made or information possessed by the Bank 
and shall be cumulative and in addition to any other warranties, 
representations, covenants or agreements which the Borrower shall now or 
hereafter give, or cause to be given, to the Bank.

9.03. DISPUTE RESOLUTION.

      A. DISPUTES. It is understood and agreed that, upon the request of any
      party to this Agreement, any dispute, claim or controversy of any kind,
      whether in contract or in tort, statutory or common law, legal or
      equitable, now existing or hereinafter arising between the parties in any
      way arising out of, pertaining to or in connection with: (i) this
      Agreement, or any related agreements, documents or instruments, (ii) all
      past and present loans, credits, accounts, deposit accounts (whether
      demand deposits or time deposits), safe deposit boxes, safekeeping
      agreements, guarantees, letters of credit, goods or services, or other
      transactions, contracts or agreements of any kind, (iii) any incidents,
      omissions, acts, practices, or occurrences causing injury to any party
      whereby another party or its agents, employees or representatives may be
      liable, in whole or in part, or (iv) any aspect of the past or present
      relationships of the parties, shall be resolved through a two-step dispute
      resolution process administered by the Judicial Arbitration & Mediation
      Services, Inc. ("JAMS") as follows:

      B. STEP I - MEDIATION. At the request of any party to the dispute, claim
      or controversy, the matter shall be referred to the nearest office of JAMS
      for mediation, which is an informal, non-binding conference or conferences
      between the parties in which a retired judge or justice from the JAMS
      panel will seek to guide the parties to a resolution of the case.

      C. STEP II - ARBITRATION (CONTRACTS NOT SECURED BY REAL PROPERTY). Should
      any dispute, claim or controversy remain unresolved at the conclusion of
      the Step I Mediation Phase, then (subject to the restriction at the end of
      this subparagraph) all such remaining matters shall be resolved by final
      and binding arbitration before a different judicial panelist, unless the
      parties shall agree to have the mediator panelist act as arbitrator. The
      hearing shall be conducted at a location determined by the arbitrator in
      Los Angeles, California (or such other city as may be agreed upon by the
      parties) and shall be administered by and in accordance with the then
      existing Rules of Practice and Procedure of JAMS and judgement upon any
      award rendered by the arbitrator may be entered by any State or Federal
      Court having jurisdiction thereof. The arbitrator shall determine which is
      the prevailing party and shall include in the award that party's
      reasonable attorneys' fees and costs. This subparagraph shall apply only
      if, at the time of the submission of the matter to JAMS, the dispute or
      issues involved do not arise out of any transaction which is secured by
      real property collateral or, if so secured, all parties consent to such
      submission.

      As soon as practicable after selection of the arbitrator, the arbitrator,
      or the arbitrator's designated representative, shall determine a
      reasonable estimate of anticipated fees and costs of the arbitrator, and
      render a statement to each party setting forth that party's pro-rata share
      of said fees and costs. Thereafter, each party shall, within 10 days of
      receipt of said statement, deposit said sum with the arbitrator. Failure
      of any party to make such a deposit shall result in a forfeiture by the
      non-depositing party of the right to prosecute or defend the claim which
      is the subject of the arbitration, but shall not otherwise serve to abate,
      stay or suspend the arbitration proceedings.

      D. STEP II - TRIAL BY COURT REFERENCE (CONTRACTS SECURED BY REAL
      PROPERTY). If the dispute, claim or controversy is not one required or
      agreed to be submitted to arbitration, as provided in the above
      subparagraph, and has not been resolved by Step I mediation, then any
      remaining dispute, claim or controversy shall be submitted for
      determination by a trial on Order of Reference conducted by a retired
      judge or justice from the panel of JAMS appointed pursuant to the
      provisions of Section 638(1) of the California Code of Civil Procedure, or
      any amendment, addition or successor section thereto, to hear the

                                      (7)
<PAGE>
 
        case and report a statement of decision thereon. The parties intend this
        general reference agreement to be specifically enforceable in accordance
        with said section. If the parties are unable to agree upon a member of
        the JAMS panel to act as referee, then one shall be appointed by the
        Presiding Judge of the county wherein the hearing is to be held. The
        parties shall pay in advance, to the referee, the estimated reasonable
        fees and costs of the reference, as may be specified in advance by the
        referee. The parties shall initially share equally, by paying their
        proportionate amount of the estimated fees and costs of the reference.
        Failure of any party to make such a fee deposit shall result in a
        forfeiture by the non-depositing party of the right to prosecute or
        defend any cause of action which is the subject of the reference, but
        shall not otherwise serve to abate, stay or suspend the reference
        proceeding.

        E.   PROVISIONAL REMEDIES, SELF HELP AND FORECLOSURE. No provision of,
        or the exercise of any rights under any portion of this Dispute
        Resolution provision, shall limit the right of any party to exercise
        self help remedies such as set off, foreclosure against any real or
        personal property collateral, or the obtaining of provisional or
        ancillary remedies, such as injunctive relief or the appointment of a
        receiver, from any court having jurisdiction before, during or after the
        pendency of any arbitration. At the Bank's option, foreclosure under a
        deed of trust or mortgage may be accomplished either by exercise of
        power of sale under the deed of trust or mortgage, or by judicial
        foreclosure. The institution and maintenance of an action for
        provisional remedies, pursuit of provisional or ancillary remedies or
        exercise of self help remedies shall not constitute a waiver of the
        right of any party to submit the controversy or claim to arbitration.

9.04.   WAIVER OF JURY. The Borrower and the Bank hereby expressly and
voluntarily waive any and all rights, whether arising under the California
constitution, any rules of the California Code of Civil Procedure, common law or
otherwise, to demand a trial by jury in any action, matter, claim or cause of
action whatsoever arising out of or in any way related to this Agreement or any
other agreement, document or transaction contemplated hereby.

9.05.   RESTRUCTURING EXPENSES. In the event the Bank and the Borrower negotiate
for, or enter into, any restructuring, modification or refinancing of the
Indebtedness under this Agreement for the purposes of remedying an Event of
Default. The Bank, may require the Borrower to reimburse all of the Bank's costs
and expenses incurred in connection therewith, including, but not limited to
reasonable attorneys' fees and the costs of any audit or appraisals required by
the Bank to be performed in connection with such restructuring, modification or
refinancing.

9.06.   ATTORNEYS' FEES. In the event of any suit, mediation, arbitration or 
other action in relation to this Agreement or any document, instrument or 
agreement executed with respect to, evidencing or securing the indebtedness 
hereunder, the prevailing party, in addition to all other sums to which it may 
be entitled, shall be entitled to reasonable attorneys' fees.

9.07.   NOTICES. All notices, payments, requests, information and demands which 
either party hereto may desire, or may be required to give or make to the other 
party shall be given or made to such party by hand delivery or through deposit
in the United States mail, postage prepaid, or by Western Union telegram,
addressed to the address set forth below such party's signature to this
Agreement or to such other address as may be specified from time to time in
writing by either party to the other.

9.08.   WAIVER. Neither the failure nor delay by the Bank in exercising any
right hereunder or under any document, instrument or agreement mentioned herein
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right hereunder or under any document, instrument or agreement mentioned
herein preclude other or further exercise thereof or the exercise of any other
right; nor shall any waiver of any right or default hereunder or under any
document, instrument or agreement mentioned herein constitute a waiver of any
other right or default or constitute a waiver of any other default of the same
or any other term or provision.

9.09.   CONFLICTING PROVISIONS. To the extent that any of the terms or
provisions contained in this Agreement are inconsistent with those contained in
any other document, instrument or agreement executed pursuant hereto, the terms
and provisions contained herein shall control. Otherwise, such provisions shall
be considered cumulative.

9.10.   BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon and 
inure to the benefit of the Borrower and the Bank and their respective 
successors and assigns, except that the Borrower shall not have the rights to 
assign its rights hereunder or any interest herein without the Bank's prior 
written consent. The Bank may sell, assign or grant participations in all or any
portion of its rights and benefits hereunder. The Borrower agrees that, in 
connection with any such sale, grant or assignment, the Bank may deliver to the
prospective buyer, participant or assignee financial statements and other 
relevant information relating to the Borrower and any guarantor.

9.11.   JURISDICTION. This Agreement, any notes issued hereunder, the rights of 
the parties hereunder to and concerning the Collateral, and any documents, 
instruments or agreements mentioned or referred to herein shall be governed by 
and construed according to the laws of the State of California, to the 
jurisdiction of whose courts the parties hereby submit.

9.12.   HEADINGS. The headings set forth herein are solely for the purpose of 
identification and have no legal significance.

9.13.   ENTIRE AGREEMENT. This Agreement and all documents, instruments and 
agreements mentioned herein constitute the entire and complete understanding of 
the parties with respect to the transactions contemplated hereunder. All 
previous conversations, memoranda and writings between the parties or pertaining
to the transactions contemplated hereunder that are not incorporated or 
referenced in this Agreement or in such documents, instruments and agreements 
are superseded hereby.

IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto as of
the date first hereinabove written.

BANK:                                        BORROWER:

SANWA BANK CALIFORNIA                        ATG INC.

BY: /s/ JOHN NORAWONG                        BY: /s/ DOREEN CHIU
   ------------------------------------         --------------------------------
   JOHN NORAWONG, AUTHORIZED OFFICER            DOREEN CHIU, PRESIDENT  

ADDRESS:                                     ADDRESS:

Oakland Main Office                          47375 Fremont Boulevard
2127 Broadway                                Fremont, CA 94538
Oakland, CA 94612       

                                      (8)

<PAGE>
 
[LOGO OF SANWA BANK APPEARS HERE]

                        LOAN DISBURSEMENT INSTRUCTIONS
                        ($8,000,000.00 Line of Credit)

Date: July 1, 1998                                     Loan Number:_____________

The undersigned hereby instructs Sanwa Bank California to disburse the proceeds 
of this loan as shown below:

                                 DISBURSEMENT                            AMOUNT

1. CREDITED TO THE FOLLOWING ACCOUNT: Any and all future              $_________
   Advances shall be deposited into checking account  
   #1138-55652 upon the request of the Borrower.

2. PAY OFF THE FOLLOWING LOAN WITH SANWA BANK CALIFORNIA: Obligation  $_________
   #83 or renew to the same obligation number as applicable.

                                                                      ==========

                                                             TOTAL:   $_________
                                                                 
                                             BORROWER:
                                        
                                             ATG INC.

                                             BY: /s/ Doreen Chic
                                                --------------------------------
                                                Doreen Chic, President

                                      (1)






<PAGE>
 
[LOGO OF SANWA BANK APPEARS HERE]

                              CONTINUING GUARANTY

For value received and in consideration of the extension credit by of SANWA BANK
CALIFORNIA (the "Bank") to ATG INC. (the "Debtor") or the benefits to the
undersigned derived therefrom, the undersigned (the "Guarantor"), guarantees and
promises to pay to the Bank any and all Indebtedness (as defined below) and
agrees as follows:

1. INDEBTEDNESS. The term "Indebtedness" is used herein in its most 
comprehensive sense and includes any and all advances, debts, obligations,
guaranties and liabilities of the Debtor heretofore, now, or hereafter made,  
incurred or created, whether voluntary or involuntary and however arising, 
whether direct or acquired by the Bank by assignment or succession, whether due 
or not due, absolute or contingent, liquidated or unliquidated, determined or 
undetermined, and whether the Debtor may be liable individually or jointly with 
others, or whether recovery upon any Indebtedness may be or hereafter becomes 
barred by any statute of limitations or whether any Indebtedness may be or 
hereafter becomes otherwise unenforceable.

2. GUARANTY. The Guarantor unconditionally agrees to pay to the Bank or its 
order, on demand, an amount equal to the amount of Indebtedness or otherwise 
perform any obligation of the Debtor undertaken pursuant to any Indebtedness. In
addition to any maximum principal liability hereunder, the Guarantor agrees to 
(i) bear the expenses enumerated hereunder in the paragraph herein entitled 
"Attorneys' Fees" and (ii) pay interest on the Indebtedness at the rate(s) 
applicable thereto. Notwithstanding the foregoing, the Bank may allow the 
Indebtedness to exceed the Guarantor's liability hereunder. Any payment by the 
Guarantor shall not reduce the maximum principal obligation of the Guarantor 
hereunder unless written notice to that effect is actually received by the Bank 
at or prior to the time of such payment. Any payment by the Debtor or any other 
person shall not reduce the Guarantor's maximum principal liability hereunder.

3. RIGHT TO AMEND OR MODIFY INDEBTEDNESS. The Guarantor authorizes the Bank, at
its sole discretion, with or without notice and without affecting the
Guarantor's liability hereunder, from time to time to: (i) change the time or
manner of payment of any Indebtedness by renewal, extension, modification,
acceleration or otherwise; (ii) alter or change any provision of any
Indebtedness including, but not limited to, the rate of interest thereon, and
any document, instrument or agreement (other than this Guaranty) evidencing,
guaranteeing, securing or related to any Indebtedness; (iii) release, discharge,
exonerate, substitute or add one or more parties liable on any Indebtedness or
one or more parties liable on any Indebtedness or one or more endorsers,
cosigners or guarantors for any Indebtedness; (iv) obtain collateral for the
payment of any Indebtedness or any Guaranty thereof; (v) release existing or
after-acquired collateral on such terms as the Bank, in its sole discretion,
shall determine; (vi) apply any sums received from the Debtor, any endorser,
cosigner, other guarantor or other person liable on any Indebtedness or from the
sale or collection of collateral or its proceeds to any indebtedness whatsoever
owed or to be owed to the Bank by the Debtor in any order or amount and
regardless of whether or not such indebtedness is guaranteed hereby, is secured
by collateral or is due and payable; and (vii) apply to any Indebtedness, in any
order or amount, regardless of whether such Indebtedness is secured by
collateral or is due and payable, any sums received from the Guarantor or from
the sale of collateral in which the Guarantor has granted the Bank a security
interest.

4. WAIVERS. The Guarantor hereby unconditionally and irrevocably acknowledges
and agrees to the matters set forth below:

      A. DEFICIENCY. In the event that any Indebtedness is now or hereafter
      secured by a deed of trust, the Guarantor waives any defense and all
      rights and benefits of those laws purporting to state that no deficiency
      judgment may be recovered on certain real property purchase money
      obligations (as presently contained in Section 580b of the California Code
      of Civil Procedure and as it may be amended or superseded in the future)
      and those laws purporting to state that no deficiency judgment may be
      recovered after a trustee's sale under a deed of trust ( as presently
      contained in Section 580d of the California Code of Civil Procedure and as
      it may be amended or superseded in the future). THE GUARANTOR ACKNOWLEDGES
      THAT A FORECLOSURE BY A TRUSTEE'S SALE UNDER A DEED OF TRUST MAY RESULT IN
      THE DESTRUCTION OF THE GUARANTOR'S SUBROGATION RIGHTS THAT MAY OTHERWISE
      EXIST AND THAT A DESTRUCTION OF THOSE RIGHTS MAY CREATE A DEFENSE TO A
      DEFICIENCY JUDGEMENT. THE GUARANTOR HEREBY SPECIFICALLY WAIVES ANY SUCH
      DEFENSE.

      B. ELECTION OF REMEDIES. The Guarantor waives any defense based upon the
      Guarantor's loss of a right against the Debtor arising from the Bank's
      election of a remedy on any Indebtedness under bankruptcy or other debtor
      relief laws or under any other laws, including, but not limited to, those
      purporting to reduce the Bank's right against the Guarantor in proportion
      to the principal obligation of any Indebtedness (as presently contained in
      Section 2809 of the California Civil Code as it may be amended or
      superseded in the future).
      
      Without limiting the generality of the foregoing, the Guarantor waives all
      rights and defenses arising out of an election of remedies by the Bank,
      even though that election of remedies, such as a nonjudicial foreclosure
      with respect to security for a guaranteed obligation, has destroyed the
      Guarantor's rights of subrogation and reimbursement against the Debtor by
      operation of Section 580d of the California Code of Civil Procedure or
      otherwise.

      C. STATUE OF LIMITATIONS. The Guarantor waives the benefit of the statute
      of limitations affecting the Guarantor's liability hereunder or the
      enforcement hereof.

      D. ACTION AGAINST THE DEBTOR AND COLLATERAL (AND OTHER REMEDIES). The
      Guarantor waives all right to require the Bank to: (i) proceed against the
      Debtor, any endorser, cosigner, other guarantor or other person liable on
      Indebtedness; (ii) join the Debtor or any endorser, cosigner, other
      guarantor or other person liable on any Indebtedness in any action or
      actions that may be brought and prosecuted by the Bank solely and
      separately against the Guarantor on any Indebtedness; (iii) proceed
      against any item or items of collateral securing any Indebtedness or any
      guaranty thereof; or (iv) pursue or refrain from pursuing any other remedy
      whatsoever in the Bank's power.

      E. DEBTOR'S DEFENSES. The Guarantor waives any defense arising by reason
      of any disability or other defense of the Debtor, the Debtor's successor
      or any endorser, cosigner, other guarantor or other person liable on any
      Indebtedness. Until all Indebtedness has been paid in full, even though it
      may be in excess of the liability incurred hereby, the Guarantor shall not
      have any right of subrogation and the Guarantor waives any benefit of and
      right to participate in any collateral now or hereafter held by the Bank.
      The Guarantor waives all presentments, demands for performance, notices of
      nonperformance, protests, notices of protest, notices of dishonor, notices
      of sale of any collateral securing any Indebtedness or any guaranty
      thereof, and notice of existence, creation or incurring of new or
      additional Indebtedness.

      F. DEBTOR'S FINANCIAL CONDITION. The Guarantor hereby recognizes,
      acknowledges and agrees that advances may be made in the future from time
      to time with respect to any Indebtedness without authorization from or
      notice to the Guarantor even though the financial condition of the Debtor,
      any endorser, cosigner, other guarantor or other person liable on any
      Indebtedness may have deteriorated since the date of this Guaranty. The
      Guarantor waives all right to require the Bank to disclose any information
      with respect to: (i) any Indebtedness now existing or hereafter incurred;
      (ii) the present or future financial condition, credit or character of the
      Debtor, any endorser, cosigner, other guarantor or other person liable on
      any Indebtedness; (iii) any present or future

                                      (1)


<PAGE>
 
          collateral securing any Indebtedness or any guaranty thereof; or (iv)
          any present or future action or inaction on the part of the Bank, the
          Debtor or any endorser, cosigner, other guarantor or other person
          liable on any Indebtedness. The Guarantor hereby assumes the
          responsibility for being informed of the financial condition, credit
          and character of the Debtor and of all circumstances bearing upon the
          risk of non-payment of any Indebtedness which diligent inquiry would
          reveal.

5.   RIGHT OF SET-OFF; GRANT OF SECURITY INTEREST. In addition to all liens upon
and rights of set-off against any monies, securities or other property of the 
Guarantor given to the Bank by law, the Bank shall have a security interest in 
and a right to set off against all monies, securities and other property of the 
Guarantor now or hereafter in the possession of or on deposit with the Bank, the
Bank's agents or any one or more of them, whether held in general or special 
account or deposit or for safekeeping or otherwise; and each such security 
interest and right of set-off may be exercised without demand upon or notice to 
the Guarantor. No action or inaction by the Bank with respect to any security 
interest or right of set-off shall be deemed a waiver thereof and every right of
set-off and security interest shall continue in full force and effect until 
specifically released by the Bank in writing. The security interest created 
hereby shall secure all of the Guarantor's obligations under this Guaranty.

6.   RIGHT OF FORECLOSURE. The Bank may foreclose, either by judicial 
foreclosure or by exercise of power of sale, any deed of trust securing any 
Indebtedness even though such foreclosure may destroy or diminish the 
Guarantor's rights against the Debtor. The Guarantor shall be liable to the Bank
for any part of any Indebtedness remaining unpaid after any such foreclosure 
whether or not such foreclosure was for fair market value.

7.   SUBORDINATION. Any indebtedness of the Debtor or any endorser, cosigner, 
other guarantor or other person liable on any Indebtedness now or hereafter owed
to the Guarantor is hereby subordinated to the Indebtedness. Such indebtedness 
owed to the Guarantor shall, if the Bank so requests, be collected, enforced and
received by the Guarantor as trustee for the Bank and be paid over to the Bank 
on account of the Indebtedness but without reducing or affecting in any manner 
the liability of the Guarantor set forth herein. Should the Guarantor fail to 
collect the proceeds of any such indebtedness owed to it and pay the proceeds 
to the Bank, the Bank, as the Guarantor's attorney-in-fact, may do such acts and
sign such documents in the Guarantor's name as the Bank considers necessary to 
effect such collection.

8.   INVALID, FRAUDULENT OR PREFERENTIAL PAYMENTS. The Guarantor agrees that, to
the extent the Debtor or any endorser, cosigner, other guarantor or other person
liable on any Indebtedness makes a payment or payments to, or is credited for 
any payment or payments made for or on behalf of the Debtor to the Bank, which 
payment or payments, or any part thereof, is subsequently invalidated, 
determined to be fraudulent or preferential, set aside or required to be repaid 
to any trustee, receiver, assignee or any other party whether under any 
bankruptcy, state or federal law or under any common law or equitable cause or 
otherwise, then, to the extent thereof, the obligation or part thereof intended 
to be satisfied thereby shall be revived, reinstated and continued in full force
and effect as if such payment or payments had not originally been made or 
credited.

9.   JOINT AND SEVERAL OBLIGATIONS; INDEPENDENT OBLIGATIONS. If more than one 
Guarantor signs this Guaranty, the obligations hereunder are joint and several. 
The Guarantor's obligations hereunder are independent of the obligations of the 
Debtor or any endorser, cosigner, other guarantor or other person liable on any 
Indebtedness and a separate action or actions may be brought and prosecuted 
against the Guarantor on any Indebtedness.

10.  FINANCIAL INFORMATION. The Guarantor hereby agrees to deliver or cause to 
be delivered to the Bank:

11.  ACKNOWLEDGEMENT OF RECEIPT. Receipt of a true copy of this Guaranty is 
hereby acknowledged by the Guarantor. The Guarantor understands and agrees that 
this Guaranty shall not constitute a commitment of any nature whatsoever by the 
Bank to renew or hereafter extend credit to the Debtor. The Guarantor agrees 
that this Guaranty shall be effective with or without notice from the Bank of 
the Bank's acceptance hereof.

12.  CONTINUING GUARANTY. This Guaranty is a continuing guaranty. Revocation 
shall be effective only upon written notice personally received by an officer of
the Bank at the originating office indicated below or actually received at the 
originating office by United States mail postage prepaid. Notice shall be 
effective at any office of the Bank should the originating office no longer be 
in existence. Revocation shall be effective at the close of the Bank's business 
day when such notice is actually received. Any revocation shall be effective 
only as to the revoking party and shall not affect that party's obligation with 
respect to any Indebtedness existing before such revocation is effective.

13.  NON-RELIANCE. In executing this Guaranty, the undersigned is not relying, 
and has not relied, upon any statement or representation made by the Bank, or 
any employee, agent or representative of the Bank, with respect to the status, 
financial condition or other matters related to the Debtor or the relationship 
between the Debtor and the Bank.

14.  MULTIPLE GUARANTIES. If the Guarantor has executed or does execute more 
than one guaranty of any indebtedness of the Debtor to the Bank, the limits of 
liability thereunder and hereunder shall be cumulative.

15.  SEVERABILITY. Should any one or more provisions of this Guaranty be 
determined to be illegal or unenforceable, all other provisions shall remain 
effective.

16.  CORPORATE OR PARTNERSHIP AUTHORITY. If the Debtor is a corporation or 
partnership, the Bank need not inquire into the power of the Debtor or the 
authority of its officers, directors, partners or agents acting or purporting to
act in its behalf and any credit granted in reliance upon the purported exercise
of such power or authority is guarantied hereunder.

17.  SEPARATE PROPERTY. Any married person who signs this Guaranty expressly 
agrees that recourse may be had against such person's separate property for all 
obligations hereunder.

18.  COLLATERAL. That certain Security Agreement in the amount of $11,000,000.00
dated as of July 1, 1998 between the Guarantor and the Bank on behalf of the 
Debtor.

19.  ASSIGNMENT. The Bank may, with or without notice, assign this Guaranty in 
whole or in part. This Guaranty shall inure to the benefit of the Bank, its 
successors and assigns, and shall bind the Guarantor and the Guarantor's heirs, 
executors, administrators, successors and assigns.

20.  WAIVER OF JURY. The Guarantor and the Bank hereby expressly and voluntarily
waive any and all rights, whether arising under the California constitution, any
rules of the California Code of Civil Procedure, common law or otherwise, to 
demand a trial by jury in any action, matter, claim or cause of action 
whatsoever arising out of or in any way related to this Guaranty or any other 
agreement, document or transaction contemplated hereby.

21.  DISPUTE RESOLUTION.

          A.   DISPUTES. It is understood and agreed that, upon the request of
          any party to this Guaranty, any dispute, claim or controversy of any
          kind, whether in contract or in tort, statutory or common law, legal
          or equitable, now existing or hereinafter arising between the parties
          in any way arising out of, pertaining to or in connection with: (i)
          this Guaranty, or any related agreements, documents or instruments,
          (ii) all past and present loans, credits, accounts, deposit accounts
          (whether demand deposits or time deposits), safe deposit boxes,
          safekeeping agreements, guarantees, letters of credit, goods or
          services, or other transactions, contracts or agreements of any kind,
          (iii) any incidents, omissions, acts, practices, or occurrences
          causing injury to any party whereby another party or its agents,
          employees or representatives may be liable, in whole or in part, or
          (iv) any aspect of the past or present relationships of the parties,
          shall be resolved through a two-step dispute resolution process
          administered by the Judicial Arbitration & Mediation Services, Inc.
          ("JAMS") as follows:

                                      (2)
<PAGE>
 
     B.   STEP I - MEDIATION. At the request of any party to the dispute, claim
     or controversy, the matter shall be referred to the nearest office of JAMS
     for mediation, which is an informal, non-binding conference or conferences
     between the parties in which a retired judge or justice from the JAMS panel
     will seek to guide the parties to a resolution of the case.

     C.   STEP II - ARBITRATION (CONTRACTS NOT SECURED BY REAL PROPERTY). Should
     any dispute, claim or controversy remain unresolved at the conclusion of
     the Step I Mediation Phase, then (subject to the restriction at the end of
     this subparagraph) all such remaining matters shall be resolved by final
     and binding arbitration before a different judicial panelist, unless the
     parties shall agree to have the mediator panelist act as arbitrator. The
     hearing shall be conducted at a location determined by the arbitrator in
     Los Angeles, California (or such other city as may be agreed upon by the
     parties) and shall be administered by and in accordance with the then
     existing Rules of Practice and Procedures of JAMS and judgement upon any
     award rendered by the arbitrator may be entered by any State or Federal
     Court having jurisdiction thereof. The arbitrator shall determine which is
     the prevailing party and shall include in the award that party's reasonable
     attorneys' fees and costs. This subparagraph shall apply only if, at the
     time of the submission of the matter to JAMS, the dispute or issues
     involved do not arise out of any transaction which is secured by real
     property collateral or, if so secured, all parties consent to such
     submission.

     As soon as practicable after selection of the arbitrator, the arbitrator,
     or the arbitrator's designated representative, shall determine a reasonable
     estimate of anticipated fees and costs of the arbitrator, and render a
     statement to each party setting forth that party's pro-rata share of said
     fees and costs. Thereafter, each party shall, within 10 days of receipt of
     said statement, deposit said sum with the arbitrator. Failure of any party
     to make such a deposit shall result in a forfeiture by the non-depositing
     party of the right to prosecute or defend the claim which is the subject of
     the arbitration, but shall not otherwise serve to abate, stay or suspend
     the arbitration proceedings.

     D.   STEP III - TRIAL BY COURT REFERENCE (CONTRACTS SECURED BY REAL
     PROPERTY). If the dispute, claim or controversy is not one required or
     agreed to be submitted to arbitration, as provided in the above
     subparagraph, and has not been resolved by Step I mediation, then any
     remaining dispute, claim or controversy shall be submitted for
     determination by a trial on Order of Reference conducted by a retired judge
     or justice from the panel of JAMS appointed pursuant to the provisions of
     Section 638(1) of the California Code of Civil Procedure, or any amendment,
     addition or successor section thereof, to hear the case and report a
     statement of decision thereon. The parties intend this general agreement to
     be specifically enforceable in accordance with said section. If the parties
     are unable to agree upon a member of the JAMS panel to act as referee, then
     one shall be appointed by the Presiding Judge of the county wherein the
     hearing is to be held. The parties shall pay in advance, to the referee,
     the estimated reasonable fees and costs of the reference, as may be
     specified in advance by the referee. The parties shall initially share
     equally, by paying their proportionate amount of the estimated fees and
     costs of the reference. Failure of any party to make such a fee deposit
     shall result in a forfeiture by the non-depositing party of the right to
     prosecute or defend any cause of action which is the subject of the
     reference, but shall not otherwise serve to abate, stay or suspend the
     reference proceeding.

     E.   PROVISIONAL REMEDIES, SELF HELP AND FORECLOSURE. No provision of, or
     the exercise of any rights under any portion of this Dispute Resolution
     provision, shall limit the right of any party to exercise self help
     remedies such as set off, foreclosure against any real or personal property
     collateral, or the obtaining of provisional or ancillary remedies, such as
     injunctive relief or the appointment of a receiver, from any court having
     jurisdiction before, during or after the pendency of any arbitration. At
     the Bank's option, foreclosure under a deed of trust or mortgage may be
     accomplished either by exercise of power of sale under the deed of trust or
     mortgage, or by judicial foreclosure. The institution and maintenance of an
     action for provisional remedies, pursuit of provisional or ancillary
     remedies or exercise of self help remedies shall not constitute a waiver of
     the right of any party to submit the controversy or claim to arbitration.

22.  ATTORNEYS' FEES. Whether or not any suit, action, arbitration or other
dispute resolution proceeding is instituted, the Guarantor agrees to pay
reasonable attorneys' fees and all other costs and expenses which may be
incurred in the collection of any Indebtedness, in the protection or
preservation of, or realization on, any collateral securing any Indebtedness and
in the enforcement by the Bank of this Guaranty.

23.  GOVERNING LAW.  This Guaranty shall be governed by and construed according 
to the laws of the State of California and the Guarantor hereby submits to the 
jurisdiction of the courts of the State of California.

24.  ENTIRE AGREEMENT. This Guaranty and all documents, instruments and
agreements mentioned herein constitute the entire and complete understanding of
the parties with respect to the transactions contemplated hereunder. All
previous conversations, memoranda and writings between the parties pertaining to
the transactions contemplated hereunder not incorporated or referenced in this
Guaranty or in such documents, instruments and agreements are superseded hereby.

25.  HEADINGS. The headings used herein are solely for the purpose of
indentification and have no legal significance.

26.  ADDRESS OF THE BANK. The Bank's originating office under this Guaranty is:
Oakland Main Office, 2127 Broadway, Oakland, CA 94612.

27.  MAXIMUM PRINCIPAL LIABILITY. THE MAXIMUM PRINCIPAL LIABILITY UNDER THIS
GUARANTY IS the amount of $11,000,000.00, plus interest at the rate(s)
applicable to any Indebtedness as set forth in the paragraph herein entitled
"Guaranty" and the expenses enumerated in the paragraph herein entitled
"Attorneys' Fees".

This Guaranty is made as of July 1, 1998, which shall be the date of this
Guaranty.

Executed by the undersigned Guarantor as of the date set forth above.

GUARANTOR:

ATG RICHLAND CORPORATION

BY:/s/ DOREEN CHIU
   --------------------------------
   DOREEN CHIU, PRESIDENT


ADDRESS:

2025 Battelle Boulevard
Richland, WA 99352

<PAGE>
 
[LOGO OF SANWA BANK CALIFORNIA APPEARS HERE]

                              SECURITY AGREEMENT

This Security Agreement ("Agreement") is made and entered into this 1st day of 
July, 1998 by and between SANWA BANK CALIFORNIA (THe "Bank") and ATG RICHLAND 
CORPORATION (the "Grantor").

1. GRANT OF SECURITY INTEREST. The Grantor hereby grants to the Bank a security
interest in and to all of the following property (hereinafter collectively
referred to as the "Collateral"):

     A. EQUIPMENT. All goods and equipment ("Equipment") now owned or hereafter
     acquired by the Grantor or in which the Grantor now has or may hereafter
     acquire any interest including, but not limited to, all machinery,
     furniture, furnishings, fixtures, tools, supplies and motor vehicles of
     every kind and description and all additions, accessions, improvements,
     replacements and substitutions thereto and thereof.

     B. INVENTORY. All inventory ("Inventory") now owned or hereafter acquired
     by the Grantor including, but not limited to, all raw materials, work in
     process, finished goods, merchandise, parts and supplies of every kind and
     description, including inventory temporarily out of the Grantor's custody
     or possession, together with all returns on accounts.

     C. ACCOUNTS AND CONTRACT RIGHTS. All accounts and contract rights now
     owned or hereafter created or acquired by the Grantor, including but not
     limited to, all receivables and all rights and benefits due to the Grantor
     under any contract or agreement.

     D. GENERAL INTANGIBLES. All general intangibles now owned or hereafter
     created or acquired by the Grantor, including but not limited to, goodwill,
     trademarks, trade styles, trade names, patents, patent applications,
     software, customer lists and business records.

     E. CHATTEL PAPER AND DOCUMENTS. All documents, instruments and chattel
     paper now owned or hereafter acquired by the Grantor.

     F. MONIES AND OTHER PROPERTY IN POSSESSION. All monies, and property of the
     Grantor now or hereafter in the possession of the Bank or the Bank's
     agents, or any one of them, including, but not limited to, all deposits
     accounts, certificates of deposit, stocks, bonds, indentures, warrants,
     options and other negotiable and non-negotiable securities and instruments,
     together with all stock rights, rights to subscribe, liquidating dividends,
     cash dividends, payments, dividends paid in stock, new securities or other
     property to which the Grantor may become entitled to receive on account of
     such property.

The Bank's security interest in the Collateral shall be a continuing lien and 
shall include all proceeds and products of the Collateral including but not 
limited to, the proceeds of any insurance thereon.

2. THE INDEBTEDNESS. The Collateral secures payment of all obligations and
indebtedness pursuant to that certain Guaranty in favor of the Bank dated July
1, 1998, executed by ATG Richland Corporation with the maximum principal
liability of $11,000,000.00 plus interest, fees, attorney's fees and other costs
and expenses related to the indebtedness guarantied. The indebtedness and
obligations secured hereby (hereinafter referred to as the "Indebtedness") shall
include any and all modifications, extensions and renewals of such obligations
or indebtedness and performance of all the terms, covenants and agreements
contained in this Security Agreement and in any other document, instrument or
agreement evidencing or related to the Indebtedness or the Collateral.

The Indebtedness secured hereby shall not include any indebtedness incurred for 
personal, family or household purposes except to the extent any disclosure 
required under any consumer protection law (including but not limited to the 
Truth in Lending Act) or any regulation thereto, as now existing or hereafter 
amended, is or has been given.

3. GRANTOR'S REPRESENTATIONS AND WARRANTIES. The Grantor hereby makes the 
following representations and warranties to the Bank, which representations and 
warranties are continuing:

     A. STATUS. The Grantor is a corporation duly organized and validly existing
     under the laws of the State of Washington and is properly licensed,
     qualified to do business and in good standing in, and, where necessary to
     maintain the Grantor's rights and privileges, has complied with the
     fictitious name statue of every jurisdiction in which the Grantor is
     doing business.

     B. AUTHORITY. The execution, delivery and performance by the Grantor of
     this Security Agreement and any instrument, document or agreement required
     hereunder have been duly authorized and do not and will not: (i) violate
     any provision of any law, rule, regulation, writ, judgment or injunction
     presently in effect affecting the Grantor; (ii) require any consent or
     approval of the stockholders or violate any provision of the articles of
     incorporation or by-laws of the Grantor; or (iii) result in a breach of or
     constitute a default under any material agreement to which the Grantor is
     a party or by which the Grantor's properties may be bound or affected.

     C. LEGAL EFFECT. This Security Agreement constitutes, and any document,
     instrument or agreement required hereunder when delivered will constitute,
     legal, valid and binding obligations of the Grantor enforceable against the
     Grantor in accordance with their respective terms.

     D. FICTITIOUS TRADE STYLES. The Grantor currently uses no fictitious trade
     styles in connection with its business operations. The Grantor shall notify
     the Bank within thirty (30) days of the use of any fictitious trade style
     at any future date, indicating the trade style and state(s) of its use.

     E. TITLE TO COLLATERAL; PERMITTED LIENS. The Grantor has good and
     marketable title to the Collateral and the same is not now and shall not
     become subject to any security interest, encumbrance, lien or claim of any
     third person other than: (i) liens and security interests securing the
     Indebtedness or other indebtedness owned to the Bank: (ii) liens for taxes,
     assessments or similar charges either not yet due or being contested in
     good faith: (iii) liens of mechanics, materialmen, warehousemen, carriers
     or other like liens arising in the ordinary course of business and securing
     obligations which are not yet delinquent: (iv) purchase money liens or
     purchase money security interests upon or in any property acquired or held
     by the Grantor in the ordinary course of business to secure indebtedness
     outstanding on the date hereof or permitted to be incurred hereunder: (v)
     liens and security interests which, as of the date hereof, have been
     disclosed to and approved by the Bank in writing: and (vi) those liens and
     security interests which in the aggregate constitute an immaterial and
     insignificant monetary amount with respect to the net value of the
     Grantor's assets (collectively, the "Permitted Liens").

     F. FINANCIAL STATEMENTS. All financial statements, information and other
     data now or hereafter submitted to the Bank by the Grantor in connection
     with the transaction with respect to which this Security Agreement is
     entered into are true, accurate and correct and have been or will be
     prepared in accordance with generally accepted accounting principles
     consistently applied. Since the most recent submission of any such
     financial statement, information or other data to the Bank, the Grantor
     represents and warrants that no material adverse change in financial
     condition or operations as disclosed therein or thereby has

                                      (1)

<PAGE>
 
     occurred which has not been fully disclosed to the Bank in writing.

     G.  LITIGATION. Except as have been disclosed to the Bank in writing, there
     are no actions, suits or proceedings pending or, to the knowledge of the
     Grantor, threatened against or affecting the Grantor or the Grantor's
     properties before any court or administrative agency which, if determined
     adversely to the Grantor, would have a material adverse effect on the
     Grantor's financial condition, operations or the Collateral.

     H.  TAXES. The Grantor has filed all tax returns required to be filed and
     paid all taxes shown thereon to be due, including interest and penalties,
     other than taxes which are currently payable without penalty or interest or
     those which are being duly contested in good faith.

4.  GRANTOR'S COVENANTS. The Grantor covenants and agrees that, unless the Bank 
otherwise consents in writing, the Grantor shall at all times:

     A.  MAINTENANCE OF INSURANCE. Keep and maintain the Collateral insured for
     not less than its full replacement value against all risks of loss and
     damage and maintain such other insurance as is usually carried by companies
     engaged in similar businesses and owning similar properties in the same
     general areas in which the Grantor operates and maintain such other
     insurance and coverages as may be required by the Bank. All such insurance
     shall be in form and amount and with companies satisfactory to the Bank.
     With respect to insurance covering the Collateral, such insurance shall
     name the Bank as loss payee pursuant to a loss payable endorsement
     satisfactory to the Bank and shall not be altered or canceled except upon
     10 days' prior written notice to the Bank. Upon the Bank's request, the
     Grantor shall furnish the Bank with the original policy or binder of all
     such insurance.

     B.  MAINTENANCE OF COLLATERAL. Except for Permitted Liens, keep and
     maintain the Collateral free and clear of all levies, liens, encumbrances
     and other security interests (including, but not limited to, any lien of
     attachment, judgment or execution) and defend the Collateral against any
     such levy, lien, encumbrance or security interest; comply with all laws,
     statutes and regulations pertaining to the Collateral, its use and
     operation; execute, file and record such statements, notices and
     agreements, take such actions and obtain such certificates and other
     documents necessary to perfect, evidence and continue the Bank's security
     interest in the Collateral and the priority thereof; maintain accurate and
     complete records of the Collateral; and properly care for, house, store and
     maintain the Collateral in good condition, free of misuse, abuse and
     deterioration, other than normal wear and tear.

     C.  LOCATION AND MAINTENANCE OF EQUIPMENT.

          (i)   LOCATION. The Equipment shall at all times be in the Grantor's
          physical possession, shall not be held for sale or lease and shall be
          kept only at the following location(s): 2025 Battelle Boulevard,
          Richard, WA 99352.

          The Grantor shall not secrete, abandon or remove, or permit the
          removal of, the Equipment, or any part thereof, from the location(s)
          shown above or remove or permit to be removed any accessories now or
          hereafter placed upon the Equipment.

          (ii)   EQUIPMENT SCHEDULES. Upon the Bank's demand, the Grantor shall
          immediately provide the Bank with a complete and accurate description
          of the Equipment including, as applicable, the make, model,
          identification number and serial number of each item of Equipment. In
          addition, the Grantor shall immediately notify the Bank of the
          acquisition of any new or additional Equipment or the replacement of
          any existing Equipment and shall supply the Bank with a complete
          description of any such additional or replacement Equipment.

          (iii)  MAINTENANCE OF EQUIPMENT. The Grantor shall, at the Grantor's
          sole cost and expense, keep and maintain the Equipment in a good state
          of repair and shall not destroy, misuse, abuse, illegally use or be
          negligent in the care of the Equipment or any part thereof. The
          Grantor shall not remove, destroy, obliterate, change, cover, paint,
          deface or alter the name plates, serial numbers, labels or other
          distinguishing numbers or identification marks place upon the
          Equipment or any part thereof by or on behalf of the manufacturer, any
          dealer or rebuilder thereof, or the Bank. The Grantor shall not be
          released from any liability to the Bank hereunder because of any
          injury to or loss or destruction of the Equipment. The Grantor shall
          allow the Bank and its representatives free access to and the right to
          inspect the Equipment at all times and shall comply with the terms and
          conditions of any leases covering the real property on which the
          Equipment is located and any orders, ordinances, laws, regulations or
          rules of any federal, state or municipal agency or authority having
          jurisdiction of such real property or the conduct of business of the
          persons having control or possession of the Equipment.

          (iv)   FIXTURES. The Equipment is not now and shall not at any time
          hereafter be so affixed to the real property on which it is located as
          to become a fixture or a part thereof. The Equipment is now and shall
          at all times hereafter be and remain personal property of the Grantor.

     D.  LOCATION AND QUALITY OF INVENTORY. The Inventory (i) is now and shall
     at all times hereafter be of good and merchantable quality and free from
     defects: (ii) is not now and shall not at any time hereafter be stored with
     a bailee, warehouseman or similar party without the Bank's prior written
     consent and, in such event, the Grantor will concurrently therewith cause
     any such bailee, warehouseman or similar party to issue and deliver to the
     Bank, in form acceptable to the Bank, warehouse receipts in the Bank's name
     evidencing the storage of inventory; (iii) shall at all times (except as
     otherwise permitted by this section) be in the Grantor's physical
     possession; (iv) shall not be held by others on consignment, sale on
     approval, or sale or return; and (v) shall be kept only at the following
     locations(s): 2025 Battelle Boulevard, Richland, WA 99352.

     E.  INSPECTION RIGHTS. At any reasonable time and from time to time,
     permit the Bank or any representative thereof to examine and make copies of
     the records and visit the properties of the Grantor and discuss the
     business and operations of the Grantor with any employee or representative
     thereof. If the Grantor now or at any time hereafter maintains any records
     (including, but not limited to, computer generated records and computer
     programs for the generation of such records) in the possession of a third
     party, the Grantor hereby agrees to notify such third party, to permit the
     Bank free access to such records at all reasonable times and to provide the
     Bank with copies of any records it may request, all at the Grantor's
     expense, the amount of which shall be payable immediately upon demand.

     F.  REPORTING REQUIREMENTS. Promptly upon the Bank's request, deliver or
     cause to be delivered to the Bank such information pertaining to the
     Grantor, the Collateral or such other matters as the Bank may reasonably
     request.

     G.  TRANSFER OF COLLATERAL. Not sell, contract for sale, convey, transfer,
     assign, lease or sublet any of the Collateral except in the ordinary course
     of business as presently conducted by the Grantor and then, only for full,
     fair and reasonable consideration.

     H.  PAYMENT OF OBLIGATIONS. Pay all of the Grantor's liabilities and 
     obligations when due.

     I.  COMPENSATION OF EMPLOYEES. Compensate the Grantor's employees for
     services rendered at an hourly rate at least equal to the minimum hourly
     rate prescribed by any applicable federal or state law or regulation.

     J.  NOTICES. Give the Bank prompt written notice of: (i) any change in the
     Grantor's place of business or the acquisition of more than one place of
     business: (ii) any proposed or actual change in the Grantor's name,
     identity or business nature; (iii) any change in the location of any
     Collateral; (iv) any Event of Default; (v) litigation, arbitration or
     administrative proceedings to which the Grantor is a party and which
     affects the Collateral and in which the claim or liability exceeds
     $100,000.00; and (vi) any other matter which has resulted in, or might
     result in, a material adverse change in the Collateral or the financial
     condition or business operations of the Grantor.

5.  EVENTS OF DEFAULT. Any one or more of the following described events shall 
constitute an event of default ("Event of Default") hereunder:

     A.  NON-PAYMENT. There shall occur a failure to pay when due any payment of
     principal or interest or any other sum referred to in this Security
     Agreement

                                      (2)

<PAGE>
 
     or under any other document, instrument or agreement evidencing or relating
     to any indebtedness owed by the Grantor to the Bank or owed to the Bank by
     any obligor on the Indebtedness.

     B.  PERFORMANCE UNDER THIS AND OTHER AGREEMENTS. The Grantor shall fail in
     any material respect to perform or observe any term, covenant or agreement
     contained in this Security Agreement or in any document, instrument or
     agreement evidencing or relating to any indebtedness of the Grantor or any
     indebtedness of any obligor on the Indebtedness (whether such indebtedness
     is owed to the Bank or third persons), and any such failure (exclusive of
     the payment of money to the Bank, which failure shall constitute and be an
     immediate Event of Default if not paid when due or when demanded to be due)
     shall continue for more than 30 days after written notice from the Bank to
     the Grantor or the obligor on the Indebtedness of the existence and
     character of such Event of Default.

     C.  REPRESENTATIONS AND WARRANTIES; FINANCIAL STATEMENTS. Any
     representation or warranty made under or in connection with this Security
     Agreement or any financial statement or information given in connection
     with the transaction with respect to which this Security Agreement is
     entered into shall prove to have been incorrect in any material respect
     when made or given or when deemed to have been made or given.

     D.  INSOLVENCY. The Grantor or any obligor on or any guarantor of the
     Indebtedness shall: (i) become insolvent or be unable to pay its debts as
     they mature; (ii) make an assignment for the benefit of creditors or to an
     agent authorized to liquidate any substantial amount of its properties or
     assets; (iii) file a voluntary petition in bankruptcy or seeking
     reorganization or to effect a plan or other arrangement with creditors;
     (iv) file an answer admitting the material allegations of an involuntary
     petition relating to bankruptcy or reorganization or join in any such
     petition; (v) become or be adjudicated a bankrupt; (vi) apply for or
     consent to the appointment of, or consent that an order be made appointing,
     any receiver, custodian or trustee, for itself or any of its properties,
     assets or businesses; or (vii) any receiver, custodian or trustee shall
     have been appointed for all or a substantial part of its properties, assets
     or businesses and shall not be discharged within 30 days after the date of
     such appointment.

     E.  EXECUTION. Any writ of execution or attachment or any judgment lien
     shall be issued against the Collateral and shall not be discharged or
     bonded against or released within 30 days after the issuance or attachment
     of such writ or lien.

     F.  IMPAIRMENT OF COLLATERAL. There shall occur any injury or damage to all
     or any part of the Collateral or all or any part of the Collateral shall
     be lost, stolen or destroyed.

     G.  REVOCATION OR LIMITATION OF GUARANTY. Any guaranty given with respect
     to the Indebtedness shall be revoked or limited or its enforceability or
     validity shall be contested by any guarantor, by operation of law, legal
     proceeding or otherwise or any guarantor who is a natural person shall die.

     H.  SUSPENSION. The Grantor or any obligor on the Indebtedness shall
     voluntarily suspend the transaction of business or allow to be suspended,
     terminated, revoked or expired any permit, license or approval of any
     federal, state or municipal agency or authority necessary to conduct such
     person's business as now conducted.

     I.  CHANGE IN OWNERSHIP. There shall occur a sale, transfer, disposition or
     encumbrance (whether voluntary or involuntary), or an agreement shall be
     entered into to do so, with respect to more than 10% of the issued and
     outstanding capital stock of the Grantor or any obligor on the
     Indebtedness, if a corporation, or there shall occur a change in any
     general partner or a change affecting the control of the Grantor or any
     obligor on the Indebtedness, if a partnership.

6. BANK'S RIGHTS AND REMEDIES ON DEFAULT. Upon the occurrence of any Event of 
Default, the Bank may, at its sole and absolute election, without demand and 
only upon such notice as may be required by law:

     A.  ACCELERATION. Declare the Indebtedness and any or all other
     indebtedness owing to the Bank by the Grantor or any obligor on the
     Indebtedness (however such indebtedness may be evidenced or secured)
     immediately due and payable, whether or not otherwise due and payable.

     B.  CEASE EXTENDING CREDIT. Cease extending credit to or for the account of
     the Grantor or any obligor on the Indebtedness under any agreement now
     existing or hereafter entered into with the Bank.

     C.  TERMINATION. Terminate any agreement as to any future obligation of the
     Bank without affecting the Grantor's obligations to the Bank or the Bank's
     rights and remedies under this Security Agreement or under any other
     document, instrument or agreement.

     D.  SEGREGATE COLLECTIONS. Require the Grantor to segregate all collections
     and proceeds of the Collateral so that they are capable of identification
     and to deliver such collections and proceeds to the Bank, in kind, without
     commingling, at such times and in such manner as required by the Bank.

     E.  RECORDS OF COLLATERAL. Require the Grantor to periodically deliver to
     the Bank records and schedules showing the status, condition and location
     of the Collateral and such contracts or other matters which affect the
     Collateral. In connection herewith, the Bank may conduct such audits or
     other examinations of such records, including, but not limited to,
     verification of balances owing by any account debtor of the Grantor, as the
     Bank, in its sole and absolute discretion, deems necessary.

     F.  NOTIFICATION OF ACCOUNT DEBTORS. Notify any or all of the Grantor's
     account debtors, buyers or transferees of the Collateral or other persons
     of the Bank's interest in the Collateral and the proceeds thereof and
     instruct such person(s) to thereafter make any payment due the Grantor
     directly to the Bank.

     The Grantor hereby irrevocably constitutes and appoints the Bank as its
     attorney-in-fact to (i) endorse the name of the Grantor on any notes,
     acceptances, checks, drafts, money orders or other evidence of payment that
     may come into the Bank's possession; (ii) sign the name of the Grantor on
     any invoice or bill of lading relating to any of the Collateral; (iii)
     notify post office authorities to change the address for delivery of mail
     addressed to the Grantor to such address as the Bank may designate and take
     possession of and open mail addressed to the Grantor and remove therefrom
     proceeds of and payments on the Collateral; and (iv) demand, receive and
     enforce payment and give receipts, releases and satisfactions for and sue
     for all money payable to the Grantor. All of the preceding may be done
     either in the name of the Bank or in the name of the Grantor with the same
     force and effect as the Grantor could have done had this Security Agreement
     not been entered into.

     G.  COMPROMISE. Grant extensions, compromise claims and settle any account
     for less than the amount owing thereunder, all without notice to the
     Grantor or any obligor on or any guarantor of the Indebtedness.

     H.  PROTECTION OF SECURITY INTEREST IN COLLATERAL. Make such payments and
     do such acts as the Bank, in its sole judgment, considers necessary and
     reasonable to protect its security interest in the Collateral. The Grantor
     hereby irrevocably authorizes the Bank to pay, purchase, contest or
     compromise any encumbrance, lien or claim which the Bank, in its sole
     judgment, deems to be prior or superior to its security interest. Further,
     the Grantor hereby agrees to pay to the Bank, upon demand therefor, all
     expenses and expenditures (including attorneys' fees) incurred in
     connection with the foregoing.
     
     I.  FORECLOSURE. Enforce any security interest or lien given or provided
     for under this Security Agreement or under any other document relating to
     the Collateral, in such manner and such order, as to all or any part of the
     Collateral, as the Bank, in its sole judgment, deems to be necessary or
     appropriate and the Grantor hereby waives any and all rights, obligations
     or defenses now or hereafter established by law relating to the foregoing.
     In the enforcement of its security interest in the Collateral, the Bank is
     authorized to enter upon the premises where any Collateral is located and
     take possession of the Collateral or

                                      (3)

<PAGE>
 
     any part thereof, together with the Grantor's records pertaining thereto,
     or the Bank may require the Grantor to assemble the Collateral and records
     pertaining thereto and make such Collateral and records available to the
     Bank at a place designated by the Bank. The Bank may sell the Collateral or
     any portions thereof, together with all additions, accessions and
     accessories thereto, giving only such notices and following only such
     procedures as are required by law, at either a public or private sale, or
     both, with or without having the Collateral present at the time of sale,
     which sale shall be on such terms and conditions and conducted in such
     manner as the Bank determines in its sole judgment to be commercially
     reasonable. Any deficiency which exists after the disposition or
     liquidation of the Collateral shall be a continuing liability or any
     obligor on or any guarantor of the Indebtedness and shall be immediately
     paid to the Bank.

     J.  APPLICATION OF PROCEEDS. All amounts received by the Bank as proceeds
     from the disposition or liquidation of the Collateral shall be applied as
     follows: first, to the costs and expenses of collection, including court
     costs and reasonable attorneys' fees, whether or not suit is commenced by
     the Bank; next, to those costs and expenses incurred by the Bank in
     protecting, preserving, enforcing, collecting, selling or disposing of the
     Collateral; next, to the payment of accrued and unpaid interest on all of
     the Indebtedness; next, to the payment of the outstanding principal balance
     of the Indebtedness; and last, to the payment of any other indebtedness
     owned by the Grantor to the Bank. Any excess Collateral or excess proceeds
     existing after the disposition or liquidation of the Collateral will be
     returned or paid by the Bank to the Grantor.

     K.  NON-EXCLUSIVITY OF REMEDIES. Exercise one or more of the Bank's rights
     set forth herein or seek such other rights or pursue such other remedies as
     may be provided by law, in equity or in any other agreement now existing or
     hereafter entered into between the Bank and the Grantor or any obligor on
     or guarantor of the Indebtedness, or otherwise.

7.  MISCELLANEOUS PROVISIONS.

     A.  AMOUNTS PAYABLE UNDER THIS SECURITY AGREEMENT. If the Grantor fails to
     pay on demand the amount of any obligations referred to in this Security
     Agreement, the Bank may pay such amount at its option and without any
     obligation to do so and without waiving any default occasioned by the
     Grantor's failure to pay such amount. All amounts so paid by the Bank,
     together with reasonable attorneys' fees and all other costs, charges and
     expenses relating to the Indebtedness, shall be a part of the Indebtedness
     and shall bear interest at the highest rate chargeable on any Indebtedness
     until paid in full.

     B.  OTHER TERMS. Terms not otherwise defined in this Security Agreement
     shall have the meanings attributed to such terms in the California Uniform
     Commercial Code.

     C.  RELIANCE. Each warranty, representation, covenant and agreement
     contained in this Security Agreement shall be conclusively presumed to have
     been relied upon by the Bank regardless of any investigation made or
     information possessed by the Bank and shall be cumulative and in addition
     to any other warranties, representations, covenants or agreements which the
     Grantor shall now or hereafter give, or cause to be given, to the Bank.

     D.  ATTORNEYS' FEES. In the event of any action in relation to this
     Security Agreement, the Collateral or any document, instrument or agreement
     secured hereby or related hereto, the prevailing party, in addition to all
     other sums to which it may entitled, shall be entitled to reasonable
     attorneys' fees.

     E.  NOTICES. All notices, payments, requests, information and demands which
     either party hereto may desire, or be required to give or make to the other
     party, shall be given or made to such party by hand delivery or through
     deposit in the United States mail, postage prepaid, or by Western Union
     telegram addressed to the address set forth below such party's signature
     to this Security Agreement or to such other address as may be specified
     from time to time in writing by either party to the other.

     F.  WAIVER. Neither the failure nor delay by the Bank in exercising any
     right hereunder or under any document, instrument or agreement mentioned
     herein shall operate as a waiver thereof, nor shall any single or partial
     exercise of any right hereunder or under any other document, instrument or
     agreement mentioned herein preclude other or further exercise thereof or
     the exercise of any other right; nor shall any waiver of any right or
     default hereunder or under any other document, instrument or agreement
     mentioned herein constitute a waiver of any other right or default or
     constitute a waiver of any other default of the same or any other term or
     provision.

     G.  ASSIGNMENT. This Security Agreement shall be binding upon the inure to
     the benefit of the Grantor and the Bank and their respective successors and
     assigns, except that the Grantor shall not have the right to assign the
     Grantor's rights hereunder or any interest herein without the Bank's prior
     written consent. The Bank may sell or assign all or any portion of its
     rights and benefits hereunder and, in connection therewith, may deliver to
     such prospective buyer or assignee financial statements and other relevant
     information pertaining to the Grantor or any obligor on the Indebtedness.

     H.  SEVERABILITY. Should any one or more provisions of this Security
     Agreement be determined to be illegal or unenforceable, all other
     provisions shall remain effective.

     I.  JURISDICTION. This Security Agreement and the rights of the parties
     hereunder to and concerning the Collateral, and any documents, instruments
     or agreements mentioned or referred to herein, shall be governed by and
     construed according to the laws of the State of California, to the
     jurisdiction of whose courts the parties hereby submit.

IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be
executed as of the date first hereinabove written.

BANK:                                           GRANTOR:

SANWA BANK CALIFORNIA                           ATG RICHLAND CORPORATION  

BY: /s/ John Norawong                           BY: /s/ Doreen Chiu  
   ---------------------------------               -----------------------------
   John Norawong, Authorized Officer               Doreen Chiu, President


ADDRESS:                                        ADDRESS:

Oakland Main Office                             2025 Battelle Boulevard
2127 Broadway                                   Richland, WA 99352
Oakland, CA 94612

                                      (4)

<PAGE>
 
                       RIDER TO LINE OF CREDIT AGREEMENT

     This Rider shall be deemed to be subject to the terms of that certain Line
of Credit Agreement dated as of July 1, 1998 by and between Bank and Borrower,
as it may be amended from time to time, and any and all addenda and riders
thereto (collectively the "Agreement"). Unless otherwise defined herein, all
terms used in this Rider shall have the same meanings as in the Agreement. To
the extent that any of the terms or provisions of this Rider conflict with those
contained in the Agreement, the terms and provisions contained herein shall
control.

     In addition to the covenants contained in Section 6 of the Agreement,
Borrower shall perform all acts reasonably necessary to ensure that Borrower
becomes Year 2000 Compliant in a timely manner. Such acts shall include
performing a review and assessment of all of Borrower's systems and adopting a
plan with a budget for the remediation and testing of such systems. For the
purposes hereof, "Year 2000 Complaint" shall mean that all software, hardware,
firmware, equipment, goods or systems, utilized by and material to the business
operations or financial condition of the Borrower, will properly perform date
sensitive functions before, during and after the Year 2000. Borrower shall use
its best efforts to remain informed as to whether its major customers, suppliers
and vendors are Year 2000 Complaint. Borrower shall, upon the Bank's request,
provide Bank with such certifications or other evidence of Borrower's compliance
with the terms hereof as Bank may from time to time require.

     Except as specifically provided in this Rider, all other terms, conditions
and covenants contained in the Agreement shall remain unchanged and shall
continue in full force and effect.

     IN WITNESS WHEREOF, this Rider has been executed by the parties hereto as 
of the date first hereinabove written.

BANK:                                        BORROWER:

SANWA BANK CALIFORNIA                        ATG INC.

By: /s/ John Norawong                        By: /s/ Doreen Chiu
  ----------------------------------            ----------------------------
  John Norawong, Authorized Officer             Doreen Chiu, President   
    

<PAGE>
 
[LOGO OF SANWA BANK, CALIFORNIA APPEARS HERE]


                   CERTIFIED CORPORATE RESOLUTION TO BORROW

WHEREAS, ATG INC., (the "Corporation") has made application to SANWA BANK
CALIFORNIA (the "Bank") for credit accommodations which may consist of but shall
in no way be limited to the following: the renewal, continuation or extension of
an existing obligation; the extension of a new loan, line of credit or
commitment; the issuance of letters of credit or banker's acceptances; or the
purchase or sale through the Bank of foreign currencies.

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

     NAME                POSITION                            SIGNATURE  
     ----                --------                            ---------

     DOREEN CHIU         President                     /s/ Doreen Chiu
                                                       ---------------------

     FRANK CHIU          Vice President/Secretary      /s/ Frank Chiu
                                                       ---------------------
is authorized, in the name of and on behalf of the Corporation to take the 
following actions:

     1.   Borrow money from the Bank in such amounts and upon such terms and
     conditions as are agreed upon by the officers of the Corporation and the
     Bank; and execute and deliver or endorse such evidences of indebtedness or
     renewals thereof or agreements therefor as may be required by the Bank, all
     in such form and content as the officers of the Corporation executing such
     documents shall approve (which approval shall be evidenced by the execution
     and delivery of such documents); provided, however, that the maximum amount
     of such indebtedness shall not exceed the principal sum of $11,000,000.00
     exclusive of any interest, fees, attorneys' fees and other costs and
     expenses related to the indebtedness.

     2. Grant security interests and liens in any real, personal or other
     property belonging to or under the control of the Corporation as security
     for any indebtedness of the Corporation to the Bank; and execute and
     deliver to the Bank any and all security agreements, pledges, mortgages,
     deeds of trust and other security instruments and any other documents to
     effectuate the grant of such security interests and liens, which security
     instruments and other documents shall be in such form and content as the
     officers of the Corporation executing such security instruments and other
     documents shall approve and which approval shall be evidenced by the
     execution and delivery of such security instruments and other documents.

     3.   Waive on behalf of the Corporation, and in any agreement, instrument,
     or document executed by the Corporation include a waiver of, any and all
     rights of the Corporation to require the Bank to adhere to certain
     processes, including without limitation, the right to a jury trial in an
     action or suit against the Bank.

     4.   Execute such evidences of indebtedness, agreements, security
     instruments and other documents and to take such other actions as are
     herein authorized.

     5.   Include in any agreement, instrument or document executed by the
     Corporation in connection with the actions herein authorized a provision
     requiring that any dispute arising under such agreement, instrument or 
     document shall be resolved by mediation, arbitration, or other similar
     dispute resolution method.

     6.   Sell to or discount or re-discount with the Bank any and all 
     negotiable instruments, contracts or instruments or evidences of 
     indebtedness at any time held by the Corporation; and endorse, transfer and
     deliver the same, together with guaranties of payment or repurchase 
     thereof, to the Bank (for which the Bank is hereby authorized and directed 
     to pay the proceeds of such sale, discount or re-discount as directed by 
     such endorsement without inquiring into the circumstances of its issue or 
     endorsement or the disposition of such proceeds).

     7.   Apply for letters of credit or seek the issuance of banker's 
     acceptances under which the Corporation shall be liable to the Bank for 
     repayment.

     8.   Purchase and sell foreign currencies, on behalf of the Corporation, 
     whether for immediate or future delivery, in such amounts and upon such
     terms and conditions as the officers of the corporation may deem
     appropriate, and give any instructions for transfers or deposits of monies
     by check, drafts, cable, letter or otherwise for any purpose incidental to
     the foregoing, and authorize or direct charges to the depository account or
     accounts of the Corporation for the cost of any foreign currencies so
     purchased through the Bank.

     9. Designate in writing to the Bank in accordance with the terms of any
     agreement or other document executed by the above-named individuals one or
     more individuals who shall have the authority as provided herein, to (a)
     request advances under lines of credit extended by the Bank to the
     Corporation; (b) apply for letters of credit or seek the issuance of
     banker's acceptances under which the Corporation shall be liable to the
     Bank for repayment; (c) make deposits and receive and execute receipts for
     deposits on accounts of the Corporation maintained with the Bank; (d) make
     withdrawals and receive and execute receipts for withdrawals on account of
     the Corporation maintained with the Bank; and (e) purchase and sell foreign
     currencies.

     10.  Transact any other business with the Bank incidental to the powers 
     hereinabove stated.

RESOLVED FURTHER, that all such evidences of indebtedness, agreements, security 
instruments and other documents executed in the name of and on behalf of the 
Corporation and all such actions taken on behalf of the Corporation in 
connection with the matters described herein are hereby ratified and approved.

RESOLVED FURTHER, that the Bank is authorized to act upon these resolutions 
until written notice of their revocation is delivered to the Bank.

RESOLVED FURTHER, that any resolution set forth herein is in addition to and 
does not supersede any resolutions previously given by the Corporation to the 
Bank.

RESOLVED FURTHER, that the Secretary of the Corporation be, and hereby is, 
authorized and directed to prepare, execute and deliver to the Bank a certified 
copy of the foregoing resolutions.


I DO HEREBY CERTIFY that I am the Secretary of the ATG Inc., a California 
corporation, and I do hereby further certify that the foregoing is a true copy 
of the resolutions of the Board of Directors of the Corporation adopted and 
approved in accordance with all applicable provisions of law and the Articles 
and By-Laws of 

                                      (1)
<PAGE>
 
IN WITNESS WHEREOF, this certificate is executed on July ?, 1998.


                                             CERTIFIED TO AND ATTESTED BY:
                         
                                               /s/ FRANK CHIU
                                             X ---------------------------------
                                               *Secretary or Assistant Secretary

                                             X _________________________________

*Note: In case the Secretary or other certifying officer is designated by the
       foregoing resolutions as one of the signing officers, this certificate
       should also be signed by a second Officer or Director of the Corporation.

                                      (2)
<PAGE>
 
 
[LOGO OF SANWA BANK, CALIFORNIA APPEARS HERE]


                CERTIFIED CORPORATE RESOLUTION TO GUARANTY AND 
                      GRANT SECURITY INTERESTS AND LIENS

WHEREAS, ATG INC. (the "Borrower") has made application to SANWA BANK CALIFORNIA
(the "Bank") for credit accommodations which may consist of but shall in no way 
be limited to the following: the renewal, continuation or extension of an 
existing obligation; the extension of a new loan, line of credit or commitment; 
the issuance of letters of credit or banker's acceptances; or the purchase or 
sale through the Bank of foreign currencies; and

WHEREAS, the business interests of ATG RICHLAND CORPORATION (the "Corporation") 
will be benefited by the credit accommodations extended or to be extended from 
the Bank to the Borrower.

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

    NAME                   POSITION                          SIGNATURE
    ----                   --------                          ---------
                           
    DOREEN CHIU            President                     /s/ Doreen Chiu
                                                         --------------------
                           
    FRANK CHIU             Vice President/Secretary      /s/ Frank Chiu
                                                         --------------------
is authorized, in the name of and on behalf of the Corporation to take the 
following actions:

    1. Guaranty repayment of any and all indebtedness of the Borrower to the
    Bank; provided, however, that the maximum amount of indebtedness which may
    be guaranteed pursuant to this authorization shall not exceed the principal
    sum of $11,000,000.00 exclusive of any interest, fees, attorneys' fees and
    other costs and expenses related to such indebtedness. Any such guaranty
    shall be in such form and content as the officers of the Corporation
    executing such guaranty shall approve, and which approval shall be evidenced
    by the execution and delivery of such guaranty.

    2. Grant security interests and liens in any real, personal or other
    property belonging to or under the control of the Corporation as security
    for any indebtedness pursuant to a guaranty by the corporation of the
    Borrower's obligations to the Bank; execute and deliver to the Bank any and
    all security agreements, pledges, mortgages, deeds of trust and such other
    security instruments and any other documents to effectuate the grant of such
    security interests and liens, which security instruments and other documents
    shall be in such form and content as the officers of the Corporation
    executing such security instruments and other ducuments shall approve and
    which approval shall be evidenced by the execution and delivery of such
    security instruments and other documents; and apply for letters of credit or
    seek the issuance of banker's acceptances with respect to any obligations
    secured.

    3. Waive on behalf of the Corporation, and in any agreement, instrument, or
    document executed by the Corporation include in a waiver of, any and all
    rights of the Corporation to require the Bank to adhere to certain
    processes, including without limitation, the right to a jury trial in any
    action or suit against the Bank.

    4. Include in any agreement, instrument or document executed by the
    Corporation in connection with the actions herein authorized a provision
    requiring that any dispute arising under such agreement, instrument or
    document shall be resolved by mediation, arbitration, or other similar
    dispute resolution method.

    5. Transact any other business with the Bank incidental to the powers 
    hereinabove stated.

RESOLVED FURTHER, that all documents executed in the name of and on behalf of 
the Corporation and all such actions taken on behalf of the Corporation in 
connection with the matters described herein are hereby ratified and approved.

RESOLVED FURTHER, that the Bank is authorized to act upon these resolutions
until written notice of their revocation is delivered to the Bank.

RESOLVED FURTHER, that any resolution set forth herein is in addition to and 
does not supersede any resolutions previously given by the Corporation to the 
Bank.

RESOLVED FURTHER, that the Secretary of the Corporation be, and hereby is, 
authorized and directed to prepare, execute and deliver to the Bank a certified
copy of the foregoing resolutions.


I DO HEREBY CERTIFY that I am the Secretary of ATG Richland Corporation, a 
Washington corporation, and I do hereby further certify that the foregoing is a 
true copy of the resolutions of the Board of Directors of the Corporation 
adopted and approved in accordance with all applicable provisions of law and the
Articles and By-Laws of the Corporation either by unanimous written consent or 
at a meeting which was duly called and held, at which meeting a majority of the 
Board of Directors of the Corporation was present and voted in favor of the 
resolutions.

I HEREBY FURTHER CERTIFY that such resolutions are presently in full force and
effect and have not been amended or revoked. I do further certify that the above
persons have been duly elected and qualified as and, this day are officers of
the Corporation, holding their respective offices appearing by their names, and
that the signatures appearing opposite their names are the genuine signatures of
such persons.

                                      (1)

<PAGE>
 
the Corporation either by unanimous written consent or at a meeting which was 
duly called and held,at which meeting a majority of the Board of Directors of 
the Corporation was present and voted in favor of the resolutions.

I HEREBY FURTHER CERTIFY that such resolutions are presently in full force and 
effect and have not been amended or revoked. I do further certify that the above
persons have been duly elected and qualified as and, this day are, officers of 
the Corporation, holding their respective offices appearing by their names, and 
that the signatures appearing opposite their names are the genuine signatures of
such persons.

IN WITNESS WHEREOF, this certificate has been executed on July 1, 1998.

                                          CERTIFIED TO AND ATTESTED BY:
                         
                                               /s/ FRANK CHIU
                                          X ------------------------------------
                                               *Secretary or Assistant Secretary

                                          X ____________________________________

*Note: In case the Secretary or other certifying officer is designated by the
       foregoing resolutions as one of the signing officers, this certificate
       should also be signed by a second Officer or Director of the Corporation.
       
                                      (2)