Exhibit 10.1

EMPLOYMENT AGREEMENT

 

THIS AGREEMENT ("Agreement") is made and entered into effective the 1st day of
August, 2005 by and among BIOANALYTICAL SYSTEMS, INC. (“BASi”, “Company”) a
corporation organized under the laws of the State of Indiana (“Company”), and
Edward M. Chait, ("Employee") as Executive Vice President, Chief Scientific
Officer of BASi.

 

Preliminary Statements:

 

A.        BASi is engaged in the business of providing contract research
services and manufacturing and distributing scientific instruments. The Company
is in the business of conducting laboratory experiments and research on behalf
of other businesses (“Business”) which is expected to add significantly to the
value of the Company and BASi.

 

B.        Employee is experienced in the Business, and is familiar with the
management and operations of the Company. The Company wishes to employ Employee
on the terms and conditions contained herein. Employee views entry into this
employment as a mutually beneficial long-term investment by both the Business
and by the Employee as a major career commitment.

 

In consideration of the premises and mutual covenants and agreements contained
herein, the parties hereby agree as follows:

 

ARTICLE 1

 

Term, Compensation, and Benefits

 

Section 1.1. Term The Company hereby agrees to employ the Employee, and the
Employee hereby accepts employment with the Company, on the terms and conditions
set forth in this Agreement until July 31, 2007 (the “Initial Term”). The
Initial Term shall be extended for successive one year periods (the "Additional
Terms," and together with the Initial Term, the "Employment Period"), except
that if either Employee or Company gives the other party written notice at least
ninety days (90) before the end of the Initial Term, or any extended term, then
this Agreement shall expire at the end of its then current term. The Employee
shall take absences at such time as shall be approved by the Chief Executive
Officer.

 

Section 1.2 Compensation and Benefits

 

Section 1.2.1 Salary: BASi will pay a base salary of $12,500.00 per month.
Salary shall be paid in equal semi-monthly installments in arrears. All amounts
to be paid hereunder shall be paid in accordance with normal payroll procedures
of the Company and shall be subject to all required withholdings and deductions.

 

Section 1.2.2. Stock Options: This Agreement will also include options to
purchase BASi shares. The exact number, strike price and maturity schedule of
those options are defined in an appendix which includes information on BASi
option plans, form of grant/s and exercise.

 

Section 1.2.3. Bonus: All employees of BASi are eligible for a bonus grant which
is based on the net income of the corporation reaching or exceeding 7% after
tax. The distribution of this bonus component is at the discretion of the
Compensation Committee of the Board of Directors.

 

Section 1.2.4 Relocation: Within the first four months of employment “employee”
may relocate to the Lafayette area. BASi will assist with relocation to the area
as described in the BASi Employee Handbook. Employee will be required to
complete a Reimbursement Agreement for all relocation expenses. Please contact
Joe Key when/if you are ready to make arrangements.

 

 

 

 

Section 1.2.5 Vacation Policy: During the initial term, Employee will accumulate
one (1) vacation day per month in accordance with policies described in the BASi
Employee Handbook. Employee shall also be granted an additional ten days
vacation at the start of the initial term, effectively granting employee 15
years seniority. Employee's compensation shall continue to be paid in full
during this period. Any vacation at the end of any year ending on an anniversary
date shall carry over to the following one-year period commencing on such
anniversary date (the “Following Year”), but shall not carry over beyond the
Following Year. Vacation time not used prior to the expiration will be banked
for short-term disability as described in the BASi Employee Handbook.

 

Section 1.2.6 Other Benefits: During the Employment Period, the Employee shall
be entitled to participate in all employee benefit plans which are generally
made available to employees of the Company, subject to the eligibility,
qualification, waiting period and other terms and conditions of such plans as
they shall be in effect from time to time unless listed herein as exceptions
from those terms and conditions. The highlights of the benefits are as follows:
group health insurance (after ninety days); two weeks unpaid vacation
(optional); term life insurance ($100,000); long term disability insurance; and
a 401K deferred tax savings incentive/profit sharing plan. Optional
participation benefits include a flexible spending account, dental, vision, and
short-term disability.

 

ARTICLE 2

 

Duties

 

Section 2.1. Duties During the Employment Period, the Employee will be the
ranking scientific officer of the company, with responsibility for the
marketing,/sales segment of our business. The Employee will lead the business
development staff, be the ultimate contact with clients and scientific advisors,
and own responsibility for the business development/scientific viability of the
company. The Employee will be called upon to perform certain services for the
Company including, without limitation, the following:

 

a)

Assess and document business needs (develop and solicit business plans and
budgets, working with various department heads).

b)

Motivate, lead and teach qualified staff to meet or exceed expectations.

c)

Develop and manage resources (staff, facilities, and equipment) to deliver new
business and maintain current clients.

d)

Work jointly with the CEO and COO of contract research to insure scientific
regulatory compliance and with the CFO to ensure SEC compliance. You would be
expected to provide accurate financial information and meet all financial
disclosure requirements..

e)

Manage relationships with outside scientific leaders.

f)

Enhance the professional image of BASi in public forums.

g)

Engage in benchmarking against competitors, presenting alternate strategies and
generally become knowledgeable about the drug development and medical device
industries.

 

Section 2.2. The Employee shall serve the Company by performing such other
services as the Company may reasonably require to conduct the Company’s
business. The Company shall also have the absolute right and power to direct and
control the Employee in carrying out duties assigned by the Company, including,
but not limited to, the right (1) to review, modify and cancel all work
performed, and (2) to assign specific duties to be performed, including the
general means and manner by which such duties shall be performed.
Notwithstanding any other provisions of this Agreement, the Company shall not
impose employment duties or constraints of any kind upon the Employee which
would require the Employee to violate any ordinance, regulation, statute or
other law. The Employee shall devote his full working time, attention and energy
to the performances of the duties imposed hereunder. The Employee shall conform
to such hours of work as may from time to time reasonably be required of him and
shall not be entitled to receive any additional remuneration for work outside
his normal hours. The Employee will NOT be held financially, legally, or
otherwise liable for any past practices or actions or decisions made by BASi, or
its predecessors prior to the start of the Employee’s beginning date of
employment.

 

 

2

 

 

 

ARTICLE 3

 

Confidentiality and Other Matters

 

Section 3.1. Confidentiality Agreement. The Employee, prior to and during the
term of employment under this Agreement, has had and will have access to and has
become or will become familiar with information, whether or not originated by
the Employee, which is used in or related to the Business or the business of
BASi or certain subsidiaries or affiliates of BASi and is (a) proprietary to,
about, or created by the Company its subsidiaries or its affiliates; (b)
designated as confidential by the Company, its subsidiaries or its affiliates;
or (c) not generally known to or ascertainable by proper means by the public
("Confidential Information").

 

Further, the Employee has had and will have access to items proprietary to the
Company, its subsidiaries or its affiliates ("Proprietary Items"). "Proprietary
Items" shall mean all legally-recognized rights which result from or are derived
from the Employee's work product or the work product of others made for the
Company, its subsidiaries or its affiliates, including all past, present and
future work product made for the Company, its subsidiaries or its affiliates, or
with knowledge, use or incorporation of Confidential Information, including, but
not limited to works of authorship, developments, inventions, innovations,
designs, discoveries, improvements, trade secrets, trademarks, applications,
techniques, know-how and ideas, whether or not patentable or copyrightable,
conceived or made or developed by the Employee (solely or in cooperation with
others) or others during the term of this Agreement or prior to or during his
tenure with the Company, or which are reasonably related to the Business or the
business of BASi or certain subsidiaries or affiliates of BASi or the actual or
demonstrably anticipated research and development of the Company.

 

The Employee agrees that any Confidential Information and Proprietary Items will
be treated in full confidence and shall not be used, directly or indirectly, by
him, nor shall the same be disclosed to any other firms, organizations, or
persons outside of the Company's employees bound by similar agreement, during
the term of this Agreement or at any time thereafter, except as required in the
course of his employment with the Company. All Confidential Information and
Proprietary Items, whether prepared by the Employee or otherwise, coming into
his possession, shall remain the exclusive property of the Company and shall not
be permanently removed from the premises of the Company under any circumstances
whatsoever, without the prior written consent of the Company.

 

The Employee will not be obliged to keep information confidential to the extent
that the information has ceased to be confidential and has entered the public
domain otherwise than due to the Employee's acts. The provisions of this Section
3.1 shall be in addition to, and shall not affect, the Employee's common law
duty of fidelity to the Company.

 

Section 3.2. The parties foresee that the Employee may make inventions or create
other intellectual property in the course of his duties hereunder and agree that
in this respect the Employee has a special responsibility to further the
interests of the Company and its affiliates.

 

Section 3.3 The Employee agrees that during the Employee’s employment with the
Company and for an additional period of the two (2) years immediately following
termination of the Employee’s employment with the Company, the Employee shall
not directly or indirectly, as an individual or as a director, officer,
contractor, employee, consultant, partner, investor or in any other capacity
with any corporation, partnership or other person or entity, other than the
Company (an “Other Entity”), (i) contact or communicate any then current
material customer or client of the Company in the Business, or any person or
entity with which the Company is then engaged in material discussions regarding
that person or entity becoming a client or customer of the Company in the
Business, for the purpose of inducing any such customer or client to move its
account from the Company to another company in the Business; provided, however,
that nothing in this sentence shall prevent the Employee from becoming employed
by or providing consulting services to any such customer or client of the
Company in the Business, or (ii) solicit any other employee of the Company for
employment or a consulting or other services arrangement with an Other Entity.
The restrictions of this Section 3.3 shall not be deemed to prevent the Employee
from owning not more than 5% of the issued and outstanding shares of any class
of securities of an issuer whose securities are listed on a national securities
exchange or registered pursuant to Section 12(g) of the Securities Exchange Act
of 1934, as amended. In the event a court of competent jurisdiction determines
that the foregoing restriction is unreasonable in

 

3

 

 

terms of geographic scope or otherwise then the court is hereby authorized to
reduce the scope of said restriction and enforce this Section 3.3 as so reduced.
If any sentence, word or provision of this Section 3.3 shall be determined to be
unenforceable, the same shall be severed herefrom and the remainder shall be
enforced as if the unenforceable sentence, word or provision did not exist.
Notwithstanding any provision of this Agreement to the contrary, the terms and
conditions of this Section 3.3 shall survive for a period of two (2) years
following termination of the Employee’s employment with the Company, at which
time the terms and conditions of this Section 3.3 shall terminate.

 

 

4

 

 

 

ARTICLE 4

 

As a new employee, your first one hundred eighty days (180) will be a trial
period during which BASi can evaluate you and you can evaluate BAS. During this
time, employment with BASi is at-will and allows the company or you to terminate
the employment relationship for any reason prior to the completion of the trial
period.

 

Termination of Employment

 

Section 4.1. Resignation by the Employee. The Employee may resign from his
employment with the Company at any time after July 31, 2007, by providing
written notice to the Company of resignation at least ninety days (90) prior to
the effective date of the resignation (the "Resignation Date”). Employee may
resign at any time for “good reason,” due to (a) a material breach of this
Agreement by the Company which continues after the Employee has given the
Company thirty days (30) written notice of such breach, or (b) the assignment to
the Employee of duties materially inconsistent with this Agreement other than in
accordance with the terms of this Agreement, and the Company has not rectified
such assignment within thirty days (30) after the Employee has given the Company
written notice of such breach. A termination by the Employee for “good reason”
shall entitle the Employee to the same compensation and benefits as if the
Employee had been terminated by the Company without cause. In the event of a
termination by the Employee for “good reason,” the provisions of Section 3.3
shall not apply and shall be of no force or effect. Upon any resignation by the
Employee, the Employee shall use reasonable best efforts to assist the Company
in good faith to effect a smooth transition. If employee voluntarily resigns his
position without “good reason” prior to the termination of this contract the
compensation terms of this agreement are null and void.

 

Section 4.2. Termination by the Company without Cause. At any time after July
31, 2007, the Company may, in its sole and absolute discretion, terminate the
Employee's employment with the Company (the actual date of termination being
referred to as the "Termination Date") without cause, by providing written
notice thereof to the Employee ("Termination Notice") at least ninety days (90)
prior to the Termination Date. In the event of termination of the Employee's
employment pursuant to this Section, the Company shall continue to pay to the
Employee the Employee’s then current Annual Salary throughout such ninety-day
(90) notice period and shall pay the Employee as compensation for loss of office
(a) six months Annual Salary at the Employee’s then current salary in equal
monthly installments over the six month period following the Termination Date
(reduced pro rata if such termination occurs during the last year of the Initial
Term and based on estimated time worked pursuant to Article 1), provided that
such payments shall cease if the Employee becomes employed by a company which is
in the Business during such six month period, and (b) all vacation accrued as of
the Termination Date calculated in accordance with Section 1.2.4. Upon receipt
by the Employee of a Termination Notice pursuant to this Section 4.2, (a) the
Employee shall assist the Company in good faith to effect a smooth transition,
and (b) the Company may request the Employee to vacate the premises owned by the
Company and used in connection with the Business within a reasonable time,
provided that the obligation of the Company to make payments to the Employee
pursuant to this Section 4.2 and the other provisions of this Agreement shall
not be affected, provided further, that in the event of a termination by the
Company without cause pursuant to this Section 4.2, the provisions of Section
3.3 shall not apply and shall be of no further force or effect.

 

Section 4.3. Termination by the Company With Cause. This Agreement shall be
deemed to be terminated and the employment relationship between the Employee and
the Company shall be deemed severed upon written notice to the Employee by the
Company after the occurrence of any of the following:

 

 

5

 

 

 

 

a)

The final, non-appealable imposition of any restrictions or limitations by any
governmental authority having jurisdiction over the Employee to such an extent
that he cannot render the services for which he was employed.

 

 

b)

The Employee (i) willfully and continually fails or refuses (without proper
cause) to substantially perform the duties of his employment and to adhere in
all material respects to the provisions of this Agreement and the written
policies of the Company, which failure shall not be remedied within thirty (30)
days after written notice from the Company to the Employee, or (ii) conducts
himself in a fraudulent manner, or (iii) conducts himself in an unprofessional
or unethical manner which in the reasonable judgment of the Board of Directors
of the Company is detrimental to the Company.

 

 

c)

The Employee willfully and continually fails or refuses to adhere to any written
agreements to which the Employee and the Company or any of its affiliates are
parties, which failure shall not be remedied within thirty (30) days after
written notice from the Company to the Employee.

 

 

d)

In the event of death of the Employee during employment. In such event the
Company shall pay to the estate of the Employee the compensation earned by the
Employee prior to his death but not yet paid to him by the Company.

 

ARTICLE 5

 

Guarantee

 

BASi hereby unconditionally and irrevocably guarantees to the Employee the due
performance by the Company of all its obligations under or in respect of the
terms of this Agreement and shall as primary obligor and not as surety on demand
pay to the Employee all sums due to be paid by the Company to the Employee. This
guarantee shall be a continuing guarantee and shall inure to the benefit of the
Employee, his heirs, successors and assigns.

 

ARTICLE 6

 

Miscellaneous

 

Section 6.1. Relationship between the Parties. The relationship between the
Company and the Employee shall be that of an employer and an employee, and
nothing contained herein shall be construed or deemed to give the Employee any
interest in any of the assets of the Company.

 

Section 6.2. Medical Examination. Employment is contingent upon your completion
of a medical examination from our company physician.

 

Section 6.3 Security Clearance Employment us contingent upon the completion of a
through background investigation.

 

Section 6.4. Eligibility. Employee must provide proof of eligibility to work in
the United States, within three days of employment, as mandated by current
federal employment laws. Proof of eligibility includes a valid driver’s license,
original social security card, passport, certified birth certificate, or an
unexpired employment eligibility card.

 

 

6

 

 

 

Section 6.5. Notices. Any notice required or permitted to be given under this
Agreement shall be in writing and delivered personally or sent by certified
mail, addressed to the party entitled to receive said notice, at the following
addresses:

 

 

If to Company:

Bioanalytical Systems Evansville

 

 

2701 Kent Avenue

 

 

West Lafayette, IN 47906

 

 

 

 

If to Employee:

Edward Chait

 

 

507 Archwood Trl

 

 

Houston, TX 77007

                               

 

or at such other address as may be specified from time to time in notices given
in accordance with the provisions of this Section 6.5.

 

Section 6.6 Enforceability. Both the Company and the Employee stipulate and
agree that if any portion, paragraph sentence, term or provision of this
Agreement shall to any extent be declared illegal, invalid or unenforceable by a
duly authorized court of competent jurisdiction, then, (a) the remainder of this
Agreement or the application of such portion, paragraph, sentence, term or
provision in circumstances other than those as to which it is so declared
illegal, invalid or unenforceable, shall not be affected thereby, (b) this
Agreement shall be construed in all respects as if the illegal, invalid or
unenforceable matter had been omitted and each portion and provision of this
Agreement shall be valid and enforceable to the fullest extent permitted by law
and (c) the illegal, invalid or unenforceable portion, paragraph, sentence, term
or provision shall be replaced by a legal, valid and enforceable provision which
most closely reflects the intention of the parties hereto as reflected herein.

 

Section 6.7. Nonwaiver. The failure of either party hereto to insist in any one
or more instances upon performance of any of the provisions of this Agreement or
to pursue its or his rights hereunder shall not be construed as a waiver of any
such provisions or as the relinquishment of any such rights.

 

Section 6.8. Succession. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and upon their heirs, personal representatives,
and successor entities. This Agreement may not be assigned by either party
without prior written agreement of both parties.

 

Section 6.9. Governing Law. The laws of the United States and the State of
Indiana shall govern the construction and enforceability of this Agreement.

 

Section 6.10. Entire Agreement. This Agreement constitutes the entire Agreement
between the parties as to the subject matter contained herein and all other
agreements or understandings are hereby superseded and terminated.

 

Section 6.11. Collective Agreements. There are no collective agreements which
directly affect the terms and conditions of the Employee's employment.

 

Section 6.12. Grievance and Disciplinary Procedures. If the Employee wishes to
obtain redress of any grievance relating to his employment or if he is
dissatisfied with any reprimand, suspension or other disciplinary steps taken by
the Company, he shall apply in writing to the Chairman of the board of directors
of the Company, setting out the nature and details of any such grievance or
dissatisfaction.

 

Section 6.13. Heading. The headings of the sections are inserted for convenience
only and do not affect the interpretation or construction of the sections.

 

 

7

 

 

 

Section 6.14. Remedies. Employee acknowledges that a remedy at law for any
breach or threatened breach of the provisions of Sections 3.1 through 3.3 of
this Agreement would be inadequate and therefore agrees that the Company shall
be entitled to injunctive relief, both preliminary and permanent, in addition to
any other available rights and remedies in case of any such breach or threatened
breach; provided, however, that nothing contained herein shall be construed as
prohibiting the Company from pursuing any other remedies available for any such
breach or threatened breach. Employee further acknowledges and agrees that in
the event of a breach by Employee of any provision of Sections 3.1 through 3.3
of this agreement, the Company shall be entitled, in addition to all other
remedies to which the Company may be entitled under this Agreement to recover
from Employee its reasonable costs including attorney's fees if the Company is
the prevailing party in an action by the Company. This Agreement is entered into
by the Company for itself and in trust for each of its affiliates with the
intention that each company will be entitled to enforce the terms of this
Agreement directly against Employee.

 

IN WITNESS WHEREOF, the Company and the Employee have executed, or caused to be
executed, this Agreement as of the day and year first written above.

 

"COMPANY"

"EMPLOYEE"

 

 

 

 

 

/s/  Lina Reeves-Kerner

--------------------------------------------------------------------------------

Lina Reeves-Kerner
Vice President Human Resources
Bioanalytical Systems, Inc.

/s/  Edward Chait

--------------------------------------------------------------------------------

Edward Chait

 

 

 

8