LOAN AGREEMENT


     This Loan  Agreement  is made and entered  into as of this 18th day of May,
1999 by and between SCNV  Acquisition  Corp., a corporation  organized under the
laws of the State of Delaware ( the  "Lender");  and Elecmatec  Electro-Magnetic
Technologies  Ltd.,  a company  organized  under the laws of the State of Israel
("Borrower").

     WHEREAS,  pursuant to the term sheet dated  December  28,  1998,  among the
Lender, the Borrower, and Messrs. Herman Branover,  Arie El-Boher, Yuri Gelfgat,
Israel Weinbaum and Ariel Shemer (the "Term Sheet"), the Lender agreed,  subject
to the closing of the  transactions  contemplated by the Term Sheet, to lend the
Borrower,  from time to time, up to an aggregate of  $1,000,000  (one million US
Dollars),  as needed by the Borrower to finance its  activities  (including  the
payment of salaries and the purchase of equipment); and

     WHEREAS,  the parties agreed that such amount shall also include guarantees
provided prior to the date of this Agreement,  and to be provided in the future,
by the Lender to the Borrower; and

     WHEREAS, the parties entered into a loan agreement dated as of December 30,
1998,  a copy of which is  attached  hereto  as  Exhibit A (the  "Original  Loan
Agreement"), pursuant to which the Lender (i) lent the Borrower an aggregate sum
of $110,000 (one hundred and ten thousand US Dollars) (the "Original  Loan") and
(ii)  provided  the  Borrower  with a guarantee  in the amount of $162,000  (one
hundred and sixty-two thousand US Dollars) (the "Original Guarantee"); and

     WHEREAS,  pursuant to the Original Loan Agreement,  upon the closing of the
transaction  contemplated by the Term Sheet, the Original Loan is to become part
of the loans to be provided  under this Agreement and to be subject to the terms
of this Agreement; and

     WHEREAS, in addition to the amounts lent to the Borrower under the Original
Loan Agreement,  the Lender has lent the Borrower,  including amounts being lent
on the date  hereof,  an  aggregate  amount of $116,917  (one-hundred  and eight
thousand, nine-hundred and seventeen US Dollars) (the "Interim Amount"); and

     WHEREAS,  the parties have agreed that upon the closing of the  transaction
contemplated  by the Term Sheet,  the Interim Amount and the Original  Guarantee
shall become part of the loans to be provided  under this Agreement and shall be
subject to the terms of this Agreement; and

     WHEREAS,  the transactions  contemplated by the Term Sheet are being closed
simultaneously with the execution of this Agreement. NOW, THEREFORE, the parties
agree as follows:

     1. Preamble.  The Preamble to this  Agreement  constitutes an integral part
hereof.


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     2. Loan and Guarantees.

     2.01  The  Lender  hereby  agrees  to  lend  the  Borrower  and/or  provide
Guarantees  (as  defined  below)  of up to an  additional  aggregate  amount  of
$619,083 (six-hundred and nineteen thousand, eighty-three US Dollars) in several
installments  (each, an "Installment")  and/or  Guarantees,  as the case may be,
based on the  actual  needs of the  Borrower.  All  amounts  transferred  to the
Borrower by the Lender  pursuant to this Section 2.01 together with the Original
Loan and the Additional  Amount shall  hereinafter be referred to as the "Loan."
The term  "Guarantee"  shall mean a  guarantee  to be  provided by the Lender to
third parties at the request of the Borrower,  including a guarantee in favor of
King ___________ Ltd.

     2.02 Each  Installment or Guarantee  shall be made by the Lender  following
the  receipt  of a written  request  from the  Chief  Executive  Officer  of the
Borrower  certifying that the Borrower is in need of such financing or Guarantee
and setting forth the use to be made of such funds or Guarantee, as the case may
be.

     2.03 Each  Installment  shall be made pursuant to a Heiter Iska in the form
attached  hereto as Exhibit B (the  "Form"),  which shall  govern the amounts of
money in excess of the  principal to be paid back by the  Borrower.  Each Heiter
Iska  shall be  drafted  in a manner to ensure  that the  amount of  "additional
profit"  as set forth in  Section 4 of the  Heiter  Iska  shall be  reduced  (as
compared  to the  amount  set  forth  in  Section  4 of the  Form)  in the  same
proportion  as the  reduction in the amount of the money loaned  pursuant to the
Heiter Iska (as compared to the amount set forth in the opening paragraph of the
Form).

     2.04 Upon the payment by the Lender of any  Installment or the provision of
any  Guarantee  pursuant to this  Section 2, the parties  shall  update the loan
schedule set forth in Exhibit C to this Agreement to include such Installment or
Guarantee.

     3. Representations and Warranties of Borrower.

     3.01  Accuracy of  Representations  and  Warranties.  The  Borrower  hereby
represents  and warrants that the  representations  and  warranties  made by the
Borrower in the Share  Purchase  Agreement  between the Borrower and the Lender,
dated as of May 18, 1999,  (attached  hereto as Exhibit D) (the "Share  Purchase
Agreement") are true and correct as of the date hereof.

     3.02  Validity of  Transaction.  The Borrower has all  requisite  power and
authority  to  execute,  deliver,  and perform  this  Agreement.  All  necessary
corporate  proceedings  of the Borrower  have been duly taken to  authorize  the
execution,  delivery,  and  performance of this Agreement by the Borrower.  This
Agreement is the legal,  valid, and binding  obligation of the Borrower,  and is
enforceable as to the Borrower in accordance with its terms.

     4. Representations and Warranties of Lender.


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     4.01  Accuracy  of  Representations  and  Warranties.   The  Lender  hereby
represents  and warrants that the  representations  and  warranties  made by the
Lender in the Share Purchase  Agreement were true and correct when made, and are
true and correct as of the date hereof as if made on the date hereof.

     4.02  Validity  of  Transaction.  The  Lender has all  requisite  power and
authority  to  execute,  deliver,  and perform  this  Agreement.  All  necessary
corporate  proceedings  of the  Lender  have been duly  taken to  authorize  the
execution,  delivery,  and  performance  of this  Agreement by the Lender.  This
Agreement is the legal,  valid,  and binding  obligation  of the Lender,  and is
enforceable as to the Lender in accordance with its terms.

     5.  Repayment  of the Loan and  Removal  of  Guarantee.  Unless  agreed  to
otherwise in writing by the Lender,  any amounts received by the Borrower in any
equity or debt  financing  and any net profit  obtained by the Borrower from its
operations  shall  first be used,  before  any use of such  funds  for any other
purpose,  to: (i) repay any outstanding balance of the principal of the Loan and
all other amounts  owing  pursuant to the Heiterei Iska entered into pursuant to
Section 2.03 above until the full repayment of the principal of the Loan and all
such other  amounts,  and (ii) cause the full removal of all of the  Guarantees,
including the Original Guarantee.

     6. Security.  As security for the  Borrower's  obligations  hereunder,  the
Borrower  pledged to the Lender  all  rights  that it holds to all  Intellectual
Property and all its physical  assets,  and granted to the Lender a lien thereto
and security interest therein. A copy of the pledge agreement is attached hereto
as Exhibit E.

     7.  Default.  Any  outstanding  balance of the Loan,  including all amounts
accumulated  pursuant to the terms of the Heiterei Iska, will immediately become
due and payable upon any Event of Default as defined  herein.  The occurrence of
any of the following shall be an Event of Default:

     7.01  any  material  breach  by  Borrower  of  any of  its  obligations  or
representations under this Agreement;

     7.02 the  commencement  by Borrower of any  liquidation  proceedings or the
adoption of a winding up  resolution by the Borrower,  or the  appointment  of a
receiver  or trustee  over the whole or any part or  Borrower's  assets,  or the
calling by Borrower of a meeting of creditors for the purpose of entering into a
scheme or arrangement with them;

     7.03 the levy of an attachment or the institution of execution  proceedings
against the whole or a substantial part of Borrower's assets. The Borrower shall
notify Lender within 72 hours of any such attachment or proceeding.


     8. Entire Agreement. This Agreement constitutes the entire understanding of
the parties with respect to the subject matter hereof. This Agreement supersedes
any provisions of the Original Loan Agreement  relating to the Original Loan and
the


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Original  Guarantee.  This  Agreement may not be modified or amended except by a
written agreement signed by the parties hereto.

     9. Governing Law. This agreement shall be governed by the laws of the State
of Israel.  Any dispute arising under or in connection with this Agreement shall
be settled exclusively before the courts of the State of Israel.


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IN WITNESS WHEREOF, the parties have executed this Loan Agreement as of the date
first above written.


SCNV Acquisition Corp.              Elecmatec Electro-Magnetic Technologies Ltd.


By: /s/ Shaul Lesin                 By: /s/ Arik El-Boher
    ---------------------           -------------------------
Name:   Shaul Lesin                 Name:   Arik El-Boher
Title:   E.V.P.                     Title:  CEO