<TABLE>
                                LOAN AGREEMENT
<CAPTION>
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<S>             <C>          <C>           <C>           <C>     <C>           <C>       <C>        <C>
Principal       Loan Date    Maturity      Loan No       Call    Collateral    Account   Officer    Initials
1,500,000.00                 07-01-2000    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.
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</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 22,  2000,  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)
      $1,500,000.00;  or  (b)  75.000%  of  the  aggregate  amount  of  Eligible
      Accounts.

      Business  Day.  The words  "Business  Day" mean a day on which  commercial
      banks are open for business in the State of California.

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

      Cash  Flow.  The words  "Cash  Flow"  mean net  income  after  taxes,  and
      exclusive  of  extraordinary  gains  and  income,  plus  depreciation  and
      amortization.

      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." Debt. The word "Debt" means all
      of Borrower's liabilities excluding Subordinated Debt.

      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.


<PAGE>
03-22-2000                             LOAN AGREEMENT                     Page 2
Loan No 0108143855                      (Continued)
================================================================================

          (k) That  portion of the Accounts of any single  Account  Debtor which
          exceeds 25.000% 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."  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.  lndebtedness.  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.

     Liquid Assets.  The words "Liquid Assets" mean Borrower's cash on hand plus
     Borrower's readily marketable securities.

     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.

     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.

     Subordinated  Debt. The words  "Subordinated  Debt" mean  indebtedness  and
     liabilities of Borrower which have been  subordinated by written  agreement
     to indebtedness owed by Borrower to Lender in form and substance acceptable
     to Lender.

     Tangible Net Worth.  The words "Tangible Net Worth" mean  Borrower's  total
     assets  excluding  all  intangible  assets  (i.e.,  goodwill,   trademarks,
     patents, copyrights, organizational expenses, and similar intangible items,
     but including leaseholds and leasehold improvements) less total Debt.

     Working  Capital.  The words  "Working  Capital"  mean  Borrower's  current
     assets, excluding prepaid expenses, less Borrower's current liabilities.

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


<PAGE>
03-22-2000                             LOAN AGREEMENT                     Page 3
Loan No 0108143855                      (Continued)
================================================================================

     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 books a record of account in
     which  Lender shall make entries for each Advance and such other 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,


<PAGE>
03-22-2000                             LOAN AGREEMENT                     Page 4
Loan No 0108143855                      (Continued)
================================================================================

     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 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
     compatiblity  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.

     Financial Covenants and Ratios.  Comply  with  the  following covenants and
     ratios:

         Tangible Net Worth.  Maintain a minimum  Tangible Net Worth of not less
         than $2,000,000.00.

         Net Worth Ratio.  Maintain a ratio of Total Liabilities to Tangible Net
         Worth of less than 1.50 to 1.00.

         Other Ratio.  Maintain a ratio of Minimum Quick Ratio: defined as, Cash
         + Marketable  Securities + Net Trade Accounts  Receivable (A/R) divided
         by Current  Liabilities of 0.85 to 1.00.  Except as provided above, all
         computations  made  to  determine   compliance  with  the  requirements
         contained in this paragraph  shall be made in accordance with generally
         accepted  accounting  principles,  applied on a consistent  basis,  and
         certified by Borrower as being true and correct.

         Insurance.  Maintain fire and other risk  insurance,  public  liability
         insurance,  and such other insurance as Lender may require with respect
         to Borrowers properties and operations, in form, amounts, coverages and
         with insurance companies reasonably acceptable to Lender.


<PAGE>
03-22-2000                             LOAN AGREEMENT                     Page 5
Loan No 0108143855                      (Continued)
================================================================================

           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.

      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 and at the time of each  disbursement  of Loan proceeds
      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) 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, or (d) purchase or retire any of Borrower's outstanding
      shares or alter or amend Borrower's capital structure.

      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


<PAGE>
03-22-2000                             LOAN AGREEMENT                     Page 6
Loan No 0108143855                      (Continued)
================================================================================

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 audited 10-K report with  unqualified  opinion within
120 days of filing.

2. A/R exam is not required at this time,  however,  if the  proposed  deal with
Northern  Brands,  Inc. is not completed and this line of credit is not paid off
prior to maturity, we will then require an A/R exam.

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 of 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


<PAGE>
03-22-2000                             LOAN AGREEMENT                     Page 7
Loan No 0108143855                      (Continued)
================================================================================

     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 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'
     fees and  Lender's  legal  expenses,  whether  or not  there is a  lawsuit,
     including 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 22, 2000.

BORROWER:

HUMAN PHEROMONE SCIENCES, INC.


By: WILLIAM P. HORGAN
    ------------------------------------------
    WILLIAM P. HORGAN, Chief Exectuive Officer


LENDER:

Mid-Peninsula Bank


By: TERESA LINK
    --------------------------------
    Authorized Officer


================================================================================
<PAGE>


                            CHANGE IN TERMS AGREEMENT
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
<S>             <C>          <C>           <C>           <C>     <C>           <C>       <C>        <C>
Principal       Loan Date    Maturity      Loan No       Call    Collateral    Account   Officer    Initials
1,500,000.00                 07-01-2000    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
================================================================================
Principal Amount: $1,500,000.00                Date of Agreement: March 22, 2000

DESCRIPTION OF EXISTING  INDEBTEDNESS.  Promissory  Note dated March 15, 1999 in
the original  principal amount of  $3,000,000.00,  (the "Note").

DESCRIPTION OF COLLATERAL.  Collateral as described in that Commercial  Security
Agreement dated August 17, 1998.

DESCRIPTION OF CHANGE IN TERMS. The maturity date of the Note is hereby extended
from April 1, 2000 to July 1, 2000. The credit limit  available  under the terms
of the Note is hereby decreased from $3,000,000.00 to $1,500,000.00.

PROMISE TO PAY. HUMAN PHEROMONE SCIENCES,  INC.  ("Borrower") promises to pay to
Mid-Peninsula Bank ("Lender"), or order, in lawful money of the United States of
America,  the  principal  amount of One Million Five  Hundred  Thousand & 00/100
Dollars ($1,500,000.00) or so much as may be outstanding, together with interest
on the unpaid outstanding  principal balance of each advance.  Interest shall be
calculated from the date of each advance until repayment of each advance.

PAYMENT. Borrower will pay this loan in one payment of all outstanding principal
plus all accrued unpaid interest on July 1, 2000. In addition, Borrower will pay
regular monthly payments of accrued unpaid interest beginning April 1, 2000, and
all  subsequent  interest  payments  are due on the same day of each month after
that.  The annual  interest  rate for this  Agreement  is  computed on a 365/360
basis; that is, by applying the ratio of the annual interest rate over a year of
360 days,  multiplied by the outstanding  principal  balance,  multiplied by the
actual number of days the principal  balance is  outstanding.  Borrower will pay
Lender at  Lender's  address  shown  above or at such other  place as Lender may
designate in writing.  Unless  otherwise  agreed or required by applicable  law,
payments will be applied first to accrued  unpaid  interest,  then to principal,
and any remaining amount to any unpaid collection costs and late charges.

VARIABLE INTEREST RATE. The interest rate on this Agreement is subject to change
from time to time based on changes in an  independent  index  which is the Prime
Rate as published in the Wall Street  Journal  (the  "Index").  The Index is not
necessarily the lowest rate charged by Lender on its loans. If the Index becomes
unavailable  during the term of this loan,  Lender may  designate  a  substitute
index after notice to Borrower. Lender will tell Borrower the current Index rate
upon Borrower's request.  Borrower  understands that Lender may make loans based
on other rates as well.  The interest rate change will not occur more often than
each day. The Index currently Is 8.750%.  The interest rate to be applied to the
unpaid principal balance of this Agreement will be at a rate of 1.000 percentage
point over the Index,  resulting in an initial rate of 9.750%.  NOTICE: Under no
circumstances  will the interest rate on this Agreement be more than the maximum
rate allowed by applicable law.

PREPAYMENT;  MINIMUM  INTEREST  CHARGE.  Borrower  agrees that all loan fees and
other  prepaid  finance  charges are earned fully as of the date of the loan and
will not be subject to refund  upon early  payment  (whether  voluntary  or as a
result of default), except as otherwise required by law. In any event, even upon
full prepayment of this Agreement,  Borrower understands that Lender is entitled
to a minimum interest charge of $250.00. Other than Borrower's obligation to pay
any minimum interest  charge,  Borrower may pay without penalty all or a portion
of the amount owed  earlier  than it is due.  Early  payments  will not,  unless
agreed to by Lender in writing,  relieve  Borrower of  Borrower's  obligation to
continue to make payments of accrued unpaid interest.  Rather,  they will reduce
the principal balance due.

LATE  CHARGE.  If a payment  is 10 days or more late,  Borrower  will be charged
5.000% of the unpaid portion of the regularly scheduled payment.

DEFAULT.  Borrower  will be in  default  if any of the  following  happens:  (a)
Borrower  fails to make any payment when due.  (b)  Borrower  breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform when
due any  other  term,  obligation,  covenant,  or  condition  contained  in this
Agreement or any agreement related to this Agreement,  or in any other agreement
or loan  Borrower  has with  Lender.  (c)  Borrower  defaults  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  ability to repay this Note or
perform Borrower's  obligations under this Note or any of the Related Documents.
(d) Any  representation  or statement made or furnished to Lender by Borrower or
on Borrower's  behalf is false or misleading in any material  respect either now
or at the time made or furnished.  (e) Borrower becomes insolvent, a receiver is
appointed for any part of Borrower's property,  Borrower makes an assignment for
the benefit of creditors,  or any proceeding is commenced  either by Borrower or
against Borrower under any bankruptcy or insolvency laws. (f) Any creditor tries
to take any of Borrower's  property on or in which Lender has a lien or security
interest. This includes a garnishment of any of Borrower's accounts with Lender.
(g) Any  guarantor  dies or any of the other  events  described  in this default
section occurs with respect to any guarantor of this  Agreement.  (h) A material
adverse change occurs in Borrower's financial condition,  or Lender believes the
prospect of payment or performance of the Indebtedness is impaired.

If any default,  other than a default in payment, is curable and if Borrower has
not been  given a notice of a breach  of the same  provision  of this  Agreement
within  the  preceding  twelve  (12)  months,  it may be cured  (and no event of
default will have  occurred) if Borrower,  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.

LENDER'S  RIGHTS.  Upon default,  Lender may declare the entire unpaid principal
balance on this  Agreement  and all accrued  unpaid  interest  immediately  due,
without notice, and then Borrower will pay that amount.  Upon Borrower's failure
to pay all amounts declared due pursuant to this section,  including  failure to
pay upon final  maturity,  Lender,  at its option,  may also, if permitted under
applicable law,  increase the variable  interest rate on this Agreement to 6.000
percentage  points over the Index.  Lender may hire or pay someone  else to help
collect this  Agreement if Borrower does not pay.  Borrower also will pay Lender
that amount. This includes, subject to any limits under applicable law, Lender's
attorneys'  fees and Lender's legal expenses  whether or not there is a lawsuit,
including  attorneys'  fees  and  legal  expenses  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.  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.

LINE OF CREDIT.  This Agreement  evidences a revolving line of credit.  Advances
under this Agreement may be requested either orally or in writing by Borrower or
by an  authorized  person.  Lender  may,  but need  not,  require  that all oral
requests  be  confirmed  in  writing.  All  communications,   instructions,   or
directions  by  telephone  or otherwise to Lender are to be directed to Lender's
office shown above. The following party or parties are


<PAGE>
03-22-2000                       CHANGE IN TERMS AGREEMENT                Page 2
Loan No 0108143855                      (Continued)
================================================================================

authorized to request  advances  under the line of credit until Lender  receives
from Borrower at Lender's  address  shown above written  notice of revocation of
their authority:  William P. Horgan, Chief Executive Officer; and Greg Fredrick.
Borrower  agrees to be liable for all sums either:  (a)  advanced in  accordance
with  the  instructions  of an  authorized  person  or  (b)  credited  to any of
Borrower's  accounts  with Lender.  The unpaid  principal  balance owing on this
Agreement at any time may be evidenced by  endorsements  on this Agreement or by
Lender's internal records, including daily computer print-outs. Lender will have
no  obligation  to advance  funds under this  Agreement  if: (a) Borrower or any
guarantor is in default under the terms of this  Agreement or any agreement that
Borrower or any  guarantor  has with Lender,  including  any  agreement  made in
connection  with the signing of this  Agreement;  (b) Borrower or any  guarantor
ceases  doing  business or is  insolvent;  (c) any  guarantor  seeks,  claims or
otherwise attempts to limit, modify or revoke such guarantor's guarantee of this
Agreement  or any other loan with  Lender;  or (d)  Borrower  has applied  funds
provided  pursuant to this Agreement for purposes other than those authorized by
Lender.

CONTINUING VALIDITY. Except as expressly changed by this Agreement, the terms of
the original  obligation or obligations,  including all agreements  evidenced or
securing  the  obligation(s),  remain  unchanged  and in full force and  effect.
Consent  by Lender to this  Agreement  does not waive  Lender's  right to strict
performance of the  obligation(s)  as changed,  nor obligate  Lender to make any
future change in terms. Nothing in this Agreement will constitute a satisfaction
of the obligation(s).  It is the intention of Lender to retain as liable parties
all makers and endorsers of the original obligation(s),  including accommodation
parties, unless a party is expressly released by Lender in writing. Any maker or
endorser, including accommodation makers, will not be released by virtue of this
Agreement.  If any person who signed the original  obligation does not sign this
Agreement below,  then all persons signing below acknowledge that this Agreement
is  given  conditionally,  based  on  the  representation  to  Lender  that  the
non-signing  party  consents to the changes and  provisions of this Agreement or
otherwise  will not be  released  by it.  This  waiver  applies  not only to any
initial  extension,  modification  or release,  but also to all such  subsequent
actions.

MISCELLANEOUS PROVISIONS.  Lender may delay or forgo enforcing any of its rights
or remedies  under this Agreement  without  losing them.  Borrower and any other
person who signs,  guarantees or endorses this Agreement,  to the extent allowed
by law, waive any applicable  statute of  limitations,  presentment,  demand for
payment,  protest and notice of  dishonor.  Upon any change in the terms of this
Agreement,  and unless otherwise expressly stated in writing, no party who signs
this Agreement,  whether as maker,  guarantor,  accommodation maker or endorser,
shall be released from  liability.  All such parties agree that Lender may renew
or extend  (repeatedly  and for any length of time) this  loan,  or release  any
party or guarantor  or  collateral;  or impair,  fail to realize upon or perfect
Lender's security  interest in the collateral;  and take any other action deemed
necessary by Lender without the consent of or notice to anyone. All such parties
also agree that Lender may modify this loan  without the consent of or notice to
anyone other than the party with whom the modification is made.

PRIOR TO SIGNING THIS AGREEMENT, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS
OF THIS AGREEMENT,  INCLUDING THE VARIABLE  INTEREST RATE  PROVISIONS.  BORROWER
AGREES TO THE TERMS OF THE  AGREEMENT  AND  ACKNOWLEDGES  RECEIPT OF A COMPLETED
COPY OF THE AGREEMENT.

BORROWER:

HUMAN PHEROMOME SCIENCES, INC.


By: WILLIAM P. HORGAN
   -------------------------------------------
    WILLIAM P. HORGAN, Chief Executive Officer

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