BUSINESS PROMISSORY/CREDIT NOTE

            (for loans in the principal amount greater than $250,000)

Borrower: Name: Tel-instrument   Lender: [X] SUMMIT BANK     [ ] SUMMIT BANK
               Electronics Corp.         ("Lender")          ("Lender")
                                         210 MAIN STREET     ONE BETHLEHEM PLAZA
                                         HACKENSACK, NJ      BETHLEHEM, PA 18018
                                         07602             

               (individually and collectively, jointly
               and severally, the "Borrower")
               Address: 728 Garden Street
               Carlstadt, N.J. 07072

           Name:

           (individually and collectively, jointly
           and severally, the "Borrower")
           Address:

Principal Amount: $ 350,000.00                      Date of Note:  July 22, 1998

FOR VALUE  RECEIVED,  Borrower  unconditionally  promises to pay to the order of
Lender the above principal amount in U.S. Dollars or, if a line of credit,  such
lesser amount of advances made but not repaid  (including the face amount of any
letter of credit issued and such other financial accommodations as may have been
made),  together  with  interest  at the rate and on the terms  provided in this
Business  Promissory/Credit  Note  (including  all renewals,  extensions  and/or
modifications,  this "Note").  Any advance(s) shall be conclusively  presumed to
have been made at the request of Borrower  when (1)  deposited or credited to an
account of Borrower  with  Lender,  or (2) made in  accordance  with the oral or
written instructions of Borrower,  or of anyone on behalf of Borrower.  Any such
sums borrowed or reborrowed must be in multiples of 5% of the Principal  Amount.
This Note and all documents  executed in connection  with this Note are referred
to herein as the "Loan Documents."

[ ]   Borrower  authorizes  Lender to effect  payment of sums due hereunder by
      debiting  Borrower's bank accounts  maintained at Lender.  If this line is
      not checked,  Borrower shall pay Lender at Lender's address shown above or
      at such other place as Lender may designate in writing.

--------------------------------------------------------------------------------

INTEREST RATE.  Interest will be calculated on the basis of the actual number of
days elapsed over a year of 360 days,  unless  prohibited by law. Interest shall
accrue on the unpaid principal balance of this Note from the date hereof at

[ ]   Fixed Rate. The rate of ________ percent per annum.

[X]   Lender's  Prevailing  Base Rate.  Lender's  Prevailing Base Rate plus 1.00
      percent.  Lender's  Prevailing  Base Rate is the rate  announced by Lender
      from  time to time and is  subject  to  change  without  prior  notice  to
      Borrower.  Lender lends at rates both above and below Lender's  Prevailing
      Base Rate, and Borrower acknowledges that Lender's Prevailing Base Rate is
      not  represented  or intended to be the lowest or most  favorable  rate of
      interest offered by Lender.

[ ]   The   rate of __________.

--------------------------------------------------------------------------------

PAYMENT SCHEDULE.  All payments received  hereunder will be applied first to the
payment of accrued  interest,  any expenses or charges payable hereunder and the
balance only applied to principal.  Borrower  shall pay in  accordance  with the
following payment schedule:

OPTION 1: Principal and Interest shall be paid:

[ ]   Principal shall be paid on demand.

[X]   Principal shall be paid in a single payment on July l5, 1999.

<PAGE>

[ ]   Principal shall be paid in equal [ ] monthly [ ] quarterly installments of
      $ each,  commencing on ___, _____,  and continuing on the same day of each
      successive  month quarter  thereafter,  with a final payment of all unpaid
      principal,  interest  and all  other  amounts  recoverable  under the Loan
      Documents on ________, _____.

[ ]   Interest  shall  be  paid  in  [X]  monthly  [ ]   quarterly  installments
      commencing  on August 15,  1998,  and  continuing  on the same day of each
      successive [X] month [ ] quarter  thereafter  with a final  payment of all
      unpaid interest and all other amounts recoverable under the Loan Documents
      at the time of final payment of unpaid principal.

OPTION 2: Principal and interest shall be paid:

[ ]   [ ]  monthly  [ ]  quarterly  in  installments  of $ each,  commencing  on
      _______,  ______,and  continuing  on the same day of each  successive  [ ]
      month  [ ]  quarter  thereafter,  with  a  final  payment  of  all  unpaid
      principal,  interest  and all  other  amounts  recoverable  under the Loan
      Documents on _______, _______.

LATE  CHARGES.  If any payment is not  received  by Lender  within TEN (10) days
after its due date, Borrower shall, to the extent permitted by law, pay Lender a
late charge of 5% of the overdue payment (in no event to be less than $25.00 nor
more than  $2,500.00).  Any such late  charge  assessed is  immediately  due and
payable.

REPRESENTATIONS AND WARRANTIES.  Borrower continually represents and warrants to
Lender that the execution,  delivery,  and  performance of the Loan Documents by
Borrower and any other parties thereto do not require the consent or approval of
any  other  party;  and do not  conflict  with,  result  in a  violation  of, or
constitute a default under any agreement or other  instrument  binding upon such
parties  or any law,  regulation,  court  decree,  or order  applicable  to such
parties.  The Loan Documents  constitute legal, valid and binding obligations of
the parties thereto enforceable in accordance with their respective terms.
Borrower shall use all loan proceeds solely for business or commercial purposes.

AFFIRMATIVE  COVENANTS.  Borrower  covenants and agrees with Lender that, at all
times any  amounts  owing to Lender  exist,  Borrower  shall  (i)  furnish  such
information   (including,   without   limitation,   tax  returns  and  financial
information)  with  respect  to  Borrower's  financial  condition  and  business
operations  as Lender may request from time to time and  cooperate and join with
Lender  in  taking  all such  further  actions  as  Lender  deems  necessary  to
effectuate the provisions of the Loan  Documents;  and (ii) permit  employees or
agents of Lender full and complete access to any or all of Borrower's properties
and  financial  records,  to make extracts from and/or audit such records and to
examine and discuss Borrower's properties,  business,  finances and affairs with
Borrower's officers and outside accountants, all at Borrower's expense.

NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that, at all times
any amounts owing to Lender exist, Borrower shall not, without the prior written
consent of Lender: (a) engage in any business activities substantially different
than  those in which  Borrower  is  presently  engaged;  (b)  cease  operations,
liquidate, merge, transfer, acquire or consolidate with any other entity, change
ownership, change name, dissolve or transfer or sell Lender's collateral outside
of the ordinary course of business;  or (c) loan,  invest in or advance money or
assets to any  other  person or  entity,  or  purchase,  create or  acquire  any
interest in any other enterprise or entity-

EVENTS OF DEFAULT AND EFFECT THEREOF.  Each of the following shall constitute an
event of default  ("Event of Default")  under this Note: (a) failure of Borrower
to make any payment when due  hereunder;  (b) failure of Borrower to comply with
or to perform any term or condition contained in the Loan Documents; (c) default
by Borrower  under any other loan  agreement  with any other  creditor;  (d) any
warranty, representation or statement made to Lender by or on behalf of Borrower
is false  or  misleading;  (e) the  dissolution  or  termination  of  Borrower's
existence as a going business,  the insolvency of Borrower, the appointment of a
receiver for any part of Borrower's property,  any assignment for the benefit of
creditors,  any type of creditor workout,  or the commencement of any proceeding
under any bankruptcy or insolvency laws by or against Borrower;  (f) the filing,
entry  or  issuance  of  any  judgment,  execution,   garnishment,   attachment,
distraint,  or lien against Borrower or any of Borrower's property, or the entry
of any order enjoining or restraining Borrower and/or restraining or seizing any
property  of  Borrower;  (g)  failure of  Borrower  to furnish  any  information
requested by Lender or to permit Lender to inspect  Borrower's books and records
or property; (h) a material adverse change in Borrower's financial condition; or
(i) any of the  preceding  events occurs with respect to any guarantor of any of
the amounts owed to Lender,  or any guarantor  dies or becomes  incompetent,  or
revokes or disputes the validity  of, or  liability  under,  any guaranty of the
amounts  owed to  Lender.  Upon  the  occurrence  of an Event  of  Default,  all
commitments and obligations of Lender under 

<PAGE>

the Loan  Documents  immediately  will terminate  and, at Lender's  option,  all
amounts  owing to Lender will become due and  payable  immediately,  all without
notice of any kind to Borrower.  In  addition,  Lender shall have all the rights
and remedies  provided in the Loan Documents or available at law, in equity,  or
otherwise.  All of Lender's  rights and remedies  shall be cumulative and may be
exercised  singularly or  concurrently.  Election by Lender to pursue any remedy
shall  not  exclude  pursuit  of any  other  remedy,  and an  election  to  make
expenditures  or take  action to perform  any  obligation  of Borrower or of any
guarantor  shall not affect Lender's right to declare an Event of Default and to
exercise its rights and remedies.

RIGHT OF SETOFF.  Borrower  grants to Lender a contractual  possessory  security
interest in, and hereby assigns,  conveys,  delivers,  pledges, and transfers to
Lender all of Borrower's right, title and interest in and to, Borrower's present
and future bank accounts.  Borrower  authorizes  Lender to charge or set off all
sums owing to Lender against any and all such accounts and, at Lender's  option,
to administratively freeze all such accounts to allow Lender to protect Lender's
charge and setoff rights provided in this paragraph.

EXPENSES.  Borrower  agrees to pay to Lender,  at  closing  and  otherwise  upon
demand, all reasonable costs and expenses incurred by Lender (including the fees
and  expenses  of  in-house  and outside  counsel)  in  connection  with (1) the
preparation,  negotiation,  execution,  delivery and administration of this Note
and the other related loan  documents  and  instruments,  and any  modifications
thereto,  and (2)  collection  of amounts due Lender under the Note or any other
related loan documents and  instruments,  or the  enforcement or preservation of
Lender's rights under this Note and other related loan document and instruments,
whether by judicial proceeding or otherwise,  including, without limitation, any
court  proceeding,  bankruptcy  or insolvency  case,  appeal,  or  post-judgment
collection  services.  In the  absence  of proof by Lender  of  actual  fees and
expenses  of a greater  amount,  Borrower  agrees  that for any  enforcement  of
Lender's rights under the Note and other related loan documents and instruments,
25% of the outstanding  balance of the Note is a reasonable  amount for Lender's
fees and expenses.

GENERAL PROVISIONS.  Borrower waives presentment,  demand for payment,  protest,
notice of dishonor,  and notice of default. Upon any change in the terms of this
Note, and unless otherwise  expressly  stated in writing,  Borrower shall not be
released from  liability-  Borrower  agrees that Lender may renew or extend this
Note, or release any party, guarantor or collateral;  or impair, fail to realize
upon or perfect Lender's security interest in any collateral; and take any other
action deemed necessary by Lender without the consent of or notice to anyone-

MISCELLANEOUS PROVISIONS.

      Severability.  If any  provision  of the  Loan  Documents  is  found to be
      invalid  or  unenforceable,  such  provision  shall  be  stricken  and all
      remaining  provisions  of  the  Loan  Documents  shall  remain  valid  and
      enforceable.

      Waiver;  Amendments.  No amendment of the Loan Documents, and no waiver of
      any one or more of the provisions  hereof and thereof,  shall be effective
      unless set forth in writing  prepared  by  Borrower  and signed by Lender;
      provided, however, that any such waiver shall be restricted to the matters
      specified in such writing.

      Entire Agreement- The Loan Documents  constitute the sole agreement of the
      parties  regarding the subject matter hereof and thereof and supersede all
      oral  negotiations and prior writings  regarding the subject matter hereof
      and thereof.

      Waiver Of Jury Trial.  Borrower and Lender acknowledge and agree that each
      party knowingly,  voluntarily and intentionally  waives the right to trial
      by jury  with  respect  to any  matter  relating  to,  arising  from or in
      connection with the Loan Documents.

      Further  Assurances.  Borrower  agrees to cooperate and take all necessary
      steps as reasonably requested by Lender to carry out the spirit and intent
      of  the  Loan  Documents,  including,  without  limitation,  executing  or
      reexecuting any of the Loan Documents.

      Successors and Assigns.  The Loan Documents shall be binding upon Borrower
      and its  successors  and assigns and shall inure to the benefit of Lender,
      its successors and assigns. Borrower may not assign or transfer Borrower's
      rights  under the Loan  Documents  without  the prior  written  consent of
      Lender.

<PAGE>

In witness whereof,  Borrower,  intending to be legally bound, has executed this
Note as of the date above.

BORROWER: Tel-instrument Electronics Corp.        ATTEST:

By:  Name: Harold K. Fletcher                     Name: Donald S. Bab
     Title: President                             Title: Secretary

BORROWER:                                         ATTEST:

By:  Name:                                        Name:
     Title:                                       Title

     DOLORES McGUIRE

NOTARY PUBLIC OF NEW JERSEY
MY COMMISSION EXPIRES SEPT. 20, 1998

<PAGE>

                     BUSINESS COMMERCIAL SECURITY AGREEMENT

Debtor: Name: Tel-instrument   Lender: [X] SUMMIT BANK     [ ] SUMMIT BANK
               Electronics Corp.         ("Lender")          ("Lender")
                                         210 MAIN STREET     ONE BETHLEHEM PLAZA
                                         HACKENSACK, NJ      BETHLEHEM, PA 18018
                                         07602             

               (individually and collectively, jointly
               and severally, the "Borrower")
               Address: 728 Garden Street
               Carlstadt, N.J. 07072

               Name:                                 If Debtor is
                                                     not the Borrower,
                                                     the Borrower is:

                 (individually and collectively, jointly
                 and severally, the "Debtor")

               Address:

DATE OF AGREEMENT: July 22, 1998

DEFINITIONS.  Capitalized  terms not otherwise  defined in this Agreement  shall
have the meanings  attributed  to such terms in the  Business  Promissory/Credit
Note or BLOC  Credit  Note,  whichever  is  executed  in  connection  with  this
Agreement  (the  "Note")  and if not  define - d in the Note,  then the  Uniform
Commercial  Code in effect from time to time in the state or states in which the
Collateral is located.  The word  "Indebtedness"  shall mean all amounts owed by
Debtor (as primary  obligor or guarantor) to Lender,  including any  outstanding
principal,  accrued and unpaid interest thereon, Lender's expenses and any other
sums recoverable by Lender. The word "Collateral" means the following  described
property of Debtor (and as more fully  described in the attachments to the UCC-1
financing  statements  executed in  connection  herewith),  whether now owned or
hereafter  acquired,  whether now  existing or hereafter  arising,  and wherever
located,   together  with  all  Proceeds  thereof  and  all  insurance  proceeds
pertaining thereto:

             [X] Inventory                    [X] Equipment
             [X] Accounts                     [X] General Intangibles

GRANT OF SECURITY  INTEREST.  In order to secure the payment of the Indebtedness
and  performance  of Debtor's  obligations  to Lender,  Debtor  hereby grants to
Lender a continuing  security  interest in and lien upon its right,  title,  and
interest in the  Collateral.  If Debtor has granted any security  interest(s) to
Lender in any or all of the Collateral prior to the date of this Agreement, this
Agreement  shall be  deemed  to be a  reaffirmation  of the  previously  granted
security interest(s).

REPRESENTATIONS  AND  COVENANTS.  Debtor  warrants  and  covenants  to Lender as
follows:

      Perfection of Security  Interest.  Debtor agrees to execute such financing
      statements  and to take whatever  other actions are requested by Lender to
      evidence,   perfect  and  continue   Lender's  security  interest  in  the
      Collateral.   Debtor   hereby   appoints   Lender   as   its   irrevocable
      attorney-in-fact  for the purpose of executing any documents  necessary to
      perfect or to continue the security  interest granted in this Agreement or
      otherwise carry out the terms of this  Agreement.  Lender may at any time,
      and without further authorization from Debtor, file a carbon, photographic
      or other reproduction of any financing  statement or of this Agreement for
      use as a  financing  statement.  Debtor  will  reimburse  Lender  for  all
      expenses for the  perfection  and the  continuation  of the  perfection of
      Lender's security interest in the Collateral.  Debtor will promptly notify
      Lender  before any change in Debtor's  name or use of  fictitious or trade
      names not otherwise disclosed in writing to Lender.

      Location of and Transactions  Involving the Collateral.  All Collateral is
      located at  Debtor's  address  shown  above.  Debtor  shall not remove the
      Collateral from its existing  locations  without the prior written consent
      of Lender. Except for inventory sold or accounts collected in the ordinary
      course of Debtor's  business,  Debtor  shall not sell,  offer to sell,  or
      otherwise transfer or dispose of the Collateral.  Debtor shall not pledge,
      mortgage, encumber or otherwise permit the Collateral to be subject to any
      lien, security interest,  encumbrance,  or charge, other than the security
      interest provided for in this Agreement, without the prior written consent
      of Lender.  Unless waived by Lender,  all proceeds from any disposition of
      the Collateral shall be held in trust for Lender,  shall not be commingled
      with any other funds, and shall  immediately be delivered to Lender.  This
      requirement,  however,  does not constitute  consent by Lender to any such
      disposition.

<PAGE>

      Collateral  Schedules and  Locations.  At Lender's  request,  Debtor shall
      deliver to Lender (i)  schedules of accounts and general  intangibles,  in
      form  and  substance   satisfactory  to  Lender,   and  (ii)  such  lists,
      descriptions,  and  designations  of inventory and equipment as Lender may
      request.  Such  information  shall be submitted for Debtor and each of its
      subsidiaries or related companies.

      Maintenance  and  Inspection  of  Collateral.  Debtor  shall  maintain all
      tangible  Collateral in good-condition and repair.  Debtor will not commit
      or permit damage to or destruction of any part of the  Collateral.  Lender
      and its designated  representatives and agents shall have the right at all
      reasonable times to examine,  inspect,  and audit the collateral  wherever
      located. Debtor shall immediately notify Lender of all cases involving the
      return, rejection,  repossession,  loss or damage of or to any Collateral;
      of any request for credit or adjustment  or of any other  dispute  arising
      with respect to the Collateral;  and generally of all happenings or events
      affecting the Collateral or the value or the amount of the Collateral.

      Taxes,  Assessments and Liens. Debtor will complete and file all necessary
      federal,  state  and local tax  returns  and will pay when due all  taxes,
      assessments,  levies and liens upon the Collateral and provide evidence of
      such payments to Lender upon request.

      Insurance.  Debtor shall procure and maintain such insurance as Lender may
      require with respect to the  Collateral,  in form,  amounts and  coverages
      reasonably  acceptable  to  Lender  and  issued  by a  company  reasonably
      acceptable  to Lender.  Debtor,  upon  request of Lender,  will deliver to
      Lender from time to time the policies or certificates of insurance,  which
      shall  contain  provisions  that the  coverages  will not be  canceled  or
      diminished  without at least  thirty  (30) days' prior  written  notice to
      Lender. Each insurance policy shall also include an endorsement  providing
      that  coverage  in favor of Lender  will not be impaired in any way by any
      act,  omission or default of Debtor or any other person.  Each such policy
      shall  also name  Lender  as loss  payee.  If Debtor at any time  fails to
      obtain or maintain any insurance as required under this Agreement,  Lender
      may  obtain  such  insurance  as Lender  deems  appropriate  and the costs
      incurred  by  Lender  shall  be added to the  Indebtedness.  Debtor  shall
      promptly notify Lender of any loss or damage to the Collateral.

EXPENDITURES  BY LENDER.  If not  discharged  or paid when due,  Lender may (but
shall  not  be  obligated  to)  discharge  or pay  any  amounts  required  to be
discharged or paid by Debtor under this Agreement,  including without limitation
all taxes,  liens,  security interests,  encumbrances,  and other claims, at any
time  levied or  placed on the  Collateral.  Lender  also may (but  shall not be
obligated  to) pay all  costs  for  insuring,  maintaining  and  preserving  the
Collateral.  All such expenditures  incurred or paid by Lender for such purposes
will then bear  interest at the rate charged under the Loan  Documents  from the
date  incurred  or paid by  Lender  to the date of  repayment  by  Debtor.  This
Agreement also will secure the payment of these amounts.  This right shall be in
addition to all other rights and  remedies to which Lender may be entitled  upon
the occurrence of an Event of Default.

RIGHTS AND REMEDIES.  Upon the  occurrence of an Event of Default,  Lender shall
have the following  rights and remedies,  in addition to the rights and remedies
available to Lender under the other Loan Documents:

      Assemble Collateral.  Lender may require Debtor to assemble the Collateral
      and make it  available  to Lender at a place to be  designated  by Lender.
      Lender also shall have full power to enter upon the  property of Debtor to
      take possession of and remove the Collateral.  If the Collateral  contains
      other goods not  covered by this  Agreement  at any time of  repossession,
      Debtor agrees that Lender may take such other goods,  provided that Lender
      makes reasonable efforts to return them to Debtor after repossession.

      Sell the  Collateral-  Lender  shall  have  full  power  to  sell,  lease,
      transfer, or otherwise deal with the Collateral or proceeds thereof in its
      own name or in the name of  Debtor.  Lender  may  sell the  Collateral  at
      public auction or private sale. Unless the Collateral threatens to decline
      speedily in value or is of a type customarily sold on a recognized market,
      Lender may give Debtor five (5)  business  days' prior  notice of the time
      after  which any private  sale or any other  intended  disposition  of the
      Collateral is to be made, which Debtor agrees is commercially  reasonable.
      All expenses  relating to the  disposition of the  Collateral,  including,
      without limitation, the expenses of retaking, holding, insuring, preparing
      for  sale  and  selling  the  Collateral,  shall  become  a  part  of  the
      Indebtedness and secured hereby.

      Collection  of  Accounts.  Lender may  exercise  its rights to collect the
      Accounts and to notify account debtors to make payments directly to Lender
      for application to the Indebtedness.

<PAGE>

      Power of Attorney.  Debtor hereby  appoints  Lender as its true and lawful
      attorney-in-fact,  irrevocably, with full power of substitution, to do the
      following:  (a) to demand, collect,  receive, receipt for, sue and recover
      all sums of money or other property which may now or hereafter become due,
      owing or payable from the Collateral; (b) to execute, sign endorse any and
      all claims,  instruments,  receipts,  checks, drafts or warrants issued in
      payment for the Collateral; (c) to settle or compromise any and all claims
      arising under the  Collateral,  and, in the place and stead of Debtor,  to
      execute and deliver its release and settlement for such claims; and (d) to
      file any  claim or to take any  action  or  institute  or take part in any
      proceedings,  either  in  its  own  name  or in the  name  of  Debtor,  or
      otherwise,  which in the  discretion of Lender may seem to be necessary or
      advisable. This power is given as security for the payment and performance
      obligations of Debtor to Lender,  and is  irrevocable  and shall remain in
      full force and effect until renounced by Lender.

IN WITNESS  WHEREOF,  DEBTOR AND LENDER,  INTENDING  TO BE LEGALLY  BOUND,  HAVE
EXECUTED THIS AGREEMENT AS OF THE DAY AND YEAR FIRST ABOVE WRITTEN.

  DEBTOR:  Tel-instrument Electronics Corp.      ATTEST:


     By:
     Name: Harold K. Fetcher                           Name:  Donald S. Bab
     Title:   President                                Title:  Secretary

     By:
     Name:                                             Name:
     Title:                                            Title:

                      LENDER:      Summit Bank
  BY:
       Authorized Representative   Jaclynn Da Costa, Assistant Vice President