Exhibit 10.15

LOAN AGREEMENT

THIS  AGREEMENT  is made  this  29th day of  October,  2002 by and  among  UNION
PLANTERS BANK, N.A., a national banking association BIOANALYTICAL SYSTEMS, INC.,
an Indiana corporation ("BAS"), and BAS EVANSVILLE, INC., an Indiana corporation
("BAS Evansville").

RECITALS

A.        
Borrowers  have  requested   certain  credit   facilities  for  the  purpose  of
refinancing existing indebtedness and funding construction in West Lafayette and
Mount Vernon, Indiana.

B.        
Lender has agreed to provide the credit facilities requested by Borrowers,  upon
the terms and subject to the conditions set forth in this Agreement.

TERMS

In  consideration  of the  premises  and the mutual  promises  set forth in this
Agreement,  and subject to the terms and conditions set forth in this Agreement,
the parties agree as follows:

1.        
Definitions. As used herein:

| | a.        
ADA Agreement means the agreement concerning compliance with the
Americans with Disabilities Act more particularly described in Section 5(a),
including any amendment, modification or replacement thereof.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b.        
Advance means a disbursement of the proceeds of a Loan.
| | --------------------------------------------------------------------

| | c.        
Agreement or Loan Agreement means this Loan Agreement, as amended from time to time.
| | ---------------------------------------------------------------------------------------------------

| | d.        
Borrower or Borrowers  means,  individually  and collectively as the context
requires, BAS and BAS Evansville.
| | -----------------------------------------------------------------------------------------------------------------------------

| | e.        
Business Day means a day on which the principal domestic office of the Bank is
open  for  the  purpose  of  conducting   substantially   all  of  its  business
activities.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | f.        
Environmental  Certificate  means  the  certificate  concerning  environmental
matters described in Section 5(a).
| | ------------------------------------------------------------------------------------------------------------------------------

| | g.        
Financing  Statements  shall have the meaning ascribed to such term in Section
5(a),     including    any     amendment,     modification     or    replacement
thereof.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | h.        
Fixtures  shall have the meaning  ascribed to such term in the Indiana Uniform
Commercial Code, as in effect from time to time.
| | --------------------------------------------------------------------------------------------------------------------------------------------

| | i.        
GAAP means generally accepted accounting principles in the United
States of America from time to time as promulgated by the Financial Accounting
Standards Board and recognized and interpreted by the American Institute of
Certified Public Accountants.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | j.        
Indebtedness means the debt obligation evidenced by the Promissory Notes.
| | --------------------------------------------------------------------------------------

| | k.        
Instruments means the Promissory Notes, the Mortgage (West
Lafayette), the Mortgage (Mount Vernon), the Rent Assignment (West Lafayette),
the Rent Assignment (Mount Vernon), the ADA Agreement, the Environmental
Certificate, the Financing Statements and any and all other loan instruments,
agreements and documents evidencing, securing or related to the Loans.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | l.        
Lender means Union Planters Bank,  N.A., a national banking  association,  its
successors and assigns.
| | -------------------------------------------------------------------------------------------------------------------

| | m.        
Loan Closing means the closing of the Loans as more particularly  described in
Section 5.
| | ------------------------------------------------------------------------------------------------------

| | n.        
Loan (Mount Vernon) means the secured construction/term loan more particularly
described    in    Section   4,    including    any    extension    or   renewal
thereof.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o.        
Loan  (West   Lafayette)  means  the  secured   construction/term   loan  more
particularly  described  in  Section  3,  including  any  extension  or  renewal
thereof.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | p.        
Loan (Mount Vernon) Conversion Date means April 18, 2003, the date
on which Borrowers may no longer receive advances on the Loan (Mount Vernon)
Promissory Note and by which the construction of the Project (Mount Vernon)
shall be substantially complete.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | q.        
Loan (West Lafayette) Conversion Date means April 18, 2004, the date
on which BAS may no longer receive advances on the Loan (West Lafayette)
Promissory Note and by which the construction of the Project (West Lafayette)
shall be substantially complete.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | r.        
Loan (Mount Vernon) Maturity Date means May 1, 2008, the date on
which the indebtedness evidenced by the Loan (Mount Vernon) Promissory Note is
due and payable in full.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | s.        
Loan (West Lafayette) Maturity Date means November 1, 2012, the date
on which the indebtedness evidenced by the Loan (West Lafayette) Promissory Note
is due and payable in full.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | t.        
Loan (Mount Vernon) Promissory Note means the promissory note more
particularly described in Section 5(a), including any amendment, modification,
renewal, extension or replacement thereof.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

 2 

| | u.        
Loan (West Lafayette) Promissory Note means the promissory note more
particularly described in Section 5(a), including any amendment, modification,
renewal, extension or replacement thereof.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | v.        
Loans means, collectively,  the Loan (Mount Vernon), the Loan (West Lafayette)
and the Term Loan.
| | --------------------------------------------------------------------------------------------------------------

| | w.        
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 Borrowers,
(b) the ability of Borrowers to perform their respective obligations under the
Instruments, (c) the validity or enforceability of any of the Instruments, or
any material provision thereof or any transaction contemplated thereby, or (d)
the rights and remedies of Lender under any of the Instruments.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | x.        
Mortgage (Mount Vernon) means the mortgage and security agreement described in
Section   5(a),   including   any   amendment,   modification   or   replacement
thereof.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | y.        
Mortgage (West Lafayette) means the mortgage and security agreement  described
in  Section  5(a),   including  any  amendment,   modification   or  replacement
thereof.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | z.        
Permitted Exceptions means (a) the lien of current real property
taxes not then due and payable, (b) leases to tenants, copies of which have been
provided to Lender, and (c) easements and restrictions and other matters that
are described in the title insurance commitment for the Real Estate (Mount
Vernon) or the Real Estate (West Lafayette), as applicable, as exceptions which
are acceptable to Lender in its sole discretion.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | aa.        
Project  (Mount  Vernon)  means the  construction  of a new  office/laboratory
facility   located  at  1024   Middle   Mount   Vernon   Road,   Mount   Vernon,
Indiana.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | bb.        
Project  (West  Lafayette)  means the  expansion  of BAS'S  existing  facility
located   at   2700,    2701   and   2801   Kent   Avenue,    West    Lafayette,
Indiana.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | cc.        
Promissory Notes means the Loan (Mount Vernon) Promissory Note, the Loan (West
Lafayette) Promissory Note and the Term Loan Promissory Note.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------

| | dd.        
Real Estate means,  collectively,  the Real Estate (Mount Vernon) and the Real
Estate (West Lafayette).
| | ---------------------------------------------------------------------------------------------------------------------

| | ee.        
Real Estate (Mount Vernon) means the real estate commonly known as
1024 Middle Mount Vernon Road, Mount Vernon, Indiana, and described on the
attached Schedule A-2.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

 3 

| | ff.        
Real Estate (West Lafayette) means the real estate commonly known as
2700, 2701 and 2801 Kent Avenue, West Lafayette, Indiana, and described on the
attached Schedule A-1.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | gg.        
Rent Assignment (Mount Vernon) means the collateral assignment of
rents and leases described in Section 5(a), including any amendment,
modification or replacement thereof.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | hh.        
Rent Assignment (West Lafayette) means the collateral assignment of
rents and leases described in Section 5(a), including any amendment,
modification or replacement thereof.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | ii.        
Subordinated  Debt means indebtedness of a Borrower expressly  subordinated to
the Indebtedness, in form and substance acceptable to Lender.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------

| | jj.        
Term Loan means the loan more  particularly  described in Section 2, including
any renewal or extension thereof.
| | ------------------------------------------------------------------------------------------------------------------------------

| | kk.        
Term Loan Maturity Date means November 1, 2012, when the
indebtedness evidenced by the Term Loan Promissory Note is due and payable in
full.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------

| | ll.        
Term Loan Promissory Note means the promissory note more
particularly described in Section 5(a), including any amendment, modification,
renewal, extension or replacement thereof.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

2.        
Term  Loan.  Lender  will lend to BAS,  for the  purpose  of  refinancing
existing  indebtedness up to Five Million Four Hundred Ten Thousand  Dollars and
No Cents  ($5,410,000.00),  in the form of a term loan, upon the terms set forth
in the attached Schedule C.

3.        
(Loan  West  Lafayette).  Lender  will lend to BAS,  for the  purpose  of
funding  the Project  (West  Lafayette),  up to Two  Million  Two Hundred  Fifty
Thousand  Dollars and No Cents  ($2,250,000.00),  in the form of a non-revolving
construction  line of credit/term loan, upon the terms set forth in the attached
Schedule E.

4.        
Loan (Mount  Vernon).  Lender will lend to Borrowers,  for the purpose of
funding the  Project  (Mount  Vernon),  up to Two Million  Three  Hundred  Forty
Thousand  Dollars and No Cents  ($2,340,000.00),  in the form of a non-revolving
construction  line of credit/term loan, upon the terms set forth in the attached
Schedule K.

5.        
Loan Closing; Disbursement.

| | a.        
Loan  Closing.  The Loan Closing will be  concurrent  with the execution of this
Agreement. At the Loan Closing, the applicable Borrower will execute and deliver
to Lender, or when applicable, cause to be delivered to Lender:
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 1. | Term Loan Promissory Note: a promissory note from BAS in form acceptable to
Lender and  substantially in the form of the attached Schedule D, evidencing the
Term Loan Indebtedness;
| |  | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

 4 

| |  | 2. | Loan (West Lafayette) Promissory Note: a promissory  note from BAS in form
acceptable to Lender and  substantially in the form of the attached  Schedule F,
evidencing the Loan (West Lafayette) Indebtedness;
| |  | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 3. | Loan (Mount Vernon) Promissory Note: a promissory note from Borrowers in form
acceptable to Lender and  substantially in the form of the attached  Schedule L,
evidencing the Loan (Mount Vernon) Indebtedness;
| |  | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 4. | Mortgage (West  Lafayette):  a mortgage from BAS in form acceptable to Lender
and  substantially in the form of the attached  Schedule G, granting to Lender a
first  priority  mortgage  and  security  interest  upon the Real  Estate  (West
Lafayette) and all Fixtures thereon, as security for payment of the Indebtedness
and performance of Borrowers' obligations hereunder and under the Instruments;
| |  | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 5. | Mortgage (Mount Vernon): a mortgage from BAS Evansville in form acceptable to
Lender and  substantially  in the form of the attached  Schedule M,  granting to
Lender a first  priority  mortgage  and security  interest  upon the Real Estate
(Mount  Vernon)  and all  Fixtures  thereon,  as  security  for  payment  of the
Indebtedness and performance of Borrowers'  obligations  hereunder and under the
Instruments;
| |  | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 6. | Assignment of Rents and Leases (West Lafayette): an assignment of rents
and leases from BAS in form acceptable to Lender and substantially in the form
of the attached Schedule H, granting to Lender a first priority security
interest in the leases of all or any portion of the Real Estate (West Lafayette)
and in the rents payable thereunder, as security for payment of the Indebtedness
and performance of Borrowers obligations hereunder and under the
Instruments;
| |  | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 7. | Assignment of Rents and Leases (Mount Vernon): an assignment of rents and
leases from BAS Evansville in form acceptable to Lender and substantially in the
form of the attached Schedule N, granting to Lender a first priority security
interest in the leases of all or any portion of the Real Estate (Mount Vernon)
and in the rents payable thereunder, as security for payment of the Indebtedness
and performance of Borrowers obligations hereunder and under the
Instruments;
| |  | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 8. | ADA Agreement:  an agreement  concerning  compliance  with the Americans with
Disabilities Act from Borrowers,  in form acceptable to Lender and substantially
in the form of the attached Schedule I;
| |  | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

 5 

| |  | 9. | Environmental  Certificate:  a certificate  concerning  environmental matters
from Borrowers,  in form acceptable to Lender and  substantially  in the form of
the attached Schedule J; and
| |  | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 10. | UCC-1 Financing Statements: a UCC-1 Financing Statement from Borrowers in
favor of Lender in form acceptable to Lender, as security for payment of the
Indebtedness in respect of the Loan (Mount Vernon) and performance of
Borrowers obligations hereunder and under the Instruments, and a UCC-1
Financing Statement from BAS in favor of Lender in form acceptable to Lender, as
security for payment of the Indebtedness in respect of the Term Loan and the
Loan (West Lafayette) and performance of BASs obligations hereunder and
under the Instruments (collectively, the Financing Statements).
| |  | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

At or before the Loan  Closing,  Borrowers  also shall  satisfy  the  applicable
requirements set forth in the attached Schedule B.

| | b.        
Disbursement.
| | ------------------------

| |  | 1. | Term Loan: Subject to satisfaction of the applicable requirements set
forth in the attached Schedule B and so long as there exists no Event of Default
or no Event of Default would be occasioned by the making of the Term Loan, the
proceeds of the Term Loan shall be disbursed to BAS at the Loan Closing or at
such other time as shall be mutually agreed by BAS and Lender.
| |  | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 2. | Loan (West Lafayette). Upon BASs request at or after the Loan
Closing and upon satisfaction of the applicable requirements of the attached
Schedule B (but not more frequently than monthly), Lender will make an Advance
under the Loan (West Lafayette) Promissory Note in an amount equal to the
out-of-pocket costs incurred by BAS through the request date in construction of
the Project (West Lafayette). Not less than three (3) Business Days prior to
each such Advance, BAS shall satisfy the applicable requirements set forth in
the attached Schedule B. However, (a) Lenders obligation to disburse any
such requested Advance will be subject to satisfactory inspection of the Real
Estate (West Lafayette) by Lender or its representative; and (b) if on the date
that any such Advance is to be disbursed, an Event of Default under this
Agreement has occurred and is continuing, or if Borrowers are in default in the
payment of any indebtedness owed by them to Lender, Lender will be relieved of
its obligation to disburse any Advance and of all further obligations hereunder.
| |  | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

 6 

| |  | 3. | Loan (Mount Vernon). Upon Borrowers request at or after the Loan
Closing and upon satisfaction of the applicable requirements of the attached
Schedule B (but not more frequently than monthly), Lender will make an Advance
under the Loan (Mount Vernon) Promissory Note in an amount equal to the amounts
to be refinanced and the out-of-pocket costs incurred by Borrowers through the
request date in construction of the Project (Mount Vernon). Not less than three
(3) Business Days prior to each such Advance, Borrowers shall satisfy the
applicable requirements set forth in the attached Schedule B. However, (a)
Lenders obligation to disburse any such requested Advance will be subject
to satisfactory inspection of the Real Estate (Mount Vernon) by Lender or its
representative; and (b) if on the date that any such Advance is to be disbursed,
an Event of Default under this Agreement has occurred and is continuing, or if
Borrowers are in default in the payment of any indebtedness owed by them to
Lender, Lender will be relieved of its obligation to disburse any Advance and of
all further obligations hereunder.
| |  | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

6.        
Fees and Expenses. Borrowers agree, forthwith upon demand of Lender, to reimburse
Lender for all costs and expenses Lender incurs in connection with the Loans,
whether or not such Loans shall close, including, without limitation,
Lenders reasonable attorneys fees, appraisal fees, title insurance
premiums, environmental investigation and report fees, survey fees, recording
and filing fees incurred in documentation of the Loans and in the perfection of
Lenders security interests granted herein or in the Instruments, and fees
in connection with the administration and enforcement of the Loans. BAS also
agrees to pay to Lender at the Loan Closing a nonrefundable commitment fee of
Twelve Thousand Six Hundred Sixty-Two Dollars and Fifty Cents ($12,662.50) in
respect of the Term Loan and Eleven Thousand Two Hundred Fifty Dollars and No
Cents ($11,250.00) in respect of the Loan (West Lafayette). In addition,
Borrowers agree to pay to Lender at the Loan Closing a nonrefundable commitment
fee of Eleven Thousand Dollars and No Cents ($11,000.00). Lender acknowledges
receipt of Ten Thousand Dollars and No Cents ($10,000.00) from BAS, which amount
shall be applied first to unreimbursed expenses and then to BASs
obligations for payment of the commitment fees.

7.        
Borrowers Representations and Warranties. To induce Lender to enter
into this  Agreement  and disburse  the proceeds of the Loans to the  applicable
Borrower(s),  each Borrower  represents  and warrants to Lender that each of the
following  statements is true and correct as of the date hereof and each of them
will continue to be true and correct as of the date of the Loan Closing,  and as
of the date of each disbursement of proceeds of the Loans:

| | a.        
Marketable title in fee simple to the Real Estate (Mount Vernon) is vested in
BAS Evansville,  and marketable  title to the other  collateral  given to secure
payment of the  Indebtedness is vested in BAS Evansville,  free and clear of any
and all  conflicting  claims of ownership,  and free from any and all mortgages,
encumbrances,   liens,   security  interests,   leases,   licenses,   easements,
restrictions,  except for Permitted  Exceptions,  and Borrowers  will defend the
Real Estate (Mount Vernon) and the other collateral  against any person claiming
an interest  in such Real Estate  (Mount  Vernon) or  collateral  adverse to the
interest of Lender;
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

 7 

| | b.        
Neither Borrower has made or assumed an assignment of rents from or leases of
the  Real   Estate   (Mount   Vernon),   except  the  Rent   Assignment   (Mount
Vernon);
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c.        
None of the provisions of this  Agreement  contravenes or is in conflict with
or creates an event of default  under any  provision  of any  existing  material
indenture or agreement to which either Borrower is a party;
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | d.        
Each financial statement of Borrowers delivered to Lender was prepared in
accordance with GAAP consistent with prior years, unless specifically otherwise
noted thereon, and fairly and completely present in all material respects the
financial condition of Borrowers as of the date thereof and the results of their
operations for the period then ended, and discloses all known or anticipated
material liabilities, direct or contingent, of Borrowers. No Material Adverse
Effect has occurred subsequent to the date of the most recent financial
statements of Borrowers delivered to Lender.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | e.        
There are no actions,  suits,  proceedings or  investigations  pending or, to
Borrowers  knowledge,  threatened  against either Borrower or any of their
respective  properties  in any  court  or  administrative  agency,  and  neither
Borrower  is in  violation  of any  outstanding  decree or order of any court or
administrative agency;
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | f.        
This Agreement and the  Instruments  evidence a business loan exempt from the
Federal  Truth-In-Lending Act (15 USC 1601, et seq.), the Federal Reserve Bank's
Regulation Z (12 CFR 226, et seq.), and the Indiana Uniform Consumer Credit Code
(IC 24-4.5-1-101, et seq.).
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | g.        
Neither Borrower is 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.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

8.        
BASs Representations and Warranties. To induce Lender to enter into this
Agreement and disburse the proceeds of the Loans to BAS, BAS represents and
warrants to Lender that each of the following statements is true and correct as
of the date hereof and each of them will continue to be true and correct as of
the date of the Loan Closing, and as of the date of each disbursement of
proceeds of the Loans:

| | a.        
Marketable  title in fee simple to the Real Estate (West Lafayette) is vested
in BAS, and marketable  title to the other collateral given to secure payment of
the  Indebtedness  is vested in BAS,  free and clear of any and all  conflicting
claims of ownership, and free from any and all mortgages,  encumbrances,  liens,
security  interests,  leases,  licenses,  easements,  restrictions,  except  for
Permitted  Exceptions,  and BAS will defend the Real Estate (West Lafayette) and
the other collateral against any person claiming an interest in such Real Estate
(West    Lafayette)    or    collateral    adverse    to   the    interest    of
Lender;
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

 8 

| | b.        
BAS has not made or  assumed an  assignment  of rents from or leases of the Real
Estate    (West     Lafayette),     except    the    Rent    Assignment    (West
Lafayette);
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

9.        
Borrowers' Affirmative Covenants. Borrowers agree that until the Indebtedness is
paid in full:

| | a.        
Borrowers will pay each installment of the Indebtedness in respect of the Loan
(Mount Vernon) and BAS will pay each installment of the Indebtedness in respect
of the Term Loan and the Loan (West Lafayette) promptly when due and in any
event within any applicable grace periods;
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b.        
Borrowers will pay, promptly when due and before any penalty attaches for
nonpayment, all real and personal property taxes, assessments and charges
assessed against the Real Estate (Mount Vernon), and BAS will pay, promptly when
due and before any penalty attaches for nonpayment, all real and personal
property taxes, assessments and charges assessed against the Real Estate (West
Lafayette);
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c.        
Borrowers will maintain the buildings and other improvements now or hereafter
located on the Real Estate (Mount Vernon) and the fixtures now or hereafter
affixed thereto, and keep them in good repair and sightly condition, and BAS
will maintain the buildings and other improvements now or hereafter located on
the Real Estate (West Lafayette) and the fixtures now or hereafter affixed
thereto, and keep them in good repair and sightly condition;
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | d.        
Borrowers will cause any lien (including, without limitation, any judgment,
attachment, execution, mechanics lien, or federal or state income tax
lien), other than the lien of property taxes and assessments, which may attach
to the Real Estate (Mount Vernon) to be satisfied and released within sixty (60)
days after attachment, except for liens contested in good faith in an
appropriate proceeding with respect to which Borrowers have given Lender such
assurances as Lender deems necessary under the circumstances;
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | e.        
BAS will cause any lien (including, without limitation, any judgment,
attachment, execution, mechanics lien, or federal or state income tax
lien), other than the lien of property taxes and assessments, which may attach
to the Real Estate (West Lafayette) to be satisfied and released within sixty
(60) days after attachment, except for liens contested in good faith in an
appropriate proceeding with respect to which BAS has given Lender such
assurances as Lender deems necessary under the circumstances;
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | f.        
Borrowers will comply in all material respects with all federal, state and
municipal laws, ordinances, rules and regulations applicable to the ownership
and operation of the Real Estate (Mount Vernon), and BAS will comply in all
material respects with all federal, state and municipal laws, ordinances, rules
and regulations applicable to the ownership and operation of the Real Estate
(West Lafayette);
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | g.        
Upon two days notice, Borrowers will allow Lender and its representatives to
inspect the Real Estate (Mount Vernon) and BAS will allow Lender and its
representatives to inspect the Real Estate (West Lafayette) at all reasonable
times;
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

 9 

| | h.        
BAS will promptly commence and diligently proceed with the construction of the
Project (West Lafayette) in accordance with the plans and specifications
therefor, and will complete the Project (West Lafayette) no later than the Loan
(West Lafayette) Conversion Date; and
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | i.        
Borrowers will promptly commence and diligently proceed with the construction of
the Project (Mount Vernon) in accordance with the plans and specifications
therefor, and will complete the Project (Mount Vernon) no later than the Loan
(Mount Vernon) Conversion Date.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

10.        
Borrowers' Financial  Covenants.  Borrowers agree that until the Indebtedness is
paid in full:

| | a.        
Accounting Records.
| | ------------------------------

| |  | 1. | Borrowers will keep proper books of account in which full, true and correct
entries will be made of all receipts and expenses related to the ownership and
operation of the Real Estate (Mount Vernon), and permit Lender upon request from
time to time to review such books of account.
| |  | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 2. | BAS will keep proper books of account in which full, true and correct entries
will be made of all receipts and expenses related to the ownership and operation
of the Real Estate (West Lafayette), and permit Lender upon request from time to
time to review such books of account.
| |  | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b.        
Debt Service Coverage Ratio. Borrowers will not permit Borrowers
Debt Service Coverage Ratio to fall below 1.2:1.0 at any time. Debt
Service Coverage Ratio means the ratio, as computed from time to time from
the consolidated financial statements of Borrowers, of (i) Borrowers net
cash flow for the immediately preceding twelve (12) months, to (ii)
Borrowers debt service requirement for the preceding twelve (12) months.
For this purpose, net cash flow means net earnings before interest,
depreciation and amortization; and Borrowers debt service
requirement means the sum of all payments under the Loans of interest and
principal on outstanding Indebtedness payable (or to be paid) in the preceding
twelve (12) months.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c.        
Annual Financial Statements. Borrowers will furnish to Lender as soon as
practicable, but in any event within one hundred twenty (120) days after the end
of each fiscal year of Borrowers, consolidated and consolidating financial
statements of Borrower, certified after audit by independent certified public
accountants acceptable to Lender, including a balance sheet, statement of income
and retained earnings and a statement of cash flows, with accompanying notes and
footnote disclosures to financial statements, accompanied by the unqualified
opinion of such accountants that such financial statements fairly present in all
material respects the financial condition of Borrowers as of the date thereof
and the results of their operations for the period then ended, all prepared in
accordance with GAAP consistent with prior years unless specifically noted
thereon, and accompanied by the certificate of an officer of BAS familiar with
such matters that there exists no Event of Default under the Instruments, or if
any Event of Default exists, stating the nature and status thereof.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

 10 

| | d.        
Accounts.  Borrowers will establish and maintain one or more deposit accounts
with Lender within forty-five (45) days after the date hereof or such other time
as the parties to this Agreement shall mutually agree.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

11.        
Negative Covenants.  Borrowers agree that, until the Indebtedness is paid in
full, neither Borrower will, without the prior written consent of Lender:

| | a.        
commit  waste on, or permit  waste to be  committed  on, or abandon the Real
Estate,  or permit any  nuisance or unlawful  activity to be carried on the Real
Estate;
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b.        
convey, sell, donate, lease, or otherwise transfer (except as set forth herein
with respect to eminent domain proceedings), or dispose of (or enter into any
contract or agreement to convey, sell, donate, lease, or otherwise transfer or
dispose of, or grant any option to purchase, lease or otherwise acquire) the
Real Estate or any interest therein, other than leases to tenants for terms,
including renewal and extension options, approved in advance in writing by
Lender;
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c.        
grant a second or  subordinate  mortgage on or security  interest in the Real
Estate or the fixtures affixed thereto,  or become security on a recognizance or
other bond, or otherwise encumber the Real Estate;
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | d.        
construct,  remodel,  alter or demolish  any  building or other  improvement
located on the Real Estate, or incur  obligations for such purposes,  except for
the Project (Mount Vernon) and the Project (West Lafayette); or
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | e.        
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) purchase money indebtedness, (c) indebtedness to The Provident
Bank and any other lender so long as Lender and such other lenders are parties
to an intercreditor agreement in form and substance acceptable to Lender, (d)
Subordinated Debt, and (e) indebtedness set forth in Schedule 11(e).
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

12.        
Indemnification by Borrowers. Borrowers will indemnify Lender against and
hold it  harmless  from  any  and all  claims,  demands,  liabilities,  damages,
actions, suits, judgments,  fines, penalties, loss, cost and expense (including,
without limitation, reasonable attorneys  fees) arising or resulting from,
or suffered,  sustained  or incurred by Lender as a result  (direct or indirect)
of, the untruth or inaccuracy of either of Borrowers  representations  and
warranties  set forth  herein or in any  Instrument  or the breach of any of the
covenants of either or both Borrowers set forth herein or in any Instrument.

 11 

13.        
Insurance.

| | a.        
At all times during the term of the Loan (Mount Vernon), Borrowers shall
provide, maintain and keep in force policies of insurance on the Real Estate
(Mount Vernon) and all Fixtures located thereon as follows:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 1. | Builder's Risk insurance with limits of coverage of not less than Two Million
Three Hundred Forty Thousand Dollars and No Cents ($2,340,000.00);
| |  | -- | ------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 2. | Comprehensive   general  liability  insurance  covering  its  ownership  and
operation of the Real Estate  (Mount  Vernon) (and any common areas on adjoining
properties)  with limits of coverage not less than  $1,000,000.00  in aggregate,
$1,000,000 for personal injury and $1,000,000 for each  occurrence,  and $10,000
for medical expenses (any one person);
| |  | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 3. | Insurance on all buildings and improvements located on the Real Estate (Mount
Vernon) and all Fixtures located thereon, in the full replacement value thereof
(but not less than $2,340,000) against loss or damage resulting from fire,
smoke, explosion, lightning, tornado, windstorm, hail, aircraft, vehicles, riot,
riot attending a strike, civil commotion, vandalism, malicious mischief and such
other risks as Lender may reasonably require;
| |  | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 4. | If it is determined that the Real Estate (Mount Vernon) lies in a flood zone, as
determined by the United States Department of Housing and Urban Development,
flood insurance shall be obtained at Borrowers expense. The amount of
flood insurance shall be the lesser of (i) the aggregate principal amount of the
Loan (Mount Vernon), or (ii) the maximum amount of flood insurance available;
and
| |  | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 5. | Such other insurance as Lender may reasonably require.
| |  | -- | ------------------------------------------------------

| | b.        
At all times during the term of the Term Loan and the Loan (West  Lafayette),
BAS shall provide,  maintain and keep in force policies of insurance on the Real
Estate (West Lafayette) and all Fixtures located thereon as follows:
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 1. | Builder's Risk insurance with limits of coverage of not less than Two Million
Two Hundred Fifty Thousand Dollars and No Cents ($2,250,000.00);
| |  | -- | ----------------------------------------------------------------------------------------------------------------------------------------------

| |  | 2. | Comprehensive general liability insurance covering its ownership and operation
of the Real Estate (West Lafayette) (and any common areas on adjoining
properties) with limits of coverage not less than $1,000,000.00 in aggregate,
$1,000,000 for personal injury and $1,000,000 for each occurrence, and $10,000
for medical expenses (any one person);
| |  | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

 12 

| |  | 3. | Insurance on all buildings and improvements located on the Real Estate (West
Lafayette) and all Fixtures located thereon, in the full replacement value
thereof (but not less than $7,660,000) against loss or damage resulting from
fire, smoke, explosion, lightning, tornado, windstorm, hail, aircraft, vehicles,
riot, riot attending a strike, civil commotion, vandalism, malicious mischief
and such other risks as Lender may reasonably require;
| |  | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 4. | If it is determined that the Real Estate (West Lafayette) lies in a flood zone,
as determined by the United States Department of Housing and Urban Development,
flood insurance shall be obtained at BASs expense. The amount of flood
insurance shall be the lesser of (i) the aggregate principal amounts of the Term
Loan and the Loan (West Lafayette), or (ii) the maximum amount of flood
insurance available; and
| |  | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | 5. | Such other insurance as Lender may reasonably require.
| |  | -- | ------------------------------------------------------

| | c.        
All policies of insurance to be provided  hereunder  shall be from  companies
and in form and amount  satisfactory to Lender with Standard  Mortgagee  Clauses
(without  contribution)  attached  to all  policies  in  favor  of  and in  form
satisfactory  to Lender,  including a  provision  requiring  that the  coverages
evidenced  thereby shall not be terminated  or  materially  modified  without at
least thirty (30)  days  prior  written  notice to Lender,  and shall have
deductibles  not in excess of an amount  reasonably  acceptable  to Lender.  All
policies  required by this Agreement  shall be written by a company or companies
authorized  to  write  such  insurance  in  the  State  of  Indiana  and  have a
Bests Key Rating Guide of A-, IX or better.  Borrowers shall have all such
insurance  made payable to Lender and  Borrowers as their  interests may appear.
Borrowers shall deliver to Lender original or duplicate  policies,  or certified
copies of relevant  policies if insurance is provided through blanket  policies,
evidencing  the  insurance  described  herein.  In addition,  where the original
policy is unavailable,  Borrowers shall provide to Lender an ACORD 27 (EPI) form
with respect to casualty and, if  applicable,  rent loss  insurance and an ACORD
25-S (COI)  form with  respect to  liability  insurance.  At least ten (10) days
prior to the  expiration or  cancellation  of any such policy,  Borrowers  shall
submit to Lender  evidence  showing  payment of  premiums  required  to continue
existing  insurance in force or new policies and  certificates  showing premiums
paid in compliance  with the foregoing  provisions.  If Borrowers  shall fail to
provide insurance and evidence thereof as required hereby,  Lender may obtain it
at Borrowers expense. Any amounts paid by Lender for any such policy shall
be treated as an advance.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | d.        
Neither Borrower shall procure separate  insurance  concurrent in coverage or
contributing  in the event of loss with the  insurance  coverage  required to be
maintained  hereunder  unless  Lender  is  included  thereon  under  a  Standard
Mortgagee Clause acceptable to Lender. Borrowers shall immediately notify Lender
whenever any such separate  insurance is procured and shall promptly  deliver to
Lender the policy or policies of  insurance.  In the event of a  foreclosure  or
transfer of title to the Real Estate, in lieu of foreclosure,  or by purchase at
foreclosure sale, all interest in any insurance  policies in force shall pass to
Lender, transferee or purchaser as the case may be.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

 13 

| | e.        
All  policies  of  insurance  required by the terms of this  Agreement  shall
contain an endorsement or agreement by the insurer that any loss will be payable
in  accordance  with  the  terms  of  such  policy  notwithstanding  any  act or
negligence  of a Borrower  which might  otherwise  result in  forfeiture of said
insurance and the further agreement of the insurer waiving all rights of setoff,
counterclaim or deduction against such Borrower.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

14.        
Events of Default;  Acceleration.  The entire  Indebtedness  will, at the
option of Lender,  be immediately  due and payable upon the occurrence of any of
the following "Events of Default":

| | a.        
Borrowers fail to pay any  installment of the  Indebtedness in respect of the
Loan (Mount Vernon) within ten (10) days after the same is due;
| | --------------------------------------------------------------------------------------------------------------------------------------------------------

| | b.        
BAS fails to pay promptly when due any  installment  of the  Indebtedness  in
respect of the Term Loan or the Loan (West Lafayette) within ten (10) days after
the same is due;
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c.        
Either Borrower makes any materially  incorrect or misleading  representation
in any financial statements or other information delivered to Lender;
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------

| | d.        
Any of the  representations  or warranties  made in this  Agreement or in the
other Instruments are or prove to have been false in any material respect;
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | e.        
Either  Borrower fails to observe or perform any obligation to be observed or
performed by such party under this Agreement or the other  Instruments and fails
to cure such default  after thirty (30) days written  notice;  provided  that is
such default  cannot  reasonably be cured within such thirty (30) day period and
such Borrower will have  commenced to cure such default  within such thirty (30)
day period and  thereafter  diligently  and  expeditiously  proceeds to cure the
same,  such  thirty  (30) day  period  will be  extended  for so long as it will
require such Borrower in the exercise of due diligence to cure such default, but
in any event no longer than sixty (60) days after such written notice;
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | f.        
A judgment is entered against either Borrower or any injunction,  attachment,
or  garnishment  is  issued  against  any  assets of  either  Borrower  and such
injunction,  attachment,  or garnishment has a Material Adverse Effect upon such
Borrower;
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | g.        
Either  Borrower fails to pay when due or within any applicable  grace period
any  indebtedness  under any existing or future  agreement  for  borrowed  money
pursuant to which such Borrower has incurred indebtedness;
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | h.        
Either Borrower makes an assignment for the benefit of creditors; consents to
the  appointment  of a  custodian,  receiver  or  trustee  for  itself  or for a
substantial part of such partys  assets; or commences any proceeding under
any bankruptcy,  reorganization,  liquidation, insolvency or similar laws of any
jurisdiction;
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

 14 

| | i.        
A custodian,  receiver or trustee is appointed  for either  Borrower or for a
substantial part of either Borrower's assets without such Borrower's consent and
is not removed within sixty (60) days after such appointment;
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | j.        
Proceedings  are commenced  against either  Borrower  under any  bankruptcy,
reorganization, liquidation, insolvency or similar laws of any jurisdiction, and
such proceedings remain undismissed for sixty (60) days after  commencement,  or
such Borrower consents to such proceedings;
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | k.        
Either Borrower is dissolved; or
| | -------------------------------------------

| | l.        
All or any part of the Real  Estate or any  interest  therein is  transferred
without Lenders prior written consent, said consent being in Lenders
sole discretion.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Upon the  occurrence  of any such Event of Default  and the failure to cure such
Event of Default  within the time  period,  if any,  set forth  herein or in the
applicable  Instrument,  and at any  time  thereafter  so  long  as the  default
continues, unless such rights are waived by Lender, Lender shall have the right,
in addition to any other rights set forth in the Instruments, to:

| | aa.        
terminate this Agreement and its obligations hereunder;
| | -------------------------------------------------------------------

| | bb.        
declare the entire  Indebtedness  to be  immediately  due and payable;
| | ----------------------------------------------------------------------------------

| | cc.        
declare  defaults and  exercise any or all of the remedies  available to it
under any or all of the Instruments;
| | ----------------------------------------------------------------------------------------------------------------------------

| | dd.        
exercise its right of setoff against any and all sums (including  amounts on
deposit) owed by Lender to either Borrower; and
| | ----------------------------------------------------------------------------------------------------------------------------------------

| | ee.        
exercise any other right or remedy available to it at law or in equity.
| | -----------------------------------------------------------------------------------

The  foregoing  remedies  will  be  cumulative  and  not  exclusive,  and may be
exercised at any time and from time to time as the occasion arises.

15.        
Lenders Right to Cure.  Upon the occurrence of an Event of Default,
Lender  may,  at its option  and  without  notice,  advance  for the  account of
Borrowers such sum or sums as may be reasonably  necessary to cure such Event of
Default.  All sums so advanced,  together with interest thereon from the date of
advancement at a rate equal to four percent (4%) per annum over the highest rate
of interest then in effect as provided in the Promissory  Notes will become part
of the  Indebtedness,  and will be immediately due and payable without notice or
demand.

16.        
Waivers.  Each Borrower  waives any demand,  notice,  protest,  notice of
acceptance of this Agreement, notice of loans made, credit extended,  collateral
received or delivered  or other  action  taken in reliance  hereon and all other
demands  and  notices  of any  description.  With  respect  to the Loans and the
collateral  given to secure  repayment  thereof,  each  Borrower  assents to any
extension or  postponement  of the time of payment or other  indulgence,  to any
substitution,  exchange, or release of collateral, to the addition or release of
any party or operation  primarily or  secondarily  liable,  to the acceptance of
partial payments thereon and the settlement,  compromise or adjustment of any of
the  foregoing,  all in such manner and at such time or times as Lender may deem
advisable.  Lender will have no duty as to the  preservation  of rights  against
prior  parties,  nor as to the  preservation  of any rights  pertaining  thereto
beyond the safe custody thereof.  Lender may exercise its rights with respect to
the  collateral  without  resorting or regard to other  collateral or sources of
reimbursement for the Loans. Lender will not be deemed to have waived any of its
rights  under this  Agreement  unless  such  waiver is in writing  and signed by
Lender.  No delay or omission on the part of Lender in exercising any right will
operate  as a waiver of such  right of any  other  right and a waiver on any one
occasion  will not be construed as a bar to or waiver of any right on any future
occasion.

 15 

17.        
Notices.  All  notices to be given  pursuant  to this  Agreement  will be
sufficient if given by personal  service,  or by guaranteed  overnight  delivery
service,  or by postage  prepaid  mailing by certified or  registered  mail with
return receipt  requested,  to the parties as set forth below,  or to such other
address as a party may request by notice  given  pursuant to this  Section.  Any
time period  provided in the giving of any notice  hereunder shall commence upon
the date of personal service, the day after delivery to the guaranteed overnight
delivery  service,  or two (2) days after mailing  certified or registered mail.
However, any failure to give notice in accordance with the terms of this Section
will not  invalidate  such  notice if such  notice  was in fact in  writing  and
actually received by the party to whom it was directed.

| | BORROWERS: | Bioanalytical Systems, Inc.
2701 Kent Avenue
West Lafayette, Indiana 47906
Attention: Douglas P. Wieten
BAS Evansville, Inc.
10424 Middle Mt. Vernon Road
Mount Vernon, Indiana 47620
Attention: Michael P. Sylvon, Ph.D.
| | ---------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | LENDER:    | UNION PLANTERS BANK, N.A
437 South Street
P.O. Box 780
Lafayette, IN 47902-0780
Attention: Daniel R. House                                                                                                               

18.        
Uniform  Commercial  Code Article 9. In connection with the perfection of
Lenders  security  interest in  collateral  under Article 9 of the Uniform
Commercial Code (any term used in the Uniform  Commercial Code and not otherwise
defined  in this  Agreement  has the  meaning  given to the term in the  Uniform
Commercial Code, as amended from time to time),

| | a.        
Each  Borrower  represents  and  warrants to Lender  that such  Borrower is a
corporation duly organized and existing under the laws of the State of Indiana.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------

 16 

| | b.        
BAS'S exact legal name and the address of BAS's chief executive  office is as
follows:
| | -------------------------------------------------------------------------------------------------

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

| | c.        
BAS Evansville's  exact legal name and the address of BAS Evansville's  chief
executive office is as follows:
| | ------------------------------------------------------------------------------------------------------------------------

BAS Evansville, Inc.
             
             
             
             
10424 Middle Mt. Vernon Rd.
             
             
             
             
Mt. Vernon, IN 47620

| | d.        
Each Borrower covenants that such Borrower will not change the state of such
Borrowers incorporation or organization, the location of such
Borrowers chief executive office, or such Borrowers legal name
without providing Lender with at least thirty (30) days prior written notice.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | e.        
Borrowers authorizes Lender to file the Financing Statements describing the
Fixtures and any or all other collateral. Additionally, Borrowers authorize
Lender to file Financing Statements describing any agricultural liens or other
statutory liens held by Lender.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | f.        
Borrowers shall have possession of all collateral, except where expressly
provided otherwise in this Agreement or where Lender chooses to perfect its
security interest by possession in addition to the filing of the Financing
Statements. Where collateral is in the possession of a third party, the
applicable Borrower will join with Lender in notifying the third party of
Lenders interest and obtaining an acknowledgment from third party that it
is holding the collateral for the benefit of Lender.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

19.        
WAIVER OF JURY  TRIAL.  THE PARTIES,  AFTER  CONSULTING OR HAVING HAD THE
OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY,  VOLUNTARILY,  AND INTENTIONALLY
WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION  BASED
UPON OR ARISING OUT OF THIS AGREEMENT,  THE PROMISSORY NOTES, THE INSTRUMENTS OR
ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY COURSE OF CONDUCT,
DEALING,  STATEMENTS,  WHETHER ORAL OR WRITTEN, OR ACTIONS OF ANY PARTY. NONE OF
THE PARTIES SHALL SEEK TO CONSOLIDATE,  BY COUNTERCLAIM OR OTHERWISE, ANY 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 ANY OF THE
PARTIES EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY ALL PARTIES.

 17 

20.        
Miscellaneous.

| | a.        
If at any time or times by assignment or otherwise Lender transfers the Loans
and any collateral therefor, such transfer will carry with it Lenders
powers and rights under this Agreement with respect to the Loans and collateral
transferred, and the transferee will become vested with said powers and rights
whether or not they are specifically referred to in the transfer;
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | b.        
To the extent that a Borrower makes a payment to Lender or Lender enforces its
security interest and lien or exercises its right of setoff, and such payment(s)
or the proceeds of such enforcement or setoff or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or are required to be repaid to any party, then to the extent of such recovery,
the Loans or the part thereof originally intended to be satisfied will be
revived and continued in full force and effect as if such payment had not been
made or such setoff or enforcement had not occurred and will be Loans secured by
the collateral;
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | c.        
This Agreement and all rights and obligations hereunder, including matters of
construction, validity and performance, will be governed by the Uniform
Commercial Code and other applicable laws of the State of Indiana. Whenever
possible each provision of this Agreement will be interpreted in such a manner
as to be effective and valid upon applicable law, but if any provision of this
Agreement will be prohibited by or invalid under applicable law, such provision
will be ineffective only to the extent of such prohibition without invalidating
the remainder of such provision or the remaining provisions of this Agreement;
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | d.        
All rights and  privileges of Lender  hereunder will inure to the benefit of its
successors and assigns;
| | -------------------------------------------------------------------------------------------------------------------

| | e.        
Neither Borrower shall have the right to assign any of such Borrowers
rights or delegate any of such Borrowers obligations hereunder without the
prior written consent of Lender.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | f.        
The parties agree to be bound by any and all additional  conditions,  covenants,
representations  and  warranties  which are set forth in the  Instruments to the
same extent as if set forth herein;
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | g.        
This Agreement is intended by the parties to incorporate their entire
understanding with respect to the subject matter hereof, and may not be
contradicted by evidence of any prior agreement or contemporaneous oral
agreement, including, without limitation, any commitment letter or agreement
previously executed by the parties or any of them.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | h.        
Lender may take or release any security, may release any party liable for any
Indebtedness under this Agreement, may grant extensions, renewals, or
indulgences with respect to such Indebtedness, and may apply any security
therefor held by it to the satisfaction of such Indebtedness without prejudice
to any of its rights hereunder.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | i.        
The Indebtedness and all other sums payable hereunder will be payable without
relief from valuation and appraisement laws, and with reasonable attorneys
fees and costs of collection.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

 18 

MADE on the date first above written.

| | LENDER:
UNION PLANTERS BANK, N.A.
By:  /s/ Daniel R. House
Daniel R. House, Senior Vice President
| | -------------------------------------------------------------------------------------------------

 19 

| | BORROWERS:
BIOANALYTICAL SYSTEMS, INC.
By:  /s/ Peter T. Kissinger
Peter T. Kissinger, Ph.D.,
Chairman and Chief Executive Officer
BAS EVANSVILLE, INC.
By:  /s/ Peter T. Kissinger
Peter T. Kissinger, President
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

 20 