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                                                                   EXHIBIT 10.26

                           LOAN MODIFICATION AGREEMENT


      This Loan Modification Agreement ("this Agreement") is made as of October
9, 1997 between Augment Systems, Inc., a Delaware corporation (the "Borrower")
and Fleet National Bank (the "Bank"). For good and valuable consideration,
receipt and sufficiency of which are hereby acknowledged, the Borrower and the
Bank act and agree as follows:

      1. Reference is made to: (i) that certain letter agreement dated August 4,
1997 (the "Letter Agreement") between the Borrower and the Bank; (ii) that
certain $3,000,000 face principal amount promissory note dated August 4, 1997
(the "Revolving Note") made by the Borrower and payable to the order of the
Bank; (iii) that certain Inventory, Accounts Receivable and Intangibles Security
Agreement dated August 4, 1997 (the "IAR Security Agreement") given by the
Borrower to the Bank; (iv) that certain Supplementary Security Agreement -
Security Interest in Goods and Chattels dated August 4, 1997 (the "Supplementary
Security Agreement") given by the Borrower to the Bank; and (v) that certain
$750,000 original principal amount promissory note of even date herewith (the
"Bridge Note") made by the Borrower and payable to the order of the Bank. The
Letter Agreement, the IAR Security Agreement, the Supplementary Security
Agreement and Bridge Note are hereinafter collectively referred to as the
"Financing Documents".

      2. The purpose of this Agreement is to provide for the suspension of the
revolving credit facility established by the Letter Agreement during the period
(the "Bridge Loan Period") commencing at the date hereof and ending on the
earlier of (i) the close of business on December 31, 1997, or (ii) the
satisfaction of both of the Resumption Conditions (defined below). During the
Bridge Loan Period, subject to the terms and conditions of the Letter Agreement
(as amended hereby), a $750,000 loan (the "Bridge Loan") will replace said
revolving credit facility. The Bridge Loan is being advanced in full at the date
hereof. If at any time on or before December 31, 1997 the Borrower raises
additional equity capital and satisfies both of the Resumption Conditions, the
revolving credit facility will be reinstated and all of the amendments set forth
in Sections 3, 5 and 6 below will be of no further force or effect; provided,
however, that, even after such reinstatement, (1) Section 3.8 of the Letter
Agreement will be deemed amended to provide that the Borrower's Capital Base (as
defined in the Letter Agreement) will at all times be at least $5,000,000, and
(2) the amendments to the Letter Agreement made in Paragraphs 3i and 3n below
will remain in effect. If the Borrower fails to satisfy both Resumption
Conditions on or prior to December 31, 1997, then the Borrower will have no
further right to obtain any loan or letter of credit under the Letter Agreement
and the Bridge Loan (including all interest thereon to the date of payment) will
become due and payable in full at the close of business on December 31, 1997. As
used herein, the "Resumption Conditions" are: (1) the repayment in full by the
Borrower of all principal of and interest on the Bridge Loan and (2) the
Borrower raising additional equity capital so that, after giving effect to such
repayment of the Bridge Loan, the Borrower's Capital Base is not less than
$5,000,000.

      3. The Letter Agreement is hereby amended, effective during, but (except
with respect to Paragraphs 3i and 3n below) only during the Bridge Loan Period,
as follows:
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      a. By deleting in its entirety clause (i) of Section 1.1 of the Letter
Agreement and by substituting in its stead the following:

            "(i) that certain $750,000 face principal amount promissory note
            (the `Bridge Note') dated October 9, 1997 issued by the Borrower and
            payable to the order of the Bank,"

      b. By deleting in their entireties Sections 1.2 and 1.3 of the Letter
Agreement and by substituting in their stead the following:

            "1.2. Bridge Loan; Bridge Note. The Bank is this day making a loan
            (the `Bridge Loan') to the Borrower in the original principal amount
            of $750,000. The Bridge Loan is evidenced by the Bridge Note and
            interest on the Bridge Loan will be payable at the times and at the
            rate provided for in the Bridge Note. Overdue principal of the
            Bridge Loan and, to the extent permitted by law, overdue interest
            shall bear interest at a fluctuating rate per annum which at all
            times shall be equal to the sum of (i) four (4%) percent per annum
            plus (ii) the per annum rate otherwise payable under the Bridge Note
            (but in no event in excess of the maximum rate from time to time
            permitted by applicable law), compounded monthly and payable on
            demand. The Borrower hereby irrevocably authorizes the Bank to make
            or cause to be made, on a schedule attached to the Bridge Note or on
            the books of the Bank, at or following the time of receiving any
            payment of principal, an appropriate notation reflecting such
            transaction and the then aggregate unpaid principal balance of the
            Bridge Loan. The amount so noted shall constitute presumptive
            evidence as to the amount owed by the Borrower with respect to
            principal of the Bridge Loan. Failure of the Bank to make any such
            notation shall not, however, affect any obligation of the Borrower
            or any right of the Bank hereunder or under the Bridge Note. All
            payments by the Borrower hereunder and/or in respect of the Bridge
            Note shall be made net of any impositions or taxes and without
            deduction, set-off or counterclaim, notwithstanding any claim which
            the Borrower may now or at any time hereafter have against the Bank.
            All payments of interest, principal and any other sum payable
            hereunder and/or under the Bridge Note shall be made to the Bank, in
            lawful money of the United States in immediately available funds, at
            its offices at 75 State Street, Boston, MA 02109 or to such other
            address as the Bank may from time to time direct. All payments
            received by the Bank after 2:00 p.m. on any day shall be deemed
            received as of the next succeeding Business Day. All monies received
            by the Bank shall be applied first to fees, charges, costs and
            expenses payable to the Bank under this letter agreement, the Bridge
            Note and/or any of the other Loan Documents, next to interest then
            accrued on account of the Bridge Loan and only thereafter to
            principal of the Bridge Loan. All fees and interest payable
            hereunder and/or under the Bridge Note will be calculated on the
            basis of a 360-day year for the actual number of days elapsed.


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            1.3. Principal Repayment. The Borrower shall repay in full the
            Bridge Loan and all interest accrued thereon upon the first to occur
            of (i) February 28, 1998 or (ii) an acceleration under ss.5.2(a)
            following an Event of Default. The Borrower may repay, at any time,
            without penalty or premium, the whole or any portion of the Bridge
            Loan. Any amounts paid or prepaid with respect to principal of the
            Bridge Loan will not be available for reborrowing."

      c. By providing that, in the Letter Agreement generally, (i) all
references to a "Revolving Loan" or to the "Revolving Loans" will be deemed to
refer to the Bridge Loan and (ii) all references to the "Revolving Note" will be
deemed to refer to the Bridge Note.

      d. By deleting in its entirety the second sentence of the first paragraph
of Section 1.4 of the Letter Agreement and by substituting in its stead the
following:

            "The proceeds of the Bridge Loan will be used by the
            Borrower solely for working capital purposes."

      e. By deleting in its entirety Section 1.5 of the Letter Agreement.

      f. By deleting in its entirety the last sentence of clause (iii) of
Section 3.6 of the Letter Agreement.

      g. By deleting in its entirety subclause (B) of clause (iv) of Section 3.6
of the Letter Agreement.

      h. By deleting in their entireties Sections 3.7-3.10, inclusive, of the
Letter Agreement.

      i. By adding to Article III of the Letter Agreement, at the end of such
Article, the following:

            "3.13. Warrants. The Borrower will issue to the Bank, as soon as
            reasonably practicable, detachable warrants (the `Warrants') to
            purchase 100,000 shares of the Borrower's common stock at an
            exercise price of $1.00 per share. The Warrants will be issued for
            no consideration other than the Bank's agreement to enter into the
            October 9, 1997 amendments to this letter agreement and to make a
            $750,000 bridge loan pursuant thereto. The Warrants will be in form
            and substance satisfactory to the Bank, will have an exercise period
            of 5 years and will be governed by a warrant purchase agreement (the
            `Warrant Agreement') in form and substance satisfactory to the
            Bank."

      j. By deleting from clause (c) of Section 5.1 of the Letter Agreement the
references to Sections 3.7, 3.8, 3.9 and 3.10.


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      k. By deleting in its entirety Section 5.4 of the Letter Agreement.

      l. By deleting in its entirety Section 6.3 of the Letter Agreement;
provided that the amendment made by this paragraph will not become effective
until the Borrower has paid all commitment fees accrued through October 9, 1997.

      m. By deleting from the fourth sentence of Section 6.7 of the Letter
Agreement the words "together with payment of the sum described in the fourth
sentence of ss.6.3".

      n. By inserting into the definition of "Loan Documents" appearing in
Section 7.1 of the Letter Agreement, immediately after the words "Revolving
Note", the following:

            "the Warrants, the Warrant Agreement,"

      4. In order to induce the Bank to enter into this Agreement and to make
the Bridge Loan, the Borrower is paying to the Bank a non-refundable amendment
fee of $10,000. This fee is not to be reduced by or applied against any fees,
interest or other payments heretofore, now or hereafter required under the
Letter Agreement, the Revolving Note and/or the Bridge Note.

      5. Wherever in any Financing Document, or in any certificate or opinion to
be delivered in connection therewith, reference is made to a "letter agreement"
or to the "Letter Agreement", from and after the date hereof same will be deemed
to refer to the Letter Agreement, as hereby amended.

      6. Simultaneously with the execution and delivery of this Agreement, the
Borrower is executing and delivering to the Bank the Bridge Note, in
substitution of the Revolving Note. The Bridge Note is a $750,000 promissory
note of the Borrower, substantially in the form attached hereto as Exhibit 1.
Wherever in any of the Financing Documents or in any certificate or opinion to
be delivered in connection therewith, reference is made to a "Revolving Note",
from and after the date hereof same will be deemed to refer to the Bridge Note.

      7. In order to induce the Bank to enter into this Agreement, the Borrower
further represents and warrants as follows:

      a. The execution, delivery and performance of this Agreement and the
Bridge Note have been duly authorized by the Borrower by all necessary corporate
and other action, will not require the consent of any third party and will not
conflict with, violate the provisions of, or cause a default or constitute an
event which, with the passage of time or the giving of notice or both, could
cause a default on the part of the Borrower under its charter documents or
by-laws or under any contract, agreement, law, rule, order, ordinance,
franchise, instrument or other document, or result in the imposition of any lien
or encumbrance (except in favor of the Bank) on any property or assets of the
Borrower.

      b. The Borrower has duly executed and delivered each of this Agreement and
the Bridge Note.


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      c. Each of this Agreement and the Bridge Note is the legal, valid and
binding obligation of the Borrower, enforceable against the Borrower in
accordance with its respective terms.

      d. The statements, representations and warranties made in the Letter
Agreement and/or in the Security Agreement continue to be correct as of the date
hereof; except as amended, updated and/or supplemented by the attached
Supplemental Disclosure Schedule.

      e. Giving effect to the amendments set forth in Section 3 above, the
covenants and agreements of the Borrower contained in the Letter Agreement
and/or in the Security Agreement have been complied with on and as of the date
hereof.

      f. Giving effect to the amendments set forth in Section 3 above, no event
which constitutes or which, with notice or lapse of time, or both, could
constitute, an Event of Default (as defined in the Letter Agreement) has
occurred and is continuing.

      g. Except as heretofore disclosed to the Bank in writing, no material
adverse change has occurred in the financial condition of the Borrower from that
disclosed in the annual financial statements of the Borrower dated December 31,
1996, heretofore furnished to the Bank.

      8. Except as expressly affected hereby, the Letter Agreement and each of
the other Financing Documents remains in full force and effect as heretofore.
Without limitation of the foregoing, the IAR Security Agreement and the
Supplementary Security Agreement remain in full force and effect and secure
inter alia the Borrower's obligations under the Bridge Note and under the Letter
Agreement, as amended by this Agreement.

      Executed, as an instrument under seal, as of the day and year first above
written.

                                          AUGMENT SYSTEMS, INC.


                                          By:__________________________________
                                             Name:
                                             Title:
Accepted and agreed:
FLEET NATIONAL BANK


By:________________________________
   Name:
   Title:


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