<PAGE>   1
                                                                   EXHIBIT 10.12

[COAST COMMERCIAL BANK LOGO]

                            BUSINESS LOAN AGREEMENT
<TABLE>
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Principal       Loan Date   Maturity      Loan No.    Call    Collateral  Account  Officer   Initials
<S>             <C>         <C>           <C>         <C>     <C>         <C>      <C>       <C>
$1,000,000.00               09-01-1998    127836001             0020      117393     017       
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      References in the shaded area are for Lender's use only and do not limit the applicability
                          of this document to any particular loan or item.
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</TABLE>

BORROWER:  NOVADIGM, INC.                    LENDER:  COAST COMMERCIAL BANK
           185 BERRY STREET, SUITE 3515               FRONT STREET
           SAN FRANCISCO, CA 94107                    720 FRONT STREET
                                                      SANTA CRUZ, CA 95060
--------------------------------------------------------------------------------

THIS BUSINESS LOAN AGREEMENT BETWEEN NOVADIGM, INC. ("BORROWER") AND COAST
COMMERCIAL 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 AUGUST 1, 1997, 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 NOVADIGM, 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 COAST COMMERCIAL BANK, its successors and 
     assigns.

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

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

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

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

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

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




<PAGE>   2

08-01-1997                  BUSINESS LOAN AGREEMENT                       Page 2
Loan No 127836001                (CONTINUED)
================================================================================

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

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

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

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

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

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

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

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

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

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

     COMMERCIAL PURPOSES. Borrower intends to use the Loan proceeds solely for
     business or commercial related purposes.

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



<PAGE>   3

08-01-1997                  BUSINESS LOAN AGREEMENT                       Page 3
Loan No 127836001                (CONTINUED)
================================================================================

     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 185 BERRY STREET, SUITE 3515, SAN FRANCISCO, CA
     94107. 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.

     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, audited
     by a certified public accountant satisfactory to Lender, and, as soon as
     available, but in no event later than forty five (45) days after the end of
     each fiscal quarter, Borrower's balance sheet and profit and loss statement
     for the period ended, prepared and certified as correct to the best
     knowledge and belief by Borrower's chief financial officer or other officer
     or person acceptable to Lender. All financial reports required to be
     provided under this Agreement shall be prepared in accordance with
     generally accepted accounting principles, applied on a consistent basis,
     and certified by Borrower as being true and correct.

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

     FINANCIAL COVENANTS AND RATIOS. Comply with the following covenants and
     ratios:

          TANGIBLE NET WORTH. Maintain a minimum Tangible Net Worth of net less
          than $20,000,000.00.

          NET WORTH RATIO. Maintain a ratio of Total Liabilities to Tangible Net
          Worth of less than 0.50 to 1.00.
          
          WORKING CAPITAL. Maintain Working Capital in excess of $15,000,000.00.

          CURRENT RATIO. Maintain a ratio of Current Assets to Current
          Liabilities in excess of 3.75 to 1.00. Except as provided above, all
          computations made to determine compliance with the requirements
          contained in this paragraph shall be made in accordance with generally
          accepted accounting principles, applied on a consistent basis, and
          certified by Borrower as being true and correct.

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

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

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

     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,



<PAGE>   4
08-01-1997                  BUSINESS LOAN AGREEMENT                       Page 4
Loan No 127836001                (CONTINUED)
================================================================================


   accounts, and records. If Borrower now or at any time hereafter maintains any
   records (including without limitation computer generated records and computer
   software programs for the generation of such records) in the possession of a
   third party, Borrower, upon request of Lender, shall notify such party to
   permit Lender free access to such records at all reasonable times and to
   provide Lender with copies of any records it may request, all at Borrower's
   expense.

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

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

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

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

   CAPITAL EXPENDITURES. Make or contract to make capital expenditures,
   including leasehold improvements, in any fiscal year in excess of
   $2,000,000.00 or incur liability for rentals of property (including both real
   and personal property) in an amount which, together with capital
   expenditures, shall in any fiscal year exceed such sum.

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

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

   LOANS, ACQUISITIONS AND GUARANTIES. (a) Loan, invest in or advance money or
   assets, (b) purchase, create or acquire ally 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; (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; or (e) Lender in good faith deems itself insecure, even
though no Event of Default shall have occurred.

RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security
interest in, and hereby assigns, conveys. delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, Borrower's accounts
with Lender (whether checking, savings, or some other account), including
without limitation all accounts held jointly with someone else and all accounts
Borrower may open in the future, excluding however all IRA and Keogh accounts,
and all trust accounts for which the grant of a security interest would be
prohibited by law. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on the Indebtedness against
any and all such accounts.

EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement:
   
   DEFAULT on INDEBTEDNESS. Failure of Borrower to make any payment when due on
   the Loans.

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

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

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

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

   INSOLVENCY. The dissolution or termination of Borrower's existence as a going
   business, the insolvency of Borrower, the appointment of a receiver for any
   part of Borrower's property, any assignment for the benefit of creditors, any
   type of creditor workout, or the commencement of any proceeding under any
   bankruptcy or insolvency laws by or against Borrower.

   CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or forfeiture
   proceedings, whether by judicial proceeding, self-help, repossession or any
   other method, by any creditor of Borrower. any creditor of any Grantor
   against any collateral securing the Indebtedness, or by any governmental
   agency. This includes a garnishment, attachment, or levy on or of any of
   Borrower's deposit accounts with Lender. However,



<PAGE>   5

08-01-1997                  BUSINESS LOAN AGREEMENT                       Page 5
Loan No 127836001                (CONTINUED)
================================================================================


     this Event of Default shall not apply if there is a good faith dispute by
     Borrower or Grantor, as the case may be, as to the validity or
     reasonableness of the claim which is the basis of the creditor or
     forfeiture proceeding, and if Borrower or Grantor gives Lender written
     notice of the creditor or forfeiture proceeding and furnishes reserves or a
     surety bond for the creditor or forfeiture proceeding satisfactory to
     Lender.

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

     CHANGE IN OWNERSHIP. Any change in ownership of twenty-five percent (25%)
     or more of the common stock of Borrower.

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

     INSECURITY.  Lender, in good faith, deems itself insecure.

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

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

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

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

     APPLICABLE LAW. THIS AGREEMENT HAS BEEN DELIVERED TO LENDER AND ACCEPTED BY
     LENDER IN THE STATE OF CALIFORNIA. IF THERE IS A LAWSUIT, BORROWER AGREES
     UPON LENDER'S REQUEST TO SUBMIT TO THE JURISDICTION OF THE COURTS OF SANTA
     CRUZ COUNTY, THE STATE OF CALIFORNIA. SUBJECT TO THE PROVISIONS ON
     ARBITRATION, THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
     ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.

     ARBITRATION. LENDER AND BORROWER AGREE THAT ALL DISPUTES, CLAIMS AND
     CONTROVERSIES BETWEEN THEM, WHETHER INDIVIDUAL, JOINT, OR CLASS IN NATURE,
     ARISING FROM THIS AGREEMENT OR OTHERWISE, INCLUDING WITHOUT LIMITATION
     CONTRACT AND TORT DISPUTES, SHALL BE ARBITRATED PURSUANT TO THE RULES OF
     THE AMERICAN ARBITRATION ASSOCIATION, UPON REQUEST OF EITHER PARTY. No act
     to take or dispose of any Collateral shall constitute a waiver of this
     arbitration agreement or be prohibited by this arbitration agreement. This
     includes. without limitation, obtaining injunctive relief or a temporary
     restraining order; invoking a power of sale under any deed of trust or
     mortgage; obtaining a writ of attachment or imposition of a receiver; or
     exercising any rights relating to personal property, including taking or
     disposing of such property with or without judicial process pursuant to
     Article 9 of the Uniform Commercial Code. Any disputes, claims, or
     controversies concerning the lawfulness or reasonableness of any act, or
     exercise of any right, concerning any Collateral, including any claim to
     rescind, reform, or otherwise modify any agreement relating to the
     Collateral, shall also be arbitrated, provided however that no arbitrator
     shall have the right or the power to enjoin or restrain any act of any
     party. Lender and Borrower agree that in the event of an action for
     judicial foreclosure pursuant to California Code of Civil Procedure Section
     726, or any similar provision in any other state, the commencement of such
     an action will not constitute a waiver of the right to arbitrate and the
     court shall refer to arbitration as much of such action, including
     counterclaims, as lawfully may be referred to arbitration. Judgment upon
     any award rendered by any arbitrator may be entered in any court having
     jurisdiction. Nothing in this Agreement shall preclude any party from
     seeking equitable relief from a court of competent jurisdiction. The
     statute of limitations, estoppel, waiver, laches, and similar doctrines
     which would otherwise be applicable in an action brought by a party shall
     be applicable in any arbitration proceeding, and the commencement of an
     arbitration proceeding shall be deemed the commencement of an action for
     these purposes. The Federal Arbitration Act shall apply to the
     construction, interpretation, and enforcement of this arbitration
     provision.

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

     CONSENT TO LOAN PARTICIPATION. Borrower agrees and consents to Lender's
     sale or transfer, whether now or later, of one or more participation
     interests in the Loans to one or more purchasers, whether related or
     unrelated to Lender. Lender may provide, without any limitation whatsoever,
     to any one or more purchasers, or potential purchasers, any information or
     knowledge Lender may have about Borrower or about any other matter relating
     to the Loan, and Borrower hereby waives any rights to privacy it may have
     with respect to such matters. Borrower additionally waives any and all
     notices of sale of participation interests, as well as all notices of any
     repurchase of such participation interests. Borrower also agrees that the
     purchasers of any such participation interests will be considered as the
     absolute owners of such interests in the Loans and will have all the rights
     granted under the participation agreement or agreements governing the sale
     of such participation interests. Borrower further waives all rights of
     offset or counterclaims 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. Lander may pay someone else to help collect the Loans
     and to enforce this Agreement, and Borrower will pay that amount. This
     includes, subject to any limits under applicable law, Lender's attorneys'
     fees and Lender's legal expenses, whether or not there is a lawsuit,
     including attorneys' fees for bankruptcy proceedings (including efforts to
     modify or vacate any automatic stay or injunction), appeals, and any
     anticipated post-judgment collection services. Borrower also will pay any
     court costs, in addition to all other sums provided by law.

     NOTICES. All notices required to be given under this Agreement shall be
     given in writing, may be sent by telefacsimile (unless otherwise required
     by law), and shall be effective when actually delivered or when deposited
     with a nationally recognized overnight courier or deposited in the United



<PAGE>   6

08-01-1997                  BUSINESS LOAN AGREEMENT                       Page 6
Loan No 127836001                (CONTINUED)
================================================================================

   States mail, first class, postage prepaid, addressed to the party to whom the
   notice is to be given at the address shown above. Any party may change its
   address for notices under this agreement by giving formal written notice to
   the other parties, specifying that the purpose of the notice is to change the
   party's address. To the extent permitted by applicable law, if there is more
   than one Borrower, notice to any Borrower will constitute notice to all
   Borrowers. For notice purposes, Borrower will keep Lander informed at all
   times of Borrower's current address(es).

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

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

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

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

   TIME IS OF THE ESSENCE. Time is of the essence in the performance of this
   Agreement.

   WAIVER. Lender shall not be deemed to have waived any rights under this
   Agreement unless such waiver is given in writing and signed by Lender. No
   delay or omission on the part of Lender in exercising any right shall operate
   as a waiver of such right or any other right. A waiver by Lender of a
   provision of this Agreement shall not prejudice or constitute a waiver of
   Lender's right otherwise to demand strict compliance with that provision or
   any other provision of this Agreement. No prior waiver by Lender, nor any
   course of dealing between Lender and Borrower, or between Lender and any
   Grantor, shall constitute a waiver of any of Lender's rights or of any
   obligations of Borrower or of any Grantor as to any future transactions.
   Whenever the consent of Lender is required under this Agreement, the granting
   of such consent by Lender in any instance shall not constitute continuing
   consent in subsequent instances where such consent is required, and in all
   cases such consent may be granted of 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
AUGUST 1, 1997.

BORROWER:
NOVADIGM, INC.

By:  /s/ WALLACE RUIZ
     ------------------------------------
     WALLACE RUIZ, VICE PRESIDENT AND CFO


LENDER:

COAST COMMERCIAL BANK


By:  [ILLEGIBLE]
     ------------------------------------
     Authorized Officer


<PAGE>   7
[COAST COMMERCIAL BANK LOGO]

                           CHANGE IN TERMS AGREEMENT

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
    PRINCIPAL    LOAN DATE   MATURITY    LOAN NO.  CALL  COLLATERAL  ACCOUNT  OFFICER  INITIALS
  <S>            <C>         <C>         <C>       <C>   <C>         <C>      <C>      <C>
  $1,000,000.00             09-01-1998  127836001           0020     117393     017  
-------------------------------------------------------------------------------------------------
   References in the shaded area are for Lender's use only and do not limit the applicability
                        of this document to any particular loan or item.
-------------------------------------------------------------------------------------------------
</TABLE>

Borrower: NOVADIGM, INC.                          LENDER: COAST COMMERCIAL BANK
          185 BERRY STREET, SUITE 3515                    FRONT STREET
          SAN FRANCISCO, CA 94107                         720 FRONT STREET
                                                          SANTA CRUZ, CA 95060

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

PRINCIPAL AMOUNT: $1,000,000.00

DATE OF AGREEMENT: AUGUST 1, 1997

DESCRIPTION OF EXISTING INDEBTEDNESS. NOTE # 127836001, A REVOLVING LINE OF
CREDIT DATED JULY 1, 1996.

DESCRIPTION OF COLLATERAL.  UNSECURED.

DESCRIPTION OF CHANGE IN TERMS. THE MATURITY DATE OF THIS LINE OF CREDIT IS
HEREBY EXTENDED TO SEPTEMBER 1, 1998.

PROMISE TO PAY. NOVADIGM, INC. ("BORROWER") PROMISES TO PAY TO COAST COMMERCIAL
BANK ("LENDER"), OR ORDER, IN LAWFUL MONEY OF THE UNITED STATES OF AMERICA, THE
PRINCIPAL AMOUNT OF ONE MILLION & 00/100 DOLLARS ($1,000,000.00) 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 ON DEMAND, OR IF NO DEMAND IS MADE, IN ONE
PAYMENT OF ALL OUTSTANDING PRINCIPAL PLUS ALL ACCRUED UNPAID INTEREST ON
SEPTEMBER 1, 1998. IN ADDITION, BORROWER WILL PAY REGULAR MONTHLY PAYMENTS OF
ACCRUED UNPAID INTEREST BEGINNING SEPTEMBER 1, 1997, AND ALL SUBSEQUENT INTEREST
PAYMENTS ARE DUE ON THE SAME DAY OF EACH MONTH AFTER THAT. Interest on this
Agreement is computed on a 365/365 simple interest basis; that is, by applying
the ratio of the annual interest rate over the number of days in a year,
multiplied by the outstanding principal balance, multiplied by the actual number
of days the principal balance is outstanding. Borrower will pay Lender at
Lender's address shown above or at such other place as Lender may designate in
writing. Unless otherwise agreed or required by applicable law, payments will be
applied first to accrued unpaid interest, then to principal, and any remaining
amount to any unpaid collection costs and late charges.

VARIABLE INTEREST RATE. The Interest rate on this Agreement is subject to change
from time to time based on changes in an index which is the COAST COMMERCIAL
BANK'S REFERENCE RATE (the "Index"). The Index is not necessarily the lowest
rate charged by Lender on its loans and is set by Lender in its sole discretion.
If the Index becomes unavailable during the term of this loan, Lender may
designate a substitute index after notifying Borrower. Lender will tell Borrower
the current index rate upon Borrower's request. Borrower understands that Lender
may make loans based on other rates as well. The interest rate change will not
occur more often than each DAY. THE INDEX CURRENTLY IS 8.500% PER ANNUM. THE
INTEREST RATE TO BE APPLIED TO THE UNPAID PRINCIPAL BALANCE OF THIS AGREEMENT
WILL BE AT A RATE EQUAL TO THE INDEX, RESULTING IN AN INITIAL RATE OF 8.500% PER
ANNUM. NOTICE: Under no circumstances will the interest rate on this Agreement
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.

LATE CHARGE. If a payment is 10 DAYS OR MORE LATE, Borrower will be charged
5.000% OF THE REGULARLY SCHEDULED PAYMENT OR $5.00, WHICHEVER IS GREATER.

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

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

LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Agreement and all accrued unpaid Interest immediately due,
without notice, and then Borrower will pay that amount. Upon Borrower's failure
to pay all amounts declared due pursuant to this section, including failure to
pay upon final maturity, Lender, at its option, may also, if permitted under
applicable law, increase the variable interest rate on this Agreement to 5.000
percentage points over the Index. Lender may hire or pay someone else to help
collect this Agreement if Borrower does not pay. Borrower also will pay Lender
that amount. This includes, subject to any limits under applicable law, Lender's
attorneys' fees and Lender's legal expenses whether or not there is a lawsuit,
including attorneys' fees and legal expenses for bankruptcy proceedings
(including efforts to modify or vacate any automatic stay or injunction),
appeals, and any anticipated post-judgment collection services. Borrower also
will pay any court costs, in addition to all other sums provided by law. THIS
AGREEMENT HAS BEEN DELIVERED TO LENDER AND ACCEPTED BY LENDER IN THE STATE OF
CALIFORNIA. IF THERE IS A LAWSUIT, BORROWER AGREES UPON LENDER'S REQUEST TO
SUBMIT TO THE JURISDICTION OF THE COURTS OF SANTA CRUZ COUNTY, THE STATE OF
CALIFORNIA. SUBJECT TO THE PROVISIONS ON ARBITRATION, THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
CALIFORNIA.

RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security
interest in, and hereby assigns, conveys, delivers, pledges, and


08-01-1997                 CHANGE IN TERMS AGREEMENT                      Page 2
Loan No 127836001                 (Continued)
--------------------------------------------------------------------------------

transfers to Lender all Borrower's right, title and interest in and to,
Borrower's accounts with Lender (whether checking, savings, or some other
account), including without limitation all accounts held jointly with someone
else and all accounts Borrower may open in the future, excluding however all IRA
and Keogh accounts, and all trust accounts for which the grant of a security
interest would be prohibited by law. Borrower authorizes Lender, to the extent
permitted by applicable law, to charge or setoff all sums owing on this
Agreement against any and all such accounts.

LINE OF CREDIT. This Agreement evidences a revolving line of credit. Advances
under this Agreement may be requested either orally or in writing by Borrower or
by any authorized person. Lender may, but need not, require that all oral
requests be confirmed in writing. All communications, instructions, or
directions by telephone or otherwise to Lender are to be directed to Lender's
office shown above. The following party or parties are authorized to request
advances under the line of credit until Lender receives from Borrower at
Lender's address shown above written notice of revocation of their authority:
WALLACE RUIZ, VICE PRESIDENT AND CFO; ALBION FITZGERALD, PRESIDENT/CEO; and ROB
ANDERSON, EVP/COO. Borrower agrees to be liable for all sums either: (a)
advanced in accordance with the instructions of an authorized person or (b)
credited to any of Borrower's accounts with Lender. The unpaid principal balance
owing on this Agreement at any time may be evidenced by endorsements on this
Agreement or by Lender's internal records, including daily computer print-outs.
Lender will have no obligation to advance funds, under this Agreement if: (a)
Borrower or any guarantor is in default under the terms of this Agreement or any
agreement that Borrower or any guarantor has with Lender, including any
agreement made in connection with the signing of this Agreement; (b) Borrower or
any guarantor ceases doing business or is insolvent; (c) any guarantor seeks,
claims or otherwise attempts to limit, modify or revoke such guarantor's
guarantee of this Agreement or any other loan with Lender; (d) Borrower has
applied funds provided pursuant to this Agreement for purposes other than those
authorized by Lender; or (e) Lender in good faith deems itself insecure under
this Agreement or any other agreement between Lender and Borrower. 

ARBITRATION. Lender and Borrower agree that all disputes, claims and
controversies between them, whether individual, joint, or class in nature,
arising from this Agreement or otherwise, including without limitation contract
and tort disputes, shall be arbitrated pursuant to the Rules of the American
Arbitration Associates, upon request of either party. No act to take or dispose
of any collateral securing this Agreement shall constitute a waiver of this
arbitration agreement or be prohibited by this arbitration agreement. This
includes, without limitation, obtaining injunctive relief or a temporary
restraining order, invoking a power of sale under any deed of trust or mortgage;
obtaining a writ of attachment or imposition of a receiver, or exercising any
rights relating to personal property, including taking or disposing of such
property with or without judicial process pursuant to Article 9 of the Uniform
Commercial Code. Any disputes, claims, or controversies concerning the
lawfulness or reasonableness of any act, or exercise of any right, concerning
any collateral securing this Agreement, including any claim to rescind, reform,
or otherwise modify any agreement relating to the collateral securing this
Agreement, shall also be arbitrated, provided however that no arbitrator shall
have the right or the power to enjoin or restrain any act of any party. Lender
and Borrower agree that in the event of an action for judicial foreclosure
pursuant to California Code of Civil Procedure Section 725, or any similar
provision in any other state, the commencement of such an action will not
constitute a waiver of the right to arbitrate and the court shall refer to
arbitration as much of such action, including counterclaims, as lawfully may be
referred to arbitration. Judgment upon any award rendered by any arbitrator may
be entered in any court having jurisdiction. Nothing in this Agreement shall
preclude any party from seeking equitable relief from a court of competent
jurisdiction. The statute of limitations, estoppel, waiver, actions, and
similar doctrines which would otherwise be applicable in an action brought by a
party shall be applicable in any arbitration proceeding, and the commencement 
of an arbitration proceeding shall be deemed the commencement of an action for
these purposes. The Federal Arbitration Act shall apply to the construction,
interpretation, and enforcement of this arbitration provision.

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

MISCELLANEOUS PROVISIONS. This Agreement is payable on demand. The inclusion of
specific default provisions or rights of Lender shall not preclude Lender's
right to declare payment of this Agreement on its demand. Lender may delay or
forgo enforcing any of its rights or remedies under this Agreement without
losing them. Borrower and any other person who signs, guarantees or endorses
this Agreement, to the extent allowed by law, waive any applicable statute of
limitations, presentment, demand for payment, protest and notice of dishonor.
Upon any change in the terms of this Agreement, and unless otherwise expressly
stated in writing, no party who signs this Agreement, whether as maker,
guarantor, accommodation maker or endorser, shall be released from liability.
All such parties agree that Lender may renew or extend (repeatedly and for any
length of time) this loan, or release any party or guarantor or collateral; or
impair, fail to realize upon or perfect Lender's security interest in the
collateral; and take any other action deemed necessary by lender without the
consent of or notice to anyone. All such parties also agree that Lender may
modify this loan without the consent of or notice to anyone other than the party
with whom the modification is made.

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

BORROWER:

NOVADIGM, INC.


By: /s/ WALLACE RUIZ
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   WALLACE RUIZ, VICE PRESIDENT AND CFO

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