Exhibit 10.10

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CREDIT AGREEMENT

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between

BIOANALYTICAL SYSTEMS, INC.

and

THE PROVIDENT BANK

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Dated as of October 29, 2002

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                                TABLE OF CONTENTS
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ARTICLE 1.     DEFINITIONS..................................................   1
  SECTION 1.1  DEFINED TERMS................................................   1
  SECTION 1.2  RULES OF CONSTRUCTION........................................  14
  SECTION 1.3  ACCOUNTING TERMS.............................................  14

ARTICLE 2.     CREDIT.......................................................  14
  SECTION 2.1  LINE OF CREDIT COMMITMENT....................................  14
  SECTION 2.2  INTEREST; UNUSED FEES AND RATE SELECTION.....................  14
      2.2.1.   LINE OF CREDIT - INTEREST....................................  14
      2.2.2.   GENERAL......................................................  14
      2.2.3.   UNUSED FEE/REDUCTION OF LINE OF CREDIT COMMITMENT............  14
      2.2.4.   INTEREST RATE SELECTION - EURODOLLAR RATE OPTION.............  15
  SECTION 2.3  PAYMENTS OF PRINCIPAL AND INTEREST...........................  15
      2.3.1.   LINE OF CREDIT...............................................  15
      2.3.2.   METHOD OF PAYMENT............................................  16
      2.3.3.   BANKING DAY..................................................  16
  SECTION 2.4  ISSUANCE OF LETTERS OF CREDIT................................  16
  SECTION 2.5  UNCONDITIONAL REIMBURSEMENT OBLIGATION.......................  17
  SECTION 2.6  RISK OF MISUSE OF LETTER OF CREDIT...........................  17
  SECTION 2.7  PREPAYMENT/EXIT FEE..........................................  18
  SECTION 2.8  USE OF PROCEEDS..............................................  18
  SECTION 2.9  METHOD OF ADVANCE............................................  18
      2.9.1.   LINE OF CREDIT...............................................  18
      2.9.2.   GENERAL......................................................  19
  SECTION 2.10 TAXES........................................................  19
      2.10.1.  GENERAL......................................................  19
      2.10.2.  TAX INDEMNITY................................................  19
  SECTION 2.11 YIELD PROTECTION.............................................  20
  SECTION 2.12 CHANGES IN CAPITAL ADEQUACY REGULATIONS......................  20
  SECTION 2.13 FUNDING INDEMNIFICATION......................................  21
  SECTION 2.14 AVAILABILITY OF TYPES OF ADVANCES............................  21
  SECTION 2.15 BANK STATEMENTS; SURVIVAL OF INDEMNITY.......................  21

ARTICLE 3.     SECURITY AND GUARANTY........................................  22
  SECTION 3.1  SECURITY.....................................................  22
  SECTION 3.2  ADDITION OF GUARANTORS; ADDITION OF PLEDGED CAPITAL STOCK
               AND OTHER COLLATERAL.........................................  22
  SECTION 3.3  ADDITIONAL COLLATERAL/SETOFF.................................  23

ARTICLE 4.     REPRESENTATIONS AND WARRANTIES...............................  23
  SECTION 4.1  DUE ORGANIZATION.............................................  23
  SECTION 4.2  DUE QUALIFICATION............................................  23
  SECTION 4.3  CORPORATE POWER..............................................  23
  SECTION 4.4  CORPORATE AUTHORITY..........................................  23
  SECTION 4.5  FINANCIAL STATEMENTS.........................................  23
  SECTION 4.6  NO MATERIAL ADVERSE CHANGE...................................  23
  SECTION 4.7  SUBSIDIARIES.................................................  23

  SECTION 4.8  BINDING OBLIGATIONS..........................................  24
  SECTION 4.9  MARKETABLE TITLE.............................................  24
  SECTION 4.10 INDEBTEDNESS.................................................  24
  SECTION 4.11 DEFAULT......................................................  24
  SECTION 4.12 TAX RETURNS..................................................  24
  SECTION 4.13 LITIGATION...................................................  24
  SECTION 4.14 ERISA........................................................  24
  SECTION 4.15 FULL DISCLOSURE..............................................  25
  SECTION 4.16 CONTRACTS OF SURETY..........................................  25
  SECTION 4.17 LICENSES.....................................................  25
  SECTION 4.18 COMPLIANCE WITH LAW..........................................  25
  SECTION 4.19 FORCE MAJEURE................................................  25
  SECTION 4.20 MARGIN STOCK.................................................  25
  SECTION 4.21 APPROVALS....................................................  26
  SECTION 4.22 INSOLVENCY...................................................  26
  SECTION 4.23 REGULATION...................................................  26
  SECTION 4.24 ENVIRONMENTAL MATTERS........................................  26
  SECTION 4.25 CONDITIONS PRECEDENT.........................................  28
  SECTION 4.26 GENERAL......................................................  28

ARTICLE 5.     COVENANTS....................................................  28
  SECTION 5.1  NEGATIVE COVENANTS...........................................  28
      5.1.1.   DISPOSE OF COLLATERAL........................................  28
      5.1.2.   FURTHER ENCUMBER.............................................  28
      5.1.3.   CONDUCT OF BUSINESS; SUBSIDIARIES; ACQUISITIONS..............  28
      5.1.4.   PURCHASE STOCK...............................................  29
      5.1.5.   SELL AND LEASEBACK...........................................  29
      5.1.6.   BORROWINGS/SUBORDINATED DEBT PAYMENTS........................  29
      5.1.7.   INVESTMENTS..................................................  29
      5.1.8.   GUARANTEES...................................................  29
      5.1.9.   CHANGE NAME OR PLACE OF BUSINESS.............................  29
      5.1.10.  SPECIAL CORPORATE TRANSACTIONS...............................  30
      5.1.11.  ACCOUNTING POLICIES..........................................  30
      5.1.12.  CHANGE OF BUSINESS...........................................  30
      5.1.13.  BENEFIT PLANS................................................  30
      5.1.14.  ADVERSITY....................................................  30
      5.1.15.  DIVIDENDS/DISTRIBUTIONS......................................  30
      5.1.16.  RESTRICTIVE AGREEMENTS.......................................  30
      5.1.17.  TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES................  30
  SECTION 5.2  AFFIRMATIVE COVENANTS........................................  30
      5.2.1.   FINANCIAL REPORTING..........................................  31
      5.2.2.   GOOD STANDING................................................  32
      5.2.3.   TAXES, ETC...................................................  32
      5.2.4.   MAINTAIN PROPERTIES..........................................  33
      5.2.5.   INSURANCE....................................................  33
      5.2.6.   BOOKS AND RECORDS............................................  33
      5.2.7.   REPORTS......................................................  33

      5.2.8.   LICENSES.....................................................  33
      5.2.9.   NOTICE OF MATERIAL ADVERSE CHANGE............................  34
      5.2.10.  COMPLIANCE WITH LAW..........................................  34
      5.2.11.  TRADE ACCOUNTS...............................................  34
      5.2.12.  USE OF PROCEEDS..............................................  34
      5.2.13.  LOAN PAYMENTS................................................  34
      5.2.14.  ENVIRONMENTAL MATTERS........................................  34
      5.2.15.  BANKING RELATIONSHIP.........................................  34
      5.2.16.  SUBORDINATED DEBT............................................  35
      5.2.17.  EQUIPMENT APPRAISAL..........................................  35
      5.2.18.  SALE OF REAL ESTATE..........................................  35
  SECTION 5.3  FINANCIAL COVENANTS..........................................  35
      5.3.1.   FUNDED DEBT RATIO............................................  35
      5.3.2.   TOTAL DEBT RATIO.............................................  35
      5.3.3.   FIXED CHARGE COVERAGE RATIO..................................  35
      5.3.4.   CURRENT RATIO................................................  35
      5.3.5.   CAPITAL EXPENDITURES.........................................  35

ARTICLE 6.     CONDITIONS PRECEDENT.........................................  35
  SECTION 6.1  CONDITIONS TO INITIAL ADVANCE................................  35
      6.1.1.   AUTHORIZATION................................................  36
      6.1.2.   INSURANCE....................................................  36
      6.1.3.   LOAN DOCUMENTS...............................................  36
      6.1.4.   INCUMBENCY...................................................  36
      6.1.5.   LEGAL MATTERS................................................  36
      6.1.6.   BORROWING BASE, ETC..........................................  36
      6.1.7.   OPINIONS OF COUNSEL..........................................  36
      6.1.8.   LANDLORD WAIVERS.............................................  36
      6.1.9.   UCC SEARCHES/LIFE INSURANCE QUESTIONNAIRE....................  36
      6.1.10.  FEES.........................................................  36
      6.1.11.  REGULATION U.................................................  37
      6.1.12.  NO DEFAULT...................................................  37
      6.1.13.  CONSENTS.....................................................  37
      6.1.14.  FIELD AUDIT..................................................  37
      6.1.15.  INTERCREDITOR AGREEMENT......................................  37
      6.1.16.  ADDITIONAL DOCUMENTATION.....................................  37
  SECTION 6.2  CONDITIONS TO SUBSEQUENT ADVANCES............................  37
      6.2.1.   NO DEFAULT...................................................  37
      6.2.2.   REPRESENTATIONS AND WARRANTIES...............................  37
      6.2.3.   LEGAL MATTERS................................................  37
  SECTION 6.3  GENERAL......................................................  37

ARTICLE 7.     DEFAULT......................................................  37

ARTICLE 8.     REMEDY.......................................................  39
  SECTION 8.1  ACCELERATION.................................................  39
  SECTION 8.2  DEPOSIT TO SECURE REIMBURSEMENT OBLIGATIONS..................  39
  SECTION 8.3  SUBROGATION..................................................  40
  SECTION 8.4  REMEDY.......................................................  40
  SECTION 8.5  PRESERVATION OF RIGHTS.......................................  40

ARTICLE 9.     GENERAL PROVISIONS...........................................  40
  SECTION 9.1  BENEFIT OF AGREEMENT.........................................  40
  SECTION 9.2  SURVIVAL OF REPRESENTATIONS..................................  40
  SECTION 9.3  GOVERNMENTAL REGULATION......................................  41
  SECTION 9.4  CONFLICT.....................................................  41
  SECTION 9.5  CHOICE OF LAW................................................  41
  SECTION 9.6  HEADINGS.....................................................  41
  SECTION 9.7  ENTIRE AGREEMENT.............................................  41
  SECTION 9.8  EXPENSES.....................................................  41
  SECTION 9.9  INDEMNIFICATION..............................................  42
  SECTION 9.10 CONFIDENTIALITY..............................................  42
  SECTION 9.11 GIVING NOTICE................................................  42
  SECTION 9.12 COUNTERPARTS.................................................  42
  SECTION 9.13 INCORPORATION BY REFERENCE...................................  42
  SECTION 9.14 TIME OF ESSENCE..............................................  43
  SECTION 9.15 NO JOINT VENTURE.............................................  43
  SECTION 9.16 RELATIONSHIP OF PARTIES; RELEASE OF CONSEQUENTIAL DAMAGES....  43
  SECTION 9.17 SEVERABILITY.................................................  43
  SECTION 9.18 GENDER.......................................................  43
  SECTION 9.19 WAIVER AND AMENDMENT.........................................  43
  SECTION 9.20 BANK NOT IN CONTROL..........................................  43
  SECTION 9.21 WAIVER OF JURY TRIAL.........................................  43

Schedule 1 Permitted Encumbrances

Schedule 4.7 Subsidiaries

Schedule 4.10 and 5.1.6 Other Indebtedness

Schedule 4.13 Material Pending or Threatened Litigation

Schedule 5.1.7 Existing Investments

Exhibit A - Credit Note

Exhibit B - General Security Agreement

Exhibit C - Policy Assignment

Exhibit D - Form of 6% Subordinated Convertible Note

CREDIT AGREEMENT

         THIS CREDIT AGREEMENT, dated as of October 29, 2002, is between
BIOANALYTICAL SYSTEMS, INC. and THE PROVIDENT BANK. The parties agree as
follows:

ARTICLE 1.         DEFINITIONS

         Section 1.1   Defined Terms.    As used herein:

        “Accounts”, “Chattel Paper”, “Deposit Accounts”, “Documents”,
“Equipment”, “Fixtures”, “General Intangibles”, “Goods”, “Instruments”,
“Inventory” and “Proceeds” shall have the meanings ascribed in the Security
Agreements.

        “Acquisition” means any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which
Borrower or any of its Subsidiaries (a) acquires any going business or all or
substantially all of the assets of any firm, corporation or division thereof,
whether through purchase of assets, merger or otherwise or (b) directly or
indirectly acquires (in one transaction or as the most recent transaction in a
series of transactions) at least a majority (in number of votes) of the
securities of a corporation which have ordinary voting power for the election of
directors (other than securities having such power only by reason of the
happening of a contingency) or a majority (by percentage of voting power) of the
outstanding equity interests of another Person.

        "Advance" means a disbursement of proceeds of the Facilities.

        “ Affiliate” means, with respect to any Person, any other Person (a)
directly or indirectly through one or more intermediaries, controlling,
controlled by, or under common control with, such Person, and (b) that directly
or indirectly owns more than Ten Percent (10%) of any class of the voting
securities or capital stock of or equity interests in such Person. A Person
shall be deemed to control another Person if such Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of such other Person, whether through the ownership of voting
securities, by contract or otherwise.

         "Agreement" means this Credit Agreement, as amended from time to time.

        “ Applicable Fee” means the per annum fee payable to Bank, which shall
be based on the Funded Debt Ratio and determined by reference to the following
table:

                                Applicable Fee          Applicable Fee for              Applicable Fee for
     Funded Debt Ratio         for Non-Use Fees      Standby Letters of Credit     Commercial Letters of Credit
     -----------------         ----------------      -------------------------     ----------------------------

Equal to or greater than             .50%                      3.50%                        2.00%
4.00 to 1.0

Less than 4.00 to 1.00 and           .25%                      3.00%                        2.00%
equal to or greater than
3.50 to 1.0

Less than 3.50 to 1.0 and            .25%                      2.50%                        2.00%
equal to or greater than
2.50 to 1.0

Less than 2.50 to 1.0                .25%                      2.00%                        2.00%

         The Applicable Fee shall initially be determined based on a Funded Debt
Ratio of 2.50 to 1.0. The Applicable Fee shall be adjusted quarterly (upwards or
downwards, as appropriate) based upon the Funded Debt Ratio determined from the
Financial Statements for the immediately preceding fiscal quarter and upon the
closing of any permitted Acquisition. The adjustment (upwards or downwards, as
appropriate), if any, to the Applicable Fee shall be effective on the fifth
(5th) Banking Day after delivery of the Financial Statements. In the event Bank
has not received the required Financial Statements pursuant to Section 5.2.1
hereof within the time periods provided therein, the highest Funded Debt Ratio
set forth in the foregoing table shall be conclusively presumed to be correct
until the fifth (5th) Banking Day after Bank receives such Financial Statements,
at which time the Applicable Fee shall be adjusted based upon the Funded Debt
Ratio determined from such Financial Statements. In no event shall the
Applicable Fee be adjusted downward if there exists a Default on the date on
which such downward adjustment would otherwise become effective until such time
as the Default has been cured, waived or ceases to exist. The provisions of this
definition are not intended to, and shall not be construed to, authorize any
violation by Borrower of any financial covenant contained in Article 5 hereof or
to constitute a waiver thereof or any commitment by Bank to waive any violation
by Borrower of any financial covenant contained in Article 5 hereof.

         “Applicable Margin” means the incremental margin to be paid by Borrower
on the Advances hereunder, which margin shall be based on the Funded Debt Ratio
and determined by reference to the following table:

                                              Applicable Margin         Applicable Margin
                                                  for Prime              for  Eurodollar
         Funded Debt Ratio                       Rate Advances            Rate Advances
         -----------------                    -----------------         -----------------

         Equal to or greater
         than 4.00 to 1.0                            1.25%                      3.50%

         Less than 4.00 to 1.0 and
         equal to or greater
         than 3.50 to 1.0                             .75%                      3.00%

         Less than 3.50 to 1.0 and                    .50%                      2.50%
         equal to or greater than 2.50 to 1.0

         Less than 2.50 to 1.0                        -0-                       2.00%

–2–

         The Applicable Margin shall initially be determined based on a Funded
Debt Ratio of 2.50 to 1.0. The Applicable Margin shall be adjusted quarterly
(upwards or downwards, as appropriate) based upon the Funded Debt Ratio
determined from the Financial Statements for the immediately preceding fiscal
quarter and upon the closing of any permitted Acquisition. The adjustment
(upwards or downwards, as appropriate), if any, to the Applicable Margin shall
be effective on the fifth (5th) Banking Day after delivery of the Financial
Statements. In the event Bank has not received the required Financial Statements
pursuant to Section 5.2.1 hereof within the time periods provided therein, the
highest Funded Debt Ratio set forth in the foregoing table shall be conclusively
presumed to be correct until the fifth (5th) Banking Day after Bank receives
such Financial Statements, at which time the Applicable Margin shall be adjusted
based upon the Funded Debt Ratio determined from such Financial Statements. In
no event shall the Applicable Margin be adjusted downward if there exists a
Default on the date on which such downward adjustment would otherwise become
effective until such time as the Default has been cured, waived or ceases to
exist. The provisions of this definition are not intended to, and shall not be
construed to, authorize any violation by Borrower of any financial covenant
contained in Article 5 hereof or to constitute a waiver thereof or any
commitment by Bank to waive any violation by Borrower of any financial covenant
contained in Article 5 hereof.

         “Approved PKL Acquisition” means the Acquisition by Borrower of
Pharmakinetics Laboratories, Inc., pursuant to a merger agreement dated June 20,
2002, as amended by instrument dated July 24, 2002, and as may be further
amended with the written consent of Bank, and as described in Borrower’s Form
S-4 filed September 13, 2002, but only if Borrower’s 6% Subordinated Convertible
Note to be issued to certain shareholders of Pharmakinetics Laboratories, Inc.
is in the form attached hereto as Exhibit D.

         “Approved LCR Acquisition” means the Acquisition of all the outstanding
capital stock of LC Resources, Inc., pursuant to the terms of that Letter of
Intent dated July 1, 2002, between Borrower and LC Resources, Inc. (or upon such
other terms as Bank agrees in writing), but only if Borrower’s obligations under
its promissory note to LC Resources are subordinated to Bank upon the same
subordination terms as are required by Bank with respect to the Approved PKL
Acquisition.

         “Bank” means The Provident Bank, its successors and assigns.

         “Banking Day” means a day on which the principal domestic office of
Bank is open for the purpose of conducting substantially all of its business
activities.

         “Borrower” means Bioanalytical Systems, Inc., an Indiana corporation.

         “Borrowing Base” means, on any date of determination, an amount equal
to (a) Eighty Percent (80%) of Borrower’s Eligible Accounts, plus (b) the lesser
of (i) Fifty Percent (50%) of Borrower’s raw materials and finished goods
Eligible Inventory or (ii) Sixty-Seven Percent (67%) of Borrower’s Eligible
Accounts, minus (c) the maximum credit limit under Borrower’s corporate credit
card issued by Bank, plus (d) the sum of (i) One Million Five Hundred Thousand
Dollars ($1,500,000), minus (ii) the product of (A) Twenty-Five Thousand Dollars
($25,000), multiplied by (B) as of any relevant date, the number of full
calendar months that have elapsed after the month of October 2002. (For example,
in June, 2003, the amount added as part of the Borrowing Base under clause (d)
above will be One Million Five Hundred Thousand Dollars ($1,500,000) minus One
Hundred Seventy-Five Thousand Dollars ($175,000) (seven times Twenty-Five
Thousand Dollars ($25,000)), or a total of One Million Three Hundred Twenty-Five
Thousand Dollars ($1,325,000)).

–3–

         “Capitalized Expenditures” means, without duplication, any expenditures
for any purchase or other acquisition of any asset which would be classified as
a fixed or capital asset on a balance sheet of Borrower prepared in accordance
with GAAP.

         “Capitalized Lease” means any lease of property which would be
capitalized on a financial statement of a Person prepared in accordance with
GAAP.

         “Capitalized Lease Obligations” means the amount of the obligations of
a Person under Capitalized Leases which are shown as liabilities on a balance
sheet of such Person prepared in accordance with GAAP.

         “CERCLA” means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.

         “CERCLIS” means the Comprehensive Environmental Response Compensation
Liability Information System List under CERCLA.

         “Change” shall have the meaning ascribed thereto in Section 2.11
hereof.

         “Change in Control” means (a) the acquisition by any Person or two or
more Persons acting in concert (other than (i) current shareholders of Borrower
as of the date of this Agreement and their respective legal heirs and any trusts
created for the benefit of such Persons or (ii) any employee or director benefit
plan or stock plan of Borrower or any trustee or fiduciary with respect to any
such plan when acting in that capacity or any trust related to any such plan),
of beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Securities Exchange Act of 1934) of twenty percent
(20%) or more of the outstanding shares of voting stock of Borrower; or (b) the
occurrence during any period of twelve (12) consecutive months, commencing
before or after the date of this Agreement, pursuant to which individuals who on
the first day of such period were directors of Borrower (together with any
replacement or additional directors who were nominated or elected by Borrower’s
nominating committee or by a majority of directors then in office) cease to
constitute a majority of the Board of Directors of Borrower.

         “Code” means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.

         “Compliance Certificate” means a Compliance Certificate, in the form
prescribed by Bank, duly executed by the chief executive or chief financial
officer of Borrower.

         “Credit Note” means the Promissory Note, in substantially the form of
Exhibit A hereto, duly executed by Borrower to Bank to evidence Advances under
the Line of Credit, including any amendment, modification, renewal, extension or
replacement thereof.

         “Current Assets” means all assets of a Person which would, in
accordance with GAAP, be classified as current assets of an entity conducting a
business the same as or similar to that of such Person.

–4–

         “Current Liabilities” means all liabilities of a Person which would, in
accordance with GAAP, be classified as current liabilities of an entity
conducting a business the same as or similar to that of such Person, including,
without limitation, all lease rental payments and all fixed prepayments of and
sinking fund payments with respect to any Indebtedness required to be made
within one (1) year from the date of determination.

         “Default” means any of the events specified in Article 7 hereof.

         “EBITDA” means, as of any date of determination, with respect to
Borrower, the sum of (a) net income, plus (b) to the extent deducted in
determining net income, income taxes paid or accrued, plus (c) depreciation,
amortization and other non-cash charges shown as a charge against earnings for
such period, minus (plus) (d) to the extent included (deducted) in determining
net income, any gain (loss) which may be treated as an extraordinary item under
GAAP or realized upon the sale or other disposition of any Property that is not
sold in the ordinary course of business, plus (e) interest expense, minus (f)
interest income, plus (g) fees and expenses incurred in connection with the
Approved PKL Acquisition, the Approved LCR Acquisition, the Facilities, and the
financings provided by Union Planters Bank, National Association and Fifth Third
Bank, Indiana in an aggregate amount not exceeding Five Hundred Thousand Dollars
($500,000), plus (h) severance payments made in 2002 in an aggregate amount not
exceeding Two Hundred Thousand Dollars ($200,000); in each instance determined
for the trailing four (4) quarter period ending on the date of determination.
EBITDA shall be calculated in accordance with GAAP and determined from the
Financial Statements.

         “Eligible Accounts” means, on any date of determination, all Accounts
then owned by Borrower, which conforms with the representations and warranties
set forth in Borrower’s Security Agreement and which is not subject to any prior
Lien, except (a) Accounts outstanding more than ninety (90) days from the date
of invoice; (b) all Accounts of any account debtor if Twenty Percent (20%) or
more of the amount owing by such account debtor is more than ninety (90) days
past due from the date of invoice; (c) all Accounts of the account debtor which
Bank reasonably deems unacceptable because of the credit-worthiness of the
account debtor; (d) Accounts of account debtors who are also creditors of
Borrower to the extent of the amount owed to such account debtors; (e) Accounts
owned by account debtors who are Affiliates of Borrower; (f) Accounts for
uncompleted sales, including pre-billings, consignment sales, and guaranteed
sales; (g) progress billings other than a portion of a sale pursuant to a
purchase order which has been shipped and has been recorded as an Account; (h)
Accounts of account debtors who are Governmental Authorities, unless proper
assignments to Bank have been completed; (i) Accounts not denominated in U.S.
Dollars; (j) Accounts of account debtors who are non-residents of the United
States, unless collateralized by an acceptable letter of credit or guaranty, and
other than large foreign pharmaceutical companies having a rating of “A-or
better” by S & P or “A-3 or better” by Moody’s; (k) Accounts with respect to
which the account debtor is located in Minnesota (or any other jurisdiction
which adopts a statute or other requirement with respect to which any Person
that obtains business from within such jurisdiction or is otherwise subject to
such jurisdiction’s tax law requiring such Person to file a Business Activity
Report or make any other required filings in a timely manner in order to enforce
its claims in such jurisdiction’s courts or arising under such jurisdiction’s
laws); provided, however, such receivables shall nonetheless be eligible if
Borrower has filed a Business Activity Report (or other applicable report or
filing) with the applicable state office by the time required or is qualified to
do business in such jurisdiction and, at the time the receivable was created,
was qualified to do business in such jurisdiction or had on file with the
applicable state office a current Business Activity Report (or other applicable
report or filing); (l) Accounts to such extent such Accounts are subject to
known payments, adjustments or credits; and (m) Accounts, or any portion
thereof, which are considered uncollectible for any reason, including, without
limitation, Inventory returned, rejected, repossessed, lost or damaged.
Notwithstanding the foregoing exclusions of Eligible Accounts, Bank will
consider including Accounts up to one hundred twenty (120) days past due for S &
P “A-or better” rated account debtors or Moody’s “A-3 or better” rated account
debtors.

–5–

         “Eligible Inventory” means, on any date of determination, that portion
of Inventory owned by Borrower consisting of raw materials and finished goods
(i) on which Bank has a first (1st) and prior lien, (ii) which conforms with the
representations and warranties set forth in Borrower’s Security Agreement, (iii)
which is not obsolete or slow moving, (iv) which is not in transit, (v) which is
not placed on consignment, (vi) which is not stored with any bailee,
warehouseman or other party, (vii) which does not constitute labor, overhead or
miscellaneous charges, and (viii) which Bank has not otherwise reasonably
determined unacceptable.

         “Environmental Laws” means all provisions of laws, statutes,
ordinances, rules, regulations, permits, licenses, judgments, writs,
injunctions, decrees, orders, awards and standards promulgated by any
Governmental Authority concerning the protection of, or regulation of the
discharge of substances into, the environment or concerning the health or safety
of persons with respect to environmental hazards, and includes, without
limitation, the Hazardous Materials Transportation Act, 42 U.S.C. § 1801 et
seq., the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986,
42 U.S.C.§ 9601 et seq., the Solid Waste Disposal Act, as amended by the
Resource Conservation and Recovery Act of 1976 and the Solid and Hazardous Waste
Amendments of 1984, 42 U.S.C. § 6901 et seq., the Federal Water Pollution
Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C. § 1251 et
seq., the Clean Air Act of 1966, as amended, 42 U.S.C. § 7401 et seq., the Toxic
Substances Control Act of 1976, 15 U.S.C. § 2601 et seq., the Federal
Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. § 7401 et seq., the
Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. § 651 et seq.,
the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C.
§ 11001 et seq., the National Environmental Policy Act of 1975, 42 U.S.C. § 4321
et seq., the Safe Drinking Water Act of 1974, as amended, 42 U.S.C. § 300(f) et
seq., and any similar or implementing state law, and all amendments, rules, and
regulations promulgated thereunder.

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

–6–

         “ERISA Affiliate” means any trade or business, whether or not
incorporated, which together with the subject Person would be treated as a
single employer under ERISA.

         “Eurodollar Base Rate” means, with respect to a Eurodollar Rate Advance
for any specified Interest Period, the applicable British Bankers’ Association
Interest Settlement Rate for deposits in U.S. dollars appearing on Reuters
Screen FRBD as of 11:00 a.m. (London time) two (2) Banking Days prior to the
first day of such Interest Period, and having a maturity equal to such Interest
Period, provided that, (a) if Reuters Screen FRBD is not available to Bank for
any reason, the applicable Eurodollar Base Rate for the relevant Interest Period
shall instead be the applicable British Bankers’ Association Interest Settlement
Rate for deposits in U.S. dollars as reported by any other generally recognized
financial information service as of 11:00 a.m. (London time) two (2) Banking
Days prior to the first day of such Interest Period, and (b) if no such British
Bankers’ Association Interest Settlement Rate is available to Bank, the
applicable Eurodollar Base Rate for the relevant Interest Period shall instead
be the rate determined by Bank, in its sole discretion, to be the rate at which
deposits in U.S. Dollars are offered to first-class banks in the London
interbank market at approximately 11:00 a.m. (London time) for the relevant
Interest Period two Banking Days prior to the first day of such Interest Period.
Such determination by Bank shall be presumed correct absent manifest error.

         “Eurodollar Rate” means, with respect to a Eurodollar Rate Advance for
the relevant Interest Period, the Eurodollar Base Rate applicable to such
Interest Period plus the then Applicable Margin. The Eurodollar Rate shall be
rounded to the next higher multiple of 1/100 of 1% if the rate is not such a
multiple.

         “Eurodollar Rate Advance” means an Advance which bears interest at the
Eurodollar Rate.

         “Facilities” means the Line of Credit, and any other credit facility
provided by Bank from time to time pursuant to this Agreement.

         “Financial Contract” of a Person means (a) any exchange-traded or
over-the-counter futures, forward, swap or option contract or other financial
instrument with similar characteristics, (b) any agreements, devices or
arrangements providing for payments related to fluctuations of interest rates,
exchange rates or forward rates, including, but not limited to, interest rate
exchange agreements, forward currency exchange agreements, interest rate cap or
collar protection agreements, forward rate currency or interest rate options, or
(c) to the extent not otherwise included in the foregoing, any Rate Hedging
Agreement.

         “Financial Statements” means, as the context may require, (a) the
financial statements of Borrower as of June 30, 2002, and/or (b) the similar
financial statements of Borrower furnished from time to time pursuant to Section
5.2.1 hereof; in all cases together with any accompanying notes or other
disclosures to such financial statements, and any other documents or data
furnished to Bank in connection therewith.

–7–

         “Fixed Charge Coverage Ratio” means, with respect to Borrower, (a) the
sum of (i) EBITDA, minus (ii) Unfunded Capital Expenditures, plus (iii) Rentals,
divided by (b) the sum of (i) interest expense, plus (ii) mandatory payments of
all long term Indebtedness, plus (iii) taxes paid, plus (iv) Rentals; in each
instance determined for the trailing four (4) quarter period ending on the date
of determination, except that for purposes of determining the Fixed Charge
Coverage Ratio (aa) for the fiscal period ending December 31, 2002, Unfunded
Capital Expenditures and mandatory payments of all long term Indebtedness shall
be determined by multiplying such amounts for the quarter-annual period then
ending by a factor of 4, (bb) for the fiscal period ending March 31, 2003,
Unfunded Capital Expenditures and mandatory payments of all long term
Indebtedness shall be determined by multiplying such amounts for the semi-annual
period then ending by a factor of 2, and (cc) for the fiscal period ending June
30, 2003, Unfunded Capital Expenditures and mandatory payments of all long term
Indebtedness shall be determined by multiplying such amounts for the three
quarter-annual period then ending by a factor of 1.33. The Fixed Charge Coverage
Ratio shall be determined from the Financial Statements.

         “Funded Debt Ratio” means, with respect to Borrower, as of the last day
of any fiscal quarter and as of the closing of any permitted Acquisition, the
ratio of (a) interest bearing Indebtedness minus, to the extent included in
interest bearing Indebtedness, Subordinated Debt to (b) EBITDA. The Funded Debt
Ratio shall be determined from the Financial Statements.

         “GAAP” means generally accepted accounting principles in the United
States of America in effect from time to time as promulgated by the Financial
Accounting Standards Board and recognized and interpreted by the American
Institute of Certified Public Accountants.

         “Governmental Authority” means any nation or government, any state or
other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to any government, including, without limiting the generality of the foregoing,
any agency, body, commission, court or department thereof whether federal,
state, local or foreign.

         “Guarantors” means any U.S. Subsidiaries of Borrower.

         “Guaranty” means any Guaranty duly executed by a U.S. Subsidiary of
Borrower, in the form prescribed by Bank, including any amendment or
modification thereof.

         “Hazardous Materials” mean (a) any “hazardous substance,” as defined by
CERCLA, (b) any “hazardous waste,” as defined by the Resource Conservation and
Recovery Act, as amended, (c) any petroleum product, or (d) any pollutant or
contaminant or hazardous, dangerous or toxic chemical, material or substance
within the meaning of any other federal, state or local law, regulation,
ordinance or requirement (including consent decrees and administrative orders)
relating to, or imposing liability or standards of conduct concerning, any
hazardous, toxic or dangerous waste, substance or material, all as amended or
hereafter amended.

–8–

         “Indebtedness” of a Person means such Person’s (a) obligations for
borrowed money, (b) obligations representing the deferred purchase price of
Property or services (other than trade payables arising in the ordinary course
of such Person’s business payable on terms customary in the trade), (c)
obligations, whether or not assumed, secured by any Lien upon or in Property
owned by the subject Person or payable out of the proceeds or production from
Property now or hereafter owned or acquired by such Person, (d) obligations
which are evidenced by notes, acceptances, or other instruments, (e) Capitalized
Lease Obligations, (f) indebtedness or other obligations of any other Person for
borrowed money or for the deferred purchase price of property or services, the
payment or collection of which the subject Person has guaranteed (except by
reason of endorsement for collection in the ordinary course of business) or in
respect of which the subject Person is liable, contingently or otherwise,
including, without limitation, liability by way of agreement to purchase, to
provide funds for payment, to supply funds to or otherwise to invest in such
other Person, or otherwise to assure a creditor against loss, (g) reimbursement
or other obligations in connection with letters of credit, (h) obligations in
connection with Sale and Leaseback Transactions, (i) any Net Mark-To-Market
Exposure of Rate Hedging Agreements or other Financial Contracts, and (j) any
other transaction which is the functional equivalent of, or takes the place of
borrowing, but which would not constitute a liability on a balance sheet of such
Person prepared in accordance with GAAP.

         “Intercreditor Agreement” means the Intercreditor Agreement of even
date herewith between Union Planters Bank, National Association and Bank, as
amended from time to time.

         “Interest Period” means, with respect to a Eurodollar Rate Advance, a
period of one (1), two (2) or three (3) months commencing on a Banking Day
selected by Borrower pursuant to this Agreement. Such Interest Period shall end
on (but exclude) the day which corresponds numerically to such date one, two or
three months thereafter; provided, however, that if there is no such numerically
corresponding day in such next, second or third succeeding month, such Interest
Period shall end on the last Banking Day of such next, second or third
succeeding month, as the case may be. If an Interest Period would otherwise end
on a day which is not a Banking Day, such Interest Period shall end on the next
succeeding Banking Day; provided, however, that if said next succeeding Banking
Day falls in a new calendar month, such Interest Period shall end on the
immediately preceding Banking Day.

         “Investments” of a Person means any loan, advance (other than
commission, travel and similar advances to officers and employees made in the
ordinary course of business), extension of credit (other than accounts
receivable arising in the ordinary course of business on terms customary in the
trade) or contribution of capital by such Person; stocks, bonds, mutual funds,
partnership interests, notes, debentures or other securities owned by such
Person; any deposit accounts and certificates of deposit owned by such Person;
and structured notes, derivative financial instruments and other similar
instruments or contracts owned by such Person.

         “Letters of Credit” means all standby and commercial Letters of Credit
now and hereafter issued by Bank from time to time at the request of and for the
account of Borrower, including any renewal, replacement, substitution, extension
or modification thereof.

–9–

         “Lien” means any lien (statutory or other), security interest,
mortgage, pledge, hypothecation, assignment for the purpose of security, deposit
arrangement for the purpose of security, encumbrance or preference, priority or
other security agreement of any kind or nature whatsoever (including, without
limitation, the interest of a vendor or lessor under any conditional sale,
Capitalized Lease or other title retention agreement).

         “Line of Credit” means the secured revolving line of credit to Borrower
in the maximum principal amount of Six Million Dollars ($6,000,000), governed by
this Agreement, including any renewal or extension thereof.

         “Line of Credit Maturity Date” means September 30, 2005.

         “Loan Documents” means this Agreement, the Credit Note, the Security
Agreement, the Policy Assignment, any Guaranty, any UCC Financing Statements and
all other documents executed and delivered by Borrower or the Subsidiaries to
govern, evidence or secure the Facilities.

         “Loss” shall have the meaning ascribed in Section 9.9 hereof.

         “Material Adverse Effect” means any event, circumstance or condition
that could reasonably be expected to have a material adverse effect on (a) the
business, operations, financial condition, Properties or prospects of Borrower
and its Subsidiaries, taken as a whole, (b) the ability of Borrower to perform
the Obligations, (c) the validity or enforceability of any of the Loan
Documents, or any material provision thereof or any material transaction
contemplated thereby, or (d) the rights and remedies of Bank under any of the
Loan Documents.

         “Moody's” means Moody's Investors Service, Inc.

         “Net Mark-to-Market Exposure” of a Person means, as of any date of
determination, the excess (if any) of all unrealized losses over all unrealized
profits of such Person arising from Rate Hedging Agreements, where “unrealized
losses” means the fair market value of the cost to such Person of replacing such
Rate Hedging Agreement as of the date of determination (assuming the Rate
Hedging Agreement were to be terminated as of that date), and “unrealized
profits” means the fair market value of the gain to such Person of replacing
such Rate Hedging Agreement as of the date of determination (assuming such Rate
Hedging Agreement were to be terminated as of that date).

         “Net Worth” means the excess of a Person’s total assets over such
Person’s total liabilities, as shown on the balance sheets furnished to Bank
from time to time pursuant to Section 5.2.1 hereof.

         “New Subsidiary” has the meaning ascribed thereto in Section 5.1.3
hereof.

         “Obligations” means all unpaid principal and accrued and unpaid
interest on the Credit Note, actual and contingent reimbursement obligations
under the Letters of Credit, all accrued and unpaid fees hereunder, obligations
of Borrower to Bank or an affiliate of Bank in respect of any Rate Hedging
Obligations, and all other obligations, indemnities and liabilities of Borrower
to Bank of every type and description, direct or indirect, joint, several or
joint and several, absolute or contingent, arising in connection with the
Facilities, due or to become due, now existing or hereafter arising and whether
or not contemplated by Borrower or Bank as of the date hereof, including,
without limitation, any Advances pursuant to any amendment of this Agreement,
all reasonable costs of collection and enforcement of any and all thereof,
including reasonable attorney fees.

–10–

         “Operating Lease” of a Person means any lease of Property (other than a
Capitalized Lease) by such Person as lessee.

         “PBGC” means the Pension Benefit Guaranty Corporation established
pursuant to ERISA, or any successor entity.

         “Permissible Increment” means a minimum principal amount of One Million
Dollars ($1,000,000) and minimum increments of Five Hundred Thousand Dollars
($500,000) above One Million Dollars ($1,000,000).

         “Permitted Encumbrances” means (a) Liens for taxes or assessments which
are not yet due, Liens for taxes or assessments or Liens of judgments which are
being contested, appealed or reviewed in good faith by appropriate proceedings
which prevent foreclosure of any such Lien or levy of execution thereunder and
against which Liens, if any, adequate insurance or reserves have been provided;
(b) pledges or deposits to secure payment of workers’ compensation obligations
and deposits or indemnities to secure public or statutory obligations or for
similar purposes; (c) those minor defects which in the opinion of Bank’s counsel
do not materially affect title to the collateral for the Obligations; (d) Liens
in favor of Bank; (e) Liens imposed by law, such as carrier’s, warehousemen’s
and mechanic’s liens and other similar Liens arising in the ordinary course of
business which secure payment of obligations not more than sixty (60) days past
due; (f) utility easements, building restrictions, zoning ordinances and such
other encumbrances or charges against real Property as are of a nature generally
existing with respect to real Properties of a similar character and which do not
in any material way affect the marketability of the same or interfere with the
use thereof in the business of Borrower; (g) lessors’ interests under
Capitalized Leases now existing; (h) subject to the Intercreditor Agreement, the
mortgage liens and assignment of rents in favor of Union Planters Bank, National
Association encumbering the UPB Priority Collateral, as defined in the
Intercreditor Agreement; (i) the mortgage lien in favor of Fifth Third Bank,
Indiana (Central) encumbering the Baltimore, Maryland real estate to be acquired
by Borrower as part of the Approved PKL Acquisition; and (j) those further
encumbrances (if any) shown on Schedule 1 attached hereto.

         “Person” means and includes an individual, a partnership, a joint
venture, a corporation, a limited liability company, a trust, an unincorporated
association and a Governmental Authority.

         “Plan” means an employee pension benefit plan which is covered by Title
IV of ERISA or subject to the minimum funding standards under Section 412 of the
Code as to which a Borrower may have any liability.

         “Policy Assignment” means the Assignment of Life Insurance Policy as
Collateral, in substantially the form of Exhibit C hereto, duly executed by
Borrower to Bank to secure the Obligations, including any amendment or
modification thereof.

–11–

         “Prime Rate” means the rate of interest quoted and announced as its
prime rate by Bank, through its usual and customary procedures as established
from time to time by Bank in its sole discretion with no responsibility to
consult with or notify Borrower in connection with any changes in such
procedures or rate, and for any specific time shall mean the prime rate then
most recently announced as the prime rate of Bank, changing when and as such
prime rate changes.

         “Prime Rate Advance” means any Advance when and to the extent that the
interest rate thereof is determined by reference to the Prime Rate.

         “Property” of a Person means any and all property, whether real,
personal, tangible, intangible, or mixed, of such Person, or other assets owned,
leased or operated by such Person.

         “Qualified Investments” means (a) short term obligations of, or fully
guaranteed by, the United States of America, (b) commercial paper rated A-1 or
better by S&P or P-1 or better by Moody’s, (c) demand deposit accounts
maintained in the ordinary course of business, and (d) certificates of deposit
issued by commercial banks having capital and surplus in excess of One Hundred
Million Dollars ($100,000,000).

         “Rate Hedging Agreement” means an agreement, device or arrangement
providing for payments which are related to fluctuations of interest rates,
exchange rates or forward rates, including, but not limited to,
dollar-denominated or cross-currency interest rate exchange agreements, forward
currency exchange agreements, interest rate cap or collar protection agreements,
forward rate currency or interest rate options, puts and warrants.

         “Rate Hedging Obligations” of a Person means any and all obligations of
such Person, whether absolute or contingent and howsoever and whensoever
created, arising, evidenced or acquired (including all renewals, extensions and
modifications thereof and substitutions therefor), under (a) any and all Rate
Hedging Agreements, and (b) any and all cancellations, buy backs, reversals,
terminations or assignments of any Rate Hedging Agreement.

         “Rentals” means, as of the last day of any fiscal quarter of Borrower,
the aggregate amount of rental expense (as determined in accordance with GAAP)
under any Operating Lease for the four (4) consecutive fiscal quarters ending on
the date of determination.

         “Reserves” means the maximum reserve requirement, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) with respect
to “Eurocurrency liabilities” or in respect of any other category of liabilities
which includes deposits by reference to which the interest rate on Eurodollar
Rate Advances is determined or category of extensions of credit or other assets
which includes loans by a non-United States office of any Bank to United States
residents.

         “S & P” means Standard and Poor’s Ratings Services, a division of The
McGraw Hill Companies, Inc.

         “Sale and Leaseback Transaction” means any sale or other transfer of
any property by any Person with the intent to lease such property as lessee.

–12–

         “Security Agreement” means the General Security Agreement, in
substantially the form of Exhibit B hereto, duly executed by Borrower in favor
of Bank to secure the Obligations, including any amendment or modification
thereof.

         “Subordinated Debt” means Indebtedness of Borrower that is subordinated
in writing to the full, final and irrevocable payment of the Obligations, in
form and substance acceptable to Bank pursuant to either a Subordination
Agreement or the documents evidencing such Indebtedness, provided Bank has
specifically agreed in writing that such Indebtedness constitutes Subordinated
Debt (which agreement Bank will not unreasonably refuse to make, delay making,
or make conditional upon other terms).

         “Subordination Agreement” means each Subordination Agreement executed
by a holder of Subordinated Debt, in the form prescribed by Bank, including any
amendment or modification thereof.

         “Subsidiaries” means, as to any Person, (a) a corporation of which
shares of stock having ordinary voting power (other than stock having such power
only by reason of the happening of a contingency) to elect a majority of the
Board of Directors or other managers of such corporation are at the time owned,
or the management of which is otherwise controlled, directly or indirectly
through one or more intermediaries, or both, by such Person, and (b) any
partnership, association, joint venture or other entity in which such Person
and/or one or more Subsidiaries of such Person has more than a Fifty Percent
(50%) equity interest.

         “Tangible Net Worth” means on any date of determination, the amount by
which (a) Net Worth, exceeds (b) the sum of (i) all assets which would be
classified as intangible assets under GAAP, including, without limitation,
goodwill (whether representing the excess of cost over book value of assets
acquired or otherwise), patents, tradenames, copyrights, franchises, operating
permits, unamortized debt discount and expense, organization costs, and research
and development costs, (ii) treasury stock and minority interests in
subsidiaries or other entities, (iii) cash set apart and held in a sinking or
other similar fund established for the purpose of redemption or other retirement
of capital stock, and (iv) to the extent not otherwise deducted, reserves for
depreciation, depletion, obsolescence and/or amortization of properties and all
other reserves or appropriations of retained earnings which, in accordance with
GAAP, should be established in connection with the business conducted by the
subject Person, and (v) any revaluation or other write-up in book value of
assets.

         “Taxes” shall have the meaning ascribed in Section 2.10 hereof.

         “Total Debt Ratio” means, with respect to Borrower, the ratio of (a)
Indebtedness divided by (b) the sum of (i) Tangible Net Worth plus (ii)
Subordinated Debt. The Total Debt Ratio shall be determined from the Financial
Statements.

         “Type” means, with respect to any Advance, its nature as a Prime Rate
Advance or a Eurodollar Rate Advance.

         “Unfunded Capital Expenditures” means capital expenditures not funded
by long term Indebtedness, as shown on the balance sheet furnished to Bank from
time to time pursuant to Section 5.2.1 hereof.

–13–

         “Unmatured Default” means any event which with notice, or lapse of
time, or both, would constitute a Default.

         “U.S. Subsidiary” means a Subsidiary organized or incorporated within
the United States of America or within any United States territories or
possessions.

         Section 1.2   Rules of Construction.    The foregoing definitions shall
be equally applicable to both the singular and plural forms of the defined
terms. Use of the terms “herein” “hereof”, and “hereunder” shall be deemed
references to this Agreement in its entirety and not to the Section clause in
which such term appears.

         Section 1.3   Accounting Terms.    All accounting terms not
specifically defined herein shall be construed in accordance with GAAP
consistent with those applied in the preparation of the Financial Statements.

ARTICLE 2.         CREDIT

         Section 2.1   Line of Credit Commitment.    Subject to the terms and
conditions of this Agreement, Bank shall make Advances under the Line of Credit
available to Borrower in a maximum principal amount equal to the lesser of: (a)
Six Million Dollars ($6,000,000), or (b) the Borrowing Base. Advances under the
Line of Credit shall be evidenced by the Credit Note.

         Section 2.2   Interest; Unused Fees and Rate Selection.   

                 2.2.1.         Line of Credit - Interest. Prior to maturity or
Default, the outstanding principal balance of Advances under the Line of Credit
shall bear interest at a per annum rate equal to the Prime Rate plus the
Applicable Margin, except that, at the option of Borrower as exercised as
provided in Section 2.2.4 hereof, the outstanding principal balance of Advances
under the Line of Credit in Permissible Increments may accrue interest at the
Eurodollar Rate. At the expiration of each Interest Period, unless Borrower
selects the Eurodollar Rate option as provided in Section 2.2.4 hereof, interest
shall again accrue at a per annum rate equal to the Prime Rate plus the
Applicable Margin.

                 2.2.2.         General. Interest shall be due and payable for
the exact number of days principal is outstanding and shall be calculated on the
basis of a three hundred sixty (360) day year. Any change in the interest rates
occasioned by a change in the Prime Rate shall be effective on the same day as
the change in the Prime Rate. After the maturity of any Facility, whether by
acceleration or otherwise, and while and so long as there shall exist any
uncured Default, the Facilities shall bear interest at a per annum rate equal to
Four Percent (4%) above the otherwise applicable rates.

                 2.2.3.         Unused Fee/Reduction of Line of Credit
Commitment. Borrower shall pay to Bank from and after the date hereof until the
date on which Bank’s commitment under the Line of Credit is terminated in whole,
an unused fee accruing at the rate of the Applicable Fee per annum on the
average daily unborrowed portion of the Line of Credit minus outstanding Letters
of Credit. All such unused fees payable under this clause shall be payable
quarterly in arrears on the last day of each fiscal quarter of Borrower
occurring after the date hereof (with the first such payment being calculated
for the period from the date hereof and ending on December 31, 2002), and, in
addition, on the date on which the Bank’s commitment under the Line of Credit is
terminated in whole. Such unused fee shall be calculated on the basis of the
actual number of days elapsed and a three hundred sixty (360) day year. Borrower
may permanently reduce the Bank’s commitment under the Line of Credit, in whole
or in part, in integral multiples of One Million Dollars ($1,000,000), upon at
least three (3) Banking Days’ written notice to Bank, which notice shall specify
the amount of any such reduction; provided, however, that the amount of Bank’s
commitment under the Line of Credit may not be reduced below the aggregate
principal amount outstanding thereunder.

–14–

                 2.2.4.         Interest Rate Selection - Eurodollar Rate
Option. A Eurodollar Rate may be elected only in accordance with the following
procedures and subject to other conditions contained in this Agreement:

                 (a)         No Eurodollar Rate may be elected at any time a
Default or an Unmatured Default exists.

                 (b)         Borrower shall notify Bank of its election or
renewal of a Eurodollar Rate prior to 11:00 a.m. (Indianapolis time) not less
than three (3) Banking Days prior to the commencement of the applicable Interest
Period therefor specifying (i) the election or renewal date, (ii) the amount of
the Advance (or Advances taken together) elected or renewed which amount shall
be in a Permissible Increment, and (iii) the duration of the Interest Period
selected to apply thereto.

                 (c)         An election of a Eurodollar Rate may be
communicated by telephone or by telex, facsimile machine or other form of
written electronic communication, or by a writing delivered to Bank. Borrower
shall confirm in writing any election communicated by telephone. Bank shall be
entitled to rely on any verbal communication of the election of a Eurodollar
Rate which is received by a designated employee of Bank from anyone reasonably
believed in good faith by such employee to be authorized.

                 (d)         Not more than three (3) Eurodollar Rate Advances
may be selected at any one time to apply thereto.

         Section 2.3   Payments of Principal and Interest.

                 2.3.1.         Line of Credit. Interest only on the outstanding
balance of Advances under the Line of Credit from time to time throughout the
term of the Line of Credit shall be due and payable (a) on the last day of each
calendar month with respect to each Prime Rate Advance, and (b) on the last day
of an applicable Interest Period with respect to a Eurodollar Rate Advance. From
time to time during the term of the Line of Credit, Borrower shall make
principal payments in an amount sufficient that the outstanding principal
balance of Advances under the Line of Credit shall not exceed the Borrowing
Base. The entire principal balance of Advances under the Line of Credit,
together with all accrued and unpaid interest thereon, and all fees and charges
payable in connection therewith, shall be due and payable on the Line of Credit
Maturity Date.

–15–

                 2.3.2.         Method of Payment. All payments of principal and
interest hereunder shall be made in immediately available funds to Bank at
Bank’s address set forth on the signature page hereof or at any other place
specified in writing by Bank to Borrower, by Noon (Indianapolis time) on the
date when due. Borrower authorizes Bank to charge the account of Borrower
maintained with Bank for each payment of principal, interest and fees as it
becomes due hereunder.

                 2.3.3.         Banking Day. If any installment of principal or
interest provided herein becomes due and payable on a date other than a Banking
Day, the maturity of the installment of principal or interest shall be extended
to the next succeeding Banking Day, and interest shall be payable during such
extension of maturity.

         Section 2.4    Issuance of Letters of Credit. Subject to the terms and
conditions hereof, the Line of Credit, at the option of Borrower upon delivery
of a proper Letter of Credit Application, in the form prescribed by Bank, may
also be utilized in the form of Letters of Credit issued by Bank for the account
of Borrower. Each Letter of Credit shall have an expiration date not later than
twelve (12) months from the date of issuance. The aggregate of the Letters of
Credit outstanding at any time plus the aggregate amount of unreimbursed
drawings under the Letters of Credit shall not exceed the lesser of the
unborrowed available portion of the Line of Credit or One Million Dollars
($1,000,000). The amount of any Letter of Credit outstanding at any time for all
purposes hereof shall be the maximum amount which could be drawn thereunder
under any circumstances from and after the date of determination. The Letters of
Credit and each unreimbursed drawing thereunder shall count against and reduce
the available amount under the Line of Credit by the amount of any Letter of
Credit outstanding unless and until such Letter of Credit expires by its terms
or otherwise terminates or the amount of a drawing thereunder is reimbursed, in
which event the Line of Credit shall be reinstated by the amount of such Letter
of Credit or the amount of such reimbursement, as the case may be. Each such
Letter of Credit shall conform to the general requirements of Bank for the
issuance of such credits, as to form and substance, shall be subject to the
Uniform Customs and Practices for Documentary Credits (1993 Revision)
International Chamber of Commerce Publication No. 500 and shall be a letter of
credit which Bank may lawfully issue. If and to the extent a drawing is at any
time made under any Letter of Credit, Borrower agrees to pay to Bank immediately
and unconditionally upon demand for reimbursement, in lawful money of the United
States, an amount equal to each amount which shall be so drawn, together with
interest from the date of such drawing to and including the date such payment is
reimbursed to Bank or converted to an Advance under the Line of Credit as
provided herein. Until demand for reimbursement, such interest shall be
calculated at a variable per annum rate equal to the Prime Rate plus the
Applicable Margin, and interest shall be calculated after such demand at a
variable per annum rate equal to the Prime Rate plus the Applicable Margin plus
Four Percent (4%). All such interest shall be calculated on the basis that an
entire year’s interest is earned in three hundred sixty (360) days. Bank shall
convert automatically the reimbursement obligations of Borrower arising out of
any such drawing into Advances under the Line of Credit so long as the Line of
Credit has not expired, and Borrower hereby irrevocably authorizes Bank to
refinance, without notice to Borrower, the reimbursement obligation of Borrower
arising out of any such drawing into Advances under the Line of Credit,
evidenced by the Credit Note and for all purposes under, on and subject to the
terms and conditions of this Agreement, without regard to the conditions
precedent to making an Advance under the Line of Credit or to any requirement of
this Agreement that each Advance be a minimal amount or multiple. This Agreement
and the other Loan Documents shall supersede any terms of any letter of credit
applications or other documents which are irreconcilably inconsistent with the
terms hereof or thereof. Borrower agrees to pay to Bank, at the time of
issuance, Letter of Credit fees equal to the Applicable Fee of the face amount
of each commercial Letter of Credit and the Applicable Fee per annum of each
standby Letter of Credit. Such Letter of Credit fees shall be due and payable
upon issuance and thereafter quarterly in advance on the first day of each
calendar quarter and shall be calculated on the basis that an entire year
consists of three hundred sixty (360) days. Such fees shall not be reduced or
refundable for any reason. Borrower shall also pay Bank’s reasonable and
customary costs of issuing, servicing, and negotiating draws under the Letters
of Credit. Borrower hereby authorizes Bank to collect such fees by deducting the
amount thereof from any account of Borrower at Bank.

–16–

         Section 2.5    Unconditional Reimbursement Obligation. The obligations
of Borrower to reimburse any drawing under the Letters of Credit shall be
absolute, unconditional and irrevocable and shall be paid and performed strictly
in accordance with the terms of this Agreement, as applicable, under all
circumstances, whatsoever, including, without limitation, the following:

                 (a)         any lack of validity or enforceability of any
Letter of Credit or any Loan Document;

                 (b)         any amendment or waiver of or consent to departure
from the terms of any Loan Document;

                 (c)         the existence of any claim, setoff, defense or
other right which Borrower may have at any time against the beneficiary of a
Letter of Credit, any transferee thereof, Bank or any other Person, whether in
connection with the Loan Documents, any Letter of Credit or any unrelated
transaction;

                 (d)         any statement, draft or other document presented
under a Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect whatsoever;

                 (e)         the surrender or impairment of any security for the
performance or observance of the terms of the Loan Documents or any Letter of
Credit; or

                 (f)         any circumstance, happening or omission whatsoever,
whether or not similar to any of the foregoing, including, without limitation,
those matters described in Section 2.6 hereof.

         Section 2.6    Risk of Misuse of Letter of Credit. Except as expressly
set forth herein, Borrower assumes all risk for the acts, omissions and/or
misrepresentations of the parties benefited by a Letter of Credit. Neither Bank
nor any of its affiliates or correspondents shall be responsible for the
validity, sufficiency, truthfulness or genuineness of any document required to
draw under a Letter of Credit even if such document should in fact prove to be
in any or all respects invalid, insufficient, fraudulent or forged, provided
only that the document appears on its face to be in accordance with the terms of
such Letter of Credit and provided Bank is not grossly negligent or engaging in
willful misconduct, or for failure of any draft to bear reference or adequate
reference to a Letter of Credit or failure of any Person to note the amount of
any draft on a Letter of Credit or to surrender or take up a Letter of Credit,
each of which provisions may be waived by Bank, or for errors, omissions,
interruptions, or delays in transmission or delivery of any messages or
documents. Without limiting the generality of the foregoing, Borrower agrees
that any action taken by Bank or any of its correspondents under or in
connection with any Letter of Credit, if taken in good faith and without gross
negligence, shall be binding upon Borrower and shall not put Bank or any such
correspondent under any resulting liability to Borrower, and Borrower likewise
agrees as to any omission unless in breach of good faith or grossly negligent.
Bank is expressly authorized to honor any request for payment which is made
under and in compliance with the terms of a Letter of Credit without regard to
and without any duty on its part to inquire into the existence of any disputes
or controversies between Borrower and the beneficiary of a Letter of Credit or
any other Person or into the respective rights, duties or liabilities of any of
them or whether any facts or occurrences represented in any of the documents
presented under a Letter of Credit are true and correct. No Person, other than
the parties hereto, shall have any rights of any nature under this Agreement or
by reason hereof. In no event shall Bank’s reliance and payment against
documents presented under any Letter of Credit appearing on its face to
substantially comply with the terms thereof be deemed to constitute gross
negligence or willful misconduct.

–17–

         Section 2.7    Prepayment/Exit Fee. Subject to the provisions of this
Agreement, Borrower may borrow, pay, reborrow and repay the available principal
amount of the Line of Credit at any time, and from time to time, in any
multiple, without premium or penalty, except that Eurodollar Rate Advances may
only be prepaid on the last day of the applicable Interest Period therefor. In
the event the Line of Credit or this Agreement is terminated prior to September
30, 2005 as a result of the Line of Credit being refinanced with funds provided
by a financial institution other than Bank, Borrower shall pay Bank an exit fee
in the amount of One Hundred Fifty Thousand Dollars ($150,000).

         Section 2.8    Use of Proceeds. The proceeds of Advances under the Line
of Credit shall be used for working capital purposes of Borrower and its U.S.
Subsidiaries (including refinancing certain existing indebtedness to Bank One,
NA), and may be used to pay closing costs related to the Approved PKL
Acquisition, and to fund the Approved LCR Acquisition.

         Section 2.9    Method of Advance.

                 2.9.1.         Line of Credit. Except as to autoline Advances
(if applicable), Borrower shall give Bank telephonic, telex or telegraphic
notice of its intention to borrow under the Line of Credit by not later than
10:00 o’clock a.m. (Indianapolis time) on the proposed borrowing date which
shall be a Banking Day, subject to Section 2.2.4 hereof with respect to
Eurodollar Rate Advances. Each request once received by Bank shall be
irrevocable, subject to Section 2.13 hereof. Borrower agrees that Bank may rely
on any such telephonic, telex, or telegraphic notices made by any Person whom
Bank in good faith believes to be authorized. If Bank requests, each requested
Advance based on telephonic notice shall be confirmed in writing by Borrower. In
the event any notice by such means shall conflict with the written confirmation,
such notice shall govern if Bank has acted in good faith in reliance thereon.
Each request shall in and of itself constitute a representation and warranty on
behalf of Borrower that no Default or Unmatured Default has occurred and is
continuing or would result from the making of the requested Advance and that the
requested Advance shall not cause the principal balance of the Line of Credit to
exceed the maximum amount available under the Line of Credit from time to time.
Other than autoline Advances and subject to Section 2.2.4 hereof with respect to
Eurodollar Rate Advances, the principal amount of Advances under the Line of
Credit made on any borrowing date shall be in minimum amounts of Fifty Thousand
Dollars ($50,000) and in integral multiples of One Thousand Dollars ($1,000) in
excess thereof.

–18–

                 2.9.2.         General. All Advances by Bank under the
Facilities and payments by Borrower on the Facilities shall be recorded by Bank
on its books and records, and the principal amount outstanding from time to
time, plus interest payable thereon, shall be determined from the books and
records of Bank. The books and records of Bank shall be presumed prima facie
correct as to such matters.

         Section 2.10   Taxes.

                 2.10.1.         General. All payments by Borrower under this
Agreement or the Credit Note shall be made free and clear of, and without
deduction or withholding for, any present or future income, stamp or other
taxes, levies, duties, imposts, charges or fees or any related penalties,
interest or other liabilities (“Taxes”). If any Taxes are required to be
deducted or withheld from any amount payable to Bank under this Agreement or the
Credit Note, Borrower shall pay additional amounts so that the amount received
by Bank after the deduction of such Taxes (including Taxes on such additional
amounts) equals the amount that the Bank would have received if no Taxes had
been deducted. Borrower shall pay to the appropriate taxing authority all Taxes
required to be deducted or withheld. Within thirty (30) days after paying any
such Taxes, Borrower shall deliver to Bank the original or a certified copy of
the receipt for such payment. Borrower shall not be required to pay additional
amounts to Bank on account of any Taxes, including, but not limited to, income
taxes, imposed solely by reason of a present or past connection between Bank and
the jurisdiction imposing such Taxes (except a connection arising solely from
the execution, delivery, performance, enforcement of or the receipt of payments
under this Agreement or the Credit Note).

                 2.10.2.         Tax Indemnity. Borrower shall indemnify Bank
against any Taxes imposed on (and any related expenses reasonably incurred by)
Bank on account of the execution, delivery, performance or enforcement of or the
receipt of payments under this Agreement or the Credit Note other than Taxes
imposed solely by reason of the cause specified in the last sentence of Section
2.10.1 hereof. Borrower also shall pay and indemnify Bank against any stamp or
other documentary, excise or property taxes or similar levies, imposts, or
charges (or any related liability) arising from the execution, delivery,
registration, performance or enforcement of this Agreement or the Credit Note.

–19–

         Section 2.11    Yield Protection. If, on or after the date of this
Agreement, the adoption of any law or any governmental or quasi-governmental
rule, regulation, policy, guideline or directive (whether or not having the
force of law), or any change in the interpretation or administration thereof by
any governmental or quasi-governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by Bank with any request or directive (whether or not having the force of law)
of any such authority, central bank or comparable agency:

                 (a)        subjects Bank to any Taxes, or changes the basis of
taxation of payments (other than with respect to Taxes imposed only by reason of
the cause specified in the last sentence of Section 2.10.1 hereof) to Bank in
respect of its Eurodollar Rate Advances, or

                 (b)         imposes or increases or deems applicable any
reserve, assessment, insurance charge, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit extended by,
Bank (other than reserves and assessments taken into account in determining the
interest rate applicable to Eurodollar Rate Advances), or

                 (c)         imposes any other condition the result of which is
to increase the cost to Bank of making, funding or maintaining its Eurodollar
Rate Advances or reduces any amount receivable by Bank in connection with its
Eurodollar Rate Advances, or requires Bank to make any payment calculated by
reference to the amount of Eurodollar Rate Advances held or interest received by
it, by an amount deemed material by Bank,

and the result of any of the foregoing is to increase the cost to Bank of making
or maintaining its Eurodollar Rate Advances or Commitment or to reduce the
return received by Bank in connection with such Eurodollar Rate Advances or
Bank’s commitment, then, within fifteen (15) days of demand by Bank, Borrower
shall pay Bank such additional amount or amounts as will compensate Bank for
such increased cost or reduction in amount received.

         Section 2.12    Changes in Capital Adequacy Regulations. If Bank
determines the amount of capital required or expected to be maintained by Bank
or any corporation controlling Bank is increased as a result of a Change, then,
within fifteen (15) days of demand by Bank, Borrower shall pay Bank the amount
necessary to compensate for any shortfall in the rate of return on the portion
of such increased capital which Bank determines is attributable to this
Agreement, the Facilities or its commitment to make Advances hereunder (after
taking into account Bank’s policies as to capital adequacy). “Change” means (a)
any change after the date of this Agreement in the Risk-Based Capital
Guidelines, or (b) any adoption of or change in any other law, governmental or
quasi-governmental rule, regulation, policy, guideline, interpretation, or
directive (whether or not having the force of law) after the date of this
Agreement which affects the amount of capital required or expected to be
maintained by Bank or any corporation controlling Bank. “Risk-Based Capital
Guidelines” means (i) the risk-based capital guidelines in effect in the United
States on the date of this Agreement, including transition rules, and (ii) the
corresponding capital regulations promulgated by regulatory authorities outside
the United States implementing the July 1988 report of the Basle Committee on
Banking Regulation and Supervisory Practices Entitled “International Convergence
of Capital Measurements and Capital Standards,” including transition rules, and
any amendments to such regulations adopted prior to the date of this Agreement.
The obligations of Borrower under this Section shall survive payment of the
Obligations and termination of this Agreement.

–20–

         Section 2.13    Funding Indemnification. If any payment of a Eurodollar
Rate Advance occurs on a date which is not the last day of the applicable
Interest Period, whether because of acceleration, prepayment or otherwise, or a
Eurodollar Rate Advance is not made on the date specified by Borrower for any
reason other than default by Bank, or Borrower attempts to revoke (expressly, by
later inconsistent notices or otherwise) in whole or in part any notice stated
herein to be irrevocable (Bank having in its sole discretion the option (a) to
give effect to such attempted revocation and obtain indemnity under this
Section, or (b) to treat such attempted revocation as having no force or effect,
as if never made), Borrower will indemnify Bank for any loss or cost incurred by
it resulting therefrom, including, without limitation, any loss or cost in
liquidating or employing deposits acquired to fund or maintain such Eurodollar
Rate Advance.

         Section 2.14    Availability of Types of Advances. If Bank determines
that maintenance of its Eurodollar Rate Advances would violate any applicable
law, rule, regulation, or directive, whether or not having the force of law, or
if Bank determines that (a) deposits of a type and maturity appropriate to match
fund Eurodollar Rate Advances are not available or (b) the interest rate
applicable to a Type of Advance does not accurately reflect the cost of making
or maintaining such Advance, then Bank shall suspend the availability of the
affected Type of Advance and require any affected Eurodollar Rate Advances to be
repaid or converted to Prime Rate Advances, subject to the payment of any
funding indemnification amounts required by Section 2.13.

         Section 2.15    Bank Statements; Survival of Indemnity. To the extent
reasonably possible, Bank shall designate an alternate lending installation with
respect to its Eurodollar Rate Advances to reduce any liability of Borrower to
Bank under Section 2.11 or to avoid the unavailability of Eurodollar Rate
Advances under Section 2.14, so long as such designation is not, in the judgment
of Bank, disadvantageous to Bank. Bank shall deliver a written statement to
Borrower as to the amount due, if any, under Section 2.11, Section 2.12 or
Section 2.13. Such written statement shall set forth in reasonable detail the
calculations upon which Bank determined such amount and shall be final,
conclusive and binding on Borrower in the absence of manifest error.
Determination of amounts payable under such Sections in connection with a
Eurodollar Rate Advance shall be calculated as though Bank funded its Eurodollar
Rate Advance through the purchase of a deposit of the type and maturity
corresponding to the deposit used as a reference in determining the Eurodollar
Rate Advance, whether in fact that is the case or not. Unless otherwise provided
herein, the amount specified in the written statement of Bank shall be payable
on demand after receipt by Borrower of such written statement. The obligations
of Borrower under Section 2.11, Section 2.12 and Section 2.13 shall survive
payment of the Obligations and termination of this Agreement.

–21–

ARTICLE 3.         SECURITY AND GUARANTY

         Section 3.1    Security. The Obligations shall be secured by the
following:

                 (a)         the Security Agreement constituting a first
priority security interest in all Accounts, Inventory, General Intangibles,
Chattel Paper, Equipment, Goods, Deposit Accounts, Instruments, Investment
Property (provided that only 65% of Borrower’s interest in non-U.S. Subsidiaries
shall be pledged), Documents and all other personal property of Borrower
(excluding Fixtures) now owned or hereafter acquired and all Proceeds thereof;

                 (b)         the Policy Assignment constituting collateral
assignment to Bank of an acceptable life insurance policy owned by Borrower
insuring the life of Peter Kissinger in the face amount of not less than One
Million Dollars ($1,000,000); and

                 (c)         such other security interests as may be described
in the Loan Documents.

         Section 3.2    Addition of Guarantors; Addition of Pledged Capital
Stock and other Collateral. Borrower shall cause each U.S. Subsidiary that is a
Subsidiary as of the date of this Agreement or at any time thereafter, to
deliver to Bank an executed Guaranty and appropriate corporate resolutions,
opinions and other documentation in form and substance reasonably satisfactory
to Bank, such Guaranty and other documentation to be delivered to Bank as
promptly as possible but in any event (a) within two (2) Banking Days after the
date of the consummation of a permitted Acquisition involving such Subsidiary
and (b) otherwise within thirty (30) days of determination that a Subsidiary
needs to be added as a Guarantor. Simultaneously with any Subsidiary becoming a
Guarantor, Borrower shall (or, if the capital stock of such Subsidiary is owned
by another Subsidiary, shall cause such other Subsidiary to) deliver to Bank an
executed supplement to the existing Security Agreement or a new Pledge
Agreement, together with appropriate corporate resolutions, opinions, stock
certificates, UCC filings or amendments and other documentation, in each case in
form and substance reasonably satisfactory to Bank and Bank shall be reasonably
satisfied that it has a first priority perfected pledge of all of the
outstanding capital stock of each U.S. Subsidiary and 65% of the outstanding
capital stock of each non-U.S. Subsidiary, in either case, owned by Borrower and
its Subsidiaries. Simultaneously with any U.S. Subsidiary becoming a Guarantor,
Borrower shall, or shall cause such U.S. Subsidiary to, (i) execute and deliver
a Security Agreement (and deliver the other documents required thereby) and such
other collateral documents as Bank may require in its sole and reasonable
discretion; and (ii) deliver such other documentation as Bank may reasonably
require in connection with the foregoing, including, without limitation,
appropriate UCC financing statements, UCC searches, certified resolutions and
other organizational and authorizing documents of such U.S. Subsidiary,
favorable opinions of counsel to such U.S. Subsidiary (which shall cover, among
other things, the legality, validity, binding effect and enforceability of the
documentation referred to above and the perfection of Bank’s liens thereunder)
and other items of the types required to be delivered by Borrower pursuant to
Section 6.1 as of the closing date, all in form, content and scope reasonably
satisfactory to Bank.

–22–

         Section 3.3    Additional Collateral/Setoff. Borrower hereby grants to
Bank (and any participant of the Facilities), as additional security for the
Obligations, a continuing lien upon all monies, securities and other property of
Borrower now or hereafter held or received by, or in transit to, Bank from or
for Borrower. Bank (and any such participant of the Facilities) is authorized at
any time and from time to time while there exists a Default, without notice to
Borrower, and shall have the right to setoff, appropriate and apply its own debt
or liability to Borrower, or to any other Person liable for the Obligations, in
whole or partial payment of any Obligation in such order or manner as Bank may
reasonably determine, without any requirements of mutual maturity.

ARTICLE 4.         REPRESENTATIONS AND WARRANTIES

         Borrower represents, covenants and warrants to Bank as follows:

         Section 4.1    Due Organization. Borrower is a corporation duly
organized and validly existing under the laws of the State of Indiana.

         Section 4.2    Due Qualification. Borrower and each Subsidiary is
qualified, in good standing and authorized to do business as a foreign
corporation or limited liability company in such other states wherein the
failure to so qualify would have a Material Adverse Effect.

         Section 4.3    Corporate Power. Borrower possesses the requisite power
to enter into the Loan Documents, as applicable, to borrow thereunder, to
execute and deliver the Loan Documents and to perform its respective obligations
thereunder.

         Section 4.4    Corporate Authority. Borrower has taken the necessary
corporate action to authorize the execution and delivery of the Loan Documents,
as applicable, and the borrowings thereunder and the granting of the security
interests therein, and none of the provisions of the Loan Documents violate,
breach, contravene, conflict with, or cause a default under any provision of the
articles of incorporation, or by-laws of Borrower or any provision of any
existing note, bond, mortgage, debenture, indenture, trust, license, lease,
instrument, decree, order, judgment, or agreement to which Borrower is a party
or by which it or its assets may be bound or affected, which in any case is
reasonably likely to have a Material Adverse Effect.

         Section 4.5    Financial Statements. The Financial Statements were
prepared in accordance with GAAP consistent with prior years, unless
specifically otherwise noted thereon, and fairly present in all material
respects the financial condition of Borrower as of the date thereof and the
results of its operations for the period then ended, and no material adverse
change in the financial condition of Borrower has occurred since the date of the
Financial Statements.

         Section 4.6    No Material Adverse Change. The information submitted by
Borrower to Bank discloses all known or anticipated material liabilities, direct
or contingent, of Borrower as of the dates thereof, and, to the best knowledge
of Borrower, since such dates, there has been no material adverse change in
Borrower’s financial condition.

         Section 4.7    Subsidiaries. Except as disclosed on Schedule 4.7
hereto, Borrower has no Subsidiaries.

–23–

         Section 4.8    Binding Obligations. Each of the Loan Documents, when
issued for value, will constitute a legal, valid and binding obligation of
Borrower, enforceable against Borrower in accordance with its terms, except as
the same may be limited by reorganization, bankruptcy, insolvency, moratorium or
other laws affecting generally the enforcement of creditors’ rights.

         Section 4.9    Marketable Title. Borrower and each Subsidiary has good
and marketable title to all of its real Property and good title to all of its
other Properties shown on the Financial Statements, except such Properties as
have been disposed of since the date of the Financial Statements in the ordinary
course of business. Except for Permitted Encumbrances, (a) the assets of
Borrower and the Subsidiaries are not subject to any Lien and the security
interests in favor of Bank under the Loan Documents will constitute first,
senior and prior perfected security interests in the collateral therein
described, and (b) no financing statement or similar instrument which names
Borrower or its Subsidiaries as debtor or relates to any of its Property, has
been filed in any state or other jurisdiction and remains unreleased, and
Borrower and its Subsidiaries have not signed any financing statement or similar
instrument or security agreement authorizing the secured party thereunder to
file any such financing statement or similar instrument.

         Section 4.10    Indebtedness. Except as shown on the Financial
Statements, except as set forth on Schedule 4.10 hereto, and except for trade
debt incurred in the ordinary course of business since the date of the Financial
Statements, neither Borrower nor any Subsidiary has any outstanding
Indebtedness.

         Section 4.11    Default. Neither Borrower nor any Subsidiary has
committed or suffered to exist any default or any circumstance which with
notice, lapse of time, or both, would constitute a default under the terms and
conditions of any trust, debenture, indenture, note, bond, instrument, mortgage,
lease, agreement, order, decree, or judgment to which Borrower or a Subsidiary
is a party or by which it or its assets may be bound or affected, which in any
case is reasonably likely to have a Material Adverse Effect.

         Section 4.12    Tax Returns. All tax returns or reports of Borrower and
its Subsidiaries required by law have been filed, and all taxes, assessments,
contributions, fees and other governmental charges (other than those presently
payable without penalty or interest and those currently being contested in good
faith and against which adequate reserves have been established) upon Borrower,
its Subsidiaries or their assets, properties or income, which are payable, have
been paid, except for the failure to file or pay that are not reasonably likely
to have a Material Adverse Effect.

         Section 4.13    Litigation. Except as set forth on any Schedule 4.13
hereto, no litigation or proceeding of any Governmental Authority or other
Person is presently pending or, to Borrower’s knowledge, threatened, nor has any
claim been asserted, against Borrower or its Subsidiaries which, if adversely
determined, is reasonably likely to have a Material Adverse Effect.

         Section 4.14    ERISA. Borrower and each ERISA Affiliate is in
compliance in all material respects with all applicable provisions of ERISA, and
neither Borrower nor any ERISA Affiliate has incurred any liability to the PBGC.
Neither a “reportable event”, nor a “prohibited transaction”, has occurred
under, nor has there occurred any complete or partial withdrawal from, nor has
there occurred any other event which would constitute grounds for termination of
or the appointment of a trustee to administer any “employee benefit plan”
(including any “multi-employer plan”) maintained for employees of Borrower or
any ERISA Affiliate, all within the meanings ascribed by ERISA.

–24–

         Section 4.15    Full Disclosure. No information, exhibit, memorandum,
or report (excluding estimated future operating results) furnished by Borrower
to Bank in connection with the negotiation of the Facilities contains any
material misstatement of fact, or omits to state any material fact necessary to
make the statements contained therein not materially misleading in light of the
circumstances when made, and all estimated future operating results, if
furnished, were prepared on the basis of assumptions, data, information, tests
or other conditions believed to be valid or accurate or to exist at the time
such estimates were prepared and furnished. To Borrower’s knowledge, there
presently exists no fact or circumstance relative to Borrower or its
Subsidiaries, whether or not disclosed, which is presently anticipated to have a
Material Adverse Effect.

         Section 4.16    Contracts of Surety. Except for the endorsements of
Borrower or a Subsidiary of negotiable instruments for deposit or collection in
the ordinary course of business and except the Guaranty, neither Borrower nor
any Subsidiary is a party to any contract of guaranty or surety.

         Section 4.17    Licenses. Borrower and each Subsidiary possesses such
franchises, licenses, permits, patents, copyrights, trademarks, and consents of
appropriate Governmental Authorities to own its property (including any assets
acquired pursuant to the Approved PKL Acquisition and the Approved LCR
Acquisition) and as are necessary to carry on its business, except where the
failure to obtain any of the foregoing, singularly or in aggregate, is not
reasonably likely to have a Material Adverse Effect.

         Section 4.18    Compliance with Law. Borrower and each Subsidiary is in
substantial compliance with all applicable requirements of law and of all
Governmental Authorities noncompliance with which is reasonably likely to have a
Material Adverse Effect.

         Section 4.19    Force Majeure. Neither the business nor the properties
of Borrower or a Subsidiary are presently affected by any fire, explosion,
accident, strike, lockout or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy or other casualty that is
reasonably likely to have a Material Adverse Effect.

         Section 4.20    Margin Stock. Borrower is not engaged in the business
of extending credit for the purpose of purchasing or carrying margin stock
(within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System), and no part of the proceeds of the Facilities will be used,
either directly or indirectly, for the purpose, whether immediate, incidental or
remote, of purchasing or carrying any margin stock or of extending credit to
others for the purpose of purchasing or carrying any margin stock, and Borrower
shall furnish to Bank, upon its request, a statement in conformity with the
requirements of Federal Reserve Board Form U-1 referred to in Regulation U.
Further, no part of the proceeds of the Facilities will be used for any purpose
that violates, or which is inconsistent with, the provisions of Regulations T, U
or X of the Board of Governors.

–25–

         Section 4.21    Approvals. No authorization, consent, approval or any
form of exemption of any Governmental Authority is required in connection with
the execution and delivery by Borrower of the Loan Documents, the borrowings and
performance by Borrower thereunder or the issuance of the Credit Note.

         Section 4.22    Insolvency. Borrower and each Subsidiary is not
“insolvent” within the meaning of that term as defined in the Federal Bankruptcy
Code and each is able to pay its debts as they mature.

         Section 4.23    Regulation. Borrower is not an “investment company”
within the meaning of the Investment Company Act of 1940, as amended, or a
“holding company” or an “affiliate of a holding company” or a “subsidiary of a
holding company” within the meanings of the Public Utility Holding Company Act
of 1935, as amended.

         Section 4.24    Environmental Matters. In the ordinary course of its
business, Borrower conducts an ongoing review of the effect of Environmental
Laws on the business, operations and Properties of Borrower and its
Subsidiaries, in the course of which it identifies and evaluates associated
liabilities and costs (including any capital or operating expenditures required
for clean-up or closure of Properties presently owned or operated, any capital
or operating expenditures required to achieve or maintain compliance with
environmental protection standards imposed by Environmental Laws or as a
condition of any license, permit or contract any related constraints on
operating activities, including any periodic or permanent shutdown of any
facility or reduction in the level of or change in the nature of operations
conducted thereat and any actual or potential liabilities to third parties,
including employees, and any related costs and expenses). On the basis of this
review, Borrower has reasonably concluded that Environmental Laws cannot
reasonably be expected to have a Material Adverse Effect. Borrower has not
received any notice to the effect that its operations are not in compliance with
any of the requirements of applicable Environmental Laws or are the subject of
any federal or state investigation evaluating whether any remedial action is
needed to respond to a release of any Hazardous Materials. Except as disclosed
in writing to Bank as of the date of this Agreement, to the best of its
knowledge (provided that clause (e) below is not subject to any such knowledge
qualification except as specifically provided in clause (e)):

                 (a)         All facilities and Property (including underlying
groundwater) owned, leased or operated by Borrower and its Subsidiaries have
been, and continue to be, owned, leased or operated by Borrower or such
Subsidiary in compliance with all applicable Environmental Laws, except for
incidences of noncompliance which, singly or in the aggregate, have not, or may
not reasonably be expected to have, a Material Adverse Effect;

                 (b)         There have been no past unresolved, and there are
no pending or threatened,

                 (i)         claims, complaints, notices or inquiries, to, or
requests for information received by, Borrower and its Subsidiaries with respect
to any alleged violation of any Environmental Law, that, singly or in the
aggregate, have had, or may reasonably be expected to have, a Material Adverse
Effect, or

–26–

                 (ii)         claims, complaints, notices or inquiries to, or
requests for information received by, Borrower and its Subsidiaries regarding
potential liability under any Environmental Law or under any common law theories
relating to operations or the condition of any facilities or Property by
Borrower or such Subsidiary that, singly or in the aggregate, have had, or may
reasonably be expected to have, a Material Adverse Effect.

                 (c)         There have been no releases of Hazardous Materials,
at, on or under any Property now or previously owned or leased by Borrower or
its Subsidiaries that, singly or in the aggregate, have had, or may reasonably
be expected to have, a Material Adverse Effect;

                 (d)         Borrower and each Subsidiary has been issued and is
in compliance with all permits, certificates, approvals, licenses and other
authorizations relating to environmental matters and necessary for its business,
the noncompliance with which, singly or in the aggregate, has not had, or is not
reasonably expected to have, a Material Adverse Effect;

                 (e)         No Property now or previously owned, leased or
operated by Borrower or its Subsidiaries is listed or, to the best knowledge of
Borrower, proposed for listing on the National Priorities List pursuant to
CERCLA (or any similar Environmental Law) or on the CERCLIS or on any other
federal or state list of sites requiring investigation or clean-up, to the
extent that any such listing, singly or in the aggregate, has had, or may
reasonably be expected to have, a Material Adverse Effect;

                 (f)         There are no underground storage tanks, active or
abandoned, including petroleum storage tanks, on or under any Property now or
previously owned, leased or operated by a Borrower or its Subsidiaries that,
singly or in the aggregate, have had, or may reasonably be expected to have had,
a Material Adverse Effect;

                 (g)         Neither Borrower nor any Subsidiary has directly
transported or directly arranged for the transportation of any Hazardous
Material to any location (i) which is listed or proposed for listing on the
National Priorities List pursuant to CERCLA (or any similar Environmental Law)
or on the CERCLIS or on any federal or state list, to the extent that any such
listing, singly or in the aggregate, has had, or may reasonably be expected to
have, a Material Adverse Effect, or (ii) which is the subject of federal, state
or local enforcement actions or other investigations which may lead to claims
against Borrower or such Subsidiary for any remedial work, damage to natural
resources or personal injury, including claims under any Environmental Law, to
the extent that such claims, singly or in the aggregate, has had, or may
reasonably be expected to have, a Material Adverse Effect;

                 (h)         There are no polychlorinated biphenyl, radioactive
materials or friable asbestos present at any Property now or previously owned or
leased by Borrower or its Subsidiaries that, singly or in the aggregate, have
had, or may reasonably be expected to have, a Material Adverse Effect; and

–27–

                 (i)         No condition exists at, on or under any Property
now or previously owned or leased by Borrower or its Subsidiaries which, with
the passage of time, or the giving of notice or both, would give rise to
material liability under any Environmental Law that, singly or in the aggregate
may reasonably be expected to have a Material Adverse Effect.

         Section 4.25    Conditions Precedent. Each item furnished to Bank
pursuant to Section 6.1 hereof is a true and correct copy thereof, has not been
modified or amended and is in full force and effect on the date hereof.

         Section 4.26    General. All statements contained in any certificate or
financial statement delivered by or on behalf of Borrower to Bank under any Loan
Document shall constitute representations and warranties made by Borrower
hereunder.

ARTICLE 5.         COVENANTS

         Section 5.1    Negative Covenants. Until the Obligations shall have
been fully and finally paid and performed, and so long as any commitment of Bank
is outstanding, without the prior written consent of Bank, Borrower shall not
and shall not permit any Subsidiary to:

                 5.1.1.         Dispose of Collateral. Sell, transfer, lease or
otherwise dispose of any collateral granted or pledged to Bank, or discount,
with or without recourse, any Accounts, except (a) for sales from Inventory in
the ordinary course of business, (b) as otherwise provided in the Security
Agreement and (c) the write-off of uncollectible Accounts in the ordinary course
of business.

                 5.1.2.         Further Encumber. Except for Permitted
Encumbrances, create or suffer to exist any Lien upon any of its Properties,
whether now owned or hereafter acquired.

                 5.1.3.         Conduct of Business; Subsidiaries; Acquisitions.

                 (a)         Neither Borrower nor any of its Subsidiaries shall
engage in any business other than the businesses engaged in by Borrower on the
date hereof, those business engaged in by the entities acquired in the Approved
PKL Acquisition, the Approved LCR Acquisition or in other Acquisitions approved
in writing by Bank, and any business or activities which are substantially
similar, related or incidental thereto.

                 (b)         Borrower shall not create, acquire or capitalize
any Subsidiary (a “New Subsidiary”) after the date hereof pursuant to any
transaction unless such transaction is permitted by or not otherwise prohibited
by this Agreement and upon the creation or acquisition of each New Subsidiary,
Borrower shall cause each New Subsidiary to promptly deliver to Bank the
documents, instruments and agreements required pursuant to Section 3.3 hereof.
After the formation or acquisition of any New Subsidiary permitted hereunder, if
requested by Bank, Borrower shall provide a supplement to Schedule 4.7 to this
Agreement.

–28–

                 (c)         Borrower shall not and shall not permit any of its
Subsidiaries to make any Acquisitions, except so long as there then exists no
Default and no Default would be occasioned thereby and subject to compliance
with the other provisions of this Agreement, the Approved PKL Acquisition and
the Approved LCR Acquisition.

                 5.1.4.         Purchase Stock. Purchase, redeem, retire or
otherwise acquire any outstanding shares of its capital stock.

                 5.1.5.         Sell and Leaseback. Other than a leaseback of
the real estate sold in accordance with Section 5.2.18 hereof, enter into any
Sale and Leaseback Transaction.

                 5.1.6.         Borrowings/Subordinated Debt Payments. Create,
incur, assume or suffer to exist any Indebtedness, except (a) trade accounts and
normal business accruals payable in the ordinary course of business, (b)
Indebtedness to Bank, (c) Subordinated Debt, (d) Indebtedness owed to Union
Planters Bank, National Association in the maximum principal amount of Ten
Million Dollars ($10,000,000), (e) Indebtedness owed to Fifth Third Bank,
Indiana (Central) in the maximum principal amount of Three Million Five Hundred
Thousand Dollars ($3,500,000), and (f) as set forth on Schedule 5.1.6 hereto.
Borrower and its Subsidiaries shall not make any payment in respect of any of
the Subordinated Debt, except (i) as permitted in the applicable Subordination
Agreement, or (ii) pursuant to the terms of the documents evidencing
Subordinated Debt that Bank has specifically approved in writing to constitute
Subordinated Debt, notwithstanding the absence of a Subordination Agreement.

                 5.1.7.         Investments. Make any Investment, except (a)
advances to trade debtors in the ordinary course of business, (b) Qualified
Investments, (c) existing Investments described on Schedule 5.1.7 hereto, (d)
Investments to and in (i) a U.S. Subsidiary that is a Guarantor, or (ii) foreign
Subsidiaries in an amount at any time not exceeding One Million Five Hundred
Thousand Dollars ($1,500,000) in the aggregate in addition to the existing
investments in foreign Subsidiaries shown on Schedule 5.1.7, provided that in
any case under clause (d) above there exists no Default or Unmatured Default at
the time of, or after giving effect to, such Investment and provided the
Subsidiary is not “insolvent” at the time of such Investment nor rendered
“insolvent” (as such terms are used in the Federal Bankruptcy Code) by such
Investment, and loans and advances to Borrower by a Guarantor, and (e) loans to
Pharmakinetics Laboratories, Inc. in an aggregate amount not exceeding Five
Hundred Thousand Dollars ($500,000) secured by a first priority security
interest in all personal property.

                 5.1.8.         Guarantees. Assume, guarantee or otherwise
become liable as a guarantor or surety for the obligations of any Person, except
(a) the endorsements by Borrower of negotiable instruments for deposit or
collection in the ordinary course of business, and (b) those in favor of Bank.

                 5.1.9.         Change Name or Place of Business. Change its
name or principal place of business, except on not less than thirty (30) days
prior written notice to Bank.

–29–

                 5.1.10.         Special Corporate Transactions. Engage in any
transaction with any Person other than in the ordinary course of business.

                 5.1.11.         Accounting Policies. Change its fiscal year or
any of its significant accounting policies, except to the extent necessary to
comply with GAAP.

                 5.1.12.         Change of Business. Make any material change in
the nature of its business as carried on as of the date of this Agreement, other
than as a result of the Approved PKL Acquisition or the Approved LCR
Acquisition.

                 5.1.13.         Benefit Plans. Permit any condition to exist in
connection with any employee benefit plan which might constitute grounds for the
PBGC to institute proceedings to have the employee benefit plan terminated or a
trustee appointed to administer the employee benefit plan; or engage in, or
permit to exist or occur any other condition, event or transaction with respect
to any employee benefit plan which could result in Borrower incurring any
material liability, fine or penalty.

                 5.1.14.         Adversity. Permit any event to occur or
condition to exist which has a Material Adverse Effect.

                 5.1.15.         Dividends/Distributions. Declare or pay any
dividend or make any distribution on account of stock, in cash or other
property.

                 5.1.16.         Restrictive Agreements. Enter into any
agreement (excluding any restrictions existing under the Loan Documents)
prohibiting (a) the creation or assumption of any lien upon any of its Property,
(b) the ability of Borrower to amend or otherwise modify this Agreement or any
other Loan Document, or (c) the ability of any Subsidiary to make any payment,
directly or indirectly, to Borrower by way of advances, repayments of loans or
advances or otherwise.

                 5.1.17.         Transactions with Shareholders and Affiliates.
Neither Borrower nor any of its Subsidiaries shall directly or indirectly enter
into or permit to exist any transaction (including, without limitation, the
purchase, sale, lease or exchange of any property or the rendering of any
service) with any holder or holders of any of the capital stock of Borrower, or
with any Affiliate of Borrower which is not its Subsidiary, on terms that are
less favorable to Borrower or any of its Subsidiaries, as applicable, than those
that might be obtained in an arm’s length transaction at the time from Persons
who are not such a holder or Affiliate.

         Section 5.2    Affirmative Covenants. Until the Obligations shall have
been fully and finally paid and performed, and so long as any commitment of Bank
is outstanding, unless expressly waived in writing by Bank, Borrower shall:

–30–

                 5.2.1.         Financial Reporting. Furnish or caused to be
furnished to Bank:

                 (a)         as soon as practicable, but in any event within one
hundred twenty (120) days after the end of each fiscal year, consolidated and
consolidating financial statements of Borrower, including a balance sheet,
statement of income and retained earnings and a statement of cash flows, with
accompanying notes to financial statements, all prepared in accordance with GAAP
on a consolidated basis consistent with prior years unless specifically noted
thereon, accompanied by the unqualified opinion of Ernst & Young or other
independent certified public accountants acceptable to Bank and shall state that
such financial statements fairly present in all material respects the
consolidated financial position of the Borrower and its Subsidiaries as at the
dates indicated and the results of their operations and cash flows for the
periods indicated in conformity with GAAP and that the examination by such
accountants in connection with such consolidated and consolidating financial
statements has been made in accordance with generally accepted auditing
standards, and further accompanied by the certificate of the chief financial
officer of Borrower that there exists no Default or Unmatured Default under the
Loan Documents, or if any Default or Unmatured Default exists, stating the
nature and status thereof;

                 (b)         as soon as possible, but in any event within thirty
(30) days after the end of each month, similar consolidated financial statements
of Borrower as of the end of such month and the results of its operations for
the portion of the fiscal year then elapsed, prepared and signed by the chief
financial officer of Borrower, all prepared in accordance with GAAP on a
consolidated basis consistent with prior periods, unless specifically otherwise
noted thereon, except for the omission of full footnotes which may be required
under GAAP and subject to normal year end adjustments, and accompanied by the
certificate of the chief financial officer of Borrower that there exists no
Default or Unmatured Default under the Loan Documents or if any Default or
Unmatured Default exists, stating the nature and status thereof;

                 (c)         as soon as possible, but in any event within five
(5) days after Borrower becomes aware thereof, a written statement signed by the
chief executive or chief financial officer of Borrower as to the occurrence of
any Default or Unmatured Default stating the specific nature thereof, Borrower’s
intended action to cure the same and the time period in which such cure is to
occur;

                 (d)         as soon as possible, but in any event within thirty
(30) days after the commencement thereof, a written statement describing any
litigation instituted by or against Borrower, its Subsidiaries or any Affiliate
which, if adversely determined, may have a Material Adverse Effect;

–31–

                 (e)         within ten (10) Banking Days after the end of each
calendar month, a Borrowing Base Certificate, in the form prescribed by Bank,
executed by the chief financial officer of Borrower, evidencing the Borrowing
Base as of the close of the immediately preceding calendar month, showing the
calculation thereof, the outstanding principal amount of the Facilities
(including, without limitation, Letters of Credit) and such other information as
Bank may reasonably request;

                 (f)         within ten (10) Banking Days after the end of each
calendar month, a certificate setting forth, as of the end of such immediately
preceding month, an accounts receivable aging statement and an accounts payable
aging statement of Borrower;

                 (g)         within thirty (30) days after the end of each
calendar month, a Compliance Certificate, in form and substance acceptable to
Bank, showing Borrower’s compliance with the financial covenants set forth in
Section 5.3 hereof;

                 (h)         as soon as possible, but in any event within ten
(10) days after Borrower becomes aware thereof, a written statement describing
any reportable event or prohibited transaction which has occurred with respect
to any employee benefit plan and the action which Borrower proposes to take with
respect thereto;

                 (i)         as soon as practicable, but in any event within ten
(10) days after the filing with the Securities and Exchange Commission, or any
successor thereto, or any states’ securities regulatory authority, copies of all
registration statements and all periodic and special reports required or
permitted to be filed under federal or state securities laws and regulations;

                 (j)         as soon as practicable, but any event within ten
(10) days after receipt by Borrower, a copy of any notice, complaint, Lien,
inquiry or claim (i) to the effect that Borrower is or may be liable to any
Person as a result of the release by Borrower, or any other Person of any
Hazardous Substance into the environment, or (ii) alleging any violation of any
Environmental Law by Borrower, which, in either case, could reasonably be
expected to have a Material Adverse Effect; and

                 (k)         such other information as Bank may from time to
time reasonably request.

                 5.2.2.         Good Standing. Maintain, and cause each
Subsidiary to maintain, its corporate existence and right to do business in its
state of organization and in such other states wherein non-qualification is
reasonably likely to have a Material Adverse Effect.

                 5.2.3.         Taxes, Etc. Pay and discharge, and cause each
Subsidiary to pay and discharge, all taxes, assessments, judgments, orders, and
governmental charges or levies imposed upon it or on its income or profits or
upon its property prior to the date on which penalties attach thereto and all
lawful claims which, if unpaid, may become a Lien or charge upon its Property,
provided that Borrower and its Subsidiaries shall not be required to pay any
tax, assessment, charge, judgment, order, levy or claim, if such payment is
being contested diligently, in good faith, and by appropriate proceedings which
will prevent foreclosure or levy upon its Property and adequate reserves against
such liability have been established.

–32–

                 5.2.4.         Maintain Properties. Maintain, and cause each
Subsidiary to maintain, all Properties and assets used by, or useful to, it in
the ordinary course of its business in good working order and condition,
ordinary wear and tear excepted, and suitable for the purpose for which it is
intended, and from time to time, make any necessary repairs and replacements.

                 5.2.5.         Insurance. Maintain, and cause each Subsidiary
to maintain, in full force and effect public liability insurance, business
interruption insurance, worker’s compensation insurance and casualty insurance
policies with coverages and with such companies as are reasonably acceptable to
Bank. Each such policy providing liability coverage shall be endorsed to reflect
Bank as an additional insured, and each such policy covering Properties pledged
as collateral to Bank shall have a lender’s loss payable clause in favor of
Bank, and a copy of each policy, accompanied by a certificate of coverage issued
by the insurance carrier, shall be delivered to Bank. Such policy shall
stipulate that the insurance cannot be cancelled or materially modified without
thirty (30) days’ prior written notice to Bank and shall insure Bank
notwithstanding the act or neglect of Borrower or its Subsidiaries.

                 5.2.6.         Books and Records. Keep proper books of account
in which full, true and correct entries will be made of all dealings and
transactions of and in relation to the business and affairs of Borrower and its
Subsidiaries, and, at all reasonable times, and as often as Bank may request,
permit authorized representatives of Bank to (a) have access to the premises and
Properties of Borrower and its Subsidiaries and to the records relating to the
operations of Borrower and its Subsidiaries; (b) make copies of or excerpts from
such records; (c) discuss the affairs, finances and accounts of Borrower with
and be advised as to the same by the chief executive and financial officers of
Borrower; and (d) audit and inspect such books, records, accounts, memoranda and
correspondence at all reasonable times, to make such abstracts and copies
thereof as Bank may deem necessary, and to furnish copies of all such
information to any proposed purchaser of or participant in the Facilities.

                 5.2.7.         Reports. File, and cause each Subsidiary to
file, as appropriate, on a timely basis, annual reports, operating records and
any other reports or filings required to be made with any Governmental
Authority, except to the extent the failure to so file any of the foregoing,
individually or in the aggregate, is not reasonably likely to have a Material
Adverse Effect.

                 5.2.8.         Licenses. Maintain, and cause each Subsidiary to
maintain, in full force and effect all operating permits, licenses, franchises,
and rights used by it in the ordinary course of business, except to the extent
the failure to so maintain any of the foregoing, individually or in the
aggregate, is not reasonably likely to have a Material Adverse Effect.

–33–

                 5.2.9.         Notice of Material Adverse Change. Give prompt
notice in writing to Bank of the occurrence of any development, financial or
otherwise, including pending or threatened litigation which is reasonably likely
to have a Material Adverse Effect.

                 5.2.10.         Compliance with Law. Comply, and cause each
Subsidiary to comply, in all material respects, with all laws, ordinances,
rules, regulations and other legal requirements applicable to it, including,
without limitation, all Environmental Laws and ERISA.

                 5.2.11.         Trade Accounts. Pay, and cause each Subsidiary
to pay, all trade accounts in accordance with standard industry practices.

                 5.2.12.         Use of Proceeds. Use the proceeds of the
Facilities solely for the purposes herein described.

                 5.2.13.         Loan Payments. Duly and punctually pay or cause
to be paid principal and interest on the Facilities in lawful money of the
United States at the time and places and in the manner specified herein
according to the stated terms and the true intent and meaning hereof.

                 5.2.14.         Environmental Matters. (a) Use, operate and
maintain, and cause each Subsidiary to use, operate and maintain, all of its
Properties in material compliance with all applicable Environmental Laws, keep
or acquire all necessary permits, approvals, certificates, licenses and other
authorizations relating to environmental matters in effect and remain in
material compliance therewith, and handle all Hazardous Substances in material
compliance with all applicable Environmental Laws, (b) within ninety (90) days
after filing thereof, have dismissed with prejudice any actions or proceedings
against Borrower or a Subsidiary relating to compliance with Environmental Laws
which, in the reasonable opinion of Bank, is reasonably likely to have a
Material Adverse Effect, and (c) diligently pursue cure of any material
underlying environmental problem which forms the basis of any claim, complaint,
notice, Lien, inquiry, proceeding or action referred to in Section 5.2.1(j)
hereof. If Borrower or a Subsidiary is notified of any event described in
Section 5.2.1(j) hereof, Borrower shall, upon the request of Bank, establish
appropriate reserves against such potential liabilities and engage a firm or
firms of engineers or environmental consultants appropriately qualified to
determine as quickly as practical the extent of contamination and the potential
financial liability of Borrower or its Subsidiary with respect thereto, and Bank
shall be provided with a copy of any report prepared by such firm or by any
Governmental Authority as to such matters as soon as any such report becomes
available to Borrower or such Subsidiary. The selection of any engineers or
environmental consultants engaged pursuant to the requirements of this Section
shall be subject to the approval of Bank, which approval shall not be
unreasonably withheld or delayed.

                 5.2.15.         Banking Relationship. Maintain its primary
banking accounts with Bank, including, without limitation, operating, lockbox
and autoline accounts. Borrower shall maintain a minimum balance on account with
Bank at all times of not less than One Hundred Thousand Dollars ($100,000).

–34–

                 5.2.16.         Subordinated Debt. At all times, cause the
Subordinated Debt to be subordinated to the full, final and irrevocable payment
of the Obligations, in form and substance acceptable to Bank.

                 5.2.17.         Equipment Appraisal. Within forty-five (45)
days of the date hereof, furnish Bank an appraisal of Borrower’s Equipment,
prepared by an independent appraiser acceptable to Bank, showing a forced
liquidation value of not less than Two Million Five Hundred Thousand Dollars
($2,500,000).

                 5.2.18.         Sale of Real Estate. Within one hundred eighty
(180) days of the closing of the Approved PKL Acquisition, cause the real estate
acquired in such Acquisition to be sold for fair market value.

         Section 5.3    Financial Covenants. Until the Obligations shall have
been fully and finally paid and performed and so long as any commitment of Bank
is outstanding, unless expressly waived in writing by Bank, Borrower shall:

                 5.3.1.         Funded Debt Ratio. Maintain its Funded Debt
Ratio at not greater than (a) 3.75 to 1.00 at each fiscal quarter ending through
and including December 31, 2002, (b) 3.50 to 1.00 as of March 31, 2003 and June
30, 2003, (c) 3.00 to 1.00 as of September 30, 2003, (b) 2.50 to 1.00 as of
December 31, 2003 and at each fiscal quarter ending thereafter through and
including September 30, 2004, and (c) 2.00 to 1.00 as of December 31, 2004 and
as of each fiscal quarter ending thereafter.

                 5.3.2.         Total Debt Ratio. Maintain its Total Debt Ratio
at not greater than (a) 2.00 to 1.00 at all times through and including
September 30, 2003, (b) 1.75 to 1.00 as of October 1, 2003 and at all times
through and including September 30, 2004, and (c) 1.50 to 1.00 as of October 1,
2004 and at all times thereafter.

                 5.3.3.         Fixed Charge Coverage Ratio. Maintain its Fixed
Charge Coverage Ratio at not less than 1.20 to 1.00 at each fiscal quarter end.

                 5.3.4.         Current Ratio. Maintain its ratio of Current
Assets to Current Liabilities of not less than 1.15 to 1.00 at all times.

                 5.3.5.         Capital Expenditures. Not make any Unfunded
Capital Expenditures, including Capitalized Lease Obligations, exceeding One
Million Six Hundred Thousand Dollars ($1,600,000) on a consolidated basis for
Borrower and its Subsidiaries during any fiscal year.

ARTICLE 6.         CONDITIONS PRECEDENT

         Section 6.1    Conditions to Initial Advance. The obligation of the
Bank to make the initial Advance under the Facilities is subject to satisfaction
of each of the following conditions precedent:

–35–

                 6.1.1.         Authorization. Bank shall have received and
approved, certified copies of Borrower’s and each Guarantor’s articles of
incorporation and by-laws, all as amended, accompanied by a recent certificate
of good standing issued by the appropriate official of its place of organization
and certificates of good standing from those states in which Borrower or a
Guarantor owns property or maintains an office and a certified copy of
resolutions adopted by Borrower’s and each Guarantor’s Board of Directors
authorizing the Facilities and specifying the names and capacities of those
persons authorized to execute and deliver the Loan Documents.

                 6.1.2.         Insurance. Borrower shall have furnished to Bank
evidence of the insurance required by this Agreement.

                 6.1.3.         Loan Documents. Each of the Loan Documents, in
the form prescribed by Bank, shall have been executed and delivered by Borrower
and the Guarantors, as applicable, to Bank, and the other loan documents and
guaranties required by this Agreement, in the form prescribed by Bank, shall
have been executed and delivered by the appropriate parties thereto.

                 6.1.4.         Incumbency. Bank shall have received an
Incumbency Certificate, executed by the Secretary or Assistant Secretary of
Borrower and each Guarantor which shall identify the name and title and bear the
signature of the officers of Borrower and such Guarantor authorized to sign the
Loan Documents, and Bank shall be entitled to rely upon such certificate until
informed of any change in writing by Borrower.

                 6.1.5.         Legal Matters. All legal matters incident to the
Loan Documents and the making of Advances shall be reasonably satisfactory to
Bank and its counsel.

                 6.1.6.         Borrowing Base, Etc. Satisfactory certificates
as to Borrowing Base, and such other certificates as Bank may reasonably
require, shall have been executed by the appropriate officers of Borrower and
delivered to Bank.

                 6.1.7.         Opinions of Counsel. Bank shall have received
the favorable written opinion(s) of counsel to Borrower and the Guarantors,
dated of even date herewith, as to those matters which Bank may reasonably
require.

                 6.1.8.         Landlord Waivers. Borrower shall have used
commercially reasonable best efforts to procure landlord and warehousemen lien
waivers, in the form prescribed by Bank, pursuant to which its various landlords
and warehousemen shall have waived all liens or other rights of detainer against
its assets constituting collateral for the Obligations.

                 6.1.9.         UCC Searches/Life Insurance Questionnaire. Bank
shall have received satisfactory return after search in accordance with the
Uniform Commercial Code in such governmental offices as Bank shall have deemed
appropriate, and Bank shall have received a satisfactory life insurance
questionnaire with respect to the life insurance policy to be assigned to Bank.

                 6.1.10.         Fees. Borrower shall have paid Bank a
non-refundable facility fee of Twenty-Eight Thousand One Hundred Twenty-Five
Dollars ($28,125), a field audit fee of Five Thousand Dollars ($5,000), and
Borrower shall have reimbursed Bank for all reasonable legal fees and other
reasonable out-of-pocket expenses of Bank in connection with the Facilities.

–36–

                 6.1.11.         Regulation U. Bank shall have received such
certificates and other documents as it shall have deemed reasonably appropriate
as to compliance with Regulations U, T and X of the Board of Governors of the
Federal Reserve System.

                 6.1.12.         No Default. As of the date hereof, and after
giving effect to the initial funding of the Facilities, there shall not exist a
Default or Unmatured Default, and Bank shall have received evidence satisfactory
to Bank that the transactions contemplated by this Agreement do not create a
default under any agreement to which Borrower is a party.

                 6.1.13.         Consents. All consents necessary for the
secured financing transaction contemplated by this Agreement pursuant to the
Loan Documents shall have been obtained.

                 6.1.14.         Field Audit. Bank shall have completed, to its
satisfaction, a field audit of Borrower's financial and accounting records,
books, journals, orders and receipts.

                 6.1.15.         Intercreditor Agreement. Bank and Union
Planters Bank, National Association shall have entered into the Intercreditor
Agreement.

                 6.1.16.         Additional Documentation. Bank shall have
received such other documents, instruments, financing statements, waivers,
certificates, reaffirmations, consents and opinions as it may request.

         Section 6.2    Conditions to Subsequent Advances. Prior to each
subsequent Advance under the Line of Credit or the issuance of a Letter of
Credit:

                 6.2.1.         No Default. No Default or Unmatured Default
shall have occurred and be continuing.

                 6.2.2.         Representations and Warranties. Each
representation and warranty contained in Article 4 shall be true and correct as
of the date of such Advance, except to the extent any such representation or
warranty relates solely to an earlier date and except for changes reflecting
transactions permitted by this Agreement.

                 6.2.3.         Legal Matters. All legal matters incident to the
making of such Advance shall be reasonably satisfactory to Bank and its counsel.

         Section 6.3    General. Each request for an Advance shall constitute a
representation and warranty by Borrower that the applicable conditions contained
in this Section 6.3 have been satisfied.

ARTICLE 7.         DEFAULT

        The occurrence of any of the following events shall be deemed a Default
hereunder:

–37–

                 (a)         any representation or warranty made by or on behalf
of Borrower, any Subsidiary or any Affiliate to Bank under or in connection with
any Loan Document or any subordination agreement shall be false in any material
respect as of the date on which made;

                 (b)         Borrower fails to make any payment of principal of
or interest on the Facilities or any fee or other payment Obligation in
connection with the Facilities when due;

                 (c)         the breach of any of the covenants contained in
Section 5.2.2, 5.2.4, 5.2.7, 5.2.8, 5.2.10, 5.2.11 or 5.2.14 which breach
remains uncured for a period of thirty (30) days after written notice to
Borrower; or the breach of any other covenant contained in Article 5 hereof;

                 (d)         the breach of any other terms or provisions of the
Loan Documents (other than a breach which constitutes a Default under Article
7(a), (b) or (c) above) not cured within thirty (30) days after written notice
from Bank to Borrower specifying such breach;

                 (e)         the failure of Borrower or any Subsidiary to pay
any other Indebtedness when due or within any applicable grace or cure period;
or the breach by Borrower or any Subsidiary of any term, provision or condition
contained in any agreement under which any such Indebtedness was created or is
governed, which constitutes a default thereunder, or any other event shall occur
or condition exist, the effect of which is to cause, or to permit the holder or
holders of such Indebtedness to cause such Indebtedness to become due prior to
its stated maturity, or any Indebtedness shall be declared to be due and payable
or required to be prepaid or repurchased (other than by a regularly scheduled
payment) prior to the stated maturity thereof;

                 (f)         Borrower or any Subsidiary shall (i) have an order
for relief entered with respect to it under the Federal Bankruptcy Code, (ii)
not pay, or admit in writing its inability to pay, its debts generally as they
become due, (iii) make an assignment for the benefit of creditors, (iv) apply
for, seek, consent to, or acquiesce in, the appointment of a receiver,
custodian, trustee, examiner, liquidator or similar official for it or any
substantial part of its property, (v) institute any proceeding seeking an order
for relief under the Federal Bankruptcy Code or seeking to adjudicate it a
bankrupt or insolvent, or seeking dissolution, winding up, liquidation,
reorganization, arrangement, adjustment or composition of it or its debts under
any law relating to bankruptcy, insolvency or reorganization or relief of
debtors or fail to file an answer or other pleading denying the material
allegations of any such proceeding filed against it, or (vi) suspend operations
as presently conducted or discontinue doing business as an ongoing concern;

                 (g)         without the application, approval or consent of
Borrower or any Subsidiary, a receiver, trustee, examiner, liquidator or similar
official shall be appointed for Borrower or such Subsidiary or any substantial
part of its Property, or a proceeding described in item (f) above shall be
instituted against Borrower or any Subsidiary and such appointment continues
undischarged or such proceeding continues undismissed or unstayed for a period
of sixty (60) consecutive days;

–38–

                 (h)         any Governmental Authority shall condemn, seize or
otherwise appropriate, or take custody or control of all or any substantial
portion of the Property of Borrower or any Subsidiary;

                 (i)         Borrower or any Subsidiary shall fail within thirty
(30) days to pay, bond or otherwise discharge any judgment or order for the
payment of money which is not stayed on appeal or otherwise appropriately
contested in good faith, or any attachment, levy or garnishment is issued
against any Property of Borrower or such Subsidiary;

                 (j)         if there occurs a Change in Control;

                 (k)         there occurs a “reportable event” or a “prohibited
transaction” under, or any complete or partial withdrawal from, or any other
event which would constitute grounds for termination of or the appointment of a
trustee to administer, any “plan” maintained by Borrower or any ERISA Affiliate
for the benefit of its “employees” (as such terms are defined in ERISA) which
will have a Material Adverse Effect;

                 (l)         any Loan Document shall for any reason fail to
create a valid and perfected first priority security interest in any collateral
purported to be covered thereby (except as permitted by the terms of any Loan
Document), or any Loan Document shall fail to remain in full force or effect or
any action shall be taken to discontinue or to assert the invalidity or
unenforceability of, or the security interest created under, any Loan Document;
or

                 (m)         any Guaranty or any material provision thereof
shall cease to be in full force or effect, or any guarantor fails to promptly
perform under its Guaranty, or any guarantor terminates or revokes or attempts
to terminate or revoke its Guaranty; or the breach by a guarantor of any other
term or provision of any Loan Document to which it is a party not cured within
thirty (30) days after written notice from Bank.

ARTICLE 8.         REMEDY

         Section 8.1    Acceleration. If any Default described in Article 7 item
(f) or (g) occurs, the Facilities and the commitment of Bank to make Advances
under the Facilities shall automatically terminate and the Obligations shall
immediately become due and payable without any election or action on the part of
Bank. If any other Default occurs, Bank may terminate its commitments hereunder
and declare the Obligations to be due and payable, whereupon the Obligations
shall become immediately due and payable, without presentment, demand, protest
or notice of any kind, all of which Borrower hereby expressly waives.

         Section 8.2    Deposit to Secure Reimbursement Obligations. When any
Default or Unmatured Default has occurred and is continuing, Bank may demand
that Borrower immediately pay to Bank an amount equal to the aggregate
outstanding amount of the Letters of Credit and Borrower shall immediately upon
any such demand make such payment. Borrower hereby irrevocably grants to Bank a
security interest in all funds deposited to the credit of or in transit to any
deposit account or fund established pursuant to this Section 8.2, including,
without limitation, any investment of such fund. Borrower hereby acknowledges
and agrees that Bank would not have an adequate remedy at law for failure by
Borrower to honor any demand made under this Section 8.2 and Bank shall have the
right to require Borrower specifically to perform its undertakings in this
Section 8.2 whether or not any draws have been made under the Letters of Credit.
In the event Bank makes a demand pursuant to this Section 8.2, and Borrower
makes the payment demanded, Bank agrees to invest the amount of such payment for
the account of Borrower and at Borrower’s risk and direction in short-term
investments reasonably acceptable to Bank.

–39–

         Section 8.3    Subrogation. Bank shall, to the extent of any payments
made by Bank under the Letters of Credit that are not reimbursed to Bank, be
subrogated to all rights of the beneficiary of the Letters of Credit as to all
obligations of Borrower with respect to which such payment shall have been made
by Bank.

         Section 8.4    Remedy. Upon the occurrence and during the continuance
of a Default, Bank may immediately proceed to exercise all remedies available to
it under the Loan Documents or otherwise under applicable law. No right or
remedy conferred upon or reserved to Bank under the Loan Documents is intended
to be exclusive of any other available remedy or right, but each and every
remedy shall be cumulative and concurrent and shall be in addition to every
other remedy now or hereafter existing at law or in equity. No single or partial
exercise of any power or right shall preclude any further or other exercise of
any power or right.

         Section 8.5    Preservation of Rights. No delay or omission of Bank to
exercise any power or right under the Loan Documents shall impair such power or
right or be construed to be a waiver of any Default or an acquiescence therein,
and any single or partial exercise of any power or right shall not preclude
other or further exercise thereof or the exercise of any other power or right.
No Advance hereunder shall constitute a waiver of any of the conditions of
Bank’s obligation to make further Advances, nor, in the event Borrower is unable
to satisfy any such condition, shall a waiver of such condition in any one
instance have the effect of precluding Bank from thereafter declaring such
inability to be a Default hereunder, unless such condition was permanently
expressly waived in writing by Bank. No course of dealing shall be binding upon
Bank.

ARTICLE 9.         GENERAL PROVISIONS

         Section 9.1    Benefit of Agreement. Bank will accept the Credit Note
as evidence of loans made in the ordinary course of its commercial banking
business. The terms and provisions of this Agreement, the Credit Note and the
other Loan Documents shall be binding upon and inure to the benefit of Borrower
and Bank and their respective successors and assigns of their entire interests,
except that Borrower shall not have the right to assign this Agreement.

         Section 9.2    Survival of Representations. All representations,
warranties and agreements of Borrower contained in the Loan Documents shall
survive delivery of the Credit Note and the making of the Facilities.

–40–

         Section 9.3    Governmental Regulation. Anything contained in this
Agreement to the contrary notwithstanding, Bank shall not be obligated to extend
credit to Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulation.

         Section 9.4    Conflict. This Agreement and the other Loan Documents
shall be interpreted, wherever possible, in a manner consistent with one
another, but in the event of any irreconcilable inconsistency, this Agreement
shall control.

         Section 9.5    Choice of Law. The Loan Documents (other than those
containing a contrary express choice of law provision) and the rights and
obligations of the parties thereunder and hereunder shall be governed by, and
construed and interpreted in accordance with the laws of the State of Indiana
(but giving effect to federal laws applicable to national banks),
notwithstanding the fact that Indiana conflict of law rules might otherwise
require the substantive rules of law of another jurisdiction to apply. Borrower
hereby consents to the jurisdiction of any state or federal court located within
Marion County, Indiana. All service of process may be made by messenger,
certified mail, return receipt requested or by registered mail directed to
Borrower at the address indicated aside its signature to this Agreement, and
Borrower otherwise waives personal service of any and all process made upon
Borrower. Borrower waives any objection which Borrower may have to any
proceeding commenced in a federal or state court located within Marion County,
Indiana, based upon improper venue or forum non conveniens. Nothing contained in
this Section shall affect the right of Bank to serve legal process in any other
manner permitted by law or to bring any action or proceeding against Borrower or
its property in the courts of any other jurisdiction.

         Section 9.6    Headings. Section headings in the Loan Documents are for
convenience of reference only and shall not govern the interpretation of any of
the provisions of the Loan Documents.

         Section 9.7    Entire Agreement. The Loan Documents embody the entire
agreement and understanding between Borrower and Bank and supersede all prior
agreements and understandings between Borrower and Bank relating to the subject
matter thereof.

         Section 9.8    Expenses. Borrower shall reimburse Bank and its
participants for any and all reasonable costs, charges and out-of-pocket
expenses (including reasonable attorneys’ fees and time charges of attorneys for
Bank), paid or incurred by Bank and its participants in connection with the
preparation, review, execution, delivery, amendment, modification,
administration, collection and enforcement of the Facilities and/or the Loan
Documents and in connection with the conduct by Bank’s internal auditors of
periodic field and servicing audits of Borrower, provided, so long as no Default
exists, that Borrower shall not be responsible for the payment of more than one
audit per fiscal year and the cost per audit shall not exceed Five Thousand
Dollars ($5,000). Bank may pay or deduct from the loan proceeds any of such
expenses, and any proceeds so applied shall be deemed to be Advances under this
Agreement evidenced by the Credit Note and secured by the Loan Documents, and
shall bear interest at the rate of interest provided in the Credit Note.

–41–

         Section 9.9    Indemnification. Borrower agrees to indemnify Bank, and
its successors and assigns (including any purchaser of a participation in the
Facilities), and their directors, officers and employees, against all losses,
claims, costs, damages, liabilities and expenses, including, without limitation,
all expenses of litigation or preparation therefor (a “Loss”), which they may
pay or incur in connection with or arising out of the direct or indirect
application of the proceeds of the Facilities hereunder. The indemnity set forth
herein shall be in addition to any other Obligations of Borrower to Bank
hereunder or at common law or otherwise, and shall survive any termination of
this Agreement, the expiration of the obligation of Bank to make the Facilities
and the payment of all Obligations.

         Section 9.10    Confidentiality. Bank agrees to treat all information
received by it in connection with the Loan Documents (except such information
which is generally available or has been made available to the public) as
confidential, provided, however, that nothing in this Section 9.10 shall
prohibit Bank from, or subject Bank to liability for, disclosing any such
information to any Governmental Authority to whose jurisdiction Bank is subject,
and provided further that Bank may provide such information to proposed
purchasers of or participants in the Facilities from time to time.

         Section 9.11    Giving Notice. Any notice required or permitted to be
given under this Agreement may be, and shall be deemed effective if made in
writing and delivered to the recipient’s address, telex number or facsimile
number addressed to Borrower or Bank at the addresses indicated aside their
signatures to this Agreement by any of the following means: (a) hand delivery,
(b) United States first class mail, postage prepaid, (c) registered or certified
mail, postage prepaid, with return receipt requested, (d) by a reputable rapid
delivery service, (e) by telegraph or telex when delivered to the appropriate
office for transmission, charges prepaid, with request for assurance of receipt
in a manner typical with respect to communication of that type or (f) by
facsimile transmission if the transmitting party receives confirmation of
successful transmission. Notice made in accordance with this Section shall be
deemed given upon receipt if delivered by hand or wire transmission, three (3)
Banking Days after mailing if mailed by first class, registered or certified
mail, or one (1) Banking Day after deposit with an overnight courier service if
delivered by overnight courier. Borrower and Bank may each change the address
for service of notice upon it by a notice in writing to the other parties
hereto.

         Section 9.12    Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one
agreement, and any of the parties hereto may execute this Agreement by signing
any such counterpart. This Agreement shall be effective when it has been
executed by Borrower and Bank.

         Section 9.13    Incorporation by Reference. All Exhibits hereto are
incorporated herein by this reference. Each of the other Loan Documents shall be
made subject to all of the terms, covenants, conditions, obligations,
stipulations and agreements contained in this Agreement to the same extent and
effect as if fully set forth therein, and this Agreement is made subject to all
of the terms, covenants, conditions, obligations, stipulations and agreements
contained in the other Loan Documents to the same extent and effect as if fully
set forth therein. The provisions of this Agreement, including, without
limitation, provisions relating to maintenance of insurance, are in addition to,
and not a limitation upon, the requirements of any other Loan Document or any
subordination agreement.

–42–

         Section 9.14    Time of Essence. Time is of the essence under the Loan
Documents.

         Section 9.15    No Joint Venture. Notwithstanding anything to the
contrary herein contained or implied, Bank, by this Agreement, or by any action
pursuant hereto, shall not be deemed to be a partner of, or a joint venturer
with, Borrower, and Borrower hereby indemnifies and agrees to defend and hold
Bank harmless, including the payment of reasonable attorneys’ fees, from any
Loss resulting from any judicial construction of the parties’ relationship as
such.

         Section 9.16    Relationship of Parties; Release of Consequential
Damages. The relationship between Borrower and Bank shall be solely that of
borrower and lender. Bank shall not have any fiduciary responsibilities to
Borrower. Bank undertakes no responsibility to Borrower to review or inform
Borrower of any matter in connection with any phase of Borrower’s business or
operations. Bank shall not have any liability with respect to, and Borrower
hereby waives, releases and agrees not to sue for, any special or consequential
damages suffered by it in connection with, arising out of, or in any way related
to the Loan Documents or the transactions contemplated thereby.

         Section 9.17    Severability. In the event any provision of this
Agreement or any of the Loan Documents shall be held invalid or unenforceable by
any court of competent jurisdiction, such holding shall not affect the validity,
enforceability or legality of the remaining provisions hereof or thereof, all of
which shall continue unaffected and unimpaired thereby.

         Section 9.18    Gender. As used herein, the masculine gender shall be
deemed to include the feminine and the neuter and the singular number shall also
include the plural.

         Section 9.19    Waiver and Amendment. Borrower and Bank may enter into
agreements supplemental hereto for the purpose of adding or modifying provisions
of this Agreement or changing the respective rights, powers, privileges, duties,
liabilities, covenants or obligations of Bank or Borrower or waiving any Default
hereunder, provided, however, that no such agreements supplemental shall be
binding unless in writing and duly signed by the parties hereto, and then only
to the extent specifically set forth therein.

         Section 9.20    Bank Not in Control. None of the covenants or other
provisions contained in the Loan Documents shall, or shall be deemed to, give
Bank the right or power to exercise control over the affairs and/or management
of Borrower, the power of Bank being limited to the right to exercise the
remedies provided in the Loan Documents, provided, however, that if Bank becomes
the owner of any stock or other equity interest in any Person, whether through
foreclosure or otherwise, Bank shall be entitled (subject to requirements of
law) to exercise such legal rights as it may have by virtue of being the owner
of such stock or other equity interest in such Person.

         Section 9.21    Waiver Of Jury Trial. BANK AND BORROWER, AFTER
CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY,
VOLUNTARILY, INTENTIONALLY, UNCONDITIONALLY AND IRREVOCABLY WAIVE ANY RIGHT
EITHER OF THEM MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY COURSE OF CONDUCT, DEALING,
STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTIONS OF EITHER OF THEM. NEITHER BANK
NOR BORROWER SHALL SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY ACTION
IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY
TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THESE PROVISIONS SHALL NOT BE DEEMED TO
HAVE BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY EITHER BANK OR BORROWER
EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY BOTH OF THEM.

–43–

         IN WITNESS WHEREOF, Borrower and Bank have caused this Agreement to be
executed by their respective officers duly authorized as of the date first above
written.

[Remainder of page intentionally left blank]

–44–

SIGNATURE PAGE OF
BIOANALYTICAL SYSTEMS, INC.
TO CREDIT AGREEMENT

"BORROWER"

BIOANALYTICAL SYSTEMS, INC.

By:  /s/ Peter T. Kissinger

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Its:  Chairman & Chief Executive Officer

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Address:

2701 Kent Avenue
West Lafayette, IN 47906
Attention:  President
Facsimile:  (765) 497-1102

SIGNATURE PAGE OF
THE PROVIDENT BANK
TO CREDIT AGREEMENT

"BANK"

THE PROVIDENT BANK

By:  /s/ Jeffrey A. Salesman

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Its:  Vice President

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

Address:

The Guaranty Building, Suite 400
20 N. Meridian St.
Indianapolis, Indiana 46204
Attention:  Jeff Salesman
Facsimile:  317-822-9800