Document:

Exhibit 10.134

    
      

    

    Exhibit
      10.134

    
 

    137VYTERIS,
      INC.

    

    2007
      OUTSIDE DIRECTOR CASH COMPENSATION AND STOCK INCENTIVE
      PLAN

    

    

    1.
      Purpose
      of the Plan.
      The
      purpose of this plan ("Plan"), to be known as the "2007 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 2005 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 2007; 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 $0.001 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 Timothy J. McIntyre.

    

    "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 5,000,000 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 5,000,000 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;

    

    
      
        
        

      

      
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    (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,
      2017.

    

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

    

    (a)
      Automatic
      Grants.
      

    

    (i)
      Initial
      Grants.
      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 2007, on the fifth business day after the Plan
      is
      adopted by the Board), the Company shall grant to each Outside Director Options
      to purchase thirty thousand (30,000) shares of Common Stock (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.

    

    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 shall vest during the first two years following the date of
      grant
      (6,250 shares at the end of each three month period following the date of grant)
      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; 

    

    
      
        
        

      

      
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    (b)
      Annual Grants shall vest during the first year following the date of grant
      (7,500 shares at the end of each three month period following the date of
      grant); 

    

    (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.

     

    
      
        
        

      

      
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    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.

     

    
      
        
        

      

      
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    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 $25,000 per annum retainer to cover general
      availability and participation in meetings and conference calls of our Board
      of
      Directors;

     

    (b) Each
      Outside Director Audit Committee member will receive a $5,000 per annum retainer
      to cover general availability and participation in Audit Committee conference
      calls and meetings;

     

    
      
        
        

      

      
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    (c) Each
      Outside Director Corporate Governance Committee member will receive a $5,000
      per
      annum retainer to cover general availability and participation in Corporate
      Governance Committee conference calls and meetings;

     

    (d) Each
      Outside Director Compensation Committee member will receive a $5,000 per annum
      retainer to cover general availability and participation in Compensation
      Committee conference calls and meetings;

     

    (e) The
      Chairman of the Board, if an Outside Director, will receive an additional
      $15,000 per annum retainer. The Chairmen of each of the Audit Committee,
      Corporate Governance Committee, and Compensation Committee will receive an
      additional $5,000 annually;

     

    (f) 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;

     

    (g) 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;

     

    (h)
       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

     

    (i) 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 June 30, 2007.

     

    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. 

    

    
      
        
        

      

      
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    (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.

     

     

    -8-Exhibit 10.135

    
      

    

    Exhibit
      10.135

    

      VYTERIS,
        INC.

      2007
        STOCK OPTION PLAN

      

      ARTICLE
        I

      

      PURPOSE
        AND ADOPTION OF THE PLAN

      

      1.01 
        Purpose.
        The
        purpose of the Vyteris, Inc. 2007 Stock Option Plan, which is an amendment
        and
        restatement of the 2005 Vyteris, Inc. Stock Option Plan (as amended and
        restated, hereinafter referred to as the “Plan”) i5 s to assist the Company (as
        defined below) in attracting and retaining highly competent employees and
        to act
        as an incentive in motivating selected officers and other employees of the
        Company and its subsidiaries, and directors and consultants of the Company
        and
        its subsidiaries, to achieve long-term corporate objectives. The purpose
        also is
        to provide for options granted under the Plan to date and to reflect amendments
        in the number of shares available under the Plan made as of December 31,
        2006
        and on May 31, 2007.

      

      1.02 
        Adoption and Term.
        The
        Plan has been approved by the Board of Directors and shareholders of the
        Company. The Plan is effective from the date approved by the shareholders
        of the
        Company (the “Effective Date”) and shall remain in effect until terminated by
        action of the Board; provided,
        however,
        that
        no
        Option (as defined below) or Stock Purchase Right (as defined below) may
        be
        granted hereunder after the tenth anniversary of the Effective
        Date.

      

      ARTICLE
        II

      

      DEFINITIONS

      

      For
        the
        purpose of this Plan, the following capitalized terms shall have the following
        meanings:

      

      2.01 
        Applicable Laws
        means
        the requirements relating to the administration of stock option plans under
        U.S.
        state corporate laws, U.S. federal and state securities laws, the Code, any
        stock exchange or quotation system on which the Common Stock is listed or
        quoted
        and the applicable laws of any foreign country or jurisdiction where Options
        or
        Stock Purchase Rights are, or will be, granted under the Plan. 

      

      2.02 
        Beneficiary
        means an
        individual, trust or estate who or which, by a written designation of the
        Participant filed with the Company or by operation of law, succeeds to the
        rights and obligations of the Participant under the Plan and the Option
        Agreement or Restricted Stock Purchase Agreement upon the Participant’s
        death.

      

      2.03 
        Board
        means
        the Board of Directors of the Company.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      

      2.04
        Code
        means
        the Internal Revenue Code of 1986, as amended. References to a section of
        the
        Code shall include that section and any comparable section or sections of
        any
        future legislation that amends, supplements or supersedes said
        section

      

      2.05
        Committee
        means
        the Committee defined in Section 3.01.

      

      2.06
        Company
        means
        Vyteris, Inc.., a Nevada corporation, and its successors.

      

      2.07
        Common Stock
        means
        the Common Stock of the Company, par value $.001 per share.

      

      2.08
        Date of Grant
        means
        the date designated by the Committee as the date as of which it grants an
        Option
        or Stock Purchase Right, which shall not be earlier than the date on which
        the
        Committee approves the granting of such Option or Stock Purchase Right;
        provided, however, with respect to Options or Grant Rights issued to replace
        options or Stock Purchase Rights which initially were granted by Vyteris
        and
        subsequently assumed by the Company, the Date
        of Grant as
        provided for in the Vyteris, Inc. 2001 Stock Option Plan (the “Predecessor
        Plan”)

      

      2.09
        Exchange Act
        means
        the Securities Exchange Act of 1934, as amended.

      

      2.10
        Fair Market Value
        means,
        as of any applicable date, the fair market value of the Common Stock as
        determined by the Board based upon such evidence as it may think necessary
        or
        desirable.

      

      2.11
        Incentive Stock Option
        means a
        stock option within the meaning of Section 422 of the Code.

      

      2.12
        Merger
        means
        any merger, reorganization, consolidation, exchange, transfer of assets or
        other
        transaction having similar effect involving the Company.

      

      2.13
        Nonstatutory Stock Option
        means a
        stock option which is not an Incentive Stock Option.

      

      2.14
        Option Agreement
        means a
        written agreement between the Company and a Participant, specifically setting
        forth the terms and conditions of an Option granted under the Plan,
        substantially in the form of Exhibit
        A
        attached
        hereto or such other form as shall be determined from time to time by the
        Committee; provided, however, that with respect to options granted by Vyteris,
        the term Option
        Agreement
        shall
        mean the option agreement entered into by the applicable optionee with Vyteris,
        as it may be supplemented by the Company.

      

      2.15
        Option Price,
        with
        respect to Options, shall have the meaning set forth in Section
        6.01(b).

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      

      2.16
        Option Term
        means,
        with respect to an Option, the period of time set forth in the Option Agreement
        during which the Option may be exercised.

      

      2.17
        Options
        means
        all Nonstatutory Stock Options and Incentive Stock Options granted at any
        time
        under the Plan or the Predecessor Plan.

      

      2.18
        Participant
        means a
        person designated to receive an Option or Stock Purchase Right under the
        Plan in
        accordance with Section 4.03 or a person designated to receive an option
        or
        stock purchase right pursuant to the predecessor Plan.

      

      2.19
        Plan
        means
        the Treasure Mountain Holdings, Inc. 2005 Stock Option Plan as described
        herein,
        as the same may be amended from time to time.

      

      2.20
        Restricted Stock
        means
        shares of Common Stock acquired pursuant to a grant of Stock Purchase Rights
        under Article V of the Plan or shares of Vyteris’ common stock acquired pursuant
        to a grant of stock purchase rights under Article V of the Predecessor Plan.
        

      

      2.21
        Restricted Stock Purchase Agreement
        means a
        written agreement between the Company and an Optionee evidencing the terms
        and
        restrictions applying to stock purchased under a Stock Purchase Right; provided,
        however, that with respect to stock purchase rights granted by Vyteris, the
        term
        Restricted Stock Purchase Agreement
        shall
        mean the restricted stock purchase agreement entered into by the applicable
        optionee with Vyteris, as it may be supplemented by the Company Each Restricted
        Stock Purchase Agreement is subject to the terms and conditions of the Plan
        and
        shall be substantially in the form of Exhibit
        B
        attached
        hereto or such other form as shall be determined from time to time by the
        Committee.

      

      2.22
        Stock Purchase Right
        means
        the right to purchase Common Stock pursuant to Article V of the Plan, as
        evidenced by a notice of grant included within the applicable Restricted
        Stock
        Purchase Agreement (the “Notice of Grant”) or, if applicable, a right to
        purchase Vyteris’ common stock pursuant to Article V of the Predecessor Plan.

      

      2.23
        Ten Percent Shareholder
        means
        any individual who, at the time an Option is granted, owns stock possessing
        more
        than 10 percent of the total combined voting power of all classes of stock
        of
        the Company.

      

      ARTICLE
        III

      

      ADMINISTRATION

      

      The
        Plan
        shall be administered by the Board or, in the discretion of the Board, by
        a
        committee of the Board (the “Committee”) comprised of at least two persons. The
        Committee or Board shall have exclusive and final authority in each
        determination, interpretation or other action affecting the Plan and its
        Participants. The Board or

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Committee
        shall have the sole discretionary authority to interpret the Plan, to establish
        and modify administrative rules for the plan, to impose such conditions and
        restrictions on Options and Stock Purchase Rights as it determines appropriate,
        and to take such steps in connection with the Plan and Options and Stock
        Purchase Rights granted hereunder as it may deem necessary or advisable.
        The
        Board or Committee may delegate such of its powers and authority under the
        Plan
        as it deems appropriate to designated officers or employees of the Company.
        In
        the event of such delegation of authority or exercise of authority by the
        Board
        or Committee, references in the Plan to the Committee shall be deemed to refer
        to the delegate of the Board or the Committee as the case may be. For purposes
        of this Plan, references to the Committee shall be deemed references to the
        Board to the extent that the Board has not appointed a Committee to administer
        the Plan.

      

      ARTICLE
        IV

      

      SHARES
        AND PARTICIPATION

      

      4.01
        Number of Shares Issuable.
        The
        total number of shares initially authorized to be issued under the Plan shall
        be
        14,901,902 shares of Common Stock. The number of shares available for issuance
        under the Plan shall be further subject to adjustment in accordance with
        Section
        7.06. The shares to be offered under the Plan shall be authorized and unissued
        Common Stock, or issued Common Stock which shall have been reacquired by
        the
        Company,

      

      4.02
        Shares Subject to Terminated Options and Stock Purchase
        Rights.
        Common
        Stock covered by any unexercised portions of terminated Options and Stock
        Purchase Rights (including canceled Options and Stock Purchase Rights) granted
        under Articles V and VI of the Plan or the Predecessor Plan and Common Stock
        subject to any Options and Stock Purchase Rights which are otherwise surrendered
        by a Participant may again be subject to new Options and Stock Purchase Rights
        under the Plan.

      

      4.03
        Participation. Participants
        in the Plan shall be such consultants, directors, officers and other employees
        of the Company and its subsidiaries as the Committee, in its sole discretion,
        may designate from time to time. The Committee’s designation of a Participant in
        any year shall not require the Committee to designate such person to receive
        Options, Stock Purchase Rights or grants in any other year. The Committee
        shall
        consider such factors as it deems pertinent in selecting Participants and
        in
        determining the type and amount of their respective Options and Stock Purchase
        Rights.

      

      ARTICLE
        V

      

      STOCK
        PURCHASE RIGHTS

      

      5.01
        Rights to Purchase.
        Stock
        Purchase Rights may be issued either alone, in addition to, or in tandem
        with
        other awards granted under the Plan and/or cash

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      awards
        made outside of the Plan. After the Committee determines that it will offer
        Stock Purchase Rights under the Plan, it shall advise the offeree in writing
        or
        electronically, by means of a Restricted Stock Purchase Agreement, of the
        terms,
        conditions and restrictions related to the offer, including the number of
        shares
        of Common Stock that the offeree shall be entitled to purchase and the price
        to
        be paid for such shares. The offer shall be accepted by execution of the
        Restricted Stock Purchase Agreement. 

      

      5.02
        Repurchase Option.
        Unless
        the Committee determines otherwise, the Restricted Stock Purchase Agreement
        shall grant the Company a repurchase option exercisable upon the voluntary
        or
        involuntary termination of the purchaser's service with the Company for any
        reason (including death or “Permanent Disability” (as defined in Section 6.03)).
        The purchase price for shares repurchased pursuant to the Restricted Stock
        Purchase Agreement shall be the original price paid by the purchaser and
        may be
        paid by cancellation of any indebtedness of the purchaser to the Company.
        The
        repurchase option shall lapse at a rate determined by the Committee. In the
        event that the Restricted Stock Purchase Agreement does not provide for a
        lapsing schedule, the restrictions shall lapse as to (a) one third of the
        shares
        subject to the Restricted Stock Purchase Agreement on the first anniversary
        of
        the grant of the Stock Purchase Right, (b) one third of the shares subject
        to
        the Restricted Stock Purchase Agreement on the second anniversary of the
        grant
        of the Stock Purchase Right and (c) one third of the shares subject to the
        Restricted Stock Purchase Agreement on the third anniversary of the grant
        of the
        Stock Purchase Right. 

      

      5.03
        Other Provisions.
        The
        Restricted Stock Purchase Agreement shall contain such other terms, provisions
        and conditions not inconsistent with the Plan as may be determined by the
        Committee in its sole discretion. 

      

      5.04
        Rights as a Shareholder.
        Once
        the Stock Purchase Right is exercised, the purchaser shall have the rights
        equivalent to those of a shareholder, and shall be a shareholder when his
        or her
        purchase is entered upon the records of the duly authorized transfer agent
        of
        the Company. No adjustment will be made for a dividend or other right for
        which
        the record date is prior to the date the Stock Purchase Right is exercised;
        provided,
        however,
        that
        Participants are entitled to share adjustments to reflect capital changes
        under
        Section 7.06.

      

      

      ARTICLE
        VI

      

      STOCK
        OPTIONS

      

      6.01    Option
        Awards.

      

      (a)    General.
        The
        Committee may grant, to such Participants as the Committee may select, Options
        entitling the Participant to purchase shares of Common Stock from the Company
        in
        such number, at such price, and on such terms and subject to such conditions,
        not inconsistent with the terms of this Plan, as may be established by the
        Committee. The terms of any Option granted under this Plan shall be set forth
        in
        an Option Agreement.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      

      (b)    Purchase
        Price of Options. The
        Option Price of each share of Common Stock which may be purchased upon exercise
        of any Option granted under the Plan shall be determined by the Committee;
        provided,
        however,
        that
        (i) with respect to Incentive Stock Options, the Option Price per share shall
        in
        all cases be equal to or greater than the Fair Market Value of a share of
        Common
        Stock on the Date of Grant as required under Section 422 of the Code, and
        (ii)
        with respect to any Incentive Stock Option granted to any Ten Percent
        Shareholder, the Option Price per share shall in all cases be equal to or
        greater than 110 percent of the Fair Market Value of a share of Common Stock
        on
        the Date of Grant as required under Section 422 of the Code.

      

      (c)    Designation
        of Options. Except
        as
        otherwise expressly provided in the Plan, the Committee may designate, at
        the
        time of the grant of each Option, the Option as an Incentive Stock Option
        or a
        Nonstatutory Stock Option.

      

      (d)    Incentive
        Stock Option Limitations.
        No
        Participant may be granted Incentive Stock Options under the Plan (or any
        other
        plans of the Company), which would result in shares with an aggregate Fair
        Market Value (measured on the Date of Grant) of more than $100,000 first
        becoming exercisable in any one calendar year. No Participant may be granted
        Incentive Stock Options under the Plan (or any other plans of the Company)
        unless the Participant is an employee of the Company or its Subsidiaries.
        An
        individual shall not cease to be an employee in the case of (i) any leave
        of
        absence approved by the Company or (ii) transfers between locations of the
        Company or between the Company and its subsidiaries. For purposes of an Option
        initially granted as an Incentive Stock Option, if a leave of absence of
        more
        than three months precludes such Option from being treated as an Incentive
        Stock
        Option under the Code, such Option thereafter shall be treated as a Nonstatutory
        Stock Option for purposes of this Plan. Neither service as a director nor
        payment of a director’s fee by the Company shall be sufficient to constitute
“employment” by the Company. 

      

      (e)    Rights
        as a Shareholder.
        A
        Participant or a transferee of an Option pursuant to Section 7.04 shall have
        no
        rights as a shareholder with respect to Common Stock covered by an Option
        until
        the Participant or transferee shall have become the holder of record of any
        such
        shares, and no adjustment shall be made for dividends in cash or other property
        or distributions or other rights with respect to any such Common Stock for
        which
        the record date is prior to the date on which the Participant or a transferee
        of
        the Option shall have become the holder of record of any such shares covered
        by
        the Option; provided,
        however,
        that
        Participants are entitled to share adjustments to reflect capital changes
        under
        Section 7.06.

      

      (f)    Vesting.
        In
        the
        event that an Option Agreement does not provide for a vesting schedule, the
        Options covered thereby shall become exercisable as to (a) one third of the
        shares subject to the Option Agreement on the first anniversary of the grant
        of
        the Option, (b) one third of the shares subject to the Option on the second
        anniversary of the grant of the Option and (c) one third of the shares subject
        to the Option on the third anniversary of the grant of the
        Option.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      

      6.02    Terms
        of Stock Options.

      

      (a)    Conditions
        on Exercise. An
        Option
        Agreement with respect to Options may contain such waiting periods, exercise
        dates and restrictions on exercise (including, but not limited to, periodic
        installments) as may be determined by the Committee as of the Date of
        Grant.

      

      (b)    Duration
        of Options.
        Options
        shall terminate after the first to occur of the following events:

      

      (i)    Expiration
        of the Option as provided in the Option Agreement;

      

      (ii)         
         Termination
        of the Option as provided in Section 6.03, following the Participant’s
        termination of employment; or

      

      (iii)        
        Ten
        years
        from the Date of Grant (five years from the Date of Grant in the case of
        any
        Incentive Stock Option granted to a Ten Percent Shareholder).

      

      (c)    Acceleration
        of Exercise Time.
        The
        Committee, in its sole discretion, shall have the right (but shall not in
        any
        case be obligated), exercisable at any time after the Date of Grant, to permit
        the exercise of any Option prior to the time such Option would otherwise
        become
        exercisable under the terms of the Option Agreement.

      

      (d)    Extension
        of Exercise Time.
        The
        Committee, in its sole discretion, shall have the right (but shall not in
        any
        case be obligated), exercisable on or at any time after the Date of Grant,
        to
        permit any Option granted under this Plan to be exercised after its expiration
        date, subject, however, to the limitation described in Section
        6.02(b)(iii).

      

      6.03    Exercise
        of Options upon Termination of Employment.

      

      (a)    General.
        In
        the
        event of the termination of employment of the Participant by the Participant
        or
        the Company and its subsidiaries for any reason whatsoever other than death,
        Permanent Disability (as defined in Section 6.03(b)) or retirement after
        attainment of age 65, (i) any Options that were not vested prior to the date
        of
        such termination of employment shall terminate on such date and (ii) any
        Options
        that were vested prior to the date of such termination of employment (and
        which
        were not previously exercised) shall terminate on the ninetieth (90th) day
        following the date of such termination of employment or the last day of the
        Option Term, whichever is earlier.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      

      (b)    Death,
        Permanent Disability or Retirement.
        In the
        event of the termination of the employment of the Participant by reason of
        death, Permanent Disability or retirement after attainment of age 65, any
        Options that were vested prior to the date of such termination (and which
        were
        not previously exercised), together with any other Options designated by
        the
        Committee, shall terminate on the earlier of (i) the first anniversary of
        the
        date of such termination and (ii) the last day of the Option Term. Any Options
        that were not vested prior to the date of such termination and do not become
        vested pursuant to the immediately preceding sentence shall terminate as
        of the
        date of such termination. As used in this Plan, the term “Permanent Disability”
means the Participant being deemed to have suffered a disability that makes
        the
        Participant eligible for immediate benefits under any long-term disability
        plan
        of the Company, as in effect from time to time.

      

      (c)    Termination
        of Employment. For
        purposes of the Plan, there shall have been a termination of employment of
        a
        Participant if such Participant is no longer an employee, consultant, director
        or officer of the Company or of any of its subsidiaries.

      

      6.04    Exercise
        Procedures.
        Each
        Option granted under the Plan shall be exercised by written notice to the
        Company which must be received by the officer or employee of the Company
        designated in the Option Agreement on or before the close of business on
        the
        expiration date of the Option. The Option Price of shares purchased upon
        exercise of an Option granted under the Plan shall be paid in full in cash
        by
        the Participant pursuant to the Option Agreement; provided,
        however,
        that
        the Committee may (but shall not be required to) permit payment to be made
        by
        delivery to the Company of either (a) Common Stock (which may include shares
        otherwise issuable in connection with the exercise of the Option, subject
        to
        such rules as the Committee deems appropriate), (b) any combination of cash
        and
        Common Stock, or (c) such other consideration as the Committee deems
        appropriate. In the event that any Common Stock shall be transferred to the
        Company to satisfy all or any part of the Option Price, the part of the Option
        Price deemed to have been satisfied by such transfer of Common Stock shall
        be
        equal to the product derived by multiplying the Fair Market Value of a share
        of
        Common Stock as of the date of exercise times the number of shares of Common
        Stock transferred to the Company. The Participant may not transfer to the
        Company in satisfaction of the Option Price any fractional share of Common
        Stock. Any part of the Option Price paid in cash upon the exercise of any
        Option
        shall be added to the general funds of the Company and may be used for any
        proper corporate purpose. Unless the Committee shall otherwise determine,
        any
        Common Stock transferred to the Company as payment of all or part of the
        Option
        Price upon the exercise of any Option shall be held as treasury
        shares.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      

      ARTICLE
        VII

      

      MISCELLANEOUS

      

      7.01    Plan
        Provisions Control Option and Stock Purchase Right Terms. The
        terms
        of the Plan shall govern all Options and Stock Purchase Rights granted under
        the
        Plan, and in no event shall the Committee have the power to grant any option
        or
        stock purchase right under the Plan which is contrary to any of the provision
        of
        the Plan. In the event any provision of any Options or Stock Purchase Rights
        granted under the Plan shall conflict with any term in the Plan as constituted
        on the Date of Grant of such Option or Stock Purchase Right, the term in
        the
        Plan as constituted on the Date of Grant of such Option or Stock Purchase
        Right
        shall control. Except as provided in Section 7.03 and Section 7.06, the terms
        of
        any Option or Stock Purchase Right granted under the Plan may not be changed
        after the Date of Grant of such Option or Stock Purchase Right so as to
        materially decrease the value of the Option or Stock Purchase Right without
        the
        express written approval of the holder.

      

      7.02    Option
        Agreement. No
        person
        shall have any rights under any Option granted under the Plan unless and
        until
        the Company and the Participant to whom such Option shall have been granted
        shall have executed and delivered an Option Agreement or received any other
        Option acknowledgment authorized by the Committee expressly granting the
        Option
        to such person and containing provisions setting forth the terms of the
        Option.

      

      7.03    Modification
        of Option After Grant. No
        Option
        or Stock Purchase Right granted under the Plan to a participant may be modified
        (unless such modification does not materially decrease the value of the Option
        or Stock Purchase Right) after the Date of Grant except by express written
        agreement between the Company and the Participant, provided that any such
        change
        (a) shall not be inconsistent with the terms of the Plan, and (b) shall be
        approved by the Committee.

      

      7.04    Limitation
        on Transfer. Unless
        determined otherwise by the Committee, a Participant’s rights and interest under
        the Plan may not be assigned or transferred other than by will or the laws
        of
        descent and distribution, and during the lifetime of a Participant, only
        the
        Participant personally (or the Participant’s personal representative) may
        exercise rights under the Plan. The Participant’s Beneficiary may exercise the
        Participant’s rights to the extent they are exercisable under the Plan following
        the death of the Participant. In the event that the Committee makes an Option
        or
        Stock Purchase Right transferable, such Option or Stock Purchase Right shall
        contain such additional terms and conditions as the Committee deems appropriate.
        

      

      7.05    Taxes.
        The
        Company shall be entitled, if the Committee deems it necessary or desirable,
        to
        withhold (or secure payment from the Participant in lieu of withholding)
        the
        amount of any withholding or other tax required by law to be withheld or
        paid by
        the Company with respect to any amount payable and/or shares issuable with
        respect to such Participant’s Option or Stock Purchase Right, or with respect to
        any 

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      income
        recognized upon a disqualifying disposition of shares received pursuant to
        the
        exercise of an Incentive Stock Option, and the Company may defer payment
        or
        issuance of shares upon exercise of an Option or Stock Purchase Right unless
        indemnified to its satisfaction against any liability for any such tax. The
        amount of such withholding or tax payment shall be determined by the Committee
        and shall be payable by the Participant at such time as the Committee
        determines. The Participant shall meet his or her withholding requirement
        by
        direct payment to the Company in cash of the amount of any taxes required
        to be
        withheld with respect to such Option or Stock Purchase Right; provided, however,
        that the Committee may (but shall not be required to) permit the Participant
        to
        meet his or her withholding requirement by (i) having withheld from such
        Option
        or Stock Purchase Right at the appropriate time that number of shares of
        Common
        Stock, rounded up to the next whole share, whose Fair Market Value is equal
        to
        the amount of withholding taxes due, or (ii) a combination of shares and
        cash.

      

      7.06    Adjustments
        to Reflect Capital Changes.

      

      (a)    Recapitalization.
        The
        number and kind of shares subject to outstanding Options or Stock Purchase
        Rights, the Option Price for such shares, the number and kind of shares
        available for Options and Stock Purchase Rights subsequently granted under
        the
        Plan and the maximum number of shares in respect of which Options can be
        granted
        to any Participant in any calendar year shall be appropriately adjusted to
        reflect any stock dividend, stock split, combination or exchange of shares,
        merger, consolidation or other change in capitalization with a similar
        substantive effect upon the Plan or the Options or Stock Purchase Rights
        granted
        under the Plan. The Committee shall have the power and sole discretion to
        determine the amount of the adjustment to be made in each case.

      

      (b)    Merger.
        After
        any Merger in which the Company is the surviving corporation, each Participant
        shall, at no additional cost, be entitled upon any exercise of an Option
        or
        Stock Purchase Right to receive (subject to any required action by
        shareholders), in lieu of the number of shares of Common Stock receivable
        or
        exercisable pursuant to such Option or Stock Purchase Right, the number and
        class of shares or other securities to which such Participant would have
        been
        entitled pursuant to the terms of the Merger if, at the time of the Merger,
        such
        participant had been the holder of record of a number of shares equal to
        the
        number of shares receivable or exercisable pursuant to such Option or Stock
        Purchase Right. Comparable rights shall accrue to each Participant in the
        event
        of successive Mergers of the character described above. In the event of a
        Merger
        in which the Company is not the surviving corporation, the surviving,
        continuing, successor, or purchasing corporation, as the case may be (the
        “Acquiring Corporation”), shall either assume the Company’s rights and
        obligations under outstanding Options and Stock Purchase Rights or substitute
        comparable options and stock purchase rights in respect of the Acquiring
        Corporation’s stock for such outstanding Options and Stock Purchase Rights. In
        the event the Acquiring Corporation elects not to assume or substitute
        comparable options and stock purchase rights for such outstanding Options
        and
        Stock Purchase Rights, the Board shall provide that any unexercisable and/or
        unvested portion of the outstanding Options and Stock Purchase Rights shall
        be

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      immediately
        exercisable and vested as of a date prior to such Merger or consolidation,
        as
        the Board so determines. The exercise and/or vesting of any Option and any
        Stock
        Purchase Right that was permissible solely by reason of this Section 7.07(b)
        shall be conditioned upon the consummation of the Merger or consolidation.
        Any
        Options and Stock Purchase Rights which are neither assumed by the Acquiring
        Corporation nor exercised as of the date of the Merger shall terminate effective
        as of the effective date of the Merger.

      

      For
        purposes of the Plan, all outstanding Options and Stock Purchase Rights will
        be
        considered assumed if, following the consummation of the Merger, the option
        or
        stock purchase rights confers the right to purchase or receive, for each
        share
        of stock subject to the Option or Stock Purchase Right immediately prior
        to the
        consummation of the Merger, the consideration (whether stock, cash, or other
        securities property) received in the Merger by holders of Common Stock for
        each
        share of the Company’s Common Stock held on the effective date of the
        transaction (and if holders were offered a choice of consideration, the type
        chosen by the holders of a majority of the outstanding shares of the Company’s
        Common Stock); provided, however, that if such consideration received in
        the
        Merger is not solely common stock of the successor corporation or its parent,
        the Committee may, with the consent of the successor corporation, provide
        for
        the consideration to be received upon the exercise of the Option or Stock
        Purchase Right, for each share of stock subject to the Option or Stock Purchase
        Right, to be solely common stock of the successor corporation or its parent
        or
        subsidiary equal in fair market value to the per share consideration received
        by
        holders of the Company’s Common Stock in the Merger.

      

      Any
        outstanding Option which is assumed or replaced in the event
        of
        a Merger and
        does not otherwise accelerate at that time will automatically accelerate
        in the
        event that the Participant’s service terminates through an “Involuntary
        Termination” effected within eighteen (18) months following the effective date
        of such Merger.
        Any Option so accelerated will remain exercisable until the earlier of (i)
        the
        expiration of the Option Term or (ii) the end of the one-year period measured
        from the date of the Involuntary Termination.

      

      An
        Involuntary Termination will be deemed to occur upon (i) the Participant's
        involuntary dismissal or discharge by the Company or its subsidiaries or
        their
        successors for reasons other than cause or (ii) such individual’s voluntary
        resignation following (A) a reduction in his or her level of compensation
        (including base salary, fringe benefits and any corporate-performance based
        bonus or incentive programs) by more than ten percent or (B) a relocation
        of
        such individual’s place of employment by more than fifty (50) miles, provided
        and only if such reduction or relocation is effected by the Company or its
        subsidiaries or their successor without the Participant’s written
        consent.

      

      (c)    Options
        to Purchase Shares of Stock of Acquired Companies. After
        any
        Merger in which the Company shall be a surviving corporation, the Committee
        may
        grant substituted options outside of the terms of this Plan, pursuant to
        

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Section
        424 of the Code, replacing old options granted under a plan of another party
        to
        the Merger whose shares or stock subject to the old options may no longer
        be
        issued following the Merger. The foregoing manner of application of the
        foregoing provisions shall be determined by the Committee in its sole
        discretion. Any such application may provide for the elimination of any
        fractional shares, which might otherwise become subject to any
        Options.

      

      7.07    No
        Right to Employment. No
        employee or other person shall have any claim of right to be granted an Option
        under this Plan. Neither the Plan nor any action taken hereunder shall be
        construed as giving any employee any right to be retained in the employ of
        the
        Company or any of its subsidiaries.

      

      7.08    Options
        Not Includable for Benefit Purposes.
        Common
        Stock received by a Participant pursuant to the provisions of the Plan shall
        not
        be included in the determination of benefits under any pension, group insurance
        or other benefit plan applicable to the Participant, which is maintained
        by the
        Company, except as may be provided under the terms of such plans or determined
        by the Board.

      

      7.09    Governing
        Law.
        All
        determinations made and actions taken pursuant to the Plan shall be governed
        by
        the laws of the State of New Jersey and construed in accordance therewith
        (except where the law of the state of incorporation of the Company
        controls).

      

      7.10    No Strict
        Construction. No
        rule
        of strict construction shall be implied against the Company, the Board, the
        Committee, or any other person in the interpretation of any of the terms
        of the
        Plan, any Option or Stock Purchase Right granted under the Plan or any rule
        or
        procedure established by the Committee.

      

      7.11    Captions.
        The
        captions (i.e., all Section headings) used in the Plan are for convenience
        only,
        do not constitute a part of the Plan, and shall not be deemed to limit,
        characterize or affect in any way any provisions of the Plan, and all provisions
        of the Plan shall be construed as if no captions have been used in the
        Plan.

      

      7.12    Severability.
        Whenever
        possible, each provision in the Plan and every Option and Stock Purchase
        Right
        at any time granted under the Plan shall be interpreted in such manner as
        to be
        effective and valid under applicable law, but if any provision of the Plan
        or
        any Option or Stock Purchase Right at any time granted under the Plan shall
        be
        held to be prohibited by or invalid under applicable law, then (a) such
        provision shall be deemed amended to accomplish the objectives of the provision
        as originally written to the fullest extent permitted by law and (b) all
        other
        provisions of the Plan and every other Option and Stock Purchase Right at
        any
        time granted under the Plan shall remain in full force and effect.

      

      7.13    Amendment
        and Termination.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      

      (a)    Amendment.
        The
        Board
        shall have complete power and authority to amend the Plan at any time. No
        termination or amendment of the Plan may, without the consent of the Participant
        to whom any Option or Stock Purchase Right shall theretofore have been granted
        under the Plan, adversely affect the right of such individual under such
        Option
        or Stock Purchase Right.

      

      (b)    Termination.
        The
        Board
        shall have the right and the power to terminate the Plan at any time; provided,
        however, that the Plan shall terminate no later than ten years after the
        adoption of the Plan by the Board. No Option or Stock Purchase Right shall
        be
        granted under the Plan after the termination of the Plan, but the termination
        of
        the Plan shall not have any other effect and any Option or Stock Purchase
        Right
        outstanding at the time of the termination of the Plan may be exercised after
        termination of the Plan at any time prior to the expiration date of such
        Option
        or Stock Purchase Right to the same extent such Option or Stock Purchase
        Right
        would have been exercisable had the Plan not terminated.

      

      7.14    Limitations.
        The
        following limitations shall apply to grants of Options: 

      

      (i)        
        No Participant shall be granted, in any fiscal year of the Company, Options
        to
        purchase more than 1,000,000 shares of Common Stock, other than grants made
        to
        the chief executive officer of the Company pursuant to an employment agreement
        approved by the Board of Directors of the Company, in which case the maximum
        number of shares covered by Options granted to such officer in any fiscal
        year
        shall not exceed 5% of the Company’s outstanding common stock, calculated on a
        fully diluted basis. 

      

      (ii)       
        The foregoing limitation shall be adjusted proportionately in connection
        with
        any change in the Company's capitalization as described in Section 7.06(b).
        

      

      (iii)      
        If an Option is canceled in the same fiscal year of the Company in which
        it was
        granted (other than in connection with a transaction described in Section
        7.06(b)), the canceled Option will be counted against the limits set forth
        in
        subsections (i) and (ii) above. 

      

      7.15    Conditions
        Upon Issuance of Shares.

      

      (a)    Legal
        Compliance.
        Shares
        of Common Stock shall not be issued pursuant to the exercise of an Option
        or
        Stock Purchase Right unless the exercise of such Option or Stock Purchase
        Right
        and the issuance and delivery of such shares shall comply with Applicable
        Laws
        and shall be further subject to the approval of counsel for the Company with
        respect to such compliance. 

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      

      (b)    Investment
        Representations.
        As a
        condition to the exercise of an Option or Stock Purchase Right, the Company
        may
        require the person exercising such Option or Stock Purchase Right to represent
        and warrant at the time of any such exercise that the shares of Common Stock
        are
        being purchased only for investment and without any present intention to
        sell or
        distribute such shares if, in the opinion of counsel for the Company, such
        a
        representation is required. 

      

      (c)    Additional
        Conditions.
        The
        Committee shall have the authority to condition the grant of any Option or
        Stock
        Purchase Right in such other manner that the Committee determines to be
        appropriate, provided that such condition is not inconsistent with the terms
        of
        the Plan. Such conditions may include, among other things, obligations of
        Optionees to execute lock-up agreements and shareholder agreements in the
        future.

      

      (d)    Other.
        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.

      

      7.16.    Inability
        to Obtain Authority.
        The
        inability of the Company to obtain authority from any regulatory body having
        jurisdiction, which authority is deemed by the Company's counsel to be necessary
        to the lawful issuance and sale of any shares of Common Stock hereunder,
        shall
        relieve the Company of any liability in respect of the failure to issue or
        sell
        such shares as to which such requisite authority shall not have been obtained.
        

      

      7.17.    Reservation
        of Shares.
        The
        Company, during the term of this Plan, will at all times reserve and keep
        available such number of shares of Common Stock as shall be sufficient to
        satisfy the requirements of the Plan.

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