VYTERIS,
INC.

      


      2010 OUTSIDE DIRECTOR CASH
COMPENSATION AND STOCK INCENTIVE PLAN

      


      


      1. Purpose of the Plan.
The purpose of this plan ("Plan"), to be known as the "2010 Outside Director
Cash Compensation and Stock Incentive Plan", is to attract qualified personnel
to accept positions of responsibility as outside directors with Vyteris, Inc., a
Nevada corporation, and its successors (collectively, the "Company"), and to
provide incentives for qualified persons to remain on the Board of Directors of
the Company as outside (non-management) directors. Following the effective date
of this Plan, the Company shall not grant any awards of cash, stock, or options
pursuant to the Company’s 2010 Outside Director Stock Incentive
Plan.

      


      2. Definitions. As used
in the Plan, unless the context requires otherwise, the following terms shall
have the following meanings:

      


      "Administrator"
shall mean the Compensation Committee of the Board, and if there is no
designated Compensation Committee, then the Board.

      


      “Annual
Meeting” shall mean an annual meeting of the Company’s stockholders. “Annual
Meeting Date” shall mean each date on which an Annual Meeting is held,
commencing with the Annual Meeting conducted during 2010; provided, however,
that if the Annual Meeting is not conducted by July 1 in any calendar year, the
term “Annual Meeting Date” for such calendar year shall be July 1 of such
calendar year.

      


      "Board"
shall mean the Board of Directors of the Company.

      


      “Cash
Award” shall mean a cash award made pursuant to Section 15 of the
Plan.

      


      "Common
Stock" shall mean the Company's common stock, par value $0.015 per share, or if,
pursuant to the adjustment provisions of Section 11 hereof, another security is
substituted for such common stock, such other security.

      


      "Existing
Director" shall mean each member of the Board on the date of adoption of this
Plan other than any member of the Board who is also an executive officer of the
Company.

      


      "Fair
Market Value" on any date means the average of the high and low sales prices of
a share of Common Stock on such date on the principal national securities
exchange on which the shares of Common Stock are listed or admitted to trading,
or, if such shares are not so listed or admitted to trading, the closing sales
price of a share of Common Stock on the National Association of Securities
Dealers Automated Quotation System (“NASDAQ”) on such date, or if such closing
price is not available, the arithmetic mean of the per share closing bid price
and per share closing asked price of a share of Common Stock on such date as
quoted on NASDAQ or such other quotation system in which such prices are
regularly quoted, or, if there have been no such published bid or asked
quotations with respect to a share of Common Stock on such date, or if such
shares are not publicly traded, the Fair Market Value shall be the fair market
value established by the Administrator.

       

      "Option"
shall mean the right, granted pursuant to Section 7 of the Plan, to purchase one
or more shares of Common Stock.

      


      "Optionee"
shall mean a person to whom an Option has been granted pursuant to the
Plan.

      


      
        
           

        

        
           

          
            

          

        

        
           

        

         

      

      “Outside
Director” shall mean (i) each Existing Director and (ii) each person who, at the
time that such person first is appointed or elected to the Board, is not, and
has not been during the twelve months prior to such appointment or election, an
employee of the Company or any of its subsidiaries; provided, however, that a
person shall cease to be an Outside Director if he or she becomes an employee of
the Company or any of its subsidiaries.

      


      “Retirement”
shall mean a director’s resignation from, or the act of foregoing election to,
the Board as a result of any mandatory retirement provisions applicable to such
director.

      


      3. Stock Subject to the
Plan. There will be reserved for use upon the exercise of Options granted
from time to time pursuant to the Plan an aggregate of 10,000,000 shares of
Common Stock, subject to adjustment as provided in Section 11 hereof. The
Administrator shall determine from time to time whether all or part of such
10,000,000 shares shall be authorized but unissued shares of Common Stock or
issued shares of Common Stock which shall have been reacquired by the Company
and which are held in its treasury. If any Option granted under the Plan should
expire or terminate for any reason without having been exercised in full, the
unpurchased shares shall become available for the grant of Options under the
Plan.

      


      4. Administration of the
Plan. The Plan shall be administered by the Administrator. Subject to the
provisions of the Plan, the Administrator shall have full
discretion:

      


      (a) To
determine the exercise price of Options granted hereunder in accordance with
Section 7 hereof;

      


      (b) To
interpret the Plan;

      


      (c) To
promulgate, amend and rescind rules and regulations relating to the Plan,
provided, however, that no such rules or regulations shall be inconsistent with
any of the terms of the Plan;

      


       (d)
To subject any Option and Cash Awards to such additional restrictions and
conditions (not inconsistent with the Plan) as may be specified when granting
the Option or Cash Award; and

      


      (e) To
make all other determinations in connection with the administration of the Plan
in a manner consistant with the Plan.

      


      5. Eligibility. The only
persons who shall be eligible to receive Options or Cash Awards under the Plan
shall be Outside Directors.

      


      6. Term. No Option or
Cash Award shall be granted under the Plan after July 1, 2020.

      


      7. Grant of Stock
Options. The following provisions shall apply with respect to Options
granted hereunder:

      


      (a) Automatic
Grants.

      


      (i) Initial Grants. For
any directors appointed after March 1, 2010, the Company shall grant Options to
purchase 50,000 shares to each non-employee director upon the date of his
initial election to the Board (“Initial
Grants”).

      


      (ii)
Annual Grants.
On each Annual Meeting Date (or, in 2010, on the fifth business day after the
Plan is adopted by the Board), the Company shall grant to each Outside Director
Options to purchase 30,000 shares of Common Stock for service as an Outside
Director, Options to purchase 2,665 shares of Common Stock for service on one or
more Board Committees, and Options to purchase 5,940 shares of Common Stock for
service as Chairman of one or more Board Committees (subject to adjustment
pursuant to Section 11 hereof) (“Annual
Grants”).

      


      
        
           

        

        
           

          
            

          

        

        
           

        

         

      

      (b) Option Price. The
price at which shares of Common Stock shall be purchased upon exercise of an
Option granted hereunder shall be equal to the Fair Market Value of such shares
on the date of grant of such Option.

      


      (c) Expiration. Except as
otherwise provided in Section 10 hereof, each Option granted hereunder shall
cease to be exercisable ten years after the date on which it is
granted.

      


      (d) Initial 2010
Grants.  The Company shall grant Options to purchase its Common
Stock as previously approved by the Compensation Committee of the Board of
Directors.

      


      8. Exercise of Options.
Unless the exercise date of an Option granted hereunder is accelerated pursuant
to Section 12 hereof, the following provisions shall apply with respect to the
exercise of such Option, unless the Administrator determines otherwise at the
time of grant:

      


      (a)
Initial Grants in paragraphs 7(a)(i) and (d) above shall vest during the first
two years following the date of grant in eight equal amounts on each quarterly
anniversary of the grant date but if a director is not reelected for a second
term then all remaining unvested options in the Initial Grant shall vest
automatically on the one year anniversary of the grant date;

      


      (b)
Annual Grants shall vest during the first year following the date of grant in
four equal amounts on each quarterly anniversary of the grant date;

      


      (c) In
the event that an Outside Director is appointed to fill a vacancy on the Board,
the Administrator shall determine the amount of the Annual Grant appropriate to
provide such Outside Director for the period such Outside Director will so serve
for the remainder of the term; and

      


      (d) All
vesting of Options shall cease if the Outside Director resigns from the Board or
otherwise ceases to serve as an Outside Director, unless the Administrator
determines that the circumstances warrant continuation of vesting.

      


      9. Method of Exercise.
To the extent permitted by Section 8 hereof, Optionees may exercise their
Options from time to time by giving written notice to the Company. The date of
exercise shall be the date on which the Company receives such notice. Such
notice shall be on a form furnished by the Company and shall state the number of
shares to be purchased and the desired closing date, which date shall be at
least fifteen days after the giving of such notice, unless an earlier date shall
have been mutually agreed upon. At the closing, the Company shall deliver to the
Optionee (or other person entitled to exercise the Option) at the principal
office of the Company, or such other place as shall be mutually acceptable, a
certificate or certificates for such shares against payment in full of the
Option price for the number of shares to be delivered, such payment to be by a
certified or bank cashier's check and/or, if permitted by the Administrator in
its discretion, by transfer to the Company of capital stock of the Company
having a Fair Market Value (as determined pursuant to Section 2) on the date of
exercise equal to the excess of the purchase price for the shares purchased over
the amount (if any) of the certified or bank cashier's check. If the Optionee
(or other person entitled to exercise the Option) shall fail to accept delivery
of and pay for all or any part of the shares specified in his or her notice when
the Company shall tender such shares to such Optionee, such Optionee’s right to
exercise the Option with respect to such unpurchased shares may be
terminated.

      


      
        
           

        

        
           

          
            

          

        

        
           

        

         

      

      10. Termination of Board
Status. In the event that an Optionee ceases to serve on the Board for
any reason other than cause, death, disability, resignation or Retirement, such
Optionee's Options shall automatically terminate three months after the date on
which such service terminates, but in any event not later than the date on which
such Options would terminate pursuant to Section 7(c). In the event that an
Optionee resigns or is removed from the Board by means of a resolution which
recites that the Optionee is being removed solely for cause, such Optionee's
Options shall automatically terminate on the date such removal is effective. In
the event that an Optionee ceases to serve on the Board by reason of death,
disability or Retirement, an Option exercisable by such Optionee shall terminate
one year after the date of death, disability or Retirement of the Optionee, but
in any event not later than the date on which such Options would terminate
pursuant to Section 7(c). During such time after death, an Option may only be
exercised by the Optionee's personal representative, executor or administrator,
as the case may be. No exercise permitted by this Section 10 shall entitle an
Optionee or such Optionee’s personal representative, executor or administrator
to exercise any portion of any Option beyond the extent to which such Option is
exercisable pursuant to Section 8 hereof on the date such Optionee ceases to
serve on the Board. In the event that an Outside Director accepts employment by
the Company or its subsidiaries after becoming an Outside Director, such
individual shall cease to be an Outside Director and thus shall not be eligible
to receive Options under this Plan thereafter, but such individual shall not be
deemed to have ceased serving on the Board for purposes of this Section 10
merely by virtue of such employment.

      


      11. Changes in Capital
Structure. In the event that, by reason of a stock dividend,
recapitalization, reorganization, merger, consolidation, reclassification, stock
split-up, combination of shares, exchange of shares, or comparable transaction,
the outstanding shares of Common Stock of the Company are hereafter increased or
decreased, or changed into or exchanged for a different number or kind of shares
or other securities of the Company or of any other corporation, then appropriate
adjustments shall be made by the Administrator to the number and kind of shares
reserved for issuance under the Plan upon the grant and exercise of Options and
the number and kind of shares subject to the automatic grant provisions of
Section 7(a) and Section 15. In addition, the Administrator shall make
appropriate adjustments to the number and kind of shares subject to outstanding
Options, and the purchase price per share under outstanding Options shall be
appropriately adjusted consistent with such change. In no event shall fractional
shares be issued or issuable pursuant to any adjustment made under this Section
11. The determination of the Administrator as to any such adjustment shall be
final and conclusive.

      


      12.
Mandatory Exercise. Notwithstanding anything to the contrary set forth in the
Plan, in the event that (x) the Company should adopt a plan of reorganization
pursuant to which (i) it shall merge into, consolidate with, or sell
substantially all of its assets to, any other corporation or entity or (ii) any
other corporation or entity shall merge with the Company in a transaction in
which the Company shall become a wholly-owned subsidiary of another entity, or
(y) the Company should adopt a plan of complete liquidation, then (I) all
Options granted hereunder shall be deemed fully exercisable fifteen days prior
to the scheduled consummation of such event and (II) the Company may give an
Optionee written notice thereof requiring such Optionee either (a) to exercise
his or her Options within ten days after receipt of such notice, including all
installments whether or not they would otherwise be exercisable at the date, (b)
in the event of a merger or consolidation in which shareholders of the Company
will receive shares of another corporation, to agree to convert his or her
Options into comparable options to acquire such shares, (c) in the event of a
merger or consolidation in which shareholders of the Company will receive cash
or other property (other than capital stock), to agree to convert his or her
Options into such consideration (in an amount representing the appreciation over
the exercise price of such Options) or (d) to surrender such Options or any
unexercised portion thereof.

       

      13. Option Grant. Each
grant of an Option under the Plan will be evidenced by a document in such form
as the Administrator may from time to time approve. Such document will contain
such provisions as the Administrator may in its discretion deem advisable,
including without limitation additional restrictions or conditions upon the
exercise of an Option, provided that such provisions are not inconsistent with
any of the provisions of the Plan. The Administrator may require an Optionee, as
a condition to the grant or exercise of an Option or the issuance or delivery of
shares upon the exercise of an Option or the payment therefor, to make such
representations and warranties and to execute and deliver such notices of
exercise and other documents as the Administrator may deem consistent with the
Plan or the terms and conditions of the option agreement. Not in limitation of
any of the foregoing, in any such case referred to in the preceding sentence the
Administrator may also require the Optionee to execute and deliver documents
(including the investment letter described in Section 14) containing such
representations, warranties and agreements as the Administrator or counsel to
the Company shall deem necessary or advisable to comply with any exemption from
registration under the Securities Act of 1933, as amended, any applicable State
securities laws, and any other applicable law, regulation or rule.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

         

      

      14. Investment Letter;
Requirements of Law.

      


      (a) If
required by the Administrator, each Optionee shall agree to execute a statement
directed to the Company, upon each and every exercise by such Optionee of any
Options, that shares issued thereby are being acquired for investment purposes
only and not with a view to the redistribution thereof, and containing an
agreement that such shares will not be sold or transferred unless either (1)
registered under the Securities Act of 1933, as amended, or (2) exempt from such
registration in the opinion of Company counsel. If required by the
Administrator, certificates representing shares of Common Stock issued upon
exercise of Options shall bear a restrictive legend summarizing the restrictions
on transferability applicable thereto.

      


      (b) The
granting of Options, the issuance of shares upon the exercise of an Option, and
the delivery of shares upon the payment therefor shall be subject to compliance
with all applicable laws, rules, and regulations. Without limiting the
generality of the foregoing, the Company shall not be obligated to sell, issue
or deliver any shares unless all required approvals from governmental
authorities and stock exchanges shall have been obtained and all applicable
requirements of governmental authorities and stock exchanges shall have been
complied with.

      


      (c) The
Company shall have the right but not the obligation to file a resale
registration statement on behalf of one or more Optionees with respect to shares
underlying options on Form S-8 or other applicable registration
statement.

      


      15.       
Cash
Awards. The following
provisions shall govern the grant of Cash Awards pursuant to the
Plan:

       

      (a)         Each Outside Director will receive a
$10,000 per annum retainer to cover general availability and participation in
meetings and conference calls of our Board of Directors;

       

      (b)       
Each Outside Director
Committee member will receive a $2,000 per annum retainer to cover general
availability and participation in Committee conference calls and
meetings;

       

       (c)       
The Chairman of the Board,
if an Outside Director, will receive an additional $6,000 per annum retainer.
The Chairmen of each of the Audit Committee, Corporate Governance Committee, and
Compensation Committee will receive an additional $2,000
annually;

       

      (d)       
 The Company will
reimburse each Outside Director for his reasonable out-of-pocket travel
expenses, to cover preparation for attendance at and participation in the Board
Meetings;

       

      (e)        
Each Outside Director shall
receive $1,000 per day for any Board approved and designated activities on
behalf of the Company other than Board or committee
meetings;

       

      (f)         In the event that an Outside Director
is appointed to fill a vacancy on the Board, any committee of the Board, or the
Chairman of the Board, the Board of Directors will determine the amount of cash
compensation appropriate to provide such director for the period such director
will so serve for the remainder of the term; and

       

      (g)       
For purposes of
administrative convenience, unless otherwise determined by the Administrator,
cash payments required by this Section 15 shall be made quarterly in arrears as
soon as practicable, but not later than 10 days after the last day of each
calendar quarter. The first such payments shall be made for the quarter ending
March 31, 2010.  All cash grants shall be reviewed on a quarterly
basis.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

         

      

      16. Tax Withholding. The
Company, as and when appropriate, shall have the right to withhold any federal,
state, or local taxes required by law to be withheld.

      


      17. Nonassignability. No
Option shall be assignable or transferable by an Optionee except by will or the
laws of descent and distribution or pursuant to a qualified domestic relations
order as defined by the Internal Revenue Code of 1986, as amended (the "Code"),
or Title I of the Employee Retirement Income Security Act ("ERISA") or the rules
thereunder, in which event the terms of this Plan, including all restrictions
and limitations set forth herein, shall continue to apply to the transferee.
Except as otherwise provided in the immediately preceding sentence, during an
Optionee's lifetime, no person other than the Optionee may exercise his or her
Options.

      


      18. Optionee's Rights as
Shareholder; Participant’s and Board Member.

      


      (a) An
Optionee shall have no rights as a shareholder of the Company with respect to
any shares subject to an Option until the Option has been exercised and the
certificate with respect to the shares purchased upon exercise of the Option has
been duly issued and registered in the name of the Optionee.

      


       (b)
Nothing in the Plan shall be deemed to give an Outside Director any right to a
continued position on the Board nor shall it be deemed to give any person any
other right not specifically and expressly provided in the Plan.

      


      19. Termination and
Amendment. The Board may at any time terminate or amend the Plan as it
may deem advisable, except that (i) the provisions of the Plan relating to the
amount of shares covered by Options, the exercise price of Options or the timing
and amount of Option grants or exercises shall not be amended more than once
every six months, other than to comport with changes required by the Code, ERISA
or the rules thereunder; and (ii) no such termination or amendment shall
adversely affect any Outside Director with respect to any right which has
accrued under the Plan in regard to any Option or Cash Award granted prior to
such termination or amendment. Any termination of this Plan will terminate the
obligation of the Company to grant any Option or Cash Award scheduled to be
granted after the date of such termination.

      


      20. Sunday or Holiday. In
the event that the time for the performance of any action or the giving of any
notice is called for under the Plan within a period of time which ends or falls
on a Sunday or legal holiday, such period shall be deemed to end or fall on the
next date following such Sunday or legal holiday which is not a Sunday or legal
holiday.