Document:

SECURITY
      AGREEMENT

     

    SECURITY
      AGREEMENT (this “Agreement”),
      dated
      as of July 25, 2008, by and among Standard Management Corporation, an Indiana
      Corporation (“Parent”),
      U.S.
      Health Services Corporation; Standard Marketing Corporation; Standard Management
      Financial Corporation; Universal HealthCare Company, LLC; (collectively the
      “Subsidiary”)(hereinafter
      the Parent and the Subsidiary shall collectively be referred to as the
“Company”)
      and
      the secured parties signatory hereto and their respective endorsees, transferees
      and assigns (collectively, the “Secured
      Party”).
      

     

    WITNESSETH:

     

    WHEREAS,
      pursuant to a Securities Purchase Agreement, dated the date hereof, between
      Parent and the Secured Party (the “Purchase
      Agreement”),
      Parent has agreed to issue to the Secured Party and the Secured Party has agreed
      to purchase from Parent certain of Parent’s 12% Callable Secured Convertible
      Notes, due three years from the date of issue (the “Notes”),
      which
      are convertible into shares of Company’s Common Stock, no par value per share
      (the “Common
      Stock”).
      In
      connection therewith, Parent shall issue the Secured Party certain Common Stock
      purchase warrants (the “Warrants”);
      and

     

    WHEREAS,
      the Company and the Subsidiary Guarantors have been, and are engaged in a
      business to operate and manage home healthcare agencies and institutional
      pharmacies for investors in Universal HealthCare, LLC. Currently, none of the
      Subsidiaries has any assets or an operating subsidiary; and

     

    WHEREAS,
      the
      Subsidiary constitutes all of the subsidiaries of the Parent and
      it is in
      the best interest of the Subsidiary as subsidiaries of the Parent and the
      indirect beneficiaries of the Purchase Agreement and Notes, that the Secured
      Party enter into the Purchase Agreement and purchase the Notes to the Company;
      and

     

    WHEREAS,
      in order to induce the Secured Party to purchase the Notes, Company has agreed
      to execute and deliver to the Secured Party this Agreement for the benefit
      of
      the Secured Party and to grant to it a first priority security interest in
      certain property of Company to secure the prompt payment, performance and
      discharge in full of all of Company’s obligations under the Notes and exercise
      and discharge in full of Company’s obligations under the Warrants;
      and

     

    WHEREAS,
      in light of the foregoing, the Company expects to derive substantial benefit
      from the Purchase Agreement and sale of the Notes and the transactions
      contemplated thereby and, in furtherance thereof, has agreed to execute and
      deliver this.

     

    NOW,
      THEREFORE, in consideration of the agreements herein contained and for other
      good and valuable consideration, the receipt and sufficiency of which is hereby
      acknowledged, the parties hereto hereby agree as follows:

     

    1. Certain
      Definitions.
      As used
      in this Agreement, the following terms shall have the meanings set forth in
      this
      Section 1. Terms used but not otherwise defined in this Agreement that are
      defined in Article 9 of the UCC (such as “general
      intangibles”
and
      “proceeds”)
      shall
      have the respective meanings given such terms in Article 9 of the
      UCC.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (a) “Collateral”
means
      the collateral in which the Secured Party is granted a security interest by
      this
      Agreement and which shall include the following, whether presently owned or
      existing or hereafter acquired or coming into existence, and all additions
      and
      accessions thereto and all substitutions and replacements thereof, and all
      proceeds, products and accounts thereof, including, without limitation, all
      proceeds from the sale or transfer of the Collateral and of insurance covering
      the same and of any tort claims in connection therewith:

     

    (i) All
      Goods
      of the Company, including, without limitations, all machinery, equipment,
      computers, motor vehicles, trucks, tanks, boats, ships, appliances, furniture,
      special and general tools, fixtures, test and quality control devices and other
      equipment of every kind and nature and wherever situated, together with all
      documents of title and documents representing the same, all additions and
      accessions thereto, replacements therefor, all parts therefor, and all
      substitutes for any of the foregoing and all other items used and useful in
      connection with the Company’s businesses and all improvements thereto
      (collectively, the “Equipment”);
      and

     

    (ii) All
      Inventory of the Company; and

     

    (iii) All
      of
      the Company’s contract rights and general intangibles, including, without
      limitation, all partnership interests, stock or other securities, licenses,
      distribution and other agreements, computer software development rights, leases,
      franchises, customer lists, quality control procedures, grants and rights,
      goodwill, trademarks, service marks, trade styles, trade names, patents, patent
      applications, copyrights, deposit accounts, and income tax refunds
      (collectively, the “General
      Intangibles”);
      and

     

    (iv) All
      Receivables of the Company including all insurance proceeds, and rights to
      refunds or indemnification whatsoever owing, together with all instruments,
      all
      documents of title representing any of the foregoing, all rights in any
      merchandising, goods, equipment, motor vehicles and trucks which any of the
      same
      may represent, and all right, title, security and guaranties with respect to
      each Receivable, including any right of stoppage in transit; and

     

    (v) All
      of
      the Company’s documents, instruments and chattel paper, files, records, books of
      account, business papers, computer programs and the products and proceeds of
      all
      of the foregoing Collateral set forth in clauses (i)-(iv) above.

     

    (b) “Company”
shall
      mean, collectively, Company and all of the subsidiaries of Company, a list
      of
      which is contained in Schedule
      A,
      attached hereto.

     

    (c) “Obligations”
means
      all of the Company’s obligations under this Agreement and the Notes, in each
      case, whether now or hereafter existing, voluntary or involuntary, direct or
      indirect, absolute or contingent, liquidated or unliquidated, whether or not
      jointly owed with others, and whether or not from time to time decreased or
      extinguished and later decreased, created or incurred, and all or any portion
      of
      such obligations or liabilities that are paid, to the extent all or any part
      of
      such payment is avoided or recovered directly or indirectly from the Secured
      Party as a preference, fraudulent transfer or otherwise as such obligations
      may
      be amended, supplemented, converted, extended or modified from time to
      time.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (d) “UCC”
means
      the Uniform Commercial Code, as currently in effect in the State of New
      York.

     

    2. Grant
      of Security Interest.
      As an
      inducement for the Secured Party to purchase the Notes and to secure the
      complete and timely payment, performance and discharge in full, as the case
      may
      be, of all of the Obligations, the Company hereby, unconditionally and
      irrevocably, pledges, grants and hypothecates to the Secured Party, a continuing
      security interest in, a continuing first lien upon, an unqualified right to
      possession and disposition of and a right of set-off against, in each case
      to
      the fullest extent permitted by law, all of the Company’s right, title and
      interest of whatsoever kind and nature in and to the Collateral (the
“Security
      Interest”).

     

    3. Representations,
      Warranties, Covenants and Agreements of the Company.
      The
      Company represents and warrants to, and covenants and agrees with, the Secured
      Party as follows: 

     

    (a) The
      Company has the requisite corporate power and authority to enter into this
      Agreement and otherwise to carry out its obligations thereunder. The execution,
      delivery and performance by the Company of this Agreement and the filings
      contemplated therein have been duly authorized by all necessary action on the
      part of the Company and no further action is required by the Company. This
      Agreement constitutes a legal, valid and binding obligation of the Company
      enforceable in accordance with its terms, except as enforceability may be
      limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
      affecting the enforcement of creditor’s rights generally.

     

    (b) The
      Company represents and warrants that it has no place of business or offices
      where its respective books of account and records are kept (other than
      temporarily at the offices of its attorneys or accountants) or places where
      Collateral is stored or located, except as set forth on Schedule
      A
      attached
      hereto;

     

    (c) The
      Company is the sole owner of the Collateral (except for non-exclusive licenses
      granted by the Company in the ordinary course of business), free and clear
      of
      any liens, security interests, encumbrances, rights or claims, and is fully
      authorized to grant the Security Interest in and to pledge the Collateral.
      There
      is not on file in any governmental or regulatory authority, agency or recording
      office an effective financing statement, security agreement, license or transfer
      or any notice of any of the foregoing (other than those that have been filed
      in
      favor of the Secured Party pursuant to this Agreement) covering or affecting
      any
      of the Collateral. So long as this Agreement shall be in effect, the Company
      shall not execute and shall not knowingly permit to be on file in any such
      office or agency any such financing statement or other document or instrument
      (except to the extent filed or recorded in favor of the Secured Party pursuant
      to the terms of this Agreement).

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (d) No
      part
      of the Collateral has been judged invalid or unenforceable. No written claim
      has
      been received that any Collateral or the Company’s use of any Collateral
      violates the rights of any third party. There has been no adverse decision
      to
      the Company’s claim of ownership rights in or exclusive rights to use the
      Collateral in any jurisdiction or to the Company’s right to keep and maintain
      such Collateral in full force and effect, and there is no proceeding involving
      said rights pending or, to the best knowledge of the Company, threatened before
      any court, judicial body, administrative or regulatory agency, arbitrator or
      other governmental authority. 

     

    (e) The
      Company shall at all times maintain its books of account and records relating
      to
      the Collateral at its principal place of business and its Collateral at the
      locations set forth on Schedule
      A
      attached
      hereto and may not relocate such books of account and records or tangible
      Collateral unless it delivers to the Secured Party at least 30 days prior to
      such relocation (i) written notice of such relocation and the new location
      thereof (which must be within the United States) and (ii) evidence that
      appropriate financing statements and other necessary documents have been filed
      and recorded and other steps have been taken to perfect the Security Interest
      to
      create in favor of the Secured Party valid, perfected and continuing first
      priority liens in the Collateral. 

     

    (f) This
      Agreement creates in favor of the Secured Party a valid security interest in
      the
      Collateral securing the payment and performance of the Obligations and, upon
      making the filings described in the immediately following sentence, a perfected
      first priority security interest in such Collateral. Except for the filing
      of
      financing statements on Form-1 under the UCC with the jurisdictions indicated
      on
Schedule
      B,
      attached hereto, no authorization or approval of or filing with or notice to
      any
      governmental authority or regulatory body is required either for
      the
      grant by the Company of, or the effectiveness of, the Security Interest granted
      hereby or for the execution, delivery and performance of this Agreement by
      the
      Company or for
      the
      perfection of or exercise by the Secured Party of its rights and remedies
      hereunder. 

     

    (g) On
      the
      date of execution of this Agreement, the Company will deliver to the Secured
      Party one or more executed UCC financing statements on Form-1 with respect
      to
      the Security Interest for filing with the jurisdictions indicated on
Schedule
      B,
      attached hereto and in such other jurisdictions as may be requested by the
      Secured Party.

     

    (h) The
      execution, delivery and performance of this Agreement does not conflict with
      or
      cause a breach or default, or an event that with or without the passage of
      time
      or notice, shall constitute a breach or default, under any agreement to which
      the Company is a party or by which the Company is bound. No consent (including,
      without limitation, from stock holders or creditors of the Company) is required
      for the Company to enter into and perform its obligations
      hereunder.

     

    (i) The
      Company shall at all times maintain the liens and Security Interest provided
      for
      hereunder as valid and perfected first priority liens and security interests
      in
      the Collateral in favor of the Secured Party until this Agreement and the
      Security Interest hereunder shall terminate pursuant to Section 11. The Company
      hereby agrees to defend the same against any and all persons. The Company shall
      safeguard and protect all Collateral for the account of the Secured Party.
      At
      the request of the Secured Party, the Company will sign and deliver to the
      Secured Party at any time or from time to time one or more financing statements
      pursuant to the UCC (or any other applicable statute) in form reasonably
      satisfactory to the Secured Party and will pay the cost of filing the same
      in
      all public offices wherever filing is, or is deemed by the Secured Party to
      be,
      necessary or desirable to effect the rights and obligations provided for herein.
      Without limiting the generality of the foregoing, the Company shall pay all
      fees, taxes and other amounts necessary to maintain the Collateral and the
      Security Interest hereunder, and the Company shall obtain and furnish to the
      Secured Party from time to time, upon demand, such releases and/or
      subordinations of claims and liens which may be required to maintain the
      priority of the Security Interest hereunder. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (j) The
      Company will not transfer, pledge, hypothecate, encumber, license (except for
      non-exclusive licenses granted by the Company in the ordinary course of
      business), sell or otherwise dispose of any of the Collateral without the prior
      written consent of the Secured Party.

     

    (k) The
      Company shall keep and preserve its Equipment, Inventory and other tangible
      Collateral in good condition, repair and order and shall not operate or locate
      any such Collateral (or cause to be operated or located) in any area excluded
      from insurance coverage.

     

    (l) The
      Company shall, within ten (10) days of obtaining knowledge thereof, advise
      the
      Secured Party promptly, in sufficient detail, of any substantial change in
      the
      Collateral, and of the occurrence of any event which would have a material
      adverse effect on the value of the Collateral or on the Secured Party’s security
      interest therein.

     

    (m) The
      Company shall promptly execute and deliver to the Secured Party such further
      deeds, mortgages, assignments, security agreements, financing statements or
      other instruments, documents, certificates and assurances and take such further
      action as the Secured Party may from time to time request and may in its sole
      discretion deem necessary to perfect, protect or enforce its security interest
      in the Collateral including, without limitation, the execution and delivery
      of a
      separate security agreement with respect to the Company’s intellectual property
      (“Intellectual
      Property Security Agreement”)
      in
      which the Secured Party has been granted a security interest hereunder,
      substantially in a form acceptable to the Secured Party, which Intellectual
      Property Security Agreement, other than as stated therein, shall be subject
      to
      all of the terms and conditions hereof.

     

    (n) The
      Company shall permit the Secured Party and its representatives and agents to
      inspect the Collateral at any time, and to make copies of records pertaining
      to
      the Collateral as may be requested by the Secured Party from time to
      time.

     

    (o) The
      Company will take all steps reasonably necessary to diligently pursue and seek
      to preserve, enforce and collect any rights, claims, causes of action and
      accounts receivable in respect of the Collateral.

     

    (p) The
      Company shall promptly notify the Secured Party in sufficient detail upon
      becoming aware of any attachment, garnishment, execution or other legal process
      levied against any Collateral and of any other information received by the
      Company that may materially affect the value of the Collateral, the Security
      Interest or the rights and remedies of the Secured Party hereunder.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (q) All
      information heretofore, herein or hereafter supplied to the Secured Party by
      or
      on behalf of the Company with respect to the Collateral is accurate and complete
      in all material respects as of the date furnished.

     

    (r) Schedule
      A
      attached
      hereto contains a list of all of the subsidiaries of Company.

     

    4. Defaults.
      The
      following events shall be “Events
      of Default”:

     

    (a) The
      occurrence of an Event of Default (as defined in the Notes) under the
      Notes;

     

    (b) Any
      representation or warranty of the Company in this Agreement or in the
      Intellectual Property Security Agreement shall prove to have been incorrect
      in
      any material respect when made; 

     

    (c) The
      failure by the Company to observe or perform any of its obligations hereunder
      or
      in the Intellectual Property Security Agreement for ten (10) days after receipt
      by the Company of notice of such failure from the Secured Party;
      and

     

    (d) Any
      breach of, or default under, the Warrants.

     

    5. Duty
      To Hold In Trust.
      Upon
      the occurrence of any Event of Default and at any time thereafter, the Company
      shall, upon receipt by it of any revenue, income or other sums subject to the
      Security Interest, whether payable pursuant to the Notes or otherwise, or of
      any
      check, draft, note, trade acceptance or other instrument evidencing an
      obligation to pay any such sum, hold the same in trust for the Secured Party
      and
      shall forthwith endorse and transfer any such sums or instruments, or both,
      to
      the Secured Party for application to the satisfaction of the
      Obligations.

     

    6. Rights
      and Remedies Upon Default.
      Upon
      occurrence of any Event of Default and at any time thereafter, the Secured
      Party
      shall have the right to exercise all of the remedies conferred hereunder and
      under the Notes, and the Secured Party shall have all the rights and remedies
      of
      a secured party under the UCC and/or any other applicable law (including the
      Uniform Commercial Code of any jurisdiction in which any Collateral is then
      located). Without limitation, the Secured Party shall have the following rights
      and powers:

     

    (a) The
      Secured Party shall have the right to take possession of the Collateral and,
      for
      that purpose, enter, with the aid and assistance of any person, any premises
      where the Collateral, or any part thereof, is or may be placed and remove the
      same, and the Company shall assemble the Collateral and make it available to
      the
      Secured Party at places which the Secured Party shall reasonably select, whether
      at the Company’s premises or elsewhere, and make available to the Secured Party,
      without rent, all of the Company’s respective premises and facilities for the
      purpose of the Secured Party taking possession of, removing or putting the
      Collateral in saleable or disposable form.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (b) The
      Secured Party shall have the right to operate the business of the Company using
      the Collateral and shall have the right to assign, sell, lease or otherwise
      dispose of and deliver all or any part of the Collateral, at public or private
      sale or otherwise, either with or without special conditions or stipulations,
      for cash or on credit or for future delivery, in such parcel or parcels and
      at
      such time or times and at such place or places, and upon such terms and
      conditions as the Secured Party may deem commercially reasonable, all without
      (except as shall be required by applicable statute and cannot be waived)
      advertisement or demand upon or notice to the Company or right of redemption
      of
      the Company, which are hereby expressly waived. Upon each such sale, lease,
      assignment or other transfer of Collateral, the Secured Party may, unless
      prohibited by applicable law which cannot be waived, purchase all or any part
      of
      the Collateral being sold, free from and discharged of all trusts, claims,
      right
      of redemption and equities of the Company, which are hereby waived and
      released.

     

    7. Applications
      of Proceeds.
      The
      proceeds of any such sale, lease or other disposition of the Collateral
      hereunder shall be applied first, to the expenses of retaking, holding, storing,
      processing and preparing for sale, selling, and the like (including, without
      limitation, any taxes, fees and other costs incurred in connection therewith)
      of
      the Collateral, to the reasonable attorneys’ fees and expenses incurred by the
      Secured Party in enforcing its rights hereunder and in connection with
      collecting, storing and disposing of the Collateral, and then to satisfaction
      of
      the Obligations, and to the payment of any other amounts required by applicable
      law, after which the Secured Party shall pay to the Company any surplus
      proceeds. If, upon the sale, license or other disposition of the Collateral,
      the
      proceeds thereof are insufficient to pay all amounts to which the Secured Party
      is legally entitled, the Company will be liable for the deficiency, together
      with interest thereon, at the rate of 15% per annum (the “Default
      Rate”),
      and
      the reasonable fees of any attorneys employed by the Secured Party to collect
      such deficiency. To the extent permitted by applicable law, the Company waives
      all claims, damages and demands against the Secured Party arising out of the
      repossession, removal, retention or sale of the Collateral, unless due to the
      gross negligence or willful misconduct of the Secured Party.

     

    8. Costs
      and Expenses. The
      Company agrees to pay all out-of-pocket fees, costs and expenses incurred in
      connection with any filing required hereunder, including without limitation,
      any
      financing statements, continuation statements, partial releases and/or
      termination statements related thereto or any expenses of any searches
      reasonably required by the Secured Party. The Company shall also pay all other
      claims and charges which in the reasonable opinion of the Secured Party might
      prejudice, imperil or otherwise affect the Collateral or the Security Interest
      therein. The Company will also, upon demand, pay to the Secured Party the amount
      of any and all reasonable expenses, including the reasonable fees and expenses
      of its counsel and of any experts and agents, which the Secured Party may incur
      in connection with the
      enforcement of this Agreement, the
      custody or preservation of, or the sale of, collection from, or other
      realization upon, any of the Collateral, or the
      exercise or enforcement of any of the rights of the Secured Party under the
      Notes. Until so paid, any fees payable hereunder shall be added to the principal
      amount of the Notes and shall bear interest at the Default Rate.

     

    9. Responsibility
      for Collateral.
      The
      Company assumes all liabilities and responsibility in connection with all
      Collateral, and the obligations of the Company hereunder or under the Notes
      and
      the Warrants shall in no way be affected or diminished by reason of the loss,
      destruction, damage or theft of any of the Collateral or its unavailability
      for
      any reason. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    10. Security
      Interest Absolute.
      All
      rights of the Secured Party and all Obligations of the Company hereunder, shall
      be absolute and unconditional, irrespective of: any
      lack
      of validity or enforceability of this Agreement, the Notes, the Warrants or
      any
      agreement entered into in connection with the foregoing, or any portion hereof
      or thereof; any
      change in the time, manner or place of payment or performance of, or in any
      other term of, all or any of the Obligations, or any other amendment or waiver
      of or any consent to any departure from the Notes, the Warrants or any other
      agreement entered into in connection with the foregoing; any
      exchange, release or nonperfection of any of the Collateral, or any release
      or
      amendment or waiver of or consent to departure from any other collateral for,
      or
      any guaranty, or any other security, for all or any of the Obligations;
any
      action by the Secured Party to obtain, adjust, settle and cancel in its sole
      discretion any insurance claims or matters made or arising in connection with
      the Collateral; or any
      other
      circumstance which might otherwise constitute any legal or equitable defense
      available to the Company, or a discharge of all or any part of the Security
      Interest granted hereby. Until the Obligations shall have been paid and
      performed in full, the rights of the Secured Party shall continue even if the
      Obligations are barred for any reason, including, without limitation, the
      running of the statute of limitations or bankruptcy. The Company expressly
      waives presentment, protest, notice of protest, demand, notice of nonpayment
      and
      demand for performance. In the event that at any time any transfer of any
      Collateral or any payment received by the Secured Party hereunder shall be
      deemed by final order of a court of competent jurisdiction to have been a
      voidable preference or fraudulent conveyance under the bankruptcy or insolvency
      laws of the United States, or shall be deemed to be otherwise due to any party
      other than the Secured Party, then, in any such event, the Company’s obligations
      hereunder shall survive cancellation of this Agreement, and shall not be
      discharged or satisfied by any prior payment thereof and/or cancellation of
      this
      Agreement, but shall remain a valid and binding obligation enforceable in
      accordance with the terms and provisions hereof. The Company waives all right
      to
      require the Secured Party to proceed against any other person or to apply any
      Collateral which the Secured Party may hold at any time, or to marshal assets,
      or to pursue any other remedy. The Company waives any defense arising by reason
      of the application of the statute of limitations to any obligation secured
      hereby.

     

    11. Term
      of Agreement.
      This
      Agreement and the Security Interest shall terminate on the date on which all
      payments under the Notes have been made in full and all other Obligations have
      been paid or discharged. Upon such termination, the Secured Party, at the
      request and at the expense of the Company, will join in executing any
      termination statement with respect to any financing statement executed and
      filed
      pursuant to this Agreement. 

     

    12. Power
      of Attorney; Further Assurances.

     

    (a) The
      Company authorizes the Secured Party, and does hereby make, constitute and
      appoint it, and its respective officers, agents, successors or assigns with
      full
      power of substitution, as the Company’s true and lawful attorney-in-fact, with
      power, in its own name or in the name of the Company, to, after the occurrence
      and during the continuance of an Event of Default, endorse
      any notes, checks, drafts, money orders, or other instruments of payment
      (including payments payable under or in respect of any policy of insurance)
      in
      respect of the Collateral that may come into possession of the Secured Party;
      to
      sign
      and endorse any UCC financing statement or any invoice, freight or express
      bill,
      bill of lading, storage or warehouse receipts, drafts against debtors,
      assignments, verifications and notices in connection with accounts, and other
      documents relating to the Collateral; to
      pay or
      discharge taxes, liens, security interests or other encumbrances at any time
      levied or placed on or threatened against the Collateral; to
      demand, collect, receipt for, compromise, settle and sue for monies due in
      respect of the Collateral; and generally,
      to do, at the option of the Secured Party, and at the Company’s expense, at any
      time, or from time to time, all acts and things which the Secured Party deems
      necessary to protect, preserve and realize upon the Collateral and the Security
      Interest granted therein in order to effect the intent of this Agreement, the
      Notes and the Warrants, all as fully and effectually as the Company might or
      could do; and the Company hereby ratifies all that said attorney shall lawfully
      do or cause to be done by virtue hereof. This power of attorney is coupled
      with
      an interest and shall be irrevocable for the term of this Agreement and
      thereafter as long as any of the Obligations shall be outstanding.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (b) On
      a
      continuing basis, the Company will make, execute, acknowledge, deliver, file
      and
      record, as the case may be, in the proper filing and recording places in any
      jurisdiction, including, without limitation, the jurisdictions indicated on
      Schedule
      B,
      attached hereto, all such instruments, and take all such action as may
      reasonably be deemed necessary or advisable, or as reasonably requested by
      the
      Secured Party, to perfect the Security Interest granted hereunder and otherwise
      to carry out the intent and purposes of this Agreement, or for assuring and
      confirming to the Secured Party the grant or perfection of a security interest
      in all the Collateral.

     

    (c) The
      Company hereby irrevocably appoints the Secured Party as the Company’s
      attorney-in-fact, with full authority in the place and stead of the Company
      and
      in the name of the Company, from time to time in the Secured Party’s discretion,
      to take any action and to execute any instrument which the Secured Party may
      deem necessary or advisable to accomplish the purposes of this Agreement,
      including the filing, in its sole discretion, of one or more financing or
      continuation statements and amendments thereto, relative to any of the
      Collateral without the signature of the Company where permitted by
      law.

     

    13. Notices.
      All
      notices, requests, demands and other communications hereunder shall be in
      writing, with copies to all the other parties hereto, and shall be deemed to
      have been duly given when if
      delivered by hand, upon receipt, if
      sent
      by facsimile, upon receipt of proof of sending thereof, if
      sent
      by nationally recognized overnight delivery service (receipt requested), the
      next business day or if
      mailed
      by first-class registered or certified mail, return receipt requested, postage
      prepaid, four days after posting in the U.S. mails, in each case if delivered
      to
      the following addresses:

    

      
        	
                If
                  to the Company:

              	
                Standard
                  Management Corporation

              
	 	
                10689
                  N. Pennsylvania Street 

              
	 	
                Indianapolis,
                  IN 46280

              
	 	
                Attention:
                  Chief Executive Officer 

              
	 	
                Telephone:
                  (317) 574-6200

              
	 	
                Facsimile:
                  (317) 574-6227

              
	 	 
	 	
                U.S.
                  Health Services Corporation;

                HomeMed
                  Channel, Inc.; 

                HomeDoc
                  Corporation; 

              

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      
        	 	
                
                  Apothecary
                  Solutions Corporation; 

                Long
                  Term Rx, Inc.; 

                Precision
                  Healthcare, Inc.; 

                Rainier
                  Home Health Care Pharmacy, Inc.; 

                Standard
                  Marketing Corporation; 

                Standard
                  Management Financial Corporation; 

                Premier
                  Life (Bermuda) Limited; 

                Standard
                  Development Company; 

                Standard
                  Management Capital Trust; 

                Universal
                  HealthCare Company, LLC; 

                Standard
                  Management Administrative Services

              
	 	 
	 	
                10689
                  N. Pennsylvania Street 

                Indianapolis,
                  IN 46280

                Attention:
                  Chief Executive Officer 

                Telephone:
                  (317) 574-6200

                Facsimile:
                  (317) 574-6227

              
	 	 
	
                With
                  copies to:

              	
                Gersten
                  Savage LLP 

              
	 	
                600
                  Lexington Avenue - 9th Floor

              
	 	
                New
                  York, New York 10022 

              
	 	
                Attn:
                  Arthur S. Marcus, Esq.

              
	 	
                Telephone:
                  (212) 752-9700

              
	 	
                Facsimile:
                  (212) 980-5192

              
	 	 
	
                If
                  to the Secured Party:

              	
                AJW
                  Partners, LLC 

              
	 	
                AJW
                  Master Fund, Ltd.

              
	 	
                New
                  Millennium Capital Partners II, LLC

              
	 	
                1044
                  Northern Boulevard

              
	 	
                Suite
                  302

              
	 	
                Roslyn,
                  New York 11576

              
	 	
                Attention:
                  Corey Ribotsky

              
	 	
                Facsimile:
                  516-739-7115

              

      

      

      
        	
                With
                  copies to:

              	
                Ballard
                  Spahr Andrews & Ingersoll, LLP

              
	 	
                1735
                  Market Street, 51st Floor

              
	 	
                Philadelphia,
                  Pennsylvania 19103

              
	 	
                Attention:
                  Gerald J. Guarcini, Esquire

              
	 	
                Facsimile:
                  215-864-8999

              

      

    

    

     

    14. Other
      Security.
      To the
      extent that the Obligations are now or hereafter secured by property other
      than
      the Collateral or by the guarantee, endorsement or property of any other person,
      firm, corporation or other entity, then the Secured Party shall have the right,
      in its sole discretion, to pursue, relinquish, subordinate, modify or take
      any
      other action with respect thereto, without in any way modifying or affecting
      any
      of the Secured Party’s rights and remedies hereunder.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    15. Miscellaneous.

     

    (a) No
      course
      of dealing between the Company and the Secured Party, nor any failure to
      exercise, nor any delay in exercising, on the part of the Secured Party, any
      right, power or privilege hereunder or under the Notes shall operate as a waiver
      thereof; nor shall any single or partial exercise of any right, power or
      privilege hereunder or thereunder preclude any other or further exercise thereof
      or the exercise of any other right, power or privilege.

     

    (b) All
      of
      the rights and remedies of the Secured Party with respect to the Collateral,
      whether established hereby or by the Notes or by any other agreements,
      instruments or documents or by law shall be cumulative and may be exercised
      singly or concurrently.

     

    (c) This
      Agreement constitutes the entire agreement of the parties with respect to the
      subject matter hereof and is intended to supersede all prior negotiations,
      understandings and agreements with respect thereto. Except as specifically
      set
      forth in this Agreement, no provision of this Agreement may be modified or
      amended except by a written agreement specifically referring to this Agreement
      and signed by the parties hereto.

     

    (d) In
      the
      event that any provision of this Agreement is held to be invalid, prohibited
      or
      unenforceable in any jurisdiction for any reason, unless such provision is
      narrowed by judicial construction, this Agreement shall, as to such
      jurisdiction, be construed as if such invalid, prohibited or unenforceable
      provision had been more narrowly drawn so as not to be invalid, prohibited
      or
      unenforceable. If, notwithstanding the foregoing, any provision of this
      Agreement is held to be invalid, prohibited or unenforceable in any
      jurisdiction, such provision, as to such jurisdiction, shall be ineffective
      to
      the extent of such invalidity, prohibition or unenforceability without
      invalidating the remaining portion of such provision or the other provisions
      of
      this Agreement and without affecting the validity or enforceability of such
      provision or the other provisions of this Agreement in any other
      jurisdiction.

     

    (e) No
      waiver
      of any breach or default or any right under this Agreement shall be considered
      valid unless in writing and signed by the party giving such waiver, and no
      such
      waiver shall be deemed a waiver of any subsequent breach or default or right,
      whether of the same or similar nature or otherwise.

     

    (f) This
      Agreement shall be binding upon and inure to the benefit of each party hereto
      and its successors and assigns.

     

    (g) Each
      party shall take such further action and execute and deliver such further
      documents as may be necessary or appropriate in order to carry out the
      provisions and purposes of this Agreement.

     

    (h) This
      Agreement shall be construed in accordance with the laws of the State of New
      York, except to the extent the validity, perfection or enforcement of a security
      interest hereunder in respect of any particular Collateral which are governed
      by
      a jurisdiction other than the State of New York in which case such law shall
      govern. Each of the parties hereto irrevocably submit to the exclusive
      jurisdiction of any New York State or United States Federal court sitting in
      Manhattan county over any action or proceeding arising out of or relating to
      this Agreement, and the parties hereto hereby irrevocably agree that all claims
      in respect of such action or proceeding may be heard and determined in such
      New
      York State or Federal court. The parties hereto agree that a final judgment
      in
      any such action or proceeding shall be conclusive and may be enforced in other
      jurisdictions by suit on the judgment or in any other manner provided by law.
      The parties hereto further waive any objection to venue in the State of New
      York
      and any objection to an action or proceeding in the State of New York on the
      basis of forum non conveniens.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (i) EACH
      PARTY HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF
      ANY
      CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. THE SCOPE
      OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY DISPUTES THAT MAY
      BE
      FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATER OF THIS AGREEMENT,
      INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS
      AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES
      THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR EACH PARTY TO ENTER INTO A
      BUSINESS RELATIONSHIP, THAT EACH PARTY HAS ALREADY RELIED ON THIS WAIVER IN
      ENTERING INTO THIS AGREEMENT AND THAT EACH PARTY WILL CONTINUE TO RELY ON THIS
      WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY FURTHER WARRANTS AND
      REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT
      SUCH PARTY HAS KNOWINGLY AND VOLUNTARILY WAIVES ITS RIGHTS TO A JURY TRIAL
      FOLLOWING SUCH CONSULTATION. THIS WAIVER IS IRREVOCABLE, MEANING THAT,
      NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IT MAY NOT BE MODIFIED EITHER
      ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
      RENEWALS AND SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF
      A
      LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY
      THE
      COURT. 

     

    (j) This
      Agreement may be executed in any number of counterparts, each of which when
      so
      executed shall be deemed to be an original and, all of which taken together
      shall constitute one and the same Agreement. In the event that any signature
      is
      delivered by facsimile transmission, such signature shall create a valid binding
      obligation of the party executing (or on whose behalf such signature is
      executed) the same with the same force and effect as if such facsimile signature
      were the original thereof.

     

    

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this to be duly executed on
      the
      day and year first above written.

     

    
      	 	
              COMPANY

              

              STANDARD
                MANAGEMENT CORPORATION

              

              

              By:
                ______________________________________ 

              Ronald
                D. Hunter

              Chief
                Executive Officer

              

              

              

              U.S.
                HEALTH SERVICES CORPORATION

              

              

              By: ______________________________________ 

              Ronald
                D. Hunter

              Chief
                Executive Officer

              

              STANDARD
                MARKETING CORPORATION

              

              

              By:
                ______________________________________ 

              Ronald
                D. Hunter

              Chief
                Executive Officer

              

              

              STANDARD
                MANAGEMENT FINANCIAL CORPORATION

              

              

              By:
                ______________________________________ 

              Ronald
                D. Hunter

              Chief
                Executive Officer

              

              

              UNIVERSAL
                HEALTHCARE COMPANY, LLC

              

              

              By:
                ______________________________________ 

              Ronald
                D. Hunter

              Chief
                Executive Officer

            

    

    
      

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    
      	 	
              SECURED
                PARTY:

              

              

              AJW
                PARTNERS, LLC

              By:
                SMS Group, LLC

               

               

               

              By:
                _____________________________________

              Corey
                S. Ribotsky

              Manager

               

               

              AJW
                MASTER FUND, LTD.

              By:
                First Street Manager II, LLC

               

               

               

              By:
                _____________________________________

              Corey
                S. Ribotsky

              Manager

               

               

              NEW
                MILLENNIUM CAPITAL PARTNERS II, LLC

              By:
                First Street Manager II, LLC

               

               

               

              By:
                _____________________________________

              Corey
                S. Ribotsky

              ManagerEMPLOYMENT
      AGREEMENT

     

    THIS
      AGREEMENT is
      made
      the 7th day of December 2005

     

    B
      E T W E E N :

     

    
      	(A)	
              MEASUREMENT
                SPECIALTIES INC. (hereinafter
                the "Company"), a
                Virginia corporation; and

            

    

     

    
      	(B)	
              STEVE
                SMITH
                (hereinafter the "Employee"),
                an individual to be lawfully retained or employed by the Company
                in the
                People's Republic of China.

            

    

     

    IT
      IS AGREED
      that the
      Company has agreed to employ the Employee and the Employee has agreed to accept
      such employment on the following terms and conditions:

     

    
      	1.	
              DEFINITIONS
                AND INTERPRETATION

            

    

     

    
      	1.1	
              In
                this Agreement where the context so admits the following words and
                expressions shall have the following
                meanings:

            

    

     

    “Board”
means
      the board of directors of the Company from time to time;

     

    “MSI
      Sensors” means
      MSI
      Sensors (China) Limited, a company incorporated under the laws of the People's
      Republic of China whose principal place of business is at Block 5A, Tian Fa
      Building, Tian An Cyber Park, Fu Tian District, Shenzhen, PRC 518048;
      and

     

    “Hong
      Kong” means
      the
      Hong Kong Special Administrative Region of the People's Republic of
      China;

     

    “PRC”
means
      the People's Republic of China;

     

    “US$”
means
      the United States of America dollars.

     

    
      	1.2	
              All
                references in this Agreement to the Company shall include its successors
                in title or assigns.

            

    

     

    
      	1.3	
              References
                herein to Clauses are references to the clauses of this Agreement
                which
                shall be deemed to form part of this Agreement. The headings in this
                Agreement are inserted for convenience of reference only and do not
                affect
                the interpretation hereof.

            

    

     

    
      	2.	
              
                EMPLOYMENT

              

            

    

     

    
      	
              2.1

            	
              The
                Employee shall at all times be an employee of the Company based in
                the
                United States but on a daily basis he shall serve the Company’s subsidiary
                MSI Sensors in the PRC in the capacity of Vice President/General
                Manager -
                Asia or
                such other capacity as the Chief Executive Officer (“CEO”) of the Company
                may determine from time to time and shall at all times comply with
                the
                lawful and reasonable directions of the
                CEO.

            

    

     

    
      	
              2.2

            	
              The
                Employee shall devote full time, attention and energies to the business
                of
                the Company and MSI Sensors. During this employment, the Employee
                shall
                not engage in any other business activity, regardless of whether
                such
                activity is pursued for profit, gain or other pecuniary
                advantage.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	3.	
              
                MANNER
                  OF
                  PERFORMANCE

              

            

    

     

    
      	3.1	
              The
                Employee shall at all times faithfully, diligently and to the best
                of his
                ability, experience and talent, perform all duties that may be required
                of
                him or her pursuant to the express and implicit terms hereof, to
                the
                reasonable satisfaction of the Company. Such duties shall be rendered
                at
                the MSI Sensors’ principal place of business and at such other place as
                the Company shall in good faith require or as the interests, needs,
                businesses and opportunities of the Company shall require or make
                advisable. 

            

    

     

    
      	3.2	
              Subject
                to any written regulations issued by the Company which are applicable
                to
                the Employee, neither the Employee nor any member of his family,
                nor any
                company or business entity in which he or they are interested, shall
                be
                entitled to receive or obtain directly or indirectly any discount,
                rebate,
                commission or other benefit in respect of any business transacted
                (whether
                or not by the Employee) by or on behalf of the Company, and if the
                Employee, any member of his family or any company or business entity
                in
                which he is or they are interested, shall directly or indirectly
                obtain
                any such discount, rebate, commission or other benefit the Employee
                shall
                forthwith account to the Company for the amount received or value
                of the
                benefit so obtained.

            

    

     

    
      	3.3	
              The
                Employee confirms that he has disclosed fully to the Company all
                circumstances in respect of which there is, or there might be, a
                conflict
                of interest between the Company, and the Employee or any member of
                his
                family, and he agrees to disclose fully to the Company any such
                circumstances which may arise during the
                employment.

            

    

     

    
      	4.	
              
                COMPENSATION
                  AND
                  REIMBURSEMENT

              

            

    

     

    
      	4.1	
              The
                Company shall pay the Employee and the Employee agrees to accept
                from the
                Company for the Employee's services hereunder remuneration at the
                rate of
                US$190,000.00 (“Base Salary”) per annum payable semi-monthly. During the
                Employment Term, the Employee may also be eligible for an annual
                bonus of
                up to 25% of his Base Salary based on minimum performance standards
                to be
                determined on an annual basis by the
                Board.

            

    

     

    
      	4.2	
              In
                addition to the foregoing remuneration, the Employee shall be entitled
                to
                the following benefits:

            

    

     

    
      	 	
              4.2.1

            	
              a
                yearly vacation of 3 weeks at full pay, subject to limitations on
                carry-forward of accrued, unused vacation days per MSI
                policy;

            

    

     

    
      	 	
              4.2.2

            	
              moving
                allowance/sign on bonus of
                US$30,000.00;

            

    

     

    
      	 	
              4.2.3

            	
              100,000
                stock options of the Company with a strike price based on the closing
                price as of 11/30/05, or $24.88, which shall vest and become exercisable
                over a five (5) year period with 1/5 of the stock options vesting
                each
                year of employment after the grant date. In the event of a Change
                in
                Control while Employee is still employed by the Company, all of the
                stock
                options shall vest and become exercisable as of the effective date
                of the
                Change in Control. For purposes of this Agreement, a “Change
                in Control”
                shall be deemed to have occurred
                if:

            

    

     

    
      	
            	4.2.3.1	
              any
                “person” (as such term is used in Sections 13(d) and 14(d) of the
                Securities Exchange Act of 1934, as amended (the “Exchange Act”)), becomes
                the “beneficial owner” (as defined in Rule 13d-3 promulgated under the
                Exchange Act), directly or indirectly, of securities of the Company
                representing 50% or more of (a) the outstanding shares of common
                stock of
                the Company; or (b) the combined voting power of the Company’s
                then-outstanding securities entitled to vote generally in the election
                of
                directors; or

            

    

     

    
      
         

      

      
        -
          2 -

        
          

        

      

      
         

      

    

     

    
      	
            	4.2.3.2	
              the
                Company (a) is party to a merger, consolidation or exchange of securities
                (excluding, without limitation, a public offering of the Company’s
                securities) which results in the holders of voting securities of
                the
                Company outstanding immediately prior thereto failing to continue
                to hold,
                directly or indirectly, more than 50% of the combined voting power
                of the
                voting securities of the Company, the surviving entity or a parent
                of the
                Company or surviving entity outstanding immediately after such merger,
                consolidation or exchange; or (b) sells or disposes of all or
                substantially all of the Company’s assets (or any transaction having
                similar effect is consummated);

            

    

     

    
      	 	
              4.2.4

            	
              housing
                allowance for reasonable living expense (apartment or
                equivalent);

            

    

     

    
      	 	
              4.2.5

            	
              reimbursement
                for return airfare from Shenzhen to any US city for four (4) trips
                per
                annum;

            

    

     

    
      	 	
              4.2.6

            	
              benefits
                equivalent to those received by other Company employees in the United
                States, including health insurance under the health insurance plan
                for
                employees based in the United States, pending approval by the Company’s
                health care provider; and

            

    

     

    
      	
            	4.2.7	
              the
                Company shall provide a“gross-up”
                payment to Employee for any tax and tax preparation obligations that
                Employee incurs as a result of his assignment to MSI Sensors in the
                PRC
                that are less favourable to Employee than the tax obligations had
                he
                worked at the Company’s headquarters in
                Virginia.

            

    

     

    
      	4.3	
              The
                Employee may incur reasonable expenses for furthering the Company's
                business, including expenses for entertainment, travel and similar
                items.
                The Company shall reimburse the Employee for all business expenses
                after
                the Employee has pursuant to the Company's policies presented an
                itemized
                account of expenses.

            

    

     

    
      	5.	
              
                CONFIDENTIALITY

              

            

    

     

    
      	5.1	
              The
                Employee acknowledges that in the course of employment he may become
                aware
                of certain information about the Company's operations or clients.
                The
                Employee agrees not to disclose such information or use the information
                in
                any manner that might be harmful to the Company's business. The Employee
                agrees that the restrictions contained or referred to in this Clause
                5 are
                reasonable and necessary to protect the legitimate business interests
                of
                the Company both during and after the termination of his
                employment.

            

    

     

    
      	5.2	
              During
                the term of this Agreement and for a period of ten (10) years from
                the
                date of termination or expiration of this Agreement for any reason
                whatsoever, the Employee receiving any trade secrets or information
                which
                is confidential to Company, shall:

            

    

     

    
      
         

      

      
        -
          3 -

        
          

        

      

      
         

      

    

     

    
      	 	
              (1)

            	
              keep
                confidential such confidential
                information;

            

    

     

    
      	 	
              (2)

            	
              not
                disclose the confidential information to any person, company, business
                entity or other organization other than with the prior written consent
                of
                the Company; and

            

    

     

    
      	 	
              (3)

            	
              not
                use the confidential information for any purpose other than the
                performance of his or her obligations under this
                Agreement.

            

    

     

    
      	5.3	
              The
                Employee shall not at any time during the continuance of his employment
                with the Company make any notes or memoranda relating to any matter
                within
                the scope of the Company’s business, dealings or affairs otherwise than
                for the benefit of the Company.

            

    

     

    
      	5.4	
              The
                obligations contained in Clause 5.2 shall cease to apply to any
                information or knowledge which may subsequently come into the public
                domain after the termination of employment other than by way of
                unauthorised disclosure.

            

    

     

    
      	5.5	
              The
                Employee shall not make or communicate any statement (whether written
                or
                oral) to any representative of the press, television, radio, or other
                media and shall not write any article for the press or otherwise
                for
                publication on any matter connected with or relating to the business
                of
                the Company without obtaining the prior written approval of the
                CEO.

            

    

     

    
      	6.	
              NON-COMPETITION

            

    

     

    
      	6.1	
              The
                Employee hereby agrees that he shall not for a period of [three years]
                immediately following the termination of his employment within [Hong
                Kong
                and PRC] and whether on his own behalf or in conjunction with or
                on behalf
                of any other person, firm, company or other organization, (and whether
                as
                an employee, director, principal, agent, consultant or in any other
                capacity whatsoever,) in competition with the Company directly or
                indirectly (i) be employed or engaged in, or (ii) perform services
                in
                respect of, or (iii) be otherwise concerned with any business similar
                to
                that conducted by the Company, either by soliciting any of its accounts
                or
                by operating within the Company's general business
                area.

            

    

     

    
      	6.2	
              The
                Employee hereby agrees that he shall not for a period of [three years]
                immediately following the termination of his employment whether on
                his own
                behalf or in conjunction with or on behalf of any person, company,
                business entity or other organization (and whether as an employee,
                director, principal, agent, consultant or in any other capacity
                whatsoever), directly or indirectly (i) solicit or, (ii) assist in
                soliciting, or (iii) accept, or (iv) facilitate the acceptance of,
                or (v)
                deal with, in competition with the Company, the custom or business
                of any
                customer or prospective customer :-

            

    

     

    
      	 	
              6.2.1

            	
              with
                whom the Employee has had material contact or dealings on behalf
                of the
                Company during the [12 months] immediately preceding the date upon
                which
                his employment with the Company terminates;
                or

            

    

     

    
      	 	
              6.2.2

            	
              for
                whom the Employee was, in a client management capacity on behalf
                of the
                Company, directly responsible during the [12 months] immediately
                preceding
                the date upon which his employment with the Company
                terminates.

            

    

     

    
      	6.3	
              The
                Employee hereby agrees that he will not for a period of [three years]
                immediately following the date of his termination either on his own
                behalf
                or in conjunction with or on behalf of any other person, company,
                business
                entity, or other organisation (and whether as an employee, principal,
                agent, consultant or in any other capacity whatsoever), directly
                or
                indirectly:-

            

    

     

    
      
         

      

      
        -
          4 -

        
          

        

      

      
         

      

    

     

    
      	 	
              6.3.1

            	
              (i)
                induce, or (ii) solicit, or (iii) entice or (iv) procure, any person
                who
                is an employee of the Company to leave the Company’s employment (as
                applicable) where that person is an employee of the Company on the
                date
                upon which his employment with the Company
                terminates;

            

    

     

    
      	 	
              6.3.2

            	
              be
                personally involved to a material extent in (i) accepting into employment
                or (ii) otherwise engaging or using the services of, any person who
                is an
                employee of the Company on the date upon which his employment with
                the
                Company terminates.

            

    

     

    
      	7.	
              
                TERM
                  AND TERMINATION OF THIS
                  AGREEMENT

              

            

    

     

    
      	7.1	
              Provided
                that any necessary visa and work permit is obtained, the employment
                of the
                Employee hereunder will commence on January 2, 2006 and will continue
                thereafter until terminated in accordance with the provisions below.
                

            

    

     

    
      	7.2	
              Subject
                to applicable law, either party may terminate this Agreement by giving
                the
                other three calendar months' advance notice in writing.
                

            

    

     

    
      	7.3	
              The
                Company may by notice in writing immediately terminate this Agreement
                if
                the Employee is in breach of any of the terms of this Agreement which
                in
                the case of a breach capable of remedy is not remedied by the Employee
                within 30 days of receipt by the Employee of a notice from Company
                specifying the breach and requiring its remedy.

            

    

     

    
      	7.4	
              Subject
                to applicable law, the Company may immediately terminate this Agreement
                in
                the event of: (i) the death of the Employee; (ii) the unwillingness
                or
                inability of the Employee to perform his duties; (iii) any criminal
                conviction of the Employee; or (iv) acts of dishonesty, fraud or
                gross
                negligence by the Employee in connection with the performance of
                his
                duties to the Company after those acts have been disclosed to the
                Employee
                and the Employee accorded an opportunity to respond in writing or
                in
                person at the Employee's option to the Company, provided that the
                Employee
                shall receive no further compensation beyond the termination date
                other
                than benefits accrued or required by
                law.

            

    

     

    
      	7.5	
              In
                the event that the Company terminates this Agreement other than pursuant
                to Clause 7.3 or 7.4, the Employee shall be entitled to a severance
                payment equivalent to an amount up to one year of his Base Salary
                (payable
                semi-monthly) and also an allowance for repatriation and relocation
                of up
                to a maximum of US$10,000.00.

            

    

     

    
      	7.6	
              In
                the event of the termination of this Agreement by the Employee, the
                Employee shall reimburse any training costs, expenses and charges
                reasonably incurred by the Company for the
                Employee.

            

    

     

    
      	7.7	
              Should
                the Company waive breach of any provision of this Agreement by the
                Employee, that waiver will not operate or to be construed as a waiver
                of
                any further breach by the Employee.

            

    

     

    
      	7.8	
              Forthwith
                upon the termination of the employment of the Employee hereunder,
                and/or
                at any other time if the Company shall so request, the Employee shall
                deliver to the Company all documents (including correspondence, lists
                of
                customers, notes, memoranda, plans, drawings and other documents
                of
                whatsoever nature), models or samples made or compiled by or delivered
                to
                the Employee during his employment hereunder and concerning the business,
                finances or affairs of the Company. For the avoidance of doubt it
                is
                hereby declared that the property in all such documents as aforesaid
                shall
                at all times be vested in the
                Company.

            

    

     

    
      
         

      

      
        -
          5 -

        
          

        

      

      
         

      

    

     

    
      	7.9	
              The
                Employee agrees that he will not at any time after the termination
                of the
                employment represent himself as still having any connection with
                the
                Company, save as a former employee for the purpose of communicating
                with
                prospective employers or complying with any applicable statutory
                requirements.

            

    

     

    
      	8.	
              NOTICES

            

    

     

    
      	8.1	
              Each
                notice, demand or other communication given or made under this Agreement
                shall be in writing and delivered or sent to the relevant party at
                its
                address or fax number set out below (or such other address or fax
                number
                as the addressee has by five days’ prior written notice specified to the
                other party):

            

    

     

    
      	
              To
                the Company:

            	
              Frank
                Guidone

            
	 	
              Measurement
                Specialties Inc.

            
	 	
              1000
                Lucas Way

            
	 	
              Hampton,
                VA 23666

            
	 	 
	 	
              Fax
                number:

            	
              [•]

            
	 	 
	 	
              Attention:

            	
              [•]

            
	 	 
	
              To
                the Executive:

            	
              Steve
                Smith

            
	 	
              1900
                Alaskan Way #116

            
	 	
              Seattle,
                WA 98101

            
	 	 
	 	
              Fax number:

            	
              [•]

            

    

     

    
      	8.2	
              Any
                notice, demand or other communication so addressed to the relevant
                party
                shall be deemed to have been delivered (a) if given or made by letter,
                when actually delivered to the relevant address; and (b) if given
                or made
                by fax, when despatched subject to receipt of machine-printed confirmation
                of error-free despatch.

            

    

     

    
      	8.3	
              Any
                notice to be given hereunder may be delivered (a) in the case of
                the
                Company by first class post addressed to its registered office for
                the
                time being and (b) in the case of the Employee, either to him personally
                or by first class post to his last known
                address.

            

    

     

    
      	9.	
              
                ENTIRE
                  AGREEMENT

              

            

    

     

    
      	9.1	
              This
                Agreement contains the entire understanding between the parties and
                supersedes all (if any) subsisting agreements arrangements and
                understandings (written or oral) relating to the employment of the
                Employee and all such agreements arrangements and understandings
                shall be
                deemed to have been terminated by mutual
                consent.

            

    

     

    
      
         

      

      
        -
          6 -

        
          

        

      

      
         

      

    

     

    
      	10.	
              
                APPLICABLE
                  LAW

              

            

    

     

    
      	10.1	
              This
                Agreement and any matters arising from or connected with it are governed
                by the laws of the Commonwealth of Virginia. Should any disagreement
                arise
                between the parties as it relates to employment, each party shall
                be
                responsible for its/his own attorneys' fees and court costs, unless
                the
                law or the court specifies
                otherwise.

            

    

     

    
      	10.2	
              Any
                subsequent amendments to laws and regulations valid at the time of
                execution of this Agreement
                shall not affect the performance of this Agreement unless it is
                specifically provided otherwise therein.

            

    

     

    
      	10.3	
              If,
                for any reason, any provision of this Agreement is held invalid,
                all other
                provisions of this Agreement shall remain in effect.
                

            

    

     

    
      	10.4	
              The
                rights and remedies conferred by this Agreement are in addition to
                and
                without derogation from any other rights and remedies that either
                the
                Employee or the Company may have at
                law.

            

    

     

    
      	11.	
              
                
                  SETTLEMENT
                    OF DISPUTES
                    

                

              

            

    

     

    
      	11.1	
              Without
                in any manner limiting the provisions of this Agreement, any action
                or
                proceeding seeking to enforce any provision of, or based on any right
                arising out of, this Agreement may be brought exclusively in the
                courts of
                the Commonwealth of Virginia, or, if it has or can acquire jurisdiction,
                in the United States District Court for the district of Virginia
                in which
                the Company’s headquarters are located, and each of the parties consents
                to the exclusive jurisdiction of such courts (and of the appropriate
                appellate courts) in any such action or proceeding and waives any
                objection to venue laid therein. Process in any action or proceeding
                referred to in the preceding sentence may be served on any party
                anywhere
                in the world. The foregoing shall not limit the rights of any party
                to
                bring the legal action or proceeding or to obtain execution of judgment
                in
                any appropriate jurisdiction. Each of the parties hereto further
                agrees
                that final judgment against it in any such action or proceeding shall
                be
                conclusive and may be enforced by any other jurisdiction within or
                outside
                the United States of America by suit on the judgment, a certified
                or
                exemplified copy of which shall be conclusive evidence
                thereof.

            

    

     

    
      	12.	
              
                MISCELLANEOUS

              

            

    

     

    
      	12.1	
              No
                waiver or modification of this Agreement, or of any covenant, condition
                or
                limitation herein contained shall be valid unless in writing and
                duly
                executed by the party to be charged therewith.

            

    

     

    
      	12.2	
              This
                Agreement is drawn up in the English language. If this Agreement
                is
                translated into another language, the English language text
                prevails.

            

    

     

    
      
         

      

      
        -
          7 -

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF this Agreement has been executed and hereby delivered by the
      parties or their authorized representatives on the date first set forth above.
      

     

    
      	    
	 	    

	
              WITNESS

            	 	
              STEVE
                SMITH

            
	 	 	 
	 	 	
              Dated:
                ________________________, 2005

            
	 	 	 
	 	 	
              MEASUREMENT
                SPECIALTIES, INC.

            
	 	 	 
	 	 	   

	 	 	
              FRANK
                GUIDONE

            
	 	 	
              CHIEF
                EXECUTIVE OFFICER

            
	 	 	 
	 	 	
              Dated:
                ________________________, 2005

            

    

     

    
      
         

      

      
        -
          8 -

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