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                                                                   EXHIBIT 10.46


                      [UNION BANK OF CALIFORNIA LETTERHEAD]

                           AMENDMENT AND WAIVER LETTER


                                                  UNION BANK OF CALIFORNIA
                                                  500 S. Main Street, Suite 200
                                                  Orange CA 92868


March 30, 1999

Mr. William Healey, President
SMARTFLEX SYSTEMS, INC.
14312 Franklin Avenue
Tustin, CA 92680-7028

Re:     THIRD AMENDMENT AND WAIVER ("Amendment" or "Waiver") to the Amended and
        Restated Loan Agreement dated September 26, 1997 (this Amendment and the
        Amended and Restated Loan Agreement together called the "Agreement")

Dear Mr. Healey:

In reference to the Agreement defined above between UNION BANK OF CALIFORNIA,
N.A. ("BANK") AND SMARTFLEX SYSTEMS, INC. ("Borrower"), Bank and Borrower desire
to amend the Agreement and waive certain breaches of the Agreement. Capitalized
terms used herein which are not otherwise defined shall have the meanings given
them in the Agreement.

        1.     Amendments to the Agreement:

               (a)    Section 4.6, is hereby amended in its entirety to read as
                      follows:

                      "TANGIBLE NET WORTH. From December 31, 1998, Borrower will
                      at all times maintain Tangible Net Worth of not less than
                      THIRTY MILLION DOLLARS ($30,000,000). Thereafter, Borrower
                      will at all times maintain a minimum Tangible Net Worth
                      that increases from said amount as of the end of each of
                      Borrower's fiscal years by seventy-five percent (75%) of
                      Borrower's net profit after taxes plus one hundred percent
                      (100%) of any new equity capital additions plus one
                      hundred percent (100%) of the cumulative amortization of
                      goodwill for fiscal periods ending subsequent to December
                      31, 1998. "Tangible Net Worth" shall mean net worth
                      increased by indebtedness of Borrower subordinated to Bank
                      and decreased by patents, licenses, trademarks, trade
                      names, goodwill and other similar intangible assets,
                      organizational expenses, and monies due from affiliates
                      (including officers, shareholders and directors)."

               (b)    Section 4.7, is hereby amended in its entirety to read as
                      follows:


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Smartflex Systems, Inc.
Third Amendment to Amended and Restated Loan Agreement
March 30, 1999
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                      "DEBT TO TANGIBLE NET WORTH. Borrower will at all times
                      maintain a ratio of total liabilities to tangible net
                      worth of not greater than 1.75 to 1.00."

               (c)    Section 4.8, is hereby amended in its entirety to read as
                      follows:

                      "PROFIT FROM OPERATIONS. Borrower will maintain a net
                      profit from operations, as defined by generally accepted
                      accounting principles, of any positive amount for each
                      fiscal year; provided, however, restructuring charges in
                      amounts not to exceed Four Million Five Hundred Thousand
                      Dollars ($4,500,000) shall be excluded from the
                      calculation for the fiscal year ending on or about
                      December 31, 1999."

               (d)    Section 4.9 shall be deleted in its entirety and replaced
                      with the following:

                      "FIXED CHARGE COVERAGE. Borrower will maintain a ratio of
                      Cash Flow to Fixed Charges of not less than 1.85 to 1.00.
                      Compliance with this subsection shall be measured at the
                      end of each fiscal quarter. "Cash Flow" shall mean
                      earnings before interest, taxes, depreciation and
                      amortization ("EBITDA") to which rent expense and lease
                      expense are added for the twelve (12) months immediately
                      preceding the date of calculation. "Fixed Charges" shall
                      mean that portion of long term debt and capital leases
                      coming due within twelve (12) months to which taxes, rent,
                      lease expense and interest expense are added for the
                      twelve (12) month period immediately preceding the date of
                      calculation."

               (e)    Section 4.10 shall be amended by substituting (1) the
                      ratio ".9:1.0" for the ratio "1.25:1.0" and (2) the date
                      "December 31, 1999" for the date "6/30/98.

               (f)    Section 5.3 is hereby amended by substituting the amount
                      "Three Million Dollars ($3,000,000)" for the amount "Ten
                      Million Dollars ($ 10,000,000)" appearing in the last line
                      thereof.

               (g)    Section 5.6 is hereby amended in its entirety to read as
                      follows:

                      "LOSSES. Borrower will not incur 2 or more consecutive
                      quarterly net losses in any fiscal year subsequent to June
                      30, 1999."

               (h)    Section 5.10 is hereby added in its entirety as follows:

                      "CAPITAL EXPENDITURES AND LEASE OBLIGATIONS. Borrower will
                      not acquire by purchase, nor become obligated as a lessee
                      under capital leases or operating leases for obtaining the
                      use of, property, plant and equipment 




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Smartflex Systems, Inc.
Third Amendment to Amended and Restated Loan Agreement
March 30, 1999
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                      whose cost exceeds Twelve Million Dollars ($12,000,000)
                      for the two (2) year period ending December 31, 2000.

        2.     Waivers to the Agreement:

               (a)    Bank hereby provides a waiver of Borrower's breach of
                      Section 1.3 of the Agreement.

                             "The proceeds of the Term Loan I shall be used to
                             purchase real property.

               (b)    Borrower has advised Bank of its purchase of certain
                      assets and assumption of certain obligations of Tanon
                      Manufacturing, Inc. ("Tanon"), a wholly owned subsidiary
                      of EA Industries on or about February 2, 1999 for total
                      consideration of approximately $15,000,000 (the
                      "Transaction"). Borrower acknowledges that the Transaction
                      constitutes Events of Default under Section 5.3 of the
                      Loan Agreement (which prohibits acquisitions which are
                      consummated, in whole or in part, with Loans from Bank,
                      and which exceed Ten Million Dollars ($10,000,000) per
                      transaction), and Section 5.5 of the Loan Agreement (which
                      prohibits the purchase of debt or equity in another
                      entity), unless Bank agrees to waive such Events of
                      Default as provided for in this Amendment.

                             Bank's agreement to waive the aforementioned Events
                             of Default is hereby made subject to the following
                             conditions:

                             (1)    On or before April 15, 1999, Borrower shall
                                    provide a copy of the definitive purchase
                                    agreement evidencing the Transaction and
                                    executed by the parties thereto.

In consideration for the Amendment and Waiver, Borrower shall pay to Bank a fee
of Thirty Five Thousand Dollars ($35,000) concurrent with the execution and
return of the acknowledgement copy specified below.

Except as specifically amended hereby, the Agreement shall remain in full force
and effect and is hereby ratified and confirmed. This Third Amendment and Waiver
shall not be a waiver of any existing or future default or breach of a condition
or covenant unless specified herein.



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Smartflex Systems, Inc.
Third Amendment to Amended and Restated Loan Agreement
March 30, 1999
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This Third Amendment and Waiver shall become effective when Bank shall have
received the acknowledgment copy of this Third Amendment and Waiver executed by
Borrower.

Very truly yours,

UNION BANK OF CALIFORNIA, N.A.

By  //s//  Robert Thomas                   AGREED AND ACCEPTED TO THIS 31ST 
   -------------------------------------   DAY OF MARCH, 1999
           Robert Thomas
           Vice President                  SMARTLFEX SYSTEMS, INC.


                                           By:   //s//  William L. Healey
                                               ---------------------------------
                                                        William Healey
                                                        Title:  President

By: //s//  Jim Heim
    ------------------------------------
           Jim Heim
           Vice President