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                                                                   Exhibit 10.1


                                   [Letterhead]


Biomagnetic Technologies, Inc.
Attn: Mr. Aron Stern, CEO
9727 Pacific Heights Blvd.
San Diego, CA 92121 3719



Zurich, December 21, 1999
(kred/ESGA/verach/Biomagnetic)



LOAN AGREEMENT NR ***


Dear Sirs,

With reference to our various discussions, we are pleased to make available
to you a loan facility on the following terms and conditions (hereinafter
referred to as the "Agreement"):


BORROWER

Biomagnetic Technologies, Inc., 9727 Pacific Heights Blvd., San Diego, CA
92121 3719
(hereinafter referred to as the "Borrower")


LENDER

AIG Private Bank Ltd., ***
(hereinafter referred to as the "Lender")


LOAN AMOUNT

USD 11'000'000.00 (United States Dollars eleven million)


PURPOSE

For the purchase of all outstanding shares of Neuromag Oy, Helsinki from
Picker International Inc., Cleveland.


*** Portions of this page have been omitted pursuant to a request for
    confidential treatment filed separately with the Commission.

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Loan Agreement, dated December 21, 1999                                   Page 2
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UTILISATION

In the form of fixed terms ("Advance(s)") in US Dollars with interest periods
of 1 to 6 months, no Advance to exceed the term of this Agreement, and in
minimum amounts of USD 2 million. The aggregate amount of all fixed term
advances outstanding shall not exceed the total amount of the loan facility.


PAYOUT

As per separate written drawdown instructions, which must be received by the
Lender at least 3 (three) Business days prior to payout, subject to the
satisfaction of all conditions precedent.


TERM / DURATION

This credit facility will be available until June 30, 2000 (the "Final
Maturity Date").


REPAYMENT

The Borrower shall repay in full all outstanding advances made to it on the
Final Maturity Date, or before at his discretion, on any roll-over date.


INTEREST RATE

The Borrower agrees to pay interest on all principal amounts outstanding in
accordance with the following provisions:

The interest rate for fixed term advances shall be the rate per annum which
is the sum of the margin of 3.5% (three and a half per cent) per annum and
the rate at which deposits in US Dollars for the relevant tenor and amount
are offered by the Lender to prime banks in the London interbank market two
business days prior to the beginning of an interest period.

Interest will be calculated on the basis of the exact number of days elapsed,
divided by a 360-day year (365/360) and will be payable at the end of each
interest period.

If any sum due and payable by the Borrower is not paid when due, the interest
on any such amounts will be calculated on the basis of the refinancing costs
of the Lender, together with the margin of *** (*** per cent) per annum, for
the period beginning with the due date until receipt by the Lender of the
payment.


*** Portions of this page have been omitted pursuant to a request for
    confidential treatment filed separately with the Commission.

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Loan Agreement, dated December 21, 1999                                   Page 3
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If any payment date shall fall on a day on which banks in Zurich or New York
are not open for business, such payment date shall be extended to the next
succeeding business day unless such business day falls in the next calendar
month in which event such due date shall be the immediately preceeding
business day.


SECURITY

1.  Pledge and assignment with the enclosed form "General Deed of Pledge and
    Declaration of Assignment" of all outstanding shares in Neuromag Oy,
    Helsinki, to be deposited with the Lender.

2.  Pledge and assignment by Scaloway Co. Ltd. (hereinafter referred to as
    "Guarantor") in a form acceptable to the Lender of a time deposit in the
    amount of USD ***--(United States Dollars ***).


ESTABLISHMENT FEE

The Borrower shall pay to the Lender an Establishment Fee of USD 20'000. --
flat of the Loan Amount, due upon signing of this Agreement. At the Lender's
discretion, this fee may be either paid immediately or deducted upon
disbursement.


COSTS, FEES AND EXPENSES

The Borrower shall pay to the Lender on demand an amount equal to all costs,
charges and expenses (including, but not limited to, legal expenses and stamp
registration or other duties) incurred by the Lender in connection with
preparation and execution of this Agreement and the security and other
documentation contemplated hereby and all costs, charges and expenses
(including legal expenses on a full indemnity basis) of the Lender in
connection with the enforcement of or preservation of any of its rights under
this Agreement or otherwise in connection with the facility.


PREPAYMENT

The Borrower may at any time, upon prior written notice of 3 days to the
Lender, prepay a portion of or the entire amount outstanding, as of the end
of any interest period. Amounts prepaid may not be reborrowed.


*** Portions of this page have been omitted pursuant to a request for
    confidential treatment filed separately with the Commission.


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Loan Agreement, dated December 21, 1999                                   Page 4
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PAYMENTS AND TAXES

All payments to be made by the Borrower to the Lender under this Agreement
shall be made in United States Dollars, freely disposable outside of
bilateral or multilateral payment agreements which may exist at the time of
payment, free and clear of and without deduction of any taxes, levies,
imposts, duties, charges, fees, deductions or withholdings of any nature, now
or hereafter imposed by or on behalf of any taxing authority or any other
entity.


ASSIGNABILITY

The Lender has the right to assign this Agreement to any party without the
consent of the Borrower but it requires the consent of the Guarantor.


COVENANTS

The Borrower covenants that, until full and final payment of all indebtedness
and liabilities incurred hereunder, unless the Lender waives compliance in
writing, the Borrower will furnish the Lender with such information
concerning the affairs of the Borrower as the Lender may reasonably request.


EVENTS OF DEFAULT

The principal and accrued interest on any outstanding balances as well as
any and all accrued fees and charges whatsoever under this Agreement, shall
become immediately due and payable, without need of further legal formality,
at the option of and upon the first demand by the Lender, if:

a)  the Borrower shall default in the payment of principal or interest on any
    advance or of any other amount payable thereunder when the same shall become
    due and payable and such failure continues for a period of 5 (five) business
    days without remedy;
b)  the Borrower shall default in the performance of any term, covenant or
    condition contained in this agreement after written notice and failure to
    cure such default within thirty (30) days from the receipt of such notice
    or an event of default in the performance of any other agreement between
    the Borrower and the Lender;
c)  any representation or warranty made by the Borrower under this agreement
    or any certificate or documents furnished pursuant thereto, shall prove to
    have been untrue when made or at any subsequent time to be incorrect in any
    material respect;
d)  any other event occurs or circumstances arise which, in the opinion of
    the Lender is likely, materially and adversely, to affect the ability of
    the Borrower or any future mortgagor to perform all or any of his or its
    obligations under or otherwise to comply with the terms of this Agreement.

The Borrower shall hold the Lender harmless of and indemnify the Lender
against any losses or expenses which the Lender may sustain or incur as a
consequence of any Event of Default by the Borrower as stipulated herein.


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Loan Agreement, dated December 21, 1999                                   Page 5
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If there is an Event of Default, the Lender reserves the right to increase the
interest rate and/or the commission rate, not to exceed *** percent per annum.


CONDITIONS PRECEDENT

This agreement its made under the condition and the Lender's obligation to
make this loan available is subject to the conditions precedent that the
Lender shall have received and approved the following:

a)  A signed copy of this agreement, each page initialed, bearing the
    authorized signature of the Borrower.

b)  Proper and completed assignment of all the collateral as per cif. 2 of the
    Security paragraph.


LAW GOVERNING THE LEGAL RELATIONSHIP BETWEEN THE LENDER AND THE BORROWER AND
PLACE OF JURISDICTION

All legal aspects of the relationship between the Borrower and the Lender
shall be governed by Swiss law. The place of performance, the exclusive place
of jurisdiction for lawsuits and all other kinds of legal proceedings and
place of foreclosure shall be the domicile of the Lender.

The Lender reserves the right to bring legal proceedings against the Borrower
before any competent court at the domicile of the Borrower or any other court
having jurisdiction over the Borrower.

No failure to exercise and no delay in exercising on the part of the Lender
any of its rights hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise or any rights preclude any other or further
exercise thereof.

The general pledge and assignment and our "General Banking Conditions" which
you already received, form an integral part of this loan agreement.

We hope that the above terms and conditions meet your requirements, and
kindly request that you duly sign and return to us the enclosed duplicates of
this agreement together with all other required documents.


*** Portions of this page have been omitted pursuant to a request for
    confidential treatment filed separately with the Commission.

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Loan Agreement, dated December 21, 1999                                   Page 6
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We look forward to hearing from you and remain

Yours truly,

AIG Private Bank Ltd.

/s/ Esther Gauch              /s/ Werner Vontobel
----------------              -------------------
  Esther Gauch                  Werner Vontobel