Exhibit 10.1

ANTARES PHARMA, INC.

2006 EQUITY INCENTIVE PLAN

SECTION 1. Purpose; Definitions. The purposes of the Antares Pharma, Inc. 2006
Equity Incentive Plan (the “Plan”) are to: (a) enable Antares Pharma, Inc. (the
“Company”) and its Affiliates to recruit and retain highly qualified personnel;
(b) provide those employees, directors and consultants with an incentive for
productivity; and (c) provide those employees, directors and consultants with an
opportunity to share in the growth and value of the Company.

For purposes of the Plan, the following terms will have the meanings defined
below, unless the context clearly requires a different meaning:

(a) “Affiliate” means, with respect to a Person, a Person that directly or
indirectly controls, is controlled by, or is under common control with such
Person.

(b) “Award” means an award of Options, Restricted Stock, Restricted Stock Units,
or Performance Awards made under this Plan.

(c) “Award Agreement” means, with respect to any particular Award, the written
document that sets forth the terms of that particular Award.

(d) “Board” means the Board of Directors of the Company, as constituted from
time to time; provided, however, that if the Board appoints a Committee to
perform some or all of the Board’s administrative functions hereunder pursuant
to Section 2, references in the Plan to the “Board” will be deemed to also refer
to that Committee in connection with administrative matters to be performed by
that Committee.

(e) “Cause” means (i) conviction of, or the entry of a plea of guilty or no
contest to, a felony or any other crime that causes the Company or its
Affiliates public disgrace or disrepute, or adversely affects the Company’s or
its Affiliates’ operations or financial performance or the relationship the
Company has with its Affiliates, (ii) gross negligence or willful misconduct
with respect to the Company or any of its Affiliates, including, without
limitation fraud, embezzlement, theft or proven dishonesty in the course of his
employment; (iii) alcohol abuse or use of controlled drugs other than in
accordance with a physician’s prescription; (iv) refusal, failure or inability
to perform any material obligation or fulfill any duty (other than any duty or
obligation of the type described in clause (vi) below) to the Company or any of
its Affiliates (other than due to a Disability), which failure, refusal or
inability is not cured within 10 days after delivery of notice thereof;
(v) material breach of any agreement with or duty owed to the Company or any of
its Affiliates; or (vi) any breach of any obligation or duty to the Company or
any of its Affiliates (whether arising by statute, common law, contract or
otherwise) relating to confidentiality, noncompetition, nonsolicitation or
proprietary rights. Notwithstanding the foregoing, if a Participant and the
Company (or any of its Affiliates) have entered into an employment agreement,
consulting agreement or other similar agreement that

 

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specifically defines “cause,” then with respect to such Participant, “Cause”
shall have the meaning defined in that employment agreement, consulting
agreement or other agreement.

(f) “Change in Control” means the occurrence of any of the following, in one
transaction or a series of related transactions:

(i) any “person” (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) becoming a “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing
more than 50% of the voting power of the Company’s then outstanding securities,
and such person owns more aggregate voting power of the Company’s then
outstanding securities entitled to vote generally in the election of directors
than any other person; provided that a Change in Control shall not be deemed to
occur as a result of (A) a change in ownership resulting from the death of a
shareholder, (B) a transaction or a series of related transactions in which the
Company is the seller of securities of the Company to the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), or (C) a transaction or a series
of related transactions in which the purchaser of the securities of the Company
is an employee benefit plan maintained by the Company; or

(ii) the consummation of (x) the merger or consolidation of the Company with
another corporation where the shareholders of the Company, immediately prior to
the merger or consolidation, will not beneficially own, immediately after the
merger or consolidation, shares entitling such shareholders to 50% or more of
all votes to which all shareholders of the surviving corporation would be
entitled in the election of directors (without consideration of the rights of
any class of stock to elect directors by a separate class vote), (y) the sale or
other disposition of all or substantially all of the assets of the Company, or
(z) a liquidation or dissolution of the Company;

(g) “Code” means the Internal Revenue Code of 1986, as amended from time to
time, and any successor thereto.

(h) “Committee” means a committee appointed by the Board in accordance with
Section 2 of the Plan.

(i) “Covered Employee” means any employee of the Company if (i) as of the close
of the taxable year, such employee is the chief executive officer of the Company
or is an individual acting in such capacity, or (ii) the total compensation of
such employee for the taxable year is required to be reported to shareholders
under the Exchange Act by reason of such employee being among the 4 highest
compensated officers for the taxable year (other than the chief executive
officer).

(j) “Director” means a member of the Board.

(k) “Disability” means a condition rendering a Participant Disabled.

(l) “Disabled” will have the same meaning as set forth in Section 22(e)(3) of
the Code.

 

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(m) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(n) “Fair Market Value” means, as of any date: (i) if the Shares are not then
publicly traded, the value of such Shares on that date, as determined by the
Board in its sole and absolute discretion; or (ii) if the Shares are publicly
traded, the closing price for a Share on the principal national securities
exchange on which the Shares are listed or admitted to trading or, if the Shares
are not listed or admitted to trading on any national securities exchange, but
are traded in the over-the-counter market, the closing sale price of a Share or,
if no sale is publicly reported, the average of the closing bid and asked
quotations for a Share, as reported by The Nasdaq Stock Market, Inc. (“Nasdaq”)
or any comparable system or, if the Common Stock is not listed on Nasdaq or a
comparable system, the closing sale price of a Share or, if no sale is publicly
reported, the average of the closing bid and asked prices, as furnished by two
members of the National Association of Securities Dealers, Inc. who make a
market in the Common Stock selected from time to time by the Company for that
purpose.

(o) “Incentive Stock Option” means any Option intended to be an “Incentive Stock
Option” within the meaning of Section 422 of the Code.

(p) “Non-Employee Director” will have the meaning set forth in
Rule 16b-3(b)(3)(i) promulgated by the Securities and Exchange Commission under
the Exchange Act, or any successor definition adopted by the Securities and
Exchange Commission; provided, however, that the Board or the Committee may, to
the extent that it deems necessary to comply with Section 162(m) of the Code or
regulations thereunder, require that each “Non-Employee Director” also be an
“outside director” as that term is defined in regulations under Section 162(m)
of the Code.

(q) “Non-Qualified Stock Option” means any Option that is not an Incentive Stock
Option.

(r) “Option” means any option to purchase Shares (including Restricted Stock, if
the Board so determines) granted pursuant to Section 5 hereof.

(s) “Parent” means, in respect of the Company, a “parent corporation” as defined
in Sections 424(e) of the Code

(t) “Participant” means an employee, consultant, Director, or other service
provider of or to the Company or any of its respective Affiliates to whom an
Award is granted.

(u) “Performance Award” means any award granted pursuant to Section 9 hereof.

(v) “Performance Factors” means the factors selected by the Board from time to
time, including, but not limited to, the following measures to determine whether
the performance goals established by the Plan Administrator and applicable to
Performance Awards have been satisfied: revenue; net revenue; revenue growth;
net revenue growth; earnings before interest, taxes, depreciation and
amortization (“EBITDA”); funds from operations; funds from

 

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operations per share; operating income (loss); operating income growth;
operating cash flow; net income; net income growth; pre- or after-tax income
(loss); cash available for distribution; cash available for distribution per
share; cash and/or cash equivalents available for operations; net earnings
(loss); earnings (loss) per share; earnings per share growth; return on equity;
return on assets; share price performance; total shareholder return; total
shareholder return growth; economic value added; improvement in cash-flow; and
confidential business unit objectives.

(w) “Person” means an individual, partnership, corporation, limited liability
company, trust, joint venture, unincorporated association, or other entity or
association.

(x) “Restricted Stock” means Shares that are subject to restrictions pursuant to
Section 7 hereof.

(y) “Restricted Stock Unit” means a right granted under and subject to
restrictions pursuant to Section 9 hereof.

(z) “Shares” means shares of the Company’s common stock, par value $.01, subject
to substitution or adjustment as provided in Section 3(c) hereof.

(aa) “Subsidiary” means, in respect of the Company, a subsidiary company as
defined in Sections 424(f) and (g) of the Code.

SECTION 2. Administration. The Plan will be administered by the Board; provided,
however, that the Board may at any time appoint a Committee to perform some or
all of the Board’s administrative functions hereunder; and provided further,
that the authority of any Committee appointed pursuant to this Section 2 will be
subject to such terms and conditions as the Board may prescribe and will be
coextensive with, and not in lieu of, the authority of the Board hereunder.

Subject to the requirements of the Company’s by-laws and certificate of
incorporation any other agreement that governs the appointment of Board
committees, any Committee established under this Section 2 will be composed of
not fewer than two members, each of whom will serve for such period of time as
the Board determines; provided, however, that if the Company has a class of
securities required to be registered under Section 12 of the Exchange Act, all
members of any Committee established pursuant to this Section 2 will be
Non-Employee Directors. From time to time the Board may increase the size of the
Committee and appoint additional members thereto, remove members (with or
without cause) and appoint new members in substitution therefor, fill vacancies
however caused, or remove all members of the Committee and thereafter directly
administer the Plan.

Directors who are eligible for Awards or have received Awards may vote on any
matters affecting the administration of the Plan or the grant of Awards, except
that no such member will act upon the grant of an Award to himself or herself,
but any such member may be counted in determining the existence of a quorum at
any meeting of the Board during which action is taken with respect to the grant
of Awards to himself or herself.

 

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The Board will have full authority to grant Awards under this Plan and determine
the terms of such Awards. Such authority will include the right to:

(a) select the persons to whom Awards are granted (consistent with the
eligibility conditions set forth in Section 4);

(b) determine the type of Award to be granted;

(c) determine the number of Shares, if any, to be covered by each Award;

(d) establish the terms and conditions of each Award Agreement;

(e) determine whether and under what circumstances an Option may be exercised
without a payment of cash under Section 5(d);

(f) select the Performance Factors used to determine whether the performance
goals established by the Board and applicable to Performance Awards have been
satisfied; and

(g) determine whether, to what extent and under what circumstances Shares and
other amounts payable with respect to an Award may be deferred either
automatically or at the election of the Participant.

The Board will have the authority to adopt, alter and repeal such administrative
rules, guidelines and practices governing the Plan as it, from time to time,
deems advisable; to establish the terms and form of each Award Agreement; to
interpret the terms and provisions of the Plan and any Award issued under the
Plan (and any Award Agreement); and to otherwise supervise the administration of
the Plan. The Board may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or in any Award Agreement in the manner and to the
extent it deems necessary to carry out the intent of the Plan.

All decisions made by the Board pursuant to the provisions of the Plan will be
final and binding on all persons, including the Company and Participants. No
Director will be liable for any good faith determination, act or omission in
connection with the Plan or any Award.

SECTION 3. Shares Subject to the Plan.

(a) Shares Subject to the Plan. The Shares to be subject to or related to Awards
under the Plan will be authorized and unissued Shares of the Company, whether or
not previously issued and subsequently acquired by the Company. The maximum
number of Shares that may be issued in respect of Awards under the Plan is
2,500,000. The Company will reserve for the purposes of the Plan, out of its
authorized and unissued Shares, such number of Shares. Notwithstanding the
foregoing, no individual may granted Options with respect to more than 500,000
Shares in any calendar year. In addition, notwithstanding the foregoing, no more
than 500,000 Shares from the maximum number of Shares that may be issued in
respect of Awards under the Plan may be issued pursuant Sections 7, 8 and 9 of
the Plan.

 

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(b) Effect of the Expiration or Termination of Awards. If and to the extent that
an Option expires, terminates or is canceled or forfeited for any reason without
having been exercised in full, the Shares associated with that Option will again
become available for grant under the Plan. Similarly, if and to the extent an
Award of Restricted Stock, Restricted Stock Unit or any Performance Award is
canceled, forfeited or repurchased for any reason, the Shares subject to that
Award will again become available for grant under the Plan. In addition, if any
Share is withheld pursuant to Section 11(e) in settlement of a tax withholding
obligation associated with an Award, that Share will again become available for
grant under the Plan. Finally, if any Share is received in satisfaction of the
exercise price payable upon exercise of an Option, that Share will become
available for grant under the Plan.

(c) Other Adjustment. In the event of any recapitalization, stock split or
combination, stock dividend or other similar event or transaction affecting the
Shares, equitable substitutions or adjustments may be made by the Board, in its
sole and absolute discretion: (i) to the aggregate number, class and/or issuer
of the securities reserved for issuance under the Plan; (ii) to the number,
class and/or issuer of Shares subject to outstanding Options; (iii) to the
exercise price of outstanding Options; (iv) to the number, class and/or issuer
of Restricted Stock and the number of Restricted Stock Units outstanding under
the Plan; and (v) to the number, class and/or issuer of Shares subject to
outstanding Performance Awards.

(d) Change in Control. Notwithstanding anything to the contrary set forth in the
Plan, upon or in anticipation of any Change in Control of the Company or any of
its Affiliates, the Board may, in its sole and absolute discretion and without
the need for the consent of any Participant, take one or more of the following
actions contingent upon the occurrence of that Change in Control: (i) cause any
or all outstanding Options to become vested and/or immediately exercisable, in
whole or in part; (ii) accelerate the expiration date of any option, provided
that the Participant is given notice of such acceleration and a period in which
to exercise any vested and exercisable Option prior to the accelerated
expiration date; (iii) cause any or all outstanding Restricted Stock, Restricted
Stock Units or Performance Awards to become non-forfeitable, in whole or in
part; (iv) cancel any Option in exchange for a substitute option in a manner
consistent with the requirements of Treas. Reg. §1.424-1(a) or any successor
regulation adopted by the Treasury Department (notwithstanding the fact that the
original Option may never have been intended to satisfy the requirements for
treatment as an Incentive Stock Option); (v) cancel any Restricted Stock,
Restricted Stock Units or Performance Award in exchange for restricted stock,
restricted stock units or performance award in respect of the capital stock of
any successor corporation or its parent; (vi) cancel any Option in exchange for
cash and/or other substitute consideration with a value equal to (A) the number
of Shares subject to that Option , multiplied by (B) the amount, if any, by
which the Fair Market Value per Share on the date of the Change in Control
exceeds the exercise price of that Option; provided, that if the Fair Market
Value per Share on the date of the Change in Control does not exceed the
exercise price of any such Option, the Board may cancel that Option without any
payment of consideration therefor; or (vii) cancel any Restricted Stock Unit in
exchange for cash and/or other substitute consideration with a value equal to
the Fair Market Value per Share on the date of the Change in Control. In the
discretion of the Board, any cash or substitute consideration payable upon
cancellation of an Award may be subjected to vesting terms substantially
identical to those that applied to the cancelled Award immediately prior to the
Change in Control.

 

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SECTION 4. Eligibility. Employees, Directors, consultants, and other individuals
who provide services to the Company or its Affiliates are eligible to be granted
Awards under the Plan; provided, however, that only employees of the Company,
its Parent or a Subsidiary are eligible to be granted Incentive Stock Options.

SECTION 5. Options. Options granted under the Plan may be of two types:
(i) Incentive Stock Options or (ii) Non-Qualified Stock Options. Any Option
granted under the Plan will be in such form as the Board may at the time of such
grant approve. Without limiting the generality of 0 3(a), any or all of the
Shares reserved for issuance under Section 3(a) may be issued in respect of
Incentive Stock Options.

The Award Agreement evidencing any Option will incorporate the following terms
and conditions and will contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Board deems appropriate in its
sole and absolute discretion:

(a) Option Price. The exercise price per Share purchasable under any Option will
be determined by the Board and will not be less than 100% of the Fair Market
Value per Share on the date of the grant. However, any Incentive Stock Option
granted to any Participant who, at the time the Option is granted, owns more
than 10% of the voting power of all classes of shares of the Company, its Parent
or a Subsidiary will have an exercise price per Share of not less than 110% of
Fair Market Value per Share on the date of the grant. Notwithstanding any
provision in the Plan to the contrary, no Option may be re-priced without
shareholder approval.

(b) Option Term. The term of each Option will be fixed by the Board, but no
Option will be exercisable more than 10 years after the date the Option is
granted; provided that an Option granted to any Participant whose principal
place of employment is outside the United States of America may be exercisable
for more than 10 years after the date the Option is granted, as determined by
the Board. However, any Incentive Stock Option granted to any Participant who,
at the time such Option is granted, owns more than 10% of the voting power of
all classes of shares of the Company, its Parent or a Subsidiary may not have a
term of more than five years. No Option may be exercised by any person after
expiration of the term of the Option.

(c) Exercisability. Options will vest and be exercisable at such time or times
and subject to such terms and conditions as determined by the Board at the time
of grant. Notwithstanding anything in the Plan to the contrary, the grant of any
Option to a Covered Employee under the Plan shall be established in conformity
with Section 162(m) of the Code and Treas. Reg. 1-162.27(e)(2)(vi) or any
successor regulation adopted by the Treasury Department.

(d) Method of Exercise. Subject to the exercisability provisions of Section 5(c)
and the termination provisions set forth in Section 6 and the applicable Award
Agreement, Options may be exercised in whole or in part at any time and from
time to time during the term of the Option, by the delivery of written notice of
exercise by the Participant to the Company specifying the number of Shares to be
purchased. Such notice will be accompanied by payment in full of the purchase
price, either by certified or bank check, or such other means as the Board may
accept. As determined by the Board, in its sole discretion, at or after grant,
payment in full or in part of the exercise price of an Option may be made in the
form of previously acquired Shares based on the Fair Market Value of the Shares
on the date the Option is exercised;

 

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provided, however, that, in the case of an Incentive Stock Option, the right to
make a payment in the form of previously acquired Shares may be authorized only
at the time the Option is granted.

No Shares will be issued upon exercise of an Option until full payment therefor
has been made, including, without limitation, the amount of any applicable
withholding tax. A Participant will not have the right to distributions or
dividends or any other rights of a stockholder with respect to Shares subject to
the Option until the Participant has given written notice of exercise, has paid
in full for such Shares, if requested, has given the representation described in
Section 11(a) hereof and fulfills such other conditions as may be set forth in
the applicable Award Agreement.

(e) Incentive Stock Option Limitations. In the case of an Incentive Stock
Option, the aggregate Fair Market Value (determined as of the time of grant) of
the Shares with respect to which Incentive Stock Options are exercisable for the
first time by the Participant during any calendar year under the Plan and/or any
other plan of the Company, its Parent or any Subsidiary will not exceed
$100,000. For purposes of applying the foregoing limitation, Incentive Stock
Options will be taken into account in the order granted. To the extent any
Option does not meet such limitation, that Option will be treated for all
purposes as a Non-Qualified Stock Option.

(f) Termination of Service. Unless otherwise specified in the applicable Award
Agreement, Options will be subject to the terms of Section 6 with respect to
exercise upon or following termination of employment or other service.

(g) Transferability of Options. Except as may otherwise be specifically
determined by the Board with respect to a particular Option: (i) no Option will
be transferable by the Participant other than by will or by the laws of descent
and distribution, and (ii) during the Participant’s lifetime, an Option will be
exercisable only by the Participant (or, in the event of the Participant’s
Disability, by his personal representative).

SECTION 6. Termination of Service. Unless otherwise specified with respect to a
particular Option in the applicable Award Agreement, all Options granted
hereunder will remain exercisable after termination of service only to the
extent specified in this Section 6.

(a) Termination by Reason of Death. If a Participant’s service with the Company
or any Affiliate terminates by reason of death, any Option held by such
Participant may thereafter be exercised, to the extent then exercisable or on
such accelerated basis as the Board may determine at or after grant, by the
legal representative of the estate or by the legatee of the Participant under
the will of the Participant, for a period expiring (i) at such time as may be
specified by the Board at or after grant, or (ii) if not specified by the Board,
then 12 months from the date of death, or (iii) if sooner than the applicable
period specified under (i) or (ii) above, upon the expiration of the stated term
of such Option.

(b) Termination by Reason of Disability. If a Participant’s service with the
Company or any Affiliate terminates by reason of Disability, any Option held by
such Participant may thereafter be exercised by the Participant or his personal
representative, to the extent it was exercisable at the time of termination, or
on such accelerated basis as the Board may determine

 

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at or after grant, for a period expiring (i) at such time as may be specified by
the Board at or after grant, or (ii) if not specified by the Board, then 12
months from the date of termination of service, or (iii) if sooner than the
applicable period specified under (i) or (ii) above, upon the expiration of the
stated term of such Option.

(c) Cause. If a Participant’s service with the Company or any Affiliate is
terminated for Cause: (i) any Option not already exercised will be immediately
and automatically forfeited as of the date of such termination, and (ii) any
Shares for which the Company has not yet delivered share certificates will be
immediately and automatically forfeited and the Company will refund to the
Participant the Option exercise price paid for such Shares, if any.

(d) Other Termination. If a Participant’s service with the Company or any
Affiliate terminates for any reason other than death, Disability or Cause, any
Option held by such Participant may thereafter be exercised by the Participant,
to the extent it was exercisable at the time of such termination, or on such
accelerated basis as the Board may determine at or after grant, for a period
expiring (i) at such time as may be specified by the Board at or after grant, or
(ii) if not specified by the Board, then 90 days from the date of termination of
service, or (iii) if sooner than the applicable period specified under (i) or
(ii) above, upon the expiration of the stated term of such Option.

SECTION 7. Restricted Stock.

(a) Issuance. Restricted Stock may be issued either alone or in conjunction with
other Awards. The Board will determine the time or times within which Restricted
Stock may be subject to forfeiture, and all other conditions of such Awards.

(b) Awards. The Award Agreement evidencing the grant of any Restricted Stock
will contain such terms and conditions, not inconsistent with the terms of the
Plan, as the Board deems appropriate in its sole and absolute discretion. The
prospective recipient of an Award of Restricted Stock will not have any rights
with respect to such Award, unless and until such recipient has delivered to the
Company an executed Award Agreement and has otherwise complied with the
applicable terms and conditions of such Award. The purchase price for Restricted
Stock may, but need not, be zero.

(c) Certificates. A share certificate will be issued in connection with each
Award of Restricted Stock. Such certificate will be registered in the name of
the Participant receiving the Award, and will bear the following legend and/or
any other legend required by this Plan, the Award Agreement or by applicable
law:

 

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THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY ARE
SUBJECT TO THE TERMS AND CONDITIONS OF THE ANTARES PHARMA, INC. 2006 EQUITY
INCENTIVE PLAN AND AN AWARD AGREEMENT ENTERED INTO BETWEEN [THE PARTICIPANT] AND
ANTARES PHARMA, INC. (WHICH TERMS AND CONDITIONS MAY INCLUDE, WITHOUT
LIMITATION, CERTAIN TRANSFER RESTRICTIONS, REPURCHASE RIGHTS AND FORFEITURE
CONDITIONS). COPIES OF THAT PLAN AND AGREEMENT ARE ON FILE IN THE PRINCIPAL
OFFICES OF ANTARES PHARMA, INC. AND WILL BE MADE AVAILABLE TO THE HOLDER OF THIS
CERTIFICATE WITHOUT CHARGE UPON REQUEST TO THE SECRETARY OF THE COMPANY.

Share certificates evidencing Restricted Stock will be held in custody by the
Company or in escrow by an escrow agent until the restrictions thereon have
lapsed. As a condition to any Award of Restricted Stock, the Participant may be
required to deliver to the Company a share power, endorsed in blank, relating to
the Shares covered by such Award.

(d) Restrictions and Conditions. The Award Agreement evidencing the grant of any
Restricted Stock will incorporate the following terms and conditions and such
additional terms and conditions, not inconsistent with the terms of the Plan, as
the Board deems appropriate in its sole and absolute discretion:

(i) During a period commencing with the date of an Award of Restricted Stock and
ending at such time or times as specified by the Board (the “Restriction
Period”), the Participant will not be permitted to sell, transfer, pledge,
assign or otherwise encumber Restricted Stock awarded under the Plan. The Board
may condition the lapse of restrictions on Restricted Stock upon the continued
employment or service of the recipient, the attainment of specified individual
or corporate performance goals, or such other factors as the Board may
determine, in its sole and absolute discretion.

(ii) Except as provided in this paragraph (ii) or the applicable Award
Agreement, once the Participant has been issued a certificate or certificates
for Restricted Stock, the Participant will have, with respect to the Restricted
Stock, all of the rights of a stockholder of the Company, including the right to
vote the Shares, and the right to receive any cash distributions or dividends.
The Board, in its sole discretion, may require cash distributions or dividends
to be subjected to the same Restriction Period as is applicable to the
Restricted Stock with respect to which such amounts are paid, or, if the Board
so determines, reinvested in additional Restricted Stock to the extent Shares
are available under Section 3(a) of the Plan. Any distributions or dividends
paid in the form of securities with respect to Restricted Stock will be subject
to the same terms and conditions as the Restricted Stock with respect to which
they were paid, including, without limitation, the same Restriction Period.

 

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(iii) Subject to the provisions of the applicable Award Agreement, if a
Participant’s service with the Company and it Affiliates terminates prior to the
expiration of the applicable Restriction Period, the Participant’s Restricted
Stock that then remains subject to forfeiture will then be forfeited
automatically.

(iv) If and when the Restriction Period expires without a prior forfeiture of
the Restricted Stock subject to such Restriction Period (or if and when the
restrictions applicable to Restricted Stock are removed pursuant to Section 3(d)
or otherwise), the certificates for such Shares will be replaced with new
certificates, without the restrictive legends described in Section 7(c)
applicable to such lapsed restrictions, and such new certificates will be
delivered to the Participant, the Participant’s representative (if the
Participant has suffered a Disability), or the Participant’s estate or heir (if
the Participant has died).

SECTION 8. Restricted Stock Units. Subject to the other terms of the Plan, the
Board may grant Restricted Stock Units to eligible individuals and may impose
conditions on such units as it may deem appropriate. Each Restricted Stock Unit
shall be evidenced by an Award Agreement in the form that is approved by the
Board and that is not inconsistent with the terms and conditions of the Plan.
Each Restricted Stock Unit will represent a right to receive from the Company,
upon fulfillment of any applicable conditions, an amount equal to the Fair
Market Value (at the time of the distribution) of one Share. Distributions may
be made in cash and/or Shares. All other terms governing Restricted Stock Units,
such as vesting, time and form of payment and termination of units shall be set
forth in the applicable Award Agreement.

SECTION 9. Performance Awards.

(a) Awards and Award Periods. The Board may grant Awards to any person eligible
to participate in the Plan in accordance with Section 4, representing the right
to receive a payment contingent upon the extent to which certain predetermined
performance targets have been met during an Award Period (a “Performance
Award”). Each Performance Award shall have an Award Period that is a minimum of
1 year from the date of grant; provided, however, that (i) the award may become
non-forfeitable according to the terms of the applicable Award Agreement during
the 1-year (or longer) Award Period in installments as a result of the
Participant’s continued employment with the Company or other basis and (ii) the
Board may set forth in the applicable Award Agreement provisions that allow for
payment of some or all of the Award prior to the end of the applicable Award
Period in circumstances that, to the extent necessary, comply with the
conditions in Section 409A of the Code to avoid the tax and related interest for
non-compliance set forth in such Section. For purposes of this Section 9, an
“Award Period” means the period during which all or a portion of an Award shall
be forfeitable by the Participant, as set forth in the applicable Award
Agreement. The Board, in its discretion and under such terms as it deems
appropriate, may permit newly eligible individuals, such as those who are
promoted or newly hired, to receive Performance Awards after an Award Period has
commenced.

(b) Performance Targets. The performance targets may include such goals related
to the performance of the Company or, where relevant, any parent or subsidiary
and/or the performance of the Participant, as may be established by the Board in
its discretion. In the

 

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case of Performance Awards to “covered employees” (as defined in Section 162(m)
of the Code), the Board shall cause to be set forth in the applicable Award
Agreement one or more of the Performance Factors (defined in Section 1(u),
above) that will be used to measure performance, and the specific performance
goals applicable to each Performance Factor so selected. The performance targets
established by the Board may vary for different Award Periods and need not be
the same for each Participant receiving a Performance Award in an Award Period.
Except to the extent inconsistent with the performance-based compensation
exception under Section 162(m) of the Code, in the case of Performance Awards
granted to employees to whom such section is applicable, the Board in its
discretion but only under extraordinary circumstances as determined by the
Board, may change any prior determination of performance targets for any Award
Period at any time prior to the final determination of the Award when events or
transactions occur to cause the performance targets to be an inappropriate
measure of achievement.

(c) Earning Performance Awards. The Board, at or as soon as practicable after
the date of grant, shall prescribe, and set forth in the applicable Award
Agreement, a formula to determine the percentage of the Performance Award to be
earned based upon the degree of attainment of the applicable performance
targets.

(d) Payment of Earned Performance Awards. Payments of earned Performance Awards
shall be made in cash, Shares, or a combination of cash and Shares, in the
discretion of the Board. The Board, in its sole discretion, may define and set
forth in the applicable Award agreement such terms and conditions with respect
to the payment of earned Performance Awards as it may deem desirable.

(e) Termination of Employment or Other Relationship With Company. In the event
of a termination of the Participant’s employment with or performance of services
for the Company or its Affiliates, the Participant’s Performance Awards shall be
forfeited; provided, however, that the Board may set forth in the applicable
Award Agreement provisions that allow for payment of some or all of the
Performance Award prior to the end of the applicable performance period in
circumstances that, to the extent necessary, comply with the conditions in
Section 409A of the Code to avoid the tax and related interest for
non-compliance set forth in such Section.

SECTION 10. Amendments and Termination. The Board may amend, alter or
discontinue the Plan at any time. However, except as otherwise provided in
Section 3, no amendment, alteration or discontinuation will be made which would
impair the rights of a Participant with respect to an Award without that
Participant’s consent or which, without the approval of such amendment within
365 days of its adoption by the Board by the Company’s stockholders in a manner
consistent with Treas. Reg. § 1.422-3, would: (i) increase the total number of
Shares reserved for issuance hereunder, or (ii) change the persons or class of
persons eligible to receive Awards.

SECTION 11. General Provisions.

(a) The Board may require each Participant to represent to and agree with the
Company in writing that the Participant is acquiring securities of the Company
for investment

 

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purposes and without a view to distribution thereof and as to such other matters
as the Board believes are appropriate. The certificate evidencing any Award and
any securities issued pursuant thereto may include any legend which the Board
deems appropriate to reflect any restrictions on transfer and compliance with
applicable securities laws.

(b) All certificates for Shares or other securities delivered under the Plan
will be subject to such share-transfer orders and other restrictions as the
Board may deem advisable under the rules, regulations and other requirements of
the Securities Act of 1933, as amended, the Exchange Act, any stock exchange
upon which the Shares are then listed, and any other applicable federal or state
securities law, and the Board may cause a legend or legends to be put on any
such certificates to make appropriate reference to such restrictions.

(c) Nothing contained in the Plan will prevent the Board from adopting other or
additional compensation arrangements, subject to stockholder approval if such
approval is required.

(d) Neither the adoption of the Plan nor the execution of any document in
connection with the Plan will: (i) confer upon any employee of the Company or an
Affiliate any right to continued employment or engagement with the Company or
such Affiliate, or (ii) interfere in any way with the right of the Company or
such Affiliate to terminate the employment of any of its employees at any time.

(e) No later than the date as of which an amount first becomes includible in the
gross income of the Participant for federal income tax purposes with respect to
any Award under the Plan, the Participant will pay to the Company, or make
arrangements satisfactory to the Company regarding the payment of, any federal,
state or local taxes of any kind required by law to be withheld with respect to
such amount. Unless otherwise determined by the Board, the minimum required
withholding obligations may be settled with Shares, including Shares that are
part of the Award that gives rise to the withholding requirement. The
obligations of the Company under the Plan will be conditioned on such payment or
arrangements and the Company will have the right to deduct any such taxes from
any payment of any kind otherwise due to the Participant.

SECTION 12. Effective Date of Plan. Subject to the approval of the Plan by the
Company’s stockholders within 12 months of the Plan’s adoption by the Board, the
Plan will become effective on the date that it is adopted by the Board.

SECTION 13. Term of Plan. The Plan will continue in effect until terminated in
accordance with Section 8; provided, however, that no Incentive Stock Option
will be granted hereunder on or after the 10th anniversary of the date of
stockholder approval of the Plan (or, if the stockholders approve an amendment
that increases the number of shares subject to the Plan, the 10th anniversary of
the date of such approval); but provided further, that Incentive Stock Options
granted prior to such 10th anniversary may extend beyond that date.

SECTION 14. Invalid Provisions. In the event that any provision of this Plan is
found to be invalid or otherwise unenforceable under any applicable law, such
invalidity or unenforceability will not be construed as rendering any other
provisions contained herein as

 

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invalid or unenforceable, and all such other provisions will be given full force
and effect to the same extent as though the invalid or unenforceable provision
was not contained herein.

SECTION 15. Governing Law. The Plan and all Awards granted hereunder will be
governed by and construed in accordance with the laws and judicial decisions of
the State of Delaware, without regard to the application of the principles of
conflicts of laws.

SECTION 16. Board Action. Notwithstanding anything to the contrary set forth in
the Plan, any and all actions of the Board or Committee, as the case may be,
taken under or in connection with the Plan and any agreements, instruments,
documents, certificates or other writings entered into, executed, granted,
issued and/or delivered pursuant to the terms hereof, will be subject to and
limited by any and all votes, consents, approvals, waivers or other actions of
all or certain stockholders of the Company or other persons required by:

(a) the Company’s Certificate of Incorporation (as the same may be amended
and/or restated from time to time);

(b) the Company’s Bylaws (as the same may be amended and/or restated from time
to time); and

(c) any other agreement, instrument, document or writing now or hereafter
existing, between or among the Company and its stockholders or other persons (as
the same may be amended from time to time).

SECTION 17. Notices. Any notice to be given to the Company pursuant to the
provisions of this Plan must be given in writing and addressed, if to the
Company, to its principal executive office to the attention of its Chief
Financial Officer (or such other person as the Company may designate in writing
from time to time), and, if to a Participant, to the address contained in the
Company’s personnel files, or at such other address as that Participant may
hereafter designate in writing to the Company. Any such notice will be deemed
duly given: if delivered personally or via recognized overnight delivery
service, on the date and at the time so delivered; if sent via telecopier or
email, on the date and at the time telecopied or emailed with confirmation of
delivery; or, if mailed, five (5) days after the date of mailing by registered
or certified mail.

ADOPTION AND APPROVAL OF PLAN

Date Plan adopted by Board: January 25, 2006

Date Plan approved by Stockholders: May 4, 2006

Effective Date of Plan: January 25, 2006

 

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