ORTEC INTERNATIONAL, INC.

2006 Stock Award and Incentive Plan

 

Purpose

1

 

Definitions

1

 

Administration

3

 

Stock Subject to Plan

5

 

Eligibility; Per-Person Award Limitations

5

 

Specific Terms of Awards

6

 

Performance Awards, Including Annual Incentive Awards

9

 

Certain Provisions Applicable to Awards

13

 

General Provisions

17

 

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ORTEC INTERNATIONAL, INC.

2006 Stock Award and Incentive Plan

1.             Purpose. The purpose of this 2006 Stock Award and Incentive Plan
(the “Plan”) is to aid Ortec International, Inc. a Delaware corporation (the
“Company”), in attracting, retaining, motivating and rewarding employees
(including executive officers and employee directors), non-employee directors,
and other persons (including consultants and advisors) who provide substantial
services to the Company or its subsidiaries or affiliates, to provide for
equitable and competitive compensation opportunities, to recognize individual
contributions and reward achievement of Company goals, and promote the creation
of long-term value for stockholders by closely aligning the interests of
Participants with those of stockholders. The Plan authorizes stock-based and
cash-based incentives for Participants.

2.             Definitions. In addition to the terms defined in Section 1 above
and elsewhere in the Plan, the following capitalized terms used in the Plan have
the respective meanings set forth in this Section:

 

(a)

“Annual Incentive Award” means a type of Performance Award granted to a
Participant under Section 7(c) representing a conditional right to receive cash,
Stock or other Awards or payments, as determined by the Committee, based on
performance in a performance period of one fiscal year or a portion thereof.

 

(b)

“Award” means any Option, Restricted Stock, Deferred Stock, Stock granted as a
bonus or in lieu of another award, Other Stock-Based Award, Performance Award or
Annual Incentive Award, together with any related right or interest, granted to
a Participant under the Plan.

 

(c)

“Beneficiary” means the legal representatives of the Participant’s estate
entitled by will or the laws of descent and distribution to receive the benefits
under a Participant’s Award upon a Participant’s death, provided that, if and to
the extent authorized by the Committee, a Participant may be permitted to
designate a Beneficiary, in which case the “Beneficiary” instead will be the
person, persons, trust or trusts (if any are then surviving) which have been
designated by the Participant in his or her most recent written beneficiary
designation filed with the Committee to receive the benefits specified under the
Participant’s Award upon such Participant’s death. Unless otherwise determined
by the Committee, any designation of a Beneficiary other than a Participant’s
spouse shall be subject to the written consent of such spouse.

 

(d)

“Board” means the Company’s Board of Directors.

(e)           “Change in Control” and related terms have the meanings specified
in Section 9.

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(f)            “Code” means the Internal Revenue Code of 1986, as amended.
References to any provision of the Code or regulation (including a proposed
regulation) thereunder shall include any successor provisions and regulations.

 

 

(g)

“Committee” means a committee or sub-committee of two or more directors
designated by the Board to administer the Plan; provided, however, that,
directors appointed or serving as members of such Board committee or
sub-committee designated as the Committee shall not be employees of the Company
or any subsidiary or affiliate. In appointing members of such Committee or
sub-committee, the Board will consider whether a member is or will be a
Qualified Member, but such members are not required to be Qualified Members at
the time of appointment or during their term of service on such Committee or
sub-committee. The full Board may perform any function of such Committee or
sub-committee, in which case the term “Committee” shall refer to the Board.

 

(h)

“Covered Employee” means an Eligible Person who is a Covered Employee as
specified in Section 10(j).

 

(i)

“Deferred Stock” means a right, granted to a Participant under Section 6(e), to
receive Stock or other Awards or a combination thereof at the end of a specified
deferral period.

 

(j)

“Effective Date” means the effective date specified in Section 11(q).

 

(k)

“Eligible Person” has the meaning specified in Section 5.

 

(l)

“Exchange Act” means the Securities Exchange Act of 1934, as amended. References
to any provision of the Exchange Act or rule (including a proposed rule)
thereunder shall include any successor provisions and rules.

 

(m)

“Fair Market Value” shall mean the amount determined by the Board or the
Committee, except that if the Stock is listed on a national securities exchange
(or traded on the over-the-counter market), the fair market value shall be the
closing price of the Stock on such exchange (or market as reported by the
National Quotation Bureau) on the day on which an Award is granted (or with
respect to a Change in Control or other event requiring the valuation of the
Stock, the closing price on the appropriate date as determined by the Board or
Committee), or, if there is no trading or closing price on that day, the closing
price on the most recent day preceding the day for which such prices are
available.

 

(n)

“Incentive Stock Option” or “ISO” means any Option designated as an incentive
stock option within the meaning of Code Section 422 or any successor provision
thereto and qualifying thereunder.

 

(o)

“Option” means a right, granted to a Participant under Section 6(b), to purchase
Stock or other Awards at a specified price during specified time periods.

 

(p)

“Other Stock-Based Awards” means Awards granted to a Participant under Section
6(h).

 

(q)

“Participant” means a person who has been granted an Award under the Plan which
remains outstanding, including a person who is no longer an Eligible Person.

 

(r)

“Performance Award” means a right, granted to a Participant under Sections 6(i)
and 7, to receive Awards or payments based upon performance criteria specified
by the Committee.

 

(s)

“Qualified Member” means a member of the Committee who is a “Non-Employee
Director” within the meaning of Rule 16b-3(b)(3) and an “outside director”
within the meaning of Regulation 1.162-27 under Code Section 162(m).

 

(t)

“Restricted Stock” means Stock granted to a Participant under Section 6(d) that
is subject to certain restrictions and to a risk of forfeiture.

 

(u)

“Rule 16b-3” means Rule 16b-3, as from time to time in effect and applicable to
Participants, promulgated by the Securities and Exchange Commission under
Section 16 of the Exchange Act.

 

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“Stock” means the Company’s Common Stock, par value $.001 per share, and any
other equity securities of the Company that may be substituted or resubstituted
for Stock pursuant to Section 10(c).

 

3.

Administration.

 

(a)

Authority of the Committee. The Plan shall be administered by the Committee
(subject to the Board’s authority to restrict the Committee), which shall have
full and final authority, in each case subject to and consistent with the
provisions of the Plan, to select Eligible Persons to become Participants; to
grant Awards; to determine the type and number of Awards, the dates on which
Awards may be exercised and on which the risk of forfeiture or deferral period
relating to Awards shall lapse or terminate, the acceleration of any such dates,
the expiration date of any Award, whether, to what extent, and under what
circumstances an Award may be settled, or the exercise price of an Award may be
paid, in cash, Stock, other Awards, or other property, and other terms and
conditions of, and all other matters relating to, Awards; to prescribe documents
evidencing or setting terms of Awards (such Award documents need not be
identical for each Participant), amendments thereto, and rules and regulations
for the administration of the Plan and amendments thereto; to construe and
interpret the Plan and Award documents and correct defects, supply omissions or
reconcile inconsistencies therein; and to make all other decisions and
determinations as the Committee may deem necessary or advisable for the
administration of the Plan. Decisions of the Committee with respect to the
administration and interpretation of the Plan shall be final, conclusive, and
binding upon all persons interested in the Plan, including Participants,
Beneficiaries, transferees under Section 10(b) and other persons claiming rights
from or through a Participant, and stockholders. The foregoing notwithstanding,
the Board shall perform the functions of the Committee for purposes of granting
Awards under the Plan to non-employee directors (authority with respect to other
aspects of non-employee director awards is not exclusive to the Board, however).

 

(b)

Manner of Exercise of Committee Authority. At any time that a member of the
Committee is not a Qualified Member, (i) any action of the Committee relating to
an Award intended by the Committee to qualify as “performance-based
compensation” within the meaning of Code Section 162(m) and regulations
thereunder may be taken by a subcommittee, designated by the Committee or the
Board, composed solely of two or more Qualified Members, and (ii) any action
relating to an Award granted or to be granted to a Participant who is then
subject to Section 16 of the Exchange Act in respect of the Company may be taken
either by such a subcommittee or by the Committee but with each such member who
is not a Qualified Member abstaining or recusing himself or herself from such
action, provided that, upon such abstention or recusal, the Committee remains
composed solely of two or more Qualified Members. Such action, authorized by
such a subcommittee or by the Committee upon the abstention or recusal of such
non-Qualified Member(s), shall be the action of the Committee for purposes of
the Plan. The express grant of any specific power to the Committee, and the
taking of any action by the Committee, shall not be construed as limiting any
power or authority of the Committee. The Committee may delegate to officers or
managers of the Company or any subsidiary or affiliate, or committees thereof,
the authority, subject to such terms as the Committee shall determine, to
perform such functions, including administrative functions, as the Committee may
determine. Notwithstanding the foregoing, no action may be taken pursuant to
this Section 3(b) if such action would result in the loss of an exemption under
Rule 16b-3(d) for Awards granted to Participants subject to Section 16 of the
Exchange Act in respect of the Company and would cause Awards intended to
qualify as “performance-based compensation” under Code Section 162(m) to fail to
so qualify.

 

(c)

Limitation of Liability. The Committee and each member thereof, and any person
acting pursuant to authority delegated by the Committee, shall be entitled, in
good faith, to rely or act upon any report or other information furnished by any
executive officer, other officer or employee of the Company or a subsidiary or
affiliate, the Company’s independent auditors, consultants or any

 

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other agents assisting in the administration of the Plan. Members of the
Committee, any person acting pursuant to authority delegated by the Committee,
and any officer or employee of the Company or a subsidiary or affiliate acting
at the direction or on behalf of the Committee or a delegee shall not be
personally liable for any action or determination taken or made in good faith
with respect to the Plan, and shall, to the extent permitted by law, be fully
indemnified and protected by the Company with respect to any such action or
determination.

 

4.

Stock Subject to Plan.

 

(a)

Overall Number of Shares Available for Delivery. Subject to adjustment as
provided in Section 10(c), the total number of shares of Stock reserved and
available for delivery in connection with Awards under the Plan shall be Two
Million Five Hundred Thousand (2,500,000). Any shares of Stock delivered under
the Plan shall consist of authorized and unissued shares or treasury shares.

 

(b)

Share Counting Rules. The Committee may adopt reasonable counting procedures to
ensure appropriate counting, avoid double counting (as, for example, in the case
of tandem or substitute awards) and make adjustments if the number of shares of
Stock actually delivered differs from the number of shares previously counted in
connection with an Award. Shares subject to an Award that is canceled, expired,
forfeited, settled in cash or otherwise terminated without a delivery of shares
to the Participant will again be available for Awards, and shares withheld in
payment of the exercise price or taxes relating to an Award and shares equal to
the number surrendered in payment of any exercise price or taxes relating to an
Award shall be deemed to constitute shares not delivered to the Participant and
shall be deemed to again be available for Awards under the Plan. In addition, in
the case of any Award granted in substitution for an award of a company or
business acquired by the Company or a subsidiary or affiliate, shares issued or
issuable in connection with such substitute Award shall not be counted against
the number of shares reserved under the Plan, but shall be available under the
Plan by virtue of the Company’s assumption of the plan or arrangement of the
acquired company or business. This Section 4(b) shall apply to the number of
shares reserved and available for ISOs only to the extent consistent with
applicable regulations relating to ISOs under the Code.

5.             Eligibility; Per-Person Award Limitations. Awards may be granted
under the Plan only to Eligible Persons. For purposes of the Plan, an “Eligible
Person” means an employee of the Company or any subsidiary or affiliate,
including any executive officer, a non-employee director of the Company, a
consultant, advisor or other person who provides substantial services to the
Company or a subsidiary or affiliate, and any person who has been offered
employment by the Company or a subsidiary or affiliate, provided that such
prospective employee may not receive any payment or exercise any right relating
to an Award until such person has commenced employment with the Company or a
subsidiary or affiliate. An employee on leave of absence may be considered as
still in the employ of the Company or a subsidiary or affiliate for purposes of
eligibility for participation in the Plan. For purposes of the Plan, a joint
venture in which the Company or a subsidiary has a substantial direct or
indirect equity investment shall be deemed an affiliate, if so determined by the
Committee. In each calendar year during any part of which the Plan is in effect,
an Eligible Person may be granted Awards intended to qualify as
“performance-based compensation” under Code Section 162(m).

 

6.

Specific Terms of Awards.

 

(a)

General. Awards may be granted on the terms and conditions set forth in this
Section 6. In addition, the Committee may impose on any Award or the exercise
thereof, at the date of grant or thereafter (subject to Section 10(e)), such
additional terms and conditions, not inconsistent with the provisions of the
Plan, as the Committee shall determine, including terms requiring forfeiture of
Awards in the event of termination of employment or service by the Participant
and terms permitting a Participant to make elections relating to his or her
Award. The Committee shall retain full power and discretion with respect to any
term or condition of an Award that is not mandatory under the Plan. The
Committee shall require the payment of lawful consideration for an Award to

 

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the extent necessary to satisfy the requirements of the Delaware General
Corporation Law, and may otherwise require payment of consideration for an Award
except as limited by the Plan.

 

(b)

Options. The Committee is authorized to grant Options to Eligible Persons on the
following terms and conditions:

 

(i)

Exercise Price. The exercise price per share of Stock purchasable under an
Option (including both ISOs and non-qualified Options) shall be determined by
the Committee, provided that such exercise price shall be not less than the Fair
Market Value of a share of Stock on the date of grant of such Option, subject to
Sections 6(f) and 9(a).

 

(ii)

Option Term; Time and Method of Exercise. The Committee shall determine the term
of each Option, provided that in no event shall the term of any ISO exceed a
period of ten years from the date of grant. The Committee shall determine the
time or times at which or the circumstances under which an Option may be
exercised in whole or in part (including based on achievement of performance
goals and/or future service requirements), the methods by which such exercise
price may be paid or deemed to be paid and the form of such payment (subject to
Section 10(k)), including, without limitation, cash, Stock, other Awards or
awards granted under other plans of the Company or any subsidiary or affiliate,
or other property (including notes and other contractual obligations of
Participants to make payment on a deferred basis, such as through “cashless
exercise” arrangements, to the extent permitted by applicable law), and the
methods by or forms in which Stock will be delivered or deemed to be delivered
in satisfaction of Options to Participants (including deferred delivery of
shares representing the Option “profit,” at the election of the Participant or
as mandated by the Committee, with such deferred shares subject to any vesting,
forfeiture or other terms as the Committee may specify).

 

(iii)

ISOs. The terms of any ISO granted under the Plan shall comply in all respects
with the provisions of Code Section 422, including but not limited to the
requirement that no ISO shall be granted more than ten years after the Effective
Date.

 

(c)

Restricted Stock. The Committee is authorized to grant Restricted Stock to
Eligible Persons on the following terms and conditions:

 

(i)

Grant and Restrictions. Restricted Stock shall be subject to such restrictions
on transferability, risk of forfeiture and other restrictions, if any, as the
Committee may impose, which restrictions may lapse separately or in combination
at such times, under such circumstances (including based on achievement of
performance goals and/or future service requirements), in such installments or
otherwise and under such other circumstances as the Committee may determine at
the date of grant or thereafter. Except to the extent restricted under the terms
of the Plan and any Award document relating to the Restricted Stock, a
Participant granted Restricted Stock shall have all of the rights of a
stockholder, including the right to vote the Restricted Stock and the right to
receive dividends thereon (subject to any mandatory reinvestment or other
requirement imposed by the Committee).

 

(ii)

Forfeiture. Except as otherwise determined by the Committee, upon termination of
employment or service during the applicable restriction period, Restricted Stock
that is at that time subject to restrictions shall be forfeited and reacquired
by the Company; provided that the Committee may provide, by rule or regulation
or in any Award document, or may determine in any individual case, that
restrictions or forfeiture conditions relating to Restricted Stock will lapse in
whole or in part, including in the event of terminations resulting from
specified causes.

 

(iii)

Certificates for Stock. Restricted Stock granted under the Plan may be evidenced
in such manner as the Committee shall determine. If certificates representing
Restricted Stock are registered in the name of the Participant, the Committee
may require that such certificates bear an appropriate legend referring to the
terms, conditions and restrictions applicable to such Restricted Stock, that

 

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the Company retain physical possession of the certificates, and that the
Participant deliver a stock power to the Company, endorsed in blank, relating to
the Restricted Stock.

 

(iv)

Dividends and Splits. As a condition to the grant of an Award of Restricted
Stock, the Committee may require that any dividends paid on a share of
Restricted Stock shall be either (A) paid with respect to such Restricted Stock
at the dividend payment date in cash, in kind, or in a number of shares of
unrestricted Stock having a Fair Market Value equal to the amount of such
dividends, or (B) automatically reinvested in additional Restricted Stock or
held in kind, which shall be subject to the same terms as applied to the
original Restricted Stock to which it relates, or (C) deferred as to payment,
either as a cash deferral or with the amount or value thereof automatically
deemed reinvested in shares of Deferred Stock, other Awards or other investment
vehicles, subject to such terms as the Committee shall determine or permit a
Participant to elect. Unless otherwise determined by the Committee, Stock
distributed in connection with a Stock split or Stock dividend, and other
property distributed as a dividend, shall be subject to restrictions and a risk
of forfeiture to the same extent as the Restricted Stock with respect to which
such Stock or other property has been distributed.

 

(d)

Deferred Stock. The Committee is authorized to grant Deferred Stock to Eligible
Persons, which are rights to receive Stock, other Awards, or a combination
thereof at the end of a specified deferral period, subject to the following
terms and conditions:

 

(i)

Award and Restrictions. Issuance of Stock will occur upon expiration of the
deferral period specified for an Award of Deferred Stock by the Committee (or,
if permitted by the Committee, as elected by the Participant). In addition,
Deferred Stock shall be subject to such restrictions on transferability, risk of
forfeiture and other restrictions, if any, as the Committee may impose, which
restrictions may lapse at the expiration of the deferral period or at earlier
specified times (including based on achievement of performance goals and/or
future service requirements), separately or in combination, in installments or
otherwise, and under such other circumstances as the Committee may determine at
the date of grant or thereafter. Deferred Stock may be satisfied by delivery of
Stock, other Awards, or a combination thereof (subject to Section 10(k)), as
determined by the Committee at the date of grant or thereafter.

 

(ii)

Forfeiture. Except as otherwise determined by the Committee, upon termination of
employment or service during the applicable deferral period or portion thereof
to which forfeiture conditions apply (as provided in the Award document
evidencing the Deferred Stock), all Deferred Stock that is at that time subject
to such forfeiture conditions shall be forfeited; provided that the Committee
may provide, by rule or regulation or in any Award document, or may determine in
any individual case, that restrictions or forfeiture conditions relating to
Deferred Stock will lapse in whole or in part, including in the event of
terminations resulting from specified causes.

 

(f)

Bonus Stock and Awards in Lieu of Obligations. The Committee is authorized to
grant Stock as a bonus, or to grant Stock or other Awards in lieu of obligations
of the Company or a subsidiary or affiliate to pay cash or deliver other
property under the Plan or under other plans or compensatory arrangements,
subject to such terms as shall be determined by the Committee.

 

(g)

Other Stock-Based Awards. The Committee is authorized, subject to limitations
under applicable law, to grant to Eligible Persons such other Awards that may be
denominated or payable in, valued in whole or in part by reference to, or
otherwise based on, or related to, Stock or factors that may influence the value
of Stock, including, without limitation, convertible or exchangeable debt
securities, other rights convertible or exchangeable into Stock, purchase rights
for Stock, Awards with value and payment contingent upon performance of the
Company or business units thereof or any other factors designated by the
Committee, and Awards valued by reference to the book value of Stock or the
value of securities of or the performance of specified subsidiaries or
affiliates or other business units. The Committee shall determine the terms and
conditions of such Awards.

 

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Stock delivered pursuant to an Award in the nature of a purchase right granted
under this Section 6(h) shall be purchased for such consideration, paid for at
such times, by such methods, and in such forms, including, without limitation,
cash, Stock, other Awards, notes, or other property, as the Committee shall
determine. Cash awards, as an element of or supplement to any other Award under
the Plan, may also be granted pursuant to this Section 6(h).

 

(h)

Performance Awards. Performance Awards, denominated in cash or in Stock or other
Awards, may be granted by the Committee in accordance with Section 7.

 

7.

Performance Awards, Including Annual Incentive Awards.

 

(a)

Performance Awards Generally. The Committee is authorized to grant Performance
Awards on the terms and conditions specified in this Section 7. Performance
Awards may be denominated as a cash amount, number of shares of Stock, or
specified number of other Awards (or a combination) which may be earned upon
achievement or satisfaction of performance conditions specified by the
Committee. In addition, the Committee may specify that any other Award shall
constitute a Performance Award by conditioning the right of a Participant to
exercise the Award or have it settled, and the timing thereof, upon achievement
or satisfaction of such performance conditions as may be specified by the
Committee. The Committee may use such business criteria and other measures of
performance as it may deem appropriate in establishing any performance
conditions, and may exercise its discretion to reduce or increase the amounts
payable under any Award subject to performance conditions, except as limited
under Sections 7(b) and 7(c) in the case of a Performance Award intended to
qualify as “performance-based compensation” under Code Section 162(m).

 

(b)

Performance Awards Granted to Covered Employees. If the Committee determines
that a Performance Award to be granted to an Eligible Person who is designated
by the Committee as likely to be a Covered Employee should qualify as
“performance-based compensation” for purposes of Code Section 162(m), the grant,
exercise and/or settlement of such Performance Award shall be contingent upon
achievement of a pre-established performance goal and other terms set forth in
this Section 7(b).

 

(i)

Performance Goal Generally. The performance goal for such Performance Awards
shall consist of one or more business criteria and a targeted level or levels of
performance with respect to each of such criteria, as specified by the Committee
consistent with this Section 7(b). The performance goal shall be objective and
shall otherwise meet the requirements of Code Section 162(m) and regulations
thereunder (including Regulation 1.162-27 and successor regulations thereto),
including the requirement that the level or levels of performance targeted by
the Committee result in the achievement of performance goals being
“substantially uncertain.” The Committee may determine that such Performance
Awards shall be granted, exercised and/or settled upon achievement of any one
performance goal or that two or more of the performance goals must be achieved
as a condition to grant, exercise and/or settlement of such Performance Awards.
Performance goals may differ for Performance Awards granted to any one
Participant or to different Participants.

 

(ii)

Business Criteria. One or more of the following business criteria for the
Company, on a consolidated basis, and/or for specified subsidiaries or
affiliates or other business units of the Company shall be used by the Committee
in establishing performance goals for such Performance Awards: (1) growth in
revenues or assets; (2) earnings from operations, earnings before or after
taxes, earnings before or after interest, depreciation, amortization, or
extraordinary or special items; (3) net income or net income per common share
(basic or diluted); (4) return on assets, return on investment, return on
capital, or return on equity; (5) cash flow, free cash flow, cash flow return on
investment, or net cash provided by operations; (6) interest expense after
taxes; (7) economic profit; (8) operating margin or gross margin; (9) stock
price or total stockholder return;

 

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and (10) strategic business criteria, consisting of one or more objectives based
on securing financing needed for the Company’s continuation or expansion of its
business operations, environmental or safety standards, market penetration,
geographic business expansion goals, cost targets, customer satisfaction,
employee satisfaction, management of regulatory compliance and key departments
such as accounting, employment practices and employee benefits, supervision of
litigation and information technology, and goals relating to acquisitions or
divestitures of subsidiaries, affiliates or joint ventures. The targeted level
or levels of performance with respect to such business criteria may be
established at such levels and in such terms as the Committee may determine, in
its discretion, including, but not limited to, as a goal relative to performance
in prior periods, or as a goal compared to the performance of one or more
comparable companies or an index covering multiple companies.

 

(iii)

Performance Period; Timing for Establishing Performance Goals. Achievement of
performance goals in respect of such Performance Awards shall be measured over a
performance period of up to one year or more than one year, as specified by the
Committee. A performance goal may be based on goals already achieved prior to
the Award or on a goal established not later than the earlier of (A) 90 days
after the beginning of any performance period applicable to such Performance
Award or (B) the time 25% of such performance period has elapsed.

 

(iv)

Performance Award Pool. The Committee may establish a Performance Award pool,
which shall be an unfunded pool, for purposes of measuring performance of the
Company in connection with Performance Awards. The amount of such Performance
Award pool shall be based upon the achievement of a performance goal or goals
based on one or more of the business criteria set forth in Section 7(b)(ii)
during the given performance period. The Committee may specify the amount of the
Performance Award pool as a percentage of any of such business criteria, a
percentage thereof in excess of a threshold amount, or as another amount which
need not bear a strictly mathematical relationship to such business criteria.

 

(v)

Settlement of Performance Awards; Other Terms. Settlement of such Performance
Awards shall be in cash, Stock, other Awards or other property, in the
Committee’s discretion. The Committee may increase or reduce the amount of a
settlement otherwise to be made in connection with such Performance Awards, but
may not exercise discretion to increase any such amount payable to a Covered
Employee in respect of a Performance Award subject to Section 7(b). Any
settlement which changes the form of payment from that originally specified
shall be implemented in a manner such that the Performance Award and other
related Awards do not, solely for that reason, fail to qualify as
“performance-based compensation” for purposes of Code Section 162(m). The
Committee shall specify the circumstances in which such Performance Awards shall
be paid or forfeited in the event of termination of employment by the
Participant or other event (including a Change in Control) prior to the end of a
performance period or settlement of such Performance Awards.

 

(c)

Annual Incentive Awards Granted to Designated Covered Employees. The Committee
may grant an Annual Incentive Award to an Eligible Person who is designated by
the Committee as likely to be a Covered Employee. Such Annual Incentive Award
will be intended to qualify as “performance-based compensation” for purposes of
Code Section 162(m), and therefore its grant, exercise and/or settlement shall
be contingent upon achievement of pre-established performance goals and other
terms set forth in this Section 7(c).

 

(i)

Grant of Annual Incentive Awards. Not later than the earlier of 90 days after
the beginning of any performance period applicable to such Annual Incentive
Award or the time 25% of such performance period has elapsed, the Committee
shall determine the Covered Employees who will potentially receive Annual
Incentive Awards, and the amount(s) potentially payable thereunder, for that
performance period. The amount(s) potentially payable shall be based upon the
achievement of a performance goal or goals based on one or more of the business
criteria set forth

 

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in Section 7(b)(ii) in the given performance period, as specified by the
Committee. The Committee may designate an annual incentive award pool as the
means by which Annual Incentive Awards will be measured, provided that the
portion of such pool potentially payable to the Covered Employee shall be
pre-established.

 

(ii)

Payout of Annual Incentive Awards. After the end of each performance period, the
Committee shall determine the amount, if any, of the Annual Incentive Award for
that performance period payable to each Participant. The Committee may determine
that the amount payable to any Participant as a final Annual Incentive Award
shall be reduced from the amount of his or her potential Annual Incentive Award,
including a determination to make no final Award whatsoever, but may not
exercise discretion to increase any such amount. The Committee shall specify the
circumstances in which an Annual Incentive Award shall be paid or forfeited in
the event of termination of employment by the Participant or other event
(including a Change in Control) prior to the end of a performance period or
settlement of such Annual Incentive Award.

 

(d)

Written Determinations. Determinations by the Committee as to the establishment
of performance goals, the amount potentially payable in respect of Performance
Awards and Annual Incentive Awards, the level of actual achievement of the
specified performance goals relating to Performance Awards and Annual Incentive
Awards, and the amount of any final Performance Award and Annual Incentive Award
shall be recorded in writing in the case of Performance Awards intended to
qualify under Code Section 162(m). Specifically, the Committee shall certify in
writing, in a manner conforming to applicable regulations under Code Section
162(m), prior to settlement of each such Award granted to a Covered Employee,
that the performance objective relating to the Performance Award and other
material terms of the Award upon which settlement of the Award was conditioned
have been satisfied.

 

8.

Certain Provisions Applicable to Awards.

 

(a)

Stand-Alone, Additional, Tandem, and Substitute Awards. Awards granted under the
Plan may, in the discretion of the Committee, be granted either alone or in
addition to, in tandem with, or in substitution or exchange for, any other Award
or any award granted under another plan of the Company, any subsidiary or
affiliate, or any business entity to be acquired by the Company or a subsidiary
or affiliate, or any other right of a Participant to receive payment from the
Company or any subsidiary or affiliate. Awards granted in addition to or in
tandem with other Awards or awards may be granted either as of the same time as
or a different time from the grant of such other Awards or awards. Subject to
Section 10(k), the Committee may determine that, in granting a new Award, the
in-the-money value of any surrendered Award or award may be applied to reduce
the exercise price of any Option or purchase price of any other Award.

 

(b)

Term of Awards. The term of each Award shall be for such period as may be
determined by the Committee, subject to the express limitations set forth in
Section 6(b)(ii).

 

(c)

Form and Timing of Payment under Awards; Deferrals. Subject to the terms of the
Plan (including Section 10(k)) and any applicable Award document, payments to be
made by the Company or a subsidiary or affiliate upon the exercise of an Option
or other Award or settlement of an Award may be made in such forms as the
Committee shall determine, including, without limitation, cash, Stock, other
Awards or other property, and may be made in a single payment or transfer, in
installments, or on a deferred basis. The settlement of any Award may be
accelerated, and cash paid in lieu of Stock in connection with such settlement,
in the Committee’s discretion or upon occurrence of one or more specified events
(subject to Section 10(k)). Installment or deferred payments may be required by
the Committee (subject to Section 10(e)) or permitted at Participant’s election
on terms and conditions established by the Committee. Payments may include,
without limitation, provisions for the payment or crediting of reasonable
interest on installment or deferred payments.

 

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(d)

Exemptions from Section 16(b) Liability. With respect to a Participant who is
then subject to the reporting requirements of Section 16(a) of the Exchange Act
in respect of the Company, the Committee shall implement transactions under the
Plan and administer the Plan in a manner that will ensure that each transaction
with respect to such a Participant is exempt from liability under Rule 16b-3 (or
otherwise not subject to liability under Section 16(b)), except that this
provision shall not limit sales by such a Participant, and such a Participant
may engage in other non-exempt transactions under the Plan. The Committee may
authorize the Company to repurchase any Award or shares of Stock deliverable or
delivered in connection with any Award (subject to Section 10(k)) to avoid a
Participant who is subject to Section 16 of the Exchange Act incurring liability
under Section 16(b). Unless otherwise specified by the Participant, equity
securities or derivative securities acquired under the Plan which are disposed
of by a Participant shall be deemed to be disposed of in the order acquired by
the Participant.

 

(e)

Loan Provisions. With the Committee’s consent, and subject at all times to, and
only to the extent, if any, permitted under and in accordance with, laws and
regulations and other binding obligations or provisions applicable to the
Company, the Company may make, guarantee, or arrange for a loan or loans to a
Participant with respect to the exercise of any Option or other payment in
connection with any Award, including the payment by a Participant of any or all
federal, state, or local income or other taxes due in connection with any Award.
Subject to such limitations, the Committee shall have full authority to decide
whether to make a loan or loans hereunder and to determine the amount, terms,
and provisions of any such loan or loans, including the interest rate, if any,
to be charged in respect of any such loan or loans, whether the loan or loans
are to be with or without recourse against the borrower, the terms on which the
loan is to be repaid and conditions, if any, under which the loan or loans may
be forgiven.

 

9.

Change in Control.

 

(a)

Effect of “Change in Control” on Non-Performance Based Awards. The Committee may
provide in the Award document, in the event of a “Change in Control,” the
following provisions shall apply to non-performance based Awards, including
Awards as to which performance conditions previously have been satisfied or are
deemed satisfied under Section 9(b):

 

(i)

All deferral of settlement, forfeiture conditions and other restrictions
applicable to Awards granted under the Plan shall lapse and such Awards shall be
fully payable as of the time of the Change in Control without regard to deferral
and vesting conditions, except to the extent of any waiver by the Participant or
other express election to defer beyond a Change in Control and subject to
applicable restrictions set forth in Section 10(a);

 

(ii)

Any Award carrying a right to exercise that was not previously exercisable and
vested shall become fully exercisable and vested as of the time of the Change in
Control and shall remain exercisable and vested for the balance of the stated
term of such Award without regard to any termination of employment or service by
the Participant other than a termination for “cause” (as defined in any
employment or severance agreement between the Company or a subsidiary or
affiliate and the Participant then in effect or, if none, as defined by the
Committee and in effect at the time of the Change in Control), subject only to
applicable restrictions set forth in Section 10(a); and

 

(iii)

The Committee may, in its discretion, determine to extend to any Participant who
holds an Option the right to elect, during the 60-day period immediately
following the Change in Control, in lieu of acquiring the shares of Stock
covered by such Option, to receive in cash the excess of the Change in Control
Price over the exercise price of such Option, multiplied by the number of shares
of Stock covered by such Option, and to extend to any Participant who holds
other types of Awards denominated in shares the right to elect, during the
60-day period immediately following the Change in Control, in lieu of receiving
the shares of Stock covered by such Award, to receive in

 

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cash the Change in Control Price multiplied by the number of shares of Stock
covered by such Award.

 

(b)

Effect of “Change in Control” on Performance-Based Awards. In the event of a
“Change in Control,” with respect to an outstanding Award subject to achievement
of performance goals and conditions, such performance goals and conditions will
be deemed to be met if and to the extent so provided by the Committee in the
Award document governing such Award or other agreement with the Participant.

 

(c)

Definition of “Change in Control.” A “Change in Control” shall be deemed to have
occurred if, after the Effective Date, there shall have occurred any of the
following:

 

(i)

any Person (other than the Company), any trustee or other fiduciary holding
securities under any employee benefit plan of the Company, or any company owned,
directly or indirectly, by the stockholders of the Company immediately prior to
the occurrence with respect to which the evaluation is being made in
substantially the same proportions as their ownership of the common stock of the
Company) becomes the Beneficial Owner (except that a Person shall be deemed to
be the Beneficial Owner of all shares that any such Person has the right to
acquire pursuant to any agreement or arrangement or upon exercise of conversion
rights, warrants or options or otherwise, without regard to the sixty day period
referred to in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company or any Significant Subsidiary (as defined below),
representing 30% of the combined voting power of the Company’s or such
subsidiary’s then outstanding securities;

 

(ii)

during any period of two consecutive years, individuals who at the beginning of
such period constitute the Board, and any new director (other than a director
designated by a person who has entered into an agreement with the Company to
effect a transaction described in clause (i), (iii), or (iv) of this paragraph)
whose election by the Board or nomination for election by the Company’s
stockholders was approved by a vote of at least two-thirds of the directors then
still in office who either were directors at the beginning of the two-year
period or whose election or nomination for election was previously so approved
but excluding for this purpose any such new director whose initial assumption of
office occurs as a result of either an actual or threatened election contest (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of an individual, corporation, partnership, group, associate or
other entity or Person other than the Board, cease for any reason to constitute
at least a majority of the Board;

 

(iii)

the consummation of a merger or consolidation of the Company or any subsidiary
owning directly or indirectly all or substantially all of the consolidated
assets of the Company (a “Significant Subsidiary”) with any other entity, other
than a merger or consolidation which would result in the voting securities of
the Company or a Significant Subsidiary outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving or resulting entity) more than 50% of
the combined voting power of the surviving or resulting entity outstanding
immediately after such merger or consolidation; or

 

(iv)

the stockholders of the Company approve a plan or agreement for the sale or
disposition of all or substantially all of the consolidated assets of the
Company (other than such a sale or disposition immediately after which such
assets will be owned directly or indirectly by the Company’s stockholders in
substantially the same proportions as their ownership of the Company’s common
stock immediately prior to such sale or disposition) in which case the Board
shall determine the effective date of the Change in Control resulting therefrom.

For purposes of this definition:

 

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(A)          The term “Beneficial Owner” shall have the meaning ascribed to such
term in Rule 13d-3 under the Exchange Act (including any successor to such
Rule).

(B)          The term “Person” shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, including “group” as defined in Section 13(d) thereof.

 

(d)

Definition of “Change in Control Price.” The “Change in Control Price” means an
amount in cash equal to the higher of (i) the amount of cash and fair market
value of property that is the highest price per share paid (including
extraordinary dividends) in any transaction triggering the Change in Control or
any liquidation of shares following a sale of substantially all assets of the
Company, or (ii) the highest Fair Market Value per share at any time during the
60-day period preceding and 60-day period following the Change in Control.

 

10.

General Provisions.

 

(a)

Compliance with Legal and Other Requirements. The Company may, to the extent
deemed necessary or advisable by the Committee, postpone the issuance or
delivery of Stock or payment of other benefits under any Award until completion
of such registration or qualification of such Stock or other required action
under any federal or state law, rule or regulation, listing or other required
action with respect to any stock exchange or automated quotation system upon
which the Stock or other securities of the Company are listed or quoted, or
compliance with any other obligation of the Company, as the Committee may
consider appropriate, and may require any Participant to make such
representations, furnish such information and comply with or be subject to such
other conditions as it may consider appropriate in connection with the issuance
or delivery of Stock or payment of other benefits in compliance with applicable
laws, rules, and regulations, listing requirements, or other obligations.

 

(b)

Limits on Transferability; Beneficiaries. No Award or other right or interest of
a Participant under the Plan shall be pledged, hypothecated or otherwise
encumbered or subject to any lien, obligation or liability of such Participant
to any party (other than the Company or a subsidiary or affiliate thereof), or
assigned or transferred by such Participant otherwise than by will or the laws
of descent and distribution or to a Beneficiary upon the death of a Participant,
and such Awards or rights that may be exercisable shall be exercised during the
lifetime of the Participant only by the Participant or his or her guardian or
legal representative, except that Awards and other rights (other than ISOs) may
be transferred to one or more transferees during the lifetime of the
Participant, and may be exercised by such transferees in accordance with the
terms of such Award, but only if and to the extent such transfers are permitted
by the Committee, subject to any terms and conditions which the Committee may
impose thereon (including limitations the Committee may deem appropriate in
order that offers and sales under the Plan will meet applicable requirements of
registration forms under the Securities Act of 1933 specified by the Securities
and Exchange Commission). A Beneficiary, transferee, or other person claiming
any rights under the Plan from or through any Participant shall be subject to
all terms and conditions of the Plan and any Award document applicable to such
Participant, except as otherwise determined by the Committee, and to any
additional terms and conditions deemed necessary or appropriate by the
Committee.

 

(c)

Adjustments. In the event that any large, special and non-recurring dividend or
other distribution (whether in the form of cash or property other than Stock),
recapitalization, forward or reverse split, Stock dividend, reorganization,
merger, consolidation, spin-off, combination, repurchase, share exchange,
liquidation, dissolution or other similar corporate transaction or event affects
the Stock such that an adjustment is determined by the Committee to be
appropriate under the Plan, then the Committee shall, in such manner as it may
deem equitable, adjust any or all of (i) the number and kind of shares of Stock
which may be delivered in connection with Awards granted

 

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thereafter, (ii) the number and kind of shares of Stock by which annual
per-person Award limitations are measured under Section 5, (iii) the number and
kind of shares of Stock subject to or deliverable in respect of outstanding
Awards and (iv) the exercise price, grant price or purchase price relating to
any Award or, if deemed appropriate, the Committee may make provision for a
payment of cash or property to the holder of an outstanding Option (subject to
Section 10(k)). In addition, the Committee is authorized to make adjustments in
the terms and conditions of, and the criteria included in, Awards (including
Performance Awards and performance goals and any hypothetical funding pool
relating thereto) in recognition of unusual or nonrecurring events (including,
without limitation, events described in the preceding sentence, as well as
acquisitions and dispositions of businesses and assets) affecting the Company,
any subsidiary or affiliate or other business unit, or the financial statements
of the Company or any subsidiary or affiliate, or in response to changes in
applicable laws, regulations, accounting principles, tax rates and regulations
or business conditions or in view of the Committee’s assessment of the business
strategy of the Company, any subsidiary or affiliate or business unit thereof,
performance of comparable organizations, economic and business conditions,
personal performance of a Participant, and any other circumstances deemed
relevant; provided that no such adjustment shall be authorized or made if and to
the extent that the existence of such authority (i) would cause Options or
Performance Awards granted under Section 7 to Participants designated by the
Committee as Covered Employees and intended to qualify as “performance-based
compensation” under Code Section 162(m) and regulations thereunder to otherwise
fail to qualify as “performance-based compensation” under Code Section 162(m)
and regulations thereunder, or (ii) would cause the Committee to be deemed to
have authority to change the targets, within the meaning of Treasury Regulation
1.162-27(e)(4)(vi), under the performance goals relating to Options granted to
Covered Employees and intended to qualify as “performance-based compensation”
under Code Section 162(m) and regulations thereunder.

 

(d)

Tax Provisions.

 

(i)

Withholding. The Company and any subsidiary or affiliate is authorized to
withhold from any Award granted, any payment relating to an Award under the
Plan, including from a distribution of Stock, or any payroll or other payment to
a Participant, amounts of withholding and other taxes due or potentially payable
in connection with any transaction involving an Award, and to take such other
action as the Committee may deem advisable to enable the Company and
Participants to satisfy obligations for the payment of withholding taxes and
other tax obligations relating to any Award. This authority shall include
authority to withhold or receive Stock or other property and to make cash
payments in respect thereof in satisfaction of a Participant’s withholding
obligations, either on a mandatory or elective basis in the discretion of the
Committee. Other provisions of the Plan notwithstanding, only the minimum amount
of Stock deliverable in connection with an Award necessary to satisfy statutory
withholding requirements will be withheld.

 

(ii)

Requirement of Notification of Code Section 83(b) Election. If any Participant
shall make an election under Section 83(b) of the Code (to include in gross
income in the year of transfer the amounts specified in Code Section 83(b)) or
under a similar provision of the laws of a jurisdiction outside the United
States, such Participant shall notify the Company of such election within ten
days of filing notice of the election with the Internal Revenue Service or other
governmental authority, in addition to any filing and notification required
pursuant to regulations issued under Code Section 83(b) or other applicable
provision.

 

(iii)

Requirement of Notification Upon Disqualifying Disposition Under Code Section
421(b). If any Participant shall make any disposition of shares of Stock
delivered pursuant to the exercise of an Incentive Stock Option under the
circumstances described in Code Section 421(b) (relating to certain
disqualifying dispositions), such Participant shall notify the Company of such
disposition within ten days thereof.

 

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(e)

Changes to the Plan. The Board may amend, suspend or terminate the Plan or the
Committee’s authority to grant Awards under the Plan without the consent of
stockholders or Participants; provided, however, that any amendment to the Plan
shall be submitted to the Company’s stockholders for approval not later than the
earliest annual meeting for which the record date is after the date of such
Board action if such stockholder approval is required by any federal or state
law or regulation or the rules of any stock exchange or automated quotation
system on which the Stock may then be listed or quoted, and the Board may
otherwise, in its discretion, determine to submit other amendments to the Plan
to stockholders for approval; and provided further, that, without the consent of
an affected Participant, no such Board action may have a material adverse affect
on the rights of such Participant under any outstanding Award.

 

(f)

Right of Setoff. The Company or any subsidiary or affiliate may, to the extent
permitted by applicable law, deduct from and set off against any amounts the
Company or a subsidiary or affiliate may owe to the Participant from time to
time, including amounts payable in connection with any Award, owed as wages,
fringe benefits, or other compensation owed to the Participant, such amounts as
may be owed by the Participant to the Company, although the Participant shall
remain liable for any part of the Participant’s payment obligation not satisfied
through such deduction and setoff. By accepting any Award granted hereunder, the
Participant agrees to any deduction or setoff under this Section 10(f).

 

(g)

Unfunded Status of Awards; Creation of Trusts. The Plan is intended to
constitute an “unfunded” plan for incentive and deferred compensation. With
respect to any payments not yet made to a Participant or obligation to deliver
Stock pursuant to an Award, nothing contained in the Plan or any Award shall
give any such Participant any rights that are greater than those of a general
creditor of the Company; provided that the Committee may authorize the creation
of trusts and deposit therein cash, Stock, other Awards or other property, or
make other arrangements to meet the Company’s obligations under the Plan. Such
trusts or other arrangements shall be consistent with the “unfunded” status of
the Plan unless the Committee otherwise determines with the consent of each
affected Participant.

 

(h)

Nonexclusivity of the Plan. Neither the adoption of the Plan by the Board nor
its submission to the stockholders of the Company for approval shall be
construed as creating any limitations on the power of the Board or a committee
thereof to adopt such other incentive arrangements, apart from the Plan, as it
may deem desirable, including incentive arrangements and awards which do not
qualify under Code Section 162(m), and such other arrangements may be either
applicable generally or only in specific cases.

 

(i)

Payments in the Event of Forfeitures; Fractional Shares. No fractional shares of
Stock shall be issued or delivered pursuant to the Plan or any Award. The
Committee shall determine whether cash, other Awards or other property shall be
issued or paid in lieu of such fractional shares or whether such fractional
shares or any rights thereto shall be forfeited or otherwise eliminated.

 

(j)

Compliance with Code Section 162(m). It is the intent of the Company that
Options granted to Covered Employees and other Awards designated as Awards to
Covered Employees subject to Section 7 shall constitute qualified
“performance-based compensation” within the meaning of Code Section 162(m) and
regulations thereunder, unless otherwise determined by the Committee at the time
of allocation of an Award.

Accordingly, the terms of Sections 7(b), (c), and (d), including the definitions
of Covered Employee and other terms used therein, shall be interpreted in a
manner consistent with Code Section 162(m) and regulations thereunder. The
foregoing notwithstanding, because the Committee cannot determine with certainty
whether a given Participant will be a Covered Employee with respect to a fiscal
year that has not yet been completed, the term Covered Employee as used herein
shall mean only a person designated by the Committee as likely to be a

 

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Covered Employee with respect to a specified fiscal year. If any provision of
the Plan or any Award document relating to a Performance Award that is
designated as intended to comply with Code Section 162(m) does not comply or is
inconsistent with the requirements of Code Section 162(m) or regulations
thereunder, such provision shall be construed or deemed amended to the extent
necessary to conform to such requirements, and no provision shall be deemed to
confer upon the Committee or any other person discretion to increase the amount
of compensation otherwise payable in connection with any such Award upon
attainment of the applicable performance objectives.

 

(k)

Certain Limitations Relating to Accounting Treatment of Awards. Other provisions
of the Plan notwithstanding, the Committee’s authority under the Plan is limited
to the extent necessary to ensure that any Option or other Award of a type that
the Committee has intended to be subject to fixed accounting with a measurement
date at the date of grant or the date performance conditions are satisfied under
APB 25 shall not become subject to “variable” accounting solely due to the
existence of such authority, unless the Committee specifically determines that
the Award shall remain outstanding despite such “variable” accounting.

 

(l)

Governing Law. The validity, construction, and effect of the Plan, any rules and
regulations relating to the Plan and any Award document shall be determined in
accordance with the laws of the State of Delaware, without giving effect to
principles of conflicts of laws, and applicable provisions of federal law.

 

(m)

Awards to Participants Outside the United States. The Committee may modify the
terms of any Award under the Plan made to or held by a Participant who is then
resident or primarily employed outside of the United States in any manner deemed
by the Committee to be necessary or appropriate in order that such Award shall
conform to laws, regulations, and customs of the country in which the
Participant is then resident or primarily employed, or so that the value and
other benefits of the Award to the Participant, as affected by foreign tax laws
and other restrictions applicable as a result of the Participant’s residence or
employment abroad, shall be comparable to the value of such an Award to a
Participant who is resident or primarily employed in the United States. An Award
may be modified under this Section 10(m) in a manner that is inconsistent with
the express terms of the Plan, so long as such modifications will not contravene
any applicable law or regulation or result in actual liability under Section
16(b) of the Exchange Act for the Participant whose Award is modified.

 

(n)

Limitation on Rights Conferred under Plan. Neither the Plan nor any action taken
hereunder shall be construed as (i) giving any Eligible Person or Participant
the right to continue as an Eligible Person or Participant or in the employ or
service of the Company or a subsidiary or affiliate, (ii) interfering in any way
with the right of the Company or a subsidiary or affiliate to terminate any
Eligible Person’s or Participant’s employment or service at any time, (iii)
giving an Eligible Person or Participant any claim to be granted any Award under
the Plan or to be treated uniformly with other Participants and employees, or
(iv) conferring on a Participant any of the rights of a stockholder of the
Company unless and until the Participant is duly issued or transferred shares of
Stock in accordance with the terms of an Award or an Option is duly exercised.
Except as expressly provided in the Plan and an Award document, neither the Plan
nor any Award document shall confer on any person other than the Company and the
Participant any rights or remedies thereunder.

 

(o)

Severability; Entire Agreement. If any of the provisions of this Plan or any
Award document is finally held to be invalid, illegal or unenforceable (whether
in whole or in part), such provision shall be deemed modified to the extent, but
only to the extent, of such invalidity, illegality or unenforceability, and the
remaining provisions shall not be affected thereby; provided, that, if any of
such provisions is finally held to be invalid, illegal, or unenforceable because
it exceeds the maximum scope determined to be acceptable to permit such
provision to be enforceable, such

 

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provision shall be deemed to be modified to the minimum extent necessary to
modify such scope in order to make such provision enforceable hereunder. The
Plan and any Award documents contain the entire agreement of the parties with
respect to the subject matter thereof and supersede all prior agreements,
promises, covenants, arrangements, communications, representations and
warranties between them, whether written or oral with respect to the subject
matter thereof.

 

(p)

Plan Effective Date and Termination. The Plan shall become effective if, and at
such time as, it is adopted by the Board and the Board recommends approval of
the Plan at the next meeting of the Company’s stockholders. Unless earlier
terminated by action of the Board, the Plan will remain in effect until such
time as no Stock remains available for delivery under the Plan and the Company
has no further rights or obligations under the Plan with respect to outstanding
Awards under the Plan.

 

(q)

Repricing. No award that could be characterized as a “repricing” shall be made
pursuant to this Plan without shareholder approval.

R:\WPDOC\pb\Ortec\Forms\2006 Stock Award and Incentive Plan Final#2.doc

 

 

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