Exhibit 10.3







April 1, 2004







Mr. Michael R. Cox

5521 Turkey Foot Road

Zionsville, IN  46027




Dear Mike:




The Board of Directors of Bioanalytical Systems, Inc. (the “Company”)
has approved the grant of non-qualified stock options to you. This letter will
serve as notice of the grant, effective as of February 27, 2004 (the “date
of grant”), of an option to purchase (the “Option”) 25,000 of the
Common Shares of the Company (the “Option Shares”) on the terms and
conditions set forth herein, and upon your execution and delivery to the Company
of the copy of this letter included herein will constitute our agreement as to
those terms. This Option has not been granted under the terms of the
Company’s employee stock option plans, and is not a “qualified”
stock option as defined by the U.S. Internal Revenue Service. You
are urged to consult with your tax advisors concerning the tax effect of the
grant and exercise of this Option.



	
1.	
OPTION PRICE.    The purchase price of the Option
Shares is $4.58 per share (the "Option Price").








	
2.	
MEDIUM AND TIME OF PAYMENT.    You must pay the
Option Price with respect to the Option Shares being purchased at the time you
exercise the Option. The Option Price may be paid either (a) in cash; (b) by
certified check or by bank cashier's check; (c) if you can do so without
violating Section 16(b) of the Securities Exchange Act of 1934, through the
tender to the Company of outstanding Common Shares or through the withholding
and surrender to the Company of Option Shares being purchased, which shall be
valued, for purposes of determining the extent to which the purchase price has
been paid, at the fair market value of the Common Shares on the date of exercise
of the Option; or (d) or by a combination of (a), (b) or (c).








	
3.	
TERM AND EXERCISABILITY OF OPTIONS.    The Option is
effective immediately upon your acceptance of this letter and may be exercised
as to the shares covered by the first installment six months after the grant of
the option and the second installment after the first anniversary of the grant
of the option.. The Option will be considered to have been effectively exercised
only upon delivery to the Company of the Option Price and a "Notice of Exercise"
in the form attached hereto, and the satisfaction to all other conditions
described in this letter. The Option shall expire as to all unexercised Option
Shares at the close of business on the tenth anniversary of the date of this
letter (or on the next business day if that date is a Saturday, Sunday or
holiday).








	
4.	
CESSATION OF SERVICE WITH THE COMPANY.    In the
event you cease to serve as an employee of the Company or any of its
subsidiaries, this Option shall terminate immediately upon termination of
employment as to any unexercised Option Shares; provided, however, that if
termination of employment is due to retirement with the consent of the Company
or is due to a permanent and total disability; you shall have the right to
exercise the Option with respect to the Common shares for which it could have
been exercised on the effective date of termination of employment at any time
within three months after the termination date, if termination is due to
retirement with the consent of the Company, or at anytime within 12 months after
termination date, if termination is due to permanent and total disability. In
the event of your death while serving as an employee of the Company or any of
its subsidiaries, your personal representative shall have the right to exercise
this Option with respect to the Common Shares for which it could have been
exercised on the date of your death. Whether termination is a retirement with
the consent of the Company or due to permanent and total disability, and whether
an authorized leave of absence on military or government service shall be deemed
to constitute termination of employment for the purposes of this Option, shall
be determined by the Board of Directors in its sole discretion, which
determination shall be final and conclusive.













	
5.	
RECAPITALIZATION.    The number of Option Shares and
the Option Price each shall be proportionally adjusted for any increase or
decrease in the number of issued shares of the Common shares resulting from a
subdivision or consolidation of shares of the Company, the payment of a share
dividend, a share split or other increase or decrease in the outstanding Common
Shares effected without receipt of consideration by the Company (including an
increase or decrease effected as a part of the Recapitalization of the Company,
as defined herein). In the event that there shall be a recapitalization or
reorganization of the Company or a reclassification of its outstanding shares
(each a "Recapitalization") as a result of which other shares (the "New Shares")
are issued in exchange for Common Shares, then there shall be substituted for
the Option Shares then issuable hereunder that number of New Shares into which
those Option Shares have been converted had they been outstanding at the
effective date of the Recapitalization.








	
6.	
MERGER, DISSOLUTION.    If the Company shall enter
into any agreement of merger or consolidation (whether or not it shall be the
surviving entity thereunder), the Company shall have the right to terminate this
Option as of any date specified in a written notice given to you not less than
30 days prior to the termination date. If the merger or consolidation described
in that notice is not consummated within 180 days following the termination date
of this Option specified in the notice, this Option thereafter shall be deemed
to have been continuously in effect since the date hereof. In the event of the
sale of all or substantially all of the assets of the Company and the
distribution of the proceeds thereof to shareholders in liquidation of the
company, the Company shall give you 30 days prior written notice specifying
record date for the purpose of determining the shareholders entitled to
participate in that distribution and this Option shall expire as to all Option
Shares that remain unexercised as of the date of that distribution.








	
7.	
NONASSIGNABILITY.    This Option is not assignable or
transferable except by will or under the laws of descent and distribution.
During your lifetime, this Option shall be exercisable only by you (or if you
become incapacitated, by your legal guardian or attorney-in-fact).








	
8.	
ISSUANCE OF SHARES AND COMPLIANCE WITH SECURITIES
LAWS.    The Company may postpone the issuance and
delivery of certificates representing Common Shares until (a) the admission of
such shares to listing on any exchange on which shares of the Company of the
same class are then listed and (b) the completion of any requirements for
registration or other qualification of the shares under any state or Federal
law, rule or regulation or the rules and regulations of any exchange upon which
the Common shares are traded as the Company shall determine to be necessary or
advisable. The Company shall use its reasonable commercial efforts to complete
any required registration or other qualification. You have no right to require
the Company to register the Common Shares acquired upon the exercise of this
Option under federal or state securities laws. As a condition to the effective
exercise of this Option you may be required to make such representations and
furnish such information as may, in the opinion of counsel for the Company, be
appropriate to permit the Company to determine whether registration or
qualification of those shares is required in connection with that transaction.








	
9.	
RIGHTS AS A SHAREHOLDER.    You shall have no rights
as a shareholder with respect to Common Shares subject to this Option until the
date of issuance of a certificate to you. A certificate will not be issued until
you have exercised the Option, fully paid for the Common Shares acquired thereby
and satisfied all other details described in this letter. No adjustment will be
made for dividends or other rights for which the record date is prior to the
date a certificate is issued.








	
10.	
NO OBLIGATION TO EXERCISE OPTION.    The grant of
this Option imposes no obligation upon you to exercise the Option.








	
11.	
NO OBLIGATION TO CONTINUE EMPLOYMENT.    The grant of
this Option to you does not constitute any contract of employment between you
and the Company, and does not impose any obligation of the Company to continue
your employment.








	
12.	
WITHHOLDINGS.    As a condition to the effective
exercise of this option, the Company may right to require you to remit to the
Company amounts sufficient to satisfy any applicable withholding requirements
set forth in the Internal Revenue Code of 1986, as amended, or under state or
local law relating to the Option. The Company shall have the right, to the
extent permitted by law, to deduct from any payment of any kind otherwise due to
you any federal, state or local taxes of any kind required by law to be withheld
with respect to the exercise of the Option.











	
13.	
POWER AND AUTHORITY.    The Board of Directors shall
have the full power and authority to take all actions and make all
determinations required or provided for under the terms of this Option; to
interpret and construe the provisions of this letter, which interpretation or
construction shall be final, conclusive and binding on the Company and you; and
to take any and all other actions and make any and all other determinations not
consistent with the specific terms and provisions of this letter which the Board
of Directors deems necessary or appropriate.








Please acknowledge your receipt of this letter and your agreement to the terms
set forth herein by signing and returning the copy enclosed for that
purpose.



Very Truly Yours,







Peter T. Kissinger

President



Accepted and agreed to:  







Date: