Exhibit 10.10

CREDIT AGREEMENT

between

BIOANALYTICAL SYSTEMS, INC.

and

THE PROVIDENT BANK

Dated as of October 29, 2002

                                TABLE OF CONTENTS
                                -----------------


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

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

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

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

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

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

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

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

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

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

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

Schedule 1 Permitted Encumbrances

Schedule 4.7 Subsidiaries

Schedule 4.10 and 5.1.6 Other Indebtedness

Schedule 4.13 Material Pending or Threatened Litigation

Schedule 5.1.7 Existing Investments


Exhibit A - Credit Note

Exhibit B - General Security Agreement

Exhibit C - Policy Assignment

Exhibit D - Form of 6% Subordinated Convertible Note

CREDIT AGREEMENT

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

ARTICLE 1.         DEFINITIONS

         Section 1.1    Defined Terms .    As used herein:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

         Less than 2.50 to 1.0                        -0-          
            2.00%

–2–

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

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

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

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

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

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

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

–3–

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

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

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

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

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

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

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

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

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

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

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

–4–

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

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

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

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

–5–

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

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

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

–6–

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

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

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

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

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

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

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

–7–

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

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

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

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

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

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

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

–8–

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

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

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

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

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

–9–

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

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

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

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

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

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

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

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

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

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

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

–10–

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

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

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

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

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

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

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

–11–

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

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

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

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

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

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

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

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

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

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

–12–

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

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

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

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

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

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

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

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

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

–13–

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

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

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

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

ARTICLE 2.         CREDIT

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

         Section 2.2    Interest; Unused Fees and Rate Selection .   

–14–