AMENDMENT AGREEMENT NO. 7 TO SECOND AMENDED
                          AND RESTATED CREDIT AGREEMENT

         This AMENDMENT  AGREEMENT NO. 7 (this  "Amendment"),  dated as of March
9, 2000,  by and among SIGNAL  TECHNOLOGY  CORPORATION,  a Delaware  corporation
("STC"),   SIGNAL  TECHNOLOGY  SALES  CORP.,  a  United  States  Virgin  Islands
corporation  ("Sales"  and,  together  with  STC,  the  "Companies"),  and FLEET
NATIONAL BANK, a national banking association formerly known as BankBoston,  N.A
and as The First National Bank of Boston (the "Bank"), amends the Second Amended
and Restated Credit Agreement dated as of September 30, 1993, as amended (as the
same may be further  amended,  modified,  or supplemented  from time to time the
"Credit Agreement"),  by and among the Companies and the Bank. Capitalized terms
used but not defined  herein shall have the meanings set forth for such terms in
the Credit Agreement.

         WHEREAS,  the Companies  have  requested that the Bank agree to certain
amendments to the Credit Agreement; and

         WHEREAS,  subject  to the  terms  and  provisions  hereof,  the Bank is
willing to so amend the Credit Agreement;

         NOW, THEREFORE, the parties hereto hereby agree as follows:

         Section 1. Amendment to Credit  Agreement.  Subject to the satisfaction
of the conditions  precedent set forth in Section 3 hereof, the Credit Agreement
is hereby amended as follows:

             (a) The  definition of the term "Bank" is hereby amended to read as
         follows:

         "Bank - Fleet National Bank, a national banking association."

             (b) Amendment of Section 2.1.  Section 2.1 of the Credit  Agreement
         is hereby  amended  effective  as of  February  22, 2000 to read in its
         entirety as follows:

                  "ss.2.1   Commitment  to  Lend.   Subject  to  the  terms  and
         conditions  hereinafter  set  forth,  the  Bank  agrees  to lend to the
         Companies,  on a joint and several basis,  during the period commencing
         on the Effective date and ending on the Revolving Credit Maturity Date,
         upon  notice by the  Companies  pursuant to ss.2.4 from time to time an
         amount (a  "Revolving  Credit  Loan",  or if more than one,  "Revolving
         Credit Loans") equal to the aggregate principal amount of the Revolving
         Credit Loan  requested by the  Companies  in such  notice,  for working
         capital and general  corporate  purposes as  permitted  pursuant to the
         provisions of this  Agreement,  provided that in no event shall the sum
         of (a) the  aggregate


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         outstanding  principal  balance of all  Revolving  Credit  Loans (after
         giving effect to all amounts requested), plus (b) the aggregate Maximum
         Drawing  Amount of  Letters  of Credit  outstanding  (collectively  the
         "Total Credit  Extended"),  exceed at any one time the Revolving Credit
         Commitment Amount."

             (c)  Amendment  of  Section  11.4.  Section  11.4(g)  of the Credit
         Agreement is hereby  amended  effective as of February 22, 2000 to read
         in its entirety as follows:

            "(g) [Omitted]; and"

             (d) Amendment of Section 12.7. Section 12.7 of the Credit Agreement
         is hereby amended to read in its entirety as follows:

                  "ss.12.7 Net Worth.  Permit at any time Consolidated  Tangible
         Net Worth to be less than the  amount  equal to the sum of  $23,000,000
         plus, on a cumulative  basis,  50% of positive  Consolidated Net Income
         for each  fiscal  quarter  ending  after  December  31,  1999  (without
         deduction for any fiscal  quarter in which  Consolidated  Net Income is
         negative)."

         Section  2.  Representations  and  Warranties.   The  Companies  hereby
represent and warrant to the Bank as follows:

             (a) Representations  and Warranties in Credit Agreement.  Except as
         specified  in writing by the  Companies to the Bank with respect to the
         subject  matter of this  Amendment  prior to the execution and delivery
         hereof  by  the  Bank  and  the  Companies,   the  representations  and
         warranties of the Companies contained in the Credit Agreement were true
         and correct in all material respects when made and continued to be true
         and correct in all  material  respects on the date hereof,  except,  in
         each  case  to  the  extent  of  changes  resulting  from  transactions
         contemplated or permitted by the Loan Documents and this Amendment, and
         changes occurring in the ordinary course of business which singly or in
         the aggregate are not materially  adverse,  and to the extent that such
         representations and warranties relate expressly to an earlier date.

             (b) Authority,  No Conflicts,  Enforceability of Obligations,  Etc.
         Each of the  Companies  hereby  confirms that the  representations  and
         warranties  of the  Companies  contained in Sections 8.1 and 8.3 of the
         Credit  Agreement  are true and correct on and as of the date hereof as
         if made  on the  date  hereof,  treating  this  Amendment,  the  Credit
         Agreement as amended  hereby,  and the other Loan  Documents as amended
         hereby,   as  "Loan   Documents"   for  the  purposes  of  making  said
         representations and warranties.

         Section 3.  Conditions  to  Effectiveness.  The  effectiveness  of this
Amendment shall be subject to the delivery to the Bank by (or on behalf of) each
of the  Companies,  as the case

                                      -2-
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may be,  contemporaneously with the execution hereof, of the following,  in form
and substance satisfactory to the Bank:

             (a) this  Amendment  signed by each of the  Companies and the Bank;
         and

             (b) any other  confirmatory  or  corporate  authority  document  or
         instrument the Bank may reasonably request.

         Section 4.  Waiver of  Noncompliance  with  Covenants.  The Bank hereby
waives the Companies'  noncompliance  with Section 12.7 of the Credit  Agreement
(as in effect  immediately  prior to giving  effect to this  Amendment)  for the
period ended December 31, 1999.

         Section 5.  Miscellaneous  Provisions.  Except as  otherwise  expressly
provided by this Amendment,  all of the terms,  conditions and provisions of the
Credit  Agreement  and the other Loan  Documents  shall remain in full force and
effect.  Each of the  Companies  confirms  and agrees that the joint and several
Obligations  of the Companies to the Bank, as amended and  supplemented  hereby,
are entitled to the benefits of the Loan  Documents.  The parties  hereto hereby
acknowledge  and agree  that all  references  to the  Credit  Agreement  and the
Obligations  thereunder  contained  in  any  of  the  Loan  Documents  shall  be
references to the Credit  Agreement and the Obligations as amended hereby and as
the same may be amended, modified,  supplemented, or restated from time to time.
This  Amendment  may be  executed  in any number of  counterparts,  but all such
counterparts  shall together  constitute but one instrument.  In making proof of
this Amendment it shall not be necessary to produce or account for more than one
counterpart  signed by each party hereto by and against which enforcement hereof
is sought.  The Companies hereby jointly and severally confirm their obligations
to pay promptly  upon request all  reasonable  out-of-pocket  costs and expenses
incurred or sustained by the Bank in connection with this  Amendment,  including
the  reasonable  fees and  expenses  of  Sullivan &  Worcester  LLP.

         Section 6. Governing Law. This Amendment  shall be construed  according
to and  governed  by the  internal  laws of The  Commonwealth  of  Massachusetts
without reference to principles of conflicts of law.

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         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized.

                          SIGNAL TECHNOLOGY CORPORATION

                             By:          /s/ ROBERT N. NELSEN
                                 -----------------------------------------------
                                     Name: Robert N. Nelsen
                                     Title: V.P.

                          SIGNAL TECHNOLOGY SALES CORP.

                             By:          /s/ ROBERT N. NELSEN
                                 -----------------------------------------------
                                     Name: Robert N. Nelsen
                                     Title: Treas.

                               FLEET NATIONAL BANK

                             By:          /s/ GISELA A. LOPIANO
                                 -----------------------------------------------
                                     Name: Gisela A. Lopiano
                                     Title: Director