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                                        UNITED STATES
                              SECURITIES AND EXCHANGE COMMISSION
                                     Washington, DC 20549

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


                                          FORM 10-Q/A

(Mark One)
         [X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
               SECURITIES EXCHANGE ACT OF 1934
                       For the Quarter Ended September 30, 1996
                                              OR
         [   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
               THE SECURITIES EXCHANGE ACT OF 1934
                       For the transition period from to
                        Commission File Number 0-27460



                            PERFORMANCE TECHNOLOGIES, INCORPORATED
                    (Exact name of registrant as specified in its charter)



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

                  Delaware                              16-1158413
    (State or other jurisdiction of     (I.R.S. Employer Identification No.)
    incorporation of organization)
                                                        14620
315 Science Parkway, Rochester New York              (Zip Code)
    (Address of principal executive
               offices)
          Registrant's telephone number, including area code: (716) 256-0200

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





        Indicate by check mark whether the  registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes X No .


        The number of shares  outstanding of the  registrant's  common stock was
4,798,226 as of November 12, 1996.


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


                                    
<PAGE>
                Performance Technologies, Incorporated and Subsidiaries

                                Index to Form 10 Q/A
                      For the Quarter Ended September 30, 1996


                                                                           

Part II.                 Other Information

Item 6.        Exhibits 

               Exhibit 10.1 - Credit Agreement dated as of October 31, 1996 
               between Performance Technologies, Inc. and The Chase Manhattan
               Bank.

               Exhibit 10.2 - Guaranty  Agreement dated as of October 31, 1996
               between  UconX  Corporation  and The Chase  Manhattan Bank.

               Signatures  
                                                      
<PAGE>

CREDIT AGREEMENT

dated as of October 31, 1996

PERFORMANCE TECHNOLOGIES, INCORPORATED

and

THE CHASE MANHATTAN BANK


          

<PAGE>

     Page
     TABLE OF CONTENTS

     Page

     ARTICLE 1.  DEFINITIONS; ACCOUNTING TERMS  1
          Section 1.01.  Definitions  1
          Section 1.02.  Accounting Terms 11
          Section 1.03.  Subsidiaries 11

     ARTICLE 2. THE CREDIT 11
          Section 2.01.  Loans 11
          Section 2.02.  Purpose 12
          Section 2.03.  Changes of Commitment 12
          Section 2.04.  Extension of Revolving Credit Termination Date 12
          Section 2.05.  Letters of Credit 13
          Section 2.06.  Facility Fee 13

     ARTICLE 3.  REPAYMENTS; INTEREST; LATE FEES, PREPAYMENTS 13
          Section 3.01.  Repayment of Loans 13
          Section 3.02.  Interest 14
          Section 3.03.  Late Fees 14
          Section 3.04.  Prepayments 14

     ARTICLE 4.  PAYMENTS; COMPUTATIONS 15
          Section 4.01.  Payments 15
          Section 4.02.  Computations 15
          Section 4.03.  Certain Notices 15
          Section 4.04.  Minimum Amounts 16

     ARTICLE 5.  YIELD PROTECTION AND ILLEGALITY 17
          Section 5.01.  Additional Costs 17
          Section 5.02.  Limitation on Types of Loans 18
          Section 5.03.  Illegality 19
          Section 5.04.  Certain Conversions Pursuant to  5.01 and 5.03 19
          Section 5.05.  Compensation 19
          Section 5.06.  Survival 20

     ARTICLE 6.  CONDITIONS PRECEDENT 20
          Section 6.01.  Initial Conditions 20
          Section 6.02. Additional Conditions Precedent 21

     ARTICLE 7.  REPRESENTATIONS AND WARRANTIES 21
          Section 7.01.  Incorporation, Good Standing and Due Qualification 21
          Section 7.02.  Corporate Power and Authority; No Conflicts 21
          Section 7.03.  Legally Enforceable Agreements 22
          Section 7.04.  Litigation 22
          Section 7.05.  Financial Statements 22
          Section 7.06.  ERISA 23
          Section 7.07.  Subsidiaries and Ownership of Stock 23
          Section 7.08.  Existing Credit Arrangements and Existing Liens 23
     ()

          Section 7.09.  Regulation U 23
          Section 7.10.  Compliance With Laws 24
          Section 7.11.  Operation of Business 24
          Section 7.12.  Hazardous Materials 24
          Section 7.13.  No Default on Outstanding Judgments or Orders 25
          Section 7.14.  No Defaults on Other Agreements 25
          Section 7.15.  Labor Disputes and Acts of God 25
          Section 7.16.  Governmental Regulation 25
          Section 7.17.  Partnerships 25
          Section 7.18.  No Forfeiture 25
          Section 7.19.  Solvency 25

     ARTICLE 8.  AFFIRMATIVE COVENANTS 26
          Section 8.01.  Maintenance of Existence 26
          Section 8.02.  Conduct of Business 27
          Section 8.03.  Maintenance of Insurance 27
          Section 8.04.  Compliance with Laws 27
          Section 8.05.  Right of Inspection 27
          Section 8.06.  Reporting Requirements 28
          Section 8.07.  Audits 32
          Section 8.08.  Lease Financings 32

     ARTICLE 9.  NEGATIVE COVENANTS 32
          Section 9.01.  Debt 32
          Section 9.02.  Guarantees, Etc 33
          Section 9.03.  Liens 33
          Section 9.04.  Investments 33
          Section 9.05.  Sale of Assets 34
          Section 9.06.  Mergers, Etc 34
          Section 9.07.  Acquisitions 34
          Section 9.08.  No Activities Leading to Forfeiture 34
          Section 9.09.  Creation of Subsidiaries 34
          Section 9.10.  No Material Change 34

     ARTICLE 10.  FINANCIAL COVENANTS 34
          Section 10.01.  Leverage Ratio 35
          Section 10.02.  Cash Flow Coverage Ratio 35
          Section 10.03.  Income or Loss 35
          Section 10.04.  Current Ratio 35

     ARTICLE 11.  EVENTS OF DEFAULT 35
          Section 11.01.  Events of Default 35
          Section 11.02.  Remedies 39

     ARTICLE 12.  MISCELLANEOUS 39
          Section 12.01.  Amendments and Waivers 39
          Section 12.02.  Survival 39
          Section 12.03.  Usury 39
          Section 12.04.  Expenses 40
          Section 12.05.  Assignment; Participations 40
          Section 12.06.  Notices 40
          Section 12.07.  Set-Off 41
          Section 12.08.  Jurisdiction; Immunities 41
          Section 12.09.  Captions 42
          Section 12.10.  Severability 42
          Section 12.11.  Counterparts 42
          Section 12.12.  Governing Law 42

     EXHIBIT B

     ANNUAL COMPLIANCE CERTIFICATE


<PAGE>

     CREDIT  AGREEMENT  dated  as  of  October  31,  1996,  between  PERFORMANCE
TECHNOLOGIES,  INCORPORATED,  a corporation organized under the laws of Delaware
(the "Borrower") and THE CHASE MANHATTAN BANK, a banking  corporation  organized
under the laws of the State of New York (the "Bank").

     The Borrower  desires that the Bank extend credit as provided  herein,  and
the Bank is prepared to extend such credit upon the terms  hereof.  Accordingly,
the Borrower and the Bank hereby agree as follows:

ARTICLE 1.  DEFINITIONS; ACCOUNTING TERMS.

     Section 1.01.  Definitions.  As used in this Agreement the following  terms
have the  following  meanings  (terms  defined in the  singular to have the same
meaning when used in the plural and vice versa):

     "Acquisition"  means any transaction  pursuant to which the Borrower or any
of its  Subsidiaries  (a) acquires  equity  securities (or warrants,  options or
other rights to acquire such  securities)  of any Person other than the Borrower
or any Person  which is not then a  Subsidiary  of the  Borrower,  pursuant to a
solicitation of tenders therefor,  or in one or more negotiated block, market or
other  transactions not involving a tender offer, or a combination of any of the
foregoing,  or (b) makes any Person a Subsidiary of the Borrower,  or causes any
such Person to be merged into the  Borrower or any of its  Subsidiaries,  in any
case pursuant to a merger,  purchase of assets or any  reorganization  providing
for the delivery or issuance to the holders of such  Person's  then  outstanding
securities,  in  exchange  for such  securities,  of cash or  securities  of the
Borrower or any of its Subsidiaries,  or a combination thereof, or (c) purchases
all or substantially all of the business or assets of any Person.

     "Adjusted Net Profit" means for any period and in respect of any Person the
sum of (i) the net income of such Person  (after  taxes)  computed in accordance
with GAAP and as reported for such period on such Person's  statements of income
and cash flow (or  similar  statements),  plus (ii) all noncash  expense  items,
including  the  amount  reported  as  depreciation  and the amount  reported  as
amortization of intangible  assets on such statements and computed in accordance
with GAAP.

     "Affiliate" means any Person: (a) which directly or indirectly controls, or
is controlled  by, or is under common  control with,  the Borrower or any of its
Subsidiaries;  (b) which directly or indirectly beneficially owns or holds 5% or
more of any class of voting stock of the Borrower or any Subsidiary thereof; (c)
5% or more of the voting stock of which is directly or  indirectly  beneficially
owned  or  held  by the  Borrower  or  Subsidiary  thereof;  or (d)  which  is a
partnership  in which  the  Borrower  or any  Subsidiary  thereof  is a  general
partner. The term "control" means the possession, directly or indirectly, of the
power to direct or cause the  direction  of the  management  and  policies  of a
Person,  whether  through the ownership of voting  securities,  by contract,  or
otherwise.
              
     "Agreement"  means this Credit  Agreement,  as amended or supplemented from
time to time. References to Articles, Sections, Exhibits, Schedules and the like
refer  to the  Articles,  Sections,  Exhibits,  Schedules  and the  like of this
Agreement unless otherwise indicated.

     "Annual Date" means the anniversary of the date of this Agreement.

     "Applicable  Margin"  means,  (a) with respect to each Loan, 0% per year on
Prime Loans and 1.5% per year on Libor Loans.

     "Banking Day" means any day on which commercial banks are not authorized or
required to close in Rochester, New York.

     "Borrowed  Money  Obligation"  means and  includes any  obligation  for the
payment of borrowed cash, including any sale and lease-back or similar financing
device or scheme by a Person in respect of assets  owned by such Person prior to
such  financing,  but  excluding  any  obligation  for payment  under any lease,
installment  purchase  or  other  title  retention  agreement  by which a Person
acquires the ownership or right to use property not previously  included in such
Person's assets in accordance with GAAP.

     "Capital  Expenditures"  means for any period  the  Dollar  amount of gross
expenditures (including obligations under Capital Leases) made for fixed assets,
real  property,  plant  and  equipment,  and  all  renewals,   improvements  and
replacements  thereto (but not repairs  thereof)  which are deemed to be capital
expenditures in accordance with GAAP and which are incurred during such period.

     "Capital  Lease" means any lease which has been or should be capitalized on
the books of the lessee in accordance with GAAP.

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

     "Commitment"  means the obligation of the Bank to make the Loans and extend
Letters of Credit under this  Agreement in an aggregate  principal  amount up to
$3,000,000,  as such amount may be reduced or  otherwise  modified  from time to
time.

     "Consolidated  Adjusted  Net Profit"  means for any period the Adjusted Net
Profit of the Borrower and its Consolidated Subsidiaries on a consolidated basis
as determined in accordance with GAAP.

     "Consolidated  Capital Expenditures" means for any period the dollar amount
of gross  expenditures  (including  Capital  Lease  Obligations)  made for fixed
assets, real property, plant and equipment,  and all renewals,  improvements and
replacements  thereto (but not repairs  thereof)  which are deemed to be capital
expenditures by the Borrower and its Consolidated Subsidiaries on a consolidated
bases as determined in accordance  with GAAP and which are incurred  during such
period.

     "Consolidated  Current  Assets"  means  all  assets  of  Borrower  and  its
Consolidated  Subsidiaries on a consolidated  basis which should,  in accordance
with GAAP,  be  classified  as current  assets,  but in any event  excluding any
assets  which are pledged or  deposited  as security  for, or for the purpose of
paying, any Debt other than the Loans.

     "Consolidated  Current  Liabilities" means all Indebtedness of Borrower and
its  Consolidated   Subsidiaries  on  a  consolidated  basis  which  should,  in
accordance  with GAAP, be classified as current  liabilities  after  eliminating
inter-company  items in  accordance  with GAAP,  but in any event  excluding the
Loans.

     "Consolidated  Current Portion of Funded Debt" means the principal payments
(including  sinking fund payments or  redemptions)  in respect of Funded Debt of
the Borrower and its  Consolidated  Subsidiaries  on a consolidated  basis which
constitute current liabilities as determined in accordance with GAAP and as such
item  appears  on the  consolidated  balance  sheet  of  the  Borrower  and  its
Consolidated Subsidiaries.

     "Consolidated Income" means, for any fiscal period, the income (or loss) of
the Borrower and its Subsidiaries on a consolidated  after-tax basis computed in
accordance with GAAP and as reported on the Borrower's  statements of income and
retained earnings (or similar statements).

     "Consolidated  Subsidiary"  means, in respect of any Person, any Subsidiary
the accounts of which are or are required to be  consolidated  with the accounts
of such Person in accordance with GAAP, excluding only UconX Corporation .

     "Consolidated  Tangible Net Worth"  means,  as at any date,  the sum of the
following  items in respect of the  Borrower and its  Consolidated  Subsidiaries
(determined on a consolidated basis in accordance with GAAP):

     a. the amount of capital stock, plus

     b. the  amount of  surplus  and  retained  earnings  (or,  in the case of a
surplus or retained earnings deficit, minus the amount of such deficit), minus

     c. the sum of the following:  cost of treasury shares and the book value of
all assets which should be classified as  intangibles  (without  duplication  of
deductions  in respect of items  already  deducted  in  arriving  at surplus and
retained  earnings) but in any event  including  goodwill,  minority  interests,
research and development costs, trademarks, trade names, copyrights, patents and
franchises, unamortized debt discount and expense, all reserves and any write-up
in the book value of assets resulting from a revaluation  thereof  subsequent to
December 31, 1995, and minus

     d. the amount of all  retained  earnings  subsequent  to December  31, 1995
derived from unusual  items,  including  without  limitation all sales of assets
other than inventory.

     "Consolidated  Total  Liabilities"  means  the  Total  Liabilities  of  the
Borrower and its  Consolidated  Subsidiaries,  as determined  on a  consolidated
basis in accordance with GAAP.

     "Current  Termination Date" means the Revolving Credit  Termination Date as
in effect from time to time under this Agreement.

     "Debt" means,  with respect to any Person:  (a) indebtedness of such Person
for borrowed money; (b) indebtedness for the deferred purchase price of property
or services  (except trade  payables in the ordinary  course of  business);  (c)
Unfunded Vested  Liabilities of such Person (if such Person is not the Borrower,
determined  in a  manner  analogous  to  that  of  determining  Unfunded  Vested
Liabilities of the Borrower);  (d) the face amount of any outstanding letters of
credit  issued for the account of such Person;  (e)  obligations  arising  under
acceptance facilities;  (f) guaranties,  endorsements (other than for collection
in the  ordinary  course  of  business)  and  other  contingent  obligations  to
purchase, to provide funds for payment, to supply funds to invest in any Person,
or otherwise to assure a creditor  against loss; (g) obligations  secured by any
Lien on property of such Person;  and (h)  obligations  of such Person as lessee
under Capital Leases.

     "Default" means any event which with the giving of notice or lapse of time,
or both, would become an Event of Default.

     "Default Rate" means, with respect to the principal of any Loan and, to the
extent  permitted by law, any other  amount  payable by the Borrower  under this
Agreement  or the Note,  a rate per annum equal to 4% above the Prime Rate as in
effect from time.

     "Dollars"  and the sign "$" mean  lawful  money  of the  United  States  of
America.

     "Environmental  Laws" means any and all federal,  state,  local and foreign
statutes, laws, regulations, ordinances and rules relating to the environment or
to  emissions,  discharges,  releases  or  threatened  releases  of  pollutants,
contaminants,  chemicals, or industrial, toxic or hazardous substances or wastes
into the environment including, without limitation,  ambient air, surface water,
ground water,  or land,  or otherwise  relating to the  manufacture,  processing
distribution,  use,  treatment,  storage,  disposal,  transport,  or handling of
pollutants,   contaminants,   chemicals,  or  industrial,   toxic  or  hazardous
substances or wastes.

     "ERISA"  means the Employee  Retirement  Income  Security  Act of 1974,  as
amended  from time to time,  including  any rules  and  regulations  promulgated
thereunder.

     "ERISA  Affiliate"  means any  corporation  or trade or business which is a
member of any group of  organizations  (i) described in Section 414(b) or (c) of
the Code of which the  Borrower  is a member,  or (ii)  solely for  purposes  of
potential  liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of
the Code and the lien created under Section  302(f) of ERISA and Section  412(n)
of the  Code,  described  in  Section  414(m)  or (o) of the Code of  which  the
Borrower is a member.

     "Event of Default" has the meaning given such term in 11.01.

     "Existing  Liens"  means all Liens  against  the  property or assets of the
Borrower and all  Subsidiaries on the date of this Agreement and as set forth on
Schedule 2 hereto.

     "Facility Documents" means this Agreement, the Note, the Guaranties and the
Security Agreements.

     "Forfeiture  Proceeding"  means any  action,  proceeding  or  investigation
affecting  the  Borrower or any of its  Subsidiaries  or  Affiliates  before any
court,   governmental   department,   commission,   board,  bureau,   agency  or
instrumentality, domestic or foreign, or the receipt of notice by any such party
that any of them is a suspect  in or a target  of any  governmental  inquiry  or
investigation,  which could  reasonably  be expected to have a Material  Adverse
Effect.

     "Funded  Debt" means,  with respect to any Person,  all Debt of such Person
for money  borrowed  which by its terms matures more than one year from the date
as of which  such  Debt is  incurred,  and any  Debt of such  Person  for  money
borrowed  maturing  within  one  year  from  such  date  which is  renewable  or
extendable at the option of the obligor to a date beyond one year from such date
(whether  or not  theretofore  renewed  or  extended),  including  any such Debt
renewable or extendable at the option of the obligor under,  or payable from the
proceeds of other Debt which may be incurred  pursuant to, the provisions of any
revolving credit agreement or other similar agreement.

     "GAAP" means generally accepted accounting  principles in the United States
of America as in effect from time to time,  applied on a basis  consistent  with
those used in the  preparation of the financial  statements  referred to in 7.05
(except  for  changes  concurred  in  by  the  Borrower's   independent   public
accountants).

     "Guarantor"  means  UconX and any other  Person  who  hereafter  guaranties
payment or collection of the Loans or any part thereof.

     "Guaranties"  means the Guaranty Agreement of even date herewith granted by
UconX and all other  guaranty  agreements  hereafter  granted to the Bank by any
Person whereby such Person guaranties  payment or collection of the Loans or any
part thereof.

     "Interest  Period"  shall mean with  respect to any Libor Loan,  the period
commencing  on the  date  such  Loan  is  made  and  ending  on the  numerically
corresponding day in the first,  second or third calendar month  thereafter,  as
the  Borrower  may select as  provided  in 4.03  hereof,  except  that each such
Interest  Period which commences on the last Banking Day of a calendar month (or
on  any  day  for  which  there  is no  numerically  corresponding  day  in  the
appropriate subsequent calendar month) shall end on the last Banking Day of such
first,  second or third calendar  month.  Notwithstanding  the  foregoing,  each
Interest  Period which would  otherwise  end on a day which is not a Banking Day
shall end on the next succeeding  Banking Day or if such next succeeding Banking
Day falls in the next succeeding  calendar month, on the next preceding  Banking
Day.

     "Lending Office" means the office of the Bank designated as such underneath
the signature of the officer of the Bank executing this  Agreement.  "Letters of
Credit"  means all letters of credit or  banker's  acceptances  now  existing or
hereafter  issued by Chase for the  Borrower as the  account  party from time to
time.

     "Libor Base Rate"  means,  with  respect to each Libor  Loan,  the rate per
annum (rounded upwards,  if necessary,  to the nearest 1/16 of 1%) quoted by the
Reference Bank at approximately 11:00 a.m. London time (or as soon thereafter as
practicable)  two Banking Days prior to the first day of the Interest Period for
such Loans for the offering by the Reference Bank to leading banks in the London
interbank  market of Dollar  deposits  having a term comparable to such Interest
Period and in an amount  comparable to the  principal  amount of such Libor Loan
made by the Bank to which such Interest Period relates.

     "Libor Loans" means Loans the interest rates on which are determined on the
basis of the Libor Base Rate.

     "Lien"  means  any  lien  (statutory  or  otherwise),   security  interest,
mortgage,  deed of trust,  priority,  pledge,  charge,  conditional  sale, title
retention  agreement,  financing lease or other  encumbrance or similar right of
others, or any agreement to give any of the foregoing.

     "Loans" means the  revolving  credit loans made by the Bank to the Borrower
pursuant  to 2.01  hereof,  and  shall be deemed to  include  any  Reimbursement
Obligation, and "Loan" shall mean any of the Loans.

     "Material  Adverse Effect" means a material adverse effect on the financial
condition  of the  Borrower  and its  Subsidiaries  taken as a whole in a Dollar
amount which equals or exceeds 5% of the  Borrower's  Consolidated  Tangible Net
Worth without regard to whether such Dollar amount is reported on the Borrower's
consolidated  financial statements in accordance with GAAP, or any change in the
nature of the business of the Borrower and Subsidiaries taken as a whole.

     "Multiemployer Plan" means a Plan defined as such in Section 3(37) of ERISA
to which contributions have been made by the Borrower or any ERISA Affiliate and
which is covered by Title IV of ERISA.

     "Note"  means the  Revolving  Credit  Note in the form of Exhibit A annexed
hereto.

     "Payment Office" means the office of the Bank designated as such underneath
the signature of the officer of the Bank executing this Agreement.

     "PBGC"  means the  Pension  Benefit  Guaranty  Corporation  and any  entity
succeeding to any or all of its functions under ERISA.

     "Permitted  Encumbrances"  means and includes  with respect to the Borrower
and its Subsidiaries:

     (i) in the case of real properties,  easements,  restrictions,  exceptions,
reservations  or defects which,  in the aggregate,  do not interfere  materially
with the  continued use of such  properties  for the purposes for which they are
used and do not affect materially the value thereof;

     (ii) liens, if contested in good faith by appropriate proceedings;

     (iii)   pledges  or  deposits  to  secure   obligations   under   workmen's
compensation laws or similar  legislation or to secure performance in connection
with bids,  tenders  and  contracts  (other  than  contracts  for the payment of
borrowed  money) to which the  Borrower or any  Subsidiary  of the Borrower is a
party;

     (iv) deposits to secure public or statutory obligations of the Borrower and
any Subsidiary of the Borrower;

     (v)  materialmen's  mechanics',  carriers',  workmen's  or other like liens
arising in the ordinary course of business, or deposits of cash or United States
obligations to obtain the release of such liens;

     (vi) deposits to secure surety or appeal bonds in  proceedings to which the
Borrower or any Subsidiary of the Borrower is a party;

     (vii) existing  leases by the Borrower or the Borrower of real and personal
property; and

     (viii) purchase money security interests for Debt not exceeding  $1,000,000
in the  aggregate  principal  amount  incurred  during  any  fiscal  year of the
Borrower; and

     (ix) Liens on inventory or equipment securing  Subordinated Debt,  provided
that such Liens are  subordinated  to the  Bank's  Liens  under a  subordination
agreement  in form and  substance  reasonably  satisfactory  to the  Bank  which
provides for no foreclosure  on other  realization  of such  subordinated  Liens
prior to the Bank's foreclosure or other realization of its Liens.

     "Person" means an individual,  partnership,  corporation,  business  trust,
joint  stock  company,  trust,   unincorporated   association,   joint  venture,
governmental authority or other entity of whatever nature.

     "Plan" means any employee  benefit or other plan established or maintained,
or to which contributions have been made, by the Borrower or any ERISA Affiliate
and which is covered by Title IV of ERISA, other than a Multiemployer Plan.

     "Prime Loans" means Loans the interest rates on which are determined on the
basis of the Prime Rate.

     "Prime Rate" means that rate of interest from time to time announced by the
Bank at its Principal Office as its prime commercial lending rate.

     "Principal  Office"  means the  principal  office  of the  Bank,  presently
located at 1 Chase Manhattan Plaza, New York, New York 10081.

     "Prohibited  Transaction" means any transaction set forth in Section 406 of
ERISA or Section 4975 of the Code.

     "Property"  shall  mean any  interest  in any kind of  property  or  asset,
whether  real,  personal  or mixed,  or tangible  or  intangible,  other than an
interest as lessee under a true lease.

     "Reference  Bank"  shall  mean the  principal  London  office  of The Chase
Manhattan Bank.

     "Regulation U" means  Regulation U of the Board of Governors of the Federal
Reserve System as the same may be amended or supplemented from time to time.

     "Regulatory  Change"  means any change after the date of this  Agreement in
United  States  federal,   state,  municipal  or  foreign  laws  or  regulations
(including without limitation Regulation D) or the adoption or making after such
date of any interpretations or directives applying to a class of banks including
the Bank of or under any United  States,  federal,  state,  municipal or foreign
laws or regulations by any court of competent  jurisdiction  or  governmental or
monetary authority charged with the interpretation or administration thereof.

     "Reportable  Event" means any of the events set forth in Section 4043(b) of
ERISA as to which events the PBGC by regulation  has not waived the  requirement
of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence
of such event,  provided that a failure to meet the minimum funding  standard of
Section  412 of the Code or Section  302 of ERISA  shall be a  Reportable  Event
regardless of any waivers given under Section 412(d) of the Code.

     "Reimbursement   Obligation"  means  any  obligation  of  the  Borrower  to
reimburse  the Bank as an issuer of a Letter of Credit  for any  amount  paid by
Bank from time to time pursuant to and under any Letter of Credit.

     "Revolving  Credit  Termination  Date" means the second  anniversary of the
date of this  Agreement  or  such  later  date to  which  the  Revolving  Credit
Termination  Date  then in  effect  shall be  extended  in  accordance  with the
provisions of 2.04 hereof;  provided that if such date is not a Banking Day, the
Revolving Credit Termination Date shall be the next succeeding Banking Day.

     "Security  Agreements"  means  and  includes,  collectively,  the  Security
Agreements  granted by the Borrower to the Bank dated as of April 3, 1985, April
13, 1993, and June 17, 1993, all amendments and modifications  thereto,  and all
further security  agreements which may hereafter be granted by any Person to the
Bank as security for payment of the Loans or any part thereof.

     "Subordinated  Debt" means Debt which is unsecured or which is secured only
by a Permitted  Encumbrance  and which shall be subordinated in right of payment
to all Debt of the Borrower and the  Guarantors to the Bank (the "Senior  Debt")
under a subordination  agreement in form and substance  satisfactory to the Bank
which permits  scheduled  payments of principal and interest on the Subordinated
Debt so long as any  Senior  Debt is  outstanding  and  permits  such  scheduled
payments of  principal  and  interest  only if no default  under the Senior Debt
shall have occurred or shall be created by such payment.

     "Subsidiary"  means,  with respect to any Person,  any corporation or other
Person of which at least one-half of the securities or other ownership interests
having ordinary voting power  (absolutely or  contingently)  for the election of
directors or other persons  performing  similar  functions are at the time owned
directly or indirectly by such Person.

     "Total  Liabilities" means, in respect of any Person, the total liabilities
of such  Person  computed in  accordance  with GAAP and as such item is reported
from time to time on such Person's balance sheets.

     "Unfunded Vested  Liabilities"  means, with respect to any Plan, the amount
(if any) by which the  present  value of all  benefit  liabilities  (within  the
meaning of Section  4001(a)(16) of ERISA) under the Plan exceeds the fair market
value of all Plan assets allocable to such benefit liabilities, as determined on
the most recent valuation date of the Plan and in accordance with the provisions
of ERISA for  calculating  the potential  liability of the Borrower or any ERISA
Affiliate under Title IV of ERISA.

     "UconX"  means  UconX  Corporation,  a  Delaware  corporation  which  is  a
Subsidiary of the Borrower.

     "UconX  Loan"  means  those  certain  loans  made to UconX by the  Borrower
pursuant  to the Line of Credit and  Security  Agreement  between  UconX and the
Borrower dated as of September 1, 1992.

     Section 1.02.  Accounting  Terms.  All  accounting  terms not  specifically
defined  herein shall be construed in  accordance  with GAAP,  and all financial
data required to be delivered  hereunder  shall be prepared in  accordance  with
GAAP.

     Section 1.03. Subsidiaries.  All references to Subsidiaries or Consolidated
Subsidiaries shall be deemed to mean if any shall exist. For so long as Borrower
has no Subsidiary,  all definitions and covenants  referring to Borrower and its
Subsidiaries  or  Consolidated  Subsidiaries  on a  consolidated  basis  and all
references to  consolidated  and  consolidating  financial  statements  shall be
deemed to refer to Borrower alone and to Borrower's  financial statements alone,
respectively, but shall remain applicable in all other respects.


     ARTICLE 2. THE CREDIT.

     Section 2.01.  Loans. The Bank agrees,  on the terms of this Agreement,  to
make one or more  revolving  credit  loans  and issue  Letters  of Credit to the
Borrower  during the period from and  including the date hereof to and including
the  Revolving  Credit  Termination  Date in  amounts  which,  when added to the
aggregate  amount of all Letter of Credit  Exposure and the principal  amount of
all Loans  outstanding  hereunder  shall not  exceed  the  amount of the  Bank's
Commitment  as then in effect.  Subject to the terms of this  Agreement,  during
such period the Borrower may borrow,  repay and reborrow up to the amount of the
Commitment. The Loans may be Prime Loans or Libor Loans (each a "type" of Loan).
The Borrower  shall give the Bank notice of each borrowing to be made under this
2.01 (other than Loans  created as a  Reimbursement  Obligation)  as provided in
4.03  hereof.   The  Loans  made  by  the  Bank  (including   Loans  created  as
Reimbursement  Obligations)  shall be  evidenced by the  promissory  note of the
Borrower in substantially the form of Exhibit A hereto,  dated as of the Closing
Date, payable to the order of the Bank in a principal amount of $3,000,000,  and
otherwise  duly  completed.  The amount,  type and date of each Loan made by the
Bank,  and all  payments  made on account  of the  principal  thereof,  shall be
recorded  by the Bank on its  books  and,  prior to any  transfer  of the  Note,
endorsed by the Bank on the  schedule  attached to the Note or any  continuation
thereof, provided, however, that the failure of the Bank to endorse the schedule
shall not  affect or impair the  Borrower's  obligation  to repay  Loans and any
interest thereon or other amounts due hereunder. The proceeds of the Loans to be
made by the Bank (other than Loans created as Reimbursement  Obligations) shall,
subject to the terms and conditions of this Agreement,  be made available to the
Borrower by  depositing  such amount,  in  immediately  available  funds,  in an
account of the Borrower maintained with the Bank.

     Section 2.02.  Purpose.  The Borrower will use the proceeds of the Loans as
working capital for its general corporate purposes and the acquisition of assets
in the ordinary course of the Borrower's business.

     Section 2.03.  Changes of Commitment.  The Borrower shall have the right to
terminate  or reduce  the amount of the  Commitment  at any time or from time to
time  upon  not  less  than 30  days'  prior  notice  to the  Bank of each  such
termination or reduction,  which notice shall specify the effective date thereof
(which shall be a Banking Day) and the amount of any such reduction and shall be
irrevocable  and effective only upon receipt by the Bank.  The  Commitment  once
terminated or reduced may not be reinstated.

     Section 2.04.  Extension of Revolving Credit Termination Date. The Borrower
may,  by written  request to the Bank not less than 60 and not more than 90 days
prior to the Current  Termination  Date,  request that such Current  Termination
Date be extended to the Annual Date next subsequent to such Current  Termination
Date.  Within 30 days following receipt of such request the Bank will advise the
Borrower in writing whether it agrees to or denies such extension, provided that
if the Bank  shall  fail to so  advise  the  Borrower  it will be deemed to have
denied such  request.  If the Bank shall agree  thereto,  such  extension  shall
become effective as of such Current  Termination Date only upon  satisfaction of
the  following  conditions  as of such  Current  Termination  Date,  in form and
substance  satisfactory to the Bank, unless expressly waived by the Bank: (a) no
Default  shall have  occurred and be  continuing;  (b) the  representations  and
warranties made by the Borrower in 7 hereof shall be true on and as of such date
with the same force and  effect as if made on and as of such date;  (c) the Bank
and the  Borrower  shall  have  executed  an  extension  agreement;  and (d) the
Borrower  shall  have  furnished  to the Bank such  corporate  documents  and/or
opinions of counsel with respect to such  extension,  as the Bank may reasonably
request. Each extension request by the Borrower under this 2.04 shall constitute
a  certification  by the Borrower to the effect set forth in clauses (a) and (b)
of the preceding  sentence  (both as of the date of such notice and,  unless the
Borrower otherwise  notifies the Bank prior to the Current  Termination Date, as
of the Current Termination Date).

     Section  2.05.  Letters of Credit.  Subject to the terms and  conditions of
this Agreement,  Bank shall, upon the request of the Borrower and payment of the
Bank's  customary  fees and expenses in connection  therewith,  issue Letters of
Credit from time to time from and including the date hereof to but excluding the
Revolving Credit  Termination Date up to but not exceeding the lesser of (i) the
aggregate  unused  amount of the  Commitment  (after  subtracting  the Letter of
Credit Exposure),  or (ii) the difference between $500,000 and the amount of the
Letter of Credit Exposure which exists immediately prior to the issuance of such
Letter of Credit. The Borrower agrees that each Reimbursement  Obligation shall,
immediately upon its creation, be and become a Prime Loan hereunder.

     Section 2.06.  Facility Fee.  Borrower shall pay to Bank in advance on each
Annual  Date a yearly  Facility  Fee of $5,000 if the  Facility  is to remain in
effect, in whole,  subsequent to such Annual Date;  provided however that if the
Facility shall be modified or restructured  prior to the occurrence of a Default
or an Event of Default and if the Bank remains the lender under such modified or
restructured  credit facility,  the Bank shall refund to the Borrower a pro rata
portion of the facility  fee which the Borrower has paid in advance  pursuant to
this 2.06 for the following  year based upon the remaining  portion of such year
for which the Facility shall not remain in effect. Nothing in this 2.06 shall be
deemed to prevent the Bank from  charging a fee which is similar to the Facility
Fee and  which is  mutually  agreed  to in  writing  by the  Borrower  under any
modified or restructured credit facility.


     ARTICLE 3.  REPAYMENTS;  INTEREST;  LATE FEES,  PREPAYMENTS.  Section 3.01.
Repayment of Loans.  All Loans shall be due and payable in full,  principal  and
interest,  on the Revolving Credit Termination Date. In addition,  at the end of
each Interest Period, the Borrower will either (i) pay to the Bank the principal
of each Loan which is a Libor Loan, or (ii) convert the principal amount of such
Libor Loan to another Loan hereunder as continuing and subsisting indebtedness.

     Section 3.02.  Interest.  The Borrower will pay to the Bank interest on the
unpaid principal amount of each Loan made by the Bank for the period  commencing
on the date of such Loan to but  excluding  the date such Loan  shall be paid in
full, at the following rates per annum:

     (a) During such periods such Loan is a Prime Loan,  the Prime Rate plus the
Applicable Margin; and

     (b) During such periods such Loan is a Libor Loan, for each Interest Period
relating  thereto,  the Libor Rate for such Libor Loan for such Interest  Period
plus the Applicable Margin.

     Notwithstanding  the foregoing,  after an Event of Default and upon written
demand by the Bank, the Borrower will pay to the Bank interest at the applicable
Default Rate on any principal of any Loan made by the Bank,  and (to the fullest
extent  permitted by law) on any other amount (other than  interest)  payable to
the Bank by the Borrower hereunder or under the Note, which shall not be paid in
full when due (whether at stated  maturity,  by acceleration or otherwise),  for
the period commencing on the date of such written demand, until the same is paid
in full. Accrued interest on each Loan shall be payable monthly on the first day
of each  month  and upon the  payment  or  prepayment  thereof  (but only on the
principal so paid or prepaid),  except that interest payable at the Default Rate
shall be  payable  from time to time  when due on  demand of the Bank.  Promptly
after the  determination  of any interest rate provided for herein or any change
therein, the Bank shall notify the Borrower thereof.

     Section  3.03.  Late Fees.  If any payment of  principal or interest on any
Loan is not received by the Bank within five days after the due date thereof,  a
late fee shall be imposed on such  payment.  The amount of the late fee shall be
(i) in respect of payments of  interest,  1% of the amount of the payment  which
was due, and (ii) in respect of payments of  principal,  4% of the amount of the
payment which was due,  provided further that in either case such late fee shall
not be less than $25 nor more than $100.

     Section 3.04. Prepayments.

     (a) The  Borrower  shall prepay upon demand by the Bank that portion of the
outstanding   principal  balance  of  the  Loans,  if  any,  which  exceeds  the
Commitment.

     (b) The  Borrower  shall have the right to prepay Loans at any time or from
time to time, provided that: (i) the Borrower shall give the Bank notice of each
such  prepayment  as  provided  in 4.03  hereof;  and (ii) no Libor  Loan may be
prepaid on any day other than the last day of an Interest  Period for such Libor
Loan except upon payment of a penalty computed in accordance with 5.05 hereof.

     ARTICLE 4. PAYMENTS; COMPUTATIONS.

     Section 4.01. Payments. Except to the extent otherwise provided herein, all
payments of  principal,  interest  and other  amounts to be made by the Borrower
under this  Agreement  and the Note  shall be made in  Dollars,  in  immediately
available  funds,  to the Bank at the Payment  Office for account of the Lending
Office, not later than 2:30 p.m. New York time on the date on which such payment
shall  become due (each such payment made after such time on such due date to be
deemed to have been  made on the next  succeeding  Banking  Day).  The  Borrower
shall,  at the time of making each  payment  under this  Agreement  or the Note,
specify to the Bank the Loans or other amounts payable by the Borrower hereunder
to which such payment is to be applied,  and if the Borrower fails to so specify
or if an Event of Default has  occurred  and is  continuing,  the Bank may apply
such payment in such manner as it may determine to be appropriate, provided that
the Bank shall apply such  payments  first to the principal of Prime Rate loans,
then to the  principal of any other Loans and then to interest on any Loans.  If
the due date of any payment  under this  Agreement  or the Note would  otherwise
fall on a day which is not a Banking  Day,  such date shall be  extended  to the
next  succeeding  Banking Day and interest shall be payable for any principal so
extended for the period of such extension.

     Section  4.02.  Computations.  Interest on Libor Loans shall be computed on
the basis of a year of 360 days and actual days elapsed (including the first day
but  excluding  the last day)  occurring  in the period for which  payable,  and
interest  on Prime  Loans shall be computed on the basis of a year of 365 or 366
days, as the case may be, and actual days elapsed  (including  the first day but
excluding the last day)  occurring in the period for which  payable.  Changes in
interest rate on Prime Loans  resulting  from changes in the Prime Rate shall be
effective for the full day which  constitutes the effective date for such change
in the Prime Rate.

     Section 4.03.  Certain Notices.  Notices by the Borrower to the Bank of the
termination or reduction of the Commitment, and of borrowings and prepayments of
Loans shall be  irrevocable  and shall be effective only if received by the Bank
not later than 12:00 noon New York time on the date, or the number of days prior
to the date, of the relevant termination,  reduction, borrowing or prepayment or
the first day of such Interest Period specified below:

Date or
Number of
Type of Notice Days Prior

Termination or reduction of
Commitment 30 days

Borrowing or prepayment of
Prime Loans Same Banking Day

Borrowing or prepayment of
Libor Loans 2 Banking Days

     Each such notice of  termination  or reduction  shall specify the amount of
the  Commitment to be  terminated  or reduced.  Each such notice of borrowing or
prepayment  shall  specify  the Loans to be  borrowed  or prepaid and the amount
(subject to 4.04  hereof)  and type of the Loans to be borrowed or prepaid,  the
date of borrowing or prepayment (which shall be a Banking Day), and the duration
of the Interest  Period.  Each notice  required  hereunder  shall be in writing,
except that a notice of borrowing may be given orally on the telephone  provided
it is  confirmed  in writing  within  two  Banking  Days.  In the event that the
Borrower  fails to notify the Bank in a timely  manner as set forth above of any
Libor Loan  borrowing  to replace  any Libor Loan  having an  expiring  Interest
Period, such Libor Loan will be automatically converted into a Prime Loan on the
last day of the then current Interest Period for such Libor Loan.

     Section 4.04.  Minimum  Amounts.  Except  conversions or  prepayments  made
pursuant to 5 hereof, each borrowing of principal of Loans shall be in an amount
at least equal to $25,000, and each prepayment of principal of Loans shall be in
an amount at least equal to $25,000  (borrowings  or  prepayments in the case of
Libor Loans  having  different  Interest  Periods  outstanding  at the same time
hereunder to be deemed  separate  borrowings and prepayments for purposes of the
foregoing, one for each distinct Interest Period). Anything in this Agreement to
the contrary  notwithstanding,  the aggregate principal amount of Libor Loans of
each type having the same  Interest  Period  shall be at least equal to $300,000
and, if any Libor Loans would otherwise be in a lesser  principal amount for any
period, such Libor Loans shall be Prime Loans during such period.




     ARTICLE 5. YIELD PROTECTION AND ILLEGALITY.

     Section 5.01. Additional Costs.

     (a) The  Borrower  shall  pay  directly  to the Bank from time to time such
amounts as the Bank may  reasonably  determine to be necessary to  compensate it
for any costs  which  the Bank  determines  are  attributable  to its  making or
maintaining of any Libor Loans or its obligation to make any Libor Loans, or any
reduction in any amount receivable by the Bank hereunder in respect of any Libor
Loans or such  obligation  (such  increases in costs and  reductions  in amounts
receivable  being  herein  called  "Additional   Costs"),   resulting  from  any
Regulatory  Change  which:  (i)  changes  the basis of  taxation  of any amounts
payable  to the Bank under  this  Agreement  or the Note in respect of any Libor
Loans (other than taxes  imposed on the overall net income of the Bank or of its
Lending Office for any Libor Loans by the jurisdiction in which the Bank has its
principal  office or such  Lending  Office);  or (ii)  imposes or  modifies  any
reserve,  special deposit or similar requirements  relating to any extensions of
credit or other assets of, or any  deposits  with or other  liabilities  of, the
Bank (including any of such Loans or any deposits  referred to in the definition
of "Libor Base Rate" in 1.01 hereof,  but excluding any reserve  requirement  or
deposit  insurance  assessment  already included in the calculation of the Libor
Rate); or (iii) imposes any other condition affecting this Agreement or the Note
(or any of such extensions of credit or liabilities)  other than such portion of
the Agreement and the Note which  pertains to Prime Loans.  If the Bank requests
compensation  from the Borrower under this 5.01(a),  the Borrower may, by notice
to the  Bank,  require  that the Loans of the type with  respect  to which  such
compensation  is requested be converted into Prime Loans in accordance  with the
provisions of 5.04 hereof.

     (b) Without limiting the effect of the provisions of 5.01(a) hereof, in the
event  that,  by reason of any  Regulatory  Change,  the Bank  either (i) incurs
Additional  Costs based on or measured by the excess above a specified  level of
the amount of a category  of  deposits  or other  liabilities  of the Bank which
includes  deposits by  reference  to which the  interest  rate on Libor Loans is
determined  as provided in this  Agreement or a category of extensions of credit
or other assets of the Bank which includes  Libor Loans or (ii) becomes  subject
to  restrictions on the amount of such a category of liabilities or assets which
it may  hold,  then,  if the Bank so  elects  by  notice  to the  Borrower,  the
obligation of the Bank to make further Libor Loans shall be suspended until such
Regulatory Change ceases to be in effect.

     (c) Without  limiting the effect of the  foregoing  provisions of this 5.01
(but without duplication), the Borrower shall pay directly to the Bank from time
to time on request  such  amounts  as the Bank may  reasonably  determine  to be
necessary  to  compensate  the  Bank  for any  costs  which  it  determines  are
attributable to the maintenance by the Bank (or any Lending Office)  pursuant to
any law or regulation or any  interpretation,  directive or request  (whether or
not having the force of law) of any court or governmental or monetary  authority
following  any  Regulatory  Change,  of capital in respect of its  Commitment or
Loans (such compensation to include, without limitation,  an amount equal to any
reduction  of the rate of return on assets or equity of the Bank (or any Lending
Office)  which  the Bank  could  have  achieved  but for such  law,  regulation,
interpretation, directive or request).

     (d) The Bank will notify the Borrower of any event occurring after the date
of this Agreement that will entitle the Bank to compensation under paragraph (a)
or (c) of this 5.01 or to convert  Loans under 5.04 as promptly as  practicable,
but in any event within 30 days after the Bank obtains actual knowledge thereof;
provided,  however,  that if the Bank fails to give such  notice  within 30 days
after it obtains actual knowledge of such an event, the Bank shall, with respect
to compensation  payable pursuant to this 5.01 in respect of any costs resulting
from such event,  only be entitled to payment  under this 5.01 or 5.04 for costs
incurred  from and after the date  that the Bank  does  give  such  notice;  and
provided  further,  that the Bank will designate a different  Lending Office for
the Loans of the Bank affected by such event if such  designation will avoid the
need for, or reduce the amount of, such  compensation  and will not, in the sole
opinion of the Bank, be  disadvantageous to the Bank, except that the Bank shall
have no obligation to designate a Lending Office located in the United States of
America.  The Bank will furnish to the Borrower a certificate  setting forth the
basis and amount of each request by the Bank for  compensation  under  paragraph
(a) or (c) of this 5.01,  which  amount will be  determined  in good faith on an
equitable basis such as, if appropriate, an allocation measured by the principal
amount of Loans to the Borrower,  or  commitments to make Loans to the Borrower,
then  outstanding  in relation to the total amount of loans,  or  commitments to
make loans,  made by the Bank of the type or  character  which has given rise to
the Additional Costs. Determinations and allocations by the Bank for purposes of
this 5.01 of the  effect of any  Regulatory  Change  pursuant  to 5.01(a) or (b)
hereof,  or of the effect of capital  maintained  pursuant to 5.01(c) hereof, on
its costs or rate of  return  of  maintaining  Loans or its  obligation  to make
Loans,  or on amounts  receivable by it in respect of Loans,  and of the amounts
required to compensate the Bank under this 5.01,  shall be conclusive,  provided
that such determinations and allocations are made on a reasonable basis.

     Section 5.02. Limitation on Types of Loans. Anything herein to the contrary
notwithstanding, if the Bank reasonably determines (which determination shall be
conclusive)  that interest  rates for the relevant  deposits  referred to in the
definition  of "Libor  Base Rate" in 1.01  hereof are not being  provided in the
relevant  amounts or for the relevant  maturities  for  purposes of  determining
rates of interest for Libor Loans as provided  herein,  then the Bank shall give
the Borrower  prompt notice  thereof,  and so long as such condition  remains in
effect the Bank shall be under no obligation to make further Libor Loans.

     Section  5.03.  Illegality.  Notwithstanding  any other  provision  of this
Agreement,  in the event that it becomes  unlawful  for the Bank or its  Lending
Office to honor its obligation to make or maintain Libor Loans  hereunder,  then
the Bank shall promptly notify the Borrower thereof and the Bank's obligation to
make Libor Loans shall be  suspended  until such time as the Bank may again make
and  maintain  Libor  Loans and the  Bank's  outstanding  Libor  Loans  shall be
converted into Prime Loans in accordance with 5.04 hereof.

     Section 5.04. Certain  Conversions  Pursuant to 5.01 and 5.03. If the Loans
of the Bank of a  particular  type  (Loans  of such  type  being  herein  called
"Affected  Loans" and such type being herein called the "Affected  Type") are to
be  converted  pursuant  to 5.01 or 5.03  hereof,  the  Affected  Loans shall be
automatically  converted into Prime Loans on the last day(s) of the then current
Interest  Period(s)  for the  Affected  Loans (or,  in the case of a  conversion
required by 5.01(b) or 5.03 hereof, on such earlier date as the Bank may specify
to the Borrower)  and,  unless and until the Bank gives notice as provided below
that the circumstances  specified in 5.01 or 5.03 hereof which gave rise to such
conversion no longer  exist:  (a) to the extent that the Bank's  Affected  Loans
have been so converted,  all payments and  prepayments of principal  which would
otherwise  be applied to such  Affected  Loans  shall be applied  instead to its
Prime  Loans;  and (b) all Loans  which would  otherwise  be made by the Bank as
Loans of the Affected  Type shall be made instead as Prime Loans.  No conversion
pursuant to this 5.04 shall be deemed to be a prepayment in respect of which any
prepayment premium or penalty shall be due, other than compensation which may be
payable under 5.01 and 5.05 (without duplication of compensation).

     Section 5.05. Compensation. The Borrower shall pay to the Bank upon request
such amount or amounts as shall be sufficient (in the reasonable  opinion of the
Bank) to compensate it for any loss,  cost or expense which the Bank  determines
are attributable to:

     (a) any  payment  or  prepayment  of a Libor  Loan  made  by the  Bank,  or
conversion  of a Libor Loan  pursuant to 5.04, on a date other than the last day
of the Interest Period for such Loan; or

     (b) any failure by the Borrower to borrow a Libor Loan from the Bank on the
date for such  borrowing  specified  in the relevant  notice of borrowing  given
pursuant to 4.03 hereof.

Without limiting the effect of the preceding  sentence,  such compensation shall
include an amount  equal to the  excess,  if any,  of (i) the amount of interest
which otherwise would have accrued on the principal  amount so paid,  prepaid or
converted  or not  borrowed  for the  period  from  the  date  of such  payment,
prepayment,  conversion  or  failure  to borrow to the last day of the  Interest
Period  for such Loan (or,  in the case of a failure  to  borrow,  the  Interest
Period for such Loan which would have  commenced on the date  specified for such
borrowing) at the applicable  rate of interest for such Loan provided for herein
over (ii) the  interest  component  of the amount the Bank would have bid in the
London  interbank  market  for  Dollar  deposits  of  leading  banks in  amounts
comparable  to such  principal  amount and with  maturities  comparable  to such
period (as reasonably determined by the Bank). A determination of the Bank as to
the amounts  payable  pursuant to this 5.05 shall be conclusive  absent manifest
error.

     Section 5.06. Survival.  The obligations of the Borrower under this Article
5 shall survive the repayment of the Loans.


     ARTICLE 6. CONDITIONS PRECEDENT.

     Section 6.01.  Initial  Conditions.  The obligation of the Bank to make the
initial  Loan is subject  to the  condition  precedent  that the Bank shall have
received on or before the date of such Loan each of the  following,  in form and
substance satisfactory to the Bank and its counsel:

     (a) Facility Documents. The Facility Documents duly executed by the parties
thereto (other than the Bank);

     (b)  Corporate  Supporting  Documents.  All such  secretarial  and  officer
certificates of the Borrower  pertaining to corporate  action,  incumbency,  and
organizational documents as the Bank may reasonably require;

     (c) Opinion of Counsel for Borrower and  Subsidiaries.  A favorable opinion
of counsel for the Borrower and its Subsidiaries, dated the Closing Date in form
and substance satisfactory to the Bank and its counsel;

     (d) Insurance.  A certificate of insurance evidencing coverage against loss
in respect of the Borrower's inventory in form and substance satisfactory to the
Bank and naming the Bank as loss payee; and

     (e) Other  Documents.  The Borrower  shall have  furnished to the Bank such
other documents,  certificates,  statements, opinions of counsel and information
with respect to the  transactions  contemplated by this Agreement as the Bank or
its counsel may reasonably request.

     Section 6.02. Additional  Conditions Precedent.  The obligation of the Bank
to make the Loans shall be subject to the further  conditions  precedent that on
the  date  of  each  Loan  the  following  statements  shall  be  true:  (i) the
representations and warranties contained in Article 7 of this Agreement are true
and  correct,  in all material  respects,  on and as of the date of such Loan as
though made on and as of such date;  and (ii) no Default or Event of Default has
occurred and is continuing, or would result from such Loan.


     ARTICLE 7. REPRESENTATIONS AND WARRANTIES.

     The Borrower hereby represents and warrants that:

     Section  7.01.  Incorporation,  Good  Standing and Due  Qualification.  The
Borrower  is a  corporation  duly  incorporated,  validly  existing  and in good
standing  under  the  laws of the  jurisdiction  of its  incorporation,  has the
corporate  power and authority to own its assets and to transact the business in
which it is now engaged or proposed to be engaged,  and is duly  qualified  as a
foreign  corporation  and  in  good  standing  under  the  laws  of  each  other
jurisdiction where failure to qualify could have a Material Adverse Effect.

     Section 7.02. Corporate Power and Authority;  No Conflicts.  The execution,
delivery and  performance  by the Borrower of the Facility  Documents  have been
duly authorized by all necessary  corporate  action and do not and will not: (a)
require any consent or approval of its stockholders;  (b) contravene its charter
or by-laws;  (c) violate any provision of, or require any filing,  registration,
consent  or  approval  under,  any law,  rule,  regulation  (including,  without
limitation,   Regulation  U),  order,  writ,   judgment,   injunction,   decree,
determination or award presently in effect having applicability to the Borrower;
(d) result in a breach of or  constitute a default or require any consent  under
any  indenture  or loan or credit  agreement  or any other  agreement,  lease or
instrument to which the Borrower is a party or by which it or its properties may
be bound  or  affected  (other  than as might  be  limited  by the  terms of any
document  pertaining  to the  County of  Monroe  Industrial  Development  Agency
$1,600,000     1990     Industrial     Development     Revenue     Bonds    (C&J
Enterprises/Performance  Technologies  Incorporated Facility); (e) result in, or
require,  the creation or  imposition of any Lien upon or with respect to any of
the properties now owned or hereafter acquired by the Borrower; or (f) cause the
Borrower to be in default under any such law,  rule,  regulation,  order,  writ,
judgment,  injunction,  decree,  determination  or award or any such  indenture,
agreement, lease or instrument.

     Section 7.03. Legally Enforceable Agreements. Each Facility Document is, or
when  delivered  under  this  Agreement  will  be, a legal,  valid  and  binding
obligation  of the Borrower or the  Guarantor,  as the case may be,  enforceable
against the Borrower or the  Guarantor in accordance  with its terms,  except to
the  extent  that such  enforcement  may be limited  by  applicable  bankruptcy,
insolvency and other similar laws affecting creditors' rights generally.

     Section 7.04. Litigation. Except as disclosed to the Bank, there are, as of
the Closing Date, no actions,  suits or proceedings pending or, to the knowledge
of any officer of the  Borrower,  threatened,  against or affecting the Borrower
directly  before  any court,  governmental  agency or  arbitrator,  which have a
reasonable likelihood that they may, in any one case or in the aggregate, have a
Material  Adverse  Effect or  materially  impair the ability of the  Borrower to
perform its obligations under the Facility Documents.

     Section 7.05. Financial Statements.  The consolidated balance sheets of the
Borrower  and its  Consolidated  Subsidiaries  as at  December  31, 1995 for the
fiscal year then ended and as at  September  30, 1996 for the nine month  period
then ended,  copies of which have been  furnished to the Bank,  are complete and
correct and fairly  present the  financial  condition  of the  Borrower  and its
Consolidated  Subsidiaries as at such dates and the results of the operations of
the Borrower and its  Consolidated  Subsidiaries for the periods covered by such
statements,  all in accordance with GAAP  consistently  applied (subject to year
end adjustments in the case of the interim financial  statements).  There are no
liabilities of the Borrower or any of its  Consolidated  Subsidiaries,  fixed or
contingent,  which are material as to the Borrower and its Subsidiaries taken as
a whole  but are not  reflected  in the  financial  statements  or in the  notes
thereto, other than liabilities arising in the ordinary course of business since
September  30,  1996 to the  Closing  Date.  No  information,  exhibit or report
furnished by the Borrower to the Bank in connection with the negotiation of this
Agreement  contained  any  material  misstatement  of fact or omitted to state a
material fact or any fact necessary to make the statement  contained therein not
materially  misleading.  Since September 30, 1996 to the Closing Date, there has
been no material  adverse  change in the  condition  (financial  or  otherwise),
business or operations of the Borrower and its Subsidiaries taken as a whole.

     Section  7.06.  ERISA.  Each of the Borrower and the ERISA  Affiliates  has
fulfilled its obligations  under the minimum funding  standards of ERISA and the
Code with respect to each Plan and is in  compliance  in all  material  respects
with the presently applicable provisions of ERISA and the Code, has not incurred
any liability to the PBGC or any Plan aggregating in excess of $100,000 which it
has failed to pay when due, and does not have  Unfunded  Vested  Liabilities  in
excess of $100,000.

     Section 7.07.  Subsidiaries and Ownership of Stock. Schedule 1 is as of the
Closing Date a complete and accurate list of the  Subsidiaries  of the Borrower,
showing the  jurisdiction of incorporation of each and showing the percentage of
the  Borrower's  ownership  of the  outstanding  stock of each such  Subsidiary,
together  with all  other  investments,  loans,  advances,  guaranties  or other
liabilities undertaken by the Borrower in respect of such Subsidiary. All of the
outstanding  capital stock of each such Subsidiary has been validly  issued,  is
fully paid and  nonassessable and is owned by the Borrower free and clear of all
Liens.
     Section 7.08. Existing Credit  Arrangements and Existing Liens.  Schedule 2
is as of the Closing Date a complete and correct list of all credit  agreements,
indentures,  guaranties  and  other  investments,  agreements  and  arrangements
presently in effect providing for or relating to extensions of credit in respect
of which the  Borrower  or any of its  Subsidiaries  is or may be in any  manner
directly or contingently obligated; and the maximum principal or face amounts of
the credit in question,  outstanding and which can be outstanding, are correctly
stated,  and all Liens of any  nature  given or  agreed to be given as  security
therefor are correctly  described or indicated in such  Schedule.  Schedule 2 is
also a complete  list as of the Closing Date of all Liens  pertaining to any and
all property or assets of the Borrower and its Subsidiaries.

     Section 7.09.  Regulation  U. The Borrower  warrants as of the date of this
Agreement  that it does not own,  directly or indirectly  any "margin stock" (as
defined  in  Regulation  U of the  Board of  Governors  of the  Federal  Reserve
System),  as supplemented from time to time, and the Borrower warrants as of the
date of each  Loan  that it does not own  "margin  stock" as of the date of such
Loan having an  aggregate  fair market value equal to or greater than 25% of the
fair market value of all of the  Borrower's  assets,  unless the Borrower  shall
have executed a Form FR U-1 (OMB No.  7100-1115) prior to obtaining the proceeds
of the Loan and, in such case, the Borrower  further  warrants that the proceeds
of such Loan are not used for the  purpose,  whether  immediate,  incidental  or
ultimate, of buying or carrying any "margin stock".

     Section  7.10.   Compliance  With  Laws.  Each  of  the  Borrower  and  its
Subsidiaries  have complied in all respects  with all  applicable  laws,  rules,
regulations, and orders, including without limitation,  compliance with all laws
related to the disposal or handling of toxic waste,  and paying  before the same
became delinquent all taxes,  assessments and governmental  charges imposed upon
it or its  property,  except (a) in the case of taxes,  where  contested in good
faith and by proper  proceedings  if appropriate  reserves are  maintained  with
respect  thereto,  or (b) where the failure to comply with a law  (including the
failure to pay taxes,  assessments  and  governmental  charges) would not have a
Material Adverse Effect.

     Section  7.11.  Operation  of  Business.  Each  of  the  Borrower  and  its
Subsidiaries possesses all licenses, permits,  franchises,  patents, copyrights,
trademarks and trade names,  or rights  thereto  (collectively,  "Permits"),  to
conduct its business substantially as now conducted and as presently proposed to
be  conducted,  except where the absence of any Permit would not have a Material
Adverse  Effect and, to the best of Borrower's  knowledge,  neither the Borrower
nor any of its  Subsidiaries  is in violation of any valid rights of others with
respect to any of the foregoing.

     Section  7.12.  Hazardous  Materials.  Except  as set forth on  Schedule  3
hereto:

     (a)  Borrower is in  substantial  compliance  with all  Environmental  Laws
applicable  to  Borrower  and has not  received  any  written  notice  from  any
government  alleging  that  Borrower  is  not  so in  compliance,  except  where
noncompliance would not have a Material Adverse Effect;

     (b)  Borrower   possesses  all   licenses,   permits,   registrations   and
authorizations  required  by  applicable  Environmental  Laws  for  the  current
operation of Borrower's  business and is in  substantial  compliance  therewith,
except where the failure to possess same or to comply therewith would not have a
Material Adverse Effect; and

     (c) To the best of  Borrower's  knowledge,  the  Borrower's  assets  do not
contain  asbestos  containing   materials,   polychlorinated   biphenyls,   urea
formaldehyde,  underground storage tanks, or hazardous materials,  as defined by
any  Environmental  Law,  which have been  discarded  or  otherwise  released by
Borrower in a quantity  and manner  requiring  that  notice  thereof be given by
Borrower to any government, except where such notice has been given.

     Section 7.13. No Default on  Outstanding  Judgments or Orders.  Each of the
Borrower  and its  Subsidiaries  has  satisfied  all  judgments  and neither the
Borrower nor any of its Subsidiaries is in default with respect to any judgment,
writ, injunction,  decree, or order of any court,  arbitrator or federal, state,
municipal or other governmental authority,  commission, board, bureau, agency or
instrumentality,  domestic or foreign,  except  where such  non-satisfaction  or
default is not likely to have a Material Adverse Effect.

     Section 7.14. No Defaults on Other Agreements. Neither the Borrower nor any
of its Subsidiaries is in default in any respect in the performance,  observance
or fulfillment of any of the obligations,  covenants or conditions  contained in
any  agreement  or  instrument  material to its business to which it is a party,
except where such default is not likely to have a Material Adverse Effect.

     Section 7.15.  Labor Disputes and Acts of God. Neither the business nor the
properties  of the  Borrower or of any of its  Subsidiaries,  has been  affected
during the  previous  two years by any strike,  lockout or other labor  dispute,
materially and adversely  affecting such business or properties or the operation
of the Borrower or such Subsidiary.

     Section 7.16. Governmental Regulation.  Neither the Borrower nor any of its
Subsidiaries  is subject to regulation  under the Public Utility Holding Company
Act of 1935,  the Investment  Company Act of 1940, the Interstate  Commerce Act,
the Federal Power Act or any other statute or regulation limiting its ability to
incur indebtedness for money borrowed as contemplated hereby.

     Section  7.17.  Partnerships.  Except as  disclosed  on  Schedule 4 hereto,
neither  the  Borrower  nor  any  of  its  Subsidiaries  is  a  partner  in  any
partnership.

     Section  7.18.  No  Forfeiture.   Neither  the  Borrower  nor  any  of  its
Subsidiaries  or  Affiliates  is  engaged  in or  proposes  to be engaged in the
conduct  of  any  business  or  activity  which  could  result  in a  Forfeiture
Proceeding  and, to the best  knowledge of Borrower,  no  Forfeiture  Proceeding
against any of them is pending or threatened.

     Section 7.19. Solvency.

     (a) The present fair market value of the assets of the Borrower (as a going
concern)  after  giving  effect  to all  the  transactions  contemplated  by the
Facility  Documents  and the funding of all  Commitments  hereunder  exceeds the
amount that will be required to be paid on or in respect of the  existing  debts
and other liabilities, as recorded on the Borrower's consolidated balance sheets
described in 7.05, of the Borrower and its Subsidiaries as they mature.

     (b) To the best  knowledge  of the  Borrower,  the Property of the Borrower
does not constitute unreasonably small capital for the Borrower to carry out its
business  as now  conducted  and as proposed to be  conducted  in the  immediate
future including the capital needs of the Borrower.

     (c) The  Borrower  does not intend  to,  nor does it believe  that it will,
incur debts  beyond its ability to pay such debts as they  mature  (taking  into
account the timing and amounts of cash to be  received by the  Borrower,  and of
amounts  to be  payable  on or in  respect  of debt of the  Borrower).  The cash
available to the Borrower after taking into account all other  anticipated  uses
of the cash of the  Borrower,  is  anticipated  to be sufficient to pay all such
amounts on or in  respect  of debt of the  Borrower  presently  recorded  on the
Borrower's consolidated balance sheet when such amounts are required to be paid.

     (d) The  Borrower  does not  believe  that  final  judgments  against it in
actions  for money  damages  that are  currently  pending  could  reasonably  be
expected to be rendered at a time when, or in an amount such that,  the Borrower
will be unable to satisfy any such judgments  promptly in accordance  with their
terms (taking into account the maximum  reasonable  amount of such  judgments in
any such actions and the earliest  reasonable time at which such judgments might
be rendered).  The cash  available to the Borrower after taking into account all
other anticipated uses of the cash of the Borrower (including the payments on or
in respect of debt referred to in paragraph (c) of this 7.19), is anticipated to
be sufficient to pay all such judgments promptly in accordance with their terms.


     ARTICLE 8. AFFIRMATIVE COVENANTS.

     So long as any  portion of the Note shall  remain  unpaid or the Bank shall
have any Commitment under this Agreement, the Borrower shall:

     Section 8.01. Maintenance of Existence. Preserve and maintain its corporate
existence and good standing in the jurisdiction of its incorporation  (which may
be any state of the  United  States of America  and may be changed  from time to
time),  and  qualify  and  remain  qualified  as a foreign  corporation  in each
jurisdiction where failure to qualify could have a Material Adverse Effect.

     Section  8.02.  Conduct  of  Business.  Continue,  and  cause  each  of its
Subsidiaries to continue,  to engage in an efficient and economical  manner in a
business  of the  same  general  type  as  conducted  by it on the  date of this
Agreement,  provided,  however,  that  nothing  in this 8.02 shall  prevent  the
abandonment  or  termination  of a line of business or of any  Subsidiary if the
Borrower  or a  Subsidiary  determines  that the  preservation  of such  line of
business is no longer  desirable  in the conduct of the business of the Borrower
or such Subsidiary.

     Section  8.03.  Maintenance  of  Insurance.  The  Borrower  shall  maintain
insurance  against risk of loss on its inventory in amounts,  under policies and
with insurers reasonably acceptable to the Bank. In addition, to the extent that
other  insurance is available to the Borrower and each of its  Subsidiaries at a
price comparable to the price paid by other Persons in the same or similar types
of business conducted by the Borrower and each Subsidiary,  maintain,  and cause
each of its  Subsidiaries  to maintain,  insurance  with  financially  sound and
reputable  insurance companies or associations in such amounts and covering such
risks as are  usually  carried  by  companies  engaged  in the same or a similar
business and similarly  situated,  which  insurance  may provide for  reasonable
deductibility  from coverage thereof.  To the extent such other insurance is not
obtained,  adopt, in lieu of or supplemental to such insurance,  such other plan
or method of protection,  whether by the  establishment  of an insurance fund or
reserve  to be held  and  applied  to  make  good  losses  from  casualties,  or
otherwise,  and conforming to the practices of similar corporations  maintaining
systems of self-insurance.

     Section  8.04.  Compliance  with  Laws.  Comply,  and  cause  each  of  its
Subsidiaries  to  comply,  in all  respects  with all  applicable  laws,  rules,
regulations  and  orders,   such  compliance  to  include  without   limitation,
compliance with all laws related to the disposal or handling of toxic waste, and
paying before the same become delinquent all taxes, assessments and governmental
charges  imposed upon it or upon its property,  except (a) in the case of taxes,
where contested in good faith and by proper proceedings if appropriate  reserves
are maintained with respect  thereto,  or (b) where the failure to comply with a
law would not have a Material Adverse Effect.

     Section 8.05. Right of Inspection. Upon reasonable notice and during normal
business  hours,  permit  the Bank or any agent or  representative  thereof,  to
examine  and make copies of and  abstracts  from the  financial  records of, and
visit the  properties  of,  the  Borrower  and any of its  Subsidiaries,  and to
discuss  the  affairs,  finances  and  accounts  of the  Borrower  and any  such
Subsidiary  with  any  of  their  respective  officers  and  directors  and  the
Borrower's  independent  accountants,  provided that the Borrower  shall receive
reasonable  notice  of  any  such  meetings  with  the  Borrower's   independent
accountants  and the  Borrower  shall  have  the  right  to be  present  at such
meetings.

     Section 8.06. Reporting Requirements. Furnish to the Bank:

     (a) Audited Annual  Financial  Statements.  As soon as available and in any
event within 120 days after the end of each fiscal year of the Borrower:

     (i) if the Borrower shall have no  Consolidated  Subsidiaries,  the balance
sheet  of the  Borrower  as of the end of such  fiscal  year and  statements  of
income,  statements  of cash flows and  statements  of changes in  shareholders'
equity of the  Borrower  for such  fiscal  year,  all in  reasonable  detail and
stating in comparative form the respective  figures for the  corresponding  date
and period in the prior fiscal year,  and all prepared in accordance  with GAAP,
and accompanied by an opinion thereon acceptable to the Bank by Price Waterhouse
llp or other  independent  accountants  of  national  standing  selected  by the
Borrower, each of such statements to be prepared in accordance with GAAP; or

     (ii)  if  the  Borrower  shall  have  any  Consolidated  Subsidiaries,  the
consolidated balance sheets of the Borrower and its Consolidated Subsidiaries as
of the end of such fiscal year and consolidated statements of income, statements
of cash flows and statements of changes in shareholders'  equity of the Borrower
and its Consolidated Subsidiaries for such fiscal year, all in reasonable detail
and stating in  comparative  form the  respective  consolidated  figures for the
corresponding  date and period in the prior  fiscal  year,  and all  prepared in
accordance with GAAP, and as to the  consolidated  statements  accompanied by an
opinion  thereon  acceptable  to the  Bank  by  Price  Waterhouse  llp or  other
independent accountants of national standing selected by the Borrower,  together
with  consolidating  statements  in  respect of all of the  foregoing  described
consolidated financial statements,  each of such consolidating  statements to be
prepared in accordance with GAAP and certified by the chief financial officer of
the Borrower.

     (iii)  accompanying  the financial  statements  delivered  pursuant to this
Subsection (a), a certificate, in substantially the form of Exhibit B hereto, by
an  appropriate  officer of the  Borrower  certifying  that the  Borrower was in
compliance  with 10.02 and 10.03 as at the end of the fiscal  year to which such
financial  statements  relate,  or if  Borrower  was  not  in  such  compliance,
describing any non-compliance in detail, and that no Default or Event of Default
has  occurred  during  the  corresponding  period,  or if a Default  or Event of
Default has occurred, describing the same and the steps taken by the Borrower to
cure the  same,and  setting  forth in  reasonable  detail  calculations  showing
compliance with the covenants set forth under Article 10 hereof.

     (b) Quarterly Financial  Statements.  As soon as available and in any event
within  45 days  after  the end of each of the  Borrower's  first  three  fiscal
quarter during each fiscal year of Borrower:

     (i) if the Borrower shall have no  Consolidated  Subsidiaries,  the balance
sheet of the Borrower as of the end of such quarter and statement of income,  of
the Borrower and its Consolidated  Subsidiaries for the period commencing at the
end of the previous  fiscal year and ending with the end of such fiscal quarter,
all in reasonable detail and stating in comparative form the respective  figures
for the  corresponding  date and period in the  previous  fiscal  year,  and all
prepared in accordance with GAAP, and certified by an appropriate officer of the
Borrower (subject to year-end adjustments); or

     (ii)  if  the  Borrower  shall  have  any  Consolidated  Subsidiaries,  the
consolidating   and  consolidated   balance  sheets  of  the  Borrower  and  its
Consolidated  Subsidiaries as of the end of such quarter and  consolidating  and
consolidated   statement  of  income,  of  the  Borrower  and  its  Consolidated
Subsidiaries  for the period  commencing at the end of the previous  fiscal year
and ending with the end of such fiscal  quarter,  all in  reasonable  detail and
stating  in  comparative  form  the  respective  consolidated  figures  for  the
corresponding  date and period in the previous  fiscal year, and all prepared in
accordance  with GAAP, and certified by an  appropriate  officer of the Borrower
(subject to year-end adjustments); and

     (iii)  accompanying  the financial  statements  delivered  pursuant to this
Subsection (b), a certificate, in substantially the form of Exhibit C hereto, by
an  appropriate  officer of the  Borrower  certifying  that the  Borrower was in
compliance  with  10.01  hereof  at all times  during  such  quarter  and was in
compliance  with  10.03 and  10.04 as at the end of the  quarter  to which  such
financial  statements  relate,  or if  Borrower  was  not  in  such  compliance,
describing any non-compliance in detail, and that no Default or Event of Default
has  occurred  during  the  corresponding  period,  or if a Default  or Event of
Default has occurred, describing the same and the steps taken by the Borrower to
cure the  same,and  setting  forth in  reasonable  detail  calculations  showing
compliance with the covenants set forth under Article 10 hereof.

     (c) Notice of  Litigation.  Promptly  after the notice of the  commencement
thereof is  received  by any  officer of the  Borrower,  notice of all  actions,
suits, and proceedings before any court or governmental department,  commission,
board,  bureau,  agency  or  instrumentality,   domestic  or  foreign,  directly
affecting the Borrower or any of its Subsidiaries which either (a) relate to the
clean-up of toxic or  chemical  waste,  or (b) if  determined  adversely  to the
Borrower or such Subsidiary, could have a Material Adverse Effect;

     (d)  Notice of  Defaults  and  Events  of  Default.  As soon as  reasonably
practicable,  and in any event  within  10 days  after  the  occurrence  of each
Default or Event of Default,  a written notice setting forth the details of such
Default or Event of Default and the action  which is proposed to be taken by the
Borrower with respect thereto;

     (e) General Information. Such other information respecting the condition or
operations,  financial or otherwise,  of the Borrower or any of its Subsidiaries
as the Bank may from time to time reasonably request.

     (f) ERISA Notices.  Promptly after notifying the government,  if government
notice is required,  and otherwise within ten days after the Borrower knows that
any of the events or  conditions  specified  below  with  respect to any Plan or
Multiemployer  Plan have  occurred  or  exist,  a  statement  signed by a senior
financial officer of the Borrower setting forth details respecting such event or
condition  and the action,  if any,  which the  Borrower or its ERISA  Affiliate
proposes  to take  with  respect  thereto  (and a copy of any  report  or notice
required to be filed with or given to PBGC by the Borrower or an ERISA Affiliate
with respect to such event or condition):

     (i) any  reportable  event,  as defined in Section  4043(b) of ERISA,  with
respect to a Plan, as to which PBGC has not by regulation waived the requirement
of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence
of such event (provided that a failure to meet the minimum  funding  standard of
Section 412 of the Code or Section 302 of ERISA including,  without  limitation,
the  failure  to make on or before  its due date a  required  installment  under
Section  412(m) of the Code or Section  302(e) of ERISA,  shall be a  reportable
event  regardless  of the  issuance of any waivers in  accordance  with  Section
412(d) of the Code) and any request  for a waiver  under  Section  412(d) of the
Code for any Plan;

     (ii) the distribution  under Section 4041 of ERISA of a notice of intent to
terminate any Plan or any action taken by the Borrower or an ERISA  Affiliate to
terminate any Plan;

     (iii) the  institution by PBGC of  proceedings  under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any Plan,
or the  receipt  by the  Borrower  or any  ERISA  Affiliate  of a notice  from a
Multiemployer  Plan that such action has been taken by PBGC with respect to such
Multiemployer Plan;

     (iv) the complete or partial  withdrawal from a  Multiemployer  Plan by the
Borrower or any ERISA  Affiliate that results in liability under Section 4201 or
4204 of ERISA  (including  the  obligation to satisfy  secondary  liability as a
result of a  purchaser  default)  or the  receipt of the  Borrower  or any ERISA
Affiliate of notice from a Multiemployer  Plan that it is in  reorganization  or
insolvency  pursuant  to  Section  4241 or 4245 of ERISA or that it  intends  to
terminate or has terminated under Section 4041A of ERISA;

     (v) the  institution  of a proceeding  by a fiduciary or any  Multiemployer
Plan  against the  Borrower  or any ERISA  Affiliate  to enforce  Section 515 of
ERISA, which proceeding is not dismissed within 30 days;

     (vi) the  adoption  of an  amendment  to any Plan that  pursuant to Section
401(a)(29)  of the Code or  Section  307 of ERISA  would  result  in the loss of
tax-exempt  status of the trust of which such Plan is a part if the  Borrower or
an ERISA  Affiliate  fails to timely provide  security to the Plan in accordance
with the provisions of said Sections.

     (g) ERISA Reports.  Promptly after the request of the Bank,  copies of each
annual  report filed  pursuant to Section 104 of ERISA with respect to each Plan
(including,  to the  extent  required  by  Section  104 of  ERISA,  the  related
financial and actuarial statements and opinions and other supporting statements,
certifications,  schedules and information  referred to in Section 103) and each
annual  report  filed with  respect to each Plan  under  Section  4065 of ERISA;
provided, however, that in the case of a Multiemployer Plan, such annual reports
shall  be  furnished  only if they are  available  to the  Borrower  or an ERISA
Affiliate;

     (h) Reports to Other Lenders. Promptly after the furnishing thereof, copies
of any statement or report furnished to any other party pursuant to the terms of
any  indenture,  loan or credit or similar  agreement to which the Borrower is a
party and not  otherwise  required to be furnished  to the Bank  pursuant to any
other clause of this 8.06;

     (i) Proxy  Reports,  Etc.  Promptly  after the  sending or filing  thereof,
copies of all proxy  statements,  financial  statements  and  reports  which the
Borrower or any of its Subsidiaries sends to its stockholders, and copies of all
regular, periodic and special reports, and all registration statements which the
Borrower  or  any  such  Subsidiary  files  with  the  Securities  and  Exchange
Commission or any governmental  authority which may be substituted  therefor, or
with any national securities exchange;

     (j)  Notice of  Forfeiture  Proceeding.  Promptly  after  the  commencement
thereof or  promptly  after the  Borrower  knows of the  commencement  or threat
thereof, notice of any Forfeiture Proceeding;

     Section  8.07.  Audits.  The Bank  shall have the right to conduct an audit
from time to time of the Borrower's inventory, operations and books and records,
including but not limited to the Borrower's  accounts  receivable.  The costs of
one such audit per  calendar  year,  computed at the Bank's  standard  rates for
audit  charges,  shall be paid by the  Borrower  upon demand by the Bank and the
Bank may,  but is not  required  to,  add such  costs to the amount of the Prime
Loans outstanding under the Note as a borrowing hereunder.

     Section 8.08. Lease Financings. Provide Bank with an opportunity to furnish
a quotation on any lease  financing to be  undertaken  by the Borrower or any of
its Consolidated Subsidiaries.


     ARTICLE 9. NEGATIVE COVENANTS.

     So long as any  portion of the Note shall  remain  unpaid or the Bank shall
have any Commitment under this Agreement, the Borrower shall not:

     Section 9.01. Debt. Create, incur, assume or suffer to exist, or permit any
of its Subsidiaries other than UconX to create, incur, assume or suffer to exist
any Debt, except:

     (a) Debt of the Borrower under this Agreement or the Note;

     (b) Debt  currently  outstanding  and reflected on the balance sheet of the
Borrower  described in 7.05 hereof,  but no renewals,  extensions,  increases or
refinancings thereof;

     (c) Purchase  money Debt not  exceeding an  aggregate  principal  amount of
$1,000,000 incurred during any fiscal year of the Borrower;

     (d)  Subordinated  Debt (provided that the incurrence of such  Subordinated
Debt does not cause the Borrower to be in violation of the  Covenants  set forth
in Article 10); and

     (e)  All  leases  which  qualify  as  "operating  leases"  under  Financial
Accounting Standards No. 13.

     Section 9.02. Guarantees,  Etc. Assume, guarantee,  endorse or otherwise be
or become directly or contingently  responsible or liable,  or permit any of its
Subsidiaries other than UconX to assume,  guarantee,  endorse or otherwise be or
become  directly  or  contingently  responsible  or liable  (including,  but not
limited to, an agreement to purchase any  obligation,  stock,  assets,  goods or
services or to supply or advance any funds,  assets,  goods or  services,  or an
agreement to maintain or cause such Person to maintain a minimum working capital
or net worth or otherwise to assure the  creditors of any Person  against  loss)
for the  obligations  of any Person,  except (i)  guarantees by  endorsement  of
negotiable  instruments for deposit or collection or similar transactions in the
ordinary course of business, (ii) the Corporation Guaranty Agreement dated as of
September 1, 1990 granted by the Borrower to Chase Lincoln First Bank, N.A., and
(iii) the  Guaranty  Agreement  dated August 31, 1995 granted by the Borrower to
the City of Rochester.

     Section  9.03.  Liens.  (a) Create,  incur,  assume,  or suffer to exist or
permit any of its Subsidiaries  other than UconX to create,  incur,  assume,  or
suffer to exist at any one time,  any Lien,  upon or with  respect to any of its
Property,   including  without   limitation,   inventory,   accounts,   accounts
receivable, contract rights, chattel paper, instruments, acceptances, drafts and
general intangibles,  all as defined in the Uniform Commercial Code of the State
of New York,  except for (i) Existing Liens,  (ii) Permitted  Encumbrances,  and
(iii) Liens granted to the Bank.

     (b) Enter  into any sale and  lease-back  or  similar  financing  device or
scheme in respect of its Property owned prior to such  financing,  or permit any
Subsidiary other than UconX to do so.

     Section 9.04. Investments. Make, or permit any of its Subsidiaries to make,
any loan or advance to any Person or purchase or  otherwise  acquire,  or permit
any such Subsidiary to purchase or otherwise acquire, any capital stock, assets,
obligations  or other  securities  of,  make any  capital  contribution  to,  or
otherwise  invest in, or  acquire  any  interest  in, any  Person,  except:  (a)
investment  grade  securities;  (b)  deposits  in  financial  institutions;  (c)
investments  in UconX as of the date of this  Agreement and listed on Schedule 1
hereto;  and (d) loans or advances  to  employees  not to exceed  $50,000 in the
aggregate  during any fiscal year of the  Borrower;  provided  further that each
such loan advance  shall be required to be repaid  within one year from the date
such advance  shall be made (and,  if not, the Borrower  shall take  appropriate
action for collection).

     Section 9.05. Sale of Assets.  Sell, lease,  assign,  transfer or otherwise
dispose of, or permit any of its Subsidiaries to sell, lease,  assign,  transfer
or  otherwise  dispose  of any of its now owned or  hereafter  acquired  assets,
(including,  without  limitation,  shares  of  stock  and  indebtedness  of such
Subsidiaries, receivables and leasehold interests and including any transfers to
any  parent  corporation  of the  Borrower  or to  any  other  Affiliate  of the
Borrower),  except  for (i)  inventory  disposed  of in the  ordinary  course of
business  and (ii) not more than  twenty  percent  (20%) of each or any class of
capital stock of any  Subsidiary,  and (iii) other assets  disposed of having an
aggregate fair market value not exceeding $200,000 during any fiscal year of the
Borrower  and sold for a price  which is  within a fair  market  value  for such
assets.

     Section 9.06.  Mergers,  Etc. Merge or consolidate  with, or sell,  assign,
lease or  otherwise  dispose of  (whether in one  transaction  or in a series of
transactions)  all or  substantially  all of its  assets  (whether  now owned or
hereafter  acquired),  to any Person, or acquire all or substantially all of the
stock or assets or the business of any Person, or permit any of its Subsidiaries
to do so.
     Section 9.07.  Acquisitions.  Make any Acquisition or permit any Subsidiary
to do so.

     Section  9.08. No Activities  Leading to  Forfeiture.  Engage or permit any
Subsidiaries  to engage in the conduct of any  business or activity  which could
reasonably be expected to result in a Forfeiture Proceeding.

     Section  9.09.  Creation  of  Subsidiaries.  Create  or permit to exist any
Subsidiary  unless such  Subsidiary  shall have first  executed and  delivered a
Guaranty to the Bank,  together with corporate  supporting  documentation  and a
favorable  opinion  of counsel  in  respect  of such  Guaranty,  all in form and
substance satisfactory to the Bank.

     Section 9.10. No Material Change. Make or permit any material change in the
management or direction of the Borrower's business or operations, including, but
not limited to, a change in its executive management,  which is not satisfactory
to the Bank.


     ARTICLE 10. FINANCIAL COVENANTS.

     So long as any  portion of the Note shall  remain  unpaid or the Bank shall
have any Commitment under this Agreement:

     Section 10.01.  Leverage Ratio.  The Borrower shall not permit the ratio of
Consolidated Total Liabilities to Consolidated  Tangible Net Worth to exceed .75
to 1.0 at any time.

     Section 10.02.  Cash Flow Coverage Ratio.  The Borrower will not permit the
ratio  of  (i)  the  difference  of  Consolidated   Adjusted  Net  Profit  minus
Consolidated  Capital  Expenditures to (ii) the Consolidated  Current Portion of
Funded  Debt to be less than 1.5 to 1.0  measured  as at the end of each  fiscal
year of the Borrower.

     Section 10.03.  Income or Loss. The Borrower shall not permit  Consolidated
Income to be a negative amount (a loss) for any fiscal quarter  commencing on or
after  July 1, 1996 or for any fiscal  year  commencing  on or after  January 1,
1996.

     Section  10.04.  Current  Ratio.  The Borrower will not permit the ratio of
Consolidated  Current Assets to Consolidated Current Liabilities to be less than
3.5 to 1.0 measured as at the end of each fiscal quarter of the Borrower.


     ARTICLE 11. EVENTS OF DEFAULT.

     Section 11.01.  Events of Default.  Any of the following events shall be an
"Event of Default":

     (a) The Borrower shall fail to pay the principal of or interest on the Note
within 15  Banking  Days  after  such  principal  or  interest  shall be due and
payable,  or shall fail to pay any amount of a fee or any other  amount  payable
under this  Agreement  within 30 Banking  Days after such amount or fee shall be
due and payable;

     (b) Any  representation  or warranty made or deemed made by the Borrower in
this  Agreement  or which is contained in any  certificate,  document,  opinion,
financial or other  statement  furnished at any time under or in connection with
any Facility Document shall prove to have been incorrect in any material respect
on or as of the date made;

     (c) The  Borrower  shall fail to perform or observe  any term,  covenant or
agreement  contained in 8.03, 8.04, 8.05 or 8.06, and, if the Borrower  provided
the Bank with the notice  required  under  8.06(d),  such  failure  shall remain
unremedied for 15  consecutive  calendar days after written notice thereof shall
have been given to the Borrower by the Bank, and if such notice under 8.06(d) is
not provided,  then such failure shall remain unremedied for 30 consecutive days
after its occurrence;  provided,  however, that if a breach or failure specified
in this  Subsection  (c) be such that (i) it is not a breach of 8.03 or 8.05 and
(ii) it can be corrected but not within the period  specified  herein,  it shall
not  constitute  the basis of an event of default  hereunder  (a) if  corrective
action capable of remedying such breach or failure is instituted by the Borrower
within 5 days of notice of such breach or failure and  diligently  pursued until
such breach or failure is corrected, (b) if the Borrower shall within such 5 day
period  furnish  to the Bank a  certificate  executed  by the  President  of the
Borrower  and  the  Chairman  of the  Borrower  (if  such  office  shall  exist)
certifying  (i) that such breach or failure is such that it can be corrected but
not  within  the  applicable  period,  (ii) that  corrective  action  capable of
remedying  such breach or failure has been  instituted  and is being  diligently
pursued and will be diligently pursued until the breach or failure is corrected,
and (iii) that the  Borrower  shall notify the Bank by  certificate  executed as
above when such  breach or failure  has been  corrected,  and (c) such breach or
failure shall be fully corrected  within a reasonable  period mutually agreed to
in writing by the Bank and the Borrower not exceeding 30 days;

     (d) The  Borrower  or any  Guarantor  shall fail to perform or observe  any
term,  covenant or agreement  contained in any Facility Document (other than the
obligations  described  in (a) and (c)  above  on its  part to be  performed  or
observed) and such failure shall remain  unremedied for 30 consecutive  calendar
days after written notice thereof shall have been given by the Bank to the other
parties to such  Facility  Document  in the  manner  required  by such  Facility
Document;  provided,  however,  that if a breach or  failure  specified  in this
Subsection (d) be such that (i) it is not a breach of 8.02,  8.07,  9.01,  9.02,
9.03(a),  9.03(c),  9.04, 9.05, 9.06, 9.07, 9.09, 10.01,  10.02, 10.03, or 10.04
and (ii) it can be  corrected  but not within the period  specified  herein,  it
shall  not  constitute  the  basis  of an  event  of  default  hereunder  (a) if
corrective  action  capable of remedying such breach or failure is instituted by
the  Borrower  within 5 days of notice of such breach or failure and  diligently
pursued  until such breach or failure is  corrected,  (b) if the Borrower  shall
within  such 5 day period  furnish  to the Bank a  certificate  executed  by the
President of the Borrower and the Chairman of the Borrower (if such office shall
exist)  certifying  (i) that  such  breach  or  failure  is such  that it can be
corrected but not within the  applicable  period,  (ii) that  corrective  action
capable of  remedying  such breach or failure has been  instituted  and is being
diligently pursued and will be diligently pursued until the breach or failure is
corrected,  and (iii) that the  Borrower  shall  notify the Bank by  certificate
executed as above when such breach or failure has been  corrected,  and (c) such
breach or failure shall be fully corrected  within a reasonable  period mutually
agreed to in writing by the Bank and the Borrower not exceeding 30 days;

     (e) The  Borrower  or any of its  Subsidiaries  shall:  (i) fail to pay any
Borrowed  Money  Obligation  of the Borrower or any  Subsidiary  in an aggregate
principal amount  outstanding  exceeding One Hundred Thousand Dollars ($100,000)
(other than the payment obligations  described in (a) above), or any interest or
premium  thereon,  within 15 days of when due after any applicable grace or cure
period for such payment  (whether by scheduled  maturity,  required  prepayment,
acceleration,  demand or  otherwise);  or (ii) fail to perform  or  observe  any
material  term,  covenant or  condition  on its part to be performed or observed
under any agreement or instrument relating to any such indebtedness  referred to
in (i) above,  when required to be performed or observed,  if the effect of such
failure to perform or observe is to  accelerate,  or to permit the  acceleration
of, after the giving of notice or passage of time, or both, the maturity of such
indebtedness,  whether or not such failure to perform or observe shall be waived
by the holder of such  indebtedness;  or any such indebtedness shall be declared
to be due and  payable,  or  required  to be prepaid  (other than by a regularly
scheduled required prepayment), prior to the stated maturity thereof;

     (f) The Borrower or any of its  Subsidiaries  which in accordance with GAAP
would be deemed to be a material  Subsidiary:  (i) shall  generally  not,  or be
unable to, or shall  admit in writing  its  inability  to, pay its debts as such
debts become due in the ordinary  course of business,  except for failure to pay
trade creditors provided that such delay in payment is in accordance with normal
business  practices;  or (ii)  shall  make an  assignment  for  the  benefit  of
creditors, petition or apply to any tribunal for the appointment of a custodian,
receiver or trustee for it or a substantial  part of its assets;  or (iii) shall
commence  any  proceeding  under any  bankruptcy,  reorganization,  arrangement,
readjustment  of  debt,  dissolution  or  liquidation  law  or  statute  of  any
jurisdiction,  whether,  now or hereafter in effect;  or (iv) shall have had any
such  petition or  application  filed,  or any such  proceeding  shall have been
commenced,  against it, in which an adjudication or appointment is made or order
for relief is entered and which remains  undismissed or unstayed for a period of
90 days or more;  or (v) by any act or omission  shall  indicate its consent to,
approval of or acquiescence  in any such petition,  application or proceeding or
order for relief or the appointment of a custodian,  receiver or trustee for all
or any  substantial  part of its  properties;  or (vi)  shall  suffer  any  such
custodianship, receivership or trusteeship to continue undischarged for a period
of 90 days or more;

     (g) One or more  judgments,  decrees or orders for the  payment of money in
excess of One Hundred  Thousand  Dollars  ($100,000) in the  aggregate  shall be
rendered against the Borrower and any of its Subsidiaries or any such judgments,
decrees or orders shall  continue  unsatisfied  and in effect for a period of 30
consecutive  days  without  being  vacated,  discharged,  satisfied or stayed or
bonded pending appeal;

     (h) Any of the  following  events  shall occur or exist with respect to the
Borrower or any ERISA Affiliate:  (i) any Prohibited  Transaction  involving any
Plan; (ii) any Reportable  Event shall occur with respect to any Plan; (iii) the
filing under  Section 4041 of ERISA of a notice of intent to terminate  any Plan
or the  termination  of any Plan;  (iv) any event or  circumstance  exists which
might  constitute  grounds  entitling  the PBGC to institute  proceedings  under
Section  4042 of ERISA  for the  termination  of,  or for the  appointment  of a
trustee to  administer,  any Plan,  or the  institution  by the PBGC of any such
proceedings;  (v) complete or partial  withdrawal  under Section 4201 or 4204 of
ERISA  from  a  Multiemployer  Plan  or  the  reorganization,   insolvency,   or
termination of any  Multiemployer  Plan;  and in each case above,  such event or
condition,  together with all other events or  conditions,  if any, could in the
opinion of the Bank subject the Borrower to any tax, penalty, or other liability
to a Plan,  Multiemployer  Plan,  the PBGC,  or  otherwise  (or any  combination
thereof) which in the aggregate exceed or may exceed $100,000.

     (i) (A) any Forfeiture Proceeding shall have been commenced or the Borrower
shall have given the Bank written notice of the  commencement  of any Forfeiture
Proceeding  as  provided  in 8.06(j)  or (B) the Bank has a good faith  basis to
believe that a Forfeiture Proceeding has been threatened or commenced;

     (j) any of the  Guaranties  shall  at any  time  after  its  execution  and
delivery  and for any  reason  cease to be in full  force and effect or shall be
declared  null and void,  or the  validity or  enforceability  thereof  shall be
contested by any of the  Guarantors or any of the  Guarantors  shall deny it has
any further  liability  or  obligation  thereunder  or shall fail to perform its
obligations thereunder; provided further, however that with respect to the death
or  incompetency  of any Guarantor who is a natural  person,  the Borrower shall
have 30 days after notice from the Bank to provide the Bank with a substitute or
replacement guaranty satisfactory to the Bank in its sole discretion;

     (k) the Security Agreements shall at any time and for any reason cease: (A)
to  create  a valid  and  perfected  priority  security  interest  in and to the
property subject to such Agreements,  other than if due to the Bank's actions or
omissions;  or (B) to be in full force and effect or shall be declared  null and
void,  or the  validity or  enforceability  thereof  shall be  contested  by the
Borrower or the Borrower  shall deny it has any further  liability or obligation
under the Security  Agreements or the Borrower  shall fail to perform any of its
obligations  thereunder  after  the  expiration  of any cure,  waivers  or grace
periods;  or (l)  there  shall  occur any  "Event of  Default"  as  defined  and
described in 8 of the Letter of Credit and  Reimbursement  Agreement dated as of
September 1, 1990 between C&J Enterprises and Chase Lincoln First Bank, N.A. (as
predecessor  to the Bank) or there shall occur any "Event of Default" as defined
and  described  in 8.01 of the  Indenture of Trust dated as of September 1, 1990
between  the  County  of  Monroe  Industrial  Development  Agency  and Key Trust
Company, as Trustee,  pertaining to the County of Monroe Industrial  Development
Agency's 1990 Industrial Development Revenue Bonds (C&J  Enterprises/Performance
Technologies Incorporated Facility).

     Section 11.02. Remedies. If any Event of Default shall occur, the Bank may,
by  notice  to the  Borrower,  (a)  declare  the  Commitment  to be  terminated,
whereupon the same shall  forthwith  terminate,  and (b) declare the outstanding
principal of the Note, all interest  thereon and all other amounts payable under
this Agreement and the Note to be forthwith due and payable, whereupon the Note,
all such  interest  and all such amounts  shall become and be forthwith  due and
payable, without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by the Borrower; provided that, in the case
of an Event of Default  referred to in 11.01(f) above,  the Commitment  shall be
automatically  terminated,  and the Note,  all  interest  thereon  and all other
amounts payable under this Agreement shall be automatically  immediately due and
payable without presentment,  demand,  protest or other formalities of any kind,
all of which are hereby expressly waived by the Borrower.


     ARTICLE 12. MISCELLANEOUS.

     Section  12.01.  Amendments  and  Waivers.  No  amendment  or waiver of any
provision  of this  Agreement  nor  consent  to any  departure  by the  Borrower
therefrom,  shall in any event be effective  unless the same shall be in writing
and signed by the Bank,  and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose which given. No failure on
the  part of the  Bank to  exercise,  and no  delay  in  exercising,  any  right
hereunder  shall  operate as a waiver  thereof or preclude  any other or further
exercise  thereof  or the  exercise  of any other  right.  The  remedies  herein
provided are cumulative and not exclusive of any remedies provided by law.

     Section 12.02.  Survival.  All  representations  and warranties made herein
shall survive the borrowings hereunder.

     Section 12.03. Usury. Anything herein to the contrary notwithstanding,  the
obligations  of the Borrower  under this Agreement and the Note shall be subject
to the limitation  that payments of interest shall not be required to the extent
that receipt  thereof would be contrary to  provisions of law  applicable to the
Bank limiting rates of interest which may be charged or collected by the Bank.

     Section  12.04.  Expenses.  The Borrower  shall  reimburse the Bank for all
reasonable costs, expenses, and charges (including, without limitation, fees and
charges  of  external  legal  counsel  for the Bank and costs  allocated  by its
internal  legal  department)  incurred  by  the  Bank  in  connection  with  the
preparation, performance or enforcement of this Agreement.

     Section 12.05. Assignment;  Participations. This Agreement shall be binding
upon,  and shall  inure to the  benefit  of,  the  Borrower,  the Bank and their
respective  successors  and assigns  (except that the Borrower may not assign or
transfer its rights or obligations  hereunder),  and such successors and assigns
shall  thereupon  become vested with all the benefits in respect thereof granted
to the Bank herein or otherwise; provided, however, that (i) the Bank may assign
all or any part of any Loan or Loans  made by it only with the prior  consent of
the Borrower (which shall not be unreasonably  withheld),  and (ii) the Bank may
sell participations  therein, only to a bank, insurance company,  trust company,
brokerage house,  pension fund, or other financial  institution,  in which event
(a) in the case of an assignment, the assignee shall have, to the extent of such
assignment (unless otherwise provided therein), the same rights and benefits and
obligations  as it would have if it were the Bank  hereunder and (b) in the case
of a  participation,  the  participant  shall  not have any  rights  under  this
Agreement,   the  Note,  or  any  other   documents   referred  to  herein  (the
participant's  rights  against the Bank in respect of such  participation  to be
those  set  forth  in  the  agreement  executed  by the  Bank  in  favor  of the
participant  relating  thereto) and all amounts  payable by the  Borrower  under
Article  5  hereof  shall  be  determined  as if the  Bank  had  not  sold  such
participation,  provided,  however,  that the  Bank may not sell  participations
under any agreement which gives the participant a right to approve or disapprove
of any consent, waiver or amendment by the Bank with respect to any provision of
this Agreement  (except for any provision  hereof relating to the payment of any
amount,  the date on  which  such  payment  is due,  the rate at which  interest
accrues on any Loan or any other amount payable hereunder, or the release of any
guarantee of, or the  substitution  or release of any  collateral  security for,
such Loans). The Bank may furnish any information concerning the Borrower in the
possession  of the  Bank  from  time  to  time  to  assignees  and  participants
(including prospective assignees and participants).

     Section 12.06. Notices.  Except in respect of service of process in respect
of any legal action or proceeding  arising out of or relating to this Agreement,
unless the party to be notified  otherwise  notifies the other party in writing,
notices shall be given to the Bank and to the Borrower by ordinary mail or telex
addressed to such party at its address on the signature page of this  Agreement.
Notices to the Bank shall be effective upon receipt.

     Section  12.07.  Set-Off.  The Borrower  agrees  that,  in addition to (and
without  limitation of) any right of set-off,  banker's lien or counterclaim the
Bank may otherwise  have, the Bank shall be entitled,  at its option,  to offset
balances  held  by it for  the  account  of the  Borrower  at any of the  Bank's
offices,  in Dollars  or in any other  currency,  against  any  principal  of or
interest on any of the Loans or any other amount  payable by the Borrower  under
this  Agreement or the Note,  which is not paid when due, in which case it shall
promptly notify the Borrower  thereof;  provided that the Bank's failure to give
such notice shall not affect the validity thereof.

     Section  12.08.   Jurisdiction;   Immunities.   (a)  The  Borrower   hereby
irrevocably  submits to the  jurisdiction of any New York State or United States
Federal court sitting in Monroe  County,  New York over any action or proceeding
arising out of or  relating  to this  Agreement  or the Note,  and the  Borrower
hereby  irrevocably  agrees  that  all  claims  in  respect  of such  action  or
proceeding  may be heard and determined in such New York State or Federal court.
The Borrower agrees that a final judgment in any such action or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any  other  manner  provided  by law.  The  Borrower  further  waives  any
objection to venue in such State and any objection to an action or proceeding in
such State on the basis of forum non  conveniens.  The Borrower  further  agrees
that any action or proceeding  brought against the Bank shall be brought only in
New York State or United States Federal court sitting in Monroe County.

     (b) Nothing in this 12.08 shall affect the right of the Bank to serve legal
process in any other manner  permitted by law or affect the right of the Bank to
bring any action or  proceeding  against  the  Borrower  or its  property in the
courts of any other jurisdictions.

     (c) To the extent  that the  Borrower  has or  hereafter  may  acquire  any
immunity  from  jurisdiction  of any  court or from any legal  process  (whether
through service or notice,  attachment  prior to judgment,  attachment in aid of
execution,  execution or otherwise) with respect to itself or its property,  the
Borrower hereby  irrevocably  waives such immunity in respect of its obligations
under this Agreement and the Note.

     Section  12.09.  Captions.  The  captions and  headings  hereunder  are for
convenience only and shall not affect the interpretation or construction of this
Agreement.

     Section 12.10. Severability.  The provisions of this Agreement are intended
to be severable. If for any reason any provision of this Agreement shall be held
invalid or unenforceable in whole or in part in any jurisdiction, such provision
shall, as to such jurisdiction,  be ineffective to the extent of such invalidity
or   unenforceability   without  in  any  manner   affecting   the  validity  or
enforceability  thereof in any other  jurisdiction  or the remaining  provisions
hereof in any jurisdiction.

     Section 12.11.  Counterparts.  This Agreement may be executed in any number
of  counterparts,  all of which taken together shall constitute one and the same
instrument,  and any party hereto may execute this Agreement by signing any such
counterpart.

     Section  12.12.  Governing  Law. This  Agreement  shall be governed by, and
interpreted and construed in accordance with, the laws of the State of New York;
provided  that the  foregoing  is not  intended  to limit  the  maximum  rate of
interest  which may be charged or collected by the Bank  hereunder if, under the
laws  applicable to it, the Bank may charge or collect such interest at a higher
rate than is permissible under the laws of said State.

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

PERFORMANCE TECHNOLOGIES,
INCORPORATED



By
Name: Dorrence Lamb
Title: Vice President of Finance

Address for notices:

315 Science Parkway
Rochester, New York 14620
Attn: President


THE CHASE MANHATTAN BANK

By
Name: John F. Sorensen
Title: Vice President

Lending and Payment Office:

The Chase Manhattan Bank
One Chase Square
Rochester, New York 14643

Address for notices:

The Chase Manhattan Bank
One Chase Square
Rochester, New York 14643
Attention: Performance
Technologies Account
Representative

<PAGE>

EXHIBIT A

REVOLVING CREDIT NOTE

$3,000,000 October 31, 1996

     FOR VALUE  RECEIVED,  Performance  Technologies,  Incorporated,  a Delaware
corporation (the "Borrower"), hereby promises to pay to The Chase Manhattan Bank
(the  "Bank"),  for account of its  Lending  Office  provided  for by the Credit
Agreement  dated as of October 31, 1996  between the  Borrower and the Bank (the
"Credit Agreement"),  or order, at the Payment Office the principal sum of Three
Million Six Hundred  Thousand and No/100  Dollars  ($3,000,000)  or such portion
thereof  as may have been  advanced  by the Bank  pursuant  to  Article 2 of the
Credit  Agreement,  in  lawful  money of the  United  States of  America  and in
immediately  available  funds,  on the dates and in the amounts  provided in the
Credit Agreement, and to pay interest on the unpaid principal amount hereof from
time to time  outstanding,  at such  office,  in like money and  funds,  for the
period  commencing  on the date of this Note until such  principal  sum shall be
paid in full,  at the rates per annum and on the dates  provided  in the  Credit
Agreement.

     The  amount,  type and date of each Loan made by the Bank to the  Borrower,
and each payment made on account of the principal thereof,  shall be recorded by
the Bank on its books and,  prior to any transfer of this Note,  endorsed by the
Bank on the schedule  attached  hereto or any  continuation  thereof,  provided,
however,  that the failure of the Bank to endorse the schedule  shall not affect
or impair the Borrower's obligation to repay any Loan or any interest thereon or
any other amount due under the Credit Agreement.

     This Note is the Note referred to in the Credit Agreement and evidences all
Loans made by the Bank thereunder.  Capitalized terms used in this Note have the
respective meanings assigned to them in the Credit Agreement.

     The Credit Agreement  provides for the acceleration of the maturity of this
Note upon the occurrence of certain events and for prepayments of Loans upon the
terms and conditions specified therein.



     This Note shall be governed by and construed in accordance with the laws of
the State of New York.


PERFORMANCE TECHNOLOGIES,
INCORPORATED


By:
Dorrance W. Lamb
Title: Vice President of Finance




ANNEX TO NOTE

              Principal       Principal
Date  Type    Amount  Amount  Unpaid
of    of      of      Paid or Principal       Notation
Loan  Loan    Loan            Prepaid         Amount          Made By




<PAGE>


EXHIBIT B

ANNUAL COMPLIANCE CERTIFICATE



     This  Compliance  Certificate is rendered to The Chase  Manhattan Bank (the
"Bank") by Performance  Technologies,  Incorporated (the "Borrower") pursuant to
8.06(a)(iii)  of the Credit  Agreement  between the Bank and the Borrower  dated
October 31, 1996 (the "Credit Agreement").

     The undersigned  hereby certifies that in respect of the fiscal year ending
December __, 199__ (the "Year"):

     1. The  Borrower  was in  compliance  with  10.02 and  10.03 of the  Credit
Agreement as at the end of the Year [except __________].

     2. No "Default" or "Event of Default" (as defined in the Credit  Agreement)
occurred during the Year [except _________].

          Dated:                           Performance Technologies,
                                           Incorporated
          _______________, 199__

                                        By:_________________________

                                        Title:______________________

<PAGE>


EXHIBIT C

QUARTERLY COMPLIANCE CERTIFICATE



     This  Compliance  Certificate is rendered to The Chase  Manhattan Bank (the
"Bank") by Performance  Technologies,  Incorporated (the "Borrower") pursuant to
8.06(b)(iii)  of the Credit  Agreement  between the Bank and the Borrower  dated
October 31, 1996 (the "Credit Agreement").

     The  undersigned  hereby  certifies  that in respect of the fiscal  quarter
ending ______________, 199__ (the "Quarter"):

     1. The Borrower was in compliance with 10.01 of the Credit Agreement at all
times during the Quarter  [except  ________]  and the Borrower was in compliance
with  10.03  and  10.04 of the  Credit  Agreement  as at the end of the  Quarter
[except __________].

     2. No "Default" or "Event of Default" (as defined in the Credit  Agreement)
occurred during the Quarter [except _________].

          Dated:                           Performance Technologies,
                                           Incorporated
          _______________, 199__

                                        By:_________________________

                                        Title:______________________

<PAGE>


SCHEDULE 1

Schedule of Subsidiaries and
Investments in Subsidiaries ( 7.07)


     Schedule 1

Schedule of Subsidiaries and Investments in Subsidiaries (section 7.07)


UconX Corporation
6540 Lusk Boulevard C-113
San Diego, California 92121

        State of Incorporation:                          Delaware

        Percentage Ownership of Borrower:                       100%

        Qualified to do business in California as UconX Delaware on 12/8/92.



     As part of the  acquisition of UconX  Corporation on September 1, 1992, PTI
agreed to lend UconX  Corporation  (at that time a 52 1/2% owned  subsidiary  of
PTI) up to $400,000.  As of October 31, 1996, the loan  outstanding to UconX was
$450,000, which includes accrued but unpaid interest.


<PAGE>


SCHEDULE 2

Existing Credit Arrangements and Liens ( 7.08)

     Schedule 2

     Existing Credit Arrangements and Liens (section 7.08)


Start         Collateral                 Monthly
Date          Description                Payment              Term
 
M & M Associates Leases:

5/1/92        Sun Equipment              $154.00              60 months

11/1/93       Sparcstation 10            $257.60              36 months


7/1/95       486DX2-80-PC                $ 82.15              36 months
             Analyzer CH Digital
                Scope

Fleet Credit Corp. Leases:

3/30/93      Harris Scicards             $4,535.57            60 months


1/15/92      Various equipment           $2,403.54            48 months

3/15/93      Minx Software               $2,205.95            48 months


U.S. Bancorp Leasing and Financial:

January, 1996  
             Production and data         $2,242.15            48 months
             processing/computer equipment


Chase Manhattan Bank:

Line of Credit
machinery, equipment, fixtures
accounts, inventory, general
intangibles, chattel paper and
insurance.
Electrovert Hydrocleaner.

<PAGE>

Schedule 2 - Continued

Existing Credit Arrangements and Liens

Start      Collateral                     Monthly
Date       Description                    Payment                     Term



City of Rochester:    $80,000 Loan from City of Rochester
                      secured by Chase Manhattan Bank Letter
                      of Credit


                                   Guaranties

Performance Technologies,  Incorporated ("PTI") has co-guaranteed  approximately
$1,250,000  of the  mortgage  obtained  to finance the  building  located at 315
Science Parkway, Rochester, New York 14620.

On December 2, 1993,  the PTI received  from the City of Rochester a Section 108
loan in the amount of $500,000  (the "City  Loan").  Pursuant to the spin-off of
Performance  Telecom Corporation ("PTC") from PTI, the City Loan and all related
security  agreements and other loan documentation were assigned from PTI to PTC.
In connection  with that  assignment,  PTI agreed to guaranty the collection and
payment of the City Loan.  As of October 31,  1996,  the  outstanding  principal
indebtedness on the City Loan was $470,000.

As part of the acquisition of UconX Corporation on September 1, 1992, PTI agreed
to lend UconX Corporation (at that time a 52 1/2% owned subsidiary of PTI) up to
$400,000.  As of October 31, 1996,  the loan  outstanding to UconX was $450,000,
which includes accrued but unpaid interest.

<PAGE>


SCHEDULE 3

Schedule of Hazardous Materials ( 7.12)


                                   Schedule 3

                    Schedule of Hazardous Materials (section 7.12)




                                      None
<PAGE>


SCHEDULE 4

Schedule of Partnerships and Joint Ventures ( 7.17)

                                   Schedule 4

              Schedule of Partnerships and Joint Ventures (section 7.17)


                                      None

<PAGE>

                                  SIGNATURES




        Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                             PERFORMANCE TECHNOLOGIES, INCORPORATED





November 19, 1996                         By: s/Charles E. Maginness
                                          -----------------------------
                                                Charles E. Maginness
                                          Chairman of the Board of Directors and
                                                Chief Executive Officer




November 19, 1996                         By: s/Dorrance W. Lamb
                                          -----------------------------
                                                Dorrance W. Lamb
                                               Chief Financial Officer and
                                                Vice President, Finance