AMENDED AND RESTATED
GENERAL SECURITY AGREEMENT

        This Amended and Restated General Security Agreement (“Security
Agreement”) is made as of the 4th day of January, 2005, by Bioanalytical
Systems, Inc., an Indiana corporation, having its chief executive offices at
2701 Kent Avenue, West Lafayette, Indiana (Taxpayer I.D. No. 35-1345024) (the
“Borrower”), in favor of National City Bank of Indiana, as successor to The
Provident Bank, having a notice address of One National City Center, #200E,
Indianapolis, Indiana 46255 (the “Bank”).

Article 1.    DEFINITIONS

        Section 1.1    Defined Terms.    As used herein:

        “Accounts”, “Inventory”, “Equipment”, “Fixtures”, “General Intangibles”,
“Chattel Paper”, “Documents”, “Goods”, “Deposit Accounts”, “Instruments”,
“Investment Property” and “Proceeds” shall mean all of Borrower’s such property
within the meanings ascribed in the Indiana Uniform Commercial Code, as in
effect from time to time.

        “Account Debtor” shall have the meaning ascribed in the Indiana Uniform
Commercial Code, as in effect from time to time.

        “Collateral” shall mean all of the Borrower’s property or rights in
which a security interest is granted hereunder.

        “Collateral Account” shall mean the Deposit Account more fully described
in Section 4.5.

        “Control” shall have the meaning ascribed in the Indiana Uniform
Commercial Code, as in effect from time to time.

        “Credit Agreement” shall mean the Amended and Restated Credit Agreement
executed between the Borrower and the Bank of even date, as amended from time to
time.

        “Foreign Subsidiaries” shall have the meaning set forth in Part B of
Schedule 4 hereto.

        “Intellectual Property” shall mean all intellectual property of the
Borrower, including, without limitation, (a) all patents, patent applications,
patent disclosures and inventions (whether or not patentable and whether or not
reduced to practice); (b) all trademarks, service marks, trade dress, trade
names, and corporate names and all the goodwill and quality control standards
associated therewith; (c) all registered and unregistered statutory and common
law copyrights; (d) all registrations, applications and renewals for any of the
foregoing; (e) all trade secrets, confidential information, ideas, formulae,
compositions, knowhow, manufacturing and production processes and techniques,
research and development information, drawings, specifications, designs, plans,
improvements, proposals, technical and computer data, financial, business and
marketing plans, and customer and supplier lists and related information; (f)
all other proprietary rights (including, without limitation, all computer
software and documentation and all license agreements and sublicense agreements
to and from third parties relating to any of the foregoing); (g) all copies and
tangible embodiments of the foregoing in whatever form or medium; (h) all
damages and payments for past, present and future infringements of the
foregoing; (i) all royalties and income due with respect to the foregoing; and
(j) the right to sue and recover for past, present and future infringements of
the foregoing.

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        “Liabilities” shall mean (a) all Obligations including all future
advances; (b) all other time to time obligations of the Borrower to the Bank of
every type and description, direct or indirect, absolute or contingent, due or
to become due, now existing or hereafter arising, and whether or not
contemplated by the Borrower or the Bank as of the date of this Security
Agreement, including, without limitation, any modification, extension, or
addition to or of the Obligations or the Credit Agreement and any overlying
advances, out of formula advances and overdrafts made or permitted in connection
with the Obligations or other Liabilities; and (c) any duty of the Borrower to
act or to refrain from acting in connection with any Liability.

        “Obligations” shall have the meaning ascribed in the Credit Agreement.

        “Schedule of Accounts” shall have the meaning ascribed in Section 4.3.

        “Stock Rights” means any securities, dividends or other distributions
and any other right or property which the Borrower shall receive or shall become
entitled to receive for any reason whatsoever with respect to, in substitution
for or in exchange for any securities or other ownership interests in a
corporation, partnership, joint venture or limited liability company
constituting Collateral and any securities, any right to receive securities and
any right to receive earnings, in which the Borrower now has or hereafter
acquires any right, issued by an issuer of such securities, other than
securities that would cause Borrower’s pledge to Bank to exceed Sixty-Five
Percent (65%) of Borrower’s interest in Foreign Subsidiaries.

        Section 1.2    Incorporation of Credit Agreement Definitions.    Other
capitalized terms used herein and not specifically herein defined shall have the
meanings ascribed to them in the Credit Agreement.

        Section 1.3    Terms Defined in the Indiana Uniform Commercial
Code.    Terms defined in the Indiana Uniform Commercial Code which are not
otherwise defined in this Security Agreement are used herein as defined in the
Indiana Uniform Commercial Code, as in effect from time to time.

Article 2.    SECURITY INTEREST IN COLLATERAL

        As security for the payment and performance of the Liabilities, the Bank
shall have, and the Borrower does hereby grant to the Bank, a continuing
security interest in the following Collateral:

        (a)         All Accounts, Deposit Accounts, General Intangibles,
Documents, Instruments, Investment Property, Chattel Paper and any other similar
rights of the Borrower however created or evidenced, whether now existing or
hereafter owned, acquired, created, used, or arising, specifically including,
without limitation, claims, leases, agreements, license agreements, licensing
fees, royalties, policies, credit insurance, guaranties, letters of credit,
advices of credit, binders or certificates of insurance, deposits, documents of
title, securities, security interests, licenses, goodwill, tax refunds (federal,
state or local), customer lists, franchises, franchise rights, drawings,
designs, marketing rights, computer programs, artwork, databases and other like
business property rights, all applications to acquire such rights, for which
application may at any time be made by the Borrower, together with any and all
books and records pertaining thereto and any right, title or interest in any
Inventory which gave rise to an Account, and all Intellectual Property
throughout the world, but specifically excluding the shares of capital stock or
other equity interest of Borrower in the Foreign Subsidiaries;

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        (b)         All Inventory, whether now existing or hereafter acquired
and wherever located, specifically including, without limitation, all
merchandise, personal property, raw materials, work in process, finished Goods,
materials and supplies of every nature usable or useful in connection with the
manufacturing, packing, shipping, advertising, selling, leasing or furnishing of
any of such Inventory and all materials of the Borrower used or consumed or to
be used or consumed in the Borrower’s business, together with any and all books
and records pertaining thereto;

        (c)         All Equipment, Goods and all other tangible personal
property of the Borrower of every kind or nature, whether now owned or hereafter
acquired, wherever located, specifically including, without limitation, all
machinery, trucks, boats, barges, on and off the road vehicles, forklifts,
tools, dies, jigs, presses, appliances, implements, improvements, accessories,
attachments, parts, components, partitions, systems, and apparatus, but
specifically excluding Fixtures;

        (d)         Sixty-Five Percent (65%) of the outstanding capital stock or
other equity interests of each Foreign Subsidiary owned by Borrower;

        (e)         All products and Proceeds of each of the foregoing,
specifically including, without limitation, (i) any and all Proceeds of any
insurance, indemnity, warranty or guaranty payable to the Borrower from time to
time, (ii) any and all payments of any form whatsoever made or due and payable
to the Borrower from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
foregoing by any Governmental Authority or any Person acting under color of
Governmental Authority, (iii) to the extent of the value of Collateral, claims
arising out of the loss, nonconformity, or interference with the use of, defects
or infringement of rights in, or damage to, the Collateral, (iv) any Stock
Rights, and (v) any and all other amounts from time to time paid or payable
under or in connection with any of the foregoing, whether or not in lieu
thereof;

        (f)         All renewals, extensions, replacements, modifications,
additions, improvements, accretions, accessions, betterments, substitutions,
replacements, annexations, tools, accessories, parts and the like now in,
attached to or which may hereafter at any time be placed in or added to any
Collateral, whether or not of like kind; and

        (g)         All rights, remedies, claims and demands under or in
connection with each of the foregoing.

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Article 3.    REPRESENTATIONS AND WARRANTIES

        To induce the Bank to enter into the Credit Agreement and to make each
and every loan and other financial accommodation thereunder, the Borrower
represents and warrants to the Bank that, except as may otherwise be provided in
the Credit Agreement:

        Section 3.1    Names of Borrower.    The exact corporate name of the
Borrower and its state of organization are each correctly stated in the preamble
to this Security Agreement. Set forth on Schedule 1 hereto is a true, accurate
and complete list of all previous legal names of the Borrower and all past and
present assumed (or fictitious) names and tradenames of the Borrower for the
past six (6) years.

        Section 3.2    Prior Combinations.    Except as set forth on Schedule 1
hereto, the Borrower has not ever been conducted as a partnership or
proprietorship, no entity has merged into the Borrower or has been consolidated
with the Borrower, and no entity has sold substantially all of its assets to the
Borrower or sold assets to the Borrower outside the ordinary course of such
entity’s business.

        Section 3.3    Chief Executive Office, etc.    The Borrower’s chief
executive office and taxpayer identification number are set forth in the
preamble to this Security Agreement. Subject to Section 4.1 hereof, Borrower
maintains all of its records with respect to its Accounts at such address.
Borrower has not at any time within the past four (4) months maintained its
chief executive office or its records with respect to Accounts at any other
location.

        Section 3.4    Title to Collateral.    Except for Intellectual Property,
which is separately addressed in Section 3.6 below, all Collateral is lawfully
owned by the Borrower, free and clear of any prior security interest, pledge,
sale, assignment, transfer or other encumbrance other than Permitted
Encumbrances; the Borrower has the unencumbered right to pledge, sell, assign or
transfer the Collateral subject to the Permitted Encumbrances and to subject the
Collateral to the security interest in favor of the Bank herein; except in
respect of Permitted Encumbrances, no financing statement covering all or any
portion of the Collateral is on file in any public office other than in favor of
the Bank; and the security interest herein constitutes a legal and valid, first
priority security interest in the Collateral.

        Section 3.5    Representations Regarding Accounts.    Except for
Permitted Encumbrances, each Account (a) is a valid Account representing an
undisputed, bona fide right to payment from the Account Debtor named therein for
Goods sold or leased, for Intellectual Property licensed, or for services
rendered, whether or not such right to payment has been earned by performance;
(b) is free and clear of any agreement wherein the Account Debtor may claim a
deduction or discount; and (c) is free and clear of all set-offs or
counterclaims.

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        Section 3.6    Representations Regarding Intellectual
Property.    Schedule 2 hereto contains a complete and accurate list as of the
date hereof of all patented and registered Intellectual Property owned by the
Borrower and of all pending applications for the registration of other
Intellectual Property owned or filed by the Borrower. Schedule 2 also contains a
complete and accurate list of all licenses and other rights granted by the
Borrower to any third party with respect to the Intellectual Property and
licenses and other rights granted by any third party to the Borrower. Except for
Permitted Encumbrances and except as may be set forth in Schedule 2 (a) the
Borrower owns and possesses all right, title and interest in and to, or has a
valid and enforceable license to use, all of the Intellectual Property necessary
for the operation of the Borrower’s business as presently conducted or proposed
to be conducted; (b) no claim by any third party contesting the validity,
enforceability, use or ownership of any Intellectual Property has been made, is
currently outstanding or, to the Borrower’s knowledge, is threatened; (c) the
Borrower has not received any notice of, nor is the Borrower aware of any facts
which indicate the likelihood of, any material infringement or misappropriation
by, or conflict with, any third party with respect to any Intellectual Property,
nor has the Borrower received any claim of infringement or misappropriation of,
or other conflict with, any intellectual property rights of any third party; (d)
the Borrower has not materially infringed, misappropriated or otherwise
conflicted with any intellectual property rights of any third party, nor is
Borrower aware of any material infringement, misappropriation or conflict which
will occur as a result of the continued operation of the business of the
Borrower as presently conducted or proposed to be conducted; (e) the Borrower
has made or will timely make all necessary filings and recordations (except user
filings) and has paid or will pay all required fees and taxes to record and
maintain its ownership in its Intellectual Property throughout the world to the
extent necessary to conduct Borrower’s business as currently being conducted or
proposed to be conducted; and (f) no consents are required on any licenses
listed on Schedule 2 hereto, except as set forth on Schedule 2, to the grant of
the security interests to, and the exercise of the rights and remedies of, the
Bank.

        Section 3.7    Representations Regarding Contracts and Leases.    All
leases of real or personal property and all contracts to which the Borrower is a
party are in full force and effect. To Borrower’s knowledge, no Person is
challenging or disputing the validity or enforceability of any such leases or
contracts, and the Borrower is not in material default under any such leases or
contracts.

        Section 3.8    Representations Regarding Equipment and
Inventory.    Schedule 3 is a true and correct list of all locations where
Equipment and Inventory of the Borrower is located (except Inventory in transit)
and all locations where Equipment and Inventory of the Borrower has been located
in the four (4) months immediately preceding the date of this Agreement.
Borrower has not purchased any Inventory in a transaction subject to the bulk
transfer laws of any state or otherwise outside the ordinary course of the
Inventory seller’s business.

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        Section 3.9    Representations Regarding Investment Property.    The
Borrower is the direct and beneficial owner of each type of Investment Property
listed on Schedule 4 hereto as being owned by it, free and clear of any liens,
encumbrances or security interests except for the security interest granted to
the Bank. The Borrower further represents and warrants that (i) all such
Investment Property which are shares of stock in a corporation or ownership
interests in a partnership or limited liability company have been (to the extent
such concepts are relevant with respect to such Investment Property) duly and
validly issued, are fully paid and non-assessable, (ii) this pledge of such
Investment Property will not violate the proscriptions or require the consent,
license, filing, report, permit, exemption, regulation or approval, of any
Governmental Authority or other Person or violate any provision of law, (iii)
such ownership of pledged Investment Property represent, in the case of U.S.
Subsidiaries, One Hundred Percent (100%) of the issued and outstanding ownership
of such U.S. Subsidiaries, and, in the case of Foreign Subsidiaries, Sixty-Five
Percent (65%) of the issued and outstanding ownership of such Foreign
Subsidiaries (iv) such Investment Property has not been materially altered and
all signatures thereon are genuine, (v) there exists no default by an issuer
under any of such Investment Property with respect thereto, (vi) no insolvency
proceedings have been instituted with respect to the issuer of such Investment
Property (vii) the Borrower has executed no instrument of any kind assigning any
of such Investment Property or the liability of any issuer thereon, or with
respect thereto, which remains in effect, (viii) none of the issuers of such
Investment Property have any obligation, commitment, subscription, option,
warrant or other rights outstanding entitling the holder thereof to purchase or
otherwise acquire any capital stock of such issuer, and (ix) with respect to any
certificates delivered to the Bank representing an ownership interest in a
partnership or limited liability company, either such certificates are
Securities as defined in Article 8 or 8.1 (as applicable) of the Uniform
Commercial Code of the applicable jurisdiction as a result of actions by the
issuer or otherwise, or, if such certificates are not Securities, the Borrower
has so informed the Bank so that the Bank may take steps to perfect its security
interest therein as a General Intangible.

Article 4.    AGREEMENTS CONCERNING ACCOUNTS

        Section 4.1    Location.    The Borrower will give the Bank written
notice of each office of the Borrower at which records of the Borrower relative
to Accounts are kept. Except where such notice is given, all records of the
Borrower relative to Accounts are and will be kept at the chief executive office
of the Borrower.

        Section 4.2    Returns and Repossessions.    Prior to the occurrence of
a Default or Unmatured Default, the Borrower may grant, in the ordinary course
of business, to any Account Debtor, any rebate, refund or adjustment to which
such Account Debtor may be lawfully entitled and may accept, in connection
therewith, the return of Goods, the sale or lease of which shall have given rise
to the obligation of the Account Debtor, subject, however, to the Bank’s
security interest therein and in any Proceeds arising from the disposition
thereof. After the occurrence of a Default or an Unmatured Default, no discount,
credit or allowance shall be granted by the Borrower to any Account Debtor, and
no return of Goods shall be accepted by the Borrower without the Bank’s prior
written consent.

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        Section 4.3    Schedule of Accounts.    Upon request by the Bank, the
Borrower will, from time to time, deliver to the Bank a schedule identifying
each Account (“Schedule of Accounts”), together with such schedules and
certificates and reports relative to all or any of the Collateral and the items
or amounts received by the Borrower in full or partial payment or otherwise, as
Proceeds of any of the Collateral. Each Schedule of Accounts or other schedule,
certificate or report shall be executed by its duly authorized officer and shall
be in the form specified by the Bank. Any Schedule of Accounts identifying any
Account shall be accompanied, if the Bank requests, (a) by a true and correct
copy of the invoice evidencing such Account, (b) by evidence of shipment,
delivery or performance, and (c) if such request shall be made after the
occurrence of a Default or an Unmatured Default, by a duly executed assignment
of such Account from the Borrower to the Bank; provided, however, that the
Borrower’s failure to execute and deliver any such Schedule of Accounts and/or
assignment shall not affect or limit the Bank’s security interest or other
rights in and to Accounts, and provided, further, that a proper assignment of
any Account wherein the United States Government is the Account Debtor may be
requested by the Bank at any time whether or not there shall have occurred a
Default or Unmatured Default.

        Section 4.4    Verification of Accounts.    After the occurrence of a
Default, the Bank, its officers, agents, attorneys, and accountants, may verify
Accounts and returned and repossessed Goods under reasonable procedures,
directly with the Account Debtor or by other methods, and the Borrower shall
furnish to the Bank upon request additional Schedules of Accounts, together with
all notes or other papers evidencing the same and any guaranty, securities or
other information relating thereto, and shall do, make and deliver all such
additional and further acts, things, deeds, assurances and instruments as the
Bank may reasonably require.

        Section 4.5    Collateral Account.    After the occurrence and during
the continuance of any Default or Unmatured Default, the Borrower (a) will, upon
the written request of the Bank, deposit all checks, drafts, cash remittances
and other Proceeds in payment of Accounts in a special collateral account
(“Collateral Account”) maintained with the Bank and thereafter keep segregated
any such checks, drafts, cash remittances or other Proceeds in trust for the
benefit of the Bank until deposited in the Collateral Account with the Bank; (b)
will, upon the written request of the Bank, note the security interest of the
Bank on all records relative to the Collateral including, without limitation,
any invoice which evidences an Account; (c) will, upon the written request of
the Bank, give notice of the Bank’s security interest to Account Debtor and
other obligors to the Borrower; (d) agrees that all checks and other Instruments
received by the Bank after the occurrence and during the continuance of any
Default or Unmatured Default as Proceeds of Accounts will be credited upon
receipt to the Liabilities in such order as the Bank may determine, subject to
final payment; and (e) will, whenever the Borrower obtains possession (by
return, repossession or otherwise) of any Goods, the sale or lease of which
shall have given rise to any of the Collateral, upon the Bank’s written request,
segregate, label and hold such Goods as subject to the security interest of the
Bank hereunder, and will, at its own expense, dispose of such Goods in such
manner as the Bank may from time to time direct. After the occurrence and during
the continuance of any Default or Unmatured Default, the Bank may notify any
Account Debtor to make payment directly to the Bank of any amounts due or to
become due and enforce the collection of any Accounts by suit or otherwise and
surrender, release or exchange all or any part thereof, or compromise or extend
or renew for a period (whether or not longer than the original period) any
indebtedness thereunder or evidenced thereby. Such notice may require the
Account Debtor or other obligor to pay the Account or other obligation directly
to the Bank. Any Proceeds shall be deposited in the form received except for the
endorsement of the Borrower where required, which endorsement the Bank is
authorized to make on the Borrower’s behalf and shall be held by the Bank as
security for all Liabilities, and the Bank may at any time and from time to time
apply all or any portion of the funds on deposit in the Collateral Account
against the Liabilities, the order of application to be at the discretion of the
Bank.

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        Section 4.6    Accounts Owed by the Federal Government.    If any
Account shall arise out of a contract with the United States of America, or any
department, agency, subdivision, or instrumentality thereof, the Borrower shall
promptly notify the Bank thereof in writing and shall take all other action
requested by the Bank to protect the Bank’s security interest in such Account
under the provisions of the federal Assignment of Claims Act, as amended.

        Section 4.7    Assignment of Security Interests.    If, at any time the
Borrower shall take and perfect a security interest in any property of an
Account Debtor or any other Person to secure payment or performance of an
Account, the Borrower shall promptly assign such security interest to the Bank.

Article 5.    AGREEMENTS CONCERNING CERTAIN COLLATERAL

        Section 5.1    Maintenance of Intellectual Property.    Unless otherwise
agreed in writing by the Bank, Borrower shall have the duty to do any and all
acts which are necessary to preserve and maintain all material rights in the
Intellectual Property. Borrower will give proper statutory notice in connection
with the use of its Intellectual Property. Borrower has used, and will continue
to use for the duration of this Agreement, consistent standards of quality in
its manufacture or creation of products sold under its trademarks. The Borrower
shall not abandon any of the Intellectual Property nor permit the expiration of
any material Intellectual Property registrations, except where occasioned by
non-use, without the written consent of the Bank. Borrower shall do any and all
acts reasonably required by the Bank to ensure Borrower’s compliance with this
Section 5.1. Any reasonable expenses incurred in connection with the
Intellectual Property shall be borne by Borrower.

        Section 5.2    After-Acquired Intellectual Property.    If the Borrower
obtains rights to any new Intellectual Property, the provisions of this Security
Agreement shall automatically apply thereto. With respect to any new
applications for Intellectual Property, the issuance of any new registration for
Intellectual Property, and renewals or extensions of any of the foregoing, the
Borrower shall give the Bank prompt written notice thereof in writing.

        Section 5.3    Opposition Proceedings.    Unless and until there shall
have occurred and be continuing a Default, Borrower shall retain the legal and
equitable title to the Intellectual Property and shall have the right to bring
any opposition proceedings, cancellation proceedings or lawsuit in its own name
to enforce, protect and use the Intellectual Property in the ordinary course of
its business, but shall not be permitted, except with the prior written consent
of the Bank, to sell, assign, transfer or otherwise encumber the Intellectual
Property, other than licensings or other dispositions in the ordinary course of
business or to resolve litigation or disputed claims brought or made by
unrelated parties.

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        Section 5.4    Verification of Intellectual Property.    After the
occurrence of a Default, the Bank, its officers, agents, attorneys and
accountants, may verify the Intellectual Property and all licenses and other
agreements with respect thereto, under reasonable procedures, directly with
licensees or by other methods, and the Borrower shall furnish to the Bank upon
request schedules of Intellectual Property and licenses, together with other
information relating thereto, and shall do, make and deliver all such additional
and further acts, things, deeds, assurances and instruments as the Bank may
reasonably require with respect to the Intellectual Property, including, without
limitation, the licenses. The Borrower shall promptly notify the Bank, if it
knows that any material application or registration relating to Intellectual
Property may become abandoned or dedicated to the public, or of any material
adverse determination or development (including any claim) regarding the
Intellectual Property or any material license with respect thereto, or regarding
its right to register, keep and maintain the same, or if it knows that a
material item of Intellectual Property is materially infringed or
misappropriated by a third party, and, in any such event, unless (a) the Bank,
or (b) the Board of Directors of the Borrower in the exercise of its reasonable
business judgment after having considered the advice of reputable intellectual
property counsel shall have determined that litigation is inappropriate or
unadvisable, promptly sue for infringement or misappropriation.

        Section 5.5    Supplemental Documentation.    Concurrently with the
execution of this Security Agreement, and from time to time hereafter upon
request of the Bank, the Borrower shall execute and deliver to the Bank
supplemental security agreements relating to any or all registered patents,
trademarks, tradenames, copyrights and applications for any of the foregoing, in
a form satisfactory to the Bank and suitable for recording in the records of the
registering Governmental Authority.

        Section 5.6    Contracts and Leases.    The Borrower shall perform, when
due, each of its obligations under all contracts, leases and other agreements
(including, without limitation, all license agreements) to which the Borrower is
a party, and, immediately upon learning of any material default by any party
under any such contract, lease or other agreement, the Borrower shall give
written notice thereof to the Bank, together with a description as to the nature
and status thereof. After the occurrence of any Default or Unmatured Default,
the Borrower shall not amend, modify, supplement or otherwise agree to any
change in any contract, lease or other agreement or waive any provision thereof,
without the prior written consent of the Bank.

        Section 5.7    Deposit Accounts.    The Borrower will (i) upon the
Bank’s request, cause each bank or other financial institution in which it
maintains (a) a Deposit Account to enter into a control agreement with the Bank,
in form and substance satisfactory to the Bank in order to give the Bank Control
of the Deposit Account or (b) other deposits (general or special, time or
demand, provisional or final) to be notified of the security interest granted to
the Bank hereunder and cause each such bank or other financial institution to
acknowledge such notification in writing, and (ii) upon the Bank’s request after
the occurrence and during the continuance of a Default, deliver to each such
bank or other financial institution a letter, in form and substance acceptable
to the Bank, transferring ownership of the Deposit Account to the Bank or
transferring dominion and control over each such other deposit to the Bank until
such time as no Default exists.

        Section 5.8    Letter-of-Credit Rights.    The Borrower will, upon the
Bank’s request, cause each issuer of a letter of credit to consent to the
assignment of proceeds of the letter of credit in order to give the Bank Control
of the letter-of-credit rights to such letter of credit.

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        Section 5.9    Uncertificated Securities.    The Borrower will permit
the Bank from time to time to cause the appropriate issuers (and, if held with a
securities intermediary, such securities intermediary) of uncertificated
securities which are Collateral to mark their books and records with the numbers
and face amounts of all such uncertificated securities and all rollovers and
replacements therefor to reflect the Lien of the Bank granted pursuant to this
Security Agreement. The Borrower will take any actions necessary to cause the
issuers of uncertificated securities which are Collateral and which are
Securities to cause the Bank to have and retain Control over such Securities.

        Section 5.10    Stock and Other Ownership Interests.

          (a)        Changes in Capital Structure of Issuers.    The Borrower
will not (i) cause any issuer of privately held corporate securities or other
ownership interests in a corporation, partnership, joint venture or limited
liability company constituting Collateral to dissolve, liquidate, retire any of
its capital stock or other Instruments or Securities evidencing ownership,
reduce its capital or merge or consolidate with any other entity, or (ii) vote
any of the Instruments or Securities in favor of any of the foregoing.

          (b)         Issuance of Additional Securities.    The Borrower will
not cause the issuer of privately held corporate securities or other ownership
interests in a corporation, partnership, joint venture or limited liability
company constituting Collateral to issue any such securities or other ownership
interests, any right to receive the same or any right to receive earnings,
except to the Borrower.

          (c)         Registration of Pledged Securities.    The Borrower will
permit any registerable Collateral to be registered in the name of the Bank or
its nominee at any time after the occurrence of a Default or at any time if
necessary to perfect the Bank’s security interest in such registerable
Collateral.

        (d)         Exercise of Rights in Pledged Securities.    The Borrower
will permit the Bank or its nominee at any time after the occurrence of a
Default, without notice, to exercise all voting and corporate rights relating to
the Collateral, including, without limitation, exchange, subscription or any
other rights, privileges, or options pertaining to any corporate securities or
other ownership interests in or of a corporation, partnership, joint venture or
limited liability company constituting Collateral and the Stock Rights as if it
were the absolute owner thereof.

Article 6.    AGREEMENTS CONCERNING INVENTORY

        Section 6.1    Locations.    Borrower will give the Bank written notice
of each location at which Inventory is or will be kept at all times. Except
where such notice is given and except for Inventory sold in the ordinary course
of business, all Inventory is and shall be kept at the locations set forth on
Schedule 3 hereto.

        Section 6.2    Sales of Inventory.    The Borrower may, in the ordinary
course of business, at its own expense, sell, lease or furnish under contracts
of sale or service, any of the Inventory normally held by the Borrower for such
purpose (a sale in the ordinary course of business does not include a transfer
in total or partial satisfaction of a debt), and use and consume, in the
ordinary course of business, any raw materials, work-in-process or materials
normally held by it for such purpose.

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        Section 6.3    Condition of Inventory; Books and Records.    Borrower
shall keep all Inventory in good order and condition and shall maintain full,
accurate and complete books and records with respect to Inventory at all times.

        Section 6.4    Warehousemen and Landlords.    Borrower shall not store
any material portion of its Inventory with any bailee, warehouseman, or similar
party without the Bank’s prior written consent. If Inventory is so stored,
Borrower will, concurrently with storing such Inventory, cause such bailee,
warehouseman, or similar party to issue and deliver to the Bank, in a form
acceptable to the Bank, warehouse receipts in the Bank’s name evidencing the
storage of the Inventory. The Borrower shall provide the Bank with copies of all
agreements between the Borrower and any bailee, warehouseman, or similar party
and shall deliver to the Bank a landlord’s or warehouseman’s lien waiver in a
form acceptable to the Bank, prior to entering into any material lease for
warehouse storage or business facilities.

        Section 6.5    Consigned Inventory.    If at any time any of the
Inventory is placed by the Borrower on consignment with any consignee, Borrower
shall, prior to delivery of such consigned Inventory, (a) provide Bank with all
consignment agreements and other instruments and documentation to be used in
connection with such consignment (all of which shall be in a form acceptable to
the Bank); (b) prepare, execute and file appropriate financing statements with
respect to any consigned Inventory showing the consignee as debtor, the Borrower
as secured party, and the Bank as assignee of the secured party; (c) prepare,
execute and file appropriate financing statements with respect to any consigned
Inventory showing the Borrower, as debtor, and the Bank, as secured party; (d)
conduct a search of all UCC filings made against the consignee in all
jurisdictions in which Inventory to be consigned is to be located while on
consignment, and furnish copies of such results to the Bank; and (e) notify in
writing all creditors of the consignee that are or may be holders of security
interests in the Inventory to be consigned that the Borrower expects to deliver
certain Inventory to the consignee.

        Section 6.6    Compliance with Law.    Borrower shall substantially
comply in all material respects with all federal, state and local laws,
regulations, rulings and orders applicable to the Borrower for its assets or
business. Without limiting the generality of the foregoing, Borrower shall
comply with all requirements of the federal Fair Labor Standards Act, as
amended, in the conduct of its business and the production of Inventory.
Borrower shall notify the Bank immediately of any violation by Borrower of the
Fair Labor Standards Act, and the absence of such notice shall constitute
Borrower’s continuing representation that all Inventory then existing has been
produced in compliance with the Fair Labor Standards Act.

Article 7.    AGREEMENTS CONCERNING EQUIPMENT

        Section 7.1    Locations.    Borrower will give the Bank written notice
of each location at which Equipment is or will be kept at all times. Except
where such notice is given, the Equipment will be kept at locations set forth on
Schedule 3 hereto. Schedule 3 sets forth all locations at which Equipment of the
Borrower is located and the name and owner of record of the real estate at each
location if the Borrower is not the owner of record.

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        Section 7.2    Condition.    The Borrower will keep the Equipment in
good order and repair, ordinary wear and tear excepted, and will not waste or
destroy the Equipment or any portion thereof, except in the case of obsolete
Equipment which is no longer used or useful in Borrower’s business.

        Section 7.3    Titled Equipment.    If Borrower now or hereafter has any
vehicles, aircraft, watercraft, or other Equipment for which a certificate of
title has been issued by a Governmental Authority, the Borrower shall
immediately deliver to the Bank, properly endorsed, each certificate of title or
application for title or other evidence of ownership for each such item of
Equipment, and the Borrower shall take all actions necessary to have the Bank’s
security interest properly recorded on each such certificate of title and shall
take all other steps necessary to perfect the Bank’s security interest in such
Equipment.

        Section 7.4    Compliance with Laws.    The Borrower will not use the
Equipment in material violation of any statute, rule, regulation or ordinance or
any policy of insurance thereon. Borrower will neither use the Equipment nor
permit the Equipment to be used, for any unlawful purpose or contrary to any
statute, law, ordinance or regulation relating to the registration, use,
operation or control of the Equipment.

        Section 7.5    Transfers of Equipment.    Borrower may from time to time
substitute Equipment, provided that (a) the substituted Equipment is not subject
to any lien or other encumbrance and has a fair market value at least equal to
the fair market of the Equipment for which it is substituted; (b) the
marketability and operating integrity of Borrower’s Equipment after such
substitution is not impaired; (c) the Equipment substituted for is no longer
used or useful in the operation of Borrower’s business and is sold in arm’s
length transaction in exchange for money or money’s worth at least equal to the
fair market value of such Equipment substituted for; and (d) no Default or
Unmatured Default has occurred and is continuing.

        Section 7.6    Fixtures.    The Borrower shall not permit any item of
Equipment to become a Fixture to real estate or an accession to any other
property not subject to the Bank’s security interest herein without the prior
written consent of the Bank.

Article 8.    GENERAL PROVISIONS CONCERNING COLLATERAL

        Section 8.1    Title to After-Acquired Collateral.    All Collateral
acquired after the date hereof will be acquired by the Borrower free of any
lien, security interest or encumbrance, except Permitted Encumbrances.

        Section 8.2    Further Assurances.    The Borrower agrees to do such
reasonable acts and things and deliver or cause to be delivered such other
documents as the Bank may deem necessary to establish and maintain a valid
security interest in the Collateral (free of all other liens and claims except
Permitted Encumbrances) to secure the payment and performance of the Liabilities
and to defend title to the Collateral against any Person claiming any interest
therein adverse to the Bank. The Borrower authorizes the Bank, at the expense of
the Borrower, to execute and file a financing statement or statements on its
behalf in those public offices deemed advisable or necessary by the Bank to
protect the security interests of the Bank herein granted. If permitted by law,
the Borrower agrees that a carbon, photographic or other reproduction of this
Security Agreement or of a financing statement may be filed as a financing
statement.

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         Section 8.3    Insurance.

 
        (a)         The Borrower shall have and maintain at all times, with
respect to Inventory and Equipment, insurance written by companies acceptable to
the Bank covering risks customarily insured against by companies engaged in
business similar to that of the Borrower in reasonable amounts, containing such
terms, in such form, and for such periods customarily maintained by companies
engaged in business similar to that of the Borrower. Such insurance shall be
payable to the Borrower and the Bank as their interests may appear.

 
        (b)         In addition to the insurance requirements set forth in
Section 8.3(a), the Borrower will carry any other insurance and amounts for
periods as may be reasonably required by the Bank, and will deliver to the Bank,
not less than five (5) days prior to the expiration of any such policy of
insurance, renewals or new policies in like amounts covering the same risks.

 
        (c)         All such insurance policies shall carry standard,
non-contributory lender’s loss payable clauses and breach of warranty
endorsements, in favor of the Bank. The insurance certificates evidencing the
Borrower’s compliance with the above shall be deposited with the Bank, and in
the event the Borrower fails to file and maintain such insurance, the Bank may,
at its option, purchase such insurance and the cost of such insurance shall
become a Liability secured by these presents and all sums expended shall bear
interest at the highest Default rate of interest set forth in the Credit
Agreement until paid. If requested by the Bank, the Borrower shall deliver
certified copies of such policies to the Bank. The Borrower shall pay all
insurance premiums promptly when due and shall provide substitute policies of
insurance should the Bank at any time reject, for reasonable cause, any such
policies of insurance furnished by the Borrower. The Borrower hereby assigns to
the Bank the proceeds of all such insurance, including, without limitation, any
premium refunds, to the extent of the Liabilities, shall direct the insurer to
make payment of any losses or refunds directly to the Bank, and appoints the
Bank its attorney-in-fact to endorse any draft, check or other form of payment
made by such insurer. So long as there then exists no Default, the Bank shall
remit any insurance proceeds less than Two Hundred Thousand Dollars ($200,000)
to the Borrower. Any insurance proceeds not remitted to the Borrower shall be
applied to the outstanding Liabilities, in the order of preference determined by
the Bank.

        Section 8.4    Collection of Collateral.    The Borrower will, at its
own expense, endeavor to collect, as and when due, all amounts due with respect
to any Collateral including the taking of such action with respect to such
collection as the Bank may reasonably request or, in the absence of such
request, as the Borrower may deem advisable.

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        Section 8.5    Bank May Defend Title.    In the event the Borrower fails
to pay any taxes, assessments, premiums, or fees, or fails to discharge any
liens or claims against the Collateral required to be paid or discharged by the
Borrower, or fails to purchase, maintain and file with the Bank any insurance
required by this Security Agreement, or if any such insurance is inappropriate
to the situation, in the Bank’s reasonable discretion, the Bank may, without
demand or notice, pay any such taxes, assessments, premiums or fees, or pay,
acquire, satisfy or discharge any liens or claims asserted against the
Collateral (without any obligation to determine the validity thereof), or
purchase any such insurance. All sums so expended by the Bank shall become a
Liability secured by these presents and shall bear interest at the highest
Default rate of interest set forth in the Credit Agreement until paid.

        Section 8.6    Negotiable Collateral.    If any Collateral, including
Proceeds, consists of a letter of credit, advice of credit, Instrument,
certificates of deposit, negotiable Documents, chattel paper or similar
property, the Borrower shall, immediately upon receipt thereof, endorse and
assign such Collateral, and deliver actual physical possession thereof, to the
Bank, and prior to such delivery, shall hold such property in trust for the
Bank. Schedule 5 hereto is a true and correct list of all such negotiable
Collateral owned by the Borrower, other than money. The Borrower will give the
Bank written notice each time it acquires such additional negotiable Collateral,
other than money.

        Section 8.7    Contracts.    The Borrower shall remain liable to perform
its obligations under any contracts included in the Collateral to the extent as
though this Security Agreement had not been entered into, and the Bank shall not
have any obligation under any such contracts by reason of this Agreement.

        Section 8.8    Accounting System.    Borrower shall maintain a standard
and modern system of accounting in accordance with GAAP which contains
information pertaining to the Collateral that may from time to time be requested
by the Bank.

        Section 8.9    Inspection of Collateral and Records.    During
Borrower’s usual business hours, the Bank may inspect and examine the Collateral
and check and test the same as to quality, quantity, value, and condition. The
Bank shall also have the right at any time or times hereafter, during Borrower’s
usual business hours or during the usual business hours of any third party
having control over the records of the Borrower, to inspect Borrower’s books and
records in order to verify the amount or condition of, or any other matter
relating to, the Collateral and Borrower’s financial condition and to copy and
make extracts from such books and records. Borrower waives the right to assert a
confidential relationship, if any, it may have with any accounting firm in
connection with any information requested by the Bank pursuant to this Security
Agreement and agrees that the Bank may directly contact any such accounting firm
in order to obtain such information.

        Section 8.10    Transfer of Collateral.    Borrower shall not sell,
lease, license, transfer or otherwise dispose of any interest in any Collateral
except (a) sales of Inventory in the ordinary course of business pursuant to
Section 6.2, (b) licensings and other dispositions of Intellectual Property in
the ordinary course of business pursuant to Section 5.3, (c) dispositions of
Equipment in accordance with Section 7.5, and (d) the writeoff of uncollectible
Accounts in the ordinary course of business.

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Article 9.    REMEDY

        Section 9.1    Remedies Generally; Power of Sale.    Upon the occurrence
of any Default and at any time thereafter, the Bank shall have all rights and
remedies available at law or in equity including, without limitation, the rights
and remedies of a secured party under the Indiana Uniform Commercial Code, as in
effect from time to time (regardless of whether the Code has been enacted in the
jurisdiction where rights or remedies are asserted), including, without
limitation, the right to take possession of the Collateral, and for that purpose
the Bank may, so far as the Borrower can give authority therefor, enter upon any
premises on which the Collateral may be situated and remove the same therefrom.
The Bank shall give to the Borrower at least ten (10) days’ prior written notice
of the time and place of any public sale of Collateral or of the time after
which any private sale or any other intended disposition is to be made. The Bank
may in its discretion transfer any securities or other property constituting
Collateral into its own name or that of its nominee and receive the income
thereon and hold the same as security for Liabilities or apply it on principal
or interest due on Liabilities. In the event that the Bank takes possession of
any Intellectual Property, the goodwill associated with any trademarks,
tradenames, trade dress, and service marks of the Borrower shall be transferred
to the Bank.

        Section 9.2    Deposits.    Any and all Deposit Accounts, deposits or
other sums at any time credited by or due from the Bank to the Borrower shall at
all times constitute security for any and all Liabilities, and the Bank may
apply or set off such deposits or other sums against Liabilities at any time in
Default whether or not the Liabilities are then due or other Collateral is
considered by the Bank to be adequate.

        Section 9.3    Waiver and Amendment.    Except as otherwise expressly
set forth herein, to the extent permitted by law, the Borrower waives demand,
notice, protest, notice of acceptance of this Security Agreement, notice of
loans made, credit extended, Collateral received or delivered or other action
taken in reliance hereon and all other demands and notices of any description.
With respect to both Liabilities and Collateral, the Borrower assents to any
extension or postponement of the time of payment or any other indulgence, to any
substitution, exchange, or release of Collateral, to the addition or release of
any party or person primarily or secondarily liable, to the acceptance of
partial payments thereon and the settlement, compromise or adjustment of any
thereof, all in such manner and at such time or times as the Bank may deem
advisable. Except as otherwise provided by law, the Bank shall have no duty as
to the collection or protection of the Collateral, or any income therefrom, nor
as to the preservation of rights against prior parties nor as to the
preservation of any rights pertaining thereto beyond the safe custody thereof.
The Bank may exercise its rights with respect to Collateral without resorting or
regard to other Collateral or sources of reimbursement for any Liability. The
Bank shall not be deemed to have waived any of these rights upon or under
Liabilities or Collateral unless such waiver be in writing and signed by the
Bank. No delay or omission on the part of the Bank in exercising any right shall
operate as a waiver of such right or any other right. A waiver on any one
occasion shall not be construed as a bar to the exercise of any right on any
future occasion. All rights and remedies of the Bank as to the Liabilities or
Collateral whether evidenced hereby or by any other instrument or papers shall
be cumulative and may be exercised singly, successively or together. The Bank
may, from time to time, without notice to the Borrower (a) retain or obtain a
security interest in any property of any other Person, in addition to the
Collateral, to secure any of the Liabilities; (b) retain or obtain the primary
or secondary liability of any party or parties, in addition to the Borrower with
respect to any of the Liabilities; (c) extend or renew for any period (whether
or not longer than the original period) or release or compromise any liability
of any party or parties primarily or secondarily liable to the Bank under the
Credit Agreement; (d) release its security interest in any of the property
securing any of the Liabilities and permit any substitution or exchange for any
such property; and (e) resort to the Collateral for the payment of any of the
Liabilities whether or not it shall have resorted to any other property or shall
have proceeded against any party primarily or secondarily liable for any of the
Liabilities. The Bank shall not, under any circumstances, or in any event
whatsoever, have any liability for any error or omission or delay of any kind
occurring in the liquidation of any Collateral, including the settlement or
collection of any Account or for any damage resulting therefrom, except
liability resulting from any act or omission by the Bank which constitutes
wilful misconduct. This Security Agreement may be amended only by a writing duly
signed by the Bank and the Borrower.

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        Section 9.4    Expenses; Proceeds of Collateral.    The Borrower shall
pay to the Bank on demand any and all reasonable out-of-pocket expenses,
including reasonable attorneys’ fees, incurred or paid by the Bank in protecting
the Collateral or the existence, perfection or priority of the Bank’s security
interest therein. After deducting all of such expenses, the residue of any
Proceeds of collection or sale of the Collateral shall be applied to the payment
of principal or interest on Liabilities in such order of preference as the Bank
may determine, and any excess shall be returned to the Borrower.

        Section 9.5    Power of Attorney.    The Borrower hereby irrevocably
appoints the Bank and the Bank’s designees from time to time its true and lawful
attorneys-in-fact, with full power of substitution in the premises upon the
occurrence of a Default (a) to demand, collect, receipt for, settle, compromise,
adjust, sue for, foreclose or realize upon the Collateral in such manner as the
Bank may determine, whether or not the Collateral is then due; (b) to receive,
open, and dispose of mail addressed to the Borrower; (c) to endorse notes,
checks, drafts, money orders, Documents or other evidences of payment, shipment
or storage or any form of Collateral on behalf of and in the name of the
Borrower; (d) to sign and send on behalf of the Borrower any invoice or bill of
lading relating to any Account, on drafts against customers, on schedules and
assignments of Accounts, on notices of assignment, financing statements and
other public records, on verifications of Accounts and on notices to customers;
(e) to sign the Borrower’s name to the proofs of claim against any Account
Debtor on behalf of the Borrower; (f) to notify the post office authorities to
change the address for delivery of the Borrower’s mail to an address designated
by the Bank; (g) to endorse Borrower’s name on all applications, documents,
papers, certificates and instruments necessary or expedient for the Bank to use
the Intellectual Property, or necessary or expedient to grant or issue any
exclusive or nonexclusive license under the Intellectual Property to anyone
else, or necessary or expedient for the Bank to assign, pledge, convey or
otherwise transfer title in, or dispose of, the Intellectual Property to anyone
else, for the purpose of recording, registering, filing or accomplishing any
other formula with respect to the Intellectual Property; and (h) to do all
things necessary to carry out this Security Agreement. The Borrower hereby
ratifies and approves all acts of such attorneys. Neither the Bank nor any
attorney will be liable for any acts or omissions nor for any error of judgment
or mistake of fact or law, absent gross negligence, bad faith or wilful
misconduct. This power, being coupled with an interest, is irrevocable until the
Liabilities have been fully satisfied. Notwithstanding anything herein to the
contrary, no attorney acting pursuant to this Section 9.5 shall have any
authority to confess judgment on behalf of the Borrower.

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        Section 9.6    License.    Borrower hereby grants to the Bank a license
to use, without charge, Borrower’s Intellectual Property and other Collateral in
completing production of, advertising for sale, or selling any Collateral after
any Default, and all of the Borrower’s rights under all licenses and franchise
agreements shall, in such event, inure to the Bank’s benefit. In addition, the
Borrower shall, upon request by the Bank, make available such personnel in
Borrower’s employ on the date of any Default as the Bank may reasonably
designate to permit the Bank to continue, directly or indirectly, to produce,
advertise and sell the Collateral sold by the Borrower under any Intellectual
Property or license. The license herein shall include the right of the Bank to
use, assign, license or sublicense any of the Borrower’s Intellectual Property,
including in such license reasonable access as to all media in which any of the
licensed items may be recorded or stored; provided that the Bank shall comply
with all pre-existing quality control standards and trademark use requirements
of the Borrower. No agreements hereafter entered into by the Borrower shall
prohibit, restrict or impair the rights of the Bank granted hereunder.

        Section 9.7    Reinstatement.    If, at any time after payment in full
by the Borrower of all Liabilities and termination of the Bank’s security
interest, any payments on the Liabilities previously made by the Borrower or any
other Person must be disgorged by the Bank for any reason whatsoever, including,
without limitation, the insolvency, bankruptcy or reorganization of the Borrower
or such Person, this Security Agreement and the Bank’s security interests herein
shall be reinstated as to all disgorged payments as though such payments had not
been made, and the Borrower shall sign and deliver to the Bank all documents,
and shall do such other acts and things, as may be necessary to re-perfect the
Bank’s security interest.

        Section 9.8    No Marshaling.    The Borrower, on its own behalf and on
behalf of its successors and assigns, hereby expressly waives all rights, if
any, to require a marshaling of assets by the Bank or to require the Bank’s
first resort to some or any portion of the Collateral before foreclosing upon,
selling or otherwise realizing on any other portion thereof.

Article 10.    MISCELLANEOUS PROVISIONS

        Section 10.1    Priority.    Unless otherwise expressly provided, the
security interest hereby created shall be pro rata on par with any prior
security interests in the Collateral now or hereafter existing in favor of the
Bank.

        Section 10.2    Governing Law.    This Security Agreement and all rights
and obligations hereunder, including matters of construction, validity and
performance, shall be governed by the Uniform Commercial Code and other
applicable laws of the State of Indiana, without regard to conflict of law
principles.

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        Section 10.3    Severability.    Whenever possible each provision of
this Security Agreement shall be interpreted in such a manner as to be effective
and valid under applicable law, but if any provision of this Security Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition without invalidating the
remainder of such provision or the remaining provisions of this Security
Agreement. The Borrower recognizes that the Bank has relied on this Security
Agreement in extending credit to the Borrower and agrees that such reliance by
the Bank shall be sufficient consideration for this Security Agreement.

        Section 10.4    Binding on Successors.    The rights and privileges of
the Bank shall inure to the benefit of its respective successors and assigns.

        Section 10.5    Chattel Mortgage.    This Security Agreement shall also
constitute a chattel mortgage and an assignment of rents.

        Section 10.6    Amendment and Restatement.    This Security Agreement
amends and restates that certain Security Agreement from Borrower to Bank dated
October 29, 2002.

        Section 10.7    Waiver Of Jury Trial.    Bank And Borrower, After
Consulting Or Having Had The Opportunity To Consult With Counsel, Knowingly,
Voluntarily, Intentionally, Irrevocably And Unconditionally 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.

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

  BIOANALYTICAL SYSTEMS, INC.,
an Indiana corporation

By:  /s/  Michael R. Cox

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Printed:  Michael R. Cox

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Title:  VP—Finance

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STATE OF INDIANA )   )  SS: COUNTY OF MARION )

        Before me, a Notary Public in and for said County and State, personally
appeared Michael R. Cox, known to me to be the VP—Finance of BIOANALYTICAL
SYSTEMS, INC., and acknowledged the execution of the foregoing for and on behalf
of said corporation.

        Witness my hand and Notarial Seal, this 3rd day of January, 2005.

My Commission Expires:

Juy 17, 2008

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ACCEPTED: /s/  Jeri A. Ungersha

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Notary Public - Signature

Jeri A. Ungersha

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Notary Public - Printed

My County of Residence:

Tippecanoe

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  NATIONAL CITY BANK OF INDIANA

By:  /s/  Michael Callas

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Printed:  Michael Callas

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Title:  Vice President

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AMENDED AND RESTATED GENERAL SECURITY AGREEMENT                            
                                                                     
                            PAGE 19

SCHEDULE 1

Former Names, Assumed Names
and Tradenames of Borrower

BAS

BASi

Prior Combinations

The Borrower purchased 100% of the outstanding shares of Vetronics, Inc.
pursuant to that certain Stock Purchase Agreement, dated as of or about October
27, 1997, by and among the Borrower and Janet R. Andre' Bootsma, Dr. Walt
Weirich, Dr. Clare McGillem, Dr. Alan Pritsker, Dr. Jorge Aunon and David
Wortma.

The Borrower purchased 100% of the outstanding shares of T.P.S., Inc. pursuant
to that certain Share Purchase Agreement, dated as of December 9, 1999, by and
among the Borrower, James A. Botta, Jr., Jarilyn B. Botta, Robert B. Botta,
Deryl T. Botta and Sheryl B. Abreu. The Borrower subsequently changed the name
of this entity to BAS Evansville, Inc.

Bioanalytical Systems Limited (a wholly-owned subsidiary of the Borrower)
purchased 100% of the outstanding shares of Clinical Innovations Ltd. pursuant
to that certain Share Purchase Agreement, dated as of July 9, 1998, by and among
Bioanalytical Systems Limited, James B. Spence, Carol Anne Green, Bryan Green
and John Cooper.

The Borrower purchased 100% of the outstanding shares of LC Resources Inc.
pursuant to that certain Stock Purchase Agreement, dated as of December 13,
2002, by and among the Borrower, LC Resources Inc., John W. Dolan, Snyder Family
Trust UDT, Thomas H. Jupille, and Derek L. Sourthern. The Borrower changed the
name of this entity to BASi Northwest Laboratory, Inc.

The Borrower and PI Acquisition Corp., a Maryland corporation and wholly-owned
subsidiary of Borrower, entered into a Merger Agreement with PharmaKinetics
Laboratories, Inc., a Maryland corporation, whereby PharmaKinetics Laboratories,
Inc. was merged with and into PI Acquisition Corp. and PharmaKinetics
Laboratories, Inc. was the surviving corporation. Pursuant to the Merger
Agreement, dated as of June 20, 2002, all outstanding shares of PharmaKinetics
Laboratories, Inc. common stock were terminated and shareholders were issued
Borrower’s common shares. The Borrower subsequently changed the name of
PharmaKinetics Laboratories, Inc. to BASi Maryland, Inc.

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AMENDED AND RESTATED GENERAL SECURITY AGREEMENT

SCHEDULE 2

Trademark and Trademark Applications and Copyright Registrations

Application or
Registration No. Trademark Country       Registration
Date 2,083,635  BAS (Stylized) United States 07/29/1997 1,461,414  BAS ANALYTICS
(Stylized) United States 10/13/1987 2,431,031  CULEX United States 02/27/2001
76/424,603 EMPIS United States 08/03/2004 76/440,731 EMPIS (and Design) United
States 08/03/2004 1,902,141  UNIJET United States 06/27/1995 TX4-877-335 Raturn
v1.0 (copyright) n/a 10/19/1998

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AMENDED AND RESTATED GENERAL SECURITY AGREEMENT

SCHEDULE 2 (Cont’d)

Patents

Title Patent No. Issue Date Serial No. Filed Country   Linear Microdialysis
5,706,806  01/13/1998 08/638,642 04/26/1996 United States Probe with Support
Fiber   Electrochemical 5,399,256  03/21/1995 08/178,913 01/07/1994 United
States Detector Cell   Movement-
Responsive
System for Conducting
Tests on Freely-Moving
Animals 0,872,179  02/12/2003 97310046.4 12/12/1997 European
Patent
Convention   Movement-
Responsive
System for Conducting
Tests on Freely-Moving
Animals published  published 99307384 09/17/1999 European
Patent
Convention   Movement- published  published 106661/98 04/16/1998 Japan
Responsive System for Conducting Tests on Freely-Moving Animals   Movement-
5,816,256  10/06/1998 08/839,299 04/17/1997 United States System for Conducting
Tests on Freely-Moving Animals   Movement- 6,062,224  05/16/2000 09/156,459
09/18/1998 United States System for Conducting Tests on Freely-Moving Animals  
Movement- DK/EP 0,872,179  02/12/2003 97310046.4 12/12/1997 Denmark System for
Conducting Tests on Freely-Moving Animals   Movement- 0,872,179(E) 02/24/2003
97310046.4 12/12/1997 Spain System for Conducting Tests on Freely-Moving Animals
  Movement- 0,872,179(E)   97310046.4 12/12/1997 Belgium System for Conducting
Tests on Freely-Moving Animals

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AMENDED AND RESTATED GENERAL SECURITY AGREEMENT

SCHEDULE 2 (Cont’d)

Registered Copyrights

Patents

Title Patent No. Issue Date Serial No. Filed Country   Pinch Value published
published 10/175,580 06/19/2002 United States and Method of Operating Same  
Device, System 6,557,898 05/06/2003 09/804,900 03/13/2001 United States and
Method for Labeling Three-Dimensional Objects   Device, System and
Method for Labeling
Three-Dimensional
Objects published published WO 02/072365 A1 03/11/2002 World
Intellectual
Property
Organization   Device and Method pending pending 60/393,738 07/03/2002 United
States Electrocardiology on Freely Moving Animals   Device and Method pending
pending 60/393,816 07/03/2002 United States Drug Delivery to Animals

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AMENDED AND RESTATED GENERAL SECURITY AGREEMENT

SCHEDULE 2 (Cont’d)

Licenses

Name of Licensee Licensed
Mark Date of
License Expiration
Date

There are no licenses that are for products, services, or intellectual property
that generate revenues for Borrower (i.e., numerous user software licenses are
not included herein).

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AMENDED AND RESTATED GENERAL SECURITY AGREEMENT

SCHEDULE 3

Location of Collateral

Equipment Locations:

Bioanalytical Systems, Inc.
2701 Kent Avenue
West Lafayette, Indiana 47906

BAS Evansville, Inc.
1024 Middle Mt. Vernon Road
Mount Vernon, Indiana 47620

BASi Northwest Laboratory, Inc.
2075 Lafayette Avenue
McMinnville, Oregon 97128

BASi Maryland, Inc.
302 West Fayette Street
Baltimore, Maryland 21201

Inventory Locations:

Bioanalytical Systems, Inc.
2701 Kent Avenue
West Lafayette, Indiana 47906

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AMENDED AND RESTATED GENERAL SECURITY AGREEMENT

SCHEDULE 4

Investment Property

A.    U.S. CERTIFICATED SECURITIES:

Issuer Issuer's
Organization Certificate
Number Number of
Shares Owned Number of
Shares Pledged Percentage
of Shares
Pledged   BAS
Evansville, Inc.   1 294 294 100%   BAS
Maryland, Inc.   100%   BAS Northwest
Laboratory, Inc.   100%

B.    NON-U.S. CERTIFICATED SECURITIES (“FOREIGN SUBSIDIARIES”)

Issuer Issuer's
Organization Certificate
Number Number of
Shares Owned Number of
Shares Pledged Percentage
of Shares
Pledged   Bioanalytical
Systems, Ltd.   65%   BAS
Instruments, Ltd.   65%   BAS Analytics, Ltd.   65%

C.    UNCERTIFICATED SECURITIES:

Issuer Issuer’s
Organization Description of Collateral Percentage Ownership Interest

None

D.    SECURITY ENTITLEMENTS:

None

E.    SECURITY ACCOUNTS:

None

F.    COMMODITY CONTRACTS:

None

G.    COMMODITY ACCOUNTS:

None

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AMENDED AND RESTATED GENERAL SECURITY AGREEMENT

SCHEDULE 5

Negotiable Collateral

None

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AMENDED AND RESTATED GENERAL SECURITY AGREEMENT