Document:

Exhibit 10.1
                                  ------------

                               AMENDMENT NO. 2 TO

                          AGREEMENT AND PLAN OF MERGER
                          ----------------------------

     THIS AMENDMENT NO. 2 TO AGREEMENT AND PLAN OF MERGER (this  "Amendment") is
made as of this 21st day of November,  2002, among Bioanalytical  Systems, Inc.,
an Indiana  corporation  ("BAS"),  PI Acquisition Corp., a Maryland  corporation
("MergerCo"), and PharmaKinetics Laboratories, Inc., a Maryland corporation (the
"Company").  All  capitalized  terms used but not defined  herein shall have the
meanings assigned to such terms in the Merger Agreement (as defined below).

     WHEREAS,  BAS,  MergerCo  and the  Company  are  parties  to  that  certain
Agreement  and Plan of Merger dated as of June 20, 2002, as amended by Amendment
No. 1 to  Agreement  and Plan of Merger  dated as of July 24, 2002 (the  "Merger
Agreement"); and

     WHEREAS,  BAS, MergerCo and the Company desire to amend certain portions of
the Merger Agreement pursuant to the terms and conditions of this Amendment;

     NOW, THEREFORE, in consideration of the mutual agreements herein contained,
and pursuant to Section 10.11 of the Merger  Agreement,  the Merger Agreement is
hereby amended by the parties as follows:

     1. The "Index of Defined  Terms" of the Merger  Agreement is hereby amended
by adding the following after the term "PKLB Common":

            "PKLB Note                          ss.9.1(d)(v)"

     2. Exhibit 2.3 is hereby  amended and restated in its entirety as set forth
on Exhibit 2.3 hereto.

     3. Section A. of the  Background  Information  is hereby  amended by adding
",other than  Parent,"  after "(x) the holders" and before "of common" in clause
(x) of the second  sentence  and the last  sentence  is hereby  restated  in its
entirety as follows "The holders of shares of PKLB Common  (other than  Parent),
Class A Preferred and Class B Preferred are sometimes  hereinafter  collectively
referred to as the 'Shareholders'.".

     4. Section 2.2 is hereby amended and restated in its entirety as follows:

     ss.2.2  Conversion of PKLB Common.  At the Effective Time, by virtue of the
Merger  and  without  any  action on the part of  MergerCo,  the  Company or the
holders of any shares of PKLB Common:

          (a) Subject to the other provisions of this Section 2.2 and to Section
     3.1(k) and (l),  other than  shares of PKLB  Common  held by Parent  (which
     shall be treated as set forth in Section 2.2(c)), each share of PKLB Common
     issued and  outstanding  immediately  prior to the Effective  Time shall be
     converted  into the  right to  receive  one-twelfth  (1/12) of one share of
     Parent Common,  upon surrender of the Common Certificate (as defined below)
     representing such shares of PKLB Common.

<PAGE>

          (b) All such  shares of PKLB  Common,  when  converted  as provided in
     Section  2.2(a),  shall no  longer  be  considered  outstanding  and  shall
     automatically  be canceled  and retired and shall cease to exist,  and each
     Common  Certificate  previously  evidencing  such shares  shall  thereafter
     represent  only the right to receive the number of shares of Parent  Common
     set forth in Section 2.2(a). The holders of Common Certificates (as defined
     below) previously evidencing shares of PKLB Common outstanding  immediately
     prior to the Effective  Time shall cease to have any rights with respect to
     the PKLB Common,  except as otherwise  provided herein or by law, and, upon
     the surrender of Common  Certificates in accordance with Section 3.1, shall
     only have the right to receive  for their  shares of PKLB Common the number
     of shares of Parent  Common as set forth in  Section  2.2(a),  without  any
     interest thereon.

          (c) The parties  acknowledge that Parent may own shares of PKLB Common
     at the Effective  Time and they hereby agree that, in such event,  any such
     shares of PKLB Common held by Parent shall,  as of the  Effective  Time, no
     longer be considered  outstanding and shall  automatically  be canceled and
     retired and shall  cease to exist and shall not  entitle  Parent to receive
     Parent Common or other Merger Consideration. Parent shall not be considered
     to be a  "Shareholder"  of the  Company  as  that  term  is  used  in  this
     Agreement.

     5.  Section  2.3(a) is hereby  amended by deleting  the phrase "Six Dollars
($6.00)" and replacing it with "Four Dollars and Eighty Cents ($4.80)".

     6. Section  9.1(b)(iii) is hereby amended by deleting the phrase  "December
31, 2002" and replacing it with "March 31, 2003".

     7. Section 9.1(d) is hereby amended as follows:

          a.   The "." is deleted  from the end of  subsection  (iii) and ";" is
               added in its place.

          b.   A new section (iv) is added as follows:

          "(iv) if any holder of Class A Preferred has delivered  written notice
     to  the  Company  that  such  holder  intends  to  exercise  or is  thereby
     exercising its right to convert all or any portion of the Class A Preferred
     held by such holder into PKLB Common; or"

          c.   A new section (v) is added as follows:

          "(v) if the registered owners of 100% of the Class B Preferred fail to
     deliver  written  notice to the Company as described  in paragraph  5(b) of
     that certain Secured Convertible Revolving Note (the "PKLB Note") issued by
     the Company to Parent dated as of November 14, 2002,  prior to such time as
     Parent may elect to exercise the Conversion  Rights (as defined in the PKLB
     Note) granted to it in the PKLB Note."

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                     - 2 -
<PAGE>

     IN WITNESS  WHEREOF,  the  undersigned  have  caused this  Amendment  to be
executed by their duly authorized officers as of the date first above written.

                              BIOANALYTICAL SYSTEMS, INC.

                              By /s/ Peter T. Kissinger
                                 -----------------------------------------------
                                     Peter T. Kissinger, Ph.D.
                                     Chief Executive Officer

                              PI ACQUISITION CORP.

                              By /s/ Peter T. Kissinger
                                 -----------------------------------------------
                                     Peter T. Kissinger, Ph.D.
                                     Director

                              PHARMAKINETICS LABORATORIES, INC.

                              By /s/ James M. Wilkinson
                                 ----------------------------------------------
                                     James M. Wilkinson, II, Ph.D.
                                       President and Chief Executive Officer

                                     - 3 -Exhibit 10.2
                                   ------------

THIS SUBORDINATED  CONVERTIBLE NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED,  OR ANY STATE OR OTHER  SECURITIES  LAWS AND MAY NOT BE
OFFERED,  SOLD,  TRANSFERRED  OR ASSIGNED  (i) EXCEPT  PURSUANT TO  REGISTRATION
THEREOF  UNDER SUCH LAWS,  OR (ii)  UNLESS,  IN THE  WRITTEN  OPINION OF COUNSEL
ADDRESSED TO BIOANALYTICAL SYSTEMS,  INC., FROM COUNSEL REASONABLY  SATISFACTORY
TO  BIOANALYTICAL  SYSTEMS,  INC.,  THE  PROPOSED  TRANSFER  MAY BE  EFFECTED IN
COMPLIANCE WITH APPLICABLE SECURITIES LAWS WITHOUT SUCH REGISTRATION.

THIS NOTE IS  SUBORDINATED  TO  CERTAIN  SENIOR  INDEBTEDNESS  OF  BIOANALYTICAL
SYSTEMS,  INC. THE HOLDER OF THIS NOTE BY ITS  ACCEPTANCE  HEREOF  COVENANTS AND
AGREES THAT  AMOUNTS  OWING WITH RESPECT TO THIS NOTE SHALL BE  SUBORDINATED  IN
ACCORDANCE  WITH THE  PROVISIONS  OF SENIOR  DEBT (AS DEFINED  HEREIN),  AND THE
HOLDER ACCEPTS AND AGREES TO BE BOUND BY SUCH PROVISIONS.

                        6% SUBORDINATED CONVERTIBLE NOTE
                        --------------------------------

$_____________                                       Dated:  _____________, 2002

     For value received,  Bioanalytical  Systems,  Inc., an Indiana  corporation
with its  principal  offices at 2701 Kent Avenue,  Purdue  Research  Park,  West
Lafayette,  Indiana 47906-1382 ("Maker"), hereby promises to pay to the order of
[Name of holder] or  [his/her/its]  assigns (the  "Holder"),  at [address] or at
such other  place as the  Holder  may direct in writing to the Maker,  in lawful
money of the United  States of  America,  the  principal  amount of  ___________
__________________________  Dollars  ($____________)  and interest,  as provided
herein,  all without relief from valuation or  appraisement  laws.  This Note is
being delivered in connection with the Agreement and Plan of Merger by and among
the Maker, PI Acquisition Corp., and PharmaKinetics Laboratories,  Inc. dated as
of June 20, 2002 (the "Merger Agreement").

     1. Payment of  Principal.  Subject to  acceleration  or earlier  payment as
provided for elsewhere in this 6% Subordinated  Convertible  Note (this "Note"),
the Maker shall pay to the Holder on January 1, 2008 (the "Maturity Date"),  the
entire  unpaid  principal  balance  of this Note  plus all  accrued  and  unpaid
interest through and including that date.

     2.  Interest.  For a period of one year from the date  hereof,  no interest
shall  accrue on the  principal  amount of this Note.  Beginning as of ________,
2003 (the "Anniversary  Date"),  interest on the unpaid principal balance hereof
existing  from time to time shall  accrue at the rate of 6% per annum.  Interest
shall be  calculated  on the  basis of  actual  daily  balances  of  outstanding
principal for the exact number of days the  principal  remains  outstanding  and
shall be computed on the basis of a 365-day  year.  Subject to  acceleration  or
earlier  payment as  provided  for  elsewhere  in this Note,  interest  shall be
payable by wire  transfer to an account  designated  by the  Holder,  in arrears
biannually  on the 15th day of July and the  15th day of  January  of each  year
following  the  Anniversary  Date,  until the Maturity  Date,  on which date all
accrued and unpaid interest shall be due and payable.

<PAGE>

     3. Prepayment. Upon twenty five (25) days prior written notice delivered to
the Holder (a "Prepayment  Notice"),  the Maker may prepay all or any portion of
the unpaid  principal  balance hereof and accrued  interest,  without premium or
penalty;  provided,  however,  all sums  received in  prepayment  shall first be
applied in payment of accrued but unpaid interest and the excess,  if any, shall
then be applied to the unpaid  principal  balance hereof.  In the event that the
Maker  elects to so prepay this Note,  the Holder may elect,  rather than accept
such prepayment, to convert the relevant portion of this Note in accordance with
Section 6 hereof;  provided,  however,  that the Maker must receive the Holder's
Election  Notice  (as  defined  below) at least  five (5) days prior to the date
specified in the Maker's  Prepayment  Notice for the Maker's  prepayment of this
Note.

     4. Default and Remedies.

     (a)  An "Event of Default" under this Note shall mean the occurrence of any
          of the  following  events:  (i) the Maker  defaults  in the payment of
          principal  of or interest on this Note when due and the Maker does not
          cure that  default  within five (5) days after the due date;  (ii) the
          Maker defaults in the  performance  of any obligation  under this Note
          (other than the payment described in the immediately preceding clause)
          and the Maker does not cure that default  within  thirty 30 days after
          receipt by the Maker of written notice from the Holder  specifying the
          nature of such default;  (iii) the Maker commences  proceedings in any
          court under the United States  Bankruptcy  Code, or any other debtors'
          relief or insolvency  act,  whether state or federal (the  "Bankruptcy
          Laws"), or any other person commences proceedings under the Bankruptcy
          Laws  against  the  Maker  and  those  proceedings  are not  stayed or
          dismissed  within one hundred  twenty  (120) days (each a  "Bankruptcy
          Default");  or (iv) any Change of Control  (as  defined  below) of the
          Maker. For purposes of this Section 4(a), the term "Change of Control"
          shall  mean  any  merger,   -------------   reorganization   or  other
          transaction in which control of a person or  substantially  all of its
          assets is transferred,  the sale of  substantially  all of the capital
          stock of a person,  or any other sale of all or  substantially  all of
          the assets of a person.

     (b)  If any Event of  Default  occurs  and is  continuing,  then the Holder
          shall have the right and option to declare,  by notice in writing sent
          by  registered  or  certified  mail  to the  Maker,  the  full  unpaid
          principal  balance  hereof,  together  with  all  accrued  and  unpaid
          interest thereon,  immediately due and payable without further demand,
          notice,  or  presentment  for  payment;   provided,   however,   that,
          notwithstanding anything in this Note to the contrary, in the event of
          a Bankruptcy  Default the entire principal  balance of and all accrued
          interest  on this Note  shall  forthwith  be due and  payable  without
          demand, presentment for payment, protest, notice of protest, notice of
          intent to accelerate, notice of acceleration and all other notices and
          further actions of any kind, all of which are hereby  expressly waived
          by the Maker.

     (c)  If  this  Note  is  collected  or  attempted  to be  collected  by the
          initiation or prosecution of any suit or through any bankruptcy court,
          or by any judicial proceeding,  or is placed in the hands of attorneys
          for  collection,  then the Maker  shall pay,  in addition to all other
          amounts owing  hereunder,  all court costs and  reasonable  attorney's
          fees incurred by the Holder.

                                     - 2 -
<PAGE>

     5. Subordination.

     (a)  Subordination to Senior Debt. Notwithstanding anything to the contrary
          contained in this Note, the Maker covenants and agrees, and the Holder
          by  acceptance of this Note  likewise  covenants and agrees,  that the
          Maker's  indebtedness  under this Note shall be junior and subordinate
          to the Senior  Debt (as  hereafter  defined)  to the extent and in the
          manner  set forth in this  Section 5,  ---------  except to the extent
          otherwise agreed to in writing by the Holder and any Senior Lender (as
          hereinafter  defined)  with  respect  to the  Senior  Debt  held by or
          payable to that Senior Lender. Each subsection of this Section 5 shall
          be given independent effect so that if a particular  --------- payment
          or action is prohibited by any one of these  subsections,  it shall be
          prohibited  although it otherwise  would not be  prohibited by another
          subsection.

     (b)  Default  on  Senior  Debt.  The Maker  may not make any  Payment  with
          respect to this Note or any Distribution of Assets if (i) there exists
          a  default  under  any  Senior  Debt or  there  exists  an  event  (an
          "Unmatured  Default") which but for the lapse of time of the giving of
          notice,  or both, would constitute a default under any Senior Debt, or
          (ii) a default or Unmatured  Default under any Senior Debt would exist
          upon giving  effect to such  Payment or  Distribution  of Assets.  The
          Maker may resume Payments with respect to this Note and  Distributions
          of Assets, subject to the terms of the Senior Debt and this Note, when
          (A) the  subject  default or  Unmatured  Default is cured or waived in
          writing by the holders of the affected  Senior  Debt,  or (B) 180 days
          pass after the occurrence of the subject default or Unmatured Default,
          but only if (a) the subject  default or the  Unmatured  Default is not
          the  subject  of  judicial  proceedings  and  (b) the  holders  of the
          affected  Senior Debt have not declared  acceleration  of their Senior
          Debt, but in either case only if this Section 5 otherwise  permits the
          Payment or Distribution --------- of Assets at that time.

     (c)  Dissolution,  Liquidation or  Reorganization of Maker. In the event of
          any insolvency,  bankruptcy or receivership  case or proceeding or any
          dissolution, winding up, liquidation,  reorganization or other similar
          proceeding  relating  to the Maker,  its  property  or its  operations
          (whether   voluntary  or   involuntary   and  whether  in  bankruptcy,
          insolvency  or  receivership   proceedings  or  otherwise),   upon  an
          assignment for the benefit of creditors,  or any other  marshalling of
          the assets of the Maker,  then payment in full of all Senior Debt then
          or  thereafter  to become due shall occur  before the Holder  shall be
          entitled  to receive or retain any  Distribution  of Assets or Payment
          with respect to this Note. In any such  proceedings,  any Distribution
          of Assets or  Payment to which the Holder  would be  entitled  if this

                                     - 3 -
<PAGE>

          Note were not  subordinated  to the  Senior  Debt shall be paid by the
          Maker  or  the  agent  or  other   person   making  such   payment  or
          distribution,  or by the Holder if received by the Holder, directly to
          each Senior Lender,  pro rata, to the extent necessary to make payment
          in full of all Senior  Debt,  after  giving  effect to any  concurrent
          payment or  distribution  to or for the benefit of the Senior Lenders.
          The Senior Lenders are authorized and empowered,  in the event of such
          insolvency,  bankruptcy  or  receivership  case or  proceeding  or any
          dissolution, winding up, liquidation,  reorganization or other similar
          proceeding  relating  to the Maker,  to demand,  sue for,  collect and
          receive  every such payment or  distribution  referred to above,  give
          acquittance  therefore,  file  claims  and  proofs  of  claim  in  any
          statutory or  non-statutory  proceeding,  vote such claims in any such
          proceeding  and take such  other  actions,  in the name of the  Senior
          Lenders  or in the name of the  Holder  or  otherwise,  as the  Senior
          Lenders may deem  necessary or advisable  for the  enforcement  of the
          provisions for this Section 5. The Holder agrees, in the event of such
          insolvency, ---------- bankruptcy,  receivership case or proceeding or
          any dissolution,  winding up,  liquidation,  reorganization,  or other
          similar  proceeding  relating  to the Maker to take such action as may
          reasonably  be  requested  at any time  and  from  time to time by the
          Senior  Lenders  to  collect  this Note for the  account of the Senior
          Lenders and to file appropriate proofs of claim in respect thereof and
          to execute and deliver such powers of attorney,  assignments  or other
          instruments as the Senior  Lenders may reasonably  request in order to
          enable the Senior  Lenders  to enforce  any and all claims  upon or in
          respect of the  indebtedness  of this Note and to collect  and receive
          any  and  all  payments  or  distributions  which  may be  payable  or
          deliverable at any time upon or in respect hereof.  Any and all monies
          so  collected  or  received by the holders of the Senior Debt shall be
          retained  indefeasibly  by the Senior  Lender for  application  to the
          Senior  Debt until the Senior Debt is fully,  finally and  irrevocably
          paid. In no event shall the Senior Lenders be liable to the Holder for
          any failure to prove any  indebtedness  of this Note,  to exercise any
          right with respect thereto or to collect any sums payable thereon.

     (d)  Subrogation.  No Distribution of Assets or Payment to which the Holder
          would have been entitled  except for the  provisions of this Section 5
          and which is received  by or paid over to the Senior  Lenders or their
          Representative  (as  hereinafter  defined) shall, as between the Maker
          and its  creditors  other than the Senior  Lenders and the Holder,  be
          deemed  to be a  payment  by the  Maker to the  Senior  Lenders  or on
          account  of the  Senior  Debt,  and the  Holder  shall  be  subrogated
          (without  any  duty on the  part of the  Senior  Lenders  to  warrant,
          create, effectuate,  preserve or protect such subrogation) to the then
          or  thereafter  existing  rights  of the  Senior  Lenders  to  receive
          Distributions of Assets or payments made on the Senior Debt until this
          Note shall be paid in full.

     (e)  Payments Held in Trust.  If the Holder  receives any  Distribution  of
          Assets or Payment which the Holder is not entitled to retain under the
          provisions  of this  Section  5, any such  Distribution  of  Assets or
          Payment so  received  shall be held in trust for the  Senior  Lenders,
          shall not be commingled with any other assets of the Holder, and shall
          be paid to the Senior  Lenders,  pro rata, to the extent  necessary to
          make payment in full, after giving effect to any concurrent payment or
          distribution to or for the benefit of the Senior Lenders.

                                     - 4 -
<PAGE>

     (f)  Changes in Senior  Debt.  Any  Senior  Lender may at any time and from
          time to time with notice to the Holder:  (i) with the  approval of the
          Maker,  extend,  renew, modify, waive or amend the terms of the Senior
          Debt; (ii) as permitted by contract  between the Maker and such Senior
          Lender or by applicable  laws,  sell,  exchange,  release or otherwise
          deal with any property  pledged,  mortgaged or otherwise  securing the
          Senior Debt; (iii) release any guarantor or any other person liable in
          any manner for the Senior  Debt or,  with the  approval  of the Maker,
          amend or waive the terms of the Senior Debt;  (iv) exercise or refrain
          from exercising any rights against the Maker or any other persons; (v)
          apply in any order any sums by  whomever  paid or however  realized to
          the Senior Debt; and (vi) take any other action which  otherwise might
          be deemed to impair the Holder's  rights.  Any and all of such actions
          may be taken by the Senior Lenders without incurring responsibility to
          the Holder and without impairing or releasing the Holder's obligations
          to the Senior Lenders.

     (g)  Except for  scheduled  payments of principal and interest on this Note
          that are not  prohibited  under Section 5(b) and except as provided in
          this  Section 5, until the Senior Debt shall have been fully,  finally
          and irrevocably  paid, (i) the Holder will not ask,  demand,  sue for,
          take or receive from the Maker,  and the Maker will not make, give, or
          permit, directly or indirectly, by setoff, redemption,  purchase or in
          any other manner, any payment on or security for the whole or any part
          of the  indebtedness  of this Note,  and,  without  the prior  written
          consent of the Senior Lenders,  the Holder will not take any action to
          enforce or  collect  amounts  so owing  against  the Maker or act as a
          petitioning  creditor in any bankruptcy  proceeding  filed against the
          Maker,  (ii) the Holder shall not have any right to possess any assets
          of the Maker or to foreclose upon any such assets, whether by judicial
          action or otherwise,  and (iii)  regardless of whether the Senior Debt
          is secured or unsecured, the Senior Lenders shall be subrogated to the
          Holder with respect to the Holder's claims against the Maker,  and the
          Holder's rights,  liens and security interests,  if any, in any of the
          Maker's assets and the proceeds thereof.

     (h)  Third-Party  Beneficiary,  Etc..  The foregoing  provisions  regarding
          subordination  are solely for the  purpose of  defining  the  relative
          rights of the  Senior  Lenders  on the one hand and the  Holder on the
          other hand.  Such provisions are for the benefit of the Senior Lenders
          (and their  successors  and assigns) and shall be  enforceable by them
          directly  against the Holder except to the extent  otherwise agreed to
          in writing by the Holder and any other Senior Lender.

     (i)  Further Assurances.  The Holder covenants and agrees that at any time,
          and from  time to time  hereafter,  it will  execute  such  additional
          instruments  and take such actions as may be  reasonably  requested by
          any Senior  Lender to confirm or perfect or otherwise to carry out the
          intent and purposes of this Section 5, including,  but not limited to,
          a subordination and standstill agreement or other similar document.

     (j)  Definitions.  As used in this Section 5 (or as elsewhere  used in this
          Note) the following terms shall have the meanings indicated:

                                     - 5 -
<PAGE>

               "Distribution  of Assets" means any distribution of assets of the
               Maker  or any of its  subsidiaries  of  any  kind  or  character,
               whether a payment,  purchase or other  acquisition  or retirement
               for cash,  property,  or securities,  with respect to the Maker's
               obligations under this Note.

               "Payment"  means  payment  of any  obligation  now  or  hereafter
               existing  under  this  Note  (as it  may  hereafter  be  amended,
               supplemented,  or otherwise modified from time to time),  whether
               created  directly or acquired by  assignment  or  otherwise,  and
               interest  and  premiums,  if any,  thereon and all other  amounts
               payable in respect thereof or in connection therewith.

               "Representative"  means,  with  respect to any Senior  Debt,  the
               trustee,  agent, or other  representative  for one or more of the
               Senior Lenders, if any, designated in the indenture, agreement or
               document  creating,  evidencing or governing  such Senior Debt or
               pursuant to which it was issued,  or otherwise  designated by the
               holders of such Senior Debt.

               "Senior  Debt" means the  principal of and  premium,  if any, and
               interest  on  indebtedness  incurred by the Maker at any time and
               from time to time for money borrowed from banks, trust companies,
               savings  and  loan   associations  and  other  similar  financial
               institutions  evidenced by notes,  bonds,  debentures,  financing
               agreements,  letters of credit, or similar obligations, or issued
               under  the  provisions  of an  indenture  or  similar  instrument
               between  the Maker and a bank or trust  company or  substantially
               similar   financial   institution;    excluding,   however,   all
               indebtedness  (principal  and interest)  owed by the Maker to the
               Holder.

               "Senior  Lender"  or  "Senior  Lenders"  means one or more of the
               holders of Senior Debt.

     6. Conversion.

     (a)  The  Holder  may,  at the  Holder's  option,  at any  time  after  the
          Anniversary  Date, and from time to time thereafter,  prior to payment
          in full of this Note,  convert the outstanding  unpaid balance of this
          Note and any interest accrued pursuant to paragraph 2 above but unpaid
          (the  "Conversion  Amount"),  in whole or in part  (but only into full
          shares),  into  fully  paid and  non-assessable  shares of the  common
          stock, without par value of the Maker (the "Common Shares"), at a rate
          equal to the  amount of  $16.00  per  Common  Share  (the  "Conversion
          Rate").  In order to exercise this conversion  right,  the Holder must
          send written  notice of the  conversion  to the Maker at least 10 days
          prior to the specified conversion date (a "Conversion Notice"). On the
          conversion date (or as soon thereafter as is reasonably  practicable),
          the Maker shall issue to the Holder a share certificate for the Common
          Shares  acquired  upon  conversion.  The  Holder's  right  to elect to
          convert the  Conversion  Amount of this Note into Common  Shares shall
          not be affected by any  Prepayment  Notice given by the Maker pursuant
          to Section 3 above,  so long as the Maker has  received  the  Holder's
          Conversion  Notice at least five (5) days prior to the date  specified
          in the Maker's  Prepayment  Notice for the Maker's  prepayment of this
          Note.

                                     - 6 -
<PAGE>

     (b)  The Conversion Rate shall not be subject to adjustment for issuance of
          Common Shares or of rights,  options,  warrants,  or other  securities
          convertible  into Common Shares,  whether at a price per share that is
          more or less  than or equal to the  Conversion  Rate or for any  other
          event,  except as specified in this  Subsection  6(b).  The Conversion
          Rate  shall  be  subject  to  adjustment  if the  Maker  at  any  time
          subdivides (by any stock split,  stock dividend,  recapitalization  or
          otherwise) one or more classes of its outstanding Common Shares into a
          greater number of shares,  in which case the Conversion Rate in effect
          immediately prior to the subdivision will be proportionately  reduced,
          and if the  Maker at any time  combines  (by  reverse  stock  split or
          otherwise) one or more classes of its outstanding Common Shares into a
          smaller number of shares,  in which case the Conversion Rate in effect
          immediately   prior  to  that  combination  will  be   proportionately
          increased.

     (c)  Notwithstanding  any  other  provisions  of  this  Section  6  to  the
          contrary,  the  conversion  rights of the  Holder  shall be subject to
          compliance with all applicable  federal and state securities laws, and
          the Holder  agrees to execute all required  agreements  and  documents
          required by the Maker to establish compliance with such laws.

     (d)  The Maker shall at all times  reserve and keep  available  and free of
          preemptive  rights out of its authorized  but unissued  Common Shares,
          solely for the purpose of issuance upon  conversion of the Note,  that
          number of Common  Shares as shall from time to time be  sufficient  to
          effect the  conversion  of the Note,  and if at any time the number of
          authorized  but  unissued  Common  Shares shall not be  sufficient  to
          effect the  conversion of the Note, the Maker shall take the corporate
          action  necessary  to  increase  the number of its  authorized  Common
          Shares to a number sufficient for this purpose.

     7. Notice of Certain Events. The Maker agrees to execute and deliver to the
Holder a certificate  signed by the chief  executive  officer or chief financial
officer of the Maker,  specifying the occurrence of any of the following  events
and including a description thereof,  promptly,  but in any event not later than
four (4) days,  after any  executive  officer of the Maker  becomes aware of the
occurrence of any of the following events:

     (a)  Events of Default.  Any condition or event which constitutes or which,
          with notice or lapse of time, would constitute an Event of Default has
          occurred,  or any holder of any of the Notes (as defined in the Merger
          Agreement) has given any notice or taken any other action with respect
          to a claimed default or Event of Default hereunder; or

     (b)  Other Defaults.  The Maker or any subsidiary of the Maker has received
          notice of any default or failure to perform any  covenant or provision
          under any agreement  relating to any Senior Debt;  provided,  however,
          that nothing in this paragraph 7 shall require the Maker to notify the
          Holder of any event or  occurrence  if,  by the  giving  notice to the
          Holder,  the Maker would also be required to make any public filing or
          public announcement that it would not otherwise be required to make.

                                     - 7 -
<PAGE>

     8. Notices.  All notices,  requests,  demands, or other communications that
are  required  or may be given  pursuant  to the terms of this Note  shall be in
writing and delivery  shall be deemed  sufficient and to have been duly given on
the date of service if  delivered  personally  or by facsimile  transmission  if
receipt is  confirmed to the party to whom notice is to be given or on the third
day after  mailing if mailed by  registered  or  certified  mail,  and  properly
addressed as follows:

    If to the Maker, to:     2701 Kent Avenue
                             West Lafayette, Indiana 47906-1382
                             Attention:  Peter T. Kissinger, Ph.D.
                                         President and Chief Executive Officer
                             Fax:  (765) 497-1102

    Copies to:               Ice Miller
                             One American Square
                             Box 82001
                             Indianapolis, Indiana
                             Attention:  Stephen J. Hackman, Esq.
                             Fax:  (317) 592-4666

    If to the Holder, to:

                             Attention:
                             Fax:

    Copies to:

                             Attention:
                             Fax:

or to such other address as may be specified in writing by any of the above.

     9. Remedies.  The remedies  provided by this Note shall be cumulative,  and
shall be in addition to and not exclusive of other remedies available at law, or
in equity. The exercise or waiver by the Holder of any right or remedy available
under this Note shall not be deemed to be a waiver of any other  right or remedy
available under this Note, at law, or in equity.

                                     - 8 -
<PAGE>

     10. Miscellaneous.

     (a)  Whenever used herein,  the singular includes the plural and the plural
          includes the singular. The term "Maker" means the corporation named in
          the opening paragraph hereof and its successors and assigns.

     (b)  All disputes,  claims or  controversies  arising out of or relating to
          this  Agreement or the  negotiation,  validity or  performance of this
          Agreement or the  Transactions  shall be governed by and  construed in
          accordance with the laws of the State of Indiana without regard to its
          rules of conflict of laws. Each of the parties hereby  irrevocably and
          unconditionally  consents to submit to the non-exclusive  jurisdiction
          of the courts of the State of Indiana and of the United States located
          in the State of  Indiana  (the  "Agreed  Courts")  for any  litigation
          arising  out of or  relating to this  Agreement,  or the  negotiation,
          validity or performance of this Agreement,  or the  Transactions  (and
          agrees not to commence any litigation  relating thereto except in such
          courts),  waives  any  objection  to the  laying  of venue of any such
          litigation  in the  Agreed  Courts and agrees not to plead or claim in
          any Agreed Court that such litigation brought therein has been brought
          in any  inconvenient  forum.  Each of the parties hereto agrees,  that
          service of process may be made on such party by prepaid certified mail
          with a proof of mailing receipt  validated by the United States Postal
          Service constituting evidence of valid service.  Service made pursuant
          to the preceding  sentence  shall have the same legal force and effect
          as if served upon such party personally within the State of Indiana.

     (c)  The Holder, by acceptance of this Note, hereby represents and warrants
          that this Note has been acquired by the Holder for investment only and
          not for resale or distribution  hereof.  The Holder,  by acceptance of
          this Note, further understands, covenants and agrees that the Maker is
          under  no  obligation  and  has  made no  commitment  to  provide  for
          registration  of this  Note  under  the  Securities  Act of  1933,  as
          amended,  or  state  securities  laws,  or to take  such  steps as are
          necessary to permit the sale of this Note without  registration  under
          those laws, except as provided in the Registration Rights Agreement by
          and between  Maker,  Holder and the other parties  thereto dated as of
          the date hereof.

     (d)  The  captions of the  sections of this Note are solely for  convenient
          reference   and  shall  not  be  deemed  to  affect  the   meaning  or
          interpretation of any provision of this Note.

     (e)  The  provisions  of  Section  5 of this  Note  may not be  amended  or
          modified without the written consent of the Senior Lenders.

                                     - 9 -
<PAGE>

     IN WITNESS  WHEREOF,  the Maker has executed,  acknowledged,  and delivered
this Note as of the day and year first above written.

                                        BIOANALYTICAL SYSTEMS, INC.

                                        By:
                                            ------------------------------------

                                        Printed:
                                                  ------------------------------

                                        Title:
                                                --------------------------------

Accepted and agreed to this _____ day of _____, 2002:

By:  ----------------------------
     [Name]

                                     - 10 -

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