<TABLE>

                                 LOAN AGREEMENT
<CAPTION>

---------------------------------------------------------------------------------------
 Principal Loan Date   Maturity    Loan No   Call  Collateral  Account Officer Initials
<S>        <C>        <C>        <C>                 <C>                <C>
$3,000,000 03-15-1999 04-01-2000 0108143855          2000               016
---------------------------------------------------------------------------------------
References  in the shaded  area are for  Lender's  use only and do not limit the
applicability of this document to any particular loan or item.
---------------------------------------------------------------------------------------
</TABLE>

Borrower: Human Pheromone Sciences, Inc.     Lender: Mid-Peninsula Bank
          4034 Clipper Court                         c/o Greater Bay Bancorp
          Fremont, CA 94538                          2860 W. Bayshore Road
                                                     Palo Alto, CA 94303

================================================================================

THIS LOAN AGREEMENT  between Human Pheromone  Sciences,  Inc.  ("Borrower")  and
Mid-Peninsula  Bank  ("Lender") is made and executed on the following  terms and
conditions.  Borrower has  received  prior  commercial  loans from Lender or has
applied  to  Lender  for  a  commercial   loan  or  loans  and  other  financial
accommodations,  including  those  which  may be  described  on any  exhibit  or
schedule   attached   to  this   Agreement.   All  such   loans  and   financial
accommodations, together with all future loans and financial accommodations from
Lender to Borrower, are referred to in this Agreement individually as the "Loan"
and  collectively as the "Loans."  Borrower  understands and agrees that: (a) in
granting,  renewing,  or extending any Loan,  Lender is relying upon  Borrower's
representations, warranties, and agreements, as set forth in this Agreement; (b)
the granting, renewing, or extending of any Loan by Lender at all times shall be
subject to Lender's sole judgment and  discretion;  and (c) all such Loans shall
be and shall  remain  subject  to the  following  terms and  conditions  of this
Agreement.

TERM. This Agreement shall be effective as of March 15, 1999, and shall continue
thereafter  until all  Indebtedness  of Borrower to Lender has been performed in
full and the parties terminate this Agreement in writing.

DEFINITIONS.  The following words shall have the following meanings when used in
this  Agreement.  Terms not otherwise  defined in this Agreement  shall have the
meanings attributed to such terms in the Uniform Commercial Code. All references
to dollar  amounts  shall mean amounts in lawful  money of the United  States of
America.

     Agreement.  The word  "Agreement"  means this Loan Agreement,  as this Loan
     Agreement may be amended or modified  from time to time,  together with all
     exhibits and schedules attached to this Loan Agreement from time to time.

     Account. The word "Account" means a trade account,  account receivable,  or
     other  right to  payment  for  goods  sold or  services  rendered  owing to
     Borrower (or to a third party grantor acceptable to Lender).

     Account  Debtor.  The  words  "Account  Debtor"  mean the  person or entity
     obligated upon an Account.

     Advance.  The word "Advance"  means a disbursement of Loan funds under this
     Agreement.

     Borrower.  The word "Borrower"  means Human Pheromone  Sciences,  Inc.. The
     word  "Borrower"  also  includes,  as  applicable,   all  subsidiaries  and
     affiliates  of  Borrower  as  provided   below  in  the  paragraph   titled
     "Subsidiaries and Affiliates."

     Borrowing  Base. The words  "Borrowing  Base" mean, as determined by Lender
     from time to time, the lesser of (a)  $3,000,000.00;  or (b) 75.000% of the
     aggregate amount of Eligible Accounts.

     CERCLA. The word "CERCLA" means the Comprehensive  Environmental  Response,
     Compensation, and Liability Act of 1980, as amended.

     Collateral. The word "Collateral" means and includes without limitation all
     property and assets granted as collateral security for a Loan, whether real
     or personal  property,  whether  granted  directly or  indirectly,  whether
     granted now or in the future, and whether granted in the form of a security
     interest,  mortgage, deed of trust,  assignment,  pledge, chattel mortgage,
     chattel trust,  factor's lien,  equipment  trust,  conditional  sale, trust
     receipt,  lien,  charge,  lien  or  title  retention  contract,   lease  or
     consignment  intended as a security  device,  or any other security or lien
     interest whatsoever,  whether created by law, contract,  or otherwise.  The
     word  "Collateral"  includes  without  limitation all collateral  described
     below in the section titled "COLLATERAL."

     Eligible Accounts.  The words "Eligible Accounts" mean, at any time, all of
     Borrower's  Accounts which contain selling terms and conditions  acceptable
     to Lender.  The net amount of any Eligible  Account  against which Borrower
     may borrow shall exclude all returns,  discounts,  credits,  and offsets of
     any  nature.  Unless  otherwise  agreed to by Lender in  writing,  Eligible
     Accounts do not include:

            (a) Accounts with respect to which the Account Debtor is an officer,
            an employee or agent of Borrower.

            (b)  Accounts  with  respect  to  which  the  Account  Debtor  is  a
            subsidiary  of, or  affiliated  with or related to  Borrower  or its
            shareholders, officers, or directors.

            (c) Accounts with respect to which goods are placed on  consignment,
            guaranteed  sale,  or other  terms by reason of which the payment by
            the Account Debtor may be conditional.

            (d) Accounts with respect to which  Borrower is or may become liable
            to the  Account  Debtor for goods sold or  services  rendered by the
            Account Debtor to Borrower.

            (e) Accounts which are subject to dispute, counterclaim, or setoff.

            (f)  Accounts  with respect to which the goods have not been shipped
            or delivered, or the services have not been rendered, to the Account
            Debtor.

            (g) Accounts with respect to which Lender,  in its sole  discretion,
            deems the  creditworthiness  or  financial  condition of the Account
            Debtor to be unsatisfactory.

            (h)  Accounts of any  Account  Debtor who has filed or has had filed
            against it a petition in  bankruptcy  or an  application  for relief
            under any provision of any state or federal bankruptcy,  insolvency,
            or  debtor-in-relief  acts;  or who  has  had  appointed  a trustee,
            custodian, or receiver for the assets of such Account Debtor; or who
            has made an  assignment  for the benefit of  creditors or has become
            insolvent  or  fails  generally  to pay  its  debts  (including  its
            payrolls) as such debts become due.

            (i) Accounts with respect to which the Account  Debtor is the United
            States government or any department or agency of the United States.

            (j)  Accounts  which have not been paid in full  within  Ninety (90)
            Days from the invoice date. The entire balance of any Account of any
            single Account debtor will be ineligible whenever the portion of the
            Account  which has not been paid  within  Ninety  (90) Days from the
            invoice date is in excess of 20.000% of the total amount outstanding
            on the Account.

            (k) That portion of the Accounts of any single  Account Debtor which
            exceeds 50% of all of  Borrower's  Accounts. 

ERISA The word "ERISA"  means the  Employee  Retirement  Income  Security Act of
1974, as amended.

Event of  Default.  The  words  "Event  of  Default"  mean and  include  without
limitation  any of the Events of Default set forth  below in the section  titled
"EVENTS OF DEFAULT."

<PAGE>

03-15-1999                      LOAN AGREEMENT                           Page 2
Loan No 0108143855               (Continued)
================================================================================

     Expiration Date. The words  "Expiration  Date" mean the date of termination
     of Lender's commitment to lend under this Agreement.

     Grantor.  The word "Grantor" means and includes without limitation each and
     all  of the  persons  or  entities  granting  a  Security  Interest  in any
     Collateral for the Indebtedness, including without limitation all Borrowers
     granting such a Security Interest.

     Guarantor.  The word "Guarantor" means and includes without limitation each
     and  all  of  the  guarantors,   sureties,  and  accommodation  parties  in
     connection with any Indebtedness.

     Indebtedness. The word "Indebtedness" means and includes without limitation
     all Loans,  together with all other  obligations,  debts and liabilities of
     Borrower  to Lender,  or any one or more of them,  as well as all claims by
     Lender  against  Borrower,  or any  one or  more of  them;  whether  now or
     hereafter existing,  voluntary or involuntary,  due or not due, absolute or
     contingent,  liquidated  or  unliquidated;  whether  Borrower may be liable
     individually or jointly with others; whether Borrower may be obligated as a
     guarantor,  surety,  or otherwise;  whether recovery upon such Indebtedness
     may be or hereafter  may become barred by any statute of  limitations;  and
     whether  such  Indebtedness  may  be  or  hereafter  may  become  otherwise
     unenforceable.

     Lender.  The  word "Lender"  means  Mid-Peninsula  Bank, its successors and
     assigns.

     Line of  Credit.  The  words  "Line of  Credit"  mean the  credit  facility
     described in the Section titled "LINE OF CREDiT" below.

     Loan. The word "Loan" or "Loans" means and includes without  limitation any
     and all  commercial  loans  and  financial  accommodations  from  Lender to
     Borrower,  whether  now  or  hereafter  existing,  and  however  evidenced,
     including  without  limitation  those  loans and  financial  accommodations
     described  herein or described on any exhibit or schedule  attached to this
     Agreement from time to time.

     Note.  The word "Note" means and  includes  without  limitation  Borrower's
     promissory note or notes, if any, evidencing Borrower's Loan obligations in
     favor of Lender, as well as any substitute, replacement or refinancing note
     or notes therefor.

     Permitted Liens.  The words "Permitted  Liens" mean: (a) liens and security
     interests  securing  Indebtedness owed by Borrower to Lender; (b) liens for
     taxes,  assessments,  or  similar  charges  either  not  yet  due or  being
     contested in good faith; (c) 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;  (d) purchase money
     liens or purchase money security interests upon or in any property acquired
     or  held  by  Borrower  in  the  ordinary  course  of  business  to  secure
     indebtedness  outstanding  on the date of this Agreement or permitted to be
     incurred under the paragraph of this  Agreement  titled  "Indebtedness  and
     Liens";  (e) liens and  security  interests  which,  as of the date of this
     Agreement,  have been  disclosed  to and approved by the Lender in writing;
     and  (f)  those  liens  and  security  interests  which  in  the  aggregate
     constitute an immaterial and insignificant  monetary amount with respect to
     the net value of Borrower's assets.

     Related Documents.  The words "Related  Documents" mean and include without
     limitation  all  promissory  notes,  credit  agreements,  loan  agreements,
     environmental agreements, guaranties, security agreements, mortgages, deeds
     of trust, and all other instruments,  agreements and documents, whether now
     or hereafter existing, executed in connection with the Indebtedness.

     Security Agreement. The words "Security Agreement" mean and include without
     limitation   any    agreements,    promises,    covenants,    arrangements,
     understandings or other agreements,  whether created by law,  contract,  or
     otherwise,  evidencing,  governing,  representing,  or  creating a Security
     Interest.

     Security Interest.  The words "Security  Interest" mean and include without
     limitation any type of collateral security,  whether in the form of a lien,
     charge,  mortgage,  deed of trust,  assignment,  pledge,  chattel mortgage,
     chattel trust,  factor's lien,  equipment  trust,  conditional  sale, trust
     receipt, lien or title retention contract, lease or consignment intended as
     a security  device,  or any other  security  or lien  interest  whatsoever,
     whether created by law, contract, or otherwise.

     SARA. The word "SARA" means the Superfund  Amendments  and  Reauthorization
     Act of 1986 as now or hereafter amended.

LINE OF CREDIT.  Lender  agrees to make  Advances to Borrower  from time to time
from the date of this Agreement to the Expiration  Date,  provided the aggregate
amount of such  Advances  outstanding  at any time does not exceed the Borrowing
Base.  Within the  foregoing  limits,  Borrower may borrow,  partially or wholly
prepay, and reborrow under this Agreement as follows.

     Conditions  Precedent  to Each  Advance.  Lender's  obligation  to make any
     Advance to or for the account of Borrower  under this  Agreement is subject
     to the following  conditions  precedent,  with all documents,  instruments,
     opinions,  reports,  and other items required under this Agreement to be in
     form and substance satisfactory to Lender:

            (a) Lender shall have received  evidence that this Agreement and all
            Related Documents have been duly authorized, executed, and delivered
            by Borrower to Lender.

            (b)  Lender   shall  have   received   such   opinions  of  counsel,
            supplemental opinions, and documents as Lender may request.

            (c) The security  interests in the  Collateral  shall have been duly
            authorized,  created,  and  perfected  with first lien  priority and
            shall be in full force and effect.

            (d) All  guaranties  required by Lender for the Line of Credit shall
            have been executed by each Guarantor, delivered to Lender, and be in
            full force and effect.

            (e)  Lender,  at its  option  and for its sole  benefit,  shall have
            conducted  an audit of  Borrower's  Accounts,  books,  records,  and
            operations, and Lender shall be satisfied as to their condition.

            (f) Borrower shall have paid to Lender all fees, costs, and expenses
            specified in this  Agreement  and the Related  Documents as are then
            due and payable.

            (g) There  shall not  exist at the time of any  Advance a  condition
            which would constitute an Event of Default under this Agreement, and
            Borrower shall have  delivered to Lender the compliance  certificate
            called for in the paragraph below titled "Compliance Certificate."

     Making Loan  Advances.  Advances  under the Line of Credit may be requested
     either  orally or in writing by  authorized  persons.  Lender may, but need
     not,  require that all oral requests be confirmed in writing.  Each Advance
     shall be  conclusively  deemed to have been made at the  request of and for
     the  benefit  of  Borrower  (a) when  credited  to any  deposit  account of
     Borrower maintained with Lender or (b) when advanced in accordance with the
     instructions  of an authorized  person.  Lender,  at its option,  may set a
     cutoff  time,  after which all  requests  for  Advances  will be treated as
     having been requested on the next succeeding Business Day.

     Mandatory Loan Repayments. If at any time the aggregate principal amount of
     the  outstanding  Advances  shall  exceed the  applicable  Borrowing  Base,
     Borrower, immediately upon written or oral notice from Lender, shall pay to
     Lender an amount equal to the difference between the outstanding  principal
     balance of the Advances and the  Borrowing  Base. On the  Expiration  Date,
     Borrower shall pay to Lender in full the aggregate  unpaid principal amount
     of all Advances then outstanding and all accrued unpaid interest,  together
     with all other applicable fees, costs and charges if any, not yet paid.

     Loan  Account.  Lender  shall  maintain on its Docks a record of account in
     which Lender shall make entries for each Advance and such other

<PAGE>

03-15-1999                       LOAN AGREEMENT                           Page 3
Loan. No 0108143855               (Continued)
================================================================================

     debits and credits as shall be  appropriate  in connection  with the credit
     facility.  Lender  shall  provide  Borrower  with  periodic  statements  of
     Borrower's account,  which statements shall be considered to be correct and
     conclusively  binding on Borrower  unless  Borrower  notifies Lender to the
     contrary  within  thirty  (30) days  after  Borrower's  receipt of any such
     statement which Borrower deems to be incorrect.

COLLATERAL. To secure payment of the Line of Credit and performance of all other
Loans,  obligations and duties owed by Borrower to Lender, Borrower (and others,
if  required)  shall grant to Lender  Security  Interests  in such  property and
assets as Lender may require (the  "Collateral"),  including without  limitation
Borrower's  present  and  future  Accounts  and  general  intangibles.  Lender's
Security Interests in the Collateral shall be continuing liens and shall include
the proceeds and products of the Collateral,  including  without  limitation the
proceeds of any insurance.  With respect to the Collateral,  Borrower agrees and
represents and warrants to Lender:

     Perfection of Security Interests. Borrower agrees to execute such financing
     statements  and to take  whatever  other actions are requested by Lender to
     perfect and continue  Lender's Security  Interests in the Collateral.  Upon
     request  of  Lender,  Borrower  will  deliver  to Lender any and all of the
     documents evidencing or constituting the Collateral, and Borrower will note
     Lender's interest upon any and all chattel paper if not delivered to Lender
     for  possession  by  Lender.  Contemporaneous  with the  execution  of this
     Agreement,  Borrower will execute one or more UCC financing  statements and
     any similar  statements as may be required by applicable law, and will file
     such  financing   statements  and  all  such  similar   statements  in  the
     appropriate  location or locations.  Borrower hereby appoints Lender as its
     irrevocable  attorney-in-fact  for  the  purpose of executing any documents
     necessary to perfect or to continue any  Security  Interest.  Lender may at
     any time, and without further  authorization from Borrower,  file a carbon,
     photograph, facsimile, or other reproduction of any financing statement for
     use as a  financing  statement.  Borrower  will  reimburse  Lender  for all
     expenses  for the  perfection,  termination,  and the  continuation  of the
     perfection  of  Lender's  security  interest  in the  Collateral.  Borrower
     promptly will notify Lender of any change  in Borrower's name including any
     change to the assumed  business  names of Borrower.  Borrower also promptly
     will notify Lender of any change in Borrower's  Social  Security  Number or
     Employer Identification Number. Borrower further agrees to notify Lender in
     writing prior to any change in address or location of Borrower's  principal
     governance  office or should  Borrower merge or consolidate  with any other
     entity.

     Collateral  Records.  Borrower does now, and at all times hereafter  shall,
     keep correct and accurate  records of the Collateral,  all of which records
     shall be  available  to Lender or Lender's  representative  upon demand for
     inspection  and  copying  at  any  reasonable  time.  With  respect  to the
     Accounts,  Borrower  agrees to keep and maintain such records as Lender may
     require,  including  without  limitation  information  concerning  Eligible
     Accounts and Account balances and agings.

     Collateral Schedules.  Concurrently with the execution and delivery of this
     Agreement,  Borrower  shall  execute  and  deliver to Lender a schedule  of
     Accounts and Eligible Accounts,  in form and substance  satisfactory to the
     Lender.  Thereafter  Borrower  shall  execute  and  deliver to Lender  such
     supplemental  schedules  of Eligible  Accounts  and such other  matters and
     information   relating  to  Borrower's  Accounts  as  Lender  may  request.
     Supplemental  schedules  shall  be  delivered  according  to the  following
     schedule:  Monthly  accounts  receivable and accounts payable agings within
     fifteen  (15)  days of month end with  Borrowing  Base  Certificate  within
     twenty (20) days of month end.

     Representations  and Warranties  Concerning  Accounts.  With respect to the
     Accounts,  Borrower  represents  and  warrants to Lender:  (a) Each Account
     represented  by  Borrower to be an  Eligible  Account for  purposes of this
     Agreement  conforms to the  requirements  of the  definition of an Eligible
     Account;  (b) All Account  information  listed on  schedules  delivered  to
     Lender will be true and correct,  subject to immaterial  variance;  and (c)
     Lender,  its  assigns,  or agents  shall  have the right at any time and at
     Borrower's expense to inspect, examine, and audit Borrower's records and to
     confirm with Account Debtors the accuracy of such Accounts.

REPRESENTATIONS  AND WARRANTIES.  Borrower represents and warrants to Lender, as
of the  date of this  Agreement,  as of the  date of each  disbursement  of Loan
proceeds, as of the date of any renewal,  extension or modification of any Loan,
and at all times any Indebtedness exists:

     Organization.  Borrower is a corporation  which is duly organized,  validly
     existing,  and in good  standing  under the laws of the State of California
     and is  validly  existing  and in good  standing  in all  states  in  which
     Borrower is doing  business.  Borrower has the full power and  authority to
     own its  properties and to transact the businesses in which it is presently
     engaged or presently proposes to engage. Borrower also is duly qualified as
     a foreign  corporation  and is in good  standing in all states in which the
     failure  to so  qualify  would  have  a  material  adverse  effect  on  its
     businesses or financial condition.

     Authorization.  The execution,  delivery, and performance of this Agreement
     and all  Related  Documents  by  Borrower,  to the  extent to be  executed,
     delivered  or  performed  by  Borrower,  have been duly  authorized  by all
     necessary action by Borrower; do not require the consent or approval of any
     other  person,  regulatory  authority  or  governmental  body;  and  do not
     conflict with,  result in a violation of, or constitute a default under (a)
     any provision of its articles of incorporation or organization,  or bylaws,
     or any agreement or other instrument  binding upon Borrower or (b) any law,
     governmental regulation, court decree, or order applicable to Borrower.

     Financial  Information.  Each financial  statement of Borrower  supplied to
     Lender truly and completely  disclosed Borrower's financial condition as of
     the date of the statement, and there has been no material adverse change in
     Borrower's  financial  condition  subsequent to the date of the most recent
     financial statement supplied to Lender. Borrower has no material contingent
     obligations except as disclosed in such financial statements.

     Legal Effect. This Agreement  constitutes,  and any instrument or agreement
     required  hereunder to be given by Borrower when delivered will constitute,
     legal,  valid and  binding  obligations  of  Borrower  enforceable  against
     Borrower in accordance with their respective terms.

     Properties. Except for Permitted Liens, Borrower owns and has good title to
     all of Borrower's properties free and clear of all Security Interests,  and
     has not executed any security documents or financing statements relating to
     such  properties.  All of  Borrower's  properties  are titled in Borrower's
     legal name,  and  Borrower  has not used,  or filed a  financing  statement
     under, any other name for at least the last five (5) years.

     Hazardous Substances.  The terms "hazardous waste," "hazardous  substance,"
     "disposal," "release," and "threatened release," as used in this Agreement,
     shall have the same  meanings  as set forth in the  "CERCLA,"  "SARA,"  the
     Hazardous Materials  Transportation  Act, 49 U.S.C.  Section 1801, et seq.,
     the Resource  Conservation  and Recovery  Act, 42 U.S.C.  Section  6901, et
     seq.,  Chapters 6.5 through 7.7 of Division 20 of the California Health and
     Safety Code,  Section 25100, et seq., or other  applicable state or Federal
     laws,  rules,  or  regulations  adopted  pursuant to any of the  foregoing.
     Except as  disclosed  to and  acknowledged  by Lender in writing,  Borrower
     represents and warrants that: (a) During the period of Borrower's ownership
     of the properties, there has been no use, generation, manufacture, storage,
     treatment,  disposal,  release or threatened release of any hazardous waste
     or substance by any person on, under,  about or from any of the properties.
     (b) Borrower has no knowledge  of, or reason to believe that there has been
     (i)  any  use,  generation,   manufacture,  storage,  treatment,  disposal,
     release,  or  threatened  release of any  hazardous  waste or substance on,
     under, about or from the properties by any prior owners or occupants of any
     of the properties, or (ii) any actual or threatened litigation or claims of
     any kind by any person relating to such matters.  (c) Neither  Borrower nor
     any  tenant,  contractor,  agent  or  other  authorized  user of any of the
     properties shall use, generate,  manufacture,  store, treat, dispose of, or
     release any hazardous  waste or substance  on, under,  about or from any of
     the properties; and any such activity shall be conducted in compliance with
     all applicable federal, state, and local laws, regulations, and ordinances,
     including  without  limitation  those  laws,   regulations  and  ordinances
     described above.  Borrower  authorizes  Lender and its agents to enter upon
     the  properties  to make such  inspections  and  tests as  Lender  may deem
     appropriate to determine  compliance of the properties with this section of
     the  Agreement.  Any  inspections  or  tests  made by  Lender  shall  be at
     Borrower's  expense  and  for  Lender's  purposes  only  and  shall  not be
     construed to create any  responsibility  or liability on the part of Lender
     to Borrower or to any other  person.  The  representations  and  warranties
     contained herein are based on Borrower's due diligence in investigating the
     properties for hazardous  waste and hazardous  substances.  Borrower hereby
     (a) releases and waives any future claims  against  Lender for indemnity or
     contribution in the event


<PAGE>

03-15-1999                     LOAN AGREEMENT                             Page 4
Loan No 0108143855              (Continued)
================================================================================

     Borrower becomes liable for cleanup or other costs under any such laws, and
     (b)  agrees to  indemnify  and hold  harmless  Lender  against  any and all
     claims, losses, liabilities,  damages, penalties, and expenses which Lender
     may directly or  indirectly  sustain or suffer  resulting  from a breach of
     this section of the Agreement or as a consequence  of any use,  generation,
     manufacture,   storage,  disposal,  release  or  threatened  release  of  a
     hazardous  waste or substance on the  properties.  The  provisions  of this
     section of the  Agreement,  including the  obligation  to indemnify,  shall
     survive the payment of the  Indebtedness  and the termination or expiration
     of this Agreement and shall not be affected by Lender's  acquisition of any
     interest in any of the properties, whether by foreclosure or otherwise.

     Litigation and Claims. No litigation, claim, investigation,  administrative
     proceeding or similar  action  (including  those for unpaid taxes)  against
     Borrower is pending or  threatened,  and no other event has occurred  which
     may  materially   adversely  affect  Borrower's   financial   condition  or
     properties,  other than litigation,  claims,  or other events, if any, that
     have been disclosed to and acknowledged by Lender in writing.

     Taxes. To the best of Borrower's knowledge,  all tax returns and reports of
     Borrower  that are or were required to be filed,  have been filed,  and all
     taxes,  assessments and other governmental  charges have been paid in full,
     except those  presently  being or to be contested by Borrower in good faith
     in the ordinary  course of business and for which  adequate  reserves  have
     been provided.

     Lien Priority.  Unless otherwise previously disclosed to Lender in writing,
     Borrower  has not  entered  into or granted  any  Security  Agreements,  or
     permitted  the  filing  or  attachment  of  any  Security  Interests  on or
     affecting any of the Collateral  directly or indirectly  securing repayment
     of Borrower's  Loan and Note, that would be prior or that may in any way be
     superior  to  Lender's  Security  Interests  and  rights  in  and  to  such
     Collateral.

     Binding Effect. This Agreement,  the Note, all Security Agreements directly
     or indirectly securing repayment of Borrower's Loan and Note and all of the
     Related  Documents  are binding  upon  Borrower as well as upon  Borrower's
     successors,  representatives  and assigns,  and are legally  enforceable in
     accordance with their respective terms.

     Commercial  Purposes.  Borrower intends to use the Loan proceeds solely for
     business or commercial related purposes.

     Employee Benefit Plans. Each employee benefit plan as to which Borrower may
     have any liability  complies in all material  respects with all  applicable
     requirements  of law and  regulations,  and  (i) no  Reportable  Event  nor
     Prohibited  Transaction  (as defined in ERISA) has occurred with respect to
     any such  plan,  (ii)  Borrower  has not  withdrawn  from any such  plan or
     initiated  steps to do so, (iii) no steps have been taken to terminate  any
     such plan,  and (iv)  there are no  unfunded  liabilities  other than those
     previously disclosed to Lender in writing.

     Location of Borrower's  Offices and Records.  Borrower's place of business,
     or Borrower's Chief executive  office,  if Borrower has more than one place
     of business,  is located at 4034 Clipper Court,  Fremont,  CA 94538. Unless
     Borrower has  designated  otherwise  in writing  this  location is also the
     office  or  offices  where  Borrower  keeps  its  records   concerning  the
     Collateral.

     Year 2000.  Borrower  warrants and represents that all software utilized in
     the conduct of Borrower's  business will have appropriate  capabilities and
     compatibility  for operation to handle  calendar  dates falling on or after
     January 1, 2000, and all information  pertaining to such calendar dates, in
     the  same  manner  and  with the same functionality  as the  software  does
     respecting  calendar dates falling on or before December 31, 1999. Further,
     Borrower  warrants and  represents  that the  data-related  user  interface
     functions,   data--fields,   and  data-related   program  instructions  and
     functions of the software include the indication of the century.

     Information.  All  information  heretofore  or  contemporaneously  herewith
     furnished by Borrower to Lender for the purposes of or in  connection  with
     this  Agreement  or  any  transaction   contemplated  hereby  is,  and  all
     information  hereafter furnished by or on behalf of Borrower to Lender will
     be,  true and  accurate in every  material  respect on the date as of which
     such information is dated or certified;  and none of such information is or
     will be incomplete by omitting to state any material fact necessary to make
     such information not misleading.

     Survival of Representations and Warranties. Borrower understands and agrees
     that Lender, without independent  investigation,  is relying upon the above
     representations  and  warranties  in extending  Loan  Advances to Borrower.
     Borrower further agrees that the foregoing  representations  and warranties
     shall be  continuing  in nature  and shall  remain in full force and effect
     until such time as Borrower's  Indebtedness shall be paid in full, or until
     this Agreement shall be terminated in the manner provided above,  whichever
     is the last to occur.

AFFIRMATIVE  COVENANTS.  Borrower  covenants and agrees with Lender that,  while
this Agreement is in effect, Borrower will:

     Litigation.  Promptly inform Lender in writing of (a) all material  adverse
     changes in  Borrower's  financial  condition,  and (b) all existing and all
     threatened litigation, claims,  investigations,  administrative proceedings
     or  similar  actions  affecting  Borrower  or  any  Guarantor  which  could
     materially  affect the  financial  condition  of Borrower or the  financial
     condition of any Guarantor.

     Financial  Records.  Maintain  its books and  records  in  accordance  with
     generally accepted  accounting  principles,  applied on a consistent basis,
     and permit Lender to examine and audit  Borrower's books and records at all
     reasonable  times.  

     Financial Statements.  Furnish Lender with, as soon as available, but in no
     event  later  than  twenty  five  (25) days  after  the end of each  month,
     Borrower's  balance  sheet and  profit  and loss  statement  for the period
     ended,  prepared and certified as correct to the best  knowledge and belief
     by Borrower's chief financial officer or other officer or person acceptable
     to  Lender.  All  financial  reports  required  to be  provided  under this
     Agreement  shall  be  prepared  in  accordance   with  generally   accepted
     accounting  principles,  applied on a consistent  basis,  and  certified by
     Borrower as being true and correct.

     Additional Information. Furnish such additional information and statements,
     lists of assets  and  liabilities,  agings  of  receivables  and  payables,
     inventory  schedules,  budgets,  forecasts,  tax returns, and other reports
     with respect to Borrower's  financial  condition and business operations as
     Lender may request from time to time.

     Insurance.  Maintain  fire  and  other  risk  insurance,  public  liability
     insurance,  and such other  insurance as Lender may require with respect to
     Borrower's properties and operations, in form, amounts,  coverages and with
     insurance companies reasonably acceptable to Lender. Borrower, upon request
     of  Lender,  will  deliver  to  Lender  from time to time the  policies  or
     certificates  of  insurance  in  form  satisfactory  to  Lender,  including
     stipulations that coverages will not be cancelled or diminished  without at
     least ten (10) days' prior written notice to Lender.  Each insurance policy
     also shall  include an  endorsement  providing  that  coverage  in favor of
     Lender will not be  impaired in any way by any act,  omission or default of
     Borrower or any other  person.  In  connection  with all policies  covering
     assets in which  Lender  holds or is  offered a security  interest  for the
     Loans,  Borrower  will  provide  Lender  with  such loss  payable  or other
     endorsements as Lender may require.

     Insurance Reports.  Furnish to Lender,  upon request of Lender,  reports on
     each  existing  insurance  policy  showing such  information  as Lender may
     reasonably  request,  including without  limitation the following:  (a) the
     name of the insurer;  (b) the risks insured;  (c) the amount of the policy;
     (d) the properties  insured;  (e) the then current  property  values on the
     basis of which  insurance has been obtained,  and the manner of determining
     those values; and (f) the expiration date of the policy. In addition,  upon
     request of Lender  (however not more often than  annually),  Borrower  will
     have  an  independent  appraiser  satisfactory  to  Lender  determine,   as
     applicable,  the actual cash value or replacement  cost of any  Collateral.
     The cost of such  appraisal  shall be paid by Borrower.  

     Other  Agreements.  Comply  with all  terms  and  conditions  of all  other
     agreements,  whether now or hereafter  existing,  between  Borrower and any
     other  party and notify  Lender  immediately  in writing of any  default in
     connection with any other such agreements.


<PAGE>

03-15-1999                        LOAN AGREEMENT                          Page 5
Loan No 0108143855                 (Continued)
================================================================================

     Loan  Proceeds.  Use all  Loan  proceeds  solely  for  Borrower's  business
     operations,  unless  specifically  consented  to the  contrary by Lender in
     writing.

     Taxes,   Charges  and  Liens.  Pay  and  discharge  when  due  all  of  its
     indebtedness and obligations, including without limitation all assessments,
     taxes,  governmental  charges,  levies and liens, of every kind and nature,
     imposed upon Borrower or its properties,  income, or profits,  prior to the
     date on which  penalties  would  attach,  and all lawful  claims  that,  if
     unpaid,  might become a lien or charge upon any of  Borrower's  properties,
     income, or profits.  Provided however, Borrower will not be required to pay
     and discharge any such assessment, tax, charge, levy, lien or claim so long
     as (a) the  legality  of the  same  shall  be  contested  in good  faith by
     appropriate  proceedings,  and (b) Borrower  shall have  established on its
     books  adequate  reserves with respect to such contested  assessment,  tax,
     charge,  levy,  lien,  or  claim  in  accordance  with  generally  accepted
     accounting  practices.  Borrower,  upon demand of Lender,  will  furnish to
     Lender  evidence of payment of the  assessments,  taxes,  charges,  levies,
     liens and claims and will authorize the appropriate  governmental  official
     to deliver to Lender at any time a written  statement  of any  assessments,
     taxes,  charges,  levies,  liens and claims against Borrower's  properties,
     income, or profits.

     Performance.  Perform and comply with all terms, conditions, and provisions
     set  forth  in this  Agreement  and in the  Related  Documents  in a timely
     manner,  and promptly notify Lender if Borrower learns of the occurrence of
     any event which  constitutes  an Event of Default  under this  Agreement or
     under any of the Related Documents.

     Operations.  Maintain executive and management personnel with substantially
     the  same  qualifications  and  experience  as the  present  executive  and
     management  personnel;  provide  written  notice to Lender of any change in
     executive  and  management  personnel;  conduct its  business  affairs in a
     reasonable  and  prudent  manner  and in  compliance  with  all  applicable
     federal,  state and  municipal  laws,  ordinances,  rules  and  regulations
     respecting its properties,  charters, businesses and operations,  including
     without limitation, compliance with the Americans With Disabilities Act and
     with all minimum  funding  standards  and other  requirements  of ERISA and
     other laws applicable to Borrower's employee benefit plans.

     Inspection.  Permit employees or agents of Lender at any reasonable time to
     inspect any and all Collateral  for the Loan or Loans and Borrower's  other
     properties and to examine or audit Borrower's books,  accounts, and records
     and to make  copies  and  memoranda  of  Borrower's  books,  accounts,  and
     records.  If Borrower now or at any time  hereafter  maintains  any records
     (including  without  limitation  computer  generated  records and  computer
     software  programs for the generation of such records) in the possession of
     a third party, Borrower, upon request of Lender, shall notify such party to
     permit  Lender free access to such records at all  reasonable  times and to
     provide Lender with copies of any records it may request, all at Borrower's
     expense. 

     Compliance Certificate.  Unless waived in writing by Lender, provide Lender
     at least annually with a certificate executed by Borrower's chief financial
     officer,  or other officer or person acceptable to Lender,  certifying that
     the representations and warranties set forth in this Agreement are true and
     correct as of the date of the certificate and further  certifying  that, as
     of the date of the  certificate,  no Event of  Default  exists  under  this
     Agreement.

     Environmental Compliance and Reports. Borrower shall comply in all respects
     with all environmental  protection federal, state and local laws, statutes,
     regulations and ordinances; not cause or permit to exist, as a result of an
     intentional or unintentional  action or omission on its part or on the part
     of any third  party,  on property  owned and/or  occupied by Borrower,  any
     environmental  activity where damage may result to the environment,  unless
     such  environmental  activity  is pursuant  to and in  compliance  with the
     conditions of a permit issued by the  appropriate  federal,  state or local
     governmental authorities; shall furnish to Lender promptly and in any event
     within  thirty  (30)  days  after  receipt  thereof  a copy of any  notice,
     summons, lien, citation,  directive, letter or other communication from any
     governmental  agency  or  instrumentality  concerning  any  intentional  or
     unintentional  action or omission on Borrower's part in connection with any
     environmental  activity  whether or not there is damage to the  environment
     and/or other natural resources.

     Additional Assurances.  Make, execute and deliver to Lender such promissory
     notes,   mortgages,   deeds  of  trust,   security  agreements,   financing
     statements,  instruments,  documents and other  agreements as Lender or its
     attorneys  may  reasonably  request to evidence and secure the Loans and to
     perfect all Security Interests.  

NEGATIVE  COVENANTS.  Borrower  covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender:

     Indebtedness  and Liens.  (a) Except for trade debt  incurred in the normal
     course  of  business  and  indebtedness  to  Lender  contemplated  by  this
     Agreement,  create,  incur  or  assume  indebtedness  for  borrowed  money,
     including capital leases,  (b) except as allowed as a Permitted Lien, sell,
     transfer, mortgage, assign, pledge, lease, grant a security interest in, or
     encumber  any of  Borrower's  assets,  or (c)  sell  with  recourse  any of
     Borrower's accounts, except to Lender.

     Continuity   of   Operations.   (a)  Engage  in  any  business   activities
     substantially  different than those in which Borrower is presently engaged,
     (b) cease operations,  liquidate,  merge, transfer,  acquire or consolidate
     with any other  entity,  change  ownership,  change its name,  dissolve  or
     transfer or sell Collateral out of the ordinary course of business, (c) pay
     any  dividends on  Borrower's  stock (other than  dividends  payable in its
     stock),  provided,  however that notwithstanding the foregoing, but only so
     long as no Event of Default has occurred and is  continuing or would result
     from the payment of dividends,  if Borrower is a "Subchapter S Corporation"
     (as defined in the Internal Revenue Code of 1986, as amended), Borrower may
     pay cash  dividends on its stock to its  shareholders  from time to time in
     amounts  necessary to enable the  shareholders to pay income taxes and make
     estimated  income tax payments to satisfy their  liabilities  under federal
     and state law which arise  solely from their  status as  Shareholders  of a
     Subchapter S Corporation  because of their  ownership of shares of stock of
     Borrower.

     Loans, Acquisitions and Guaranties. (a) Loan, invest in or advance money or
     assets,  (b)  purchase,  create  or  acquire  any  interest  in  any  other
     enterprise  or entity,  or (c) incur any  obligation as surety or guarantor
     other than in the ordinary course of business.

CESSATION OF ADVANCES.  If Lender has made any  commitment  to make  any Loan to
Borrower,  whether  under this  Agreement or under any other  agreement,  Lender
shall have no  obligation to make Loan Advances or to disburse Loan proceeds if:
(a) Borrower or any Guarantor is in default under the terms of this Agreement or
any of the  Related  Documents  or any  other  agreement  that  Borrower  or any
Guarantor  has with Lender;  (b) Borrower or any  Guarantor  becomes  insolvent,
files a  petition  in  bankruptcy  or  similar  proceedings,  or is  adjudged  a
bankrupt;  (c) there occurs a material  adverse  change in Borrower's  financial
condition,  in the financial condition of any Guarantor,  or in the value of any
Collateral  securing any Loan; or (d) any Guarantor  seeks,  claims or otherwise
attempts to limit, modify or revoke such Guarantor's guaranty of the Loan or any
other loan with Lender.

ADDITIONAL FINANCIAL REPORTING. Borrower agrees to the following:

1.   To provide Lender with a semiannual  satisfactory  account receivable audit
     at Borrower's expense.

2.   To provide Lender with audited financial statement,  bearing an unqualified
     opinion,  within one  hundred-twenty  (120) days of fiscal year end, by way
     of submission of the 10-K filing.

3.   To provide Lender with monthly inventory certification.

ADDITIONAL COVENANTS. Borrower agrees to the following:

1.   To maintain a minimum Tangible Net Worth not less than 1,700,000.00 through
     5/31: $2,000,000.00 thereafter.

<PAGE>

03-15-1999                      LOAN AGREEMENT                            Page 6
Loan No 0108143855               (Continued)
================================================================================

2.   To maintain a ratio of Total Liabilities to Tangible Net Worth of less than
     1.8 to 1:00 through 9/30; 1.5 to 1:00 thereafter.

3.   To maintain a ratio of Minimum  Quick Ratio of 0.60 to 1:00  through  9/30;
     0.85 to 1:00 thereafter.

EVENTS OF DEFAULT.  Each of the following  shall  constitute an Event of Default
under this Agreement:

     Default on  indebtedness.  Failure of Borrower to make any payment when due
     on the Loans.

     Other  Defaults.  Failure,  of Borrower or any Grantor to comply with or to
     perform  when  due  any  other  term,  obligation,  covenant  or  condition
     contained in this Agreement or in any of the Related Documents,  or failure
     of  Borrower  to comply  with or to  perform  any other  term,  obligation,
     covenant or condition  contained in any other agreement  between Lender and
     Borrower.

     Default in Favor of Third Parties.  Should  Borrower or any Grantor default
     under any loan, extension of credit, security agreement,  purchase or sales
     agreement, or any other agreement, in favor of any other creditor or person
     that may materially affect any of Borrower's  property or Borrower's or any
     Grantor's   ability  to  repay  the  Loans  or  perform  their   respective
     obligations under this Agreement or any of the Related Documents.

     False  Statements.  Any  warranty,  representation  or  statement  made  or
     furnished  to Lender by or on behalf of Borrower or any Grantor  under this
     Agreement or the Related  Documents is false or  misleading in any material
     respect at the time made or  furnished,  or becomes  false or misleading at
     any time thereafter.

     Defective Collateralization. This Agreement or any of the Related Documents
     ceases to be in full force and effect  (including  failure of any  Security
     Agreement to create a valid and  perfected  Security  Interest) at any time
     and for any reason.

     Insolvency.  The  dissolution or  termination of Borrower's  existence as a
     going business,  the insolvency of Borrower,  the appointment of a receiver
     for any part of  Borrower's  property,  any  assignment  for the benefit of
     creditors,  any  type  of  creditor  workout,  or the  commencement  of any
     proceeding under any bankruptcy or insolvency laws by or against  Borrower.
    
     Creditor  or  Forfeiture   Proceedings.   Commencement  of  foreclosure  or
     forfeiture   proceedings,   whether  by  judicial  proceeding,   self-help,
     repossession or any other method, by any creditor of Borrower, any creditor
     of any Grantor against any collateral securing the Indebtedness,  or by any
     governmental agency. This includes a garnishment, attachment, or levy on or
     of any of Borrower's deposit accounts with Lender.  However,  this Event of
     Default  shall not apply if there is a good faith  dispute by  Borrower  or
     Grantor,  as the case may be, as to the validity or  reasonableness  of the
     claim which is the basis of the creditor or forfeiture  proceeding,  and if
     Borrower  or  Grantor  gives  Lender  written  notice  of the  creditor  or
     forfeiture  proceeding  and  furnishes  reserves  or a surety  bond for the
     creditor or forfeiture proceeding satisfactory to Lender.

     Events Affecting Guarantor. Any of the preceding events occurs with respect
     to any  Guarantor  of any of the  Indebtedness  or any  Guarantor  dies  or
     becomes  incompetent,  or revokes or disputes the validity of, or liability
     under, any Guaranty of the Indebtedness.  Lender,  at its option,  may, but
     shall  not  be  required  to,  permit  the  Guarantor's  estate  to  assume
     unconditionally  the  obligations  arising  under the  guaranty in a manner
     satisfactory  to  Lender,  and,  in doing  so,  cure the  Event of Default.

     Change In Ownership.  Any change in ownership  pursuant to which any person
     or  controlled  group  acquires  twenty-five  percent  (25%) or more of the
     common stock of Borrower.

     Adverse Change.  A material  adverse change occurs in Borrower's  financial
     condition, or Lender believes the prospect of payment or performance of the
     Indebtedness is impaired.

     Right to Cure.  If any default,  other than a Default on  Indebtedness,  is
     curable and if Borrower or Grantor,  as the case may be, has not been given
     a notice of a similar default within the preceding  twelve (12) months,  it
     may be cured (and no Event of Default  will have  occurred)  if Borrower or
     Grantor,  as the case may be, after  receiving  written  notice from Lender
     demanding  cure of such default:  (a) cures the default within fifteen (15)
     days; or (b) if the cure requires more than fifteen (15) days,  immediately
     initiates  steps which  Lender  deems in  Lender's  sole  discretion  to be
     sufficient to cure the default and  thereafter  continues and completes all
     reasonable and necessary steps sufficient to produce  compliance as soon as
     reasonably  practical. 

EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where
otherwise provided in this Agreement or the Related  Documents,  all commitments
and  obligations of Lender under this Agreement or the Related  Documents or any
other  agreement  immediately  will terminate  (including any obligation to make
Loan  Advances or  disbursements),  and, at Lender's  option,  all  Indebtedness
immediately  will  become due and  payable,  all  without  notice of any kind to
Borrower,  except that in the case of an Event of Default of the type  described
in the "Insolvency"  subsection above, such acceleration  shall be automatic and
not  optional.  In  addition,  Lender  shall have all the  rights  and  remedies
provided in the Related  Documents or available at law, in equity, or otherwise.
Except as may be  prohibited  by  applicable  law,  all of  Lender's  rights and
remedies  shall be cumulative and may be exercised  singularly or  concurrently.
Election by Lender to pursue any remedy  shall not exclude  pursuit of any other
remedy,  and an  election to make  expenditures  or to take action to perform an
obligation  of  Borrower or of any Grantor  shall not affect  Lender's  right to
declare a default and to exercise its rights and remedies.

MISCELLANEOUS  PROVISIONS.  The following miscellaneous provisions are a part of
this Agreement:

     Amendments.   This   Agreement,   together  with  any  Related   Documents,
     constitutes the entire understanding and agreement of the parties as to the
     matters set forth in this Agreement.  No alteration of or amendment to this
     Agreement  shall be  effective  unless  given in writing  and signed by the
     party or  parties  sought  to be  charged  or bound  by the  alteration  or
     amendment.

     Applicable Law. This Agreement has been delivered to Lender and accepted by
     Lender in the State of California.  If there is a lawsuit,  Borrower agrees
     upon Lender's  request to submit to the jurisdiction of the courts of Santa
     Clara County, the State of California.  This Agreement shall be governed by
     and construed in accordance with the laws of the State of California.

     Caption  Headings.  Caption  headings in this Agreement are for convenience
     purposes only and are not to be used to interpret or define the  provisions
     of this Agreement.

     Consent to Loan  Participation.  Borrower  agrees and  consents to Lender's
     sale or  transfer,  whether  now or  later,  of one or  more  participation
     interests  in the  Loans  to one or more  purchasers,  whether  related  or
     unrelated to Lender. Lender may provide, without any limitation whatsoever,
     to any one or more purchasers, or potential purchasers,  any information or
     knowledge Lender may have about Borrower or about any other matter relating
     to the Loan,  and Borrower  hereby waives any rights to privacy it may have
     with  respect to such  matters.  Borrower  additionally  waives any and all
     notices of sale of participation  interests,  as well as all notices of any
     repurchase of such participation  interests.  Borrower also agrees that the
     purchasers of any such  participation  interests  will be considered as the
     absolute owners of such interests in the Loans and will have all the rights
     granted under the participation  agreement or agreements governing the sale
     of such  participation  interests.  Borrower  further  waives all rights of
     offset  or  counterclaim  that it may have now or later  against  Lender or
     against any purchaser of such a participation  interest and unconditionally
     agrees  that  either  Lender  or  such  purchaser  may  enforce  Borrower's
     obligation under the Loans irrespective of the failure or insolvency of any
     holder of any  interest  in the Loans.  Borrower  further  agrees  that the
     purchaser of any such  participation  interests  may enforce its  interests
     irrespective  of any  personal  claims or defenses  that  Borrower may have
     against Lender.

     Costs and  Expenses.  Borrower  agrees to pay upon  demand all of  Lender's
     expenses,   including  without  limitation  attorneys'  fees,  incurred  in
     connection with the preparation,  execution, enforcement,  modification and
     collection of this Agreement or in connection with the Loans made
<PAGE>


03-15-1999                       LOAN AGREEMENT                          Page 7
Loan No 0108143855                 (Continued)
================================================================================

     pursuant to this Agreement. Lender may pay someone else to help collect the
     Loans and to enforce this  Agreement,  and  Borrower  will pay that amount.
     This  includes,  subject  to any  limits  under  applicable  law,  Lender's
     attorneys' reasonable fees and Lender's reasonable legal expenses,  whether
     or not  there is a  lawsuit,  attorneys'  fees for  bankruptcy  proceedings
     (including  efforts to modify or vacate any automatic stay or  injunction),
     appeals, and any anticipated  post-judgment  collection services.  Borrower
     also will pay any court  costs,  in addition to all other sums  provided by
     law.

     Notices.  All notices  required to be given under this  Agreement  shall be
     given in writing,  may be sent by telefacsimile  (unless otherwise required
     by law), and shall be effective  when actually  delivered or when deposited
     with a nationally  recognized  overnight courier or deposited in the United
     States mail, first class,  postage prepaid,  addressed to the party to whom
     the notice is to be given at the address shown above.  Any party may change
     its address for  notices  under this  Agreement  by giving  formal  written
     notice to the other parties,  specifying  that the purpose of the notice is
     to change the party's  address.  To the extent permitted by applicable law,
     if there is more than one Borrower,  notice to any Borrower will constitute
     notice to all  Borrowers.  For notice  purposes,  Borrower will keep Lender
     informed at all times of Borrower's current address(es).

     Severability.  If a court of competent  jurisdiction finds any provision of
     this  Agreement  to be  invalid  or  unenforceable  as  to  any  person  or
     circumstance,  such  finding  shall not render  that  provision  invalid or
     unenforceable as to any other persons or  circumstances.  If feasible,  any
     such  offending  provision  shall be deemed to be modified to be within the
     limits of enforceability or validity;  however,  if the offending provision
     cannot be so  modified,  it shall be stricken and all other  provisions  of
     this Agreement in all other respects shall remain valid and enforceable.

     Subsidiaries  and Affiliates of Borrower.  To the extent the context of any
     provisions  of this  Agreement  makes  it  appropriate,  including  without
     limitation any representation, warranty or covenant, the word "Borrower" as
     used herein shall  include all  subsidiaries  and  affiliates  of Borrower.
     Notwithstanding  the foregoing however,  under no circumstances  shall this
     Agreement  be  construed  to  require  Lender  to make  any  Loan or  other
     financial accommodation to any subsidiary or affiliate of Borrower.

     Successors  and Assigns.  All covenants and  agreements  contained by or on
     behalf of Borrower shall bind its successors and assigns and shall inure to
     the benefit of Lender,  its  successors  and assigns.  Borrower  shall not,
     however,  have the right to assign its rights  under this  Agreement or any
     interest therein, without the prior written consent of Lender.

     Survival. All warranties,  representations,  and covenants made by Borrower
     in this Agreement or in any  certificate or other  instrument  delivered by
     Borrower to Lender under this  Agreement  shall be  considered to have been
     relied upon by Lender and will  survive the making of the Loan and delivery
     to Lender of the Related Documents, regardless of any investigation made by
     Lender or on Lender's behalf.

     TIme is of the Essence.  Time is of the essence in the  performance of this
     Agreement.

     Waiver.  Lender  shall not be deemed to have  waived any rights  under this
     Agreement  unless such waiver is given in writing and signed by Lender.  No
     delay or  omission  on the part of Lender  in  exercising  any right  shall
     operate as a waiver of such right or any other right. A waiver by Lender of
     a provision of this Agreement shall not prejudice or constitute a waiver of
     Lender's right otherwise to demand strict compliance with that provision or
     any other provision of this Agreement.  No prior waiver by Lender,  nor any
     course of dealing  between  Lender and Borrower,  or between Lender and any
     Grantor,  shall  constitute  a waiver of any of  Lender's  rights or of any
     obligations  of Borrower  or of any Grantor as to any future  transactions.
     Whenever  the  consent  of Lender is  required  under this  Agreement,  the
     granting of such  consent by Lender in any  instance  shall not  constitute
     continuing consent in subsequent  instances where such consent is required,
     and in all cases  such  consent  may be  granted  or  withheld  in the sole
     discretion of Lender.


BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS LOAN AGREEMENT, AND
BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF MARCH 15, 1999.

BORROWER:

Human Pheromone Sciences, Inc.

By:  /s/ William P. Horgan
     ------------------------------------------
     William P. Horgan, Chief Executive Officer

LENDER:

Mid-Peninsula Bank

By:  /s/ ??????? Stafford
     ------------------------------------------
     Authorized Officer

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