EXECUTION COPY

EMPLOYMENT AGREEMENT
 
This Employment Agreement (this "Agreement") is entered into as of July 5, 2010,
by and between YOUNG INNOVATIONS, INC., a Missouri corporation ("Employer"), and
Joshua A. McKey, of Edwardsville, Illinois ("Employee").  Capitalized terms are
defined in the Appendix to this Agreement.
 
In consideration of Employer's employment of Employee, the terms, conditions and
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Employee and Employer,
intending to be legally bound, hereby agree as follows:
 
1. EMPLOYMENT.  Employer hereby agrees to employ Employee and Employee agrees to
accept such employment upon the terms and conditions herein set forth.
 
2. TERM.  The initial term of employment hereunder shall commence on the date
hereof and shall expire on June 2, 2011 (such period, the "Term"); PROVIDED,
HOWEVER, that the Term shall automatically be extended for an additional period
of one year on June 2, 2011 and on each June 2 thereafter unless Employer or
Employee delivers written notice of the intention not to extend the Term not
later than six (6) months prior to its expiration.
 
3. POSITION AND DUTIES.  Employee hereby agrees to serve as Vice President or in
such other capacity to which Employee may be promoted during the term
hereof.  Employee shall devote his full business time and attention to the
management, development and enhancement of the business of Employer and perform
such duties as are necessary and required of the Vice President or in such
capacity as Employee may then be serving.  During the Term, Employee may not
undertake any other employment, engagements, consulting or other outside
activities that in the opinion of the Board of Directors interfere with the
effective carrying out of Employee's duties hereunder, PROVIDED, HOWEVER, that
nothing herein shall prevent Employee from engaging in community and/or
charitable activities, so long as such activities, either singly or in the
aggregate, do not interfere with the proper performance of his duties and
responsibilities to Employer.
 
4. COMPENSATION AND BENEFITS.
 
(a) BASE SALARY.  Employer shall pay to Employee salary at the rate of
 
$175,000 per year during the Term hereof, or such higher amounts as shall be
recommended and approved by the Compensation Committee of the Board of Directors
(in each case, the "Base Salary").
 
(b) BONUS COMPENSATION.  In addition to Base Salary, Employee shall be entitled
to receive bonus compensation as recommended and approved by the Compensation
Committee of the Board of Directors (the "Bonus Compensation").
 
(c) HOLIDAYS, VACATION TIME AND SICK LEAVE.  Employee shall be entitled to paid
holidays, vacation and sick leave as is consistent with Employer's policy for
executive employees with respect to such matters as of the date hereof.
 
 
 

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(d) OTHER BENEFITS.  Subject to Employer's rules, policies and regulations as in
effect from time to time, Employee shall be entitled to all other rights and
benefits for which Employee may be eligible under any: (i) group life insurance,
disability or accident, death or dismemberment insurance, (ii) medical and/or
dental insurance program, (iii) 401(k) benefit plan, or (iv) other employee
benefits that Employer may, in its sole discretion, make generally available to
employees of Employer of the same level and responsibility as Employee;
PROVIDED, HOWEVER, that nothing herein shall obligate Employer to establish or
maintain any of such benefits or benefit plans.
 
(e) AUTOMOBILE ALLOWANCE.  Employer shall provide Employee with an automobile
allowance consistent with Employer’s policy for executive employees with respect
to such matters as of the date hereof.
 
5. SUPPLEMENTAL PAYMENT UPON A CHANGE IN CONTROL.  If a Change In Control (as
hereafter defined) occurs and Employee is employed by Employer on the date of
the Change In Control or Employee demonstrates that Employee would have been
employed by Employer on the date of the Change In Control but for steps taken at
the request of a third party to effect the Change In Control or Employee's
termination was without Cause and arose in connection with or anticipation of
such Change In Control, then Employee shall have the additional rights set forth
in this Section 5.  Namely,  Employer shall, within thirty (30) days immediately
following the date of the Change In Control, pay to Employee a lump sum cash
amount equal to Employee’s then current annual base salary plus an amount equal
to the Bonus Compensation for the year in which the Change In Control occurs
that Employee would have been eligible to receive under Employer’s bonus program
(the “Change of Control Payment”); provided however, in no event may the
aggregate present value of such payments to Employee exceed 2.9999 times the
“base amount” (as such term is used in Section 280G(b)(3) of the Code), and
Employee agrees to reduce the amount permitted to be paid pursuant to this
Agreement (including amounts specified under Sections 5 and 6 hereto) which may
be subject to Section 280G of the Code to comply with this limitation.  Employer
shall engage its accounting firm to determine the “base amount” and all amounts
payable in connection with a Change In Control; provided, however, that if the
accounting firm is serving as accountant or auditor for the person, entity or
group effecting the Change In Control, Employer shall appoint another nationally
recognized accounting firm which shall provide Employee with detailed supporting
calculations for its conclusions.  All fees and expenses of the accounting firm
shall be borne solely by Employer.
 
6. TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL.
 
(a) PERMANENT DISABILITY.  In the event of the Permanent Disability (as defined
below) of Employee.  Employer may terminate this Agreement by giving notice to
Employee of its intention to terminate and this Agreement shall terminate at the
end of the month following the month in which notice is given.  In the event of
such termination, Employer shall pay (offset by any such amounts payable under
Employer’s benefit plans or insurance) all amounts of Base Salary and Bonus
Compensation accrued pursuant to Section 4 above through the date of
termination, which payment shall constitute full and complete satisfaction of
Employer’s obligations hereunder.  Notwithstanding the foregoing, all payments
hereunder shall
 
 
 
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end upon the earlier to occur of Employee's attaining the age of sixty-five (65)
or the cessation of such Permanent Disability (whether as a result of recovery,
rehabilitation, death or otherwise).
 
(b) DEATH.  In the event of Employee's death, Employer shall pay to Employee's
personal representative (on behalf of Employee's estate), within sixty (60) days
after Employer receives written notice of such representative's appointment, all
amounts of Base Salary and Bonus Compensation accrued pursuant to Section 4
above as of the date of Employee's death, which payment shall constitute full
and complete satisfaction of Employer's obligations hereunder.  Employee and his
dependents shall also be entitled to any continuation health insurance coverage
rights, if any, under applicable law.
 
(c) TERMINATION FOR CAUSE OR VOLUNTARY TERMINATION WITHOUT GOOD
REASON.  Employer may in its sole discretion terminate this Agreement and
Employee's employment with Employer for Cause (as defined in the Appendix) at
any time and with or without advance notice to Employee.  If Employee's
employment is terminated for Cause, or if Employee Voluntarily Terminates (as
defined in the Appendix) his employment with Employer without Good Reason (as
defined in the Appendix), Employer shall promptly pay to Employee all amounts of
Base Salary accrued pursuant to Section 4 above through the date of termination
(but not Bonus Compensation), whereupon Employer shall have no further
obligations to Employee under this Agreement.  Employee and his dependents shall
also be entitled to any continuation health insurance coverage rights, if any,
under applicable law.
 
(d)  TERMINATION WITHOUT CAUSE; VOLUNTARY TERMINATION WITH GOOD
REASON.  Employer may terminate this Agreement and Employee’s employment with
Employer without Cause at any time, with or without notice, for any reason or no
reason (and no reason need be given).  Employee may terminate this Agreement and
Voluntarily Terminate his employment with Employer with Good Reason (as defined
in the Appendix).  In the event Employee’s employment with Employer is
terminated pursuant to this Section 6(d) and such termination is not in
connection with a Change In Control, (i) Employer shall pay to Employee all
amounts of Base Salary accrued pursuant to Section 4 above through the date of
termination, and any accrued, but unpaid, Bonus Compensation attributable to
completed fiscal years, and (ii) Employee shall be relieved of his obligations
under Sections 1 and 3 hereof.  In addition, if Employee’s employment with
Employer is terminated pursuant to this Section 6(d) and such termination is not
in connection with a Change In Control, Employer shall pay to Employee the Base
Salary that Employee would have earned under this Agreement for the remaining
Term together with all reasonable attorneys’ or other professional fees and
costs incurred by Employee in enforcing his rights under this Section
6(d).  Employer may also require Employee to fully and completely release any
and all claims for breach of this Agreement at the time of termination as a
condition to receiving such payments under this Section 6(d); provided that any
such release would be executed and effective no later than 60 days after
Employee’s termination date.  Employee and his dependents shall also be entitled
to any continuation health insurance coverage rights, if any, under applicable
law.  Any benefits provided under Section 6(d) shall be paid in installments
subject to the following:
 
(i)           For purposes of applying the exception to Section 409A for
short-term deferrals, each installment payment made pursuant to this Section
6(d) shall be treated as a separate “payment” for purposes of Section
409A.  Accordingly, any benefits paid (1) within 2-
 
 
 
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½ months of the end of Employer’s taxable year containing the date on which
Employee incurs a separation from service (as defined in Section 409A) (the
“separation date”), or (2) within 2-½ months of Employee’s taxable year
containing the separation date shall be exempt from Section 409A.
 
(ii)           To the extent benefits are not exempt from Section 409A under
subparagraph (i) above, and to the extent Employee’s remaining severance pay
benefit is equal to or less than the lesser of the amounts described in Treasury
Regulation Section 1.409A-1(b)(9)(iii)(A)(1) and (2), such severance benefit
shall be exempt from Section 409A.
 
(iii)           Only to the extent a portion of Employee’s severance pay benefit
is not exempt from Section 409A pursuant to subparagraphs (i) and (ii) above,
such severance pay benefit shall be payable to Employee in installments
according to Employer’s normal payroll schedule commencing on the payroll date
following Employee’s separation date; provided, however, that no payment shall
be paid to Employee if he is a specified employee as defined in Section 409A
until the first payroll date of the seventh (7th) month following Employee’s
separation date with any suspended payments paid in a lump sum without
interest.  Thereafter, the remainder of Employee’s severance pay benefit subject
to this subparagraph (iii) shall be payable in installments according to
Employer’s normal payroll schedule.
 
(e) MUTUAL AGREEMENT.  This Agreement may be terminated by the mutual written
agreement of Employer and Employee. Employee's rights and obligations, in such
event, shall be as set forth in that agreement.
 
7. EMPLOYEE COVENANTS.
 
(a) CONSIDERATION AND ACKNOWLEDGEMENTS.  Employee acknowledges and agrees that
the covenants described in this Section 7 are essential terms of this Agreement
and that the Agreement would not be entered into by Employer in the absence of
the covenants described herein.  Employee acknowledges and agrees that the
covenants set forth in this Section are necessary for the protection of the
business interests of Employer.  Employee further acknowledges that these
covenants are supported by adequate consideration as set forth elsewhere in this
Agreement, that full compliance with these covenants will not prevent Employee
from earning a livelihood following the termination of his employment, and that
these covenants do not place undue restraint on Employee and are not in conflict
with any public interest . Employee acknowledges and agrees that the covenants
set forth in this Section 7 are reasonable and enforceable in every respect
under applicable law.
 
(b) DEFINITIONS.  As used in this Section 7, the following terms have the
following meanings:
 
(i) "Employer" shall mean Young Innovations, Inc., including and any parent,
subsidiary or affiliate as of the date of this Agreement or at any time during
the term of Employee’s employment.
 
(ii) "Confidential Information" shall include any and all information not
generally available to the public through legitimate means regarding any past,
current or anticipated future business, product, system service, process, or
practice of Employer, as well as
 
 
 
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any and all information relating to Employer's business, research, development,
purchasing, accounting, advertising, marketing, manufacturing, merchandising and
selling . Confidential Information includes but is not limited to information
that may constitute a "trade secret" under applicable law.
 
(iii) “Competing Business” means any product, system, service, process or
practice produced, provided, marketed or sold anywhere in the geographic area
where the Employer is then conducting any business by any person or entity other
than the Employer which resembles or competes directly or indirectly with any
product, system, service, process or practice produced, provided, marketed,
sold, or under development by the Employer at the time during Employee’s
employment.
 
(iv) “Competing Organization” means any person or entity which is engaged in, or
is planning to become engaged in research, development, production,
manufacturing, marketing or selling of a Competing Business within the area in
which Employer is then conducting any business or has affirmative plans to
conduct business while these covenants are in effect.
 
(c) Employee hereby acknowledges and agrees that all personal property and
equipment furnished to or prepared by Employee in the course of or incident to
his employment by Employer, belongs to Employer and shall be promptly returned
to Employer upon termination of Employee's employment.  The term "Personal
Property" includes, without limitation, all books, manuals, records, reports,
notes, contracts, requests for proposals, bids, lists, blueprints, and other
documents, or materials, or copies thereof (including computer files), and all
other proprietary information relating  to the business of Employer or any of
its affiliates.  Following termination, Employee will not retain any written or
other tangible material containing any proprietary information of Employer or
any of its affiliates.
 
(d) Upon termination of employment, Employee shall be deemed to have resigned
from all offices and directorships then held with Employer and each of its
affiliates.
 
(e) The representations and warranties contained herein and Employee's
obligations under Sections 7 and 10 shall survive termination of employment and
the expiration of the Term of this Agreement.
 
(f) CONFIDENTIALITY . Except as necessary to perform his job duties, Employee
agrees not to use any Confidential Information, or disclose any Confidential
Information to any person or entity, either during or at any time after his
employment, without Employer's prior written consent, unless required to do so
by a court of competent jurisdiction, or by an administrative or legislative
body (including a committee thereof) with purported or apparent jurisdiction to
order Employee to divulge, disclose or make accessible such information.
 
(g) NON-COMPETITION.  Employee agrees that during his employment and for a
period of one (1) year after the termination of his employment for Cause or
Voluntary Termination without Good Reason (provided that no Change in Control
has occurred), he will not render services to, give advice to, become employed
by or otherwise Affiliate with,
 
 
 
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directly or indirectly, any Competing Organization, nor will he (on behalf of
himself or any other person or entity) engaged directly or indirectly in any
Competing Business, unless otherwise agreed to in writing by Employer.
 
(h) NON-SOLICITATION.  Employee agrees that during the term of his employment
that he will not directly or indirectly solicit any other employee to leave the
employ of Employer or to carry out, directly or indirectly, any such activity;
provided, however, that Employer shall not be in violation of this provision if
an employee decides to join the new employer of Employee if Employee did not
intentionally direct or solicit such employee to leave.
 
(i) INVENTIONS AND PATENTS . Employee agrees to promptly and fully disclose in
writing and does hereby assign to Employer every invention, innovation,
copyright, or improvement made or conceived by Employee during the period of his
employment that relates directly or indirectly to his employment with
Employer.  Employee further agrees that both during and after his employment,
without charge to Employer but at Employer's expense, he will execute,
acknowledge and deliver any documents, including applications for Letters
Patent, as may be necessary, or in the opinion of Employer, advisable to (a)
obtain, enjoy and/or enforce Letters Patent for those inventions, innovations or
improvements in the United States and in any other country; (b) obtain, enjoy or
enforce the right to claim the priority of the first filed patent application
anywhere in the world; or (c) vest title in Employer and its successors, assigns
or nominees.  Additionally, Employee agrees that for a period of one (1) year
after termination of his employment, any invention, development, innovation, or
improvement within the scope of this Section shall be presumed to have been made
during the term of his employment. Employee shall have the burden of clearly and
convincingly establishing otherwise.
 
This Agreement does not apply to any invention for which no equipment, supplies,
facility or trade secret information of Employer was used and which was
developed entirely on Employee's own time, and (1) which does not relate (a)
directly to the business of Employer or (b) to Employer's actual or demonstrably
anticipated research or development, or (2) which does not result from any work
performed by employee for Employer.
 
(j) ENFORCEMENT OF THESE COVENANTS.  Employee acknowledges that full compliance
with all of the covenants set forth in this Section 7 is necessary to enable
Employer to do business with its customers.  In the event of a breach of any of
these covenants, Employee therefore acknowledges and agrees that Employer shall
be entitled to injunctive relief, regardless of whether or not Employer has
complied with this Agreement, and Employer shall further be entitled to such
other relief, including money damages, as may be deemed appropriate by a court
of competent jurisdiction.  In the event of a court action based upon an alleged
breach of any of these covenants, the prevailing party (as determined by court
ruling on the merits of the dispute) will be reimbursed by the other party for
reasonable attorneys' fees and costs incurred as a result of the dispute.  If
any court should at any time find any one of these covenants to be unenforceable
or unreasonable as to scope, territory or period of time, then the scope,
territory or period of time of the covenant shall be that determined by the
court to be reasonable, and the parties hereby agree that the court has the
authority to so modify any of these covenants as necessary to make the covenant
enforceable.
 
 
 
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(k) EXISTENCE OF OTHER OBLIGATIONS.  Employee represents and warrants that he is
not currently subject to any contractual or other obligations to any former
employer or other entity, including but not limited to obligations not to use or
disclose confidential information, or to refrain from competing with any person
or entity.
 
(l) WAIVER.  Employee agrees that Employer's failure to enforce any of the
covenants of this Section 7 in any particular instance shall not be deemed to be
a waiver of the covenant in that or any subsequent instance, nor shall it be
deemed a waiver by Employer of any other rights at law or under this Agreement.
 
8. JURISDICTION; SERVICE OF PROCESS.  Each of the parties hereto agrees that any
action or proceeding initiated or otherwise brought to judicial proceedings by
either Employee or Employer concerning the subject matter of this Agreement
shall be litigated in the United States District Court for the Northern District
of Illinois or, in the event such court cannot or will not exercise
jurisdiction, in the state courts of the State of Illinois (the "Courts").  Each
of the parties hereto expressly submits to the jurisdiction and venue of the
Courts and consents to process being served in any suit, action or proceeding of
the nature referred to above either (a) by the mailing of a copy thereof by
registered or certified mail, postage prepaid, return receipt requested, to his
or its address as set forth herein or (b) by serving a copy thereof upon such
party's authorized agent for service of process (to the extent permitted by
applicable law, regardless of whether the appointment of such agent for service
of process for any reason shall prove to be ineffective or such agent for
service of process shall accept or acknowledge such service); PROVIDED that, to
the extent lawful and practicable, written notice of said service upon said
agent shall be mailed by registered or certified mail, postage prepaid, return
receipt requested, to the party at his or its address as set forth herein.  Each
party hereto agrees that such service, to the fullest extent permitted by law,
(i) shall be deemed in every respect effective service of process upon him or it
in any such suit, action or proceeding and (ii) shall be taken and held to be
valid personal service upon and personal delivery to him or it.  Each party
hereto waives any claim that the Courts are an inconvenient forum or an improper
forum based on lack of venue or jurisdiction.
 
9. INJUNCTIVE RELIEF.  Employee acknowledges that damages would be an inadequate
remedy for Employee's breach of any of the provisions of Section 7 of this
Agreement, and that breach of any of such provisions will result in immeasurable
and irreparable harm to Employer.  Therefore, in addition to any other remedy to
which Employer may be entitled by reason of Employee's breach or threatened
breach of any such provision, Employer shall be entitled to seek and obtain a
temporary restraining order, a preliminary and/or permanent injunction, or any
other form of equitable relief from any court of competent jurisdiction
restraining Employee from committing or continuing any breach of such
provisions, without the necessity of posting a bond.  It is further agreed that
the existence of any claim or cause of action on the part of Employee against
Employer, whether arising from this Agreement or otherwise, shall in no way
constitute a defense to the enforcement of the provisions of Section 7 of this
Agreement.
 
10. MISCELLANEOUS.
 
 
 
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(a) NOTICES.  All notices and other communications hereunder shall be in writing
and shall be deemed given (i) when made, if delivered personally, (ii) three (3)
days after being mailed by certified or registered mail, postage prepaid, return
receipt requested, or (iii) two (2) days after delivery to a reputable overnight
courier service, to the parties, their successors in interest or their assignees
at the following addresses, or at such other addresses as the parties may
designate by written notice in the manner aforesaid:
 
To Employer:
 
Young Innovations, Inc.
 
13705 Shoreline Court East
 
Earth City, MO 63045
 
Attention:  President
 
To Employee, to his home address as recorded in the payroll records of Employer
from time to time.
 
(b) GOVERNING LAW.  This Agreement shall be governed as to its validity and
effect by the internal laws of the State of Illinois, without regard to its
rules regarding conflicts of law.
 
(c) SUCCESSORS AND ASSIGNS.  This Agreement shall be binding upon and shall
inure to the benefit of (i) the heirs, executors and legal representatives of
Employee, upon Employee's death, and (ii) any successor of Employer, and any
such successor shall be deemed substituted for Employer under the terms hereof
for all purposes.  As used in this Agreement, "successor" shall include any
person, firm, corporation or other business entity that at any time, whether by
purchase, merger, consolidation or otherwise, directly or indirectly acquires a
majority of the assets, business or stock of Employer.
 
(d) INTEGRATION.  This Agreement supersedes all prior oral or written
understandings and agreements relating to its subject matter and all other
business relationships between Employer and/or its affiliated companies.
 
(e) NO REPRESENTATIONS.  No person or entity has made or has the authority to
make any representations or promises on behalf of any of the parties which are
inconsistent with the representations or promises contained in this Agreement,
and this Agreement has not been executed in reliance on any representations or
promises not set forth herein.  Specifically, no promises, warranties or
representations have been made by anyone on any topic or subject matter related
to Employee's relationship with Employer or any of its executives or employees,
including but not limited to any promises, warranties or representations
regarding future employment, compensation, commissions and benefits, any
entitlement to stock, stock rights, stock incentive plan benefits, profits, debt
and equity interests in Employer or any of its affiliated companies or regarding
the termination of Employee's employment.  In this regard, Employee agrees that
no promises, warranties or representations shall be deemed to be made in the
future unless they are set forth in writing and signed by an authorized
representative of Employer.
 
 
 
 
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(f) AMENDMENTS.  This Agreement may be modified only by a written instrument
executed by the parties that is designated as an amendment to this Agreement.
 
(g) COUNTERPARTS.  This Agreement is being executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
 
(h) SEVERABILITY AND NON-WAIVER.  Any provision of this agreement (or portion
thereof) which is deemed invalid, illegal or unenforceable in any jurisdiction
shall, as to that jurisdiction and subject to this Section, be ineffective to
the extent of such invalidity, illegality or unenforceability, without affecting
in any way the remaining provisions thereof in such jurisdiction or rendering
that or any other provisions of this Agreement invalid, illegal, or
unenforceable in any other jurisdiction.  No waiver of any provision or
violation of this Agreement by Employer shall be implied by Employer's
forbearance or failure to take action.
 
(i) VOLUNTARY AND KNOWLEDGEABLE ACT.  Employee represents and warrants that
Employee has read and understands each and every provision of this Agreement and
has freely and voluntarily entered into this Agreement.
 
(j) CODE SECTION 409A COMPLIANCE.  It is the intent of Employer and Employee to
comply with all provisions of Section 409A so that Employee shall not be
required to include in his gross income for federal income tax purposes, prior
to the actual receipt thereof, any amounts received that may otherwise be
considered to be deferred payments.  In the event that the interpretation or
requirements of Section 409A change during the Term, Employee and Employer will
amend this Agreement, only as necessary, to comply with any such change, if and
to the extent such an amendment would be permitted by Section
409A.  Notwithstanding any provision herein to the contrary, nothing in this
Agreement shall require Employer or any Affiliate to pay any tax, penalty or
interest assessed against Employee or otherwise required to be paid by Employee
for any Section 409A failures or non-compliance with Section 409A.
 
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
 
EMPLOYER
 
YOUNG INNOVATIONS, INC.
 
By: /s/
 

 

 
EMPLOYEE
 
By: /s/ Joshua A. McKey
 
Joshua A. McKey
 

 
 
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APPENDIX
 
EMPLOYMENT AGREEMENT
 
Definitions
 
The terms set forth below have the following meanings (such meanings to be
applicable to both the singular and plural forms, except where otherwise
expressly indicated):
 
DEFINITIONS.  For the purposes of this Agreement the following terms and phrases
shall have the following meanings:
 
1. AFFILIATE(S) shall have the same meaning ascribed to such term in the
Exchange Act.
 
2. BOARD shall mean the board of directors of Employer.
 
3. CAUSE shall mean (i) violation of any agreement or law relating to
non-competition, trade secrets, inventions, non-solicitation or confidentiality
between Employee and Employer or an affiliate, (ii) willful, intentional or bad
faith conduct that materially injures Employer or an Affiliate, (iii) commission
of a felony, an act of fraud or the misappropriation of property; (iv) gross
neglect or moral turpitude; and (v) violation of Employer’s Code of Ethics.
 
4. CHANGE IN CONTROL shall mean and be deemed to occur upon the first of the
following events:
 
(a) the acquisition, after the date hereof, by an individual, entity or group
within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of twenty percent (20%) or more of the combined voting power of
the Voting Securities of Employer then outstanding after giving effect to such
acquisition; or
 
(b) Employer is merged or consolidated or reorganized into or with another
company or other legal entity, and as a result of such merger, consolidation or
reorganization less than a majority of the combined voting power of the Voting
Securities of such company or entity immediately after such transaction is held
in the aggregate by the holders of Voting Securities of Employer immediately
prior to such merger, consolidation or reorganization; or
 
(c) Employer sells or otherwise transfers all or substantially all of its assets
(including but not limited to its Subsidiaries) to another company or legal
entity in one transaction or a series of related transactions, and as a result
of such sale(s) or transfer(s), less than a majority of the combined voting
power of the then outstanding Voting Securities of such company or entity
immediately after such sale or transfer is held in the aggregate by the holders
of Voting Securities of Employer immediately prior to such sale or transfer; or
 
(d) approval by the Board or the stockholders of Employer of a complete or
substantial liquidation or dissolution of Employer; or
 
 
 
 
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(e) the majority of the members of the Board being replaced during any twelve
(12) month period by directors whose appointment or election is not endorsed by
a majority of members of the Board immediately prior to such appointment or
election.
 
Notwithstanding the foregoing, unless otherwise determined in a specific case by
majority vote of the Board, a Change in Control shall not be deemed to have
occurred solely because (a) Employer, (b) a Subsidiary, (c) any one or more
members of executive management of Employer or its Affiliates, (d) any employee
stock ownership plan or any other employee benefit plan of Employer or any
Subsidiary or (e) any combination of the Persons referred to in the preceding
clauses (a) through (d) becomes the actual or beneficial owner (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty percent
(20%) or more of the Voting Securities of Employer.
 
5. CODE shall mean the Internal Revenue Code of 1986, as amended.
 
6. EXCHANGE ACT shall mean the Securities Exchange Act of 1934, as amended.
 
7. GOOD REASON shall mean, with respect to a Voluntary Termination, (i) a
material and adverse change in Employee's duties, responsibilities or status
with Employer or an affiliate made without Cause, (ii) a reduction in the annual
compensation or total benefit package of Employee (other than a comparable
reduction in cash compensation or benefits generally affecting substantially all
officers or executive employees of Employer), (iii) a change in Employee's job
location beyond an area outside of a 25-mile radius of Employee's principal
office or (iv) the Board of Directors of Employer otherwise determines that a
Voluntary Termination by Employee is for "Good Reason" under the circumstances
then prevailing; provided, however, that Good Reason will not be deemed to exist
unless Employee provides written notice to Employer within 60 days after the
occurrence of the event specified above and Employer fails to cure the event to
Employee's reasonable satisfaction within 60 days after Employer receives such
notice.
 
8. PERMANENT DISABILITY shall have the meaning set forth in Section 22(e)(3) of
the Code.
 
9. PERSON shall have the same meaning as ascribed to such term in Sections 13(d)
and 14(d)(2) of the Exchange Act; provided, however, that for purposes of this
Agreement, neither Employer nor any trustee or fiduciary acting in such capacity
for an employee benefit plan sponsored or maintained by Employer or any entity
controlled by Employer, shall be deemed to be a "person".
 
10. QUALIFIED DEPENDENTS shall mean Employee's spouse and unmarried children
less than 19 years old; provided, that the 19 year age limit does not apply to a
child who: i) is enrolled as a full time student in school and ii) has not
attained the age of 23 years.
 
11. SUBSIDIARY shall mean a company or other entity (a) more than fifty percent
(50%) of whose outstanding shares or securities (representing the right to vote
for the election of directors or other managing authority) are, or (b) which
does not have outstanding shares or securities (as may be the case in a
partnership, joint venture, or unincorporated association), but more than fifty
percent (50%) of whose ownership interest representing the right generally to
 
 
 
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make decisions for such other entity is, now or hereafter, owned or controlled,
directly or indirectly, by Employer.
 
12. VOLUNTARY TERMINATION shall mean the termination by Employee of his
employment by Employer by voluntary resignation or any other means other than
death, retirement or Permanent Disability and other than simultaneous with or
following termination for Cause or an event which, whether or not known to
Employer at the time of such Voluntary Termination by such Executive, would
constitute Cause.
 
13. VOTING SECURITIES shall mean with respect to any Person, any securities
entitled to vote (including by the execution of action by written consent)
generally in the election of directors of such Person (together with direct or
indirect options or other rights to acquire any such securities).
 

 
 
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