September 28, 2007
 
VIA E-MAIL and OVERNIGHT COURIER
 
Candice B. Kissinger
c/o David Given
Baker Daniels LLP
600 East 96th Street, Suite 600
Indianapolis, IN 46240
 
Re: Severance Agreement and Release of All Claims
 
Dear Candice:
 
As communicated to you in June , 2007, the Board of Directors and management
team of Bioanalytical Systems, Inc. have determined to make a change that will
result in the elimination of your position with the Company. You were initially
placed on a two-week paid leave. That leave was subsequently extended to August
28, 2007, to give you sufficient time to consult with counsel. As you are aware,
BASi announced your separation effective as of August 28 in its Form 8-K filed
with the SEC that same date.
 
Following the discussions between your counsel and counsel for BASi, BASi is
prepared to offer you a severance package with the terms detailed in this
letter. Because this severance offer is a modified version of the original offer
presented to you on August 11, 2007, the period spelled out in paragraph 19
below to consider this Agreement has already expired. However, in an effort to
facilitate the resolution of these discussions, BASi will give you until October
5 to consider this modified version of the Agreement and to return an executed
copy to BASi.
 
BASi has paid you all compensation due and owing for service prior to your
separation date (including payment for all accrued but unused vacation), and you
will not be entitled to any additional compensation from BASi or to participate
in any of BASi's benefit plans (except as otherwise specifically provided
herein) other than as set forth in the Agreement below. In addition, to the
extent you have not already done so, you are expected to return all keys,
computers, key cards, files and other Company property, of any kind, to the
Company by October 5, 2007.
 

A.  
Terms.

 

1.  
Definitions. The terms “you” and “your” and “Kissinger” mean Candice B.
Kissinger, and anyone who has or obtains any legal right or claims through her.
“BASi” and “Company” mean Bioanalytical Systems, Inc. and include its past and
present officers, directors, employees, agents, related corporations and
entities, affiliates, principals, shareholders, attorneys, trustees,
subsidiaries, predecessors, successors and assigns, any and all employee benefit
plans (and any fiduciary of such plans) sponsored by BASi. “Agreement” means
this letter agreement which contains the terms of the severance package and
which includes a release of all claims arising out of Kissinger employment
relationship with BASi and the termination of the employment relationship. “The
Parties” means Kissinger and BASi.

 

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Candice B. Kissinger
c/o David Given
September 28, 2007
Page 2
 
 

2.  
No Admission of Liability. This Agreement shall not in any way be construed as
(a) an admission by BASi that it has acted wrongfully with respect to you or any
other person, or that you have any rights whatsoever against BASi, or (b) an
admission by Kissinger that she acted wrongfully with respect to BASi or any
other person, or that BASi has any rights whatsoever against Kissinger.

 

3.  
Resignation. Pursuant to this Agreement, Kissinger will be deemed to have
resigned her employment and her position as an officer of BASi effective as of
August 28, 2007. Kissinger further agrees to resign her membership on the BASi
Board of Directors immediately upon the Release Effective Date.

 

4.  
Claims released by Kissinger. By signing this Agreement, Kissinger
unconditionally and fully releases and forever discharges BASi from (a) any and
all possible claims, known or unknown, arising out of or from her employment
with BASi under any and all possible legal, equitable, tort, contract or
statutory theories, including but not limited to any claims for constructive or
wrongful discharge or breach of contract, except for any claims relating to
accrued and vested rights under a retirement plan; (b) any and all claims
arising on or before the date Kissinger signs this Agreement, including but not
limited to any charges, claims, demands or actions under Title VII of the Civil
Rights Act of 1964 and the Equal Pay Act, 42 U.S.C. § 2000e et seq.,
Section 1981 of the Civil Rights Act of 1866, 42 U.S.C. § 1981, the Age
Discrimination in Employment Act, the Older Workers’ Benefit Protection Act, the
Americans with Disabilities Act, 42 U.S.C. § 12101 et seq., the Indiana Civil
Rights Law, the Employee Retirement Income Security Act, 29 U.S.C. § 1001 et
seq., the United States Constitution, the Indiana Constitution, any and all
amendments to said statutes, and any other federal, state or local statute or
law, ordinance or regulation, dealing in any way with employment or
employment-related benefits and all claims for costs and attorneys’ fees; and
(c) all claims Kissinger may have against BASi arising out of Kissinger
employment and/or termination of employment with BASi. Kissinger agrees and
understands that any claims she may have under the aforementioned laws, statutes
or any other federal, state or local law, ordinance, rule or regulation are
effectively waived by this Agreement. Kissinger further acknowledges and agrees
that she has received all compensation from BASi to which she is entitled on
account of her service prior to her separation effective August 28, 2007,
including pay for accrued but unused vacation. BASi and Kissinger acknowledge
and agree, however, that the release/waiver of claims set forth in this
paragraph 4 does not release, affect or relinquish (i) any of Kissinger's rights
as a shareholder of BASi, (ii) any of Kissinger's rights (or BASi's obligations)
under this Agreement or any other agreement between BASi and Kissinger executed
concurrently with or subsequent to this Agreement, (iii) any rights Kissinger
may have with respect to any vested benefits under any of the Company's employee
retirement and/or welfare benefit plans, including without limitation under any
applicable 401(k) plan or (iv) any rights Kissinger may have for indemnification
of any third-party claim relating to Kissinger's service as an employee, officer
and/or director of BASi. Kissinger understands that the signing of this
Agreement prevents her from making any further claims against BASi in connection
with her employment and the termination of her employment with BASi. Kissinger
agrees not to bring any lawsuits against BASi relating to the claims she has
given up, released and waived, nor will she allow any suit to be brought on her
behalf.

 

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Candice B. Kissinger
c/o David Given
September 28, 2007
Page 3
 
 

5.  
BASi Claims against Kissinger. BASi represents and acknowledges that its senior
management is unaware of any claims it may have against Kissinger as of the date
of this Agreement, including claims arising out of her service as an employee,
officer and/or member of the Board of Directors.

 

6.  
Waiver of Re-employment. Kissinger waives any right or claim of reinstatement to
employment with BASi and agrees not to seek further employment with BASi. If
Kissinger does seek employment with BASi, BASi is under no obligation to
consider her for employment.

 

7.  
Payments and Benefits to be Provided to Kissinger. In exchange for and in
consideration of Kissinger's agreement to release claims against BASi as
described in paragraph 4 and in consideration of the other promises contained in
this Agreement, BASi agrees as follows:

 

a.  
BASI agrees to pay Kissinger a severance benefit of One Hundred Seventy-Five
Thousand Dollars and No Cents ($175,000.00), less tax and other deductions
required by law. One half of this amount (Eighty-Seven Thousand Five Hundred
Dollars and No Cents ($87,500.00), will be paid in a lump-sum payment on BASi's
first regular payroll date following the Release Effective Date. The remaining
half of this amount will be paid in six (6) equal monthly installments beginning
in November 2007 and ending in April 2008. Unless Kissinger notifies BASi’s
payroll department of a different bank account, these amounts will be deposited
in the bank account that Kissinger has previously designated for direct deposit;

 

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Candice B. Kissinger
c/o David Given
September 28, 2007
Page 4
 
 

b.  
Additionally, BASi shall pay Kissinger an additional monthly payment equal to
the monthly premium cost to Kissinger to continue health insurance coverage for
Kissinger and any covered dependents under BASi’s group health insurance program
pursuant to the federal law known as COBRA (the “Monthly Payment”) for a period
of twelve (12) consecutive months. Kissinger may use the Monthly Payment to pay
COBRA premiums or for any other purpose. The first Monthly Payment shall be paid
to Kissinger on BASi’s first regular payroll date following the Release
Effective Date and the Monthly Payments shall continue thereafter for eleven
(11) consecutive months. These payments will be deposited in the bank account
that Kissinger has previously designated for direct deposit, unless Kissinger
notifies BASi's payroll department of a different bank account.

 

c.  
Kissinger agrees that all of her stock options, including vested and unvested
stock options, shall be irrevocably terminated and of no further effect as of
the date hereof.

 

d.  
Kissinger, if she so desires, shall promptly contact the National Life Insurance
Company to convert the life insurance on Kissinger's life to Kissinger. BASi
shall provide reasonable assistance to Kissinger to support any such conversion
of such life insurance policy to an individual policy (if such right is
available under the policy). BASi shall have no obligation to fund this policy
following Kissinger's separation effective as of August 28, 2007.

 

8.  
Acknowledgement. Kissinger acknowledges that she is not entitled to any of the
payments and benefits listed in paragraphs 6(a)-(b) of this Agreement unless she
signs this Agreement.

 

9.  
Non-Disparagement. In consideration of the promises made in this Agreement,
Kissinger and BASi each agree that she/it shall not make any false, negative or
disparaging remarks or comments to any person and/or entity about the other
party to this Agreement, nor shall Kissinger or BASi make any statement that may
subject the other party to potential embarrassment, humiliation or any other
negative consequence; provided, however, nothing in this paragraph 9 shall
prohibit either party from making any statements as may be required or compelled
by law, including without limitation pursuant to any judicial or administrative
process. The Parties agree to the issuance of the press release/media statement
attached hereto as Exhibit A, and each party shall have the right to make
statements consistent with such press release/media statement.

 

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

Candice B. Kissinger
c/o David Given
September 28, 2007
Page 5
 
 

10.  
Confidentiality. The parties understand that BASi will be required to file this
Agreement with the SEC as part of its reporting obligations. Otherwise, BASi and
Kissinger each agree to keep strictly confidential and not to disclose any of
the terms of this Agreement to any third parties; provided, however, (a) any
Party may disclose the terms of this Agreement as may be required by applicable
law or by judicial or administrative process; (b) any Party may disclose the
terms of this Agreement in any action or proceeding to enforce this Agreement or
relating to the enforcement of this Agreement; (c) BASi may disclose the terms
of this Agreement to its management, its counsel and its accountants; and (d)
Kissinger may disclose the terms of this Agreement to her immediate family, her
counsel, her accountants and her financial advisors, provided that such
individuals in turn agree to keep same confidential and not make any disclosures
in any manner that is inconsistent with the terms of this Agreement.

 

11.  
Consultation with Attorney. Kissinger agrees that she has read this Agreement
and the releases contained herein, that she understands all of the terms hereof,
that she has not been coerced, threatened or intimidated into signing this
Agreement, and that she executes this Agreement voluntarily and with full
knowledge of its meaning and consequences and that she has had sufficient
opportunity to consult with her attorney regarding this Agreement. Kissinger
further acknowledges that BASi hereby advises her that she should consult with
an attorney before executing this Agreement.

 

12.  
Severability. Kissinger agrees that if she breaches any obligation set forth in
this Agreement, BASi shall have the right to set off an amount from future
payments described in this Agreement equal to the damages caused by such breach,
in addition to any other remedies to which BASi may be entitled under law. The
Parties further understand and agree that in the event that this Agreement is
ever held to be invalid or unenforceable, in whole or in part, as to any
particular type of claim or charge or as to any particular circumstances, this
Agreement shall remain fully valid and enforceable as to all other claims,
charges and circumstances.

 

13.  
Restrictive Covenants. Kissinger agrees that for the two (2) years immediately
following the effective date hereof (which, in the event of a breach of this
Paragraph 13 by Kissinger, shall be extended automatically by a number of days
equal to the number of days during which the breach exists) (the “Restricted
Period”), Kissinger shall not directly or indirectly:

 

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

Candice B. Kissinger
c/o David Given
September 28, 2007
Page 6
 
 

a.  
Customer Non-Solicitation. Contact, solicit or communicate with any Customer of
the Company, or any Prospective Customer of the Company, for the purpose of:

 

i.  
diverting or influencing or attempting to divert or influence any Business of
the Company to a Competitor of the Company;

 

ii.  
marketing, selling, distributing, leasing or providing any products or services
in competition with the services or products offered by the Company with respect
to the Company’s Business; or

 

iii.  
otherwise interfering in any fashion with the Company’s Business or the
Company's relationship with any of its Customers or Prospective Customers with
respect to the Company’s Business.

 

b.  
Employee Non-Solicitation. Solicit, hire or employ any person who is then an
employee of the Company or in any way (a) cause or assist or attempt to cause or
assist any employee to leave the Company or (b) directly or indirectly seek to
solicit, induce, bring about, influence, promote, facilitate, or encourage any
employee of the Company to leave the Company.

 

c.  
Activities Not Prohibited. The restrictions of this Paragraph 13 shall not be
deemed to prevent Kissinger from owning (1) 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 of
the Securities Exchange Act of 1934, as amended, and/or (2) any issued and
outstanding securities of BASi.

 

d.  
Modification. In the event a court of competent jurisdiction determines that any
of the foregoing restrictions are unreasonable in terms of geographic scope or
otherwise then Kissinger and the Company agree that the court is hereby
authorized to reduce the scope of said restriction through application of the
blue pencil doctrine and enforce this Paragraph 13 as so reduced. If any
sentence, word or provision of this Paragraph 13 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.
Kissinger acknowledges that all of the provisions contained in this Agreement,
including the restrictions of the covenant not to compete, are reasonable and
necessary to protect the legitimate interests of the Company.

 

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

Candice B. Kissinger
c/o David Given
September 28, 2007
Page 7
 
 

e.  
Definitions.

 

i.  
Competitor. A “Competitor” shall mean any person or entity that provides
research or development resources to pharmaceutical, medical device or
biotechnology companies, or that provides outsourced drug development services,
biological services or products used in the development of pharmaceutical
products or in pharmaceutical or biological research and competes with the
Company's Business.

 

ii.  
Customer. A “Customer” of the Company is any person or entity which, within the
twenty-four (24) month period preceding the date hereof, used, leased, received
or purchased or contracted to use, lease, receive or purchase any of Company’s
products or services.

 

iii.  
Prospective Customer. A “Prospective Customer” of the Company is any person or
entity to which, within the twenty-four (24) month period preceding the date
hereof, BASi submitted a proposal for services.

 

iv.  
Business. The "Business" is BASi's products and services offered as an
alternative to its clients' internal product development, compliance, and
quality control programs and outsourced drug development services, biological
services and products useful in developing pharmaceutical products and
performing pharmaceutical and biological research; provided, however, (A) the
“Business” includes only those products and services that BASi is providing as
of the date of separation of Kissinger’s employment with BASi, and (B) the
"Business" does not include the development or commercialization of the
technology that is subject to the License Agreement entered concurrently
herewith between BASi and Phlebotics, Inc.

 

14.  
Acceptance of Agreement. To accept the terms of this Agreement, Kissinger must
deliver this Agreement, after it has been signed and dated by her, to the
undersigned in an envelope marked “Personal and Confidential" or to BASi's
counsel.

 

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Candice B. Kissinger
c/o David Given
September 28, 2007
Page 8
 
 

15.  
Representations. BASi and Kissinger each represent and warrant that in the
making and execution of this Agreement, it/she is not relying on any
representation, statement, or assertion of fact or opinion made by any agent,
attorney, employee, or representative of the persons, parties, or corporations
being released herein, and it/she hereby waives any right to rely upon all prior
agreements and/or oral representations made by any agent, attorney, employee, or
representative of such persons, parties, or corporations even though made for
the purpose of inducing it/her to enter into this Agreement.

 

16.  
Return of BASi’s Property. Kissinger hereby represents and warrants that she has
returned to BASi all of BASi’s property that was in her possession or control or
that any such property will be returned to BASi by October 5, 2007. This
includes, but is not limited to, keys, credit cards, phone cards, cellular
telephones, pages, directories, computer hardware and software, books,
documents, memoranda, and all other records, and copies thereof.

 

17.  
Cooperation and Transition Assistance. Kissinger agrees that for a period of
sixty (60) days following the date hereof (the "Cooperation Period") she will be
available to assist BASi with transitional matters relating to her former duties
with BASi, without additional compensation, provided that Kissinger's obligation
to provide assistance shall consist primarily of making herself reasonably
available, as BASi may reasonably request, to respond to questions and confer
with BASi's officers or other designated representatives on work transition
matters and nothing herein shall preclude Kissinger from engaging in other
full-time employment or business activities during the Cooperation Period. BASi,
in turn, agrees to allow Kissinger to serve out her current terms on such boards
(excluding the Board of Directors of BASi and all of its affiliates and
subsidiaries) on which she currently sits, with the express understanding that
she shall have no authority to speak or act on behalf of BASi in those
capacities and may not represent that she has such authority.

 

18.  
Miscellaneous. The Parties agree that this Agreement is deemed made and entered
into in the State of Indiana and in all respects shall be interpreted, enforced
and governed under the laws of the State of Indiana, unless otherwise preempted
by federal law. Jurisdiction and venue for litigation of any dispute,
controversy, or claim arising out of or in connection with this Agreement shall
lie exclusively in the federal or state courts in Tippecanoe County, Indiana,
and the Parties hereby consent to service of process from said courts. This
Agreement shall inure to the benefit of and may be enforced by, and shall be
binding on the Parties and their heirs, executors, administrators, personal
representatives, assigns, and successors in interest. The language of all parts
of this Agreement shall be in all cases construed as a whole, according to its
fair meaning, and not strictly for or against the drafter.

 

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

Candice B. Kissinger
c/o David Given
September 28, 2007
Page 9
 
 

19.  
Time to Consider this Agreement. Kissinger understands that she has been given
forty-five (45) days from the original date of delivery of this Agreement to
consider the terms of this Agreement and that, following discussions between
counsel for parties, such consideration period has been extended to and
including October 5, 2007. Kissinger understands that she may sign this
Agreement at any time during the forty-five day period, as extended. Kissinger
understands that she may revoke this Agreement if she so chooses until seven (7)
days after the date of execution. Kissinger further understands that this
Agreement will not become effective or enforceable and that BASi’s obligations
in paragraph 6 of this Agreement to make payments and provide benefits will not
become effective or enforceable until seven (7) days from the date of
Kissinger's execution of this Agreement and provided that the Agreement is not
revoked during such seven day period ("Release Effective Date").

20.  
OWBPA Disclosures. Kissinger understands that the claims released by this
Agreement include claims under the Age Discrimination in Employment Act, as
modified by the Older Worker Benefit Protection Act ("OWBPA"). Kissinger
acknowledges that she has been advised by BASi to consult with an attorney
concerning the requirements of the OWBPA. By her signature below, Kissinger
signifies her understanding that this Agreement satisfies the requirements of
the OWBPA. In particular, Kissinger acknowledges that she has been advised (a)
that the only employees being separated and offered severance benefits at this
time are Kissinger and Peter Kissinger; (b) that there are no other employees in
similar job classifications to these two individuals; (c) that Kissinger must
sign this Agreement within the time limits described above in order to be
eligible for benefits under it; and (d) that no further disclosures are required
under the OWBPA.

 

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

Candice B. Kissinger
c/o David Given
September 28, 2007
Page 10
 
 

        Sincerely,       Bioanalytical Systems, Inc.  
   
   
    By:   /s/ R.M. Shepperd   

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

Richard M. Shepperd   President and Chief Executive Officer 

 

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Candice B. Kissinger
c/o David Given
September 28, 2007
Page 11
 
 
My signature below represents my acceptance of all terms and conditions
contained in this Agreement.
 

/s/ Candice B. Kissinger
 
September 28, 2007

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

Candice B. Kissinger
 

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

Date

 

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EXHIBIT A

For more information:  Richard M. Shepperd
765.463.4527
dshepperd@bioanalytical.com
 
BASi Announces Resignations of Peter T. Kissinger, Ph.D. and Candice B.
Kissinger and Selection of Peter T. Kissinger as Chairman Emeritus of the Board
of Directors

WEST LAFAYETTE, IN, October 2, 2007 — Bioanalytical Systems, Inc. (Nasdaq: BASI)
announced today that Peter T. Kissinger, Ph.D. and Candice B. Kissinger have
resigned from the Board of Directors of BASi. Dr. Kissinger has also resigned as
the Chief Scientific Officer and Chairman of the Board, and Mrs. Kissinger
resigned from the offices of Vice President, Secretary and Director of Research.
In connection with their resignations, BASi has entered into a severance
agreement with each of Dr. Kissinger and Mrs. Kissinger, as well as a license
agreement for a new technology which Mrs. Kissinger has developed while with
BASi. BASi also named Dr. Kissinger to be the Chairman Emeritus of its Board of
Directors. This completes the negotiations regarding the departures of Dr. and
Mrs. Kissinger that were previously disclosed by BASi.

Richard M. Shepperd, President and Chief Executive Officer of BASi, noted today
that "all of the people of BASi wish to express their thanks to Pete and Candice
Kissinger for the leadership they have provided over their years with BASi. We
acknowledge all of the fine work that Pete and Candice have accomplished for
BASi. On behalf of the Board, I want to thank Pete and Candice for their many
years of service with BASi. We know that they have had the best interests of
BASi in mind throughout their tenures."

Dr. Kissinger commented, “Candice and I had a wonderful thirty year run at BASi
and it is a good time for us to move on to new opportunities. Our strengths and
passions are on the technical side and we are excited to apply our skills to
several entrepreneurial activities."

BASi is a contract research and research products company providing services and
laboratory instruments to the world’s leading drug development companies and
life science research organizations. The Company focuses on developing
innovative services and products that increase efficiency and reduce costs
associated with taking new drugs to market. Visit www.bioanalytical.com for more
about BASi.
 
This release contains forward-looking statements that are subject to risks and
uncertainties including, but not limited to, risks and uncertainties related to
management transition matters, the development of products and services, changes
in technology, industry standards and regulatory standards, and various market
and operating risks detailed in the company’s filings with the Securities and
Exchange Commission.
 
# # # # #
 
 
 

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