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Term Loan Agreement - Sanwa Bank California and ATG Inc.

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                              TERM LOAN AGREEMENT

This Term Loan Agreement ("Agreement") is made and entered into this 18th day of
September, 1997 by and between SANWA BANK 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.  "Business Day" shall mean a day, other than a Saturday or Sunday, on
       which commercial banks are open for business in California.

       B.  "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.

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

       D.  "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).

       E.  "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,
       emissions 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.

       F.  "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.

       G.  "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.

       H.  "Event of Default" shall have the meaning set forth in the section
       herein entitled "Events of Default".

       I.  "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.

       J.  "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 otherwise assures a creditor against loss
       and (ii) obligations under leases which shall have been or should be, in
       accordance with generally accepted 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.

       K.  "Obligations" shall mean all amounts owing by the Borrower to the
       Bank pursuant to this Agreement.

       L.  "Permitted Liens" shall mean: (i) liens and security interests
       securing indebtedness owed by the Borrower to the Bank; (ii) liens for
       taxes, assessment, 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 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 Borrower's assets.

       M.  "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 made by the Bank at,
       below or above such reference rate.

       N.  "Subordinated Debt" shall mean such liabilities of the Borrower which
       have been subordinated to those owed 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 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.
<PAGE>
 
                                  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 fallow.

2.02.  Term Loan, The Bank agrees to lend to the Borrower up to the maximum
amount of $400,000.00 (the "Term Loan").

       A.  Purpose. The Term Loan shall be used to pay off an existing term loan
       with the Bank and to provide additional funds to purchase 30 acres of
       unimproved land to build a new facility.

       B.  Interest Rate. Interest shall accrue on the outstanding principal
       balance under this Term Loan at a variable rate equal to the Bank's
       Reference Rate, as it may change from time to time, plus 1,750% per
       annum. (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 an October 31,
       1997. If interest is not paid as it becomes due, without waiving any
       Event of Default occasioned by such non-payment, the Bank may, at its
       option but without any obligation to do so, add such unpaid interest to
       principal and it shall thereafter become and be treated as part of the
       principal and shall thereafter bear like interest.

       D.  Repayment of Principal. Unless sooner due in accordance with the
       terms of this Agreement, the Borrower hereby promises and agrees to pay
       principal in 60 monthly installments of S6,667.00 per installment,
       commencing on October 31, 1997 and continuing on the last day of each
       month thereafter.

       On September 30, 2002 the Borrower hereby promises and agrees to pay to
       the Bank in full the aggregate unpaid principal balance 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 Term Loan 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.  Term Loan Account. The Bank shall maintain on its books a record of
       account in which the Bank shall make entries setting forth all payments
       made, the application of such payments to interest and principal, accrued
       and unpaid interest (if any) and the outstanding principal balance under
       the Term Loan (the "Term Loan Account. The Bank shall provide the
       Borrower with a monthly statement of the Borrower's Term Loan 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.

                                  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 became 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, pants and
       supplies of every kind and description, including inventory temporarily
       out of the Borrower's custody or possession, together with all returns an
       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 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.  Real Property Security. The Borrower hereby agrees that all of the
Obligations referenced in this Agreement and the Borrower's performance of each
and all of the terms, covenants and agreements contained in this Agreement shall
be secured by a deed of trust, in farm and substance satisfactory to the Bank
(the "Deed of Trust"), encumbering as a lien of second encumbrance certain real
property described in the attached "Real Property Schedule" (the "Real
Property") located in the County of Alameda, State of California, subject only
to current taxes and assessments not yet due and payable.

3.03.  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.

3.04.  Exclusion of Consumer Debt. The Obligations and performance secured
hereby shall not include any indebtedness of the Borrower incurred for personal,
<PAGE>
 
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. The obligation
of the Bank to make the initial extension of credit hereunder is subject to the
conditions precedent that the Bank shall have received before the date of such
extension of credit 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.  Guarantors. Continuing guaranties in favor of the Bank, in form and
       substance satisfactory to the Bank, executed by Doreen Chiu, Frank Chiu
       and ATG Richland Corporation (each a "Guarantor"), together with evidence
       that the execution, delivery and performance of the Guaranties by each
       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.  Real Property Documents. The following documents relating to the real
       property security provided for in this Agreement:

               (i)    An appraisal of the Real Property.

               (ii)   A title insurance policy or binder in the amount of
               $400,000.00 issued by a title insurance company satisfactory to
               the Bank and in such form and substance and with such 
               endorsements as are satisfactory to the Bank. Such title
               insurance policy or binder shall indicate to the Bank's
               satisfaction that the Deed of Trust shall constitute a lien of
               second encumbrance on the Real Property subject only to Permitted
               Title Exceptions.

               (iii)  Evidence that the Deed of Trust has been recorded and
               constitutes a lien on the Real Property subject only to the
               Permitted Title Exceptions.

               (iv)   Reimbursement to the Bank in the amount of all escrow,
               recordation and appraisal fees, title guaranty or insurance
               premiums, closing costs and all other out-of-pocket expenses
               incurred by the Bank with respect to the Real Property.

       F.  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. The obligation of the
Bank to make any extensions of credit to or on account of the Borrower
(including the initial extension of credit) shall be subject to the further
conditions precedent that, as of the date of each extension of credit and after
the making of such extension of credit:

       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
bylaws 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.

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,
<PAGE>
 
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 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
Tide 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 an 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 its 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, claim and allowances; and properly claim 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 the 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 times 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
       of 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 an 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 an 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 representative 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 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 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 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 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:
<PAGE>

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 the
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 account payable, the cost and expenses of which shall be paid by the
Borrower to the Bank upon demand.

6.08.  Repenting 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.  Interim Statements. Not later than 30 days after the end of each
       fiscal quarter, the Borrower's financial statement as of the end of such
       fiscal quarter.

       C.  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 owed or to be owed to the Bank, (ii) indebtedness to trade
creditors incurred in the ordinary course of the Borrower's business, or (iii)
(iii) indebtedness incurred equipment leasing up to an aggregate amount not
exceeding $2,000,000.00 in any one fiscal year.

6.12.  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
for equipment leasing in any one fiscal year.

6.13.  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.

6.14.  Change in the Nature or 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.

6.15.  Financial Condition, Maintain at all times:

       A.  Net Worth, A minimum Effective Tangible Net Worth of not less than
       512,250,000.00.

       B.  Debt to Net Worth Ratio, A Debt to Effective Tangible Net Worth ratio
       of not more than 1.15 to 1.00.

       C.  Quick Ratio, A ratio of cash, cash equivalents, and accounts
       receivable to current liabilities of not less than 1,30 to 1.00.

       D.  Debt Service Coverage Ratio, A Debt Service Coverage Ratio (defined
       herein as the sum of net profit after tax plus depreciation, amortization
       and interest expense less dividends, distributions and withdrawals
       divided by the current portion of long term debt plus interest expense)
       of not less than 1.05 to 1.00.

       E.  Profitability, The Borrower shall not show a loss in any two
       consecutive fiscal quarters.

6.16.  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.

6.17.  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 54,000,000,00 in any one
fiscal year.

6.18.  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 plus accrued interest 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 update of the status of 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;
<PAGE>
 
(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 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 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.

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 of 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 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 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.
<PAGE>
 
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 judgment, 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 claim which the Bank, in its sole judgment, 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 is
authorized to enter upon the premises when 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 of 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 pan, 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, nonbinding conference or
       conferences between the parties in which a retired judge or justice from
       the JAMS panel will seek to guide the panics 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 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
       panics 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.
<PAGE>
 
       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 setoff, foreclosure against any real or personal
       property collateral, or the obtaining of provisional or ancillary
       remedies, such as injunctive relief of 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 requited 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 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.

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 right 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 panics 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:_______________________________________          By:_________________________
Craig Fendel, Authorized Officer                      Doreen Chiu, President

Address:                                            Address: 

Oakland Main Office                                 47375 Fremont Boulevard
2127 Broadway                                       Fremont, CA 94538
Oakland, CA 94612
 
<PAGE>
 
                            REAL PROPERTY SCHEDULE
                                        
The following is the Real Property described in the Collateral section of this
Term Loan Agreement dated September 18, 1997 to which this Schedule is attached.


Item 1: 47375 Fremont Boulevard, Fremont, CA 94538.

All that real property located in the County of Alameda, State of California,
legally described as follows:

    Parcel 1, Parcel Map 4703, filed November 22, 1985, Map Book 157, Pages 57-
    58, Alameda County Records.

    Excepting therefrom:

    Reserving to the Grantor and its successors and assigns all oil, gas,
    mineral, geothermal, and hydrocarbon substances in and under or that may be
    produced below a depth of 500 feet below the surface of said property
    without any right of entry upon the surface of said land for the purposes of
    mining, drilling, exploring or extracting such oil, gas, mineral,
    geothermal, or hydrocarbon substances and without any right to the use of or
    rights in or to any portion of the surface of said land to a depth of 500
    feet below the surface thereof reserved by King and Lyons, a California
    general partnership, recorded November 22, 1985, Series No, 85-251319.

    A,P, No, 519-1693-021