EX-10.2






Exhibit 10.2




SANTARUS, INC.

2004 EQUITY INCENTIVE AWARD PLAN




STOCK OPTION AGREEMENT




THIS AGREEMENT, dated as of the Grant Date set forth on Exhibit A hereto, (the terms
of which are hereby incorporated by reference and made a part of this Agreement) is made by and
between Santarus, Inc., a Delaware corporation, hereinafter referred to as the “Company,” and the
Employee, Director or consultant of the Company, or a Subsidiary of the Company, identified on
Exhibit A and hereinafter referred to as “Optionee.”



WHEREAS, the Company wishes to afford the Optionee the opportunity to purchase shares of its
Stock, par value $0.0001 per share; and



WHEREAS, the Company wishes to carry out the Santarus, Inc. 2004 Equity Incentive Award Plan
(the “Plan”) (the terms of which are hereby incorporated by reference and made a part of this
Agreement); and



WHEREAS, the Committee appointed to administer the Plan has determined that it would be to the
advantage and best interest of the Company and its stockholders to grant the Option provided for
herein to the Optionee as an inducement to enter into or remain in the service of the Company or
its Subsidiaries and as an incentive during such service, and has advised the Company thereof and
instructed the undersigned officer to issue said Option.



NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties hereto do hereby
agree as follows:



ARTICLE I




DEFINITIONS




1.1 General. Wherever the following terms are used in this Agreement they shall have
the meanings specified below, unless the context clearly indicates otherwise. Capitalized terms
not specifically defined herein shall have the meanings specified in the Plan.



1.2 Director. “Director” shall mean a member of the Board. “Director” shall include
both a member of the Board who is an Employee and a “Non-Employee Director” (as defined in the
Plan).



1.3 Exercise Notice. “Exercise Notice” shall mean a written notice to the Company,
substantially in the form attached hereto as Exhibit B (or such other form as the Committee
shall approve), stating that the Option or a portion of the Option is exercised.



1.4 Grant Date. “Grant Date” shall mean the date of grant set forth on Exhibit
A.



1.5 Managing Underwriter. “Managing Underwriter” shall have the meaning set forth in
Section 5.3.



1.6 Market Standoff Period. “Market Standoff Period” shall have the meaning set forth
in Section 5.3.




1.7 Secretary. “Secretary” shall mean the Secretary of the Company.



1.8 Termination of Service. “Termination of Service” shall mean the time when the
service relationship (whether as an Employee, Director or a consultant) between the Optionee and
the Company or any Subsidiary is terminated for any reason, with or without Cause, including, but
not by way of limitation, a termination by resignation, discharge, death or Disability; but
excluding (a) a termination where there is a simultaneous reemployment or continuing employment or
consultancy of the Optionee by the Company or any Subsidiary or a parent corporation thereof
(within the meaning of Section 422 of the Code), (b) at the discretion of the Committee, a
termination which results in a temporary severance of the employee-employer or consulting
relationship, and (c) at the discretion of the Committee, a termination which is followed by the
simultaneous establishment of a consulting relationship by the Company or a Subsidiary with the
former Employee. The Committee, in its absolute discretion, shall determine the effect of all
matters and questions relating to Termination of Service for the purposes of this Agreement,
including, but not by way of limitation, the question of whether, for Optionees who are Employees
of the Company or any of its Subsidiaries, a Termination of Service resulted from a discharge for
Cause or Good Reason, and all questions of whether particular leaves of absence for Optionees who
are Employees of the Company or any of its Subsidiaries constitute Terminations of Service;
provided, however, that, if this Option is designated as an Incentive Stock Option,
unless otherwise determined by the Administrator in its discretion, a leave of absence, change in
status from an Employee to an independent contractor or other change in the employee-employer
relationship shall constitute a Termination of Service if, and to the extent that, such leave of
absence, change in status or other change interrupts employment for the purposes of Section
422(a)(2) of the Code and the then applicable regulations and revenue rulings under said Section.
Notwithstanding any other provision of the Plan or this Agreement, the Company or any Subsidiary
has an absolute and unrestricted right to terminate the Optionee’s employment and/or consultancy at
any time for any reason whatsoever, with or without Cause, except to the extent expressly provided
otherwise in a written agreement between the Company and the Optionee.



ARTICLE II




GRANT OF OPTION




2.1 Grant of Option. In consideration of the Optionee’s agreement to remain in the
employ of or otherwise provide services to the Company or its Subsidiaries and for other good and
valuable consideration, effective as of the Grant Date, the Company irrevocably grants to the
Optionee the Option to purchase any part or all of an aggregate of the number of shares of Stock
set forth on Exhibit A, upon the terms and conditions set forth in this Agreement. Unless
designated as a Non-Qualified Stock Option on Exhibit A, the Option shall be an Incentive
Stock Option to the maximum extent permitted by law.



2.2 Purchase Price. The purchase price of the shares of Stock subject to the Option
per share shall be as set forth on Exhibit A hereto, without commission or other charge;
provided, however, that if this Option is designated as an Incentive Stock Option
the price per share of the shares subject to the Option shall not be less than the greater of (i)
100% of the Fair Market Value of a share of Stock on the Grant Date, or (ii) 110% of the Fair
Market Value of a share of Stock on the Grant Date in the case of an Optionee then owning (within
the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all
classes of stock of the Company or any Subsidiary or parent corporation thereof (within the meaning
of Section 422 of the Code).



2.3 Consideration to the Company. In consideration of the granting of the Option by
the Company, the Optionee agrees to render faithful and efficient services to the Company or any
Subsidiary, with such duties and responsibilities as the Company shall from time to time prescribe.
Nothing in the Plan or this Agreement shall confer upon the Optionee any right to (a) continue in
the employ of the Company or any Subsidiary or shall interfere with or restrict in any way the
rights of the Company and its Subsidiaries, which are hereby expressly reserved, to discharge the
Optionee, if the Optionee is an Employee, or (b) continue to provide services to the Company or any
Subsidiary or shall interfere with or restrict in any way the rights of the Company or its
Subsidiaries, which are hereby expressly reserved, to terminate the services of Optionee, if the
Optionee is a Consultant, at any time for any reason whatsoever, with or without Cause, except to
the extent expressly provided otherwise in a written agreement between the Company and the
Optionee.



ARTICLE III




PERIOD OF EXERCISABILITY





3.1 Commencement of Exercisability.



(a) Subject to Sections 3.3 and 5.11, the Option shall become exercisable in such amounts and
at such times as are set forth in Exhibit A hereto.



(b) No portion of the Option which has not become exercisable at Termination of Service shall
thereafter become exercisable, except as may be otherwise provided by the Committee or as set forth
in a written agreement between the Company and the Optionee.



3.2 Duration of Exercisability. The installments provided for in Section 3.1(a) and
Exhibit A hereto are cumulative. Each such installment which becomes exercisable pursuant
to Section 3.1 shall remain exercisable until it becomes unexercisable under Section 3.3.



3.3 Expiration of Option. The Option may not be exercised to any extent by anyone
after the first to occur of the following events:




(a) The expiration of ten (10) years from the Grant Date; or



(b) If this Option is designated as an Incentive Stock Option and the Optionee owned (within
the meaning of Section 424(d) of the Code), at the time the Option was granted, more than ten
percent (10%) of the total combined voting power of all classes of stock of the Company or any
Subsidiary or parent corporation thereof (within the meaning of Section 422 of the Code), the
expiration of five years from the date the Option was granted; or



(c) The expiration of 90 days following the date of the Optionee’s Termination of Service,
unless, if Optionee is an Employee of the Company or any of its Subsidiaries, such Termination of
Service occurs by reason of the Optionee’s discharge for Cause, or by reason of the Optionee’s
death, or Disability or as set forth in a written agreement with the Company; or



(d) The date of the Optionee’s Termination of Service by reason of the Optionee’s discharge
for Cause if Optionee is an Employee of the Company or any of its Subsidiaries; or



(e) The expiration of one year following the date of the Optionee’s Termination of Service by
reason of the Optionee’s death or Disability if Optionee is an Employee of the Company or any of
its Subsidiaries.



3.4 Special Tax Consequences. The Optionee acknowledges that, to the extent that the
aggregate Fair Market Value of stock with respect to which Incentive Stock Options (but without
regard to Section 422(d) of the Code), including the Option, are exercisable for the first time by
the Optionee during any calendar year (under the Plan and all other incentive stock option plans of
the Company, any Subsidiary and any parent corporation thereof (within the meaning of Section 422
of the Code)) exceeds $100,000, the Option and such other options shall be treated as not
qualifying under Section 422 of the Code but rather shall be taxed as Non-Qualified Stock Options.
The Optionee further acknowledges that the rule set forth in the preceding sentence shall be
applied by taking options into account in the order in which they were granted. For purposes of
these rules, the Fair Market Value of Stock shall be determined as of the time the option with
respect to such Stock is granted.



ARTICLE IV




EXERCISE OF OPTION




4.1 Person Eligible to Exercise. Except as provided in Sections 5.2(b) and 5.2(c),
during the lifetime of the Optionee, only the Optionee may exercise the Option or any portion
thereof. After the death of the Optionee, any exercisable portion of the Option may, prior to the
time when the Option becomes unexercisable under Section 3.3, be exercised by the Optionee’s
beneficiary designated in accordance with Section 10.4 of the Plan. If no beneficiary has been
designated or survives the Optionee, the Option may be exercised by the person entitled to such
exercise pursuant to the Optionee’s will or the laws of descent and distribution.



4.2 Partial Exercise. Any exercisable portion of the Option or the entire Option, if
then wholly exercisable, may be exercised in whole or in part at any time prior to the time when
the Option or portion thereof becomes unexercisable under Section 3.3.



4.3 Manner of Exercise. The Option, or any exercisable portion thereof, may be
exercised solely by delivery to the Secretary or the Secretary’s office of all of the following
prior to the time when the Option or such portion thereof becomes unexercisable under Section 3.3:



(a) An Exercise Notice in writing signed by the Optionee or the other person then entitled to
exercise the Option or portion thereof, stating that the Option or portion thereof is thereby
exercised, such notice complying with all applicable rules established by the Committee. Such
notice shall be substantially in the form attached as Exhibit B (or such other form as is
prescribed by the Committee); and




(b) (i) Full payment (in cash or by check) for the shares with respect to which the
Option or portion thereof is exercised, to the extent permitted under applicable laws; or




(ii) With the consent of the Committee, such payment may be made, in whole or in part,
through the delivery of shares of Stock which have been owned by the Optionee for at least
six months, duly endorsed for transfer to the Company with a Fair Market Value on the date
of delivery equal to the aggregate exercise price of the Option or exercised portion
thereof; or




(iii) To the extent permitted under applicable laws, through the delivery of a notice
that the Optionee has placed a market sell order with a broker with respect to shares of
Stock then issuable upon exercise of the Option, and that the broker has been directed to
pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of
the Option exercise price, provided, that payment of such proceeds is made to the
Company upon settlement of such sale; or




(iv) With the consent of the Committee, any combination of the consideration provided
in the foregoing subparagraphs (i), (ii) and (iii); and



(c) A bona fide written representation and agreement, in such form as is prescribed by the
Committee, signed by the Optionee or other person then entitled to exercise such Option or portion
thereof, stating that the shares of Stock are being acquired for the Optionee’s own account, for
investment and without any present intention of distributing or reselling said shares or any of
them except as may be permitted under the Securities Act and then applicable rules and regulations
thereunder, and that the Optionee or other person then entitled to exercise such Option or portion
thereof will indemnify the Company against and hold it free and harmless from any loss, damage,
expense or liability resulting to the Company if any sale or distribution of the shares by such
person is contrary to the representation and agreement referred to above. The Committee may, in
its absolute discretion, take whatever additional actions it deems appropriate to ensure the
observance and performance of such representation and agreement and to effect compliance with the
Securities Act and any other federal or state securities laws or regulations. Without limiting the
generality of the foregoing, the Committee may require an opinion of counsel acceptable to it to
the effect that any subsequent transfer of shares acquired on an Option exercise does not violate
the Securities Act, and may issue stop-transfer orders covering such shares. Share certificates
evidencing Stock issued on exercise of the Option shall bear an appropriate legend referring to the
provisions of this subsection (c) and the agreements herein. The written representation and
agreement referred to in the first sentence of this subsection (c) shall, however, not be required
if the shares to be issued pursuant to such exercise have been registered under the Securities Act,
and such registration is then effective in respect of such shares; and



(d) Full payment to the Company (or other employer corporation) of all amounts which, under
federal, state or local tax law, it is required to withhold upon exercise of the Option. With the
consent of the Committee, (i) shares of Stock owned by the Optionee for at least six months duly
endorsed for transfer or (ii) shares of Stock issuable to the Optionee upon exercise of the Option,
having a Fair Market Value at the date of Option exercise equal to the statutory minimum sums
required to be withheld, may be used to make all or part of such payment; and



(e) In the event the Option or portion thereof shall be exercised pursuant to Section 4.1 by
any person or persons other than the Optionee, appropriate proof of the right of such person or
persons to exercise the Option.



4.4 Conditions to Issuance of Stock Certificates. The shares of Stock deliverable
upon the exercise of the Option, or any portion thereof, may be either previously authorized but
unissued shares or issued shares which have then been reacquired by the Company. Such shares shall
be fully paid and nonassessable. The Company shall not be required to issue or deliver any
certificate or certificates for shares of Stock purchased upon the exercise of the Option or
portion thereof prior to fulfillment of all of the following conditions:



(a) The admission of such shares to listing on all stock exchanges on which such Stock is then
listed; and



(b) The completion of any registration or other qualification of such shares under any state
or federal law or under rulings or regulations of the Securities and Exchange Commission or of any
other governmental regulatory body, which the Committee shall, in its absolute discretion, deem
necessary or advisable; and



(c) The obtaining of any approval or other clearance from any state or federal governmental
agency which the Committee shall, in its absolute discretion, determine to be necessary or
advisable; and



(d) The receipt by the Company of full payment for such shares, including payment of all
amounts which, under federal, state or local tax law, the Company (or other employer corporation)
is required to withhold upon exercise of the Option; and



(e) The lapse of such reasonable period of time following the exercise of the Option as the
Committee may from time to time establish for reasons of administrative convenience.



4.5 Rights as Stockholder. The holder of the Option shall not be, nor have any of the
rights or privileges of, a stockholder of the Company in respect of any shares purchasable upon the
exercise of any part of the Option unless and until certificates representing such shares shall
have been issued by the Company to such holder.



ARTICLE V




OTHER PROVISIONS




5.1 Administration. The Committee shall have the power to interpret the Plan and this
Agreement and to adopt such rules for the administration, interpretation and application of the
Plan as are consistent therewith and to interpret, amend or revoke any such rules. All actions
taken and all interpretations and determinations made by the Committee in good faith shall be final
and binding upon the Optionee, the Company and all other interested persons. No member of the
Committee shall be personally liable for any action, determination or interpretation made in good
faith with respect to the Plan, this Agreement or the Option. In its absolute discretion, the
Board may at any time and from time to time exercise any and all rights and duties of the Committee
under the Plan and this Agreement.




5.2 Option Not Transferable.



(a) Subject to Section 5.2(b), the Option may not be sold, pledged, assigned or transferred in
any manner other than by will or the laws of descent and distribution unless and until the Option
has been exercised, or the shares underlying such Option have been issued, and all restrictions
applicable to such shares have lapsed. Neither the Option nor any interest or right therein shall
be liable for the debts, contracts or engagements of the Optionee or his or her successors in
interest or shall be subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or
by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void
and of no effect, except to the extent that such disposition is permitted by the preceding
sentence.



(b) Notwithstanding any other provision in this Agreement, with the consent of the Committee
and to the extent the Option is not intended to qualify as an Incentive Stock Option, the Option
may be transferred to, exercised by and paid to certain persons or entities related to the
Optionee, including but not limited to members of the Optionee’s family, charitable institutes or
trusts or other entities whose beneficiaries or beneficial owners are members of the Optionee’s
family or to such other persons or entities as may be expressly approved by the Committee (each a
“Permitted Transferee”), pursuant to such conditions and procedures as the Committee may require.



(c) Unless transferred to a Permitted Transferee in accordance with Section 5.2(b), during the
lifetime of the Optionee, only the Optionee may exercise the Option or any portion thereof.
Subject to such conditions and procedures as the Committee may require, a Permitted Transferee may
exercise the Option or any portion thereof during the Optionee’s lifetime. After the death of the
Optionee, any exercisable portion of the Option may, prior to the time when the Option becomes
unexercisable under Section 3.3, be exercised by the Optionee’s beneficiary designated in
accordance with Section 10.4 of the Plan. If no beneficiary has been designated or survives the
Optionee, the Option may be exercised by the person entitled to such exercise pursuant to the
Optionee’s will or the laws of descent and distribution.



5.3 Lock-Up Period. The Optionee hereby agrees that, if so requested by the Company
or any representative of the underwriters (the “Managing Underwriter”) in connection with any
registration of the offering of any securities of the Company under the Securities Act, the
Optionee shall not sell or otherwise transfer any shares of Stock or other securities of the
Company during such period as may be requested in writing by the Managing Underwriter and agreed to
in writing by the Company (which period shall not be longer than 180 days) (the “Market Standoff
Period”) following the effective date of a registration statement of the Company filed under the
Securities Act; provided, however, that such restriction shall apply only to the
first registration statement of the Company to become effective under the Securities  Act
that includes securities to be sold on behalf of the Company to the public in an underwritten
public offering under the Securities Act.




5.4 Restrictive Legends and Stop-Transfer Orders.



(a) The share certificate or certificates evidencing the shares of Stock purchased hereunder
shall be endorsed with any legends that may be required by state or federal securities laws.



(b) The Optionee agrees that, in order to ensure compliance with the restrictions referred to
herein, the Company may issue appropriate “stop transfer” instructions to its transfer agent, if
any, and that, if the Company transfers its own securities, it may make appropriate notations to
the same effect in its own records.



(c) The Company shall not be required: (i) to transfer on its books any shares of Stock that
have been sold or otherwise transferred in violation of any of the provisions of this Agreement, or
(ii) to treat as owner of such shares of Stock or to accord the right to vote or pay dividends to
any purchaser or other transferee to whom such shares shall have been so transferred.



5.5 Shares to Be Reserved. The Company shall at all times during the term of the
Option reserve and keep available such number of shares of Stock as will be sufficient to satisfy
the requirements of this Agreement.



5.6 Notices. Any notice to be given under the terms of this Agreement to the Company
shall be addressed to the Company in care of the Legal Affairs Department, and any notice to be
given to the Optionee shall be addressed to the Optionee at the address given beneath the
Optionee’s signature hereto. By a notice given pursuant to this Section 5.6, either party may
hereafter designate a different address for notices to be given to that party. Any notice which is
required to be given to the Optionee shall, if the Optionee is then deceased, be given to the
Optionee’s designated beneficiary if any, or the person otherwise entitled to exercise his or her
Option pursuant to Section 4.1 by written notice under this Section 5.6. Any notice shall be
deemed duly given when sent via email or enclosed in a properly sealed envelope or wrapper
addressed as aforesaid and deposited (with postage prepaid) in a post office or branch post office
regularly maintained by the United States Postal Service.



5.7 Titles. Titles are provided herein for convenience only and are not to serve as a
basis for interpretation or construction of this Agreement.



5.8 Stockholder Approval. The Plan will be submitted for approval by the Company’s
stockholders within 12 months after the date the Plan was initially adopted by the Board. The
Option may not be exercised to any extent by anyone prior to the time when the Plan is approved by
the stockholders, and if such approval has not been obtained by the end of said 12 month period,
the Option shall thereupon be canceled and become null and void.



5.9 Notification of Disposition. If this Option is designated as an Incentive Stock
Option, the Optionee shall give prompt notice to the Company of any disposition or other transfer
of any shares of stock acquired under this Agreement if such disposition or transfer is made (a)
within two years from the Grant Date with respect to such shares or (b) within one year after the
transfer of such shares to him. Such notice shall specify the date of such disposition or other
transfer and the amount realized, in cash, other property, assumption of indebtedness or other
consideration, by the Optionee in such disposition or other transfer.



5.10 Construction. This Agreement shall be administered, interpreted and enforced
under the laws of the State of California without regard to conflicts of laws thereof.



5.11 Conformity to Securities Laws. The Optionee acknowledges that the Plan is
intended to conform to the extent necessary with all provisions of the Securities Act and the
Exchange Act and any and all regulations and rules promulgated by the Securities and Exchange
Commission thereunder, and state securities laws and regulations. Notwithstanding anything herein
to the contrary, the Plan shall be administered, and the Option is granted and may be exercised,
only in such a manner as to conform to such laws, rules and regulations. To the extent permitted
by applicable law, the Plan and this Agreement shall be deemed amended to the extent necessary to
conform to such laws, rules and regulations.



5.12 Amendments. This Agreement may not be modified, amended or terminated except by
an instrument in writing, signed by the Optionee or such other person as may be permitted to
exercise the Option pursuant to Section 4.1 and by a duly authorized representative of the Company.



(signature page follows)






1







IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto.




SANTARUS, INC.




BY:



Optionee Name:


Address:



Optionee’s Social Security Number:



2




EXHIBIT A




STOCK OPTION AGREEMENT

dated _____________, _____,

by and between

Santarus, Inc.

and _____________________




Optionee’s Name:      



Optionee’s Address:      



Optionee’s Social Security Number:      



Type of Option (check one):




 ̈  Incentive Stock Option




 ̈ Non-Qualified Stock Option



Date of Grant:     



Vesting Commencement Date:      



1. Pursuant to Section 2.1 of the Agreement, the Company grants an option to purchase any part
or all of an aggregate of      shares of Common Stock (“Option Shares”) at a price per
share of $     upon the terms and conditions set forth in the Agreement.



2. In accordance with Section 3.1(a) of the Agreement and subject to stockholder approval of
the Plan, the Option shall become exercisable in cumulative installments, rounded down to the
nearest whole number of shares, as follows:




(a) One-fourth (1/4) of the Option Shares will vest one year after the Vesting
Commencement Date.




(b) The remainder of the Option Shares will vest monthly thereafter over the following
three (3) years at a rate of 1/36th of the shares each month.



3. Capitalized terms not otherwise defined herein shall have the meanings assigned thereto in
the Agreement.



3




EXHIBIT B




FORM OF EXERCISE NOTICE




Santarus, Inc.


10590 West Ocean Air Drive


Suite 200


San Diego, CA 92130



Attention: [Secretary]




Re: Exercise of Stock Option



Ladies and Gentlemen:



1. Exercise of Option. The undersigned Optionee,      , was granted an
option (the “Option”) to purchase shares of the Common Stock, par value $0.0001 per share (“Common
Stock”), of Santarus, Inc., a Delaware corporation (the “Company”), effective as of      ,
pursuant to the Stock Option Agreement, dated      (the “Option Agreement”). The
undersigned hereby elects to exercise the Option as follows:




	 	(a)	 	The undersigned hereby elects to exercise the Option as to
     shares of the Common Stock, in accordance with Section 3.1 of the
Option Agreement (the “Shares”).






(b) This date of this exercise is      ,      .



2. Payment. The undersigned has enclosed herewith      (representing full payment for
such Shares in accordance with Section 4.3 of the Option Agreement). The undersigned authorizes
payroll withholding and otherwise will make adequate provision for the tax withholding obligations
of the Company, if any, with respect to such exercise.



3. Binding Effect. The undersigned agrees that the Shares are being acquired in accordance
with and subject to the terms, provisions and conditions of the Option Agreement set forth therein,
to all of which the undersigned hereby expressly assent. This Agreement shall inure to the benefit
of and be binding upon the heirs, executors, administrators, successors and assigns of the
undersigned.



The undersigned understands that she is purchasing the Shares pursuant to the terms of the
Option Agreement, a copy of which the undersigned has received and carefully read and understands.




     



Receipt of the above is hereby acknowledged



SANTARUS, INC.,


a Delaware corporation



By:     



Title:     




4