HOME FEDERAL SAVINGS BANK

                     PROMISSORY NOTE AND SECURITY AGREEMENT

                                        Riverhead, New York

                                        Dated: March 18 1998

                                        Loan No.: 192486

     FOR VALUE RECEIVED,  the undersigned,  TELEBYTE TECHNOLOGY,  INC., having a
place of business at 207 Pulaski  Road,  Greenlawn,  New York 11740  ("Obligor")
hereby  promises to pay to the order of HOME FEDERAL  SAVINGS BANK, (the "Bank")
as successor in interest to The Union  Savings  Bank, at its offices at 62 South
Ocean Avenue,  Patchogue,  New York 11772, in lawful money of the United States,
the principal sum of Nine Hundred Sixty-five Thousand Eight Hundred Twenty-seven
and 88/100 ($965,827.88) DOLLARS,  together with interest payable as hereinafter
described.

     INTEREST  RATE:  The rate of interest  applicable  hereunder  until June 1,
2000,  shall be at the rate of Nine percent  (9.00%) per annum and the principal
shall be amortized over a 10-year payout schedule. on the 1st day of June, 2000,
the  interest  rate shall be  adjusted  so as to equal the three (3) year weekly
average US Treasury  Constant Maturity rate in effect on May 1, 2000, plus 3.00%
and the principal shall be amortized over an 8year payout schedule.  Thereafter,
on the lst day of June, 2003, the interest rate shall again be adjusted so as to
equal the three (3) year weekly  average US Treasury  Constant  Maturity rate in
effect on May 1, 2003,  plus 3.00% and the principal  shall be amortized  over a
5-year payout schedule.  Thereafter,  on the lst day of June, 2006, the interest
rate shall again be adjusted so as to equal the three (3) year weekly average US
Treasury  Constant  Maturity  rate in effect on May 1, 2006,  plus 3.00% and the
principal  shall be amortized  over a 2- year payout  schedule.  The interest on
this  Promissory  Note and Security  Agreement shall be paid monthly in arrears,
computed on the basis of a 360-day year of twelve  30-day  months.  All payments
under this Note shall be made to the Bank in immediately  available funds as the
Bank shall direct in writing.  It is not intended by any  provision of this Note
to charge  Obligor  interest  at a rate in excess of the  maximum  legal rate of
interest  permitted  to be charged  to  Obligor  under  applicable  law,  but if
nevertheless, interest in excess of said maximum legal rate shall be paid on the
obligation,  the  excess  amount  shall be deemed to have been paid in error and
shall be  automatically  applied in  reduction of the  principal  balance of the
Obligation.

     PREPAYMENT PRIVILEGE:  During the term of this Obligation, the Party of the
Second Part may prepay this obligation, at any time, without penalty.

     PAYMENT:  The principal amount of the  indebtedness  hereunder shall be due
and payable in full on June 1, 2008. During the term of this Promissory Note and
Security  Agreement,  the undersigned  shall pay to the Bank monthly payments of
principal and interest as follows:  Commencing on the lst day of May,  1998, the
sum of Twelve Thousand One Hundred Ten and 92/100 ($12,110.92)  DOLLARS shall be
due and payable.  Thereafter,  a similar sum of Twelve  Thousand One Hundred Ten
and 92/100 ($12,110.92)  DOLLARS shall be due and payable on the Ist day of each
and every month  thereafter  until the lst day of June,  2000, at which time the
interest rate shall be adjusted as set forth herein.  At that time,, the monthly
payment of principal and interest  shall also be adjusted so as to determine the
new monthly payment amount based on the




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new adjusted  interest rate and the then  principal  balance of this  obligation
amortized  over the next ensuing  three (3) years of the term hereof based on an
8-year pay-out  schedule.  Thereafter,  the new monthly  payment of interest and
principal shall be due and payable on the lst day of July,  2000, and on the lst
day of each and  every  month  thereafter  until  June 1,  2003,  at which  time
the-interest rate shall again be adjusted as set forth herein. At that time, the
monthly  payment of  principal  and  interest  shall also be  adjusted  so as to
determine the new monthly payment amount based on the new adjusted interest rate
and the  then  principal  balance  of this  obligation  amortized  over the next
ensuing  three (3) years of the term hereof based on a 5-year  payout  schedule.
Thereafter,  the new monthly  payment of interest and principal shall be due and
payable on the lst day of July, 2003, and on the lst day of each and every month
thereafter  until June 1, 2006,  at which time the interest  rate shall again be
adjusted as set forth herein. At that time, the monthly payment of principal and
interest  shall also be adjusted  so as to  determine  the new  monthly  payment
amount based on the new adjusted interest rate and the then principal balance of
this  obligation  amortized  over the remaining two (2) years of the term hereof
based on a 2-year  payout  schedule.  Thereafter,  the new  monthly  payment  of
interest and  principal  shall be due and payable on the ist day of July,  2006,
and on the ist day of each and every month  thereafter  until June l, 2008, when
the entire  unpaid  principal  balance  shall be due and  payable.  Each of said
payments  shall be applied  first when  received  by the Bank to the  payment of
interest at the rate in effect at the time of the due date of said  payment,  to
be computed  from the date  hereof on the unpaid  balance of the  principal  sum
hereof  to the date of  payment,  and  secondly  towards  the  reduction  of the
principal sum hereof.

     BALANCE DUE:  Notwithstanding the foregoing,  the unpaid principal balance,
together with accrued and unpaid  interest,  if any, shall be due and payable on
June 1, 2008, herein called the "Maturity Date".

     LATE  CHARGE:  The  undersigned  agrees to pay to the Bank a late charge of
five  percent  (5%) of each  monthly  payment  not  received  by the Bank by the
fifteenth (15th) day following the due day of such payment.

     SECURITY:  As security for the due and punctual  payment and performance of
this  Promissory  Note and  Security  Agreement  and of every other  obligation,
indebtedness or liability of the undersigned, including, without limitation, the
obligation to reimburse the Bank for all reasonable  costs,  attorneys' fees and
legal  expenses  incurred by it in  exercising  any of the  remedies  hereunder,
joint,  several or  independent,  direct or  indirect,  absolute or  contingent,
contractual or tortious, liquidated or unliquidated, arising by law or otherwise
due or to become due, now or hereafter arising  (hereinafter  referred to as the
"Obligations"),  the undersigned hereby grants, assigns, pledges,  mortgages and
sets over a  security  interest  in and a general  lien  upon,  and/or  right of
set-off  to  the  Bank  in  the  following   described   property   (herein  the
"Collateral"):



          Mortgage made by Telebyte  Technology,  Inc. to The Union Savings Bank
          in the original  principal amount of $850,000.00 dated the 30th day of
          September, 1985, and recorded in the Office of the Clerk of the county
          of Suffolk on the 10th day of  October,  1985,  in Liber 11085 mp 597;
          and



          Mortgage made by Telebyte  Technology,  Inc. to The Union Savings Bank
          in the original  principal amount of $454,300.00 dated the 25th day of
          May,  1988,  and  recorded in the Office of the Clerk of the County of
          Suffolk on the 9th day of June,




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          1988,  in Liber 14143 mp 444,  which  mortgage was  consolidated  with
          mortgage  recorded  in Liber  11085 mp 597 by a certain  Consolidation
          Agreement  dated May 25, 1988,  recorded in the Suffolk County Clerk's
          Office on June 9, 1988,  in Liber  14143 mp 449, to form a single lien
          in the amount of $1,275,000.00,  and which mortgages, as consolidated,
          have a current unpaid principal balance of $965,827.88.



     ACCELERATION OF DEBT: If any monthly  installment of principal and interest
is not paid when due and remains unpaid for fifteen (15) days, the entire unpaid
principal  amount plus accrued  interest may, at the option of the Bank,  become
immediately  due and payable.  The Bank may exercise  this option to  accelerate
during any default by the  Obligor,  regardless  of any-prior  forbearance.  The
Obligor  agrees to indemnify the Bank for, and to hold the Bank  harmless  from,
any loss or expense which the Bank may sustain or incur as a consequence  of any
default by the Obligor in the payment of any of the Obligations.  The Bank shall
be entitled to collect all  reasonable  costs and expenses of any suit which may
be brought in connection  herewith,  including,  but not limited to,  attorneys'
fees and costs.

     DEFAULT  INTEREST:  Upon the  acceleration  of the  indebtedness  after the
occurrence of an event of default or upon the failure to pay the indebtedness in
full on maturity,  the Obligor shall pay interest on the entire unpaid principal
balance at the rate of five percent  (5%) above the Interest  Rate to be paid by
the Obligor as hereinabove  set forth,  or at the maximum rate of interest which
the Obligor may be required to pay by law,  whichever  is lower,  to be computed
from the  occurrence  of the event of  default  until  the  actual  receipt  and
collection  of the  debt.  This  charge  shall be added to the debt and shall be
deemed secured by this  Promissory Note and Security  Agreement.  Payment of the
loan following an  acceleration of the loan due to obligor's  default  hereunder
shall be deemed to be a  voluntary  prepayment,  and the  Obligor  shall pay, in
addition to all other  amounts due and payable  under this  Promissory  Note and
Security Agreement, the prepayment considerations specified herein. This clause,
however,  shall not be construed as an agreement or privilege to extend the date
of the payment of the  indebtedness nor as a waiver of any other right or remedy
accruing to the Bank by reason of the occurrence of any event of default.

     DEFAULT  REMEDIES:  (A) Upon the (i) failure to pay any of the  Obligations
when the same shall become or shall be declared due and payable; (ii) occurrence
of an event of default in the payment when due or in the  performance  of any of
the terms,  covenants  or  conditions  hereof or of any loan,  security or other
agreement in favor of the Bank;  (iii) failure to pay any  pecuniary  obligation
(other  than this Note) or the  occurrence  of a default in  performance  of any
agreement  under  which any such  obligation  is  created  if the effect of such
default is to cause such  obligation to become due or to permit  holders of such
obligation or a trustee in their behalf to declare such  obligation due prior to
its normal  maturity;  (iv) filing by or against the Obligor of any petition for
an order of relief under the Bankruptcy  Code or proceeding for  receivership or
under any insolvency,  dissolution or conservatorship statute; (v) suspension of
business, commencement of liquidation,  assignment for the benefit of creditors,
making of any offer of settlement,  extension or  composition,  appointment of a
committee of creditors or a liquidating  agency, by, or for the Obligor; or (vi)
issuance of an  attachment,  injunction  or execution or tax lien or filing of a
judgment  or other  lien  against  the  Obligor;  or (B) if the  Obligor  or any
obligor, maker, endorser,  acceptor,  surety or guarantor of, or any other party
(the "Obligors") to any of the obligations shall




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default in respect of any of the obligations,  or any other obligation of any of
them to the Bank, or any obligations  with respect to the Collateral;  or (C) if
any of the obligors  shall die (if  individuals)  or dissolve  (if  partnerships
and/or  corporations);  or (D) if the  undersigned or any other obligor shall be
unable to pay its, his, her or their debts as they mature in the regular  course
of  business;  or (E)  should  the Bank for any reason  deem the  Collateral  is
inadequate  to secure  the  Obligations;  or (F)  should  the Bank,  in its sole
discretion,  determine  there has  occurred  a  material  adverse  change in the
business or affairs of the Obligor,  then, and in any such event, the Bank shall
have the right to declare this  Promissory  Note and Security  Agreement and any
such other  Obligations  and  liabilities  above  mentioned  immediately due and
payable,  whereupon the maturity of the then unpaid  balance of this  Promissory
Note and Security  Agreement and all other  Obligations shall be accelerated and
the same,  and all interest  accrued  thereon,  shall  forthwith  become due and
payable without presentment, protest, notice or demand of any kind, all of which
are hereby expressly  waived,  at the option of the Bank. In addition,  the Bank
shall  have the right to enter upon the  premises  where any  Collateral  may be
located,  obtain immediate  possession thereof,  foreclose upon the right, title
and interest of the Obligor  therein,  and sell,  lease,  temporarily hold idle,
assign, deliver and otherwise dispose of the whole of the Collateral or any part
thereof, or any substitutes thereof, or additions thereto, or any other security
or property  subject to the lien  hereinabove  given, at any exchange,  broker's
board or at public or private sale, at the option of the Bank,  without  demand,
advertisement or notice of any kind, all of which are hereby  expressly  waived.
At any such sale, the Bank may itself purchase all or any part of the Collateral
sold,  free from any right of  redemption  ont he part of the Obligor,  which is
hereby waived and released to the extent  permitted by applicable  law. The Bank
may require the Obligor to assemble the  Collateral and make it available to the
Bank  at a  place  designed  by  the  Bank  which  is  mutually  and  reasonably
convenient.  The Bank may apply the  proceeds of any such sale or sales or other
disposition,  after  deducting  all costs and expenses of recovery,  collection,
storing,  sale and  delivery,  to pay either this  Promissory  Note and Security
Agreement or any such other  obligation or liability  above  mentioned,  whether
same be then due or not.  The Bank may,  at its option at any time,  appropriate
and apply to the payment of this Promissory  Note and Security  Agreement or any
such other obligation or liability above mentioned, any such Collateral or other
property,  money or account affected by the lien hereinbefore given. In addition
to the above  remedies,  the Bank shall have the right to (a) take any action at
law or in equity to collect  the  payments  due under this  Promissory  Note and
Security  Agreement or to enforce  performance of the obligations of any Obligor
or recover  damages for breach  thereof and (b)  exercise any and all rights and
remedies  conferred  upon  secured  parties by the  Uniform  Commercial  Code or
otherwise  possessed by the Bank.  If any action or  proceeding  be commenced to
collect  this  Promissory  Note and  Security  Agreement  or enforce  any of its
provisions,  the obligor  further  agrees to pay all costs and  expenses of such
action or proceeding (including attorneys' fees), which the obligor agrees to be
reasonable,  and the Obligor does hereby  expressly waive any and every right to
have the reasonableness of such costs and expenses determined by any court judge
thereof and does further  expressly  waive any and every right to interpose  any
counterclaim in any such action or proceeding.

     DUE ON SALE: The Bank shall have the right to declare this  Promissory Note
and  Security  Agreement  immediately  due and  payable  in the event of a sale,
conveyance,  transfer or net leasing or disposition,  directly or indirectly, of
the  property or interest  therein,  including  the further  encumbrance  of the
property to secure an obligation of the Obligor, or the sale or transfer of a




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majority interest of the Obligor (either of record or beneficially).

     TAX ESCROW:  The Obligor shall pay to the Bank all amounts necessary to pay
for taxes,  assessments,  water and sewer  charges,  if any,  assessed  upon the
property,  unless the Bank notifies the Obligor, in writing, to the contrary, or
unless the law requires  otherwise.  Said payments shall be made on the same day
that the monthly  payments of  principal  and  interest are due pursuant to this
Note.  Each of said payments  pursuant to this  provision  shall be  one-twelfth
(1/12) of the estimated yearly taxes,  assessments,  water and sewer charges, if
any, assessed in connection with the mortgaged premises.

     ATTORNEYS'  FEES:  In the event  that  this  Promissory  Note and  Security
Agreement  is placed  in the  hands of an  attorney  for the  collection  of any
payment  hereunder or for the  enforcement  of any of the terms,  covenants  and
conditions thereof, the Obligor agrees to pay all costs of collection, including
'reasonable  attorneys'  fees  incurred by the Bank,  either with or without the
institution  of an action  or  proceeding,  and in  addition,  all other  costs,
disbursements  and allowances  provided by law. All such costs so incurred shall
be deemed to be secured  by this  Promissory  Note and  Security  Agreement  and
collectable out of the mortgaged  premises in any manner  permitted by law or by
this Obligation.

     PRIOR NOTES:  This Promissory Note and Security  Agreement  supersedes Note
dated September 30, 1985, in the original  principal amount of $850,000.00,  and
the Note dated May 25, 1988, in the original principal amount of $454,300.00.

     JURISDICTION: The Obligor hereby submits to the jurisdiction of the Supreme
Court  of the  State  of New  York  and  agrees  with  the  Bank  that  personal
jurisdiction  over the.Obligor shall rest with the Supreme Court of the State of
New York for  purposes of any action on or related to this  Promissory  Note and
Security Agreement, the obligations,  or the enforcement of either or all of the
same. The Obligor hereby waives  personal  service by manual delivery and agrees
that service of process may be made by post-paid  certified mail directed to the
obligor's address set forth above, or at such other address as may be designated
in writing by the obligor to the Bank,  and that upon  mailing of such  process,
such  service  shall be  effective  with the same  effect as  though  personally
served, whether or not the obligor, in fact, receives and accepts such certified
mail. The Obligor hereby expressly waives any and every right to a trial by jury
in any action on or related to this Promissory Note and Security Agreement,  the
Obligations or the enforcement of either or all of the same.

     MODIFICATION AND WAIVER: No modification or waiver of any of the provisions
of this  Promissory  Note and Security  Agreement  shall be effective  unless in
writing,  signed by the Bank and only to the extent therein set forth; nor shall
any action or omission by the Bank constitute a waiver of any right or remedy of
the Bank hereunder.  Such rights or remedies are cumulative and not exclusive of
any  rights or  remedies  provided  by law.  The  failure  of any holder of this
Promissory Note and Security Agreement to insist upon strict performance of each
and/or all of the terms and conditions hereof,  shall not be construed or deemed
to be a waiver of any such term or condition.  Payment of principal and interest
on this Promissory Note and Security Agreement shall not discharge the obligor's
obligations with respect to any other amount payable hereunder.

     WAIVER:   The  Obligor  and  all  endorsers  and  guarantors  hereof  waive
presentment and demand for payment, notice of non-payment, protest and notice of
protest.




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     GOVERNING  LAW:  The  provisions  of  this  Promissory  Note  and  Security
Agreement  shall be construed  and  interpreted  and all rights and  obligations
hereunder determined in accordance with the laws of the State of New York.

                                       TELEBYTE TECHNOLOGY, INC.

                                       By:/s/ Michael Breneisen
                                          Michael Breneisen
                                          Vice President


                   STATE OF NEW YORK, COUNTY OF SUFFOLK : SS.:



On this 18 day of March 1998, before me personally came Michael Breneisen, to me
known,  who,  being  duly  sworn by me, did depose and say that he resides at 12
Olympia Pace E. Northport, NY;



That he is the Vice  President of TELEBYTE  TECHNOLOGY,  INC.,  the  corporation
described in and which executed the foregoing instrument; and that he signed his
name by order of the Board of Directors of said corporation.





                                                            Notary Public

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TO:      NEW YORK STATE TAX COMMISSION
         CLERK OF SUFFOLK COUNTY, NEW YORK

STATE OF NEW YORK,

COUNTY OF SUFFOLK     :     ss.:



     MARCIA Z. HEFTER, being duly sworn, deposes and says:



     That she is an  attorney  at law with  offices  at 108  East  Main  Street,
Riverhead, New York, and that she is a partner of the law firm of Esseks, Hefter
& Angel, the attorneys for Home Federal Savings Bank, the mortgagee herein.

     That she is personally familiar with the facts hereinafter set forth:

     That on the 18th day of March 1998,  an  Assignment of Leases and Rents was
given by TELEBYTE  TECHNOLOGY,  INC. to Home Federal  Savings Bank as additional
collateral  security for an  indebtedness as evidenced by an assignment of rents
and leases being executed simultaneously herewith.

     That said Assignment of Leases and Rents presented  herewith secures no new
or further indebtedness.

     That this Affidavit is made to induce the NEW YORK STATE TAX COMMISSION and
the CLERK OF  SUFFOLK  COUNTY  to accept  said  Assignment  of Leases  and Rents
presented herewith,  together with the payment of $ -0- mortgage tax thereon and
to record the within  instrument  without  requiring any mortgage tax other than
the aforesaid sum, under the provisions of the Tax Law relating to exemptions of
mortgage tax.



                                                      Marcia Z Hefter

sworn to before me this

18th day of March 1998



Notary Public






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