<PAGE>
                                                                   EXHIBIT 10.11

                                THIRD AMENDMENT
                               TO LOAN AGREEMENT

This Third Amendment Agreement to Loan Agreement (this "Third Agreement") dated
this 13th day of March, 1997, by and between Taitron Components Incorporated, a
California Corporation ("Borrower") and Union Bank of California N.A.

Whereas, Borrower and Bank have previously entered into that certain Loan
Agreement, dated June 16, 1995, ("The Loan Agreement"), pursuant to which Bank
has agreed to make certain loans and advances to Borrower and Amendments thereto
dated March 30, 1996 and January 9, 1997 (the "Agreement").

Whereas, Borrower has requested that Bank agree to amend certain provisions
contained in the Loan Agreement; and

Whereas, Borrower and Bank have agreed and intend to hereby amend the Loan
Agreement.

Now, therefore, the parties hereby agree as follows:

     1.    DEFINED TERMS. Initially capitalized terms used herein which are
           -------------
           not otherwise defined shall have the meanings assigned thereto in
           the Agreement.

     2.    AMENDMENTS TO THE AGREEMENT.
           ----------------------------

     (a).  Section 1.1.1.1 on line (1) add "this is a sublimit to the Second
Revolving Note" and line eight (8) shall be changed from "obligations under
drawn L/C's shall not exceed Five Hundred Thousand Dollars ($500,000)"; to
"obligations under drawn L/C's shall not exceed Two Million Dollars
($2,000,000)".

     (b).  Section 1.1.1.2 on line (1) add "this is a sublimit to the Second
Revolving Note" and line four (4) shall be changed from "reimbursement
obligations under drawn L/C's shall not exceed Five Hundred Thousand Dollars
($500,000)"; to "reimbursement obligations under drawn L/C's shall not exceed
Two Million Dollars ($2,000,000)".

     (c)   Section 1.1.2 shall be deleted in its entirety and a new section
1.1.2 shall be added as follows:

           Section 1.1.2 partial combined limit, aggregate total advances
under subparagraphs 1.1.1.1 and 1.1.1.2 above shall not exceed Two Million
Dollars ($2,000,0000) at any time.

     (d)   Section 1.1.3 shall be deleted in its entirety and a new section
1.1.3 shall be added as follows:


                                       1
<PAGE>

The Second Revolving Loan. Bank will laon to borrower an amount not to exceed
Five Million Three Hundred Thousand Dollars ($5,300,000) outstanding in the
aggregate at any one time (The "Second Revolving Loan"). Borrower shall borrow,
repay and reborrow all or part of the Revolving Loan in amounts of not less than
One Hundred Thousand Dollars ($100,000.00) in accordance with the term of the
Revolving Note. All borrowings must be made on or before June 2, 1997 at which
time all unpaid principal and interest of the Revolving Loan shall be evidenced
by a Promissory Note (The "Second Revolving Note") on the standard form used by
Bank for commercial loans. Bank shall enter each amount borrowed and repaid in
Bank's records and such entries shall be deemed to be the amounts of the
Revolving Loan outstanding. Omission of Bank to make any such entries shall not
discharge Borrower of its obligation to repay in full with interest all amounts
borrowed.

     3.  Except as modified hereby, the Loan Agreement shall remain otherwise
unchanged and in full force and effect and this agreement shall be effective
from the date hereof and shall have no retroactive effect whatsoever.

In Witness Whereof, Borrower has executed and delivered this agreement.

"Borrower"
Taitron Components Incorporated

By: /s/ Stewart Wang
   -------------------------------
    Stewart Wang, CEO


Accepted and effected this __ day of March 1997, at Bank's place of business in
the City of Los Angeles, State of California.

"Bank"
Union Bank of California, NA.



By: __________________________________
    Ronald L. Watterworth, Vice President


                                       2
<PAGE>

 UNION
  BANK OF
CALIFORNIA

                                PROMISSORY NOTE
                                  (BASE RATE)


--------------------------------------------------------------------------------
  Borrower Name TAITRON COMPONENTS INCORPORATED
--------------------------------------------------------------------------------
<TABLE>
  <S>                                    <C>                  <C>
  Borrower Address                       Office 30361         Loan Number 8863128726 0084-00-0-000
  25202 ANZA DRIVE
  SANTA CLARITA, CA 91355-3496           Maturity Date  JUNE 2, 1997             Amount $5,300,000.00
</TABLE>
--------------------------------------------------------------------------------


$5,300,000.00                                   Date  March 13, 1997
 ------------------                                 ---------------------

FOR VALUE RECEIVED, on June 2, 1997, the undersigned ("Debtor") promises to pay
                       ------    --
to the order of UNION BANK OF CALIFORNIA, N.A. ("Bank"), as indicated below, the
principal sum of FIVE MILLION THREE HUNDRED THOUSAND AND NO/100 Dollars
                 ----------------------------------------------
($5,300,000.00), or so much thereof as is disbursed, together with interest on
  ------------
the balance of such principal from time to time outstanding, at the per annum
rate or rates and at the times set forth below.

1. INTEREST PAYMENTS. Debtor shall pay interest on the 2ND day of each MONTH
                                                       ---             -----
(commencing APRIL 2, 1997). Should interest not be paid when due, it shall
            -------    --
become part of the principal and bear interest as herein provided.  All
computations of interest under this note shall be made on the basis of a year of
360 days, for actual days elapsed.

     a. BASE INTEREST RATE. At Debtor's option, amounts outstanding hereunder in
     increments of at least $100,000 shall bear interest at a rate, based on an
     index selected by Debtor, which is 1.35% per annum in excess of Bank's
     LIBOR-Rate for the Interest Period selected by Debtor.

     Any Base Interest Rate may not be changed, altered or otherwise modified
     until the expiration of the Interest Period selected by Debtor. The
     exercise of interest rate options by Debtor shall be as recorded in Bank's
     records, which records shall be prima facie evidence of the amount borrowed
     under either interest option and the interest rate; provided, however, that
     failure of Bank to make any such notation in its records shall not
     discharge Debtor from its obligations to repay in full with interest all
     amounts borrowed. In no event shall any Interest Period extend beyond the
     maturity date of this note.

     To exercise this option, Debtor may, from time to time with respect to
     principal outstanding on which a Base Interest Rate is not accruing, and on
     the expiration of any Interest Period with respect to principal outstanding
     on which a Base Interest Rate has been accruing, select an index offered by
     Bank for a Base Interest Rate Loan and an Interest Period by telephoning an
     authorized lending officer of Bank located at the banking office identified
     below prior to 10:00 a.m., Pacific time, on any Business Day and advising
     that officer of the selected index, the Interest Period and the Origination
     Date selected (which Origination Date, for a Base Interest Rate Loan based
     on the LIBOR-Rate, shall follow the date of such selection by no more than
     two (2) Business Days).

     Bank will mail a written confirmation of the terms of the selection to
     Debtor promptly after the selection is made. Failure to send such
     confirmation shall not affect Bank's rights to collect interest at the rate
     selected. If, on the date of the selection, the index selected is
     unavailable for any reason, the selection shall be void. Bank reserves the
     right to fund the principal from any source of funds notwithstanding any
     Base Interest Rate selected by Debtor.

     b. VARIABLE INTEREST RATE. All principal outstanding hereunder which is not
     bearing interest at a Base Interest Rate shall bear interest at a rate per
     annum equal to the Reference Rate, which rate shall vary as and when the
     Reference Rate changes.

     At any time prior to the maturity of this note, subject to the provisions
of paragraph 4, below, of this note, Debtor may borrow, repay and reborrow
hereon so long as the total outstanding at any one time does not exceed the
principal amount of this note.  Debtor shall pay all amounts due under this note
in lawful money of the United States at Bank's SAN FERNANDO VALLEY COMMERCIAL
                                               ------------------------------
BANKING Office, or such other office as may be designated by Bank, from time to
-------
time.

                                      -1-

<PAGE>

2. LATE PAYMENTS. If any payment required by the terms of this note shall remain
unpaid ten days after same is due, at the option of Bank, Debtor shall pay a fee
of $100 to Bank.

3.  INTEREST RATE FOLLOWING DEFAULT.  In the event of default, at the option of
Bank, and, to the extent permitted by law, interest shall be payable on the
outstanding principal under this note at a per annum rate equal to five percent
(5%) in excess of the interest rate specified in paragraph 1.b, above,
calculated from the date of default until all amounts payable under this note
are paid in full.

4.  PREPAYMENT.

     a. Amounts outstanding under this note bearing interest at a rate based on
     the Reference Rate may be prepaid in whole or in part at any time, without
     penalty or premium. Amounts outstanding under this note bearing interest at
     a Base Interest Rate may only be prepaid, in whole or in part provided Bank
     has received not less than five (5) Business Days prior written notice of
     an intention to make such prepayment and Debtor pays a prepayment fee to
     Bank in an amount equal to the present value of the product of: (i) the
     difference (but not less than zero) between (a) the Base Interest Rate
     applicable to the principal amount which Debtor intends to prepay, and (b)
     the return which Bank could obtain if it used the amount of such prepayment
     of principal to purchase at bid price regularly quoted securities issued by
     the United States having a maturity date most closely coinciding with the
     relevant Base Rate Maturity Date and such securities were held by Bank
     until the relevant Base Rate Maturity Date ("Yield Rate"); (ii) a fraction,
     the numerator of which is the number of days in the period between the date
     of prepayment and the relevant Base Rate Maturity Date and the denominator
     of which is 360; and (iii) the amount of the principal so prepaid (except
     in the event that principal payments are required and have been made as
     scheduled under the terms of the Base Interest Rate Loan being prepaid,
     then an amount equal to the lesser of (A) the amount prepaid or (B) 50% of
     the sum of (1) the amount prepaid and (2) the amount of principal scheduled
     under the terms of the Base Interest Rate Loan being prepaid to be
     outstanding at the relevant Base Rate Maturity Date). Present value under
     this note is determined by discounting the above product to present value
     using the Yield Rate as the annual discount factor.

     b. In no event shall Bank be obligated to make any payment or refund to
     Debtor, nor shall Debtor be entitled to any setoff or other claim against
     Bank, should the return which Bank could obtain under the above prepayment
     formula exceed the interest that Bank would have received if no prepayment
     has occurred. All prepayments shall include payment of accrued interest on
     the principal amount so prepaid and shall be applied to payment of interest
     before application to principal. A determination by Bank as to the
     prepayment fee amount, if any, shall be conclusive.

     c. Such prepayment fee, if any, shall also be payable if prepayment occurs
     as the result of the acceleration of the principal of this note by Bank
     because of any default hereunder. If, following such acceleration, all or
     any portion of a Base Interest Rate Loan is satisfied, whether through sale
     of property encumbered by any security agreement or other agreement
     securing this note, at a foreclosure sale held thereunder or through the
     tender of payment at any time following such acceleration, but prior to
     such a foreclosure sale, then such satisfaction shall be deemed an evasion
     of the prepayment conditions set forth above, and Bank shall, automatically
     and without notice or demand, be entitled to receive, concurrently with
     such satisfaction the prepayment fee set forth above, and the amount of
     such prepayment fee shall be added to the principal. DEBTOR HEREBY
     ACKNOWLEDGES AND AGREES THAT BANK WOULD NOT MAKE THE LOAN TO DEBTOR
     EVIDENCED BY THIS NOTE WITHOUT DEBTOR'S AGREEMENT, AS SET FORTH ABOVE, TO
     PAY BANK A PREPAYMENT FEE UPON THE SATISFACTION OF ALL OR ANY PORTION OF
     THE PRINCIPAL BEARING INTEREST AT A BASE INTEREST RATE FOLLOWING THE
     ACCELERATION OF THE MATURITY DATE HEREOF BY REASON OF A DEFAULT. DEBTOR HAS
     CAUSED THOSE PERSONS SIGNING THIS NOTE ON ITS BEHALF TO SEPARATELY INITIAL
     THE AGREEMENT CONTAINED IN THIS PARAGRAPH BY PLACING THEIR INITIALS BELOW:

     INITIALS:  /s/ Illegible

5. DEFAULT AND ACCELERATION OF TIME FOR PAYMENT. Default shall include, but not
be limited to, any of the following: (a) the failure of Debtor to make any
payment required under this note when due; (b) any breach, misrepresentation or
other default by Debtor, any guarantor, co-maker, endorser, or any person or
entity other than Debtor provided security for this note (hereinafter
individually and collectively referred to as the "Obligor") under any security
agreement, guaranty or other agreement between Bank and any Obligor; (c) the
insolvency of any Obligor or the failure of any Obligor generally to pay such
Obligor's debts as such debts become due; (d) the commencement as to any Obligor
of any voluntary or involuntary proceeding under any laws relating to
bankruptcy, insolvency, reorganization, arrangement, debt adjustment or debtor
relief; (e) the assignment by any Obligor for the benefit of such Obligor's
creditors; (f) the appointment, or commencement of any proceeding for the
appointment of a receiver, trustee, custodian or similar official for all or
substantially all of any Obligor's property; (g) the commencement of any
proceeding for the dissolution or liquidation of any Obligor; (h) the
termination of existence or death of any Obligor; (i) the revocation of any
guaranty or subordination agreement given in connection with this note; (j) the
failure of any Obligor to comply with any order, judgement, injunction, decree,
writ or demand of any court or other public authority; (k) the filing or
recording against any Obligor, or the property of any Obligor, of any notice of
levy, notice to withhold, or other legal process for taxes other than property
taxes; (l) the default by any Obligor personally liable for amounts owed
hereunder on any obligation concerning the borrowing of money; (m) the issuance
against any Obligor, or the property of any Obligor, of any writ of attachment,
execution, or other judicial lien; or (n) the deterioration of the financial
condition of any Obligor which results in Bank deeming itself, in good faith,
insecure. Upon the occurrence of any such default, Bank, in its discretion, may
cease to advance funds hereunder and may declare all obligations under this note
immediately due and payable; however, upon the occurrence of an event of default
under d, e, f, or g, all principal and interest shall automatically become
immediately due and payable.

6.  ADDITIONAL AGREEMENTS OF DEBTOR.  If any amounts owing under this note are
not paid when due, Debtor promises to pay all costs and expenses, including
reasonable attorneys' fees, incurred by Bank in the collection or enforcement of
this note.  Debtor and any endorsers of this note, for the maximum period of
time and the full extent permitted by law, (a) waive diligence, presentment,
demand, notice of nonpayment, protest, notice

                                      -2-


<PAGE>

of protest, and notice of every kind; (b) waive the right to assert the defense
of any statue of limitations to any debt or obligation hereunder; and (c)
consent to renewals and extensions of time for the payment of any amounts due
under this note. If this note is signed by more than one party, the term
"Debtor" includes each of the undersigned and any successors in interest
thereof; all of whose liability shall be joint and several. Any married person
who signs this note agrees that recourse may be had against the separate
property of that person for any obligations hereunder. The receipt of any check
or other item of payment by Bank, at its option, shall not be considered a
payment on account until such check or other item of payment is honored when
presented for payment at the drawee bank. Bank may delay the credit of such
payment based upon Bank's schedule of funds availability, and interest under
this note shall accrue until the funds are deemed collected. In any action
brought under or arising out of this note, Debtor and any Obligor, including
their successors and assigns, hereby consent to the jurisdiction of any
competent court within the State of California, as provided in any alternative
dispute resolution agreement executed between Debtor and Bank, and consent to
service of process by any means authorized by said state's law. The term "Bank"
includes, without limitation, any holder of this note. This note shall be
construed in accordance with and governed by the laws of the State of
California. This note hereby incorporates any alternative dispute resolution
agreement previously, concurrently or hereafter executed between Debtor and
Bank.

7. DEFINITIONS. As used herein, the following terms shall have the meanings
respectively set forth below: "BASE INTEREST RATE" shall mean a rate of interest
based on the LIBOR-Rate. "BASE INTEREST RATE LOAN" shall mean amounts
outstanding under this note that bear interest at a Base Interest Rate. "BASE
RATE MATURITY DATE" shall mean the last day of the Interest Period with respect
to principal outstanding on which a Base Interest Rate has bee selected by
Debtor. "BUSINESS DAY" shall mean a day which is not a Saturday or Sunday on
which Bank is open for business in the state identified in paragraph 6, above,
and, with respect to the rate of interest based on the LIBOR Rate, on which
dealings in U.S. dollar deposits outside of the United States may be carried on
by Bank. "INTEREST PERIOD" shall mean any calendar period of one, three, six,
nine or twelve months. In determining an Interest Period, a month means a period
that starts on one Business Day in a month and ends on and includes the day
preceding the numerically corresponding day in the next month. For any month in
which there is no such numerically corresponding day, then as to that month such
day shall be deemed to be the last calendar day of such month. Any Interest
Period which would otherwise end on a non-Business Day shall end on the next
succeeding Business Day unless that is the first day of a month, in which event
such Interest Period shall end on the next preceding Business Day. "LIBOR RATE"
shall mean a per annum rate of interest (rounded upward, if necessary, to the
nearest 1/100 of 1%) at which dollar deposits, in immediately available funds
and in lawful money of the United States would be offered to Bank, outside of
the United States, for a term coinciding with the Interest Period selected by
Debtor and for an amount equal to the amount of principal covered by Debtor's
interest rate selection, plus Bank's costs, including the costs, if any, of
reserve requirements. "ORIGINATION DATE" shall mean the Business Day on which
funds are made available to Debtor relating to Debtor's selection of a Base
Interest Rate. "REFERENCE RATE" shall mean the rate announced by Bank from time
to time at its corporate headquarters as its "REFERENCE RATE." The Reference
Rate is an index rate determined by Bank from time to time as a means of pricing
certain extensions of credit and is neither directly tied to any external rate
of interest or index nor necessarily the lowest rate of interest charged by Bank
at any given time.


TAITRON COMPONENTS INCORPORATED
-------------------------------------



By  /s/ Stewart Wang
  -----------------------

Title  President and CEO
     --------------------



                                      -3-
PN-REV(LIBOR-RR)
1/15/97


<PAGE>

                               SECOND AMENDMENT
                               TO LOAN AGREEMENT

This Second Amendment Agreement to Loan Agreement (this "Second Agreement")
dated this 9th day of January, 1997, by and between Taitron Components,
Incorporated, a California Corporation ("Borrower") and Union Bank of California
N.A.

Whereas, Borrower and Bank have previously entered into that certain Loan
Agreement, dated June 16, 1995 ("The Loan Agreement"), pursuant to which Bank
has agreed to make certain loans and advances to Borrower and Amendments thereto
dated March 30, 1996 (the "Agreement").

Whereas, Borrower has requested that Bank agree to amend certain provisions
contained in the Loan Agreement; and

Whereas, Borrower and Bank have agreed and intend to hereby amend the Loan
Agreement.

Now, therefore, the parties hereby agree as follows:

     1.   Defined Terms. Initially capitalized terms used herein which are not
          -------------
          otherwise defined shall have the meanings assigned thereto in the
          Agreement.

     2.   Amendments to the Agreement.
          ---------------------------

     (a)  Section 1.1.1.1 line eight (8) shall be changed from "obligations
under drawn L/C's shall not exceed Two Million Dollars ($2,000,000)"; to
"obligations under drawn L/C's shall not exceed Five Hundred Thousand Dollars
($500,000)".

     (b)  Section 1.1.1.2 line four (4) shall be changed from "reimbursement
obligations under drawn L/C's shall not exceed Two Million Dollars
($2,000,000)"; to "reimbursement obligations under drawn L/C's shall not exceed
Five Hundred Thousand Dollars ($500,000)".

     (c)  Section 1.1.2 shall be deleted in its entirety and a new section 1.1.2
shall be added as follows:

     1.1.2 partial combined limit, aggregate total advances under subparagraphs
1.1.1.1 and 1.1.1.2 above shall not exceed Five Hundred Thousand Dollars
($500,000) at any time.

     (d)  Section 1.1.3 shall be deleted in its entirety and a new section 1.1.3
shall be added as follows:

The Second Revolving Loan.  Bank will loan to borrower an amount not to exceed
One Million Five Hundred Thousand Dollars ($1,500,000.00) outstanding in the
aggregate at any one time (The "Second Revolving Loan").  The Second Revolving
Loan will reduce to $500,000 on April 30, 1997.

                                       1
<PAGE>

Borrower shall borrow, repay and reborrow all or part of the Revolving Loan in
amounts of not less than One Hundred Thousand Dollars ($100,000.00) in
accordance with the term of the Revolving Note.  All borrowings must be made on
or before May 31, 1997 at which time all unpaid principal and interest of the
Revolving Loan shall be evidenced by a Promissory Note (The "Second Revolving
Note") on the standard form used by Bank for commercial loans.  Bank shall enter
each amount borrowed and repaid in Bank's records and such entries shall be
deemed to be the amounts of the Revolving Loan outstanding.  Omission of Bank to
make any such entries shall not discharge Borrower of its obligation to repay in
full with interest all amounts borrowed.

     3.   Except as modified hereby, the Loan Agreement shall remain otherwise
unchanged and in full force and effect and this agreement shall be effective
from the date hereof and shall have no retroactive effect whatsoever.

In Witness Whereof, Borrower has executed and delivered this agreement.

"Borrower"
Taitron Components, Incorporated



By  /s/ Stewart Wang
    -------------------------------------
    Stewart Wang, CEO


Accepted and effected this __ day of, January 1997, at Bank's place of business
in the City of Los Angeles, State of California.

"Bank"
Union Bank of California, NA.



By
    -------------------------------------
    Ronald L. Watterworth, Vice President

                                       2
<PAGE>

                      [LOGO OF UNION BANK OF CALIFORNIA]

                                PROMISSORY NOTE
                                  (BASE RATE)


================================================================================
Borrower Name  TAITRON COMPONENTS INCORPORATED
--------------------------------------------------------------------------------
Borrower Address  25202 ANZA DRIVE, SANTA CLARITA, CA 91355
                             ---------------------------------------------------
                             Office  30361                Loan Number 8863128726
                             ---------------------------------------------------
                             Maturity Date  MAY 31, 1997  Amount  $1,500,000.00
================================================================================


WOODLAND HILLS, California         $1,500,000.00       Date ____________________
--------------                      ------------

FOR VALUE RECEIVED, on MAY 31, 1997 the undersigned ("Debtor") promises to pay
                       ------------
to the order of UNION BANK OF CALIFORNIA, N.A. ("Bank"), as indicated below, the
principal sum of ONE MILLION FIVE HUNDRED THOUSAND AND NO/100 Dollars
                 --------------------------------------------
($1,500,000.00), or so much thereof as is disbursed, together with interest on
  ------------
the balance of such principal from time to time outstanding, at the per annum
rates and the times set forth below.

1. INTEREST PAYMENTS.  Debtor shall pay interest on the LAST day of each MONTHLY
                                                        ----             -------
(commencing JANUARY 31, 1997).  Should interest not be paid when due, it shall
            ----------------
become part of the principal and bear interest as herein provided.  All
computations of interest under this note shall be made on the basis of a year of
360 days, for actual days elapsed.

     a. BASE INTEREST RATE. At Debtor's option, amounts outstanding hereunder in
     increments of at least $100,000 shall bear interest at a rate to be
     selected by Debtor which is 1.50% per annum in excess of Bank's Adjusted
                                 ----
     LIBOR-Rate for the Interest Period so selected by Debtor.

     Any Base Interest Rate selected by Debtor may not be changed, altered or
     otherwise modified until the expiration of the Interest Period for which it
     was selected. The exercise of interest options by Debtor shall be as
     recorded in Bank's records, which records shall be prima facie evidence of
     the amount borrowed under either interest option and the interest rate;
     provided, however, that failure of Bank to make any such notation in its
     records shall not discharge Debtor from its obligations to repay in full
     with interest all amounts borrowed. In no event shall any Interest Period
     extend beyond the maturity date of this note.

     To select a Base Interest Rate, Debtor may, from time to time with respect
     to principal outstanding on which a Base Interest Rate has not been
     selected and on the expiration of any Interest Period with respect to
     principal outstanding on which a Base Interest Rate has been selected,
     select a Base Interest Rate by telephoning an authorized lending officer of
     Bank located at the banking office identified below prior to 10:00 a.m.,
     California time, on any Business Day and advising that officer of the Base
     Interest Rate, the Interest Period and the Origination Date selected (which
     Origination Date, for a Base Interest Rate Loan based on the Adjusted
     LIBOR-Rate, shall follow the date of such election by no more than two (2)
     Business Days).

     Bank will confirm the terms of the election in writing by mail to Debtor
     promptly after the election is made. Failure to send such confirmation
     shall not affect Bank's rights to collect interest at the rate selected.
     If, on the date of the election, the Base Interest Rate selected is
     unavailable for any reason, the selection shall be void. Bank reserves the
     right to fund the principal from any source of funds notwithstanding any
     Base Interest Rate selected by Debtor.

     b. VARIABLE INTEREST RATE. All principal outstanding hereunder which is not
     bearing interest at a Base Interest Rate shall bear interest at a rate per
     annum equal to the Reference Rate, which rate shall vary as and when the
     Reference Rate changes.

                                      -1-

<PAGE>

1.1 AVAILABILITY/PRINCIPAL REDUCTIONS:

     At any time prior to the maturity of this note, subject to the provisions
     of paragraph 4, below, of this note, Debtor may borrow, repay and reborrow
     under this note, provided that at no time shall the total outstanding
     principal exceed the principal amount then available under this note. If at
     any time the total outstanding exceeds the principal amount then available
     under this note, Debtor shall immediately repay such excess. The principal
     amount available under this note shall be as follows:

     January 9, 1997 through and including April 29, 1997     $1,500,000.00
     April 30, 1997 through May 31, 1997                        $500,000.00

Debtor shall pay all amounts due under this note in lawful money of the United
States at Bank's SAN FERNANDO VALLEY COMMERCIAL BANKING Office, or such other
                 --------------------------------------
office as may be designated by Bank, from time to time.

2.  LATE PAYMENTS.  If any payment required by the terms of this note shall
remain unpaid ten days after same is due, at the option of Bank, Debtor shall
pay a fee of $100 to Bank.

3.  INTEREST RATE FOLLOWING DEFAULT.  In the event of default, at the option of
Bank, and, to the extent permitted by law, interest shall be payable on the
outstanding principal under this note at a per annum rate equal to five percent
(5%) in excess of the interest rate specified in paragraph 1.b, above, of this
note, calculated from the date of default until all amounts payable under this
note are paid in full.

4.  PREPAYMENT.

     a. Amounts outstanding under this note bearing interest at a rate based on
     the Reference Rate may be prepaid in whole or in part at any time, without
     penalty or premium. Amounts outstanding at a Base Interest Rate under this
     note may only be prepaid, in whole or in part provided Bank has received
     not less than five (5) Business Days prior written notice of an intention
     to make such prepayment and Debtor pays a prepayment fee to Bank in an
     amount equal to: (i) the difference between (a) the Base Interest Rate
     applicable to the principal amount which Debtor intends to prepay, and (b)
     the return which Bank could obtain if it used the amount of such prepayment
     of principal to purchase at bid price regularly quoted securities issued by
     the United States having a maturity date most closely coinciding with the
     relevant Base Rate Maturity Date and such securities were held by Bank
     until the relevant Base Rate Maturity Date ("Yield Rate"); (ii) the above
     difference, if greater than zero, is multiplied by a fraction, the
     numerator of which is the number of days in the period between the date of
     prepayment and the relevant Base Rate Maturity Date and the denominator of
     which is 360 days; (iii) the above product is multiplied by the amount of
     the principal so prepaid (except in the event that principal payments are
     required and have been made as scheduled under the terms of the Base
     Interest Rate Loan being prepaid, then the amount multiplied in this
     section shall be the lesser of the amount prepaid or 50% of the total of
     the amount prepaid and the amount of principal scheduled under the terms of
     the Base Interest Rate Loan being prepaid to be outstanding at the relevant
     Base Rate Maturity Date); and (iv) the above product is then discounted to
     present value using the Yield Rate as the annual discount factor.

     b. In no event shall Bank be obligated to make any payment or refund to
     Debtor, nor shall Debtor be entitled to any setoff or other claim against
     Bank, should the return which Bank could obtain under the above prepayment
     formula exceed the interest that Bank would have received if no prepayment
     had occurred. All prepayments shall include payment of accrued interest on
     the principal amount so prepaid and shall be applied to payment of interest
     before application to principal. A determination by Bank as to the
     prepayment fee amount, if any, shall be conclusive.

     c. Such prepayment fee, if any, shall also be payable if prepayment occurs
     as the result of the acceleration of the principal of this note by Bank
     because of any default hereunder. If, following such acceleration, all or
     any portion of a Base Interest Rate Loan is satisfied, whether through sale
     of property encumbered by a security agreement or other agreement securing
     this note, if any, at a foreclosure sale held thereunder or through the
     tender of payment any time following such acceleration, but prior to such a
     foreclosure sale, then such satisfaction shall be deemed an evasion of the
     prepayment conditions set forth above, and Bank shall, automatically and
     without notice or demand, be entitled to receive, concurrently with such
     satisfaction the prepayment fee set forth above, and the obligation to pay
     such prepayment fee shall be added to the principal. DEBTOR HEREBY
     ACKNOWLEDGES AND AGREES THAT BANK WOULD NOT LEND TO DEBTOR THE LOAN
     EVIDENCED BY THIS NOTE WITHOUT DEBTOR'S AGREEMENT, AS SET FORTH ABOVE, TO
     PAY BANK A PREPAYMENT FEE UPON THE SATISFACTION OF ALL OR ANY PORTION OF
     THE PRINCIPAL BEARING INTEREST AT A BASE INTEREST RATE FOLLOWING THE
     ACCELERATION OF THE MATURITY DATE HEREOF BY REASON OF A DEFAULT. DEBTOR HAS
     CAUSED THOSE PERSONS SIGNING THIS NOTE ON ITS BEHALF TO SEPARATELY INITIAL
     THE AGREEMENT CONTAINED IN THIS PARAGRAPH BY PLACING THEIR INITIALS BELOW:

     INITIALS:   /s/Illegible
                 ------------     ------------

5.  DEFAULT AND ACCELERATION OF THE TIME FOR PAYMENT.  Default shall include,
but not be limited to, any of the following:  (a) the failure of Debtor to make
any payment required under this note when due; (b) any breach, misrepresentation
or other default by Debtor, any guarantor, co-maker, endorser, or any person or
entity other than Debtor providing security for this note (hereinafter
individually and collectively referred to as the "Obligor") under any security
agreement, guaranty or other agreement between Bank and any Obligor; (c) the
insolvency of any Obligor or the failure of any Obligor generally to pay such
Obligor's debts as such debts become due; (d) the commencement as to any Obligor
of any voluntary or involuntary proceeding under any laws relating to
bankruptcy, insolvency, reorganization, arrangement, debt adjustment or debtor
relief; (e) the assignment by any Obligor for the benefit of such Obligor's
creditors; (f) the appointment, or commencement of any proceeding for the
appointment of a receiver, trustee, custodian or similar official for all or
substantially all of any Obligor's property; (g) the commencement of any
proceeding for

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<PAGE>

the dissolution or liquidation of any Obligor; (h) the termination of existence
or death of any Obligor; (i) the revocation of any guaranty or subordination
agreement given in connection with this note; (j) the failure of any Obligor to
comply with any order, judgement, injunction, decree, writ or demand of any
court or other public authority; (k) the filing or recording against any
Obligor, or the property of any Obligor, of any notice of levy, notice to
withhold, or other legal process for taxes other than property taxes; (l) the
default by any Obligor personally liable for amounts owed hereunder on any
obligation concerning the borrowing of money; (m) the issuance against any
Obligor, or the property of any Obligor, of any writ of attachment, execution,
or other judicial lien; or (n) the deterioration of the financial condition of
any Obligor which results in Bank deeming itself, in good faith, insecure. Upon
the occurrence of any such default, Bank, in its discretion, may cease to
advance funds hereunder and may declare all obligations under this note
immediately due and payable; however, upon the occurrence of an event of default
under d, e, f, or g, all principal and interest shall automatically become
immediately due and payable.

6.  ADDITIONAL AGREEMENTS OF DEBTOR.  If any amounts owing under this note are
not paid when due, Debtor promises to pay all costs and expenses, including
reasonable attorneys' fees, incurred by Bank in the collection or enforcement of
this note.  Debtor and any endorsers of this note, for the maximum period of
time and the full extent permitted by law, (a) waive diligence, presentment,
demand, notice of nonpayment, protest, notice of protest, and notice of every
kind; (b) waive the right to assert the defense of any statute of limitations to
any debt or obligation hereunder; and (c) consent to renewals and extensions of
time for the payment of any amounts due under this note.  If this note is signed
by more than one party, the term "Debtor" includes each of the undersigned and
any successors in interest thereof; all of whose liability shall be joint and
several. Any married person who signs this note agrees that recourse may be had
against the separate property of that person for any obligations hereunder. The
receipt of any check or other item of payment by Bank, at its option, shall not
be considered a payment on account until such check or other item of payment is
honored when presented for payment at the drawee bank. Bank may delay the credit
of such payment based upon Bank's schedule of funds availability, and interest
under this note shall accrue until the funds are deemed collected. In any action
brought under or arising out of this note, Debtor and any Obligor, including
their successors or assigns, hereby consent to the jurisdiction of any competent
court within the State of California, as provided in any alternative dispute
resolution agreement executed between Debtor and Bank, and consent to service of
process by any means authorized by California law. The term "Bank" includes,
without limitation, any holder of this note. This note shall be construed in
accordance with and governed by the laws of the State of California. This note
hereby incorporates any alternative dispute resolution agreement previously,
concurrently or hereafter executed between Debtor and Bank.

7. DEFINITIONS. As used herein, the following terms shall have the meanings
respectively set forth below:  "Adjusted LIBOR-Rate" shall mean the LIBOR Base
Rate as adjusted for reserve requirements imposed on Bank from time to time.
"Base Interest Rate" shall mean a rate of interest based on the Adjusted
LIBOR-Rate.  "Base Interest Rate Loan" shall mean amounts outstanding under this
note that bear interest at a Base Interest Rate.  "Base Rate Maturity Date"
shall mean the last day of the Interest Period with respect to principal
outstanding on which a Base Interest Rate has been selected by Debtor. "Business
Day" shall mean a day which is not a Saturday or Sunday on which Bank is open
for business in California and on which dealings in U.S. dollar deposits outside
of the United States may be carried on by Bank. "Interest Period" shall mean any
calendar period of one, three, six, nine or twelve months. In determining an
Interest Period, a month means a period that starts on one Business Day in a
month and ends on and includes the day preceding the numerically corresponding
day in the next month. For any month in which there is no such numerically
corresponding day, then as to that month, such day shall be deemed to be the
last calendar day of such month. Any Interest Period which would otherwise end
on a non-Business Day shall end on the next succeeding Business Day unless that
is the first day of a month, in which event such Interest Period shall end on
the next preceding Business Day. "LIBOR Base Rate" shall mean for each Interest
Period the rate per annum (rounded upward, if necessary, to the nearest 1/100 of
1%) at which dollar deposits, in immediately available funds and in lawful money
of the United States would be offered to Bank, outside of the United States, for
a term coinciding with such Interest Period and for an amount equal to the
amount of principal covered by Debtor's interest rate election. "Origination
Date" shall mean the Business Day on which funds are made available to Debtor
relating to Debtor's selection of a Base Interest Rate. "Reference Rate" shall
mean the rate announced by Bank from time to time at its corporate headquarters
at its "Reference Rate." The Reference Rate is an index rate determined by Bank
from time to time as a means of pricing certain extensions of credit and is
neither directly tied to any external rate of interest or index nor necessarily
the lowest rate of interest charged by Bank at any given time.

TAITRON COMPONENTS INCORPORATED
-------------------------------


By  /s/ Stewart Wang
    ----------------

Title  President
      --------------

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