November 10, 2008
 
VIA HAND DELIVERY
 
Dr. Edward M. Chait
308 Rosebank Lane
West Lafayette, IN  47906
 
Re:           Severance Agreement and Release of All Claims
 
Dear Ed:
 
As you were advised on November 6, 2008, your employment with BASi has been
separated effective as of Friday, November 7, 2008.

In order to ease your transition and resolve any disputes arising from your
Employment Agreement dated November 6, 2007, BASi is prepared to offer you a
severance package with the terms detailed in this letter.  In addition to the
severance amounts offered below, you will receive a check on Friday, November 14
for hours worked November 1 through November 10.  This check will be direct
deposited and the pay stub will be mailed to your current address on file with
BASi.

Please submit any outstanding expense statements as soon as possible.  We would
like to finalize all claims in that regard within a short period of time.

You will receive information concerning your right to continuation of insurance
pursuant to the federal law known as COBRA by separate letter.  In addition, the
process to have your money withdrawn from the 401K plan can be initiated at your
discretion.  We have enclosed some literature explaining the latest tax rules
with regard to withdrawals that are not rolled over to another plan or an
IRA.  Please contact Jeri Ungersma (ext. 358) if you have questions on this.

Please return all keys, BASi property, credit cards, and the enclosed
termination agreement to me.

A.
Terms.

 
 
1.
Definitions.  The terms “you” and “your” and “Chait” mean Dr. Edward M.
Chait, and anyone who has or obtains any legal right or claims through
him.  “BASi” and “Company” mean Bioanalytical Systems, Inc. and include its past
and present officers, directors, employees, agents, related corporations and
entities, affiliates, principals, insurers, 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 Chait's employment
relationship with BASi and the termination of the employment relationship.  “The
Parties” means Chait and BASi.

 
 
2.
No Admission of Liability.  This Agreement shall not in any way be construed as
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.

 
 
 

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Dr. Edward M. Chait
November 10, 2008
Page 2

 
3.
Claims released by Chait.  By signing this Agreement, Chait unconditionally and
fully releases and forever discharges BASi from (a) any and all possible claims,
known or unknown, arising out of or from his 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 Chait
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 Chait may have against BASi arising out of
Chait's employment and/or termination of employment with BASi, including any
claims arising out of his Employment Agreement dated November 6, 2007, any bonus
program, or any vacation policy.  Chait agrees and understands that any claims
he 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.  Chait understands that the signing of this Agreement prevents him
from making any further claims against BASi in connection with his employment
and the termination of his employment with the BASi.

 
 
4.
Waiver of Re-employment.  Chait waives any right or claim of reinstatement to
employment with BASi and agrees not to seek further employment with BASi.  If
Chait does seek employment with BASi, BASi is under no obligation to consider
him for employment.

 
 
5.
Payments and Benefits to be Provided to Chait.  In exchange for and in
consideration of Chait's agreement to release all claims against BASi as
described in paragraph 3 and in consideration of the other promises contained in
this Agreement, BASi agrees as follows:

 
 
a.
BASi agrees to pay you a severance benefit of an amount equal to Twelve Months
salary (i.e., Thirteen Thousand Seven Hundred Fifty Dollars and No Cents
($13,750.00 per month), for a gross amount of One Hundred Sixty-Five Thousand
Dollars and No Cents ($165,000.00), less tax and other deductions required by
law.  These amounts will be paid to you in the form of salary continuation
beginning the first pay period following the Release Effective Date and ending
twelve months later.  Unless you notify BASi’s payroll department of a different
bank account, this amount will be deposited in the bank account that you have
previously designated for direct deposit.

 
 
 

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Dr. Edward M. Chait
November 10, 2008
Page 3
 
 
a.
Additionally, BASi agrees to continue health insurance coverage for you and any
covered dependents under BASi’s group health insurance program through December
31, 2008.  You will be responsible for the employee portion of the premium.

 
 
b.
Chait agrees that all of his stock options, including vested and unvested stock
options, shall be irrevocably terminated and of no further effect as of the date
hereof.

 
 
6.
Acknowledgement.  Chait acknowledges that he is not entitled to any of the
payments and benefits listed in paragraph 5 of this Agreement unless he signs
this Agreement.  Chait further acknowledges that: (a) the payments and benefits
listed in paragraph 5 of this Agreement are in lieu of any amounts he may claim
to have been entitled to under his Employment Agreement dated November 6, 2007,
BASi's vacation policy, and any applicable bonus programs; and (b) the release
of claims contained in paragraph 3 of this Agreement includes any claims by him
for further payments or benefits under his Employment Agreement dated November
6, 2007, BASi's vacation policy and/or any applicable bonus programs.

 
 
7.
Non-Disparagement.  In consideration of the promises made in this Agreement,
Chait agrees that he shall not make any false, negative or disparaging remarks
or comments to any person and/or entity about BASI or any of its executives, nor
shall Chait make any statement that may subject BASi to potential embarrassment,
humiliation or any other negative consequence.  In addition, Chait agrees that
he shall not make any public statement, including but not limited to, the media
or to BASi employees, regarding the termination of his employment with BASi.

 
 
8.
Confidentiality.  The Parties agree that an essential condition and material
term of this Agreement shall be that the terms of this Agreement and all
negotiations, discussions, correspondence and other related matters that
preceded it shall be maintained confidential. Chait agrees that neither he nor
his representatives shall in any way publish, reveal, disclose, or cause to be
published, revealed, or disclosed, any terms, information, or details of this
Agreement, or the negotiations and discussions that preceded it.  These
restrictions on disclosure do not apply to disclosures which may be required by
law or by judicial or administrative process or order. The Parties may disclose
the terms of this Agreement to BASi management or Chait's immediate family,
attorney, or income tax services provider, provided they agree to keep same
confidential and not make any disclosures in any manner that is inconsistent
with the terms of this Agreement.

 
 
9.
Consultation with Attorney.  Chait agrees that he has read this Agreement and
the releases contained herein, that he understands all of the terms hereof, that
he has not been coerced, threatened or intimidated into signing this Agreement,
and that he executes this Agreement voluntarily and with full knowledge of its
meaning and consequences and that he has had sufficient opportunity to consult
with his attorney regarding this Agreement.  Chait further acknowledges that
BASi hereby advises him that he should consult with an attorney before executing
this Agreement.

 
 
 

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Dr. Edward M. Chait
November 10, 2008
Page 4
 
 
10.
Violation of Agreement and Severability.  Chait agrees that if he breaches any
obligation set forth in this Agreement, BASi shall cease all payments to him, as
described in this Agreement.  Chait also understands and agrees 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.

 
 
11.
Restrictive Covenants.  Chait agrees that for the two (2) years immediately
following the effective date hereof (which, in the event of a breach of this
paragraph 11 by Chait, shall be extended automatically by a number of days equal
to the number of days during which the breach exists) (the “Restricted Period”),
Chait shall not directly or indirectly:

 
 
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 in the
Company’s Business; or

 
 
iii.
otherwise interfering in any fashion with the Company’s Business or operations
then being conducted by the Company or the Company's relationship with any of
its Customers or Prospective Customers.

 
 
b.
Employee Non-Solicitation.  Solicit, hire or employ any person who is 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
current employee of the Company to leave the Company.

 
 
c.
Activities Not Prohibited.  The restrictions of this paragraph 11 shall not be
deemed to prevent Chait 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, provided that Chait shall not, either directly
or indirectly (i) act to increase his direct or beneficial ownership of any
class of equity security of BASi, provided, however:

 
 
 

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Dr. Edward M. Chait
November 10, 2008
Page 5
 
 
i.
Neither Chait nor any Affiliate (as such term is defined in Rule 405 under the
Securities Act of 1933 as amended) of Chait will:  (i) acquire, offer to
acquire, or agree to acquire, directly or indirectly, by purchase or otherwise,
any voting securities or direct rights or options to acquire any voting
securities of BASi, (ii) make, or in any way participate, directly or
indirectly, in any "solicitation" of "proxies" to vote as such terms are used in
the proxy rules of the Securities and Exchange Commission, or seek to advise or
influence any person or entity with respect to the voting of any voting
securities of BASi, (iii) form, join, or in any way participate in a "group"
within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended, with respect to any voting securities of BASi, or (iv) otherwise
act, alone or in concert with others, to seek to control or influence the
management, Board of Directors, or policies of BASi, or initiate, induce or
attempt to induce or give encouragement to any other person to initiate, any
tender or exchange offer for securities of BASi or for a change of control of
BASi.  Chait acknowledges that BASi would not have an adequate remedy at law for
money damages in the event that this covenant were not performed in accordance
with its terms and therefore agrees that BASi shall be entitled to specific
enforcement of the terms hereof in addition to any other remedy to which it may
be entitled, at law or in equity.

 
 
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 Chait 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 11 as so reduced.  If any
sentence, word or provision of this paragraph 11 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.  Chait 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.

 
 
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.

 
 
 

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Dr. Edward M. Chait
November 10, 2008
Page 6
 
 
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, a proposal for services was submitted or which was specifically
identified by the Company as a prospective customer or prospective client.

 
 
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.

 
 
f.
Confidentiality and Other Matters.  Chait acknowledges that the terms of this
paragraph 11 are in addition to the terms of Article 3 ("Confidentiality and
Other Terms") of his Employment Agreement dated November 6, 2007.  In the event
of any conflict between the terms of this paragraph 11 and Article 3 of his
Employment Agreement, Chait understands and agrees that the more restrictive
terms will control.

 
12.
Acceptance of Agreement.  To accept the terms of this Agreement, Chait must
deliver this Agreement, after it has been signed and dated by him to the
undersigned in an envelope marked “Personal and Confidential.”

 
 
13.
Chait's Representations.  Chait represents and warrants that in the making and
execution of this Agreement, he 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 he 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
him to enter into this Agreement.

 
 
14.
Return of BASi’s Property.  Chait hereby represents and warrants that he has
returned to BASi all of BASi’s property that was in his possession or
control.  This includes, but is not limited to, keys, credit cards, phone cards,
cellular telephones, pagers, directories, computer hardware and software, books,
documents, memoranda, and all other records, and copies thereof.

 
 
 

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Dr. Edward M. Chait
November 10, 2008
Page 7
 
 
15.
Cooperation and Transition Assistance.  Chait agrees that he will be available
to assist BASi with transitional matters relating to his former duties with
BASi, without additional compensation, for the severance period discussed in
paragraph 5, above.

 
 
16.
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.

 
 
17.
Time to Consider this Agreement.  Chait understands that he has until twenty-one
(21) days from the date of delivery of this Agreement to consider the terms of
this Agreement.  Chait understands that he may sign this Agreement at any time
during the twenty-one day period.  Chait understands that he may revoke this
Agreement if he so chooses until seven (7) days after the date of
execution.  Chait further understands that this Agreement will not become
effective or enforceable and that BASi’s obligations in paragraph 5 of this
Agreement to make payments and provide benefits will not become effective or
enforceable until seven (7) days from the date of Chait's execution of this
Agreement and provided that the Agreement is not revoked during such seven day
period ("Release Effective Date").

 
 
18.
OWBPA Disclosures. Chait 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").  Chait acknowledges that he
has been advised by BASi to consult with an attorney concerning the requirements
of the OWBPA.  By his signature below, Chait signifies his understanding that
this Agreement satisfies the requirements of the OWBPA.

 

 
Sincerely,
     
BIOANALYTICAL SYSTEMS, INC.
     
Richard M. Shepperd
 
President & C.E.O.

 
 
 

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Dr. Edward M. Chait
November 10, 2008
Page 8
 
My signature below represents my unconditional acceptance of all terms and
conditions contained in this Agreement.

     
Dr. Edward M.. Chait
 
Date

 
 
 

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