Document:

BIOANALYTICAL SYSTEMS, INC.

 

EMPLOYEE STOCK OPTION AGREEMENT

 

THIS AGREEMENT, made this 7th day of February
2013, by and between Bioanalytical Systems, Inc., an Indiana corporation with its principal office at 2701 Kent Avenue, West Lafayette,
Indiana (hereinafter called “Company”), and Jacqueline M. Lemke, residing at 14239 Kingdom Court, Fishers, IN 46040
(hereinafter called the “Grantee”), pursuant to the terms, conditions and limitations contained in the Company’s
2008 Stock Option Plan (hereinafter called the “Plan”), a copy of which is attached hereto as Exhibit A.

 

WITNESSETH THAT:

 

WHEREAS, in the interests of affording an
incentive to the Grantee to give her best efforts to the Company as a company officer, key employee, or member of the Board of
Directors, the Company wishes to provide that the Grantee shall have an option to buy Common Shares of the Company:

 

NOW, THEREFORE, it is hereby mutually agreed
to as follows:

 

1.          The
Company hereby grants to the Grantee the right and option to purchase, on the terms and conditions hereinafter set forth, all or
any part of an aggregate of 50,000 shares (hereinafter called “Subject Shares”) of the presently authorized, but unissued,
or treasury, Common Shares of the Company, (hereinafter called the “Common Shares”) at a purchase price of $1.70
per share (hereinafter called the "Option Price"), exercisable in whole or in part from time to time subject to the limitation
that no option may be exercised with respect to fewer than twenty-five (25) Subject Shares, in which event any exercise must be
as to all such shares and subject to the further limitations that fifty percent (50%) of the options represented by this Option
Agreement shall vest and become exercisable in three equal annual installments on the first, second and third anniversaries of
the grant date, and the other 50% of the Options will vest and become exercisable on the date the audit of the Company's fiscal
2013 financial statements is completed, but only if the Company's EBITDA for fiscal 2013 is equal to or greater than the budgeted
EBITDA set forth in the Company's operating plan for fiscal 2013 as determined by the Board of Directors of the Company (the "Board").
The option will be considered to have been effectively exercised upon delivery to the Company of the Option Price and a “Notice
of Exercise” in the form attached hereto, and the satisfaction of all other conditions described in this letter. The options
will terminate as provided for in the Option Plan and related agreement, provided that, in the event Employee ceases to serve as
an employee of the Company or any of its subsidiaries due to a termination by the Company without cause or a resignation by Employee
for "good reason", Employee will be entitled to exercise any options that are vested on the date Employee's employment
terminated for a period of sixty (60) days following such termination date. The option shall expire as to all unexercised Subject
Shares subject to purchase hereunder at the close of business on the 10th anniversary date of this Option Agreement
(or on the next business day if that date is a Saturday, Sunday or holiday).

 

 

    	 

    	 

    

 

2. Subject to the limitations specified
in Section 1 hereof and the terms and conditions of the Plan (including, but not limited to, the exercise provisions of Section
7 of the Plan), the Grantee may from time to time exercise this option by delivering a written notice of exercise and subscription
agreement to the Secretary of the Company specifying the number of whole shares to be purchased, accompanied by payment of the
Option Price (i) in cash, (ii) by certified check or bank cashier’s check, (iii) through the tender to the Company of Common
Shares of the Company owned by the Grantee or by withholding of Common Shares of the Company that are subject to the option, which
Common Shares shall be valued, for purposes of determining the extent to which the purchase price has been paid, at their fair
market value on the date of exercise as determined in Section 6(c) of the Plan, or (iv) by a combination of the methods described
in (i), (ii), or (iii). The Company may, in its sole discretion, refuse to withhold Common Shares of the Company as payment of
the Option Price. Such exercise shall be effective upon receipt by the Secretary of such written notice, subscription agreement
and payment of the Option Price. Only the Grantee may exercise the option during the lifetime of the Grantee. No fractional shares
may be purchased at any time hereunder.

 

3. Upon the effective exercise of the option,
or any part thereof, certificates representing the shares so purchased, marked fully paid and non-assessable, shall be delivered
to the person who exercised the option, except as provided in Section 6(j) of the Plan. Until certificates representing such shares
shall have been issued and delivered, the Grantee shall not have any of the rights or privileges of a shareholder of the Company
in respect of any such shares.

 

4. In the event that, prior to the delivery
by the Company of all the Subject Shares, there shall be an increase or reduction in the number of Common Shares of the Company
issued and outstanding by reason of any subdivision or consolidation of Common Shares or any other capital adjustment, the number
of Subject Shares then subject to this option shall be increased or decreased as provided in Section 11 of the Plan.

 

5. The option and the rights and privileges
conferred by this Option Agreement shall not be assigned or transferred by the Grantee in any manner except by will or under the
laws of descent and distribution. In the event of any attempted assignment or transfer in violation of this Section 5, the option,
rights and privileges conferred by this Option Agreement shall become null and void.

 

6. Nothing herein contained shall be deemed
to create any limitation nor restriction upon such rights as the Company would otherwise have to terminate a person as an employee
of the Company.

 

    	 

    	 

    

 

7. The option, rights and privileges herein
conferred are granted subject to the terms and conditions set forth herein and in the Plan.

 

8. Any notices to be given or served under
the terms of this Option Agreement shall be addressed to the Secretary of the Company at 2701 Kent Avenue, West Lafayette, Indiana,
and to the Grantee at the address set forth on page one of this Option Agreement, or such other address or addresses as either
party may hereafter designate in writing to the other. Any such notice shall be deemed to have been duly given or served, and deposited
in the United States mail.

 

9. The interpretation by the Compensation
Committee, appointed by the Company’s Board of Directors to administer the Plan, or any provisions of the Plan or of this
Option Agreement shall be final and binding on the Grantee unless otherwise determined by the Company’s Board of Directors.

 

10. This Option Agreement shall be governed
by the laws of the State of Indiana.

 

IN WITNESS WHEREOF, the Company and the
Grantee have signed this Option Agreement as of the day and year first above written.

 

	 	“COMPANY”
	 	 
	 	BIOANALYTICAL SYSTEMS, INC.
	 	 
	 	By:	 
	 	David W. Crabb, M.D., Compensation Committee Chair
	 	 
	 	“GRANTEE”
	 	 
	 	 
	 	Jacqueline M. LemkeExecution Version

 

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

 

THIS AMENDED AND RESTATED
EMPLOYMENT AGREEMENT ("Agreement") is made and entered into effective the ___ day of February, 2013 (the "Effective
Date"), by and between BIOANALYTICAL SYSTEMS, INC., a corporation organized under the laws of the State of Indiana ("BASi"
or the "Company"), and Jacqueline M. Lemke, an individual residing in the State of Indiana ("Employee").

 

Preliminary Statements:

 

A.           BASi
is engaged in the business of providing contract research services and manufacturing and distributing scientific instruments (the
"Business").

 

B.           On
April 9, 2012 (the "Start Date"), BASi and Employee entered into an employment agreement, which was amended as of October
15, 2012 (as amended, the "Original Agreement") which sets forth certain terms and conditions of Employee's employment
with BASi.

 

C.           The
Company and Employee desire to amend and restate the Original Agreement and to continue Employee's employment 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 Employee as a major career commitment.

 

In consideration of
the premises and mutual covenants and agreements contained herein, the parties hereby agree that the Original Agreement is hereby
amended and restated in its entirety as follows:

 

ARTICLE 1

 

Term, Compensation, and Benefits

 

Section 1.1.
Term. The Company hereby agrees to employ Employee, and Employee hereby accepts employment with the Company, on the terms
and conditions set forth in this Agreement until February 28, 2015, (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 the Company gives the other party written notice at least ninety (90) days before the end of
the Initial Term or any Additional Term, as the case may be, then this Agreement shall not renew and shall expire at the end of
its then current term.

 

Section
1.2 Compensation and Benefits.

 

Section 1.2.1.
Salary. BASi will pay Employee a base salary at a rate of $24,183.33 per month from January 5, 2013 until adjusted by the
Compensation Committee of the Board of Directors. Base salary shall be paid in equal bi-weekly installments in arrears.

 

Section 1.2.2.
Stock Options. Employee has, shall or may receive the following grants of options, as set forth herein:

 

(a)          pursuant
to the Original Agreement, on April 9, 2012, Employee received an inducement grant of nonqualified stock options to purchase 125,000
BASi shares, and on October 15, 2012, Employee was granted options to purchase an additional 50,000 BASi shares under the
Company’s 2008 Director and Employee Stock Option Plan (the “Option Plan”) (collectively, the "Initial Options").
The terms of the Initial Options are set forth in the Option Plan and in separate option agreements entered into between the Company
and Employee.

 

    	 

    	 

    

 

(b)          On
the Effective Date, Employee shall receive a grant of options to purchase 50,000 BASi shares under the Option Plan and an option
agreement to be entered into between the Company and Employee (the "Additional Options"). The exercise price of the Additional
Options shall be the fair market value of the Company's common shares on the trading day prior to the Effective Date (determined
as provided in the Option Plan). Fifty percent (50%) of the Additional Options will vest and become exercisable in three equal
annual installments on the first, second and third anniversaries of the Effective Date, and the other 50% of the Additional Options
will vest and become exercisable on the date the audit of the Company's fiscal 2013 financial statements is completed, but only
if the Company's EBITDA for fiscal 2013 is equal to or greater than the budgeted EBITDA set forth in the Company's operating plan
for fiscal 2013 as determined by the Board of Directors of the Company (the "Board"), subject to the conditions
set forth in the Option Plan and related agreement. "EBITDA" means the Company's earnings before interest, taxes, depreciation,
amortization and stock option costs, without giving effect to receipt of extraordinary income or payment of extraordinary expenses
as determined by the Compensation Committee of the Board and includes a deduction for an amount for payments pursuant to the Company's
Annual Incentive Bonus Plan ("AIBP"), if any, for the fiscal year.  The Additional Options will terminate as provided
for in the Option Plan and related agreement, provided that, in the event Employee ceases to serve as an employee of the Company
or any of its subsidiaries due to a termination by the Company without cause or a resignation by Employee for "good reason",
Employee will be entitled to exercise any Additional Options that are vested on the date Employee's employment terminated for a
period of sixty (60) days following such termination date.

 

(c)          Employee
will be eligible to receive additional option grants from time to time during the Employment Period as determined by the Board
or any committee thereof and as may be otherwise provided for in this Agreement. The exact number, strike price and vesting schedule
of those options will be set forth in appropriate option agreements between the Company and Employee as required by the Option
Plan.

 

Section 1.2.3.
Bonus.

 

(a)          For
fiscal year 2013, Employee will receive a cash bonus in an amount equal to the greater of (i) two percent (2%) of consolidated
earnings before interest expense, income tax expense, depreciation expense, amortization expense and restructuring charges ("EBITDAR")
of the Company (before any payment or accrual related to the EBITDAR Bonus or any other bonus plan, including the AIBP) (the "EBITDAR
Bonus") or (ii) the amount which Employee becomes entitled to receive pursuant to the AIBP, if any, for fiscal 2013. For the
remainder of the Employment Period, Employee shall be entitled to receive an annual cash bonus pursuant to the Company Bonus Plan,
if any, for the applicable fiscal year. If Employee is entitled to receive the EBITDAR Bonus for fiscal 2013, it shall be paid
on the first regular pay date of the Company after the Board has confirmed the amount of the Company’s EBITDAR and the EBITDAR
Bonus for fiscal 2013. The Board shall make such confirmation promptly upon completion of the audited consolidated financial statements
of the Company for fiscal 2013. If Employee is entitled to receive the bonus pursuant to the AIBP, it will be paid pursuant to
the terms of the AIBP. The bonus Employee is entitled to receive for any fiscal year pursuant to this Section 1.2.3 is hereinafter
referred to as the "Annual Bonus".

 

(b)          Employee
will also be eligible for bonus grants under bonus plans adopted by the Company or otherwise at the discretion of the Compensation
Committee of the Board.

 

Section 1.2.4.
Vacation. Employee will receive twenty-five (25) vacation days per annum to be used in accordance with the Company's vacation
policy.

 

Section 1.2.5.
Commuting Allowance. Commencing on the Effective Date and continuing until such time, if ever, that Employee relocates to
West Lafayette, Indiana, Employee shall be entitled to receive a commuting allowance of $1,400.00 per month.

 

Section 1.2.6.
Expense Reimbursement. Employee will be entitled to reimbursement of travel, entertainment and other out of pocket expenses
incurred by her in the course of her employment in accordance with the Company's standard reimbursement policies.

 

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Section 1.2.7.
Other Benefits. During the Employment Period, 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; term life insurance (two times base salary);
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.

 

Section 1.2.8.
Required Withholdings. All amounts to be paid hereunder, including any amounts to be paid under Article 4 or Article
5, shall be paid in accordance with normal payroll procedures of the Company and shall be subject to all required withholdings
and deductions.

 

ARTICLE 2

 

Duties

 

Section 2.1.
Duties. Beginning on the Start Date, Employee has served as Vice President of Finance and Chief Financial Officer of the
Company. Beginning on July 6, 2012, Employee also became the Interim President and Chief Executive Officer of the Company. Beginning
on the Effective Date, Employee shall serve as President and Chief Executive Officer of the Company and, until a successor to her
in her role as Vice President of Finance and Chief Financial Officer is elected, Employee shall also continue to serve in that
role.

 

Section 2.1.1.
President and Chief Executive Officer. In her role as President and Chief Executive Officer of
the Company, Employee shall have such duties as shall be provided in the Bylaws of the Company or assigned to her by the Board,
including, but not limited to, responsibility for the development, implementation and oversight of appropriate risk management
policies and procedures. In such capacity, she shall have full responsibility and decision-making authority for the day-to-day
operations of the Company's business, subject to the general control of the Board. 

 

Section 2.1.2.
Vice President of Finance and Chief Financial Officer. In her role as Vice President of Finance and Chief Financial Officer,
Employee will lead the financial services staff, be the ultimate financial contact with clients, auditors and banks and own responsibility
for assisting the Senior Management Team on all strategic and tactical matters as related to budget management, cost benefit analysis,
forecasting needs, securing appropriate funding, and positioning the Company for growth. In addition, Employee is responsible for
strengthening existing collaborations, building new partnerships, plus executing programs and initiatives to support the BASi mission
statement. Employee will be called upon to perform certain services for the Company including, without limitation, the duties as
outlined in the job description for this position.

 

Section 2.2.
Other Duties. 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 Employee in
carrying out duties assigned by the Company, including, but not limited to, the right (a) to review, modify and cancel all work
performed, and (b) 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 Employee which would require Employee to violate any ordinance, regulation, statute or other law. Employee shall
devote her full working time, attention and energy to the performances of the duties imposed hereunder. Employee shall conform
to such hours of work as may from time to time reasonably be required of her and shall not be entitled to receive any additional
remuneration for work outside her normal hours. Employee will NOT be held financially, legally, or otherwise liable for
any practice or action or decision made by BASi, or its predecessors or successors prior to the Start Date.

 

Section 2.3.
Officer Indemnification. Employee shall be entitled to indemnification as provided for the Company's directors and officers
in its articles of incorporation and bylaws, as amended from time to time.

 

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ARTICLE 3

 

Confidentiality and Other Matters

 

Section 3.1.
Confidentiality Agreement. 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 Employee, which is used in or related
to 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, 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 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 Employee (solely or in cooperation with others) or others during the term of this Agreement or prior to
or during her 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.

 

Employee agrees that
any Confidential Information and Proprietary Items will be treated in full confidence and shall not be used, directly or indirectly,
by her 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 her employment
with the Company. All Confidential Information and Proprietary Items, whether prepared by Employee or otherwise, coming into her
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.

 

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 Employee's acts. The provisions of this Section 3.1 shall be in addition to, and shall not
affect, Employee's common law duty of fidelity to the Company.

 

Section 3.2.
Disclosure and Assignment of Inventions. The parties foresee that Employee may make inventions or create other intellectual
property in the course of her duties hereunder and agree that in this respect Employee has a special responsibility to further
the interests of the Company and its affiliates. In order to protect the Company's interest in its intellectual property, the Company
and Employee have entered into a separate agreement regarding these matters dated as of April 9, 2012.

 

Section 3.3
Non-Solicitation. Employee agrees that during Employee’s employment with the Company and for an additional period
of the two (2) years immediately following termination of Employee’s employment with the Company, 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 with 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 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.

 

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The restrictions of
this Section 3.3 shall not be deemed to prevent Employee from owning not more than 5% of the issued and outstanding shares
of any class of securities of an issuer engaged in the Business 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, or from owning any amount of securities
of an issuer who is not engaged in the Business 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 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 Employee’s
employment with the Company, at which time the terms and conditions of this Section 3.3 shall terminate.

 

Section 3.4.
Code of Conduct. Employee agrees to abide by all the conditions of the Company Code of Conduct and Ethics.

 

ARTICLE 4

 

Termination of Employment

 

Section 4.1. Resignation by Employee.
Employee may resign from her employment with the Company at any time by providing written notice to the Company of resignation
at least ten (10) days prior to the effective date of the resignation (such effective date, the "Resignation Date").
Employee may resign at any time for "good reason" due to (a) a material breach of this Agreement by the Company (b) the
assignment to Employee of duties materially inconsistent with this Agreement other than in accordance with the terms of this Agreement,
(c)  any material decrease in base compensation, or (d) a requirement by the Company for the Employee to be based more than
fifty miles from the location the Employee is employed upon the Effective Date of this Agreement and the Company has not rectified
such “good reason” within thirty (30) days after Employee has given the Company written notice of such "good reason”.

 

A termination by Employee
for "good reason" shall entitle Employee to the same compensation and benefits as if Employee had been terminated by
the Company without cause. In the event of a termination by 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 Employee, Employee shall use reasonable best
efforts to assist the Company in good faith to effect a smooth transition. If Employee voluntarily resigns her 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, the Company may, in its sole and absolute discretion, terminate 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 Employee ("Termination Notice") at least ten (10) days prior to the Termination
Date. In the event of termination of Employee's employment pursuant to this Section, the Company shall continue to pay to Employee
her then current annual salary throughout such ten (10) day notice period and shall pay Employee as compensation for loss of office
(a) fifteen (15) months base salary at Employee’s then current salary in equal bi-weekly installments over the fifteen (15)
month period following the Termination Date (the "Severance Period"), (b) a pro-rated Bonus for the completed portion
of any fiscal year in which the Termination Date occurs, and (c) all vacation pay accrued as of the Termination Date calculated
in accordance with Section 1.2.4. Upon receipt by Employee of a Termination Notice pursuant to this Section 4.2,
(a) Employee shall assist the Company in good faith to effect a smooth transition, and (b) the Company may request 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 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 for cause and the employment relationship
between Employee and the Company shall be deemed severed upon written notice to Employee by the Company after the occurrence of
any of the following:

 

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

 

		(b)	Employee (i) willfully and continually fails or refuses
(without proper cause) to substantially perform the duties of her 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 Employee, or (ii) conducts herself in a fraudulent manner, or (iii) conducts herself in an unprofessional
or unethical manner which in the reasonable judgment of the Board of the Company is detrimental to the Company.

 

		(c)	Employee willfully and continually fails or refuses to
adhere to any written agreements to which 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 Employee.

 

If Employee's employment is terminated
by the Company for cause pursuant to this Section 4.3, the Company shall pay to Employee any unpaid base salary for the
period ending on the termination date, plus the amount of any accrued vacation as of the termination date. For the avoidance of
doubt, the removal of Employee from the position of Vice President of Finance and Chief Financial Officer without removing her
as President and Chief Executive Officer shall not constitute "good reason" for any purpose under this Agreement.

 

Section 4.4.
Death or Disability. This Agreement and Employee's employment with the Company shall terminate upon the death or Disability
of Employee. In either such event, the Company shall pay to Employee or her estate (a) Employee's unpaid base salary for
the period ending on the termination date; (b) a pro-rated Bonus for the completed portion of any fiscal year in which the
termination date occurs; and (c) all vacation pay accrued as of the Termination Date calculated in accordance with Section 1.2.4.
For purposes of this Agreement, "Disability" means that Employee meets one of the following requirements: (i) Employee
is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that
can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) Employee
is, by reason of medically determinable physical or mental impairment that can be expected to result in death or can be expected
to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than
3 months under an accident and health plan covering employee of the Company.

 

Section 4.5.
Non-Renewal by Company. If the Company provides Employee with written notice of its intent not to renew this Agreement as
provided in Section 1.1, then Employee shall be entitled to the same severance benefits described in this Agreement as if
her employment was terminated by the Company without cause.

 

Section 4.6. Continuation of Health
Insurance Benefits. If Employee is terminated by the Company without cause, or resigns her employment with the Company for
"good reason", then Employee shall be entitled to participate in the Company’s group health plan as an active employee,
at the active employee rate, throughout the entire Severance Period.  Upon the conclusion of the Severance Period, Employee
will then be eligible to participate in the Company’s group health plan and elect continuation of health coverage pursuant
to Section 601 through 608 of the Employee Retirement Income Security Act of 1974, as amended (“COBRA”).  Employee’s
participation in the Company’s group medical plan during the Severance Period will NOT run concurrently with the allotted
eighteen-month period under COBRA and any law requiring continuation of health care coverage.  If the terms of the Company's
group health plan at the time of the termination of Employee's employment as described in this section do not permit Employee to
continue to participate as an active employee as described herein and Employee elects continuation of health care coverage under
COBRA, then the Company shall reimburse Employee an amount equal to her monthly COBRA premiums for the Severance Period. Notwithstanding
the foregoing, Employee's participation in the Company's group health plan shall cease immediately upon Employee’s becoming
entitled to other health insurance.

 

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ARTICLE 5

 

Change in Control

 

The Board has determined
that it is in the best interests of the Company and its shareholders to assure that the Company will have the continued dedication
of Employee, notwithstanding the possibility or occurrence of a Change in Control of the Company. The Board believes it is imperative
to diminish the inevitable distraction of Employee by virtue of personal uncertainties and risks created by a pending or threatened
Change in Control and to encourage Employee’s full attention and dedication to the Company currently and in the event of
any pending, threatened or actual Change in Control and to provide Employee with compensation and benefits arrangements upon a
Change in Control which are consistent with Employee’s significant leadership position and which are competitive. (See Addendum
A for Definition of Change in Control)

 

Section 5.1.
Involuntary Termination/Change in Control. In the case of involuntary termination of Employee by the Company within one
(1) year after a Change in Control of the Company (which shall include any termination as to which notice is given by the Company
within such one (1) year period, notwithstanding the effective date of termination) Employee will be paid compensation in terminal
pay and participation in benefits, savings and retirement plans as set forth in Section 5.2, 5.3 and 5.4 of
this Agreement.

 

Section 5.2.
Terminal Pay. Employee will receive terminal pay equal to fifteen (15) months base salary at the monthly rate in effect
on the date of termination ("Terminal Pay"), to be paid over a fifteen-month period in equal bi-weekly installments beginning
with the first regular pay period of the Company following such termination.

 

Section 5.3.
Special Bonus. In addition to the Terminal Pay, Employee will be eligible, based on performance, for any special bonus program
which may be instituted by the Company in recognition of particular assignments, duties or responsibilities required during the
crucial transition period leading up to, or following, the Change in Control.

 

Section 5.4.
Benefits, Savings and Retirement Plans. During the period of terminal payments, Employee will remain in employee status
for benefits purposes only and will be entitled to participate in all benefits, savings and retirement plans, practices, policies
and programs of the Company applicable generally to other peer executives of the Company, with the expectation that Employee continue
to make all applicable employee contributions to said program(s). If the terms of the Company's group health plan at the time of
the termination of Employee's employment as described in Section 5.1 do not permit Employee to continue to participate as
an active employee as described herein and Employee elects continuation of health care coverage under COBRA, then the Company shall
reimburse Employee an amount equal to her monthly COBRA premiums for the fifteen-month period following such termination.

 

Section 5.5.
Interaction with Article 4 of this Agreement. To the extent any of the provisions of this Article 5 are in conflict
with the provisions of Article 4 of this Agreement (e.g., as to Terminal Pay due upon involuntary termination), in circumstances
in which this Article 5 applies, the terms of Article 5 shall control and shall supersede and replace any varying
provisions set forth in Article 4; provided, however, that nothing in this Section 5.5 shall be deemed to limit or
eliminate any rights of Employee or the Company under any provision of Article 4 not so superseded and replaced."

 

ARTICLE 6

 

Miscellaneous

 

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

 

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Section 6.2.
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 Inc.
	 	2701 Kent Avenue
	 	West Lafayette, IN  47906
	 	 
	If to Employee:	Jacqueline Lemke
	 	address on file with employee’s records

 

or at such other address as may be specified
from time to time in notices given in accordance with the provisions of this Section 6.2.

 

Section 6.3.
Enforceability. Both the Company and 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 6.4.
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 her rights hereunder shall not be construed as a waiver of any such provisions or as the
relinquishment of any such rights.

 

Section 6.5.
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 6.6.
Governing Law. The laws of the State of Indiana shall govern the construction and enforceability of this Agreement.

 

Section 6.7.
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 6.8.
Collective Agreements. There are no collective agreements which directly affect the terms and conditions of Employee's employment.

 

Section 6.10.
Heading. The headings of the sections are inserted for convenience only and do not affect the interpretation or construction
of the sections.

 

Section 6.11.
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.

 

 

Signature page follows

 

    	8

    	 

    

 

IN WITNESS WHEREOF, the Company and Employee
have executed, or caused to be executed, this Agreement as of the Effective Date.

 

	"COMPANY"	 	"EMPLOYEE"
	 	 	 
	BIOANALYTICAL SYSTEMS, INC.	 	 
	 	 	 
	By:	/s/ John B. Landis, Ph.D.	 	/s/ Jacqueline M. Lemke
	 	John B. Landis, Ph.D.	 	Jacqueline M. Lemke
	 	Chairman of the Board	 	 

 

    	9

    	 

    

 

ADDENDUM A

 

Definition of Change in Control

 

A "Change in Control" shall mean
the occurrence of any of the following events:

 

		1.	Approval by shareholders of the Company of (a) any consolidation
or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of stock
of the Company would be converted into cash, securities or other property, other than a consolidation or merger of the Company
in which holders of its common shares immediately prior to the consolidation or merger have substantially the same proportionate
ownership of voting common stock of the surviving corporation immediately after the consolidation or merger as immediately before,
or (b) a sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all or substantially
all the assets of the Company.

 

		2.	A change in the majority of members of the Board of Directors
of the Company within a twenty-four (24) month period unless the election, or nomination for election by the Company shareholders,
of each new director was approved by a vote of two-thirds (2/3) of the directors then still in office who were in office at the
beginning of the twenty-four (24) month period.

 

		3.	The Company combines with another company and is the
surviving corporation but, immediately after the combination, the shareholders of the Company immediately prior to the combination
do not hold, directly or indirectly, more than fifty percent (50%) of the share of voting common stock of the combined company
(there being excluded from the number of shares held by such shareholders, but not from the shares of voting common stock of the
combined company, any shares received by affiliates (as defined in the rules of the SEC) of such other company in exchange for
stock of such other company).

 

 

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