Document:

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                                                                   EXHIBIT 10.10
                                  CONFIDENTIAL

                                         December 17, 2004

Mr. Gerry J. Haak
The Town & Country Trust
100 South Charles Street
Baltimore, MD 21201

            RE: SEPARATION AGREEMENT AND GENERAL RELEASE

Dear Gerry :

      This letter agreement (the "Agreement"), when signed by you, will
constitute a binding agreement between us with respect to the terms of your
separation from employment with The Town and Country Trust (the "Company"). You
are advised to consult with an attorney prior to signing this Agreement. By
signing this Agreement, you will receive significant, additional benefits that
you would not otherwise be entitled, and you also will be waiving important
legal rights.

      1.    You acknowledge that you have resigned from your executive position
with the Company effective November 19, 2004 (the "Termination Date").

      2.    You acknowledge that you have been paid all of your earned salary
and accrued vacation through the Termination Date, and that the Company has
fully reimbursed all of your business expenses through such date.

      3.    In return for your promises in this Agreement, provided that you
sign the Agreement, do not revoke the Agreement, and abide by its terms, the
Company will provide you with the following separation benefits (the "Separation
Benefit") commencing with the Company's first regular pay date following your
execution of this Agreement and continuing as stated below unless you have
revoked the Agreement as set forth herein:

            (a)   The Company will continue to pay to you your salary, at the
                  rate of $265,000 per annum, payable bi-weekly, less deductions
                  and withholdings required or permitted by law, through
                  November 19, 2006.

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Mr. Gerry J. Haak
December 17, 2004
Page 2

            (b)   The Company will pay to you a lump sum bonus payment in the
                  amount of $110,000 on the date that it normally pays bonuses
                  (on or about January 31, 2005), less deductions and
                  withholdings required or permitted by law, for the year ending
                  December 31, 2004.

            (c)   In consideration of the immediate redemption of 8,334 unvested
                  stock options granted to you under the Company's Stock Option
                  Plan (which are scheduled to vest in January 2005), t he
                  Company will pay to you a lump sum bonus payment equal to the
                  difference between the exercise price of such options and the
                  stock price of such options on such date as such options would
                  have vested under the terms of the Company's Stock Option Plan
                  (January 31, 2005). This lump sum bonus payment will be made
                  to you by the Company within a reasonable time-frame following
                  the date upon which such options would have vested.

            (d)   The Company agrees to forgive one loan that you have with the
                  Company with an outstanding balance of $31,603.05 as of
                  February 2004. With regard to a second loan you have with the
                  Company with a current balance of $32,071.17, the Company
                  agrees to offset the total balance of this second loan against
                  your lump sum bonus payment for calendar year 2004, as set
                  forth in paragraph 3(b) above.

            (e)   The Company agrees to waive any vesting requirements for 5,500
                  shares of restricted stock and that the shares of restricted
                  stock will vest as of the Termination Date.

            (f)   The Company will continue to make contributions on your behalf
                  for group heath and dental insurance through the earliest of
                  the following dates (i) 18 months after Termination date, or
                  (ii) the date on which you commence employment with a new
                  employer that has heath insurance benefits. In the event that
                  you have not begun working for an employer with health
                  insurance benefits within 18 months after your Termination
                  Date, the Company will pay you, at such time, a lump sum
                  amount equivalent to the Company's COBRA premiums for an
                  additional 6 months.

            (g)   You agree that the split-dollar life insurance policy ("SERP")
                  that the Company maintains on your behalf will be governed by
                  the Agreements between you and the Company that are already in
                  place regarding the same, except that the time-frame for your
                  repayment of life insurance premiums paid on your behalf by
                  the Company will be extended until you reach age 65 and you
                  will be charged interest at a yearly rate of 4.68% for the
                  term of such repayment.

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Mr. Gerry J. Haak
December 17, 2004
Page 3

            (h)   The Company will continue to permit your use of the Company
                  automobile in your possession, at your sole operating expense
                  (such cost to include gas, repairs and maintenance, but it is
                  understood and agreed that while the automobile is titled in
                  the Company's name, the Company will continue to maintain
                  fleet insurance on the automobile at the same levels it
                  currently has), and the Company will transfer the title of
                  that automobile to you, without cost to you, as of November
                  19, 2006.

            (i)   You will be permitted to retain possession of your cell phone
                  and the Company-owned computer presently in your home.

            (j)   The Company will provide you with outplacement services up
                  through November 19, 2005. These outplacement services must be
                  mutually agreeable to both you and the Company.

            (k)   The Company agrees to reimburse you for legal and financial
                  consulting fees incurred with respect to the review and
                  negotiation of this Agreement, up to a limit of $10,000. The
                  Company shall not reimburse you for any attorneys' fees
                  incurred in connection with contesting this Agreement.

      4.    In consideration for the Separation Benefit and other benefits
contained in this Agreement, on behalf of yourself and your heirs, family
members, executors, administrators, successors and assigns, you hereby fully and
forever release and discharge the Company (which for purposes of such waiver,
release and discharge is deemed to include its present and former officers,
directors, employees, agents, investors, shareholders, administrators,
representatives, affiliates, divisions, subsidiaries, parent corporations,
predecessor and successor corporations and assigns) from any and all liability
for any claim, duty, obligation, cause of action or damages (collectively
"claims"), whether presently known or unknown, suspected or unsuspected, that
you may possess arising from any omission, act or fact arising out of your
employment with the Company or the termination thereof, that has occurred from
the beginning of time up to and including the date you sign this Agreement. Such
released claims include, but are not limited to:

            (a)   any claims for wages, separation pay, severance pay, bonuses,
                  accrued vacation, personal days, holidays, stock, stock
                  options, attorneys' fees, costs or expenses;

            (b)   any other claims arising out of your employment with the
                  Company or the termination thereof;

            (c)   any claims arising under the common law including, without
                  limitation, all claims pursuant to public policy or tort law;

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Mr. Gerry J. Haak
December 17, 2004
Page 4

            (d)   all claims arising under any agreement, contract (express or
                  implied), understanding or promise (whether oral or written)
                  between you and the Company;

            (e)   any claims arising under any federal, state or local
                  constitution, statute, regulation or ordinance, each as
                  amended to the date hereof, including, without limitation,
                  Title VII of the Civil Rights Act of 1964; the Civil Rights
                  Act of 1991; the Age Discrimination in Employment Act of 1967;
                  the Americans with Disabilities Act of 1990; the Equal Pay
                  Act; the Family and Medical Leave Act of 1993; the Maryland
                  Fair Employment Practices Act; and

            (f)   any claim for any other loss or damage.

      5.    You acknowledge that the Separation Benefit provided to you under
this Agreement exceeds any payment, benefit and/or other thing of value to which
you might otherwise be entitled pursuant to any policy, plan or procedure of the
Company or pursuant to any prior agreement or contract with the Company. You
specifically acknowledge that among the rights and claims against the Company
that you are waiving are all your rights and claims under the Age Discrimination
in Employment Act of 1967, as amended. You understand that you are not waiving
any rights or claims that arise after the effective date of this Agreement and
that you are not releasing the Company with respect to any rights you may have
under any employee benefit plans as defined in Section 3(3) of ERISA.

      6.    The Company agrees to release any and all claims that it may possess
against you as of this date, provided that you sign this Agreement, do not
revoke it, and abide by its terms. The Company further hereby releases, waives,
discharges and gives up any and all rights which it may have against you arising
out of your employment with the Company or termination therefrom or during your
tenure and in any of your roles (or prior roles) or officer positions (or former
officer positions) or the circumstances related thereto or by reason of any
other matter, cause or thing whatsoever from the first date of your employment
or holding any such office or position to the Termination Date.

      7.    Except for the purpose of seeking enforcement of the terms of this
Agreement, you agree that you have not and will not institute any charges,
claims, administrative proceedings, arbitration proceedings or actions against
the Company regarding any matter that has been released pursuant to paragraph 4.
If you violate this Agreement by filing or instituting any such charges, claims,
administrative proceedings, arbitration proceedings or actions, you agree to pay
all costs and expenses of defending against the suit incurred by the Company,
including its reasonable attorneys' fees, disbursements and costs.

<PAGE>

Mr. Gerry J. Haak
December 17, 2004
Page 5

      8.    You agree that you will not, unless required by law or authorized in
writing by an officer of the Company, talk about, write about or otherwise
publicize the terms of this Agreement, the benefits being paid under it or the
fact of their payment, except that this information may be disclosed to your
respective family members, attorneys, accountants or other professional advisors
to whom disclosure must be made in order for them to render professional
services to you. Such attorneys, accountants or other professional advisors
will, however, be instructed to maintain the confidentiality of this
information. The Company agrees that it will not disclose internally or
externally the existence, terms and conditions of this Agreement, the payments
to be made to you as described herein or the fact of their payment, except that
it may disclose such information to employees, directors or agents of the
Company who have a business need to know such information and the Company
retains sole discretion to determine the content of any disclosure that is
required of the Company by law or regulation. Notwithstanding the foregoing, you
and the Company agree that this Agreement may be used as evidence in any
proceeding, administrative, judicial, arbitral or otherwise, relating to the
enforcement of this Agreement.

      9.    You further agree that you will not, at any time, orally or in
writing, disparage, denigrate or defame the Company, or any subsidiary, parent
corporation or affiliate of the Company, their respective products, services or
business conduct, or otherwise impugn the reputation of the Company, or any
subsidiary or affiliate of the Company, or that of any of their respective
directors, officers, affiliates, agents, employees or representatives. The
Company agrees that it will not, orally or in writing, disparage, denigrate or
defame you, or otherwise impugn your reputation.

      10.   You agree to direct any inquiries regarding the termination of your
employment to Harvey Schulweis, who will give you a positive recommendation
regarding your employment performance, character and otherwise provide the dates
of your employment, positions and compensation. For any inquires the Company
receives regarding the termination of your employment, the Company agrees to
refer any inquiries to Harvey Schulweis, who will give you a positive
recommendation regarding your employment performance, character and otherwise
provide the dates of your employment, positions and compensation.

      11.   You recognize and acknowledge that the Company has expended
considerable resources in the acquisition, development and accumulation of
confidential information, trade secrets and proprietary information concerning
its business operations. You further recognize and acknowledge that by reason of
your employment with the Company you were in a confidential relationship with
the Company and had access to its confidential information, trade secrets and
proprietary information. Accordingly, you agree as follows:

            (a)   You agree that you will not use or disclose to any third
                  party, in any manner whatsoever, whether created by you or
                  obtained from the Company (or any subsidiary or affiliate
                  thereof) or third parties, any confidential information, trade
                  secrets or proprietary information relating to your employment
                  with the Company, the operations of the Company (or any
                  subsidiary or affiliate thereof) (including, without
                  limitation, marketing and sales plans, financial data and

<PAGE>

Mr. Gerry J. Haak
December 17, 2004
Page 6

                  reports, business plans and employee information), or
                  confidential information pertaining to any business
                  relationships of the Company (or any subsidiary, parent
                  corporation or affiliate thereof).

            (b)   Except for the benefits and property enumerated in paragraph 3
                  of this Agreement, you agree that you will immediately return
                  to the Company (i) all property of the Company (or any
                  subsidiary or affiliate thereof) in your possession or under
                  your control, including, without limitation, computer hardware
                  and software, computer data files (whether in tape or diskette
                  form) and computer system access codes, and (ii) all
                  merchandising programs, memoranda, notes, plans, records,
                  reports, financial statements, employee files, prospective
                  employee resumes, correspondence (both intra-company and with
                  outside parties) and other documents and data (and all copies
                  thereof) relating to the business of the Company (or any
                  subsidiary or affiliate thereof), whether created by you or
                  obtained from the Company (or any subsidiary or affiliate
                  thereof) or third parties, which you have in your possession
                  or under your control.

      12.   You acknowledge that your obligations set forth in this Agreement
are reasonable and necessary for the protection of the Company and that the
Company may be irrevocably damaged if such obligations are not specifically
enforced. Accordingly, you agree that, in addition to any other relief to which
the Company may be entitled in the form of actual or punitive damages, the
Company shall be entitled to seek and obtain injunctive relief from a court of
competent jurisdiction for the purpose of restraining you from any actual or
threatened breach of such obligations. It is further agreed that, in case of
your breach or threatened breach of any of such obligations, the Company shall
have no further liability to make any payments to you which would otherwise be
due and payable hereunder, shall be entitled to recover from you any benefit
paid under this Agreement, and shall be entitled to recover from you any and all
damages, losses, costs and expenses it incurs (including, without limitation,
attorneys' fees and expenses) in connection with such breach or violation (or
threat thereof) and any enforcement of the Company's rights hereunder. In the
event of any breach or threatened breach of any of the Company's obligations
under this Agreement, you shall be entitled to recover from the Company any and
all damages, losses, costs and expenses that you incur (including, without
limitation, attorneys' fees and expenses) in connection with such breach or
violation (or threat thereof) and any enforcement of your rights hereunder.
Except for the purpose of seeking enforcement of the terms of this Agreement,
the Company agrees that it has not and will not institute any charges, claims,
administrative proceedings, arbitration proceedings or actions against you
regarding any matter that has been released pursuant to this Agreement. If the
Company violates this Agreement by filing or instituting any such charges,
claims, administrative proceedings, arbitration proceedings or actions, it
agrees to pay all costs and expenses of defending against the suit incurred by
you, including it reasonable attorneys' fees, disbursements and costs.

<PAGE>

Mr. Gerry J. Haak
December 17, 2004
Page 7

      13.   If, for any reason, any aspect of your obligations in this Agreement
as applied to you is determined by a court of competent jurisdiction to be
unreasonable or unenforceable against you for any reason, such obligations
shall, if possible, be modified by such court to the minimum extent necessary to
make such obligations enforceable against you.

      14.   This Agreement will be deemed to have been made within the State of
Maryland, and shall be interpreted, construed and enforced in accordance with
the laws of the State of Maryland applicable to agreements made and to be
performed entirely within that state, without regard to the conflicts of laws or
choice or law principles thereof. In any action to enforce the terms of this
Agreement, the parties hereby waive trial by jury, and consent and agree that
the Circuit Court for Baltimore County, Maryland and the United States District
Court for the District of Maryland each shall have personal jurisdiction and
proper venue with respect to any dispute between us.

      15.   Nothing in this Agreement shall be construed as an admission of any
liability by the Company, and the Company specifically disclaims any liability
to or wrongful treatment of you.

      16.   Except as otherwise provided in paragraph 13 hereof, if any clause
of this Agreement should ever be determined to be unenforceable, the parties
agree that the same shall not affect the remainder of this Agreement, which
shall otherwise be given full effect, without regard to the invalid clause.

      17.   Although you may sign this Agreement as soon as you wish, you may
take up to 21 days to decide whether to sign it. Your decision to sign this
Agreement and to accept its terms is revocable at your option within 7 days
after the date you sign it. Any revocation of this Agreement within this period
must be submitted in writing to Harvey Schulweis at the address set forth
herein. None of the Company's obligations hereunder become effective until you
sign the Agreement and the 7-day revocation period has expired. Since the
Separation Benefit and other benefits contained in this Agreement are contingent
on your execution and non-revocation of this Agreement, if you do not sign the
Agreement within 21 days or if you revoke it, the Company will not have any
obligation to provide the Separation Benefit or any other benefit within this
Agreement to you.

      18.   This Agreement is binding upon, and will insure to the benefit of,
you and the Company and your and its respective heirs, executors, legatees,
legal administrators, transferees, administrators, successors and assigns.

      19.   This Agreement may be executed in one or more counterparts,
including by facsimile signatures, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.

<PAGE>

Mr. Gerry J. Haak
December 17, 2004
Page 8

      20.   All communications with respect hereto shall be in writing and shall
be delivered by hand, sent prepaid by express mail or sent by the United States
post office, certified, postage prepaid, return receipt requested, to the
following addresses:

      If to the Company, then to:

                 Harvey Schulweis
                 The Town & Country Trust
                 9 W. 57th Street, 50th Floor
                 New York, NY 10019-2701

      If to you, then to:

                 Mr. Gerald J. Haak
                 6 Blueleaf Court
                 Hunt Valley, MD 21030

            With copy (not constituting notice) to:

                 Jacqueline M. Davies, Esq.
                 Williams & Connolly, LLP
                 725 12th Street, N.W.
                 Washington, DC 20005

      21.   The Company represents and warrants to you that the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized and that
all necessary action required to be taken by the Company for the execution,
delivery and performance of this Agreement has been duly and effectively taken.

      22.   Each party hereto shall execute such additional documents, and do
such additional things, as may reasonably be requested by the other party to
effectuate the purposes of this Agreement.

      23.   BY SIGNING BELOW, YOU ACKNOWLEDGE THAT YOU UNDERSTAND THAT THIS
AGREEMENT CONTAINS A LEGALLY BINDING AND COMPLETE RELEASE OF ALL CLAIMS YOU MAY
HAVE AGAINST THE COMPANY AND CERTAIN OTHER PERSONS IDENTIFIED IN PARAGRAPH 4.
YOU FURTHER AGREE THAT YOU HAVE BEEN GIVEN A SUFFICIENT OPPORTUNITY TO CONSIDER
THIS AGREEMENT AND HAVE BEEN ADVISED TO CONSULT WITH AN ATTORNEY OF YOUR CHOICE.
YOU ACKNOWLEDGE THAT YOU ARE SIGNING THIS AGREEMENT VOLUNTARILY, AND THAT YOU
HAVE RELIED ONLY ON THE PROMISES WRITTEN IN THIS AGREEMENT AND NOT ON ANY OTHER
PROMISE MADE BY THE COMPANY. THIS AGREEMENT MAY NOT BE MODIFIED OTHER THAN BY A
WRITING SIGNED BY BOTH OF US.

<PAGE>

Mr. Gerry J. Haak
December 17, 2004
Page 9

      Kindly sign this Agreement where indicated below, and return the original
to me. A second copy has been enclosed for your files.

                                            Very truly yours,

                                            The Town and Country Trust

                                            By: /s/ Harvey Schulweis
                                                --------------------------------
                                                Harvey Schulweis
                                                Chairman & CEO

AGREED TO AND ACCEPTED:

/s/ Gerry J. Haak
--------------------------------
Gerry J. Haak

12/22/04
--------------------------------
Dateexv4w3

 

ORTHOLOGIC CORP.

1997 STOCK OPTION PLAN

	 	1.  	Purpose

     The purposes of the 1997 Stock Option Plan (“Plan”) of OrthoLogic Corp., a Delaware
corporation, are to attract and retain the best available employees and directors of OrthoLogic
Corp. or any parent or subsidiary or affiliate of OrthoLogic Corp. which now exists or hereafter
is organized or acquired by or acquires OrthoLogic Corp. (collectively or individually as the
context requires the “Company”) as well as appropriate third parties who can provide valuable
services to the Company, to provide additional incentive to such persons and to promote the success
of the business of the Company. This Plan is intended to comply with Rule 16b-3 under Section 16
of the Securities Exchange Act of 1934, as amended or any successor rule (“Rule 16b-3”), and the
Plan shall be construed, interpreted and administered to comply with Rule 16b-3.

	 	2.  	Definitions

          (a) “Affiliate” means any corporation, partnership, joint venture or other entity, domestic or
foreign, in which the Company, either directly or through another affiliate or affiliates, has a
50% or more ownership interest.

          (b) “Affiliated Group” means the group consisting of the Company and any entity that is an
“affiliate,” a “parent” or a “subsidiary” of the Company.

          (c) “Board” means the Board of Directors of the Company.

          (d) “Committee” means the Compensation or Stock Option Committee of the Board (as designated
by the Board), if such a committee has been appointed.

          (e) “Code” means the United States Internal Revenue Code of 1986, as amended.

          (f) “Incentive Stock Options” means options intended to qualify as incentive stock options
under Section 422 of the Code, or any successor provision.

          (g) “ISO Group” means the group consisting of the Company and any corporation that is a
“parent” or a “subsidiary” of the Company.

          (h) “Nonemployee Director” means a director of the Company who is not an employee of the
Company or any Affiliated Group Member.

          (i) “Nonqualified Stock Options” means options that are not intended to qualify for favorable
income tax treatment under Sections 421 through 424 of the Code.

          (j) “Parent” means a corporation that is a “parent” of the Company within the meaning of Code
Section 424(e).

 

 

          (k) “Section 16” means Section 16 of the Securities Exchange Act of 1934, as amended.

          (l) “Subsidiary” means a corporation that is a “subsidiary” of the Company within the meaning
of Code Section 424(f).

	 	3.  	Incentive and Nonqualified Stock Options

     Two types of options (referred to herein as “options,” without distinction between such two
types) may be granted under the Plan: Incentive Stock Options and Nonqualified Stock Options.

	 	4.  	Eligibility and Administration

          (a) Eligibility. The following individuals shall be eligible to receive grants pursuant to
the Plan as follows:

               (i) Any employee (including any officer or director who is an employee) of the Company or any
ISO Group member shall be eligible to receive either Incentive Stock Options or Nonqualified Stock
Options under the Plan. An employee may receive more than one option under the Plan.

               (ii) Any director of the Company or consultant to the Company who is not an employee of the
Company or any of its subsidiaries shall be eligible to receive Nonqualified Stock Options under
the Plan.

               (iii) Any other individual whose participation the Board or the Committee determines is in the
best interests of the Company shall be eligible to receive Nonqualified Stock Options.

          (b) Administration. The Plan may be administered by the Board or by a Committee appointed by
the Board which is constituted so to permit the Plan to comply under Rule 16b-3 and 162(m) of the
Code. The Company shall indemnify and hold harmless each director and Committee member for any
action or determination made in good faith with respect to the Plan or any option. Determinations
by the Committee or the Board shall be final and conclusive upon all parties.

	 	5.  	Shares Subject to Options

     The stock available for grant of options under the Plan shall be shares of the Company’s
authorized but unissued or reacquired voting common stock. The aggregate number of shares that may
be issued pursuant to exercise of options granted under the Plan shall be 4,190,000 shares;
provided, however, that, in any one calendar year, no individual may receive grants of options
covering more than 200,000 shares. If any outstanding option grant under the Plan for any reason
expires or is terminated, the shares of common stock allocable to the unexercised portion of the
option grant shall again be available for options under the Plan as if no options had been granted
with respect to such shares.

2

 

	 	6.  	Terms and Condition of Options

     Option grants under the Plan shall be evidenced by agreements in such form and containing such
provisions as are consistent with the Plan as the Board or the Committee shall from time to time
approve. Each agreement shall specify whether the option(s) granted thereby are Incentive Stock
Options or Nonqualified Stock Options. Such agreements may incorporate all or any of the terms
hereof by reference and shall comply with and be subject to the following terms and conditions:

          (a) Shares Granted. Each option grant agreement shall specify the number of Incentive Stock
Options and/or Nonqualified Stock Options being granted; one option shall be deemed granted for
each share of stock. In addition, each option grant agreement shall specify the exercisability
and/or vesting schedule of such options, if any.

          (b) Purchase Price. The purchase price for a share subject to (i) a Nonqualified Stock Option
may be any amount determined in good faith by the Committee, and (ii) an Incentive Stock Option
shall not be less than 100% of the fair market value of the share on the date the option is
granted, provided, however, the option price of an Incentive Stock Option shall not be less than
110% of the fair market value of such share on the date the option is granted to an individual then
owning (after the application of the family and other attribution rules of Section 424(d) or any
successor rule of the Code) more than 10% of the total combined voting power of all classes of
stock of the Company or any ISO Group member. For purposes of the Plan, “fair market value” at any
date shall be (i) the reported closing price of such stock on the New York Stock Exchange or other
established stock exchange or Nasdaq National Market on such date, or if no sale of such stock
shall have been made on that date, on the preceding date on which there was such a sale, (ii) if
such stock is not then listed on an exchange or the Nasdaq National Market, the last trade price
per share for such stock in the over-the-counter market as quoted on Nasdaq or the pink sheets or
successor publication of the National Quotation Bureau on such date, or (iii) if such stock is not
then listed or quoted as referenced above, an amount determined in good faith by the Board or the
Committee.

          (c) Termination. Unless otherwise provided herein or in a specific option grant agreement
which may provide for accelerated vesting and/or longer or shorter periods of exercisability, no
option shall be exercisable after the expiration of the earliest of

               (i) in the case of an Incentive Stock Option:

     (1) 10 years from the date the option is granted, or five years from
the date the option is granted to an individual owning (after the
application of the family and other attribution rules of Section 424(d) of
the Code) at the time such option was granted, more than 10% of the total
combined voting power of all classes of stock of the Company or any ISO
Group member,

     (2) three months after the date the optionee ceases to perform services
for the Company or any ISO Group member, if such cessation is

3

 

for any reason other than death, disability (within the meaning of Code
Section 22(e)(3)), or cause,

     (3) one year after the date the optionee ceases to perform services for
the Company or any ISO Group member, if such cessation is by reason of death
or disability (within the meaning of Code Section 22(e)(3)), or

     (4) the date the optionee ceases to perform services for the Company or
any ISO Group member, if such cessation is for cause, as determined by the
Board or the Committee in its sole discretion;

               (ii) in the case of a Nonqualified Stock Option;

     (1) 10 years from the date the option is granted,

     (2) two years after the date the optionee ceases to perform services
for the Company or any Affiliated Group member, if such cessation is for any
reason other than death, permanent disability, retirement or cause,

     (3) three years after the date the optionee ceases to perform services
for the Company or any Affiliated Group member, if such cessation is by
reason of death, permanent disability or retirement, or

     (4) the date the optionee ceases to perform services for the Company or
any Affiliated Group member, if such cessation is for cause, as determined
by the Board or the Committee in its sole discretion;

provided, that, unless otherwise provided in a specific option grant agreement, an option shall
only be exercisable for the periods above following the date an optionee ceases to perform services
to the extent the option was exercisable on the date of such cessation.

          (d) Method of Payment. The purchase price for any share purchased pursuant to the exercise of
an option granted under the Plan shall be paid in full upon exercise of the option by any of the
following methods, (i) by cash, (ii) by check, or (iii) to the extent permitted under the
particular grant agreement, by transferring to the Company shares of stock of the Company at their
fair market value as of the date of exercise of the option as determined in accordance with
paragraph 6(b), provided that the optionee held the shares of stock for at least six months.

Notwithstanding the foregoing, the Company may arrange for or cooperate in permitting
broker-assisted cashless exercise procedures. The Company may also extend and maintain, or arrange
for the extension and maintenance of, credit to an optionee to finance the optionee’s purchase of
shares pursuant to the exercise of options, on such terms as may be approved by the Board or the
Committee, subject to applicable regulations of the Federal Reserve Board and any other applicable
laws or regulations in effect at the time such credit is extended.

4

 

          (e) Exercise. Except for options which have been transferred pursuant to paragraph 6(f), no
option shall be exercisable during the lifetime of an optionee by any person other than the
optionee, his or her guardian or legal representative. The Board or the Committee shall have the
power to set the time or times within which each option shall be exercisable and to accelerate the
time or times of exercise; provided, however, no options may be exercised prior to the later of the
expiration of six months from the date of grant thereof or stockholder approval, unless otherwise
provided by the Board or Committee. To the extent that an optionee has the right to exercise one
or more options and purchase shares pursuant thereto, the option(s) may be exercised from time to
time by written notice to the Company stating the number of shares being purchased and accompanied
by payment in full of the purchase price for such shares. Any certificate for shares of
outstanding stock used to pay the purchase price shall be accompanied by a stock power duly
endorsed in blank by the registered owner of the certificate (with the signature thereon
guaranteed). If the certificate tendered by the optionee in such payment covers more shares than
are required for such payment, the certificate shall also be accompanied by instructions from the
optionee to the Company’s transfer agent with respect to the disposition of the balance of the
shares covered thereby.

          (f) Nontransferability. No option shall be transferable by an optionee otherwise than by will
or the laws of descent and distribution, provided that the Committee in its discretion may grant
options that are transferable, without payment of consideration, to immediate family members of the
optionee or to trusts or partnerships for such family members; the Committee may also amend
outstanding options to provide for such transferability.

          (g) ISO $100,000 Limit. If required by applicable tax rules regarding a particular grant, to
the extent that the aggregate fair market value (determined as of the date an Incentive Stock
Option is granted) of the shares with respect to which an Incentive Stock Option grant under this
Plan (when aggregated, if appropriate, with shares subject to other Incentive Stock Option grants
made before said grant under this Plan or another plan maintained by the Company or any ISO Group
member) is exercisable for the first time by an optionee during any calendar year exceeds $100,000
(or such other limit as is prescribed by the Code), such option grant shall be treated as a grant
of Nonqualified Stock Options pursuant to Code Section 422(d).

          (h) Investment Representation. Unless the shares of stock covered by the Plan have been
registered with the Securities and Exchange Commission pursuant to Section 5 of the Securities Act
of 1933, as amended, each optionee by accepting an option grant represents and agrees, for himself
or herself and his or her transferees by will or the laws of descent and distribution, that all
shares of stock purchased upon the exercise of the option grant will be acquired for investment and
not for resale or distribution. Upon such exercise of any portion of any option grant, the person
entitled to exercise the same shall upon request of the Company furnish evidence satisfactory to
the Company (including a written and signed representation) to the effect that the shares of stock
are being acquired in good faith for investment and not for resale or distribution. Furthermore,
the Company may if it deems appropriate affix a legend to certificates representing shares of stock
purchased upon exercise of options indicating that such shares have not been registered with the
Securities and Exchange Commission and may so notify its transfer agent.

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          (i) Rights of Optionee. An optionee or transferee holding an option grant shall have no
rights as a stockholder of the Company with respect to any shares covered by any option grant until
the date one or more of the options granted thereunder have been properly exercised and the
purchase price for such shares has been paid in full. No adjustment shall be made for dividends
(ordinary or extraordinary, whether cash, securities or other property) or distributions or other
rights for which the record date is prior to the date such share certificate is issued, except as
provided for in paragraph 6(k). Nothing in the Plan or in any option grant agreement shall confer
upon any optionee any right to continue performing services for the Company or any Affiliated Group
member, or interfere in any way with any right of the Company or any Affiliated Group member to
terminate the optionee’s services at any time.

          (j) Fractional Shares. The Company shall not be required to issue fractional shares upon the
exercise of an option. The value of any fractional share subject to an option grant shall be paid
in cash in connection with an exercise that results in all full shares subject to the grant having
been exercised.

          (k) Reorganizations, Etc. Subject to paragraph 9 hereof, if the outstanding shares of stock
of the class then subject to this Plan are increased or decreased, or are changed into or exchanged
for a different number or kind of shares or securities, as a result of one or more reorganizations,
stock splits, reverse stock splits, stock dividends, spin-offs, other distributions of assets to
stockholders, appropriate adjustments shall be made in the number and/or type of shares or
securities for which options may thereafter be granted under this Plan and for which options then
outstanding under this Plan may thereafter be exercised. Any such adjustments in outstanding
options shall be made without changing the aggregate exercise price applicable to the unexercised
portions of such options.

          (l) Option Modification. Subject to the terms and conditions and within the limitations of
the Plan, the Board or the Committee may modify, extend or renew outstanding options granted under
the Plan, or accept the surrender of outstanding options (to the extent not theretofore exercised).
Notwithstanding the foregoing, no modification of an option (either directly or through
modification of the Plan) shall, without the consent of the optionee, alter or impair any rights of
the optionee under the option. Notwithstanding anything herein to the contrary, the Board or
Committee may not reprice outstanding options nor may the Board or the Committee accept the
surrender of outstanding options in conjunction with a grant of new options in substitution
therefor at an exercise price lower than the price of the options surrendered, and this sentence
may not be amended without consent of the Board and ratification by the Company’s stockholders.

          (m) Grants to Foreign Optionees. The Board or the Committee in order to fulfill the Plan
purposes and without amending the Plan may modify grants to optionees who are foreign nationals or
performing services for the Company or an Affiliated Group member outside the United States to
recognize differences in local law, tax policy or custom.

          (n) Other Terms. Each option grant agreement may contain such other terms, provisions and
conditions not inconsistent with the Plan as may be determined by the Board or the Committee, such
as without limitation discretionary performance standards, tax withholding provisions, or other
forfeiture provisions regarding competition and confidential information.

6

 

	 	7.  	Termination or Amendment of the Plan

     The Board may at any time terminate or amend the Plan; provided, that stockholder approval
shall be obtained of any action for which stockholder approval is required in order to comply with
Rule 16b-3, the Code or other applicable laws or regulatory requirements within such time periods
prescribed.

	 	8.  	Stockholder Approval and Term of the Plan

     The Plan shall be effective as of March 26, 1997, the date as of which it was adopted by the
Board, subject to ratification by the stockholders of the Company within (each of) the time
period(s) prescribed under Rule 16b-3, the Code, and any other applicable laws or regulatory
requirements, and shall continue thereafter until terminated by the Board. Unless sooner
terminated by the Board, in its sole discretion, the Plan will expire on March 25, 2007, solely
with respect to the granting of Incentive Stock Options or such later date as may be permitted by
the Code for Incentive Stock Options, provided that options outstanding upon termination or
expiration of the Plan shall remain in effect until they have been exercised or have expired or
been forfeited.

	 	9.  	Merger, Consolidation or Reorganization

     In the event of a merger, consolidation or reorganization with another corporation in which
the Company is not the surviving corporation, the Board, the Committee (subject to the approval of
the Board) or the board of directors of any corporation assuming the obligations of the Company
hereunder shall take action regarding each outstanding and unexercised option pursuant to either
clause (a) or (b) below:

          (a) Appropriate provision may be made for the protection of such option by the substitution on
an equitable basis of appropriate shares of the surviving corporation, provided that the excess of
the aggregate fair market value (as defined in paragraph 6(b)) of the shares subject to such option
immediately before such substitution over the exercise price thereof is not more than the excess of
the aggregate fair market value of the substituted shares made subject to option immediately after
such substitution over the exercise price thereof; or

          (b) Appropriate provision may be made for the cancellation of such option. In such event, the
Company, or the corporation assuming the obligations of the Company hereunder, shall pay the
optionee an amount of cash (less normal withholding taxes) equal to the excess of the highest fair
market value (as defined in paragraph 6(b)) per share of the Common Stock during the 60-day period
immediately preceding the merger, consolidation or reorganization over the option exercise price,
multiplied by the number of shares subject to such options (whether or not then exercisable).

	 	10.  	Dissolution or Liquidation

     Anything contained herein to the contrary notwithstanding, on the effective date of any
dissolution or liquidation of the Company, the holder of each then outstanding option (whether

7

 

or not then exercisable) shall receive the cash amount described in paragraph 9(b) hereof and such
option shall be cancelled.

	 	11.  	Acceleration of Exercisability and Vesting Under Certain Circumstances

     Notwithstanding any provision in the Plan to the contrary, unless the particular letter of
grant provides otherwise, 75% of the unvested options held by each optionee shall automatically
become exercisable and vested upon the occurrence, before the expiration or termination of such
option, of the acquisition by a third party of 100% of the Company’s outstanding equity securities,
a merger in which the Company is not the surviving corporation, a sale of all or substantially all
of the Company’s assets, or a similar reorganization of the Company (collectively, “Accelerating
Events”). The balance of each optionee’s unvested options will vest and become exercisable in 12
equal monthly installments following the occurrence of any Accelerating Event, or according to the
optionee’s individual vesting schedule as applicable without regard to this Section 11, whichever
is earlier. If an optionee loses his position with the Company as a result of or subsequent to the
occurrence of an Accelerating Event, 100% of the unexpired and unvested options granted pursuant to
this Plan held by such optionee shall automatically become vested upon such loss of position.

	 	12.  	Withholding Taxes

          (a) General Rule. Pursuant to applicable federal and state laws, the Company is or may be
required to collect withholding taxes upon the exercise of an option. The Company may require, as
a condition to the exercise of an option or the issuance of a stock certificate, that the optionee
concurrently pay to the Company (either in cash or, at the request of optionee but in the
discretion of the Board or the Committee and subject to such rules and regulations as the Board or
the Committee may adopt from time to time, in shares of Common Stock of the Company) the entire
amount or a portion of any taxes which the Company is required to withhold by reason of such
exercise, in such amount as the Committee or the Board in its discretion may determine.

          (b) Withholding from Shares to be Issued. In lieu of part or all of any such payment, the
optionee may elect, subject to such rules and regulations as the Board or the Committee may adopt
from time to time, or the Company may require that the Company withhold from the shares to be
issued that number of shares having a fair market value (as defined in paragraph 6(b)) equal to the
amount which the Company is required to withhold.

          (c) Special Rule for Insiders. Any such request or election (to satisfy a withholding
obligation using shares) by an individual who is subject to the provisions of Section 16 shall be
made in accordance with the rules and regulations of the Securities and Exchange Commission
promulgated thereunder.

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