EXHIBIT 10.53
                              AMENDED AND RESTATED
                           TERM LOAN CREDIT AGREEMENT


     This Term Loan Credit Agreement (the  "Agreement") is made and entered into
this  ___________________ day of May, 1997, by and between SANWA BANK CALIFORNIA
(the "Bank") and ELEXSYS INTERNATIONAL, INC. (the "Borrower") , on the terms and
conditions that follow:

     Whereas Bank and Borrower  entered into a Term Loan Credit  Agreement dated
as of January 27, 1997, (the "Prior Agreement"); and

     Whereas, Bank and Borrower wish to amend and restate the Prior Agreement.

     Now, therefore, the parties hereto agree as follows:

                                    SECTION I
                                   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 described in Section 3.01.

          (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 less all intangible assets of the Borrower
     (i.e., goodwill, trademarks, patents, copyrights,  organization expense and
     similar intangible items).

          (e) "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.

          (f) "Event of Default": shall have the meaning set forth in Section 7.

          (g) "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.

          (h) "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 the Term Loan, as hereinafter defined.

          (i) "Permitted Indebtedness":  shall mean (i) Indebtedness of Borrower
     in favor of Bank arising under this  Agreement or any other Loan  Document;
     (ii)  Indebtedness  existing on the date hereof and disclosed in writing to
     the Bank; (iii)  Subordinated  Debt; (iv)  Indebtedness to trade creditors,
     including,  without  limitation,  affiliates  of Borrower,  incurred in the
     ordinary  course  of  business;  (v) Other  Indebtedness  of  Borrower  not
     exceeding  $1,000,000.00  in the aggregate  outstanding  at any time;  (vi)
     Contingent  obligations  of Borrowing  consisting of guarantees  (and other
     credit  support) of the obligations of 

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     vendors and suppliers of Borrower in respect of  transactions  entered into
     in the ordinary  course of  business;  (vii)  Indebtedness  with respect to
     capital  lease  obligations  and purchase  money  indebtedness  incurred in
     connection  with the  acquisition  of assets  secured by  Permitted  Liens;
     (viii)  Extensions,  renewals,  refundings,  refinancings,   modifications,
     amendments and restatements of any of the items of Permitted Indebtedness.

          (j) "Permitted Investment": shall mean (i) investments existing on the
     date hereof and disclosed in writing to the Bank;  (ii)  marketable  direct
     obligations  issued or  unconditionally  guaranteed by the United States of
     America or any  agency or any State  thereof  maturing  within one (1) year
     from the date of  acquisition  thereof;  (iii)commercial  paper maturing no
     more  than one (1) year from the date of  creation  thereof  and  currently
     having  the  highest  rating  obtainable  from  either  Standard  &  Poor's
     Corporation or Moody's Investors Service, Inc.; (iv) investments consisting
     of deposits  maturing no more than one (1) year from the date of investment
     therein  issued by Bank; (v) extensions of credit in the nature of accounts
     receivable or notes  receivable  arising from the sale or lease of goods or
     services in the ordinary course of business; (vi) investments consisting of
     the  endorsement  of  negotiable  instruments  for deposit or collection or
     similar transactions in the ordinary course of business; (vii) investments,
     including debt  obligations,  received in connection with the bankruptcy or
     reorganization  of customers or suppliers  and in  settlement of delinquent
     obligations of, and other disputes with,  customers or suppliers arising in
     the  ordinary  course  of  business;   (viii)  investments   consisting  of
     compensation  of  employees,  officers and directors of Borrower so long as
     the Board of Directors of Borrower  determines that such compensation is in
     the best interest of Borrower,  and travel  advances,  employee  relocation
     loans and other  employee  loans and  advances  in the  ordinary  course of
     business;  (ix) other investments  aggregating not in excess of $250,000.00
     at any time.

          (k) "Permitted  Liens":  shall mean: (i) liens and security  interests
     securing  indebtedness  owed by the  Borrower  to the Bank;  (ii) liens for
     taxes, assessments or similar charges either not yet due or being contested
     in good faith;  (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
     under Section 6.09 hereof;  (v) liens and security  interests  which, as of
     the  date  hereof,  have  been  disclosed  to and  approved  by the Bank in
     writing;  (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;  liens  securing  capital  lease
     obligations on assets subject to such capital  leases;  (vii) liens arising
     from  judgments,  decrees or  attachments to the extent and only so long as
     such judgment,  decree or attachment has not caused or resulted in an Event
     of Default, (viii) easements,  reservations,  rights-of-way,  restrictions,
     minor defects or  irregularities in title and other similar liens affecting
     real  property not  interfering  in any material  respect with the ordinary
     conduct of the  business  of  Borrower,  (ix) liens in favor of customs and
     revenue  authorities arising as a mater of law to secure payment of customs
     duties in  connection  with the  importation  of goods,  (x) liens  arising
     solely by virtue of any  statutory  or common  law  provision  relating  to
     banker's  liens,  rights of setoff or  similar  rights and  remedies  as to
     deposit  accounts  or other  funds  maintained  with a creditor  depository
     institutions;  (xi) liens not otherwise permitted which liens do not in the
     aggregate exceed $250,000.00 at any time.

          (l) "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.

          (m) "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  including,  but  not  limited  to,  that  certain
     Indenture dated as of February 15, 1987 between Borrower and  Manufacturers
     Hanover Trust Company,  as trustee,  with respect to the 5 1/2% Convertible
     Subordinated Debentures due March 1, 2012.

          (n) "Term Loan":  shall mean the credit facility  described in Section
     2.

     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.

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                                    SECTION 2
                                  THE TERM LOAN

     2.01  Term  Loan.  The  Bank  agrees  to lend  to the  Borrower,  upon  the
Borrower's  request  therefor made prior to December 31, 1998, the lesser of 80%
of  the  appraised   liquidation   value  of  the  Borrower's  fixed  assets  or
7,000,000.00 (the "Term Loan").

          A.  Purpose.  Proceeds  under the Term Loan shall be used for business
     acquisitions.

          B.  Interest.  Interest  shall  accrue  on the  outstanding  principal
     balance  of the Term  Loan (the  "Term  Balance")  at one of the  following
     rates, as quoted by the Bank and as elected by the Borrower:

               1. Variable Rate Balance: A variable rate per annum equivalent to
          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 Bank at,  below or above such  reference
          rate ("Reference  Rate") plus 1.00% per annum.  (the "Variable Rate").
          Interest  shall  be  adjusted  concurrently  with  any  change  in the
          Reference  Rate.  A Term  Balance  based  upon  the  Variable  Rate is
          hereinafter referred to as a "Variable Rate Balance".

               2. Cost of Funds Balance: At the Borrower's election,  at a fixed
          rate for such  period  of time  that the  Bank may  quote  and  offer,
          provided  that any such  period of time  shall be for at least 30 days
          and shall not  extend  beyond  the  maturity  date (the "Cost of Funds
          Interest Period") for the Term Balance.  Such interest rate shall be a
          percentage  approximately  equivalent  to three  percent  (3.00 %) per
          annum in excess of the rate which the Bank  determines in its sole and
          absolute  discretion to be equal to the Bank's cost of acquiring funds
          (adjusted  for  any  and  all  assessments,   surcharges  and  reserve
          requirements  pertaining  to the  borrowing or purchase by the Bank of
          such funds) in an amount  equal to the amount of the Term  Balance and
          for a period  of time  approximately  equal to the  relevant  Interest
          Period (the "Cost of Funds Rate" or the "Fixed  Rate").  Term Balances
          based upon the Cost of Funds or Fixed Rate are hereinafter referred to
          as "Cost of Funds Balances" or "Fixed Rate Balances".

          Interest  shall be  computed  on the basis of 360 days per  year,  but
charged on the actual number of days elapsed.  The Borrower  hereby promises and
agrees  to pay  the  Bank  interest  monthly,  commencing  on May 31,  1997  and
continuing on the last day of each month thereafter to and including January 31,
2001.  If  interest  is not  paid as and when it is due it shall be added to and
become  and be  treated  as part of  principal,  and the  amount of such  unpaid
interest  shall  bear  interest,  until  paid in full,  at the  then  applicable
interest rate.

          (a) Notice of Election to Adjust Interest Rate. Upon telephonic notice
     which  shall be received  by the Bank at or before  11:00 a.m.  (California
     time) on a business day, the Borrower may elect:

               (1) That interest on a Variable Rate Balance shall be adjusted to
          accrue at the Fixed Rate; provided, however, that such notice shall be
          received by the Bank no later than two business  days prior to the day
          (which shall be a business  day) on which the Borrower  requests  that
          interest be adjusted to accrue at the Fixed Rate.

               (2) That  interest  on a Fixed Rate  Balance  shall  continue  to
          accrue at a newly  quoted  Fixed Rate or shall be adjusted to commence
          to accrue at the  Variable  Rate;  provided,  however that such notice
          shall be received by the Bank no later than two business days prior to
          the last day of the  Interest  Period  pertaining  to such  Fixed Rate
          Balance.  If the Bank  shall not have  received  notice as  prescribed
          herein of the  Borrower's  election  that  interest  on any Fixed Rate
          Balance shall continue to accrue at the Fixed Rate, the Borrower shall
          be deemed to have elected that  interest  thereon shall be adjusted to
          accrue at the Variable Rate upon the expiration of the Interest Period
          pertaining to such Term Balance.

          (b)   Prohibition   Against   Prepayment   of  Fixed  Rate   Balances.
     Notwithstanding  anything to the contrary in the  Agreement,  no prepayment
     shall be made on any Fixed Rate  Balance  except on a day which is the last
     day of the Interest Period pertaining  thereto. If the whole or any part of
     any Fixed Rate Balance is prepaid by reason of  acceleration  or otherwise,
     the Borrower shall, upon the Bank's request,  promptly pay to and indemnify
     the Bank for all costs and any loss (including  interest) actually incurred
     by the Bank and any  loss  (including  loss of  profit  resulting  from the
     re-employment  of funds)  sustained  by the Bank as a  consequence  of such
     prepayment. Borrower shall not be obligated to pay to or reimburse Bank for
     any  reimbursable 

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     amounts which arose or were incurred  during or are otherwise  attributable
     to any  period of time more than 180 days  prior to the date on which  Bank
     delivered its written  statement for  indemnification  or  reimbursement of
     such reimbursable amounts.

          (c) Conversion from Fixed Rate to Variable Rate. In the event that the
     Bank shall at any time  determine that the accrual of interest on the basis
     of the Fixed Rate (i) is infeasible because the Bank is unable to determine
     the Fixed Rate due to the unavailability of U.S. dollar deposits, contracts
     or certificates of deposit in an amount  approximately  equal to the amount
     of the relevant Term Balance and for a period of time  approximately  equal
     to the  relevant  Interest  Period;  or (ii) is or has become  unlawful  or
     infeasible  by  reason of the  Bank's  compliance  with any new law,  rule,
     regulation,  guideline or order, or any new  interpretation  of any present
     law,  rule,  regulation,  guideline  or  order,  then the Bank  shall  give
     telephonic notice thereof (confirmed in writing) to the Borrower,  in which
     event any Fixed Rate Term  Balance  shall be deemed to be a  Variable  Rate
     Term  Balance  and  interest  shall  thereupon  immediately  accrue  at the
     Variable Rate.  Interest on any Term Balance shall be computed on the basis
     of 360 days per year, but charged on the actual number of days elapsed.

          C. Principal. The Borrower hereby promises and agrees to pay principal
     in 36 equal installments  commencing on January 31, 1998, and continuing on
     the last day of each month  thereafter  up to and  including  December  31,
     2000. On January 31, 2001, the Borrower  hereby  promises and agrees to pay
     to the Bank the entire unpaid principal balance,  together with accrued and
     unpaid interest.

     Each payment  received by the Bank shall, at the Bank's option,  be applied
to pay interest then due and unpaid and the remainder  thereof (if any) shall be
applied to pay principal.

          D. Term Loan Account.

          (a) The Bank shall  maintain on its books a record of account in which
     the Bank shall make entries for each  drawing  under the Term Loan and such
     other debits and credits as shall be  appropriate  in  connection  with the
     Term Loan (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 Borrower  notifies  the Bank to the  contrary  within 60 days after the
     Borrower's receipt of any such statement which it deems to be incorrect, or
     unless there is a manifest error.

          (b) The  Borrower  hereby  authorizes  the Bank,  if and to the extent
     payment  owed to the Bank  under the Term  Loan is not made  when  due,  to
     charge,  from time to time,  against any or all of the  Borrower's  deposit
     accounts with the Bank any amount so due.

          E. Late Payment:  If any payment of principal  (other than a principal
     payment due on January 31, 2001) or interest, or any portion thereof, under
     this Agreement 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.

     1.03  Disbursement  of Proceeds from Loan. Any loan made hereunder shall be
conclusively  presumed to have been made to and for the Borrower's  benefit when
the  proceeds  of such loan are  disbursed  in  accordance  with the  Borrower's
instructions or deposited into a checking account of the Borrower  maintained at
the Bank.


                                    SECTION 3
                                   COLLATERAL

     3.01  The  Collateral:  To  secure  payment  and  performance  of  all  the
Borrower's  Obligations under this Agreement and 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  the  Bank a  security  interest  in and to all of the  following
property:

          (a) All goods 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,  equipment,  furniture,
     furnishings, fixtures, tools, supplies and motor vehicles of every kind and
     description, and all additions, accessions, improvements,  replacements and
     substitutions thereto and thereof.

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          (b) Bank agrees to release  its  security  interest in any  equipment,
     fixtures,  leasehold improvements,  or other property if within ninety (90)
     days after Borrower acquires title to such property, Borrower finances such
     property pursuant to either (i) a sale and leaseback  transaction or (ii) a
     debt  financing  transaction  in an amount not to exceed the purchase price
     of, and secured by a security interest in such property.

          (c) All  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.

          (d) All accounts, contract rights and general intangibles now owned or
     hereafter created or acquired by the Borrower,  including,  but not limited
     to, all  receivables,  goodwill,  trademarks,  trade  styles,  trade names,
     patents,  patent  applications,   software,  customer  lists  and  business
     records.

          (e)  All  documents,  instruments  and  chattel  paper  now  owned  or
     hereafter acquired by the Borrower.

          (f)  All  monies,  deposit  accounts,   certificates  of  deposit  and
     securities  of the  Borrower  now or hereafter in the Bank's or its agents'
     possession.

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

                                    SECTION 4
                              CONDITIONS OF LENDING

     4.01  Conditions  Precedent : The  obligation of the Bank to make the first
extension of credit to or on account of the Borrower hereunder is subject to the
conditions  precedent that the Bank shall have received  before the date of such
initial  extension  of  credit  all of the  following,  in  form  and  substance
satisfactory to the Bank:

          (a)  Evidence  that the  execution,  delivery and  performance  by the
     Borrower  of this  Agreement  and any  document,  instrument  or  agreement
     required hereunder have been duly authorized.

          (b)  Except as  disclosed  in  writing  to Bank,  the  representations
     contained  herein  and in any other  document,  instrument  or  certificate
     delivered to the Bank hereunder are correct.

          (c) 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) Such  other  evidence  as the Bank may  request to  establish  the
     consummation of the transaction  contemplated hereunder and compliance with
     the conditions of this Agreement.

                                    SECTION 5
                         REPRESENTATIONS AND WARRANTIES

The Borrower  hereby makes the following  representations  and warranties to the
Bank as of the date of this Agreement.

     5.01  Status:  The Borrower is a  corporation  duly  organized  and validly
existing under the laws of the State of Delaware and is properly licensed and is
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 and
where failure to so qualify would have a material adverse effect.

     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, order, writ, judgment,  injunction, decree, determination
or award presently in effect having application to the Borrower;  (ii) result in
a breach of or  constitute  a default  under any  material  indenture or loan or
credit agreement or other material  agreement,  lease or instrument to which the
Borrower is a party or by which it or its  properties  may be bound or affected;
(iii)  require  any  consent or  approval  of its  stockholders  or violate  any
provision of its certificate of incorporation.

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     5.03 Legal Effect: This Agreement constitutes, and any instrument, document
or agreement required hereunder when delivered hereunder 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:  There are no fictitious trade styles used by
the Borrower in  connection  with its business  operations.  The Borrower  shall
notify the Bank within 30 days of effecting any change in the matters  described
hereinor  prior to using any other  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 or which may  hereafter be submitted by the Borrower to
the Bank are true,  accurate  and  correct  and have been or will be prepared in
accordance with generally accepted accounting  principles  consistently  applied
and accurately  represent the financial  condition or, as applicable,  the other
information  disclosed  therein.  Since  the  most  recent  submission  of  such
financial  information or 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,  threatened  against  or  affecting  the  Borrower  or the  Borrower's
properties  in excess of  $500,000  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 or operations or on 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 such taxes which are currently payable without penalty or interest or those
which are being duly contested in good faith.

     5.10 Environmental Compliance: The Borrower has implemented and complied in
all  material  respects  with all  applicable  federal,  state and  local  laws,
ordinances,  statutes and regulations with respect to hazardous or toxic wastes,
substances or related materials, industrial hygiene or environmental conditions.
There are no suits, proceedings, claims or disputes pending or, to the knowledge
of the  Borrower,  threatened  against or affecting the Borrower or its property
claiming violations of any federal,  state or local law,  ordinance,  statute or
regulation  relating  to  hazardous  or  toxic  wastes,  substances  or  related
materials.

                                    SECTION 6
                                    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  will,  unless  the Bank  shall  otherwise  consent 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;  notwithstanding the foregoing Borrower may liquidate or
dissolve, or enter into any consolidation, merger, partnership, joint venture or
other combination,  acquire any other business  organization,  or acquire all or
substantially  all  of  the  assets  of  any  other  person  (collectively,   an
"Acquisition"),  so  long  as  Borrower  is in  compliance  with  the  covenants
contained in Section 6.14 immediately  after such  Acquisition;  and conduct its
business and  operations  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  name  the  Bank  as  loss  payee  pursuant  to a loss  payable
endorsement satisfactory to the Bank and shall not be altered 

                                   Accounts Receivable Credit Agreement - Page 6

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or  canceled  except upon 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,  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,  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  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,  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  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.

     6.05  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 discuss the business and
operations of the Borrower with any employee or representative  thereof.  If the
Borrower shall  maintain any records  (including,  but not limited to,  computer
generated  records or 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  which it may  request,  at the
Borrower's expense, limited to $20,000 or at Bank's expense, the amount of which
shall be payable within five (5) days of written notice.  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 five (5) days
prior written notice.

     6.06  Reporting  and  Certification  Requirements:  Deliver  or cause to be
delivered to the Bank in form and detail satisfactory to the Bank:

          (a) Not later  than 90 days  after  the end of each of the  Borrower's
     fiscal  years,  a copy of (i) the annual  audited  financial  report of the
     Borrower for such year prepared by a firm of certified  public  accountants
     reasonably acceptable to Bank, and (ii) the Borrower's Form 10-K filed with
     the Securities Exchange  Commission and (iii) the Borrower's  consolidating
     balance sheet and income  statement  for such year;  and, not later than 60
     days after the end of each of the  Borrower's  fiscal years,  a copy of the
     Borrower's projected balance sheet and income statement for the fiscal year
     then in effect.

          (b) Not later  than 45 days  after  the end of each of the  Borrower's
     first three fiscal quarters,  a copy of the Borrower's Form 10-Q filed with
     the Securities Exchange Commission and the Borrower's consolidating balance
     sheet and income statement

          (c) Concurrently  with the delivery of the financial  reports required
     hereunder,  a compliance  certificate  in  substantially  the form attached
     hereto as Exhibit "A",  showing the  calculations  which would  demonstrate
     compliance with all of the financial covenants contained herein.

          (d)  Promptly  upon  the  Bank's  request,   such  other   information
     pertaining to the Borrower,  the  Collateral or any guarantor  hereunder as
     the Bank may reasonably request.

     6.07 Payment of Dividends: Not declare or pay any dividends on any class of
stock now or hereafter  outstanding  except (i) dividends  payable solely in the
Borrower's capital stock, or (ii) dividends approved by Bank.

     6.08 Redemption or Repurchase of Stock:  Not redeem or repurchase in excess
of 5% per year any class of the  Borrower's  stock now or hereafter  outstanding
without prior written Bank approval.

     6.09 Additional Indebtedness:  Not, after the date hereof, create, incur or
assume,  directly or  indirectly,  any  additional  Indebtedness  other than (i)
indebtedness  owed or to be owed to the  Bank  or  (ii)  indebtedness  to  trade
creditors  incurred in the ordinary  course of the Borrower's  business or (iii)
Permitted Indebtedness.

                                   Accounts Receivable Credit Agreement - Page 7

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     6.10 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 and  subsidiaries  of the  Borrower,
except for (i) credit extended in the ordinary course of the Borrower's business
as presently conducted and (ii) Permitted Investments.

     6.11  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 of such properties,
except for Permitted Liens or as otherwise provided in this Agreement.

     6.12 Transfer  Assets:  Except for an amount not exceeding in the aggregate
$100,000 in any fiscal  year,  not,  after the date hereof,  sell,  contract for
sale, convey,  transfer,  assign, lease or sublet, any of its assets (including,
but not limited to, the Collateral) except in the ordinary course of business as
presently  conducted by the Borrower  and,  then,  only for fair and  reasonable
consideration  and (i) sales of inventory  in the  ordinary  course of business,
(ii) transfer of assets in the ordinary course of business that have become worn
out or  obsolete  or that  are  promptly  being  replaced,  (iii)  transfers  of
non-exclusive  licenses  and  similar  arrangements  for the use of  property of
Borrower  made in the ordinary  course of  business,  and (iv)  transfers  which
constitute liquidation of permitted investments.

     6.13  Change in Nature of  Business:  Not make any  material  change in its
financial structure or the nature of its business as existing or conducted as of
the date hereof.

     6.14 Financial Condition: Maintain at all times:

          (a) A minimum  Effective  Tangible  Net Worth of at least  $31,000,000
     plus 50% of net profit after taxes at the end of each fiscal quarter.

          (b) A ratio of Debt to  Effective  Tangible Net Worth of not more than
     1.5 to 1.

          (c) A minimum working capital (defined as current assets minus current
     liabilities) of not less than $5,000,000.

          (d) A  ratio  of the  sum  of  cash,  cash  equivalents  and  accounts
     receivable to current liabilities of not less than .65 to 1.0.

          (e) A minimum  net  profit  after tax of at least  $1.00 at the end of
     each fiscal quarter for the immediately preceding two (2) fiscal quarters.

          (f): Maintain a ratio of consolidated earnings before interest, taxes,
     depreciation  and  amortization  expense to the sum of (i) interest expense
     and (ii) the current  portion of long term Debt of not less than  2.00:1.00
     at the end of each fiscal  quarter for the  immediately  preceding 4 fiscal
     quarters..

     6.15  Compensation  of  Employees:  Compensate  its  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.

     6.16 Capital Expense:  Not make any fixed capital  expenditure,  including,
but not limited to, incurring liability for leases which would be, in accordance
with generally accepted  accounting  principles,  reported as capital leases, or
purchase  any  real  or  personal  property  in an  aggregate  amount  exceeding
$15,000,000  in  any  one  fiscal  year,  exclusive  of  acquisition  financing,
provided,  however,  that Borrower may make capital  expenditures  in connection
with  acquisitions  in an amount up to $3,000,000 in any one fiscal year without
the Bank's approval.

     6.17 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 $500,000 or
which affects the Collateral; and (iii) 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.

     6.18 Environmental Compliance. The Borrower shall:

                                   Accounts Receivable Credit Agreement - Page 8

<PAGE>

          (a) Implement and comply in all material  respects with all applicable
     federal,  state and local laws,  ordinances,  statutes and regulations with
     respect to  hazardous or toxic  wastes,  substances  or related  materials,
     industrial hygiene or to environmental conditions.

          (b) Not own, use, generate, manufacture, store, handle, treat, release
     or dispose of any  hazardous  or toxic  wastes,  substances  or  materials,
     except in material compliance with all applicable federal,  state and local
     laws, ordinances, statutes and regulations.

          (c)  Give  prompt   written  notice  of  any  discovery  of  or  suit,
     proceeding, claim, dispute, or filing respecting hazardous or toxic wastes,
     substances or related materials.

          (d) At all times indemnify and hold harmless Bank from and against any
     and all liability arising out of Borrower's use,  generation,  manufacture,
     storage, handling, treatment, or disposal by Borrower of hazardous or toxic
     wastes, substances or materials at the site.

                                    SECTION 7
                                EVENTS OF DEFAULT

     Any one or more of the following described events shall constitute an event
of default (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  such
indebtedness  is 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 instrument,  document or agreement,  which failure shall constitute and be
an Event of Default if not paid  within 10 days of 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  and  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 substantial  part of its  properties,  assets or businesses
and shall not be discharged within 60 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 60 days after the issuance or attachment of
such writ or lien.

     7.06 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.

     7.07 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  25% of the  issued  and
outstanding  capital stock of the  Borrower,  if a  corporation,  or there shall
occur a change in any general  partner or a change  affecting the control of the
Borrower, if a partnership.

                                    SECTION 8
                               REMEDIES ON DEFAULT

                                   Accounts Receivable Credit Agreement - Page 9
<PAGE>

     Upon the occurrence and during the continuance of any Event of Default, the
Bank may,  at its sole and  absolute  election,  without  demand and with prompt
subsequent notice to Borrower:

     8.01 Acceleration:  Declare any or all of the Borrower's indebtedness owing
to the Bank,  whether under this Agreement or 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, the Bank's
obligations  to the Borrower,  or the Bank's or  Borrower's  rights and remedies
under this Agreement or under any other document, instrument or agreement.

     8.04 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 or  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  reasonable  expenses  and  expenditures
(including   reasonable   attorneys'  fees)  incurred  in  connection  with  the
foregoing.  Notwithstanding the foregoing, Bank shall be responsible for its own
gross negligence or willful misconduct.

     8.05  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, in such manner and such order, as to all or any part of
the  properties  subject to such security  interest or lien, 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 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 the 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 the Borrower to the Bank and
shall be paid by the  Borrower  to the Bank  within  five (5)  business  days of
written notice.

     8.06 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.

     8.07 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,  liquidating, 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.

                                    SECTION 9
                                  MISCELLANEOUS

     9.01 Default Interest Rate: The Borrower shall pay the Bank interest on any
indebtedness  or amount  payable under this  Agreement,  from the date that such
indebtedness  or amount became due or was demanded to be due until paid in full,
at a rate  which is 3% in  excess  of the rate  otherwise  provided  under  this
Agreement.

                                  Accounts Receivable Credit Agreement - Page 10

<PAGE>
     9.02  Disposal of Invoices:  All  documents,  schedules,  invoices or other
papers  received by the Bank from the Borrower may be destroyed or disposed of 6
months after  receipt by the Bank,  unless the Borrower  requests in writing the
return thereof, which shall be done at the Borrower's expense.

     9.03 Dispute Resolution.  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:  (1)  this  Agreement,  or  any  related
agreements,  documents, or instruments, (2) 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, (3) any
incidents,  omissions,  acts, practices, or occurrences causing injury to either
party whereby the other party or its agents, employees or representatives may be
liable,  in  whole  or in  part,  or (4)  any  aspect  of the  past  or  present
relationships  of the  parties,  shall be  resolved  through a two-step  dispute
resolution process  administered by Judicial  Arbitration & Mediation  Services,
Inc. ("J-A-M-S") as follows:

          (a) Step I -  Mediation:  At the request of any party to the  dispute,
     claim or  controversy of the matter shall be referred to the nearest office
     of J-A-M-S for mediation,  that is, an informal,  non-binding conference or
     conferences between the parties in which a retired judge or justice for the
     J-A-M-S panel will seek to guide the parties to a resolution of the case.

          (b) Step II - Unsecured  Contracts - Arbitration:  Should any dispute,
     claim or  controversy  remain  unresolved  at the  conclusion of the Step I
     Mediation Phase then 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
     San Jose County and shall be  administered  by and in  accordance  with the
     then  existing  Rules of Practice and  Procedure of Judicial  Arbitration &
     Mediation  Services,  Inc.,  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  (b)  shall  apply  only if,  at the time of the
     submission of the matter to J-A-M-S,  the dispute(s) or issue(s) do(es) not
     arise  out of a  transaction(s)  which  is/are  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  his/her   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.

          (c)  Step II -  Contracts  Secured  By Real  Estate  - Trial  by Court
     Reference [ss.638 (1)] Code of Civil Procedure):  If the dispute,  claim or
     controversy is not one required or agreed to be submitted to arbitration as
     provided by subparagraph (b) and has not been resolved by Step I mediation,
     them 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 J-A-M-S  appointed  pursuant to the provisions
     of California Code of Civil Procedure ss.638(1) 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 this parties
     are  unable to agree upon a member of the  J-A-M-S  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 the cause(s) of action which is(are) the subject of the
     reference,  but shall not  otherwise  serve to abate,  stay or suspend  the
     reference proceeding.

          (d) Provisional Remedies, Self Help and Foreclosure:  No provision of,
     or the  exercise of any  right(s)  under  subparagraph  (b),  nor any other
     provision of this Dispute  Resolution  Provision,  shall limit the right of
     any party to exercise  self help  remedies  such as set off,  to  foreclose
     against any real or personal property collateral,  or obtain 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 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 

                                  Accounts Receivable Credit Agreement - Page 11
<PAGE>

     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, including the plaintiff,  to submit the controversy
     or claim to arbitration.

     9.04  Waiver of Jury  Trial.  THE  BORROWER  AND THE BANK EACH WAIVE  THEIR
RESPECTIVE  RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE
TRANSACTIONS  CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES  AGAINST ANY OTHER PARTY OR
PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE
BORROWER AND THE BANK EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE
TRIED BY A COURT TRIAL  WITHOUT A JURY.  WITHOUT  LIMITING  THE  FOREGOING,  THE
PARTIES FURTHER AGREE THAT THEIR  RESPECTIVE  RIGHT TO A TRIAL BY JURY IS WAIVED
BY OPERATION OF THIS SECTION AS TO ANY ACTION,  COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS AGREEMENT OR THE OTHER LOAN  DOCUMENTS OR ANY PROVISION  HEREOF OR THEREOF.
THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,  RENEWALS,  SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

     9.05 Reliance:  Each  warranty,  representation,  covenant,  obligation 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 and agreements which the Borrower now or
hereafter shall give, or cause to be given, to the Bank.

     9.06  Attorneys'  Fees:  Borrower  shall  pay to the  Bank  all  costs  and
expenses,  including but not limited to reasonable  attorneys fees,  incurred by
Bank in connection with the administration,  enforcement,  or any refinancing or
restructuring in the nature of a "work-out",  of this Agreement or any document,
instrument  or agreement  executed  with respect to,  evidencing or securing the
indebtedness hereunder.

     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  hereto,  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  as set  forth  below or to such  other  address  as may be
specified from time to time in writing by either party to the other.

To the Borrower                                 To the Bank:
ELEXSYS INTERNATIONAL, INC.                     SANWA BANK CALIFORNIA
4405 Fortran Court                              San Jose CBC
San Jose, CA  95134                             220 Almaden Blvd.
                                                San Jose, CA  95113

Attn:    Robert DeLaurentis                     Attn:    Jillian E. Mathur
Title:   C.F.O.                                          Vice President

with a copy to:                                 With a copy to:

COOLEY GODWARD LLP                              SANWA BANK CALIFORNIA
Five Palo Alto Square                           Asset Based Financing Department
3000 El Camino Real
Palo Alto, CA  94306-2155                       444 Market Street, 22nd Floor
                                                San Francisco, CA  94111
Attn:    Bill Veatch

     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  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.

                                  Accounts Receivable Credit Agreement - Page 12

<PAGE>

     9.09 Conflicting Provisions: To the extent the 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 prior  written
consent of the Bank. The Bank may sell, assign or grant  participation 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 herein set forth 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 pertaining to
the transactions  contemplated  hereunder not incorporated or referenced in this
Agreement  or in such  documents,  instruments  and  agreements  are  superseded
hereby.

     9.14 Confidentiality  Agreement.  In handling any confidential  information
Bank,  and all  employees  and  agents of Bank,  including  but not  limited  to
accountants,  shall  exercise the same degree of care that Bank  exercises  with
respect to its own  proprietary  information  of the same types to maintain  the
confidentiality  of any  non-public  information  thereby  received  or received
pursuant to this Agreement  except that  disclosure of such  information  may be
made (i) to the  subsidiaries  or affiliates  of Bank in  connection  with their
present or prospective  business  relations  with Borrower;  (ii) to prospective
transferees or purchasers of any interest in the loans,  provided that they have
entered  into a  comparable  confidentiality  agreement in favor of Borrower and
have delivered a copy to Borrower;  (iii) as required by law, regulations,  rule
or order, subpoena,  judicial order or similar order; (iv) as may be required in
connection with the examination,  audit or similar investigation of Bank and (v)
as Bank may  determine  in  connection  with  the  enforcement  of any  remedies
hereunder. Confidential information hereunder shall not include information that
either:  (a) is in the public  domain or in the  knowledge or possession of Bank
when disclosed to Bank, or becomes part of the public domain after disclosure to
Bank  through no fault of Bank;  or (b) is  disclosed  to Bank by a third party,
provided Bank does not have actual knowledge that such third party is prohibited
from disclosing such information.


                                  Accounts Receivable Credit Agreement - Page 13

<PAGE>


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

Borrower                                     Bank:

                                             SANWA BANK CALIFORNIA
ELEXSYS INTERNATIONAL, INC.

BY:________________________________          BY:________________________________
Name:    Robert DeLaurentis                  Name:    Jillian E. Mathur
Title:   C.F.O.                              Title:   Vice President