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                                  EXHIBIT 10.49


                           LOAN AND SECURITY AGREEMENT


This LOAN AND SECURITY AGREEMENT is entered into as of October 22, 1997 by 
and between SILICON VALLEY BLINK ("Bank") and VISTA MEDICAL TECHNOLOGIES, 
INC., a Delaware corporation ("Borrower").
                                       
                                    RECITALS

Borrower wishes to obtain credit from time to time from Bank, and Bank 
desires to extend credit to Borrower. This Agreement sets forth the terms on 
which Bank will advance credit to Borrower, and Borrower will repay the 
amounts owing to Bank.

                                    AGREEMENT

The parties agree as follows:

1.      DEFINITIONS AND CONSTRUCTION

        1.1     Definitions. As used in this Agreement, the following terms 
shall have the following definitions:

                "Accounts" means all presently existing and hereafter arising 
accounts, contract rights, and all other forms of obligations owing to 
Borrower arising out of the sale or lease of goods (including, without 
limitation, the licensing of software and other technology) or the rendering 
of services by Borrower, whether or not earned by performance, and any and 
all credit insurance, guaranties, and either security therefor, as well as 
all merchandise returned to or reclaimed by Borrower and Borrower's Books 
relating to any of the foregoing.

                "Advance" or "Advances" means a loan advance under the 
Committed Line.

                "Affiliate" means, with respect to any Person, any Person 
that owns or controls directly or indirectly such Person, any Person that 
controls or is controlled by or is under common control with such Person, and 
each of such Person's senior executive officers, directors, partners and, for 
any Person that is a limited liability company, such Persons, managers and 
members.

                "Bank Expenses" means all reasonable costs or expenses 
(including reasonable attorneys' fees and expenses) incurred in connection 
with the preparation, negotiation, administration, and enforcement of the 
Loan Documents; and Bank's reasonable attorneys' fees and expenses incurred 
in amending, enforcing or defending the Loan Documents, (including fees 

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and expenses of appeal or review, or those incurred in any Insolvency 
Proceeding) whether or not suit is brought.

                "Borrower's Books" means all of Borrower's books and records 
including, without limitation: ledgers; records concerning Borrower's assets 
or liabilities, the Collateral, business operations or financial condition; 
and all computer programs, or tape files, and the equipment, containing such 
information.

                "Borrowing Base" shall have the meaning set forth in Section 
2.1.1 hereof.

                "Business Day" means any day that is not a Saturday, Sunday, 
or other day on which banks in the State of California are authorized or 
required to close.

                "Closing Date" means the date of this Agreement.

                "Code" means the California Uniform Commercial Code.

                "Collateral" means the property described on EXHIBIT A 
attached hereto.

                "Committed Line" means a credit extension of up to Ten 
Million Dollars ($10,000,000).

                "Contingent Obligation" means, as applied to any Person, any 
direct or indirect liability, contingent or otherwise, of that Person with 
respect to (i) any indebtedness, lease, dividend, letter of credit or other 
obligation of another, including, without limitation, any such obligation 
directly or indirectly guaranteed, endorsed, co-made or discounted or sold 
with recourse by that Person, or in respect of which that Person is otherwise 
directly or indirectly liable; (ii) any obligations with respect to undrawn 
letters of credit issued for the account of that Person; and (iii) all 
obligations arising under any interest rate, currency or commodity swap 
agreement, interest rate cap agreement, interest rate collar agreement, or 
other agreement or arrangement designated to protect a Person against 
fluctuation in interest rates, currency exchange rates or commodity prices; 
provided, however, that the term "Contingent Obligation" shall not include 
endorsements for collection or deposit in the ordinary course of business. 
The amount of any Contingent Obligation shall be deemed to be an amount equal 
to the stated or determined amount of the primary obligation in respect of 
which such Contingent Obligation is made or, if not stated or determinable, 
the maximum reasonably anticipated liability in respect thereof as determined 
by such Person in good faith; provided, however, that such amount shall not 
in any event exceed the maximum amount of the obligations under the guarantee 
or other support arrangement.

                "Cost Evidence" shall have the meaning set forth in Section 
2.1.1 (a) hereof.

                "Credit Extension" means each Advance and each other 
extension of credit by Bank for the benefit of Borrower hereunder.

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                "Current Assets" means, as of any applicable date, all 
amounts that should, in accordance with GAAP, be included as current assets 
on the consolidated balance sheet of Borrower and its Subsidiaries as at such 
date.

                "Current Liabilities" means, as of any applicable date, all 
amounts that should, in accordance with GAAP, be included as current 
liabilities on the consolidated balance sheet of Borrower and its 
Subsidiaries, as at such date, plus, to the extent not already included 
therein, all outstanding Credit Extensions made under this Agreement, 
including all Indebtedness that is payable upon demand or within one year 
from the date of determination thereof unless such Indebtedness is renewable 
or extendable at the option of Borrower or any Subsidiary to a date more than 
one year from the date of determination, but excluding Subordinated Debt.

                "Debt Service Ratio" means as of any quarter end period, with 
respect to the Borrower on a consolidated basis, the ratio of (a) Borrower's 
earnings after taxes plus depreciation and other non-cash amortization 
expenses and other non-cash expenses of Borrower for such quarter, to (b) 
Borrower's obligations relating to the payment of interest and the current 
principal amounts due on Borrower's outstanding long term Indebtedness, in 
each case determined in accordance with generally accepted accounting 
principles, consistently applied.

                "Eligible Accounts" means those Accounts that arise in the 
ordinary course of Borrower's business that comply with all of Borrowers 
representations and warranties to Bank set forth in Section 5.4. Unless 
otherwise agreed to by Bank in writing, Eligible Accounts shall not include 
the following:

                (a)     Accounts that the account debtor has failed to pay 
within ninety (90) days of invoice date;

                (b)     Accounts with respect to an account debtor, fifty 
percent (50%) of whose Accounts the account debtor has failed to pay within 
ninety (90) days of invoice date;

                (c)     Accounts with respect to an account debtor, including 
Affiliates, whose total obligations to Borrower exceed twenty-five percent 
(25%) of all Accounts, to the extent such obligations exceed the 
aforementioned percentage, except as approved in writing by Bank;

                (d)     Accounts with respect to which the account debtor 
does not have its principal place of business in the United States;

                (e)     Accounts with respect to which the account debtor is 
a federal, state, or local governmental entity or any department, agency, or 
instrumentality thereof;

                (f)     Accounts with respect to which Borrower its liable to 
the account debtor, but only to the extent of any amounts owing to the 
account debtor (sometimes referred to as "contra" accounts, e.g. accounts 
payable, customer deposits, credit accounts etc.);

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                (g)     Accounts generated by demonstration or promotional 
equipment, or with respect to which goods are placed on consignment, 
guaranteed sale, sale or return, sale on approval, bill and hold, or other 
terms by reason of which the payment by the account debtor may be conditional;

                (h)     Accounts with respect to which the account debtor is 
an Affiliate, officer, employee, or agent of Borrower;

                (i)     Accounts with respect to which the account debtor 
disputes liability or makes any claim with respect thereto as to which Bank 
believes, in its sole discretion, that there may be a basis for dispute (but 
only to the extent of the amount subject to such dispute or claim), or is 
subject to any Insolvency Proceeding, or becomes insolvent, or goes out of 
business; and

                (j)     Accounts the collection of which Bank reasonably 
determines to be doubtful.

                "Eligible Usage Agreement" means a Usage Agreement submitted 
by Borrower to Bank requesting that the Related Equipment covered by such 
Usage Agreement be the basis for an Advance hereunder and which Agreement is 
acceptable to the Bank.

                "Equipment" means all present and future machinery, 
equipment, tenant improvements, furniture, fixtures, vehicles, tools, parts 
and attachments in which Borrower has any interest.

                "ERISA" means the Employment Retirement Income Security Act 
of 1974, as amended, and the regulations thereunder.

                "GAAP" means generally accepted accounting principles as in 
effect in the United States from time to time.

                "Indebtedness" means (a) all indebtedness for borrowed money 
or the deferred purchase price of property or services, including without 
limitation reimbursement and other obligations with respect to surety bonds 
and letters of credit, (b) all obligations evidenced by notes, bonds, 
debentures or similar instruments, (c) all capital lease obligations and (d) 
all Contingent Obligations.

                "Insolvency Proceeding" means any proceeding commenced by or 
against any person or entity under any provision of the United States 
Bankruptcy Code, as amended, or under any other bankruptcy or insolvency law, 
including assignments for the benefit of creditors, formal or informal 
moratoria, compositions, extension generally with its creditors, or 
proceedings seeking reorganization, arrangement, or other relief.

                "Inventory" means all present and future inventory in which 
Borrower has any interest, including merchandise, raw materials, parts, 
supplies, packing and shipping materials, 

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work in process and finished products intended for sale or lease or to be 
furnished under a contract of service, of every kind and description now or 
at any time hereafter owned by or in the custody or possession, actual or 
constructive, of Borrower, including such inventory as is temporarily out of 
its custody or possession or in transit and including any returns upon any 
accounts or other proceeds, including insurance proceeds, resulting from the 
sale or disposition of any of the foregoing and any documents of title 
representing any of the above.

                "Investment" means any beneficial ownership of (including 
stock, partnership interest or other securities) any Person, or any loan, 
advance or capital contribution to any Person.

                "IRC" means the Internal Revenue Code of 1986, as amended, 
and the regulations thereunder.

                "Lien" means any mortgage, lien, deed of trust, charge, 
pledge, security interest or other encumbrance.

                "Loan Availability End Date" shall have the meaning set forth 
in Section 2.1(a) hereof.

                "Loan Documents" means, collectively, this Agreement, any 
note or notes executed by Borrower, and any other present or future agreement 
entered into between Borrower and/or for the benefit of Bank in connection 
with this Agreement, all as amended, extended or restated from time to time.

                "Material Adverse Effect" means a material adverse effect on 
(i) the business operations or condition (financial or otherwise) of Borrower 
and its Subsidiaries taken as a whole or (ii) the ability of Borrower to 
repay the Obligations or otherwise perform its obligations under the Loan 
Documents.

                "Maturity Date" means the date that is thirty (30) months 
from the date hereof.

                "Negotiable Collateral" means all of Borrower's present and 
future letters of credit of which it is a beneficiary, notes, drafts, 
instruments, securities, documents of title, and chattel paper.

                "Obligations" means all debt, principal, interest, Bank 
Expenses and other amounts owed to Bank by Borrower pursuant to this 
Agreement or any other agreement, whether absolute or contingent, due or to 
become due, now existing or hereafter arising, including any interest that 
accrues after the commencement of an Insolvency Proceeding and including any 
debt, liability, or obligation owing from Borrower to others that Bank may 
have obtained by assignment or otherwise.

                "Payment Date" means the first calendar day of each month 
commencing on the first such date after the Closing Date and ending on the 
Maturity Date.

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                "Permitted Indebtedness" means:

                        (a)     Indebtedness of Borrower in favor of Bank;
        arising under this Agreement or any other Loan Document;

                        (b)     Indebtedness existing on the Closing Date and 
        disclosed in the Schedule;

                        (c)     Subordinated Debt;

                        (d)     Indebtedness to trade creditors incurred in 
        the ordinary course of business; and

                        (e)     Indebtedness secured by Permitted Liens.

                "Permitted Investment" means:

                        (a)     Investments existing on the Closing Date 
        disclosed in the Schedule;

                        (b)     (i)     marketable direct obligations issued 
        or unconditionally guaranteed by the United States of America or any 
        agency or any State thereof. (ii) corporate securities including 
        commercial paper and currently having the highest rating obtainable 
        from either Standard & Poor's Corporation or Moody's Investor's 
        Service. Inc., (iii) certificates of deposit and bankers' 
        acceptances; (iv) repurchase agreements with member banks of the 
        Federal Reserve System and primary dealers limited to securities of 
        the United States federal government; and (v) money market funds 
        consistent with Investments set forth in (i) through (iv) hereof and 
        which provide for daily purchase and redemption together with a 
        constant share price.

                "Permitted Liens" means the following:

                        (a)     Any Liens existing on the Closing Date and 
        disclosed in the Schedule or arising under this Agreement or the 
        other Loan Documents:

                        (b)     Liens for taxes, fees, assessments or other 
        governmental charges or levies, either not delinquent or being 
        contested in good faith by appropriate proceedings and as to which 
        adequate reserves are maintained on Borrower's Books in accordance 
        with GAAP, PROVIDED the same have no priority over any of Bank's 
        security interests;

                        (c)     Liens (i) upon or in any Equipment acquired 
        or held by Borrower or any of its Subsidiaries to secure the purchase 
        price of such Equipment or indebtedness incurred solely for the 
        purpose of financing the acquisition of such Equipment provided that 
        the amount indebtedness relating thereto shall not exceed $4,000,000 
        at any one time. or (ii) existing on such equipment at the time of 
        its acquisition, PROVIDED that the Lien is 


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        confined solely to the property so acquired and improvements thereon, 
        and the proceeds of such equipment;

                        (d)     Liens on Equipment licensed for use by 
        Borrower or any Subsidiary to a third party and on the related Usage 
        Agreement (including proceeds thereof and accessions thereto) 
        incurred solely For the purpose of financing the usage agreement 
        relating to such Equipment:

                        (e)     Licenses relating to Borrower's present and 
        future patents, patent applications, copyrights, processes, 
        proprietary information, license rights and related intellectual 
        property items granted to other parties in the ordinary course of 
        business in connection with Borrower's research, development, 
        manufacturing and distribution collaborative efforts with such other 
        parties; and

                        (f)     Liens incurred in connection with the 
        extension, renewal or refinancing of the indebtedness secured by 
        Liens of the type described in clauses (a) through (e) above, 
        PROVIDED that any extension, renewal or replacement Lien shall be 
        limited to the property encumbered by the existing Lien and the 
        principal amount of the indebtedness being extended, renewed or 
        refinanced does not increase.

                "Person" means any individual, sole proprietorship, 
partnership, limited liability company, joint venture, trust, unincorporated 
organization, association, corporation, institution, public benefit 
corporation, firm, joint stock company, estate, entity or governmental agency.

                "Prime Rate" means the variable rate of interest, per annum, 
most recently announced by Bank, as its "prime rate," whether or not such 
announced rate is the lowest rate available from Bank.

                "Quick Assets" means, as of any applicable date, the 
unrestricted consolidated cash, cash equivalents, Eligible Accounts and 
investments with maturities of fewer than one year of Borrower determined in 
accordance with GAAP.

                "Related Equipment" means, as to any Advance, the Equipment 
that is financed by that Advance, and any Equipment substituted therefor with 
Bank's consent.

                "Related Usage Agreement" means, as to any Advance, a Usage 
Agreement of the Related Equipment, and any Usage Agreement subsequently 
substituted therefor with the consent of the Bank.

                "Responsible Officer" means each of the Chief Executive 
Officer, the President the Chief Financial Officer and the Controller of 
Borrower.

                "Schedule" means the schedule of exceptions attached hereto, 
if any.


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                "Subordinated Debt" means any debt incurred by Borrower that 
is subordinated to the debt owing by Borrower to Bank on terms acceptable to 
Bank (and identified as being such by Borrower and Bank).

                "Subsidiary" means with respect to any Person, corporation, 
partnership, company association, joint venture, or any other business entity 
of which more than fifty percent (50%) of the voting stock or other equity 
interests is owned or controlled, directly or indirectly, by such Person or 
one or more Affiliates of such Person.

                "Tangible Net Worth" means as of any applicable date the 
consolidated total assets of Borrower and its Subsidiaries MINUS, without 
duplication, (i) the sum of any amounts attributable to (a) goodwill, (b) 
intangible items such as unamortized debt discount and expense, patents, 
trade and service marks and names, copyrights and research and development 
expenses except prepaid expenses, and (c) all reserves not already deducted 
from assets, AND (ii) Total Liabilities.

                "Total Liabilities" means as of any applicable date, any date 
as of which the amount thereof shall he determined, all obligations that 
should, in accordance with GAAP be classified as liabilities on the 
consolidated balance sheet of Borrower, including in any event all 
Indebtedness, but specifically excluding Subordinated Debt.

                "Usage Agreement" means any usage agreement (including any 
and all schedules, supplements and amendments thereto and modifications 
thereof) entered into by Borrower as the licenser of the usage with respect 
to the Related Equipment, provided that if a usage agreement is a "master 
usage agreement," such agreement shall be considered as a "Usage Agreement" 
only insofar as it relates to Related Equipment and the equipment schedule 
thereto covering Related Equipment.

        1.2     ACCOUNTING AND OTHER TERMS.  All accounting terms not 
specifically defined herein shall be construed in accordance with GAAP and 
all calculations and determinations made hereunder shall be made in 
accordance with GASP.  When used herein, the term "financial statements" 
shall include the notes and schedules thereto. The terms "including"/ 
"includes" shall always be read as meaning "including (or includes) without 
limitation", when used herein or in any other Loan Document.

2.      LOAN AND TERMS OF PAYMENT

        2.1     CREDIT EXTENSIONS.  Borrower promises to pay to the order of 
Bank, in lawful money of the United States of America, the aggregate unpaid 
principal amount of all Credit Extensions made by Bank to Borrower hereunder. 
Borrower shall also pay interest on the unpaid principal amount of all Credit 
Extensions at rates in accordance with the terms hereof.

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                2.1.1   Advances.

                (a)     Subject to the terns and conditions of this 
Agreement, Bank agrees at any time from the date hereof through the date that 
is twelve (12) months from the date hereof (the "Loan Availability End 
Date"), to make Advances to Borrower in an initial principal amount not to 
exceed the lesser of the Committed Line or the Borrowing Base. For purposes 
of this Agreement, "Borrowing Base" shall mean an amount equal to 100% of the 
manufacturing cost to the Borrower of the Related Equipment covered by 
Eligible Usage Agreements; upon request by the Bank, Borrower shall supply 
evidence to the Bank, that is satisfactory to the Bank in its reasonable 
discretion of such cost (the "Cost Evidence"). Each Advance shall be in 
amount equal to at least  ***  ($ *** ).

                (b)     Whenever Borrower desires an Advance prior to the 
Loan Availability End Date, Borrower will notify Bank by facsimile 
transmission or telephone no later than 3:00 p.m. Pacific time, on the 
Business Day that the Advance is to be made.  Each such notification shall be 
promptly confirmed by a Payment/Advance Form in substantially the form of 
EXHIBIT B hereto.  Bank is authorized to make Advances under this Agreement, 
based upon instructions received from a Responsible Officer or a designee of 
a Responsible Officer, or without instructions if in Bank's discretion such 
Advances are necessary to meet Obligations which have become due and remain 
unpaid.  Bank shall be entitled to rely on any telephonic notice given by a 
person who Bank reasonably believes to be a Responsible Officer or a designee 
thereof, and Borrower shall indemnify and hold Bank harmless for any damages 
or loss suffered by Bank as a result of such reliance.  Bank will credit the 
amount of Advances made under this Section 2.1 to Borrower's deposit account.

                (c)     Any Advances that are outstanding on the Loan 
Availability End Date will be payable in eighteen (18) equal monthly 
installments of principal, plus all accrued interest, with the first of such 
payments due on November 1, 1998, and continuing with each succeeding payment 
due and payable on the first day of each month thereafter for the following 
seventeen (17) consecutive months, and with all Advances and all Obligations 
relating thereto to be fully due and payable in a final payment no later than 
April 1. 2000. Advances, once repaid may not be reborrowed.

        2.2     OVERADVANCES.  If, at any time or for any reason, the amount 
of Obligations owed by Borrower to Bank pursuant to Section 2 of this 
Agreement is greater than the lesser of (i) the Committed Line or (ii) the 
Borrowing Base, Borrower shall immediately pay to Bank, in cash, the amount 
of such excess.

        2.3     INTEREST RATES, PAYMENTS, AND CALCULATIONS.

                (a)     INTEREST RATE.  Except as set forth in Section 
2.3(b), any Advances shall bear interest, on the average daily balance 
thereof, at a per annum rate equal to One and one-half (1.50) percentage 
points above the Prime Rate.


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                (b)     DEFAULT RATE.  All Obligations shall bear interest, 
from and after the occurrence of an Event of Default, at a rate equal to five 
(5) percentage points above the interest rate applicable immediately prior to 
the occurrence of the Event of Default.

                (c)     PAYMENTS.  Interest hereunder shall be due and 
payable on each Payment Date.  Borrower hereby authorizes Bank to debit any 
accounts with Bank, including, without limitation, Account Number    
   ***    for payments of principal and interest due on the Obligations 
and any other amounts owing by Borrower to Bank.  Bank will notify Borrower 
of all debits which Bank has made against Borrower's accounts.  Any such 
debits against Borrower's accounts in no way shall be deemed a set-off.  Any 
interest not paid when due shall be compounded by becoming a part of the 
Obligations, and such interest shall thereafter accrue interest at the rate 
then applicable hereunder.

                (d)     COMPUTATION. In the event the Prime Rate is changed 
from time to time hereafter, the applicable rate of interest hereunder shall 
be increased or decreased effective as of 12:01 a.m. on the day the Prime 
Rate is changed, by an amount equal to such change in the Prime Rate. All 
interest chargeable under the Loan Documents shall be computed on the basis 
of a three hundred sixty (360) day year for the actual number of days elapsed.

        2.4     CREDITING PAYMENTS.  Prior to the occurrence of an Event of 
Default, Bank shall credit a wire transfer of funds, check or other item of 
payment to such deposit account or Obligation as Borrower specifies. After 
the occurrence of an Event of Default, the receipt by Bank of any wire 
transfer of funds, check, or other item of payment, whether directed to 
Borrower's deposit account with Bank or to the Obligations or otherwise, 
shall be immediately applied to conditionally reduce Obligations, but shall 
not be considered a payment in respect of the Obligations unless such payment 
is of immediately available federal funds or unless and until such check or 
other item of payment is honored when presented for payment. Notwithstanding 
anything to the contrary contained herein, any wire transfer or payment 
received by Bank after 12:00 noon Pacific time shall be deemed to have been 
received by Bank as of the opening of business on the immediately followings 
Business Day. Whenever any payment to Bank under the Loan Documents would 
otherwise be due (except by reason of acceleration) on a date that is not a 
Business Day, such payment shall instead be due on the next Business Day, and 
additional fees or interest, as the case may be, shall accrue and be payable 
for the period of such extension.

        2.5     MANDATORY PREPAYMENTS.  In the event that with respect to any 
Advance:

                (a)     any Related Equipment shall be lost, wholly destroyed 
or damaged in any manner whatsoever beyond economically feasible repair;

                (b)     any rental payments under a Related Usage Agreement 
shall be past due beyond ninety (90) days;

                (c)     any bankruptcy with respect to a licensee on a 
Related Usage Agreement shall occur;


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                (d)     any event of default (other than delinquent rent 
payments) shall occur with respect to a Related Usage Agreement, or

                (e)     any Related Equipment is sold or otherwise disposed 
of, (each of the foregoing being a "Prepayment Event"),

                then Borrower shall, within ten (10) days after any such 
occurrence, prepay that portion of such Advance attributable to the Related 
Usage Agreement or Related Equipment.

        2.6     FEES.  Borrower shall pay to Bank the following:

                (a)     FACILITY FEE.  A Facility Fee equal to $  ***  , which 
fee shall be due on the Closing Date and shall be fully earned and 
non-refundable;

                (b)     FINANCIAL EXAMINATION AND APPRAISAL FEES.  Bank's 
customary fees and out-of-pocket expenses for Bank's audits of the 
Collateral, and for each appraisal of Collateral and financial analysis and 
examination of Borrower performed from time to time by Bank or its agents;

                (c)     BANK EXPENSES. Upon demand from Bank, including, 
without limitation, upon the date hereof, all Bank Expenses incurred through 
the date hereof, including reasonable attorneys' fees and expenses, and, 
after the date hereof, all Bank Expenses, including reasonable attorneys' 
fees and expenses, as and when they become due.

                (d)     WARRANTS.  Borrower shall, concurrently herewith, 
provide Lender with warrants to purchase 27,184 shares of Common Stock of the 
Borrower, at $ 12.875 per share, on the terms and conditions in the Warrant 
to Purchase Stock and related documents being executed concurrently with this 
Agreement.

        2.7     ADDITIONAL COSTS.  In case any law, regulation, treaty or 
official directive or the interpretation or application thereof by any court 
or any governmental authority charged with the administration thereof or the 
compliance with any guideline or request of any central bank or other 
governmental authority (whether or not having the force of law):

                (a)     subjects Bank to any tax with respect to payments of 
principal or interest or any other amounts payable hereunder by Borrower or 
otherwise with respect to the transactions contemplated hereby (except for 
taxes on the overall net income of Bank imposed by the United States of 
America or any political subdivision thereof);

                (b)     imposes, modifies or deems applicable any deposit 
insurance, reserve, special deposit or similar requirement against assets 
held by, or deposits in or for the account of, or loans by Bank; or


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                (c)     imposes upon Bank any other condition with respect to 
its performance under this Agreement, and the result of any of the foregoing 
is to increase the cost to Bank, reduce the income receivable by Bank or 
impose any expense upon Bank with respect to any loans, Bank shall notify 
Borrower thereof. Borrower agrees to pay to Bank the amount of such increase 
in cost, reduction in income or additional expense as and when such cost, 
reduction or expense is incurred or determined, upon presentation by Bank of 
a statement of the amount and setting forth Bank's calculation thereof, all 
in reasonable detail, which statement shall be deemed true and correct absent 
manifest error.

        2.8     TERM.  Except as otherwise set forth herein, this Agreement 
shall become effective on the Closing Date and, subject to Section 12.7, 
shall continue in full force and effect for a term ending on the Maturity 
Date. Notwithstanding the foregoing, Bank shall have the right to terminate 
its obligation to make Credit Extensions under this Agreement immediately and 
without notice upon clue occurrence and during the continuance of an Event of 
Default. Notwithstanding termination of this Agreement, Bank's lien on the 
Collateral shall remain in effect for so long as any Obligations are 
outstanding.

3.      CONDITIONS OF LOANS

        3.1     CONDITIONS PRECEDENT TO INITIAL CREDIT EXTENSION.  The 
obligation of Bank to make the initial Credit Extension is subject to the 
condition precedent that Bank shall have received, in form and substance 
satisfactory to Bank, the following:

                (a)     this Agreement;

                (b)     a certificate of the Secretary of Borrower with 
respect to articles, bylaws, incumbency and resolutions authorizing the 
execution and delivery of this Agreement;

                (c)     certified copy of Commercial Finance Lender's License 
of Borrower;

                (d)     Evidence that the Borrower has received at least 
$20,000,000 in net proceeds from the initial public offering of its common 
stock;

                (e)     financing statements (Forms UCC-1);

                (f)     insurance certificate; 

                (g)     payment of the fees and Bank Expenses then due 
specified in Section 2.5 hereof;

                (h)     Certificate of Foreign Qualification (if applicable); 
and

                (i)     such other documents, and completion of such other 
matters, as Bank may reasonably deem necessary or appropriate.

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        3.2     CONDITIONS PRECEDENT TO ALL CREDIT EXTENSIONS.  The 
obligation of Bank to make each Credit Extension, including the initial 
Credit Extension, is further subject to the following conditions:

                (a)     timely receipt by Bank of:

                        (i)     the Payment/Advance Form as provided in 
Section 2.1;

                        (ii)    a supplement, form acceptable to the Bank, 
describing the Related Equipment and the Related Usage Agreements;

                        (iii)   all executed original counterparts in the 
Borrower's possession of the Related Usage Agreements and original guarantees 
of the Related Usage Agreement, if any, except that if the Usage Agreement 
consists of a schedule to a master usage agreement, Bank shall receive the 
originals of such schedule and a copy of the master usage agreement certified 
by Borrower to be a true and correct copy;

                        (iv)    a copy of the notice provided from Borrower 
to licensee under the Related Usage Agreement that such Agreement will be 
assigned to the Bank;

                        (v)     evidence satisfactory to Bank (including 
corporate resolutions) that the licensee under the Related Usage Agreement is 
authorized to enter into such Agreement;

                        (vi)    evidence satisfactory to Bank that each item 
of Related Equipment has been delivered and installed and accepted by 
licensee of the usage thereof;

                        (vii)   the Cost Evidence, if required by the Bank;

                        (viii)  copy of the credit report on the licensee of 
the usage of the Related Equipment and the guarantor of the such party's 
obligations to the Borrower, if any, along with Borrower's request for such a 
report;

                        (ix)    copies of such licensee's and guarantor's 
most recent fiscal year end and interim financial statements;

                        (x)     evidence satisfactory to Bank that adequate 
casualty insurance on the Related Equipment exists with Borrower named as 
additional loss payee, provided that Bank may designate, in its sole 
discretion, certain licensees that may be self-insured.

                        (xi)    financing statements executed by Borrower, 
wherein Borrower is named as debtor and Bank as secured party and describing 
the Related Equipment and the Related Usage Agreements, for filing in each 
public office (including, without limitation, filing offices in the state or 
states where the Related Equipment is located) where such filing is necessary 
or appropriate to perfect the Bank's security interest; and

                                       13
<PAGE>

                        (xii)   evidence satisfactory to Bank that Borrower 
has filed a financing statement or statements in the appropriate public 
office against the licensee on such Usage Agreement, and a financing 
statement assignment or assignments (UCC-2) assigning such financing 
statements to Bank.

                (b)     the representations and warranties contained in 
Section 5 shall be true and correct in all material respects on and as of the 
date of such Payment/Advance Form and on the effective date of each Advance 
as though made at and as of each such date, and no Event of Default shall 
have occurred and be continuing, or would result from such Advance. The 
making of each Advance shall be deemed to be a representation and warranty by 
the Borrower on the date of such Advance as to the accuracy of the facts 
referred to in this Section 3.2(b).

4.      CREATION OF SECURITY INTEREST

        4.1     GRANT OF SECURITY INTEREST.  Borrower grants and pledges to 
Bank a continuing security interest in all presently existing and hereafter 
acquired or arising Collateral in order to secure prompt payment of any and 
all Obligations and in order to secure prompt performance by Borrower of each 
of its covenants, and duties under the Loan Documents. Except as set forth in 
the Schedule, such security interest constitutes a valid, first priority 
security interest in the presently existing Collateral, and will constitute a 
valid, first priority security interest in Collateral acquired after the date 
hereof. Borrower acknowledges that Bank may place a "hold" on any Deposit 
Account pledged as Collateral to secure the Obligations.  Notwithstanding 
termination of this Agreement, Bank's Lien on the Collateral shall remain in 
effect for so long as any Obligations are outstanding.

        4.2     DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED.  Borrower 
shall from time to time execute and deliver to Bank, at the request of Bank, 
all Negotiable Collateral, all financing statements and other documents that 
Bank may reasonably request, in form satisfactory to Bank, to perfect and 
continue perfected Bank's security interests in the Collateral and in order 
to fully consummate all of the transactions contemplated under the Loan 
Documents.

        4.3     RIGHT TO INSPECT.  Bank (through any of its officers, 
employees, or agents) shall have the right, upon reasonable prior notice, 
from time to time during Borrower's usual business hours, to inspect 
Borrower's Books and to make copies thereof and to check, test, and appraise 
the Collateral in order to verify Borrower's financial condition or the 
amount, condition of, or any other matter relating to, the Collateral.

5.      REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants as follows:

        5.1     DUE ORGANIZATION AND QUALIFICATION.  Borrower and each 
Subsidiary is a corporation duly existing and in good standing under the laws 
of its state of incorporation and qualified and licensed to do business in, 
and is in good standing in, any state in which the 

                                       14
<PAGE>

conduct of its business or its ownership of property requires that it be so 
qualified.

        5.2     DUE AUTHORIZATION; NO CONFLICT.  The execution, delivery, and 
performance of the lean Documents are within Borrower's powers, have been 
duly authorized, and are not in conflict with nor constitute a breach of any 
provision contained in Borrower's Articles/Certificate of Incorporation or 
Bylaws, nor will they constitute an event of default under any material 
agreement to which Borrower is a party or by which Borrower is bound. 
Borrower is not in default under any agreement to which it is a party or by 
which it is bound, which default could have a Material Adverse Effect.

        5.3     NO PRIOR ENCUMBRANCES.  Borrower has good and indefeasible 
title to the Collateral, free and clear of Liens, except for Permitted Liens.

        5.4     BONA FIDE USAGE AGREEMENTS.  With respect to each Advance, 
(i) each Related Usage Agreement will be the legal, valid, bindings and 
unenforceable obligation of the licensee named therein, (ii) as to each 
Related Usage Agreement, there shall be no setoffs, counterclaims or defenses 
on the part of the licensee of the usage thereunder with respect to the 
obligation of such licensee to make usage payments, and (iii) the Related 
Equipment shall have been delivered to and accepted by the licensee thereof 
at such party's address set forth in the supplement delivered in connection 
with such Advance.

        5.5     MERCHANTABLE INVENTORY. All Inventory is in all material 
respects of good and marketable quality, free from all material defects.

        5.6     NAME; LOCATION OF CHIEF EXECUTIVE OFFICE.  Except as 
disclosed in the Schedule, Borrower has not done business and will not 
without at least thirty (30) days prior written notice to Bank do business 
under any name other than that specified on the signature page hereof. The 
chief executive office of Borrower is located at the address indicated in 
Section 10 hereof.

        5.7     LITIGATION. Except as set forth in the Schedule, there are no 
actions or proceedings pending, or, to Borrower's knowledge, threatened by or 
against Borrower or any Subsidiary before any court or administrative agency 
in which an adverse decision could have a Material Adverse Effect or a 
material adverse effect on Borrower's interest or Bank's security interest in 
the Collateral.

        5.8     NO MATERIAL ADVERSE CHANGE IN FINANCIAL STATEMENTS. All 
consolidated financial statements related to Borrower and any Subsidiary that 
have been delivered by Borrower to Bank fairly present in all material 
respects Borrower's consolidated financial condition as of the date thereof 
and Borrower's consolidated results of operations for the period then ended.  
There has not been a material adverse change in the consolidated financial 
condition of Borrower since the date of the most recent of such financial 
statements submitted to Bank on or about the Closing Date.

<PAGE>

        5.9     SOLVENCY.  The fair saleable value of Borrower's assets 
(including goodwill minus disposition costs) exceeds the fair value of its 
liabilities; the Borrower is not left with unreasonably small capital after 
the transactions contemplated by this Agreement; and Borrower is able to pay 
its debts (including trade debts) as they mature.

        5.10    REGULATORY COMPLIANCE. Borrower and each Subsidiary have met 
the minimum funding requirements of ERISA with respect to any employee 
benefit plans subject to ERISA. No event has occurred resulting from 
Borrower's failure to comply with ERISA that is reasonably likely to result 
in Borrower's incurring any liability that could have a Material Adverse 
Effect. Borrower is not an "investment company" or a company "controlled" by 
an "investment company" within the meaning of the Investment Company Act of 
1940. Borrower is not engaged principally, or as one of its important 
activities, in the business of extending credit for the purpose of purchasing 
or carrying margin stock within the meaning of Regulations G, T and U of the 
Board of Governors of the Federal Reserve System). Borrower has complied with 
all the provisions of the Federal Fair Labor Standards Act. Borrower has not 
violated any statutes, laws, ordinances or rules applicable to it, violation 
of which could have a Material Adverse Effect.

        5.11    ENVIRONMENTAL CONDITION.  None of Borrower's or any 
Subsidiary's properties or assets has ever been used by Borrower or any 
Subsidiary or, to the best of Borrower's knowledge, by previous owners or 
operators, in the disposal of, or to produce, store, handle, treat, release, 
or transport, any hazardous waste or hazardous substance other than in 
accordance with applicable law; to the best of Borrower's knowledge, none of 
Borrower's properties or assets has ever been designated or identified in any 
manner pursuant to any environmental protection statute as a hazardous waste 
or hazardous substance disposal site, or a candidate for closure pursuant to 
any environmental protection statute; no lien arising under any environmental 
protection statute has attached to any revenues or to any real or personal 
property owned by Borrower or any Subsidiary; and neither Borrower nor any 
Subsidiary has received a summons, citation, notice or directive from the 
Environmental Protection Agency or any other federal, state or other 
governmental agency concerning any action or omission by Borrower or any 
Subsidiary resulting in the release or other disposition of hazardous waste 
or hazardous substances into the environment.

        5.12    TAXES. Borrower and each Subsidiary has filed or caused to be 
filed all tax returns required to be filed on a timely basis, and has paid, 
or has made adequate provision for the payment of, all taxes reflected 
therein.

        5.13    SUBSIDIARIES.  Borrower does not own any stock, partnership 
interest or other equity securities of any Person, except for Permitted 
Investments.

        5.14    GOVERNMENT CONSENT. Borrower and each Subsidiary has obtained 
all consents, approvals and authorizations of, made all declarations or 
filings with, and given all notices to, all governmental authorities that are 
necessary for the continued operation of Borrower's business as currently 
conducted.

                                       16

<PAGE>

        5.15    FULL DISCLOSURE. No representation, warranty or other 
statement made by Borrower in any certificate or written statement furnished 
to Bank contains any untrue statement of a material fact or omits to state a 
malarial fact necessary in order to make the statements contained in such 
certificates or statements not misleading.

6.      AFFIRMATIVE COVENANTS

        Borrower covenants and agrees that, until payment in full of all 
outstanding Obligations, and for so long as Bank may have any commitment to 
make a Credit Extension hereunder, Borrower shall do all of the following:

        6.1     GOOD STANDING.  Borrower shall maintain its and each of its 
Subsidiaries' corporate existence and good standing in its jurisdiction of 
incorporation and maintain qualification in each jurisdiction in which the 
failure to so qualify could have a Material Adverse Effect. Borrower shall 
maintain, and shall cause each of its Subsidiaries to maintain, to the extent 
consistent with prudent management of Borrower's business, in force all 
licenses, approvals and agreements, the loss of which could have a Material 
Adverse Effect.

        6.2     GOVERNMENT COMPLIANCE. Borrower shall meet, and shall cause 
each Subsidiary to meet, the minimum funding requirements of ERISA with 
respect to any employee benefit plans subject to ERISA. Borrower shall 
comply, and shall cause each Subsidiary to comply, with all statutes, laws, 
ordinances and government rules and regulations to which it is subject, 
noncompliance with which could have a Material Adverse Effect or a material 
adverse effect on the Collateral or the priority of Bank's Lien on the 
Collateral.

        6.3     FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.  Borrower shall 
deliver to Bank: (a) as soon as available, but in any event within thirty 
(30) days after the end of each month, a company prepared consolidated 
balance sheet and income statement covering Borrower's consolidated 
operations during such period, in a form and certified by an officer of 
Borrower reasonably acceptable to Bank; (b) as soon as available, but in any 
event within ninety (90) days after the end of Borrower's fiscal year, 
audited consolidated financial statements of Borrower prepared in accordance 
with GAAP, consistently applied, together with an unqualified opinion on such 
financial statements of an independent certified public accounting firm 
reasonably acceptable to Bank; (c) within five (5) days of filing, copies of 
all statements, reports and notices sent or made available generally by 
Borrower to its security holders or to any holders of Subordinated Debt and 
all reports on Form 10-K, 10-Q and 8-K filed with the Securities and Exchange 
Commission; (d) promptly upon receipt of notice thereof, a report of any 
legal actions pending or threatened against Borrower or any Subsidiary that 
could result in damages or costs to Borrower or any Subsidiary of Five 
Hundred Thousand Dollars ($500,000) or more; and (e) such budgets, sales 
projections, operating plans or other financial information as Bank may 
reasonably request from time to time.

        Within twenty (20) days after the last day of each month, Borrower 
shall deliver to Bank aged listings of accounts receivable and accounts 
payable.

                                       17

<PAGE>

        Within thirty (30) days after the last day of each month, Borrower 
shall deliver to Bank with the monthly financial statements a Compliance 
Certificate signed by a Responsible Officer in substantially the form of 
EXHIBIT D hereto.

        Bank shall have a right from time to time hereafter to audit 
Borrowers Accounts at Borrower's expense, provided that such audits will be 
conducted no more often than every six (6) months unless an Event of Default 
has occurred and is continuing.

        6.4     INVENTORY; RETURNS.  Borrower shall keep all Inventory in 
good and marketable condition, free from all material defects. Returns and 
allowances, if any, as between Borrower and its account debtors shall be on 
the same basis and in accordance with the usual customary practices of 
Borrower, as they exist at the time of the execution and delivery of this 
Agreement. Borrower shall promptly notify Bank of all returns and recoveries 
and of all disputes and claims, where the return, recovery, dispute or claim 
involves more than     ***    ($  ***  ).

        6.5     TAXES.  Borrower shall make, and shall cause each Subsidiary 
to make, due and timely payment or deposit of all material federal, state, 
and local taxes, assessments, or contributions required of it by law and will 
execute and deliver to Bank, on demand, appropriate certificates attesting to 
the payment or deposit thereof; and Borrower will make, and will cause each 
Subsidiary to make, timely payment or deposit of all material tax payments 
and withholding taxes required of it by applicable laws, including, but not 
limited to, those laws concerning F.I.C.A. F.U.T.A., state disability, and 
local, state, and federal income taxes, and will, upon request, furnish Bank 
with proof satisfactory to Bank indicating that Borrower or a Subsidiary has 
made such payments or deposits; provided that Borrower or a Subsidiary need 
not make any payment if the amount or validity of such payment is (I) 
contested in good faith by appropriate proceedings, (ii) is reserved against 
(to the extent required by GAAP) by Borrower and (iii) no lien other than a 
Permitted Lien results.

        6.6     INSURANCE.

                6.6.1   Borrower, at its expense, shall keep the Collateral 
insured against loss or damage by fire,  theft, explosion, sprinklers, and 
all other hazards and risks, and in such amounts, as ordinarily insured 
against by other owners in similar businesses conducted in the locations 
where Borrower's business is conducted on the date hereof. Borrower shall 
also maintain insurance relating to Borrower's ownership and use of the 
Collateral in amounts and of a type that are customary to businesses similar 
to Borrower's.

                6.6.2   All such policies of insurance shall be in such form, 
with such companies, and in such amounts as are reasonably satisfactory to 
Bank. All such policies of property insurance shall contain a lender's loss 
payable endorsement, in a form satisfactory to Bank, showing Bank as an 
additional loss payee thereof and all liability insurance policies shall show 
the Bank as an additional insured, and shall specify that the insurer must 
give at least twenty (20) days notice to Bank before canceling its policy for 
any reason. At Bank request, Borrower shall 


***     Portions of this page have been omitted pursuant to request for
        Confidential Treatment and filed separately with the Commission.

        
                                       18
<PAGE>

deliver to Bank certified copies of such policies of insurance and evidence 
of the Payments of all premiums therefor.  All proceeds payable under any 
such policy shall, at the option of Bank, be payable to Bank to be applied on 
account of the Obligations.

        6.7     PRINCIPAL DEPOSITORY.  Borrower shall maintain its principal 
depository and operating accounts with Bank.

        6.8     QUICK RATIO.  Borrower shall maintain, as of the last day of 
each calendar month, a ratio of Quick Assets to Current Liabilities of at 
least  ***  to  *** .

        6.9     DEBT-NET WORTH RATIO.  Borrower shall maintain, as of the 
last day of each calendar month, a ratio of Total Liabilities less 
Subordinated Debt to Tangible Net Worth plus Subordinated Debt of not more 
than  ***  to  *** .

        6.10    TANGIBLE NET WORTH.  Borrower shall maintain, as of the last 
day of each fiscal quarter, a Tangible Net Worth of not less than $ ***  PLUS 
 *** % of the net proceeds that the Borrower receives from equity financing 
transactions consummated after June 30, 1997 plus the amount of positive 
income for such quarter, provided that if Borrower incurs a loss for such 
quarter then MINUS such loss up to the permitted maximum loss amount relating 
to such quarter as set forth in Section 6.11 hereof.

        6.11    PROFITABILITY.  Borrower shall not incur losses (after taxes) 
in amounts greater than the following for each indicated period: $ ***  for 
the fiscal quarter ending September 30, 1997; $ ***  for the fiscal quarter 
ending December 31, 1997; $ ***  for the fiscal quarter ending March 31, 
1998; and $ ***  for the fiscal quarter ending June 30, 1998.

        6.12    LIQUIDITY COVENANT.  Subject to compliance with the 
provisions of Section 6.13 hereof, Borrower shall maintain, as of the last 
calendar day of each month, a ratio of (I) unrestricted Quick Assets of 
Borrower to (II) the amount of Obligations hereunder, of at least  ***  to  
*** .

        6.13    DEBT SERVICE RATIO.  Subject to the following sentence, 
Borrower, on a consolidated basis, shall maintain, as of the last day of each 
monthly, a Debt Service Ratio of at least  ***  to  *** .  This covenant 
shall become effective at such time that the Borrower is able to comply 
herewith; at such time Borrower shall no longer be required to comply with 
the Liquidity Covenant set forth in Section 6.12.

        6.14    LOCKBOX ARRANGEMENT.  Borrower shall assist Bank in the 
establishment of a  lockbox arrangement in favor of Bank for the payments 
that the Borrower receives with respect to the Usage Agreements. Such 
arrangement and the provisions relating thereto, including, without 
limitation, the application of the proceeds collected by the Bank under such 
arrangement, shall be established within _____ days hereof and shall be 
satisfactory to the Bank in its reasonable discretion.


***     Portions of this page have been omitted pursuant to request for
        Confidential Treatment and filed separately with the Commission.

        
                                       19

<PAGE>

        6.15    FURTHER ASSURANCES.  At any time and from time to time 
Borrower shall execute and deliver such further instruments and take such 
further action as may reasonably be requested by Bank to effect the purposes 
of this Agreement.

7.      NEGATIVE COVENANTS

        Borrower covenants and agrees that, so long as any Credit Extension 
hereunder shall be available and until payment in full of the outstanding 
Obligations or for so long as Bank may have any commitment to make any 
Advances, without the prior written consent of the Bank, Borrower will not do 
any of the following:

        7.1     DISPOSITIONS.  Convey, sell, lease, transfer or otherwise 
dispose of (collectively, a "Transfer"), or permit any of its Subsidiaries to 
Transfer, all or any part of its business or property, other than Transfers: 
(i) of inventory in the ordinary course of business, (ii) of non-exclusive 
licenses and similar arrangements for the use of the property of Borrower or 
its Subsidiaries in the ordinary course of business, (iii) that constitute 
payment of normal and usual operating expenses in the ordinary course of 
business; or (iv) of worn-out or obsolete Equipment.

        7.2     CHANGES IN BUSINESS OR OWNERSHIP, BUSINESS LOCATIONS.  Engage 
in any business, or permit any of its Subsidiaries to engage in any business, 
other than the businesses currently engaged in by Borrower and any business 
substantially similar or related thereto (or incidental thereto), or suffer a 
change in Borrower's ownership of greater than  *** %.  Borrower will not, 
without a least thirty (30) days prior written notification to Bank, relocate 
its chief executive office or add any new offices or business locations.

        7.3     MERGERS OR ACQUISITIONS.  Merge or consolidate, or permit any 
of its Subsidiaries to merge or consolidate, with or into any other business 
organization, or acquire, or permit any of its Subsidiaries to acquire, all 
or substantially all of the capital stock or property of another Person, 
unless the Borrower is the surviving corporation in the merger and the 
aggregate value of the assets acquired in the merger do not exceed  *** % of 
Borrower's Tangible Net Worth as of the end of the month prior to the 
effective date of the merger, and the assets of the corporation or entity 
acquired in the merger are not subject to any liens or encumbrances, except 
Permitted Liens, provided that at the time of entering into such a 
transaction no Default or Event of Default is then occurring or would 
otherwise arise upon the consummation of such transaction.

        7.4     INDEBTEDNESS.  Create, incur, assume or be or remain liable 
with respect to any Indebtedness, or permit any Subsidiary so to do, other 
than Permitted Indebtedness.

        7.5     ENCUMBRANCES.  Create, incur, assume or suffer to exist any 
Lien with respect to any of its property, or assign or otherwise convey any 
right to receive income, including the sale of any Accounts, or permit any of 
its Subsidiaries so to do, except for Permitted Liens.


***     Portions of this page have been omitted pursuant to request for
        Confidential Treatment and filed separately with the Commission.

        
                                       20

<PAGE>

        7.6     DISTRIBUTIONS.  Pay any dividends or make any other 
distribution or payment on account of or in redemption, retirement or 
purchase of any capital stock.

        7.7     INVESTMENTS, LOANS; GUARANTEES.  Directly or indirectly 
acquire or own, or make any Investment in or to any Person, or permit any of 
its Subsidiaries so to do, other than Permitted Investments, or make any 
loans of any money or any other assets to any Person, or guarantee or 
otherwise become liable with respect to the obligations of any other Person, 
other than respect to loans by the Borrower to employees of the Borrower in 
an aggregate amount not to exceed $ ***  outstanding at any one time, 
provided that at the time of the making of any such loan no Default or Event 
of Default is then occurring or would otherwise arise upon the making of such 
loan.

        7.8     TRANSACTIONS WITH AFFILIATES.  Directly or indirectly enter 
into or permit to exist any material transaction with any Affiliate of 
Borrower except for transactions that are in the ordinary course of 
Borrower's business, upon fair and reasonable terms that are no less 
favorable to Borrower than would be obtained in an arm's length transaction 
with a nonaffiliated Person.

        7.9     SUBORDINATED DEBT.  Make any payment in respect of any 
Subordinated Debt, or permit any of its Subsidiaries to make any such 
payment, except in compliance with the terms of such Subordinated Debt, or 
amend any provision contained in any documentation relating to the 
Subordinated Debt without Bank's prior written consent.

        7.10    INVENTORY.  Store the Inventory with a bailee, warehousman, 
or similar party unless Bank has received a pledge of any warehouse receipt 
covering such Inventory.  Except for Inventory sold in the ordinary course of 
business and except for such other locations as Bank may approve in writing, 
Borrower shall keep the Inventory only at the location set forth in Section 
10 hereof and such other locations of which Borrower gives Bank prior written 
notice and as to which Borrower signs and files a financing statement where 
needed to perfect Bank's security interest.

        7.11    COMPLIANCE.  Become an "investment company" or a company 
controlled by an "investment company," within the meaning of the Investment 
Company Act of 1940, or become principally engaged in, or undertake as one of 
its important activities, the business of extending credit for the purpose of 
purchasing or carrying margin stock, or use the proceeds of any Advance for 
such purpose; fail to meet the minimum funding requirements of ERISA; permit 
a Reportable Event or Prohibited Transaction, as defined in ERISA, to occur, 
fail to comply with the Federal Fair Labor Standards Act or violate any other 
law or regulations, which violation could have a Material Adverse Effect or a 
material adverse effect on the Collateral or the priority of Bank's Lien on 
the Collateral; or permit any of its Subsidiaries to do any of the foregoing.


***     Portions of this page have been omitted pursuant to request for
        Confidential Treatment and filed separately with the Commission.

        
                                       21

<PAGE>

8.      EVENTS OF DEFAULT

        Any one or more of the following events shall constitute an Event of 
Default by Borrower under this Agreement:

        8.1     PAYMENT DEFAULT.  If Borrower fails to pay, when due, any of 
the Obligations.

        8.2     COVENANT DEFAULT.

                (a)     If Borrower fails to perform any obligation under 
Sections 6.3, 6.6, 6.7, 6.8, 6.9, 6.10, 6.11, 6.12, 6.13, 6.14 or 6.15 or 
violates any of the covenants contained in Article 7 of this Agreement, or

                (b)     If Borrower fails or neglects to perform, keep, or 
observe any other material terms, provision, condition, covenant, or 
agreement contained in this Agreement, in any of the Loan Documents, or in 
any other present or future agreement between Borrower and Bank and as to any 
default under such other term, provision, condition, covenant or agreement 
that can be cured, has failed to cure such default within ten (10) days after 
the occurrence thereof; provided, however, that if the default cannot by its 
nature be cured within the ten (10) day period or cannot after diligent 
attempts by Borrower be cured within such ten (10) day period, and such 
default is likely to be cured within a reasonable time, then Borrower shall 
have an additional reasonable period (which shall not in any case exceed 
thirty (30) days) to attempt to cure such default, and within such reasonable 
time period the failure to have cured such default shall not be deemed an 
Event of Default (provided that no Advances will be required to be made 
during such cure period);

        8.3     MATERIAL ADVERSE CHANGE.  If there (i) occurs a material adverse
change in the business, operations, or condition (financial or otherwise) of the
Borrower, or (ii) is a material impairment of the prospect of repayment of any
portion of the Obligations or (iii) is a material impairment of the value or
priority of Bank's security interests in the Collateral;

        8.4     ATTACHMENT.  If any material portion of Borrower's assets is 
attached, seized, subjected to a writ or distress warrant, or is levied upon, 
or comes into the possession of any trustee, receiver or person acting in a 
similar capacity and such attachment, seizure, writ or distress warrant or 
levy has not been removed, discharged or rescinded within ten (10) days, or 
if Borrower is enjoined, restrained, or in any way prevented by court order 
from continuing to conduct all or any material part of its business affairs, 
or if a judgment or other claim becomes a lien or encumbrance upon any 
material portion of Borrower's assets, or if a notice of lien, levy, or 
assessment is filed of record with respect to any of Borrower's assets by the 
United States Government, or any department, agency, or instrumentality 
thereof, or by any state, county, municipal, or governmental agency, and the 
same is not paid within ten (10) days after Borrower receives notice thereof, 
provided that none of the foregoing shall constitute an Event of Default 
where such action or event is stayed or an adequate bond has been posted 
pending a good faith contest by Borrower (provided that no Credit Extensions 
will be required to be made during such 

                                       22

<PAGE>

cure period);

        8.5     INSOLVENCY.  If Borrower becomes insolvent, or if an 
Insolvency Proceeding is commenced by Borrower, or if an Insolvency 
Proceeding is commenced against Borrower and is not dismissed or stayed 
within 30 days (provided that no Advances will be made prior to the dismissal 
of such Insolvency Proceeding);

        8.6     OTHER AGREEMENTS.  If there is a default in any agreement to 
which Borrower is a party with a third party or parties resulting in a right 
by such third party or parties, whether or not exercised, to accelerate the 
maturity of any Indebtedness in an amount in excess of One Hundred Thousand 
Dollars ($100,000) or that could have a Material Adverse Effect:

        8.7     SUBORDINATED DEBT.  If Borrower makes any payment on account 
of Subordinated Debt, except to the extent such payment is allowed under any 
subordination agreement entered into with Bank;

        8.8     JUDGMENTS.  If a judgment or judgments for the payment of 
money in an amount, individually or in the aggregate, of at least Fifty 
Thousand Dollars ($50,000) shall be rendered against Borrower and shall 
remain unsatisfied and unstayed for a period of ten (10) days (provided that 
no Credit Extensions will be made prior to the satisfaction or stay of such 
judgment); or

        8.9     MISREPRESENTATIONS.  If any material misrepresentations or 
material misstatement exists now or hereafter in any warranty or 
representation set forth herein or in any certificate or writing delivered to 
Bank by Borrower or any Person acting on Borrower's behalf pursuant to this 
Agreement or to induce Bank to enter into this Agreement or any other Loan 
Document.

9.      BANK'S RIGHTS AND REMEDIES

        9.1     RIGHTS AND REMEDIES.  Upon the occurrence and during the 
continuance of an Event of Default, Bank may, at its election, without notice 
of its election and without demand, do any one or more of the following, all 
of which are authorized by Borrower:

                (a)     Declare all Obligations, whether evidenced by this 
Agreement, by any of the other Loan Documents, or otherwise, immediately due 
and payable (provided that upon the occurrence of an Event of Default 
described in Section 8.5 all Obligations shall become immediately due and 
payable without any action by Bank);

                (b)     Cease advancing money or extending credit to or for 
the benefit of Borrower under this Agreement or under any other agreement 
between Borrower and Bank;

                (c)     Exercise any rights of Borrower as lessor under the 
Related Usage Agreements, commence direct collections of amounts due under 
the Related Usage Agreements, settle or adjust disputes and claims directly 
with licensees of usage thereunder for amounts, upon 

                                       23

<PAGE>

terms and in whatever order that Bank reasonably considers advisable;

                (d)     Settle or adjust disputes and claims directly with 
account debtors for amounts, upon terms and in whatever order that Bank 
reasonably considers advisable;

                (e)     Without notice to or demand upon Borrower, make such 
payments and do such acts as Bank considers necessary or reasonable to 
protect its security interest in the Collateral.  Borrower agrees to assemble 
the Collateral if Bank so requires, and to make the Collateral available to 
Bank as Bank my designate.  Borrower authorizes Bank to enter the premises 
where the Collateral is located, to take and maintain possession of the 
Collateral, or any part of it, and to pay, purchase, contest, or compromise 
any encumbrances, charge or lien which in Bank's determination appears to be 
prior or superior to its security interest and to pay all expenses incurred 
in connection therewith. With respect to any of Borrower's premises, Borrower 
hereby grants Bank a license to enter such premises and to occupy the same, 
without charge in order to exercise any of Bank's rights or remedies provided 
herein, at law, in equity, or otherwise;

                (f)     Without notice to Borrower set off and apply to the 
Obligations any and all (i) balances and deposits of Borrower held by Bank, 
or (ii) indebtedness at any time owing to or for the credit or the account of 
Borrower held by Bank;

                (g)     Ship, reclaim, recover, store, finish, maintain, 
repair, prepare for sale, advertise for sale, and sell (in the manner 
provided for herein) the Collateral.  Bank is hereby granted a non-exclusive, 
royalty-free license or other right, solely pursuant to the provisions of 
this Section 9.1, to use, without charge, Borrower's labels, patents, 
copyrights, mask words, rights of use of any name, trade secrets, trade 
names, trademarks, service marks, and advertising matter, or any property of 
a similar nature, as it pertains to the Collateral in completing production 
of, advertising for sale, and selling any Collateral and, in connection with 
Bank's exercise of its rights under this Section 9.1, Borrower's rights under 
all licenses and all franchise agreements shall inure to Bank's benefit;

                (h)     Sell the Collateral at either a public or private 
sale, or both, by way of one or more contracts or transactions, for cash or 
on terms, in such manner and at such places (including Borrower's premises) 
as Bank determines is commercially reasonable, and apply the proceeds thereof 
to the Obligations in whatever manner or order it deems appropriate;

                (i)     Bank may credit bid and purchase at any public sale, 
or at any private sale as permitted by law; and

                (j)     Any deficiency that exists after disposition of the 
Collateral as provided above will be paid immediately by Borrower.

                                       24
<PAGE>

        9.2     POWER OF ATTORNEY.  Effective only upon the occurrence and 
during the continuance of an Event of Default, Borrower hereby irrevocably 
appoints Bank (and any of Bank's designated officers, or employees) as 
Borrower's true and lawful attorney to:  (a) send requests for verification 
of Accounts or notify account debtors of Bank's security interest in the 
Accounts; (b) endorse Borrower's name on any checks or other forms of payment 
or security that may come into Bank's possession; (c) sign Borrower's name on 
any invoice or bill of lading relating to any Account, drafts against account 
debtors, schedules and assignments of Accounts, verifications of Accounts, 
and notices to account debtors; (d) make, settle, and adjust all claims under 
an decisions with respect to Borrower's policies of insurance; and (e) settle 
and adjust disputes and claims respecting the accounts directly with account 
debtors, for amounts and upon terms which Bank determines to be reasonable; 
provided Bank may exercise such power of attorney to sign the name of 
Borrower on any of the documents described in Section 4.2 regardless of 
whether an Event of Default has occurred.  The appointment of Bank as 
Borrower's attorney in fact, and each and every one of the Bank's rights and 
powers, being coupled with an interest, is irrevocable until all of the 
Obligations have been fully repaid and performed and Bank's obligation to 
provide advances hereunder is terminated.

        9.3     ACCOUNTS COLLECTION.  Upon the occurrence and during the 
continuance of an Event of Default, Bank may notify any Person owing funds to 
Borrower of Bank's security interest in such funds and verify the amount of 
such Account.  Borrower shall collect all amounts owing to Borrower for Bank, 
receive in trust all payments as Bank's trustee, and if requested or required 
by Bank, immediately deliver such payments to Bank in their original form as 
received from the account debtor, with proper endorsements for deposit.

        9.4     BANK EXPENSES.  If Borrower fails to pay any amounts or 
furnish any required proof of payment due to third persons or entities, as 
required under the terms of this Agreement, then Bank may do any or all of 
the following: (a) make payment of the same or any part thereof; (b) set up 
such reserves under the Committed Line as Bank deems necessary to protect 
Bank from the exposure created by such failure; or (c) obtain and maintain 
insurance policies of the type discussed in Section 6.6 of this Agreement, 
and take any action with respect to such policies as Bank deems prudent.  Any 
amounts so paid or deposited by Bank shall constitute Bank Expenses, shall be 
immediately due and payable, and shall bear interest at the then applicable 
rate hereinabove provided, and shall be secured by Collateral.  Any payments 
made by Bank shall not constitute an agreement by Bank to make similar 
payments in the future or a waiver by Bank of any Event of Default under this 
Agreement.

        9.5     BANK'S LIABILITY FOR COLLATERAL.  So long as Bank complies 
with reasonable banking practices, Bank shall not in any way or manner be 
liable or responsible for: (a) the safekeeping of the Collateral; (b) any 
loss or damage thereto occurring or arising in any manner or fashion from any 
cause; (c) any diminution in the value thereof; or (d) any act or default of 
any carrier, warehouseman, bailee, forwarding agency, or other person 
whomsoever.  All risk of loss, damage or destruction of the Collateral shall 
be borne by the Borrower.

        9.6     REMEDIES CUMULATIVE.  Bank's rights and remedies under this
Agreement, the Loan 

                                       25

<PAGE>

Documents and all other agreements shall be cumulative. Bank shall have all 
other rights and remedies not expressly set forth herein as provided under 
the Code, by law, or in equity.  No exercise by Bank of one right or remedy 
shall be deemed an election, and no waiver by Bank of any Event of Default on 
Borrower's part shall be deemed a continuing waiver.  No delay by Bank shall 
constitute a waiver, election, or acquiescence by it.  No waiver by Bank 
shall be effective unless made in a written document signed on behalf of Bank 
and then shall be effective only in the specific instance and for the 
specific purpose for which it was given.

        9.7     DEMAND; PROTEST.  Borrower waives demand, protest, notice of 
protest, notice of default or dishonor, notice of payment and nonpayment, 
notice of any default, nonpayment at maturity, release, compromise, 
settlement, extension, or renewal of accounts, documents, instruments, 
chattel paper, and guarantees at any time held by Bank on which Borrower may 
in any way be liable.

10.     REPOSSESSION AND REMARKETING

        10.1    REQUEST TO REPOSSESS; REMARKETING.

                (a)     Upon Bank's determination that a default exists under 
a Related Usage Agreement, and that such default remains uncured with the 
time, if any, for curing the same permitted by the Related Usage Agreement, 
Bank, as secured party under this Agreement, may request Borrower to act as 
its agent, and upon such request Borrower will, as such agent, use diligent 
efforts to repossess the Equipment subject to such Related Usage Agreement as 
promptly and efficiently as is legally permissible.  Thereafter Borrower will 
refurbish and update, as needed, and, for a period of one hundred twenty 
(120) days or such other period as Borrower and Bank may agree upon in 
writing from the date the Equipment is repossessed (the "Remarketing 
Period"), attempt to sell or release such Equipment on such terms and 
conditions as reflect fair market value for similar equipment and are 
acceptable to Bank, in its sole discretion.  Borrower shall give no less 
priority to remarketing Equipment pursuant to this Section 10.1 than they 
would similar equipment owned, leased or managed by Borrower. The obligations 
of Borrower to remarket such Equipment for sale or lease shall include, but 
not be limited to, efforts to lease such Equipment to new or established 
lessees, efforts to sell such Equipment, preparation and supervision of the 
documentation of each transaction and an accounting of the activities 
referred to in this Section 10.1, including information relative to the 
status of negotiations for offers made in respect of such Equipment.

                (b)     If Borrower has not remarketed any Equipment at the 
conclusion of the Remarketing Period, upon notice from Bank, Borrower's 
exclusive right to remarket shall terminate and Bank shall have the right to 
remarket such Equipment on terms and conditions satisfactory to it.  If Bank 
remarkets the equipment, it shall retain proceeds in an amount equal to all 
amounts due with respect to the Advance financing the Usage Agreement to 
which such Equipment was subject and shall remit the excess proceeds to 
Borrower.

                (c)     Nothing contained in this Section 10.1 shall be deemed
to constitute a 

                                       26
<PAGE>

release by Bank of its security interest in any of the Collateral.  Bank 
shall release its security interest in Equipment that has been sold pursuant 
to this Section 10.1.

        10.2    REMARKETING EXPENSES.  Remarketing expenses shall be for the 
account of the party incurring such expenses and shall be recoverable from 
proceeds realized by the party remarketing the Equipment.

11.     NOTICES

        Unless otherwise provided in this Agreement, all notices or demands 
by any party relating to this Agreement or any other agreement entered into 
in connection herewith shall be in writing and (except for financial 
statements and other informational documents which may be sent by firstclass 
mail, postage prepaid) shall be personally delivered or sent by a recognized 
overnight delivery service, by certified mail, postage prepaid, return 
receipt requested, or by telefacsimile to Borrower or to Bank, as the case 
may be, at its addresses set forth below:

<TABLE>
<S>                                    <C>
        If to Borrower                  Vista Medical Technologies, Inc.
                                        5451 Avenida Encinas, Suite A
                                        Carlsbad, California 92008
                                        Attn: Robert De Vaere
                                        FAX: 760-603-9170

        If to Bank                      Silicon Valley Bank
                                        5414 Oberlin Drive, Suite 230
                                        San Diego, CA 92121
                                        Attn: Manager
                                        FAX: 619-535-1611
</TABLE>

The parties hereto may change the address at which they are to receive 
notices hereunder, by notice in writing in the foregoing manner given to the 
other.

12.     CHOICE OF LAW AND VENUE; JURY WAIVER

        The Loan Documents shall be governed by, and construed in accordance 
with, the internal laws of the State of California, without regard to 
principles of conflicts of law.  Each of Borrower and Bank hereby submits to 
the exclusive jurisdiction of the stare and Federal courts located in the 
County of San Diego, State of California. BORROWER AND BANK EACH HEREBY WAIVE 
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED 
UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS 
CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY 
CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY RECOGNIZES 
AND AGREES THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT 
TO ENTER INTO THIS AGREEMENT. EACH PARTY 

                                       27
<PAGE>

REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL 
COUNSEL AND THAT IT KNOWINGLY, AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS 
FOLLOWING CONSULTATION WITH LEGAL COUNSEL.

13.     GENERAL PROVISIONS

        13.1    SUCCESSORS AND ASSIGNS.  This Agreement shall bind and inure 
to the benefit of the respective successors and permitted assigns of each of 
the parties; PROVIDED, HOWEVER, that neither this Agreement nor any rights 
hereunder may be assigned by Borrower without Bank's prior written consent, 
which consent may be granted or withheld in Bank's sole discretion. Bank 
shall have the right without the consent of or notice to Borrower to sell, 
transfer, negotiate, or grant participation in all or any part of, or any 
interest in, Bank's obligations, rights and benefits hereunder.

        13.2    INDEMNIFICATION.  Borrower shall, indemnify, defend, protect 
and hold harmless Bank and its officers, employees, and agents against: (a) 
all obligations. demands, claims, and liabilities claimed or asserted by any 
other party in connection with the transactions contemplated by the Loan 
Documents, and (b) all losses or Bank Expenses in any way suffered, incurred, 
or paid by Bank as a result of or in any way arising out of, following, or 
consequential to transactions between Bank and Borrower whether under the 
Loan Documents, or otherwise (including without limitation reasonable 
attorneys fees and expenses), except for losses caused by Bank's gross 
negligence or willful misconduct.

        13.3    TIME OF ESSENCE.  Time is of the essence for the performance 
of all obligations set forth in this Agreement.

        13.4    SEVERABILITY OF PROVISIONS.  Each provision of this Agreement 
shall be severable from every other provision of this Agreement for the 
purpose of determining the legal enforceability of any specific provision.

        13.5    AMENDMENTS IN WRITING, INTEGRATION.  This Agreement cannot be 
amended or terminated except by a writing signed by Borrower and Bank. All 
prior agreements, understandings, representations, warranties, and 
negotiations between the parties hereto with respect to the subject matter of 
this Agreement, if any, are merged into this Agreement and the Loan Documents.

        13.6    COUNTERPARTS.  This Agreement may be executed in any number 
of counterparts and by different parties on separate counterparts, each of 
which, when executed and delivered, shall be deemed to be an original, and 
all of which, when taken together, shall constitute but one and the same 
Agreement.

        13.7    SURVIVAL.  All covenants, representations and warranties made 
in this Agreement shall continue in full force and effect so long as any 
Obligations remain outstanding. The obligations of Borrower to indemnify 
Bank; with respect to the expenses. damages, losses, costs 

                                       28
<PAGE>

and liabilities described in Section 13.2 shall survive until all applicable 
statute of limitations periods with respect to actions that may be brought 
against Bank have run.





                                       29
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be 
executed as of the date first above written.

                                        VISTA MEDICAL TECHNOLOGIES, INC.


                                        By: /s/John Lyon
                                            ----------------------------------
                                        Title: President/CEO
                                              --------------------------------

                                        By: /s/ Robert DeVaere
                                            ----------------------------------
                                        Title: CFO
                                              --------------------------------

                                        SILICON VALLEY BANK


                                        By: /s/ Susan Batchen
                                            ----------------------------------
                                        Title: Vice President
                                              --------------------------------


                                       30
<PAGE>

                                   EXHIBIT A

The Collateral shall consist of all right, title and interest of Borrower in 
and to the following.

(a)     All goods and equipment now owned or hereafter acquired, including, 
without limitation, all machinery, fixtures, vehicles (including motor 
vehicles and trailers), and any interest in any of the foregoing, and all 
attachments, accessories, accessions, replacements, substitutions, additions, 
and improvements to any of the foregoing, wherever located;

(b)     All inventory, now owned or hereafter acquired, including, without 
limitation, all merchandise, raw materials, parts, supplies, packing and 
shipping materials, work in process and finished products including such 
inventory as is temporarily out of Borrower's custody or possession or in 
transit and including any returns upon any accounts or other proceeds, 
including insurance proceeds, resulting from the sale or disposition of any 
of the foregoing and any documents of title representing any of the above;

(c)     All contract rights and general intangibles now owned or hereafter 
acquired, including, without limitation, goodwill, trademarks, servicemarks, 
trade styles, trade names, patents, patent applications, leases, license 
agreements' franchise agreements, blueprints, drawings, purchase orders, 
customer lists, route lists, infringements, claims, computer programs, 
computer discs, computer tapes, literature, reports, catalogs, design rights, 
income tax refunds, payments of insurance and rights to payment of any kind;

(d)     All now existing and hereafter arising accounts, contract rights. 
royalties. license rights and all other forms of obligations owing to 
Borrower arising out of the sale or lease of goods, the licensing of 
technology or the rendering of services by Borrower, whether or not earned by 
performance, and any and all credit insurance, guaranties, and other security 
therefor, as well as all merchandise returned to or reclaimed by Borrower;

(e)     All documents, cash, deposit accounts, securities, investment 
property, letters of credit, certificates of deposit, instruments and chattel 
paper now owned or hereafter acquired and Borrower's Books relating to the 
foregoing;

(f)     All copyright rights, copyright applications, copyright registrations 
and like protections in each work of authorship and derivative work thereof, 
whether published or unpublished, now owned or hereafter acquired; all trade 
secret rights, including all rights to unpatented inventions, know-how, 
operating manuals, license rights and agreements and confidential 
information, now owned or hereafter acquired; all mask work or similar rights 
available for the protection of semiconductor chips, now owned or hereafter 
acquired; all claims for damages by way of any past, present and future 
infringement of any of the foregoing; and

(g)     All Borrower's Books relating to the foregoing and any and all 
claims, rights and interests in any of the above and all substitutions for, 
additions and accessions to and proceeds thereof.

                                      31

<PAGE>

                                      EXHIBIT B

                     LOAN PAYMENT/ADVANCE TELEPHONE REQUEST FORM

                DEADLINE FOR SAME DAY PROCESSING IS 3:00 P.M., P.S.T.

TO:     CENTRAL CLIENT SERVICE DIVISION       DATE:
                                                   --------------------

FAX#:                                      TIME:
     ----------------------------------         -----------------------

FROM:
     ------------------------------------------------------------------
                BORROWER'S NAME

FROM:
     ------------------------------------------------------------------
                AUTHORIZED SIGNER'S NAME

-----------------------------------------------------------------------
                AUTHORIZED SIGNATURE

PHONE:
      -----------------------------------------------------------------

FROM ACCOUNT #                          TO ACCOUNT #
              -----------------                     -------------------

-----------------------------------------------------------------------
REQUESTED TRANSACTION TYPE                       REQUEST DOLLAR AMOUNT
--------------------------                       ---------------------
PRINCIPAL INCREASE (ADVANCE)                     $
                                                  --------------------
PRINCIPAL PAYMENT (ONLY)                         $
                                                  --------------------
INTEREST PAYMENT (ONLY)                          $
                                                  --------------------
PRINCIPAL AND INTEREST (PAYMENT)                 $
                                                  --------------------
OTHER INSTRUCTIONS:
                    --------------------------------------------------
-----------------------------------------------------------------------

All representations and warranties of Borrower stated in the Loan and 
Security Agreement are true, correct and complete in all material respects as 
of the date of the telephone request for and Advance confirmed by this 
Advance Request; provided, however, that those representations and warranties 
expressly referring to another date shall be true, correct and complete in 
all material respects as of such date.

                                      32

<PAGE>

                                  EXHIBIT C

                                  [RESERVED]


                                      33

<PAGE>

                                      EXHIBIT D

                                COMPLIANCE CERTIFICATE

TO:             SILICON VALLEY BANK

FROM:   


The undersigned authorized officer of _______________________________ hereby 
certifies that in accordance with the terms and conditions of the Loan and 
Security Agreement between Borrower and Bank (the "Agreement"), (i) Borrower 
is in complete compliance for the period ending with all acquired covenants 
except as noted below and (ii) all representations and warranties of Borrower 
stated in the Agreement are true and correct in all material respects as of 
the date hereof. Attached herewith are the required documents supporting the 
above certification. The Officer further certifies that these are prepared in 
accordance with Generally Accepted Accounting Principles (GAAP) and are 
consistently applied from one period to the next except as explained in an 
accompanying letter or footnotes. The Officer expressly acknowledges that no 
borrowings may be requested by the Borrower at any time or date of 
determination that Borrower is not in compliance with any of the terms of the 
Agreement, and that such compliance is determined not just at the date this 
certificate is delivered.

    PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" 
COLUMN.

<TABLE>
<CAPTION>
 REPORTING COVENANT          REQUIRED                        COMPLIES
 ------------------          --------                        --------
 <S>                         <C>                             <C>     <C>
 Monthly financial           Monthly within 30               Yes     No
 statements                  days
 Annual (CPA Audited)        FYE within 90 days              Yes     No
 [10Q and 10K                Within 5 days after filing      Yes     No
                             with the SEC]
 A/R & A/P Agings            Monthly within 20               Yes     No
                             days
 FINANCIAL COVENANT          REQUIRED             ACTUAL     COMPLIES
 ------------------          --------             ------     --------
 <S>                         <C>                  <C>        <C>     <C>
 Maintain on a Monthly                                       Yes     No
 Basis:
 Minimum Quick Ratio         ***                  ____:1.0   Yes     No
 Maximum Debt/Tangible Net   ***                  ____:1.0   Yes     No
 Worth

 Tangible Net Worth (qtrly)  ***                  $_______   Yes     No
                             Equity + - Income
 Profitability:  9/30/97     $ ***                $_______   Yes     No
                 12/31/97    $ ***                $_______   Yes     No
                 3/31/98     $ ***                $_______   Yes     No
                 6/30/98     $ ***                $_______   Yes     No
 Minimum Debt Service          ***                ____:1.0   Yes     No
 (qtrly)
   OR
 Liquidity Ratio               ***                ____:1.0   Yes     No
</TABLE>


***     Portions of this page have been omitted pursuant to request for
        Confidential Treatment and filed separately with the Commission.


                                      34

<PAGE>

                            CORPORATE BORROWING RESOLUTION

        BORROWER: VISTA MEDICAL TECHNOLOGIES, INC.    BANK: SILICON VALLEY BANK

        I, THE UNDERSIGNED SECRETARY OR ASSISTANT SECRETARY OF VISTA MEDICAL 
TECHNOLOGIES, INC. (the "Borrower"), HEREBY CERTIFY that Borrower is a 
corporation duly organized and existing under and by virtue of the laws of 
the State of Delaware.

        I FURTHER CERTIFY that at a meeting of the Directors of Borrower (or 
by other duly authorized corporate action in lieu of a meeting), duly called 
and held, at which a quorum was present and voting, the following resolutions 
were adopted.

        BE IT RESOLVED, that any one (l) of the following named officers, 
employees, or agents of Borrower, whose actual signatures are shown below:

        NAMES           POSITIONS                       ACTUAL SIGNATURES
        -----           ---------                       -----------------
John R. Lyon            President & CEO                 /s/ John R. Lyon
                                                        -----------------
Robert J. De Vaere      V.P. Finance &                  /s/ Robert DeVaere
                        Admin., CFO &                   -----------------
                        Secretary               


acting for and on behalf of Borrower and as its act and deed be, and they hereby
are authorized and empowered:

        BORROW MONEY. To borrow frown time to time frown Silicon Valley Bank
        ("Bank"), on such terms as may be agreed upon between the officers of
        Borrower and Bank, such sum or sums of money as in their judgment should
        be borrowed.

        EXECUTE LOAN DOCUMENTS. To execute and deliver to Bank the loan
        documents of Borrower, on Bank's forms, at such rates of interest and on
        such terms as may be agreed upon, evidencing the sums of money so
        borrowed or any indebtedness of Borrower to Bank, and also to execute
        and deliver to Bank one or more renewals, extensions, modifications,
        refinancings, consolidations, or substitutions for one or more of the
        loan documents, or any portion of the loan documents.

        GRANT SECURITY. To grant a security interest to Bank in any of
        Borrower's assets, which security interest shall secure all of
        Borrower's obligations to Bank

        NEGOTIATE ITEMS. To draw, endorse, and discount with Bank all drafts,
        trade acceptances, promissory notes, or other evidences of indebtedness
        payable to or belonging to Borrower or in which Borrower may have an
        interest, and either to receive cash for the same or to 

                                      35

<PAGE>

        cause such proceeds to be credited to the account of Borrower with Bank
        or to cause such other disposition of the proceeds derived therefrom as
        they may deem advisable.

                                      36

<PAGE>

                            CORPORATE BORROWING RESOLUTION
                                        Page 2

        LETTERS OF CREDIT. To execute letter of credit applications and other
        related documents pertaining to Bank's issuance of letters of credit.

        FOREIGN EXCHANGE CONTRACTS. To execute and deliver foreign exchange
        contracts, either spot or forward, from time to time, in such amount as,
        in the judgment of the officer or officers herein authorized.

        ISSUE WARRANTS. To issue warrants to purchase Borrower's capital stock
        for such class, series and number, and on such terms, as an officer of
        Borrower shall deem appropriate.

        FURTHER ACTS. In the case of lines of credit, to designate additional or
        alternate individuals as being authorized to request advances
        thereunder, and in all cases, to do and perform such other acts and
        things, to pay any and all fees and costs, and to execute and deliver
        such other documents and agreements, including agreements waiving the
        right to a trial by jury, as they may in their discretion deem
        reasonably necessary or proper in order to carry into effect the
        provisions of these Resolutions.

        BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to
these Resolutions and performed prior to the passage of these resolutions are
hereby ratified and approved, that these Resolutions shall remain in full force
and effect and Bank may rely on these Resolutions until written notice of their
revocation shall have been delivered to and received by Bank. Any such notice
shall not affect any of Borrower's agreements or commitments in effect at the
time notice is given.

        I FURTHER CERTIFY that the persons named above are principal officers of
the Corporation and occupy the positions set opposite their respective natives;
that the foregoing Resolutions now stand of record on the books of the
Corporation; and that they are in full force and effect and have not been
modified or revoked in any manner whatsoever.

        IN WITNESS WHEREOF, I have hereunto set my hand on 10/23/97 and attest
that the signatures set opposite the names listed above are their genuine
signatures.

                                        CERTIFIED TO AND ATTESTED BY:


                                        X /s/ ROBERT DEVAERE
                                          ----------------------------------
                                          *Secretary or Assistant Secretary


                                        X
                                          ----------------------------------

                                      37