Exhibit 10.1




                  SECOND AMENDED AND RESTATED CREDIT AGREEMENT

                                   dated as of

                                  MAY 31, 2005

                                  by and among

           GREATBATCH LTD., formerly known as Wilson Greatbatch, Ltd.

                            the LENDERS Party Hereto

                                       and

                     MANUFACTURERS AND TRADERS TRUST COMPANY
                    as Administrative Agent and Lead Arranger


                                   $50,000,000



<PAGE>


                                TABLE OF CONTENTS

ARTICLE I   DEFINITIONS                                                        1
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1.01     Defined Terms.                                                        1
1.02     Terms Generally.                                                     17
1.03     Accounting Terms; GAAP.                                              17

ARTICLE II  THE CREDIT FACILITY                                               19
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2.01     Revolving Credit Facilities.                                         19
2.02     Requests for Loans.                                                  20
2.03     Requests for Swingline Loans.                                        21
2.04     Letters of Credit.                                                   23
2.05     Funding of Borrowings.                                               27
2.06     Interest Elections.                                                  27
2.07     Termination and Reduction of the Commitments.                        29
2.08     Repayment and Prepayment of Loans; Evidence of Debt.                 30
2.09     Fees.                                                                31
2.10     Interest.                                                            32
2.11     Alternate Rate of Interest.                                          32
2.12     Increased Costs.                                                     33
2.13     Break Funding Payments.                                              34
2.14     Taxes.                                                               34
2.15     Payments Generally; Pro Rata Treatment; Sharing of Set-offs.         35
2.16     Mitigation Obligations; Replacement of Lenders.                      37

ARTICLE III REPRESENTATIONS AND WARRANTIES                                    38
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3.01     Organization; Powers.                                                38
3.02     Authorization; Enforceability.                                       38
3.03     Governmental Approvals; No Conflicts.                                38
3.04     Financial Condition; No Material Adverse Change.                     38
3.05     Properties.                                                          39
3.06     Litigation and Environmental Matters.                                39
3.07     Compliance with Laws and Agreements.                                 40
3.08     Investment and Holding Company Status.                               40
3.09     Taxes.                                                               40
3.10     ERISA.                                                               40
3.11     Disclosure.                                                          40
3.12     Use of Credit.                                                       40
3.13     Anti-Terrorism Law Compliance
         41

ARTICLE IV  CONDITIONS                                                        41
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4.01     Effective Date.                                                      41
4.02     Each Credit Event.                                                   43

ARTICLE V   AFFIRMATIVE COVENANTS                                             43
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5.01     Financial Statements and Other Information.                          43
5.02     Notices of Material Events.                                          44
5.03     Existence: Conduct of Business.                                      45


<PAGE>


5.04     Future Subsidiaries; Subsidiary Guarantors.                          45
5.05     Future Parent Entities; Parent Guarantors.                           45
5.06     Payment of Obligations.                                              46
5.07     Maintenance of Properties; Insurance.                                46
5.08     Books and Records; Inspection Rights.                                46
5.09     Compliance with Laws.                                                46
5.10     Use of Proceeds.                                                     46
5.11     Anti-Terrorism Laws
                      47

ARTICLE VI  NEGATIVE COVENANTS                                                46
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6.01     Indebtedness.                                                        47
6.02     Liens.                                                               49
6.03     Fundamental Changes.                                                 50
6.04     Lines of Business.                                                   51
6.05     Restrictive Agreements.                                              51
6.06     Investments, Loans, Advances, Guarantees and Acquisitions;
         Hedging Agreements.                                                  52
6.07     Restricted Payments.                                                 52
6.08     Transactions with Affiliates.                                        53
6.09     Sale and Lease-Back Transactions.                                    53

ARTICLE VII EVENTS OF DEFAULT                                                 53
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ARTICLE VIII  THE ADMINISTRATIVE AGENT                                        56
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ARTICLE IX  MISCELLANEOUS                                                     58
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9.01     Notices.                                                             58
9.02     Waivers; Amendments.                                                 59
9.03     Expenses; Indemnity; Damage Waiver.                                  61
9.04     Successors and Assigns.                                              62
9.05     Survival.                                                            64
9.06     Counterparts; Integration; Effectiveness.                            64
9.07     Severability.                                                        65
9.08     Right of Setoff.                                                     65
9.09     Governing Law; Jurisdiction: Etc.                                    65
9.10     Waiver of Jury Trial                                                 66
9.11     Headings.                                                            66
9.12     Treatment of Certain Information: Confidentiality.                   66
9.13     USA Patriot Act                                                      67


SCHEDULE I - Commitments
SCHEDULE II - Existing Indebtedness, Liens and Investments
SCHEDULE III - Litigation
SCHEDULE IV - Environmental Matters
SCHEDULE V - Existing Letters of Credit

EXHIBIT A - Form of  Assignment  and  Acceptance
EXHIBIT B - Form of Opinion of Counsel to the Borrower
EXHIBIT C - Form of Revolving Credit Note
EXHIBIT D - Form of Revolving Credit Borrowing  Request
EXHIBIT E - Form of  Interest  Election  Request  for  Revolving
            Credit  Borrowing
EXHIBIT F - Form of Borrower Compliance Certificate

                                                                              ii


<PAGE>


      SECOND AMENDED AND RESTATED CREDIT  AGREEMENT dated as of May 31, 2005, by
and among  GREATBATCH  LTD., a New York  corporation,  formerly  known as Wilson
Greatbatch,  Ltd. ("Borrower"),  the LENDERS party hereto, and MANUFACTURERS AND
TRADERS TRUST COMPANY, a New York banking  corporation,  as Administrative Agent
and Lead Arranger.

                                    RECITALS

      Pursuant to a Credit Agreement dated as of January 12, 2001 (the "Original
Credit  Agreement") the Lenders (as hereinafter  defined) extended credit to the
Borrower in an aggregate  principal or face amount not  exceeding  Sixty Million
Dollars  ($60,000,000)  at  any  one  time  outstanding  (the  "Original  Credit
Facilities").

      Pursuant to an Amended and Restated Credit  Agreement dated as of June 18,
2001,  the Lenders  modified the Original  Credit  Agreement  and  increased the
amount of the Original Credit  Facilities by extending credit to the Borrower in
an aggregate  principal or face amount not exceeding One Hundred Million Dollars
($100,000,000),  made available  Swingline Loans (as hereinafter  defined),  and
made certain other changes to the Original  Credit  Agreement (as modified,  the
"Amended and Restated Credit Agreement").

      The Amended and Restated Credit Agreement was amended by a First Amendment
dated as of August 31, 2001, a Second  Amendment  dated as of July 1, 2002 and a
Third  Amendment  dated as of May 23,  2003 ( the Amended  and  Restated  Credit
Agreement  together  with  the  First  Amendment,  Second  Amendment  and  Third
Amendment  are  referred  to herein as the "First  Amended and  Restated  Credit
Agreement").

      On or  about  May 23,  2003,  the  Borrower  irrevocably  paid in full the
outstanding  principal and interest balance of the term loan facilities extended
pursuant to the First Amended and Restated Credit Agreement.

      The Borrower has  requested  the Lenders to further  amend and restate the
First  Amended and  Restated  Credit  Agreement  to (i)  increase  the  Lenders'
Revolving  Credit   Commitment  (as  defined  herein)  from   $20,000,000.00  to
$50,000,000.00,  (ii) to revise certain  financial and other covenants and (iii)
to delete  the  provisions  related to the term loan  facilities  that have been
irrevocably paid in full by the Borrower.  The Lenders are prepared to amend and
restate the First  Amended and  Restated  Credit  Agreement,  upon the terms and
conditions of this Second Amended and Restated Credit Agreement.

      Now, the parties hereto, intending to be legally bound, agree as follows:

                    ARTICLE I         DEFINITIONS

1.01 Defined  Terms.  As used in this  Agreement,  the following  terms have the
meanings specified below:


<PAGE>


      "ABR" when used in reference to any Loan or Borrowing, indicates that such
Loan, or the Loans  constituting such Borrowing,  are bearing interest at a rate
determined by reference to the Adjusted Base Rate.

      "Adjusted  LIBOR"  means,  with  respect  to any ALR Loan for the  related
Interest  Period,  the  rate  per  annum  that  is  equal  to the sum of (a) the
Applicable  Margin,  plus (b) the rate per annum obtained by multiplying (i) the
LIBOR, by (ii) the Eurocurrency Reserve Rate, all as conclusively  determined by
the  Administrative  Agent,  such sum to be  rounded  up, if  necessary,  to the
nearest whole multiple of one hundredth (1/100th) of one percent (1%).

      "Adjusted  Base Rate"  means,  for any day, a rate per annum  equal to the
greater of (a) the Prime  Rate and (b) the sum of the  Federal  Funds  Effective
Rate on such day,  plus  one-half of one percent  (0.50%),  plus the  Applicable
Margin in effect for such day.

      "Administrative  Agent" means M&T, in its capacity as administrative agent
for the Lenders hereunder.

      "Administrative  Agent's  Account"  means  an  account  designated  by the
Administrative Agent in a notice to the Borrower and the Lenders.

      "Administrative  Questionnaire" means an Administrative Questionnaire in a
form supplied by the Administrative Agent.

      "Affiliate" means, with respect to a specified Person, another Person that
directly,  or  indirectly  through  one or more  intermediaries,  Controls or is
Controlled by or is under common Control with the Person specified.

      "ALR" when used in reference to any Loan or Borrowing, indicates that such
Loan, or the Loans  constituting such Borrowing,  are bearing interest at a rate
determined by reference to the Adjusted LIBOR.

      "Anti-Terrorism Law" means the USA Patriot Act or any other law pertaining
to the  prevention of future acts of terrorism,  in each case as such law may be
amended from time to time.

      "Applicable  Margin" means,  for any day, (a) with respect to any ABR Loan
the  applicable  rate per annum set forth below under the caption "ABR  Spread",
(b) with respect to any ALR Loan, the applicable  rate per annum set forth below
under the caption "LIBOR  Spread",  or (c) with respect to the revolving  credit
fees payable hereunder,  the applicable rate per annum set forth below under the
caption "Revolving Credit Fee Rate", respectively, based upon the Leverage Ratio
as at the end of the most recent fiscal quarter.

                                                                               2


<PAGE>


<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
      Leverage Ratio (= "x")                ABR Spread    LIBOR Spread       Revolving
                                                                           Credit Fee Rate
-------------------------------------------------------------------------------------------
<S>      <C>    <C>   <C>                      <C>           <C>               <C>
Category 1: x < 1:50: 1                        0.00          1.00              0.125
-------------------------------------------------------------------------------------------
Category 2:  x =1.50 : 1 and  < 2.0: 1         0.00          1.25              0.125
-------------------------------------------------------------------------------------------
Category 3:  x =2.00 : 1 and < 2.50 : 1        0.00          1.50              0.250
-------------------------------------------------------------------------------------------
Category 4:  x =2.50:1 and < 3.00 : 1          0.00          1.75              0.250
-------------------------------------------------------------------------------------------
Category 5:  x  =3.00:1                        0.00          2.25              0.250
-------------------------------------------------------------------------------------------
</TABLE>


For purposes of the foregoing,  each change in the Applicable  Margin  resulting
from a change in the  Leverage  Ratio  shall be  effective  as to any Loans then
outstanding or thereafter made during the period commencing on and including the
date three (3) Business Days after delivery to the  Administrative  Agent of the
Consolidated  financial  statements  pursuant to Section 5.01(a) or 5.01(b),  as
applicable,  indicating such change and ending on the date immediately preceding
the effective date of the next such change;  provided that the Applicable Margin
shall be deemed to be in  Category  5: (i) at any time that an Event of  Default
has occurred and is  continuing;  and (ii) if the Borrower  fails to deliver the
Consolidated  financial  statements  required to be  delivered by it pursuant to
Section 5.01(a) or 5.01(b),  during the period commencing on the expiration date
of the time for delivery  thereof and ending on the date three (3) Business Days
after such Consolidated financial statements are delivered.

      "Applicable  Percentage" means, with respect to any Lender, the percentage
of the total  Commitments  represented by such Lender's  Commitment as set forth
opposite such Lender's name on Schedule I or in the  Assignment  and  Acceptance
pursuant to which such Lender shall have assumed its Commitment,  as applicable.
If  the  Commitments  have  terminated  or  expired,  each  Lender's  Applicable
Percentage  shall be  determined  based upon the  Commitments  most  recently in
effect,  after giving effect to any  assignments of any  Commitments by or among
the Lenders.

      "Approved  Fund" means any Fund that is administered or managed by (a) any
Lender or (b) an Affiliate of any Lender.

      "Assignment  and  Acceptance"  means an assignment and acceptance  entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.04), and accepted by the Administrative Agent, in the form
of Exhibit A or any other form approved by the Administrative Agent.

      "Availability  Period"  means the period from and  including the Effective
Date to but excluding the earlier of the Revolving Credit Commitment Termination
Date and the date of termination of the Revolving Credit Commitments.

      "Board" means the Board of Governors of the Federal  Reserve System of the
United States of America.

      "Borrower" means Greatbatch Ltd., a New York  corporation,  formerly known
as Wilson Greatbatch, Ltd.

                                                                               3


<PAGE>


      "Borrower Pledge  Agreement" refers to the Borrower Pledge Agreement dated
January  12,  2001   pursuant  to  which  the   Borrower   has  pledged  to  the
Administrative Agent (for the benefit of the Lenders) all issued and outstanding
securities of each domestic  Subsidiary of the Borrower to secure the payment of
any and all  Indebtedness  and  liabilities,  whether now  existing or hereafter
incurred,  of the  Borrower  to  the  Administrative  Agent,  the  Lenders,  the
Swingline  Lender and the Issuing  Lender arising under or evidenced by the Loan
Documents.

      "Borrowing"  means (a) all ABR Loans made,  converted  or continued on the
same  date,  or (b) all ALR  Loans  (or  portions  thereof)  that  have the same
Interest Period.

      "Borrowing  Request"  means a request by the  Borrower  for a Borrowing of
Revolving Credit Loans in accordance with Section 2.02 or 2.03, as applicable.

      "Business  Day" means any day (a) that is not a Saturday,  Sunday or other
day on which commercial banks in Buffalo, New York are authorized or required by
law to remain  closed,  and (b) if such day relates to a borrowing of, a payment
or prepayment of principal of or interest on, a continuation or conversion of or
into,  or the  Interest  Period  for,  an ALR  Borrowing,  or to a notice by the
Borrower with respect to any such Borrowing, payment, prepayment,  continuation,
conversion,  or Interest  Period,  a day that is also a day on which dealings in
deposits  for United  States  Dollars are  carried  out in the London  interbank
market.

      "Capital Lease  Obligations"  of any Person means the  obligations of such
Person to pay rent or other  amounts  under  any lease of (or other  arrangement
conveying the right to use) real or personal property, or a combination thereof,
which  obligations  are required to be  classified  and accounted for as capital
leases on a balance  sheet of such  Person  under  GAAP,  and the amount of such
obligations  shall be the  capitalized  amount thereof  determined in accordance
with GAAP.

      "Cash Interest Expense" of any Person means, for any period, the aggregate
consolidated  interest expense of such Person including (without duplication and
in  accordance  with  GAAP)  the  following:  (a) all  interest  in  respect  of
Indebtedness  (including  the  interest  component of any payments in respect of
Capital  Lease   Obligations  and  synthetic  lease   obligations)   accrued  or
capitalized  during  such  period  (whether  or not  actually  paid  during such
period),  plus (b) the net amount  payable (or minus the net amount  receivable)
under  interest  rate  Hedging  Agreements  during such  period  (whether or not
actually paid or received during such period), minus (c) the sum of (i) interest
income during such period, plus (ii) all amounts  attributable to non-cash items
of interest expense, all as determined in accordance with GAAP.

      "Change in Control" means any time at which (a)  Technologies  shall cease
to beneficially  own, in the aggregate,  one hundred percent (100%) of the total
combined  voting power of all classes of voting capital stock of Holdings,  free
and clear of all Liens (including,  without  limitation,  pursuant to any voting
trust or other agreement to which such shareholder  becomes a party or bound by,
that in any way limits the right or ability of such  shareholder to exercise one
hundred  percent (100%) of such total  combined  voting  powers);  or (b) Wilson
Greatbatch  Intermediate Holdings,  Inc. shall cease to beneficially own, in the
aggregate,  one hundred percent (100%) of the total combined voting power of all
classes of voting stock of the Borrower, free and clear of all Liens (including,
without  limitation,  pursuant to any voting  trust or other  agreement to which
such  shareholder  becomes a party or bound by, that in any way limits the right
or ability of such  shareholder  to exercise one hundred  percent (100%) of such
total combined voting powers).

                                                                               4

<PAGE>


      "Change  in Law" means (a) the  adoption  of any law,  rule or  regulation
after the date of this Agreement,  (b) any change in any law, rule or regulation
or in the  interpretation or application  thereof by any Governmental  Authority
after the date of this Agreement, or (c) compliance by any Lender or the Issuing
Lender (or,  for  purposes  of Section  2.12(b),  by any lending  office of such
Lender or by such Lender's or the Issuing Lender's holding company, if any) with
any request,  guideline or directive (whether or not having the force of law) of
any Governmental Authority made or issued after the date of this Agreement.

      "CIP Regulations" has the meaning set forth in Article VIII.

      "Closing Fee" has the meaning set forth in paragraph 2.09(c).

      "Code"  means the Internal  Revenue Code of 1986,  as amended from time to
time.

      "Collateral Agency Agreement" shall have the meaning ascribed to such term
in  Section  6.01(a)(iv),   as  such  agreement  may  be  modified,  amended  or
supplemented from time to time.

      "Commitment"  means,  with  respect to a Lender,  the  commitment  of such
Lender  to make  Loans  and to  acquire  participations  in  Letters  of  Credit
hereunder,  expressed as an amount  representing the maximum aggregate amount of
such Lender's Revolving Credit Commitment hereunder.  The initial amount of each
Lender's  Commitment  is set  forth  on  Schedule  I, or in the  Assignment  and
Acceptance  pursuant to which such Lender shall have assumed its Commitment,  as
applicable.  The "Commitments"  shall mean the aggregate amounts of all Lenders'
commitments  to make  Loans and to acquire  participations  in Letters of Credit
hereunder;  the  initial  amount of the  Commitments  is Fifty  Million  Dollars
($50,000,000).

      "Compliance  Certificate"  means a certificate  of a Financial  Officer as
described in Section 5.01(c).

      "Consolidated"  or  "Consolidated   Basis"  means,   except  as  otherwise
specifically  provided for in this Agreement,  the consolidation of the accounts
of Technologies and all of its direct and indirect  Subsidiaries,  including the
Borrower, in accordance with GAAP, including principles of consolidation.

      "Consolidated  Adjusted  EBITDA"  means,  for any  period,  the sum of the
following on a Consolidated  basis: (a) Consolidated Net Income for such period,
plus (b)  without  duplication  and to the extent  deducted  in  computing  such
Consolidated  Net  Income  for such  period,  the sum of (i)  Consolidated  Cash
Interest  Expense,  plus (ii) income tax expense,  plus (iii)  depreciation  and
amortization  expense,  plus (iv) amortization or write-off of debt discount and
debt  issuance  costs and  commissions,  discounts  and other  fees and  charges
associated with  Indebtedness  (including the Loans),  plus (v)  amortization of
intangibles  (including,  but not limited to, goodwill) and organization  costs,
plus  (vi) any  extraordinary,  unusual  or  non-recurring  expenses  or  losses
(including,  whether or not  otherwise  includable  as a  separate  item in such
Consolidated  Net Income for such period,  (A) losses on sales of assets outside
of the ordinary course of business and (B) actual restructuring charges deducted
by the  Borrower in fiscal year 2005 and

                                                                               5

<PAGE>


2006  not  to  exceed   $12,000,000.00   and  $5,000,000.00  in  the  aggregate,
respectively)  determined in accordance with GAAP, plus (vii) any other non-cash
charges, and minus (c) to the extent included in computing such Consolidated Net
Income  for  such  period,  the  sum  of  (i)  any  extraordinary,   unusual  or
nonrecurring income or gains (including,  whether or not otherwise includable as
a separate item in such  Consolidated  Net Income for such period,  gains on the
sales of assets  outside  of the  ordinary  course of  business)  determined  in
accordance with GAAP, plus (ii) any other non-cash income.

      "Consolidated  Fixed  Charges"  means,  for  any  period,  the  sum of the
following on a Consolidated  basis:  (a) capital  expenditures  (minus Expansion
Capital  Expenditures),  plus (b) Cash Interest Expense,  plus (c) all regularly
scheduled   repayments  of  principal  of  Indebtedness   (including   principal
repayments of any Capital Lease  Obligations),  minus, (d) for such period,  the
cost of  financing  any  capital  expenditures  described  in clause (a) of this
definition for such period.

      "Consolidated  Funded Debt" means,  at any time,  the sum of the following
(without  duplication and in accordance with GAAP) on a Consolidated  basis: (a)
all interest-bearing Indebtedness;  plus (b) Capital Lease Obligations; plus (c)
synthetic lease  obligations minus (d) cash, cash equivalents and investments of
the Borrower with a maturity not exceeding one (1) year.

      "Consolidated  Net Income" means,  for any period,  the Net Income (or net
loss) of the Borrower and the Guarantors on a  consolidated  basis provided that
there shall be excluded (a) the income (or deficit) of any Person  accrued prior
to the date it becomes a Subsidiary or is merged into or  consolidated  with the
Borrower, (b) the income (or deficit) of any Person in which the Borrower has an
ownership interest,  except to the extent that any such income has been actually
received by the Borrower in the form of dividends, or similar distributions, (c)
the undistributed earnings of the Borrower to the extent that the declaration or
payment  of  dividends  or  similar  distributions  by  the  Borrower  and  such
Subsidiary  is not at the time  permitted  by the  terms of its  charter  of any
agreement,  instrument,  judgment,  decree, order, statute, rule or governmental
regulation  applicable to the Borrower,  (d) any aggregate net after tax gain or
net after tax loss during such period  arising from the sale,  exchange or other
disposition  of capital  assets (such term to include all fixed assets,  whether
tangible or intangible,  all Inventory sold in conjunction  with the disposition
of fixed assets, and all securities), (e) any write-up of any asset, (f) any net
gain from the collection of the proceeds of life insurance polices, (g) any gain
arising from the acquisition of any  securities,  or the  extinguishment,  under
GAAP,  of any  Indebtedness,  of the  Borrower,  (h) any  after tax gain or loss
during  such  period  from any  change  in  accounting,  from  any  discontinued
operations or the disposition thereof, from any extraordinary events or from any
prior  period  adjustments,  (i) in the case of a successor  to the  Borrower by
consolidation  or merger or as a transferee  of its assets,  any earnings of the
successor corporation prior to such consolidation, merger or transfer of assets.

      "Control" and "Controlling" means the possession,  directly or indirectly,
of the power to direct or cause the direction of the management or policies of a
Person,  whether  through the ability to exercise  voting power,  by contract or
otherwise. "Controlled" has the correlative meaning to such terms.

                                                                               6

<PAGE>


      "Credit  Exposure"  means,  with  respect to a Lender,  at any time,  such
Lender's Revolving Credit Exposure at such time.

      "Default"  means  any event or  condition  which  constitutes  an Event of
Default or which  upon  notice,  lapse of time or both  would,  unless  cured or
waived, become an Event of Default.

      "Disclosed Matters" means the actions,  suits and proceedings disclosed in
Schedule III and the environmental matters disclosed in Schedule IV.

      "Dollars" or "$" refers to lawful money of the United States of America.

      "Effective  Date"  means the date on which  the  conditions  specified  in
Section 4.01 are satisfied (or waived in accordance with Section 9.02).

      "Eligible  Assignee" means (a) an Affiliate of any Lender; (b) an Approved
Fund;  and (c) any other Person  (other than a natural  person)  approved by the
Borrower (such approval not to be  unreasonably  withheld or delayed);  provided
that no such approval  shall be required if an Event of Default has occurred and
is continuing.

      "Environmental   Laws"  means  all  laws,   rules,   regulations,   codes,
ordinances,  orders,  decrees,  judgments,   injunctions,   notices  or  binding
agreements  issued,  promulgated or entered into by any Governmental  Authority,
relating in any way to the  environment,  preservation or reclamation of natural
resources,  the  management,  release or  threatened  release  of any  Hazardous
Material or to health and safety matters.

      "Environmental  Liability"  means any  liability,  contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties  or  indemnities),  of the  Borrower  or any  Subsidiary  directly  or
indirectly  resulting from or based upon (a) violation of any Environmental Law,
(b)  the  generation,  use,  handling,  transportation,  storage,  treatment  or
disposal of any Hazardous  Materials,  (c) exposure to any Hazardous  Materials,
(d) the  release or  threatened  release  of any  Hazardous  Materials  into the
environment,  or (e) any  contract,  agreement or other  consensual  arrangement
pursuant to which  liability  is assumed or imposed  with  respect to any of the
foregoing.

      "ERISA"  means the Employee  Retirement  Income  Security Act of 1974,  as
amended from time to time.

      "ERISA   Affiliate"   means  any  trade  or   business   (whether  or  not
incorporated) that, together with the Borrower,  is treated as a single employer
under Section  414(b) or (c) of the Code, or, solely for purposes of Section 302
of ERISA and  Section  412 of the Code,  is treated as a single  employer  under
Section 414 of the Code.

      "ERISA Event" means (a) any "reportable event", as defined in Section 4043
of ERISA or the regulations issued thereunder with respect to a Plan (other than
an event for which the 30-day notice period is waived),  (b) the existence  with
respect  to any Plan of an  "accumulated  funding  deficiency"  (as  defined  in
Section 412 of the Code or Section 302 of ERISA), whether or not waived, (c) the
filing  pursuant to Section  412(d) of the Code or Section 303(d) of ERISA of an
application  for a waiver of the minimum  funding  standard  with respect to any
Plan, (d)

                                                                               7

<PAGE>

the  incurrence by the Borrower or any of its ERISA  Affiliates of any liability
under Title IV of ERISA with  respect to the  termination  of any Plan,  (e) the
receipt  by the  Borrower  or any ERISA  Affiliate  from the PBGC of any  notice
relating to an intention to terminate  any Plan or Plans or to appoint a trustee
to administer  any Plan,  (f) the incurrence by the Borrower or any of its ERISA
Affiliates of any liability with respect to the withdrawal or partial withdrawal
from any  Multiemployer  Plan,  or (g) the receipt by the  Borrower or any ERISA
Affiliate  of any  notice,  or the  receipt by any  Multiemployer  Plan from the
Borrower or any ERISA  Affiliate of any notice,  concerning  the  imposition  of
Withdrawal  Liability or a  determination  that a  Multiemployer  Plan is, or is
expected to be, insolvent or in  reorganization,  within the meaning of Title IV
of ERISA.

      "Event of Default" has the meaning assigned to such term in ARTICLE VII.

      "Eurocurrency  Reserve Rate" means,  for any Interest  Period,  a fraction
(expressed  as a decimal)  the  numerator of which is the number one (1) and the
denominator of which is the number one (1) minus the arithmetic mean, taken over
each day in such  Interest  Period,  of the  aggregate  of the  maximum  reserve
percentages established by the Board (including any marginal, special, emergency
or  supplemental  reserves)  expressed as a decimal to which the  Administrative
Agent  is  subject  for  "Eurocurrency  Liabilities"  (as  that  term is used in
Regulation  D  of  the  Board).   ALR  Loans  shall  be  deemed  to   constitute
"Eurocurrency  Liabilities"  and to be  subject  to  such  reserve  requirements
without  benefit of or credit for  proration,  exemptions or offsets that may be
available  from  time to time  to any  Lender  under  such  Regulation  D or any
comparable   regulation.   The  Eurocurrency  Reserve  Rate  shall  be  adjusted
automatically  on and as of the  effective  date of any  change  in any  reserve
percentage for "Eurocurrency Liabilities".

      "Excluded  Taxes" means,  with respect to the  Administrative  Agent,  any
Lender,  the Issuing Lender or any other  recipient of any payment to be made by
or on  account  of any  obligation  of the  Borrower  hereunder,  (a)  income or
franchise  taxes imposed on (or measured by) its net income by the United States
of America,  or by the  jurisdiction  under the laws of which such  recipient is
organized  or in which its  principal  office is located  or, in the case of any
Lender,  in which its  applicable  lending  office is  located,  (b) any  branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other  jurisdiction  in which the Borrower is located and (c) in the case
of a Foreign  Lender  (other  than an  assignee  pursuant  to a  request  by the
Borrower under Section 2.16(b)),  any withholding tax that is imposed on amounts
payable to such Foreign  Lender at the time such Foreign  Lender becomes a party
to this  Agreement  or is  attributable  to such  Foreign  Lender's  failure  or
inability  (other than as a result of a Change in Law) to deliver  documentation
prescribed by applicable  law that permits  payments made to such Foreign Lender
to be made  without  holding  taxes,  except to the  extent  that  such  Foreign
Lender's assignor (if any) was entitled,  at the time of assignment,  to receive
additional  amounts  from the  Borrower  with  respect to such  withholding  tax
pursuant to Section 2.14(a).

      "Expansion  Capital  Expenditures"  means the  actual  amount  of  capital
expenditures in connection with the expansion of the Borrower's facility located
in  Alden,  New  York  and the  facility  in  Tijuana,  Mexico  operated  by the
Borrower's  Affiliate  Greatbatch  Technologias de Mexico, S. de. C.V. in fiscal
year 2005 and fiscal year 2006 not to exceed  $15,000,000  and $5,000,000 in the
aggregate, respectively.

                                                                               8

<PAGE>


      "Federal Funds  Effective Rate" means,  for any day, the weighted  average
(rounded  upwards,  if  necessary,  to the next one  hundredth  (1/100th) of one
percent (1%)) of the rates on overnight Federal funds  transactions with members
of the Federal Reserve System arranged by Federal funds brokers, as published on
the next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so  published  for any day that is a Business  Day, the average
(rounded  upwards,  if  necessary,  to the next one  hundredth  (1/100th) of one
percent (1%)) of the quotations for such day for such  transactions  received by
the Administrative Agent from three Federal funds brokers of recognized standing
selected by it.

      "Financial  Officer" means the chief financial officer,  treasurer or vice
president-finance of the Borrower.

      "Fixed Charges  Coverage Ratio" means the ratio of  Consolidated  Adjusted
EBITDA to  Consolidated  Fixed Charges as at the end of each fiscal  quarter and
measured for the four (4) consecutive  fiscal quarters ending on the last day of
such fiscal quarter; provided, the items contained in clauses (a) and (d) of the
definition of  Consolidated  Fixed  Charges as at the end of any fiscal  quarter
shall be measured for the four (4)  consecutive  fiscal  quarters  ending on the
last day of such fiscal quarter. The determination of the Fixed Charges Coverage
Ratio  shall  be based  upon the  Consolidated  financial  statements  delivered
pursuant to Section 5.01(a) or 5.01(b), as applicable.

      "Foreign  Lender"  means any Lender that is organized  under the laws of a
jurisdiction  other than that in which the Borrower is located.  For purposes of
this  definition,  the United  States of  America,  each State  thereof  and the
District of Columbia shall be deemed to constitute a single jurisdiction.

      "Fund" means any Person (other than a natural person) that is (or will be)
engaged in making,  purchasing,  holding or otherwise  investing  in  commercial
loans and similar extensions of credit in the ordinary course of its business.

      "GAAP" means generally accepted accounting principles in the United States
of America.

      "Governmental  Authority"  means the  government  of the United  States of
America, or of any other nation, or any political  subdivision thereof,  whether
state or local,  and any agency,  authority,  instrumentality,  regulatory body,
court, central bank or other entity exercising executive, legislative, judicial,
taxing,  regulatory  or  administrative  powers or functions of or pertaining to
government.

      "Greatbatch,  LLC" means  Greatbatch,  LLC, a Delaware  limited  liability
company and wholly-owned Subsidiary of the Borrower.

      "Guarantee" of or by any Person (the  "guarantor")  means any  obligation,
contingent or otherwise,  of the guarantor  guaranteeing  or having the economic
effect of guaranteeing  any Indebtedness or other obligation of any other Person
(the  "primary  obligor") in any manner,  whether  directly or  indirectly,  and
including any obligation of the guarantor,  direct or indirect,  (a) to purchase
or pay (or  advance  or  supply  funds  for the  purchase  or  payment  of) such
Indebtedness  or other  obligation or to purchase (or to advance or supply funds
for the purchase of) any  security for the payment  thereof,  (b) to purchase or
lease property,  securities or services for the purpose of assuring the owner of
such  Indebtedness or other obligation of the payment


                                                                               9

<PAGE>


thereof, (c) to maintain working capital,  equity capital or any other financial
statement  condition  or  liquidity  of the primary  obligor so as to enable the
primary  obligor  to pay such  Indebtedness  or other  obligation;  or (d) as an
account party in respect of any letter of credit or letter of guaranty issued to
support such Indebtedness or obligation;  provided that the term Guarantee shall
not include  endorsements  for  collection or deposit in the ordinary  course of
business.

      "Guarantor" and "Guarantors"  means,  individually and collectively,  each
Parent Guarantor and each Subsidiary Guarantor.

      "Guaranty  Agreement" and "Guaranty  Agreements"  means,  individually and
collectively,  (i)  the  Subsidiary  Guaranty  executed  and  delivered  to  the
Administrative  Agent by each of Greatbatch,  LLC and  Laboratories  on the date
hereof,   (ii)  each   Subsidiary   Guaranty   executed  and  delivered  to  the
Administrative Agent by each of the Borrower's Subsidiary Guarantors (other than
Greatbatch,  LLC and Laboratories) prior to the date of this Agreement and (iii)
each Parent Guaranty executed and delivered to the Administrative  Agent by each
of Holdings and Technologies dated as of January 12, 2001, as any such agreement
may be modified, amended or supplemented from time to time.

      "Hazardous  Materials"  means all explosive or  radioactive  substances or
wastes  and all  hazardous  or toxic  substances,  wastes  or other  pollutants,
including  petroleum or petroleum  distillates,  asbestos or asbestos containing
materials,  polychlorinated biphenyl's,  radon gas, infectious or medical wastes
and all other  substances  or wastes of any  nature  regulated  pursuant  to any
Environmental Law.

      "Hedging Agreement" means any interest rate protection agreement,  foreign
currency  exchange  agreement,  commodity  price  protection  agreement or other
interest or currency exchange rate or commodity price hedging arrangement.

      "Hittman Pledge Agreement" refers to the Subsidiary Pledge Agreement dated
as of June 18, 2001  pursuant to which  Greatbatch-Hittman,  Inc. has pledged to
the  Administrative  Agent (on behalf of the Lenders) all issued and outstanding
securities  of  Greatbatch  Sierra,  Inc.,  to secure the payment of any and all
Indebtedness and liabilities, whether now existing or hereafter incurred, of the
Borrower  or of  Greatbatch-Hittman,  Inc. to the  Administrative  Agent and the
Lenders.

      "Holdings" means WGL Intermediate  Holdings,  Inc., a Delaware corporation
and  the  owner  of all of the  issued  and  outstanding  capital  stock  of the
Borrower.

      "Indebtedness"   of  any  Person  means,   without   duplication  (a)  all
obligations  of such Person for  borrowed  money or with  respect to deposits or
advances of any kind,  (b) all  obligations  of such Person  evidenced by bonds,
debentures,  notes or similar  instruments,  (c) all  obligations of such Person
upon which interest  charges are  customarily  paid, (d) all obligations of such
Person under  conditional sale or other title retention  agreements  relating to
property acquired by such Person,  (e) all obligations of such Person in respect
of the  deferred  purchase  price of  property or  services  (excluding  current
accounts  payable  incurred  in  the  ordinary  course  of  business),  (f)  all
Indebtedness of others secured by (or for which the holder of such  Indebtedness
has an existing  right,  contingent or otherwise,  to be secured by) any Lien on
property  owned or  acquired  by such  Person,  whether or not the  Indebtedness
secured  thereby  has  been  assumed,

                                                                              10

<PAGE>


(g) all  Guarantees by such Person of  Indebtedness  of others,  (h) all Capital
Lease Obligations of such Person, (i) all obligations,  contingent or otherwise,
of such  Person as an account  party in respect of letters of credit and letters
of guaranty, and (j) all obligations, contingent or otherwise, of such Person in
respect of bankers'  acceptances.  The  Indebtedness of any Person shall include
the  Indebtedness  of any other entity  (including any partnership in which such
Person is a general  partner) to the extent such Person is liable  therefor as a
result of such Person's  ownership  interest in or other  relationship with such
entity,  except to the extent the terms of such  Indebtedness  provide that such
Person is not liable therefor.

      "Indemnified Taxes" means Taxes other than Excluded Taxes.

      "Indemnitee" has the meaning assigned to such term in Section 9.03(b).

      "Intellectual  Property Security Agreements" refers to the Patent Security
Agreements,  Trademark  Security  Agreements and Copyright  Security  Agreements
executed  and  delivered  to the  Administrative  Agent by the Borrower and each
Subsidiary,  as the same may be modified,  amended or supplemented  from time to
time.

      "Interest  Election  Request" means a request by the Borrower to convert a
Borrowing  to, or continue a Borrowing as an ABR  Borrowing or ALR  Borrowing in
accordance with Section 2.06.

      "Interest  Payment Date" means (a) with respect to any ABR Loan, the first
day of each  calendar  month,  and (b) with  respect  to any ALR Loan,  the next
Business  Day  immediately  following  the  last  day of  each  Interest  Period
therefor.

      "Interest Period" means, (a) for any ALR Loan or ALR Borrowing, the period
commencing on the date of such Loan, or with respect to such Borrowing, the date
specified in the applicable  Interest  Election Request as the commencement date
of the  Interest  Period  for such  Borrowing,  and  ending  on the  numerically
corresponding  day in the calendar  month that is one (1), two (2), three (3) or
six (6) months thereafter, or (b) with respect to any portion of any ALR Loan or
Borrowing  that is scheduled  to be repaid on the  Revolving  Credit  Commitment
Termination  Date, a period of less than one (1) month's duration  commencing on
the date of such Loan, or with respect to such Borrowing,  the date specified in
the  applicable  Interest  Election  Request  as the  commencement  date  of the
Interest  Period  for  such  Borrowing,  and  ending  on  the  Revolving  Credit
Commitment  Termination  Date, as applicable;  provided that (i) if any Interest
Period would end on a day other than a Business Day, such Interest  Period shall
be  extended to the next  succeeding  Business  Day unless such next  succeeding
Business Day would fall in the next calendar  month, in which case such Interest
Period  shall  end on the  immediately  preceding  Business  Day,  and  (ii) any
Interest  Period (other than an Interest  Period  pertaining to an ALR Borrowing
that ends on the Revolving Credit  Commitment  Termination  Date, as applicable,
that is  permitted  to be of less than one (1)  month's  duration as provided in
this definition) that commences on the last Business Day of a calendar month (or
on a day  for  which  there  is no  numerically  corresponding  day in the  last
calendar  month of such  Interest  Period) shall end on the last Business Day of
the last calendar month of such Interest Period.  For purposes hereof,  the date
of a  Revolving  Credit Loan  initially  shall be the date on which such Loan is
made and thereafter shall be the effective date of the most recent conversion or
continuation of such Loan as an ALR Loan, and the date of a Borrowing comprising
a Revolving  Credit Loan,  multiple  Revolving Credit Loans, or any portion of a
Revolving Credit Loan or Revolving Credit Loans, that has or have, respectively,
been  converted  or  continued  shall be the  effective  date of the most recent
conversion or continuation of such Loan, Loans or portion thereof.

                                                                              11

<PAGE>


      "Issuing  Lender"  means M&T, in its  capacity as the issuer of Letters of
Credit  hereunder,  and its  successors  in such capacity as provided in Section
2.04(j).

      "Laboratories"   means   Greatbatch    Technologies    Advanced   Research
Laboratories, Inc., a Delaware corporation and Subsidiary of the Borrower.

      "LC Disbursement" means a payment made by the Issuing Lender pursuant to a
Letter of Credit.

      "LC Exposure"  means,  at any time,  the sum of (a) the aggregate  undrawn
amounts  of all  outstanding  Letters  of  Credit  at such  time,  plus  (b) the
aggregate amount of all LC Disbursements that have not yet been reimbursed by or
on behalf of the  Borrower  at such time.  The LC  Exposure of any Lender at any
time shall be its Applicable Percentage of the total LC Exposure at such time.

      "Lenders" means the Persons listed on Schedule I and any other Person that
shall have become a party hereto pursuant to an Assignment and Acceptance, other
than any such Person that ceases to be a party hereto  pursuant to an Assignment
and Acceptance.

      "Letter of Credit" means any standby  letter of credit issued  pursuant to
this Agreement.

      "Letter of Credit  Documents" means, with respect to any Letter of Credit,
collectively,  any application  therefor and any other agreements,  instruments,
guarantees or other documents (whether general in application or applicable only
to such  Letter  of  Credit)  governing  or  providing  for (a) the  rights  and
obligations  of the parties  concerned or at risk with respect to such Letter of
Credit, or (b) any collateral security for any of such obligations,  each as the
same may be modified and supplemented and in effect from time to time.

      "Leverage  Ratio" means the ratio of (a)  Consolidated  Funded Debt, as at
the end of each fiscal quarter,  to (b)  Consolidated  Adjusted EBITDA as at the
end of each fiscal  quarter,  and measured for the four (4)  consecutive  fiscal
quarters ending on the last day of such fiscal quarter. The determination of the
Leverage  Ratio  shall  be  based  upon the  Consolidated  financial  statements
delivered pursuant to Section 5.01(a) or 5.01(b), as applicable.

      "LIBOR"  means for any  Interest  Period,  the per annum rate at which the
United States Dollar  deposits are offered on page 3750 of the Dow Jones Markets
Telerate or as determined by the Administrative Agent if such information is not
available from any broker, quoting service or commonly available source utilized
by  the  Administrative  Agent,  at  which  United  States  Dollar  deposits  in
immediately available funds are offered to leading banks in the London interbank
deposit  market at 11:00  a.m.  Greenwich  Mean Time (or as soon  thereafter  as
practicable)  on the  Quotation  Date  for  delivery  on the  first  day of such
Interest Period and for a period equal to such Interest Period.

                                                                              12

<PAGE>


      "Lien" means, with respect to any asset, (a) any mortgage,  deed of trust,
lien, pledge, hypothecation,  encumbrance, charge or security interest in, on or
of such asset,  (b) the interest of a vendor or a lessor  under any  conditional
sale  agreement,  capital lease or title  retention  agreement (or any financing
lease having  substantially  the same economic  effect as any of the  foregoing)
relating to such asset, and (c) in the case of securities,  any purchase option,
call or similar right of a third party with respect to such securities.

      "Loan  Documents"  means,  collectively,  this Agreement,  the Notes,  the
Letter of Credit Documents,  the Guaranty  Agreements,  the Security Agreements,
the Borrower  Pledge  Agreement,  Hittman  Pledge  Agreement,  the  Intellectual
Property  Security  Agreements,   the  Reaffirmation  Agreement  and  all  other
agreements,  documents,  certificates and instruments  executed and delivered by
the Borrower, any Subsidiary Guarantor, Technologies,  Holdings, Greatbatch LLC,
Laboratories,  and  any  other  Person  pursuant  to  the  terms  hereof  to the
Administrative Agent and/or the Lenders in connection with the Transactions,  as
each of such Loan Documents may be modified,  amended or supplemented  from time
to time.

      "Loans"  means the  Revolving  Credit  Loans  made by the  Lenders  to the
Borrower pursuant to this Agreement.

      "Local Time" means the local time in Buffalo, New York.

      "M&T" means Manufacturers and Traders Trust Company.

      "Margin Stock" means "margin stock" within the meaning of Regulations T, U
and X of the Board.

      "Material  Adverse  Effect"  means a  material  adverse  effect on (a) the
business,  assets,  operations  or  condition,  financial or  otherwise,  of the
Borrower and its Subsidiaries  taken as a whole, (b) the ability of the Borrower
to perform any of its obligations  under this Agreement or any of the other Loan
Documents,  or (c) the  ability of the Lenders to enforce or assert any right or
interest  granted to the Lenders  under this  Agreement or any of the other Loan
Documents.

      "Multiemployer  Plan"  means a  multiemployer  plan as  defined in Section
4001(a)(3) of ERISA.

      "Net Income" of any Person, means, with respect to any period, all amounts
which, in conformity with GAAP,  would be included under net income on an income
statement of such Person for such period.

      "Note" and "Notes" means,  individually  and  collectively,  the Revolving
Credit Note.

      "Other  Taxes"  means any and all present or future  stamp or  documentary
taxes or any other excise or property  taxes,  charges or similar levies arising
from any payment made under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Loan Document.

      "Parent  Guarantor"  and  "Parent  Guarantors"  means,   individually  and
collectively,  Technologies,  Holdings  and each Person in relation to which the
Borrower or any  Subsidiary  of the Borrower  becomes a Subsidiary  and that has
executed  and  delivered  to the  Administrative  Agent a Guaranty  Agreement as
provided in Section 5.05.

                                                                              13

<PAGE>


      "Participant" has the meaning set forth 9.04(c).

      "PBGC"  means the Pension  Benefit  Guaranty  Corporation  referred to and
defined in ERISA and any successor entity performing similar functions.

      "Permitted Acquisition" has the meaning set forth in Section 6.03.

      "Permitted  Investments"  means: (a) direct obligations of, or obligations
the principal of and interest on which are  unconditionally  guaranteed  by, the
United  States  of  America  (or by  any  agency  thereof  to  the  extent  such
obligations  are backed by the full  faith and  credit of the  United  States of
America),  in each case  maturing  within one year from the date of  acquisition
thereof; (b) investments in commercial paper maturing within two hundred seventy
(270) days from the date of  acquisition  thereof  and  having,  at such date of
acquisition, the highest credit rating obtainable from Standard & Poor's Ratings
Services or Moody's Investors Services,  Inc; (c) investments in certificates of
deposit,  banker's  acceptances and time deposits  maturing within one year from
the date of  acquisition  thereof  issued or guaranteed  by or placed with,  and
money market deposit  accounts  issued or offered by, any domestic office of any
commercial  bank organized under the laws of the United States of America or any
State thereof which has a combined capital and surplus and undivided  profits of
not less than Two Hundred Fifty Million  Dollars  ($250,000,000);  and (d) fully
collateralized  repurchase  agreements  with a term of not more than thirty (30)
days for securities  described in clause (a) of this definition and entered into
with a financial institution  satisfying the criteria described in clause (c) of
this definition.

      "Person" means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership,  Governmental Authority
or other entity.

      "Plan" means any employee pension benefit plan (other than a Multiemployer
Plan) subject to the  provisions of Title IV of ERISA or Section 412 of the Code
or  Section  302 of ERISA,  and in respect  of which the  Borrower  or any ERISA
Affiliate  is (or, if such plan were  terminated,  would under  Section  4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.

      "Prime Rate" means the rate of interest per annum publicly  announced from
time to time by M&T as its  prime  rate in  effect  at its  principal  office in
Buffalo,  New York;  each change in the Prime Rate shall be  effective  from and
including the date such change is publicly announced as being effective.

      "Quarterly  Dates" means the last Business Day of March,  June,  September
and December in each year,  the first of which shall be the first such day after
the date hereof.

      "Quotation Date" means, for any Interest Period,  the date that is two (2)
Business Days prior to the first day of such Interest Period.

      "Reaffirmation Agreement" has the meaning set forth in Section 4.01(f).

                                                                              14

<PAGE>


      "Related  Parties"  means,  with  respect to any  specified  Person,  such
Person's Affiliates and the respective directors,  officers,  employees,  agents
and advisors of such Person and such Person's Affiliates.

      "Required Lenders" means, at any time, Lenders having Credit Exposures and
unused Revolving Credit Commitments  representing greater than sixty six and two
thirds  percent (66 2/3%) of the sum of the total  Credit  Exposures  and unused
Revolving Credit Commitments at such time.

      "Restricted  Payment"  for any  Person  means  (a) any  dividend  or other
distribution (whether in cash, securities or other property) with respect to any
shares of any class of capital stock of such Person, or (b) any payment (whether
in cash,  securities or other  property),  including any sinking fund or similar
deposit,  on  account  of the  purchase,  redemption,  retirement,  acquisition,
cancellation  or  termination of any such shares of capital stock of such Person
or any  option,  warrant or other  right to acquire  any such  shares of capital
stock of such Person, or (c) any dividend, distribution or other payment by such
Person or any  Subsidiary  of such Person to any  shareholder  of such Person or
such  Subsidiary  (other than such Person),  or to any Affiliate of such Person,
any of its Subsidiaries, or to such shareholder,  whether in cash, securities or
other property.

      "Revolving  Credit  Commitment"  means,  with  respect  to a  Lender,  the
commitment  of such  Lender  to  make  Revolving  Credit  Loans  and to  acquire
participations  in  Letters  of  Credit   hereunder,   expressed  as  an  amount
representing  the maximum  aggregate  amount of such Lender's  Revolving  Credit
Exposure hereunder and its Applicable  Percentage of the unused principal amount
of the Revolving Credit Note, as such commitment may be (a) reduced from time to
time  pursuant to Section 2.07,  and (b) reduced or increased  from time to time
pursuant to  assignments  by or to such Lender  pursuant  to Section  9.04.  The
initial  amount of each  Lender's  Revolving  Credit  Commitment is set forth on
Schedule I, or in the Assignment  and  Acceptance  pursuant to which such Lender
shall  have  assumed  its  Commitment,  as  applicable.  The  "Revolving  Credit
Commitments"  shall mean the aggregate  amounts of all Lenders'  commitments  to
make Revolving Credit Loans and to acquire  participations  in Letters of Credit
hereunder;  the amount of the  Revolving  Credit  Commitments  is Fifty  Million
Dollars ($50,000,000.00).

      "Revolving Credit Commitment  Termination Date" means, with respect to the
Revolving Credit Loans, Revolving Credit Note and the Letters of Credit, May 30,
2008.

      "Revolving Credit Exposure" means, with respect to any Lender at any time,
the sum of the outstanding  principal  amount of such Lender's  Revolving Credit
Loans and its LC Exposure at such time.

      "Revolving  Credit  Facility" means the credit extended to the Borrower as
described in Section 2.01.

      "Revolving Credit Loan" and "Revolving  Credit Loans" means,  individually
and collectively, each Loan and each Swingline Loan made by the Lenders pursuant
to Section 2.01.

                                                                              15

<PAGE>


      "Revolving  Credit  Note" means the  Replacement  Revolving  Credit  Notes
executed and delivered by the Borrower to the  Administrative  Agent pursuant to
Section  2.01 and in the form of  Exhibit C hereto,  and all  substitutions  and
replacements thereof.

      "Security  Agreement" and "Security  Agreement"  means,  individually  and
collectively,  (i) the Subsidiary  Security Agreements executed and delivered to
the Administrative Agent on the date hereof by Greatbatch, LLC and Laboratories,
(ii)  each  Subsidiary   Security   Agreement  executed  and  delivered  to  the
Administrative  Agent  by  each  Subsidiary  (other  than  Greatbatch,  LLC  and
Laboratories) and (iii) the Borrower Security  Agreement  executed and delivered
to the Administrative Agent by the Borrower and dated as of January 12, 2001, as
any such agreement may be modified, amended or supplemented from time to time.

      "Senior  Executive  Officer"  with respect to any Person,  means the Chief
Executive Officer, President or Executive Vice President of such Person.

      "Subordinated  Indebtedness"  means,  with respect to the Borrower and its
Subsidiaries,  all  unsecured  Indebtedness  that is  subordinated  in  right of
payment to the payment of the Loans and is otherwise junior to the rights of the
Lenders with respect to the Loans in all respects.

      "Subsidiary" means, with respect to any Person (the "parent") at any date,
any corporation,  limited liability company,  partnership,  association or other
entity the accounts of which would be  consolidated  with those of the parent in
the parent's consolidated financial statements if such financial statements were
prepared  in  accordance  with  GAAP as of  such  date,  as  well  as any  other
corporation, limited liability company, partnership, association or other entity
(a) of which  securities or other  ownership  interests  representing  more than
fifty  percent  (50%) of the  equity or more  than  fifty  percent  (50%) of the
ordinary voting power or, in the case of a partnership,  more than fifty percent
(50%)  of the  general  partnership  interests  are,  as of  such  date,  owned,
controlled or held, or (b) that is, as of such date,  otherwise  Controlled,  by
the parent or one or more subsidiaries of the parent or by the parent and one or
more subsidiaries of the parent. Unless otherwise specified,  "Subsidiary" means
a Subsidiary of the Borrower.

      "Subsidiary Guarantor" and "Subsidiary Guarantors" means, individually and
collectively,  each  Subsidiary  of the  Borrower  or of any  Subsidiary  of the
Borrower  that  has  executed  and  delivered  to  the  Administrative  Agent  a
Subsidiary Guaranty in form acceptable to the Administrative Agent.

      "Swingline  Lender"  means M&T, in its capacity as the issuer of Swingline
Loans  hereunder,  and its  successors  in such  capacity as provided in Section
2.03(g).

      "Swingline   Loan"  and   "Swingline   Loans"  means,   individually   and
collectively, each Loan made by the Swingline Lender and the other Lenders under
the Revolving Credit Facility pursuant to Section 2.03.

      "Technologies"   means  Greatbatch,   Inc.   (formerly  Wilson  Greatbatch
Technologies,  Inc., a Delaware  corporation  and the owner of all of the issued
and outstanding capital stock of Holdings.

                                                                              16

<PAGE>


      "Taxes"  means any and all  present  or  future  taxes,  levies,  imposts,
duties,  deductions,   charges  or  withholdings  imposed  by  any  Governmental
Authority.

      "Transactions"  means  the  execution,  delivery  and  performance  by the
Borrower of this Agreement and the other Loan Documents, the borrowing of Loans,
the use of the proceeds thereof and the issuance of Letters of Credit hereunder.

      "Type" when used in reference to any Loan or Borrowing,  refers to whether
the rate of interest on such Loan, or on the Loans  constituting such Borrowing,
is determined by reference to the Adjusted LIBOR or the Adjusted Base Rate, and,
accordingly,  whether  such Loan or Borrowing is an ALR Loan or Borrowing or ABR
Loan or Borrowing, respectively.

      "USA Patriot Act" means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT Act)
Act of 2001.

      "Withdrawal Liability" means liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer  Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.

1.02 Terms Generally. The definitions of terms herein shall apply equally to the
singular  and  plural  forms of the terms  defined.  Whenever  the  context  may
require,  any pronoun shall include the  corresponding  masculine,  feminine and
neuter forms. The words "include", "includes" and "including" shall be deemed to
be  followed  by the  phrase  "without  limitation".  The word  "will"  shall be
construed  to have the same meaning and effect as the word  "shall".  Unless the
context requires  otherwise (a) any definition of or reference to any agreement,
instrument  or other  document  herein  shall be  construed as referring to such
agreement,   instrument  or  other  document  as  from  time  to  time  amended,
supplemented  or  otherwise  modified  (subject  to  any  restrictions  on  such
amendments,  supplements or modifications  set forth herein),  (b) any reference
herein to any Person shall be construed to include such Person's  successors and
assigns, (c) the words "herein", "hereof" and "hereunder",  and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any  particular  provision  hereof,  (d)  all  references  herein  to  Articles,
Sections,  Exhibits  and  Schedules  shall be construed to refer to Articles and
Sections of, and Exhibits and  Schedules  to, this  Agreement  and (e) the words
"asset" and  "property"  shall be  construed to have the same meaning and effect
and to refer to any and all  tangible  and  intangible  assets  and  properties,
including cash, securities, accounts and contract rights.

1.03 Accounting Terms; GAAP.

      (a) GAAP;  Changes in  Accounting  Terms  Treatment.  Except as  otherwise
expressly  provided herein, all terms of an accounting or financial nature shall
be construed in accordance  with GAAP, as in effect from time to time;  provided
that,  if the  Borrower  notifies  the  Administrative  Agent that the  Borrower
requests an amendment  to any  provision  hereof to eliminate  the effect of any
change occurring after the date hereof in GAAP or in the application  thereof on
the operation of such  provision (or if the  Administrative  Agent  notifies the
Borrower that the Required  Lenders request an amendment to any provision hereof
for such  purpose),  regardless  of whether any such  notice is given  before or
after such change in GAAP or in the  application  thereof,  then such  provision
shall be interpreted  on the basis of GAAP as in effect and applied  immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.

                                                                              17

<PAGE>


      (b)  Changes  in  Fiscal  Periods.  To enable  the  ready  and  consistent
determination  of compliance with the covenants set forth in Section ARTICLE VI,
the  Borrower  will not change  the last day of its fiscal  year from the Friday
nearest to December 31 of each year  (whether or not such last day occurs in the
same calendar year or the next following calendar year), or the last days of the
first  three  fiscal  quarters  in each of their  fiscal  years  from the Friday
closest to March 31, June 30 or September 30 of each year, respectively.  By way
of  illustration  of the  foregoing,  fiscal year 2005 will end on December  30,
2005.

      (c) Pro Forma  Treatment  of  Acquisitions.  For the purposes of computing
Consolidated Adjusted EBITDA, Consolidated Fixed Charges, Cash Interest Expense,
Consolidated  Funded Debt,  the Fixed  Charges  Coverage  Ratio and the Leverage
Ratio (and any  financial  calculations  required to be made or included  within
such amounts or ratios) as of the end of any  measurement  period,  in the event
any Person (an  "acquired  Person") is  acquired  by the  Borrower or any of its
Subsidiaries  after the  beginning  of and prior to the end of such  measurement
period,   all   components  of  such  amounts  or  ratios  (other  than  capital
expenditures  as determined in accordance  with GAAP) shall be computed on a pro
forma  basis  as if such  acquisition  has  occurred  on the  first  day of such
measurement  period,  and  shall,  without   duplication,   and  to  the  extent
applicable:

            (i)  include,  for  purposes of  calculating  Consolidated  Adjusted
      EBITDA,  the actual items of income and expense of the acquired  Person as
      measured for the four (4)  consecutive  fiscal  quarters of such  acquired
      Person  ending  on the date of its  acquisition  by the  Borrower  or such
      Subsidiary;

            (ii)  include,  for  purposes  of  calculating   Consolidated  Fixed
      Charges,  the  actual  items of fixed  charges of the  acquired  Person as
      measured for the four (4)  consecutive  fiscal  quarters of such  acquired
      Person  ending  on the date of its  acquisition  by the  Borrower  or such
      Subsidiary;

            (iii) include,  for purposes of determining  Cash Interest  Expense,
      the  actual  items of cash  interest  expense  of the  acquired  Person as
      measured for the four (4)  consecutive  fiscal  quarters of such  acquired
      Person  ending  on the date of its  acquisition  by the  Borrower  or such
      Subsidiary;

            (iv) include,  for the purposes of determining  Consolidated  Funded
      Debt,  the actual  amount of all  interest-bearing  Indebtedness,  Capital
      Lease  Obligations and synthetic lease  obligations of the acquired entity
      as at the date of its acquisition by the Borrower or such Subsidiary;

            (v) exclude any  Indebtedness  of the acquired  Person that has been
      retired  or  discharged  on or  prior to the  date  the  Borrower  or such
      Subsidiary acquired such acquired Person (the "acquisition date");

                                                                              18

<PAGE>


            (vi) calculate  interest payable during such measurement period with
      respect to any  Indebtedness of such acquired Person at a rate of interest
      equal to the actual weighted average interest rate in effect for the Loans
      hereunder on the date of such acquisition; and

            (vii)  include all cost  savings to be  realized by the  Borrower or
      such Subsidiary in connection with such acquisition during the twelve (12)
      month  period  ending on the first (1st)  anniversary  of the  acquisition
      date, as determined in good faith by the Borrower or such  Subsidiary  and
      set  forth  in  the  relevant  Compliance  Certificate  delivered  by  the
      Financial   Officer  of  the   Borrower   for  such   measurement   period
      (collectively,  the  "projected  cost  savings");  provided,  however,  in
      computing each such amount or ratio (A) no cost savings which would accrue
      or occur after the first (1st) year  anniversary of the  acquisition  date
      shall be  considered,  and (B) the actual  cost  savings  realized  by the
      Borrower  or such  Subsidiary  (if any)  during  each  measurement  period
      commencing  after  the  end  of  the  measurement  period  containing  the
      acquisition  date,  rather than the projected cost savings  expected to be
      realized during such measurement period,  shall (to the extent applicable)
      be used in  computing  each  such  amount  or  ratio as of the end of such
      measurement period.

                     ARTICLE II      THE CREDIT FACILITY


2.01  Revolving Credit Facility.

      (a) Revolving  Credit  Commitments.  Each Lender  severally agrees to make
Revolving Credit Loans to the Borrower from time to time during the Availability
Period  in an  aggregate  principal  amount  that  will not  result  in (i) such
Lender's  Revolving  Credit Exposure  exceeding such Lender's  Revolving  Credit
Commitment,  or (ii) the total Revolving  Credit  Exposures  exceeding the total
Revolving Credit  Commitments.  Each Lender's Revolving Credit Commitment is set
forth  opposite  such  Lender's  name on  Schedule  I or in the  Assignment  and
Acceptance  pursuant  to  ----------  which such Lender  shall have  assumed its
Commitment, as applicable.  Within the foregoing limits and subject to the terms
and conditions set forth herein,  the Borrower may borrow,  prepay and re-borrow
Revolving Credit Loans.

      (b)  Obligations  of Lenders for Revolving  Credit Loans.  Each  Revolving
Credit Loan shall be made on the date of such  Borrowing by the Lenders  ratably
in accordance with their respective Applicable  Percentages.  The failure of any
Lender to make any  Revolving  Credit  Loan  required to be made by it shall not
relieve  any  other  Lender  of its  obligations  hereunder;  provided  that the
Revolving  Credit  Commitments of the Lenders are several and no Lender shall be
responsible  for any other Lender's  failure to make  Revolving  Credit Loans as
required hereunder.

      (c) Type of Revolving  Credit Loans.  Each  Borrowing of Revolving  Credit
Loans shall be constituted entirely of ABR Loans or of ALR Loans as the Borrower
may request in accordance  herewith.  Subject to the provisions of Section 2.11,
the Borrower may elect to change the Type of any  Borrowing of Revolving  Credit
Loans after the  Effective  Date in  accordance  with the  provisions of Section
2.06.

                                                                              19

<PAGE>


      (d) Revolving  Credit Note. The Revolving Credit Loans, and the Borrower's
obligation to repay the Revolving  Credit Loans and interest  thereon,  shall be
evidenced  by  the   Revolving   Credit  Note  executed  and  delivered  to  the
Administrative  Agent on the Effective Date, and shall be in the form of Exhibit
C  hereto.  Interest  on the  outstanding  and  unpaid  principal  amount of the
Revolving Credit Note will be payable from the date of the Revolving Credit Note
as hereinafter provided, and the entire unpaid principal amount of the Revolving
Credit Note shall be repaid on the Revolving Credit Commitment Termination Date.

      (e) Records of the Administrative  Agent. The  Administrative  Agent shall
set forth on a schedule  attached  to and made a part of each  Revolving  Credit
Note or on any  separate  similar  schedule or on any  continuation  of any such
schedule  (including,  but not limited to, any similar  schedule  maintained  in
computerized  records) annotations  evidencing (i) the date and principal amount
of each Revolving  Credit Loan,  (ii) the aggregate of all principal  amounts of
all Revolving Credit Loans,  (iii) the amounts of any repayments of principal of
the  Revolving  Credit  Loans,  (iv) the  outstanding  principal  amount of each
Revolving  Credit Note,  (v) the applicable  Interest  Period for each Borrowing
that is an ALR Borrowing (vi) the Applicable Margin and resulting  interest rate
for each Borrowing of Revolving Credit Loans, (vii) the aggregate amounts of all
payments  under or repayments of principal of each  Revolving  Credit Note,  and
(viii) and such other  information  relating to each Revolving  Credit Note, the
Revolving  Credit Loans,  principal  amounts  thereof,  interest paid or payable
thereon, or otherwise as the Administrative  Agent shall deem appropriate in the
Administrative  Agent's sole  discretion.  Each such  annotation  shall,  in the
absence of manifest  error,  be  conclusive  and binding upon the  Borrower.  No
failure of the  Administrative  Agent to make and no error by the Administrative
Agent in making any  annotation  on such  attached  schedule or any such similar
schedule  shall affect the  obligations  of the Borrower to repay the  principal
amount of each Revolving  Credit Loan and the  outstanding  principal  amount of
each  Revolving  Credit Note,  the obligation of the Borrower to pay interest on
the  outstanding  principal  amount  of each  Revolving  Credit  Loan and on the
outstanding  principal  amount  of each  Revolving  Credit  Note,  or any  other
obligation of the Borrower to the Administrative Agent or any Lender pursuant to
this Agreement.

2.02  Requests for Loans.

      (a) Notice by the  Borrower.  To request a Borrowing,  the Borrower  shall
notify the Administrative  Agent of such request by telephone (i) in the case of
an ALR Borrowing, not later than 11:00 a.m., Local Time, three (3) Business Days
before  the  date of the  proposed  Borrowing,  or  (ii)  in the  case of an ABR
Borrowing  (including  an ABR  Borrowing to finance the  reimbursement  of an LC
Disbursement  as contemplated  by Section  2.04(f)),  not later than 11:00 a.m.,
Local  Time,  on the  date  of the  proposed  Borrowing.  Each  such  telephonic
Borrowing  Request shall be irrevocable and shall be confirmed  promptly by hand
delivery or telecopy to the Administrative  Agent of a written Borrowing Request
in the form of  Exhibit D hereto and  ----------  signed by the  Borrower  on or
prior to the date of such Borrowing as required pursuant to the foregoing.

      (b) Content of Borrowing  Requests.  Each telephonic and written Borrowing
Request shall specify the following information in compliance with Section 2.01:

            (i) the aggregate amount of the requested Borrowing;

                                                                              20

<PAGE>


            (ii) the date of such Borrowing, which shall be a Business Day;

            (iii)  whether such  Borrowing  is to be an ABR  Borrowing or an ALR
      Borrowing; and

            (iv) in the case of an ALR Borrowing,  the Interest Period therefor,
      which  shall  be a  period  contemplated  by the  definition  of the  term
      "Interest Period" and permitted under Section 2.06(g).

      (c) Minimum Amounts of Borrowings.  Each ALR Borrowing under the Revolving
Credit  Facility  shall be in an aggregate  amount equal to Two Million  Dollars
($2,000,000)  or a  larger  multiple  of  Two  Hundred  Fifty  Thousand  Dollars
($250,000).  Each ABR Borrowing under the Revolving  Credit Facility shall be in
an aggregate  amount  equal to Five Hundred  Thousand  Dollars  ($500,000)  or a
larger multiple of Two Hundred Fifty Thousand Dollars ($250,000);  provided that
an ABR  Borrowing  under the  Revolving  Credit  Facility may be in an aggregate
amount that is equal to the entire unused balance of the total Revolving  Credit
Commitments  or  that  is  required  to  finance  the  reimbursement  of  an  LC
Disbursement as contemplated by Section 2.04(f).

      (d) Notice by the Administrative Agent to the Lenders.  Promptly following
receipt  of  a  Borrowing   Request  in  accordance   with  this  Section,   the
Administrative  Agent shall advise each Lender of the details thereof and of the
amount  of  such  Lender's  Revolving  Credit  Loan  to be  made  as part of the
requested Borrowing.

      (e)  Failure  to  Elect.  If the  Borrower  fails to  elect  the Type of a
requested Borrowing,  then the requested Borrowing shall be an ABR Borrowing. If
no Interest Period is specified with respect to any requested ALR Borrowing, the
requested Borrowing shall be made instead as an ABR Borrowing.

2.03  Requests for Swingline Loans.

      (a) Notice by the  Borrower.  Notwithstanding  the  provisions  of Section
2.02,  above, the Borrower may from time to time request the Swingline Lender to
consider  making  a  Swingline  Loan to the  Borrower.  In order  to  request  a
Swingline  Loan the  Borrower  shall  notify  the  Administrative  Agent of such
request by telephone  not later than 3:00 p.m.,  Local Time,  on the date of the
proposed Borrowing.  Each such telephonic Borrowing Request shall be irrevocable
and  shall  be  confirmed   promptly  by  hand   delivery  or  telecopy  to  the
Administrative  Agent and Swingline Lender of a written Borrowing Request in the
form of Exhibit D hereto and signed by the  ----------  Borrower  on the date of
such Borrowing.  Each telephonic and written Borrowing Request shall specify the
following  information in compliance with Section 2.02: (i) the principal amount
of such  Swingline  Loan,  and (ii) the  aggregate  amount  of  Swingline  Loans
outstanding,  both before and after giving effect to such  Swingline  Loan,  and
(iii) the date of such Swingline Loan, which shall be a Business Day.

      (b)  Determination by Swingline  Lender.  Any decision to make a Swingline
Loan to the  Borrower  shall  be in the  sole  and  absolute  discretion  of the
Swingline  Lender,  and the  Swingline  Lender  shall  review each request for a
Swingline Loan on a case-by-case  basis.


                                                                              21

<PAGE>


The Swingline Lender shall not make a Swingline Loan if it has actual notice, or
has received notice from the  Administrative  Agent, any Lender or the Borrower,
that an Event of Default has occurred and is continuing. Other than instances in
which the Swingline  Lender has actual notice,  or has received  notice from the
Administrative  Agent, any Lender or the Borrower,  that an Event of Default has
occurred and is continuing,  in the event the Swingline  Lender does not approve
Borrower's  request for a Swingline Loan, the Borrowing Request delivered to the
Administrative  Agent and Swingline Lender  requesting a Swingline Loan shall be
treated as a Borrowing  Request for an ABR Loan  pursuant to the  provisions  of
Section 2.02, above, and such requested Loan's borrowing date shall be deemed to
be the  earliest  date for  borrowing  an ABR Loan  following  delivery  of such
Borrowing  Request to the  Administrative  Agent pursuant to such Section.  This
Agreement does not constitute a commitment,  and the Swingline  Lender shall not
have any obligation, to make any Swingline Loan.

      (c)  Limitations on Amounts.  Each Swingline Loan shall be in an amount of
not less than Fifty Thousand Dollars ($50,000) and, if in an amount greater than
Fifty Thousand  Dollars  ($50,000),  shall be in whole multiples of Ten Thousand
Dollars  ($10,000).  No Swingline  Loan shall (i)  individually  be in an amount
greater  than  Five  Hundred  Thousand  Dollars   ($500,000),   or  (ii)  either
individually  or when  aggregated  with all other  Swingline  Loans,  exceed the
lesser of (A) the amount of the Swingline  Lender's Revolving Credit Commitment,
and (B) Two Million Five Hundred Thousand Dollars ($2,500,000).

      (d)  Notification  by Swingline  Lender.  If, after  receiving a Borrowing
Request with respect to a Swingline Loan, and upon the Borrower's fulfillment of
all applicable  conditions set forth herein, the Swingline Lender elects to make
a Swingline  Loan  available to the  Borrower,  the  Swingline  Lender shall (i)
notify the  Borrower by 4:00 p.m.,  Local  Time,  on the date of receipt of such
Borrowing Request, (ii) pay or deliver all funds so requested by the Borrower in
the Borrowing  Request by the end of business on such date,  and (iii)  promptly
notify the Administrative Agent of such Swingline Loan.

      (e)  Notification by  Administrative  Agent.  After receiving  notice of a
Swingline  Loan  from the  Swingline  Lender,  the  Administrative  Agent  shall
promptly  notify each Lender by  telephone  of such  Swingline  Loan and of such
Lender's  Applicable  Percentage of the principal amount of such Swingline Loan.
Each Lender (other than the Swingline Lender) shall, before 12:00 p.m.. (Eastern
Standard  Time or  Eastern  Daylight  Savings  Time,  as the case may be) on the
Business Day immediately  following the date of a Swingline  Loan,  deposit with
the Administrative  Agent the amount of such Lender's  Applicable  Percentage of
the principal  amount of such  Swingline Loan in  immediately  available  funds.
After  receipt by the  Administrative  Agent of such funds,  the  Administrative
Agent shall pay or deliver  all funds so received to the order of the  Swingline
Lender to the account designated by the Swingline Lender for the receipt of such
funds,  and each  amount  paid by a Lender to the  Administrative  Agent for the
account of the Swingline Lender shall constitute such Lender 's Revolving Credit
Commitment  with respect to such  Swingline  Loan for purposes of this Agreement
and the Revolving Credit Note.

      (f) Discontinuance of Swingline Loans. Upon one (1) Business Day's written
notice to the Administrative  Agent and the other Lenders, any Lender (including
the Swingline  Lender) may elect to discontinue  to honor any Borrowing  Request
with respect to its  Applicable  Percentage of a Swingline Loan delivered to the
Swingline Lender and the Administrative  Agent after such notice.

                                                                              22

<PAGE>


In such event, the Administrative  Agent and other Lenders shall elect to either
(i) terminate the availability of Swingline Loans to the Borrower after the date
of such notice,  or (ii)  negotiate  with the  Borrower an  alternate  method of
making  Swingline  Loans (or an  equivalent  form of  credit)  available  to the
Borrower upon terms and conditions satisfactory to the Lenders.

      (g)  Replacement  of the Swingline  Lender.  The  Swingline  Lender may be
replaced at any time by written agreement among the Borrower, the Administrative
Agent, the replaced  Swingline Lender and the successor  Swingline  Lender.  The
Administrative  Agent shall promptly notify the Lenders of any such  replacement
of the  Swingline  Lender.  From  and  after  the  effective  date  of any  such
replacement,  (i) the successor  Swingline  Lender shall have all the rights and
obligations of the replaced  Swingline  Lender under this Agreement with respect
to Swingline Loans to be issued  thereafter,  and (ii) references  herein to the
term " Swingline  Lender"  shall be deemed to refer to such  successor or to any
previous  Swingline  Lender,  or to such  successor  and all previous  Swingline
Lenders,  as the context shall  require.  After the  replacement of an Swingline
Lender hereunder, the replaced Swingline Lender shall cease to be a party hereto
and shall not have any right,  duty or obligation  hereunder to issue additional
Swingline Loans.

2.04  Letters of Credit.

      (a) General.  Subject to the terms and  conditions  set forth  herein,  in
addition  to the  Revolving  Credit  Loans  provided  for in Section  2.01,  the
Borrower may request the Issuing  Lender to issue,  at any time and from time to
time during the  Availability  Period,  Letters of Credit for its own account in
such  form  as  is   acceptable  to  the  Issuing   Lender  in  its   reasonable
determination.  Letters of Credit issued hereunder shall constitute  utilization
of the Revolving Credit Commitments.

      (b) Notice of Issuance;  Amendment;  Renewal or Extension.  To request the
issuance of a Letter of Credit (or the  amendment,  renewal or  extension  of an
outstanding  Letter of Credit),  the Borrower shall hand deliver or telecopy (or
transmit by electronic  communication,  if  arrangements  for doing so have been
approved by the Issuing  Lender) to the  Issuing  Lender and the  Administrative
Agent  (reasonably  in advance of the  requested  date of  issuance,  amendment,
renewal or extension) a notice requesting the issuance of a Letter of Credit, or
identifying  the  Letter of Credit  to be  amended,  renewed  or  extended,  and
specifying the date of issuance, amendment, renewal or extension (which shall be
a  Business  Day),  the date on which  such  Letter of  Credit is to expire  (in
compliance  with  paragraph (d) of this  Section),  the amount of such Letter of
Credit,  the  name  and  address  of the  beneficiary  thereof  and  such  other
information as shall be necessary to prepare, amend, renew or extend such Letter
of Credit.  The Borrower also shall submit a letter of credit application on the
Issuing  Lender's  standard form in connection  with any request for a Letter of
Credit.  In the event of any  inconsistency  between the terms and conditions of
this  Agreement  and the  terms and  conditions  of any form of letter of credit
application or other agreement  submitted by the Borrower to, or entered into by
the Borrower  with,  the Issuing  Lender  relating to any Letter of Credit,  the
terms and conditions of this Agreement shall control.

      (c) Limitations on Amounts.  A Letter of Credit shall be issued,  amended,
renewed or extended only if (and upon issuance,  amendment, renewal or extension
of each Letter of Credit the Borrower  shall be deemed to represent  and warrant
that), after giving effect to such issuance, amendment, renewal or extension

                                                                              23

<PAGE>


(i) the  aggregate  LC  Exposure  of the Issuing  Lender  (determined  for these
purposes  without  giving  effect to the  participations  therein of the Lenders
pursuant to paragraph (e) of this Section) shall not exceed Ten Million  Dollars
($10,000,000.00), and (ii) the total Revolving Credit Exposures shall not exceed
the total Revolving Credit Commitments.

      (d) Expiration Date. Each Letter of Credit shall expire at or prior to the
close  of  business  ten  (10)  Business  Days  prior  to the  Revolving  Credit
Commitment Termination Date.

      (e) Participations. By the issuance of a Letter of Credit (or an amendment
to a Letter of Credit increasing the amount thereof) by the Issuing Lender,  and
without any further action on the part of the Issuing Lender or the Lenders, the
Issuing  Lender  hereby grants to each Lender,  and each Lender hereby  acquires
from the Issuing Lender,  a participation in such Letter of Credit equal to such
Lender's  Applicable  Percentage of the aggregate  amount  available to be drawn
under such  Letter of  Credit.  Each  Lender  acknowledges  and agrees  that its
obligation to acquire  participations  pursuant to this  paragraph in respect of
Letters of Credit is absolute and unconditional and shall not be affected by any
circumstance  whatsoever,  including any amendment,  renewal or extension of any
Letter of Credit or the occurrence and  continuance of a Default or reduction or
termination  of the  Commitments.  In  consideration  and in  furtherance of the
foregoing,  each Lender hereby absolutely and  unconditionally  agrees to pay to
the  Administrative  Agent,  for account of the Issuing  Lender,  such  Lender's
Applicable  Percentage  of  each LC  Disbursement  made  by the  Issuing  Lender
promptly  upon the  request of the  Issuing  Lender at any time from the time of
such LC Disbursement until such LC Disbursement is reimbursed by the Borrower or
at any time after any  reimbursement  payment is  required to be refunded to the
Borrower  for any  reason.  Such  payment  shall  be made  without  any  offset,
abatement,  withholding or reduction whatsoever. Each such payment shall be made
in the same  manner as provided  in Section  2.05 with  respect to Loans made by
such Lender (and  Section  2.05 shall apply,  mutatis  mutandis,  to the payment
obligations of the Lenders),  and the Administrative Agent shall promptly pay to
the Issuing  Lender the amounts so  received  by it from the  Lenders.  Promptly
following receipt by the  Administrative  Agent of any payment from the Borrower
pursuant  to the  next  following  paragraph,  the  Administrative  Agent  shall
distribute such payment to the Issuing Lender or, to the extent that the Lenders
have made payments  pursuant to this paragraph to reimburse the Issuing  Lender,
then to such Lenders and the Issuing Lender as their  interests may appear.  Any
payment made by a Lender  pursuant to this  paragraph  to reimburse  the Issuing
Lender for any LC Disbursement shall not constitute a Loan and shall not relieve
the Borrower of its obligation to reimburse such LC Disbursement.

      (f) Reimbursement. If the Issuing Lender shall make any LC Disbursement in
respect of a Letter of Credit,  the Borrower shall  reimburse the Issuing Lender
in  respect of such LC  Disbursement  by paying to the  Administrative  Agent an
amount equal to such LC Disbursement  not later than 12:00 noon,  Local Time, on
(i) the Business Day that the Borrower  receives notice of such LC Disbursement,
if such notice is received prior to 10:00 a.m., Local Time, or (ii) the Business
Day  immediately  following the day that the Borrower  receives such notice,  if
such notice is not received prior to such time,  provided that the Borrower may,
subject to the  conditions to borrowing set forth herein,  request in accordance
with  Section  2.02 that such  payment be financed  with an ABR  Borrowing in an
equivalent amount and, to the extent so financed,  the Borrower's  obligation to
make  such  payment  shall be  discharged  and  replaced  by the  resulting  ABR
Borrowing.   If  the  Borrower   fails  to  make  such  payment  when  due,  the
Administrative Agent shall notify each Lender of the applicable LC Disbursement,
the  payment  then due from the  Borrower in respect  thereof and such  Lender's
Applicable Percentage thereof.

                                                                              24

<PAGE>


      (g)  Obligations  Absolute.  The  Borrower's  obligation  to  reimburse LC
Disbursements  as provided in paragraph  (f) of this Section  shall be absolute,
unconditional  and  irrevocable,  and shall be performed  strictly in accordance
with the terms of this Agreement under any and all circumstances  whatsoever and
irrespective  of (i) any lack of  validity  or  enforceability  of any Letter of
Credit,  or any term or  provision  therein,  (ii) any  draft or other  document
presented  under a Letter of Credit proving to be forged,  fraudulent or invalid
in any  respect or any  statement  therein  being  untrue or  inaccurate  in any
respect,  (iii) payment by the Issuing  Lender under a Letter of Credit  against
presentation of a draft or other document that does not comply strictly with the
terms  of such  Letter  of  Credit,  and (iv) any  other  event or  circumstance
whatsoever,  whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of the
Borrower's obligations hereunder.  Neither the Administrative Agent, the Lenders
nor the  Issuing  Lender,  nor any of  their  Related  Parties,  shall  have any
liability or  responsibility  by reason of or in connection with the issuance or
transfer of any Letter of Credit by the Issuing Lender or any payment or failure
to  make  any  payment  thereunder  (irrespective  of any  of the  circumstances
referred to in the preceding sentence),  or any error,  omission,  interruption,
loss or  delay  in  transmission  or  delivery  of any  draft,  notice  or other
communication  under or relating to any Letter of Credit (including any document
required to make a drawing thereunder), any error in interpretation of technical
terms or any  consequence  arising from causes beyond the control of the Issuing
Lender; provided that the foregoing shall not be construed to excuse the Issuing
Lender from  liability to the  Borrower to the extent of any direct  damages (as
opposed to consequential  damages,  claims in respect of which are hereby waived
by the  Borrower to the extent  permitted  by  applicable  law)  suffered by the
Borrower  that are caused by the Issuing  Lender's  gross  negligence or willful
misconduct when determining whether drafts and other documents presented under a
Letter of Credit comply with the terms  thereof.  The parties  hereto  expressly
agree that:

            (i) the  Issuing  Lender may accept  documents  that appear on their
      face to be in substantial  compliance with the terms of a Letter of Credit
      without responsibility for further investigation, regardless of any notice
      or information to the contrary,  and may make payment upon presentation of
      documents that appear on their face to be in substantial  compliance  with
      the terms of such Letter of Credit;

            (ii)  the  Issuing  Lender  shall  have  the  right,   in  its  sole
      discretion,  to decline to accept such  documents and to make such payment
      if such  documents  are not in  strict  compliance  with the terms of such
      Letter of Credit; and

            (iii) this  sentence  shall  establish  the  standard  of care to be
      exercised by the Issuing Lender when determining  whether drafts and other
      documents presented under a Letter of Credit comply with the terms thereof
      (and  the  parties  hereto  hereby  waive,  to  the  extent  permitted  by
      applicable law, any standard of care inconsistent with the foregoing).

                                                                              25

<PAGE>


      (h) Disbursement Procedures. The Issuing Lender shall, within a reasonable
time  following  its  receipt  thereof,  examine  all  documents  purporting  to
represent a demand for  payment  under a Letter of Credit.  The  Issuing  Lender
shall promptly after such examination  notify the  Administrative  Agent and the
Borrower by  telephone  (confirmed  by  telecopy) of such demand for payment and
whether the Issuing Lender has made or will make an LC Disbursement  thereunder;
provided  that any  failure  to give or delay in giving  such  notice  shall not
relieve the Borrower of its  obligation to reimburse the Issuing  Lender and the
Lenders with respect to any such LC Disbursement.

      (i)  Interim   Interest.   If  the  Issuing   Lender  shall  make  any  LC
Disbursement, then, unless the Borrower shall reimburse such LC Disbursement, in
full, on the date such LC  Disbursement is made, the unpaid amount thereof shall
bear interest,  for each day from and including the date such LC Disbursement is
made  to  but  excluding  the  date  that  the  Borrower   reimburses   such  LC
Disbursement, at the rate per annum then applicable to ABR Loans; provided that,
if the Borrower  fails to reimburse  such LC  Disbursement  when due pursuant to
paragraph  (f) of this  Section,  then Section  2.10(c)  shall  apply.  Interest
accrued  pursuant to this paragraph  shall be for account of the Issuing Lender,
except  that  interest  accrued  on and after the date of  payment by any Lender
pursuant to paragraph (f) of this Section to reimburse the Issuing  Lender shall
be for account of such Lender to the extent of such payment.

      (j) Replacement of the Issuing Lender.  The Issuing Lender may be replaced
at any time by written agreement among the Borrower,  the Administrative  Agent,
the replaced Issuing Lender and the successor Issuing Lender. The Administrative
Agent shall notify the Lenders of any such replacement of the Issuing Lender. At
the time any such replacement shall become effective, the Borrower shall pay all
unpaid fees  accrued  for account of the  replaced  Issuing  Lender  pursuant to
Section 2.09(b). From and after the effective date of any such replacement,  (i)
the successor  Issuing  Lender shall have all the rights and  obligations of the
replaced  Issuing  Lender under this Agreement with respect to Letters of Credit
to be issued thereafter, and (ii) references herein to the term "Issuing Lender"
shall be deemed to refer to such successor or to any previous Issuing Lender, or
to such  successor  and all  previous  Issuing  Lenders,  as the  context  shall
require.  After the  replacement  of an Issuing Lender  hereunder,  the replaced
Issuing  Lender shall  remain a party hereto and shall  continue to have all the
rights and obligations of an Issuing Lender under this Agreement with respect to
Letters  of  Credit  issued  by it prior to such  replacement,  but shall not be
required to issue additional Letters of Credit.

      (k) Cash Collateralization.  If either (i) an Event of Default shall occur
and be continuing and the Borrower receives notice from the Administrative Agent
or the Required Lenders (or, if the maturity of the Loans has been  accelerated,
Lenders with LC Exposure  representing  greater than fifty one percent  (51%) of
the total LC Exposure) demanding the deposit of cash collateral pursuant to this
paragraph,  or (ii) the  Borrower  shall be  required  to  provide  cover for LC
Exposure pursuant to Section 2.08, the Borrower shall  immediately  deposit into
an  account  established  and  maintained  on  the  books  and  records  of  the
Administrative  Agent,  which account may be a "securities  account" (within the
meaning  of Section  8-501 of the  Uniform  Commercial  Code as in effect in the
State of New York), in the name of the Administrative  Agent and for the benefit
of the Lenders,  an amount in cash equal to, in the case of an Event of Default,
the LC Exposure as of such date plus any  accrued  and unpaid  interest  thereon
and, in the case of cover  pursuant to Section 2.08,  the amount  required under
Section 2.08; provided that the obligation to deposit such cash collateral shall
become effective immediately,


                                                                              26

<PAGE>

and such deposit shall become  immediately  due and payable,  without  demand or
other  notice of any kind,  upon the  occurrence  of any Event of  Default  with
respect to the  Borrower  described  in clause (i) or (j) of ARTICLE  VII.  Such
deposit  shall  be held by the  Administrative  Agent as  collateral  for the LC
Exposure under this Agreement, and for this purpose the Borrower hereby grants a
security interest to the Administrative  Agent for the benefit of the Lenders in
such collateral  account and in any financial  assets (as defined in the Uniform
Commercial  Code as in effect in the State of New York) or other  property  held
therein.

2.05  Funding of Borrowings.

      (a) Funding by Lenders. Each Lender shall make (i) each Loan to be made by
it hereunder on the proposed  Borrowing  Date thereof,  and (ii) each  Swingline
Loan to be made by it hereunder  pursuant to the  provisions  of Section 2.03 on
the day  immediately  following such Loan's  Borrowing Date, by wire transfer of
immediately  available  funds by 12:00 noon,  Local Time,  to the account of the
Administrative  Agent most recently  designated by it for such purpose by notice
to the Lenders.  The Administrative  Agent will make such Revolving Credit Loans
available to the Borrower by promptly crediting the amounts so received, in like
funds,  to an  account  of  the  Borrower  designated  by  the  Borrower  in the
applicable  Borrowing Request;  provided that ABR Borrowings made to finance the
reimbursement  of an LC  Disbursement  as provided in Section  2.04(f)  shall be
remitted by the Administrative Agent to the Issuing Lender.

      (b) Presumption by the  Administrative  Agent.  Unless the  Administrative
Agent shall have received notice from a Lender (i) at least one (1) Business Day
prior to the proposed Borrowing Date of any Borrowing of a Loan, or (ii) by 4:00
p.m. on the day the  Administrative  Agent notifies such Lender of the Swingline
Lender's  receipt of a Borrowing  Request for a Swingline Loan, that such Lender
will not make available to the Administrative  Agent such Lender's share of such
Borrowing,  the Administrative Agent may assume that such Lender (A) in the case
of a Loan, has made such share  available on such Borrowing Date, and (B) in the
case of a Swingline  Loan, will make such share available on the day immediately
following the Borrowing  Date of such Loan, in accordance  with paragraph (a) of
this Section,  and may, in reliance upon such assumption,  make available to the
Borrower a corresponding  amount. In such event, if a Lender has not so notified
the  Administrative  Agent and has not in fact made its share of the  applicable
Borrowing available to the Administrative  Agent, then the applicable Lender and
the Borrower  severally  agree to pay to the  Administrative  Agent forthwith on
demand such  corresponding  amount with interest thereon,  for each day from and
including  the  date  such  amount  is made  available  to the  Borrower  to but
excluding the date of payment to the Administrative Agent, at (y) in the case of
such  Lender,  the  Federal  Funds  Effective  Rate,  or (z) in the  case of the
Borrower,  the interest rate then  applicable to ABR Loans.  If such Lender pays
such amount to the Administrative  Agent, then such amount shall constitute such
Lender's Loan included in such Borrowing.

2.06  Interest Elections.

      (a) Elections by the Borrower for Borrowings.  The Loans constituting each
Borrowing  initially  shall be of the Type  specified  by the  Borrower (i) with
respect  to any  Borrowing,  as  specified  by the  Borrower  in the  applicable
Borrowing  Request,  and (ii) and in the case of any  portion  of the  Revolving
Credit Loans that is an ALR Borrowing shall have the Interest  Period  specified
by the  Borrower  in  such  Borrowing  Request,  respectively.


                                                                              27

<PAGE>


Thereafter, the Borrower may elect to convert such Borrowing to a Borrowing of a
different  Type or to continue  such  Borrowing  as a Borrowing of the same Type
and, in the case of a ALR Borrowing, may elect the Interest Period therefor, all
as  provided  in this  Section,  and in form  attached  hereto as Exhibit E with
respect to a Borrowing  (an  "Interest  Election  Request for  Revolving  Credit
Borrowing"),  respectively  (each such request to be referred to as an "Interest
Election  Request").  The Borrower may elect  different  options with respect to
different  portions of any  Borrowing,  in which case each such portion shall be
allocated  ratably  among  the  Lenders  holding  the  Loans  constituting  such
Borrowing,  and the Loans  constituting  each such portion shall be considered a
separate Borrowing. Notwithstanding anything to the contrary herein, at no point
in time shall more than five (5) ALR Borrowings be outstanding, and any election
by the Borrower pursuant to Section 2.06 to continue or convert any Borrowing as
or to, as the case may be, an ALR  Borrowing  in excess of this  limit  shall be
treated by the  Administrative  Agent as an election by the Borrower to continue
or convert such Borrowing as or to, as the case may be, an ABR Borrowing.

      (b) Interest on Swingline Loans.  Notwithstanding anything to the contrary
contained  herein,  each  Swingline Loan shall at all times bear interest at the
Adjusted Base Rate.

      (c) Notice of Elections. To make an election pursuant to this Section, the
Borrower shall notify the Administrative  Agent of such election by telephone by
the time that a Borrowing  Request  would be required  under Section 2.02 if the
Borrower were requesting a Borrowing of the Type resulting from such election to
be made on the effective date of such election.  Each such  telephonic  interest
election  request shall be irrevocable  and shall be confirmed  promptly by hand
delivery or telecopy to the Administrative  Agent of a written Interest Election
Request in the form of Exhibit E.

      (d) Content of Interest  Election  Requests.  Each  telephonic and written
Interest Election Request shall specify the following  information in compliance
with Section 2.02:

            (i) the Borrowing to which such Interest  Election  Request  applies
      and, with respect to any Borrowing if different  options are being elected
      with respect to different  portions  thereof,  the portions  thereof to be
      allocated to each resulting Borrowing (in which case the information to be
      specified  pursuant to clauses (iii) and (iv) of this  paragraph  shall be
      specified for each resulting Borrowing);

            (ii)  the  effective  date of the  election  made  pursuant  to such
      Interest Election Request, which shall be a Business Day;

            (iii)  whether the  Borrowing  is to be an ABR  Borrowing  or an ALR
      Borrowing; and

            (iv) if the  Borrowing  is an ALR  Borrowing,  the  Interest  Period
      therefor  after giving  effect to such  election,  which shall be a period
      contemplated by the definition of the term "Interest Period" and permitted
      under paragraph (g) of this Section.

                                                                              28

<PAGE>


      (e) Notice by the Administrative Agent to the Lenders.  Promptly following
receipt of an Interest Election Request,  the Administrative  Agent shall advise
each  Lender  of the  details  thereof  and of  such  Lender's  portion  of each
resulting Borrowing.

      (f) Failure to Elect;  Events of Default. If the Borrower fails to deliver
a timely and complete Interest Election Request with respect to an ALR Borrowing
prior to the end of the Interest Period therefor, then, unless such Borrowing is
repaid as provided  herein,  at the end of such Interest  Period such  Borrowing
shall be converted to an ABR Borrowing.  Notwithstanding  any contrary provision
hereof,  if an  Event  of  Default  has  occurred  and  is  continuing  and  the
Administrative  Agent, at the request of the Required  Lenders,  so notifies the
Borrower,  then, so long as an Event of Default is continuing (A) no outstanding
Borrowing may be converted to an ALR Borrowing,  and (B) unless repaid, each ALR
Borrowing  shall be  converted  to an ABR  Borrowing  at the end of the Interest
Period therefor.

      (g) Limitations on Interest Periods.  Notwithstanding  any other provision
of this  Agreement,  the  Borrower  shall not be  entitled to (i) request (or to
elect to  convert to or  continue  as an ALR  Borrowing)  any  Borrowing  if the
Interest  Period  requested  therefor  would  end  after  the  Revolving  Credit
Commitment Termination Date and (ii) the Borrower may not elect an ALR Borrowing
at any time where the  approval of such  election by the Lender  would result in
there being more than five (5) interest rate tranches in effect at one time.

2.07  Termination and Reduction of the Commitments.

      (a) Scheduled  Termination.  Unless previously  terminated,  the Revolving
Credit   Commitments   shall  terminate  on  the  Revolving  Credit   Commitment
Termination  Date, and the  obligations of the Lenders to make Revolving  Credit
Loans shall terminate on such date.

      (b) Voluntary  Termination  or  Reduction.  The Borrower may, at any time,
terminate,  or from  time to time  reduce,  the  Revolving  Credit  Commitments;
provided that (i) each reduction of the Revolving Credit Commitments shall be in
an amount that is Five Million Dollars  ($5,000,000.00)  or a larger multiple of
Five Hundred  Thousand  Dollars  ($500,000.00),  and (ii) the Borrower shall not
terminate or reduce the Revolving Credit  Commitments if, after giving effect to
any  concurrent  prepayment  of the Revolving  Credit Loans in  accordance  with
Section  2.08,  the total  Revolving  Credit  Exposures  would  exceed the total
Revolving Credit Commitments.

      (c) Notice of Voluntary  Termination  or  Reduction.  The  Borrower  shall
notify the  Administrative  Agent of any  election  to  terminate  or reduce the
Revolving Credit  Commitments under paragraph (b) of this Section at least three
(3) Business Days prior to the effective date of such  termination or reduction,
specifying  such election and the effective  date  thereof.  Promptly  following
receipt of any notice, the Administrative  Agent shall advise the Lenders of the
contents thereof. Each notice delivered by the Borrower pursuant to this Section
shall be  irrevocable;  provided that a notice of  termination  of the Revolving
Credit  Commitments  delivered  by the  Borrower  may state that such  notice is
conditioned  upon the  effectiveness of other credit  facilities,  in which case
such  notice  may be revoked by the  Borrower  (by notice to the  Administrative
Agent on or prior to the  specified  effective  date) if such  condition  is not
satisfied.

                                                                              29

<PAGE>


      (d) Effect of  Termination or Reduction.  Any  termination or reduction of
the  Revolving  Credit  Commitments  shall be permanent.  Each  reduction of the
Revolving  Credit  Commitments  shall  be made  ratably  among  the  Lenders  in
accordance with their respective Revolving Credit Commitments.

2.08  Repayment and Prepayment of Loans; Evidence of Debt.

      (a) Repayment.  The Borrower  hereby  unconditionally  promises to pay the
Loans as follows:

            (i) to the  Administrative  Agent for  account  of the  Lenders  the
      outstanding  principal  amounts  of  the  Loans  on the  Revolving  Credit
      Commitment Termination Date, and

            (ii) in addition to the amounts  described  immediately  above,  the
      Borrower  unconditionally  promises to pay to the Administrative Agent for
      the account of the Lenders,  and for the account of the Issuing Lender, as
      applicable,  on the  Revolving  Credit  Commitment  Date,  all accrued and
      unpaid  interest,  all fees,  costs and  expenses,  and all other  amounts
      payable on or in connection with the Loans and Letters of Credit.

      (b) Prepayments.


            (i)  Prepayment.  The Borrower  shall have the right at any time and
      from time to time prior to the  Revolving  Credit  Commitment  Termination
      Date to prepay the Loans, in whole or in part, subject to the requirements
      of this Section.  Any  prepayment of less than the  outstanding  principal
      amount of the Loans shall be in a minimum  aggregate  principal  amount of
      Five Million  Dollars  ($5,000,000) or in a larger multiple of Two Hundred
      Fifty Thousand  Dollars  ($250,000).  Prepayments of the Loans made at any
      time  the  Borrowing  being  repaid  (in  whole  or in part) is (A) an ABR
      Borrowing  shall be without  premium or penalty,  and (B) an ALR Borrowing
      shall be subject to the provisions of Section 2.13.

            (ii) Manner of Prepayment;  Notices;  Etc. The Borrower shall notify
      the  Administrative  Agent by  telephone  (confirmed  by  telecopy) of any
      prepayment  hereunder (A) in the case of a prepayment of an ALR Borrowing,
      not later than 11:00 a.m.,  Local Time, three (3) Business Days before the
      date of prepayment, and (B) in the case of prepayment of an ABR Borrowing,
      not  later  than  11:00  a.m.,  Local  Time,  on the date of the  proposed
      prepayment.  Each such notice shall be  irrevocable  and shall specify the
      prepayment  date,  and the principal  amount of each Borrowing (or portion
      thereof) to be prepaid;  provided that, if a notice of prepayment is given
      in connection  with a conditional  notice of  termination of the Revolving
      Credit  Commitments as  contemplated  by Section 2.07, then such notice of
      prepayment  may be revoked  if such  notice of  termination  is revoked in
      accordance  with  Section  2.07.  Promptly  following  receipt of any such
      notice, the Administrative  Agent shall advise the Lenders of the contents
      thereof.  Each prepayment of a Borrowing (or portion thereof) constituting
      Loans (or a portion  thereof,  respectively)  shall be applied  ratably to
      each  Lender's  Revolving  Credit  Commitment  pursuant  to Section  2.15.
      Prepayments  shall  be  accompanied  by  accrued  interest  to the  extent
      required  by  Section  2.10 and shall be made in the manner  specified  in
      Section 2.15.

                                                                              30

<PAGE>


      (c)  Maintenance  of Records by  Lenders.  Each Lender  shall  maintain in
accordance with its usual practice  records  evidencing the  indebtedness of the
Borrower to such Lender resulting from each Loan made by such Lender,  including
the amounts of principal and interest  payable and paid to such Lender from time
to time hereunder.

      (d) Effect of Entries. The entries made in the records maintained pursuant
to paragraph (c) of this Section and Section  2.01(e),  as applicable,  shall be
prima facie  evidence of the existence and amounts of the  obligations  recorded
therein;  provided that the failure of any Lender or the Administrative Agent to
maintain  such records or any error  therein  shall not in any manner affect the
obligation  of the Borrower to repay the Loans in  accordance  with the terms of
this Agreement.

2.09  Fees.

      (a)   Revolving   Credit  Fees.   The  Borrower   agrees  to  pay  to  the
Administrative  Agent for  account of each  Lender  revolving  credit fees which
shall accrue at the Applicable  Margin on the average daily unused amount of the
Revolving Credit  Commitment of such Lender during the period from and including
the date  hereof  to but  excluding  the  earlier  to occur of (i) the date such
Revolving  Credit   Commitment   terminates,   and  (ii)  the  Revolving  Credit
Termination  Date.  Accrued revolving credit fees shall be payable in arrears on
the third (3rd) Business Day following  each Quarterly  Date, and on the earlier
to occur of (A) the date the Revolving Credit Commitments terminate, and (B) the
Revolving Credit Commitment  Termination Date, commencing on the first such date
to occur after the date hereof.  All revolving  credit fees shall be computed on
the basis of a year of three  hundred  sixty (360) days and shall be payable for
the actual  number of days elapsed  (including  the first day but  excluding the
last day). For purposes of computing revolving credit fees, the Revolving Credit
Commitment  of a  Lender  shall  be  deemed  to be  used  to the  extent  of the
outstanding Revolving Credit Loans and LC Exposure of such Lender.

      (b)  Letter  of  Credit  Fees.  The  Borrower  agrees  to  pay  (i) to the
Administrative Agent for account of each Lender a participation fee with respect
to its  participations  in Letters of Credit,  which shall  accrue at a rate per
annum equal to the  Applicable  Margin over LIBOR as of the date of the issuance
of each Letter of Credit. Fees accrued through and including each Quarterly Date
shall be payable on the third (3rd) Business Day following such Quarterly  Date,
commencing  on the first such date to occur after the Effective  Date;  provided
that all such fees shall be payable  on the date on which the  Revolving  Credit
Commitments  terminate  and any such fees  accruing  after the date on which the
Revolving  Credit  Commitments  terminate shall be payable on demand.  Any other
fees payable to the Issuing Lender  pursuant to this paragraph  shall be payable
within ten (10) days after  demand.  All  participation  fees and fronting  fees
shall be computed on the basis of a year of three  hundred  sixty (360) days and
shall be payable for the actual number of days elapsed  (including the first day
but excluding the last day).

      (c) Closing Fees. The Borrower agrees,  on or prior to the Effective Date,
to pay to the  Administrative  Agent for the  ratable  benefit of the  Lenders a
closing fee in the amount of $100,000.00 (the "Closing Fee").

                                                                              31

<PAGE>


      (d) Payment of Fees. All fees payable hereunder shall be paid on the dates
due in  immediately  available  funds  to the  Administrative  Agent  (or to the
Issuing Lender, in the case of fees payable to it) for distribution, in the case
of  revolving  credit  fees and  Letters of Credit  participation  fees,  to the
Lenders  entitled  thereto.   Fees  paid  shall  not  be  refundable  under  any
circumstances.

2.10  Interest.

      (a) ABR  Loans.  The Loans  constituting  each ABR  Borrowing  shall  bear
interest at a rate per annum equal to the Adjusted Base Rate.

      (b) ALR  Loans.  The Loans  constituting  each ALR  Borrowing  shall  bear
interest at a rate per annum equal to the Adjusted LIBOR for the Interest Period
for such Borrowing.

      (c) Default Interest.  Notwithstanding the foregoing,  if any principal of
or  interest  on any Loan or any fee or other  amount  payable  by the  Borrower
hereunder is not paid when due, whether at stated maturity,  upon  acceleration,
or otherwise,  such overdue amount shall bear interest, after, as well as before
judgment,  at a rate per annum equal to (i) in the case of overdue  principal of
any Loan, two percent (2%) above the rate  otherwise  applicable to such Loan as
provided  above or (ii) in the case of any other amount,  two percent (2%) above
the Adjusted Base Rate.

      (d) Payment of Interest. Accrued interest on each Loan shall be payable in
arrears on each Interest  Payment Date for such Loan and on the Revolving Credit
Commitment  Termination  Date;  provided that (A) interest  accrued  pursuant to
paragraph  (c) of this Section  shall be payable on demand,  (B) in the event of
any prepayment of any ALR Loan, accrued interest on the principal amount prepaid
shall be payable on the date of such prepayment,  (C) in the event of prepayment
of any ABR Loan,  accrued  interest on the  principal  amount  prepaid  shall be
payable on the next scheduled Interest Payment Date, and (D) in the event of any
conversion of an ALR Borrowing prior to the end of the Interest Period therefor,
accrued  interest on such  Borrowing  shall be payable on the effective  date of
such conversion.

      (e) Computation. Interest on ABR Loans shall be computed on the basis of a
year of three hundred sixty five (365) days (or three hundred sixty six (366) as
applicable),  and  shall be  payable  for the  actual  number  of days  elapsed.
Interest on ALR Loans and all fees  payable  hereunder  shall be computed on the
basis of a year of three  hundred  sixty (360) days and shall be payable for the
actual number of days elapsed. The applicable Adjusted Base Rate and/or Adjusted
LIBOR shall be determined by the  Administrative  Agent, and such  determination
shall be conclusive absent manifest error.

2.11  Alternate Rate of Interest.  If prior to the  commencement of the Interest
      Period for any ALR Borrowing:

      (a) the  Administrative  Agent determines  (which  determination  shall be
conclusive  absent  manifest  error) that adequate and  reasonable  means do not
exist for ascertaining the LIBOR for such Interest Period; or

                                                                              32

<PAGE>


      (b) the  Administrative  Agent is advised by the Required Lenders that the
LIBOR for such Interest  Period will not  adequately and fairly reflect the cost
to such Lenders of making or maintaining their respective Loans included in such
Borrowing for such Interest  Period;  then the  Administrative  Agent shall give
notice  thereof to the  Borrower  and the  Lenders by  telephone  or telecopy as
promptly as practicable  thereafter and, until the Administrative Agent notifies
the Borrower and the Lenders that the  circumstances  giving rise to such notice
no longer exist, (i) any Interest  Election Request that requests the conversion
of any Borrowing to, or the  continuation  of any Borrowing as, an ALR Borrowing
shall be ineffective and such Borrowing  (unless prepaid) shall be continued as,
or converted to, an ABR Borrowing, and (ii) if any Borrowing Request requests an
ALR Borrowing, such Borrowing shall be made as an ABR Borrowing.

2.12  Increased Costs.

      (a) Increased Costs Generally. If any Change in Law shall:

            (i) impose,  modify or deem applicable any reserve,  special deposit
      or similar requirement against assets of, deposits with or for account of,
      or credit  extended by, any Lender  (except any such  reserve  requirement
      reflected in the LIBOR) or the Issuing Lender; or

            (ii)  impose on any  Lender  or the  Issuing  Lender  or the  London
      interbank market any other condition affecting this Agreement or ALR Loans
      made by such Lender or any Letter of Credit or participation therein; and

            (iii) the result of any of the  foregoing  shall be to increase  the
      cost to such  Lenders  of  making  or  maintaining  any  ALR  Loan  (or of
      maintaining  its obligation to make any such Loan) or to increase the cost
      to such  Lender or the  Issuing  Lender of  participating  in,  issuing or
      maintaining  any  Letter  of Credit  or to  reduce  the  amount of any sum
      received or  receivable  by such Lender or the  Issuing  Lender  hereunder
      (whether of principal, interest or otherwise); then

the Borrower will pay to such Lender or the Issuing Lender,  as the case may be,
such additional  amount or amounts as will compensate such Lender or the Issuing
Lender,  as the case may be, for such  additional  costs  incurred or  reduction
suffered.

      (b) Capital  Requirements.  If any Lender or the Issuing Lender reasonably
determines that any Change in Law regarding  capital  requirements  has or would
have the effect of reducing  the rate of return on such  Lender's or the Issuing
Lender's  capital or on the capital of such  Lender's  or the  Issuing  Lender's
holding  company,  if any, as a consequence  of this Agreement or the Loans made
by, or  participations in Letters of Credit held by, such Lender, or the Letters
of Credit issued by the Issuing Lender,  to a level below that which such Lender
or the Issuing Lender or such Lender's or the Issuing  Lender's  holding company
could have achieved but for such Change in Law (taking into  consideration  such
Lender's or the Issuing  Lender's  policies and the policies of such Lender's or
the Issuing  Lender's  holding company with respect to capital  adequacy),  then
from time to time the Borrower will pay to such Lender or the Issuing Lender, as
the case may be,  such  additional  amount or  amounts as will  compensate  such
Lender or the Issuing  Lender or such Lender's or the Issuing  Lender's  holding
company for any such reduction suffered.

                                                                              33

<PAGE>


      (c)  Certificates  from Lenders.  A certificate of a Lender or the Issuing
Lender setting forth the amount or amounts,  necessary to compensate such Lender
or the Issuing Lender or its holding  company,  as the case may be, as specified
in paragraph  (a) or (b) of this Section  shall be delivered to the Borrower and
shall be conclusive absent manifest error. The Borrower shall pay such Lender or
the  Issuing  Lender,  as the case may be, the  amount  shown as due on any such
certificate within ten (10) Business Days after receipt thereof.

      (d) Delay in  Requests.  Failure or delay on the part of any Lender or the
Issuing  Lender  to  demand  compensation  pursuant  to this  Section  shall not
constitute  a waiver of such  Lender's or the Issuing  Lender's  right to demand
such compensation;  provided that the Borrower shall not be -------- required to
compensate  a Lender or the  Issuing  Lender  pursuant  to this  Section for any
increased  costs or  reductions  incurred  more than six (6) months prior to the
date that such Lender or the Issuing  Lender,  as the case may be,  notifies the
Borrower of the Change in Law giving rise to such increased  costs or reductions
and of such  Lender's or the Issuing  Lender's  intention to claim  compensation
therefor;  provided further that, if the Change in  ----------------  Law giving
rise to such  increased  costs or  reductions is  retroactive,  then the six (6)
month  period  referred  to above  shall be  extended  to include  the period of
retroactive effect thereof.

2.13 Break Funding Payments. In the event of (a) the payment of any principal of
any ALR  Loan  other  than on the  applicable  Interest  Payment  Date  therefor
(including  as a result of an Event of Default),  (b) the  conversion of any ALR
Loan other than on the last day of an Interest Period therefor,  (c) the failure
to borrow,  convert,  continue or prepay any Loan on the date  specified  in any
notice delivered pursuant hereto (regardless of whether such notice is permitted
to be revocable  under Section 2.07 and is revoked in accordance  herewith),  or
(d) the assignment as a result of a request by the Borrower  pursuant to Section
2.16(b)  of any ALR  Loan  other  than on the  last  day of an  Interest  Period
therefor,  then,  in any such event,  the  Borrower  shall pay to each Lender an
amount as will (in the reasonable  determination of such Lender) compensate such
Lender for losses, costs and expenses  attributable to such event. A certificate
of any Lender  setting  forth any amount or amounts that such Lender is entitled
to receive pursuant to this Section shall be delivered to the Borrower and shall
be conclusive  absent  manifest  error.  The Borrower  shall pay such Lender the
amount shown as due on any such certificate  within ten (10) Business Days after
receipt thereof.

2.14  Taxes.

      (a) Payments  Free of Taxes.  Any and all payments by or on account of any
obligation of the Borrower  hereunder or under any other Loan Document  shall be
made free and clear of and without  deduction for any Indemnified Taxes or Other
Taxes;  provided that if the Borrower  shall be --------  required to deduct any
Indemnified  Taxes or Other Taxes from such  payments,  then (i) the sum payable
shall be increased  as  necessary so that after making all required  deductions,
(including  deductions applicable to additional sums payable under this Section)
the Administrative  Agent, any Lender or the Issuing Lender (as the case may be)
receives  an  amount  equal  to the  sum it  would  have  received  had no  such
deductions been made, (ii) the Borrower shall make such deductions and (iii) the
Borrower  shall  pay the  full  amount  deducted  to the  relevant  Governmental
Authority in accordance with applicable law.

                                                                              34

<PAGE>


      (b) Payment of Other Taxes by the  Borrower.  In  addition,  the  Borrower
shall pay any Other Taxes to the relevant  Governmental  Authority in accordance
with applicable law.

      (c)  Indemnification  by the Borrower.  The Borrower  shall  indemnify the
Administrative  Agent,  each  Lender  and the  Issuing  Lender,  within ten (10)
Business  Days  after  written  demand  therefor,  for the  full  amount  of any
Indemnified  Taxes or Other Taxes  (including  Indemnified  Taxes or Other Taxes
imposed or asserted on or  attributable  to amounts  payable under this Section)
paid by the Administrative Agent, such Lender or the Issuing Lender, as the case
may be, and any penalties, interest and reasonable expenses arising therefrom or
with respect thereto,  whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority.
A  certificate  as to the amount of such payment or  liability  delivered to the
Borrower by a Lender or the Issuing Lender,  or by the  Administrative  Agent on
its own  behalf  or on  behalf  of a  Lender  or the  Issuing  Lender,  shall be
conclusive absent manifest error.

      (d)  Evidence of  Payments.  As soon as  practicable  after any payment of
Indemnified  Taxes or Other Taxes by the Borrower to a  Governmental  Authority,
the  Borrower  shall  deliver  to the  Administrative  Agent the  original  or a
certified copy of a receipt  issued by such  Governmental  Authority  evidencing
such payment,  a copy of the return  reporting such payment or other evidence of
such payment reasonably satisfactory to the Administrative Agent.

2.15  Payments Generally; Pro Rata Treatment; Sharing of Set-offs.

      (a)  Payments  by the  Borrower.  The  Borrower  shall  make each  payment
required to be made by it hereunder  (whether of  principal,  interest,  fees or
reimbursement  of LC  Disbursements,  or under  Section  2.12,  2.13 or 2.14, or
otherwise)  or under any other Loan  Document  (except  to the extent  otherwise
provided  therein)  prior to 12:00 noon,  Local  Time,  on the date when due, in
immediately  available  funds,  without  set-off or  counterclaim.  Any  amounts
received   after  such  time  on  any  date  may,  in  the   discretion  of  the
Administrative  Agent,  be deemed to have been  received on the next  succeeding
Business Day for purposes of  calculating  interest  thereon.  All such payments
shall be made to the Administrative Agent at the Administrative Agent's Account,
except as otherwise  expressly provided in the relevant Loan Document and except
payments to be made directly to the Issuing Lender as expressly  provided herein
and payments pursuant to Sections 2.12, 2.13, 2.14 and 9.03, which shall be made
directly  to the  Persons  entitled  thereto.  The  Administrative  Agent  shall
distribute  any such payments  received by it for account of any other Person to
the appropriate  recipient  promptly  following receipt thereof.  If any payment
hereunder shall be due on a day that is not a Business Day, the date for payment
shall be extended to the next  succeeding  Business  Day and, in the case of any
payment accruing  interest,  interest thereon shall be payable for the period of
such  extension.  All amounts owing under this  Agreement  (including  revolving
credit fees,  and for payments  required  under Section 2.13) or under any other
Loan Document (except to the extent otherwise  provided  therein) are payable in
Dollars.

      (b)  Application of  Insufficient  Payments.  If at any time  insufficient
funds are received by and available to the Administrative Agent to pay fully all
amounts of principal, unreimbursed LC Disbursements,  interest and fees then due
hereunder,  such funds shall be applied (i) first,


                                                                              35

<PAGE>


to pay interest and fees then due hereunder,  ratably among the parties entitled
thereto in  accordance  with the amounts of  interest  and fees then due to such
parties,  and (ii) second,  to pay principal and  unreimbursed LC  Disbursements
then due  hereunder,  ratably among the parties  entitled  thereto in accordance
with the amounts of principal and unreimbursed LC Disbursements then due to such
parties.

      (c) Pro Rata Treatment.  Except to the extent  otherwise  provided herein:
(i)(A) each  payment of revolving  credit fees under  Section 2.09 shall be made
for account of the Lenders pro rata according to the amounts of their respective
Revolving  Credit  Commitments,  and (B) each  termination  or  reduction of the
amount of the Revolving Credit  Commitments  under Section 2.07 shall be applied
to the Revolving  Credit  Commitments  of the Lenders pro rata  according to the
amounts of their respective  Revolving Credit  Commitments;  (ii) each Borrowing
shall be  allocated  pro rata  among the  Lenders  (in the case of the making of
Loans)   according  to  the  amounts  of  their   respective   Revolving  Credit
Commitments, as applicable, or their respective Loans that are to be included in
such Borrowing (in the case of conversions  and  continuations  of  Borrowings);
(iii) each payment or prepayment of principal of the Loans by the Borrower shall
be made for account of the Lenders pro rata in  accordance  with the  respective
unpaid principal amounts of the Loans, respectively, held by them; and (iv) each
payment of  interest on the Loans by the  Borrower  shall be made for account of
the  Lenders  pro rata in  accordance  with the amounts of interest on the Loans
then due and payable to the respective Lenders.

      (d) Sharing of Payments by Lenders. If any Lender shall, by exercising any
right of set-off or counterclaim or otherwise,  obtain payment in respect of any
principal  of  or  interest  on  any  of  its  Loans  or  participations  in  LC
Disbursements resulting in such Lender receiving payment of a greater proportion
of the aggregate amount of its Loans and  participations in LC Disbursements and
accrued  interest  thereon  then due than the  proportion  received by any other
Lender,  then the Lender  receiving such greater  proportion shall purchase (for
cash at  face  value)  participations  in the  Loans  and  participations  in LC
Disbursements  of other  Lenders to the extent  necessary so that the benefit of
all such payments shall be shared by the Lenders  ratably in accordance with the
aggregate  amount of principal of and accrued interest on their respective Loans
and  participations in LC Disbursements;  provided that (i) -------- if any such
participations  are purchased and all or any portion of the payment  giving rise
thereto is recovered,  such  participations  shall be rescinded and the purchase
price restored to the extent of such recovery,  without  interest,  and (ii) the
provisions of this paragraph shall not be construed to apply to any payment made
by the Borrower  pursuant to and in  accordance  with the express  terms of this
Agreement  or  any  payment  obtained  by a  Lender  as  consideration  for  the
assignment of or sale of a participation  in any of its Loans or  participations
in LC Disbursements  to any assignee or participant,  other than to the Borrower
or any  Subsidiary  or  Affiliate  thereof (as to which the  provisions  of this
paragraph shall apply).  The Borrower  consents to the foregoing and agrees,  to
the  extent it may  effectively  do so under  applicable  law,  that any  Lender
acquiring a participation  pursuant to the foregoing  arrangements  may exercise
against the  Borrower  rights of set-off and  counterclaim  with respect to such
participation  as fully as if such Lender were a direct creditor of the Borrower
in the amount of such participation.

                                                                              36

<PAGE>


      (e) Presumptions of Payment.  Unless the  Administrative  Agent shall have
received  notice from the Borrower prior to the date on which any payment is due
to the  Administrative  Agent for account of the  Lenders or the Issuing  Lender
hereunder that the Borrower will not make such payment, the Administrative Agent
may assume that the Borrower  has made such  payment on such date in  accordance
herewith and may, in reliance upon such assumption, distribute to the Lenders or
the Issuing  Lender,  as the case may be, the amount due. In such event,  if the
Borrower  has not in fact made such  payment,  then each of the  Lenders  or the
Issuing  Lender,  as  the  case  may  be,  severally  agrees  to  repay  to  the
Administrative  Agent  forthwith  on demand  the amount so  distributed  to such
Lender  or the  Issuing  Lender  with  interest  thereon,  for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to the Administrative Agent, at the Federal Funds Effective Rate.

      (f) Certain  Deductions by the  Administrative  Agent. If any Lender shall
fail to make any payment  required to be made by it pursuant to Section 2.04(e),
2.05(b)  or  2.15(e),  then the  Administrative  Agent  may,  in its  discretion
(notwithstanding  any contrary provision  hereof),  apply any amounts thereafter
received by the Administrative  Agent for account of such Lender to satisfy such
Lender's obligations under such Sections until all such unsatisfied  obligations
are fully paid.

2.16  Mitigation Obligations; Replacement of Lenders.

      (a)  Designation of a Different  Lending  Office.  If any Lender  requests
compensation  under  Section  2.12,  or if the  Borrower  is required to pay any
additional amount to any Lender or any Governmental Authority for account of any
Lender pursuant to Section 2.14,  then such Lender shall use reasonable  efforts
to  designate  a  different  lending  office for  funding  or booking  its Loans
hereunder  or to assign its rights and  obligations  hereunder to another of its
offices,  branches  or  affiliates,  if, in the  judgment of such  Lender,  such
designation or assignment (i) would eliminate or reduce amounts payable pursuant
to  Section  2.12 or 2.14,  as the case may be, in the future and (ii) would not
subject such Lender to any unreimbursed  cost or expense and would not otherwise
be  disadvantageous  to such  Lender.  The  Borrower  hereby  agrees  to pay all
reasonable costs and expenses incurred by any Lender in connection with any such
designation or assignment.

      (b)  Replacement of Lenders.  If any Lender  requests  compensation  under
Section 2.12, or if the Borrower is required to pay any additional amount to any
Lender or any  Governmental  Authority  for  account of any Lender  pursuant  to
Section  2.14,  or if any  Lender  defaults  in its  obligation  to  fund  Loans
hereunder, then the Borrower may, at its sole expense and effort, upon notice to
such  Lender and the  Administrative  Agent,  require  such Lender to assign and
delegate,  without  recourse (in accordance with and subject to the restrictions
contained in Section 9.04), all its interests, rights and obligations under this
Agreement to an assignee that shall assume such obligations  (which assignee may
be another Lender, if a Lender accepts such  assignment);  provided that (i) the
Borrower  shall have  received the prior written  consent of the  Administrative
Agent (and,  if a  Commitment  is being  assigned,  the Issuing  Lender),  which
consent shall not unreasonably be withheld, (ii) such Lender shall have received
payment  of an  amount  equal to the  outstanding  principal  of its  Loans  and
participations in LC Disbursements  accrued interest  thereon,  accrued fees and
all other amounts  payable to it hereunder,  from the assignee (to the extent of
such  outstanding  principal and accrued  interest and fees) or the Borrower (in
the case of all other  amounts),  and  (iii) in the case of any such  assignment
resulting from a claim for compensation  under Section 2.12 or payments required
to be made pursuant to Section 2.14,  such assignment will result in a reduction
in such  compensation  or  payments.

                                                                              37

<PAGE>


A Lender shall not be required to make any such  assignment  and  delegation if,
prior  thereto,  as a result  of a  waiver  by such  Lender  or  otherwise,  the
circumstances  entitling the Borrower to require such  assignment and delegation
cease to apply.

           ARTICLE III      REPRESENTATIONS AND WARRANTIES

The Borrower  represents  and warrants to the Lenders that (a) on the  Effective
Date, and (b) if any  representation  or warranty  below is expressly  stated to
have been made as of a specific date, as of such specific date:

3.01 Organization; Powers. Each of the Borrower, its Subsidiaries,  Technologies
and Holdings is duly organized,  validly existing and in good standing under the
laws of the  jurisdiction  of its  organization,  has all  requisite  power  and
authority  to carry on its  business as now  conducted,  and is  qualified to do
business  in  and  is  in  good  standing  in  every   jurisdiction  where  such
qualification  is  required,  except  where  the  failure  to be  so  qualified,
individually or in the aggregate, could not result in a Material Adverse Effect.
Holdings  is  the  owner  of one  hundred  percent  (100%)  of  the  issued  and
outstanding capital stock of the Borrower,  and Technologies is the owner of one
hundred percent (100%) of the issued and outstanding  capital stock of Holdings.
Greatbatch-Hittman,  Inc.  is the  owner of one  hundred  percent  (100%) of the
issued and outstanding capital stock of Greatbatch-Sierra, Inc.

3.02 Authorization;  Enforceability.  The Transactions are within the Borrower's
and its  Subsidiaries'  corporate  powers and have been duly  authorized  by all
necessary corporate and, if required,  by all necessary shareholder action. This
Agreement has been duly executed and delivered by the Borrower and  constitutes,
and  each  of  the  other  Loan  Documents  when  executed  and  delivered  will
constitute,  a legal,  valid  and  binding  obligation  of the  Borrower  or its
Subsidiaries,  as the case may be,  enforceable  in  accordance  with its terms,
except as such  enforceability  may be  limited by (a)  bankruptcy,  insolvency,
reorganization,  moratorium or similar laws of general  applicability  affecting
the  enforcement  of  creditors'  rights,  and (b) the  application  of  general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).

3.03 Governmental Approvals;  No Conflicts.  The Transactions (a) do not require
any consent or approval of, registration or filing with, or any other action by,
any Governmental Authority, except such as have been obtained or made and are in
full force and effect,  (b) will not violate any applicable law or regulation or
the charter, by-laws or other organizational documents of the Borrower or any of
its  Subsidiaries  or any  order  of any  Governmental  Authority,  (c) will not
violate  or  result  in a  default  under  any  indenture,  agreement  or  other
instrument  binding upon the Borrower or any of its  Subsidiaries or assets,  or
give rise to a right  thereunder  to require  any payment to be made by any such
Person, and (d) will not result in the creation or imposition of any Lien on any
asset of the  Borrower or any of its  Subsidiaries  other than Liens in favor of
the Administrative Agent and the Lenders in connection with the Transactions.

3.04 Financial Condition; No Material Adverse Change.

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<PAGE>


      (a)  Financial  Condition.  The Borrower has  heretofore  furnished to the
Lenders (i) a Consolidated balance sheet and statements of income, stockholders'
equity  and cash  flows of  Technologies  and its  Subsidiaries  (including  the
Borrower  and its  Subsidiaries)  as of and for each of the fiscal  years  ended
January 3, 2003,  January 2, 2004 and December 31, 2004, as audited and reported
on by  Deloitte  &  Touche,  LLP,  independent  public  accountants  and  (ii) a
Consolidated  unaudited  balance sheet and  statements of income,  stockholders'
equity  and cash  flows of  Technologies  and its  Subsidiaries  (including  the
Borrower and its  Subsidiaries) as of and for the fiscal quarter ended March 31,
2005. The financial  statements  referred to in clause (i) above present fairly,
in all material  respects,  the financial position and results of operations and
cash flows of  Technologies  and its  Subsidiaries as of such dates and for such
periods in accordance  with GAAP.  Subject to normal  year-end  adjustments  and
disclosures as would be made in the financial  statements  referred to in clause
(ii) above if audited, the financial statements referred to in clause (ii) above
present fairly, in all material respects,  the financial position and results of
operations and cash flows of Technologies  and its  Subsidiaries as of such date
and for such period in accordance with GAAP.

      (b) No Material  Adverse Change.  Since March 15, 2005,  there has been no
material  adverse  change in the  business,  assets,  operations  or  condition,
financial or otherwise,  of (i)  Technologies and its  Subsidiaries,  taken as a
whole, or (ii) the Borrower and its Subsidiaries, taken as a whole.

3.05  Properties.

      (a) Property Generally. Each of the Borrower and its Subsidiaries has good
title to, or valid  leasehold  interests in, all its real and personal  property
material to its  business,  subject only to Liens  permitted by Section 6.02 and
except  for minor  defects in title that do not  interfere  with its  ability to
conduct its business as currently  conducted or to utilize such  properties  for
their intended purposes.

      (b) Intellectual Property.  Each of the Borrower and its Subsidiaries owns
all trademarks,  tradenames, copyrights, patents and other intellectual property
material  to its  business,  and  the  use  thereof  by  the  Borrower  and  its
Subsidiaries  does not materially  infringe upon the rights of any other Person.
All  patents,  trademarks  and  tradenames  owned by the  Borrower or any of its
Subsidiaries on the Effective Date are listed on Part D of Schedule II hereto.

3.06  Litigation and Environmental Matters.

      (a) Actions.  Suits and  Proceedings.  Except for the  Disclosed  Matters,
there are no  actions,  suits or  proceedings  by or before  any  arbitrator  or
Governmental  Authority now pending against, or to the knowledge of the Borrower
threatened  against,  or affecting the Borrower or any of its  Subsidiaries  (i)
that, if adversely determined,  could, individually or in the aggregate,  result
in a Material  Adverse Effect,  or (ii) in connection with this Agreement or the
Transactions.

      (b) Environmental Matters.  Except for the Disclosed Matters,  neither the
Borrower  nor  any of its  Subsidiaries  (i)  has  failed  to  comply  with  any
Environmental Law or to obtain,  maintain or comply with any permit,  license or
other approval  required under any  Environmental  Law, which  noncompliance  or
failure could,  individually or in the aggregate,


                                                                              39

<PAGE>


result in a Material  Adverse  Effect,  (ii) has become  subject to any material
Environmental Liability,  (iii) has received notice of any claim with respect to
any  Environmental  Liability,  or (iv) knows of any basis for any Environmental
Liability.

      (c) Disclosed Matters. Since the date of this Agreement, there has been no
change in the  status of the  Disclosed  Matters  that,  individually  or in the
aggregate, has resulted in, or could result in, a Material Adverse Effect.

3.07  Compliance  with  Laws  and  Agreements.  Each  of the  Borrower  and  its
Subsidiaries is in material compliance with all laws,  regulations and orders of
any Governmental  Authority applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property. No Default has
occurred and is continuing.

3.08 Investment and Holding Company Status.  Neither the Borrower nor any of its
Subsidiaries  is (a) an  "investment  company"  as  defined  in, or  subject  to
regulation under, the Investment Company Act of 1940, or (b) a "holding company"
as defined  in, or subject  to  regulation  under,  the Public  Utility  Holding
Company Act of 1935.

3.09 Taxes.  Each of Technologies,  Holdings,  the Borrower and its Subsidiaries
has timely  filed or caused to be filed all tax returns and reports  required to
have been  filed and has paid or  caused to be paid all Taxes  required  to have
been paid by it,  except  (a) Taxes  that are being  contested  in good faith by
appropriate  proceedings  and for which  such  Person has set aside on its books
adequate  reserves  and (b) for such  failures  to timely  file Tax  returns  or
reports  or  nonpayment  of  Taxes  which  could  not,  individually  or in  the
aggregate, result in a Material Adverse Effect.

3.10 ERISA. No ERISA Event has occurred or is reasonably  expected to occur that
has resulted in or that could result in a Material  Adverse  Effect.  No Plan is
subject to Title IV of ERISA.

3.11  Disclosure.  None of the reports,  financial  statements,  certificates or
other information  furnished by or on behalf of the Borrower or its Subsidiaries
to the Lenders in  connection  with the  negotiation  of this  Agreement and the
other Loan  Documents  or  delivered  hereunder  or  thereunder  (as modified or
supplemented   by  other   information  so  furnished)   contains  any  material
misstatement  of fact or omits to state any material fact  necessary to make the
statements  therein,  in the light of the  circumstances  under  which they were
made,  not  misleading;  provided  --------  that,  with  respect  to  projected
financial  information,  the Borrower  represents only that such information was
prepared in good faith based upon  assumptions  believed to be reasonable at the
time.

3.12 Use of Credit.  Neither the Borrower nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose, whether immediate,  incidental or ultimate, of buying or
carrying  Margin  Stock,  and no part of the proceeds of any extension of credit
hereunder will be used to buy or carry any Margin Stock.

3.13  Anti-Terrorism  Law  Compliance.  Neither  the  Borrower  nor  any  of its
Subsidiaries are subject to or in violation of any law,  regulation,  or list of
any government agency (including, without limitation, the U.S. Office of Foreign
Asset  Control  list,  Executive  Order No.  13224 or

                                                                              40

<PAGE>


the USA Patriot Act) that  prohibits  or limits the conduct of business  with or
the  receiving  of funds,  goods or  services  to or for the  benefit of certain
persons  specified  therein  or that  prohibits  or limits any Lender or Issuing
Lender from making any advance or  extension  of credit to the  Borrower or from
otherwise conducting business with the Borrower.


                            ARTICLE IV   CONDITIONS

4.01 Effective  Date. The continued  obligation of the Lenders to make Loans and
of the  Issuing  Lender to issue  Letters of Credit  hereunder  shall not become
effective until the date on which the  Administrative  Agent shall have received
each of the  following  documents,  each of which shall be  satisfactory  to the
Administrative Agent (and to the extent specified below, to each Lender) in form
and  substance  (or such  condition  shall have been waived in  accordance  with
Section 9.02):

      (a) Executed Counterparts. From each party hereto either (i) a counterpart
of this  Agreement  signed on behalf of such  party,  or (ii)  written  evidence
satisfactory   to  the   Administrative   Agent  (which  may  include   telecopy
transmission  of a signed  signature page to this Agreement) that such party has
signed a counterpart of this Agreement.

      (b) Replacement  Notes. An executed original  Revolving Credit Note of the
Borrower issued in favor of each Lender in the maximum  principal amount of such
Lender's  respective  Revolving Credit Commitment which shall be in substitution
and  replacement  for, but not in payment of,  revolving  credit notes currently
held by the Borrower.

      (c) Opinion of Counsel.  A favorable  written  opinion  (addressed  to the
Administrative  Agent and the Lenders and dated the  Effective  Date) of Hodgson
Russ, LLP, counsel to the Borrower, its Subsidiaries, Technologies and Holdings,
substantially in the form of Exhibit B, and covering such other matters relating
to the Borrower,  this  Agreement or the  Transactions  as the Required  Lenders
shall  reasonably  request (and the Borrower  hereby  instructs  such counsel to
deliver such opinion to the Lenders and the Administrative Agent).

      (d)  Corporate   Documents.   Such  documents  and   certificates  as  the
Administrative  Agent or its  counsel  may  reasonably  request  relating to the
organization,  existence and good standing of the  Borrower,  its  Subsidiaries,
Technologies and Holdings,  the  authorization of the Transactions and any other
legal matters relating to the Borrower, this Agreement or the Transactions,  all
in form and substance satisfactory to the Administrative Agent and its counsel.

      (e) Officer's  Certificate.  A  certificate,  dated the Effective Date and
signed by a Senior  Executive  Officer or a Financial  Officer of the  Borrower,
confirming  compliance with the conditions set forth in the lettered  clauses of
the first sentence of Section 4.02.

      (f) Reaffirmation  Agreement.  Each of the Borrower, each Parent Guarantor
and each Subsidiary  Guarantor  (other than  Greatbatch,  LLC and  Laboratories)
shall have executed and delivered to the  Administrative  Agent a  Reaffirmation
Agreement (the "Reaffirmation  Agreement") in form and content acceptable to the
Administrative  Agent (on behalf of the Lenders),  acknowledging  and confirming
the  continuing  effectiveness  and  enforceability  of each of the  other  Loan
Documents to which such Person is a party.

                                                                              41

<PAGE>


      (g)  Guaranty  Agreements.  Greatbatch,  LLC and  Laboratories  shall have
executed and delivered to the Administrative  Agent a Guaranty Agreement in form
and content acceptable to the  Administrative  Agent (on behalf of the Lenders),
providing  for the  guarantee  of  payment  by  such  Person  of the  Borrower's
obligations to the Administrative  Agent, the Lenders,  the Swingline Lender and
the Issuing Lender under the Loan Documents.

      (h)  Security  Agreements.  Greatbatch,  LLC and  Laboratories  shall have
executed and delivered to the Administrative  Agent a Security Agreement in form
and  content   acceptable  to  the   Administrative   Agent,   granting  to  the
Administrative  Agent (on behalf of the Lenders) a Lien in all of such  Person's
equipment,  inventory,  fixtures,  accounts, chattel paper, general intangibles,
documents, investment property, instruments, deposit accounts,  letter-of-credit
rights  (whether  or not the  letter  of  credit  is  evidenced  by a  writing),
commercial tort claims, and general intangibles  including,  without limitation,
payment intangibles,  whether now owned or hereafter acquired, wherever located,
and any and all products and proceeds  thereof,  and shall secure the payment of
any and all  Indebtedness  and  liabilities,  whether now  existing or hereafter
incurred,  of such  Subsidiary to the  Administrative  Agent,  the Lenders,  the
Swingline  Lender  and the  Issuing  Lender  under the Loan  Documents;  and the
Administrative  Agent shall have received  appropriate  financing  statements to
perfect  each such Lien,  which Lien shall be  superior in priority to all other
Liens, other than Liens arising after the date of this Agreement having priority
over the Liens of the  Administrative  Agent by operation of  applicable  law or
Liens permitted pursuant to the provisions of Section 6.02. Greatbatch,  LLC and
Laboratories  shall have  executed and delivered to the  Administrative  Agent a
Patent  Security  Agreement,  a  Trademark  Security  Agreement  and a Copyright
Security Agreement,  each in form and substance acceptable to the Administrative
Agent.

      (i)  Certificates  of  Insurance.  The  Administrative  Agent  shall  have
received  certificates of insurance and insurance policies,  in form and content
acceptable to the Administrative Agent,  evidencing the insurance required to be
carried by the  Borrower  pursuant to Section  5.07  hereof  with  endorsements,
satisfactory to the Administrative  Agent,  designating the Administrative Agent
as an additional insured and a loss payee and further designating that each such
insurance policy contains a notice of cancellation provision satisfactory to the
Administrative Agent.

      (j) Payment of Fees. On or before Effective Date the Administrative  Agent
the Administrative Agent shall have received all fees, including but not limited
to  the  Closing  Fee,  payable  to  the  Administrative  Agent  for  itself  as
Administrative  Agent  pursuant  to one or more  agreements  with  the  Borrower
relating to such fees.

      (k)  General  Assurances.   All  other  documents  and  legal  matters  in
connection  with the  transactions  contemplated by this Agreement and the other
Loan Documents shall be satisfactory in form and substance to the Administrative
Agent.  The  Borrower  shall  have  delivered  such  further  documents  to  the
Administrative Agent and taken such further action respecting this Agreement and
the other Loan Documents as the Administrative Agent or any Lender or counsel to
the Administrative Agent may reasonably request.

                                                                              42

<PAGE>


      The  obligation  of any  Lender to make its  initial  extension  of credit
hereunder  is also  subject to the  payment by the  Borrower of such fees as the
Borrower shall have agreed to pay to any Lender or the  Administrative  Agent in
connection  herewith,  including,  without  limitation,  the reasonable fees and
expenses of Lippes Mathias Wexler  Friedman LLP,  counsel to the  Administrative
Agent, in connection with the negotiation,  preparation,  execution and delivery
of this  Agreement  and the other Loan  Documents  and the  extensions of credit
hereunder  (to the extent that  statements  for such fees and expenses have been
delivered to the Borrower).

      The Administrative  Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding.

4.02 Each Credit Event.  The  obligation of each Lender to make any Loan, and of
the Issuing  Lender to issue,  amend,  renew or extend any Letter of Credit,  is
additionally subject to the satisfaction of the following conditions:

      (a) the  representations  and warranties of the Borrower set forth in this
Agreement  shall be true and  correct  on and as of the date of such Loan or the
issuance,  amendment,  renewal or extension of such Letter or Credit (or, if any
such  representation  or warranty is expressly  stated to have been made as of a
specific date, as of such specific date); and

      (b) at the time of and immediately after giving effect to such Loan or the
issuance,  amendment,  renewal  or  extension  of  such  Letter  of  Credit,  as
applicable, no Default shall have occurred and be continuing.

Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit  shall be deemed to  constitute  a  representation  and  warranty  by the
Borrower  on the date  thereof  as to the  matters  specified  in the  preceding
sentence.

                        ARTICLE V   AFFIRMATIVE COVENANTS

      Until the Commitments have expired or been terminated and the principal of
and  interest  on each  Note and all fees and  expenses  payable  under the Loan
Documents  shall  have been paid in full and all  Letters  of Credit  shall have
expired or terminated and all LC Disbursements  shall have been reimbursed,  the
Borrower  covenants  and agrees with the  Administrative  Agent,  the  Swingline
Lender, the Issuing Lender and the Lenders that:

5.01 Financial  Statements and Other Information.  The Borrower will furnish, or
cause to be furnished, to the Administrative Agent and each Lender:

      (a)  within  ninety  (90)  days  after  the  end of  each  fiscal  year of
Technologies,  the audited  Consolidated balance sheet and related statements of
operations,  stockholders'  equity  and  cash  flows  of  Technologies  and  its
Subsidiaries  as of the end of and for such year,  setting forth in each case in
comparative  form the  figures for the  previous  fiscal  year,  all audited and
reported by Deloitte & Touche,  LLP or other independent  public  accountants of
recognized national standing (without a "going concern" or like qualification or
exception  and without any  qualification  or  exception as to the scope of such
audit) to the effect that such consolidated  financial statements present fairly
in all material  respects the  financial  condition and results of operations of
Technologies  and its  Subsidiaries  on a consolidated  basis in accordance with
GAAP consistently applied;

                                                                              43

<PAGE>


      (b) within  forty five (45) days after the end of each of the first  three
(3) fiscal  quarters  of each  fiscal  year of  Technologies,  the  Consolidated
balance sheet and related  statements of  operations,  stockholders'  equity and
cash flows as of the end of and for such  fiscal  quarter  and the then  elapsed
portion of the fiscal year for Technologies and its Subsidiaries  (including the
Borrower and its  Subsidiaries),  setting forth in each case in comparative form
the  figures for (or,  in the case of the  balance  sheet,  as of the end of the
corresponding period or periods of the previous fiscal year), all certified by a
Financial  Officer of the Borrower as presenting fairly in all material respects
the financial  condition and results of  operations on a  Consolidated  basis in
accordance  with GAAP  consistently  applied,  subject to normal  year-end audit
adjustments and the absence of footnotes;

      (c)  concurrently  with any delivery of financial  statements under clause
(a) or (b) of this Section, a certificate of a Financial Officer of the Borrower
in the form of Exhibit F (i)  certifying  ---------  as to whether a Default has
occurred and, if a Default has occurred,  specifying the details thereof and any
action taken or proposed to be taken with respect  thereto,  (ii) setting  forth
reasonably detailed  calculations  demonstrating  compliance with Sections 6.01,
6.07 and Section (o) of Article  VII,  and (iii)  stating  whether any change in
GAAP or in the  application  thereof has occurred  since the date of the audited
financial  statements  referred  to in Section  3.04 and, if any such change has
occurred,  specifying  the  effect of such  change on the  financial  statements
accompanying such certificate;

      (d)  concurrently  with any delivery of financial  statements under clause
(a) of this Section,  a certificate of the accounting firm that reported on such
financial  statements  stating whether they obtained knowledge during the course
of  their  examination  of  such  financial  statements  of any  Default  (which
certificate  may be  limited  to the  extent  required  by  accounting  rules or
guidelines);

      (e) promptly  following  submission  to the United States  Securities  and
Exchange Commission,  a copy of Form 10-Q (with all attachments),  Form 10-K and
all other forms,  documents or certificates  filed by Technologies or any of its
Subsidiaries with such Commission; and

      (f)  promptly  following  any  request  therefor,  such other  information
regarding  the  operations,  business  affairs and  financial  condition  of the
Borrower  or any of its  Subsidiaries,  or  compliance  with  the  terms of this
Agreement  and the other  Loan  Documents,  as the  Administrative  Agent or any
Lender may reasonably request.

5.02 Notices of Material Events. The Borrower will furnish to the Administrative
Agent and each Lender prompt written notice of the following:

      (a) the occurrence of any Default;

      (b) the filing or  commencement  of any action,  suit or  proceeding by or
before  any  arbitrator  or  Governmental  Authority  against or  affecting  the
Borrower or any of its Affiliates that, if adversely determined, could result in
a Material Adverse Effect;

                                                                              44

<PAGE>


      (c) the occurrence of any ERISA Event;

      (d) the  assertion  of any  material  environmental  matter by any  Person
against,  or with  respect  to the  activities  of, the  Borrower  or any of its
Subsidiaries and any alleged material  violation of or  non-compliance  with any
Environmental Laws or any permits, licenses or authorizations; and

      (e) any other  development that results in, or could result in, a Material
Adverse Effect.

Each notice  delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth the
details of the event or  development  requiring such notice and any action taken
or proposed to be taken with respect thereto.

5.03 Existence:  Conduct of Business.  The Borrower will, and will cause each of
its  Subsidiaries  to, do or cause to be done all things  necessary to preserve,
renew and keep in full  force and  effect its legal  existence  and the  rights,
licenses,  permits,  privileges  and  franchises  material to the conduct of its
business;   provided  that  the   foregoing   shall  not  prohibit  any  merger,
consolidation, liquidation or dissolution permitted under Section 6.03.

5.04 Future Subsidiaries;  Subsidiary Guarantors.  The Borrower shall cause each
domestic  Subsidiary of the Borrower on the Effective Date, and each Person that
becomes a  domestic  Subsidiary  of the  Borrower  or of any  Subsidiary  of the
Borrower after the Effective Date, to execute and deliver to the  Administrative
Agent a Guaranty Agreement, a Security Agreement, Intellectual Property Security
Agreements,  and such other  agreements,  documents and  instruments  reasonably
requested by the  Administrative  Agent. All Subsidiaries of the Borrower on the
Effective  Date are listed on Part E of  Schedule  II.  Upon the  request of the
Required  Lenders,  the Borrower  shall execute  -----------  and deliver to the
Administrative Agent (on behalf of the Lenders) a Borrower Pledge Agreement with
respect  to the  capital  stock or other  securities  of any  Subsidiary  of the
Borrower that is domiciled  outside of the United States,  or of any Person that
is  domiciled  outside of the United  States that  becomes a  Subsidiary  of the
Borrower or of any Subsidiary of the Borrower after the Effective Date, pursuant
to which the Borrower shall pledge to the Administrative Agent (on behalf of the
Lenders)  up to a maximum of sixty six and two thirds  percent (66 2/3 %) of the
issued and outstanding  securities of such foreign Subsidiary,  and shall secure
the payment of any and all Indebtedness and liabilities, whether now existing or
hereafter incurred, of the Borrower to the Administrative Agent, the Lenders and
the Issuing  Lender,  and in connection  therewith  shall have  delivered to the
Administrative  Agent  certificates  representing  such  issued and  outstanding
securities with related stock powers duly endorsed in blank

5.05  Future  Parent  Entities;  Parent  Guarantors.  If  the  Borrower  or  any
Subsidiary  of the  Borrower  becomes a  Subsidiary  of any  Person  other  than
Technologies or Holdings after the Effective Date, the Borrower shall cause each
such  Person to  execute  and  deliver  to the  Administrative  Agent a Guaranty
Agreement (each such Person to be referred to as a "Parent Guarantor").

                                                                              45

<PAGE>


5.06  Payment of  Obligations.  The  Borrower  will,  and will cause each of its
Subsidiaries to, pay its obligations,  including tax liabilities before the same
shall become  delinquent or in default,  except where (a) the validity or amount
thereof is being  contested in good faith by  appropriate  proceedings,  (b) the
Borrower or such  Subsidiary has set aside on its books  adequate  reserves with
respect  thereto in  accordance  with GAAP and (c) the  failure to make  payment
pending such contest would not result in a Material Adverse Effect.

5.07  Maintenance  of Properties;  Insurance.  The Borrower will, and will cause
each of its Subsidiaries to, (a) keep and maintain all property  material to the
conduct of its business in good working order and  condition,  ordinary wear and
tear excepted, and (b) maintain,  with financially sound and reputable insurance
companies,  insurance in such amounts and against such risks as are  customarily
maintained by companies engaged in the same or similar  businesses  operating in
the  same or  similar  locations.  Part F of  Schedule  II lists  and  generally
describes  each policy of  insurance  covering  the business of, or any material
asset of, the Borrower or any of its Subsidiaries on the Effective Date.

5.08 Books and Records;  Inspection  Rights.  The Borrower  will, and will cause
each of its  Subsidiaries  to, keep proper  books of record and account in which
full,  true and correct  entries are made of all  dealings and  transactions  in
relation to its business and activities.  The Borrower will, and will cause each
of  its   Subsidiaries  to,  permit  any   representatives   designated  by  the
Administrative  Agent or any Lender,  upon  reasonable  prior  notice and during
normal business hours, to visit and inspect its properties,  to examine and make
extracts  from its books and records,  and to discuss its affairs,  finances and
condition with its officers and independent accountants,  all at such reasonable
times and as often as reasonably requested.

5.09  Compliance  with  Laws.  The  Borrower  will,  and will  cause each of its
Subsidiaries  to,  comply with all laws,  rules,  regulations  and orders of any
Governmental  Authority  applicable  to it  or  its  property  in  all  material
respects.

5.10 Use of Proceeds.  The proceeds of the Loans will only be used,  and Letters
of Credit will be issued only to support  obligations  incurred by the  Borrower
and its  Subsidiaries to finance  acquisitions  permitted  pursuant to the terms
hereof and capital  expenditures  relating to existing and acquired  properties,
and for the general  corporate  purposes of the Borrower and its Subsidiaries in
the  ordinary  course of  business.  No part of the proceeds of any Loan will be
used whether directly or indirectly,  for any purpose that entails  violation of
any of the  Regulations  of the  Board,  including  Regulations  U and X. in the
ordinary course of business

5.11 Anti-Terrorism Laws. Neither the Borrower nor any of its Subsidiaries shall
be subject to or in violation of any law, regulation,  or list of any government
agency (including,  without limitation, the U.S. Office of Foreign Asset Control
list, Executive Order No. 13224 or the USA Patriot Act) that prohibits or limits
the conduct of business with or the receiving of funds,  goods or services to or
for the benefit of certain persons specified therein or that prohibits or limits
any Lender or Issuing  Lender from making any advance or  extension of credit to
the Borrowers or from otherwise conducting business with the Borrowers.

                                                                              46

<PAGE>


                       ARTICLE VI   NEGATIVE COVENANTS

      Until the Commitments  have expired or terminated and the principal of and
interest on each Note and all fees and expenses payable under the Loan Documents
have been paid in full and all Letters of Credit have expired or terminated  and
all LC  Disbursements  shall have been  reimbursed,  the Borrower  covenants and
agrees with the  Administrative  Agent, the Issuing Lender, the Swingline Lender
and the Lenders that:

6.01  Indebtedness.

      (a) The Borrower  will not, nor will it permit any of its  Guarantors  to,
create, incur, assume or permit to exist any Indebtedness, except:

            (i) Indebtedness created hereunder;

            (ii) Indebtedness  existing on the date hereof and set forth in Part
      A of Schedule II and  extensions,  renewals and  replacements  of any such
      Indebtedness  that  do  not  increase  the  outstanding  principal  amount
      thereof;

            (iii)  Indebtedness of the Borrower to any Subsidiary  Guarantor and
      of any  Subsidiary  Guarantor  to the  Borrower  or any  other  Subsidiary
      Guarantor;

            (iv)   secured   Indebtedness   (including,    without   limitation,
      Indebtedness  incurred in connection with Capital Lease  Obligations,  and
      Hedging  Agreements)  of the  Borrower  or such  Guarantor  in  excess  of
      Indebtedness  permitted by Sections  6.01(a)(i) and (ii), above,  provided
      that (A) the incurrence  and/or repayment of such  Indebtedness  would not
      cause a  violation  of  Section  (o) of  Article  VII,  (B) the  ratio  of
      Consolidated  Funded Debt  (including the  Indebtedness to be incurred) to
      Consolidated Adjusted EBITDA (as at the end of the last fiscal quarter for
      which  financial  statements  are available but giving pro forma effect to
      such  additional  Indebtedness  as set forth in Section 1.03) is less than
      the then-applicable  Leverage Ratio as set forth in Section ARTICLE VII(o)
      of Article VII,  (C) in the case of  Indebtedness  incurred in  connection
      with Capital Lease Obligations, the obligations incurred do not exceed the
      fair market value of such property or assets (as  determined in good faith
      by the Board of Directors of the  Borrower or of the  Guarantor  incurring
      such  Indebtedness),  (D) the  creditors  in  respect  of such  additional
      Indebtedness (other than creditors with respect to Indebtedness secured by
      Liens  permitted  pursuant  to Section  6.02) shall  become  parties to an
      intercreditor  agreement by and among the Lenders (the "Collateral  Agency
      Agreement")  whereby  the  Administrative  Agent  shall  agree  to  act as
      collateral agent for itself, the Lenders and such additional  creditors as
      provided for herein,  and the Collateral Agency Agreement shall be amended
      if necessary to reflect such additional  Indebtedness  and otherwise be in
      form and substance  satisfactory  to the Lenders,  (E) if  subordinated in
      right of  payment  to the  Indebtedness  to the  Lenders  hereunder,  such
      Indebtedness  is  created  under  an  agreement  pursuant  to  which  such
      Indebtedness is  subordinated  in right of payment to the  Indebtedness to
      the Lenders  hereunder  pursuant to a subordination  agreement in form and
      content acceptable to the Lenders,  and (F) no Default or Event of Default
      shall occur or be continuing after incurring such Indebtedness;

                                                                              47

<PAGE>


            (v)  unsecured  Indebtedness  of the  Borrower or such  Guarantor in
      excess of Indebtedness  permitted by Sections  6.01(a)(i) and (ii), above,
      provided that (A) the  incurrence  and/or  repayment of such  Indebtedness
      would not cause a violation  of Section (o) of Article  VII, (B) the ratio
      of Consolidated Funded Debt to Consolidated Adjusted EBITDA (as at the end
      of the last fiscal  quarter for which  financial  statements are available
      but giving pro forma effect to such  additional  Indebtedness as set forth
      in Section 1.03) is less than the  then-applicable  Leverage Ratio, (C) in
      the  case of  Indebtedness  incurred  in  connection  with  Capital  Lease
      Obligations,  the obligations incurred do not exceed the fair market value
      of such  property or assets (as  determined  in good faith by the Board of
      Directors   of  the   Borrower  or  of  the   Guarantor   incurring   such
      Indebtedness), (D) such Indebtedness is Subordinated Indebtedness, and (E)
      no  Default  or Event  of  Default  shall  occur  or be  continuing  after
      incurring such Indebtedness;

            (vi) if no Default or Event of Default  shall have  occurred  and be
      continuing,  the  provisions of this Section  6.01(a) will not prevent the
      Borrower or any Guarantor  from becoming  liable for secured  Indebtedness
      pari  passu  to  the  Indebtedness  to  the  Lenders  hereunder,   or  for
      Subordinated  Indebtedness,  in each  case  incurred  for the  purpose  of
      extending,  renewing,  replacing  or  refinancing  the same  type of debt,
      provided  that (A) the  principal  amount of such  Indebtedness  shall not
      exceed the principal amount of the debt being extended,  renewed, replaced
      or refinanced, together with any accrued interest and premium with respect
      thereto and any costs and  expenses  related to such  extension,  renewal,
      replacement or refinancing, and (B) such Indebtedness (i) shall not mature
      prior  to  the  stated   maturity  of  the  pari  passu   Indebtedness  or
      Subordinated  Indebtedness so extended,  renewed,  replaced or refinanced,
      (ii)  shall have an average  life equal to or greater  than the  remaining
      average  life  of the  Indebtedness  so  extended,  renewed,  replaced  or
      refinanced, and (iii) if Indebtedness other than Subordinated Indebtedness
      is being  extended,  renewed,  replaced or refinanced,  such  Indebtedness
      shall continue to be subject to the Collateral  Agency  Agreement,  and if
      Subordinated   Indebtedness  is  being  extended,   renewed,  replaced  or
      refinanced, such Subordinated Indebtedness (as extended, renewed, replaced
      or refinanced) shall be created under an agreement  pursuant to which such
      Indebtedness is  subordinated  in right of payment to the  Indebtedness to
      the Lenders  hereunder  pursuant to a subordination  agreement in form and
      content acceptable to the Lenders;

      (b) The  Borrower  will  not,  nor will it  permit  any of its  Subsidiary
Guarantors  to,  create,  incur,  assume or  permit  to exist any  Indebtedness,
except:

            (i)  Indebtedness  assumed  by  the  Borrower  and/or  by any of its
      Subsidiary  Guarantors in any  acquisition  permitted  pursuant to Section
      6.03(c)(iii)  to the  extent,  and  solely to the  extent,  the  aggregate
      principal amount of all such Indebtedness at any time outstanding does not
      exceed Seven  Million  Five Hundred  Thousand  Dollars  ($7,500,000),  and
      refinancings  and  replacements  thereof  (A) in a  principal  amount  not
      exceeding in the  aggregate the principal  amount of the  Indebtedness  so
      refinanced or replaced plus any  prepayment  penalties,  fees and expenses
      incurred in connection with such refinancings or replacements, (B) with an
      all-in cost which is less than the Indebtedness so refinanced or replaced,
      and (C) with an average life to maturity of not less than the then average
      life to maturity of the Indebtedness so refinanced or replaced; and

                                                                              48

<PAGE>


            (ii)  Indebtedness  of  the  Borrower  or any  Subsidiary  Guarantor
      incurred to finance the  acquisition,  construction  or improvement of any
      fixed or capital  assets,  including  Capital  Lease  Obligations  and any
      Indebtedness assumed in connection with the acquisition of any such assets
      or secured by a Lien on any such assets prior to the acquisition  thereof,
      and extensions, renewals and replacements of any such Indebtedness that do
      not increase the outstanding  principal amount thereof;  provided that (A)
      such  Indebtedness  is incurred  prior to or within thirty (30) days after
      such acquisition or the completion of such construction or improvement and
      (B) the  aggregate  principal  amount of  Indebtedness  permitted  by this
      clause (ii) shall not exceed Five Million Dollars ($5,000,000) at any time
      outstanding.

6.02 Liens.  The Borrower  will not, nor will it permit any of its  Subsidiaries
to,  create,  incur,  assume  or  permit  to  exist  any  Lien on any  property,
including,  without  limitation,  real  property or asset now owned or hereafter
acquired  by it, or assign or sell any income or  revenues  (including  accounts
receivable) or rights in respect of any thereof, except:

      (a) any  Lien on any  property  or  asset  of the  Borrower  or any of its
Subsidiaries existing on the date hereof and set forth in Part B of Schedule II;

      (b)  Liens  for  taxes,  assessments,   governmental  charges  or  levies,
statutory Liens of landlords and Liens of carriers, warehousemen,  mechanics and
materialmen  incurred in the ordinary course of business for sums not yet due or
which are being actively contested in good faith by appropriate proceedings;

      (c)  Liens  (other  than  Liens  imposed  on  the  Borrower  or any of its
Subsidiaries  under ERISA)  incurred or deposits made in the ordinary  course of
business (a) in connection with workers'  compensation,  unemployment  insurance
and other  types of social  security  or (b) to secure (or to obtain  letters of
credit that secure) performance of tenders,  statutory  obligations,  surety and
appeal bonds, bids, leases, performance bonds, sales contracts and other similar
obligations;  provided that, in each case, such Liens do not materially  detract
from the value of the property or assets of the Borrower or its  Subsidiaries or
materially  impair  the use  thereof in the  operation  of the  business  of the
Borrower or its Subsidiaries;

      (d)  Liens (i)  securing  Capital  Lease  Obligations,  or (ii)  placed on
property  acquired  by the  Borrower  or any of  its  Subsidiaries  (other  than
property  consisting  of  securities  or  constituting  the assets of a business
acquired  in whole or in part from any Person or  Persons)  and  existing at the
time of the  acquisition  of such  property,  or (iii) placed on property  being
acquired or constructed by the Borrower or any of its Subsidiaries to secure the
purchase  price or cost  thereof,  or (iv)  securing  Indebtedness  incurred  to
finance any acquisition or  construction  described in clauses (i) through (iii)
immediately  above and permitted  under Section 6.01,  provided that the Lien is
confined to the property so acquired or constructed; and

      (e) Liens  extending,  renewing or replacing any Lien permitted by clauses
(a) and (d)  above,  provided  that (i) such  Lien  shall not apply to any other
property or assets of the  Borrower  or any  Subsidiary,  (ii) such  extensions,
renewals and replacements thereof that do not increase the outstanding principal
amount  thereof  and (iii) that,  at the time of and  immediately  after  giving
effect to such extension,  renewal or replacement is in effect, no Default shall
have occurred and be continuing.

                                                                              49

<PAGE>


6.03 Fundamental Changes.

      (a) The Borrower will not, nor will it permit any of its  Subsidiaries to,
enter  into any  transaction  of merger or  consolidation  or  amalgamation,  or
liquidate,   wind  up  or  dissolve   itself  (or  suffer  any   liquidation  or
dissolution), except:

            (i) any  Subsidiary  of the Borrower  may be merged or  consolidated
      with or into the Borrower or another Subsidiary,  provided (A) that if any
      such  transaction  shall be between a  Subsidiary  and the  Borrower,  the
      Borrower shall be the continuing or surviving corporation,  and (B) if any
      such transaction shall be between a Subsidiary and another Subsidiary, the
      surviving or continuing Subsidiary shall be a Subsidiary Guarantor; and

            (ii) any merger or  consolidation  permitted  under  clause (iii) of
      paragraph (c) of this Section.

      (b) The Borrower will not, nor will it permit any of its  Subsidiaries to,
convey,  sell, lease,  transfer or otherwise dispose of, in one transaction or a
series of  transactions,  all or a substantial part of its business or property,
whether now owned or hereafter acquired, except:

            (i) any  Subsidiary  Guarantor  of the  Borrower  may  sell,  lease,
      transfer  or  otherwise  dispose  of any or  all  of  its  property  (upon
      voluntary  liquidation or otherwise) to the Borrower or another Subsidiary
      Guarantor of the Borrower; and

            (ii) the capital  stock of any  Subsidiary  of the  Borrower  may be
      sold,  transferred  or  otherwise  disposed of, to the Borrower or another
      Subsidiary Guarantor of the Borrower.

      (c) The Borrower will not, nor will it permit any of its  Subsidiaries to,
acquire any business or property from, or capital stock of, or be a party to any
acquisition  of, any Person (whether by way of purchase of such assets or stock,
by merger or consolidation or otherwise), except:

            (i) for any merger or  consolidation  permitted  under clause (i) of
      paragraph (a) of this Section;

            (ii) for  purchases  of inventory  and other  property to be sold or
      used in the ordinary  course of business and  Investments  permitted under
      Section 6.06(a); and

            (iii) the Borrower or any  Subsidiary  Guarantor of the Borrower may
      acquire any business, and the related assets, of any other Person (whether
      by way of  purchase  of  assets or stock,  by merger or  consolidation  or
      otherwise), so long as such acquisition meets the following qualifications
      (each such acquisition a "Permitted Acquisition"):

                                                                              50

<PAGE>


                        [A] if such  acquisition  shall be effected by merger or
                  consolidation  involving the Borrower,  the Borrower  shall be
                  the continuing or surviving entity;

                        [B] such  acquisition (if by purchase of stock) shall be
                  effected in such manner so that the acquired  entity becomes a
                  Subsidiary Guarantor of the Borrower;

                        [C]  such  acquisition  involves  a  line  or  lines  of
                  business that will not substantially change the general nature
                  of the business in which the  Borrower  and its  Subsidiaries,
                  considered as an entirety, are engaged on the Effective Date.

                        [D] no Default or Event of Default  shall exist prior to
                  or immediately after giving effect to such acquisition;

                        [E]  the   Borrower   shall   have   delivered   to  the
                  Administrative  Agent a certificate of a Financial  Officer in
                  the form of  Exhibit  F  showing  calculations  in  reasonable
                  detail to  demonstrate  compliance  with clause Section (o) of
                  Article VII immediately above; and

                        [F] the Borrower  shall have  obtained the prior written
                  consent of the Required Lenders.

6.04 Lines of  Business.  The  Borrower  will not, nor will it permit any of its
Subsidiaries  to, engage to any material  extent in any business  other than the
business of  manufacturing,  distributing and selling  components and assemblies
for  medical  devices,  batteries,   capacitors  and  precision  components  and
assemblies for select industrial and medical market segments.

6.05 Restrictive  Agreements.  The Borrower will not, and will not permit any of
its Subsidiaries to, enter into any agreement prohibiting:

      (a)  (i)  the  creation  or  assumption  of  any  Lien  in  favor  of  the
Administrative Agent and/or the Lenders upon its properties, revenues or assets,
whether now owned or hereafter  acquired;  provided,  the -------- Borrower may,
and may permit any of its Subsidiaries to, enter into any agreement  restricting
the right of the  Administrative  Agent  and/or the Lenders to make subject to a
Lien any  property  to the  extent  (A) such  property  is subject to a security
interest  in favor of  another  Person,  (B) the  Indebtedness  incurred  by the
Borrower or such Subsidiary is otherwise permitted pursuant to Section 6.01, and
(C) the Lien in favor of such third  Person is otherwise  permitted  pursuant to
Section 6.02, or (ii) the ability of the Borrower or any Subsidiary Guarantor to
amend or otherwise modify this Agreement or any other Loan Document; and

      (b) any Subsidiary  from making any payments,  directly or indirectly,  to
the Borrower by way of  dividends,  advances,  repayments  of loans or advances,
reimbursements  of  management  and other  intercompany  charges,  expenses  and
accruals or other returns on investments,  or any other agreement or arrangement
which restricts the ability of any such Subsidiary to make any payment, directly
or indirectly, to the Borrower.

                                                                              51

<PAGE>


6.06  Investments,   Loans,  Advances,  Guarantees  and  Acquisitions;   Hedging
Agreements.

      (a) Investments, Etc. The Borrower will not, nor will it permit any of its
Subsidiaries to,  purchase,  hold or acquire  (including  pursuant to any merger
with any Person that was not a wholly owned Subsidiary prior to such merger) any
capital stock,  evidences of  indebtedness  or other  securities  (including any
option,  warrant or other  right to acquire  any of the  foregoing)  of, make or
permit to exist any loans or advances to,  Guarantee any obligations of, or make
or permit to exist any investment or any other interest in, any other Person, or
purchase or otherwise  acquire (in one transaction or a series of  transactions)
any assets of any other Person constituting a business unit, except:

            (i) investments  existing on the date hereof and set forth in Part C
      of Schedule II;

            (ii) Permitted Investments;

            (iii)  investments  by the  Borrower  in the  capital  stock  of its
      Subsidiaries;

            (iv)  loans  or  advances  made by the  Borrower  to any  Subsidiary
      Guarantor and made by any Subsidiary  Guarantor to the Borrower or another
      Subsidiary Guarantor;

            (v) Guarantees constituting  Indebtedness permitted by Section 6.01;
      and

            (vi) any transaction permitted under Section 6.03.

      (b) Hedging  Agreements.  The Borrower will not, nor will it permit any of
its  Subsidiaries  to,  enter into any  Hedging  Agreement,  other than  Hedging
Agreements  entered into in the ordinary course of business to hedge or mitigate
risks to which the Borrower or any  Subsidiary  is exposed in the conduct of its
business or the management of its liabilities.

6.07 Restricted  Payments.  The Borrower will not, nor will it permit any of its
Subsidiaries  to,  declare  or  make,  or  agree  to pay or  make,  directly  or
indirectly, any Restricted Payment; provided that:

      (a) the Borrower may declare and pay dividends with respect to its capital
stock payable as follows:

            (i) in additional shares of its common stock, or

            (ii) in cash only if, and solely to the extent, the aggregate amount
      of cash  dividends  declared  and paid by the Borrower for any period does
      not  exceed  the  difference  between:  (A)  fifty  percent  (50%)  of the
      Consolidated  Net Income of the  Borrower  and its  Subsidiaries  for such
      period,  and (B) the lesser of (x) the  aggregate  amount of cash paid (as
      dividends or  otherwise)  by the Borrower  during such period  pursuant to
      clause  (b)  immediately   below  or  (y)  One  Hundred  Thousand  Dollars
      ($100,000), or

                                                                              52

<PAGE>


            (iii) any combination of the foregoing; and

      (b) in any fiscal year the  Borrower  may  declare and pay cash  dividends
with  respect to its  capital  stock,  and/or may make  payments  of cash to any
parent  corporation;  provided,  in no event shall the aggregate  amount of cash
dividends  and cash payments made pursuant to this clause (b) exceed One Hundred
Thousand Dollars ($100,000); and

      (c) in any fiscal year of the Borrower  the Borrower may make  payments to
its  Affiliates  only  if,  and  solely  to  the  extent,   the  transaction  or
transactions  giving rise to such payments  satisfy the  requirements of Section
6.08; and

      (d)  the  Borrower  may  make  payments  to  former  participants  of  the
Borrower's  existing  employee stock  ownership plan qualified  under ERISA (the
"ESOP") in connection with the redemption of the securities of the Borrower held
in such former participant's ESOP account, as permitted pursuant to the terms of
the ESOP or as otherwise required by ERISA.

Nothing  herein  shall be deemed to  prohibit  the payment of  dividends  by any
Subsidiary of the Borrower to the Borrower or to any other Subsidiary  Guarantor
of the Borrower.

6.08 Transactions with Affiliates. The Borrower will not, nor will it permit any
of its Subsidiaries to, sell, lease or otherwise transfer any property or assets
to, or  purchase,  lease or otherwise  acquire any  property or assets from,  or
otherwise engage in any other transactions  with, any of its Affiliates,  except
(a)  transactions  in the ordinary course of business at prices and on terms and
conditions not less favorable to the Borrower or such  Subsidiary  than could be
obtained on an arm's-length basis from unrelated third parties, (b) transactions
between or among the  Borrower  and its  Subsidiaries  not  involving  any other
Affiliate and (c) any Restricted Payment permitted by Section 6.07.

6.09 Sale and Lease-Back Transactions. The Borrower will not, nor will it permit
any of its Subsidiaries to, enter into any arrangement,  directly or indirectly,
with any  Person  whereby  it  shall  sell or  transfer  any  property,  real or
personal,  used or  useful  in its  business,  whether  now  owned or  hereafter
acquired,  and thereafter rent or lease such property or other property which it
intends to use for  substantially  the same  purpose or purposes as the property
being sold or transferred.



                       ARTICLE VII   EVENTS OF DEFAULT

If any of the following events ("Events of Default") shall occur:

      (a) the  Borrower  shall fail to pay any  principal of any Loan or Note or
any  reimbursement  obligation in respect of any LC Disbursement when and as the
same shall become due and payable,  whether at the due date thereof or at a date
fixed for prepayment thereof or otherwise;

      (b) the Borrower shall fail to pay any interest on any Loan or Note or any
fee or any other amount (other than an amount  referred to in clause (a) of this
Article) payable under this Agreement or under any other Loan Document, when and
as the same shall  become  due and  payable,  and such  failure  shall  continue
unremedied for a period of five (5) or more Business Days;

                                                                              53

<PAGE>


      (c) any  representation or warranty made or deemed made by or on behalf of
the Borrower or any of its  Subsidiaries in or in connection with this Agreement
or any other Loan Document or any amendment or  modification  hereof or thereof,
or in any report,  certificate,  financial statement or other document furnished
pursuant to or in connection  with this  Agreement or any other Loan Document or
any  amendment  or  modification  hereof or  thereof,  shall  prove to have been
incorrect when made or deemed made;

      (d) the Borrower shall fail to observe or perform any covenant,  condition
or  agreement  contained  in  Section  5.02(a)  or  5.03  (with  respect  to the
Borrower's existence) or in ARTICLE VI;

      (e) the Borrower shall fail to observe or perform any covenant,  condition
or agreement  contained in this Agreement (other than those specified in clauses
(a),  (b) or (d) of this  Article) or any other Loan  Document  and such failure
shall  continue  unremedied for a period of ten (10) or more Business Days after
notice  thereof  from the  Administrative  Agent  (given at the  request  of any
Lender) to the Borrower;

      (f) any Subsidiary  Guarantor or Parent Guarantor shall fail to observe or
perform any covenant,  condition or agreements contained in any Loan Document to
which it is a party, and such failure shall continue  unremedied for a period of
ten (10) or more  Business  Days after notice  thereof  from the  Administrative
Agent  (given at the  request of any  Lender) to such  Subsidiary  Guarantor  or
Parent Guarantor;

      (g) the Borrower or any of its Subsidiaries shall fail to make any payment
(whether of principal or interest  and  regardless  of amount) in respect of any
Indebtedness,  the outstanding and unpaid  principal amount of which at the time
equals or exceeds One Million Dollars  ($1,000,000),  when and as the same shall
become due and payable;

      (h) any event or condition  occurs that results in any  Indebtedness,  the
outstanding and unpaid  principal  amount of which at the time equals or exceeds
One Million Dollars  ($1,000,000),  becoming due prior to its scheduled maturity
or that enables or permits  (with or without the giving of notice,  the lapse of
time or both) the holder or holders of such Indebtedness or any trustee or agent
on its or their behalf to cause such  Indebtedness  to become due, or to require
the  prepayment,  repurchase,  redemption  or defeasance  thereof,  prior to its
scheduled maturity;

      (i)  an  involuntary  proceeding  shall  be  commenced  or an  involuntary
petition shall be filed seeking (i) liquidation,  reorganization or other relief
in respect of the  Borrower  or any of its  Subsidiaries  or its debts,  or of a
substantial part of its assets, under any Federal,  state or foreign bankruptcy,
insolvency,  receivership or similar law now or hereafter in effect, or (ii) the
appointment  of a receiver,  trustee,  custodian,  sequestrator,  conservator or
similar  official  for  the  Borrower  or  any  of  its  Subsidiaries  or  for a
substantial  part of its  assets,  and,  in any such case,  such  proceeding  or
petition shall continue  undismissed  for a period of sixty (60) or more days or
an order or decree approving or ordering any of the foregoing shall be entered;

                                                                              54

<PAGE>


      (j) the Borrower or any of its Subsidiaries shall (i) voluntarily commence
any proceeding or file any petition seeking liquidation, reorganization or other
relief under any Federal, state or foreign bankruptcy, insolvency,  receivership
or similar law now or hereafter in effect,  (ii) consent to the  institution of,
or fail to  contest  in a timely  and  appropriate  manner,  any  proceeding  or
petition described in clause (i) of this Article,  (iii) apply for or consent to
the appointment of a receiver, trustee, custodian, sequestrator,  conservator or
similar  official  for  the  Borrower  or  any  of  its  Subsidiaries  or  for a
substantial  part of its  assets,  (iv) file an answer  admitting  the  material
allegations  of a petition filed against it in any such  proceeding,  (v) make a
general  assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing;

      (k) the Borrower or any of its Subsidiaries shall become unable,  admit in
writing its inability or fail generally to pay its debts as they become due;

      (l) one or more judgments for the payment of money in an aggregate  amount
in excess of applicable  insurance coverage of One Million Dollars  ($1,000,000)
or more shall be rendered against the Borrower or any of its Subsidiaries or any
combination  thereof  and the same  shall  remain  undischarged  for a period of
thirty (30)  consecutive  days during which  execution  shall not be effectively
stayed, or any action shall be legally taken by a judgment creditor to attach or
levy upon any assets of the Borrower or any of its  Subsidiaries  to enforce any
such judgment;

      (m) an ERISA Event shall have occurred that is reasonably likely to result
in a liability or loss to the Borrower or any of its  Subsidiaries  in an amount
in excess of One Million Dollars ($1,000,000);

      (n) a Change in Control shall occur; or

      (o)  Technologies  shall (i) permit the Leverage  Ratio as at (A) the last
day of each of its fiscal  quarters  through and  including  the fiscal  quarter
ending December 30, 2006, to exceed 3.50 to 1.00; or (B) the last day of each of
its fiscal  quarters  ending after December 30, 2006, to exceed 3.00 to 1.00; or
(ii) permit the Fixed Charges  Coverage Ratio to be less than 1.25 to 1.00 as at
the last day of any fiscal quarter ending after the Effective Date.

      (p) any Loan Document or Lien granted  thereunder shall terminate or cease
to be effective (other than pursuant to its terms) or cease to be legally valid,
binding and enforceable  obligation of the Borrower, a Subsidiary Guarantor or a
Parent  Guarantor  party thereto  (other than as a result of any  termination in
accordance with the terms thereof);  the Borrower,  any Subsidiary  Guarantor or
Parent  Guarantor  party to any Loan  Documents  shall,  directly or indirectly,
contest  in any  manner  the  effectiveness  of any such Loan  Document  or Lien
granted thereunder or the validity,  binding nature, or enforceability  thereof;
or any Lien shall  cease to have the  priority  purported  to be given under the
applicable Loan Document;

then,  and in every such event (other than an event with respect to the Borrower
described  in clause  (i) or (j) of this  Article),  and at any time  thereafter
during the continuance of such event, the  Administrative  Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either or
both of the following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and


                                                                              55

<PAGE>


(ii)  declare the Loans then  outstanding  to be due and payable in whole (or in
part,  in which case any  principal  not so  declared  to be due and payable may
thereafter  be declared to be due and  payable),  and thereupon the principal of
the Loans so declared to be due and  payable,  together  with  accrued  interest
thereon and all fees and other  obligations of the Borrower  accrued  hereunder,
shall become due and payable immediately,  without presentment,  demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower; and
in case of any event with respect to the Borrower described in clause (i) or (j)
of this Article, the Commitments shall automatically terminate and the principal
of the Loans then  outstanding,  together with accrued  interest thereon and all
fees  and  other   obligations  of  the  Borrower   accrued   hereunder,   shall
automatically become due and payable,  without presentment,  demand,  protest or
other notice of any kind, all of which are hereby waived by the Borrower.

                   ARTICLE VIII   THE ADMINISTRATIVE AGENT

      Each of the Lenders and the Issuing Lender hereby irrevocably appoints the
Administrative  Agent as its agent  hereunder and under the other Loan Documents
and authorizes the  Administrative  Agent to take such actions on its behalf and
to exercise  such powers as are  delegated  to the  Administrative  Agent by the
terms hereof or thereof, together with such actions and powers as are reasonably
incidental thereto.

      The Person serving as the  Administrative  Agent  hereunder shall have the
same rights and powers in its  capacity as a Lender as any other  Lender and may
exercise  the same as  though  it were not the  Administrative  Agent,  and such
Person and its Affiliates may accept  deposits from, lend money to and generally
engage in any kind of  business  with the  Borrower or any  Subsidiary  or other
Affiliate thereof as if it were not the Administrative Agent hereunder.

      The  Administrative  Agent shall not have any duties or obligations except
those  expressly  set forth  herein  and in the other  Loan  Documents.  Without
limiting the generality of the foregoing, (a) the Administrative Agent shall not
be subject to any  fiduciary or other  implied  duties,  regardless of whether a
Default has occurred and is continuing,  (b) the Administrative  Agent shall not
have any duty to take any  discretionary  action or exercise  any  discretionary
powers, except discretionary rights and powers expressly  contemplated hereby or
by the  other  Loan  Documents  that the  Administrative  Agent is  required  to
exercise in writing by the Required  Lenders,  and (c) except as  expressly  set
forth herein and in the other Loan Documents, the Administrative Agent shall not
have any duty to disclose,  and shall not be liable for the failure to disclose,
any  information  relating to the  Borrower or any of its  Subsidiaries  that is
communicated to or obtained by the bank serving as  Administrative  Agent or any
of its Affiliates in any capacity.  The Administrative Agent shall not be liable
for any action  taken or not taken by it with the  consent or at the  request of
the Required  Lenders or in the absence of its own gross  negligence  or willful
misconduct.  The  Administrative  Agent shall be deemed not to have knowledge of
any  Default   unless  and  until  written   notice  thereof  is  given  to  the
Administrative  Agent by the Borrower or a Lender, and the Administrative  Agent
shall not be  responsible  for or have any duty to ascertain or inquire into (i)
any statement,  warranty or  representation  made in or in connection  with this
Agreement  or any other Loan  Document,  (ii) the  contents of any  certificate,
report or other  document  delivered  hereunder or  thereunder  or in connection
herewith  or  therewith,  (iii)  the  performance  or  observance  of any of the
covenants,  agreements or other terms or conditions set forth herein or therein,
(iv)  the  validity,  enforceability,   effectiveness  or  genuineness  of  this
Agreement,  any other  Loan  Document  or any  other  agreement,  instrument  or
document,  or (v) the  satisfaction  of any condition set forth in ARTICLE IV or
elsewhere  herein or therein,  other than to confirm  receipt of items expressly
required to be delivered to the Administrative Agent.

                                                                              56

<PAGE>


      The  Administrative  Agent shall be  entitled to rely upon,  and shall not
incur any liability for relying upon, any notice, request, certificate, consent,
statement,  instrument,  document or other writing  believed by it to be genuine
and to have been signed or sent by the proper Person. The  Administrative  Agent
also may rely upon any statement  made to it orally or by telephone and believed
by it to be made by the proper  Person,  and shall not incur any  liability  for
relying thereon.  The  Administrative  Agent may consult with legal counsel (who
may be counsel for the  Borrower),  independent  accountants  and other  experts
selected by it, and shall not be liable for any action  taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.

      The  Administrative  Agent may perform any and all its duties and exercise
its rights and powers by or through any one or more sub-agents  appointed by the
Administrative  Agent.  The  Administrative  Agent  and any such  sub-agent  may
perform any and all its duties and exercise its rights and powers  through their
respective  Related  Parties.  The  exculpatory   provisions  of  the  preceding
paragraphs  shall apply to any such sub-agent and to the Related  Parties of the
Administrative Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities  provided
for herein as well as activities as Administrative Agent.

      The Administrative  Agent may resign at any time by notifying the Lenders,
the Issuing  Lender and the Borrower.  Upon any such  resignation,  the Required
Lenders  shall have the right,  with the prior  written  consent of the Borrower
(which consent shall not be unreasonably  withheld),  to appoint a successor. If
no successor shall have been so appointed by the Required Lenders and shall have
accepted   such   appointment   within  thirty  (30)  days  after  the  retiring
Administrative  Agent  gives  notice  of  its  resignation,  then  the  retiring
Administrative  Agent's  resignation shall nonetheless  become effective and (1)
the  retiring  Administrative  Agent  shall be  discharged  from its  duties and
obligations  hereunder and (2) the Required  Lenders shall perform the duties of
the  Administrative  Agent (and all payments and  communications  provided to be
made by, to or through the  Administrative  Agent shall instead be made by or to
each  Lender  directly)  until  such  time as the  Required  Lenders  appoint  a
successor agent as provided for above in this paragraph.  Upon the acceptance of
its appointment as Administrative Agent hereunder by a successor, such successor
shall succeed to and become vested with all the rights,  powers,  privileges and
duties of the  retiring  (or  retired)  Administrative  Agent  and the  retiring
Administrative  Agent  shall be  discharged  from  its  duties  and  obligations
hereunder  (if not  already  discharged  therefrom  as  provided  above  in this
paragraph). The fees payable by the Borrower to a successor Administrative Agent
shall be the same as those payable to its predecessor  unless  otherwise  agreed
between  the  Borrower  and such  successor.  After the  Administrative  Agent's
resignation  hereunder,  the  provisions  of this Article and Section 9.03 shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as Administrative Agent.

      Each Lender  acknowledges that it has,  independently and without reliance
upon the  Administrative  Agent or any other Lender and based on such  documents
and information as it has deemed  appropriate,  made its own credit analysis and
decision to enter into this  Agreement.


                                                                              57

<PAGE>


Each Lender also acknowledges  that it will,  independently and without reliance
upon the  Administrative  Agent or any other Lender and based on such  documents
and information as it shall from time to time deem appropriate, continue to make
its own  decisions  in  taking or not  taking  action  under or based  upon this
Agreement,  any other Loan  Document or any related  agreement  or any  document
furnished hereunder or thereunder.

      Each Lender  acknowledges and agrees that neither such Lender,  nor any of
its Affiliates,  participants or assignees, may rely on the Administrative Agent
to carry out such Lender's,  Affiliate's,  participant's or assignee's  customer
identification  program,  or other  obligations  required  or  imposed  under or
pursuant to the USA Patriot Act or the  regulations  thereunder,  including  the
regulations  contained in 31 CFR 103.121 (as hereafter amended or replaced,  the
"CIP  Regulations"),  or any other  Anti-Terrorism  Law,  including any programs
involving  any of the  following  items  relating to or in  connection  with the
Borrower or any of their  Subsidiaries,  any of their  respective  Affiliates or
agents, this Agreement,  the Loan Documents or the Transactions  hereunder:  (a)
any  identity  verification   procedures,   (b)  any  record  keeping,  (c)  any
comparisons  with government  lists,  (d) any customer  notices or (e) any other
procedures required under the CIP Regulations or such other laws.

      Each Lender or assignee or  participant  of a Lender that is not organized
under the laws of the United  States of America or a state  thereof  (and is not
excepted from the certification  requirement contained in Section 313 of the USA
Patriot Act and the applicable  regulations  because it is both (a) an affiliate
of a depository  institution or foreign bank that maintains a physical  presence
in the United States or foreign  country,  and (b) subject to  supervision  by a
banking authority regulating such affiliated  depository  institution or foreign
bank)  shall  deliver  to the  Administrative  Agent the  certification,  or, if
applicable,  recertification,  certifying  that such Lender is not a "shell" and
certifying  to other  matters as  required by Section 313 of the USA Patriot Act
and the  applicable  regulations:  (i) within ten (10) days after the  Effective
Date, and (ii) at such other times as are required under the USA Patriot Act.

      Except as  otherwise  provided  in Section  9.02(b)  with  respect to this
Agreement,  the Administrative Agent may, with the prior consent of the Required
Lenders (but not otherwise),  consent to any modification,  supplement or waiver
under any of the Loan Documents.


                          ARTICLE IX   MISCELLANEOUS

9.01 Notices.  Except in the case of notices and other communications  expressly
permitted  to be  given by  telephone,  all  notices  and  other  communications
provided  for  herein  shall be in  writing  and shall be  delivered  by hand or
overnight  courier  service,  mailed by certified or registered  mail or sent by
telecopy, as follows:

      (a) if to the Borrower:

       Greatbatch Ltd.
       10000 Wehrle Drive
       Clarence, New York  14031
       Tel:  (716) 759-5602
       Fax: (716) 759-5614

                                                                              58

<PAGE>


       Attn:      Lawrence P. Reinhold
                  Treasurer
       with a copy to:   John P. Amershadian, Esq.
                         Hodgson Russ LLP
                         One M&T Plaza
                         Suite 2000
                         Buffalo, New York  14203
                         Tel:  (716) 848-1277
                         Fax: (716) 849-0349

      (b) if to the Administrative Agent, Issuing Lender or Swingline Lender:

       Manufacturers and Traders Trust Company
       One Fountain Plaza
       12th Floor
       Buffalo, New York  14203
       Tel:  (716) 848-7303
       Fax: (716) 848-7318

       Attn:      Michael J. Prendergast
                  Vice President

       with a copy to:  William E. Mathias, Esq.
                        Lippes Mathias Wexler Friedman LLP
                        665 Main Street
                        Suite 300
                        Buffalo, New York  14203-1425
                        Tel:  (716) 853-5100
                        Fax: (716) 853-5199


      (c) if to a Lender, to it at its address (or telecopy number) set forth in
Schedule I.

      Any party hereto may change its address or telecopy number for notices and
      other communications  hereunder by notice to the other parties hereto (or,
      in the case of any such change by a Lender,  by notice to the Borrower and
      the Administrative  Agent). All notices and other  communications given to
      any party hereto in accordance with the provisions of this Agreement shall
      be deemed  to have been  given on the date of  receipt.  Unless  otherwise
      specified herein, each notice or other communication required or permitted
      to be given  hereunder  by the  Borrower  shall be given or made only by a
      Senior Executive Officer or Financial Officer of the Borrower.

      9.02 Waivers; Amendments.

      (a) No Deemed  Waivers:  Remedies  Cumulative.  No failure or delay by the
Administrative  Agent,  the Issuing Lender or any Lender in exercising any right
or power hereunder  shall operate as a waiver  thereof,  nor shall any single or
partial   exercise  of  any  such  right  or  power,


                                                                              59

<PAGE>


or any abandonment or  discontinuance of steps to enforce such a right or power,
preclude  any other or further  exercise  thereof or the  exercise  of any other
right or power. The rights and remedies of the Administrative Agent, the Issuing
Lender and the Lenders  hereunder  are  cumulative  and are not exclusive of any
rights or remedies that they would otherwise have. No waiver of any provision of
this  Agreement or consent to any departure by the Borrower  therefrom  shall in
any event be effective  unless the same shall be  permitted by paragraph  (b) of
this  Section,  and then such waiver or consent  shall be effective  only in the
specific  instance  and for the purpose for which  given.  Without  limiting the
generality  of the  foregoing,  the making of a Loan or  issuance of a Letter of
Credit shall not be construed as a waiver of any Default,  regardless of whether
the  Administrative  Agent, any Lender or the Issuing Lender may have had notice
or knowledge of such Default at the time.

      (b)  Amendments.  Neither this  Agreement nor any provision  hereof may be
waived,  amended or modified  except  pursuant to an agreement or  agreements in
writing entered into by the Borrower and the Required Lenders or by the Borrower
and the Administrative Agent with the consent of the Required Lenders;  provided
that no such agreement shall:

            (i)  increase  the  Commitment  of any Lender  without  the  written
      consent of such Lender,

            (ii) reduce the principal  amount of any Loan or LC  Disbursement or
      reduce the rate of interest thereon, or reduce any fees payable hereunder,
      without the written consent of each Lender affected thereby,

            (iii) postpone the scheduled date of payment of the principal amount
      of any  Loan or LC  Disbursement,  or any  interest  thereon,  or any fees
      payable  hereunder,  or reduce  the  amount  of,  waive or excuse any such
      payment,  or postpone the scheduled date of expiration of any  Commitment,
      without the written consent of each Lender affected thereby,

            (iv)  change  Section  2.15(d)  without  the  consent of each Lender
      affected thereby, or

            (v) change any of the  provisions of this Section or the  percentage
      in the  definition of the term "Required  Lenders" or any other  provision
      hereof  specifying the number or percentage of Lenders  required to waive,
      amend or modify any rights  hereunder or make any  determination  or grant
      any consent hereunder,

            (vi)  release  any  collateral  subject  to a Lien in  favor  of the
      Administrative  Agent granted pursuant to any Loan Document,  or terminate
      or modify any  Guaranty  Agreement  (whether now in existence or hereafter
      delivered  to the  Administrative  Agent  pursuant  to the terms  hereof),
      except  in  connection   with  sales  in  the  ordinary  course  or  other
      dispositions  of Collateral  permitted by this Agreement or any other Loan
      Document,

without the written  consent of each Lender,  and provided  further that no such
agreement  shall amend,  modify or otherwise  affect the rights or duties of the
Administrative  Agent or the Issuing Lender hereunder  without the prior written
consent of the Administrative Agent the Issuing Lender, as the case may be.

                                                                              60

<PAGE>


      (c)  Notwithstanding the foregoing,  the Borrower  acknowledges and agrees
that the Administrative  Agent reserves the right, at any time, after consulting
with the Borrower,  to modify  pricing,  tenor or terms of the Revolving  Credit
Facility,  but not the  principal  amount of either of such  facilities,  if the
Administrative Agent determines,  on a commercially  reasonable basis, that such
modifications  are advisable to ensure  successful  syndication of the Revolving
Credit Facility.

9.03 Expenses; Indemnity; Damage Waiver.

      (a)  Costs  and  Expenses.  The  Borrower  shall  pay (i)  all  reasonable
out-of-pocket  expenses incurred by the Administrative Agent and its Affiliates,
including the  reasonable  fees,  charges and  disbursements  of counsel for the
Administrative   Agent,  in  connection  with  the  syndication  of  the  credit
facilities  provided for herein,  the  preparation  and  administration  of this
Agreement  and the other Loan  Documents  or any  amendments,  modifications  or
waivers of the  provisions  hereof or thereof  (whether or not the  transactions
contemplated  hereby  or  thereby  shall be  consummated),  (ii) all  reasonable
out-of-pocket  expenses  incurred by the Issuing  Lender in connection  with the
issuance,  amendment, renewal or extension of any Letter of Credit or any demand
for payment thereunder, and (iii) all reasonable out-of-pocket expenses incurred
by the  Administrative  Agent,  the Issuing Lender or any Lender,  including the
reasonable fees, charges and disbursements of any counsel for the Administrative
Agent,  the Issuing Lender or any Lender,  in connection with the enforcement or
protection  of its rights in connection  with this  Agreement and the other Loan
Documents,  including its rights under this Section,  or in connection  with the
Loans made or Letters of Credit issued  hereunder,  including in connection with
any workout, restructuring or negotiations in respect thereof.

      (b)  Indemnification  by the Borrower.  The Borrower  shall  indemnify the
Administrative Agent, the Issuing Lender and each Lender, and each Related Party
of any of the foregoing  Persons (each such Person being called an "Indemnitee")
against, and to hold each Indemnitee harmless from, any and all losses,  claims,
damages,  liabilities  and related  expenses,  including  the  reasonable  fees,
charges and  disbursements  of any counsel  for any  Indemnitee,  incurred by or
asserted  against any  Indemnitee  arising out of, in  connection  with, or as a
result of (i) the execution or delivery of this Agreement, any of the other Loan
Documents or any agreement or  instrument  contemplated  hereby or thereby,  the
performance by the parties hereto of their respective  obligations  hereunder or
the  consummation  of the  Transactions or any other  transactions  contemplated
hereby,  (ii) any Loan or Letter of Credit or the use of the proceeds  therefrom
(including any refusal by the Issuing Lender to honor a demand for payment under
a Letter of Credit if the documents  presented in connection with such demand do
not strictly  comply with the terms of such Letter of Credit),  (iii) any actual
or alleged  presence or release of  Hazardous  Materials on or from any property
owned  or  operated  by  the  Borrower  or  any  of  its  Subsidiaries,  or  any
Environmental  Liability  related  in  any  way to  the  Borrower  or any of its
Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation
or proceeding relating to any of the foregoing,  whether based on contract, tort
or any other theory and regardless of whether any Indemnitee is a party thereto;
provided that such indemnity  shall not, as to any  Indemnitee,  be available to
the extent that such losses,  claims,  damages,  liabilities or related expenses
are determined by a court of competent  jurisdiction by final and  nonappealable
judgment to have  resulted from the gross  negligence  or willful  misconduct of
such Indemnitee.

                                                                              61

<PAGE>


      (c) Reimbursement by Lenders. To the extent that the Borrower fails to pay
any amount required to be paid by it to the Administrative  Agent or the Issuing
Lender under paragraph (a) or (b) of this Section,  each Lender severally agrees
to pay to the  Administrative  Agent or the Issuing Lender,  as the case may be,
such  Lender's  Applicable  Percentage  (determined  as of  the  time  that  the
applicable  unreimbursed  expense or indemnity payment is sought) of such unpaid
amount;  provided that the  unreimbursed  expense or  indemnified  loss,  claim,
damage,  liability  or related  expense,  as the case may be, was incurred by or
asserted against the Administrative  Agent or the Issuing Lender in its capacity
as such.

      (d) Waiver of  Consequential  Damages;  Etc.  To the extent  permitted  by
applicable  law, the Borrower  shall not assert,  and hereby  waives,  any claim
against any  Indemnitee,  on any theory of  liability,  for  special,  indirect,
consequential  or  punitive  damages  (as  opposed to direct or actual  damages)
arising out of, in  connection  with,  or as a result of, this  Agreement or any
agreement or  instrument  contemplated  hereby,  the  Transactions,  any Loan or
Letter of Credit or the use of the proceeds thereof.

      (e) Payments. All amounts due under this Section shall be payable promptly
after written demand therefor.

9.04 Successors and Assigns.

      (a)  Assignments;  Generally.  The provisions of this  Agreement  shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby, except that the Borrower may not assign
or otherwise  transfer any of its rights or  obligations  hereunder  without the
prior  written  consent of the Lender and the Lender may not assign or otherwise
transfer any of its rights or  obligations  hereunder  except (i) to an Eligible
Assignee in accordance  with the  provisions of subsection  (b) of this Section,
(ii) by way of participation in accordance with the provisions of subsection (c)
of this Section,  or (iii) by way of pledge or assignment of a security interest
subject to the  restrictions  of  subsection  (e) of this Section (and any other
attempted  assignment  or transfer by any party  hereto shall be null and void).
Nothing in this  Agreement,  expressed or implied,  shall be construed to confer
upon any Person (other than the parties hereto, their respective  successors and
assigns permitted hereby,  Participants to the extent provided in subsection (c)
of  this  Section  and,  to  the  extent  expressly   contemplated  hereby,  the
Indemnitees) any legal or equitable right, remedy or claim under or by reason of
this Agreement.

      (b)  Assignments  by Lenders.  Any Lender may at any time assign to one or
more  Eligible  Assignees all or a portion of its rights and  obligations  under
this Agreement  (including all or a portion of the Revolving Credit  Commitment,
the  Loans  and LC  Exposure  at the  time  owing to it  provided  that (i) such
assignment   shall  not  be  in  an  amount  less  than  Five  Million   Dollars
($5,000,000.00)  and (ii) the  assignee  and the  assigning  Lender  shall pay a
processing  and   recordation   fee  of  Three  Thousand  Five  Hundred  Dollars
($3,500.00)  and  (iii)  such  assignment  shall be  pursuant  to  documentation
acceptable to the  Administrative  Agent to include at least an  Assignment  and
Acceptance  and  Administrative   Questionnaire  and  the  assignee,   it  being
understood and agreed that with respect to any Letters of Credit  outstanding at
the time of any such assignment,  such Lender may sell to the assignee a ratable
participation  in such  Letters of  Credit.


                                                                              62

<PAGE>

From and after the effective date specified in such documentation, such Eligible
Assignee  shall be a party to this  Agreement and, to the extent of the interest
assigned by any Lender,  have the rights and  obligations  of such Lender  under
this Agreement, and the Lender shall, to the extent of the interest so assigned,
be released from its  obligations  under this Agreement  (and, in the case of an
assignment of all of the Lender's rights and  obligations  under this Agreement,
shall  cease to be a party  hereto  but shall  continue  to be  entitled  to the
benefits  of  Sections  2.12,  2.13,  2.14 and 9.03  with  respect  to facts and
circumstances  occurring  prior to the effective  date of such  assignment,  and
shall  continue to have all of the rights  provided  hereunder to such Lender in
its capacity as issuer of any Letters of Credit  outstanding at the time of such
assignment).  Upon  request,  the Borrower (at its  expense)  shall  execute and
deliver  new or  replacement  notes to the  Lender and the  assignee,  and shall
execute and deliver any other documents  reasonably  necessary or appropriate to
give effect to such  assignment  and to provide for the  administration  of this
Agreement after giving effect thereto.

      (c) Participations. Any Lender may at any time, without the consent of, or
notice to, the Borrower, sell participations to any Person (other than a natural
person or the  Borrower or any of the  Borrower's  Affiliates  or  Subsidiaries)
(each,  a  "Participant")  in all or a portion  of the  Lender's  rights  and/or
obligations  under this  Agreement  (including all or a portion of its Revolving
Credit  Commitment  and/or LC Exposure and/or the Loans and/or the reimbursement
obligations  in respect of Letters of Credit);  provided  that (i) such Lender's
obligations under this Agreement shall remain unchanged,  (ii) such Lender shall
remain  solely   responsible  to  the  Borrower  for  the  performance  of  such
obligations  and (iii) the Borrower  shall  continue to deal solely and directly
with  the  Administrative  Agent in  connection  with any  Lender's  rights  and
obligations under this Agreement.  Any agreement or instrument pursuant to which
any Lender sells such a  participation  shall  provide  that the  Administrative
Agent,  on behalf of the  Lenders,  shall  retain the sole right to enforce this
Agreement and the Administrative Agent, with the consent of the Required Lenders
shall  approve any  amendment,  modification  or waiver of any provision of this
Agreement;  provided  that such  agreement  or  instrument  may provide that the
Administrative  Agent and the  Lenders  will not,  without  the  consent  of the
Participant, agree to any amendment, waiver or other modification that would (i)
postpone  any date upon which any  payment of money is  scheduled  to be made to
such Participant, or (ii) reduce the principal,  interest, fees or other amounts
payable to such Participant (provided, however, that the Lender may, without the
consent of the Participant,  (A) amend any financial  covenant hereunder (or any
defined  term used  therein)  even if the effect of such  amendment  would be to
reduce  the rate of  interest  on any Loan or  Letter  of  Credit  reimbursement
obligation or to reduce any fee payable  hereunder and (B) waive the right to be
paid interest at the Default Rate),  or (iii) release any the Guarantor from its
Guaranty  Agreement.  Subject to subsection  (d) of this  Section,  the Borrower
agrees that each Participant shall be entitled to the benefits of Sections 2.12,
2.13 and 2.14 to the same extent as if it were the Lender and had  acquired  its
interest by assignment pursuant to subsection (b) of this Section. To the extent
permitted  by law,  each  Participant  also shall be entitled to the benefits of
Section 9.08 as though it were a Lender.

      (d)  Limitations  on Rights of  Participants.  A Participant  shall not be
entitled to receive  any greater  payment  under  Section  2.12 or 2.14 than the
Lender would have been  entitled to receive  with  respect to the  participation
sold  to  such  Participant,  unless  the  sale  of the  participation  to  such
Participant is made with the  Borrower's  prior written  consent.  A Participant
that is not a "United States  person" within the meaning of Section  7701(a)(30)
of the Code shall not be  entitled to the  benefits  of Section  2.14 unless the
Borrower is  notified of the  participation  sold to such  Participant  and such
Participant  agrees,  for the benefit of the Borrower,  to provide to the Lender
such tax forms  prescribed by the IRS as are necessary or desirable to establish
an exemption from, or reduction of, U.S. withholding tax.

                                                                              63

<PAGE>


      (e)  Certain  Pledges.  Any  Lender  may at any time  pledge  or  assign a
security  interest  in all or any  portion  of its rights  under this  Agreement
(including  under  the  Note,  if  any) to  secure  obligations  of the  Lender,
including any pledge or assignment to secure  obligations  to a Federal  Reserve
Bank;  provided that no such pledge or assignment  shall release the Lender from
any of its obligations  hereunder or substitute any such pledgee or assignee for
the Lender as a party hereto.

      (f) No Assignments to the Borrower or Affiliates. Anything in this Section
to the  contrary  notwithstanding,  no  Lender  may  assign or  participate  any
interest in any Loan or LC Exposure  held by it hereunder to the Borrower or any
of its Affiliates or Subsidiaries without the prior consent of each Lender.

9.05 Survival. All covenants, agreements, representations and warranties made by
the Borrower herein and in the  certificates or other  instruments  delivered in
connection  with or pursuant to this Agreement  shall be considered to have been
relied upon by the other  parties  hereto and shall  survive the  execution  and
delivery  of this  Agreement  and the  making of any Loans and  issuance  of any
Letters of Credit,  regardless of any investigation made by any such other party
or on its behalf and notwithstanding that the Administrative  Agent, the Issuing
Lender  or any  Lender  may have had  notice  or  knowledge  of any  Default  or
incorrect  representation  or  warranty  at the  time  any  credit  is  extended
hereunder,  and shall continue in full force and effect as long as the principal
of or any accrued  interest on any Loan or any fee or any other  amount  payable
under  this  Agreement  is  outstanding  and  unpaid or any  Letter of Credit is
outstanding and so long as the Commitments  have not expired or terminated.  The
provisions of Sections 2.12,  2.13, 2.14 and 9.03 and Article VIII shall survive
and  remain in full  force and  effect  regardless  of the  consummation  of the
transactions  contemplated hereby, the repayment of the Loans, the expiration or
termination of the Letters of Credit and the  Commitments or the  termination of
this Agreement or any provision hereof.

9.06 Counterparts; Integration; Effectiveness. This Agreement may be executed in
counterparts (and by different parties hereto on different  counterparts),  each
of which shall  constitute  an  original,  but all of which when taken  together
shall  constitute a single  contract.  This  Agreement  and any separate  letter
agreements with respect to fees payable to the  Administrative  Agent constitute
the entire contract between and among the parties relating to the subject matter
hereof and supersede any and all previous agreements and understandings, oral or
written,  relating to the subject matter  hereof.  Except as provided in Section
4.01, this Agreement shall become  effective when it shall have been executed by
the Administrative  Agent and when the Administrative  Agent shall have received
counterparts  hereof which, when taken together,  bear the signatures of each of
the other parties hereto,  and thereafter shall be binding upon and inure to the
benefit of the  parties  hereto and their  respective  successors  and  assigns.
Delivery of an executed  counterpart  of a signature  page to this  Agreement by
telecopy  shall be effective as delivery of a manually  executed  counterpart of
this Agreement.

                                                                              64

<PAGE>


9.07 Severability.  Any provision of this Agreement held to be invalid,  illegal
or  unenforceable  in  any  jurisdiction  shall,  as to  such  jurisdiction,  be
ineffective  to the extent of such  invalidity,  illegality or  unenforceability
without  affecting the validity,  legality and  enforceability  of the remaining
provisions hereof; and the invalidity of a particular  provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.

9.08  Right of  Setoff.  If an Event  of  Default  shall  have  occurred  and be
continuing,  subject to the  provisions  of Section  2.15 each  Lender is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all  deposits  (general  or  special,  time or
demand,  provisional  or final) at any time held and other  indebtedness  at any
time owing by such  Lender to or for the credit or the  account of the  Borrower
against any of and all the obligations of the Borrower now or hereafter existing
under this  Agreement held by such Lender,  irrespective  of whether or not such
Lender  shall  have made any demand  under  this  Agreement  and  although  such
obligations  may be unmatured.  The rights of each Lender under this Section are
in addition to other  rights and  remedies  (including  other  rights of setoff)
which such Lender may have.

9.09 Governing Law; Jurisdiction: Etc.

      (a) Governing  Law. This Agreement  shall be construed in accordance  with
and  governed  by the  law of the  State  of New  York,  without  regard  to its
principles of conflicts of laws.

      (b)  Submission  to  Jurisdiction.  The Borrower  hereby  irrevocably  and
unconditionally  submits,  for  itself  and its  property,  to the  nonexclusive
jurisdiction  of the  Supreme  Court of the  State of New York  sitting  in Erie
County and of the United States  District  Court of the Western  District of New
York,  and any  appellate  court from any thereof,  in any action or  proceeding
arising out of or relating to this Agreement,  or for recognition or enforcement
of any  judgment,  and  each  of  the  parties  hereto  hereby  irrevocably  and
unconditionally  agrees  that  all  claims  in  respect  of any such  action  or
proceeding  may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court.  Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other  jurisdictions  by suit on the judgment or in any other manner
provided  by law.  Nothing  in this  Agreement  shall  affect any right that the
Administrative  Agent,  the Issuing  Lender or any Lender may otherwise  have to
bring any action or proceeding  relating to this Agreement  against the Borrower
or its properties in the courts of any jurisdiction.

      (c) Waiver of Venue. The Borrower hereby  irrevocably and  unconditionally
waives,  to the  fullest  extent  it may  legally  and  effectively  do so,  any
objection which it may now or hereafter have to the laying of venue of any suit,
action or proceeding  arising out of or relating to this  Agreement in any court
referred to in paragraph (b) of this Section.  Each of the parties hereto hereby
irrevocably  waives,  to the fullest extent  permitted by law, the defense of an
inconvenient  forum to the  maintenance of such action or proceeding in any such
court.

      (d) Service of Process.  Each party to this Agreement irrevocably consents
to  service  of process in the  manner  provided  for  notices in Section  9.01.
Nothing in this  Agreement  will affect the right of any party to this Agreement
to serve process in any other manner permitted by law.

                                                                              65

<PAGE>


9.10 WAIVER OF JURY  TRIAL.  EACH PARTY  HERETO  HEREBY  WAIVES,  TO THE FULLEST
EXTENT  PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
ANY LEGAL PROCEEDING  DIRECTLY OR INDIRECTLY  ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE  TRANSACTIONS  CONTEMPLATED  HEREBY (WHETHER BASED ON CONTRACT,
TORT  OR  ANY  OTHER   THEORY).   EACH  PARTY  HERETO  (A)  CERTIFIES   THAT  NO
REPRESENTATIVE,  AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION,  SEEK
TO  ENFORCE  THE  FOREGOING  WAIVER AND (B)  ACKNOWLEDGES  THAT IT AND THE OTHER
PARTIES  HERETO HAVE BEEN INDUCED TO ENTER INTO THIS  AGREEMENT  BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

9.11  Headings.  Article and  Section  headings  and the Table of Contents  used
herein are for convenience of reference only, are not part of this Agreement and
shall  not  affect  the  construction  of,  or be taken  into  consideration  in
interpreting, this Agreement.

9.12 Treatment of Certain Information: Confidentiality.

      (a) Treatment of Certain Information.  The Borrower acknowledges that from
time to time financial  advisory,  investment  banking and other services may be
offered or  provided  to the  Borrower  or one or more of its  Subsidiaries  (in
connection  with this  Agreement or  otherwise)  by any Lender or by one or more
subsidiaries  or  affiliates of such Lender and the Borrower  hereby  authorizes
each Lender to share any  information  delivered  to such Lender by the Borrower
and its  Subsidiaries  pursuant to this  Agreement,  or in  connection  with the
decision of such Lender to enter into this Agreement,  to any such subsidiary or
affiliate,  it being understood that any such subsidiary or affiliate  receiving
such  information  shall be bound by the  provisions  of  paragraph  (b) of this
Section as if it were a Lender hereunder.  Such authorization  shall survive the
repayment of the Loans,  the  expiration or termination of the Letters of Credit
and the  Commitments  or the  termination  of this  Agreement  or any  provision
hereof.

      (b) Confidentiality.  Each of the Administrative Agent, the Issuing Lender
and the Lenders agrees to maintain the  confidentiality  of the  Information (as
defined  below),  except that  Information  may be disclosed  (i) to its and its
Affiliates' directors,  officers,  employees and agents,  including accountants,
legal counsel and other advisors (it being  understood  that the Persons to whom
such  disclosure  is made will be  informed of the  confidential  nature of such
Information and instructed to keep such Information  confidential),  (ii) to the
extent  requested by any regulatory  authority,  (iii) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (iv)
to any other party to this Agreement, (v) in connection with the exercise of any
remedies  hereunder  or under any other  Loan  Document  or any suit,  action or
proceeding  relating  to  this  Agreement  or any  other  Loan  Document  or the
enforcement  of rights  hereunder  or  thereunder,  (vi) subject to an agreement
containing provisions  substantially the same as those of this paragraph, to any
assignee of or Participant in, or any prospective assignee of or Participant in,
any of its rights or obligations under this Agreement, (vii) with the consent of
the  Borrower or (viii) to the extent  such  Information  (A)  becomes  publicly
available  other than as a result of a breach of this  paragraph  or (B) becomes

                                                                              66

<PAGE>


available to the  Administrative  Agent,  the Issuing  Lender or any Lender on a
nonconfidential basis from a source other than the Borrower. For the purposes of
this paragraph,  "Information" means all information  received from the Borrower
relating to the Borrower or its business,  other than any such  information that
is available to the Administrative  Agent, the Issuing Lender or any Lender on a
nonconfidential basis prior to disclosure by the Borrower; provided that, in the
case of  information  received  from the Borrower  after the date  hereof,  such
information is clearly  identified at the time of delivery as confidential.  Any
Person  required to maintain the  confidentiality  of Information as provided in
this Section shall be  considered to have complied with its  obligation to do so
if  such  Person  has  exercised  the  same  degree  of  care  to  maintain  the
confidentiality  of such  Information  as such  Person  would  accord to its own
confidential information

9.13 USA Patriot Act. Each Lender subject to the USA Patriot Act hereby notifies
the Borrower  that  pursuant to the  requirements  of the USA Patriot Act, it is
required to obtain,  verify and record information that identifies the Borrower,
which  information  includes  the name and  address  of the  Borrower  and other
information  that will allow such Lender to identify the Borrower in  accordance
with the USA Patriot Act.


                                                                              67

<PAGE>


      IN WITNESS  WHEREOF,  the parties  hereto have caused this Agreement to be
duly  executed by their  respective  authorized  officers as of the day and year
first above written.

GREATBATCH LTD.


By: /s/ Lawrence P. Reinhold
    ---------------------------------
Name: Lawrence P. Reinhold
Title: Treasurer


LENDERS
-------

MANUFACTURERS  AND  TRADERS  TRUST  COMPANY,  as  Administrative  Agent and Lead
Arranger


By: /s/ Michael J. Prendergast
    ---------------------------------

Name: Michael J. Prendergast
Title: Vice President


MANUFACTURERS AND TRADERS TRUST COMPANY,  for itself and as Swingline Lender and
as Issuing Lender


By: /s/ Michael J. Prendergast
    ---------------------------------

Name: Michael J. Prendergast
Title: Vice President


KEYBANK NATIONAL ASSOCIATION


By: /s/ Mark F. Wachowiak
    ---------------------------------
Name: Mark F. Wachowiak
Title: Vice President


HSBC BANK USA, NATIONAL ASSOCIATION


By: /s/ John G. Tierney
    ---------------------------------

Name: John G. Tierney
Title: Vice President


                                                                              68

<PAGE>


BANK OF AMERICA, N.A.

By: /s/ Kenneth Burton
    ---------------------------------

Name: Kenneth Burton
Title: Vice President


FIRST NIAGARA FUNDING, INC.


By: /s/ Jerome J. Jacobi
    ---------------------------------
Name: Jerome J. Jacobi
Title: Vice President

                                                                              69