4.2 Annual Bonus. Kraeutler shall be eligible to receive an annual bonusas established by the Board of Directors in addition to Base Salary.4.3 Other Compensation. In addition to compensation specified in thisAgreement, Kraeutler shall be eligible to receive stock options and other compensation underMeridian’s compensation plans and arrangements available from time to time to Meridian’sofficers. Meridian stock options, restricted stock and other incentive compensationsubject to vesting (Award), granted to Kraeutler shall vest according to the agreement enteredinto with Kraeutler at the time of the grant of such Award; provided, however, thatthe Award shall fully vest upon the happening of any of the following events:Change of Control Event (as defined in Section 8.7) or termination ofKraeutler’s employment without Cause (as defined in Section 7.3), due to death orDisability (as defined in Section 7.2) or Kraeutler’s termination of employment for GoodReason (as defined in Section 7.4).5. Expense Reimbursement. Kraeutler shall be entitled to prompt reimbursementby Meridian for all reasonable out-of-pocket expenses incurred by him inperforming services under this Agreement, upon submission of such accounts and recordsas may be required under Meridian policy.6. Other Benefits.6.1 Benefit Plans and Programs. Kraeutler shall be entitled, at Meridian’s expense, to suchmedical, dental, hospitalization, life insurance, pension plan, profit-sharing, employeebenefits and such other similar employment privileges and benefits or perquisites asare afforded generally from time to time to other senior officers of Meridian.6.2 Vacation. During the Term of Kraeutler’s employment withMeridian, Kraeutler shall be entitled to paid vacation time in accordance with theplans, practices, policies, and programs applicable to other senior officers of Meridian, butin no event shall such vacation time be less than four weeks per year.7. Termination of Employment. Notwithstanding the provisions of Section 2,Kraeutler’s employment may be terminated under the following circumstances:7.1 Death. Kraeutler’s employment is terminated upon his death.7.2 Disability. Kraeutler’s employment may be terminated by Meridian due to illness or other physical ormental disability of Kraeutler, resulting in his inability to perform substantially hisduties under this Agreement for a period of Ninety or more consecutive days or forOne Hundred Eighty days in the aggregate during any consecutive Twelve month period(“Disability”).7.3 Cause. Kraeutler’s employment may be terminated by Meridianupon Notice of Termination to Kraeutler of action taken by the Board ofDirectors of Meridian to discharge Kraeutler for Cause, which Notice of Terminationshall be delivered to Kraeutler within Ninety days after the Board of Directors hasboth (x) knowledge of the conduct or event allegedly constituting Cause and (y)reason to believe that such conduct or event constitutes grounds to terminateKraeutler for Cause. As used herein, “Notice of Termination” means a resolution dulyadopted by the affirmative vote of not less than a simple majority of the members of the Board ofDirectors of Meridian, excluding Kraeutler, at a meeting called for the purpose ofdetermining that Kraeutler engaged in conduct that constitutes Cause (and at whichKraeutler had a reasonable opportunity, together with his counsel, to be heard beforethe Board of Directors prior to such vote). For purposes of this Agreement,Meridian shall have “Cause” to terminate Kraeutler’s employment upon:(i) an intentional act of fraud, embezzlement or theft in the course ofKraeutler’s employment with Meridian resulting in material harm to Meridian; or(ii) intentional wrongful damage to material assets of Meridian.Any act or omission by Kraeutler shall be deemed “intentional” only if done, or omitted to bedone, by Kraeutler not in good faith and without the reasonable belief that his action oromission was in or not opposed to the best interests of Meridian. Failure to meetperformance standards or objectives set by Meridian shall not constitute “Cause” forpurposes of this Agreement.
 
 

 
7.4 Good Reason. Kraeutler’s employment may be terminated byKraeutler for Good Reason. For purposes of this Agreement, “Good Reason” shallmean (i) the assignment to Kraeutler of any duties materially inconsistent withKraeutler’s position (including, without limitation, status, offices, titles andreporting requirements), authority, duties or responsibilities as contemplated by thisAgreement, or any other action by Meridian that results in a material diminution in suchposition, authority, duties or responsibilities, excluding for this purpose an action nottaken in bad faith and that is remedied by Meridian within Ten days after receiptof written notice thereof given by Kraeutler, provided that repeated instances of such actionshall constitute the bad faith of Meridian; (ii) a 5% or more reduction in Kraeutler’s BaseSalary or other benefits under this Agreement; (iii) the relocation of Meridian’s principaloffices to a location more than Fifty miles from the current location of such offices; (iv) anymaterial failure by Meridian to comply with any of the provisions of this Agreement, other thana failure not occurring in bad faith and which is remedied by Meridian within Tendays after receipt of written notice thereof given by Kraeutler, provided thatrepeated failures shall constitute the bad faith of Meridian; or (v) removal ofKraeutler as Chief Executive Officer, other than for Cause.8. Compensation Upon Termination.8.1 If Kraeutler’s employment is terminated voluntarily without Good Reason, terminated as a result ofKraeutler’s death, or is terminated by Meridian for Cause, Kraeutler, or his estate, shall beentitled to:(i) any Base Salary earned but not yet paid;(ii) any bonus awarded pursuant to Section 4.2 of this Agreement but not yet paid;(iii) upon Kraeutler’s death, all or a portion of the Performance Bonus that he would havereceived pursuant to Section 4.2 (assuming that Kraeutler and/or Meridian achieves thegoals necessary to receive any level of bonus potential for that year) for the yearin which the termination occurred (*pro rata*, according to the number of days Kraeutlerwas employed by Meridian during such year) payable in a lump sum.(iv) reimbursement in accordance with this Agreement of any reasonable businessexpense incurred by Kraeutler but not yet paid; and(v) other benefits accrued and earned by Kraeutler through the date ofhis death or termination in accordance with applicable plans and programs of Meridian.8.2 If Kraeutler’s employment is terminated as a result of Kraeutler’s Disability,Kraeutler shall be entitled to receive on an annual basis until Kraeutler reaches agesixty-five the full amount of Kraeutler’s Base Salary plus Performance Bonus and grouphealth and life insurance benefits until Kraeutler reaches age 65 at the same level thatKraeutler was receiving such benefits at the date of termination. Compensation paid shall beprorated during periods of less than one year. The amount of annual Base Salaryplus Performance Bonus shall be computed by averaging the Base Salary plus Performance Bonusearned by Kraeutler during the preceding three fiscal years of Meridian.8.3 If (a) Kraeutler’s employment is terminated by Meridian without Cause, (b)Kraeutler terminates his employment with Meridian for Good Reason or (c) Kraeutler’s employmentis terminated for any reason (with or without Cause or voluntary or involuntary) upon or withinninety days of a Change of Control Event (as defined below), Kraeutler shall be entitled to:(i) (A) any Base Salary earned but not yet paid, plus (B) three times his BaseSalary (computed as the average annual Base Salary of Kraeutler for the preceding thirty-sixmonths).(ii) any bonuses awarded pursuant to Section 4.2 of this Agreement but not yetpaid and three times the average annual Performance Bonus received by Kraeutler for thepreceding thirty-six months.(iii) continued participation in all employee benefit plans and/or programs atMeridian’s expense in which he was participating on the date of his termination ofemployment for a period equal to the lesser of three years and the date that Kraeutler isemployed at another location.
 
 

 
(iv) reimbursement in accordance with this Agreement of any business expensesincurred by Kraeutler but not yet paid to him on the date of his termination of employment.(v) engagement, for a three month period, by Meridian on Kraeutler’sbehalf of a recognized job recruitment agency for the purpose of locating subsequentemployment for Kraeutler in a position of equal rank to Kraeutler’s position with Meridian.(vi) full vesting in Kraeutler’s Supplemental Income Agreement as if Kraeutler hadreached age sixty-two and all premiums paid and full vesting in Kraeutler’s options to purchaseMeridian stock.8.4 Unless otherwise indicated, any payments payable under this Section 8shall be paid in a lump sum payment as soon as practical after Kraeutler’stermination of employment but in any event no later than thirty days thereafter.8.5 If, under the terms of any employee benefit plan referred to in subsection 8.3(iii)above, Kraeutler may not continue his participation, he shall be provided with theafter-tax economic equivalent of the benefits provided under any plan in which he waspreviously eligible to participate for the period specified in subsection 8.3(iii) above. Theeconomic equivalent of any benefit foregone shall be deemed to be the cost that wouldbe incurred by Kraeutler in obtaining such benefit.8.6 Any amounts due under this Section 8 are in the nature of severancepayments or liquidated damages, or both, and shall fully compensate Kraeutler and hisdependents or beneficiaries, as the case may be, for any and all direct damages andconsequential damages that any of them may suffer as a result of termination ofKraeutler’s employment in breach of this Agreement, and they are not in the nature of a penalty.Upon termination of Kraeutler’s employment for any reason other than by Meridian forCause or by Kraeutler for Good Reason, Kraeutler and Meridian will, at the option ofKraeutler, execute and deliver to each other a general release releasing the other and inthe case of Meridian its officers, directors, employees, agents, trustees, parents, subsidiaries,predecessors, and affiliates (the “Releasees”) from all causes of action, claims, or demands thateither party may then have or have had against the Releasees based on any matter or thing,including but not limited to Kraeutler’s employment with Meridian or the termination ofhis employment (but not the obligations under this Agreement that continue after the dateon which Kraeutler’s employment terminates). The execution of this release shall be acondition to the receipt by Kraeutler of the payments and benefits described in thisSection 8 except that the execution of this release shall not be a condition for thereceipt by Kraeutler of base salary earned but not yet paid, bonuses awardedpursuant to Section 4.2 of this Agreement but not yet paid and reimbursement of anybusiness expenses incurred by Kraeutler but not yet paid.8.7 As used herein, a “Change of Control Event” means (i) the sale of all, orsubstantially all of the assets of Meridian; (ii) a merger, or recapitalization, orsimilar transactions which results in the shareholders of Meridian immediately prior tosuch event owning less than 60% of the fair market value or the voting power of thesurviving entity ; (iii) the date during any 12-month period that majority ofMeridian’s Board of Directors is replaced by directors whose appointment is not endorsed by amajority of the members of Meridian’s Board of Directors before the date of appointmentor election; or (iv) the acquisition, directly or indirectly, of the beneficialownership (within the meaning of that term as it is used in Section 13(d) of theSecurities Exchange Act of 1934 and the rules and regulations promulgated thereunder) of FiftyPercent or more of the outstanding voting securities of Meridian by any person, entityor group; provided, however, that a Change in Control of Meridian shall not include thepurchase of additional securities of Meridian by any person in Control of Meridian as ofDecember 31, 2000. This definition shall not apply to the purchase of Shares byunderwriters in connection with a public offering of securities of Meridian, or thepurchase of shares of up to Twenty-Five Percent of any class of securities of Meridian bya tax-qualified employee stock benefit plan. The term “Control” means (i) ownership or controlof more than 50% of the fair market value or voting power of the outstanding shares of anyclass of voting securities of Meridian, directly or indirectly, or (ii) the ability,in any manner, to elect a majority of the directors of Meridian. The term“person” refers to an individual or a corporation, partnership, trust, association,joint venture, pool, syndicate, sole proprietorship, unincorporated organization or anyother form of entity not listed.
 
 

 
9. Covenants and Confidential Information. Kraeutler and Meridian herebyreaffirm the terms of that certain Non-Competition and Confidentiality Agreement by andamong Meridian and its affiliated companies and its subsidiaries and Kraeutler datedOctober 8, 1992. Such agreement is hereby incorporated herein by reference.10. Parachute Payment. If Kraeutler is liable for the payment of any excisetax (the “Basic Excise Tax”) because of Section 4999 of the Internal Revenue Code of1986, as amended (the “Code”), or any successor or similar provision, with respect toany payments or benefits received or to be received from Meridian or any successor toMeridian, whether provided under this Agreement or otherwise, Meridian shall payKraeutler an amount (the “Special Reimbursement”) which, after payment by Kraeutler (oron Kraeutler’s behalf) of any federal, state and local taxes applicable to thepayment, including, without limitation, any further excise tax under such Section 4999of the Code, on, with respect to or resulting from the Special Reimbursement, equalsthe net amounts of the Basic Excise Tax.11. Assignability; Binding Nature. This Agreement shall be binding upon andinure to the benefit of the Parties and their respective successors, heirs (in the case ofKraeutler) and assigns.12. Entire Agreement. Except to the extent otherwise provided herein, thisAgreement contains the entire understanding and agreement between the Parties concerning thesubject matter hereof and supersedes any prior agreements, whether written or oral, between theParties concerning the subject matter hereof.13. Amendment or Waiver. No provision in this Agreement may be amendedunless such amendment is agreed to in writing and signed by both Kraeutler and anauthorized officer of Meridian. No waiver by either Party of any breach by the other Partyof any condition or provision contained in this Agreement to be performed by such other Partyshall be deemed a waiver of a similar or dissimilar condition or provision at the same or anyprior or subsequent time. Any waiver must be in writing and signed by Kraeutler oran authorized officer of Meridian, as the case may be.14. Severability. If any provision or portion of this Agreementshall be determined to be invalid or unenforceable for any reason, in whole or in part, theremaining provisions of this Agreement shall be unaffected thereby and shall remain in full forceand effect to the fullest extent permitted by law.15. Survivorship. The respective rights and obligations of theParties hereunder shall survive any termination of Kraeutler’s employment withMeridian to the extent necessary to the intended preservation of such rights andobligations as described in this Agreement.16. Governing Law. This Agreement shall be governed by and construed andinterpreted in accordance with the internal substantive laws of Ohio, without reference toprinciples of conflict of laws.17. Notices. Any notice given to either Party shall be in writingand shall be deemed to have been given when delivered personally or One day afterhaving been sent by overnight courier service or Three days after having been sent bycertified or registered mail, postage prepaid, return receipt requested, duly addressedto the Party concerned at the address indicated below or to such changed address as such Partymay subsequently give such notice of:   If to Meridian or the Board: Meridian Bioscience, Inc.  3471 River Hills Drive  Cincinnati, Ohio 45244   If to Kraeutler: John A. Kraeutler  Cincinnati, Ohio18. Headings. The headings of the sections contained in this Agreement are for convenience only and shallnot be deemed to control or affect the meaning or construction of any provision of this Agreement.
 
 

 
19. Counterparts. This Agreement may be executed in one or morecounterparts, each of which shall be deemed an original but all of which together willconstitute one and the same instrument.IN WITNESS WHEREOF, Kraeutler and Meridian have executed this Agreement as of thedate and year first above written.      MERIDIAN BIOSCIENCE, INC.