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Eastern Bank

                                                     May 20, 1999


International Electronics, Inc.
427 Turnpike Street
Canton, Massachusetts 02021
Attn:  John Waldstein, President and Treasurer

Gentlemen:

         Reference is made to our Demand Loan and Security Agreement Accounts
Receivable and Inventory dated February 28, 1997, together with all amendments
and additions thereto (hereinafter called the "Agreement"). Notwithstanding the
provisions of the Agreement, it is agreed, effective immediately, that the
Agreement shall be amended as follows:

         1. Section 5.A. of the Agreement is hereby stricken in its entirety
and the following new Section 5.A. substituted therefor:


               "A. Subject to the terms and provisions of this Agreement, the
         Bank hereby establishes a discretionary revolving line of credit in
         Borrower's favor in the amount set forth below, as determined by Bank
         from time to time hereafter. Bank may make such loans to Borrower,
         based upon such facts and circumstances existing at the time of the
         request, as from time to time Bank elects to make which are secured by
         Borrower's Inventory, Accounts and all other Collateral and the
         proceeds thereof. Without limiting the discretionary nature of Bank's
         obligation to make loans hereunder, or the demand feature of any loans
         that Bank does make hereunder, Borrower agrees that the aggregate
         unpaid principal of all direct loans plus the sum of the aggregate
         amount undrawn on all letters of credit and acceptances shall not
         exceed the sum of One Million ($1,000,000.00) Dollars. All such loans
         shall bear interest and at the option of Bank shall be evidenced by
         demand notes in form satisfactory to Bank, but in the absence of notes
         shall be conclusively evidenced by the Bank's record of disbursements
         and repayments and shall be payable ON DEMAND. Interest will be charged
         to Borrower at a fluctuating rate which is the daily equivalent to the
         Base Rate in effect from time to time, or at such other rate agreed on
         from time to time by the parties, upon any balance owing to Bank at the
         close of each day and shall be payable monthly in arrears, on the first
         day of each month, until the Bank makes demand. The rate of interest
         payable by Borrower shall be changed effective as of that date in which
         a change in the Base Rate becomes effective. Interest shall be computed
         on the basis of the actual number of days elapsed over a year of three
         hundred sixty (360) days. The term "Base Rate" as

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         used herein and in any supplement and amendment hereto shall mean the
         rate of interest announced from time to time by Bank, at its head
         office, as its Base Rate, it being understood that such rate is a
         reference rate and not necessarily the lowest rate of interest charged
         by the Bank. The Base Rate on the date hereof is agreed to be seven and
         three-quarters (7 3/4%) percent."

         2. Section 6 of the Agreement is hereby stricken in its entirety and
the following new Section 6 substituted therefor:

                  "6. DEFINITION OF QUALIFIED ACCOUNT. This section has been
         intentionally reserved."

         3. Section 7 of the Agreement is hereby stricken in its entirety and
the following new Section 7 substituted therefor:

                  "7. DEFINITION OF ELIGIBLE INVENTORY. This section has been
         intentionally reserved."

         4. Section 13(d) of the Agreement is hereby stricken in its entirety
and the following new Section 13(d) substituted therefor:

                  "(d) Borrower will at all times keep accurate and complete
         records of Borrower's Inventory, Accounts and other Collateral, and
         Bank, or any of its agents, shall have the right to call at Borrower's
         place or places of business at intervals to be determined by Bank, and
         without hindrance or delay, to inspect, audit, check, and make extracts
         from any copies of the books, records, journals, orders, receipts,
         correspondence which relate to Borrower's Accounts, and other
         Collateral or other transactions, between the parties thereto and the
         general financial condition of Borrower and Bank may remove any of such
         records temporarily for the purpose of having copies made thereof.
         Absent the occurrence of an Event of Default which is continuing,
         Borrower shall not be obligated to pay to Bank an audit fee in
         connection with any such audit or inspection."

         5. Section 14(a) of the Agreement is hereby stricken in its entirety
and the following new Section 14(a) substituted therefor:

                  "(a) (Debt to Worth) permit the aggregate amount of its
         indebtedness to be more than one and one-half (1 1/2) times the amount
         of its tangible net worth on the last day of any fiscal year beginning
         with the fiscal year ending August 31, 1998, or the last day of the
         month of February, 1999, commencing February 28, 1999;"

         6. The Agreement is hereby amended by adding the following new Section
14(m) thereto:



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                  "(m) (Minimum Net Earnings) permit the net after tax earnings
         of Borrower for the six (6) month period ending on the last day of
         February of each year or the twelve (12) month period ending on the
         last day of August of each year to be less than One ($1.00) Dollar."

         Kindly note that the alterations contained herein do not in any way
alter, release or change any other sections contained in the Agreement.

         Please acknowledge your agreement to the foregoing by signing the
enclosed copy of this letter and returning the same to the undersigned.

                                Very truly yours,

                                EASTERN BANK


                                By: /s/ Alan Roberts
                                   ----------------------------
                                   Alan Roberts, Vice President

UNDERSTOOD AND AGREED TO:

INTERNATIONAL ELECTRONICS, INC.


By: /s/ John Waldstein
   ------------------------------------------------------
      John Waldstein, President and Treasurer


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