Document:

Unassociated Document

    EMPLOYMENT
      AGREEMENT

    

    THIS
      AGREEMENT ("Agreement") is made and entered into effective the ____ day of
      December 2008 by and among BIOANALYTICAL SYSTEMS, INC. (“BASi”, “Company”) a
      corporation organized under the laws of the State of Indiana (“Company”), and
      Anthony S. Chilton, ("Employee") as Chief Operating Officer, Scientific Services
      of BASi. 

    

    Preliminary
      Statements:

    

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

    

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

    

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

    

    ARTICLE
      1

    

    Term,
      Compensation, and Benefits

    

    Section
      1.1.
      Term
      The
      Company hereby agrees to employ the Employee, and the Employee hereby accepts
      employment with the Company, on the terms and conditions set forth in this
      Agreement until December 30, 2010, (the “Initial Term”). The Initial Term shall
      be extended for successive one year periods (the "Additional Terms," and
      together with the Initial Term, the "Employment Period"), except that if either
      Employee or Company gives the other party written notice at least ninety days
      (90) before the end of the Initial Term, then this Agreement shall expire at
      the
      end of its then current term. The Employee shall take absences at such time
      as
      shall be approved by the Chief Executive Officer.

    

    Section
      1.2Compensation
      and Benefits

    

    Section
      1.2.1 Salary:
      BASi
      will pay a base salary of $16,250.00 per month. Salary shall be paid in equal
      semi-monthly installments in arrears. All amounts to be paid hereunder shall
      be
      paid in accordance with normal payroll procedures of the Company and shall
      be
      subject to all required withholdings and deductions.

    

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

    

    Section
      1.2.3.
      Bonus:
      Employee will receive a sign-in bonus in two installments, totaling Ten thousand
      Dollars and No Cents ($10,000.00), less taxes and other deductions required
      by
      law. The first installment of Five Thousand Dollars and No Cents ($5,000.00)
      will be paid on or before March 15, 2009. The second installment of Five
      Thousand Dollars and No Cents ($5,000) will be paid on or before July 15, 2009.
      Employee will also be eligible for bonus grants under bonus plans adopted by
      the
      Company at the discretion of the Compensation Committee of the Board of
      Directors. 

    

    Section
      1.2.4  Expense Reimbursement.
      Employee
      will be entitled to reimbursement for reasonable out of pocket expenses incurred
      by him for living quarters in the Lafayette, Indiana area during the first
      year
      of employment. Travel to and from the Employees residence in Alpharetta, Georgia
      and not more frequently than twenty four times per year (excluding the
      Thanksgiving and Christmas Holidays). Employee will also be entitled to
      reimbursement of travel, entertainment and other out of pocket expenses incurred
      by him in the course of his employment in accordance with the Company’s standard
      reimbursement policies.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

    

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

    

    Section
      1.2.7COBRA:
      BASi
      will pay your COBRA premium for a 90 day period, after which you will be
      eligible for the Company’s medical plan. The Company will “gross up” the premium
      amount paid to offset income taxes, FICA, and any other payroll
      taxes.

    

    Section
      1.2.8.Relocation Package:
      Employee shall become eligible for a standard relocation package during the
      first year of employment.

    

    ARTICLE
      2

    

    Duties

    

    Section
      2.1. Duties
      During
      the Employment Period, the Employee will be the ranking Chief Operating Officer
      of Scientific Services of our business. The Employee will lead the scientific
      staff, be the ultimate contact with clients and scientific advisors, and own
      responsibility for the administering and overseeing the strategic plan to
      advance BASi in the area of research activities. In addition, employee is
      responsible for strengthening existing collaborations, building new
      partnerships, plus executing programs and initiatives to support the BASi
      mission statement. The Employee will be called upon to perform certain services
      for the Company including, without limitation, the following: 

    

    
      	 	
              a)

            	
              Coordinate
                the communication between Project Managers and BASi Senior
                Management.

            

    

    
      	 	
              b)

            	
              Identifying
                opportunities for proposed direction of new and existing
                projects

            

    

    
      	 	
              c)

            	
              Develop
                and manage global full range of interactions on research related
                activities

            

    

    
      	 	
              d)

            	
              Develop
                and implement strategies that support company goals and milestones
                

            

    

    
      	 	
              e)

            	
              Support
                other management/departments by providing scientific resources advice,
                counsel, and decisions; analyzing information and
                applications.

            

    

    
      	 	
              f)

            	
              Participate
                in departmental and organizational meetings to ensure that employees
                are
                informed of new initiatives. 

            

    

    
      	 	
              g)

            	
              Support
                operations and administration of Board by advising and informing
                Board
                members of issues and trends related to the
                sciences

            

    

    
      	 	
              h)

            	
              Function
                as liaison between research and operational departments at BASi with
                respect to scientific development and progress of individual research
                activities

            

    

    
      	 	
              i)

            	
              Ensure
                BASi compliance with current, applicable laws and develop safety/security
                policies to meet Company needs and comply with state and federal
                laws

            

    

    
      	 	
              j)

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

            

    

    
      	 	
              k)

            	
              Enhance
                the professional image of BASi in public
                forums

            

    

    
      	 	
              l)

            	
              Manage
                relationships with outside business
                leaders

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

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

    

    Confidentiality
      and Other Matters

    

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

    

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

    

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

    

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

    

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

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

    

    Section
      3.4.
      The
      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 the Employee.
      The
      Employee may resign from her employment with the Company at any time providing
      written notice to the Company of resignation at least ninety days (90) prior
      to
      the effective date of the resignation (the “Resignation Date”). Employee may
      resign at any time for” good reason” due to (a) a material breach of this
      Agreement by the Company which continues after the Employee has given the
      Company thirty days (30) written notice of such breach, or (b) the assignment
      to
      the Employee of duties materially inconsistent with this Agreement other than
      in
      accordance with the terms of this Agreement, and the Company has not rectified
      such assignment within thirty days (30) after the Employee has given the Company
      written notice of such breach. 

    

    A
      termination by the Employee for “good reason” shall entitle the Employee to the
      same compensation and benefits as if the Employee had been terminated by the
      Company without cause. In the event of a termination by the Employee for “good
      reason,” the provisions of Section
      3.3
      shall
      not apply and shall be of no force or effect. Upon any resignation by the
      Employee, the Employee shall use reasonable best efforts to assist the Company
      in good faith to effect a smooth transition. If Employee voluntarily resigns
      her
      position without “good reason” prior to the determination 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 the
      Employee's employment with the Company (the actual date of termination being
      referred to as the "Termination Date") without cause, by providing written
      notice thereof to the Employee ("Termination Notice") at least ninety days
      (90)
      prior to the Termination Date. In the event of termination of the Employee's
      employment pursuant to this Section, the Company shall continue to pay to the
      Employee the Employee’s then current Annual Salary throughout such ninety-day
      (90) notice period and shall pay the Employee as compensation for loss of office
      (a) 12 months Annual Salary at the Employee’s then current salary in equal
      monthly installments over the twelve month period following the Termination
      Date
      (reduced pro rata if such termination occurs during the last year of the Initial
      Term and based on estimated time worked pursuant to Article 1), provided that
      such payments shall cease if the Employee becomes employed by a company which
      is
      in the Business during such six month period, and (b) all vacation accrued
      as of
      the Termination Date calculated in accordance with Section
      1.2.4.
      Upon
      receipt by the Employee of a Termination Notice pursuant to this Section
      4.2,
      (a) the
      Employee shall assist the Company in good faith to effect a smooth transition,
      and (b) the Company may request the Employee to vacate the premises owned by
      the
      Company and used in connection with the Business within a reasonable time,
      provided that the obligation of the Company to make payments to the Employee
      pursuant to this Section
      4.2
      and the
      other provisions of this Agreement shall not be affected, provided further,
      that
      in the event of a termination by the Company without cause pursuant to this
      Section
      4.2,
      the
      provisions of Section
      3.3
      shall
      not apply and shall be of no further force or effect.

    

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

    

    
      	 	
              a)

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

            

    

    

    
      	 	
              b)

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

            

    

    

    
      	 	
              c)

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

            

    

    

    
      	 	
              d)

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

            

    

     

    Section
      4.4.
      Continuation
      of Health Insurance Benefits.
      If
      Employee is terminated by the Company without Cause, or terminated her
      employment with the Company for Good Reason, and provided that Employee elects
      continuation of health coverage pursuant to Section 601 through 608 of the
      Employee Retirement Income Security Act of 1974, as amended (“COBRA”), Company
      shall pay Employee an amount equal to her monthly COBRA premiums for a period
      equal to the period remaining in the Employment Period after termination;
      provided further, such payment will cease upon Employee’s entitlement to other
      health insurance without charge.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      5

    

    Change
      in Control

    

        The
      Board of
      Directors of the Company (“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 the Chief Operating Officer, Scientific
      Services, 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 the Employee by virtue of personal uncertainties and risks
      created by a pending or threatened Change in Control and to encourage the
      Executive’s full attention and dedication to the Company currently and in the
      even of any pending, threatened or actual Change in Control and to provide
      the
      Employee with compensation and benefits arrangements upon a Change in Control
      which are consistent with the 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 the Employee, resulting from a Change in
      Control of the Company, and due to one or more of the following conditions
      being
      met up to one year following such Change in Control:

    

    
      	 	
              a.

            	
              Elimination
                or diminution of the Employee’s position, authority, duties and
                responsibilities relative to the most significant of those held,
                exercised
                and assigned at any time during the six month period immediately
                preceding
                a Change in Control;

            

    

    
      	 	
              b.

            	
              Change
                in location requiring the Employee’s services to be performed at a
                location other than the location where the Employee was employed
                immediately preceding a Change in Control, other than any office
                which is
                the headquarters of the Company and is less that 35 miles from such
                location.

            

    

    

    The
      Employee will receive written notice of involuntary termination and will be
      paid
      compensation in terminal pay, annual bonus, and participation in benefits,
      savings and retirement plan as summarized below.

    

    Section
      5.2 Voluntary Termination/Change in Control.
      In the
      event of change in control, which does not result in involuntary termination
      of
      the Employee or diminution of the Employee’s position, authority, duties and
      responsibilities, the Employee may elect to voluntarily terminate within one
      year of the Change in Control and may elect the Change in Control provisions
      summarized below.

    

    Section
      5.3 Terminal Pay.
      The
      Employee will receive terminal pay, to be paid in equal installments in
      semi-monthly installments, at least equal to two (2) years annual base salary
      payable to the Employee by the Company in respect of the twelve month period
      immediately preceding termination.

    

    Section
      5.4 Special Bonus.
      In
      addition to the Terminal Pay and Annual Bonus, the 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
      5.5 Benefits, Savings and Retirement. Plans.
      During
      the period of terminal payments, the 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 the Employee continue to make all applicable employee
      contributions to said program(s).

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    ARTICLE
      6

     

    Guarantee

    

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

    

    ARTICLE
      7

    

    Miscellaneous

    

    Section
      7.1.
      Relationship
      between the Parties.
      The
      relationship between the Company and the Employee shall be that of an employer
      and an employee, and nothing contained herein shall be construed or deemed
      to
      give the Employee any interest in any of the assets of the Company.

     

    Section
      7.2.
      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 Evansville

    2701
      Kent
      Avenue

    West
      Lafayette, IN 47906

    

    

    If
      to
      Employee:             Anthony
      S. Chilton

    1035
      Richmond Glen Circle

    Alpharetta,
      GA 30004 

    

    or
      at
      such other address as may be specified from time to time in notices given in
      accordance with the provisions of this Section
      7.2.

    

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

    

    Section
      7.4.
      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
      his
      rights hereunder shall not be construed as a waiver of any such provisions
      or as
      the relinquishment of any such rights.

    

    Section
      7.5.
      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
      7.6.
      Governing Law.
      The
      laws of the United States and the State of Indiana shall govern the construction
      and enforceability of this Agreement.

    

    Section
      7.7.
      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
      7.8.
      Collective
      Agreements.
      There
      are no collective agreements which directly affect the terms and conditions
      of
      the Employee's employment.

    

    Section
      7.9.
      Grievance
      and Disciplinary Procedures.
      If the
      Employee wishes to obtain redress of any grievance relating to her employment
      or
      if she is dissatisfied with any reprimand, suspension or other disciplinary
      steps taken by the Company, she shall apply in writing to the Chairman of the
      board of directors of the Company, setting out the nature and details of any
      such grievance or dissatisfaction.

    

    Section
      7.10.
      Heading.
      The
      headings of the sections are inserted for convenience only and do not affect
      the
      interpretation or construction of the sections.

    

    Section
      7.11. 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.

     

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

    
 

    
      	"COMPANY"	 	"EMPLOYEE"
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	  
	Richard
              M. Shepperd 	 	Anthony S. Chilton
	President
              and CEO
              Bioanalytical
                Systems, Inc.THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”). THE SECURITIES MAY NOT BE SOLD,
      TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
      FOR THE SECURITIES UNDER SAID ACT, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE
      AND SCOPE CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS THAT
      REGISTRATION IS NOT REQUIRED UNDER SAID ACT.

    

    10%
      PROMISSORY NOTE

     

    
      
        	New York, New York	 
	November __, 2008 	
                $______

              

      

    

     

    FOR
      VALUE RECEIVED,
      EMERALD DAIRY INC.,
      a Nevada
      corporation (hereinafter called the “Borrower”),
      hereby promises to pay to the order of __________, a __________, or its
      registered assigns (the “Holder”)
      the
      sum of _______________ Dollars ($__________), on November __, 2009 (the
“Maturity
      Date”),
      and
      to pay interest on the unpaid principal balance hereof at the rate of ten
      percent (10%) per annum (the “Initial
      Interest Rate”)
      from
      November __, 2008 (the “Issue
      Date”)
      until
      the same becomes due and payable, whether at maturity or upon acceleration
      or by
      prepayment or otherwise. Any amount of principal or interest on this Note which
      is not paid when due shall bear interest at the rate of twelve percent (12%)
      per
      annum from the due date thereof until the same is paid (“Default
      Interest”).
      Interest shall commence accruing on the Issue Date, shall be computed on the
      basis of a 365-day year and the actual number of days elapsed and shall be
      payable, at the Maturity Date. All payments due hereunder shall be made in
      lawful money of the United States of America. All payments shall be made at
      such
      address as the Holder shall hereafter give to the Borrower by written notice
      made in accordance with the provisions of this Note. Whenever any amount
      expressed to be due by the terms of this Note is due on any day which is not
      a
      business day, the same shall instead be due on the next succeeding day which
      is
      a business day. As used in this Note, the term “business day” shall mean any day
      other than a Saturday, Sunday or a day on which commercial banks in the city
      of
      New York, New York are authorized or required by law or executive order to
      remain closed. This Note is being issued pursuant to a Securities Purchase
      Agreement entered into between the Borrower and Holder (the “Purchase
      Agreement”),
      dated
      of even date herewith. Each capitalized term used herein, and not otherwise
      defined, shall have the meaning ascribed thereto in the Purchase
      Agreement.

    

    The
      following terms shall apply to this Note: 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    ARTICLE
      I. 

    PREPAYMENT

    

    1.1 Borrower’s
      Prepayment Option.
      Notwithstanding
      anything to the contrary contained herein, at Borrower’s option at any time
      following the Issue Date, upon fifteen (15) days prior written notice, the
      Borrower shall have the right to prepay the entire principal amount of the
      Note
      (the “Prepayment
      Option”).
      On
      the 16th day following such notice, the Borrower shall make payment to the
      Holder of an amount in cash equal to the sum of (a) the principal amount of
      the
      Note outstanding on such day plus (b) accrued and unpaid interest on such unpaid
      principal amount plus (c) Default Interest, if any, on the amounts referred
      to
      in clauses (a) and (b) plus (d) any amounts owed to the Holder pursuant to
      this
      Note (the “Prepayment
      Amount”).
      If
      the Borrower fails to make such payment within one (1) business day of such
      date
      the Borrower shall be subject to a penalty of .005 multiplied by the Prepayment
      Amount for every additional business day on which such payment is not
      made.

    

    1.2 Holder’s
      Prepayment Option.
      Notwithstanding anything to the contrary contained herein, at Holder’s option,
      Holder shall have the right at any time to be prepaid, in whole or in part,
      any
      amounts due under the terms of this Note from the proceeds of any offering
      of
      the Borrower’s securities resulting in gross proceeds of $6,500,000 or more. In
      order to exercise such right, Holder shall deliver a written notice of
      prepayment to the Borrower. The Borrower shall make payment to the Holder of
      an
      amount in cash equal to the sum indicated in such notice within three (3)
      business days following the date on which notice of prepayment is
      delivered.

    

    ARTICLE
      II. 

    CERTAIN
      COVENANTS

    

    2.1 Distributions
      on Capital Stock.
      So long
      as the Borrower shall have any obligation under this Note, the Borrower shall
      not without the Holder’s written consent (a) pay, declare or set apart for such
      payment, any dividend or other distribution (whether in cash, property or other
      securities) on shares of capital stock other than dividends on shares of Common
      Stock solely in the form of additional shares of Common Stock or (b) directly
      or
      indirectly or through any subsidiary make any other payment or distribution
      in
      respect of its capital stock except for distributions pursuant to any
      shareholders’ rights plan which is approved by a majority of the Borrower’s
      disinterested directors.

    

    2.2 Restriction
      on Stock Repurchases.
      So long
      as the Borrower shall have any obligation under this Note, the Borrower shall
      not without the Holder’s written consent redeem, repurchase or otherwise acquire
      (whether for cash or in exchange for property or other securities or otherwise)
      in any one transaction or series of related transactions any shares of capital
      stock of the Borrower or any warrants, rights or options to purchase or acquire
      any such shares, with the exception of the Company’s obligations under the Put
      Call Agreements described in the Company’s SEC Filings.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

    2.3 Sale
      of Assets.
      So long
      as the Borrower shall have any obligation under this Note, the Borrower shall
      not, without the Holder’s written consent, sell, lease or otherwise dispose
      (collectively, a “Disposition”)
      of any
      significant portion of its assets, other than to a wholly-owned subsidiary
      of
      the Borrower, outside the ordinary course of business unless the proceeds of
      such Disposition shall be used to repay this Note. Any consent to the
      disposition of any assets may be conditioned on a specified use of the proceeds
      of disposition.

    

    2.4 Advances
      and Loans.
      So long
      as the Borrower shall have any obligation under this Note, the Borrower shall
      not, without the Holder’s written consent, lend money, give credit or make
      advances to any person, firm, joint venture or corporation, including, without
      limitation, officers, directors, employees, subsidiaries and affiliates of
      the
      Borrower, except loans, credits or advances (a) in existence or committed on
      the
      date hereof and which the Borrower has informed Holder in writing prior to
      the
      date hereof or (b) made in the ordinary course of business. 

    

    2.5 Contingent
      Liabilities.
      So long
      as the Borrower shall have any obligation under this Note, the Borrower shall
      not, without the Holder’s written consent, assume, guarantee, endorse,
      contingently agree to purchase or otherwise become liable upon the obligation
      of
      any person firm, partnership, joint venture or corporation, except by the
      endorsement of negotiable instruments for deposit or collection and except
      assumptions, guarantees, endorsements and contingencies (a) in existence or
      committed on the date hereof and which the Borrower has informed Holder in
      writing prior to the date hereof, and (b) similar transactions in the ordinary
      course of business. 

    

    ARTICLE
      III. 

    EVENTS
      OF DEFAULT

    

    3.1 Events
      of Default.
      Each of
      the following events shall be deemed an “Event of Default” under this
      Note:

    

    (a) Failure
      to Pay Principal or Interest.
      The
      Borrower fails to pay the principal hereof or interest thereon when due on
      this
      Note, whether at maturity, upon acceleration, or otherwise.

    

    (b) Breach
      of Covenants.
      The
      Borrower breaches any material covenant or other material term or condition
      contained herein, or in the Purchase Agreement, and such breach continues for
      a
      period of thirty (30) days after written notice thereof to the Borrower from
      the
      Holder.

    

    (c) Breach
      of Representations and Warranties.
      Any
      representation or warranty of the Borrower made herein or in any agreement,
      statement or certificate given in writing pursuant hereto or in connection
      herewith (including, without limitation, the Purchase Agreement), shall be
      false
      or misleading in any material respect when made and the breach of which has
      (or
      with the passage of time will have) a material adverse effect on the rights
      of
      the Holder with respect to this Note or the Purchase Agreement.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    

    (d) Receiver
      or Trustee.
      The
      Borrower or any subsidiary of the Borrower shall make an assignment for the
      benefit of creditors, or apply for or consent to the appointment of a receiver
      or trustee for it or for a substantial part of its property or business, or
      such
      a receiver or trustee shall otherwise be appointed;

    

    (e) Judgments.
      Any
      money judgment, writ or similar process shall be entered or filed against the
      Borrower or any subsidiary of the Borrower or any of its property or other
      assets for more than $250,000, and shall remain un-vacated, un-bonded or
      un-stayed for a period of twenty (20) days unless otherwise consented to by
      the
      Holder, which consent will not be unreasonably withheld;

    

    (f) Bankruptcy.
      Bankruptcy, insolvency, reorganization or liquidation proceedings or other
      proceedings for relief under any bankruptcy law or any law for the relief of
      debtors shall be instituted by or against the Borrower or any subsidiary of
      the
      Borrower and if instituted against Borrower is not dismissed within sixty (60)
      days; or

    

    (g) Delisting
      of Common Stock.
      The
      Borrower shall fail to maintain the listing of the Common Stock on at least
      one
      of the OTCBB, the Nasdaq National Market, the Nasdaq SmallCap Market, the New
      York Stock Exchange, the American Stock Exchange, or comparable market or
      exchange.

    

    3.2 Effect
      of Event of Default.
      Upon
      the
      happening of any Event of Default, as set forth in Section 3.1 above, then,
      or
      at any time thereafter, and in each and every such case, unless such Event
      of
      Default shall have been waived in writing by the Holder (which waiver shall
      not
      serve as a waiver of any subsequent default) at the option of the Holder and
      in
      the Holder’s sole discretion, the Holder may consider this Note immediately due
      and payable, without presentment, demand, protest or notice of any kind, all
      of
      which are hereby expressly waived, anything herein notwithstanding, and the
      Holder may immediately enforce any and all of the Holder’s rights and remedies
      provided herein or any other right or remedy afforded by law.

    

    ARTICLE
      IV. 

    MISCELLANEOUS

    

    4.1 Failure
      or Indulgence Not Waiver.
      No
      failure or delay on the part of the Holder in the exercise of any power, right
      or privilege hereunder shall operate as a waiver thereof, nor shall any single
      or partial exercise of any such power, right or privilege preclude other or
      further exercise thereof or of any other right, power or privileges. All rights
      and remedies existing hereunder are cumulative to, and not exclusive of, any
      rights or remedies otherwise available.

    

    4.2 Notices.
      Any
      notice herein required or permitted to be given shall be in writing and may
      be
      personally served or delivered by courier or sent by United States mail and
      shall be deemed to have been given upon receipt if personally served (which
      shall include telephone line facsimile transmission) or sent by courier or
      three
      (3) days after being deposited in the United States mail, certified, with
      postage pre-paid and properly addressed, if sent by mail. For the purposes
      hereof, the address of the Holder shall be as shown on the records of the
      Borrower; and the address of the Borrower shall be 11990 Market Street, Suite
      205, Reston, VA 20190, Fax #: (678) 868-0633. Both the Holder and the Borrower
      may change the address for service by service of written notice to the other
      as
      herein provided.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    

    4.3 Amendments.
      This
      Note and any provision hereof may only be amended by an instrument in writing
      signed by the Borrower and the Holder. The term “Note” and all reference
      thereto, as used throughout this instrument, shall mean this instrument (and
      the
      other Notes issued pursuant to the Purchase Agreement) as originally executed,
      or if later amended or supplemented, then as so amended or
      supplemented.

    

    4.4 Assignability.
      This
      Note shall be binding upon the Borrower and its successors and assigns, and
      shall inure to the benefit of the Holder and its successors and assigns. Each
      transferee of this Note must be an “accredited investor” (as defined in Rule
      501(a) of the 1933 Act). Notwithstanding anything in this Note to the contrary,
      this Note may be pledged as collateral in connection with a bona fide
      margin
      account or other lending arrangement.

    

    4.5 Cost
      of Collection.
      If
      default is made in the payment of this Note, the Borrower shall pay the Holder
      hereof costs of collection, including reasonable attorneys’ fees.

    

    4.6 Governing
      Law.
      THIS
      NOTE SHALL BE ENFORCED, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
      OF
      THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY
      WITHIN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS. THE
      BORROWER HEREBY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES
      FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK WITH RESPECT TO ANY DISPUTE ARISING
      UNDER THIS NOTE, THE AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH OR THE
      TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. BOTH PARTIES IRREVOCABLY WAIVE
      THE
      DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT OR PROCEEDING.
      BOTH PARTIES FURTHER AGREE THAT SERVICE OF PROCESS UPON A PARTY MAILED BY FIRST
      CLASS MAIL SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON
      THE PARTY IN ANY SUCH SUIT OR PROCEEDING. NOTHING HEREIN SHALL AFFECT EITHER
      PARTY’S RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. BOTH
      PARTIES AGREE THAT A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR
      PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
      SUIT ON SUCH JUDGMENT OR IN ANY OTHER LAWFUL MANNER. THE PARTY WHICH DOES NOT
      PREVAIL IN ANY DISPUTE ARISING UNDER THIS NOTE SHALL BE RESPONSIBLE FOR ALL
      FEES
      AND EXPENSES, INCLUDING ATTORNEYS’ FEES, INCURRED BY THE PREVAILING PARTY IN
      CONNECTION WITH SUCH DISPUTE.

    

    4.7 Denominations.
      At the
      request of the Holder, upon surrender of this Note, the Borrower shall promptly
      issue new Notes in the aggregate outstanding principal amount hereof, in the
      form hereof, in such denominations as the Holder shall request.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    

    4.8 Purchase
      Agreement.
      By its
      acceptance of this Note, each Holder agrees to be bound by the applicable terms
      of the Purchase Agreement.

    

    4.9 Remedies.
      The
      Borrower acknowledges that a breach by it of its obligations hereunder will
      cause irreparable harm to the Holder, by vitiating the intent and purpose of
      the
      transaction contemplated hereby. Accordingly, the Borrower acknowledges that
      the
      remedy at law for a breach of its obligations under this Note will be inadequate
      and agrees, in the event of a breach or threatened breach by the Borrower of
      the
      provisions of this Note, that the Holder shall be entitled, in addition to
      all
      other available remedies at law or in equity, and in addition to the penalties
      assessable herein, to an injunction or injunctions restraining, preventing
      or
      curing any breach of this Note and to enforce specifically the terms and
      provisions thereof, without the necessity of showing economic loss and without
      any bond or other security being required.

    

    [THE
      REMAINDER OF THIS PAGE IS LEFT BLANK INTENTIONALLY]

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF,
      Borrower has caused this Note to be signed in its name by its duly authorized
      representative this ___ day of November, 2008.

    
      	 	 	 
	 	EMERALD
              DAIRY INC.
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              
Name:
              Yang Yong Shan
	 	Title:
              Chief Executive Officer

    
      
         

      

      
        7

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