<TABLE>

                            BUSINESS LOAN AGREEMENT
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<CAPTION>
  Principal     Loan Date     Maturity     Loan No.    Call  Collateral   Account     Officer  Initials
<S>             <C>          <C>          <C>          <C>   <C>          <C>         <C>      <C>
$6,000,000.00   04-01-1997   04-01-1998   0108143855    513      04                     JS
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References  in the shaded  area are for  Lender's  use only and do not limit the
applicability of this document to any particular loan or item.
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</TABLE>

Borrower:  Erox Corporation                Lender:  Mid-Peninsula  Bank 
           4034 Clipper Court                       c/o Greater Bay Bancorp
           Fremont, CA 94538                        2860 W. Bayshore
                                                    Palo Alto, CA 94303

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

TERM.  This Agreement shall be effective as of April 1, 1997, and shall continue
thereafter  until all  Indebtedness  of Borrower to Lender has been performed in
full and the parties terminate this Agreement in writing.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


<PAGE>

04-01-1997                   BUSINESS LOAN AGREEMENT                      Page 2
Loan No 0108143855                 (Continued)
================================================================================

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

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

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

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

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

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

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

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

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

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

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

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

    Properties.  Except  as  contemplated  by this  Agreement  or as  previously
    disclosed in Borrower's  financial statements or in writing to Lender and as
    accepted  by  Lender,  and  except  for  property  tax  liens  for taxes not
    presently  due and  payable,  Borrower  owns  and has  good  title to all of
    Borrower's properties free and clear of all Security Interests,  and has not
    executed any security  documents  or financing  statements  relating to such
    properties.  All of Borrower's  properties  are titled in  Borrower's  legal
    name, and Borrower has not used, or filed a financing  statement  under, any
    other name for at least the last five (5) years.

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

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

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

    Lien Priority.  Unless  otherwise previously disclosed to Lender in writing,
    Borrower  has not  entered  into or  granted  any  Security  Agreements,  or
    permitted the filing or attachment of any Security Interests on or affecting
    any of the Collateral directly or indirectly securing repayment of


<PAGE>

04-01-1997                 BUSINESS LOAN  AGREEMENT                       Page 3
Loan No 0108143855              (Continued)
================================================================================
    Borrower's  Loan  and  Note,  that  would be prior or that may in any way be
    superior  to  Lender's  Security   Interests  and  rights  in  and  to  such
    Collateral.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


<PAGE>


04-01-1997                      BUSINESS LOAN AGREEMENT                   Page 4
Loan No 0108143855                    (Continued)
================================================================================

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

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

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

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

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

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

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

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

ADDITIONAL COVENANTS. Borrower further agrees that it will maintain Shareholders
Equity  as   disclosed  on  Borrowers  Financial  Statements  at  no  less  than
$4,200,000.00  and will maintain the ratio of Total  Liabilities to Shareholders
Equity at no greater  than 1.5 to 1 at the end of each month.  If the  principal
balance owing under the Note exceeds  $4,000,000 at the end of any month,  or if
the ratio of Borrower's cash plus  account receivable  divided by total  current
liabilities  is  less  than  1.2:1;  then  Borrower  agrees  to  the  additional
provisions   regarding  Advances  Against  Accounts  Receivable  and  Additional
Financial Reporting as set forth below:

ADVANCES AGAINST ACCOUNTS RECEIVABLE. Lender shall make advances to Borrower, at
Borrowers  request,  equal to a maximum of seventy  five cent (75%) of  Eligible
Accounts Receivable. The definition of Accounts Receivable and Eligible Accounts
Receivable  is  described  on Exhibit "A"  consisting  of two pages (2) which is
attached  hereto  and  made a part  of  this  Business  Loan  Agreement  by this
reference.

ADDITIONAL FINANCIAL  REPORTING.  Borrower will provide to Lender the following:

1. Monthly,  within 20 days of the month end, Accounts  Receivable Aging with an
Accounts Receivable Borrowing Base Certificate.

2. Monthly Accounts Payable aging within 20 days of the month end.

FINANCIAL REPORTING.  Borrower will provide to Lender the following:  

1. Company prepared Financial Statements within 20 days of each month end.

2. Copies of all 10QSB  filings  within 10 days of its filing with the  Security
and Exchange Commission.

3. Borrower's audited Financial  Statement,  bearing an unqualified opinion from
Borrowers auditor, to be provided within 90 days of its calendar year end.

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

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

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

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

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

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




<PAGE>


04-01-1997                BUSINESS LOAN AGREEMENT                         Page 5
Loan No 0108143855               (Continued)
================================================================================

    at any time thereafter.

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

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

    Creditor  or  Forfeiture   Proceedings.   Commencement   of  foreclosure  or
    forfeiture   proceedings,   whether  by  judicial   proceeding,   self-help,
    repossession or any other method, by any creditor of Borrower,  any creditor
    of any Grantor against any collateral  securing the Indebtedness,  or by any
    governmental agency. This includes a garnishment,  attachment, or levy on or
    of any of Borrower's  deposit accounts with Lender.  However,  this Event of
    Default  shall not apply if there is a good  faith  dispute by  Borrower  or
    Grantor,  as the case may be, as to the  validity or  reasonableness  of the
    claim which is the basis of the creditor or  forfeiture  proceeding,  and if
    Borrower  or  Grantor  gives  Lender  written  notice  of  the  creditor  or
    forfeiture  proceeding  and  furnishes  reserves  or a  surety  bond for the
    creditor or forfeiture proceeding satisfactory to Lender.

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

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

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

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

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

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

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

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

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

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

    Costs and  Expenses.  Borrower  agrees to pay upon  demand  all of  Lender's
    expenses,   including  without  limitation   attorneys'  fees,  incurred  in
    connection with the preparation,  execution,  enforcement,  modification and
    collection of this  Agreement or in connection  with the Loans made pursuant
    to this Agreement. Lender may pay someone else to help collect the Loans and
    to enforce this Agreement, and Borrower will pay that amount. This includes,
    subject to any limits under applicable law, Lender's  attorneys'  reasonable
    fees and  Lender's  reasonable  legal  expenses,  whether  or not there is a
    lawsuit,  attorneys' fees for bankruptcy  proceedings  (including efforts to
    modify  or  vacate  any  automatic  stay or  injunction),  appeals,  and any
    anticipated  post-judgment  collection services.  Borrower also will pay any
    court costs, in addition to all other sums provided by law.

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

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

<PAGE>

04-01-1997               BUSINESS LOAN AGREEMENT                          Page 6
Loan No 0108143855             (Continued)
================================================================================

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

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

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

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

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

BORROWER  ACKNOWLEDGES  HAVING READ ALL THE  PROVISIONS  OF THIS  BUSINESS  LOAN
AGREEMENT, AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF APRIL
1, 1997.

BORROWER:

Erox Corporation

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


LENDER:

Mid-Peninsula Bank

By:
   ---------------------------------------------------------
   Authorized Officer

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

<PAGE>
                                  EXHIBIT "A"

A.   Definitions

     (1)  "Account  Receivable"  shall mean an account  arising in the  ordinary
course  of  Borrower's  business  from the sale of goods or the  performance  of
services.

     (2) "Account Debtor" shall mean the obligor on any Account Receivable.

     (3)  "Eligible  Account"  shall mean an Account  Receivable,  excluding the
following.

         a. Accounts  Receivable which remain uncollected more than 90 days from
invoice date ("Delinquent Accounts")

         b. Accounts  Receivable due from an Account Debtor which has suffered a
business  failure  or  the  termination  of  its  existence,  or as to  which  a
dissolution,  insolvency  or  bankruptcy  proceeding  has  been  commenced,  any
assignment for the benefit of creditors has been made or a trustee,  receiver or
conservator  has  been  appointed  for all or any part of the  property  of such
Account Debtor;

         c.  Accounts  Receivable  due from an Account  Debtor  affiliated  with
Borrower in any manner, including without limitation,  as a stockholder,  owner,
officer, director, agent or employee;

         d.  Accounts  Receivable  with  respect  to which  payment is or may be
conditional;

         e. Accounts Receivable due from an Account Debtor who is not a resident
or citizen of, located in, or subject to service of process in the United States
of America;

         f. Accounts  Receivable due from an Account Debtor who is any national,
federal or state government,  including without limitation,  an instrumentality,
division, agency, body or department thereof;

         g. Accounts  Receivable  commonly known as "bill and hold" or a similar
arrangement;

         h. Accounts  Receivable  due from an Account  Debtor as to which 20% or
more of the aggregate dollar amount of all outstanding Accounts Receivable owing
from such Account Debtor are Delinquent Accounts;

                                      (1)
<PAGE>

                                  EXHIBIT "A"

Paqe Two.

         i. That portion of Accounts Receivable due from an Account Debtor which
is in excess of 50% of the Borrower's aggregate dollar amount of all outstanding
Accounts Receivable;

         j. Accounts  Receivable as to which Borrower is or may become liable to
the Account Debtor for any reason;

         k. Accounts  Receivable which are not free of all liens,  encumbrances,
charges, rights and interest of any kind, except in favor of Lender;

         1.  Accounts  Receivable  which  are  supported  or  represented  by  a
promissory note,  post-dated check or letter of credit unless such instrument is
actually delivered to Lender;

         m.  Accounts   Receivable  which  are  unsuitable  as  collateral,   as
determined by Lender in the exercise of its reasonable sole discretion;

Dated:      April 1, 1997          Borrower:
      --------------------------
                                   By: /s/ William P. Horgan
                                      ----------------------------------------
                                      William P. Horgan, Chairman &
                                      Chief Executive Officer

                                   By:
                                      ----------------------------------------



                                      Lender: Mid-Peninsula Bank

                                   By:
                                      ----------------------------------------
                                      J.H. Stafford, Senior Vice President

<PAGE>
<TABLE>
-------------------------------------------------------------------------------------------------------
                                PROMISSORY NOTE
-------------------------------------------------------------------------------------------------------
<CAPTION>
  Principal     Loan Date     Maturity     Loan No.    Call  Collateral   Account     Officer  Initials
<S>             <C>          <C>          <C>          <C>   <C>          <C>         <C>      <C>
$6,000,000.00   04-01-1997   04-01-1998   0108143855    513      04                     JS
-------------------------------------------------------------------------------------------------------
References  in the shaded  area are for  Lender's  use only and do not limit the
applicability of this document to any particular loan or item.
-------------------------------------------------------------------------------------------------------
</TABLE>
 Borrower:       Erox Corporation         Lender:       Mid-Peninsula Bank
                 4034 Clipper Court                     c/o Greater Bay Bancorp
                 Fremont, CA 94538                      2860 W. Bayshore
                                                        Palo Alto, CA 94303
================================================================================
Principal Amount: $6,000,000.00                      Date of Note: April 1, 1997
                                Initial Rate: 8.500%


PROMISE TO PAY. Erox Corporation  ("Borrower")  promises to pay to Mid-Peninsula
Bank ("Lender"),  or order, in lawful money of the United States of America, the
principal amount of Six Million & 00/100 Dollars  ($6,000,000.00)  or so much as
may be outstanding,  together with interest on the unpaid outstanding  principal
balance of each  advance.  Interest  shall be  calculated  from the date of each
advance until repayment of each advance.

PAYMENT.  Borrower will pay this loan on demand, or if no demand is made, in one
payment of all  outstanding  principal plus all accrued unpaid interest on April
1, 1998.  In addition,  Borrower  will pay regular  monthly  payments of accrued
unpaid interest beginning May 1, 1997, and all subsequent  interest payments are
due on the same day of each month after that.  Interest on this Note is computed
on a 365/360 simple interest basis; that is, by applying the ratio of the annual
interest rate over a year of 360 days,  multiplied by the outstanding  principal
balance,  multiplied  by the  actual  number of days the  principal  balance  is
outstanding. Borrower will pay Lender at Lender's address shown above or at such
other place as Lender may  designate  in  writing.  Unless  otherwise  agreed or
required by applicable  law,  payments  will be applied first to accrued  unpaid
interest,  then to principal,  and any remaining amount to any unpaid collection
costs and late charges.

VARIABLE INTEREST RATE. The interest rate on this Note is subject to change from
time to time based on changes in an index which is the  Mid-Peninsula  Bank Base
Rate (the  "Index").  The Index is not  necessarily  the lowest rate  charged by
Lender on its loans  and is set by Lender in its sole  discretion.  If the Index
becomes  unavailable  during  the term of this  loan,  Lender  may  designate  a
substitute index after notifying Borrower. Lender will tell Borrower the current
Index rate upon Borrower's  request.  Borrower  understands that Lender may make
loans based on other rates as well. The interest rate change will not occur more
often than each day. The Index currently is 8.250% per annum.  The Interest rate
to be applied to the unpaid principal  balance of this Note will be at a rate of
0.250 percentage  points over the Index,  resulting in an initial rate of 8.500%
per annum. NOTICE: Under no circumstances will the interest rate on this Note be
more than the maximum rate allowed by applicable law.

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

LATE  CHARGE.  If a payment  is 10 days or more late,  Borrower  will be charged
5.000% of the regularly scheduled payment or $10.00, whichever is greater.

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

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

LENDER'S  RIGHTS.  Upon default,  Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest  immediately  due,  without
notice,  and then Borrower will pay that amount.  Upon Borrower's failure to pay
all amounts declared due pursuant to this section, including failure to pay upon
final maturity,  Lender, at its option,  may also, if permitted under applicable
law, increase the variable interest rate on this Note to 5.250 percentage points
over the Index. Lender may hire or pay someone else to help collect this Note if
Borrower does not pay. Borrower also will pay Lender that amount. This includes,
subject  to any  limits  under  applicable  law,  Lender's  attorneys'  fees and
Lender's legal expenses whether or not them is a lawsuit,  including  attorneys'
fees and legal expenses for bankruptcy  proceedings (including efforts to modify
or vacate  any  automatic  stay or  injunction),  appeals,  and any  anticipated
post-judgment  collection  services.  Borrower also will pay any court costs, in
addition to all other sums  provided  by law.  This Note has been  delivered  to
Lender and accepted by Lender In the State of California. If there is a lawsuit,
Borrower  agrees  upon  Lender's  request to submit to the  jurisdiction  of the
courts of Santa  Clara  County,  the  State of  California.  This Note  shall be
governed  by  and  construed  In  accordance  with  the  laws  of the  State  of
California.

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

LINE OF CREDIT.  This Note evidences a revolving line of credit.  Advances under
this Note, as well as directions for payment from  Borrower's  accounts,  may be
requested  orally or in writing by Borrower or by an authorized  person.  Lender
may, but need not,  require that all oral requests be confirmed in writing.  The
following party or parties are authorized to request  advances under the line of
credit until  Lender  receives  from  Borrower at Lender's  address  shown above
written notice of revocation of their authority:  William P. Horgan,  Chairman &
Chief Executive Officer; and Maxine

<PAGE>

04-01-1997                    PROMISSORY NOTE                             Page 2
Loan No 0108143855             (Continued)
================================================================================

C. Harmatta,  Vice President & Chief  Financial  Officer.  Borrower agrees to be
liable for all sums either:  (a) advanced in accordance with the instructions of
an authorized person or (b) credited to any of Borrower's  accounts with Lender.
The unpaid principal balance owing on this Note at any time may be evidenced  by
endorsements  on this Note or by  Lender's  internal  records,  including  daily
computer print-outs.  Lender will have no obligation to advance funds under this
Note if: (a)  Borrower or any  guarantor  is in default  under the terms of this
Note or any agreement that Borrower or any guarantor has with Lender,  including
any agreement made in connection  with the signing of this Note; (b) Borrower or
any guarantor  ceases doing business or is insolvent;  (c) any guarantor  seeks,
claims or  otherwise  attempts  to limit,  modify  or  revoke  such  guarantor's
guarantee  of this  Note or any other  loan with  Lender;  or (d)  Borrower  has
applied  funds  provided  pursuant  to this Note for  purposes  other than those
authorized by Lender.

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

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

BORROWER:

Erox Corporatlon

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

================================================================================
Variable Rate. Line of Credit.      LASER PRO, Reg. U.S. Pat. & T.M. Off., Ver.
                                    3.23 (c) 1997 CFI ProServices, Inc. All 
                                    rights reserved. [CA-D20 EROX1L.LN]

<PAGE>
<TABLE>
-------------------------------------------------------------------------------------------------------
                                 DISBURSEMENT REQUEST AND AUTHORIZATION
-------------------------------------------------------------------------------------------------------
<CAPTION>
  Principal     Loan Date     Maturity     Loan No.    Call  Collateral   Account     Officer  Initials
<S>             <C>          <C>          <C>          <C>   <C>          <C>         <C>      <C>
$6,000,000.00   04-01-1997   04-01-1998   0108143855    513      04                     JS
-------------------------------------------------------------------------------------------------------
References  in the shaded  area are for  Lender's  use only and do not limit the
applicability of this document to any particular loan or item.
-------------------------------------------------------------------------------------------------------
</TABLE>


Borrower:     Erox Corporation            Lender:      Mid-Peninsula Bank
              4034 Clipper Court                       c/o Greater Bay Bancorp
              Fremont, CA 94538                        2860 W. Bayshore
                                                       Palo Alto, CA 94303
================================================================================

LOAN TYPE.  This is a Variable Rate (0.250% over  Mid-Peninsula  Bank Base Rate,
making  an  initial  rate  of  8.500%),  Revolving  Line  of  Credit  Loan  to a
Corporation for $6,000,000.00 due on April 1, 1998.

PRIMARY  PURPOSE  OF LOAN.  The  primary  purpose  of this  loan is for  (please
initial):

[ ]   Personal, Family, or Household Purposes or Personal Investment.

[x]   Business (Including Real Estate Investment).

SPECIFIC  PURPOSE.  The  specific  purpose  of this loan is:  Reaffirmation  and
increase of existing  Revolving  Line of Credit to support  seasonal  buildup in
Accounts Receivable and Inventory.

DISBURSEMENT  INSTRUCTIONS.  Borrower  understands that no loan proceeds will be
disbursed  until  all of  Lender's  conditions  for  making  the loan  have been
satisfied. Please disburse the loan proceeds of $6,000,000.00 as follows:

           Amount paid to Borrower directly:                           $0.00
           Undisbursed Funds:                                  $5,840,000.00
           Amount paid on Borrower's account:                    $160,000.00
           $160,000.00 Payment on Loan # Renew #108143855      -------------

           Note Principal:                                     $6,000,000.00

CHARGES  PAID IN  CASH.  Borrower  has paid or will  pay in cash as  agreed  the
following charges:

            Prepaid Finance Charges Paid In Cash:                 $15,000.00
                $14,000.00 Loan Fees
                $1,000.00 Commitment Fee
                                                                -------------
            Total Charges Paid In Cash:                           $15,000.00

AUTOMATIC  PAYMENTS.  Borrower hereby authorizes Lender  automatically to deduct
from Borrower's  account numbered  108143801 the amount of any loan payment.  If
the funds in the account are insufficient to cover any payment, Lender shall not
be  obligated  to advance  funds to cover the  payment.  At any time and for any
reason, Borrower or Lender may voluntarily terminate Automatic Payments.

FINANCIAL  CONDITION.  BY SIGNING THIS  AUTHORIZATION,  BORROWER  REPRESENTS AND
WARRANTS TO LENDER THAT THE  INFORMATION  PROVIDED ABOVE IS TRUE AND CORRECT AND
THAT THERE HAS BEEN NO MATERIAL ADVERSE CHANGE IN BORROWER'S FINANCIAL CONDITION
AS DISCLOSED  IN  BORROWER'S  MOST RECENT  FINANCIAL  STATEMENT TO LENDER.  THIS
AUTHORIZATION IS DATED APRIL 1, 1997.

BORROWER:

Erox Corporatlon

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

================================================================================
Variable Rate. Line of Credit.      LASER PRO, Reg. U.S. Pat. & T.M. Off., Ver. 
                                    3.23 (c) 1997 CFI ProServices, Inc. 
                                    All rights reserved. [CA-120 EROX1L. LN]

<PAGE>
<TABLE>
-------------------------------------------------------------------------------------------------------
                                     AGREEMENT TO PROVIDE INSURANCE
-------------------------------------------------------------------------------------------------------
<CAPTION>
  Principal     Loan Date     Maturity     Loan No.    Call  Collateral   Account     Officer  Initials
<S>             <C>          <C>          <C>          <C>   <C>          <C>         <C>      <C>
$6,000,000.00   04-01-1997   04-01-1998   0108143855    513      04                     JS
-------------------------------------------------------------------------------------------------------
References  in the shaded  area are for  Lender's  use only and do not limit the
applicability of this document to any particular loan or item.
-------------------------------------------------------------------------------------------------------
</TABLE>

 Borrower:    Erox Corporatlon              Lender:    Mid-Peninsula Bank
              4034 Clipper Court                       c/o Greater Bay Bancorp
              Fremont, CA 94538                        2860 W. Bayshore
                                                       Palo Alto, CA 94303

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

INSURANCE REQUIREMENTS.  Erox Corporation ("Grantor") understands that insurance
coverage is required in connection with the extending of a loan or the providing
of other financial  accommodations to Grantor by Lender.  These requirements are
set forth in the security  documents.  The following minimum insurance coverages
must be provided on the following described collateral (the "Collateral"):

Collateral: All Inventory and Equipment.
            Type. All risks, including fire, theft and liability. 
            Amount. Full insurable value. 
            Basis. Replacement value.
            Endorsements.  Lender's loss payable  clause with  stipulation  that
            coverage  will not be cancelled or  diminished  without a minimum of
            ten (10) days' prior written notice to Lender.

INSURANCE  COMPANY.  Grantor may obtain  insurance  from any  insurance  company
Grantor may choose that is reasonably acceptable to Lender.  Grantor understands
that credit may not be denied solely because insurance was not purchased through
Lender.

FAILURE TO PROVIDE INSURANCE.  Grantor agrees to deliver to Lender, fifteen (15)
days from the date of this  Agreement,  evidence of the  required  insurance  as
provided  above,  with an effective  date of April 1, 1997, or earlier.  Grantor
acknowledges and agrees that if Grantor fails to provide any required  insurance
or fails to continue  such  insurance  in force,  Lender may do so at  Grantor's
expense as provided in the applicable  security  document.  The cost of any such
insurance, at the option of Lender, shall be payable on demand or shall be added
to the indebtedness as provided in the security document.  GRANTOR  ACKNOWLEDGES
THAT IF LENDER SO  PURCHASES  ANY SUCH  INSURANCE,  THE  INSURANCE  WILL PROVIDE
LIMITED PROTECTION AGAINST PHYSICAL DAMAGE TO THE COLLATERAL,  UP TO THE BALANCE
OF THE LOAN; HOWEVER,  GRANTOR'S EQUITY IN THE COLLATERAL MAY NOT BE INSURED. IN
ADDITION,  THE INSURANCE MAY NOT PROVIDE ANY PUBLIC LIABILITY OR PROPERTY DAMAGE
INDEMNIFICATION   AND  MAY  NOT  MEET   THE   REQUIREMENTS   OF  ANY   FINANCIAL
RESPONSIBILITY LAWS.

AUTHORIZATION.  For purposes of insurance  coverage on the  Collateral,  Grantor
authorizes  Lender to provide to any person  (including  any insurance  agent or
company)  all  information  Lender  deems  appropriate,  whether  regarding  the
Collateral,  the  loan or  other  financial  accommodations,  or  both. 

GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS AGREEMENT TO PROVIDE
INSURANCE AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED APRIL 1, 1997.

GRANTOR:

Erox Corporatlon

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

--------------------------------------------------------------------------------
                               FOR LENDER USE ONLY
                             INSURANCE VERIFICATION

DATE:___________________________________________    PHONE: ____________________
AGENT'S NAME: _________________________________________________________________
INSURANCE COMPANY: ____________________________________________________________
POLICY NUMBER: ________________________________________________________________
EFFECTIVE DATES: ______________________________________________________________
COMMENTS: _____________________________________________________________________
--------------------------------------------------------------------------------
LASER PRO, Reg. U.S. Pat. & T.M. Off., Ver. 3.23 (c) 1997 CFI  ProServices, Inc.
All rights reserved. [CA-I10 EROXlL. LN]