<TABLE>

                            BUSINESS LOAN AGREEMENT
<CAPTION>
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Principal     Loan Date     Maturity   Loan No    Call   Collateral  Account    Officer     Initials
----------------------------------------------------------------------------------------------------
<S>           <C>          <C>        <C>          <C>      <C>      <C>          <C>          <C>        
$3,000,000    04-01-1998   04-01-1999 0108143855   CL 10    04                    JS           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 Road
                                        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 March 27, 1998, 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.

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

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

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

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

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

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

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

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

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

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

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

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

         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

<PAGE>
04-01-1998               BUSINESS LOAN AGREEMENT                          Page 2
Loan No 0108143855            (Continued)
================================================================================

         Interest.

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

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

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

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

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

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
<PAGE>

04-01-1998                 BUSINESS LOAN AGREEMENT                        Page 3
Loan No 0108143855              (Continued)
================================================================================

         of  this  section  of  the  Agreement,   including  the  obligation  to
         indemnify,  shall  survive  the  payment  of the  Indebtedness  and the
         termination  or expiration of this  Agreement and shall not be affected
         by  Lender's  acquisition  of any  interest  in any of the  properties,
         whether  by  foreclosure  or  otherwise. 

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

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

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

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

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

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

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

         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.  

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

               Tangible Net Worth.  Maintain a minimum Tangible Net Worth of not
               less  than   $3,200,000.00.

               Net  Worth  Ratio.  Maintain  a ratio  of  Total  Liabilities  to
               Tangible  Net Worth of less  than 1.25 to 1.00.

               Other Ratio.  Maintain a ratio of Minimum  Quick Ratio of 0.90 to
               1.00.   Except  as  provided  above,  all  computations  made  to
               determine  compliance  with the  requirements  contained  in this
               paragraph  shall be made in accordance  with  generally  accepted
               accounting  principles,   applied  on  a  consistent  basis,  and
               certified by Borrower as being true and correct.

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

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

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

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

         Taxes,  Charges  and  Liens.  Pay  and  discharge  when  due all of its
         indebtedness  and  obligations,   including   without   limitation  all
         assessments,  taxes,  governmental charges,  levies and liens, of every
         kind and nature,  imposed upon Borrower or its properties,  income,  or
         profits,  prior to the date on which  penalties  would attach,  and all
         lawful claims that,  if unpaid,  might become a lien or charge upon any
         of  Borrower's  properties,   income,  or  profits.  Provided  however,
         Borrower will not be required to pay and discharge any such assessment,
         tax,  charge,  levy,  lien or claim so



<PAGE>
04-01-1998               BUSINESS LOAN AGREEMENT                          Page 4
Loan No 0108143855            (Continued)
================================================================================

         long as (a) the  legality of the same shall be  contested in good faith
         by appropriate proceedings,  and (b) Borrower shall have established on
         its books adequate reserves with respect to such contested  assessment,
         tax, charge, levy, lien, or claim in accordance with generally accepted
         accounting practices.  Borrower, upon demand of Lender, will furnish to
         Lender evidence of payment of the assessments,  taxes, charges, levies,
         liens  and  claims  and will  authorize  the  appropriate  governmental
         official  to deliver to Lender at any time a written  statement  of any
         assessments,   taxes,   charges,   levies,  liens  and  claims  against
         Borrower's properties, income, or profits.

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

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

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

         Compliance  Certificate.  Unless  waived in writing by Lender,  provide
         Lender at least  annually  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.

ADVANCES  AGAINST ACCOUNTS  RECEIVABLE/INVENTORY.  Lender shall make advances to
Borrower,  at  Borrower's  request,  equal to a maximum of seventy  five percent
(75%) of Eligible Accounts Receivable. The definition of Accounts Receivable and
Eligible  Accounts  Receivable is described on Exhibit "A" consisting of two (2)
pages which is attached  hereto and made a part of this Business Loan  Agreement
by this  reference.  The maximum line  borrowing  will be limited by the advance
rates  specified  above,  based on the trading  assets levels at the end of each
monthly period.

ADDITIONAL FINANCIAL  REPORTING.  Borrower will provide to Lender the following:
Monthly Accounts  Receivable Agings,  Accounts Payable Agings and Borrowing Base
Certificate to be received within 20 days of month end.

FINANCIAL  REPORTING.  Borrower  will  provide to Lender the  following:  
1.) Company  prepared  Financial  Statements  including  Balance  Sheet,  Income
Statement, and Statement of Cash flows on a monthly basis.
2.)  Audited  financial  statement,  bearing  an  unqualified  opinion,  will be
provided  within 120 days of fiscal year end, by way of  submission  of the 10-K
filing.

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

<PAGE>

04-01-1998                BUSINESS LOAN AGREEMENT                         Page 5
Loan No 0108143855             (Continued)
================================================================================

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

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

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

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

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

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

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

         Change In  Ownership.  Any change in  ownership  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  California.  This
         Agreement  shall be governed by and  construed in  accordance  with the
         laws of the State of California.

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

         Consent to Loan Participation. Borrower agrees and consents to Lender's
         sale or transfer,  whether now or later,  of one or more  participation
         interests in the Loans to one or more  purchasers,  whether  related or
         unrelated  to  Lender.  Lender  may  provide,  without  any  limitation
         whatsoever, to any one or more purchasers, or potential purchasers, any
         information  or knowledge  Lender may have about  Borrower or about any
         other  matter  relating to the Loan,  and  Borrower  hereby  waives any
         rights to privacy it may have with  respect to such  matters.  Borrower
         additionally  waives  any and  all  notices  of  sale of  participation
         interests,   as  well  as  all  notices  of  any   repurchase  of  such
         participation  interests.  Borrower also agrees that the  purchasers of
         any such  participation  interests  will be  considered as the absolute
         owners of such  interests  in the  Loans  and will have all the  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  (unless  otherwise
         required by law),  and shall be effective  when  actually  delivered or
         when  deposited  with a  nationally  recognized  overnight  courier  or
         deposited in the United
 
<PAGE>
04-0l-1998               BUSINESS LOAN AGREEMENT                          Page 6
Loan No 0108143855            (Continued)
================================================================================

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

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

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

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

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

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

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

BORROWER  ACKNOWLEDGES  HAVING READ ALL THE  PROVISIONS  OF THIS  BUSINESS  LOAN
AGREEMENT, AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF APRIL
1, 1998.

BORROWER:

EROX Corporation

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

LENDER:

Mid-Peninsula Bank

By: /s/ J. H. Stafford
   -----------------------------------------------------
   Authorized Officer J. H. Stafford, Sr. Vice President 

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

<PAGE>

                                  EXHIBITS "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"

Page 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;

         l.  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, 1998               Borrower:

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

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


                                   Lender: Mid-Peninsula Bank

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