Document:

EXHIBIT
10.5

      

      BACTERIN
INTERNATIONAL

      EQUITY
INCENTIVE PLAN

       

      Effective
June 7, 2010

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      BACTERIN
INTERNATIONAL

      EQUITY
INCENTIVE PLAN

      
 

      ARTICLE
I

      INTRODUCTION

      

      1.1 Establishment.  K-Kitz,
Inc., a Delaware corporation, hereby establishes the Bacterin International
Equity Incentive Plan for certain key employees of the Company and certain
directors and consultants to the Company.  The Plan permits the grant
of incentive stock options within the meaning of Code § 422, non-qualified
stock options, restricted stock awards, stock appreciation rights, stock
bonuses, restricted stock units and other stock grants to certain key employees
of the Company and to certain directors and consultants to the
Company.

      

      1.2 Purposes.  The
purposes of the Plan are to provide those who are selected for participation in
the Plan with added incentives to continue in the long-term service of the
Company and to create in such persons a more direct interest in the future
success of the operations of the Company by relating incentive compensation to
increases in shareholder value, so that the income of those participating in the
Plan is more closely aligned with the income of the Company's
shareholders.  The Plan is also designed to provide a financial
incentive that will help the Company attract, retain and motivate the most
qualified employees, directors, and consultants.

       

      ARTICLE
II

      DEFINITIONS

      

      2.1 "Affiliated
Corporation" means any corporation or other entity that is affiliated
with the Plan Sponsor through stock ownership or otherwise, provided, however,
that for purposes of Incentive Options granted pursuant to the Plan, an
"Affiliated Corporation" means any parent or subsidiary of the Plan Sponsor as
defined in Code § 424.

      

      2.2 "Award"
means an Option, a Restricted Stock Award, a Stock Appreciation Right, a
Restricted Stock Unit, or grants of Stock issued under the Plan.

      

      2.3 "Board"
means the Board of Directors of the Plan Sponsor.

      

      2.4 "Cause"
shall have the meaning assigned to it by the Participant’s employment agreement,
if the Company has entered into an employment agreement with the Participant;
otherwise termination for "Cause" shall mean termination of employment as a
result of a violation of any Company policy, procedure or guideline, or engaging
in any of the following forms of misconduct: conviction of any felony or of any
misdemeanor involving dishonesty or moral turpitude; theft or misuse of the
Company's property or time; use of alcohol or controlled substances on the
Company's premises or appearing on such premises while intoxicated or under the
influence of drugs not prescribed by a physician, or after having abused
prescribed medications; illegal use of any controlled substance; illegal
gambling on the Company's premises; discriminatory or harassing behavior,
whether or not illegal under federal, state or local law; willful misconduct; or
falsifying any document or making any false or misleading
statement  relating to employment by the Company; or injures the
economic or ethical welfare of the Company by misconduct or inattention to
duties and responsibilities, or fails to meet the Company's performance
expectations, as determined by the Company in its sole discretion.

       

      
        
          
            	
                    Bacterin
      International Equity Incentive Plan

                  	
                    6/4/2010

                  

          

        

      

       

      
        
          
          

        

        
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      2.5 "Change in
Control" occurs on the date that:

      

      
        	
                 
      

              	
                (a)

              	
                any
      one person, or more than one person acting as a group, acquires ownership
      of stock of the Plan Sponsor that, together with stock held by such person
      or group, constitutes more than 50% of the total Fair Market Value or
      total voting power of the stock of the Plan Sponsor. However, if any one
      person or more than one person acting as a group, is considered to own
      more than 50% of the total Fair Market Value or total voting power of the
      stock of the Plan Sponsor, the acquisition of additional stock by the same
      person or persons is not considered to cause a change in the ownership of
      the Plan Sponsor (or to cause a change in the effective control of the
      Plan Sponsor. An increase in the percentage of stock owned by any one
      person, or persons acting as a group, as a result of a transaction in
      which the Plan Sponsor acquires its stock in exchange for property will be
      treated as an acquisition of stock for purposes of this
      Section.

              

      

      

      
        	
                 
      

              	
                (b)

              	
                there
      is a change in the effective control of the Plan Sponsor. A change in the
      effective control of the Plan Sponsor occurs on the date that
      either:

              

      

      

      
        	
                 
      

              	
                (i)

              	
                Any
      one person, or more than one person acting as a group, acquires (or has
      acquired during the 12-month period ending on the date of the most recent
      acquisition by such person or persons) ownership of stock of the Plan
      Sponsor possessing 30% or more of the total voting power of the stock of
      such corporation; or

              

      

      

      
        
          	
                	
                  (ii)

                	
                  a
      majority of members of the Plan Sponsor's board of directors is replaced
      during any 12-month period by directors whose appointment or election is
      not endorsed by a majority of the members of the Plan Sponsor's board of
      directors prior to the date of the appointment or
  election.

                

        

      

      

      
        	
                 
      

              	
                (c)

              	
                any
      one person, or more than one person acting as a group, acquires ownership
      of assets of the Plan Sponsor that have a gross fair market value equal to
      or more than 40% of the total gross fair market value of all of the assets
      of the Plan Sponsor immediately prior to such acquisitions.  For
      this purpose, gross fair market value means the value of the assets of the
      Plan Sponsor, or the value of the assets being disposed of, determined
      without regard to any liabilities associates with the
    assets.

              

      

      

      Persons Acting as a
Group. Persons will not be considered to be acting as a group solely
because they purchase or own stock of the Plan Sponsor at the same time, or as a
result of the same public offering. However, persons will be considered to be
acting as a group if they are owners of a corporation that enters into a merger,
consolidation, purchase or acquisition of stock, or similar business transaction
with the corporation. If a person, including an entity, owns stock in both
corporations that enter into a merger, consolidation, purchase or acquisition of
stock, or similar transaction, such shareholder is considered to be acting as a
group with other shareholders in a corporation prior to the transaction giving
rise to the change and not with respect to the ownership interest in the other
corporation.

      
         

        
          
            
              	
                      Bacterin
      International Equity Incentive Plan

                    	
                      6/4/2010

                    

            

          

        

      

       

      
        
          
          

        

        
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      This
Section shall be interpreted in accordance with Treasury guidance for the
definition of Change in Control under Code § 409A.

      

      2.6 "Code"
means the Internal Revenue Code of 1986, as it may be amended from time to
time.

      

      2.7 "Committee"
means a committee established under Article X of the Plan which is empowered to
take actions with respect to the administration of the Plan.

      

      2.8 "Company"
means the Plan Sponsor and the Affiliated Corporations.

      

      2.9 "Disabled"
or "Disability"
shall have the meaning given to such terms in Code § 22(e)(3).

      

      2.10
"Effective
Date" means the effective date of the Plan which is June 7, 2010;
however, the adoption of those provisions of the Plan by the Board which relate
to the grant of Incentive Options are subject to approval and ratification by
the shareholders of the Plan Sponsor within 12 months of the effective
date.  Incentive Options granted under the Plan prior to the approval
of the Plan by the shareholders of the Plan Sponsor shall be subject to approval
of the Plan by the shareholders of the Plan Sponsor.

      

      2.11
"Eligible
Employees" means the employees (including, without limitation, officers
and directors who are also employees) of the Company who are selected for
participation in the Plan.  For purposes of the Plan, an employee is
an individual whose wages are subject to the withholding of federal income tax
under Code § 3401.

      

      2.12
"Eligible
Individuals" means those consultants to the Company and directors of the
Company who are selected by the Committee for participation in the
Plan.

      

      2.13
"Fair
Market Value" means the closing price, on the Over-The-Counter Bulletin
Board (OTCBB), the principal stock exchange or other market on which the Stock
is traded, on the trading day preceding the grant date.  If the price
of the Stock is not reported on any securities exchange or national market
system, the Fair Market Value of the Stock on a particular date shall be as
determined by the Committee in good faith by applying any reasonable valuation
method permitted under Code § 409A to determine fair market value in
accordance with Code § 409A.

      

      2.14
"Incentive
Option" means an Option designated as an incentive stock option and
granted in accordance with Code § 422.

      
         

        
          
            
              	
                      Bacterin
      International Equity Incentive Plan

                    	
                      6/4/2010

                    

            

          

        

      

       

      
        
          
          

        

        
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      2.15
"Non-Qualified
Option" means any Option other than an Incentive Option.

      

      2.16
"Option"
means a right to purchase Stock at a stated or formula price for a specified
period of time.  Options granted under the Plan shall be either
Incentive Options or Non-Qualified Options.

      

      2.17
"Option
Agreement" shall have the meaning given to it in Section
4.3.

      

      2.18
"Option
Holder" means a Participant who has been granted one or more Options
under the Plan.

      

      2.19
"Option
Period" shall have the meaning given to it in Section
4.3(c).

      

      2.20
"Option
Price" means the price at which each Share subject to an Option may be
purchased, determined in accordance with Section 4.3(b).

      

      2.21
"Participant"
means an Eligible Employee or Eligible Individual designated by the Committee
during the term of the Plan to receive one or more Awards under the
Plan.

      

      2.22
"Plan"
means the Bacterin International Equity Incentive Plan.

      

      2.23
"Plan
Sponsor" means K-Kitz, Inc. and any successor thereto.

      

      2.24
"Restricted
Stock Award" means Stock granted to a Participant that is subject to
certain restrictions.

      

      2.25
"Restricted
Stock Award Agreement" shall have the meaning given to it in Section
5.2.

      

      2.26
"Restricted
Stock Unit" means a hypothetical interest in the value of one Share,
denominated in United States dollars.

      

      2.27
"RSU
Agreement" shall have the meaning given to it in Section
6.2.

      

      2.28
"RSU
Holder" means a Participant who has been granted one or more RSUs under
the Plan.  The term “RSU Holder” also includes the beneficiary of a
deceased Participant.

      

      2.29
"RSUs"
means Restricted Stock Units.

      

      2.30
"SAR
Agreement" shall have the meaning given to it in Section
7.3.

      

      2.31
"SAR
Holder" means a Participant who has been granted one or more SARs under
the Plan.

      

      2.32
"SAR
Period" shall have the meaning given to it in Section
7.3(c).

      
         

        
          
            
              	
                      Bacterin
      International Equity Incentive Plan

                    	
                      6/4/2010

                    

            

          

        

      

       

      
        
          
          

        

        
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      2.33
"SARs"
means Stock Appreciation Rights.

      

      2.34
"Section"
or "Subsection" means a reference to a section or subsection of the Plan,
unless another reference specifically applies.

      

      2.35
"Share"
means a share of Stock.

      

      2.36
"Shareholders
Agreement" shall have the meaning given to it in Section
12.4.

      

      2.37
"Stock"
means the common stock of the Plan Sponsor and any stock issued or issuable
subsequent to the Effective Date in substitution for the common
stock.

      

      2.38
"Stock
Appreciation Right" means the right, granted by the Committee pursuant to
the Plan, to receive a payment equal to the increase in the Fair Market Value of
a Share subsequent to the grant of such right.

      

      2.39
"Stock
Bonus" means either an outright grant of Stock or a grant of Stock
subject to and conditioned upon certain employment or performance related
goals.

      

      ARTICLE
III

      PARTICIPATION
AND LIMIT ON AWARDS

      

      3.1 Participation.  The Committee
shall select the Eligible Employees and Eligible Individuals who are
Participants in the Plan.  The Committee shall select the Eligible
Employees who, in the judgment of the Committee, are performing, or during the
term of their incentive arrangement will perform, vital services in the
management, operation and development of the Company, and significantly
contribute, or are expected to significantly contribute, to the achievement of
long-term corporate economic objectives.  The Committee shall select
the Eligible Individuals from the non-employee consultants and directors for the
Company who are performing services important to the operation and growth of the
Company.  Participants may be granted from time to time one or more
Awards.

      

      3.2 Limit on
Awards.  No Participant
shall receive Awards for any calendar year in excess of 2,500,000 Shares and all
Awards for all Participants in any calendar year shall not exceed 5,000,000
Shares.

      

      ARTICLE
IV

      OPTIONS

      

      4.1 Grant of
Options. A Participant may be granted one or more
Options.  Options shall be granted as of the date specified in the
Option Agreement.  The Committee in its sole discretion shall
designate whether an Option is an Incentive Option or a Non-Qualified
Option.  Only Non-Qualified Options may be granted to Eligible
Individuals.  The Committee may grant both an Incentive Option and a
Non-Qualified Option to an Eligible Employee at the same time or at different
times.  Incentive Options and Non-Qualified Options, whether granted
at the same time or at different times, shall be deemed to have been awarded in
separate grants and shall be clearly identified.  In no event shall
the exercise of one Option affect the right to exercise any other Option or
affect the number of Shares for which any other Option may be exercised. The
grant of each Option shall be separately approved by the Committee, and the
receipt of one Option shall not result in automatic receipt of any other
Option.  Upon determination by the Committee to grant an Option to a
Participant, the Committee shall enter into an Option Agreement with the
Participant.

      
         

        
          
            
              	
                      Bacterin
      International Equity Incentive Plan

                    	
                      6/4/2010

                    

            

          

        

      

       

      
        
          
          

        

        
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      4.2 Restrictions on
Incentive Options.

      

      
        	
                 
      

              	
                (a)

              	
                Initial
      Exercise.  The aggregate Fair Market Value of the Shares
      with respect to which Incentive Options are exercisable for the first time
      by an Option Holder in any calendar year, under the Plan and any other
      plan of the Company, shall not exceed $100,000.  For this
      purpose, the Fair Market Value of the Shares shall be determined as of the
      date of grant of the Option.  To the extent the Option Holder
      holds two or more Options which become exercisable for the first time in
      the same calendar year, the $100,000 limitation shall be applied on the
      basis of the order in which the Options are granted.  Any Option
      or portion thereof that exceeds the $100,000 limit shall be treated as a
      Non-Qualified Option, but only to the extent of such
    excess.

              

      

      

      
        	
                 
      

              	
                (b)

              	
                Ten Percent
      Stockholders.   Incentive Options granted to an
      Option Holder who is the holder of record of 10% or more of the
      outstanding Stock of the Plan Sponsor shall have an Option Price equal to
      110% of the Fair Market Value of the Shares on the date of grant of the
      Option and the Option Period for any such Option shall not exceed five
      years.

              

      

      

      
        	
                 
      

              	
                (c)

              	
                No
      Award of Incentive Options shall be granted after June 6, 2020, the day
      before the 10th
      year anniversary of the Effective
Date.

              

      

      

      4.3 Stock Option
Agreements.  Each Option granted under the Plan shall be
evidenced by an agreement (an "Option Agreement").  An Option
Agreement shall be issued by the Plan Sponsor in the name of the Option Holder
and in such form as may be approved by the Committee.  The Option
Agreement shall incorporate and conform to the conditions in the Plan as well as
any other terms and conditions that are not inconsistent as the Committee may
consider appropriate. In the event of any inconsistency between the provisions
of the Plan and any Option Agreement, the provisions of the Plan shall
govern.

      

      
        	
                 
      

              	
                (a)

              	
                Number of
      Shares. Each Option Agreement shall state that it covers a
      specified number of Shares, as determined by the
  Committee.

              

      

      

      
        	
                 
      

              	
                (b)

              	
                Option
      Price. The price at which each Share covered by an Option may be
      purchased shall be determined in each case by the Committee and set forth
      in the Option Agreement, and shall not be less than 100% of the Fair
      Market Value of the Stock on the date the Option is
    granted.

              

      

      
         

        
          
            
              	
                      Bacterin
      International Equity Incentive Plan

                    	
                      6/4/2010

                    

            

          

        

      

       

      
        
          
          

        

        
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                (c)

              	
                Duration of
      Options. Each Option Agreement shall state the period of time,
      determined by the Committee, within which the Option may be exercised by
      the Option Holder (the "Option Period").  The Option Period must
      end not more than ten years from the date the Option is
      granted.  If the Option Agreement does not specify the Option
      Period, the Option Period will end ten years from the date the Option is
      granted.

              

      

      

      
        	
                 
      

              	
                (d)

              	
                Restrictions
      on Exercise. The Option Agreement shall also set forth any
      restrictions on Option exercise during the Option Period, if any, as may
      be determined by the Committee.  Each Option shall become
      exercisable (vest) over such period of time, if any, or upon such events,
      as determined by the Committee.  If the Option Agreement does
      not specify the period of time over which the Option becomes exercisable,
      the Option shall become exercisable (vest) 20% on each subsequent
      anniversary date of the Option grant, so that the Option is 100%
      exercisable (vested) on the 5th
      anniversary of the date of the Option
grant.

              

      

      

      
        	
                 
      

              	
                (e)

              	
                Termination
      of Services, Death, or Disability.  The Committee may
      specify in the Option Agreement the period, if any, after which an Option
      may be exercised following termination of the Option Holder's
      services.  If the Option Agreement does not specify the period
      of time following termination of service during which Options may be
      exercised, the time periods in this Subsection shall
      apply.  Once an Option is granted, the Committee may not change
      the time period during which an Option may be exercised following
      termination of the Option Holder’s services, unless such a change would
      not cause additional taxes to be imposed pursuant to Code
      § 409A.

              

      

      

      
        	
                 
      

              	
                (i)

              	
                Termination
      for Cause.  If the
      services of the Option Holder are terminated within the Option Period for
      Cause, as determined by the Company, the Option shall thereafter be void
      for all purposes.

              

      

      

      
        	
                 
      

              	
                (ii)

              	
                Disability.  If the
      Option Holder becomes Disabled and terminates services, the Option may be
      exercised by the Option Holder within six months following the Option
      Holder's termination of services on account of Disability (provided that
      such exercise must occur within the Option Period), but not
      thereafter.  The Option may be exercised only to the extent the
      Option had become exercisable on or before the date of the Option Holder's
      termination of services because of
Disability.

              

      

      

      
        	
                 
      

              	
                (iii)

              	
                Death.  If the
      Option Holder dies during the Option Period while still performing
      services for the Company or within the six month period referred to in
      (ii) above or the three-month period referred to in (iv) below, the Option
      may be exercised by those entitled to do so under the Option Holder's will
      or by the laws of descent and distribution within six months following the
      Option Holder's death, (provided that such exercise must occur within the
      Option Period), but not thereafter.  The Option may be exercised
      only to the extent the Option had become exercisable on or before the date
      of the Option Holder's termination of services because of the Option
      Holder’s death.

              

      

      
         

        
          
            
              	
                      Bacterin
      International Equity Incentive Plan

                    	
                      6/4/2010

                    

            

          

        

      

       

      
        
          
          

        

        
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                (iv)

              	
                Termination
      for Reasons Other than Cause, Disability or Death.  If the
      Option Holder is no longer employed by the Company or performing services
      for the Company for any reason other than Cause, Disability or the Option
      Holder's death, the Option may be exercised by the Option Holder within
      three months following the date of termination (provided that the exercise
      must occur within the Option Period), but not thereafter.  The
      Option may be exercised only to the extent the Option had become
      exercisable on or before the date of the Option Holder's termination of
      services.

              

      

      

      4.4 Transferability.  Each
Option shall not be transferable by the Option Holder except by will or pursuant
to the laws of descent and distribution.  Each Option is exercisable
during the Option Holder’s lifetime only by him or her, or in the event of
Disability or incapacity, by his or her guardian or legal
representative.  The Committee may, however, provide at the time of
grant or thereafter that the Option Holder may transfer a Non-Qualified Option
to a member of the Option Holder’s immediate family, a trust of which members of
the Option Holder’s immediate family are the only beneficiaries, or a
partnership of which members of the Option Holder’s immediate family or trusts
for the sole benefit of the Option Holder’s immediate family are the only
partners.  Immediate family means the Option Holder’s spouse, issue
(by birth or adoption), parents, grandparents, and siblings (including half
brothers and sisters and adopted siblings).  During the Option
Holder’s lifetime the Option Holder may not transfer an Incentive Option under
any circumstances.

      

      4.5 Manner of
Exercise.  The method for exercising each Option granted
hereunder shall be by delivery to the Plan Sponsor of (1) written notice
specifying the number of Shares with respect to which such Option is exercised,
(2) payment in full of the exercise price and any liability the Company may
have for withholding of federal, state or local income or other taxes incurred
by reason of the exercise of the Option, (3) representation meeting the
requirements of Section 12.1 if requested by the Plan Sponsor, and (4) a
Shareholders Agreement meeting the requirements of Section 12.4 if requested by
the Plan Sponsor.  The purchase of such Shares shall take place at the
principal offices of the Plan Sponsor within thirty days following delivery of
such notice, at which time the Option Price of the Shares shall be paid in full.
If the Option Price is paid by means of a broker's loan transaction, in whole or
in part, the closing of the purchase of the Stock under the Option shall take
place (and the Option shall be treated as exercised) on the date on which, and
only if, the sale of Stock upon which the broker's loan was based has been
closed and settled, unless the Option Holder makes an irrevocable written
election, at the time of exercise of the Option, to have the exercise treated as
fully effective for all purposes upon receipt of the Option Price by the Plan
Sponsor regardless of whether or not the sale of the Stock by the broker is
closed and settled.  A properly executed certificate or certificates
representing the Shares shall be delivered to the Option Holder upon
payment.  If Options on less than all shares evidenced by an Option
Agreement are exercised, the Plan Sponsor shall deliver a new Option Agreement
evidencing the Option on the remaining shares upon delivery of the Option
Agreement for the Option being exercised.

      
         

        
          
            
              	
                      Bacterin
      International Equity Incentive Plan

                    	
                      6/4/2010

                    

            

          

        

      

       

      
        
          
          

        

        
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      4.6 Payment of the
Exercise Price.  The exercise price shall be paid by any of the
following methods or any combination of the following methods at the election of
the Option Holder, or by any other method approved by the Committee upon the
request of the Option Holder:

      

      
        
          	
                	
                  (a) 

                	
                  in
      cash.

                

        

      

      

      
        	
                 
      

              	
                (b)

              	
                by
      certified check, cashier's check or other check acceptable to the Plan
      Sponsor, payable to the order of the Plan
  Sponsor.

              

      

      

      
        	
                 
      

              	
                (c)

              	
                by
      delivery to the Plan Sponsor of certificates representing the number of
      Shares then owned by the Option Holder, the Fair Market Value of which
      equals the purchase price of the Stock purchased pursuant to the Option,
      properly endorsed for transfer to the Plan Sponsor.  No Option
      may be exercised by delivery to the Plan Sponsor of certificates
      representing Stock, unless such Stock has been held by the Option Holder
      for more than six months.  The Fair Market Value of any Shares
      delivered in payment of the purchase price upon exercise of the Option
      under the Plan shall be the Fair Market Value as of the exercise date. The
      exercise date shall be the day of delivery of the certificates for the
      Stock used as payment of the Option
Price.

              

      

      

      
        	
                 
      

              	
                (d)

              	
                by
      delivery to the Plan Sponsor of a properly executed notice of exercise
      together with irrevocable instructions to a broker to deliver to the Plan
      Sponsor promptly the amount of the proceeds of the sale of all or a
      portion of the Stock or of a loan from the broker to the Option Holder
      required to pay the Option Price.

              

      

      

      4.7 Withholding
Requirement.  The Plan Sponsor's obligations to deliver Shares
upon the exercise of any Option shall be subject to the Participant's
satisfaction of all applicable federal, state and local income and other tax
withholding requirements.

      

      
        	
                 
      

              	
                (a)

              	
                Non-Qualified
      Options.  Upon
      exercise of an Option, the Option Holder shall make appropriate
      arrangements with the Company to provide for the amount of additional
      withholding required by Code §§ 3102 and 3402 and applicable state
      income tax laws, including payment of such taxes through delivery of
      Shares or by withholding Stock to be issued under the
    Option.

              

      

      

      
        	
                 
      

              	
                (b)

              	
                Incentive
      Options.  If an
      Option Holder makes a disposition (as defined in Code § 424(c)) of
      any Stock acquired pursuant to the exercise of an Incentive Option prior
      to the expiration of two years from the date on which the Incentive Option
      was granted or prior to the expiration of one year from the date on which
      the Option was exercised, the Option Holder shall send written notice to
      the Company at the Company's principal place of business of the date of
      such disposition, the number of shares disposed of, the amount of proceeds
      received from such disposition and any other information relating to such
      disposition as the Company may reasonably request.  The Option
      Holder shall, in the event of such a disposition, make appropriate
      arrangements with the Company to provide for the amount of additional
      withholding, if any, required by Code §§ 3102 and 3402 and applicable
      state income tax laws.

              

      

      
         

        
          
            
              	
                      Bacterin
      International Equity Incentive Plan

                    	
                      6/4/2010

                    

            

          

        

      

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      4.8 Withholding With
Stock. The Committee may, in its sole discretion, grant the Participant
an election to pay all such amounts of tax withholding, or any part thereof, by
electing to transfer to the Plan Sponsor, or to have the Plan Sponsor withhold
from shares otherwise issuable to the Participant, Shares having a value equal
to the amount required to be withheld or such lesser amount as may be elected by
the Participant.  All elections shall be subject to the approval or
disapproval of the Committee.  The value of Shares to be withheld
shall be based on the Fair Market Value of the Stock on the date that the amount
of tax to be withheld is to be determined (the "Tax Date").  Any such
elections by Participants to have Shares withheld for this purpose will be
subject to the following restrictions:

      

      
        
          	
                	
                  (a) 

                	
                  All
      elections must be made prior to the Tax
Date.

                

        

      

      

      
        
          	
                	
                  (b) 

                	
                  All
      elections shall be
irrevocable.

                

        

      

      

      
        	
                 
      

              	
                (c)

              	
                If
      the Participant is an officer or director of the Plan Sponsor within the
      meaning of Section 16 of the 1934 Act ("Section 16"), the Participant must
      satisfy the requirements of such Section 16 and any applicable Rules
      thereunder with respect to the use of Stock to satisfy such tax
      withholding obligation.

              

      

      

      4.9 Shareholder
Privileges.  No Option Holder shall have any rights as a
shareholder with respect to any Shares covered by an Option until the Option
Holder becomes the holder of record of such Stock, and no adjustments shall be
made for dividends or other distributions or other rights as to which there is a
record date preceding the date such Option Holder becomes the holder of record
of such Stock, except as provided in the Plan.

      

      4.10
Change in
Control.

      

      
        	
                 
      

              	
                (a)

              	
                Unless
      otherwise determined by the Committee (either at the time an Option is
      granted or by subsequent action), the Options shall not be subject to
      accelerated vesting at the time of a Change in
  Control.

              

      

      

      
        	
                 
      

              	
                (b)

              	
                Upon
      the consummation of a Change in Control, all outstanding Options shall
      terminate and cease to be outstanding, except to the extent assumed by the
      successor corporation (or parent thereof) or otherwise continued in effect
      pursuant to the terms of the Change in Control transaction.  An
      Option Holder may make an irrevocable election to exercise an Option that
      is contingent upon and effective as of the effective date of the Change in
      Control.

              

      

      
         

        
          
            
              	
                      Bacterin
      International Equity Incentive Plan

                    	
                      6/4/2010

                    

            

          

        

      

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                (c)

              	
                Each
      Option which is assumed in connection with a Change in Control or
      otherwise continued in effect shall be appropriately adjusted, immediately
      after such Change in Control, to apply to the number and class of
      securities which would have been issuable to the Option Holder in
      consummation of such Change in Control, had the Option been exercised
      immediately prior to the Change in Control.  Appropriate
      adjustments shall also be made to (i) the number and class of
      securities available for issuance under the Plan following the
      consummation of the Change in Control and (ii) the exercise price
      payable per share under each outstanding Option, provided the aggregate
      exercise price payable for such securities shall remain the
      same.  To the extent the actual holders of the Company’s
      outstanding Stock receive cash consideration for their Stock in
      consummation of the Change in Control, the successor corporation may, in
      connection with the assumption of the outstanding options under this Plan,
      substitute one or more shares of its own common stock with a fair market
      value equivalent to the cash consideration paid per Share in such Change
      in Control.

              

      

       

      
        	
                 
      

              	
                (d)

              	
                The
      Committee shall have the discretion, exercisable either at the time the
      Option is granted or at any time while the Option remains outstanding, to
      structure one or more Options so that those Options shall automatically
      accelerate and vest in full upon the occurrence of a Change in Control,
      whether or not those Options are to be assumed in the Change in Control or
      otherwise continued in effect.

              

      

      

      
        	
                 
      

              	
                (e)

              	
                The
      portion of any Incentive Option accelerated in connection with a Change in
      Control shall remain exercisable as an Incentive Option only to the extent
      the applicable $100,000 limitation is not exceeded.  To the
      extent such dollar limitation is exceeded, the accelerated portion of such
      Option shall be exercisable as a Non-Qualified Option under the federal
      tax laws.

              

      

      

      ARTICLE
V

      RESTRICTED
STOCK

      

      5.1 Persons
Eligible.  The Committee, in its sole discretion, may grant a
Participant one or more Restricted Stock Awards consisting of
Shares.  The number of Shares granted as a Restricted Stock Award
shall be determined by the Committee.

      

      5.2 Terms of
Award.  The Committee shall determine at the time of the grant
of a Restricted Stock Award any other terms that will apply to the Restricted
Stock Award. Each Restricted Stock Award granted under the Plan shall be
evidenced by a written restricted stock agreement (a “Restricted Stock Award
Agreement”).  A Restricted Stock Award Agreement shall be issued by
the Plan Sponsor in the name of the Participant and in such form as may be
approved by the Committee.  The Restricted Stock Award Agreement shall
incorporate and conform to the conditions in the Plan as well as any other terms
and conditions that are not inconsistent as the Committee may consider
appropriate. In the event of any inconsistency between the provisions of the
Plan and any Restricted Stock Award Agreement, the provisions of the Plan shall
govern.

      

      
        	
                 
      

              	
                (a)

              	
                Number of
      Shares of Restricted Stock.  Each Restricted Stock Award
      Agreement shall state that it covers a specified number of Shares, as
      determined by the Committee.

              

      

      
      

      
        
          
            
              	
                      Bacterin
      International Equity Incentive Plan

                    	
                      6/4/2010

                    

            

          

        

      

      
      

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                (b)

              	
                Restrictions.
      The Restricted Stock Award Agreement shall set forth the vesting
      restrictions as may be determined by the Committee.  Each Share
      of Restricted Stock shall vest over such period of time, if any, or upon
      such events, as determined by the Committee.  If no restrictions
      are stated in the Restricted Stock Award Agreement, 20% of the Award shall
      vest on the 1st
      anniversary of the date of grant and an additional 20% of the Award shall
      vest on each subsequent anniversary of the date of grant, so that the
      Award is 100% vested on the 5th
      anniversary of the date of the
Award.

              

      

      

      
        	
                 
      

              	
                (c)

              	
                Termination
      of Services, Death, or Disability.  Unless the Restricted
      Stock Award Agreement provides otherwise, if a Participant terminates
      service for any reason, including death or Disability, the remaining
      unvested Award at the date of termination shall be forfeited and shall be
      immediately returned to the
Company.

              

      

      

      5.3 Privileges of a
Stockholder, Transferability.  Subject to the terms of the
Restricted Stock Award Agreement, a Participant shall have all voting, dividend,
liquidation and other rights with respect to Stock held pursuant to the
Restricted Stock Award Agreement upon the Participant's becoming the holder of
record of such Stock, except that the Participant may not have the right to
sell, encumber, or otherwise transfer such Stock until the restrictions
lapse.

      

      5.4 Enforcement of
Restrictions.  The Committee shall cause a legend to be placed
on the Stock certificates issued pursuant to each Restricted Stock Award
referring to the restrictions of this Article and, in addition, may in its sole
discretion require one or more of the following methods of enforcing the
restrictions of this Article:

      

      
        	
                 
      

              	
                (a)

              	
                Requiring
      the Participant to keep the Stock certificates, duly endorsed, in the
      custody of the Company while the restrictions remain in effect;
      or

              

      

      

      
        	
                 
      

              	
                (b)

              	
                Requiring
      that the Stock certificates, duly endorsed, be held in the custody of a
      third party while the restrictions remain in
  effect.

              

      

      

      Any new,
substituted, or additional securities or other property (including money paid
other than as a regular cash dividend) which the Participant may have the right
to receive with respect to the Participant’s unvested Restricted Stock Award by
reason of any stock dividend, stock split, recapitalization, combination of
shares, exchange of shares or other change affecting the Stock as a class
without the Company’s receipt of consideration shall be issued subject to
(i) the same vesting requirements applicable under the Participant’s
Restricted Stock Award Agreement and (ii) such escrow arrangements as the
Committee shall deem appropriate.

      

      5.5 Withholding
Requirement.  Upon satisfaction of all restrictions under a
Restricted Stock Award Agreement, the Participant is subject to and shall be
required to pay to the Company all taxes required to be withheld, all government
mandated social benefit contributions, and any other payments required to be
withheld which are applicable to the Participant.

      
         

        
          
            
              	
                      Bacterin
      International Equity Incentive Plan

                    	
                      6/4/2010

                    

            

          

        

      

      
      

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      5.6 Change in
Control. Unless otherwise determined by the Committee (either at the time
a Restricted Stock Award is granted or by subsequent action), Restricted Stock
Awards shall not be subject to accelerated vesting at the time of a Change in
Control. Upon the consummation of a Change in Control, any Restricted Stock
Award as to which the period for which services are required or other
restrictions have not been satisfied (or waived or accelerated) shall be
forfeited, and all Shares related thereto shall be immediately returned to the
Company, except to the extent assumed by the successor corporation (or parent
thereof) or otherwise continued in effect pursuant to the terms of the Change in
Control transaction.

      

      The Committee shall have the
discretion, exercisable either at the time the Restricted Stock Award is granted
or at any time while the Restricted Stock Award remains outstanding, to
structure one or more Restricted Stock Awards so that those Restricted Stock
Awards shall automatically accelerate and vest in full upon the occurrence of a
Change in Control, whether or not those Restricted Stock Awards are to be
assumed in the Change in Control or otherwise continued in effect.

      

      ARTICLE
VI

      RESTRICTED
STOCK UNITS

      

      6.1 Grant of
RSUs.  A Participant may be granted one or more Restricted
Stock Units as determined by the Committee.  Restricted Stock Units
shall be granted as of the date specified in the RSU Agreement. RSUs granted may
be 100% vested on the date the Award is granted, or they may be subject to a
vesting schedule.  Each Award shall be separately approved by the
Committee, and the receipt of one Award shall not result in automatic receipt of
any other Award. Upon determination by the Committee to grant Restricted Stock
Units to a Participant, the Company, by action of the Committee, shall enter
into an RSU Agreement with the Participant.

      

      6.2 RSU
Agreements.  Each Award granted under the Plan shall be
evidenced by a written restricted stock unit agreement (an "RSU
Agreement").  An RSU Agreement shall be issued by the Plan Sponsor in
the name of the Participant to whom the Award is granted and in such form as may
be approved by the Committee. The RSU Agreement shall incorporate and conform to
the conditions in the Plan as well as any other terms and conditions that are
not inconsistent as the Committee may consider appropriate.

      

      
        	
                 
      

              	
                (a)

              	
                Number of
      RSUs.  Each RSU Agreement shall state that it covers a
      specified number of RSUs, as determined by the
  Committee.

              

      

      

      
        	
                 
      

              	
                (b)

              	
                Restrictions.
      The RSU Agreement shall set forth the vesting restrictions as may be
      determined by the Committee.  Each RSU shall vest over such
      period of time, if any, or upon such events, as determined by the
      Committee, in a manner that does not cause adverse tax consequences under
      Code § 409A.  If no restrictions are stated in the RSU
      Agreement, 20% of the Award shall vest on the 1st
      anniversary of the date of grant and an additional 20% of the Award shall
      vest on each subsequent anniversary of the date of grant, so that the
      Award is 100% vested on the 5th
      anniversary of the date of the
Award.

              

      

      
         

        
          
            
              	
                      Bacterin
      International Equity Incentive Plan

                    	
                      6/4/2010

                    

            

          

        

      

      
      

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

      
         

        
          	
                   
      

                	
                  (c)

                	
                  Termination
      of Services, Death, or Disability.  Unless the RSU
      Agreement provides otherwise, if a Participant terminates service for any
      reason, including death or Disability, the remaining unvested Award at the
      date of termination shall be forfeited and shall be immediately returned
      to the Company.

                

        

      

       

      6.3 Non-Transferability
of RSUs.  No RSU shall be assignable or transferable during the
lifetime of the Participant, either voluntarily or involuntarily, or subjected
to any lien, directly or indirectly, by operation of law, or otherwise,
including execution, levy, garnishment, attachment, pledge or
bankruptcy.  In the event of an RSU Holder's death, an RSU Holder's
RSUs shall be automatically transferred to the RSU Holder's beneficiary
designated in accordance with Section 6.4, or if the RSU Holder did not
designate a beneficiary, or if no beneficiary survives the RSU Holder, the RSU
Holder's legal representatives, heirs or legatees.

      

      6.4 Designation of
Beneficiary.  Each RSU Holder may designate one or more
beneficiaries (who may be designated contingently or successively) to whom the
RSU payment is payable in the event of the RSU Holder's death.  Each
designation will automatically revoke any prior designations by the same RSU
Holder.  The beneficiary designation shall be in writing on a form
prescribed by the Committee.  Any beneficiary designation will be
effective as of the date on which the written designation is received by the
Committee during the lifetime of the RSU Holder.  If the RSU Holder
does not designate a beneficiary, or if a beneficiary does not survive the RSU
Holder, the cash payment (or the portion of the cash payment attributable to a
deceased beneficiary) shall be payable to the RSU Holder’s estate.

      

      6.5 Redemption of
RSUs.  As of the date an RSU is vested, the Company shall
redeem the RSU. In no event shall the redemption of RSUs granted under one RSU
Agreement affect the redemption of any RSUs under the same RSU Agreement or any
other RSU Agreement or affect the number of RSUs which may be redeemed.
Following redemption of all RSUs granted under an RSU Agreement, the RSU
Agreement shall be terminated.

      

      
        	
                 
      

              	
                (a)

              	
                Amount
      of RSU Payment. If the RSU Agreement
      specifies that payment of the RSU shall be made in cash, the Plan Sponsor
      (or the Affiliated Corporation utilizing the services of the RSU Holder)
      shall make a cash payment for each RSU equal to the Fair Market Value of a
      Share on the date the RSU is vested, less any withholdings (as determined
      under Section 6.7). If the RSU Agreement specifies that payment of the RSU
      shall be made in Shares, the Plan Sponsor (or the Affiliated Corporation
      utilizing the services of the RSU Holder) shall deliver one Share for each
      RSU to the RSU Holder, less any withholdings (as determined under Section
      6.7).  The Plan Sponsor has the right to reduce any payment due
      under the Plan by any amounts owed by the RSU Holder to the Company. The
      amount of any cash payment shall be calculated and paid in United States
      dollars.

              

      

      

      
        	
                 
      

              	
                (b)

              	
                Timing
      of Payment.  Unless the
      RSU Agreement provides otherwise, the Plan Sponsor (or the Affiliated
      Corporation utilizing the services of the RSU Holder) shall make any cash
      payment in a single sum payment as soon as administratively practicable
      (in accordance with procedures established by the Committee) after the
      receipt by the Plan Sponsor of all representations requested by the
      Committee pursuant to Section 12.1, but in no event later than the 15th
      day of the third month following the end of the calendar year in which the
      RSU vests.  Unless the RSU Agreement provides otherwise, the
      Plan Sponsor (or the Affiliated Corporation utilizing the services of the
      RSU Holder) shall deliver any Stock payment as soon as administratively
      practicable (in accordance with procedures established by the Committee)
      after the receipt by the Plan Sponsor of all representations requested by
      the Committee pursuant to Article XI, but in no event later than the
      15th
      day of the third month following the end of the calendar year in which the
      RSU vests.

              

      

      
         

        
          
            
              	
                      Bacterin
      International Equity Incentive Plan

                    	
                      6/4/2010

                    

            

          

        

      

      
      

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                (c)

              	
                Cancellation
      of RSUs Redeemed.  Upon
      redemption of an RSU, the RSU Holder no longer has any rights to any
      increase in value of the RSU, and the Participant's RSUs which were
      redeemed are canceled.

              

      

      

      6.6 Cancellation of
RSUs Upon Termination of Service.

      

      
        	
                 
      

              	
                (a)

              	
                Termination
      of Services for Any Reason.  If an RSU
      Holder voluntarily terminates service or is terminated involuntarily from
      service for any reason other than death (including retirement or
      disability), all unvested RSUs shall be
  forfeited.

              

      

      

      
        	
                 
      

              	
                (b)

              	
                Definition
      of Termination of Services.  Termination
      of services occurs as of the first day on which the RSU Holder is no
      longer performing services for the Company or any entity related to the
      Company.  Whether an RSU Holder has terminated service shall be
      determined by the Committee in its sole
  discretion.

              

      

      

      6.7 Withholding
Requirement.  All payments under the Plan are subject to
withholding of all taxes, government mandated social benefit contributions, or
other payments required to be withheld which are applicable to the RSU
Holder.

      

      6.8 No Equity Holder
Privileges.  No RSU Holder shall have any privileges as an
equity holder with respect to any RSUs.

      

      6.9 Change in
Control. Unless otherwise determined by the Committee (either at the time
a RSU is granted or by subsequent action that does not cause adverse tax
consequences under Code § 409A), RSUs shall not be subject to accelerated
vesting at the time of a Change in Control. Upon the consummation of a Change in
Control, any RSU as to which the period for which services are required or other
restrictions have not been satisfied (or waived or accelerated) shall be
forfeited, except to the extent assumed by the successor corporation (or parent
thereof) or otherwise continued in effect pursuant to the terms of the Change in
Control transaction.

      

      The Committee shall have the
discretion at the time the RSU is granted (or at any time the RSU remains
outstanding, if the action subsequent to the grant date does not cause adverse
tax consequences under Code § 409A) to structure one or more RSUs so that
those RSUs shall automatically accelerate and vest in full upon the occurrence
of a Change in Control, whether or not those RSUs are to be assumed in the
Change in Control or otherwise continued in effect.

      
         

        
          
            
              	
                      Bacterin
      International Equity Incentive Plan

                    	
                      6/4/2010

                    

            

          

        

      

      
      

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

      ARTICLE
VII

      STOCK
APPRECIATION RIGHTS

      

      7.1 Persons
Eligible.  The Committee, in its sole discretion, may grant a
Participant one or more Stock Appreciation Rights.

      

      7.2 Types of Stock
Appreciation Rights. The Committee may grant Stock Appreciation Rights
that are settled in cash under the Plan, or Stock Appreciation Rights that are
settled in Stock.

       

      7.3 Terms of
Grant.  The Committee shall determine at the time of the grant
of a Stock Appreciation Right the time period during which the Stock
Appreciation Right may be exercised, the type of Stock Appreciation Right being
granted, and any other terms that will apply to the Stock Appreciation
Right.  Each Stock Appreciation Right granted under the Plan shall be
evidenced by a written stock appreciation right agreement (a “SAR
Agreement”).  A SAR Agreement shall be issued by the Plan Sponsor in
the name of the SAR Holder and in such form as may be approved by the
Committee.  The SAR Agreement shall incorporate and conform to the
conditions in the Plan as well as any other terms and conditions that are not
inconsistent as the Committee may consider appropriate. In the event of any
inconsistency between the provisions of the Plan and any Option Agreement, the
provisions of the Plan shall govern.

      

      
        	
                 
      

              	
                (a)

              	
                Number of
      SARs.  Each SAR Agreement shall state that it covers a
      specified number of Stock Appreciation Rights, as determined by the
      Committee.

              

      

      

      
        	
                 
      

              	
                (b)

              	
                Stock Price
      for Determining Appreciation.  Each SAR Agreement shall
      state the Fair Market Value of a Share from which appreciation of the SAR
      will be measured. The Stock price specified shall not be less than 100% of
      the Fair Market Value of the Stock on the date the SAR is
      granted.

              

      

      

      
        	
                 
      

              	
                (c)

              	
                Duration of
      SARs.  Each SAR Agreement shall state the period of time,
      determined by the Committee, within which the SAR may be exercised by the
      SAR Holder (the "SAR Period").  The SAR Period must end not more
      than ten years from the date the SAR is granted.  If no SAR
      Period is stated in the SAR Agreement, the SAR Period shall end on the day
      immediately preceding the 10th
      anniversary of the date of grant.

              

      

      

      
        	
                 
      

              	
                (d)

              	
                Restrictions
      on Exercise.  The SAR Agreement shall also set forth any
      restrictions on SAR exercise during the SAR Period, if any, as may be
      determined by the Committee.  Each SAR shall become exercisable
      (vest) over such period of time, if any, or upon such events, as
      determined by the Committee.  If the SAR Agreement does not
      specify the period of time over which the SAR becomes exercisable, the SAR
      shall become exercisable (vest) 20% on each subsequent anniversary date of
      the SAR grant, so that the SAR is 100% exercisable (vested) on the 5th
      anniversary of the date of the SAR
grant.

              

      

      
         

        
          
            
              	
                      Bacterin
      International Equity Incentive Plan

                    	
                      6/4/2010

                    

            

          

        

      

         

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

       

      
        	
                 
      

              	
                (e)

              	
                Termination
      of Services, Death, or Disability.  The Committee may
      specify the period, if any, after which an SAR may be exercised following
      termination of the SAR Holder's services in the SAR
      Agreement.  If the SAR Agreement does not specify the period of
      time following termination of service during which SARs may be exercised,
      the time periods in this Subsection shall apply.  Once a SAR is
      granted, the Committee may not change the time period during which a SAR
      may be exercised following termination of the SAR Holder’s services,
      unless such a change would not cause additional taxes to be imposed
      pursuant to Code § 409A.

              

      

      

      
        	
                 
      

              	
                (i)

              	
                Termination
      for Cause.  If the
      services of the SAR Holder are terminated within the SAR Period for Cause,
      as determined by the Company, the SAR shall thereafter be void for all
      purposes.

              

      

      

      
        	
                 
      

              	
                (ii)

              	
                Disability.  If the SAR
      Holder becomes Disabled and terminates services, the SAR may be exercised
      by the SAR Holder within six months following the SAR Holder's termination
      of services on account of Disability (provided that such exercise must
      occur within the SAR Period), but not thereafter.  The SAR may
      be exercised only with respect to the extent the SAR had become
      exercisable on or before the date of the SAR Holder's termination of
      services because of Disability.

              

      

      

      
        	
                 
      

              	
                (iii)

              	
                Death.   If the SAR
      Holder dies during the SAR Period while still performing services for the
      Company or within the six month period referred to in (ii) above or the
      three-month period referred to in (iv) below, the SAR may be exercised by
      those entitled to do so under the SAR Holder's will or by the laws of
      descent and distribution within six months following the SAR Holder's
      death, (provided that such exercise must occur within the SAR Period), but
      not thereafter.  The SAR may be exercised only to the extent the
      SAR had become exercisable on or before the date of the SAR Holder's
      termination of services because of the SAR Holder’s
  death.

              

      

      

      
        	
                 
      

              	
                (iv)

              	
                Termination
      for Reasons Other than Cause, Disability or Death.  If the SAR
      Holder is no longer employed by the Company or performing services for the
      Company for any reason other than Cause, Disability or the SAR Holder's
      death, the SAR may be exercised by the SAR Holder within three months
      following the date of termination (provided that the exercise must occur
      within the SAR Period), but not thereafter.  The SAR may be
      exercised only to the extent the SAR had become exercisable on or before
      the date of termination of
services.

              

      

      
        
        

        
          
            
              	
                      Bacterin
      International Equity Incentive Plan

                    	
                      6/4/2010

                    

            

          

        

      

      
      

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

       

      7.4 Exercise of Stock
Appreciation Rights. Upon vesting in a Stock Appreciation Right, a
Participant shall be permitted to exercise the Stock Appreciation Right at any
time prior to the date the Stock Appreciation Right expires.  The
effective date of exercise of a Stock Appreciation Right is the date on which
the Company receives notice from the Participant of the exercise of the Stock
Appreciation Right. Upon the exercise of one or more Stock Appreciation Rights
settled in Stock, the Company will issue to the Participant the number of whole
Shares determined by dividing (i) the number of Stock Appreciation Rights being
exercised, multiplied by the difference in the Fair Market Value of one Share on
the exercise date of the Stock Appreciation Right and the Fair Market Value of
one Share on the grant date in the Stock Appreciation Right by (ii) the
Fair Market Value of one Share on the exercise date.  Upon exercise of
one or more Stock Appreciation Rights settled in cash, the Company shall make a
cash payment to the Participant in an amount equal to the total number of vested
Stock Appreciation Rights, multiplied by the difference in the Fair Market Value
of one Share on the grant date of the Stock Appreciation Right and the Fair
Market Value of one Share on the date of exercise, less any
withholdings.

       

      7.5 Withholding
Requirement.  All payments under the Plan are subject to
withholding of all taxes, government mandated social benefit contributions, or
other payments required to be withheld which are applicable to the
Participant.

      

      7.6 Effect of
Exercise.  The exercise or cash-out of a Stock Appreciation
Right will result in an equal reduction in the number of Stock Appreciation
Rights that were granted.

      

      7.7 No Equity Holder
Privileges.  No holder of a Stock Appreciation Right shall have
any privileges as an equity holder with respect to any Stock Appreciation
Rights.

      

      7.8 Change in
Control. Unless otherwise determined by the Committee (either at the time
a SAR is granted or by subsequent action), SARs shall not be subject to
accelerated vesting at the time of a Change in Control. Upon the consummation of
a Change in Control, any SAR as to which the period for which services are
required or other restrictions have not been satisfied (or waived or
accelerated) shall be forfeited, except to the extent assumed by the successor
corporation (or parent thereof) or otherwise continued in effect pursuant to the
terms of the Change in Control transaction.

      

      The Committee shall have the
discretion, exercisable either at the time the SAR is granted or at any time
while the SAR remains outstanding, to structure one or more SARs so that those
SARs shall automatically accelerate and vest in full upon the occurrence of a
Change in Control, whether or not those SARs are to be assumed in the Change in
Control or otherwise continued in effect.

       

      ARTICLE
VIII

      STOCK
BONUSES AND OTHER COMMON STOCK GRANTS

      

      The
Committee may award Stock Bonuses to such Participants, subject to such
conditions and restrictions, as it determines in its sole
discretion.  Stock Bonuses may be either outright grants of Stock, or
may be grants of Stock subject to and conditioned upon certain employment or
performance related goals.

      

      From time
to time during the duration of this Plan, the Board may, in its sole discretion,
adopt one or more incentive compensation arrangements for Participants pursuant
to which the Participants may acquire Shares, whether by purchase, outright
grant, or otherwise.  Any such arrangements shall be subject to the
general provisions of this Plan and all Shares issued pursuant to such
arrangements shall be issued under this Plan.

      
         

        
          
            
              	
                      Bacterin
      International Equity Incentive Plan

                    	
                      6/4/2010

                    

            

          

        

      

      
      

      
        
          
          

        

        
          19

          
            

          

        

        
          
          
 

      

      ARTICLE
IX

      PERFORMANCE
AWARDS

      

      9.1 Performance-Based
Awards. The Company intends that performance-based Awards to certain
Eligible Employees will satisfy the performance-based compensation requirements
of Code § 162(m) so that the Company may deduct any compensation paid under
the Plan for federal income tax purposes without limitation under Code
§ 162(m).  If any provision of this Plan or any Award Agreement
would otherwise frustrate or conflict with such intent, that provision, to the
extent possible, shall be interpreted and deemed amended so as to avoid such
conflict.

      

      9.2 Grants of
Performance-Based Awards. The Committee may grant Performance Awards that
grant a specific number of Options, SARs, shares of Restricted Stock, or
Restricted Stock Units that vest in whole or in part upon satisfaction of
specified performance goals.  The Committee may also grant Awards that
require the Committee to grant a specific number of shares of Stock, Options,
SARs, shares of Restricted Stock, or Restricted Stock Units upon satisfaction of
specified performance goals.  The Committee shall, in its sole
discretion, determine: (a) the type of performance-based Awards to be made,
(b) the time at which performance-based Awards are to be made, (c) the
time at which the performance-based Awards vest or shares are granted under
performance-based Awards, (d) actual performance against targets for
purposes of performance-based Award vesting or granting of Awards,
(e) specific weighing of the components of performance-based Award vesting
or grants, and (f) establish such other terms under the Plan as the
Committee may deem necessary or desirable and consistent with the terms of the
Plan. The Committee shall have the full and exclusive right to grant and
determine terms and conditions of all performance-based Awards granted under the
Plan. The performance goal or goals for a Performance Award shall be established
in writing at the time the Performance Award is granted.  The
Committee shall have no power to increase a performance-based Award that has
been granted, but shall have the power to decrease a performance-based
Award.

      

      9.3 Award
Agreements. Award Agreements that are intended to comply with Code
§ 162(m) shall specify the target number of Shares for the
Participant.  The maximum vesting for a performance-based Award shall
be 100% of the Award.  No performance-based Award shall entitle the
Participant to receive more than the maximum number of Shares in any calendar
year set forth in Article III.  Performance-based Awards to all
Participants for any calendar year shall not exceed the maximum number of Shares
set forth in Article III.

      
        
        

        
          
            
              	
                      Bacterin
      International Equity Incentive Plan

                    	
                      6/4/2010

                    

            

          

        

      

      
      

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

       

      9.4 Preestablished
Performance Goals.  The performance criteria for any Award that
is intended to satisfy the requirements for “performance-based compensation”
under Code § 162(m) shall be a measure based on one or more Qualifying
Performance Criteria selected by the Committee and specified at the time the
Performance Award is granted. For purposes of this Plan, the term “Qualifying
Performance Criteria” shall mean any one or more of the following performance
criteria, either individually or in any combination, applied to either the
Company as a whole or to a business unit or Affiliated Corporation, either
individually or in any combination, and measured either annually or cumulatively
over a period of years, on an absolute basis or relative to a pre-established
target, to previous years’ results or to a designated comparison group, in each
case as specified by the Committee in the performance-based Award: (a) cash
flow, (b) earnings per share, (c) earnings before interest, taxes and
amortization, (d) return on equity, (e) total stockholder return, (f) share
price performance, (g) return on capital, (h) return on assets or net assets,
(i) revenue, (j) income or net income, (k) operating income or net
operating income, (l) operating profit or net operating profit, (m) operating
margin or profit margin, (n) return on operating revenue, (o) return on invested
capital,  (q) product release schedules, and (r) new product
innovation. The Committee may appropriately adjust any evaluation of performance
under a Qualifying Performance Criteria to exclude any of the following events
that occurs during a performance period: (i) asset write-downs, (ii) litigation
or claim judgments or settlements, (iii) the effect of changes in tax law,
accounting principles or other such laws or provisions affecting reported
results, (iv) accruals for reorganization and restructuring programs and (v) any
extraordinary non-recurring items as described in management’s discussion and
analysis of financial condition and results of operations appearing in the
Company’s Securities Exchange Act filings.

       

      9.5 Committee
Certification. Notwithstanding satisfaction of any Qualifying Performance
Criteria, the number of Stock, Options, SARs, or RSUs under a performance-based
Award to be granted or vested on account of satisfaction of such Qualifying
Performance Criteria may be reduced by the Committee on the basis of such
further considerations as the Committee in its sole discretion shall determine.
The Participant shall not be entitled to vest in or be granted any portion of a
performance-based Award until the Committee certifies in writing that the Holder
has met his or her specific performance goals and determines the portion of the
performance-based Award which is to be vested or granted.

       

      ARTICLE
X

      PLAN
ADMINISTRATION

      

      10.1
Committee.  The Plan shall be
administered by a Committee appointed by and serving at the pleasure of the
Board of Directors, consisting of not less than two Directors (the "Committee")
and, at any time when the Plan Sponsor is a publicly held corporation,
consisting solely of outside Directors (within the meaning of Code
§ 162(m)(4)(C)(i)). The Board of Directors may from time to time remove
members from or add members to the Committee, and vacancies on the Committee,
howsoever caused, shall be filled by the Board of Directors. At any time when
the Plan Sponsor is a publicly held corporation, the Committee shall be so
constituted at all times as to permit the Plan to comply with Rule 16b-3 or any
successor rule promulgated under the Securities Exchange Act of 1934 (the "1934
Act") and to permit Awards to comply with the performance based compensation
exception of Code § 162(m).  Members of the Committee and any
subcommittee or special committee shall be appointed from time to time by the
Board, shall serve at the pleasure of the Board and may resign at any time upon
written notice to the Board.

      

      10.2
Committee
Meetings and Actions.  The Committee shall hold meetings at
such times and places as it may determine.  A majority of the members
of the Committee shall constitute a quorum, and the acts of the majority of the
members present at a meeting or a consent in writing signed by all members of
the Committee shall be the acts of the Committee and shall be final, binding and
conclusive upon all persons, including the Company, its shareholders, and all
persons having any interest in Options which may be or have been granted
pursuant to the Plan.

      
      

      
        
          
            
              	
                      Bacterin
      International Equity Incentive Plan

                    	
                      6/4/2010

                    

            

          

        

      

      
      

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

      
      

      10.3
Powers of
Committee.  In accordance with the provisions of the Plan, the
Committee shall, in its sole discretion, select the Participants from among the
Eligible Employees and Eligible Individuals, determine the Awards to be made
pursuant to the Plan, and the time at which such Awards are to be made, fix the
exercise price, period and manner in which an Option or SAR becomes exercisable,
and establish such other terms under the Plan as the Committee may deem
necessary or desirable and consistent with the terms of the Plan.  The
Committee shall determine the form or forms of the agreements with Participants
that shall evidence the particular provisions, terms, conditions, rights and
duties of the Plan Sponsor and the Participants with respect to Awards granted
pursuant to the Plan, which provisions need not be identical except as may be
provided herein. The Committee shall have the full and exclusive right to grant
and determine terms and conditions of all Awards granted under the
Plan.  In granting Awards, the Committee shall take into consideration
the contribution the Participant has made or may make to the success of the
Company or its subsidiaries and such other factors as the Committee shall
determine.  The Committee may from time to time adopt such rules and
regulations for carrying out the purposes of the Plan as it may deem proper and
in the best interests of the Company.  The Committee may correct any
defect, supply any omission or reconcile any inconsistency in the Plan or in any
agreement entered into hereunder in the manner and to the extent it shall deem
expedient and it shall be the sole and final judge of such
expediency.  No member of the Committee shall be liable for any action
or determination made in good faith.  The determinations,
interpretations and other actions of the Committee pursuant to the provisions of
the Plan shall be binding and conclusive for all purposes and on all
persons.

      

      10.4
Options May
Be Assumed.  In accordance with the provisions of Code
§ 424(a), the Committee may, in its sole discretion, substitute a new
Option for an outstanding option or assume an outstanding option in connection
with a Corporate Transaction, without the substitution or assumption being
treated as a modification of the existing incentive stock option under Code
§ 424(h) or a modification of an existing option under Code §
409A.  If the new substituted Option or assumed Option is intended to
be an Incentive Option, the provisions of this Section apply solely to an
Eligible Employee who is providing services to the Company at the time of the
substitution or assumption (or a former Eligible Employee within the 3-month
period following termination of service).  For purposes of this
Section, the term “Corporate Transaction” includes:  (a) a
corporate merger, consolidation, acquisition of property or stock, separation,
reorganization, or liquidation; (b) a distribution (excluding an ordinary dividend or a
stock split or stock dividend described in Treas. Reg. § 1.424-1(e)(4)(v))
or change in the terms or number of outstanding shares of such corporation; and
(c) any other corporate
events prescribed by the Commissioner in published guidance.

      

      10.5
Interpretation of
Plan.  The determination of the Committee as to any disputed
question arising under the Plan, including questions of construction and
interpretation, shall be final, binding and conclusive upon all persons,
including the Company, its shareholders, and all persons having any interest in
Options which may be or have been granted pursuant to the Plan.  Stock
Options, Stock Appreciation Rights, Restricted Stock grants, and Stock grants
are intended to be excluded from the requirements of Code § 409A as a
result of the exception for stock rights and the exception for transfers of
property subject to § 83.  Restricted Stock Unit grants are
intended to be excluded from the requirements of Code § 409A under the
short-term deferral exception.  To the extent that any provision of
the Plan or of any grant Agreement could be interpreted otherwise, the Plan and
all grant Agreements shall be interpreted in a manner that ensures all grants
are excluded from the requirements of Code § 409A.  The Company
will amend the Plan as necessary to ensure exclusion of Awards from the
requirements of Code § 409A, or to the extent necessary or appropriate, to
comply with the requirements of Code § 409A.

      
         

        
          
            
              	
                      Bacterin
      International Equity Incentive Plan

                    	
                      6/4/2010

                    

            

          

        

      

      
      

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

       

      10.6 Indemnification.  Each person who
is or shall have been a member of the Committee or of the Board of Directors
shall be indemnified and held harmless by the Plan Sponsor against and from any
loss, cost, liability or expense that may be imposed upon or reasonably incurred
in connection with or resulting from any claim, action, suit or proceeding to
which such person may be a party or in which such person may be involved by
reason of any action taken or failure to act under the Plan and against and from
any and all amounts paid in settlement thereof, with the Company's approval, or
paid in satisfaction of a judgment in any such action, suit or proceeding
against him, provided such person shall give the Company an opportunity, at its
own expense, to handle and defend the same before undertaking to handle and
defend it on such person's own behalf.  The foregoing right of
indemnification shall not be exclusive of, and is in addition to, any other
rights of indemnification to which any person may be entitled under the Plan
Sponsor's Articles of Incorporation or Bylaws, as a matter of law, or otherwise,
or any power that the Company may have to indemnify them or hold them
harmless.

      

      ARTICLE
XI

      STOCK
SUBJECT TO THE PLAN

      

      11.1
Number of
Shares.  The number of Shares that are authorized for issuance
under the Plan in accordance with the provisions of the Plan and subject to such
restrictions or other provisions as the Committee may from time to time deem
necessary shall not exceed 6,000,000, subject to the provisions regarding
changes in capital.  The Shares may be either authorized and unissued
Shares or previously issued Shares acquired by the Plan Sponsor.  This
authorization may be increased from time to time by approval of the Board and by
the stockholders of the Plan Sponsor if, in the opinion of counsel for the Plan
Sponsor, stockholder approval is required.  Shares that may be issued
upon exercise of Options under the Plan shall be applied to reduce the maximum
number of Shares remaining available for use under the Plan.  The Plan
Sponsor shall at all times during the term of the Plan and while any Awards are
outstanding retain as authorized and unissued Stock at least the number of
Shares from time to time required under the provisions of the Plan, or otherwise
assure itself of its ability to perform its obligations hereunder.

      

      11.2
Unused
Stock.  Any Shares that are subject to an Award that expires or
for any reason is terminated and any Shares withheld for the payment of taxes or
received by the Plan Sponsor as payment of the exercise price of an Award shall
automatically become available for use under the Plan.

      
         

        
          
            
              	
                      Bacterin
      International Equity Incentive Plan

                    	
                      6/4/2010

                    

            

          

        

      

      
      

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

       

      11.3
Adjustments
for Stock Splits and Stock Dividends.  If the Plan Sponsor
shall at any time increase or decrease the number of its outstanding Shares or
change in any way the rights and privileges of such Shares by means of the
payment of a stock dividend or any other distribution upon such Shares payable
in Stock, or through a stock split, subdivision, consolidation, combination,
reclassification or recapitalization involving the Stock, then in relation to
the Stock that is affected by one or more of the above events, the numbers,
rights and privileges of the following shall be increased, decreased or changed
in like manner (in accordance with the rules governing modifications,
extensions, substitutions and assumptions of stock rights described in Treas.
Reg. § 1.409A-1(b)(5)(v)(D)) as if they had been issued and outstanding,
fully paid and nonassessable at the time of such occurrence:  (i) the
Shares as to which Awards may be granted under the Plan and (ii) the Shares then
included in each outstanding Award granted hereunder.

      

      11.4
Other
Distributions and Changes in the Stock.  If the Plan Sponsor
distributes assets or securities of persons other than the Plan Sponsor
(excluding cash or distributions referred to in Section 11.3) with respect to
the Stock, or if the Plan Sponsor grants rights to subscribe pro rata for
additional Shares or for any other securities of the Plan Sponsor to the holders
of its Stock, or if there is any other change (except as described in Section
11.3) in the number or kind of outstanding Shares or of any stock or other
securities into which the Stock will be changed or for which it has been
exchanged, and
if the Committee in its discretion determines that the event equitably requires
an adjustment in the number or kind of Shares subject to an Award, an adjustment
in the exercise price or the taking of any other action by the Committee,
including without limitation, the setting aside of any property for delivery to
the Participant upon the exercise of an Award or the full vesting of an Award,
then such adjustments shall be made, or other action shall be taken, by the
Committee (in accordance with the rules governing modifications, extensions,
substitutions and assumptions of stock rights described in Treas. Reg.
§ 1.409A-1(b)(5)(v)(D)) and shall be effective for all purposes of the Plan
and on each outstanding Award.

      

      11.5
General
Adjustment Rules.  No adjustment or substitution provided for
in this Article shall require the Plan Sponsor to sell a fractional Share under
any Award, or otherwise issue a fractional Share, and the total substitution or
adjustment with respect to each Award shall be limited by deleting any
fractional Share.  In the case of any such substitution or adjustment,
the aggregate exercise price for the total number of Shares then subject to an
Option shall remain unchanged but the exercise price per Share under each such
Option shall be equitably adjusted by the Committee to reflect the greater or
lesser number of Shares or other securities into which the Stock subject to the
Option may have been changed, and appropriate adjustments shall be made to other
Awards to reflect any such substitution or adjustment.  In the case of
any such substitution or adjustment, such Option shall be equitably adjusted by
the Committee in accordance with the rules governing modifications, extensions,
substitutions and assumptions of stock rights described in Treas. Reg.
§ 1.409A-1(b)(5)(v)(D).

      

      11.6
Determination by
the Committee.  Adjustments under this Article shall be made by
the Committee, whose determinations shall be final and binding upon all
parties.

      

      ARTICLE
XII

      GENERAL
RESTRICTIONS

      

      12.1
Investment
Representations.  The Plan Sponsor may require any person to
whom an Award is granted, as a condition of receiving Stock pursuant to the
Award, to give written assurances in substance and form satisfactory to the Plan
Sponsor and its counsel to the effect that such person is acquiring the Stock
for his own account for investment and not with any present intention of selling
or otherwise distributing the same, and to such other effects as the Plan
Sponsor deems necessary or appropriate in order to comply with federal and
applicable state securities laws.  Legends evidencing such
restrictions may be placed on the Stock certificates.

      
         

        
          
            
              	
                      Bacterin
      International Equity Incentive Plan

                    	
                      6/4/2010

                    

            

          

        

      

      
      

      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

       

      12.2
Compliance
with Securities Laws.  Each Award shall be subject to the
requirement that, if at any time counsel to the Plan Sponsor shall determine
that the listing, registration or qualification of the Shares subject to such
Award upon any securities exchange or under any state or federal law, or the
consent or approval of any governmental or regulatory body, is necessary as a
condition of, or in connection with, the issuance or purchase of shares
thereunder, such Award may not be accepted or exercised in whole or in part
unless such listing, registration, qualification, consent or approval shall have
been effected or obtained on conditions acceptable to the
Committee.  Nothing herein shall be deemed to require the Plan Sponsor
to apply for or to obtain such listing, registration or
qualification.

      

      12.3
Changes in
Accounting Rules.  Except as provided otherwise at the time an
Award is granted, notwithstanding any other provision of the Plan to the
contrary, if, during the term of the Plan, any changes in the financial or tax
accounting rules applicable to Awards shall occur which, in the sole judgment of
the Committee, may have a material adverse effect on the reported earnings,
assets or liabilities of the Plan Sponsor, the Committee shall have the right
and power to modify as necessary, any then outstanding Awards as to which the
applicable services or other restrictions have not been satisfied.

      

      12.4
Shareholders
Agreement.  Upon demand by the Plan Sponsor, the Participant
shall execute and deliver to the Plan Sponsor a shareholders agreement in such
form as the Company may provide at the time of the Participant is receiving
Stock pursuant to the Plan (“Shareholders Agreement”).  The
Shareholders Agreement may include, without limitation, restrictions upon the
Participant's right to transfer shares, including the creation of an irrevocable
right of first refusal in the Plan Sponsor and its designees, and provisions
requiring the Participant to transfer the Shares to the Plan Sponsor or the Plan
Sponsor's designees upon a termination of employment.  Upon such
demand, execution of the Shareholders Agreement by the Participant prior to the
transfer or delivery of any shares and prior to the expiration of the option
period shall be a condition precedent to the right to purchase such Shares,
unless such condition is expressly waived in writing by the Plan
Sponsor.

      

      ARTICLE
XIII

      REQUIREMENTS
OF LAW

      

      13.1
Requirements of
Law.  The issuance of Stock and the payment of cash pursuant to
the Plan shall be subject to all applicable laws, rules and
regulations.

      

      13.2
Federal
Securities Law Requirements.  If a Participant is an officer or
director of the Plan Sponsor within the meaning of Section 16, Awards granted
hereunder shall be subject to all conditions required under Rule 16b-3, or any
successor rule promulgated under the 1934 Act, to qualify the Award for any
exception from the provisions of Section 16(b) of the 1934 Act available under
that Rule.  Such conditions shall be set forth in the agreement with
the Participant which describes the Award or other document evidencing or
accompanying the Award.

      
         

        
          
            
              	
                      Bacterin
      International Equity Incentive Plan

                    	
                      6/4/2010

                    

            

          

        

      

      
      

      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

      

       

      13.3
Governing
Law.  The Plan and all agreements hereunder shall be construed
in accordance with and governed by the laws of the State of
Colorado.

       

      ARTICLE
XIV

      PLAN
AMENDMENT, MODIFICATION AND TERMINATION

      

      The Board
may at any time terminate, and from time to time may amend or modify the Plan
provided, however, that no amendment or modification may become effective
without approval of the amendment or modification by the shareholders if
shareholder approval is required to enable the Plan to satisfy any applicable
statutory or regulatory requirements, or if the Plan Sponsor, on the advice of
counsel, determines that shareholder approval is otherwise necessary or
desirable.

      

      No
amendment, modification or termination of the Plan shall in any manner adversely
affect any Award previously granted under the Plan, without the consent of the
Participant holding such Award.

      

      ARTICLE
XV

      MISCELLANEOUS

      

      15.1
Gender and
Number.  Except when otherwise indicated by the context, the
masculine gender shall also include the feminine gender, and the definition of
any term herein in the singular shall also include the plural.

      

      15.2
No Right to
Continued Employment.  Nothing contained in the Plan or in any
Award granted under the Plan shall confer upon any Participant any right with
respect to the continuation of his employment by, or consulting relationship
with, the Company, or interfere in any way with the right of the Company,
subject to the terms of any separate employment agreement or other contract to
the contrary, at any time to terminate such services or to increase or decrease
the compensation of the Participant from the rate in existence at the time of
the grant of an Award. Nothing in this Plan shall limit or impair the Company's
right to terminate the employment of any employee, to terminate the consulting
services of any consultant, or to terminate the services of any
director.  Whether an authorized leave of absence, or absence in
military or government service, shall constitute a termination of service shall
be determined by the Committee at the time.

      

      15.3
Nontransferability.  Except
as provided otherwise at the time of grant or as otherwise provided in the Plan,
no right or interest of any Participant in an Award granted pursuant to the Plan
shall be assignable or transferable during the lifetime of the Participant,
either voluntarily or involuntarily, or subjected to any lien, directly or
indirectly, by operation of law, or otherwise, including execution, levy,
garnishment, attachment, pledge or bankruptcy.  In the event of a
Participant's death, a Participant's rights and interests in Awards shall, to
the extent provided in the Plan, be transferable by will or the laws of descent
and distribution, and payment of any amounts due under the Plan shall be made
to, and exercise of any Awards may be made by, the Participant's legal
representatives, heirs or legatees.  Notwithstanding the foregoing,
the Option Holder may not transfer an Incentive Option during the Option
Holder's lifetime.  If in the opinion of the Committee a person
entitled to payments or to exercise rights with respect to the Plan is disabled
from caring for his affairs because of mental condition, physical condition or
age, payment due such person may be made to, and such rights shall be exercised
by, such person's guardian, conservator or other legal personal representative
upon furnishing the Committee with evidence satisfactory to the Committee of
such status.

      
        
        

        
          
            
              	
                      Bacterin
      International Equity Incentive Plan

                    	
                      6/4/2010

                    

            

          

        

      

         

      
        
          
          

        

        
          26

          
            

          

        

        
          
          

        

      

       

      15.4
No Plan
Funding.  Obligations to Participants under the Plan will not
be funded, trusteed, insured or secured in any manner.  The
Participants under the Plan shall have no security interest in any assets of the
Company, and shall be only general creditors of the Company.

      

      15.5
Other
Employee Benefits.  The amount of any compensation deemed to be
received by a Participant as a result of Awards under the Plan shall not
constitute "earnings" or "compensation" with respect to which any other employee
benefits of such employee are determined, including without limitation benefits
under any pension, profit sharing, 401(k), life insurance or salary continuation
plan.

      

      IN
WITNESS WHEREOF, the Plan Sponsor has caused this Plan to be duly executed,
effective as of the Effective Date.

       

      
        
          
            
              
                
                  	
                          K-KITZ,
      INC.

                        
	
                          Plan
      Sponsor

                        
	 
      	 
      
	
                          By:

                        	
                          /s/
      Jennifer Jarvis

                        
	 
      	 
      
	
                          Title: 

                        	President,
      CEO, and CFO  
	 
      	 
      
	
                          Date:

                        	June
      11, 2010 

                

              

            

          

        

      

         

      
        
          
            
              	
                      Bacterin
      International Equity Incentive Plan

                    	
                      6/4/2010

                    

            

          

        

      

         

      
        
          
          

        

        
          27EXHIBIT
10.6

    

    EMPLOYMENT
AGREEMENT

    

    This
agreement made and entered into this 1st day of
January, 2006 by and between Bacterin International, Inc., of Belgrade, MT,
hereinafter referred to as “employer”, and Guy Cook, of Bozeman, MT, hereinafter
refereed to as “employee”. 

    The
parties recite that:

    
      A.     
Employer is engaged in the coating of medical devices and maintains business
premises at 600 Cruiser Lane, Belgrade, MT 59714.

    

    
      B.      
Employee is willing to be employed by employer, and employer is willing to
employ employee, on the terms and conditions hereinafter set
forth.

    

    

    For the
reasons set forth above, and in consideration of the mutual covenants and
promises of the parties hereto, employer and employee covenant and agree as
follows:

    

    AGREEMENT
TO EMPLOY AND  BE EMPLOYED

    

    Employer
hereby employs employee as CEO and President at the above-mentioned premises,
and the employee hereby accepts and agrees to such employment.

    

    DESCRIPTION
OF EMPLOYEE’S DUTIES

    

    Subject
to the supervision and pursuant to the orders, advice, and direction of
employer, employee shall perform such duties as are customarily performed by one
holding such position in other businesses or enterprises of the same or similar
nature as that engaged in by the employer.  Employee shall additionally
render such other and unrelated services and duties as may be assigned to him or
her from time to time by employer.

    

    MANNER
OF PERFORMANCE OF EMPLOYEE’S DUTIES

    

    Employee
shall at all times faithfully, industriously, and to the best of his ability,
experience, and talent, perform all duties that may be require of and from him
or her pursuant to the express and implicit terms hereof, to the reasonable
satisfaction of employer.  Such duties shall be rendered at the above
mentioned premises and at such other place or places as employer shall in good
faith require or as the interests, needs, business, and opportunities of
employer shall require or make advisable.

    

    DURATION
OF EMPLOYMENT

    

    The term
of employment shall commence on January 1, 2006.  Voluntary termination is
determined by the employee, but is subject, however, to termination procedures
as provided in Section 8 and 9 hereof and in the Employee Handbook. This
employment agreement ends Dec. 31, 2011.

    

    COMPENSATION;
REIMBURSEMENT

    

    Employer
shall pay employee and employee agrees to accept from employer, in full payment
for employee’s services hereunder, compensation at the rate of Twenty Thousand
and 00/100’s Dollars ($20,000) per month, payable bi-weekly, and commencing
January 1, 2006.   In addition to the foregoing, employer will
reimburse for any and all necessary, customary, and usual expenses incurred by
him or her while traveling for and on behalf of the employer pursuant to
employer’s directions.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    INTELLECTUAL
PROPERTY

     

    The
Company will be entitled to and will own all the results and proceeds of the
Employee's services under this Agreement, including, without limitation, all
rights throughout the world to any copyright, patent, trademark or other right
and to all ideas, inventions, products, programs, procedures, formats and other
materials of any kind created or developed or worked on by the Employee during
his/her employment by the Company, and one year after termination, that pertains
to Company business; the same shall be the sole and exclusive property of the
Company; and the Employee will not have any right, title or interest of any
nature or kind therein. Without limiting the foregoing, it will be presumed that
any copyright, patent, trademark or other right and any idea, invention,
product, program, procedure, format or material created, developed or worked on
by the Employee at any time during the term of her employment will be a result
or proceed of the Employee's services under this Agreement. The Employee will
take such action and execute such documents as the Company may request to
warrant and confirm the Company's title to and ownership of all such results and
proceeds and to transfer and assign to the Company any rights which the Employee
may have therein.

    

    EMPLOYEE’S
LOYALTY TO EMPLOYER’S INTERESTS

    

    Employee
shall devote all of his or her time, attention, knowledge, and skill solely and
exclusively to the business and interests of employer, and employer shall be
entitled to all benefits, emoluments, profits, or other issues arising from or
incident to any and all work, services, and advice of employee.  Employee
expressly agrees that during the term hereof he or she will not be interested,
directly or indirectly, in any form, fashion, or manner, as partner, officer,
director, stockholder, advisor, employee, or in any form or capacity, in any
other business similar to employer’s business or any allied trade, except that
nothing herein contained shall be deemed to prevent or limit the right of
employee to invest any of his or her surplus funds in the capital stock or other
securities of any corporation whose stock or securities are publicly owned or
are regularly traded on any public exchange, nor shall anything herein contained
by deemed to prevent employee from investing or limit employee’s right to invest
his or her surplus funds in real estate.

    

    NONDISCLOSURE
OF INFORMATION CONCERNING BUSINESS

    

    Employee
will not at any time, in any fashion, form, or manner, either directly or
indirectly divulge, disclose, or communicate to any person, firm, or corporation
in any manner whatsoever any information of any kind, nature, or description
concerning any matters affecting or relating to the business of employer,
including, without limitation, the names of any of it’s customers, the prices it
obtains or has obtained, or at which it sells or has sold its products, or any
other information concerning the business of employer, its manner of operation,
or its plans, processes, or other date of any kind, nature, or description
without regard to whether any or all of the foregoing matters would be deemed
confidential, material, or important.  The parties hereby stipulate that,
as between them, the foregoing matters are important, material, and
confidential, and gravely affect the effective and successful conduct of the
business of employer, and its good will, and that any breach of the terms of
this section is a material breach of this agreement.

    

    OPTION
TO TERMINATE ON PERMANENT DISABILITY OF EMPLOYEE

    

    Notwithstanding
anything in this agreement to the contrary, employer is hereby given the option
to terminate this agreement in the event that during the term hereof employee
shall become permanently disabled, as the term “permanently disabled” is
hereinafter fixed and defined.  Such option shall be exercised by employer
giving notice to employee by registered mail, addressed to him or her in care of
employer at the above stated address, or at such other address as employee shall
designate in writing, of its intention to terminate this agreement on the last
day of the month during which such notice is mailed. 

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

     On
the giving of such notice this agreement and the term hereof shall cease and
come to an end on the last day of the month in which the notice is mailed, with
the same force and effect as if such last day of the month were the date
originally set forth as the termination date.  For purposes of this
agreement, employee shall be deemed to have become permanently disabled if,
during any year of the term hereof, because of ill health, physical or mental
disability, or for other causes beyond his or her control, he or she shall have
been continuously unable or unwilling or have failed to perform his or her
duties hereunder for thirty (30) consecutive days, or if, during any year of the
term hereof, he or she shall have been unable or unwilling or have failed to
perform his or her duties for a total period of thirty (30) days, whether
consecutive or not.  For the purposes hereof, the term “any year of the
term hereof” is defined to mean any period of 12 calendar months commencing on
the first day of January and terminating on the last day of December of the
following year during the term hereof.

    

    DISCONTINUANCE
OF BUSINESS AS TERMINATION OF EMPLOYMENT

    

    Anything
herein contained to the contrary notwithstanding, in the event that employer
shall discontinue operations at the premises mentioned above, then this
agreement shall cease and terminate as of the last day of the month in which
operations cease with the same force and effect as if such last day of the month
were originally set forth as the termination date hereof..

    

    EMPLOYEE’S
COMMITMENTS BINDING ON EMPLOYER ONLY ON WRITTEN CONSENT

    

    Employee
shall not have the right to make any contracts or other commitments for or on
behalf of employer within the written consent of the employer.

    

    CONTRACT
TERMS TO BE EXCLUSIVE

    

    This
written agreement contains the sole and entire agreement between the parties,
and supersedes any and all other agreements between them.  The parties
acknowledge and agree that neither of them has made any representation with
respect to the subject matter of this agreement or any representations inducing
the execution and delivery hereof except such representations as are
specifically set forth herein, and each party acknowledges that he, she or it
has relied on his, her or its own judgment in entering into the agreement. 
The parties further acknowledge that any statements or representations that may
have heretofore been made by either of them to the other are void and of no
effect and that neither of them has relied thereon on connection with his, her
or its dealings with the other.

    

    WAIVER
OR MODIFICATION INEFFECTIVE UNLESS IN WRITING

    

    No waiver
or modification of this agreement or of its covenant, condition, or limitation
herein contained shall be valid unless in writing and duly executed by the party
to be charged therewith.  Furthermore, no evidence of any waiver or
modification shall be offered or received in evidence in any proceeding,
arbitration, or litigation between the parties arising out of or affecting this
agreement, or the rights or obligations of any party hereunder, unless such
waiver or modification is in writing, duly executed as aforesaid.  The
provisions of this paragraph may not be waived except as herein set
forth.

    

    CONTRACT
GOVERNED BY LAW

    

    This
agreement and performance hereunder and all suits and special proceedings
hereunder shall be construed in accordance with the laws of the State of
Montana.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    GUARANTOR
OF COMPANY DEBT

    

    Employee,
as personal guarantor of company debt, can, at any time, demand full and
immediate payment of such loans in event of termination.  At any time
during his employ, employee may borrow at 2% below prime rate from the employer
any amount equal to the total dollar amount currently guaranteed by
employee.

     

    BINDING
EFFECT OF AGREEMENT

    

    This
agreement shall be binding on and inure to the benefit of the respective parties
and their respective heirs, legal representatives, successors, and
assigns.

    

    Executed
on the date first above written.

    

    
      	
              /s/ Guy Cook

            	 
      	
              /s/ Guy Cook

            	 
      
	
              “Employee”

            	
              “Employer”

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