Document:

Amended and Restated Credit Agreement

AMENDED AND RESTATED CREDIT
AGREEMENT

between

BIOANALYTICAL SYSTEMS, INC.

and

NATIONAL CITY BANK OF INDIANA

Dated as of January 4, 2005

TABLE OF CONTENTS

			
	Article 1	Definitions	6 
	   Section 1.1	Defined Terms	6 
	   Section 1.2	Rules of Construction	17 
	   Section 1.3	Accounting Terms	18 
	Article 2	Credit	18 
	   Section 2.1	Line of Credit Commitment	18 
	   Section 2.2	Interest; Unused Fees and Rate Selection	18 
	      2.2.1	Line of Credit - Interest	18 
	      2.2.2	General	18 
	      2.2.3	Unused Fee/Reduction of Line of Credit Commitment	18 
	      2.2.4	Interest Rate Selection — Eurodollar Rate Option	19 
	   Section 2.3	Payments of Principal and Interest	19 
	      2.3.1	Line of Credit	19 
	      2.3.2	Method of Payment	19 
	      2.3.3	Banking Day	20 
	   Section 2.4	Issuance of Letters of Credit	20 
	   Section 2.5	Unconditional Reimbursement Obligation	21 
	   Section 2.6	Risk of Misuse of Letter of Credit	21 
	   Section 2.7	Prepayment/Exit Fee	22 
	   Section 2.8	Use of Proceeds	22 
	   Section 2.9	Method of Advance	22 
	      2.9.1	Line of Credit	22 
	      2.9.2	General	23 
	   Section 2.10	Taxes	23 
	      2.10.1	General	23 
	      2.10.2	Tax Indemnity	23 
	   Section 2.11	Yield Protection	23 
	   Section 2.12	Changes in Capital Adequacy Regulations	24 
	   Section 2.13	Funding Indemnification	25 
	   Section 2.14	Availability of Types of Advances	25 
	   Section 2.15	Bank Statements; Survival of Indemnity	25 
	Article 3	Security and Guaranty	25 
	   Section 3.1	Security	25 
	   Section 3.2	Addition of Guarantors; Addition of Pledged Capital Stock and other Collateral	26 
	   Section 3.3	Additional Collateral/Setoff	26 
	Article 4	Representations and Warranties	27 
	   Section 4.1	Due Organization	27 
	   Section 4.2	Due Qualification	27 
	   Section 4.3	Corporate Power	27 
	   Section 4.4	Corporate Authority	27 
	   Section 4.5	Financial Statements	27 
	   Section 4.6	No Material Adverse Change	27 
	   Section 4.7	Subsidiaries	27 
	   Section 4.8	Binding Obligations	27 

			
	   Section 4.9	Marketable Title	28 
	   Section 4.10	Indebtedness	28 
	   Section 4.11	Default	28 
	   Section 4.12	Tax Returns	28 
	   Section 4.13	Litigation	28 
	   Section 4.14	ERISA	28 
	   Section 4.15	Full Disclosure	28 
	   Section 4.16	Contracts of Surety	29 
	   Section 4.17	Licenses	29 
	   Section 4.18	Compliance with Law	29 
	   Section 4.19	Force Majeure	29 
	   Section 4.20	Margin Stock	29 
	   Section 4.21	Approvals	29 
	   Section 4.22	Insolvency	30 
	   Section 4.23	Regulation	30 
	   Section 4.24	Environmental Matters	30 
	   Section 4.25	Conditions Precedent	32 
	   Section 4.26	General	32 
	Article 5	Covenants	32 
	   Section 5.1	Negative Covenants	32 
	      5.1.1	Dispose of Collateral	32 
	      5.1.2	Further Encumber	32 
	      5.1.3	Conduct of Business; Subsidiaries; Acquisitions	32 
	      5.1.4	Purchase Stock	32 
	      5.1.5	Sell and Leaseback	33 
	      5.1.6	Borrowings/Subordinated Debt Payments	33 
	      5.1.7	Investments	33 
	      5.1.8	Guarantees	33 
	      5.1.9	Change Name or Place of Business	33 
	      5.1.10	Special Corporate Transactions	33 
	      5.1.11	Accounting Policies	33 
	      5.1.12	Change of Business	33 
	      5.1.13	Benefit Plans	33 
	      5.1.14	Adversity	34 
	      5.1.15	Dividends/Distributions	34 
	      5.1.16	Restrictive Agreements	34 
	      5.1.17	Transactions with Shareholders and Affiliates	34 
	   Section 5.2	Affirmative Covenants	34 
	      5.2.1	Financial Reporting	34 
	      5.2.2	Good Standing	36 
	      5.2.3	Taxes, Etc.	36 
	      5.2.4	Maintain Properties	36 
	      5.2.5	Insurance	37 
	      5.2.6	Books and Records	37 
	      5.2.7	Reports	37 

			
	      5.2.8	Licenses	37 
	      5.2.9	Notice of Material Adverse Change	37 
	      5.2.10	Compliance with Law	37 
	      5.2.11	Trade Accounts	38 
	      5.2.12	Use of Proceeds	38 
	      5.2.13	Loan Payments	38 
	      5.2.14	Environmental Matters	38 
	      5.2.15	Banking Relationship	38 
	      5.2.16	Subordinated Debt	38 
	   Section 5.3	Financial Covenants	38 
	      5.3.1	Senior Debt Ratio	38 
	      5.3.2	Fixed Charge Coverage Ratio	39 
	      5.3.3	Tangible Capital Funds	39 
	Article 6	Conditions Precedent	39 
	   Section 6.1	Conditions to Initial Advance	39 
	      6.1.1	Authorization	39 
	      6.1.2	Insurance	39 
	      6.1.3	Loan Documents	39 
	      6.1.4	Incumbency	39 
	      6.1.5	Legal Matters	39 
	      6.1.6	Borrowing Base, Etc	39 
	      6.1.7	Opinions of Counsel	39 
	      6.1.8	Landlord Waivers	40 
	      6.1.9	UCC Searches/Life Insurance Questionnaire	40 
	      6.1.10	Fees	40 
	      6.1.11	Regulation U	40 
	      6.1.12	No Default	40 
	      6.1.13	Consents	40 
	      6.1.14	Additional Documentation	40 
	   Section 6.2	Conditions to Subsequent Advances	40 
	      6.2.1	No Default	40 
	      6.2.2	Representations and Warranties	40 
	      6.2.3	Legal Matters	40 
	   Section 6.3	General	40 
	Article 7	Default	41 
	Article 8	Remedy	42 
	   Section 8.1	Acceleration	42 
	   Section 8.2	Deposit to Secure Reimbursement Obligations	43 
	   Section 8.3	Subrogation	43 
	   Section 8.4	Remedy	43 
	   Section 8.5	Preservation of Rights	43 
	Article 9	General Provisions	43 
	   Section 9.1	Benefit of Agreement	43 
	   Section 9.2	Survival of Representations	44 
	   Section 9.3	Governmental Regulation	44 
	   Section 9.4	Conflict	44 

	   Section 9.5	Choice of Law	44 
	   Section 9.6	Headings	44 
	   Section 9.7	Entire Agreement	44 
	   Section 9.8	Expenses	44 
	   Section 9.9	Indemnification	45 
	   Section 9.10	Confidentiality	45 
	   Section 9.11	Giving Notice	45 
	   Section 9.12	Counterparts	45 
	   Section 9.13	Incorporation by Reference	45 
	   Section 9.14	Time of Essence	46 
	   Section 9.15	No Joint Venture	46 
	   Section 9.16	Relationship of Parties; Release of Consequential Damages	46 
	   Section 9.17	Severability	46 
	   Section 9.18	Gender	46 
	   Section 9.19	Waiver and Amendment	46 
	   Section 9.20	Bank Not in Control	46 
	   Section 9.21	Waiver Of Jury Trial	47 

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

AMENDED AND RESTATED
CREDIT AGREEMENT

        
THIS AMENDED AND RESTATED
CREDIT AGREEMENT, dated as of January 4, 2005, is
between BIOANALYTICAL SYSTEMS, INC.
and NATIONAL CITY BANK, as
successor to THE PROVIDENT
BANK.

WITNESSETH:

        WHEREAS,
as of October 29, 2002, the parties hereto entered into a Credit Agreement, as amended
(the “Original Agreement”); 

        WHEREAS, the
parties hereto desire to completely amend and restate the Original Agreement;

        NOW
THEREFORE, in consideration of the premises, and the mutual
premises herein contained, the parties hereto agree that the Original Agreement
be, and it hereby is, amended and restated 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
Agreement. 

        “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, or (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 Amended and Restated Credit Agreement, as amended from time to time. 

        “Applicable
Fee” means the per annum fee payable to Bank, which shall be determined
by reference to the following table: 

	Applicable Fee

for Non-Use Fees
	Applicable Fee for

Standby Letters of Credit
	Applicable Fee for

Commercial Letters of

Credit

	.25%
	1.50%
	1.50%

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

	Senior Debt Ratio		Applicable Margin

for Prime

Rate Advances		Applicable Margin

for Eurodollar

Rate Advances
	 

	Equal to or greater	 	 	 	 	 	 		 
	than 2.75 to 1.0	 	 	.25%	 	 	3.00%
	 

	Less than 2.75 to 1.0 and	 	 
	equal to or greater	 	 
	than 2.00 to 1.0	 	 	-0-	 	 	2.75%
	 

	Less than 2.00 to 1.0	 	 	-0-	 	 	2.50%

        The Applicable Margin shall
initially be determined based on a Senior Debt Ratio of greater than 2.75 to
1.0. The Applicable Margin shall be adjusted quarterly (upwards or downwards, as
appropriate) based upon the Senior 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 Senior 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 Senior 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. 

        “Bank” means
National City Bank of Indiana, as successor to The Provident Bank, and 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, and, if the
applicable day relates to a Eurodollar Rate Advance, a notice with respect to a
Eurodollar Rate Advance, or a day on which dealings in U.S. dollar deposits are
carried on in the London interbank market and banks are open for business in
London. 

        “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) Forty Percent (40%) of Borrower’s Eligible
Accounts, plus (c) the sum of (i) Nine Hundred Thousand Dollars
($900,000), minus (ii) the sum 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 December 2004. (For
example, in June, 2005, the amount added as part of the Borrowing Base under
clause (c) above will be Nine Hundred Thousand Dollars ($900,000) minus
One Hundred Twenty-Five Thousand Dollars ($125,000) (five times Twenty-Five
Thousand Dollars ($25,000)), or a total of Seven Hundred Seventy-Five Thousand
Dollars ($775,000)). 

        “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 2.12 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 Replacement 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. 

        “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; 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. 

        “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 is not work-in-process, (viii) which is
not supply Inventory or live Inventory, and (ix) 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. 

        “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, 2004, 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. 

        “Fixed Charge Coverage
Ratio” means, with respect to Borrower, (a) the sum of (i) EBITDA,
minus (ii) Unfunded Capital Expenditures, minus (iii) taxes paid,
divided by (b) the sum of (i) interest expense, plus (ii)
mandatory payments of all long term Indebtedness, in each instance determined
for the trailing four (4) quarter period ending on the date of determination,
except that for the four (4) quarter period ending December 31, 2004, Unfunded
Capital Expenditures shall be reduced by Five Hundred Thousand Dollars
($500,000). The Fixed Charge Coverage 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. 

        “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 dated October 29, 2002 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. 

        “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 December 31, 2007. 

        “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.

        “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; and (i) 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. 

        “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. 

        “Security
Agreement” means the Amended and Restated 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. 

        “Senior 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) Indebtedness minus Subordinated Debt, to (b) EBITDA. The Senior Debt Ratio
shall be determined from the Financial Statements. 

        “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. 

        “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. 

        “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 March 31, 2005), 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.

                    

               	 	
                            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.

	 	
        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 Three Million Eight Hundred Thousand Dollars ($3,800,000). 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 or International Standby
Practices Publication 590 of the International Chamber of Commerce 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.

        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.

        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, 2006 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 Subsidiaries.

        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.

	 	
        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. 

        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.

        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.

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.

        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.

        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.

        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 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.

        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

	 	
        (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

	 	
        (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 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.

	 	
        (c)         Borrower
shall not and shall not permit any of its Subsidiaries to make any Acquisitions.

	 	
        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 its Baltimore,
Maryland facility, 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), and (e) 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.

	 	
        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.

	 	
        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.

	 	
        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:

	 	
        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 KPMG 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 forty-five (45) days after the end of each
fiscal quarter, similar consolidated financial statements of Borrower as of the end of
such quarter 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;

	 	
        (e)         within
thirty (30) 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
thirty (30) 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, an
accounts payable aging statement and an Inventory report of Borrower;

	 	
        (g)         within
forty-five (45) days after the end of each fiscal quarter, 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.

	 	
        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.

	 	
        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.

	 	
        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.

        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.         Senior
Debt Ratio.    Maintain its Senior Debt Ratio at not greater than
3.50 to 1.00 as of each fiscal quarter end.

	 	
        5.3.2.         Fixed
Charge Coverage Ratio.    Maintain its Fixed Charge Coverage
Ratio at not less than 1.25 to 1.00 at each fiscal quarter end.

	 	
        5.3.3.         Tangible
Capital Funds.    Maintain its Tangible Net Worth plus
Subordinated Debt at not less than Seventeen Million Five Hundred Thousand Dollars
($17,500,000) as of June 30, 2004, and increasing as of each fiscal quarter end
thereafter by an amount equal to Twenty-Five Percent (25%) of Borrower’s net income
(without reduction for any net losses) for such fiscal quarter.

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:

	 	
        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 assigned to Bank.

	 	
        6.1.10.         Fees.    Borrower
shall have reimbursed Bank for all reasonable legal fees and other reasonable
out-of-pocket expenses of Bank in connection with the Facilities.

	 	
        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.         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:

	 	
        (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;

	 	
        (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.

        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.

        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, including the Original
Agreement.

        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.

        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.

        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.

        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]

SIGNATURE PAGE OF

BIOANALYTICAL SYSTEMS, INC.
 TO
AMENDED AND RESTATED CREDIT
AGREEMENT

	
 	
"BORROWER"

BIOANALYTICAL SYSTEMS, INC.

By:  /s/ Michael R. Cox

Its:  VP — Finance

	
 

Address:

2701 Kent Avenue

West Lafayette, IN 47906

Attention:  President

Facsimile:  (765) 497-1102

SIGNATURE PAGE OF

NATIONAL CITY BANK OF INDIANA

TOAMENDED AND RESTATED CREDIT
AGREEMENT

	
 	
"BANK"

NATIONAL CITY BANK OF INDIANA, AS SUCCESSOR

TO THE PROVIDENT BANK

By:  Michael C. Callas

Its:  Vice President

	
 

Address:

One National City Center, #200E

Indianapolis, Indiana 46255

Attention:  Michael C. Callas

Facsimile:  317-267-6249

SCHEDULE 1

PERMITTED ENCUMBRANCES

None

SCHEDULE 4.7

SUBSIDIARIES

BAS Evansville, Inc., an Indiana corporation and wholly-owned subsidiary of the
Borrower.

BASi Maryland, Inc., a Maryland corporation and wholly-owned subsidiary of the
Borrower.

Bioanalytical Systems, Ltd., a private limited company organized under the laws
of England and wholly-owned subsidiary of the Borrower.

BAS Instruments, Ltd., a private limited company organized under the laws of
England and wholly-owned subsidiary of the Borrower.

BAS Analytics, Ltd., a private limited company organized under the laws of
England and wholly-owned subsidiary of the Borrower.

BASi Northwest Laboratory, Inc., a California corporation and wholly-owned
subsidiary of the Borrower, is also qualified to do business in Oregon and New
Jersey.

SCHEDULE 4.10 AND 5.1.6

OTHER INDEBTEDNESS

Master Lease Agreement by and between the Borrower and Banc One Leasing
Corporation dated on or about July 3, 2002 with a maximum funding amount at
$1,500,000 and cut-off date as April 1, 2003.

SCHEDULE 4.13

MATERIAL PENDING OR
THREATENED LITIGATION

None

SCHEDULE 5.1.7

EXISTING INVESTMENTS

NoneReplacement Promissory Note

REPLACEMENT PROMISSORY NOTE

	
$6,000,000.00	
Dated:  January 4, 2005

Indianapolis, Indiana

        FOR VALUE RECEIVED, the
undersigned BIOANALYTICAL SYSTEMS, INC., an Indiana corporation (the
"Borrower"), hereby promises to pay to the order of NATIONAL CITY BANK OF
INDIANA, as successor to The Provident Bank ("Bank"), or its assigns, at its
principal office at Indianapolis, Indiana, or at such other place as the holder
hereof may designate in writing, in lawful money of the United States of America
and in immediately available funds, the principal sum of Six Million Dollars
($6,000,000), or so much thereof as may be advanced and outstanding from time to
time, together with interest on the unpaid principal balance existing from time
to time at the per annum rates and on the dates set forth in the Agreement
(hereinafter defined). The entire unpaid balance of principal, and all accrued
and unpaid interest thereon, shall be due and payable on the Facility 1 Maturity
Date, and Borrower shall make such mandatory principal payments as are required
to be made under the terms of Section 2.3 of the Agreement.

        Bank shall, and is hereby
authorized to, record in accordance with its usual practice, the date and amount
of each advance and each principal payment hereunder.

        This Note is issued pursuant to,
is entitled to the benefit of, and is subject to the provisions of that certain
Amended and Restated Credit Agreement between Borrower and Bank dated of even
date herewith (as the same may be amended from time to time, the "Agreement").
Advances under this Note shall be made in accordance with the Agreement. The
Agreement, among other things, contains a description of the collateral securing
this Note, the definitions of the proper nouns used herein and provisions for
acceleration of the maturity hereof upon the happening of certain stated
events.

        Subject to the terms of the
Agreement, Borrower may borrow, prepay, reborrow and repay the principal amount
of this Note at any time and from time to time.

        If Borrower fails to make the
payment of any installment of principal or interest, as provided in the
Agreement, when due, or upon the occurrence of any other Default, then in any of
such events, or at any time thereafter prior to such Default being cured, the
entire principal balance of this Note, and all accrued and unpaid interest
thereon, irrespective of the maturity date specified herein, together with
reasonable attorneys' fees and other costs incurred in collecting or enforcing
payment or performance hereof and with interest from the date of Default on the
unpaid principal balance hereof at the Default rate specified in the Agreement,
shall, at the election of the holder hereof (except as otherwise provided for
automatic acceleration on the occurrence of certain Defaults specified in the
Agreement), and without relief from valuation and appraisement laws, become
immediately due and payable.

        If any payment is not received
by Bank within ten (10) days after its due date, Bank may assess and Borrower
agrees to pay a late fee equal to the greater of: (a) five percent (5%) of the
past due amount, or (b) Twenty Dollars ($20.00). This late fee shall be in
addition to, and not in lieu of, any other remedy Bank may have and is in
addition to any reasonable fees and charges of any attorneys which Bank is
entitled to employ, whether authorized herein or by law.

Page 1 of a Note containing Two Pages dated January 4, 2005 from BIOANALYTICAL
SYSTEMS, INC. to NATIONAL CITY BANK OF INDIANA.

        Borrower and all endorsers,
guarantors, sureties, accommodation parties hereof and all other parties liable
or to become liable for all or any part of this indebtedness, severally waive
demand, presentment for payment, notice of dishonor, protest and notice of
protest and expressly agree that this Note and any payment coming due under it
may be extended or otherwise modified from time to time without in any way
affecting their liability hereunder.

        This Note completely replaces
that certain Promissory Note dated October 29, 2002 from Borrower to Bank in the
face amount of $6,000,000, and continues to represent the same indebtedness as
evidenced by such Promissory Note.

        This Note shall be construed
according to and governed by the laws of the State of Indiana. Notice of
acceptance of this Note is hereby waived by Borrower.

        Any action, claim, counterclaim,
crossclaim, proceeding, or suit, whether at law or in equity, whether sounding
in tort, contract, or otherwise at any time arising under or in connection with
this Note or any other Loan Document, the administration, enforcement, or
negotiation of this Note or any other Loan Document, or the performance of any
obligation in respect of this Note or any other Loan Document (each such action,
claim, counterclaim, crossclaim, proceeding, or suit, an "Action") may be
brought in any federal or state court located in Marion County, Indiana.
Borrower hereby unconditionally submits to the jurisdiction of any such court
with respect to each such Action and hereby waives any objection Borrower may
now or hereafter have to the venue of any such Action brought in any such court.
BORROWER HEREBY, AND EACH HOLDER OF THIS NOTE, BY TAKING POSSESSION HEREOF,
KNOWINGLY AND VOLUNTARILY WAIVES JURY TRIAL IN RESPECT OF ANY ACTION.

        IN WITNESS WHEREOF, Borrower has
caused this Note to be executed by its duly authorized officer as of the day and
year first hereinabove written.

	
 	
BIOANALYTICAL SYSTEMS, INC.

By:  /s/  Michael R. Cox

Its:  VP — Finance

Page 2 of a Note containing Two Pages dated January 4, 2005 from BIOANALYTICAL
SYSTEMS, INC. to NATIONAL CITY BANK OF INDIANA.

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