AMENDMENT AND WAIVER
                                       to
                                CREDIT AGREEMENT


          AMENDMENT  AND  WAIVER  dated  as of  June  4,  1998  between  V  BAND
CORPORATION,  a New York  corporation  (the  "Borrower")  and  NATIONAL  BANK OF
CANADA, NEW YORK BRANCH (the "Bank").

                                    RECITALS

          A. The Borrower and the Bank are party to the Credit  Agreement  dated
as of May 28, 1997 (as heretofore amended, the "Credit Agreement"),  pursuant to
which the Bank agreed to extend  credit to the Borrower in the form of revolving
loans and  letters of credit upon the terms and  subject to the  conditions  set
forth in the Credit Agreement.

          B. The  Borrower  has advised  the Bank that it was not in  compliance
with the financial covenants set forth in Section 7.1 of the Credit Agreement on
April 30, 1998 (the "Financial Covenant  Violations") and has requested that the
Bank waive the resulting Events of Default.

          C. The Borrower has requested  that the Bank permit it to borrow under
the Credit  Agreement  overadvances of up to $400,000 in the aggregate and allow
such overadvances to remain outstanding through August 17, 1998.

          D. The Bank is willing to waive the Events of Default  resulting  from
the Financial Covenant  Violations and to permit such  overadvances,  subject to
the terms and conditions set forth below.

          ACCORDINGLY,  in  consideration of the premises and for other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged, the parties hereto agree as follows:

          1.  Definitions.  Capitalized  terms  used in this  Amendment,  unless
otherwise  defined,  shall  have  the  meanings  given  to  them  in the  Credit
Agreement,  as amended hereby.  In addition,  the following terms shall have the
following meanings:

          "Credit  Agreement"  shall  have the  meaning  specified  in Recital A
           hereto.

          "Amendment Date" shall have the meaning specified in Section 7 hereof.

          2. Amendments to Credit Agreement.
<PAGE>
          (a) The definition of the term  "Borrowing  Base" set forth in Section
1.1 of the Credit Agreement (Defined Terms) is hereby amended in its entirety to
read as follows:

          "Borrowing Base": at any time, an amount equal to the sum of:

                  (i) up to the A/R Advance Rate of the aggregate  amount of the
                  Eligible Accounts at such time; plus

                  (ii) up to the  lesser of (x) 40% of the  aggregate  value (at
                  the  lower of cost or market  value) at such time of  Eligible
                  Inventory  or (y) the  Inventory  Cap in effect at such  time;
                  plus

                  (iii) up to the Permitted Overadvance Amount.

          For purposes of this definition,  (a) the terms "A/R Advance Rate" and
          "Inventory  Cap" mean,  during each period  specified  below,  the A/R
          Advance Rate and Inventory Cap set forth below opposite such period:

<TABLE>
<CAPTION>
                      From                        To                 A/R Advance Rate           Inventory Cap
                      ----                        --                 ----------------           -------------
<S>                                         <C>                            <C>                     <C>     
                  Closing Date              February 8, 1998               85.00%                  $750,000

                  February 9, 1998          March 8, 1998                  82.50%                   740,000

                  March 9, 1998             April 5, 1998                  80.00%                   730,000
 
                  April 6, 1998             May 3, 1998                    77.50%                   720,000

                  May 4, 1998               May 30, 1998                   75.00%                   710,000

                  June 1, 1998              June 28, 1998                  72.50%                   700,000

                  June 29, 1998             and thereafter                70.00%                    690,000
</TABLE>

          and (b) the term "Permitted  Overadvance  Amount" means (x) during the
          period  commencing on June 4, 1998 and ending on August 17, 1998, Four
          Hundred Thousand Dollars ($400,000) and (y) thereafter, $0.00.

          (b) Section  7.1  (Financial  Covenants)  of the Credit  Agreement  is
hereby amended in its entirety to read as follows:

          7.1 Financial Covenants. The Borrower hereby covenants and agrees that
          so long as the  Commitment  remains  in effect or any Letter of Credit
          remains  outstanding  and until the payment in full of the Obligations
          and  the  complete   performance  of  all  of  the  Borrower's   other
          obligations  hereunder and under the other Loan Documents,  unless the
          Bank shall otherwise consent in writing, the Borrower shall not:

<PAGE>
          (a) Permit its  Consolidated  EBITDA for any fiscal quarter  specified
below to be less than the amount set forth below for such fiscal quarter:
<TABLE>
<CAPTION>
           Fiscal Year Ending      First Quarter         Second Quarter         Third Quarter         Fourth Quarter
           ------------------      -------------         --------------         -------------         --------------
<S>                               <C>                       <C>                   <C>                    <C>     
           October 31, 1997       Not Applicable            $228,000               $225,000               $456,000

           October 31, 1998       ($2,000,000)              ($50,000)             ($500,000)             ($200,000)

           October 31, 1999       $185,000                  $438,000               $438,000               $690,000
</TABLE>

          (b) Permit its Leverage Ratio for any fiscal quarter  specified  below
to exceed the ratio set forth below for such fiscal quarter:
<TABLE>
<CAPTION>
           Fiscal Year Ending     First Quarter         Second Quarter          Third Quarter         Fourth Quarter
           ------------------     -------------         --------------          -------------         --------------
<S>                                 <C>                    <C>                    <C>                    <C>   
           October 31, 1997         0.60:1.00              0.60:1.00              0.60:1.00              0.60:1.00

           October 31, 1998         2.75:1.00              2.75:1.00              5.00:1.00              5.00:1.00

           October 31, 1999         0.45:1.00              0.45:1.00              0.45:1.00              0.45:1.00
</TABLE>

          (c) Permit its  Consolidated  Tangible  Net Worth as at the end of any
fiscal quarter  specified below to  be less than the amount set forth  below for
such fiscal quarter:
<TABLE>
<CAPTION>
           Fiscal Year Ending     First Quarter         Second Quarter          Third Quarter         Fourth Quarter
           ------------------     -------------         --------------          -------------         --------------
<S>                                <C>                    <C>                    <C>                    <C>        
           October 31, 1997        $11,655,000            $11,868,000            $12,053,000            $12,469,000

           October 31, 1998        $ 3,500,000            $ 3,500,000            $ 1,500,000            $ 1,500,000

           October 31, 1999        $13,693,000            $14,096,000            $14,449,000            $15,157,000
</TABLE>

          (d) Permit its  Interest  Coverage  Ratio to be less than 5.00 to 1.00
for any Calculation Period ending after October 31, 1998.

          (e)  Permit its  Current  Ratio to be (i) less than 2.50 to 1.00 as at
the end of any fiscal quarter of its fiscal year ending  October 31, 1997,  (ii)
less than 1.00 to 1.00 as at the end of any fiscal  quarter  of its fiscal  year
ending  October 31,  1998,  or (iii) less than 3.00 to 1.00 as at the end of any
fiscal quarter ending thereafter.

          (c) All references in the Credit Agreement to "this Agreement" or such
words as  "hereof",  "herein",  "hereto"  or  "hereunder"  shall be deemed to be
references to the Credit Agreement as amended by this Amendment.
<PAGE>
          3 Reaffirmation of Obligations.  The Borrower hereby  acknowledges and
confirms to the Bank (a) that the  amendments  and  modifications  to the Credit
Agreement  made  pursuant  hereto  shall  not  affect  or  impair in any way the
validity,  binding  effect or  enforceability  of any Loan Document to which the
Borrower  is a party or of any liens or security  interests  granted to the Bank
thereunder,  or the  Borrower's  obligations  or the Bank's  rights and remedies
thereunder and (b) that the Loan Documents to which the Borrower is a party, any
liens and security interests granted to the Bank thereunder,  and the Borrower's
obligations and the Bank's rights and remedies thereunder shall continue in full
force and effect, notwithstanding such amendments and modifications.

          4 Waivers. The Bank hereby waives the Events of Default resulting from
the  Financial  Covenant  Violations.  The  foregoing  waiver  shall be  limited
precisely  as  drafted,  shall be  effective  only  for the  dates  and  periods
specified  therein and for no subsequent date or period,  and shall not amend or
modify,  or  constitute  a waiver of, any other term or  provision of the Credit
Agreement or any other Loan Document,  all of which shall continue in full force
and effect.

          5 Amendment  Fee. As  consideration  for the  amendment  of the Credit
Agreement  as provided  herein and the waivers set forth  herein,  the  Borrower
shall  pay to the Bank on or before  the  Amendment  Date a fee (the  "Amendment
Fee") in the amount of $15,000,  which fee shall be  nonrefundable  and shall be
deemed earned when paid.

          6 Representations  and Warranties.  The Borrower hereby represents and
warrants  to the Bank that (a) it has full power and  authority  to execute  and
deliver this Amendment,  (b) this Amendment, and the Credit Agreement as amended
hereby,  constitute  the legal,  valid and binding  obligations of the Borrower,
enforceable  against the Borrower in accordance with their respective terms, (c)
the Borrower's execution and delivery of this Amendment,  and its performance of
this  Amendment and of the Credit  Agreement as amended  hereby,  have been duly
authorized  by all  requisite  action of the  Borrower  and do not  require  the
approval of its shareholders,  (d) the execution and delivery by the Borrower of
this Amendment and the  performance  by the Borrower of the Credit  Agreement as
amended  hereby do not and will not (i) violate the  Borrower's  Certificate  of
Incorporation  or By-Laws or any law or  regulation  applicable to the Borrower,
(ii) violate or constitute  (with due notice or lapse of time or both) a default
under  any  indenture,  agreement,  license  or other  instrument  to which  the
Borrower  is a party or by which the  Borrower or any of its  properties  may be
bound  or  affected,   (iii)  violate  any  order  of  any  court,  tribunal  or
governmental agency binding upon the Borrower or its properties,  (iv) result in
the  creation  or  imposition  of any  Lien of any  nature  whatsoever  upon any
properties  or assets of the  Borrower,  or (v) require any license,  consent or
approval of any governmental  agency or regulatory  authority or any other third
party.

          7  Conditions  Precedent.  This  Amendment  and  Waiver  shall  become
effective  on the date (the  "Amendment  Date") on which  each of the  following
conditions precedent shall have been satisfied or waived:

          (a) The  Borrower  and the Bank  shall  have  executed  and  delivered
counterpart originals or facsimiles hereof;

          (b) The Bank shall have received payment in full of the Amendment Fee;

          (c) The Borrower  shall have  executed  and  delivered to the Bank UCC
financing  statements in form, substance and number sufficient for filing in all
offices specified by the Bank; and
<PAGE>
          (d) All legal,  documentary  and other matters in connection with this
Amendment and the transactions  contemplated hereby shall be satisfactory to the
Bank and its counsel.

          The  amendments to the Credit  Agreement set forth in Section 2 hereof
and  the  Waiver  set  forth  in  Section  5  hereof  shall   become   effective
automatically on the Amendment Date,  without the need for any further action by
any party hereto.

          8 Miscellaneous.

          (a) THIS  AMENDMENT  AND WAIVER SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO ITS CONFLICT OF LAWS RULES  (OTHER THAN SECTION  5-1401 OF THE GENERAL
OBLIGATIONS LAW).

          (b) Except as expressly  amended  hereby,  all terms and conditions of
the Credit  Agreement and the other Loan  Documents,  and all rights of the Bank
and  obligations  of the Borrower  thereunder  and under all related  documents,
shall remain in full force and effect.  Without  limiting the  generality of the
foregoing, nothing herein contained shall be deemed to increase the Commitment.

          (c) The Borrower hereby agrees to pay on demand all costs and expenses
(including  without  limitation  the  reasonable  fees and  expenses  of outside
counsel to the Bank)  incurred by the Bank in connection  with the  negotiation,
preparation, execution and delivery of this Amendment and Waiver and all related
documents, whether or not the transactions contemplated hereby are consummated.

          (d) This  Amendment  and Waiver may be  executed by one or more of the
parties  hereto  on any  number  of  separate  counterparts,  and  all  of  said
counterparts  taken  together  shall be  deemed to  constitute  one and the same
instrument.  Delivery of an executed signature page to this Amendment and Waiver
by facsimile transmission shall be as effective as delivery of a manually signed
counterpart hereof.



                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;
                             SIGNATURE PAGE FOLLOWS]


<PAGE>


                    [SIGNATURE PAGE TO AMENDMENT AND WAIVER]

          IN WITNESS WHEREOF,  the parties hereto have caused this Amendment and
Waiver to be duly executed by their duly  authorized  officers as of the day and
year first above written.


                                    V BAND CORPORATION



                                    By:  /s/ Robert O. Riiska
                                         --------------------
                                          Name:Robert O. Riiska
                                          Title:Chief Financial Officer

                                    NATIONAL BANK OF CANADA, NEW YORK BRANCH



                                    By:  /s/ Gaetan R.Frosina
                                         --------------------
                                          Name:Gaetan R. Frosina
                                          Title:Vice President


                                    By:  /s/ J. Michael Smith
                                         --------------------
                                          Name:J. Michael Smith
                                          Title:Vice President