Document:

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                        PROVIDENT BANKSHARES CORPORATION
                           CHANGE IN CONTROL AGREEMENT

This AGREEMENT ("Agreement") is entered into as of May 5, 2005 by and between
PROVIDENT BANKSHARES CORPORATION (the "Corporation"), a corporation organized
under the laws of the State of Maryland, with its offices at 114 East Lexington
Street, Baltimore, Maryland and [NAME] ("Executive").

         WHEREAS, the Corporation recognizes the continued importance of
Executive to the Corporation's operations and wishes to protect Executive's
position with the Corporation and/or its affiliates in the event of a Change in
Control (as defined in Section 2(b) of this Agreement); and

         WHEREAS, Executive and the Board of Directors of the Corporation desire
to enter into an agreement setting forth the terms and conditions of payments
due to Executive in the event of a change in control and the related rights and
obligations of each of the parties.

         NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is hereby agreed as follows:

1.       TERM OF AGREEMENT.

         (a) The term of this Agreement shall be (i) the initial term,
consisting of the period commencing on the date of this Agreement (the
"Effective Date") and ending on the third anniversary of the Effective Date,
plus (ii) any and all extensions of the initial term made pursuant to Section
1(b) of this Agreement.

         (b) Commencing on the Effective Date and on each day thereafter, the
term under this Agreement shall renew automatically for an additional one (1)
day period beyond the then effective expiration date, without action by any
party, provided that neither the Corporation, on the one hand, nor Executive, on
the other, shall have given at least sixty (60) days written notice of their
desire that the term not renew. In the case notice is given by one party to the
other, the term of this Agreement shall become fixed and shall end on the third
anniversary of the date of the notice.

         (c) Notwithstanding anything in this Section to the contrary, this
Agreement shall terminate if Executive or the Corporation terminates Executive's
employment prior to a Change in Control.

2.       CHANGE IN CONTROL.

         (a) Upon the occurrence of a Change in Control (as defined in Section
2(b) of this Agreement), followed at any time during the term of this Agreement
by the termination of Executive's employment in accordance with the terms of
this Agreement, other than for Just Cause (as defined in Section 2(c) of this
Agreement), the provisions of Section 3 of this

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Agreement shall apply. Upon the occurrence of a Change in Control, Executive
shall have the right to elect to voluntarily terminate their employment at any
time during the term of this Agreement following an event constituting "Good
Reason." Following a Change in Control, Executive may also voluntarily terminate
their employment for any reason in accordance with Section 3(b) of this
Agreement. For purposes of this Agreement "Good Reason" and "Change in Control"
have the following meanings:

         "Good Reason" means, unless Executive has consented in writing thereto,
the occurrence following a Change in Control, of any of the following:

                (i)        the assignment to Executive of any duties materially
                           inconsistent with Executive's position, including any
                           material change in status, title, authority, duties
                           or responsibilities or any other action that results
                           in a material diminution in such status, title,
                           authority, duties or responsibilities, excluding for
                           this purpose an isolated, insubstantial and
                           inadvertent action not taken in bad faith and that is
                           remedied by the Corporation or Executive's employer
                           reasonably promptly after receipt of notice thereof
                           given by Executive;

                (ii)       a reduction by the Corporation or Executive's
                           employer of Executive's base salary in effect
                           immediately prior to the Change in Control;

                (iii)      the relocation of  Executive's  office to a location
                           more than 20 miles from its location immediately
                           prior to the Change in Control;

                (iv)       the taking of any action by the Corporation or any of
                           its affiliates or successors that would materially
                           adversely affect Executive's overall compensation and
                           benefits package, unless such changes to the
                           compensation and benefits package are made on a
                           non-discriminatory basis to all employees; or

                (v)        the failure of the Corporation or Executive's
                           employer, or any affiliate that directly or
                           indirectly owns or controls any affiliate by which
                           Executive is employed, to obtain the assumption in
                           writing of the Corporation's obligation to perform
                           this Agreement by any successor to all or
                           substantially all of the assets of the Corporation or
                           such affiliate within thirty (30) days after a
                           reorganization, merger, consolidation, sale or other
                           disposition of assets of the Corporation or such
                           affiliate.

         (b) For purposes of this Agreement, a "Change in Control" shall be
deemed to occur on the earliest of any of the following events:

                  (i)   Merger: The Corporation merges into or consolidates with
                        ------
                  another corporation, or merges another corporation into the
                  Corporation, and as a result less than a majority of the
                  combined voting power of the resulting corporation immediately
                  after the merger or consolidation is held by persons who were

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                  stockholders of the Corporation immediately before the merger
                  or consolidation; or

                  (ii)  Acquisition of Significant Share Ownership: The
                        ------------------------------------------
                  Corporation files, or is required to file, a report on
                  Schedule 13D or another form or schedule (other than Schedule
                  13G) required under Sections 13(d) or 14(d) of the Securities
                  Exchange Act of 1934, if the schedule discloses that the
                  filing person or persons acting in concert has or have become
                  the beneficial owner of 10% or more of a class of the
                  Corporation's voting securities, but this clause (ii) shall
                  not apply to beneficial ownership of the Corporation's voting
                  shares held in a fiduciary capacity by an entity of which the
                  Corporation directly or indirectly beneficially owns 50% or
                  more of its outstanding voting securities; or

                  (iii) Change in Board Composition: During any period of two
                        ---------------------------
                  consecutive years, individuals who constitute the
                  Corporation's Board of Directors at the beginning of the
                  two-year period cease for any reason to constitute at least a
                  majority of the Corporation's Board of Directors; provided,
                  however, that for purposes of this clause (iii), each director
                  who is first appointed by the board (or first nominated by the
                  board for election by the stockholders) by a vote of at least
                  three-quarters (3/4) of the directors who were directors at
                  the beginning of the two-year period shall be deemed to have
                  also been a director at the beginning of such period; or

                  (iv)  Sale of Assets: The Corporation sells to a third party
                        --------------
                  all or substantially all of its assets.

         (c) Executive shall not have the right to receive termination benefits
under this Agreement upon their termination for Just Cause. The term "Just
Cause" shall mean termination because of a material loss to the Corporation or
one of its affiliates caused by Executive's willful, intentional and continued
failure to substantially perform stated duties (unless the failure results from
incapacity due to physical or mental illness), personal dishonesty, willful
violation of any law, rule, regulation (other than traffic violations or similar
offenses) or final cease and desist order. For purposes of this Section 2(b), no
act, or the failure to act, on Executive's part shall be considered "willful"
unless done, or omitted to be done, not in good faith and without reasonable
belief that the action or omission was in the best interest of the Corporation
or its affiliates. Notwithstanding the foregoing, Executive shall not be deemed
to have been terminated for Just Cause unless and until there shall have been
delivered to Executive a copy of a resolution duly adopted by the affirmative
vote of three-quarters (3/4) of the entire membership of the Board of Directors
at a meeting of the Board of Directors called and held for that purpose (after
reasonable notice to Executive and an opportunity for Executive, together with
counsel, to be heard before the Board of Directors), finding that in the good
faith opinion of the Board of Directors, Executive was guilty of conduct
justifying termination for Just Cause and specifying the particulars thereof in
detail. Executive shall not have the right to receive compensation or other
benefits for any period after termination for Just Cause.

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3.       TERMINATION BENEFITS.

         (a) Upon Executive's voluntary resignation from employment for Good
Reason or Executive's involuntary termination of employment for any reason other
than for Just Cause at any following a Change in Control but during the term of
this Agreement, the Corporation shall pay Executive a sum equal to THREE (3)/TWO
(2) times Executive's average annual taxable compensation (as reported in Box 1
of Form W-2) for the five (5) consecutive taxable years ending immediately prior
to the taxable year in which Executive's employment terminates; provided,
however, that for this purpose, Executive's average annual compensation shall
not include any taxable compensation realized by virtue of Executive's exercise
of stock options or the vesting of Restricted Stock awarded to Executive. The
Corporation shall make this severance payment to Executive in a single lump sum
(less any required federal, state or local tax withholdings) at the effective
date of Executive's resignation or termination of employment. In addition, the
Corporation (or its successors) shall provide continued life and medical
insurance coverage to Executive (substantially identical to the life and medical
insurance coverage provided to Executive (and his dependents) immediately prior
to his severance from employment) for THIRTY-SIX (36)/TWENTY-FOUR (24) full
calendar months following the effective date of Executive's resignation or
termination of employment. In lieu of this continued life and medical insurance
coverage, Executive may elect, no later than fifteen (15) days prior to
Executive's severance date, to receive a cash payment equal to thirty-six (36)
times the monthly premium amount paid by the Corporation for Executive (and his
dependents) for life and medical insurance coverage for the calendar month
immediately preceding the effective date of Executive's resignation or
termination of employment. If Executive makes this election, the Corporation
shall make this payment to Executive in a single lump sum (less any required
federal, state or local tax withholdings) at the effective date of Executive's
resignation or termination of employment.

         (b) Upon Executive's voluntary resignation from employment for any
reason after one year following a Change in Control but during the term of this
Agreement, the Corporation shall pay Executive a sum equal to one-half (1/2)
Executive's annual base salary in effect as of the effective date of Executive's
resignation. The Corporation shall make this severance payment to Executive in a
single lump sum (less any required federal, state or local tax withholdings) at
the effective date of Executive's resignation. In addition, the Corporation (or
its successors) shall provide continued life and medical insurance coverage to
Executive (substantially identical to the life and medical insurance coverage
provided to Executive (and his dependents) immediately prior to Executive's
severance from employment) for six (6) full calendar months following the
effective date of Executive's resignation. In lieu of this continued life and
medical insurance coverage, Executive may elect, no later than fifteen (15) days
prior to Executive's severance date, to receive a cash payment equal to six (6)
times the monthly premium amount paid by the Corporation for Executive (and his
dependents) for life and medical insurance coverage for the calendar month
immediately preceding the effective date of Executive's resignation. If
Executive makes this election, the Corporation shall make this

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payment to Executive in a single lump sum (less any required federal, state or
local tax withholdings) at the effective date of Executive's resignation.

         (c)     Nothing in this Agreement shall deprive Executive of the right
to receive benefits due under or contributed by the Corporation or its
affiliates on Executive's behalf pursuant to any retirement, incentive, profit
sharing, bonus, performance, disability or other employee benefit plan
maintained by the Corporation or its affiliates, pursuant to the terms and
conditions of such plans or arrangements, on Executive's behalf.

         (d)     Notwithstanding the preceding provisions of this Section 3, in
the event that:

                 (i)    the aggregate payments or benefits to be made or
                        afforded to Executive, which are deemed to be parachute
                        payments for purposes of Section 280G of the Internal
                        Revenue Code of 1986, as amended (the "Code"), or any
                        successor thereof, (the "Termination Benefits"), would
                        be deemed to include an "excess parachute payment" for
                        purposes of Section 280G of the Code; and

                 (ii)   if the Termination Benefits were reduced to an amount
                        (the "Non-Triggering Amount"), the value of which is one
                        dollar ($1.00) less than an amount equal to three (3)
                        times Executive's "base amount," as determined in
                        accordance with Section 280G of the Code, and the
                        Non-Triggering Amount would be greater than the
                        aggregate value of the Termination Benefits (excluding
                        such reduction) less the amount of tax required to be
                        paid by Executive under Section 4999 of the Code,

then the Termination Benefits shall be reduced to the Non-Triggering Amount.
Executive shall determine the allocation of the reduction among the Termination
Benefits.

4.       NOTICE OF TERMINATION.

         (a) Any termination of Executive's employment by the Corporation or by
Executive upon or following a Change in Control shall be communicated to the
other party by a Notice of Termination. For purposes of this Agreement, a
"Notice of Termination" shall mean a written notice that shall indicate the
specific termination provision in this Agreement relied upon and shall set forth
in detail the facts and circumstances claimed to provide a basis for termination
of Executive's employment under the provision so indicated.

         (b) "Date of Termination" shall mean the date specified in the Notice
of Termination (which, in the case of a termination for Just Cause, shall not be
less than thirty (30) days from the date such Notice of Termination is given).

         (c) If, within thirty (30) days after any Notice of Termination is
given, the party receiving the Notice of Termination notifies the other party
that a dispute exists concerning the termination, the Date of Termination shall
be the date on which the dispute is finally determined, either by mutual written
agreement of the parties, by a binding arbitration award, or by a final
judgment, order or decree of a court of competent jurisdiction (the time for
appeal therefrom having expired and no appeal having been perfected) and
provided further that the Date of

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Termination shall be extended by a notice of dispute only if such notice is
given in good faith and the party giving such notice pursues the resolution of
such dispute with reasonable diligence. Notwithstanding the pendency of any such
dispute, the Corporation shall continue to pay Executive's salary in effect when
the notice giving rise to the dispute was given and continue Executive as a
participant in all compensation, benefit and insurance plans in which Executive
was participating when the notice of dispute was given, until the dispute is
finally resolved in accordance with this Agreement. Amounts paid under this
Section 4(c) are in addition to all other amounts due under this Agreement and
shall not be offset against or reduce any other amounts due under this
Agreement.

5.       SOURCE OF PAYMENTS.

         All payments provided in this Agreement shall be timely paid in cash or
check from the general funds of the Corporation or its affiliates.

6.       EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFIT PLANS.

         This Agreement contains the entire understanding between the parties
hereto and supersedes any prior agreement between the Corporation or its
affiliates and Executive, except that this Agreement shall not affect or operate
to reduce any benefit or compensation inuring to Executive of any kind elsewhere
provided. No provision of this Agreement shall be interpreted to mean that
Executive is subject to receiving fewer benefits than those available to
Executive without reference to this Agreement. Nothing in this Agreement shall
confer upon Executive the right to continue in the employ of the Corporation or
its affiliates or shall impose on the Corporation or its affiliates any
obligation to employ or retain Executive in its employ for any period.

7.       NO ATTACHMENT.

         (a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation or to execution,
attachment, levy or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null, void
and of no effect.

         (b) This Agreement shall be binding upon, and inure to the benefit of,
Executive, the Corporation, its affiliates and their respective successors and
assigns.

8.       MODIFICATION AND WAIVER.

         (a) This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.

         (b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there be any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver

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shall be deemed a continuing waiver unless specifically stated therein, and each
such waiver shall operate only as to the specific term or condition waived and
shall not constitute a waiver of such term or condition for the future or as to
any act other than that specifically waived.

9.       SEVERABILITY.

         If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.

10.      HEADINGS FOR REFERENCE ONLY.

         The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.

11.      GOVERNING LAW.

         Except to the extent preempted by federal law, the validity,
interpretation, performance, and enforcement of this Agreement shall be governed
by the laws of the State of Maryland, without regard to principles of conflicts
of law of that State.

12.      ARBITRATION.

         Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three arbitrators sitting in a location selected by Executive within fifty
(50) miles from the location of the Corporation, in accordance with the rules of
the American Arbitration Association then in effect. Judgment may be entered on
the arbitrator's award in any court having jurisdiction; provided, however, that
Executive shall be entitled to seek specific performance of his right to be paid
until the Date of Termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement.

13.      PAYMENT OF LEGAL FEES.

         All reasonable legal fees paid or incurred by Executive pursuant to any
dispute or question of interpretation relating to this Agreement shall be paid
or reimbursed by the Corporation, only if Executive is successful pursuant to a
legal judgment, arbitration or settlement.

14.      INDEMNIFICATION.

         The Corporation or its affiliates shall provide Executive (including
Executive's heirs, executors and administrators) with coverage under a standard
directors' and officers' liability insurance policy at its expense and shall
indemnify Executive (and Executive's heirs, executors

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and administrators) to the fullest extent permitted under applicable law against
all expenses and liabilities reasonably incurred by Executive in connection with
or arising out of any action, suit or proceeding in which Executive may be
involved by reason of Executive having been a director or officer of the
Corporation or its affiliates (whether or not Executive continues to be a
director or officer at the time of incurring such expenses or liabilities), such
expenses and liabilities to include, but not be limited to, judgments, court
costs, attorneys' fees and the cost of reasonable settlements.

15.      SUCCESSORS TO THE CORPORATION.

         The Corporation shall require any successor or assignee, whether direct
or indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all of the business or assets of the Corporation, expressly and
unconditionally to assume and agree to perform the obligations of the
Corporation and its affiliates under this Agreement, in the same manner and to
the same extent that the Corporation and its affiliates would be required to
perform if no such succession or assignment had taken place.

16.      SIGNATURES

        IN WITNESS WHEREOF, Provident Bankshares Corporation has caused this
Agreement to be executed by its duly authorized officer.

ATTEST:                                    PROVIDENT BANKSHARES CORPORATION

                                           By:
------------------------------------           ---------------------------------
Corporate Secretary                            For the Entire Board of Directors

                                       8EXHIBIT 10.1

               SEPARATION AGREEMENT AND FULL RELEASE OF ALL CLAIMS

         THIS SEPARATION  AGREEMENT AND FULL RELEASE OF ALL CLAIMS  (hereinafter
the  "Agreement") is entered into by and among MICROTEK MEDICAL  HOLDINGS,  INC.
(the "Company") and BARBARA J. OSBORNE ("Employee").

                                   WITNESSETH

     A.  The  Company  and  Employee  are  parties  to that  certain  Employment
Agreement (the "Employment Agreement") dated as of June 14, 2004.

     B. The Company and the  Employee  have  mutually  agreed to  terminate  the
employment  of the Employee  with the Company.

     C. Employee and the Company are terminating  their employment  relationship
effective  March 3, 2005, and desire to settle fully and finally all differences
between them that may arise out of or relate to Employee's  employment  with the
Company  and all  other  claims  Employee  has or may have  through  the date of
execution of this Agreement.

     NOW,  THEREFORE,  in consideration of the recitals,  the mutual  agreements
contained  herein  and  other  good and  valuable  consideration,  the  receipt,
adequacy and  sufficiency of which is hereby  acknowledged,  the parties to this
Agreement  hereby agree,  promise and covenant as to each of the  following:

     1.   Capacity to Execute.

          Each of the parties  represents  and warrants that he or it is legally
viable and  competent to enter into this  Agreement,  is relying on  independent
judgment and the advice of legal counsel and has not been influenced,  pressured
or  coerced  to  any  extent   whatsoever  in  making  this   Agreement  by  any
representations  or statements  made by the Company and/or any person or persons
representing the Company,  and that the individuals  executing this Agreement on
his or its
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behalf are  authorized  to do so. Each of the  parties  further  represents  and
warrants  that  he or it  has  not  sold,  assigned,  transferred,  conveyed  or
otherwise disposed of all or any part of the claims released hereunder,  whether
known or unknown.

     2.   Specific Consideration Provided to Employee.

          In exchange for the covenants of Employee hereunder and other good and
valuable consideration, and in addition to the benefits to Employee set forth in
the Employment  Agreement (including those benefits set forth in Section 8(c) of
the Employment Agreement) which shall remain in full force and effect subject to
the terms and conditions thereof,  Employee shall receive the following forms of
compensation as severance from the Company:

          (a) Provided  Employee  shall not have  breached any of the  covenants
contained in this Agreement or the Employment Agreement, Employee shall receive:

          A lump sum payment in the amount of $157,500  payable  within five (5)
days  after the  Effective  Date (as  defined in  Section  10(e)  below) of this
Agreement, less any legally required deductions and withholdings

          (b) Bonus for the fourth  quarter in the amount of $21,656.25  payable
within  five (5) days after the  Effective  Date (as  defined  in Section  10(e)
below) of this Agreement,  less any legally required deductions and withholdings

          (c) The  benefits  set forth in  Section  8(c)(ii)  of the  Employment
Agreement  which  provide for twelve  months of COBRA  coverage for Employee and
Employee's  dependents  who are currently  included in such coverage  subject to
COBRA to the extent such benefits otherwise are in effect for Employee under the
Employment  Agreement,  understanding  however that Employee is responsible  for
complying with all terms and  conditions of any employee  benefit plan to obtain
such benefits.

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          (d)  Executive  outplacement  services as shall be  designated  by the
Company  for a period  of six (6)  months  from and  after  March 3,  2005.

          The  severance  obligations  set  forth in  paragraph  2 herein  shall
constitute  the total payment and severance  obligations  under this  Agreement,
which represent  payments and  obligations  that Employee would not otherwise be
entitled to receive  from the Company.  Accordingly,  Employee  understands  and
warrants  that no  amount  other  than as set  forth  in this  Section  2 (which
includes  amounts set forth in the  Employment  Agreement) is or shall be due or
claimed  to be due from the  Company  and/or  from any  other  person  or entity
released in  paragraph 3 below with  respect to any claim or claims  released in
paragraph  3 below,  including,  but not  limited  to,  any and all  claims  for
attorneys'  fees and the costs of litigation that he may have under any federal,
state or local law,  common law or in equity.

     3.   Full Release of all Claims by Employee.

          In  consideration of the payment provided for in paragraph 2 above and
other good and valuable consideration, the receipt, adequacy, and sufficiency of
which is hereby acknowledged, Employee and his heirs, executors, administrators,
agents,  assigns,   receivers,   attorneys,   servants,  legal  representatives,
predecessors  and  successors  in  interest,  regardless  of form,  trustees  in
bankruptcy or otherwise, wards, and any other representative or entity acting on
his or their behalf,  pursuant to, or by virtue of the rights of any of them, do
hereby  now and  forever  unconditionally  release,  discharge,  acquit and hold
harmless the Company and any parent,  subsidiary or related  companies,  and any
and  all  of  their  employees,  agents,  administrators,   assigns,  receivers,
attorneys, servants, legal representatives,  affiliates,  insurers, predecessors
and  successors  in interest,  regardless  of form,  trustees in  bankruptcy  or
otherwise,  insurance  benefit  plans,  and any other  representative  or entity
acting on its or their behalf (collectively,  the "Released Parties"),  from

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any and all claims, rights, demands,  actions, suits, damages, losses, expenses,
liabilities, indebtedness, and causes of action, of whatever kind or nature that
existed  from  the  beginning  of time  through  the date of  execution  of this
Agreement,  regardless  of whether known or unknown,  and  regardless of whether
asserted by Employee to date,  including,  but not limited to, all claims for or
relating to assault, battery, negligence, negligent hiring, negligent retention,
negligent supervision,  negligent training,  negligent or intentional infliction
of  emotional  distress,  false  imprisonment,   defamation  (whether  libel  or
slander), personal injury, bodily injury, bad faith, pain and suffering, medical
expenses,  wage and hour, lost income and earnings  (including,  but not limited
to, back pay, front pay and any other form of present or future income, benefits
and/or  earnings),  equitable  reinstatement,  breach of any  express or implied
contract,  breach  of the  covenant  of good  faith and fair  dealing,  workers'
compensation,  wrongful  termination,  wrongful  demotion,  wrongful  failure to
promote, wrongful deprivation of a career opportunity, discrimination (including
disparate  treatment and disparate impact),  hostile work environment,  quid pro
quo sexual harassment, retaliation, any request to submit to a drug or polygraph
test, and/or whistleblowing, whether said claim(s) are brought pursuant to Title
VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, 42 U.S.C. ss.
1981,  the  Employee  Retirement  Income  Security  Act,  the Equal Pay Act, the
Pregnancy   Discrimination   Act,  the  Fair  Labor   Standards   Act,  the  Age
Discrimination  in Employment  Act, the  Americans  with  Disabilities  Act, the
Family and Medical Leave Act or any other constitutional,  federal,  regulatory,
state or local  law,  or under the common  law or in  equity.

          Employee  further  understands  and warrants that this Agreement shall
operate  as a fully  binding  and  complete  resolution  of all claims as to the
parties to this  Agreement and all parties  represented  by or claiming  through
such  parties,  and that he shall not be able to seek any  monies for

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any claim,  whether  known or  unknown,  against  any of the persons or entities
released  hereunder  other than as provided in  paragraph 2 above.

     4.   Covenant Not-to-Sue.

          Employee  covenants  and  agrees  not to file or  initiate  a  lawsuit
against any of the Released Parties in regard to any claims,  demands, causes of
action, suits, damages,  losses and expenses,  arising from acts or omissions of
the Company occurring on or before the date of execution of this Agreement,  and
Employee  will ask no other  person or entity to initiate  such a lawsuit on his
behalf.  If  Employee  breaches  this  covenant  and  agreement,  Employee  must
immediately repay and refund to the Company all payments he received pursuant to
paragraph 2 above,  and  Employee  shall also  indemnify  and hold  harmless the
Company,  any of the  Released  Parties,  and  any of  their  officers,  owners,
directors,  employees and agents from any and all costs  incurred by any and all
of them,  including their reasonable  attorneys' fees, in defending  against any
such lawsuit.

     5.   No Proceedings Initiated.

          Employee  represents and warrants that neither he nor anyone acting on
his behalf has filed or initiated any charge or claim against the Company in any
administrative or judicial  proceeding.

     6.   Covenants of Employee.

          (a)  Employee  ratifies  and  confirms  each and  every  covenant  and
agreement  of  Employee   contained  in  the  Employment   Agreement.   Employee
acknowledges   that  certain  of  such  covenants  and  agreement   survive  the
termination  of employment of Employee with the Company and remain in full force
and effect in accordance with their terms.

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          (b)  Employee  agrees  that he shall  not  disparage  the  Company  or
otherwise seek to reduce the goodwill of the Company.  The Company agrees not to
disparage Employee or to act in any way to diminish Employee's reputation.

     7.   No Voluntary Assistance.

          Employee  hereby  covenants  and agrees thats he will not  voluntarily
assist, support, or cooperate with, directly or indirectly, any entity or person
alleging  or  pursuing  any  claim,  administrative  charge,  or cause of action
against the Company,  including without  limitation,  by providing  testimony or
other  information,  audio or  video  recordings,  or  documents,  except  under
compulsion of law. If compelled to testify,  nothing  contained  herein shall in
any way  inhibit  or  interfere  with  Employee  providing  completely  truthful
testimony.  Nor shall anything herein prevent  Employee's full  cooperation with
any   investigation  or  other  proceeding  by  any  federal,   state  or  local
governmental  agency.

     8.   No Admission of Liability.

          The parties agree and  acknowledge  that this  Agreement is a full and
complete  compromise of the matters  released herein between the parties hereto;
that  neither the  releases  nor the  negotiations  for this  Agreement  and the
settlement  embodied herein,  including all statements or communications made to
date,  shall be considered  admissions by them.

     9.   Intentionally Omitted.

     10.  OWBPA Rights.

          (a) Employee is advised to seek legal  counsel  regarding the terms of
this Agreement.  Employee  acknowledges that she has either sought legal counsel
or has consciously decided not to seek legal counsel,  contrary to the Company's
advice,  regarding  the  terms  and  effect  of  this  Agreement.

                                       6
<PAGE>

          (b) Employee  acknowledges  that this  Agreement  releases  only those
claims which exist as of the date of Employee's execution of this Agreement.

          (c) Employee acknowledges that he may take a period of twenty-one (21)
days from the date of receipt of this Agreement  (April 1, 2005) within which to
consider and sign this Agreement.

          (d) Employee  acknowledges  that she will have seven (7) days from the
date of  signing  this  Agreement  to revoke  the  Agreement  in  writing in its
entirety  ("Revocation  Period").  Employee acknowledges that the Agreement will
not become effective or enforceable until the Revocation Period has expired.  In
the event the Employee  chooses to revoke this Agreement,  within the Revocation
Period, she will:

               1. Revoke the entire Agreement in a signed writing,  delivered to
the  following  person on or before the seventh  (7th) day after he executed the
Agreement:

                    Mr. Jeff Stearns
                    Microtek Medical Holdings, Inc.
                    13000 Deerfield Parkway, Suite 300
                    Alpharetta, Georgia 30004

               2. Forfeit all severance and other consideration from the Company
that are  contemplated  by this  Agreement;  and

               3. Return the full amount of consideration  received,  if any, to
the  Company  along  with the signed  writing.

          (e) The Effective Date of this Agreement shall be the eighth (8th) day
after the date  Employee  signs the  Agreement,  assuming  the  Employee has not
revoked the  Agreement in writing  within the  Revocation  Period.

          (f) Employee  expressly  acknowledges  that the payments and the other
consideration  that he is receiving  under this  Agreement  constitute  material
consideration  for his

                                       7
<PAGE>

execution of this Agreement,  and represent  valuable  consideration to which he
would not otherwise be entitled.

     11.  Jurisdiction/Choice of Forum.

          The laws of the State of Georgia shall govern this  Agreement,  unless
pre-empted  by any  applicable  federal  law  controlling  the  review  of  this
Agreement. The parties further stipulate and agree that any litigation regarding
this Agreement  shall be brought in the state or federal courts for the Northern
District of Georgia and neither  party will object to personal  jurisdiction  or
venue in any of these courts.

     12.  Advice of Attorneys.

          The  parties  acknowledge  that they have fully read,  understood  and
unconditionally accepted this Agreement after consulting with their attorneys or
having the opportunity to consult with an attorney,  and  acknowledge  that this
Agreement is mutual and binding upon all parties hereto regardless of the extent
of damages allegedly  suffered by any of the parties hereto.

     13.  Counterparts.

          This  Agreement may be signed in  counterpart  originals with the same
force and effect as if signed in a single original document.

     14.  Cooperation of the Parties.

          The parties to this Agreement  agree to cooperate fully and to execute
any and all supplementary  documents and to take all additional actions that may
be necessary or appropriate to give full force and effect to the basic terms and
intent of this Agreement and the settlement  embodied  herein.  Employee further
agrees  to fully  cooperate  with  the  Company  in any and all  investigations,
inquiries or  litigation  whether in any  judicial,  administrative,  or public,
quasi-public or private forum, in which the Company is involved,  whether or not
Employee  is a  defendant  in

                                       8
<PAGE>

such  investigations,  inquiries,  proceedings  or  litigation.  Employee  shall
provide  truthful  and accurate  testimony,  background  information,  and other
support and cooperation as the Company may reasonably request.  The Company will
compensate  Employee for all travel  expenses,  attorney's fees, and preparation
expenses and lost wages  associated with pursuit of actions  necessary to comply
with Section 14.

     15.  Modification in Writing Only.

          Neither this  Agreement  nor any  provision of this  Agreement  may be
modified or waived in any way except by an agreement  in writing  signed by each
of  the  parties  hereto  consenting  to  such   modification  or  waiver.

     16.  Construction of this Agreement.

          The parties agree that they each have  participated in the drafting of
this Agreement,  and that, as a result, this Agreement shall not be construed in
favor  of  or  against   any  party   hereto.

     17.  No False Statements or Misrepresentation.

          The Company and Employee hereby warrants and represents that they have
not made any false  statements or  misrepresentations  in  connection  with this
Agreement.

     18.  Headings and Captions; Pronouns.

          The headings and captions used in the Agreement are for convenience of
reference only, and shall in no way define,  limit,  expand, or otherwise affect
the meaning or construction  of any provision of this Agreement.  The use of any
word in any gender  shall be deemed to include  any other  gender and the use of
any word in the singular shall be deemed to include the plural where the context
requires.

     19.  Entire Agreement.

          This Agreement contains the entire agreement of the parties concerning
the  subject

                                       9
<PAGE>

matter  hereof,  and  is  intended  and  shall  be  construed  as an  integrated
Agreement.  Each  party  understands,  acknowledges  and hereby  represents  and
warrants that this  Agreement  supersedes  any and all prior or  contemporaneous
understandings,  agreements,  representations  and/or promises,  whether oral or
written,  which are not expressly  set forth herein or expressly  referred to in
this  Agreement,  and no  understanding,  agreement,  representation,  warranty,
promise  or  inducement  has been made  concerning  the  subject  matter of this
Agreement other than as set forth in this Agreement,  and that each party enters
into this  Agreement  without any reliance  whatsoever  upon any  understanding,
agreement,  representation,  warranty  or  promise  not set forth  herein.

          This  Agreement  shall be binding upon and inure to the benefit of the
parties hereto,  jointly and severally,  and the past, present and future heirs,
executors,  administrators,  agents, employees, servants, attorneys,  affiliated
persons and  entities,  predecessors  and  successors  in interest  and assigns,
regardless  of  form,  trustees  in  bankruptcy  or  otherwise,  and  any  other
representative  or entity acting on behalf of,  pursuant to, or by virtue of the
rights of each.

                   [Remainder of page let blank intentionally;
                     Signatures contained on following page]

                                       10
<PAGE>

     IN WITNESS WHEREOF, the undersigned have executed this Separation Agreement
and Full Release of All Claims.

                              EMPLOYEE:

                              --------------------------------------------------
                              Barbara J. Osborne

                              Date:
                                   ---------------------------------------------

                              MICROTEK MEDICAL HOLDINGS, INC.:

                              By:
                                 -----------------------------------------------

                              Its:
                                  ----------------------------------------------

                              Date:
                                   ---------------------------------------------

                                       11
<PAGE>

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