Document:

EXHIBIT 10.2
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ARTICLE I

                     EXPORT-IMPORT BANK OF THE UNITED STATES
                        WORKING CAPITAL GUARANTEE PROGRAM

                               BORROWER AGREEMENT

         THIS BORROWER  AGREEMENT (this "Agreement") is made and entered into by
the entity  identified as Borrower on the signature page hereof  ("Borrower") in
favor of the  Export-Import  Bank of the United  States  ("Ex-Im  Bank") and the
institution identified as Lender on the signature page hereof ("Lender").

                                    RECITALS

         Borrower has requested  that Lender  establish a Loan Facility in favor
of Borrower for the  purposes of  providing  Borrower  with  pre-export  working
capital to finance the manufacture, production or purchase and subsequent export
sale of Items.

         It is a condition to the establishment of such Loan Facility that Ex-Im
Bank   guarantee  the  payment  of  ninety   percent  (90%)  of  certain  credit
accommodations  subject  to the  terms  and  conditions  of a  Master  Guarantee
Agreement, the Loan Authorization  Agreement, and to the extent applicable,  the
Delegated Authority Letter Agreement.

         Borrower  is  executing  this  Agreement  for the benefit of Lender and
Ex-Im Bank in consideration for and as a condition to Lender's  establishing the
Loan  Facility  and Ex-Im  Bank's  agreement  to  guarantee  such Loan  Facility
pursuant to the Master Guarantee Agreement.

         NOW, THEREFORE, Borrower hereby agrees as follows:

ARTICLE II
                                   DEFINITIONS

         2.1  Definition  of Terms.  As used in this  Agreement,  including  the
Recitals to this Agreement and the Loan Authorization  Agreement,  the following
terms shall have the following meanings:

                  "Accounts  Receivable"  shall mean all of Borrower's now owned
         or hereafter  acquired (a)  "accounts"  (as such term is defined in the
         UCC),  other  receivables,  book debts and other forms of  obligations,
         whether  arising  out of goods sold or  services  rendered  or from any
         other  transaction;  (b) rights in, to and under all purchase orders or
         receipts for goods or services;  (c) rights to any goods represented or
         purported to be represented by any of the foregoing  (including  unpaid
         sellers'  rights of rescission,  replevin,  reclamation and stoppage in
         transit and rights to returned,  reclaimed or repossessed  goods);  (d)
         moneys due or to become due to such Borrower under all purchase  orders
         and contracts for the sale of goods or the  performance  of services or
         both by Borrower  (whether or not yet earned by performance on the part
         of Borrower),  including the proceeds of the foregoing;  (e) any notes,
         drafts,  letters of credit,  insurance  proceeds or other  instruments,
         documents and writings evidencing or supporting the foregoing;  and (f)
         all  collateral  security and guarantees of any kind given by any other
         Person with respect to any of the foregoing.

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                  "Advance  Rate" shall mean the rate  specified in Section 5(C)
         of the Loan Authorization Agreement for each category of Collateral.

                  "Business Day" shall mean any day on which the Federal Reserve
         Bank of New York is open for business.

                  "Buyer"  shall mean a Person that has entered into one or more
         Export Orders with Borrower.

                  "Collateral"  shall mean all property and interest in property
         in or upon which  Lender has been  granted a Lien as  security  for the
         payment of all the Loan Facility  Obligations  including the Collateral
         identified  in Section 6 of the Loan  Authorization  Agreement  and all
         products and proceeds (cash and non-cash) thereof.

                  "Commercial  Letters  of Credit"  shall mean those  letters of
         credit subject to the UCP payable in Dollars and issued or caused to be
         issued by Lender on behalf of Borrower  under a Loan  Facility  for the
         benefit of a  supplier(s)  of Borrower in  connection  with  Borrower's
         purchase  of goods or  services  from the  supplier  in  support of the
         export of the Items.

                  "Country   Limitation   Schedule"   shall  mean  the  schedule
         published  from time to time by Ex-Im Bank and  provided to Borrower by
         Lender which sets forth on a country by country basis whether and under
         what conditions  Ex-Im Bank will provide  coverage for the financing of
         export transactions to countries listed therein.

                  "Credit  Accommodation  Amount" shall mean, the sum of (a) the
         aggregate  outstanding  amount of  Disbursements  and (b) the aggregate
         outstanding face amount of Letter of Credit Obligations.

                  "Credit Accommodations" shall mean, collectively,
         Disbursements and Letter of Credit Obligations.

                  "Debarment  Regulations"  shall  mean,  collectively,  (a) the
         Governmentwide  Debarment and Suspension  (Nonprocurement)  regulations
         (Common  Rule),  53 Fed.  Reg.  19204 (May 26,  1988),  (b) Subpart 9.4
         (Debarment,  Suspension,  and Ineligibility) of the Federal Acquisition
         Regulations,  48 C.F.R.  9.400-9.409 and (c) the revised Governmentwide
         Debarment and Suspension (Nonprocurement) regulations (Common Rule), 60
         Fed. Reg. 33037 (June 26, 1995).

                  "Delegated   Authority   Letter   Agreement"  shall  mean  the
         Delegated  Authority Letter  Agreement,  if any, between Ex-Im Bank and
         Lender.

                  "Disbursement" shall mean,  collectively,  (a) an advance of a
         working  capital loan from Lender to Borrower  under the Loan Facility,
         and (b) an advance to fund a drawing under a Letter of Credit issued or
         caused to be issued by Lender  for the  account of  Borrower  under the
         Loan Facility.

                  "Dollars" or "$" shall mean the lawful  currency of the United
         States.

                  "Effective  Date"  shall  mean the date on which  (a) the Loan
         Documents are executed by Lender and Borrower or the date, if later, on
         which  agreements  are executed by Lender and Borrower  adding the Loan
         Facility to an existing working capital loan arrangement between Lender
         and Borrower and (b) all of the conditions to the making of

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         the  initial  Credit  Accommodations  under the Loan  Documents  or any
         amendments thereto have been satisfied.

                  "Eligible  Export-Related  Accounts  Receivable" shall mean an
         Export-Related  Account  Receivable  which is  acceptable to Lender and
         which is deemed to be eligible  pursuant to the Loan Documents,  but in
         no event shall Eligible  Export-Related Accounts Receivable include any
         Account Receivable:

                           (a) that does not arise from the sale of Items in the
                  ordinary course of Borrower's business;

                           (b) that is not subject to a valid,  perfected  first
                  priority Lien in favor of Lender;

                           (c)  as to  which  any  covenant,  representation  or
                  warranty  contained in the Loan Documents with respect to such
                  Account Receivable has been breached;

                           (d) that is not owned by  Borrower  or is  subject to
                  any right,  claim or interest of another Person other than the
                  Lien in favor of Lender;

                           (e) with  respect  to which an  invoice  has not been
                  sent;

                           (f) that arises from the sale of defense  articles or
                  defense services;

                           (g) that is due and payable from a Buyer located in a
                  country  with  which  Ex-Im  Bank  is  prohibited  from  doing
                  business as designated in the Country Limitation Schedule;

                           (h) that does not comply with the requirements of the
                  Country Limitation Schedule;

                           (i) that is due and  payable  more  than one  hundred
                  eighty (180) days from the date of the invoice;

                           (j) that is not paid within sixty (60)  calendar days
                  from its original due date, unless it is insured through Ex-Im
                  Bank export credit insurance for comprehensive  commercial and
                  political  risk,  or  through  Ex-Im  Bank  approved   private
                  insurers for comparable coverage, in which case it is not paid
                  within ninety (90) calendar days from its due date;

                           (k)  that   arises   from  a  sale  of  goods  to  or
                  performance  of  services  for  an  employee  of  Borrower,  a
                  stockholder  of Borrower,  a subsidiary of Borrower,  a Person
                  with a  controlling  interest in  Borrower  or a Person  which
                  shares common controlling ownership with Borrower;

                           (l) that is backed by a letter of credit  unless  the
                  Items  covered  by the  subject  letter  of  credit  have been
                  shipped;

                           (m) that  Lender  or Ex-Im  Bank,  in its  reasonable
                  judgment, deems uncollectible for any reason;

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                           (n) that is due and payable in a currency  other than
                  Dollars, except as may be approved in writing by Ex-Im Bank;

                           (o) that is due and  payable  from a military  Buyer,
                  except as may be approved in writing by Ex-Im Bank;

                           (p) that does not  comply  with the terms of sale set
                  forth in Section 7 of the Loan Authorization Agreement;

                           (q)  that is due  and  payable  from a Buyer  who (i)
                  applies for,  suffers,  or consents to the  appointment of, or
                  the taking of possession by, a receiver, custodian, trustee or
                  liquidator  of itself or of all or a  substantial  part of its
                  property or calls a meeting of its  creditors,  (ii) admits in
                  writing its  inability,  or is  generally  unable,  to pay its
                  debts as they become due or ceases  operations  of its present
                  business,  (iii) makes a general assignment for the benefit of
                  creditors,  (iv) commences a voluntary case under any state or
                  federal  bankruptcy laws (as now or hereafter in effect),  (v)
                  is adjudicated as bankrupt or insolvent, (vi) files a petition
                  seeking to take  advantage of any other law  providing for the
                  relief  of  debtors,  (vii)  acquiesces  to,  or fails to have
                  dismissed,  any  petition  which  is filed  against  it in any
                  involuntary  case under such bankruptcy  laws, or (viii) takes
                  any action for the purpose of effecting any of the foregoing;

                           (r)  that  arises  from a  bill-and-hold,  guaranteed
                  sale,  sale-and-return,  sale on approval,  consignment or any
                  other  repurchase  or return  basis or is evidenced by chattel
                  paper;

                           (s) for which the Items  giving rise to such  Account
                  Receivable have not been shipped and delivered to and accepted
                  by the  Buyer  or the  services  giving  rise to such  Account
                  Receivable have not been performed by Borrower and accepted by
                  the  Buyer  or  the  Account  Receivable  otherwise  does  not
                  represent a final sale;

                           (t)  that  is  subject  to  any  offset,   deduction,
                  defense,  dispute,  or  counterclaim  or the  Buyer  is also a
                  creditor or supplier of Borrower or the Account  Receivable is
                  contingent in any respect or for any reason;

                           (u) for which  Borrower has made any  agreement  with
                  the Buyer for any deduction therefrom, except for discounts or
                  allowances  made in the ordinary course of business for prompt
                  payment, all of which discounts or allowances are reflected in
                  the calculation of the face value of each  respective  invoice
                  related thereto; or

                           (v) for which any of the  Items  giving  rise to such
                  Account   Receivable   have   been   returned,   rejected   or
                  repossessed.

                  "Eligible Export-Related  Inventory" shall mean Export-Related
         Inventory  which is  acceptable  to  Lender  and  which is deemed to be
         eligible pursuant to the Loan Documents, but in no event shall Eligible
         Export-Related Inventory include any Inventory:

                           (a) that is not subject to a valid,  perfected  first
                  priority Lien in favor of Lender;

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                           (b) that is located  at an address  that has not been
                  disclosed to Lender in writing;

                           (c) that is placed by Borrower on consignment or held
                  by Borrower on consignment from another Person;

                           (d)  that  is in the  possession  of a  processor  or
                  bailee,   or  located  on  premises  leased  or  subleased  to
                  Borrower,  or on premises  subject to a mortgage in favor of a
                  Person other than Lender,  unless such  processor or bailee or
                  mortgagee or the lessor or sublessor of such premises,  as the
                  case may be, has  executed  and  delivered  all  documentation
                  which Lender shall  require to evidence the  subordination  or
                  other  limitation or  extinguishment  of such Person's  rights
                  with  respect to such  Inventory  and  Lender's  right to gain
                  access thereto;

                           (e) that is produced in  violation  of the Fair Labor
                  Standards  Act  or  subject  to  the  "hot  goods"  provisions
                  contained  in 29  US.C.ss.215  or  any  successor  statute  or
                  section;

                           (f)  as to  which  any  covenant,  representation  or
                  warranty with respect to such Inventory  contained in the Loan
                  Documents has been breached;

                           (g)      that is not located in the United States;

                           (h)      that is demonstration Inventory;

                           (i)  that  consists  of  proprietary  software  (i.e.
                  software  designed solely for Borrower's  internal use and not
                  intended for resale);

                           (j) that is damaged, obsolete,  returned,  defective,
                  recalled or unfit for further processing;

                           (k) that has been previously exported from the United
                  States;

                           (l) that  constitutes  defense  articles  or  defense
                  services;

                           (m) that is to be  incorporated  into Items  destined
                  for shipment to a country as to which Ex-Im Bank is prohibited
                  from doing  business as designated  in the Country  Limitation
                  Schedule;

                           (n) that is to be  incorporated  into Items  destined
                  for  shipment  to a Buyer  located in a country in which Ex-Im
                  Bank  coverage  is not  available  for  commercial  reasons as
                  designated in the Country Limitation Schedule, unless and only
                  to the extent  that such Items are to be sold to such  country
                  on terms of a letter of credit  confirmed by a bank acceptable
                  to Ex-Im Bank; or

                           (o) that is to be incorporated  into Items whose sale
                  would  result in an Account  Receivable  which would not be an
                  Eligible Export-Related Account Receivable.

                  "Eligible   Person"   shall   mean  a   sole   proprietorship,
         partnership,  limited  liability  partnership,  corporation  or limited
         liability company which (a) is domiciled,  organized,

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         or  formed,  as the case may be, in the United  States;  (b) is in good
         standing  in the state of its  formation  or  otherwise  authorized  to
         conduct business in the United States;  (c) is not currently  suspended
         or debarred from doing  business  with the United States  government or
         any  instrumentality,  division,  agency  or  department  thereof;  (d)
         exports or plans to export  Items;  (e)  operates and has operated as a
         going  concern for at least one (1) year;  (f) has a positive  tangible
         net worth  determined  in  accordance  with GAAP;  and (g) has  revenue
         generating  operations  relating to its core business activities for at
         least one year.

                  "ERISA"  shall  mean the  Employee  Retirement  Income
         Security  Act  of  1974  and  the  rules  and  regulations  promulgated
         thereunder.

                  "Export  Order" shall mean a written  export order or contract
         for the purchase by the Buyer from Borrower of any of the Items.

                  "Export-Related Accounts Receivable" shall mean those Accounts
         Receivable  arising from the sale of Items which are due and payable to
         Borrower in the United States.

                  "Export-Related  Accounts Receivable Value" shall mean, at the
         date of  determination  thereof,  the aggregate face amount of Eligible
         Export-Related  Accounts  Receivable  less taxes,  discounts,  credits,
         allowances and Retainages,  except to the extent otherwise permitted by
         Ex-Im Bank in writing.

                  "Export-Related  Borrowing  Base" shall  mean,  at the date of
         determination  thereof,  the  sum of (a) the  Export-Related  Inventory
         Value  multiplied  by the Advance  Rate  applicable  to  Export-Related
         Inventory  set  forth in  Section  5(C)(1)  of the  Loan  Authorization
         Agreement,  (b) the Export-Related Accounts Receivable Value multiplied
         by the Advance Rate applicable to  Export-Related  Accounts  Receivable
         set forth in Section 5(C)(2) of the Loan Authorization  Agreement,  (c)
         if permitted by Ex-Im Bank in writing,  the Retainage Value  multiplied
         by the Retainage  Advance Rate set forth in Section 5(C)(3) of the Loan
         Authorization  Agreement  and (d) the Other Assets Value  multiplied by
         the  Advance  Rate  applicable  to Other  Assets  set forth in  Section
         5(C)(4) of the Loan Authorization Agreement.

                  "Export-Related  Borrowing  Base  Certificate"  shall  mean  a
         certificate  in the form  provided or  approved by Lender,  executed by
         Borrower  and  delivered  to  Lender  pursuant  to the  Loan  Documents
         detailing  the  Export-Related  Borrowing  Base  supporting  the Credit
         Accommodations   which   reflects,   to  the  extent  included  in  the
         Export-Related  Borrowing  Base,  Export-Related  Accounts  Receivable,
         Eligible Export-Related Accounts Receivable,  Export-Related  Inventory
         and  Eligible   Export-Related   Inventory   balances  that  have  been
         reconciled with Borrower's  general ledger,  Accounts  Receivable aging
         report and Inventory schedule.

                  "Export-Related  General Intangibles" shall mean those General
         Intangibles  necessary  or  desirable  to or  for  the  disposition  of
         Export-Related Inventory.

                  "Export-Related   Inventory"   shall  mean  the  Inventory  of
         Borrower  located  in  the  United  States  that  has  been  purchased,
         manufactured  or otherwise  acquired by Borrower for resale pursuant to
         Export Orders.

                  "Export-Related  Inventory  Value" shall mean,  at the date of
         determination  thereof,  the lower of cost or market  value of Eligible
         Export-Related  Inventory of Borrower as determined in accordance  with
         GAAP.

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                  "Final  Disbursement  Date" shall mean,  unless  subject to an
         extension of such date agreed to by Ex-Im Bank,  the last date on which
         Lender  may make a  Disbursement  set forth in  Section  10 of the Loan
         Authorization  Agreement  or, if such date is not a Business  Day,  the
         next succeeding  Business Day;  provided,  however,  to the extent that
         Lender has not received cash collateral or an indemnity with respect to
         Letter  of Credit  Obligations  outstanding  on the Final  Disbursement
         Date, the Final  Disbursement Date with respect to an advance to fund a
         drawing  under a Letter of Credit  shall be no later than  thirty  (30)
         Business  Days  after the expiry  date of the Letter of Credit  related
         thereto.

                  "GAAP" shall mean the generally accepted accounting principles
         issued by the American  Institute of Certified Public Accountants as in
         effect from time to time.

                  "General Intangibles" shall mean all intellectual property and
         other  "general  intangibles"  (as  such  term is  defined  in the UCC)
         necessary or desirable to or for the disposition of Inventory.

                  "Guarantor"  shall mean each  Person,  if any,  identified  in
         Section  3 of the Loan  Authorization  Agreement  who  shall  guarantee
         (jointly and severally if more than one) the payment and performance of
         all or a portion of the Loan Facility Obligations.

                  "Guaranty  Agreement"  shall  mean  a  valid  and  enforceable
         agreement of guaranty executed by each Guarantor in favor of Lender.

                  "Inventory"  shall  mean  all  "inventory"  (as  such  term is
         defined in the UCC),  now or  hereafter  owned or acquired by Borrower,
         wherever located, including all inventory, merchandise, goods and other
         personal  property  which are held by or on behalf of Borrower for sale
         or lease or are  furnished or are to be  furnished  under a contract of
         service or which constitute raw materials, work in process or materials
         used or consumed or to be used or consumed in Borrower's business or in
         the processing,  production, packaging, promotion, delivery or shipping
         of the same, including other supplies.

                  "ISP" shall mean the  International  Standby  Practices-ISP98,
         International   Chamber  of  Commerce   Publication  No.  590  and  any
         amendments and revisions thereof.

                  "Issuing  Bank"  shall  mean the bank that  issues a Letter of
         Credit, which bank is Lender itself or a bank that Lender has caused to
         issue a Letter of Credit by way of guarantee.

                  "Items"  shall mean the finished  goods or services  which are
         intended  for export from the United  States,  as  specified in Section
         4(A) of the Loan Authorization Agreement.

                  "Letter of Credit" shall mean a Commercial Letter of Credit or
         a Standby Letter of Credit.

                  "Letter  of Credit  Obligations"  shall  mean all  outstanding
         obligations incurred by Lender, whether direct or indirect,  contingent
         or  otherwise,  due or not due,  in  connection  with the  issuance  or
         guarantee by Lender or the Issuing Bank of Letters of Credit.

                  "Lien"  shall  mean  any  mortgage,  security  deed or deed of
         trust, pledge, hypothecation,  assignment,  deposit arrangement,  lien,
         charge,   claim,   security  interest,

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         security  title,  easement or encumbrance,  or preference,  priority or
         other  security  agreement or  preferential  arrangement of any kind or
         nature  whatsoever  (including any lease or title retention  agreement,
         any financing  lease having  substantially  the same economic effect as
         any of the  foregoing,  and the filing of, or  agreement  to give,  any
         financing  statement  perfecting a security  interest  under the UCC or
         comparable law of any  jurisdiction) by which property is encumbered or
         otherwise charged.

                  "Loan Agreement" shall mean a valid and enforceable  agreement
         between  Lender and Borrower  setting forth the terms and conditions of
         the Loan Facility.

                  "Loan   Authorization   Agreement"   shall   mean   the   Loan
         Authorization  Agreement  entered into between Lender and Ex-Im Bank or
         the  Loan   Authorization   Notice  setting  forth  certain  terms  and
         conditions of the Loan Facility,  a copy of which is attached hereto as
         Annex A.

                  "Loan Authorization  Notice" shall mean the Loan Authorization
         Notice  executed by Lender and  delivered  to Ex-Im Bank in  accordance
         with the Delegated  Authority Letter Agreement  setting forth the terms
         and conditions of each Loan Facility.

                  "Loan Documents" shall mean the Loan Authorization  Agreement,
         the  Loan  Agreement,   this   Agreement,   each  promissory  note  (if
         applicable),  each  Guaranty  Agreement,  and  all  other  instruments,
         agreements  and documents now or hereafter  executed by Borrower or any
         Guarantor evidencing,  securing,  guaranteeing or otherwise relating to
         the Loan Facility or any Credit Accommodations made thereunder.

                  "Loan  Facility"  shall mean the Revolving Loan Facility,  the
         Transaction   Specific  Loan  Facility  or  the  Transaction   Specific
         Revolving  Loan  Facility  established  by Lender in favor of  Borrower
         under the Loan Documents.

                  "Loan Facility  Obligations"  shall mean all loans,  advances,
         debts, expenses, fees, liabilities, and obligations for the performance
         of  covenants,  tasks or  duties or for  payment  of  monetary  amounts
         (whether or not such  performance  is then required or  contingent,  or
         amounts are liquidated or determinable) owing by Borrower to Lender, of
         any kind or nature,  present or future,  arising in connection with the
         Loan Facility.

                  "Loan  Facility Term" shall mean the number of months from the
         Effective Date to the Final  Disbursement  Date as originally set forth
         in the Loan Authorization Agreement.

                  "Master  Guarantee  Agreement" shall mean the Master Guarantee
         Agreement  between  Ex-Im  Bank  and  Lender,  as  amended,   modified,
         supplemented and restated from time to time.

                  "Material Adverse Effect" shall mean a material adverse effect
         on (a) the  business,  assets,  operations,  prospects  or financial or
         other condition of Borrower or any Guarantor, (b) Borrower's ability to
         pay or perform the Loan Facility  Obligations  in  accordance  with the
         terms  thereof,  (c) the Collateral or Lender's Liens on the Collateral
         or the priority of such Lien or (d) Lender's  rights and remedies under
         the Loan Documents.

                  "Maximum Amount" shall mean the maximum  principal  balance of
         Credit  Accommodations  that may be  outstanding  at any time under the
         Loan  Facility  specified  in  Section  5(A) of the Loan  Authorization
         Agreement.

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                  "Other Assets" shall mean the Collateral, if any, described in
         Section 5(C)(4) of the Loan Authorization Agreement.

                  "Other Assets Value" shall mean, at the date of  determination
         thereof, the value of the Other Assets as determined in accordance with
         GAAP.

                  "Permitted Liens" shall mean (a) Liens for taxes,  assessments
         or other  governmental  charges or levies  not  delinquent,  or,  being
         contested in good faith and by appropriate proceedings and with respect
         to which proper reserves have been taken by Borrower;  provided,  that,
         the Lien shall have no effect on the  priority of the Liens in favor of
         Lender or the value of the assets in which Lender has such a Lien and a
         stay of enforcement  of any such Lien shall be in effect;  (b) deposits
         or  pledges   securing   obligations   under   worker's   compensation,
         unemployment  insurance,  social  security or public  liability laws or
         similar  legislation;  (c) deposits or pledges securing bids,  tenders,
         contracts  (other than  contracts  for the  payment of money),  leases,
         statutory obligations, surety and appeal bonds and other obligations of
         like nature arising in the ordinary course of Borrower's business;  (d)
         judgment  Liens  that  have  been  stayed or  bonded;  (e)  mechanics',
         workers',  materialmen's  or other like Liens  arising in the  ordinary
         course of Borrower's business with respect to obligations which are not
         due; (f) Liens placed upon fixed assets hereafter  acquired to secure a
         portion of the purchase  price thereof,  provided,  that, any such Lien
         shall not  encumber  any  other  property  of  Borrower;  (g)  security
         interests being terminated  concurrently with the execution of the Loan
         Documents;  (h) Liens in favor of  Lender  securing  the Loan  Facility
         Obligations;  and (i)  Liens  disclosed  in  Section  6(D) of the  Loan
         Authorization Agreement.

                  "Person"  shall  mean  any  individual,  sole  proprietorship,
         partnership,  limited  liability  partnership,  joint  venture,  trust,
         unincorporated   organization,    association,   corporation,   limited
         liability company, institution,  public benefit corporation,  entity or
         government (whether national, federal, provincial, state, county, city,
         municipal  or  otherwise,  including  any  instrumentality,   division,
         agency,  body or department  thereof),  and shall include such Person's
         successors and assigns.

                  "Principals" shall mean any officer, director, owner, partner,
         key employee,  or other Person with primary  management or  supervisory
         responsibilities  with respect to Borrower or any other Person (whether
         or not an  employee)  who  has  critical  influence  on or  substantive
         control over the transactions covered by this Agreement.

                  "Retainage"  shall mean that portion of the purchase  price of
         an Export Order that a Buyer is not obligated to pay until the end of a
         specified period of time following the satisfactory  performance  under
         such Export Order.

                  "Retainage  Accounts  Receivable" shall mean those portions of
         Eligible Export-Related Accounts Receivable arising out of a Retainage.

                  "Retainage  Advance  Rate"  shall  mean  the  percentage  rate
         specified in Section 5(C)(3) of the Loan Authorization Agreement as the
         Advance Rate for the Retainage Accounts Receivable of Borrower.

                  "Retainage  Value"  shall mean,  at the date of  determination
         thereof,  the aggregate face amount of Retainage  Accounts  Receivable,
         less taxes,  discounts,  credits and  allowances,  except to the extent
         otherwise permitted by Ex-Im Bank in writing.

                                       9

<PAGE>

                  "Revolving  Loan Facility"  shall mean the credit  facility or
         portion  thereof  established  by Lender in favor of  Borrower  for the
         purpose of providing  pre-export  working  capital in the form of loans
         and/or  Letters of Credit to finance  the  manufacture,  production  or
         purchase and subsequent export sale of Items pursuant to Loan Documents
         under  which  Credit  Accommodations  may  be  made  and  repaid  on  a
         continuous  basis based  solely on the  Export-Related  Borrowing  Base
         during the term of such credit facility.

                  "Special Conditions" shall mean those conditions,  if any, set
         forth in Section 13 of the Loan Authorization Agreement.

                  "Specific  Export  Orders"  shall  mean  those  Export  Orders
         specified in Section 5(D) of the Loan Authorization Agreement.

                  "Standby  Letter of Credit" shall mean those letters of credit
         subject  to the ISP or UCP  issued or caused to be issued by Lender for
         Borrower's  account  that can be drawn upon by a Buyer only if Borrower
         fails to  perform  all of its  obligations  with  respect  to an Export
         Order.

                  "Transaction  Specific  Loan  Facility"  shall  mean a  credit
         facility  or a  portion  thereof  established  by  Lender  in  favor of
         Borrower for the purpose of providing pre-export working capital in the
         form of loans  and/or  Letters  of Credit to finance  the  manufacture,
         production or purchase and subsequent  export sale of Items pursuant to
         Loan Documents under which Credit  Accommodations are made based solely
         on the Export-Related Borrowing Base relating to Specific Export Orders
         and  once  such  Credit  Accommodations  are  repaid  they  may  not be
         reborrowed.

                  "Transaction  Specific  Revolving Loan Facility"  shall mean a
         Revolving Credit Facility  established to provide financing of Specific
         Export Orders.

                  "UCC" shall mean the Uniform  Commercial  Code as the same may
         be in effect from time to time in the jurisdiction in which Borrower or
         Collateral is located.

                  "UCP"  shall  mean  the  Uniform   Customs  and  Practice  for
         Documentary Credits (1993 Revision),  International Chamber of Commerce
         Publication No. 500 and any amendments and revisions thereof.

                  "U.S." or "United  States"  shall  mean the  United  States of
         America and its territorial possessions.

                  "U.S.  Content"  shall  mean with  respect to any Item all the
         labor,  materials and services which are of U.S. origin or manufacture,
         and which are incorporated into an Item in the United States.

                  "Warranty"  shall mean Borrower's  guarantee to Buyer that the
         Items will function as intended during the warranty period set forth in
         the applicable Export Order.

                  "Warranty  Letter of Credit"  shall  mean a Standby  Letter of
         Credit  which is issued or caused to be issued by Lender to support the
         obligations  of Borrower with respect to a Warranty or a Standby Letter
         of Credit which by its terms becomes a Warranty Letter of Credit.

                                       10
<PAGE>

         2.2  Rules  of  Construction.  For  purposes  of  this  Agreement,  the
following  additional  rules of construction  shall apply,  unless  specifically
indicated to the contrary: (a) wherever from the context it appears appropriate,
each term stated in either the singular or plural shall include the singular and
the plural,  and pronouns  stated in the  masculine,  feminine or neuter  gender
shall include the masculine,  the feminine and the neuter;  (b) the term "or" is
not  exclusive;  (c) the term  "including"  (or any form  thereof)  shall not be
limiting or exclusive;  (d) all  references to statutes and related  regulations
shall include any amendments of same and any successor statutes and regulations;
(e) the words "this Agreement",  "herein", "hereof",  "hereunder" or other words
of similar  import refer to this  Agreement as a whole  including the schedules,
exhibits,  and  annexes  hereto  as  the  same  may  be  amended,   modified  or
supplemented;  (f) all  references  in this  Agreement to  sections,  schedules,
exhibits,  and annexes  shall refer to the  corresponding  sections,  schedules,
exhibits,  and annexes of or to this  Agreement;  and (g) all  references to any
instruments or agreements, including references to any of the Loan Documents, or
the   Delegated   Authority   Letter   Agreement   shall  include  any  and  all
modifications,  amendments and supplements thereto and any and all extensions or
renewals thereof to the extent permitted under this Agreement.

         2.3  Incorporation  of  Recitals.  The Recitals to this  Agreement  are
incorporated into and shall constitute a part of this Agreement.

ARTICLE III
                             OBLIGATIONS OF BORROWER

         Until payment in full of all Loan Facility  Obligations and termination
of the Loan Documents, Borrower agrees as follows:

         3.1  Use of  Credit  Accommodations.  (a)  Borrower  shall  use  Credit
Accommodations  only for the purpose of enabling Borrower to finance the cost of
manufacturing,  producing, purchasing or selling the Items. Borrower may not use
any of the Credit  Accommodations  for the purpose of: (i) servicing or repaying
any of  Borrower's  pre-existing  or future  indebtedness  unrelated to the Loan
Facility (unless approved by Ex-Im Bank in writing); (ii) acquiring fixed assets
or capital goods for use in Borrower's business;  (iii) acquiring,  equipping or
renting commercial space outside of the United States;  (iv) paying the salaries
of non U.S. citizens or non-U.S.  permanent residents who are located in offices
outside of the United States;  or (v) in connection with a Retainage or Warranty
(unless approved by Ex-Im Bank in writing).

                  (b) In  addition,  no  Credit  Accommodation  may be  used  to
finance the manufacture, purchase or sale of any of the following:

                      (i)  Items to be sold or resold  to a Buyer  located  in a
         country as to which  Ex-Im Bank is  prohibited  from doing  business as
         designated in the Country Limitation Schedule;

                      (ii) that part of the cost of the Items  which is not U.S.
         Content unless such part is not greater than fifty percent (50%) of the
         cost of the Items  and is  incorporated  into the  Items in the  United
         States;

                                       11

<PAGE>

                      (iii) defense articles or defense services; or

                      (iv) without Ex-Im Bank's prior written consent, any Items
         to be used in the construction, alteration, operation or maintenance of
         nuclear  power,  enrichment,  reprocessing,  research  or  heavy  water
         production facilities.

         3.2 Loan  Documents  and Loan  Authorization  Agreement.  (a) Each Loan
Document and this  Agreement  have been duly executed and delivered on behalf of
Borrower,  and each such Loan Document and this  Agreement are and will continue
to be a legal  and valid  obligation  of  Borrower,  enforceable  against  it in
accordance with its terms.

                  (b) Borrower shall comply with all of the terms and conditions
of the Loan Documents, this Agreement and the Loan Authorization Agreement.

         3.3  Export-Related  Borrowing Base  Certificates and Export Orders. In
order to receive Credit  Accommodations under the Loan Facility,  Borrower shall
have  delivered  to Lender  an  Export-Related  Borrowing  Base  Certificate  as
frequently  as  required  by Lender  but at least  within the past  thirty  (30)
calendar  days  and a copy  of the  Export  Order(s)  (or,  for  Revolving  Loan
Facilities,  if permitted  by Lender,  a written  summary of the Export  Orders)
against which Borrower is requesting  Credit  Accommodations.  If Lender permits
summaries  of Export  Orders,  Borrower  shall also  deliver  promptly to Lender
copies of any Export Orders requested by Lender.  In addition,  so long as there
are any Credit  Accommodations  outstanding  under the Loan  Facility,  Borrower
shall  deliver to Lender at least  once each  month no later than the  twentieth
(20th) day of such month or more  frequently as required by the Loan  Documents,
an Export-Related Borrowing Base Certificate.

         3.4 Exclusions from the  Export-Related  Borrowing Base. In determining
the Export-Related  Borrowing Base,  Borrower shall exclude therefrom  Inventory
which is not Eligible Export-Related Inventory and Accounts Receivable which are
not Eligible Export-Related Accounts Receivable. Borrower shall promptly, but in
any event within five (5) Business Days,  notify Lender (a) if any then existing
Export-Related Inventory no longer constitutes Eligible Export-Related Inventory
or (b) of any event or  circumstance  which to Borrower's  knowledge would cause
Lender to consider any then existing  Export-Related  Accounts  Receivable as no
longer constituting an Eligible Export-Related Accounts Receivable.

         3.5  Financial  Statements.   Borrower  shall  deliver  to  Lender  the
financial  statements  required to be delivered by Borrower in  accordance  with
Section 11 of the Loan Authorization Agreement.

         3.6 Schedules,  Reports and Other Statements.  Borrower shall submit to
Lender in writing each month (a) an Inventory  schedule for the preceding  month
and (b) an Accounts  Receivable  aging report for the preceding  month detailing
the terms of the  amounts due from each Buyer.  Borrower  shall also  furnish to
Lender promptly upon request such information,  reports, contracts, invoices and
other data concerning the Collateral as Lender may from time to time specify.

                                       12

<PAGE>

         3.7  Additional  Security or Payment.  (a) Borrower  shall at all times
ensure  that the  Export-Related  Borrowing  Base  equals or exceeds  the Credit
Accommodation  Amount. If informed by Lender or if Borrower otherwise has actual
knowledge  that the  Export-Related  Borrowing Base is at any time less than the
Credit  Accommodation  Amount,  Borrower  shall,  within five (5) Business Days,
either  (i)  furnish  additional  Collateral  to  Lender,  in  form  and  amount
satisfactory  to Lender and Ex-Im Bank or (ii) pay to Lender an amount  equal to
the difference  between the Credit  Accommodation  Amount and the Export-Related
Borrowing Base.

                  (b)  For  purposes  of  this  Agreement,  in  determining  the
Export-Related  Borrowing  Base there shall be deducted from the  Export-Related
Borrowing  Base  (i)  an  amount  equal  to  twenty-five  percent  (25%)  of the
outstanding  face amount of Commercial  Letters of Credit and Standby Letters of
Credit  and (ii) one  hundred  percent  (100%) of the face  amount  of  Warranty
Letters of Credit  less the amount of cash  collateral  held by Lender to secure
Warranty Letters of Credit.

                  (c) Unless  otherwise  approved in writing by Ex-Im Bank,  for
Revolving  Loan  Facilities  (other than  Transaction  Specific  Revolving  Loan
Facilities),  Borrower shall at all times ensure that the outstanding  principal
balance  of the  Credit  Accommodations  that  is  supported  by  Export-Related
Inventory  does  not  exceed  sixty  percent  (60%)  of the  sum  of  the  total
outstanding  principal  balance of the Disbursements and the undrawn face amount
of all  outstanding  Commercial  Letters of Credit.  If informed by Lender or if
Borrower  otherwise has actual knowledge that the outstanding  principal balance
of the Credit  Accommodations  that is  supported  by  Inventory  exceeds  sixty
percent  (60%) of the sum of the  total  outstanding  principal  balance  of the
Disbursements and the undrawn face amount of all outstanding  Commercial Letters
of Credit,  Borrower  shall,  within five (5) Business Days,  either (i) furnish
additional  non-Inventory  Collateral to Lender, in form and amount satisfactory
to Lender and Ex-Im Bank, or (ii) pay down the applicable  portion of the Credit
Accommodations so that the above described ratio is not exceeded.

         3.8 Continued Security Interest. Borrower shall not change (a) its name
or identity in any manner,  (b) the location of its principal place of business,
(c) the  location  of any of the  Collateral  or (d) the  location of any of the
books or records  related to the  Collateral,  in each instance  without  giving
thirty (30) days prior written  notice  thereof to Lender and taking all actions
deemed  necessary or appropriate by Lender to  continuously  protect and perfect
Lender's Liens upon the Collateral.

         3.9 Inspection of Collateral. Borrower shall permit the representatives
of Lender  and  Ex-Im  Bank to make at any time  during  normal  business  hours
inspections  of the  Collateral and of Borrower's  facilities,  activities,  and
books and  records,  and shall cause its  officers  and  employees  to give full
cooperation and assistance in connection therewith.

         3.10 General  Intangibles.  Borrower  represents  and warrants  that it
owns,  or is licensed to use, all General  Intangibles  necessary to conduct its
business as currently  conducted  except where the failure of Borrower to own or
license  such General  Intangibles  could not  reasonably  be expected to have a
Material Adverse Effect.

                                       13

<PAGE>

         3.11 Notice of Certain  Events.  Borrower  shall  promptly,  but in any
event within five (5) Business Days,  notify Lender in writing of the occurrence
of any of the following:

                  (a) Borrower or any Guarantor (i) applies for,  consents to or
         suffers the appointment of, or the taking of possession by, a receiver,
         custodian, trustee, liquidator or similar fiduciary of itself or of all
         or a  substantial  part  of its  property  or  calls a  meeting  of its
         creditors,  (ii)  admits in  writing  its  inability,  or is  generally
         unable, to pay its debts as they become due or ceases operations of its
         present business,  (iii) makes a general  assignment for the benefit of
         creditors,  (iv)  commences a voluntary case under any state or federal
         bankruptcy laws (as now or hereafter in effect),  (v) is adjudicated as
         bankrupt or insolvent,  (vi) files a petition seeking to take advantage
         of any other law providing for the relief of debtors,  (vii) acquiesces
         to, or fails to have  dismissed  within thirty (30) days,  any petition
         filed against it in any involuntary case under such bankruptcy laws, or
         (vii)  takes  any  action  for  the  purpose  of  effecting  any of the
         foregoing;

                  (b) any Lien in any of the Collateral,  granted or intended by
         the Loan  Documents  to be  granted  to  Lender,  ceases to be a valid,
         enforceable,  perfected,  first priority Lien (or a lesser  priority if
         expressly  permitted  pursuant  to Section 6 of the Loan  Authorization
         Agreement) subject only to Permitted Liens;

                  (c) the issuance of any levy, assessment,  attachment, seizure
         or Lien,  other than a Permitted  Lien,  against any of the  Collateral
         which is not stayed or lifted within thirty (30) calendar days;

                  (d) any proceeding is commenced by or against  Borrower or any
         Guarantor for the liquidation of its assets or dissolution;

                  (e) any litigation is filed against  Borrower or any Guarantor
         which  has had or  could  reasonably  be  expected  to have a  Material
         Adverse Effect and such litigation is not withdrawn or dismissed within
         thirty (30) calendar days of the filing thereof;

                  (f) any default or event of default under the Loan Documents;

                  (g)  any  failure  to  comply  with  any  terms  of  the  Loan
         Authorization Agreement;

                  (h)  any  material  provision  of any  Loan  Document  or this
         Agreement for any reason ceases to be valid, binding and enforceable in
         accordance with its terms;

                  (i) any event which has had or could reasonably be expected to
         have a Material Adverse Effect; or

                  (j) the Credit  Accommodation  Amount  exceeds the  applicable
         Export-Related Borrowing Base.

                                       14

<PAGE>

         3.12 Insurance.  Borrower will at all times carry  property,  liability
and other  insurance,  with  insurers  acceptable  to  Lender,  in such form and
amounts,  and with such  deductibles  and  other  provisions,  as  Lender  shall
require, and Borrower will provide evidence of such insurance to Lender, so that
Lender is  satisfied  that such  insurance  is, at all times,  in full force and
effect. Each property insurance policy shall name Lender as loss payee and shall
contain a lender's  loss payable  endorsement  in form  acceptable to Lender and
each liability insurance policy shall name Lender as an additional insured.  All
policies of  insurance  shall  provide that they may not be cancelled or changed
without  at least ten (10)  days'  prior  written  notice  to  Lender  and shall
otherwise  be in form  and  substance  satisfactory  to  Lender.  Borrower  will
promptly deliver to Lender copies of all reports made to insurance companies.

         3.13  Taxes.  Borrower  has timely  filed all tax  returns  and reports
required by applicable law, has timely paid all applicable  taxes,  assessments,
deposits and contributions  owing by Borrower and will timely pay all such items
in the future as they  became due and  payable.  Borrower  may,  however,  defer
payment  of any  contested  taxes;  provided,  that  Borrower  (a) in good faith
contests  Borrower's  obligation  to pay such taxes by  appropriate  proceedings
promptly and diligently instituted and conducted; (b) notifies Lender in writing
of the  commencement of, and any material  development in, the proceedings;  (c)
posts bonds or takes any other steps  required to keep the contested  taxes from
becoming a Lien upon any of the Collateral;  and (d) maintains adequate reserves
therefor in conformity with GAAP.

         3.14 Compliance with Laws. Borrower represents and warrants that it has
complied in all material respects with all provisions of all applicable laws and
regulations,  including  those  relating  to  Borrower's  ownership  of  real or
personal property, the conduct and licensing of Borrower's business, the payment
and  withholding  of  taxes,  ERISA  and  other  employee  matters,  safety  and
environmental matters.

         3.15 Negative  Covenants.  Without the prior  written  consent of Ex-Im
Bank and Lender, Borrower shall not (a) merge,  consolidate or otherwise combine
with any other  Person;  (b) acquire all or  substantially  all of the assets or
capital stock of any other Person; (c) sell, lease, transfer,  convey, assign or
otherwise dispose of any of its assets,  except for the sale of Inventory in the
ordinary  course of business and the  disposition  of obsolete  equipment in the
ordinary  course of business;  (d) create any Lien on the Collateral  except for
Permitted Liens; (e) make any material changes in its  organizational  structure
or identity; or (f) enter into any agreement to do any of the foregoing.

         3.16  Reborrowings  and Repayment  Terms. (a) If the Loan Facility is a
Revolving Loan  Facility,  provided that Borrower is not in default under any of
the Loan Documents,  Borrower may borrow,  repay and reborrow  amounts under the
Loan Facility until the close of business on the Final Disbursement Date. Unless
the Revolving Loan Facility is renewed or extended by Lender with the consent of
Ex-Im Bank, Borrower shall pay in full the outstanding Loan Facility Obligations
and all accrued and unpaid interest thereon no later than the first Business Day
after the Final Disbursement Date.

                  (b)  If the  Loan  Facility  is a  Transaction  Specific  Loan
Facility,  Borrower shall,  within two (2) Business Days of the receipt thereof,
pay to Lender (for application against

                                       15

<PAGE>

the  outstanding  Loan  Facility  Obligations  and accrued  and unpaid  interest
thereon)  all  checks,  drafts,  cash and other  remittances  it may  receive in
payment or on account of the  Export-Related  Accounts  Receivable  or any other
Collateral,  in  precisely  the form  received  (except for the  endorsement  of
Borrower  where  necessary).  Pending  such  deposit,  Borrower  shall hold such
amounts in trust for Lender  separate and apart and shall not commingle any such
items of payment with any of its other funds or property.

         3.17 Cross Default.  Borrower shall be deemed in default under the Loan
Facility if Borrower  fails to pay when due any amount  payable to Lender  under
any loan or other credit accommodations to Borrower whether or not guaranteed by
Ex-Im Bank.

         3.18  Munitions  List. If any of the Items are articles,  services,  or
related technical data that are listed on the United States Munitions List (part
121 of title 22 of the  Code of  Federal  Regulations),  Borrower  shall  send a
written  notice  promptly,  but in any event within five (5) Business  Days,  of
Borrower   learning   thereof  to  Lender   describing   the  Items(s)  and  the
corresponding invoice amount.

         3.19  Suspension  and  Debarment,  etc.  On the date of this  Agreement
neither  Borrower nor its Principals are (a) debarred,  suspended,  proposed for
debarment  with a final  determination  still  pending,  declared  ineligible or
voluntarily  excluded  (as such  terms are  defined  under any of the  Debarment
Regulations   referred  to  below)  from   participating   in   procurement   or
nonprocurement transactions with any United States federal government department
or  agency  pursuant  to any  of  the  Debarment  Regulations  or (b)  indicted,
convicted  or had a  civil  judgment  rendered  against  Borrower  or any of its
Principals for any of the offenses  listed in any of the Debarment  Regulations.
Unless  authorized by Ex-Im Bank,  Borrower  will not  knowingly  enter into any
transactions  in  connection  with the Items with any  person  who is  debarred,
suspended,  declared  ineligible or voluntarily  excluded from  participation in
procurement  or  nonprocurement  transactions  with any  United  States  federal
government  department or agency  pursuant to any of the Debarment  Regulations.
Borrower  will  provide  immediate  written  notice  to Lender if at any time it
learns that the  certification set forth in this Section 2.19 was erroneous when
made or has become erroneous by reason of changed circumstances.

ARTICLE IV
                               RIGHTS AND REMEDIES

4.1  Indemnification.  Upon  Ex-Im  Bank's  payment  of a  Claim  to  Lender  in
connection with the Loan Facility  pursuant to the Master  Guarantee  Agreement,
Ex-Im Bank may assume all rights and remedies of Lender under the Loan Documents
and may enforce any such rights or remedies against Borrower, the Collateral and
any  Guarantors.  Borrower  shall hold Ex-Im Bank and Lender  harmless  from and
indemnify  them  against any and all  liabilities,  damages,  claims,  costs and
losses  incurred or suffered by either of them resulting from (a) any materially
incorrect  certification or statement knowingly made by Borrower or its agent to
Ex-Im Bank or Lender in connection with the Loan Facility,  this Agreement,  the
Loan  Authorization  Agreement  or any other Loan  Documents or (b) any material
breach by  Borrower  of the terms and  conditions  of this  Agreement,  the Loan
Authorization  Agreement  or any of the  other  Loan  Documents.  Borrower  also
acknowledges  that  any  statement,  certification  or  representation

                                       16

<PAGE>

made by  Borrower  in  connection  with  the Loan  Facility  is  subject  to the
penalties provided in Article 18 U.S.C. Section 1001.

         4.2  Liens.  Borrower  agrees  that any and all Liens  granted by it to
Lender are also hereby  granted to Ex-Im Bank to secure  Borrower's  obligation,
however  arising,  to reimburse  Ex-Im Bank for any payments  made by Ex-Im Bank
pursuant to the Master  Guarantee  Agreement.  Lender is authorized to apply the
proceeds of, and  recoveries  from,  any  property  subject to such Liens to the
satisfaction  of Loan Facility  Obligations in accordance  with the terms of any
agreement between Lender and Ex-Im Bank.

ARTICLE V
                                  MISCELLANEOUS

         5.1 Governing Law. This Agreement and the Loan Authorization  Agreement
and the  obligations  arising under this  Agreement  and the Loan  Authorization
Agreement shall be governed by, and construed in accordance with, the law of the
state governing the Loan Documents.

         5.2 Notification. All notices required by this Agreement shall be given
in the manner and to the parties provided for in the Loan Agreement.

         5.3 Partial  Invalidity.  If at any time any of the  provisions of this
Agreement becomes illegal, invalid or unenforceable in any respect under the law
of any jurisdiction,  neither the legality,  the validity nor the enforceability
of the remaining provisions hereof shall in any way be affected or impaired.

         5.4 Waiver of Jury Trial.  BORROWER HEREBY  KNOWINGLY,  VOLUNTARILY AND
INTENTIONALLY  WAIVES  ANY  AND ALL  RIGHTS  IT MAY  HAVE TO A TRIAL  BY JURY IN
RESPECT OF ANY ACTION,  SUIT,  PROCEEDING OR OTHER LITIGATION BROUGHT TO RESOLVE
ANY DISPUTE ARISING UNDER,  ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT,
THE LOAN  AUTHORIZATION  AGREEMENT,  ANY LOAN DOCUMENT,  OR ANY OTHER AGREEMENT,
DOCUMENT OR INSTRUMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THEREWITH
OR ANY COURSE OF  CONDUCT,  COURSE OF  DEALING,  STATEMENTS  (WHETHER  VERBAL OR
WRITTEN),  OR ACTIONS OR OMISSIONS OF LENDER,  EX-IM BANK,  OR ANY OTHER PERSON,
RELATING TO THIS AGREEMENT,  THE LOAN AUTHORIZATION  AGREEMENT OR ANY OTHER LOAN
DOCUMENT.

                                       17

<PAGE>

         IN WITNESS  WHEREOF,  Borrower  has caused  this  Agreement  to be duly
executed on the 17th day of January,  2001,  to be  effective as of December 29,
2000.

DATAWATCH CORPORATION

By:  /s/  Bruce R. Gardner
    -----------------------------
         (Signature)

Name:  Bruce R. Gardner
      ---------------------------
         (Print or Type)

Title:  President
       --------------------------
         (Print or Type)

DATAWATCH INTERNATIONAL LIMITED

By:  /s/  Bruce R. Gardner
    -----------------------------
         (Signature)

Name:  Bruce R. Gardner
      ---------------------------
         (Print or Type)

Title:  President
       --------------------------
         (Print or Type)

DATAWATCH EUROPE LIMITED

By:  /s/  Bruce R. Gardner
    -----------------------------
         (Signature)

Name:  Bruce R. Gardner
      ---------------------------
         (Print or Type)

Title:  President
       --------------------------
         (Print or Type)

                                       18

<PAGE>

GUILDSOFT LIMITED

By:  /s/  Bruce R. Gardner
    -----------------------------
         (Signature)

Name:  Bruce R. Gardner
      ---------------------------
         (Print or Type)

Title:  President
       --------------------------
         (Print or Type)

ACKNOWLEDGED:

SILICON VALLEY BANK

By:  /s/  Maggie Garcia
    -----------------------------
         (Signature)

Name:  Maggie Garcia
      ---------------------------
         (Print or Type)

Title:  Loan Administrative Team Leader
       --------------------------------
         (Print or Type)

                                       19

<PAGE>

ANNEXES:

Annex A  -        Loan Authorization Agreement or Loan Authorization Notice

                                       20

<PAGE>

                              CONSENT OF GUARANTORS

         Each of the  undersigned as a Guarantor of the  obligations of Borrower
to the Lender executing the foregoing Agreement hereby agrees that the foregoing
Agreement,  each of their  respective  Guaranty  Agreements  and each other Loan
Documents may be assigned to the Export-Import Bank of the United States.

                                            ------------------------------------
                                            [INDIVIDUAL GUARANTOR]

                                            [CORPORATE GUARANTOR]

                                             By:________________________________

                                             Name:______________________________

                                             Title:_____________________________

                                       21EXHIBIT 10.3
                                                                    ------------

                       SECOND LOAN MODIFICATION AGREEMENT

         This  Second  Loan  Modification  Agreement  is executed on January 17,
2001,  to be  effective  as of  December  29,  2000,  by and  between  DATAWATCH
CORPORATION,  a Delaware  corporation with its chief executive office located at
175 Cabot Street, Suite 503, Lowell,  Massachusetts  01854-3633 ("Borrower") and
SILICON VALLEY BANK, a  California-chartered  bank ("Bank"),  with its principal
place of business at 3003 Tasman  Drive,  Santa Clara,  CA 95054 and with a loan
production  office  located  at One  Newton  Executive  Park,  Suite  200,  2221
Washington  Street,  Newton,  MA 02462,  doing  business under the name "Silicon
Valley East".

1. DESCRIPTION OF EXISTING  INDEBTEDNESS.  Among other indebtedness which may be
owing by  Borrower to Bank,  Borrower  is  indebted  to Bank  pursuant to a loan
arrangement dated March 16, 1999, evidenced by, among other documents, a certain
Amended and Restated Loan and Security  Agreement  dated as of March 16, 1999 by
and among the  Borrower,  Personics  Corporation,  and the Bank, as amended by a
certain  First Loan  Modification  Agreement  dated as of  December  27, 1999 by
Borrower  and  Bank (as  amended,  the  "Loan  Agreement").  The Loan  Agreement
established  a working  capital  line of credit in favor of the  Borrower in the
maximum   principal   amount  of  One  Million  Five  Hundred  Thousand  Dollars
($1,500,000.00) (the "Committed Revolving Line"). Capitalized terms used but not
otherwise defined herein shall have the same meaning as in the Loan Agreement.

Hereinafter,  all indebtedness owing by Borrower to Bank shall be referred to as
the "Obligations".

2.  DESCRIPTION  OF COLLATERAL.  Repayment of the  Obligations is secured by the
Collateral  as  described  in the Loan  Agreement,  and a  certain  Intellectual
Property  Security  Agreement dated as of December 27, 1999 by Borrower in favor
of Bank (the "Intellectual Property Security Agreement") (hereinafter,  the Loan
Agreement,  as amended hereby, and the Intellectual Property Security Agreement,
together with any other  collateral  security granted to Bank, shall be referred
to as the "Security Documents").

Hereinafter,   the  Security  Documents,   together  with  all  other  documents
evidencing  or securing the  Obligations  shall be referred to as the  "Existing
Loan Documents".

3.       DESCRIPTION OF CHANGE IN TERMS.
         ------------------------------

         A. Modification(s) to Loan Agreement.

                  1.       The Loan  Agreement  shall be amended by deleting the
                           Tangible  Net Worth  covenants  appearing  as Section
                           6.7(a)(ii)  and Section  6.7(b)(ii)  and inserting in
                           lieu thereof the following  text to appear as Section
                           6.7(c) thereof:

                                    "(c) Tangible Net Worth.  The Borrower shall
                                    maintain,  as of the last day of each month,
                                    commencing  with the month ending  September
                                    30,  2000,  a Tangible Net Worth of not less
                                    than  Four  Million  Five  Hundred  Thousand
                                    Dollars ($4,500,000.00)."

                  2.       The Loan  Agreement  shall be amended by deleting the
                           following   definition   appearing  in  Section  13.1
                           thereof:

                                    ""EXIM  Agreement"  shall mean that  certain
                                    Export-Import  Loan and  Security  Agreement
                                    dated  December  27, 1999 by and between the
                                    Borrower and the Bank."

                           and inserting in lieu thereof the following:

<PAGE>

                                    ""EXIM  Agreement"  shall mean that  certain
                                    Export-Import  Loan and  Security  Agreement
                                    dated  December  27, 1999 by and between the
                                    Borrower  and  the  Bank,  as  amended  by a
                                    certain  First Loan  Modification  Agreement
                                    (EXIM Line) dated  January 17, 2001,  as may
                                    be further amended from time to time."

                  3.       The Loan  Agreement  shall be amended by deleting the
                           following   definition   appearing  in  Section  13.1
                           thereof:

                            ""Revolving Maturity Date" means December 27, 2000."

                           and inserting in lieu thereof the following:

                            ""Revolving Maturity Date" means December 31, 2001."

                  4.       The Compliance  Certificate appearing as Exhibit D to
                           the  Loan  Agreement  is  hereby  replaced  with  the
                           Compliance Certificate attached as Exhibit A hereto.

                  5.       The Borrower  ratifies,  confirms and reaffirms,  all
                           and  singular,  the terms and  conditions  of:  (i) a
                           certain  Collateral  Assignment,  Patent Mortgage and
                           Security  Agreement dated as of November 1, 1994 (the
                           "1994 IP Agreement")  between  Borrower and Bank, and
                           acknowledges,   confirms   and   agrees   that   said
                           Collateral  Assignment,  Patent Mortgage and Security
                           Agreement shall remain in full force and effect,  and
                           (ii)  a  certain   Intellectual   Property   Security
                           Agreement dated as of December 27, 1999 (the "1999 IP
                           Agreement")   by  Borrower  in  favor  of  Bank,  and
                           acknowledges,   confirms   and   agrees   that   said
                           Intellectual Property Security Agreement shall remain
                           in full force and effect.

                           The Borrower hereby acknowledges, confirms and agrees
                           that the  Collateral  under the 1994 IP Agreement and
                           the Intellectual  Property  Collateral under the 1999
                           IP  Agreement  shall be amended to  include,  without
                           limitation,  the  intellectual  property  owed by the
                           Borrower  appearing on Exhibit B attached  hereto and
                           made a part hereof.

4. FEE.  Borrower shall pay to Bank a fee for the  modification  of the domestic
line equal to Twelve Thousand Five Hundred Dollars ($12,500.00), which fee shall
be due on the date  hereof  and  shall be  deemed  fully  earned  as of the date
hereof.  The Borrower  shall also reimburse Bank for all legal fees and expenses
incurred in connection with this amendment to the Existing Loan Documents.

5. CONSISTENT  CHANGES.  The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.

6.  RATIFICATION OF LOAN  DOCUMENTS.  Borrower hereby  ratifies,  confirms,  and
reaffirms all terms and conditions of all security or other  collateral  granted
to the Bank,  and  confirms  that the  indebtedness  secured  thereby  includes,
without limitation, the Obligations.

7. NO DEFENSES OF BORROWER.  Borrower  agrees that,  as of this date,  it has no
defenses against the obligations to pay any amounts under the Obligations.

8. CONTINUING  VALIDITY.  Borrower  understands and agrees that in modifying the
existing   Obligations,   Bank  is  relying  upon  Borrower's   representations,
warranties, and agreements, as set forth in the Existing Loan Documents.  Except
as expressly modified pursuant to this Loan Modification

                                       2

<PAGE>

Agreement, the terms of the Existing Loan Documents remain unchanged and in full
force and effect.  Bank's agreement to modifications to the existing Obligations
pursuant to this Loan  Modification  Agreement in no way shall  obligate Bank to
make  any  future  modifications  to  the  Obligations.  Nothing  in  this  Loan
Modification Agreement shall constitute a satisfaction of the Obligations. It is
the  intention  of Bank and  Borrower to retain as liable  parties all makers of
Existing  Loan  Documents,  unless the party is  expressly  released  by Bank in
writing.  No  maker  will  be  released  by  virtue  of this  Loan  Modification
Agreement.

9.  JURISDICTION/VENUE.  Borrower  accepts for itself and in connection with its
properties,  unconditionally,  the  non-exclusive  jurisdiction  of any state or
federal court of competent  jurisdiction in the Commonwealth of Massachusetts in
any action, suit, or proceeding of any kind against it which arises out of or by
reason of this Loan Modification Agreement;  provided,  however, that if for any
reason  Bank  cannot  avail  itself  of  the  courts  of  the   Commonwealth  of
Massachusetts, then venue shall lie in Santa Clara County, California.

10.  COUNTERSIGNATURE.  This Loan Modification  Agreement shall become effective
only when it shall have been executed by Borrower and Bank  (provided,  however,
in no event shall this Loan Modification Agreement become effective until signed
by an officer of Bank in California).

                                       3

<PAGE>

         This Loan  Modification  Agreement  is executed as a sealed  instrument
under the laws of the Commonwealth of Massachusetts as of the date first written
above.

BORROWER:                                                     BANK:

DATAWATCH CORPORATION             SILICON VALLEY BANK, doing business as
                                  SILICON VALLEY EAST

By:  /s/  Bruce R. Gardner        By: /s/  Jonathan L. Gray
    -----------------------          --------------------------------

Name:  Bruce R. Gardner           Name: Jonathan L. Gray
      ---------------------            ------------------------------

Title: President                  Title: SVP
      ---------------------             -----------------------------

                                  SILICON VALLEY BANK

                                  By: /s/  Maggie Garcia
                                     --------------------------------

                                  Name: Maggie Garcia
                                       ------------------------------

                                  Title: Loan Administrative Team Leader
                                        --------------------------------------
                                      (signed in Santa Clara County, California)

                                       4

<PAGE>

                                    EXHIBIT A
                             COMPLIANCE CERTIFICATE

TO:               SILICON VALLEY BANK

FROM:             DATAWATCH CORPORATION

         The  undersigned  authorized  officer of DATAWATCH  CORPORATION  hereby
certifies  that in  accordance  with the  terms and  conditions  of the Loan and
Security Agreement between Borrower and Bank (the "Agreement"),  (i) Borrower is
in complete  compliance for the period ending with all required covenants except
as noted below and (ii) all representations and warranties of Borrower stated in
the  Agreement  are true and  correct in all  material  respects  as of the date
hereof.  Attached  herewith  are the  required  documents  supporting  the above
certification.  The  Officer  further  certifies  that  these  are  prepared  in
accordance  with  Generally  Accepted  Accounting   Principles  (GAAP)  and  are
consistently  applied  from one  period to the next  except as  explained  in an
accompanying  letter or footnotes.  The Officer  expressly  acknowledges that no
borrowings may be requested by the Borrower at any time or date of determination
that Borrower is not in compliance  with any of the terms of the Agreement,  and
that such  compliance is  determined  not just at the date this  certificate  is
delivered.

                   Please  indicate  compliance  status by circling Yes/No under
"Complies" column.
<TABLE><CAPTION>
     <S>                              <C>                                    <C>

     Reporting Covenant               Required                                Complies
     ------------------               --------                                --------

     Financial Statements & CC        Monthly within 35 days*                 Yes    No
     Annual (CPA Audited)             FYE within 120 days                     Yes    No
     10-Q, 10-K and 8-K               Within 5 days after filing w/ SEC       Yes    No
     BBC & A/R Agings                 Monthly within 25 days*                 Yes    No

  *when Advances are outstanding or have been requested

     Financial Covenant               Required                   Actual       Complies
     ------------------               --------                   ------       --------

Maintain on a Monthly Basis:

     Minimum Adjusted Quick Ratio**   1.50:1.0                   _____:1.0    Yes    No
     Minimum Tangible Net Worth       $4,500,000(begin 9/30/00)  $________    Yes    No

  **only for months ending January, February, April, May, July, August, October and November

Maintain on a Quarterly Basis:

     Minimum Adjusted Quick Ratio     1.75:1.0                   _____:1.0    Yes    No

</TABLE>

================================
         BANK USE ONLY
Received By:____________________
Date:________________
Reviewed By:____________________
Compliance Status:  Yes / No
================================

Comments Regarding Exceptions:

Sincerely,

_______________________    Date:_______________
SIGNATURE
------------------------
TITLE

                                       5

<PAGE>

                 Exhibit B to Second Loan Modification Agreement
                 -----------------------------------------------

Trademark:  QUETZAL/SC
Status:  Pending
Application Number:  821,537
Country:  Australia
Owner:  Datawatch Corporation
Filed:  28-Jan-2000
Classes:          9

Trademark:  QUETZAL/SC
Status:  Pending
Application Number:  1,045,423
Country:  Canada
Owner:  Datawatch Corporation
Filed:  03-Feb-2000
Classes:         9

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