<PAGE>


                               PROMISSORY NOTE
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BORROWER: GYNECARE, INC.                   LENDER: Silicon Valley Bank
          235 Constitution Drive                   Embarcadero/Technology
          Menio Park, CA 94025                     1731 Embarcadero, Suite 220
                                                   Palo Alto, CA 94303
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PRINCIPAL AMOUNT: $750,000.00  INITIAL RATE: 10.250%  DATE OF NOTE: July 12, 
1995

Promise To Pay. GYNECARE, INC. ("Borrower") promises to pay to Silicon Valley 
Bank ("Lender"), or order, in lawful money of the United States of America, 
the principal amount of Seven Hundred Fifty Thousand & 00/100 Dollars 
($750,000.00) 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 accordance with the following payment 
schedule:

     Borrower will pay regular monthly payments of all accrued unpaid 
     interest beginning July 31, 1995, and all subsequent interest payments 
     are due on the last day of each month thereafter until December 31, 
     1995, at which time the outstanding principal balance will be payable in 
     even payments of principal plus interest for thirty (30) months due on 
     the last day of the each month beginning January 31, 1996. The final 
     payment due on June 30, 1998 will be for all outstanding principal and 
     accrued unpaid interest.

Interest on this Note is computed on a 365/360 simple interest 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 Note is subject to change 
from time to time based on changes in an index which is Lender's Prime Rate 
(the "Index"). This is the rate Lender charges, or would charge, on 90-day 
unsecured loans to the most creditworthy corporate customers. This rate may 
or may not be the lowest rate available from Lender at any given time. 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 time the prime rate 
is adjusted by Silicon Valley Bank. The Index currently is 8.750% per annum. 
The interest rate to be applied to the unpaid principal balance of this Note 
will be at a rate of 1.500 percentage points over the Index, resulting in an 
initial rate of 10.250% per annum. NOTICE: Under no circumstances will the 
interest rate on this Note be more than the maximum rate allowed by 
applicable law.

PREPAYMENT. 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. Except for the foregoing, 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.

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 
Note or any agreement related to this Note, 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 of the events 
described in this default section occurs with respect to any guarantor of 
this Note. (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.

LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal 
balance on this Note 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, do one or both of the following: (a) increase the variable 
interest rate on this Note to 6.500 percentage points over the Index, and (b) 
add any unpaid accrued interest to principal and such sum will bear interest 
therefrom until paid at the rate provided in this Note (including any 
increased rate). Lender may hire or pay someone else to help collect this 
Note 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-judgement collection services. 
Borrower also will pay any court costs, in addition to all other sums 
provided by law.* This Note 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. Lender and Borrower hereby waive the 
right to any jury trial in any action, proceeding, or counterclaim brought by 
either Lender or Borrower against the other. (Initial Here   MMF  ) This Note 
shall be governed by and construed in accordance with the laws of the State 
of California.*

LINE OF CREDIT. This Note evidences a straight line of credit until December 
31, 1995. Once the total amount of principal has been advanced, Borrower is 
not entitled to further loan advances. Advances under this Note, as well as 
directions for payment from Borrower's accounts, may be requested orally or 
in writing by Borrower or by authorized person. Lender may, but need not, 
require that all oral requests be confirmed in writing. 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 Note at any time may be 
evidenced by endorsements on this Note or by Lender's internal records, 
including daily computer print-outs. Lender will have no obligation to 
advance funds under this Note if: (a) Borrower or any guarantor is in default 
under the terms of this Note or any agreement that Borrower or any guarantor 
has with Lender, including any agreement made in connection with the signing 
of this Note; (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 Note or any other loan 
with Lender; or (d) Borrower has applied funds provided pursuant to this Note 
for purposes other than those authorized by Lender.

REQUEST TO DEBIT ACCOUNTS. Borrower will regularly deposit all funds received 
from its business activities in accounts maintained by Borrower at Silicon 
Valley Bank. Borrower hereby requests and authorizes Lender to debit any of 
the Borrower's accounts with Lender, specifically, without limitation, 
Account Number 0273517270, for payments of principal and interest due on 
the loan and any other obligations owing by the Borrower to

<PAGE>

                              PROMISSORY NOTE                       PAGE 2
                                (CONTINUED)

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Lender. Lender will notify Borrower of all debits which Lender makes against 
Borrower's accounts. Any such debits against Borrower's accounts in no way 
shall be deemed a set-off.

ADVANCES. At any time from the date hereof through December 31, 1995, 
Borrower may from time to time request advances (each, an "Advance") from 
Lender in an aggregate amount not to exceed $750,000.00. To evidence the 
Advance, Borrower shall deliver to Lender, at the time of each Advance 
Request, an invoice for the equipment or machinery to be purchased. The 
Advances shall be used only to purchase equipment or machinery and shall not 
exceed one hundred percent (100%) of the invoice amount of such equipment and 
machinery approved from time to time by Lender, excluding taxes, shipping, 
warranty charges, freight discount and installation expenses. Tenant 
improvements and software Advances may, however, comprise up to $400,000.00 
of the Advances.

BUSINESS LOAN AGREEMENT. This Note is subject to and shall be governed by all 
the terms and conditions of the Business Loan Agreement of even date between 
Lender and Borrower, as the same may be amended from time to time, which 
Business Loan Agreement is incorporated herein by reference.

LOAN FEE. This Note is subject to a loan fee in the amount of Seven Thousand 
Five Hundred and 00/100 Dollars ($75,000.00) plus all out-of-pocket expenses.

GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or 
remedies under this Note without losing them. Borrower and any other person 
who signs, guarantees or endorses this Note, 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 Note, 
and unless otherwise expressly stated in writing, no party who signs this 
Note, 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 NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS 
OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER 
AGREES TO THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY 
OF THE NOTE.

BORROWER:

GYNECARE, INC.

BY:  /s/ M M Farnsworth
   ---------------------------------------------------
NAME: Malcolm Farnsworth           TITLE:  CFO
      -------------------------           -----

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<PAGE>

                          BUSINESS LOAN AGREEMENT


     BORROWER:  GYNECARE, INC.             LENDER:  SILICON VALLEY BANK
                235 Constitution Drive              1731 Embarcadero, suite 220
                Menlo Park, CA 94025                Palo Alto, CA 94303


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

THIS BUSINESS LOAN AGREEMENT between GYNECARE, INC. ("Borrower") and Silicon 
Valley 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 July 12, 1995, 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 Business Loan Agreement, as 
     this Business Loan Agreement may be amended or modified from time to time,
     together with all exhibits and schedules attached to this Business Loan 
     Agreement from time to time.

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

     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.

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

     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."

     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 Silicon Valley Bank, its successors and 
     assigns.

     Liquid Assets. The words "Liquid Assets" mean Borrower's cash on hand 
     plus Borrower's receivables.

     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.

<PAGE>

                              BUSINESS LOAN AGREEMENT
                                     (Continued)


     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.

     Subordinated Debt. The words "Subordinated Debt" mean indebtedness and 
     liabilities of Borrower which have been subordinated by written 
     agreement to indebtedness owned 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.

CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial 
Loan Advance and each subsequent Loan Advance under this Agreement shall be 
subject to the fulfillment to Lender's satisfaction of all of the conditions 
set forth in this Agreement and in the Related Documents.

     Loan Documents. Borrower shall provide to Lender in form satisfactory to 
     Lender the following documents for the Loan: (a) the Note, (b) Security 
     Agreements granting to Lender security interests in the Collateral, (c) 
     Financing Statements perfecting Lender's Security Interests; (d) evidence
     of insurance as required below; and (e) any other documents required 
     under this Agreement or by Lender or its counsel.

     Borrower's Authorization. Borrower shall have provided in form and 
     substance satisfactory to Lender properly certified resolutions, duly 
     authorizing the execution and delivery of this Agreement, the Note and the 
     Related Documents, and such other authorizations and other documents and 
     instruments as Lender or its counsel, in their sole discretion, may 
     require.

     Payment of Fees and Expenses. Borrower shall have paid to Lender all 
     fees, charges, and other expenses which are then due and payable as 
     specified in this Agreement or any Related Document.

     Representations and Warranties. The representations and warranties set 
     forth in this Agreement, in the Related Documents, and in any document or 
     certificate delivered to Lender under this Agreement are true and correct.

     No Event of Default. There shall not exist at the time of any advance a 
     condition which would constitute an Event of Default under this Agreement.

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 as contemplated by this Agreement or as previously 
     disclosed in Borrower's financial statements or in writing to Lender and as
     accepted by Lender, and except for property tax liens for taxes not 
     presently due and payable, Borrower owns and has good title to all of 
     Borrower's

<PAGE>

                           BUSINESS LOAN AGREEMENT
                                (Continued)

     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, 49 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 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 occurring prior to Borrower's ownership or interest 
     in the properties, whether or not the same was or should have been known to
     Borrower. 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, and (iii) no steps have been taken to terminate 
     any such plan.

     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 235 Constitution Drive, Menlo Park, CA 94025. 
     Unless Borrower has designated otherwise in writing this location is also 
     the office or offices where Borrower keeps its records concerning the 
     Collateral.

     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.

<PAGE>

                           BUSINESS LOAN AGREEMENT
                                (Continued)

FINANCIAL STATEMENTS. Furnish Lender with, as soon as available, but in no 
event later than ninety (90) days after the end of each fiscal year, 
Borrower's balance sheet and income statement for the year ended, reviewed by 
a certified public accountant satisfactory to Lender, and, as soon as 
available, but in no event later than thirty (30) 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: Except as provided above, all computations made to determine 
compliances 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 
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 canceled 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 
monthly, within 30 days, 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

<PAGE>
                                       
                            BUSINESS LOAN AGREEMENT
                                  (Continued)

     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, equipment lease, 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, or (d) 
     purchase or retire any of Borrower's outstanding shares (other than the 
     repurchase of unvested Employee Common Stock) 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 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.

LOAN ADVANCES. Lender, in its discretion, will make loans to Borrower, in 
amounts determined by Lender, up to the amounts as defined and permitted in 
the Agreement and Related Documents, including but not limited to any 
Promissory Notes, executed by Borrower (the "Credit Limit"). The Borrower is 
responsible for monitoring the total amount of Loans and Indebtedness 
outstanding from time to time, and Borrower shall not permit the same, at any 
time to exceed the Credit Limit. If at any time the total of all outstanding 
Loans and Indebtedness exceeds the Credit Limit, the Borrower shall 
immediately pay the amount of the excess to Lender, without notice or demand.

DEFAULT RATE. Upon default, including failure to pay upon final maturity, 
Lender, at its option, may do one or both of the following: (a) increase the 
variable interest rate on the Note to five percentage points (5.000%) over 
the Interest Rate otherwise payable thereunder, and (b) add any unpaid 
accrued interest to principal and such sum will bear interest therefrom until 
paid at the rate provided in the Note.

FINANCIAL COVENANTS. Borrower shall maintain, on a monthly basis, a minimum 
quick ratio of 1.50 to 1.00; a minimum tangible net worth of $1,000,000.00; a 
maximum total debt to tangible net worth ratio of 1.00 to 1.00; and a minimum 
liquidity of $2,000,000.00, reducing to $1,250,000.00 as of June 30, 1997. 
Upon Borrower's ability to achieve two (2) consecutive quarters of a minimum 
debt service coverage of 1.50 to 1.00, the liquidity covenant shall be 
replaced with a minimum debt service coverage of 1.50 to 1.00, to be tested 
by Lender, on a quarterly basis.

ADDITIONAL PROVISION. Borrower shall afford Lender the first right of 
refusal to provide a commercially reasonable line of credit to the Borrower.

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.

     
<PAGE>

                             BUSINESS LOAN AGREEMENT
                                  (Continued)


     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.
     
     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.
     
     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.
          
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. Lender and Borrower 
     hereby waive the right to any jury trial in any action, proceeding, or 
     counterclaim brought by either Lender or Borrower against the other. 
     (Initial Here  /s/MMF ) 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.

     MULTIPLE PARTIES; CORPORATE AUTHORITY. All obligations of Borrower under 
     this Agreement shall be joint and several, and all references to 
     Borrower shall mean each and every Borrower. This means that each of the 
     Borrowers signing below is responsible for all obligations in 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 
     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, 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 agrees to 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

<PAGE>

                             BUSINESS LOAN AGREEMENT
                                  (Continued)
     
     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 BUSINESS LOAN 
AGREEMENT, AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF 
JULY 12, 1995.


BORROWER:

GYNECARE, INC.


By: /s/ MM Farnsworth
   ----------------------------
Name: Malcolm Farnsworth
     --------------------------
Title: CFO
      -------------------------


LENDER:
Silicon Valley Bank

By: /s/ Raja F. Singh
   ----------------------------
   Authorized Officer

<PAGE>

                        COMMERCIAL SECURITY AGREEMENT
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

Borrower:  GYNECARE, INC.                   Lender:  Silicon Valley Bank
           235 Constitution Drive                    Embarcadero/Technology
           Menlo Park, CA 94025                      1731 Embarcadero, Suite 220
                                                     Palo Alto, CA 94303
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

THIS COMMERCIAL SECURITY AGREEMENT is entered into between GYNECARE, INC. 
(referred to below as "Grantor"); and Silicon Valley Bank (referred to below 
as "Lender").  For valuable consideration, Grantor grants to Lender a 
security interest in the Collateral to secure the Indebtedness and agrees that 
Lender shall have the rights stated in this Agreement with respect to the 
Collateral, in addition to all other rights which Lender may have by law.

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 Commercial Security 
     Agreement, as this Commercial Security Agreement may be amended or 
     modified from time to time, together with all exhibits and schedules 
     attached to this Commercial Security Agreement from time to time.

     COLLATERAL. The word "Collateral" means the following described property 
     of Grantor, whether now owned or hereafter acquired, whether now existing 
     or hereafter arising, and wherever located:

EQUIPMENT AND FIXTURES

     In addition, the word "Collateral" includes all the following, whether 
     now owned or hereafter acquired, whether now existing or hereafter 
     arising, and wherever located:

          (a) All attachments, accessions, accessories, tools, parts, 
          supplies, increases, and additions to and all replacements of and 
          substitutions for any property described above.

          (b) All products and produce of any of the property described in 
          this Collateral section.

          (c) All accounts, contract rights, general intangibles, 
          instruments, rents, monies, payments, and all other rights, arising 
          out of a sale, lease, or other disposition of any of the property 
          described in this Collateral section.

          (d) All proceeds (including insurance proceeds) from the sale, 
          destruction, loss, or other disposition of any of the property 
          described in this Collateral section.

          (e) All records and data relating to any of the property described 
          in this Collateral section, whether in the form of a writing, 
          photograph, microfilm, microfiche, or electronic media, together 
          with all of Grantor's right, title, and interest in and to all 
          computer software required to utilize, create, maintain, and process 
          any such records or data on electronic media.

     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."

     GRANTOR. The word "Grantor" means GYNECARE, INC., its successors and 
     assigns

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

     INDEBTEDNESS. The word "Indebtedness" means the indebtedness evidenced 
     by the Note, including all principal and interest, together with all 
     other indebtedness and costs and expenses for which Grantor is responsible 
     under this Agreement or under any of the Related Documents. 
     (Initial Here            )

     LENDER. The word "Lender" means Silicon Valley Bank, its successors 
     and assigns.

     NOTE. The word "Note" means the Notes, letters of credit or credit 
     agreements in any principal amount from Borrower to Lender, together 
     with all renewals of, extensions of, modifications of, refinancings of,
     consolidations of and substitutions for the notes, letters of credit or
     credit agreements.

     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.

OBLIGATIONS OF GRANTOR. Grantor warrants and covenants to Lender as follows:

     PERFECTION OF SECURITY INTEREST. Grantor agrees to execute such 
     financing statements and to take whatever other actions are requested by 
     Lender to perfect and continue Lender's security interest in the 
     Collateral. Upon request of Lender, Grantor will deliver to Lender any and 
     all of the documents evidencing or constituting the Collateral, and 
     Grantor will note Lender's interest upon any and all chattel paper if not 
     delivered to Lender for possession by Lender. Grantor hereby appoints 
     Lender as its irrevocable attorney-in-fact for the purpose of executing 
     any documents necessary to perfect or to continue the security interest 
     granted in this Agreement. Lender may at any time, and without further 
     authorization from Grantor, file a carbon, photographic or other 
     reproduction of any financing statement or of this Agreement for use as 
     a financing statement. Grantor will reimburse Lender for all expenses for 
     the perfection and the continuation of the perfection of Lender's security 
     interest in the Collateral. Grantor promptly will notify Lender before 
     any change in Grantor's name including any change to the assumed business 
     names of Grantor.

     NO VIOLATION. The execution and delivery of this Agreement will not 
     violate any law or agreement governing Grantor or to which Grantor is a 
     party, and its certificate or articles of incorporation and bylaws do not 
     prohibit any term or condition of this Agreement.

     ENFORCEABILITY OF COLLATERAL. To the extent the Collateral consists of 
     accounts, chattel paper, or general intangibles, the Collateral is 
     enforceable in accordance with its terms, is genuine, and complies with 
     applicable laws concerning form, content and manner of preparation and 
     execution, and all persons appearing to be obligated on the Collateral 
     have authority and capacity to contract and are in fact obligation as they 
     appear to be on the Collateral.

     LOCATION OF THE COLLATERAL. Grantor, upon request of Lender, will deliver 
     to Lender in form satisfactory to Lender a schedule of real properties and 
     Collateral locations relating to Grantor's operations, including without 
     limitation the following: (a) all real property owned or being purchased 
     by Grantor; (b) all real property being rented or leased by Grantor; 
     (c) all storage facilities owned, rented, leased, or being used by 
     Grantor; and


<PAGE>


                        COMMERCIAL SECURITY AGREEMENT                     Page 2
                                 (Continued)
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     (d) all other properties where Collateral is or may be located. Except 
     in the ordinary course of its business, Grantor shall not remove the 
     Collateral from its existing locations without the prior written consent 
     of Lender.

     REMOVAL OF COLLATERAL. Grantor shall keep the Collateral (or to the 
     extent the Collateral consists of intangible property such as accounts, 
     the records concerning the Collateral) at Grantor's address shown above, 
     or at such other locations as are acceptable to Lender. Except in the 
     ordinary course of its business, including the sales of inventory, Grantor 
     shall not remove the Collateral from its existing locations without the 
     prior written consent of Lender. To the extent that the Collateral 
     consists of vehicles, or other titled property, Grantor shall not take 
     or permit any action which would require application for certificates of 
     title for the vehicles outside the State of California, without the 
     prior written consent of Lender.

     TRANSACTIONS INVOLVING COLLATERAL. Except for inventory sold or accounts 
     collected in the ordinary course of Grantor's business, Grantor shall not 
     sell, offer to sell, or otherwise transfer or dispose of the Collateral. 
     While Grantor is not in default under this Agreement, Grantor may sell 
     inventory, but only in the ordinary course of its business and only to 
     buyers who qualify as a buyer in the ordinary course of business. A sale 
     in the ordinary course of Grantor's business does not include a transfer 
     in partial or total satisfaction of a debt or any bulk sale. Grantor 
     shall not pledge, mortgage, encumber or otherwise permit the Collateral 
     to be subject to any lien, security interest, encumbrance, or charge, 
     other than the security interest provided for in this Agreement, without 
     the prior written consent of Lender. This includes security interests even 
     if junior in right to the security interest granted under this Agreement. 
     Unless waived by Lender, all proceeds from any disposition of the 
     Collateral (for whatever reason) shall be held in trust for Lender and 
     shall not be commingled with any other funds; provided however, this 
     requirement shall not constitute consent by Lender to any sale or other 
     disposition. Upon receipt, Grantor shall immediately deliver any such 
     proceeds to Lender.

     TITLE. Grantor represents and warrants to Lender that it holds good and 
     marketable title to the Collateral, free and clear of all liens and 
     encumbrances except for the lien of this Agreement. No financing statement 
     covering any of the Collateral is on file in any public office other than 
     those which reflect the security interest created by this Agreement or to 
     which Lender has specifically consented. Grantor shall defend Lender's 
     rights in the Collateral against the claims and demands of all other 
     persons.

     COLLATERAL SCHEDULES AND LOCATIONS. Insofar as the Collateral consists 
     of inventory, Grantor shall deliver to Lender, as often as Lender shall 
     require, such lists, descriptions, and designations of such Collateral as 
     Lender may require to identify the nature, extent, and location of such 
     Collateral. Such information shall be submitted for Grantor and each of 
     its subsidiaries or related companies.

     MAINTENANCE AND INSPECTION OF COLLATERAL. Grantor shall maintain all 
     tangible  Collateral in good condition and repair. Grantor will not commit 
     or permit damage to or destruction of the Collateral or any part of the 
     Collateral. Lender and its designated representatives and agents shall 
     have the right at all reasonable times to examine, inspect, and audit the 
     Collateral wherever located. Grantor shall immediately notify Lender of 
     all cases involving the return, rejection, repossession, loss or damage 
     of or to any Collateral; of any request for credit or adjustment or of any 
     other dispute arising with respect to the Collateral; and generally of all 
     happenings and events affecting the Collateral or the value or the amount 
     of the Collateral.

     TAXES, ASSESSMENTS AND LIENS. Grantor will pay when due all taxes, 
     assessments and liens upon the Collateral, its use or operation, upon 
     this Agreement, upon any promissory note or notes evidencing the 
     indebtedness, or upon any of the other Related Documents. Grantor may 
     withhold any such payment or may elect to contest any lien if Grantor is 
     in good faith conducting an appropriate proceeding to contest the 
     obligation to pay and so long as Lender's interest in the Collateral is 
     not jeopardized in Lender's sole opinion. If the Collateral is subjected 
     to a lien which is not discharged within fifteen (15) days, Grantor shall 
     deposit with Lender cash, a sufficient corporate surety bond or other 
     security satisfactory to Lender in an amount adequate to provide for the 
     discharge of the lien plus any interest, costs, attorneys' fees or other 
     charges that could accrue as a result of foreclosure or sale of the 
     Collateral. In any contest Grantor shall defend itself and Lender and 
     shall satisfy any final adverse judgement before enforcement against 
     the Collateral. Grantor shall name Lender as an additional obligee under 
     any surety bond furnished in the contest proceedings.

     COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. Grantor shall comply promptly 
     with all laws, ordinances, rules and regulations of all governmental 
     authorities, now or hereafter in effect, applicable to the ownership, 
     production, disposition, or use of the Collateral. Grantor may contest in 
     good faith any such law, ordinance or regulation and withhold compliance 
     during any proceeding, including appropriate appeals, so long as Lender's 
     interest in the Collateral, in Lender's opinion, is not jeopardized.

     HAZARDOUS SUBSTANCES. Grantor represents and warrants that the Collateral 
     never has been, and never will be so long as this Agreement remains a lien 
     on the Collateral, used for the generation, manufacture, storage, 
     transportation, treatment, disposal, release or threatened release of any 
     hazardous waste or substance, as those terms are defined in the 
     Comprehensive Environmental Response, Compensation, and Liability Act of 
     1980, as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the 
     Superfund Amendments and Reauthorization Act of 1986, Pub. L No. 99-499 
     ("SARA"), the Hazardous Materials Transportation Act, 49 U.S.C. 
     Section 1801, et seq., the Resource Conservation and Recovery Act, 
     49 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. The terms "hazardous waste" and 
     "hazardous substance" shall also include, without limitation, petroleum 
     and petroleum by-products or any fraction thereof and asbestos. The 
     representations and warranties contained herein are based on Grantor's 
     due diligence in investigating the Collateral for hazardous wastes 
     and substances. Grantor hereby (a) releases and waives any future claims 
     against Lender for indemnity or contribution in the event Grantor 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 and losses 
     resulting from a breach of this provision of this Agreement. This 
     obligation to indemnify shall survive the payment of the indebtedness and 
     the satisfaction of this Agreement.

     MAINTENANCE OF CASUALTY INSURANCE. Grantor shall procure and maintain all 
     risks insurance, including without limitation fire, theft and liability 
     coverage together with such other insurance as Lender may require with 
     respect to the Collateral, in form, amounts, coverages and basis 
     reasonably acceptable to Lender and issued by a company or companies 
     reasonably acceptable to Lender. Grantor, 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 and not including any disclaimer of 
     the insurer's liability for failure to give such a notice. 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 Grantor or any other person. In connection with all policies covering 
     assets in which Lender holds or is offered a security interest, Grantor 
     will provide Lender with such loss payable or other endorsements as 
     Lender may require. If Grantor at any time fails to obtain or maintain 
     any insurance as required under this Agreement, Lender may (but shall 
     not be obligated to) obtain such insurance as Lender deems appropriate, 
     including if it so chooses "single interest insurance," which will cover 
     only Lender's interest in the Collateral.

     APPLICATION OF INSURANCE PROCEEDS. Grantor shall promptly notify Lender of 
     any loss or damage to the Collateral. Lender may make proof of loss if 
     Grantor fails to do so within fifteen (15) days of the casualty. All 
     proceeds of any insurance on the Collateral, including accrued proceeds 
     thereon, shall be held by Lender as part of the Collateral. If Lender 
     consents to repair or replacement of the damaged or destroyed Collateral. 
     Lender shall, upon satisfactory proof of expenditure, pay or reimburse 
     Grantor from the proceeds for the reasonable cost of repair or 
     restoration. If Lender does not consent to repair or replacement of the 
     Collateral, Lender shall retain a sufficient amount of the proceeds to 
     pay all of the indebtedness, and shall pay the balance to Grantor. Any 
     proceeds which have not been disbursed within six (6) months after 
     their receipt and which Grantor has not committed to the repair 
     or restoration of the Collateral shall be used to prepay the indebtedness.

<PAGE>

                         COMMERCIAL SECURITY AGREEMENT                    PAGE 3
                                  (CONTINUED)

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     INSURANCE RESERVES. Lender may require Grantor to maintain with Lender 
     reserves for payment of insurance premiums, which reserves shall be 
     created by monthly payments from Grantor of a sum estimated by Lender to 
     be sufficient to produce, at least fifteen (15) days before the premium 
     due date, amounts at least equal to the insurance premiums to be paid. 
     If fifteen (15) days before payment is due, the reserve funds are 
     insufficient, Grantor shall upon demand pay any deficiency to Lender. 
     The reserve funds shall be held by Lender as a general deposit and shall 
     constitute a non-interest-bearing account which Lender may satisfy by 
     payment of the insurance premiums required to be paid by Grantor as they 
     become due. Lender does not hold the reserve funds in trust for Grantor, 
     and Lender is not the agent of Grantor for payment of the insurance 
     premiums required to be paid by Grantor. The responsibility for the 
     payment of premiums shall remain Grantor's sole responsibility.
     
     INSURANCE REPORTS. Grantor, upon request of Lender, shall furnish to 
     Lender reports on each existing policy of insurance showing such 
     information as Lender may reasonably request including the following: 
     (a) the name of the insurer; (b) the risks insured; (c) the amount of 
     the policy; (d) the property insured; (e) the then current value on the 
     basis of which insurance has been obtained and the manner of determining 
     that value; and (f) the expiration date of the policy. In addition, 
     Grantor shall upon request by Lender (however not more often than 
     annually) have an independent appraiser satisfactory to Lender 
     determine, as applicable, the cash value or replacement cost of the 
     Collateral.
     
GRANTOR'S RIGHT TO POSSESSION. Until default, Grantor may have possession of 
the tangible personal property and beneficial use of all the Collateral and 
may use it in any lawful manner not inconsistent with this Agreement or the 
Related Documents, provided that Grantor's right to possession and 
beneficial use shall not apply to any Collateral where possession of the 
Collateral by Lender is required by law to perfect Lender's security 
interest in such Collateral. If Lender at any time has possession of any 
Collateral, whether before or after an Event of Default, Lender shall be 
deemed to have exercised reasonable care in the custody and preservation of 
the Collateral if Lender takes such action for that purpose as Grantor shall 
request or as Lender, in Lender's sole discretion, shall deem appropriate 
under the circumstances, but failure to honor any request by Grantor shall 
not of itself be deemed to be a failure to exercise reasonable care. Lender 
shall not be required to take any steps necessary to preserve any rights in 
the Collateral against prior parties, nor to protect, preserve or maintain 
any security interest given to secure the indebtedness.

EXPENDITURES BY LENDER. If not discharged or paid when due, Lender may (but 
shall not be obligated to) discharge or pay any amounts required to be 
discharged or paid by Grantor under this Agreement, including without 
limitation all taxes, liens, security interests, encumbrances, and other 
claims, at any time levied or placed on the Collateral. Lender also may (but 
shall not be obligated to) pay all costs for insuring, maintaining and 
preserving the Collateral. All such expenditures incurred or paid by Lender 
for such purposes will then bear interest at the rate charged under the Note 
from the date incurred or paid by Lender to the date of repayment by Grantor. 
All such expenses shall become a part of the indebtedness and, at Lender's 
option, will (a) be payable on demand, (b) be added to the balance of the Note 
and be apportioned among and be payable with any installment payments to 
become due during either (i) the term of any applicable insurance policy or 
(ii) the remaining term of the Note, or (c) be treated as a balloon payment 
which will be due and payable at the Note's maturity. This Agreement also 
will secure payment of these amounts. Such right shall be in addition to all 
other rights and remedies to which Lender may be entitled upon the occurrence 
of an Event of Default.

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

     DEFAULT ON INDEBTEDNESS. Failure of Grantor to make any payment when due 
     on the indebtedness.
     
     OTHER DEFAULTS. Failure of Grantor to comply with or to perform any 
     other term, obligation, covenant or condition contained in this 
     Agreement or in any of the Related Documents or in any other agreement 
     between Lender and Grantor.
     
     INSOLVENCY. The dissolution or termination of Grantor's existence as a 
     going business, the insolvency of Grantor, the appointment of a receiver 
     for any part of Grantor'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 Grantor.
     
     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 Grantor or by any 
     governmental agency against the Collateral or any other collateral 
     securing the indebtedness. This includes a garnishment of any of 
     Grantor's deposit accounts with Lender.
     
     EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with 
     respect to any Guarantor of any of the indebtedness or such Guarantor 
     dies or becomes incompetent.

     ADVERSE CHANGE. A material adverse change occurs in Grantor's financial 
     condition, or Lender believes the prospect of payment or performance of 
     the indebtedness is impaired.

RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this 
Agreement, at any time thereafter, Lender shall have all the rights of a 
secured party under the California Uniform Commercial Code. In addition and 
without limitation, Lender may exercise any one or more of the following 
rights and remedies:

     ACCELERATE INDEBTEDNESS. Lender may declare the entire indebtedness, 
     including any prepayment penalty which Grantor would be required to pay, 
     immediately due and payable, without notice.

     ASSEMBLE COLLATERAL. Lender may require Grantor to deliver to Lender all 
     or any portion of the Collateral and any and all certificates of title 
     and other documents relating to the Collateral. Lender may require 
     Grantor to assemble the Collateral and make it available to Lender at a 
     place to be designated by Lender. Lender also shall have full power to 
     enter upon the property of Grantor to take possession of and remove the 
     Collateral. If the Collateral contains other goods not covered by this 
     Agreement at the time of repossession, Grantor agrees Lender may take 
     such other goods, provided that Lender makes reasonable efforts to 
     return them to Grantor after repossession.
     
     SELL THE COLLATERAL. Lender shall have full power to sell, lease, 
     transfer, or otherwise deal with the Collateral or proceeds thereof in 
     its own name or that of the Grantor. Lender may sell the Collateral at 
     public auction or private sale. Unless the Collateral threatens to 
     decline speedily in value or is of a type customarily sold on a 
     recognized market, Lender will give Grantor reasonable notice of the 
     time after which any private sale or any other intended disposition of 
     the Collateral is to be made. The requirements of reasonable notice 
     shall be met if such notice is given at least ten (10) days, or such 
     lesser time as required by state law, before the time of the sale or 
     disposition. All expenses relating to the disposition of the 
     Collateral, including without limitation the expenses of retaking, 
     holding, insuring, preparing for sale and selling the Collateral, shall 
     become a part of the indebtedness secured by this Agreement and shall be 
     payable on demand, with interest at the Note rate from date of 
     expenditure until repaid.

     APPOINT RECEIVER. To the extent permitted by applicable law, Lender 
     shall have the following rights and remedies regarding the appointment 
     of a receiver: (a) Lender may have a receiver appointed as a matter of 
     right, (b) the receiver may be an employee of Lender and may serve 
     without bond, and (c) all fees of the receiver and his or her attorney 
     shall become part of the indebtedness secured by this Agreement and 
     shall be payable on demand, with interest at the Note rate from date of 
     expenditure until repaid.
     
     COLLECT REVENUES, APPLY ACCOUNTS. Lender, either itself or through a 
     receiver, may collect the payments, rents, income, and revenues from the 
     Collateral. Lender may at any time in its discretion transfer any 
     Collateral into its own name or that of its nominee and receive the 
     payments, rents, income, and revenues therefrom and hold the same as 
     security for the indebtedness or apply it to payment of the indebtedness 
     in such order of preference as Lender may determine. Insofar as the 
     Collateral consists of accounts, general intangibles, insurance 
     policies, instruments, chattel paper, choses in action, or similar 
     property, Lender may demand, collect, receipt for, settle, compromise, 
     adjust, sue for, foreclose, or realize on the Collateral as Lender may 
     determine, whether or not indebtedness or Collateral is the due. For 
     these purposes, Lender may, on

<PAGE>

                         COMMERCIAL SECURITY AGREEMENT                    PAGE 4
                                  (CONTINUED)

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     behalf of and in the name of Grantor, receive, open and dispose of mail 
     addressed to Grantor; change any address to which mail and payments are 
     to be sent; and endorse notes, checks, drafts, money orders, documents 
     of title, instruments and items pertaining to payment, shipment, or 
     storage of any Collateral. To facilitate collection, Lender may notify 
     account debtors and obligors on any Collateral to make payments directly 
     to Lender.
     
     OBTAIN DEFICIENCY. If Lender chooses to sell any or all of the 
     Collateral, Lender may obtain a judgment against Grantor for any 
     deficiency remaining on the indebtedness due to Lender after application 
     of all amounts received from the exercise of the rights provided in this 
     Agreement. Grantor shall be liable for a deficiency even if the 
     transaction described in this subsection is a sale of accounts or 
     chattel paper.

     OTHER RIGHTS AND REMEDIES. Lender shall have all the rights and remedies 
     of a secured creditor under the provisions of the Uniform Commercial 
     Code, as may be amended from time to time. In addition, Lender shall 
     have and may exercise any or all other rights and remedies it may have 
     available at law, in equity, or otherwise.
     
     CUMULATIVE REMEDIES. All of Lender's rights and remedies, whether 
     evidenced by this Agreement or the Related Documents or by any other 
     writing, 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 Grantor under this Agreement, 
     after Grantor's failure to perform, shall not affect Lender's right to 
     declare a default and to exercise its 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, Grantor 
     agrees upon Lender's request to submit to the jurisdiction of the courts 
     of Santa Clara County, State of California. Lender and Grantor hereby 
     waive the right to any jury trial in any action, proceeding, or 
     counterclaim brought by either Lender or Grantor against the other. 
     Initial Here (/s/MMF) This Agreement shall be governed by and construed 
     in accordance with the laws of the State of California.
     
     ATTORNEYS' FEES; EXPENSES. Grantor agrees to pay upon demand all of 
     Lender's costs and expenses, including attorneys' fees and Lender's 
     legal expenses, incurred in connection with the enforcement of this 
     Agreement. Lender may pay someone else to help enforce this Agreement, 
     and Grantor shall pay the costs and expenses of such enforcement. Costs 
     and expenses include Lender's attorneys' fees and legal expenses whether 
     or not there is a lawsuit, including attorneys' fees and legal expenses 
     for bankruptcy proceedings (and including efforts to modify or vacate 
     any automatic stay or injunction), appeals, and any anticipated 
     post-judgment collection services. Grantor also shall pay all court 
     costs and such additional fees as may be directed by the court.
     
     CAPTION HEADINGS. Caption headings in the Agreement are for convenience 
     purposes only and are not to be used to interpret or define the 
     provisions of this Agreement.
     
     MULTIPLE PARTIES; CORPORATE AUTHORITY. All obligations of Grantor under 
     this Agreement shall be joint and several, and all references to Grantor 
     shall mean each and every Grantor. This means that each of the Borrowers 
     signing below is responsible for all obligations in the Agreement.
     
     NOTICES. All notices required to be given under this Agreement shall be 
     given in writing, may be sent by telefacimile, 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 Grantor, notice to any Grantor will constitute notice 
     to all Grantors. For notice purposes, Grantor agrees to keep Lender 
     informed at all times of Grantor's current address(es).
     
     POWER OF ATTORNEY. Grantor hereby appoints Lender as its true and lawful 
     attorney-in-fact, irrevocably, with full power of substitution to do the 
     following: (a) to demand, collect, receive, receipt for, sue and 
     recover all sums of money or other property which may now or hereafter 
     become due, owing or payable from the Collateral; (b) to execute, sign 
     and endorse any and all claims, instruments, receipts, checks, drafts or 
     warrants issued in payment for the Collateral; (c) to settle or 
     compromise any and all claims arising under the Collateral, and, in the 
     place and stead of Grantor, to execute and deliver its release and 
     settlement for the claim; and (d) to file any claim or claims or to take 
     any action or institute or take part in any proceedings, either in its 
     own name or in the name of Grantor, or otherwise, which in the 
     discretion of Lender may seem to be necessary or advisable. This power 
     is given as security for the Indebtedness, and the authority hereby 
     conferred is and shall be irrevocable and shall remain in full force 
     and effect until renounced by Lender.
     
     PREFERENCE PAYMENTS. Any monies Lender pays because of an asserted 
     preference claim in Borrower's bankruptcy will become a part of the 
     Indebtedness and, at Lender's option, shall be payable by Borrower as 
     provided above in the "EXPENDITURES BY LENDER" paragraph.
     
     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.
     
     SUCCESSOR INTERESTS. Subject to the limitations set forth above on 
     transfer of the Collateral, this Agreement shall be binding upon and 
     inure to the benefit of the parties, their successors and assigns.
     
     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 Grantor, shall 
     constitute a waiver of any of Lender's rights or of any of Grantor's 
     obligations 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 to 
     subsequent instances where such consent is required and in all cases 
     such consent may be granted or withheld in the sole discretion of Lender.
     
     WAIVER OF CO-OBLIGOR'S RIGHTS. If more than one person is obligated for 
     the Indebtedness, Borrower irrevocably waives, disclaims and relinquishes 
     all claims against such other person which Borrower has or would 
     otherwise have by virtue of payment of the Indebtedness or any part 
     thereof, specifically including but not limited to all rights of 
     indemnity, contribution or exoneration.
     
ADDITIONAL PROVISIONS. If any law is passed that requires additional action 
on the part of Lender, Borrower and/or Grantor shall fully cooperate with 
Lender in complying with the law and accordingly, shall reimburse Lender for 
all costs and expenses which Lender incurs in compliance with the law.

<PAGE>

                         COMMERCIAL SECURITY AGREEMENT                    PAGE 5
                                  (CONTINUED)

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   GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS COMMERCIAL 
   SECURITY AGREEMENT, AND GRANTOR AGREES TO ITS TERMS. THIS AGREEMENT IS DATED 
   JULY 12, 1995.

   GRANTOR:

   GYNECARE, INC.

   By: /s/ M M Farnsworth
       ------------------------------------
     Name: Malcolm Farnsworth  Title: CFO
           -------------------       ------

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<PAGE>

                        LOAN MODIFICATION AGREEMENT

    This Loan Modification Agreement is entered into as of December 17, 1996, 
by and between Gynecare, Inc. ("Borrower") whose address is 235 Constitution 
Drive, Menlo Park, CA 94025, and Silicon Valley Bank ("Lender") whose address 
is 3003 Tasman Drive, Santa Clara, CA 95054.

1.  DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which may 
be owing by Borrower to Lender, Borrower is indebted to Lender pursuant to, 
among other documents, a Promissory Note, of even date herewith, in the 
original principal amount of Six Hundred Thousand and 00/100 Dollars 
($600,000.00)(the "Term Note"). The Note, together with other promissory 
notes from Borrower to Lender, is governed by the terms of a Business Loan 
Agreement, dated July 12, 1995, as such agreement may be amended from time to 
time, between Borrower and Lender (the "Loan Agreement"). Defined terms used 
but not otherwise defined herein, shall have the same meanings as in the Loan 
Agreement.

Hereinafter, all indebtedness owing by Borrower to Lender shall be referred 
to as the "Indebtedness".

2.  DESCRIPTION OF COLLATERAL AND GUARANTIES. Repayment of the Indebtedness, 
together with other promissory notes from Borrower to Lender, is secured by 
a Commercial Security Agreement, dated July 12, 1995.

Hereinafter, the above-described security documents and guaranties, together 
with all other documents securing repayment of the Indebtedness shall be 
referred to as the "Security Documents". Hereinafter, the Security Documents, 
together with all other documents evidencing or securing the Indebtedness 
shall be referred to as the "Existing Loan Documents".

3.  DESCRIPTION OF CHANGE IN TERMS.

    A.  MODIFICATION(S) TO LOAN AGREEMENT.

        1.  The paragraph entitled "Financial Covenants" is hereby amended in 
            its entirety, to read as follows:

            Borrower shall maintain, on a quarterly basis, beginning with the 
            quarter ending December 31, 1996, a minimum Tangible Net Worth of 
            $2,500,000.00; a maximum total Debt to Tangible Net Worth ratio of 
            1.00 to 1.00; and a minimum liquidity of $3,000,000.00, reducing to 
            $2,000,000.00 as of the quarter ending June 30, 1998, and 
            thereafter. Upon Borrower's achievement of a minimum debt service 
            coverage ratio of 1.50 to 1.00 for two (2) consecutive quarters, 
            the liquidity covenant shall be replaced with a debt service 
            coverage covenant of 1.50 to 1.00. For purposes of calculation, 
            deferred revenue shall be excluded from current liabilities. 
            Notwithstanding the foregoing, in the event Borrower's liquidity 
            falls below $5,000,000.00, Borrower shall maintain the above 
            covenants on a monthly basis. Such change shall only become 
            effective the month following Lender's receipt of Borrower's 
            financial statements showing Borrower has achieved the above-
            described criteria.

                                         1

<PAGE>

        2.  The paragraph entitled "Financial Statements" is hereby amended 
            in its entirety, to read as follows:

            Furnish Lender with, as soon as available, but in no event later 
            than five (5) days after filing with the Securities Exchange 
            Commission (SEC), Borrower's forms 10K and 10Q together with a 
            Compliance Certificate. 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. Notwithstanding the foregoing, in the event Borrower's 
            cash falls below $5,000,000.00, Borrower shall furnish Lender 
            with a Compliance Certificate as soon as available, but in no 
            event later than thirty (30) days after the end of each month.

4.  CONSISTENT CHANGES. The Existing Loan Documents are hereby amended 
wherever necessary to reflect the changes described above.

5.  PAYMENT OF LOAN FEE. Borrower shall pay to Lender a fee in the amount of 
Four Thousand Five Hundred and 00/100 Dollars ($4,500.00)(the "Loan Fee") 
plus all out-of-pocket expenses.

6.  NO DEFENSES OF BORROWER. Borrower (and each guarantor and pledgor signing 
below) agrees that it has no defenses against the obligations to pay any 
amounts under the Indebtedness.

7.  CONTINUING VALIDITY. Borrower (and each guarantor and pledgor signing 
below) understands and agrees that in modifying the existing Indebtedness, 
Lender is relying upon Borrower's representations, warranties, and 
agreements, as set forth in the Existing Loan Documents. Except as expressly 
modified pursuant to this Loan Modification Agreement, the terms of the 
Existing Loan Documents remain unchanged and in full force and effect. 
Lender's agreement to modifications to the existing Indebtedness pursuant to 
this Loan Modification Agreement in no way shall obligate Lender to make any 
future modifications to the Indebtedness. Nothing in this Loan Modification 
Agreement shall constitute a satisfaction of the Indebtedness. It is the 
intention of Lender and Borrower to retain as liable parties all makers and 
endorsers of Existing Loan Documents, unless the party is expressly released 
by Lender in writing. No maker, endorser, or guarantor will be released by 
virtue of this Loan Modification Agreement. The terms of this paragraph apply 
not only to this Loan Modification Agreement, but also to all subsequent loan 
modification agreements.

8.  CONDITIONS. The effectiveness of this Loan Modification Agreement is 
conditioned upon Borrower's payment of the Loan Fee.

    This Loan Modification Agreement is executed as of the date first written 
above.

BORROWER:                          LENDER:

GYNECARE, INC.                     SILICON VALLEY BANK

By: /s/ M M Farnsworth                By:  /s/ John Dewey
    ---------------------                ---------------------

Name:   M M Farnsworth              Name: John Dewey
     --------------------                --------------------

Title: CFO                         Title: A.V.P
      -------------------                -------------------

                              2

<PAGE>

                            PROMISSORY NOTE

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BORROWER:  Gynecare, Inc.                      LENDER: Silicon Valley Bank
           235 Constitution Drive                      3003 Tasman Drive
           Menlo Park, CA 94025                        Santa Clara, CA 95054

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PRINCIPAL AMOUNT: $600,000.00    INITIAL RATE: 9.500% 
                                               DATE OF NOTE: DECEMBER 17, 1996

PROMISE TO PAY. Gynecare, Inc. ("Borrower") promises to pay to Silicon 
Valley Bank ("Lender"), or order, In lawful money of the United States of 
America, the principal amount of Six Hundred Thousand & 00/100 Dollars 
($600,000.00) 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 accordance with the following payment 
schedule:

       The Draw Period shall begin as of this date and shall end on December 
       31, 1997 (the "Draw Period"). During the Draw Period, Borrower will pay 
       regular monthly payments of all accrued unpaid Interest due as of each 
       payment date, beginning January 31, 1996 and all subsequent Interest 
       payments will be due on the last day of each month thereafter through 
       December 31, 1997. The outstanding principal balance of the Note on 
       December 31, 1997 will be payable in forty-two (42) even payments of 
       principal plus Interest due as of each payment date, beginning 
       January 31, 1998 and all subsequent payments of principal plus Interest 
       will be due on the last day of each month thereafter. The final payment, 
       due on June 30, 2001, will be for all outstanding principal plus all 
       accrued Interest not yet paid.

Interest on this Note is computed on a 365/360 simple interest 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 Note is subject to change 
from time to time based on changes in an index which is Lender's Prime Rate 
(the "Index"). This is the rate Lender charges, or would charge, on 90-day 
unsecured loans to the most creditworthy corporate customers. This rate 
may or may not be the lowest rate available from Lender at any given time. 
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 time the prime 
rate is adjusted by Silicon Valley Bank. THE INDEX CURRENTLY IS 8.250% PER 
ANNUM. THE INTEREST RATE TO BE APPLIED TO THE UNPAID PRINCIPAL BALANCE OF 
THIS NOTE WILL BE AT A RATE OF 1.250 PERCENTAGE POINTS OVER THE INDEX, 
RESULTING IN AN INITIAL RATE OF 9.500% PER ANNUM. NOTICE: Under no 
circumstances will the interest rate on this Note be more than the maximum 
rate allowed by applicable law.

PREPAYMENT. 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. Except for the foregoing, 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.

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 
Note or any agreement related to this Note, 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 the 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 Note. (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.

LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal 
balance on this Note 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 Note to 6.250 
percentage points over the Index. Lender may hire or pay someone else to help 
collect this Note 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 NOTE 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. LENDER AND BORROWER HEREBY WAIVE THE 
RIGHT TO ANY JURY TRIAL IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY 
EITHER LENDER OR BORROWER AGAINST THE OTHER. THIS NOTE SHALL BE GOVERNED BY 
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.

LINE OF CREDIT. This Note evidences a straight line of credit through the end 
of the Draw Period. Once the total amount of principal has been advanced, 
Borrower is not entitled to further loan advances. Advances under this Note, 
as well as directions for payment from Borrower's accounts, may be requested 
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. 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 Note at any 
time may be evidenced by endorsements on this Note or by Lender's internal 
records, including daily computer print-outs. Lender will have no obligation 
to advance funds under this Note if: (a) Borrower or any guarantor is in 
default under the terms of this Note or any agreement that Borrower or any 
guarantor has with Lender, including any agreement made in connection with 
the signing of this Note; (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 Note or any other 
loan with Lender; or (d) Borrower has applied funds provided pursuant to this 
Note for purposes other than those authorized by Lender.

BUSINESS LOAN AGREEMENT. This Note is governed by all the terms and 
conditions of the Business Loan Agreement dated July 12, 1995, between 
Borrower and Lender, as such agreement may be amended from time to time, 
which Business Loan Agreement is incorporated herein by this reference.

PAYMENT OF LOAN FEE. Borrower shall pay to Lender a fee in the amount of Four 
Thousand Five Hundred and 00/100 Dollars ($4,500.00) plus all

<PAGE>

12-17-1996                       PROMISSORY NOTE                        PAGE 2
                                   (Continued)

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out-of-pocket expenses.

REQUEST TO DEBIT ACCOUNTS. Borrower will regularly deposit all funds received 
from its business activities in accounts maintained by Borrower at Silicon 
Valley Bank. Borrower hereby requests and authorizes Lender to debit any of 
Borrower's accounts with Lender, specifically, without limitation, Account 
Number       , for payments of principal and interest due on the loan and any 
other obligations owing by Borrower to Lender. Lender will notify Borrower of 
all debits which Lender makes against Borrower's accounts. Any such debits 
against Borrower's accounts in no way shall be deemed a set-off.

ADVANCE RATE. At any time from the date hereof through the end of the Draw 
Period, Borrower may request advances (each an "Advance" and collectively, 
the "Advances") from Lender in an aggregate amount not to exceed the 
principal amount of the Note. To evidence the Advances, Borrower shall 
deliver to Lender, at the time of each Advance request, an invoice for the 
equipment or machinery to be purchased. The Advances shall only be used to 
purchase equipment or machinery and shall not exceed one hundred percent 
(100%) of the invoice amount approved from time to time by Lender, excluding 
taxes, shipping and installation expense (except as provided for herein). 
Taxes, shipping and installation expense may, however, comprise up to 
$100,000.00 of total advances. An amount not to exceed $350,000.00 may be 
used for the purchase of used equipment, including prior tenant improvements, 
provided, however, such used equipment is purchased with the initial advance 
under this Note and the value of such equipment shall not exceed the net book 
value of the equipment.

GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or 
remedies under this Note without losing them. Borrower and any other person 
who signs, guarantees or endorses this Note, 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 Note, 
and unless otherwise expressly stated in writing, no party who signs this 
Note, 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 NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS 
OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER 
AGREES TO THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY 
OF THE NOTE.

BORROWER:

GYNECARE, INC.

BY:     /s/ M M Farnsworth
    ------------------------

    NAME:   M M Farnsworth, TITLE:  CFO
          ----------------         -----

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