<PAGE>

                                   CREDIT AGREEMENT
                                           
                                           
                                       BETWEEN
                                           
                                           
                              PHYSIO-CONTROL CORPORATION
                                           
                                           
                                         AND
                                           
                                           
                BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
                                           
                                           
                                       AS AGENT
                                           
                                           
                                         AND
                                           
                                           
                BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
                                           
                                           
                                         AND
                                           
                                           
                                  MELLON BANK, N.A.
                                           
                                           
                                       AS BANKS
                                           
                                           
                                  DATED JUNE 3, 1997

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                                  TABLE OF CONTENTS

            ARTICLE 1
            DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . .  1
    1.1  ADJUSTED LIBOR RATE . . . . . . . . . . . . . . . . . . . . . . . .  1
    1.2  ADVANCES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1
    1.3  AGENT'S RELATED PARTIES . . . . . . . . . . . . . . . . . . . . . .  1
    1.4  ASSESSMENT RATE . . . . . . . . . . . . . . . . . . . . . . . . . .  1
    1.5  AVAILABLE AMOUNT. . . . . . . . . . . . . . . . . . . . . . . . . .  2
    1.6  BASE RATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  2
    1.7  BASE RATE ADVANCES. . . . . . . . . . . . . . . . . . . . . . . . .  2
    1.8  BASE RATE MARGIN. . . . . . . . . . . . . . . . . . . . . . . . . .  2
    1.9  BUSINESS DAY. . . . . . . . . . . . . . . . . . . . . . . . . . . .  2
    1.10 COLLATERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . .  2
    1.11 COMMENCEMENT DATE . . . . . . . . . . . . . . . . . . . . . . . . .  2
    1.12 CREDIT LIMIT. . . . . . . . . . . . . . . . . . . . . . . . . . . .  2
    1.13 DEBT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  2
    1.14 DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  2
    1.15 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  2
    1.16 EXCHANGE RATE . . . . . . . . . . . . . . . . . . . . . . . . . . .  2
    1.17 FED FUNDS RATE. . . . . . . . . . . . . . . . . . . . . . . . . . .  2
    1.18 FEE MARGIN. . . . . . . . . . . . . . . . . . . . . . . . . . . . .  3
    1.19 FIXED CHARGE COVERAGE RATIO . . . . . . . . . . . . . . . . . . . .  3
    1.20 FIXED RATE MARGIN . . . . . . . . . . . . . . . . . . . . . . . . .  3
    1.21 GUARANTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  3
    1.22 HAZARDOUS SUBSTANCES. . . . . . . . . . . . . . . . . . . . . . . .  3
    1.23 INTEREST PAYMENT DATES. . . . . . . . . . . . . . . . . . . . . . .  3
    1.24 INTEREST PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . .  3
    1.25 ISSUANCE FEE. . . . . . . . . . . . . . . . . . . . . . . . . . . .  3
    1.26 L/C AGREEMENT(S). . . . . . . . . . . . . . . . . . . . . . . . . .  3
    1.27 LETTER(S) OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . .  3
    1.28 LIBOR RATE. . . . . . . . . . . . . . . . . . . . . . . . . . . . .  3
    1.29 LIBOR RATE ADVANCES . . . . . . . . . . . . . . . . . . . . . . . .  4
    1.30 LOAN DOCUMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . .  4
    1.31 LONDON BANKING DAY. . . . . . . . . . . . . . . . . . . . . . . . .  4
    1.32 MAJORITY BANKS. . . . . . . . . . . . . . . . . . . . . . . . . . .  4
    1.33 MARGIN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  4
    1.34 MATERIAL SUBSIDIARY . . . . . . . . . . . . . . . . . . . . . . . .  4
    1.35 MULTICURRENCY ADVANCES. . . . . . . . . . . . . . . . . . . . . . .  4
    1.36 MULTICURRENCY RATE. . . . . . . . . . . . . . . . . . . . . . . . .  4
    1.37 OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . .  5
    1.38 PERSON. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  5
    1.39 PLAN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  5
    1.40 PRO RATA SHARE(S) . . . . . . . . . . . . . . . . . . . . . . . . .  5
    1.41 QUOTED RATE . . . . . . . . . . . . . . . . . . . . . . . . . . . .  5
    1.42 REAL PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . .  5
    1.43 REFERENCE RATE. . . . . . . . . . . . . . . . . . . . . . . . . . .  5
    1.44 RESERVE ADJUSTMENT. . . . . . . . . . . . . . . . . . . . . . . . .  5
    1.45 REVOLVING LOAN. . . . . . . . . . . . . . . . . . . . . . . . . . .  6
    1.46 SUBORDINATED DEBT . . . . . . . . . . . . . . . . . . . . . . . . .  6
    1.47 SWING LINE. . . . . . . . . . . . . . . . . . . . . . . . . . . . .  6
    1.48 SWING LINE ADVANCES . . . . . . . . . . . . . . . . . . . . . . . .  6
    1.49 TANGIBLE NET WORTH. . . . . . . . . . . . . . . . . . . . . . . . .  6
    1.50 TERMINATION DATE. . . . . . . . . . . . . . . . . . . . . . . . . .  6

               ARTICLE 2
            REVOLVING LOAN . . . . . . . . . . . . . . . . . . . . . . . . .  6
    2.1  REVOLVING LOAN FACILITY . . . . . . . . . . . . . . . . . . . . . .  6
    2.2  PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  6
    2.3  PROCEDURE FOR BASE RATE ADVANCES. . . . . . . . . . . . . . . . . .  7
    2.4  PROCEDURE FOR LIBOR RATE ADVANCES . . . . . . . . . . . . . . . . .  7

    2.5  PROCEDURE FOR MULTICURRENCY ADVANCES. . . . . . . . . . . . . . . .  7
    2.6  BANK FUNDING. . . . . . . . . . . . . . . . . . . . . . . . . . . .  8
    2.7  COMMITMENT FEES . . . . . . . . . . . . . . . . . . . . . . . . . .  8

                ARTICLE 3
            LETTERS OF CREDIT. . . . . . . . . . . . . . . . . . . . . . . .  8
    3.1  ISSUANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  8
    3.2  FEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  8
    3.3  YIELD INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . .  9

            ARTICLE 4
            SWING LINE . . . . . . . . . . . . . . . . . . . . . . . . . . .  9
    4.1  DESCRIPTION OF FACILITY . . . . . . . . . . . . . . . . . . . . . .  9
    4.2  PROCEDURE FOR SWING LINE ADVANCES . . . . . . . . . . . . . . . . .  9

                ARTICLE 5
            RISK PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . .  9

                 ARTICLE 6
            COLLATERAL SECURITY. . . . . . . . . . . . . . . . . . . . . . . 10
    6.1  COLLATERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
    6.2  COLLATERAL AGENT. . . . . . . . . . . . . . . . . . . . . . . . . . 10
    6.3  FINANCING STATEMENTS AND OTHER DOCUMENTS. . . . . . . . . . . . . . 10
    6.4  COSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
    6.5  AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT . . . . . . . . . . . . . . 10
    6.6  NEGATIVE PLEDGE . . . . . . . . . . . . . . . . . . . . . . . . . . 10

            ARTICLE 7
            GUARANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

                  ARTICLE 8
            INTEREST RATE OPTIONS. . . . . . . . . . . . . . . . . . . . . . 11
    8.1  INTEREST RATES AND PAYMENT DATE . . . . . . . . . . . . . . . . . . 11
    8.2  OPTION RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . 11
    8.3  PREPAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
    8.4  REVERSION TO BASE RATE. . . . . . . . . . . . . . . . . . . . . . . 11
    8.5  INABILITY TO PARTICIPATE IN MARKET. . . . . . . . . . . . . . . . . 11
    8.6  COSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
    8.7  BASIS OF QUOTES . . . . . . . . . . . . . . . . . . . . . . . . . . 12

                  ARTICLE 9
            CONDITIONS OF LENDING. . . . . . . . . . . . . . . . . . . . . . 12
    9.1  AUTHORIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
    9.2  DOCUMENTATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
    9.3  REFINANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
    9.4  LEGAL OPINION . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
    9.5  GUARANTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
    9.6  PROOF OF INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . 12
    9.7  REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . 12
    9.8  MATERIAL ADVERSE CHANGE . . . . . . . . . . . . . . . . . . . . . . 12
    9.9  COMPLIANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

                                             -i-

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                     ARTICLE 10
            REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . 13
    10.1  EXISTENCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
    10.2  ENFORCEABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . 13
    10.3  NO LEGAL BAR . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
    10.4  LIENS AND ENCUMBRANCES . . . . . . . . . . . . . . . . . . . . . . 13
    10.5  LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
    10.6  PAYMENT OF TAXES . . . . . . . . . . . . . . . . . . . . . . . . . 13
    10.7  EMPLOYEE BENEFIT PLAN. . . . . . . . . . . . . . . . . . . . . . . 13
    10.8  MISREPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . . . . 13
    10.9  NO DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
    10.10 NO BURDENSOME RESTRICTIONS . . . . . . . . . . . . . . . . . . . . 14
    10.11 HAZARDOUS SUBSTANCES . . . . . . . . . . . . . . . . . . . . . . . 14
    10.12 MATERIAL SUBSIDIARIES. . . . . . . . . . . . . . . . . . . . . . . 14
    10.13 MARGIN STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
    10.14 MATERIAL ADVERSE CHANGE. . . . . . . . . . . . . . . . . . . . . . 14

                 ARTICLE 11
            AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . 14
    11.1  USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . 14
    11.2  FIXED CHARGE COVERAGE RATIO. . . . . . . . . . . . . . . . . . . . 14
    11.3  TANGIBLE NET WORTH . . . . . . . . . . . . . . . . . . . . . . . . 14
    11.4  DEBT RATIO . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
    11.5  FINANCIAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . 15
    11.6  MAINTENANCE OF EXISTENCE . . . . . . . . . . . . . . . . . . . . . 15
    11.7  BOOKS AND RECORDS. . . . . . . . . . . . . . . . . . . . . . . . . 16
    11.8  ACCESS TO PREMISES AND RECORDS . . . . . . . . . . . . . . . . . . 16
    11.9  NOTICE OF EVENTS . . . . . . . . . . . . . . . . . . . . . . . . . 16
    11.10 PAYMENT OF DEBTS AND TAXES . . . . . . . . . . . . . . . . . . . . 16
    11.11 FDA CONSENT DECREE . . . . . . . . . . . . . . . . . . . . . . . . 16
    11.12 INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
    11.13 HAZARDOUS SUBSTANCES . . . . . . . . . . . . . . . . . . . . . . . 17
    11.14 COMPLIANCE WITH LAWS . . . . . . . . . . . . . . . . . . . . . . . 17

                ARTICLE 12
            NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . 17
    12.1  DEBT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
    12.2  LIENS AND ENCUMBRANCES . . . . . . . . . . . . . . . . . . . . . . 18
    12.3  DISPOSITION OF ASSETS. . . . . . . . . . . . . . . . . . . . . . . 18
    12.4  MERGERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
    12.5  CAPITAL STRUCTURE. . . . . . . . . . . . . . . . . . . . . . . . . 18
    12.6  WAGE AND HOUR LAWS . . . . . . . . . . . . . . . . . . . . . . . . 18
    12.7  ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
    12.8  DISSOLUTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
    12.9  BUSINESS ACTIVITIES. . . . . . . . . . . . . . . . . . . . . . . . 18
    12.10 DIVIDENDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
    12.11 PERMISSIBLE LOANS AND INVESTMENTS. . . . . . . . . . . . . . . . . 19

           ARTICLE 13
            AGENCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
    13.1  APPOINTMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
    13.2  SUCCESSOR AGENT. . . . . . . . . . . . . . . . . . . . . . . . . . 19
    13.3  DUTIES OF AGENT. . . . . . . . . . . . . . . . . . . . . . . . . . 19
    13.4  DELEGATION OF DUTIES . . . . . . . . . . . . . . . . . . . . . . . 20
    13.5  EXCULPATORY PROVISIONS . . . . . . . . . . . . . . . . . . . . . . 20
    13.6  RELIANCE BY AGENT. . . . . . . . . . . . . . . . . . . . . . . . . 20
    13.7  INSTRUCTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
    13.8  NOTICE OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . 20
    13.9  REPRESENTATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 21
    13.10 INDEPENDENT CREDIT REVIEW. . . . . . . . . . . . . . . . . . . . . 21
    13.11 INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
    13.12 INDEMNITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
    13.13 SEPARATION OF CAPACITIES . . . . . . . . . . . . . . . . . . . . . 21


                      ARTICLE 14
            EVENTS AND CONSEQUENCES OF DEFAULT . . . . . . . . . . . . . . . 22
    14.1  EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . 22
    14.2  REMEDIES UPON DEFAULT. . . . . . . . . . . . . . . . . . . . . . . 23
    14.3  DEFAULT INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . 24

              ARTICLE 15
            MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . 24
    15.1  MANNER OF PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . 24
    15.2  NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
    15.3  DOCUMENTATION AND ADMINISTRATION EXPENSES. . . . . . . . . . . . . 25
    15.4  COLLECTION EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . 26
    15.5  WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
    15.6  ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
    15.7  MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
    15.8  AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
    15.9  CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
    15.10 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 27


EXHIBITS:

Exhibit 1 -- Prepayment Fee Exhibit
Exhibit 2 -- Borrowing Notice
Exhibit 3 -- Form of Participation Certificate
Exhibit 4 -- Form of Guarantor CFO Certificate
Exhibit 5 -- Form of Subsidiary's Certificate
Schedule 10.5 - List of Pending Litigation
Schedule 10.12 - List of Material Subsidiaries
Schedule 12.1(b) - Disclosure List of Existing Debt
Schedule 12.2(a) - Disclosure List of Existing Liens

                                                -ii-



<PAGE>

                                   CREDIT AGREEMENT


    THIS CREDIT AGREEMENT ("Agreement") is made between Physio-Control 
Corporation, a Delaware corporation ("Borrower"), and Bank of America 
National Trust and Savings Association, doing business as Seafirst Bank, a 
national banking association, as agent ("Agent"), and the following financial 
institutions that are individually called a "Bank" and collectively called 
the "Banks," including their respective successors and/or assigns: Bank of 
America National Trust and Savings Association, doing business as Seafirst 
Bank (in its capacity as a Bank, "Seafirst"), and Mellon Bank, N.A. 
("Mellon").  For mutual consideration, the parties agree as follows:

                                      ARTICLE 1
                                     DEFINITIONS

    All terms defined below shall have the meaning indicated.  All references 
in this Agreement to:

         (a)  "dollars" or "$" shall mean U.S. dollars;

         (b)  "Article," "Section," or "Subsection" shall mean articles,
    sections, and subsections of this Agreement, unless otherwise indicated;

         (c)  all interest and fees payable on a per annum basis with regard to
    this Agreement shall be calculated on the basis of the actual number of
    days elapsed over a year of 360 days, unless otherwise specified;

         (d)  terms defined in the Washington version of the Uniform Commercial
    Code, R.C.W. Section 62A.9-101, ET SEQ. ("UCC"), and not otherwise defined
    in this Agreement, shall have the meaning given in the UCC; and

         (e)  an accounting term not otherwise defined in this Agreement shall
    have the meaning assigned to it under GAAP.

    1.1  ADJUSTED LIBOR RATE shall mean for any day that per annum rate equal 
to the sum of (a) the Fixed Rate Margin, (b) the Assessment Rate, and (c) the 
quotient of (i) the LIBOR Rate as determined for such day, divided by (ii) 
the Reserve Adjustment.  The Adjusted LIBOR Rate shall change with any change 
in the LIBOR Rate on the first day of each Interest Period and on the 
effective date of any change in the Assessment Rate or Reserve Adjustment.

    1.2  ADVANCES shall mean Base Rate Advances, LIBOR Rate Advances, Swing 
Line Advances, and Multicurrency Advances.  No Advance shall constitute a 
"payment order" under R.C.W. Section 62A.4A-103.

    1.3  AGENT'S RELATED PARTIES shall mean Agent, its affiliates, and all 
officers, directors and employees of Agent and such affiliates.

    1.4  ASSESSMENT RATE shall mean as of any day the minimum annual 
percentage rate established by the Federal Deposit Insurance Corporation (or 
any successor) for the assessment due from members of the Bank Insurance Fund 
(or any successor) in effect for the assessment period during which said day 
occurs based on deposits maintained at such members' offices located outside 
of the United States.  In the event of a retroactive reduction in the 
Assessment Rate after a commencement of any Interest Period, Agent shall not 
retroactively adjust as to such Interest Period any interest rate calculated 
using the Assessment Rate.

                                     -1-

<PAGE>

    1.5  AVAILABLE AMOUNT shall mean at any time the amount of the Credit 
Limit, minus the unpaid principal balance of the Revolving Loan, minus the 
aggregate outstanding principal amount of all Letters of Credit, minus the 
sum of the U.S. dollar equivalent of the outstanding balance of all 
Multicurrency Advances, based on the Exchange Rate for each such Advance.

    1.6  BASE RATE shall mean (a) the greater of the Reference Rate or the 
Fed Funds Rate, plus (b) the Base Rate Margin.

    1.7  BASE RATE ADVANCES shall mean those portions of principal of the 
Revolving Loan accruing interest at the Base Rate.

    1.8  BASE RATE MARGIN shall have the meaning given in Section 1.33.

    1.9  BUSINESS DAY shall mean any day other than a Saturday, Sunday, or 
other day on which commercial banks in Seattle, Washington, or Pittsburgh, 
Pennsylvania, are authorized or required by law to close.

    1.10 COLLATERAL shall have the meaning given in Section 6.1.

    1.11 COMMENCEMENT DATE shall mean the first day of any Interest Period as 
requested by Borrower.

    1.12 CREDIT LIMIT shall mean $25,000,000.

    1.13 DEBT shall mean all consolidated obligations, on a GAAP basis, 
included in the liability section of a balance sheet of Guarantor, together 
with, regardless of whether such items would otherwise not be shown on the 
liability side of a balance sheet:

         (a)  all obligations guaranteed or assumed by Guarantor or any
    subsidiary, directly or indirectly in any manner, or endorsed (other than
    for collection and deposit in the ordinary course of business) or
    discounted by Guarantor or any subsidiary with recourse, including all
    indebtedness guaranteed by Guarantor or any subsidiary through any
    agreement, contingent or otherwise;

         (b)  all obligations for the payment of money or other property
    pursuant to capital leases under which Guarantor or any of its subsidiaries
    is leasing real or personal property; and

         (c)  all obligations of any partnership or joint venture of which
    Guarantor or any of its subsidiaries is a member, if Guarantor or any such
    subsidiary is legally liable for such obligations.

    1.14 DEFAULT shall have the meaning given in Section 14.1.

    1.15 ERISA shall mean the Employee Retirement Income Security Act of 
1974, as amended.

    1.16 EXCHANGE RATE shall mean the rate of exchange actually obtained by 
Agent for a given currency in funding a Multicurrency Advance in such 
currency.

    1.17 FED FUNDS RATE shall mean, for any period, a fluctuating interest 
rate per annum equal for each day during such period to (a) the weighted 
average of the rates on overnight federal funds transactions with members of 
the Federal Reserve System arranged by federal funds brokers, as published 
for such day (or, if such day is not a Business Day, for the next preceding 
Business Day) by the Federal Reserve Bank of San Francisco or, if such rate 
is not so published for any day which is a Business Day, the average of the 
quotations for such day on transactions received by Agent from three federal 
funds brokers of recognized standing selected by Agent; plus (b) 0.5%.

                                   -2-

<PAGE>

    1.18 FEE MARGIN shall have the meaning given in Section 1.33.

    1.19 FIXED CHARGE COVERAGE RATIO shall mean, as to Guarantor on a 
consolidated basis, the ratio of:

         (a)  earnings before interest expense, taxes, depreciation, and
    amortization, minus capital expenditures (excluding, through fiscal quarter
    ending September 30, 1997, $4,900,000 in capital expenditures consisting of
    soft costs of a major computer system upgrade carried out in 1996); to

         (b)  (i) interest expense, plus (ii) the current portion of long-term
    Debt (excluding the Obligations), plus (iii) 20% of the outstanding
    principal amount of all Obligations.

    1.20 FIXED RATE MARGIN shall have the meaning given in Section 1.33.

    1.21 GUARANTOR shall mean Physio-Control International Corporation, a 
Washington corporation.

    1.22 HAZARDOUS SUBSTANCES shall mean any substance or material defined or 
designated as hazardous or toxic wastes, a hazardous or toxic material, a 
hazardous, toxic, or radioactive substance, or other similar term by any 
applicable federal, state, or local statute, regulation, or ordinance now or 
hereafter in effect.

    1.23 INTEREST PAYMENT DATES shall mean (a) for Multicurrency Advances, 
the last day of its Interest Period; (b) for Base Rate Advances, the last 
Business Day of each month; (c) for LIBOR Rate Advances, the last day of each 
Interest Period (PROVIDED, that if the Interest Period is longer than three 
months, the end of the third month of the Interest Period shall also be an 
Interest Payment Date); and (d) in each case, upon maturity, including upon 
maturity by acceleration.

    1.24 INTEREST PERIOD shall mean the period commencing on the date of any 
Advance, or Multicurrency Advance, or of any conversion to an Adjusted LIBOR 
Rate and ending on any date thereafter as selected by Borrower.  Interest 
Periods for Multicurrency Advances may be one week or one, two, three, or six 
months, and Interest Periods for LIBOR Rate Advances shall be subject to the 
restrictions of Section 8.2. If any Interest Period would end on a day which 
is not a Business Day, the Interest Period shall be extended to the next 
succeeding Business Day, unless the next succeeding Business Day falls in the 
next month, in which case the Interest Period shall be shortened to the 
preceding Business Day.

    1.25 ISSUANCE FEE shall have the meaning assigned to it in Section 3.2.

    1.26 L/C AGREEMENT(S) shall have the meaning assigned to it in Article 3.

    1.27 LETTER(S) OF CREDIT shall have the meaning assigned to it in Article 
3.

    1.28 LIBOR RATE shall mean for any Interest Period that per annum rate 
equal to the arithmetic mean (rounded to the nearest hundred-thousandth of a 
percentage point) of the offered rates for U.S. Dollar deposits for a period 
equal to the Interest Period appearing on the display designated as page 
"LIBO" on the Reuters Monitor Money Rates Service (or such other page on such 
service as may replace said page or, if none, on such other available service 
which displays two or more London interbank offered rates of major banks for 
U.S. Dollar deposits) as of 11:00 a.m., London time, on the day which is two 
London Banking Days prior to the first day of the Interest Period.  If there 
is no period equal to the Interest Period on the display, the LIBOR Rate 
shall be determined by straight-line interpolation to the nearest month (or 
week or day if expressed in weeks or days) corresponding to the Interest 
Period between the two nearest neighboring periods on the display.

                                 -3-

<PAGE>

    1.29 LIBOR RATE ADVANCES shall mean those portions of principal of the 
Revolving Loan accruing interest at the Adjusted LIBOR Rate.

    1.30 LOAN DOCUMENTS shall mean collectively this Agreement, the L/C 
Agreements, each guaranty of the Obligations, and all other security 
agreements, documents, instruments, and other agreements now or later 
executed in connection with this Agreement.

    1.31 LONDON BANKING DAY shall mean any Business Day other than a day on 
which commercial banks in London, England, are authorized or required by law 
to close.

    1.32 MAJORITY BANKS shall mean Banks holding 67% of the Pro Rata Shares.

    1.33 MARGIN shall mean (a) as to Base Rate Advances the "Base Rate 
Margin" as determined by the following chart; (b) as to LIBOR Rate Advances, 
Swing Line Advances, Multicurrency Advances, and the calculation of Letter of 
Credit Issuance Fees, the "Fixed Rate Margin" as determined by the following 
chart; and (c) as to the calculation of the commitment fee under Section 2.7, 
the "Fee Margin" as determined by the following chart:

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
      Fixed Charge           Base Rate Margin     Fixed Rate Margin   Fee Margin
    Coverage Ratio*
--------------------------------------------------------------------------------
GREATER THAN 
OR EQUAL TO   2.75 to 1            -0-                  0.50%           0.125%
--------------------------------------------------------------------------------
GREATER THAN 
OR EQUAL TO   2.50 to 1            -0-                  0.625%          0.125%
--------------------------------------------------------------------------------
GREATER THAN 
OR EQUAL TO   2.25 to 1            -0-                  0.75%           0.125%
--------------------------------------------------------------------------------
GREATER THAN 
OR EQUAL TO   2.00 to 1            -0-                  1.0%            0.125%
--------------------------------------------------------------------------------
GREATER THAN 
OR EQUAL TO   1.75 to 1            -0-                  2.00%           0.25%
--------------------------------------------------------------------------------
LESS THAN     1.75 to 1           2.0%                  3.00%           0.50%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

* AS DETERMINED BASED ON THE MOST RECENTLY DELIVERED QUARTERLY CONSOLIDATED 
FINANCIAL STATEMENT OF GUARANTOR.

Upon receipt of a quarterly financial statement showing a decrease or 
increase in Fixed Charge Coverage Ratio which places Borrower in a new 
pricing category, all Advances, commitment fees, and Letter of Credit 
issuance fees shall begin being calculated at the higher or lower margin, as 
the case may be, for the period beginning on the date 30 days after the end 
of the quarter reported on in such statement.

    1.34 MATERIAL SUBSIDIARY shall mean Physio-Control Manufacturing 
Corporation, and each other direct or indirect subsidiary of Guarantor which 
has assets in excess of 10% of Guarantor's total consolidated assets, or 
annual net income in excess of 10% of Guarantor's consolidated annual net 
income.

    1.35 MULTICURRENCY ADVANCES shall have the meaning given in Subsection 
2.5.

    1.36 MULTICURRENCY RATE shall mean for each Multicurrency Advance (i) the 
per annum rate for the currency advanced, calculated on the basis of actual 
number of days elapsed over a year of 365/366 days as to Canadian Dollars and 
British Pounds Sterling, and on the basis of actual number of days elapsed 
over a year of 360 days as to all other currencies, determined by Agent to be 
the applicable borrowing rate for such currency in an amount and for the 
Interest Period of the Multicurrency Advance requested, as determined between 
6:30 a.m. and 7:00 a.m., Seattle time, on the day which is (a) two Business 
Days prior to the date of such Advance as to all currencies other 

                                -4-

<PAGE>

than Canadian Dollars, and (b) one Business Day prior to the date of such 
Advance as to Canadian Dollars; which rate shall be a rate within 0.125% of 
the index rate appearing on the display designated as "Page 3740" and "Page 
3750" on the Telerate Service for such currency between 6:30 a.m. and 7:00 
a.m., Seattle time, on the same date; plus (ii) the Fixed Rate Margin.

    1.37 OBLIGATIONS shall mean Borrower's obligation to repay all Advances, 
with interest, the L/C Agreements, Borrower's obligation to reimburse Banks 
for all amounts drawn under the Letters of Credit, and all fees, costs, 
expenses, and indemnifications due to Agent and/or Banks under this Agreement.

    1.38 PERSON shall mean any individual, partnership, corporation, business 
trust, unincorporated organization, joint venture, or any governmental 
entity, department, agency, or political subdivision.

    1.39 PLAN shall mean any employee benefit plan or other plan maintained 
for Borrower's employees and covered by Title IV of ERISA, excluding any plan 
created or operated by or for any labor union.

    1.40 PRO RATA SHARE(S) shall mean 50% as to Seafirst and 50% as to 
Mellon; or if any assignments are made by a Bank pursuant to Section 15.6, 
then such different percentages resulting from any such assignment; PROVIDED 
that, (1) after the occurrence and during the continuance of a Default, and 
(2) with regard to Sections 1.32, 6.2, 13.7, 13.12, and 14.2:

-   Mellon's Pro Rata Share shall be the percentage arrived at by dividing:

         (a)  the sum of (i) 50% of the sum of all outstanding Base Rate
    Advances, LIBOR Rate Advances, and Multicurrency Advances (based on U.S.
    Dollar equivalent determined as of the date of Advance) plus (ii) 50% of
    the sum of the combined face amount of all outstanding Letters of Credit
    plus the aggregate of all unreimbursed Letter of Credit draws, to

         (b)  the combined outstanding principal balance of all Obligations
    (including issued but undrawn Letters of Credit); and

-   Seafirst's Pro Rata Share shall be 100% minus Mellon's Pro Rata Share.

    1.41 QUOTED RATE shall mean that per annum fixed rate quoted by Seafirst 
and accepted by Borrower as the applicable rate for a Swing Line Advance 
commencing on the date of advance and continuing until the next Business Day, 
plus an interest rate spread equal to the Fixed Rate Margin.

    1.42 REAL PROPERTY shall mean any real property owned or leased by 
Borrower or any of its subsidiaries ("Subject Property"), or any adjacent 
real property affected by any Hazardous Substances stored or used in, on, 
under, over, or about any such Subject Property.

    1.43 REFERENCE RATE shall mean the rate of interest publicly announced 
from time to time by Agent in San Francisco, California, as its "Reference 
Rate." The Reference Rate is set based on various factors, including Agent's 
costs and desired return, general economic conditions, and other factors, and 
is used as a reference point for pricing some loans.  Agent may price loans 
to its customers at, above, or below the Reference Rate.  Any change in the 
Reference Rate shall take effect at the opening of business on the day 
specified in the public announcement of a change in the Reference Rate.

    1.44 RESERVE ADJUSTMENT shall mean as of any day the remainder of one 
minus that percentage (expressed as a decimal) which is the highest of any 
such percentages established by the Board of Governors of the Federal Reserve 
System (or any successor) for required reserves (including any emergency, 
marginal, or supplemental reserve requirement) regardless of the aggregate 
amount of deposits with said member bank and without benefit of any possible 
credit, proration, exemptions, 

                                  -5-

<PAGE>

or offsets for time deposits established at offices of member banks located 
outside of the United States or for eurocurrency liabilities, if any.

    1.45 REVOLVING LOAN shall have the meaning given in Section 2.1.

    1.46 SUBORDINATED DEBT shall mean consolidated Debt of Guarantor to third 
parties, the repayment of which is subordinated to Banks, in form 
satisfactory to Banks.

    1.47 SWING LINE shall have the meaning given in Section 4.1.

    1.48 SWING LINE ADVANCES shall mean the disbursement of loan proceeds 
under the Swing Line.

    1.49 TANGIBLE NET WORTH shall mean the excess of total consolidated 
assets over total consolidated liabilities, excluding, however, from the 
determination of total assets (a) all assets which should be classified as 
intangible assets (such as goodwill, patents, trademarks, copyrights, 
franchises, and deferred charges, including unamortized debt discount and 
research and development costs), (b) cash held in a sinking or other similar 
fund established for the purpose of redemption or other retirement of capital 
stock, (c) to the extent not already deducted from total assets, reserves for 
depreciation, depletion, obsolescence, or amortization of properties and 
other reserves or appropriations of retained earnings which have been or 
should be established in connection with Guarantor's business, and (d) any 
revaluation or other write-up in book value of assets subsequent to the 
fiscal year of Guarantor last ended at the date Tangible Net Worth is being 
measured.

    1.50 TERMINATION DATE shall mean May 31, 2000, or such earlier date upon 
which the commitments to make Advances, and issue Letters of Credit is 
terminated pursuant to Subsection 14.2(a); PROVIDED, that the Termination 
Date may be extended on May 31, 1998, to May 31, 2001, and on May 31, 1999, 
to May 31, 2002, upon the mutual written consent of Borrower, Agent, and all 
Banks, which any one or more of them may withhold in their sole discretion.

                                      ARTICLE 2
                                    REVOLVING LOAN

    2.1  REVOLVING LOAN FACILITY.  Subject to the terms and conditions of 
this Agreement and to the extent of its Pro Rata Share of the Credit Limit, 
each Bank shall make Advances (other than Swing Line Advances) to Borrower 
from time to time, until the Termination Date ("Revolving Loan"), with the 
aggregate principal amount at any one time outstanding not to exceed the 
Credit Limit less the aggregate outstanding principal amount of all Letters 
of Credit.  Borrower may use the Revolving Loan by borrowing, prepaying and 
reborrowing the amounts available under the Revolving Loan, in whole or in 
part; PROVIDED that Borrower shall fully and finally pay off the Revolving 
Loan on the Termination Date. Each borrowing by Borrower under this Agreement 
shall constitute a representation and warranty by Borrower as of the date of 
each such borrowing that the conditions precedent contained in Sections 9.7 
through 9.9 of this Agreement have been satisfied.

    2.2  PAYMENTS.  Except as set forth below as to Multicurrency Advances, 
Borrower shall repay all Advances, with interest, which shall accrue and be 
paid as provided in Article 8.  All Advances shall be repaid on or before the 
Termination Date.  Each of the Banks shall note on its internal records each 
Advance made by it, each payment of principal and/or interest received by it, 
and any interest rate conversions.  As to Multicurrency Advances:

         (a)  INTEREST.  Each Multicurrency Advance shall bear interest from
    the date of Advance until the end of its respective Interest Period at the
    Multicurrency Rate determined by Agent for such Advance pursuant to Section
    1.35.  All interest accrued on each such Advance shall be due and payable
    in full on each Interest Payment Date applicable to such Advance.

                                      -6-

<PAGE>

         (b)  PRINCIPAL.  Borrower shall repay in full the outstanding
    principal balance of each Multicurrency Advance, in the currency advanced,
    on the last day of its Interest Period.  Such repayment may be effected
    either (i) by making payment to Agent in immediately available funds
    pursuant to Subsection 15.1(b), or (ii) by obtaining, subject to
    satisfaction of all conditions precedent, an Advance, pursuant to the
    procedures of Section 2.5, in the same currency and at least the same
    amount as the maturing Multicurrency Advance (but in any case not to exceed
    the Available Amounts), with instructions to Agent to apply the proceeds of
    such new Advance to the maturing Advance before disbursing the balance (if
    any) to Borrower.  Agent and Banks shall have no liability for, nor bear
    any of the risk of, intra-day fluctuations in foreign exchange rates. 
    Multicurrency Advances may not be prepaid prior to the end of their
    respective Interest Periods.

    2.3  PROCEDURE FOR BASE RATE ADVANCES.  In accordance with all terms and 
conditions of this Agreement, Borrower may borrow at the Base Rate under the 
Revolving Loan on any Business Day.  Borrower shall give Agent irrevocable 
notice (written or oral) specifying the amount to be borrowed on or before 
9:30 a.m., Seattle time, on the day that a Base Rate Advance is requested; 
all Base Rate Advances shall be discretionary to the extent notification by 
Borrower is given subsequent to that time.  Agent shall advise each Bank by 
10:30 a.m., Seattle time, of a request for a Base Rate Advance, and each Bank 
shall make available to Agent its respective Pro Rata Share of such requested 
Base Rate Advance no later than 12:00 noon, Seattle time, on the same day.  
Agent shall make such funds available to Borrower on the same Business Day.  
Whether or not any Bank fails to fund its Pro Rata Share of a Base Rate 
Advance, each Bank shall only be obligated to disburse to Agent such Bank's 
Pro Rata Share of such requested Base Rate Advance.

    2.4  PROCEDURE FOR LIBOR RATE ADVANCES.  In accordance with all terms and 
conditions of this Agreement, Borrower may borrow at the Adjusted LIBOR Rate 
under the Revolving Loan on any Commencement Date.  Borrower shall, on any 
London Banking Day two London Banking Days before such Commencement Date, no 
later than 9:30 a.m., Seattle time, request Agent to give an Adjusted LIBOR 
Rate quote for a specified loan amount and Interest Period.  Agent will then 
quote to Borrower the available Adjusted LIBOR Rate.  Borrower shall have 60 
minutes from the time of the quote to elect an Adjusted LIBOR Rate by giving 
Agent irrevocable notice of such election, of which election Agent will 
promptly notify Banks.  On the Commencement Date, each Bank shall make 
available to Agent its respective Pro Rata Share of such requested LIBOR Rate 
Advance no later than 12:00 noon, Seattle time, on the specified borrowing 
date.  Whether or not any Bank fails to fund its Pro Rata Share of a LIBOR 
Rate Advance, each Bank shall only be obligated to disburse to Agent such 
Bank's Pro Rata Share of such requested LIBOR Rate Advance.  At the time that 
Agent is informed by any Bank of any change in the Assessment Rate or Reserve 
Adjustment, Agent shall notify Borrower of the change and of the impact on 
any LIBOR Rate Advances then outstanding.

    2.5  PROCEDURE FOR MULTICURRENCY ADVANCES.  Borrower may request an 
Advance in British Pounds Sterling, Canadian Dollars, French Francs, German 
Marks, Italian Lire, Dutch Guilders, Swedish Kroner, or Spanish Pesetas (each 
a "Multicurrency Advance"), up to the U.S. Dollar equivalent of the lesser of 
(a) U.S.$5,000,000, or (b) the Available Amounts, as determined by the 
Exchange Rate for each such currency, as determined on the date the interest 
rate for such Advance is determined, by delivering its borrowing notice to 
Agent, in the form of Exhibit 2 attached, on or before 9:30 a.m., Seattle 
time, on a London Banking Day at least three Business Days prior to the date 
the Multicurrency Advance is to be made.  Such notice shall specify the 
currency, principal amount, and Interest Period requested.  Agent shall 
advise each Bank of a request for a Multicurrency Advance by 10:30 a.m., 
Seattle time, three Business Days prior to the date the Multicurrency Advance 
is to be made.  Each Bank shall make available to Agent its Pro Rata Share of 
such requested Multicurrency Advance to the account in the bank and country 
specified to each Bank by Agent, on the date the Advance is to be made.  
Multicurrency Advances shall be credited on the date of Advance to the 
account specified by Borrower.  Each Multicurrency Advance shall be in a 
minimum amount equivalent to U.S.$500,000.

                                 -7-

<PAGE>

    2.6  BANK FUNDING.  Agent shall have no obligation to fund any portion of 
an Advance which has not been funded by such time by the applicable Bank.  
If, however, a Bank does not fund its Pro Rata Share of a Multicurrency 
Advance in a timely manner, and Agent funds such Advance to Borrower before 
having received funding from such Bank, such Bank shall reimburse Agent for 
any overdraft charges and interest incurred by Agent on account of such late 
or failed funding.

    2.7  COMMITMENT FEES.  On the first Business Day of each April, July, 
October, and January, beginning July 1, 1997, Borrower shall pay:

         (A)  to Agent for the account of Banks, in arrears, to be applied in
    accordance with their respective Pro Rata Shares, a commitment fee equal to
    the Fee Margin multiplied by the difference between (a) $25,000,000, and
    (b) the sum of (i) the daily outstanding principal balance of the Revolving
    Loan (with Multicurrency Advances to be valued as the U.S. Dollar
    equivalent of such Multicurrency Advances, based on the Exchange Rate for
    each such Advance); and (ii) the daily aggregate outstanding principal
    amount of all Letters of Credit; and

         (B)  to Seafirst for its sole account, in arrears, a commitment fee
    equal to the Fee Margin multiplied by the difference between
    (a) $5,000,000, and (b) the daily outstanding principal balance of the
    Swing Line.


                                      ARTICLE 3
                                  LETTERS OF CREDIT

    3.1  ISSUANCE.  Upon Borrower's execution of Seafirst's then-standard 
form Application and Agreement for Standby Credit ("L/C Agreement(s)"), 
Seafirst shall issue on Borrower's behalf standby letters of credit ("Letters 
of Credit") until the Termination Date, up to the Available Amount, in 
amounts not to exceed $5,000,000 in the aggregate, and with tenors not to 
extend beyond the Termination Date.  If there is a draw under a Letter of 
Credit, Borrower shall on demand immediately reimburse Seafirst for the 
amount of the draw, together with interest on the amount drawn, from the date 
of draw until paid, at a floating rate equal to the Base Rate plus 3% per 
annum.  Seafirst shall in addition have all rights provided in the L/C 
Agreement executed with respect to such Letter of Credit.  Any default in the 
L/C Agreement shall be a Default.

    3.2  FEES.  Borrower shall pay to Seafirst in advance, for the account of 
Banks, upon issuance of each Letter of Credit, a nonreimbursable Issuance Fee 
equal to the greater of (a) a percentage per annum equal to the Fixed Rate 
Margin (as determined on the date of issuance) on the face amount of the 
Letter of Credit, or (b) $250.  Borrower shall additionally, on demand, pay 
the following administrative fees to Seafirst for its own account (i.e., not 
for the account of the other Banks):

    (A)  a fee of $100 for each Letter of Credit which is required to be 
issued on the same Business Day as application is made for such Letter of 
Credit by Borrower;

    (B)  a fee of $50 for each Letter of Credit, the application for which 
does not have a form of letter of credit attached thereto, or where such form 
needs substantial re-working prior to its issuance;

    (C)  a fee of $100 for each Letter of Credit to be confirmed, advised, or 
guaranteed by banks which are not a correspondent bank of Seafirst or with 
which Seafirst does not have other standing relationships (in each case as 
such categorization is reasonably determined by Seafirst);

    (D)  reimbursement to Seafirst of all fees and charges charged to 
Seafirst by any advising or confirming bank with regard to any Letter of 
Credit;

                                 -8-

<PAGE>

plus additional transaction fees according to Seafirst's then-outstanding 
standard fee schedule, as delivered to Borrower, on all drafts, transfers, 
extensions, and other transactions in regard to the Letters of Credit, and 
reimburse Seafirst for all out-of-pocket costs, legal fees, and expenses.

    3.3  YIELD INDEMNITY.  If any law or regulation imposes or increases any 
reserve, special deposit, or similar requirement against letters of credit 
issued by Seafirst or subjects Seafirst or any Bank to any tax, charge, fee, 
deduction, or withholding of any kind in regard to the Letters of Credit, 
Borrower shall promptly on demand indemnify Seafirst or such Bank for any 
such increased costs, taxes, or charges.  Seafirst or such Bank, as the case 
may be, shall provide documentation to Borrower of any such increased costs, 
taxes, or charges.

                                      ARTICLE 4
                                      SWING LINE

    4.1  DESCRIPTION OF FACILITY.  Seafirst shall make Swing Line Advances to 
Borrower, PROVIDED that (a) the aggregate amount of all outstanding Swing 
Line Advances shall not exceed $5,000,000, and (b) each Swing Line Advance 
shall mature and be repaid on the earlier of (i) the next Business Day after 
the date such Swing Line Advance is advanced or (ii) the Termination Date 
(the "Swing Line").  Each Swing Line Advance shall bear interest at the 
Quoted Rate (or Base Rate, whichever is lower) as determined on the date the 
Swing Line Advance is disbursed to or for the benefit of Borrower, with all 
principal and accrued interest to be repaid on the next Business Day; 
PROVIDED, however, that Borrower may elect to pay all accrued interest on 
Swing Line Advances quarterly, on the last Business Day of each March, June, 
September, and December, in which case the Fixed Rate Margin shall be 
increased by 4 basis points (0.04%) for all Swing Line Advances.

    4.2  PROCEDURE FOR SWING LINE ADVANCES.  In accordance with all terms and 
conditions of this Agreement, Borrower may borrow at the Quoted Rate (or Base 
Rate, whichever is lower) under the Swing Line on any Business Day.  Borrower 
shall give Agent irrevocable notice (written or oral) specifying the amount 
to be borrowed on or before 3:30 p.m., Seattle time, on the day that a Swing 
Line Advance is requested; all Swing Line Advances shall be discretionary to 
the extent notification by Borrower is given subsequent to that time.  Agent 
shall advise Seafirst of a request for a Swing Line Advance, and Seafirst 
shall make available to Borrower its Swing Line Advance by the end of the 
same Business Day.

                                      ARTICLE 5
                                  RISK PARTICIPATION

    Mellon agrees for the benefit of Seafirst that it hereby purchases a risk 
participation in the Letters of Credit and any unreimbursed Letter of Credit 
draws equal to Mellon's Pro Rata Share of the outstanding balance of Letters 
of Credit plus the aggregate unreimbursed Letter of Credit draws.  Upon the 
occurrence of a Default, Mellon shall fund to Seafirst, pursuant to this risk 
participation, Mellon's Pro Rata Share of the aggregate unreimbursed Letter 
of Credit draws.  Mellon shall have no interest in any principal, interest, 
fees, or expenses due to Seafirst with regard to the Swing Line.  Prior to 
its funding under this Article, Mellon shall have no interest in any 
principal, interest, fees, or expenses due to Seafirst with regard to Letters 
of Credit, except (a) those accruing after the date such participation is 
funded, (b) those fees payable under Subsection 2.7, and (c) as to Issuance 
Fees, Mellon's Pro Rata Share of the amount of such fees.  Mellon's purchase 
of such participations shall be evidenced by a certificate in the form of 
Exhibit 3 attached.

                                    -9-

<PAGE>

                                      ARTICLE 6
                                 COLLATERAL SECURITY

    6.1  COLLATERAL.  As security for the prompt satisfaction of all 
Obligations, Borrower hereby grants to Agent, as agent for Banks, a lien 
upon, and a security interest in, all of the following as described below 
wherever the same shall be located, whether now owned or hereafter acquired, 
together with all replacements therefor and proceeds (including, but without 
limitation, insurance proceeds) and products thereof, all of which shall be 
of first-lien priority:  all of Borrower's accounts, all of Borrower's 
inventory located in the United States, and all proceeds thereof (together 
the "Collateral").

    6.2  COLLATERAL AGENT.  To the extent required by this Agreement, Agent 
shall perfect all Collateral in its own name as agent for each Bank, 
according to its respective Pro Rata Share, and such agency shall be 
disclosed on any UCC filings.  Agent shall only be required to perfect upon 
those portions of the Collateral which can be perfected by the filing of a 
UCC1 financing statement.

    6.3  FINANCING STATEMENTS AND OTHER DOCUMENTS.

         Borrower shall:

         (a)  Join with Agent in executing such UCC financing statements
    (including amendments thereto and continuation statements thereof) and
    other documents, in form satisfactory to Agent and as Agent may reasonably
    specify, in order to perfect, or continue the perfection of, the rights of
    Banks in the Collateral, with the priority of security interest required by
    this Agreement;

         (b)  Pay, or reimburse Agent for paying, all costs and taxes of filing
    or recording the same in such public offices as Agent may reasonably
    designate; 

         (c)  Except as provided in Subsection (d), take such other steps as
    Agent may reasonably direct, including the noting of the Agent's lien on
    the Collateral and on any certificates of title therefor, as is necessary
    to perfect to Agent's satisfaction the interest of Agent, as agent for the
    Banks, in the Collateral; and

         (d)  Upon a Default and notice from Agent, deliver to Agent all
    Collateral which is deliverable.

    6.4  COSTS.  If a Default has occurred and is continuing, Banks, upon 
unanimous agreement, shall have the right, but not the obligation, to pay 
taxes, assessments, charges, claims, liens or encumbrances and to cause 
compliance with all applicable governmental requirements if Banks, upon 
unanimous consent, consider it necessary to protect their security or the 
prospects of repayment of the Obligations.  Such payments and expenses are 
repayable on demand with interest at a floating rate equal to the Base Rate 
plus 3% per annum.

    6.5  AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT.  Borrower hereby 
irrevocably constitutes and appoints Agent and any officer or agent thereof, 
with full power of substitution, effective upon the occurrence of and during 
the continuation of a Default, as its true and lawful attorney-in-fact with 
full irrevocable power and authority in the place and stead of Borrower and 
in the name of Borrower or in its own name, from time to time in accordance 
with this Agreement, for the purposes of exercising its rights as a secured 
creditor pursuant to this Agreement, to take any and all appropriate action 
and to execute any or all documents and instruments that may be necessary or 
desirable to accomplish such purposes.

    6.6  NEGATIVE PLEDGE.  So long as any amount is payable by Borrower under 
this Agreement, or any Bank is committed to make Advances or issue Letters of 
Credit under this Agreement, Borrower 

                                  -10-

<PAGE>

shall not allow any property of Borrower, Guarantor, or any Material 
Subsidiary, whether real or personal, tangible or intangible, to be 
transferred or encumbered, or to have any lien placed upon such property, 
except (a) sales of inventory in the ordinary course of business, (b) 
patents, or intellectual or proprietary property, (c) to secure the 
Obligations, or (d) as otherwise expressly permitted by Sections 12.2 or 12.3.

                                    ARTICLE 7
                                   GUARANTIES

    The Obligations shall be absolutely and unconditionally guaranteed by 
Guarantor and every Material Subsidiary of Guarantor, jointly and severally, 
in form satisfactory to Banks.  Borrower authorizes Agent to release to any 
present or future guarantor all information Agent possesses concerning 
Borrower or any loans, credits, or other financial accommodations made to 
Borrower by Agent or Banks.

                                      ARTICLE 8
                                INTEREST RATE OPTIONS

    8.1  INTEREST RATES AND PAYMENT DATE.  The Revolving Loan shall bear 
interest from the date of Advance on the unpaid principal balance outstanding 
from time to time at the Base Rate or Adjusted LIBOR Rate as selected by 
Borrower, and all accrued interest shall be payable in arrears on each 
Interest Payment Date.

    8.2  OPTION RESTRICTIONS.  Each Interest Period for LIBOR Rate Advances 
shall be one week or one, two, three, or six months.  In no event shall the 
Interest Period extend beyond the Termination Date.  The minimum amount of a 
LIBOR Rate Advance shall be $500,000, with additional increments of $100,000 
each permitted.

    8.3  PREPAYMENTS.  Borrower may prepay any Base Rate Advance on any 
Business Day without premium or penalty.  If Borrower prepays all or any 
portion of a LIBOR Rate Advance prior to the end of an Interest Period, there 
shall be due at the time of any such prepayment the Prepayment Fee, 
determined in accordance with Form 51-6325, which shall be attached as 
Exhibit 1 to this Agreement, and any such prepayment may only be made if in 
the amount of $100,000 or more.

    8.4  REVERSION TO BASE RATE.  The Revolving Loan shall bear interest at 
the Base Rate unless an Adjusted LIBOR Rate is specifically selected.  At the 
termination of any Interest Period, each LIBOR Rate Advance shall revert to a 
Base Rate Advance unless Borrower directs otherwise pursuant to Section 2.4.

    8.5  INABILITY TO PARTICIPATE IN MARKET.  If Agent or any Bank in good 
faith cannot participate in the Eurodollar market for legal or practical 
reasons, the Adjusted LIBOR Rate shall cease to be an interest rate option. 
Agent or such Bank shall notify Borrower if and when it again becomes legal 
or practical to participate in the Eurodollar market, at which time the 
Adjusted LIBOR Rate shall resume being an interest rate option.

    8.6  COSTS.  Borrower shall, as to LIBOR Rate Advances, reimburse Agent, 
for the account of Banks, for all costs, taxes, and expenses, and defend and 
hold Banks harmless for any liabilities, which Banks may incur as a 
consequence of any changes in the cost of participating in, or in the laws or 
regulations affecting, the Eurodollar market, including any additional 
reserve requirements, except to the extent such costs are already calculated 
into the Adjusted LIBOR Rate.  This covenant shall survive this Agreement and 
the repayment of the Revolving Loan.  Banks shall provide documentation to 
Borrower detailing the basis for any charges made pursuant to this Section.

                                   -11-

<PAGE>

    8.7  BASIS OF QUOTES.  Borrower acknowledges that Agent or Banks may or 
may not in any particular case actually match-fund a LIBOR Rate Advance.  
Whether the mechanism for setting a particular rate in fact represents the 
actual cost to Banks for any particular dollar or Eurodollar deposit or any 
LIBOR Rate Advance will depend upon how such Bank actually chooses to fund 
the LIBOR Rate Advance,  or any foreign exchange contract.  By electing an 
Adjusted LIBOR Rate, Borrower waives any right to object to Agent's means of 
calculating the Adjusted LIBOR Rate quote accepted by Borrower.

                                      ARTICLE 9
                                CONDITIONS OF LENDING

    Banks' obligation to make the initial Advance or Swing Line Advance or 
issue any Letter of Credit is subject to the conditions precedent listed in 
Sections 9.1 through 9.6, and their obligation to make subsequent Advances 
and Swing Line Advances, and to issue subsequent Letters of Credit, is 
subject to the conditions precedent listed in Sections 9.7 through 9.9, 
unless waived by all Banks in writing:

    9.1  AUTHORIZATION.  Borrower shall have delivered to Agent a certified 
copy of the resolution of Borrower's board of directors authorizing the 
transactions contemplated by this Agreement and the execution, delivery, and 
performance of all Loan Documents, together with appropriate certificates of 
incumbency.  Each corporate guarantor shall have delivered to Agent a 
certified copy of a resolution of such guarantor's board of directors, 
satisfactory in form to Agent, authorizing its guaranty.

    9.2  DOCUMENTATION.  Borrower shall have executed and delivered to Agent 
all documents to reflect the existence of the Obligations and to perfect, as 
a first lien, the security interests granted to Banks.

    9.3  REFINANCE.  Borrower shall have repaid, or shall have provided Agent 
with instructions sufficient to repay, from Advances and/or Swing Line 
Advances, all indebtedness owing to Creditanstalt-Bankverein, and all 
agreements and security interests relating to such facility shall have been 
terminated or released.

    9.4  LEGAL OPINION.  Borrower shall have provided to each Bank a legal 
opinion of Borrower's legal counsel (which may be provided by Borrower's 
in-house legal counsel) that the Agreement and all other Loan Documents are 
duly authorized, valid, and binding obligations of Borrower and/or Guarantor, 
as the case may be, and attesting to the truth of the representations made in 
Sections 10.1 through 10.5.

    9.5  GUARANTIES.  Guarantor and each other entity required to provide a 
guaranty of the Obligations pursuant to the terms of this Agreement shall 
have executed and delivered its guaranty to Agent, and each such guaranty 
shall remain in full force and effect.

    9.6  PROOF OF INSURANCE.  Proof of insurance as required by Section 11.12 
shall have been provided to Agent.

    9.7  REPRESENTATIONS AND WARRANTIES.  The representations and warranties 
made by Borrower or Guarantor in the Loan Documents and in any certificate, 
document, or financial statement furnished at any time shall continue to be 
true and correct, except to the extent that such representations and 
warranties expressly relate to an earlier date.

    9.8  MATERIAL ADVERSE CHANGE.  No material adverse change has occurred in 
Borrower or Guarantor's business, property, or financial condition since the 
end of Guarantor's 1996 fiscal year, as reported in Guarantor's audited 
financial statements, and at the time of each Advance, or issuance of each 
Letter of Credit.

                                    -12-
<PAGE>

    9.9  COMPLIANCE.  No Default or other event which, upon notice or lapse 
of time or both would constitute a Default, shall have occurred and be 
continuing, or shall exist after giving effect to the Advance or the issuance 
of a Letter of Credit to be made.

                                      ARTICLE 10
                            REPRESENTATIONS AND WARRANTIES

    To induce Banks to enter into this Agreement, Borrower represents, 
warrants, and covenants to Agent and Banks as follows:

    10.1 EXISTENCE.  Borrower is in good standing as a corporation under the 
laws of the state of Delaware, has the power, authority, and legal right to 
own and operate its property or lease the property it operates and to conduct 
its current business; and is qualified to do business and is in good standing 
in all other jurisdictions where the ownership, lease, or operation of its 
property or the conduct of its business requires such qualification.

    10.2 ENFORCEABILITY.  The Loan Documents, when executed and delivered by 
Borrower, shall be enforceable against Borrower in accordance with their 
respective terms.

    10.3 NO LEGAL BAR.  The execution, delivery, and performance by Borrower 
of the Loan Documents, and the use of the loan proceeds, shall not violate 
any existing law or regulation applicable to Borrower; any ruling applicable 
to Borrower of any court, arbitrator, or governmental agency or body of any 
kind; Borrower's organizational documents; any security issued by Borrower; 
or any mortgage, indenture, lease, contract, undertaking, or other agreement 
to which Borrower is a party or by which Borrower or any of its property may 
be bound.

    10.4 LIENS AND ENCUMBRANCES.  As of this date, Borrower and each Material 
Subsidiary has good and marketable title to its property free and clear of 
all security interests, liens, encumbrances, or rights of others, except as 
disclosed in writing to Banks on attached Schedule 12.2(a), and except for 
taxes which are not yet delinquent and for conditions, restrictions, 
easements, and rights of way of record which do not materially affect the use 
of any of Borrower's property.

    10.5 LITIGATION.  Except as disclosed in writing to Banks on attached 
Schedule 10.5, there is no threatened (to Borrower's knowledge) or pending 
litigation, investigation, arbitration, or administrative action which may 
materially adversely affect Borrower's business, property, operations, or 
financial condition.

    10.6 PAYMENT OF TAXES.  Borrower has filed or caused to be filed all tax 
returns when required to be filed; and has, to the best of its knowledge, 
paid all taxes, assessments, fees, licenses, excise taxes, franchise taxes, 
governmental liens, penalties, and other charges levied or assessed against 
Borrower or any of its property imposed on it by any governmental authority, 
agency, or instrumentality that are due and payable (other than those returns 
or payments of which the amount, enforceability, or validity are contested in 
good faith by appropriate proceedings and with respect to which adequate 
reserves in conformity with GAAP are provided on Borrower's books).

    10.7 EMPLOYEE BENEFIT PLAN.  Borrower is, to the best of its knowledge, 
in material compliance with the provisions of ERISA and the regulations and 
published interpretations thereunder.  Borrower has not engaged in any acts 
or omissions which would make Borrower liable to the Plan, to any of its 
participants, or to the Internal Revenue Service, under ERISA.

    10.8 MISREPRESENTATIONS.  No information, exhibits, data, or reports 
furnished by Borrower or Guarantor or delivered to Agent or Banks in 
connection with Borrower's application for credit misstates any material 
fact, or omits any fact necessary to make such information, exhibits, data, 
or reports not misleading.

                                 -13-

<PAGE>

    10.9  NO DEFAULT.  Borrower is not in default in any Loan Document, or in 
any material contract, agreement, or instrument to which it is a party.

    10.10 NO BURDENSOME RESTRICTIONS.  No contract or other instrument to 
which Borrower is a party, or order, award, or decree of any court, 
arbitrator, or governmental agency, materially impairs Borrower's ability to 
repay the Obligations.

    10.11 HAZARDOUS SUBSTANCES.  To the best of Borrower's knowledge after 
due and diligent inquiry, no hazardous or toxic waste or substances are being 
stored on any Real Property, other than in accordance with all applicable 
environmental laws and regulations, or as disclosed in writing to Banks at 
the closing of this Agreement; nor have any such waste or substances been 
stored or used in, on, under, over, or about the Real Property prior to or 
during Borrower's or any subsidiary's ownership, possession, or control of 
any of such Real Property, other than in accordance with all applicable 
environmental laws and regulations or as disclosed in writing to Banks at the 
closing of this Agreement.  Borrower agrees to provide written notice to 
Agent immediately upon Borrower becoming aware that the Real Property is 
being or has been contaminated with hazardous or toxic waste or substances.  
Borrower will not cause nor permit any activities on the Real Property which 
directly or indirectly would be likely to result in the Real Property or any 
other property becoming contaminated with hazardous or toxic waste or 
substances.

    10.12 MATERIAL SUBSIDIARIES.  As of the date of this Agreement no 
Material Subsidiaries exist other than as listed on attached Schedule 10.12.

    10.13 MARGIN STOCK.  Borrower is not engaged, nor shall it engage, 
principally or as one of its important activities, in the business of 
extending credit for the purpose of "purchasing" or "carrying" margin stock 
under Regulation U of the Board of Governors of the Federal Reserve System.  
Borrower shall not use any part of the proceeds of any Advance for any 
purpose which violates or is inconsistent with the provisions of Regulation 
G, T, U, or X of such Board of Governors, as the same may be amended, 
supplemented, or modified from time to time.

    10.14 MATERIAL ADVERSE CHANGE.  As of each request for an Advance or for 
issuance of a Letter of Credit, that no material adverse change has occurred 
in Borrower's or Guarantor's business, property, or financial condition since 
the end of Guarantor's 1996 fiscal year, as reported in Guarantor's audited 
financial statements, and at the time of such Advance, or at the time of 
issuance of such Letter of Credit.

                                      ARTICLE 11
                                AFFIRMATIVE COVENANTS

    So long as this Agreement shall remain in effect, or any liability exists 
under the Loan Documents, Borrower shall, as to Sections 11.1, and 11.6 
through 11.14 (and shall take any action necessary to assure that each 
Material Subsidiary shall); and Guarantor shall, as to Sections 11.2 through 
11.14:

    11.1  USE OF PROCEEDS.  Use the proceeds of the Revolving Loan and Swing 
Line for working capital, for acquisitions permitted under this Agreement, 
and to refinance obligations owing prior to the execution of this Agreement 
to Creditanstalt-Bankverein.

    11.2  FIXED CHARGE COVERAGE RATIO.  Maintain a Fixed Charge Coverage 
Ratio, measured quarterly for the four quarters then ending, of not less than 
1.75 to 1.

    11.3  TANGIBLE NET WORTH.  Maintain a Tangible Net Worth of not less than 
$37,500,000, increasing each fiscal quarter, beginning quarter ending March 
31, 1997, by an amount equal to 90% 

                                     -14-

<PAGE>

of net income for the quarter then ending, without adjustment downward for 
quarters in which a net loss is incurred.

    11.4 DEBT RATIO.  Maintain a ratio of (a) Debt minus Subordinated Debt to 
(b) the sum of Tangible Net Worth plus Subordinated Debt, of not more than 
1.5 to 1.

    11.5 FINANCIAL INFORMATION.  Maintain a standard system of accounting in 
accordance with GAAP and furnish to each Bank the following:

         (a)  QUARTERLY FINANCIAL STATEMENTS.  As soon as available and, in any
    event, within 45 days after the end of each fiscal quarter except the last
    fiscal quarter of each fiscal year, a copy of the consolidated statement of
    income and retained earnings of Guarantor for the quarter and for the
    current fiscal year through such quarter, and for each such quarter a copy
    of the consolidated balance sheet, consolidated statement of shareholders'
    equity, and consolidated statement of cash flow of Guarantor as of the end
    of such quarter, and for the current fiscal year through such quarter,
    setting forth, in each case, in comparative form, figures for the
    corresponding period of the preceding fiscal year, all in reasonable detail
    and satisfactory in scope to each Bank, prepared under the supervision of
    the chief financial officer of Guarantor, and in form and substance
    satisfactory to each Bank;

         (b)  ANNUAL FINANCIAL STATEMENTS.  As soon as available and, in any
    event, within 90 days after the end of each fiscal year, a copy of the
    consolidated balance sheet, consolidated statement of income and retained
    earnings, consolidated statement of shareholders' equity, and consolidated
    statement of cash flow of Guarantor for such year, setting forth in each
    case, in comparative form, corresponding figures from the preceding annual
    statements, each audited by independent certified public accountants of
    recognized standing selected by Guarantor and satisfactory to each Bank
    certifying that such statement is complete and correct, fairly presents
    without qualification the consolidated financial condition of Guarantor for
    such period, is prepared in accordance with GAAP, and has been audited in
    conformity with generally accepted auditing standards;

         (c)  CONSOLIDATING STATEMENTS.  If Guarantor or Borrower shall create
    or acquire any Material Subsidiary, Guarantor shall thereafter also provide
    to each Bank consolidating annual and quarterly financial statements as to
    each Material Subsidiary, including Borrower;

         (d)  PROJECTIONS.  By December 31 of each year, an update of
    Guarantor's three-year financial projections;

         (e)  OTHER CERTIFICATES.  Together with the delivery of the financial
    statements required by Subsections 11.5(a) and 11.5(b), a certificate of
    the chief financial officer of Guarantor, in the form of Exhibit 4
    attached, together with the calculations made to determine compliance with
    Sections 11.2 through 11.5; and

         (f)  ADDITIONAL FINANCIAL INFORMATION.  As soon as available and, in
    any event, within ten days after request, such other data, information, or
    documentation as any Bank may reasonably request.

    11.6 MAINTENANCE OF EXISTENCE.  Preserve and maintain its existence, 
powers, and privileges in the jurisdiction of its formation, and qualify and 
remain qualified in each jurisdiction in which its presence is necessary or 
desirable in view of its business, operations, or ownership of its property. 
Borrower and Guarantor shall also maintain and preserve all of its respective 
property which is necessary or useful in the proper course of its business, 
in good working order and condition, ordinary wear and tear excepted.

                                   -15-

<PAGE>

    11.7  BOOKS AND RECORDS.  Keep accurate and complete books, accounts, and 
records in which complete entries shall be made in accordance with GAAP, 
reflecting all financial transactions of Borrower or Guarantor, as the case 
may be.

    11.8  ACCESS TO PREMISES AND RECORDS.  At all reasonable times and as 
often as Agent or Banks may reasonably request, permit any authorized 
representative designated by Agent or Banks to have access to the premises, 
property, and financial records of Borrower or Guarantor, as the case may be, 
including all records relating to the finances, operations (other than 
relating to research and development, or any trade secrets), and procedures 
of Borrower or Guarantor, as the case may be, and to make copies of or 
abstracts from such records.

    11.9  NOTICE OF EVENTS.  Furnish Banks prompt written notice of:

         (a)  PROCEEDINGS.  Any proceeding instituted by or against Borrower or
    Guarantor, as the case may be, in any court or before any commission or
    regulatory body, or any proceeding threatened against it in writing by any
    governmental agency which if adversely determined would have a material
    adverse effect on Borrower's or Guarantor's business, property, or
    financial condition, or where the amount involved is $500,000 or more and
    not covered by insurance;

         (b)  MATERIAL DEVELOPMENT.  Any material development in any such
    proceeding referred to in Subsection 11.9(a);

         (c)  MATERIAL SUBSIDIARIES.  Creation or acquisition of any Material
    Subsidiary;

         (d)  DEFAULTS.  Any accident, event, or condition which is or, with
    notice or lapse of time or both, would constitute a Default, or a default
    under any other material agreement to which Borrower or Guarantor, as the
    case may be, is a party, along with a statement describing actions being
    taken to remedy such default;

         (e)  ADVERSE EFFECT.  Any other action, event, or condition of any
    nature which could result in a material adverse effect on the business,
    property, or financial condition of Borrower or Guarantor, as the case may
    be; and

         (f)  CONSENT DECREE.  Any violation of the Consent Decree described in
    Section 11.11.

    11.10 PAYMENT OF DEBTS AND TAXES.  Pay all Debt and perform all 
obligations promptly and in accordance with their terms, and pay and 
discharge promptly all taxes, assessments, and governmental charges or levies 
imposed upon Guarantor, on a consolidated basis, its property, or revenues 
prior to the date on which penalties attach thereto, as well as all lawful 
claims for labor, material, supplies, or otherwise which, if unpaid, might 
become a lien or charge upon the property of Guarantor, Borrower, or any 
Material Subsidiary. Guarantor, Borrower, and the Material Subsidiaries shall 
not, however, be required to pay or discharge any such tax, assessment, 
charge, levy, or claim so long as its enforceability, amount, or validity is 
contested in good faith by appropriate proceedings, and adequate reserves are 
maintained.

    11.11 FDA CONSENT DECREE.  Remain in compliance at all times with the 
Consent Decree dated July 24, 1992, entered into between the U.S. Food and 
Drug Administration ("FDA") and Borrower with respect to a civil complaint 
filed by the FDA for alleged violations of "good manufacturing practices" and 
FDA medical device reporting regulations.

    11.12 INSURANCE.  Maintain commercially adequate levels of coverage with 
financially sound and reputable insurers, including, without limitation:

                                 -16-

<PAGE>

          (a)  PROPERTY INSURANCE.  Insurance on all property of a character
    usually insured by organizations engaged in the same or similar type of
    business as Borrower  or Guarantor, as the case may be, against all risks,
    casualties, and losses through extended coverage or otherwise and of the
    kind customarily insured against by such organizations, with such policy or
    policies covering tangible collateral to name Agent as loss payee, as its
    interests may appear;

          (b)  LIABILITY INSURANCE.  Public liability insurance against tort
    claims which may be asserted against Borrower or Guarantor, as the case may
    be; and 

          (c)  ADDITIONAL INSURANCE.  Such other insurance as may be required by
    law.

    11.13 HAZARDOUS SUBSTANCES.  Promptly comply, at Borrower's expense, with 
all statutes, regulations, and ordinances which apply to Borrower or the Real 
Property, and with all orders, decrees, or judgments of governmental 
authorities or courts having jurisdiction which Borrower is bound by, 
relating to the use, collection storage, treatment, control, removal, or 
cleanup of hazardous or toxic waste or substances in, on, under, over, or 
about the Real Property or in, on, under, over, or about any adjacent 
property that becomes contaminated with hazardous or toxic waste or 
substances as a result of construction, operations, or other activities on, 
or the contamination of, the Real Property.  Borrower shall defend, protect, 
hold harmless, and indemnify Agent, Banks, and their affiliates, and their 
successors and assigns, and their shareholders, directors, officers, 
employees, attorneys, and agents, from and against any and all claims, 
demands, penalties, fees, liens, damages, losses, expenses, and liabilities 
arising out of or in any way connected with any alleged or actual past or 
future presence on or under the Real Property of any hazardous or toxic waste 
or substances from any cause whatsoever; it being intended that Borrower 
shall be strictly and absolutely liable to Agent and Banks without regard to 
any fault by Borrower.

    11.14 COMPLIANCE WITH LAWS.  Comply in all material respects with all 
laws and regulations applicable to Borrower or Guarantor, as the case may be, 
and its respective business activities.

                                      ARTICLE 12
                                  NEGATIVE COVENANTS

    So long as this Agreement shall remain in effect, or any liability shall 
exist under the Loan Documents, neither Borrower nor Guarantor nor any 
Material Subsidiary shall:

    12.1 DEBT.  Create, incur, assume, permit to exist, or otherwise become
committed for any Debt except any:

         (a)  UNSECURED TRADE CREDIT.  Unsecured, short-term Debt arising from
    current operations by purchasing on credit goods, services, supplies, or
    merchandise and not constituting borrowings;

         (b)  EXISTING OBLIGATIONS.  Debt in existence as of the date of this
    Agreement and disclosed to Banks in Schedule 12.1(b) attached hereto, and
    all renewals, modifications, and extensions thereof;

         (c)  NEGOTIABLE INSTRUMENTS.  Endorsements on negotiable instruments
    for deposit or collection in the ordinary course of business;

         (d)  AFFILIATES.  Guaranties by Guarantor or any Material Subsidiary
    of the Obligations;

         (e)  PERFORMANCE BONDS.  Performance bonds as required in the ordinary
    course of Borrower's business; and

                                      -17-

<PAGE>

         (f)  OTHER INDEBTEDNESS.  Debt which in the aggregate does not exceed
    $500,000 outstanding at any one time.

    12.2  LIENS AND ENCUMBRANCES.  Create, incur, or assume, or agree to 
create, incur, or assume any lien, whether consensual or nonconsensual, on 
any of its property, or to enter into any lease with respect to any of its 
property except:

         (a)  EXISTING LIENS.  Liens in existence as of the date of this
    Agreement and disclosed to Banks in Schedule 12.2(a) attached hereto;

         (b)  PURCHASE MONEY.  Purchase money security interests on equipment
    acquired by Borrower through the financing which is secured by such lien;

         (c)  TAX LIENS.  Liens for taxes not yet due or which are being
    contested in good faith by appropriate proceedings, and for which adequate
    reserves are maintained; and

         (d)  INCIDENTAL LIENS.  Other liens incidental to the conduct of
    Borrower's business or the ownership of its property which are not incurred
    in connection with the borrowing of money or the obtaining of credit, and
    which do not in the aggregate materially impair the value or use of
    property.

    12.3  DISPOSITION OF ASSETS.  Sell, transfer, lease, or otherwise assign 
or dispose of more than five percent (5%) of its assets, outside the ordinary 
course of business (PROVIDED, that assets held less than 60 days shall be 
deemed sales in the ordinary course of business), in any one fiscal year; 
PROVIDED, that Borrower may transfer a substantial portion of its business to 
a wholly-owned subsidiary if (a) such subsidiary fulfills the requirements 
for Material Subsidiaries to guaranty the Obligations, (b) such subsidiary 
grants to Banks, to secure its guaranty, a first-lien security interest in 
all of such subsidiary's accounts and inventory, and all proceeds thereof, 
providing to Agent all documents and instruments necessary to create and 
perfect such security interests, and (c) such subsidiary shall execute and 
deliver to Agent the certificate in the form of Exhibit 5 attached.

    12.4  MERGERS.  Become a party to any merger, consolidation, or like 
corporate change, other than where Borrower is the surviving entity of a 
merger and no other provision of this Agreement is thereby violated; or make 
any substantial transfer or contribution to, or material investment in, 
stock, shares, or licenses of any Person, other than acquisitions or joint 
ventures involving an investment of no more than $2,000,000 in the aggregate 
in any one fiscal year.

    12.5  CAPITAL STRUCTURE.  Purchase, retire, or redeem any of its capital 
stock or otherwise effect any change in Borrower's capital structure, other 
than stock purchased pursuant to 401(k) plans.

    12.6  WAGE AND HOUR LAWS.  Engage in any material violation of the 
federal Fair Labor Standards Act or any comparable state wage and hour law.

    12.7  ERISA.  Engage in any act or omission which would make Borrower 
materially liable under ERISA to the Plan, to any of its participants, or to 
the Internal Revenue Service.

    12.8  DISSOLUTION.  Adopt any agreement or resolution for dissolving, 
terminating, or substantially altering Borrower's present business activities.

    12.9  BUSINESS ACTIVITIES.  Engage or enter into any activity which is 
unusual to Borrower's existing business.

    12.10 DIVIDENDS.  Declare or pay any dividend.

                                -18-
<PAGE>

    12.11 PERMISSIBLE LOANS AND INVESTMENTS.  Make any loan or advance to any 
Person otherwise than in the ordinary course of business, or make any 
investment outside the ordinary course of Borrower's or Guarantor's business, 
except:

          (a)  CERTIFICATES OF DEPOSIT.  Investments in certificates of deposit
    maturing within one year from the date of acquisition from any one or more
    of the top 100 United States commercial banks, as rated by dollar value of
    assets;

          (b)  MONEY MARKET.  Money market mutual funds, bankers' acceptances,
    eurodollar investments, repurchase agreements, and other short-term money
    market investments acceptable to Agent;

          (c)  COMMERCIAL PAPER.  Prime commercial paper with ratings of A-1/P-1
    or better by Moody's or Standard & Poor (or equivalent rating if such
    rating systems change) with maturities of less than one year; and

          (d)  U. S. GOVERNMENT PAPER.  Obligations issued or guaranteed by the
    United States Government or its agencies with maturities of less than one
    year.


                                      ARTICLE 13
                                        AGENCY

    13.1 APPOINTMENT.  The Banks irrevocably designate and appoint Agent as 
their agent under this Agreement, and irrevocably authorize Agent, as their 
agent, to take such action on their behalf under the provisions of this 
Agreement and to exercise all such powers as are expressly delegated to Agent 
by the terms of this Agreement, together with such other powers as are 
reasonably incidental thereto.  No implied covenants, functions, 
responsibilities, duties, obligations, or liabilities shall be read into this 
Agreement or otherwise exist against Agent.  Notwithstanding any provision to 
the contrary in this Agreement, Agent shall have no implied duties or 
responsibilities to take any action, except such action as it is expressly 
required to take under the express terms of this Agreement, and shall have no 
fiduciary relationship with any of the Banks as to any matter not expressly 
provided for by the Loan Documents including, without limitation, enforcement 
or collection of the Obligations. Agent shall not be required to exercise any 
discretion or take any action, but shall be required to act or to refrain 
from acting upon the consent and instructions of Majority Banks.  Any company 
into which Agent may be merged or converted or with which it may be 
consolidated, or any company resulting from any merger, conversion, or 
consolidation to which it shall be a party, or any company to which Agent may 
sell or transfer all or substantially all of its agency relationships, shall 
be the successor to Agent without any further action by Banks or Borrower and 
without the execution or filing of any paper.

    13.2 SUCCESSOR AGENT.  Agent may resign as Agent upon 30 days' notice to 
Banks.  Upon Agent's resignation as agent under this Agreement, Banks, upon 
consent of Majority Banks, shall appoint from among the Banks a successor 
agent for the Banks.  If no successor agent is appointed prior to the 
effective date of the resignation of Agent, Agent may appoint, after 
consulting with Banks, a successor agent, and Agent shall remain in place 
until a new agent accepts such appointment.  Upon the acceptance of its 
appointment as successor agent hereunder, (a) such successor agent shall 
succeed to all the rights, powers, and duties of the retiring Agent, (b) the 
term "Agent" shall mean such successor agent, and (c) the retiring Agent's 
appointment, powers, and duties as Agent shall be terminated.  After any 
retiring Agent's resignation hereunder as Agent, the provisions of this 
Agreement shall inure to such retiring Agent's benefit as to any actions 
taken or omitted to be taken by it while it was Agent under this Agreement.

    13.3 DUTIES OF AGENT.  Agent shall service the Revolving Loan, the Swing 
Line, and the Letter of Credit Facility in accordance with its usual practice 
in connection with similar credits.  In servicing and collecting the 
Revolving Loan, the Swing Line, and the Letter of Credit Facility and in 
carrying out 

                               -19-

<PAGE>

the terms and provisions of the Loan Documents, Agent shall not be liable to 
any of the Banks for any error of judgment, or for any action taken or 
omitted to be taken by it, except for gross negligence or willful misconduct.

    13.4 DELEGATION OF DUTIES.  Agent may execute any of its duties under 
this Agreement by or through agents or attorneys-in-fact and shall be 
entitled to rely upon advice of counsel concerning all matters pertaining to 
such duties. Agent shall not be responsible for the negligence or misconduct 
of any agent or attorney-in-fact selected by it with reasonable care or any 
action taken or omitted to be taken in good faith by it in accordance with 
the advice of such counsel.

    13.5 EXCULPATORY PROVISIONS.  Agent's Related Parties shall not be 
responsible or otherwise liable to any of Banks in any manner for:

         (a)  ACTIONS.  Any action lawfully taken or omitted to be taken by it
    or by such other persons or entities under or in connection with this
    Agreement or any other Loan Document, except for its or their own gross
    negligence or willful misconduct;

         (b)  BORROWER STATEMENTS.  Any recital, statement, representation, or
    warranty made by Borrower or any officer thereof contained in this
    Agreement or any other Loan Document, or in any certificate, report,
    statement, or other document relating to this Agreement or any other Loan
    Document;

         (c)  ENFORCEABILITY.  The validity, effectiveness, genuineness,
    enforceability, or sufficiency of this Agreement or any other Loan
    Document, the financial condition of Borrower, or any failure of Borrower
    to perform its obligations under this Agreement or any other Loan Document;

         (d)  FAILURE TO PERFECT.  Inability to perfect any Collateral to the
    extent required by this Agreement where such inability is due to Borrower's
    failure to act or take such steps as Agent may direct; or

         (e)  INVESTIGATION.  Ascertaining or inquiring as to the observance of
    or Borrower's performance under any Loan Document, or inspecting the
    property, books, or records of Borrower.

    13.6 RELIANCE BY AGENT.  Agent's Related Parties shall be entitled to 
rely, and shall be fully protected in relying upon, any note, writing, 
resolution, notice, consent, certificate, message, statement, order, or other 
document or conversation believed to have been authorized, genuine or 
correct, or signed, sent, or made by the proper Person, or upon advice and 
statements of counsel (including, without limitation, legal counsel to Agent 
or Borrower, and independent accountants and other experts selected by Agent).

    13.7 INSTRUCTIONS.  Agent shall be fully justified in failing or refusing 
to take any action under this Agreement or any other Loan Document as Agent 
deems appropriate, unless it shall first receive the consent of Majority 
Banks or shall first be indemnified to its satisfaction by all Banks, in 
accordance with their respective Pro Rata Share, against all liabilities and 
expenses which may be incurred by it or by reason of taking or continuing to 
take any such action.  Agent shall in all cases be fully protected in acting 
or in refraining from acting under this Agreement or any other Loan Document 
in accordance with the consent of Majority Banks, where required, and such 
request and any action taken or not taken to act pursuant thereto shall be 
binding upon all of the Banks and all future holders of any interest in the 
Obligations.

    13.8 NOTICE OF DEFAULT.  Agent shall not be deemed to have knowledge or 
notice of the occurrence of any Default unless Agent has actual knowledge or 
has received notice from one or more of the Banks or Borrower referring to 
this Agreement, describing such Default and stating in substance 

                                   -20-

<PAGE>

that such notice is a "notice of default."  In the event Agent receives such 
a notice or has actual knowledge of any Default, Agent shall give notice 
thereof to all of the Banks.

    13.9  REPRESENTATIONS.  None of Agent's Related Parties have made any 
representation or warranty to Banks, and no action taken by Agent after the 
date of this Agreement, including any review of Borrower's affairs, shall be 
deemed to constitute any representation or warranty by Agent to any of the 
Banks.

    13.10 INDEPENDENT CREDIT REVIEW.  Each Bank represents to Agent that it 
has, independently and without reliance upon Agent, and based upon such 
financial statements, documents and information as it has deemed appropriate, 
made its own appraisal of and investigation into the business, property, 
operations, and financial condition of Borrower and Guarantor and made its 
own decision to enter into this Agreement.  Each of the Banks also represents 
that it shall, independently and without reliance upon Agent, and based upon 
such financial statements, documents, and information as it shall deem 
appropriate at the time, continue to make its own credit analysis, 
appraisals, and decisions in taking or not taking action under this 
Agreement, and to make such investigation as it deems necessary to inform 
itself as to the business, property, operations, and financial condition of 
Borrower.  For purposes of determining compliance with the conditions 
specified in Article 9, each Bank that has executed this Agreement shall be 
deemed to have consented to, approved, or accepted, or to be satisfied with, 
each document or other matter either sent by Agent to such Bank for consent, 
approval, acceptance, or satisfaction, or required under said Article to be 
consented to or approved by or acceptable or satisfactory to such Bank, 
unless such Bank promptly provides Agent with notice to the contrary.

    13.11 INFORMATION.  Agent shall have no obligation, duty, or 
responsibility, either initially or on a continuing basis, to provide Banks 
with any credit or other information concerning the business, property, 
operations, or financial condition of Borrower or Guarantor which may come 
into possession of any of Agent's Related Parties.  Although Agent may 
furnish to Banks, upon request, copies of documents Agent has received 
pursuant to this Agreement, Agent assumes no responsibility as to the 
authenticity, validity, or enforceability of any such documents.

    13.12 INDEMNITY.  The Banks shall indemnify Agent, according to their 
respective Pro Rata Share, from and against any and all liabilities, 
obligations, losses, damages, penalties, actions, suits, judgments, 
reasonable costs and expenses, taxes, and disbursements of any kind or nature 
whatsoever (except to the extent they arise from Agent's gross negligence or 
willful misconduct) which may at any time be imposed on, incurred by, or 
asserted against any of Agent's Related Parties or in any way relating to or 
arising out of this Agreement, any other Loan Document, or any document 
contemplated by or referred to therein, any transaction contemplated thereby, 
or any action taken or omitted by Agent under or in connection with any of 
the foregoing.  Without limiting the foregoing, each Bank shall reimburse 
Agent, in accordance with such Bank's Pro Rata Share, for any costs or 
expenses incurred by Agent subsequent to the closing of this Agreement, 
including outside or in-house legal fees, which (a) are required to be 
reimbursed to Agent by Borrower under any of the Loan Documents, but are not 
so reimbursed, or (b) arise out of action taken by Agent at the unanimous 
consent of Banks in accordance with this Agreement.  This subsection shall 
survive the final payment of the Obligations and payment of all other amounts 
due under this Agreement or the other Loan Documents.

    13.13 SEPARATION OF CAPACITIES.  In its capacity as a lender that is one 
of the Banks, Seafirst shall have the same rights and powers hereunder as the 
other Banks and may exercise the same as though it were not Agent.  The term 
"Bank(s)" shall include Seafirst, in its individual capacity as a lender and 
not as an agent, unless the context otherwise indicates.  This Agreement 
shall not restrict in any way any Bank's ability to enter into other credit 
or banking facilities with Borrower or Guarantor, so long as such facility 
(a) does not violate any other provision of this Agreement and (b) is not 
secured by any of the Collateral; and the other Bank or Banks hereunder shall 
not have any rights or obligations as to any such facilities not provided by 
such Bank or Banks.

                                      -21-

<PAGE>

                                      ARTICLE 14
                          EVENTS AND CONSEQUENCES OF DEFAULT

    14.1 EVENTS OF DEFAULT.  Any of the following events shall constitute a 
default by Borrower under the terms of this Agreement, the L/C Agreements, 
and all other Loan Documents ("Default"):

         (a)  NONPAYMENT.  Any payment of principal or reimbursement of a draw
    on a Letter of Credit is not made on the date when due, or any other
    payment or reimbursement due or demanded under this Agreement or any Loan
    Document is not made within five days of the date when due;

         (b)  BREACH OF WARRANTY.  Any material representation or warranty made
    or deemed made in connection with this Agreement or any other Loan
    Document, or any certificate, notice, or report furnished pursuant hereto,
    is determined by any Bank to be false in any respect when made;

         (c)  FAILURE TO PERFORM.  Any other term, covenant, or agreement
    contained in any Loan Document is not performed or satisfied, and, if
    remediable, such failure continues unremedied for 30 days after written
    notice thereof has been given to Borrower by Agent;

         (d)  DEFAULTS ON OTHER OBLIGATIONS.  There exists a default by
    Borrower, Guarantor, or any Material Subsidiary in the performance of any
    other agreement or obligation for the payment of borrowed money, for the
    deferred purchase price of property or services, or for the payment of rent
    under any lease, whether by acceleration or otherwise, which would permit
    such obligation to be declared due and payable prior to its stated
    maturity, with any such occurrence to be a Default immediately if the
    obligation concerned exceeds $500,000 or, if such occurrence is with regard
    to an obligation of $500,000 or less, if such default continues for 30 days
    after Borrower, Guarantor, or such Material Subsidiary, as the case may be,
    receives written notice thereof from the creditor so affected;

         (e)  GUARANTIES.  Any Guarantor or any Material Subsidiary revokes or
    attempts to revoke such guaranty, whether with respect to future
    transactions or outstanding Obligations, or otherwise breaches the terms
    and conditions of such guaranty, or violates any promise made pursuant to
    this Agreement, or any such guaranty is ruled to be invalid or
    unenforceable by any court of competent jurisdiction;

         (f)  CHANGE OF CONTROL.  Any Person (including any affiliated group of
    individuals and/or entities) shall acquire 25% or more of the outstanding
    voting stock of Guarantor; or Guarantor shall cease to own 100% of the
    outstanding voting stock of Borrower;

         (g)  AFFILIATES.  Any Material Subsidiary shall violate any of the
    covenants made by it in a certificate in the form of Exhibit 5 attached
    hereto, or any representation or warranty made or deemed made by it in such
    certificate is determined by any Bank to be false in any material respect
    when made, or any of the representations and warranties made by Guarantor
    in the addendum to this Agreement is determined by any Bank to be false in
    any material respect when made;

         (h)  LOSS, DESTRUCTION, OR CONDEMNATION OF PROPERTY.  A portion of
    Borrower's, Guarantor's, or any Material Subsidiary's property is affected
    by any uninsured loss, damage, destruction, theft, sale, or encumbrance
    other than created herein or is condemned, seized, or appropriated, the
    effect of which materially impairs Borrower's, Guarantor's, or such
    Material Subsidiary's financial condition or its ability to pay its debts
    as they come due;

                                        -22-

<PAGE>

         (i)  ATTACHMENT PROCEEDINGS AND INSOLVENCY.  Borrower, Guarantor, or
    any Material Subsidiary, or any of Borrower's, Guarantor's, or any such
    Material Subsidiary's property is affected by any:

              (I)  Judgment lien, execution, attachment, garnishment, general
         assignment for the benefit of creditors, sequestration, or forfeiture,
         to the extent Borrower's, Guarantor's, or such Material Subsidiary's
         financial condition or its ability to pay its debts as they come due
         is thereby materially impaired; or

              (II) Proceeding under the laws of any jurisdiction relating to
         receivership, insolvency, or bankruptcy, whether brought voluntarily
         or involuntarily by or against Borrower, Guarantor, or any Material
         Subsidiary, including, without limitation, any reorganization of
         assets, deferment or arrangement of debts, or any similar proceeding,
         and, if such proceeding is involuntarily brought against Borrower,
         Guarantor, or such Material Subsidiary, it is not dismissed within 60
         days;

         (j)  JUDGMENTS.  Final judgment on claims not covered by insurance
    which, together with other outstanding final judgments against Borrower,
    Guarantor, or any Material Subsidiary, exceeds $500,000, is rendered
    against Borrower, Guarantor, or any Material Subsidiary and is not
    discharged, vacated, or reversed, or its execution stayed pending appeal,
    within 60 days after entry, or is not discharged within 60 days after the
    expiration of such stay; or

         (k)  GOVERNMENT APPROVALS.  Any governmental approval, registration,
    or filing with any governmental authority, now or later required in
    connection with the performance by Borrower of its obligations under the
    Loan Documents, is revoked, withdrawn, or withheld, or fails to remain in
    full force and effect, except Borrower shall have 60 days after notice of
    any such event to take whatever action is necessary to obtain all necessary
    approvals, registrations, and filings.

    14.2 REMEDIES UPON DEFAULT.  If any Default occurs under Subsection 
14.1(i), the Banks' commitment to make Advances and Seafirst's commitment to 
make Swing Line Advances and issue new Letters of Credit shall immediately 
and automatically terminate (but Agent shall have no liability to any other 
Bank for, and any risk participations shall be effective as to, any Advances 
made by Agent or Letters of Credit issued by Seafirst prior to Agent 
receiving actual notice of such occurrence, absent Agent's willful misconduct 
or gross negligence), and all Obligations, including all accrued interest, 
shall immediately and automatically become due and payable, without 
presentment, demand, protest, or notice of any kind, all of which are hereby 
expressly waived by Borrower, and Agent may immediately, upon receiving 
notice of such an occurrence, exercise any or all of the following remedies 
for Default; and if any other Default occurs and is continuing, Agent, upon 
direction of Majority Banks, shall, by notice from Agent to Borrower:

         (a)  TERMINATE COMMITMENTS.  Terminate Banks' commitment to make
    Advances and Seafirst's commitment to make Swing Line Advances and issue
    new Letters of Credit;

         (b)  SUSPEND COMMITMENTS.  Refuse to make further Advances or Swing
    Line Advances or issue new Letters of Credit until any Default has been
    cured;

         (c)  ACCELERATE.  Declare all Obligations, including all accrued
    interest, to be immediately due and payable without presentment, demand,
    protest, or notice of any kind, all of which are hereby expressly waived by
    Borrower;

         (d)  COLLATERAL.  Proceed to realize on any or all Collateral by any
    available means; and/or

         (e)  ALL REMEDIES.  Pursue any other available legal and equitable
    remedies.

                                       -23-

<PAGE>

In addition, each Bank shall have the right to set off against, or place an 
administrative freeze upon, deposit accounts of Borrower at such Bank any 
amounts owing under the Obligations, including amounts in excess of such 
Bank's Pro Rata Share of the outstanding balance of the Obligations.  Any 
such amounts, and any other amounts received by any Bank on account of the 
Obligations, other than from Agent, shall be delivered to Agent to be 
distributed to each Bank in accordance with its respective Pro Rata Share; 
PROVIDED, however, that if all or any portion of such payment turned over 
from a Bank to Agent and distributed to each Bank is thereafter recovered by 
Borrower from such Bank, each Bank shall, in accordance with its respective 
Pro Rata Share, reimburse such other Bank for the amount so recovered.  All 
of Banks' and Agent's rights and remedies in all Loan Documents shall be 
cumulative and can be exercised separately or concurrently.  Borrower shall 
have no liability to any Bank with respect to any sum that Agent receives in 
accordance with this Agreement and fails to distribute to such Bank as 
required by this Agreement.

    14.3 DEFAULT INTEREST.  Upon Default, whether or not acceleration has 
occurred, all outstanding Advances shall, upon direction by Majority Banks to 
Agent, accrue interest at a floating rate per annum of 3.0% above the Base 
Rate, as it may vary from time to time.

                                      ARTICLE 15
                                    MISCELLANEOUS

    15.1 MANNER OF PAYMENTS.

         (a)  PAYMENTS ON NONBUSINESS DAYS.  Whenever any event is to occur or
    any payment is to be made under any Loan Document on any day other than a
    Business Day, such event shall occur or such payment shall be made on the
    next succeeding Business Day and such extension of time shall be included
    in computation of interest in connection with any such payment.

         (b)  PAYMENTS.  All payments and prepayments to be made by Borrower
    shall be made to Agent when due, at Agent's office as may be designated by
    Agent, without offsets or counterclaims for any amounts claimed by Borrower
    to be due from Agent or Banks, in the currency advanced, and in immediately
    available funds.

         (c)  TIMING OF PAYMENTS.  All payments and prepayments to be made by
    Borrower shall be made to Banks care of Agent, no later than 12:00 noon on
    the date when due (with payments received after 12:00 noon to be deemed
    received on the following Business Day), at Agent's office as may be
    designated by Agent, without offsets or counterclaims for any amounts
    claimed by Borrower to be due from any Bank, in the currency which was
    advanced to Borrower and in immediately available funds.  Notwithstanding
    the foregoing, payments due under the Swing Line may be made until 3:30
    p.m.

         (d)  APPLICATION OF PAYMENTS.  All payments made by Borrower shall be
    applied first against fees, expenses, and indemnities due; second, against
    interest due; and third, against principal, with Agent having the
    obligation, after a Default which is continuing, to apply any payments or
    collections received against the Obligations owing to the Banks in
    accordance with their respective Pro Rata Shares.  Except for payments made
    by Borrower to Agent for fees and indemnities due Agent, or payments made
    with regard to Swing Line Advances or Letters of Credit in which no Bank
    has been called upon to purchase a participation pursuant to Article 5, all
    payments made by Borrower shall be deemed to be made to Agent, as agent for
    Banks in accordance with each Bank's Pro Rata Share, and shall be
    distributed by Agent to Banks according to their respective Pro Rata Share;
    PROVIDED, that while Agent will make a good faith effort to make such
    remittances on the same Business Day as received, if payments are received
    from Borrower after 12:00 noon, and if it is not practicable for Agent to
    make same-day remittances to the Banks, then Agent shall not be obligated
    to remit funds to the Banks 

                                           -24-

<PAGE>

    until the next Business Day, along with interest at the Fed Funds Rate.  
    Any such payments which are received by a Bank shall be delivered 
    immediately by such Bank to Agent for distribution to Banks in accordance 
    with this subsection.

         (e)  RECORDING OF PAYMENTS.  Agent is authorized to record on a
    schedule or computer-generated statement the date and amount of each
    Advance and Swing Line Advance, all conversions between interest rate
    options, and all payments of principal and interest.  All such schedules or
    statements shall constitute PRIMA FACIE evidence of the accuracy of the
    information so recorded.

         (f)  ANTICIPATORY PAYMENTS.  Agent shall have the right (but not the
    obligation), if it reasonably anticipates receipt of payment from Borrower
    but has not actually received such payment, to forward payment to each Bank
    of its respective Pro Rata Share; PROVIDED, that if Borrower fails within
    one Business Day to make such payment, each Bank shall, immediately upon
    the demand of Agent, return such funds to Agent.

         (g)  PAYMENTS PURSUANT TO ADVANCES.  If an Advance is repaid by means
    of a new Advance in a like amount, Agent shall credit such new Advance
    directly to repayment of the maturing Advance, and no funds shall be
    transferred to or from Banks.

         (h)  MULTICURRENCY ADVANCES.  If a Multicurrency Advance is not repaid
    on the date when due, Borrower shall indemnify Agent and all Banks for all
    costs, expenses, and interest incurred by Agent and each such Bank in
    covering any foreign exchange contracts and hedges entered into by such
    parties with regard to such Multicurrency Advance.

    15.2 NOTICES.  Agent may make Advances and conversions between interest 
rates, and Seafirst shall make Swing Line Advances, based on telephonic, 
telex, and oral requests made by any Person whom Agent in good faith believes 
to be authorized to act on behalf of Borrower.  All other notices, demands, 
and other communications to be given pursuant to any of the Loan Documents 
shall be in writing and shall be deemed received the earlier of when actually 
received, or two days after being mailed, postage prepaid and addressed as 
follows, or as later designated in writing:

AGENT:                                  BORROWER:                        
                                                                         
SEAFIRST BANK                           PHYSIO-CONTROL CORPORATION       
Seafirst Agency Services                11811 Willows Road Northeast     
701 Fifth Avenue, 16th Floor            Redmond, WA  98073-9706          
Seattle, WA  98104                      Attention:  Joseph J. Caffarelli 
Attention:  Ken Puro                    


BANKS:                                  
                                        
SEAFIRST BANK                           MELLON BANK, N.A.                   
Metropolitan Wholesale, Team 1          Western Region                      
701 Fifth Avenue, 13th Floor            400 South Hope Street, 5th Floor    
Seattle, Washington  98104              Los Angeles, California  90071-2806 
Attention:  Michael Collum              Attention:  Susan A. Dalton         

    15.3 DOCUMENTATION AND ADMINISTRATION EXPENSES.  Borrower shall pay, 
reimburse, and indemnify Agent and Banks for all of Agent's and Banks' 
reasonable costs and expenses, including, without limitation, all accounting, 
appraisal, and report preparation fees or expenses, all attorneys' fees 
(including the allocated cost of in-house counsel), legal expenses, and 
recording or filing fees, incurred in connection with the negotiation, 
preparation, execution, and administration of this Agreement and 

                               -25-

<PAGE>

all other Loan Documents, and all amendments, supplements, or modifications 
thereto, and the perfection of all security interests, liens, or encumbrances 
that may be granted to Banks; PROVIDED, that Borrower shall pay no more than 
$3,000 in legal fees for the initial documentation of the facilities 
evidenced by this Agreement. Borrower acknowledges that any legal counsel 
retained or employed by Agent or Banks acts solely on the Agent's and Banks' 
behalf and not on Borrower's behalf, despite Borrower's obligation to 
reimburse Agent and Banks for the cost of such legal counsel, and that 
Borrower has had sufficient opportunity to seek the advice of its own legal 
counsel with regard to this Agreement.

    15.4 COLLECTION EXPENSES.  The nonprevailing party shall, upon demand by 
the prevailing party, reimburse the prevailing party for all of its costs, 
expenses, and reasonable attorneys' fees (including the allocated cost of 
in-house counsel) incurred in connection with any controversy or claim 
between said parties relating to this Agreement or any of the other Loan 
Documents, or to an alleged tort arising out of the transactions evidenced by 
this Agreement, including those incurred in any action, bankruptcy 
proceeding, arbitration or other alternative dispute resolution proceeding, 
or appeal, or in the course of exercising any judicial or nonjudicial 
remedies.

    15.5 WAIVER.  No failure to exercise and no delay in exercising, on the 
part of Agent or Banks, any right, power, or privilege hereunder shall 
operate as a waiver thereof, nor shall any single or partial exercise of any 
right, power, or privilege hereunder preclude any other or further exercise 
thereof, or the exercise of any other right, power, or privilege.  Further, 
no waiver or indulgence by Agent or Banks of any Default shall constitute a 
waiver of Agent's and Banks' right to declare a subsequent similar failure or 
event to be a Default.

    15.6 ASSIGNMENT.  This Agreement is made expressly for the sole benefit 
of Borrower and for the protection of Agent and Banks and their respective 
successors and assigns.  The rights of Borrower hereunder shall not be 
assignable by operation of law or otherwise, without the prior written 
consent of Agent and Banks.  Upon any assignment, the assigning Bank shall 
pay Agent an assignment fee of $2,500.  Either Bank may at any time sell, 
assign, grant participations in, or otherwise transfer to any other financial 
institution (a "Participant") all or any part of its obligations under the 
Letters of Credit and its rights under this Agreement and the Loan Documents, 
with assignments only to be made with the consent of Borrower, which shall 
not be unreasonably withheld.  Participations may be sold without the consent 
of Borrower, PROVIDED that any voting rights of such participants shall be 
limited to matters of principal amount, interest rates, fees, payment dates, 
release of any Collateral or any guarantors, and extensions of the 
Termination Date or other maturities. Banks acknowledge and agree that any 
such disposition will not alter or affect such Bank's direct obligations 
under this Agreement and under the Letters of Credit and its participation 
therein.  Borrower acknowledges that any such Participant will become an 
owner PRO RATA of the Obligations, and Borrower waives any right it may have 
to setoff the Obligations against any claims or counterclaims it may have 
against the Bank selling such participation. Assignments by Banks, as opposed 
to participations, must be in minimum amounts of $5,000,000, and may only be 
made with the prior written consent of Borrower and Agent.  It is the 
intention of the parties that Borrower's obligation to pay or reimburse 
expenses will not be increased because of an assignment or the creation or 
transfer of a participation interest.  Notwithstanding anything in this 
Agreement to the contrary, Borrower shall not be required to pay or reimburse 
Agent or Banks for any fees, costs, or expenses, including attorneys' fees, 
relating to the creation or transfer of any assignment or participation 
interest.  Neither shall Borrower be required to pay or reimburse Agent or 
Banks for any documentation and administration expenses incurred by an 
assignee or Participant except to the extent that such expenses are in lieu 
of, and not in addition to, expenses incurred by Seafirst or Mellon.

    15.7 MERGER.  The rights and obligations set forth in this Agreement 
shall not merge into or be extinguished by any of the Loan Documents, but 
shall continue and remain valid and enforceable.  This Agreement and the 
other Loan Documents constitute Agent's and Banks' entire agreement with 
Borrower with regard to the Revolving Loan, the Swing Line, and the Letters 
of Credit, and supersede all prior writings and oral negotiations.  No oral 
or written representation, covenant, commitment, 

                                   -26-

<PAGE>

waiver, or promise of either Agent, any Bank or Borrower shall have any 
effect, whether made before or after the date of this Agreement, unless 
contained in this Agreement or another Loan Document, or in an amendment 
complying with Section 15.8.  ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN 
MONEY, TO EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE 
NOT ENFORCEABLE UNDER WASHINGTON LAW.

    15.8  AMENDMENTS.  Any amendment or waiver of, or consent to any 
departure by Borrower from any provision of, this Agreement or any other Loan 
Document shall be in writing signed by each party to be bound thereby, and 
shall be effective only in the specific instance and for the specific purpose 
for which given.  Banks authorize Agent (i) to make the following amendments 
only upon the prior written consent of all Banks:

         (a)  increase the Credit Limit or the maximum amounts permitted for
    the Swing Line or issuance of Letters of Credit;

         (b)  extend the Termination Date;

         (c)  release any guaranty of the Obligations, or release any
    Collateral;

         (d)  reduce the principal, interest, or interest rate on the Revolving
    Loan or Swing Line, or the issuance fees charged with regard to Letters of
    Credit, or fees otherwise accruing under this Agreement, from that
    otherwise required under this Agreement; or

         (e)  postpone the date fixed for payment of any principal, interest,
    or fees;

and (ii) to waive, change, or release Borrower from any affirmative or 
negative covenant under this Agreement only upon the prior written consent of 
Majority Banks.  Seafirst shall not make Swing Line Advances after the 
occurrence of and during the continuance of a Default without the consent of 
all Banks.

    15.9  CONSTRUCTION.  Each term of this Agreement and each Loan Document 
shall be binding to the extent permitted by law and shall be governed by the 
laws of the State of Washington, excluding its conflict of laws rules.  If 
one or more of the provisions of this Agreement should be invalid, illegal, 
or unenforceable in any respect, the remaining provisions of this Agreement 
shall remain effective and enforceable.  If there is a conflict among the 
provisions of any Loan Documents, the provisions of this Agreement shall be 
controlling. The captions and organization of this Agreement are for 
convenience only, and shall not be construed to affect any provision of this 
Agreement.

    15.10 COUNTERPARTS.  This Agreement may be signed in any number of 
counterparts, each of which shall be an original, with the same effect as if 
the signatures to such counterparts were upon the same instrument.  This 
Agreement shall become effective when Agent shall have received counterparts 
of the Agreement signed by all of the parties to the Agreement.

                                -27-
<PAGE>

DATED June 3, 1997.

BORROWER:                                 AGENT:              
                                                              
PHYSIO-CONTROL CORPORATION                SEAFIRST BANK       
                                                              
                                                              
                                                              
                                                              
By                                        By                  
  --------------------------------          ------------------------------

Title                                     Title
     -----------------------------             ---------------------------


By
  --------------------------------          

Title
     -----------------------------           

BANKS:

SEAFIRST BANK                             MELLON BANK, N.A. 
                                                            
                                                            
                                                            
                                                            
By                                        By                
  --------------------------------          ------------------------------

Title                                     Title             
     -----------------------------             ---------------------------

                              CONSENT OF GUARANTOR

    The undersigned Guarantor acknowledges receipt of a copy of the above 
Agreement, consents to its contents, and agrees to comply with the covenants 
of Sections 11.2 through 11.14 thereof.  By submitting each of the financial 
statements required by Subsection 11.5(a) and 11.5(b), Guarantor is deemed to 
represent and warrant that: (a) such statement is complete and correct and 
fairly presents the consolidated financial condition of Guarantor as of the 
date of such statement; (b) such statement discloses all liabilities of 
Guarantor that are required to be reflected or reserved against under GAAP, 
whether liquidated or unliquidated, fixed or contingent; and (c) such 
statement has been prepared in accordance with GAAP.  As of the date of 
execution of this Agreement, there has been no adverse change in Guarantor's 
financial condition since preparation of the last such financial statements 
delivered to Banks which would materially impair Guarantor's ability to honor 
Guarantor's guaranty of the Obligations.  Guarantor hereby adopts and 
repeats, as to Guarantor, all representations and warranties made by Borrower 
as to Borrower in Article 10 of the above Agreement.

                                -28-

<PAGE>

DATED June 3, 1997.


                                   GUARANTOR:

                                   PHYSIO-CONTROL INTERNATIONAL
                                   CORPORATION




                                   By
                                     --------------------------------

                                   Title
                                        -----------------------------


                                   By
                                     --------------------------------

                                   Title
                                        -----------------------------

                                -29-

<PAGE>


                          EXHIBIT 1 TO CREDIT AGREEMENT

                               PREPAYMENT FEES

    If the principal balance of this note is prepaid in whole or in part, 
whether by voluntary prepayment, operation of law, acceleration or otherwise, 
a prepayment fee, in addition to any interest earned, will be immediately 
payable to the holder of this note.

    The amount of the prepayment fee depends on the following:

(1) The amount by which interest reference rates as defined below have changed
    between the time the loan is prepaid and either a) the time the loan was
    made for fixed rate loans, or b) the time the interest rate last changed
    (repriced) for variable rate loans.
(2) A prepayment fee factor (see "Prepayment Fee Factor Schedule" on reverse).
(3) The amount of principal prepaid.

If the proceeds from a CD or time deposit pledged to secure the loan are used 
to prepay the loan resulting in payment of an early withdrawal penalty for 
the CD, a prepayment fee will not also be charged under the loan.

           DEFINITION OF PREPAYMENT REFERENCE RATE FOR VARIABLE RATE LOANS

The "Prepayment Reference Rate" used to represent interest rate levels for 
variable rate loans shall be the index rate used to determine the rate on 
this loan having maturities equivalent to the remaining period to interest 
rate change date (repricing) of this loan rounded upward to the nearest 
month. The "Initial Prepayment Reference Rate" shall be the Prepayment 
Reference Rate at the time of last repricing and a new Initial Prepayment 
Reference Rate shall be assigned at each subsequent repricing.  The "Final 
Prepayment Reference Rate" shall be the Prepayment Reference Rate at the time 
of prepayment.

             DEFINITION OF PREPAYMENT REFERENCE RATE FOR FIXED RATE LOANS

The "Prepayment Reference Rate" used to represent interest rate levels on 
fixed rate loans shall be the bond equivalent yield of the average U.S. 
Treasury rate having maturities equivalent to the remaining period to 
maturity of this loan rounded upward to the nearest month. The "Initial 
Prepayment Reference Rate" shall be the Prepayment Reference Rate at the time 
the loan was made.  The "Final Prepayment Reference Rate" shall be the 
Prepayment Reference Rate at time of prepayment.

The Prepayment Reference Rate shall be interpolated from the yields as 
displayed on Page 119 of the Dow Jones Telerate Service (or such other page 
or service as may replace that page or service for the purpose of displaying 
rates comparable to said U.S. Treasury rates) on the day the loan was made 
(Initial Prepayment Reference Rate) or the day of prepayment (Final 
Prepayment Reference Rate).

                            CALCULATION OF PREPAYMENT FEE

If the Initial Prepayment Reference Rate is less than or equal to the Final 
Prepayment Reference Rate, there is no prepayment fee.

If the Initial Prepayment Reference Rate is greater than the Final Prepayment
Reference Rate, the prepayment fee shall be equal to the difference between the
Initial and Final Prepayment Reference Rates (expressed as a decimal),
multiplied by the appropriate factor from the Prepayment Fee Factor Schedule,
multiplied by the principal amount of the loan being prepaid.

<PAGE>

                        EXAMPLE OF PREPAYMENT FEE CALCULATION

VARIABLE RATE LOAN: A non-amortizing 6-month LIBOR based loan with principal 
of $250,000 is fully prepaid with 3 months remaining until next interest rate 
change date (repricing). An Initial Prepayment Reference Rate of 7.0% was 
assigned to the loan at last repricing.  The Final Prepayment Reference Rate 
(as determined by the 3-month LIBOR index) is 6.5%. Rates therefore have 
dropped 0.5% since last repricing and a prepayment fee applies.  A prepayment 
fee factor of 0.31 is determined from Table 3 below and the prepayment fee is 
computed as follows:

       Prepayment Fee = (0.07 - 0.065) x (0.31) x ($250,000) = $387.50

FIXED RATE LOAN: An amortizing loan with remaining principal of $250,000 is 
fully prepaid with 24 months remaining until maturity. An Initial Prepayment 
Reference Rate of 9.0% was assigned to the loan when the loan was made. The 
Final Prepayment Reference Rate (as determined by the current 24-month U.S. 
Treasury rate on Page 119 of Telerate) is 7.5%. Rates therefore have dropped 
1.5% since the loan was made and a prepayment fee applies. A prepayment fee 
factor of 1.3 is determined from Table 1 below and the prepayment fee is 
computed as follows:

       Prepayment Fee = (0.09 - 0.075) x (1.3) x ($250,000) = $4,875

                          PREPAYMENT FEE FACTOR SCHEDULE


                           TABLE I: FULLY AMORTIZING LOANS

<TABLE>
<CAPTION>

Proportion of Remaining      
Principal Amount Being Prepaid                  Months Remaining To Maturity/Repricing(1)
--------------------------------------------------------------------------------------------------------------------------
<S>          <C>   <C>    <C>    <C>    <C>       <C>       <C>       <C>       <C>       <C>      <C>      <C>      <C>
             0     3      6      9      12        24        36        48        60        84       120      240      360
--------------------------------------------------------------------------------------------------------------------------
90-100%      0     .21    .36    .52    .67       1.3       1.9       2.5       3.1       4.3      5.9      10.3     13.1
60-89%       0     .24    .44    .63    .83       1.6       2.4       3.1       3.9       5.4      7.5      13.2     17.0
30-59%       0     .28    .53    .78    1.02      2.0       3.0       4.0       5.0       7.0      9.9      18.5     24.4
0-29%        0     .31    .63    .92    1.22      2.4       3.7       5.0       6.3       9.0      13.4     28.3     41.8
</TABLE>

                                TABLE II: PARTIALLY AMORTIZING (BALLOON) LOANS


<TABLE>
<CAPTION>

Proportion of Remaining Principal                                  
Amount Being Prepaid                            Months Remaining To Maturity/Repricing(1)
--------------------------------------------------------------------------------------------------------------------------
             0     3      6      9      12        24        36        48        60        84       120      240      360
--------------------------------------------------------------------------------------------------------------------------
<S>          <C>   <C>    <C>    <C>    <C>       <C>       <C>       <C>       <C>       <C>      <C>      <C>      <C>
90-100%      0     .26    .49    .71    .94       1.8       2.7       3.4       4.2       5.6      7.4      11.6     14.0
60-89%       0     .30    .59    .86    1.15      2.2       3.3       4.3       5.3       7.1      9.4      15.0     18.1
30-59%       0     .31    .63    .95    1.27      2.6       3.9       5.3       6.6       9.1      12.6     21.2     26.2
0-29%        0     .31    .63    .95    1.27      2.6       4.0       5.4       7.0       10.2     15.7     33.4     46.0
</TABLE>

                                  TABLE III: NONAMORTIZING (INTEREST ONLY) LOANS

<TABLE>
<CAPTION>
Proportion of Remaining Principal 
Amount Being Prepaid                            Months Remaining To Maturity/Repricing(1)
--------------------------------------------------------------------------------------------------------------------------
             0     3      6      9      12        24        36        48        60        84       120      240      360
--------------------------------------------------------------------------------------------------------------------------
<S>          <C>   <C>    <C>    <C>    <C>       <C>       <C>       <C>       <C>       <C>      <C>      <C>      <C>
0-100%       0     .31    .61    .91    1.21      2.3       3.4       4.4       5.3       6.9      8.9      13.0     14.8
</TABLE>

(1)   For the remaining period to maturity/repricing between any two 
maturities/repricings shown in the above schedules, interpolate between the 
corresponding factors to the closest month.

The holder of this note is not required to actually reinvest the prepaid 
principal in any U.S. Government Treasury Obligations, or otherwise prove its 
actual loss, as a condition to receiving a prepayment fee as calculated above.

<PAGE>

                            EXHIBIT 2 TO CREDIT AGREEMENT
                                           
                        FORM OF MULTICURRENCY BORROWING NOTICE
                                           
To:   Seafirst Agency Services
      701 Fifth Ave., 16th Floor
      Seattle, Washington  98104
      Attention:
                -----------------------
      Phone:    (206) 358-0078
      Fax:      (206) 358-0971

      BORROWING INSTRUCTIONS:

      Date of Borrowing:
                                                    ----------------------------
      Specify New Advance or Rollover:
                                                    ----------------------------
      Currency Type:
                                                    ----------------------------
      Amount requested (in applicable currency):     
                                                    ----------------------------
      Interest Period:
                                                    ----------------------------

      WIRE INSTRUCTIONS:

      Bank Name:
                                                    ----------------------------
      Swift Code:
                                                    ----------------------------
      Account Name:
                                                    ----------------------------
      Account Number:
                                                    ----------------------------
      Attention:
                                                    ----------------------------
      Phone Number:
                                                    ----------------------------


    Borrower hereby represents and warrants to Banks that as of the date 
hereof (a) the statements set forth in Article 10 of the Credit Agreement 
dated June 3, 1997, among Physio-Control Corporation, Bank of America 
National Trust and Savings Association, doing business as Seafirst Bank as 
Agent, and Bank of America National Trust and Savings Association, doing 
business as Seafirst Bank, and Mellon Bank, N.A., as Banks (the "Credit 
Agreement") are true and correct; and (b) no Default (as defined in the 
Credit Agreement) has occurred and is continuing or will result from 
disbursement of the requested Advance.

    DATED:                                       .
           --------------------------------------

                                       PHYSIO-CONTROL CORPORATION



                                       By
                                         --------------------------------

                                       Title                    
                                            -----------------------------

<PAGE>

                            EXHIBIT 3 TO CREDIT AGREEMENT
                                           
                          FORM OF PARTICIPATION CERTIFICATE
                                           

$                                                    Date: 
 ----------------------                                    ---------------------

    Bank of America National Trust and Savings Association, a national 
banking association, doing business as Seafirst Bank (the "Issuing Bank"), 
for and in consideration of the mutual covenants and agreements of the 
Issuing Bank and Mellon Bank, N.A. (the "Participating Bank") set forth in 
that certain Credit Agreement dated June 3, 1997 ("Credit Agreement") among 
Physio-Control Corporation ("Borrower"), the Issuing Bank, and the 
Participating Bank, hereby assigns to Participating Bank a 50% interest (the 
"Participation Interest") in all of its rights and obligations under the 
following letters of credit issued by the Issuing Bank for the account of 
Borrower, including all rights of the Issuing Bank relating thereto under the 
Credit Agreement and any L/C Agreement:


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

    Such Participation Interest is equal to $                                  .
                                             ----------------------------------

    All capitalized terms used in this certificate and not otherwise defined 
shall have the meaning given in the Credit Agreement.

    The Participation Interest granted hereby and the respective rights and 
duties of the Issuing Bank and the Participating Bank are governed by the 
terms of the Credit Agreement referred to above.

    Dated as of the date first set forth above.


                                                 SEAFIRST BANK



                                                 By
                                                   --------------------------

                                                 Title
                                                      -----------------------

<PAGE>

                            EXHIBIT 4 TO CREDIT AGREEMENT

               [Form of Certificate to be sent with financial reports]

[Date]

Seafirst Bank
Seafirst Agency Services
701 Fifth Avenue, 16th Floor
Seattle, WA  98104
Attention:  Ken Puro

Re:  Certificate of Chief Financial Officer

Ladies and Gentlemen:

With respect to that certain Credit Agreement between Physio-Control 
Corporation ("Borrower") and Physio-Control International Corporation 
("Guarantor"), Bank of America National Trust and Savings Association, doing 
business as Seafirst Bank as Agent, and Bank of America National Trust and 
Savings Association, doing business as Seafirst Bank, and Mellon Bank, N.A., 
as Banks, dated June 3, 1997 (the "Credit Agreement"), we hereby represent to 
you the following (capitalized terms used in this certificate shall have the 
same meaning as in the Credit Agreement):

1.  Enclosed are financial statements dated as of _________________________
    required by Section 11.5 of the Credit Agreement.

2.  As of the date of such financial statements, Guarantor's Tangible Net Worth
    is $________________________.

3.  As of the date of such financial statements, Guarantor's ratio of Debt to
    Tangible Net Worth is ________________________.

4.  As of the date of such financial statements, Guarantor's Fixed Charge
    Coverage Ratio is ________________________.

5.  As of the date of such financial statements, the following entities
    constitute all of Guarantor's Material Subsidiaries:______________________
    __________________________________________________________________________.

6.  Such financial statements are complete and correct, fairly present, without
    qualification, the financial condition of Guarantor for such period, and
    are prepared in accordance with GAAP.

7.  No Default exists, nor any event which, with lapse of time or upon the
    giving of notice, would constitute a Default under the Credit Agreement.

Sincerely,

PHYSIO-CONTROL INTERNATIONAL CORPORATION




By
  ------------------------------------
   Chief Financial Officer

<PAGE>


                            EXHIBIT 5 TO CREDIT AGREEMENT
                                           
                           FORM OF SUBSIDIARY'S CERTIFICATE
                                           

    The undersigned corporation, which is a corporation organized under the 
laws of the state of _________________________________ (the "Company"), and 
which is a "Material Subsidiary" as such term is defined in the Credit 
Agreement dated June 3, 1997 ("Credit Agreement"), among Physio-Control 
Corporation ("Borrower"), Bank of America National Trust and Savings 
Association, doing business as Seafirst Bank, a national banking association, 
as agent ("Agent"), and Seafirst Bank and Mellon Bank, N.A. as "Banks," makes 
this certificate with respect to the Credit Agreement.  Terms defined in the 
Credit Agreement have the same meaning when used in this certificate.  The 
Company acknowledges that it is a Material Subsidiary, and hereby adopts and 
repeats, as to itself and as of the date of this certificate, all 
representations and warranties made by Borrower as to Borrower in Article 10 
of the Credit Agreement; and agrees to comply with, as to the Company, all 
the covenants made by Borrower as to Borrower in Articles 11 and 12 of the 
Credit Agreement.

    DATED                          , 199    .
          -------------------------     ----

                                              COMPANY:

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




                                              By
                                                --------------------------

                                              Title
                                                   -----------------------