Document:

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                                                                   EXHIBIT 10.5

                          COMMERCIAL SERVICES AGREEMENT

      This Commercial Services Agreement ("AGREEMENT"), dated as of April 1,
2004, is between Cardinal Health PTS, LLC, a Delaware limited liability company
("CARDINAL") and Adams Laboratories, Inc., a Texas corporation d/b/a Adams
Respiratory Therapeutics ("ADAMS").

                                    RECITALS

      WHEREAS, Cardinal and Adams are parties to that certain Asset Purchase
Agreement (the "PURCHASE AGREEMENT") dated March 24, 2004, pursuant to which
Adams agreed to sell and Cardinal agreed to purchase certain assets on the terms
and conditions set forth therein; and

      WHEREAS, in connection with the Purchase Agreement, Cardinal and Adams are
entering into a Supply Agreement (the "SUPPLY AGREEMENT"), pursuant to which
Cardinal is agreeing to manufacture and sell and Adams is agreeing to purchase
certain products on the terms and conditions set forth therein; and

      WHEREAS, as a material inducement for Cardinal to consummate the
transactions contemplated by the Purchase Agreement and to commit to perform the
services contemplated by the Supply Agreement, Adams has agreed that Cardinal
shall be Adams' preferred provider of marketing, sales, logistics, development,
analytical and other services and as a material inducement for Adams to
consummate the transactions contemplated by the Purchase Agreement and to commit
to purchase products as contemplated by the Supply Agreement, Cardinal has
agreed to provide favorable pricing to Adams for certain services, in each case
on the terms and conditions set forth in this Agreement.

                                    AGREEMENT

      NOW, THEREFORE, in consideration of the premises and the promises set
forth in this Agreement, the parties agree as follows:

      1.    Definitions.

      (a) "ADAMS PRODUCT" means all products for which Adams now has or during
the term of this Agreement obtains the rights to market or sell including
without limitation products currently marketed under the Mucinex(R) brand, the
ALLERx(R) brand, the Aquatab(R) brand or any replacement or successor brand of
such brands and also includes any experimental (pre-commercial) product.

      (b) "AFFILIATE" as applied to Cardinal or Adams shall mean any legal
entity other than Cardinal or Adams, as the case may be, in whatever country
organized, controlling, controlled by or under common control with Cardinal or
Adams. An entity is deemed to be in control of another entity (controlled
entity) if the former owns directly or indirectly at least fifty percent (50%),
or the maximum percentage allowed by law in the country of the controlled
entity, of the outstanding voting equity securities of the controlled entity (or
other equity or ownership interest if such controlled entity is other than a
corporation) or otherwise has the power to direct or cause the direction of the
management of the controlled entity.

      (c) "COMMERCIAL OUTSOURCE ACTIVITY" means marketing, sales, logistics,
development, analytical and other services that support or are intended to
support the

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commercialization of Adams Products if such services (a) are services of the
type that Cardinal (together with its Affiliates) possesses (or can reasonably
be expected to possess within the applicable timeframe) the means to provide and
(b) are not Excluded Activities. Notwithstanding anything contained herein,
Commercial Outsource Activities do not include development or analytical
services provided by Cardinal with respect to Mucinex(R) or any Mucinex(R) line
extension pursuant to the Transition Services Agreement between Adams and
Cardinal dated as of the date of this Agreement. Without limiting the generality
of the foregoing, a "Commercial Outsource Activity" includes: (i) product
formulation; (ii) product development (including activities to develop an
enhanced, next-generation or line extension of an Adams Product); (iii)
manufacture of samples or products for clinical testing or commercial sale; (iv)
packaging of samples or products for clinical testing or commercial sale; (v)
supply or distribution of samples or products for clinical testing or commercial
sale; (vi) product sales and marketing services; (vii) funding or other
risk-sharing arrangement with respect to the conduct of clinical trials of an
Adams Product; and (viii) other goods or services related to the development,
manufacture or distribution of pharmaceutical or health care products of a type
regularly provided by Cardinal or its Affiliates.

      (d) "EXCLUDED ACTIVITY" means services relating to an Adams Product that
are performed by employees of Adams in the ordinary course of business or
product sales and marketing services set forth in Section 1(c)(vi) performed by
a Major Pharmaceutical Enterprise that acquires exclusive rights to market the
relevant Adams Product. For the avoidance of doubt, Excluded Activities, as that
term relates to a Major Pharmaceutical Enterprise or its Affiliates, do not
include any of those Commercial Outsource Activities set forth in Section 1(c)
other than Section 1(c)(vi).

      (e) "MAJOR PHARMACEUTICAL ENTERPRISE" means (i) a company which, together
with its Affiliates, had worldwide annual revenues from the sale of prescription
and/or over the counter pharmaceutical, health care or personal care products in
excess of $2 billion during its most recently completed fiscal year and (ii) any
Affiliates of such company.

      2.    Preferred Provider; Grant Of Right Of First Refusal. During the term
of this Agreement, in connection with any proposed arrangement for Commercial
Outsource Activities required by Adams, Cardinal shall have a right of first
refusal, should Adams seek to source any Commercial Outsource Activities with a
provider (other than Cardinal or its Affiliates), unless Cardinal (together with
its Affiliates) does not then possess (or cannot reasonably be expected to
possess within the applicable timeframe) the means to provide such Commercial
Outsource Activities to Adams. In connection with any Commercial Outsource
Services, Adams shall submit to Cardinal a written request for a proposal
specifying Adams's requirements for the Commercial Outsource Services, including
reasonably prescribed specifications, standards for materials, quality,
delivery, pricing and/or service support (the "PERFORMANCE REQUIREMENTS").
Within thirty (30) days of the receipt of Adams' Performance Requirements,
Cardinal shall submit a proposal to Adams for the provision of the relevant
Commercial Outsource Services or such portion of such services as Cardinal
possesses (or can reasonably be expected to possess within the applicable
timeframe) the means to provide, proposed pricing and evidence of its ability to
satisfy the Performance Requirements (the "PROPOSAL"). The parties shall then
negotiate in good faith to reach agreement on applicable pricing and/or any
changes to the Performance Requirements and on a definitive agreement for the
Commercial Outsource Services. If the parties do not reach an agreement for the
provision of the Commercial Outsource Services within thirty (30) days of Adams'
receipt of the Proposal (each a "Rejected Commercial Outsource Service), then
Adams shall be free to source such Rejected Commercial Outsource Services with
an alternate provider (other than Adams or its

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Affiliates) so long as the material terms and/or conditions of the arrangement
with the alternate provider are more favorable to Adams than the corresponding
material terms and/or conditions offered by Cardinal in the Proposal or the
subsequent negotiations between Cardinal and Adams.

      3.    REPRESENTATIONS AND WARRANTIES:

      (a) DUE AUTHORIZATION. Adams represents and warrants that this Agreement
has been duly authorized by all necessary corporate action on the part of Adams,
has been duly executed by a duly authorized officer of Adams and constitutes a
valid and binding obligation of Adams. Cardinal represents and warrants that
this Agreement has been duly authorized by all necessary corporate action on the
part of Cardinal, has been duly executed by a duly authorized officer of
Cardinal and constitutes a valid and binding obligation of Cardinal.

      (b) NO CONFLICTS. Adams hereby represents and warrants that neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated by it will violate or result in any violation of or be
in conflict with or constitute a default under any term of the organizational
documents of Adams or any agreement, instrument, judgment, decree, law, rule or
order applicable to Adams. Cardinal hereby represents and warrants that neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated by it will violate or result in any violation of or be
in conflict with or constitute a default under any term of the organizational
documents of Cardinal or any agreement, instrument, judgment, decree, law, rule
or order applicable to Cardinal.

      4.    MISCELLANEOUS.

      (a) TERMINATION. This Agreement will terminate upon the earlier of (i) the
termination of the Supply Agreement or (ii) the mutual agreement of the Cardinal
and Adams.

      (b) PARTIAL INVALIDITY. In the event one or more terms of this Agreement
are found to violate the provisions of any applicable statute, law or
regulation, the parties hereto shall negotiate in good faith to modify this
Agreement, but only to the extent necessary to make this Agreement valid and
enforceable, having full regard for applicable laws and the intent and purposes
of the parties entering into this Agreement.

      (c) INDEPENDENT CONTRACTOR. The parties hereto are independent contractors
under this Agreement and neither of the parties hereto shall have any right or
authority to assume or create any obligations on behalf of, or in the name of
any other party hereto or to bind the other party hereto to any contract,
agreement or undertaking with any third party without the written consent of the
other party hereto.

      (d) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties relating to the subject matter of this Agreement, and this
Agreement may not be amended or modified, unless such amendment or modification
is in writing and signed by a duly authorized representative of each party.

      (e) ASSIGNABILITY. Neither party shall assign this Agreement other than to
Affiliates; however, in the event of any assignment, performance shall be
guaranteed by the assignor in form satisfactory to the other party.

      (f) SUCCESSORS AND PERMITTED ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the permitted successors or permitted assigns of
Cardinal and

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Adams respectively.

      (g) NOTICES. Any and all notices provided for shall be sent to the
respective parties at the following addresses by certified or registered mail or
sent by a nationally-recognized overnight courier service:

<TABLE>
<S>                 <C>
If to Cardinal:     Cardinal Health PTS, LLC
                    14 Schoolhouse Road
                    Somerset, New Jersey 08873
                    Attention: President, Modified Release Technologies
                    Facsimile No.: 732.537.6491

With a copy to:     Cardinal Health PTS, LLC
                    7000 Cardinal Place
                    Dublin, Ohio 43017
                    Attention:  Vice President and Associate General Counsel, Pharmaceutical
                    Technologies & Services
                    Facsimile No.: 614.757.5051

If to Adams:        Adams Laboratories, Inc.
                    d/b/a Adams Respiratory Therapeutics
                    Colonial Court
                    409 Main Street
                    Chester, New Jersey  07930
                    Attention: Walter E. Riehemann, Esq., General Counsel, Vice-President and
                    Secretary
                    Facsimile No.: 908.879.9784

With a copy to:     Kelley Drye & Warren LLP
                    200 Kimball Drive
                    Parsippany, New Jersey  07054
                    Attention:  Christopher G. FitzPatrick, Esq.
                    Facsimile No.:  973.503.5950
</TABLE>

or to such other addresses as may be subsequently furnished by one party to the
other in writing. Any such notice shall be deemed effective from the date of
mailing.

      (h) GOVERNING LAW. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Delaware without regard to its conflict
of laws provisions.

      (i) COUNTERPARTS. This Agreement may be executed in multiple counterparts,
which may be delivered by facsimile, each of which shall have the force and
effect of an original.

      (j) DESCRIPTIVE HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

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      NOW THEREFORE, on the date first above written, the parties have duly
executed this COMMERCIAL SERVICES AGREEMENT.

                                       CARDINAL HEALTH PTS, LLC

                                       By: /s/ Thomas J. Stuart
                                           ___________________________________

                                       Name:   Thomas J. Stuart
                                              _________________________________

                                       Title:  President, Modified Release Tech.
                                              ________________________________

                                       ADAMS LABORATORIES, INC.

                                       By: /s/ David Becker
                                           ___________________________________

                                       Name:   David P. Becker
                                             _________________________________

                                       Title:  Chief Financial Officer
                                             _________________________________

                                        5<PAGE>
                                                                    EXHIBIT 10.6

                            ADAMS LABORATORIES, INC.

                          1999 LONG-TERM INCENTIVE PLAN

ARTICLE 1. ESTABLISHMENT AND PURPOSE

      1.1   ESTABLISHMENT. ADAMS LABORATORIES, INC., a Texas corporation, hereby
establishes the ADAMS LABORATORIES, INC. 1999 LONG-TERM INCENTIVE PLAN, as set
forth in this document.

      1.2   PURPOSE. The purposes of the Plan are to attract able persons to
enter the employ of the Company, to encourage Employees to remain in the employ
of the Company and to provide motivation to Employees to put forth maximum
efforts toward the continued growth, profitability and success of the Company,
by providing incentives to such persons through the ownership and performance of
the Common Stock of AdamsLabs. A further purpose of the Plan is to provide a
means through which the Company may attract able persons to become directors,
consultants and independent contractors of the Company and to perform other
services beneficial to the Company and to provide such individuals with
incentive and reward opportunities. Toward these objectives, Awards may be
granted under the Plan to Employees and Consultants on the terms and subject to
the conditions set forth in the Plan.

      1.3   EFFECTIVENESS. The Plan shall become effective as of July 21, 1999,
the date of its adoption by the Board, provided it is duly approved by the
holders of at least a majority of the shares of Common Stock present or
represented and entitled to vote at a meeting of the shareholders of AdamsLabs
duly held in accordance with applicable law within twelve months after the date
of adoption of the Plan by the Board. If the Plan is not so approved, the Plan
shall terminate and any Award granted hereunder shall be null and void.

ARTICLE 2. DEFINITIONS

      2.1   ADAMSLABS. "AdamsLabs" means ADAMS LABORATORIES, INC., a Texas
corporation, and any successor thereto.

      2.2   AFFILIATE. "Affiliate" means a "parent corporation" or a "subsidiary
corporation" of AdamsLabs, as those terms are defined in Section 424(e) and (f)
of the Code.

      2.3   AWARD. "Award" means any Option or Restricted Stock granted under
the Plan to a Participant.

      2.4   AWARD AGREEMENT. "Award Agreement" means a written agreement between
AdamsLabs and a Participant that sets forth the terms, conditions, restrictions
and/or limitations applicable to an Award.

      2.5   BOARD. "Board" means the Board of Directors of AdamsLabs.

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      2.6   CODE. "Code" means the Internal Revenue Code of 1986, as amended
from time to time, including regulations thereunder and successor provisions and
regulations thereto.

      2.7   COMMON STOCK. "Common Stock" means the Common Stock, $0.01 par value
per share, of AdamsLabs, or any stock or other securities of AdamsLabs hereafter
issued or issuable in substitution or exchange for the Common Stock.

      2.8   COMPANY. "Company" means AdamsLabs and its Affiliates.

      2.9   CONSULTANT. "Consultant" means (i) an individual duly elected or
chosen as a director of AdamsLabs who is not also an Employee or (ii) any other
individual who performs services for and is treated by AdamsLabs or an Affiliate
as an independent contractor for employment tax purposes.

      2.10  EFFECTIVE DATE. "Effective Date" means the date an Award is
determined to be effective by the Board upon the grant of such Award.

      2.11  EMPLOYEE. "Employee" means any person treated as an employee by
AdamsLabs or an Affiliate. "Employee" shall not include a Consultant.

      2.12  FAIR MARKET VALUE. "Fair Market Value" means the fair market value
of the Common Stock as determined by the Board in good faith.

      2.13  INCENTIVE STOCK OPTION. "Incentive Stock Option" means an Option
that is intended to meet the requirements of Section 422(b) of the Code.

      2.14  NONQUALIFIED STOCK OPTION. "Nonqualified Stock Option" means an
Option that is not intended to meet the requirements of Section 422(b) of the
Code.

      2.15  OPTION. "Option" means an option to purchase shares of Common Stock
granted to a Participant pursuant to Article 7, and includes both Incentive
Stock Options and Nonqualified Stock Options.

      2.16  PARTICIPANT. "Participant" means any Employee or Consultant to whom
an Award has been granted under the Plan.

      2.17  PLAN. "Plan" means this ADAMS LABORATORIES, INC. 1999 LONG-TERM
INCENTIVE PLAN.

      2.18  RESTRICTED STOCK. "Restricted Stock" means an Award of shares of
Common Stock granted to a Participant pursuant to, and with such restrictions as
are imposed under, Article 8. Restricted Stock shall constitute issued and
outstanding shares of Common Stock for all corporate purposes.

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      2.19  RETIREMENT. "Retirement" means the termination of an Employee's
employment with AdamsLabs or an Affiliate on or after the Employee's attainment
of age 65 and completion of at least 15 years of employment with AdamsLabs or an
Affiliate.

ARTICLE 3. PLAN ADMINISTRATION

      3.1   RESPONSIBILITY OF ADMINISTRATOR. The Plan shall be administered by
the Board. The Board may delegate responsibility for administration of the Plan
to a committee appointed by and serving at the pleasure of the Board, under such
terms and conditions as the Board shall determine; provided, however, that one
member of any such committee shall be appointed by and serve at the pleasure of
S.Z. Investments, L.L.C. The Board shall have total and exclusive responsibility
to control, operate, manage and administer the Plan in accordance with its
terms. The Board shall have all the authority that may be necessary or helpful
to enable it to discharge its responsibilities with respect to the Plan. Without
limiting the generality of the preceding sentence, the Board shall have the
exclusive right to: (i) interpret the Plan and the Award Agreements executed
hereunder; (ii) determine eligibility for participation in the Plan; (iii)
decide all questions concerning eligibility for, and the amount of, Awards
payable under the Plan; (iv) construe any ambiguous provision of the Plan or any
Award Agreement; (v) prescribe the form of the Award Agreements embodying Awards
granted under the Plan; (vi) correct any defect, supply any omission or
reconcile any inconsistency in the Plan or any Award Agreement; (vii) issue
administrative guidelines as an aid to administer the Plan and make changes in
such guidelines as it from time to time deems proper; (viii) make regulations
for carrying out the Plan and make changes in such regulations as it from time
to time deems proper; (ix) to the extent permitted under the Plan, grant waivers
of Plan terms, conditions, restrictions and limitations; (x) accelerate the
exercise, vesting or payment of an Award when such action or actions would be in
the best interests of the Company; (xi) grant Awards in replacement of Awards
previously granted under the Plan or any other employee benefit plan of the
Company; and (xii) take any and all other actions it deems necessary or
advisable for the proper operation or administration of the Plan.

      3.2   DISCRETIONARY AUTHORITY. The Board shall have full discretionary
authority in all matters related to the discharge of its responsibilities and
the exercise of its authority under the Plan, including, without limitation, its
construction of the terms of the Plan and its determination of eligibility for
participation and Awards under the Plan. The decisions of the Board and its
actions with respect to the Plan shall be final, conclusive and binding on all
persons having or claiming to have any right or interest in or under the Plan,
including Participants and their respective estates, beneficiaries and legal
representatives.

      3.3   LIABILITY; INDEMNIFICATION. No member of the Board nor any person to
whom authority has been properly delegated, shall be personally liable for any
action, interpretation or determination made in good faith with respect to the
Plan or Awards granted hereunder, and each member of the Board (or delegatee of
the Board) shall be fully indemnified and protected by AdamsLabs with respect to
any liability he or she may incur with respect to any such action,
interpretation or determination, to the extent permitted by applicable law.

                                      -3-
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ARTICLE 4. ELIGIBILITY

      All Employees and Consultants are eligible to participate in the Plan. The
Board shall select, from time to time, Participants from those Employees and
Consultants, who, in the opinion of the Board, can further the Plan's purposes.
In making this selection, the Board may give consideration to the functions and
responsibilities of the Participant, his or her past, present and potential
contributions to the growth and success of the Company and such other factors
deemed relevant by the Board. Once a Participant is so selected, the Board shall
determine the type and size of Award to be granted to the Participant and shall
establish in the related Award Agreement the terms, conditions, restrictions
and/or limitations applicable to the Award, in addition to those set forth in
the Plan and the administrative rules and regulations, if any, established by
the Board.

ARTICLE 5. FORM OF AWARDS

      Awards may, at the Board's sole discretion, be granted under the Plan in
the form of Options pursuant to Article 7, Restricted Stock pursuant to Article
8, or a combination thereof. All Awards shall be subject to the terms,
conditions, restrictions and limitations of the Plan. The Board may, in its sole
judgment, subject any Award to such other terms, conditions, restrictions and/or
limitations (including, but not limited to, the time and conditions of exercise,
vesting or payment of an Award and restrictions on transferability of any shares
of Common Stock issued or delivered pursuant to an Award), provided they are not
inconsistent with the terms of the Plan. Awards under a particular Article of
the Plan need not be uniform, and Awards under two or more Articles of the Plan
may be combined into a single Award Agreement. Any combination of Awards may be
granted at one time and on more than one occasion to the same Participant.

ARTICLE 6. SHARES SUBJECT TO THE PLAN

      6.1   AVAILABLE SHARES. The maximum number of shares of Common Stock that
shall be available for grant of Awards under the Plan shall not exceed 700,000,
subject to adjustment as provided in Sections 6.2 and 6.3. Shares of Common
Stock issued pursuant to the Plan may be shares of original issuance or treasury
shares or a combination of the foregoing, as the Board, in its discretion, shall
from time to time determine.

      6.2   ADJUSTMENTS FOR RECAPITALIZATIONS AND REORGANIZATIONS.

            (a)   The shares with respect to which Awards may be granted under
      the Plan are shares of Common Stock as presently constituted, but if, and
      whenever, prior to the expiration or satisfaction of an Award theretofore
      granted, AdamsLabs shall effect a subdivision or consolidation of shares
      of Common Stock or the payment of a stock dividend on Common Stock without
      receipt of consideration by AdamsLabs, the number of shares of Common
      Stock with respect to which such Award may thereafter be exercised or
      satisfied, as applicable, (i) in the event of an increase in the number of
      outstanding shares shall be proportionately increased, and the exercise
      price per share

                                      -4-
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      shall be proportionately reduced, and (ii) in the event of a reduction in
      the number of outstanding shares shall be proportionately reduced, and the
      exercise price per share shall be proportionately increased.

            (b)   If AdamsLabs recapitalizes or otherwise changes its capital
      structure, thereafter upon any exercise or satisfaction, as applicable, of
      an Award theretofore granted the Participant shall be entitled to (or
      entitled to purchase, if applicable) under such Award, in lieu of the
      number of shares of Common Stock then covered by such Award, the number
      and class of shares of stock or other securities to which the Participant
      would have been entitled pursuant to the terms of the recapitalization if,
      immediately prior to such recapitalization, the Participant had been the
      holder of record of the number of shares of Common Stock then covered by
      such Award.

            (c)   In the event of changes in the outstanding Common Stock by
      reason of recapitalizations, reorganizations, mergers, consolidations,
      combinations, separations (including a spin-off or other distribution of
      stock or property), exchanges or other relevant changes in capitalization
      occurring after the date of grant of any Award and not otherwise provided
      for by this Section 6.2, any outstanding Awards and any Award Agreements
      evidencing such Awards shall be subject to adjustment by the Board at its
      discretion as to the number, price and kind of shares or other
      consideration subject to, and other terms of, such Awards to reflect such
      changes in the outstanding Common Stock.

            (d)   In the event of any changes in the outstanding Common Stock
      provided for in this Section 6.2, the aggregate number of shares available
      for grant of Awards under the Plan may be equitably adjusted by the Board,
      whose determination shall be conclusive. Any adjustment provided for in
      this Section 6.2 shall be subject to any required stockholder action.

      6.3   ADJUSTMENTS FOR AWARDS. The Board shall have full discretion to
determine the manner in which shares of Common Stock available for grant of
Awards under the Plan are counted. Without limiting the discretion of the Board
under this Section 6.3, the following rules shall apply for the purpose of
determining the number of shares of Common Stock available for grant of Awards
under the Plan unless otherwise determined by the Board in its discretion;
provided, however, that any exercise of discretion by the Board with respect to
the rules set forth below that is not consistent with the rule as set forth
below shall not be given effect without the consent of a member of the Board
designated by S.Z. Investments, L.L.C. for such purpose:

            (a)   OPTIONS AND RESTRICTED STOCK. The grant of Options and
      Restricted Stock shall reduce the number of shares available for grant of
      Awards under the Plan by the number of shares subject to such Award.

            (b)   TERMINATION. If any Award referred to in paragraph (a) above
      is canceled or forfeited, or terminates, expires or lapses for any reason,
      the shares then subject to such Award shall again be available for grant
      of Awards under the Plan.

                                      -5-
<PAGE>

            (c)   PAYMENT OF EXERCISE PRICE AND WITHHOLDING TAXES. If previously
      acquired shares of Common Stock are used to pay the exercise price of an
      Award, or shares of Common Stock that would be acquired upon exercise of
      an Award are withheld to pay the exercise price of such Award, the number
      of shares available for grant of Awards under the Plan other than
      Incentive Stock Options shall be increased by the number of shares
      delivered or withheld as payment of such exercise price. If previously
      acquired shares of Common Stock are used to pay withholding taxes payable
      upon exercise, vesting or payment of an Award, or shares of Common Stock
      that would be acquired upon exercise, vesting or payment of an Award are
      withheld to pay withholding taxes payable upon exercise, vesting or
      payment of such Award, the number of shares available for grant of Awards
      under the Plan other than Incentive Stock Options shall be increased by
      the number of shares delivered or withheld as payment of such withholding
      taxes.

ARTICLE 7. OPTIONS

      7.1   GENERAL. Awards may be granted to Employees and Consultants in the
form of Options. These Options may be Incentive Stock Options or Nonqualified
Stock Options, or a combination of both; provided, however, that (i) no
Incentive Stock Options shall be granted later than 10 years from the date of
adoption of the Plan by the Board and (ii) only Employees shall be eligible to
receive Incentive Stock Options.

      7.2   TERMS AND CONDITIONS OF OPTIONS. An Option shall be exercisable in
whole or in such installments and at such times as may be determined by the
Board; provided, however, that except as provided in Article 9 of this Plan, no
Option shall be exercisable sooner than one year from the Effective Date of the
Option and the Option shall first become exercisable with respect to no more
than 20% of the number of shares covered by the Option on the date which is one
year from the Effective Date of the Option with no more than an additional 20%
first becoming exercisable on each subsequent anniversary thereof until such
Option is exercisable in full. Notwithstanding the preceding sentence, the Board
may grant an Option that is exercisable in full immediately upon grant provided
that the shares purchased upon exercise of any such Option shall be Restricted
Stock, the Restriction Period for which shall begin on the Effective Date of the
Option and, except as provided in Article 9 of this Plan, shall end no sooner
than (i) one year with respect to 20% of the shares covered by the Option, (ii)
two years with respect to an additional 20% of the shares covered by the Option,
(iii) three years with respect to an additional 20% of the shares covered by the
Option, (iv) four years with respect to an additional 20% of the shares covered
by the Option, and (v) five years with respect to the remainder of shares
covered by the Option. The preceding provisions to the contrary notwithstanding,
solely for purposes of determining the percentage of shares exercisable pursuant
to an Option and the Restriction Period with respect to Restricted Stock
purchased upon exercise of an Option, the Effective Date of an Option granted to
an Employee in substitution for the cancellation of all phantom share units
previously granted to such Employee under a phantom stock plan of AdamsLabs in
effect prior to the date of adoption of this Plan shall be the original
effective date of the grant of such phantom share units. Any Restricted Stock
purchased pursuant to the

                                      -6-
<PAGE>

exercise of an Option as provided in the preceding provisions of this Section
shall be subject to the terms of Article 8 of this Plan and such other
provisions of this Plan that are applicable to Restricted Stock, and the Award
Agreement for such Option shall provide that in the event of the Participant's
termination of employment or termination of services as a Consultant during the
Restriction Period for any reason, all shares with respect to which the
Restriction Period has not ended shall be forfeited to AdamsLabs and AdamsLabs
shall pay to the Participant an amount equal to the lesser of the price paid by
the Participant upon exercise of the shares so forfeited or the Fair Market
Value of the shares on the date of forfeiture; provided, however, that for this
purpose, the "price paid by the Participant upon exercise" of a Nonqualified
Stock Option that is exercised solely by means of the withholding of shares
which otherwise would be acquired on exercise shall be zero. The price at which
a share of Common Stock may be purchased upon exercise of an Option shall be
determined by the Board, but such exercise price shall not be less than 100% of
the Fair Market Value of a share of Common Stock on the Effective Date of the
Option's grant. Except as otherwise provided in Section 7.3, the term of each
Option shall be as specified by the Board; provided, however, that, unless
otherwise designated by the Board, no Options shall be exercisable later than 10
years from the Effective Date of the Option's grant.

      7.3   RESTRICTIONS RELATING TO INCENTIVE STOCK OPTIONS. Options granted in
the form of Incentive Stock Options shall, in addition to being subject to the
terms and conditions of Section 7.2, comply with Section 422(b) of the Code.
Accordingly, to the extent that the aggregate Fair Market Value (determined at
the time the respective Incentive Stock Option is granted) of Common Stock with
respect to which Incentive Stock Options are exercisable for the first time by
an individual during any calendar year under all incentive stock option plans of
AdamsLabs and its Affiliates exceeds $100,000, such excess Incentive Stock
Options shall be treated as options which do not constitute Incentive Stock
Options. The Board shall determine, in accordance with applicable provisions of
the Code, which of an optionee's Incentive Stock Options will not constitute
Incentive Stock Options because of such limitation and shall notify the optionee
of such determination as soon as practicable after such determination. No
Incentive Stock Option shall be granted to an Employee under the Plan if, at the
time such Option is granted, such Employee owns stock possessing more than 10%
of the total combined voting power of all classes of stock of AdamsLabs or an
Affiliate, within the meaning of Section 422(b)(6) of the Code, unless (i) on
the Effective Date of grant of such Option, the exercise price of such Option is
at least 110% of the Fair Market Value of the Common Stock subject to the Option
and (ii) such Option by its terms is not exercisable after the expiration of
five years from the Effective Date of the Option's grant.

      7.4   ADDITIONAL TERMS AND CONDITIONS. The Board may subject any Award of
an Option to such other terms, conditions, restrictions and/or limitations as it
determines are necessary or appropriate, provided they are not inconsistent with
the Plan.

      7.5   EXERCISE OF OPTIONS. Subject to the terms and conditions of the
Plan, Options shall be exercised by the delivery of a written notice of exercise
to AdamsLabs, setting forth the number of shares of Common Stock with respect to
which the Option is to be exercised, accompanied by full payment for such
shares.

                                      -7-
<PAGE>

      Upon exercise of an Option, the exercise price of the Option shall be
payable to AdamsLabs in full either: (i) in cash or an equivalent acceptable to
the Board or (ii) in the discretion of the Board and in accordance with any
applicable administrative guidelines established by the Board, by (a) tendering
previously acquired nonforfeitable, unrestricted shares of Common Stock having
an aggregate Fair Market Value at the time of exercise equal to the total
exercise price (including an actual or deemed multiple series of exchanges of
such shares), (b) with respect to Nonqualified Stock Options only, withholding
shares which otherwise would be acquired on exercise having an aggregate Fair
Market Value at the time of exercise equal to the total exercise price or (c) a
combination of the forms of payment specified in clauses (i), (ii)(a) or (ii)(b)
above.

      In addition, the Board, in its sole and absolute discretion, may approve
the extension of a loan to an optionee who is an Employee to assist the optionee
in paying the exercise price of an Option; provided, however, that no such loan
shall be for an amount greater than the excess of the (i) the exercise price of
the shares of Common Stock issuable upon exercise of the Option over (ii) the
par value of such shares of Common Stock. Any such loan will be made on such
terms and conditions as the Board shall deem to be appropriate.

      In addition, any grant of a Nonqualified Stock Option under the Plan may
provide that payment of the exercise price of the Nonqualified Stock Option may
also be made in whole or in part in the form of shares of Restricted Stock or
other shares of Common Stock that are subject to risk of forfeiture or
restrictions on transfer. Unless otherwise determined by the Board at the time
of grant of such Nonqualified Stock Option, whenever the exercise price of such
Nonqualified Stock Option is paid in whole or in part by means of the form of
consideration specified in the immediately preceding sentence, the shares of
Common Stock received by the Participant upon the exercise of such Option shall
be subject to the same risk of forfeiture and restrictions on transfer as those
that applied to the consideration surrendered by the Participant. However, the
risk of forfeiture and restrictions on transfer shall apply only to the same
number of shares of Common Stock received by the Participant upon exercise as
applied to the forfeitable or restricted Common Stock surrendered by the
Participant in payment of the exercise price.

      As soon as reasonably practicable after receipt of written notification of
exercise of an Option and full payment of the exercise price and any required
withholding taxes, AdamsLabs shall deliver to the Participant, in the
Participant's name, a stock certificate or certificates in an appropriate amount
based upon the number of shares of Common Stock purchased under the Option.

      7.6   TERMINATION OF SERVICE. Each Award Agreement embodying the Award of
an Option shall set forth the extent to which the Participant shall have the
right to exercise the Option following termination of the Participant's
employment or service with the Company. Such provisions shall be determined in
the sole discretion of the Board, need not be uniform among all Options granted
under the Plan and may reflect distinctions based on the reasons for termination
of employment or service. Subject to Sections 7.2 and 7.3 and Article 9, in the
event that an Employee's Award Agreement embodying the Award of an Option does
not set forth such

                                      -8-
<PAGE>

termination provisions, the following termination provisions shall apply with
respect to such Award:

            (a)   RETIREMENT, DEATH OR DISABILITY. If the employment of a
      Participant shall terminate by reason of Retirement, death or permanent
      and total disability (within the meaning of Section 22(e)(3) of the Code),
      outstanding Options held by the Participant may be exercised, to the
      extent then vested, no more than one year from the date of such
      termination of employment, unless the Options, by their terms, expire
      earlier.

            (b)   INVOLUNTARY TERMINATION. If the employment of a Participant is
      involuntarily terminated by the Company for any reason (other than for
      cause as described in paragraph (d) below), outstanding Options held by
      the Participant may be exercised, to the extent then vested, no more than
      three months from the date of such termination of employment, unless the
      Options, by their terms, expire earlier.

            (c)   VOLUNTARY TERMINATION. If the employment of a Participant
      terminates due to the Participant's voluntary resignation for any reason
      (other than the reasons set forth in paragraph (a) above), outstanding
      Options held by the Participant may be exercised, to the extent then
      vested, no more than thirty days from the date of such termination of
      employment, unless the Options, by their terms, expire earlier.

            (d)   TERMINATION FOR CAUSE. Notwithstanding paragraphs (a), (b) and
      (c) above, if the employment of a Participant shall be terminated for
      cause, all outstanding Options held by the Participant shall immediately
      be forfeited to the Company and no additional exercise period shall be
      allowed, regardless of the vested status of the Options. For this purpose,
      termination for "cause" shall mean termination by reason of such
      Participant's fraud, dishonesty or performance of other acts detrimental
      to the Company, as determined by the Board in good faith.

      7.7   MAXIMUM OPTION GRANTS. Notwithstanding any provision contained in
the Plan to the contrary, the maximum number of shares of Common Stock for which
Options may be granted under the Plan to any one Employee during a calendar year
is 100,000.

ARTICLE 8. RESTRICTED STOCK

      8.1   GENERAL. Awards may be granted to Employees and Consultants in the
form of Restricted Stock. Restricted Stock shall be awarded in such numbers and
at such times as the Board shall determine.

      8.2   RESTRICTION PERIOD. At the time an Award of Restricted Stock is
granted, the Board shall establish a period of time (the "Restriction Period")
applicable to such Restricted Stock; provided, however, that except as provided
in Article 9 of this Plan, the Restriction Period with respect to any Award of
Restricted Stock shall be at least (i) one year with respect to 20% of the
shares awarded, (ii) two years with respect to an additional 20% of the shares
awarded, (iii)

                                      -9-
<PAGE>

three years with respect to an additional 20% of the shares awarded, (iv) four
years with respect to an additional 20% of the shares awarded and (v) five years
with respect to the remainder of shares awarded. Subject to the preceding
sentence, each Award of Restricted Stock may have a different Restriction
Period, in the discretion of the Board. The Restriction Period applicable to a
particular Award of Restricted Stock shall not be changed except as permitted by
Section 6.2, Section 8.3 or Article 9.

      8.3   OTHER TERMS AND CONDITIONS. Restricted Stock awarded to a
Participant under the Plan shall be represented by a stock certificate
registered in the name of the Participant or, at the option of AdamsLabs, in the
name of a nominee of AdamsLabs. Subject to the terms and conditions of the Award
Agreement, a Participant to whom Restricted Stock has been awarded shall have
the right to receive dividends thereon during the Restriction Period, to vote
the Restricted Stock and to enjoy all other stockholder rights with respect
thereto, except that (i) the Participant shall not be entitled to possession of
the stock certificate representing the Restricted Stock until the Restriction
Period shall have expired, (ii) AdamsLabs shall retain custody of the Restricted
Stock during the Restriction Period, (iii) the Participant may not sell,
transfer, pledge, exchange, hypothecate or otherwise dispose of the Restricted
Stock during the Restriction Period and (iv) a breach of the terms and
conditions established by the Board pursuant to the Award of the Restricted
Stock shall cause a forfeiture of the Restricted Stock. At the time of an Award
of Restricted Stock, the Board may, in its sole discretion, prescribe additional
terms, conditions, restrictions and/or limitations applicable to the Restricted
Stock, including, but not limited to, rules pertaining to the termination of
employment or service (by reason of death, permanent and total disability, or
otherwise) of a Participant prior to expiration of the Restriction Period.

      8.4   PAYMENT FOR RESTRICTED STOCK. A Participant shall not be required to
make any payment for Restricted Stock awarded to the Participant, except to the
extent otherwise required by the Board or by applicable law.

      8.5   MISCELLANEOUS. Nothing in this Article 8 shall prohibit the exchange
of shares of Restricted Stock issued under the Plan pursuant to a plan of
reorganization for stock or securities of AdamsLabs or another corporation a
party to the reorganization, but the stock or securities so received for shares
of Restricted Stock shall, except as provided in Section 6.2 or Article 9,
become subject to the restrictions applicable to the Award of such Restricted
Stock. Any shares of stock received as a result of a stock split or stock
dividend with respect to shares of Restricted Stock shall also become subject to
the restrictions applicable to the Award of such Restricted Stock.

ARTICLE 9. CORPORATE TRANSACTION

                                      -10-
<PAGE>

      Notwithstanding anything contained in the Plan to the contrary, in the
event of a Corporate Transaction (as defined below), unless otherwise provided
in the related Award Agreement: (i) each Option then outstanding shall become
exercisable in full; (ii) all restrictions (other than restrictions imposed by
law) and conditions of all Restricted Stock then outstanding shall be deemed
satisfied; and (iii) AdamsLabs shall have the right, but shall not be obligated,
to cancel any and all Options outstanding at the time of such Corporate
Transaction by payment for each share of Common Stock that may be purchased
pursuant to the Option at the time of the cancellation of an amount in cash
equal to the excess, if any, of the Fair Market Value of the Common Stock as
determined by the Board based upon the consideration being paid for a share of
Common Stock in the Corporate Transaction, over the purchase price set forth in
the Option.

      A "Corporate Transaction" shall include any of the following transactions
with respect to which AdamsLabs is a party:

            (a)   a merger or consolidation in which AdamsLabs is not the
      surviving entity, except for (i) a transaction the principal purpose of
      which is to change the state of AdamsLabs's incorporation, or (ii) a
      transaction in which AdamsLabs's shareholders immediately prior to such
      merger or consolidation hold (by virtue of securities received in exchange
      for their shares in AdamsLabs) securities of the surviving entity
      representing more than fifty percent (50%) of the total voting power of
      such entity immediately after such transaction;

            (b)   the sale, transfer or other disposition of all or
      substantially all of the assets of AdamsLabs unless AdamsLabs's
      shareholders immediately prior to such sale, transfer or other disposition
      hold (by virtue of securities received in exchange for their shares in
      AdamsLabs) securities of the purchaser or other transferee representing
      more than fifty percent (50%) of the total voting power of such entity
      immediately after such transaction; or

            (c)   any reverse merger in which AdamsLabs is the surviving entity
      but in which AdamsLabs's shareholders immediately prior to such merger do
      not hold (by virtue of their shares in AdamsLabs held immediately prior to
      such transaction) securities of AdamsLabs representing more than fifty
      percent (50%) of the total voting power of AdamsLabs immediately after
      such transaction.

Notwithstanding the foregoing, a "Corporate Transaction" shall not include a
transaction or series of transactions involving an internal reorganization of
AdamsLabs pursuant to which certain assets of AdamsLabs are transferred, leased
or otherwise contributed to entities which are directly or indirectly wholly
owned by AdamsLabs.

ARTICLE 10. AMENDMENT AND TERMINATION

                                      -11-
<PAGE>

      The Board may at any time suspend, terminate, amend or modify the Plan, in
whole or in part; provided, however, that no amendment or modification of the
Plan shall become effective without the approval of such amendment or
modification by the stockholders of AdamsLabs if such amendment or modification
(i) increases the maximum number of shares subject to the Plan or (ii) changes
the designation or class of persons eligible to receive Awards under the Plan.
Upon termination of the Plan, the terms and provisions of the Plan shall,
notwithstanding such termination, continue to apply to Awards granted prior to
such termination. No suspension, termination, amendment or modification of the
Plan shall adversely affect in any material way any Award previously granted
under the Plan, without the consent of the Participant holding such Award.

      The Board may amend the terms of any outstanding Award granted pursuant to
this Plan, but any amendment that would adversely affect the Participant's
rights under an outstanding Award shall not be made without the written consent
of the Participant. The Board may, with a Participant's written consent, cancel
any outstanding Award or accept any outstanding Award in exchange for a new
Award.

ARTICLE 11. MISCELLANEOUS

      11.1  AWARD AGREEMENTS. After the Board grants an Award under the Plan to
a Participant, AdamsLabs and the Participant shall enter into an Award Agreement
setting forth the terms, conditions, restrictions and/or limitations applicable
to the Award and such other matters as the Board may determine to be
appropriate. The terms and provisions of the respective Award Agreements need
not be identical. In the event of any conflict between an Award Agreement and
the Plan, the terms of the Plan shall govern.

      11.2  ADDITIONAL CONDITIONS. Notwithstanding anything in the Plan to the
contrary: (i) AdamsLabs may, if it shall determine it necessary or desirable for
any reason, at the time of grant of any Award or the issuance of any shares of
Common Stock pursuant to any Award, require the recipient of the Award or such
shares of Common Stock, as a condition to the receipt thereof, to deliver to
AdamsLabs a written representation of present intention to acquire the Award or
such shares of Common Stock for his or her own account for investment and not
for distribution; and (ii) if at any time AdamsLabs further determines, in its
sole discretion, that the listing, registration or qualification (or any
updating of any such document) of any Award or shares of Common Stock issuable
pursuant thereto is necessary on any securities exchange or market or under any
federal or state securities or blue sky laws, or that the consent or approval of
any governmental or regulatory body is necessary or desirable as a condition of,
or in connection with, the grant of any Award, the issuance of shares of Common
Stock pursuant thereto or the removal of any restrictions imposed on such
shares, such Award shall not be awarded or such shares of Common Stock shall not
be issued or such restrictions shall not be removed, as the case may be, in
whole or in part, unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to AdamsLabs.

                                      -12-
<PAGE>

      11.3  LEGEND ON STOCK CERTIFICATES. Each certificate representing shares
of Common Stock issued pursuant to an Award shall bear a legend in substantially
the following form:

      THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT TO
      THE TERMS OF THE 1999 LONG-TERM INCENTIVE PLAN OF ADAMS LABORATORIES, INC.
      ("ADAMSLABS") AND MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR
      OTHERWISE ENCUMBERED OR DISPOSED OF EXCEPT AS SET FORTH IN THE TERMS OF AN
      AGREEMENT ENTERED INTO BETWEEN THE REGISTERED OWNER HEREOF AND ADAMSLABS.
      A COPY OF SUCH PLAN AND AGREEMENT ARE ON FILE AT THE PRINCIPAL EXECUTIVE
      OFFICES OF ADAMSLABS.

      11.4  RESTRICTIONS ON TRANSFER. The Common Stock acquired pursuant to any
and all Awards shall be subject to a right of first refusal in favor of
AdamsLabs, its successors and designees, and such other restrictions and
agreements regarding sale, assignment, encumbrances or other transfer as the
Board shall deem advisable and shall set forth in the Award Agreement. In
addition, AdamsLabs shall have the right to repurchase the shares of Common
Stock acquired pursuant to any and all Awards at any time on or after an
Employee's termination of employment for any reason or the termination of
services of a Consultant. The price to be paid by AdamsLabs, its successors or
designees for the repurchase of Common Stock acquired pursuant to an Award shall
be the Fair Market Value of the Common Stock; provided, however, that in the
event of a repurchase of Common Stock with respect to a Participant following
such Participant's termination of employment for cause as described in Section
7.3(d), the price to be paid by AdamsLabs, its successors or designees for the
repurchase of Common Stock acquired pursuant to an Award shall be the lesser of
the Fair Market Value of the Common Stock or the price paid for the shares, if
any. The preceding provisions of this Section 11.4 to the contrary
notwithstanding, unless otherwise provided in the related Award Agreement, the
rights of AdamsLabs, its successors and designees to a right of first refusal
for or right to repurchase Common Stock pursuant to this Section or an Award
Agreement and such other restrictions and agreements regarding sale, assignment,
encumbrances or other transfer of Common Stock as may be set forth in an Award
Agreement, shall terminate upon the closing of the first underwritten public
offering of the common stock of AdamsLabs that is pursuant to a registration
statement filed with, and declared effective by, the Securities and Exchange
Commission under the Securities Act of 1933, as amended, covering the offer and
sale of any common stock to the public for AdamsLabs' account; provided,
however, that nothing in this Section is intended to or shall shorten the
Restriction Period with respect to Restricted Stock or accelerate the
exercisability or vesting of any Award prior to time provided for such exercise
or vesting pursuant to the terms of this Plan and the related Award Agreement.

      11.5  NONASSIGNABILITY. No Award granted under the Plan may be sold,
transferred, pledged, exchanged, hypothecated or otherwise disposed of, other
than by will or pursuant to the applicable laws of descent and distribution.
Further, no such Award shall be subject to execution, attachment or similar
process. Any attempted sale, transfer, pledge, exchange,

                                      -13-
<PAGE>

hypothecation or other disposition of an Award not specifically permitted by the
Plan or the Award Agreement shall be null and void and without effect. All
Awards granted to a Participant under the Plan shall be exercisable during his
or her lifetime only by such Participant or, in the event of the Participant's
legal incapacity, by his or her guardian or legal representative.

      11.6  WITHHOLDING TAXES. The Company shall be entitled to deduct from any
payment made under the Plan, regardless of the form of such payment, the amount
of all applicable income and employment taxes required by law to be withheld
with respect to such payment, may require the Participant to pay to the Company
such withholding taxes prior to and as a condition of the making of any payment
or the issuance or delivery of any shares of Common Stock under the Plan and
shall be entitled to deduct from any other compensation payable to the
Participant any withholding obligations with respect to Awards under the Plan.
In accordance with any applicable administrative guidelines it establishes, the
Board may allow a Participant to pay the amount of taxes required by law to be
withheld from or with respect to an Award by (i) withholding shares of Common
Stock from any payment of Common Stock due as a result of such Award or (ii)
permitting the Participant to deliver to the Company previously acquired shares
of Common Stock, in each case having a Fair Market Value equal to the amount of
such required withholding taxes. No payment shall be made and no shares of
Common Stock shall be issued pursuant to any Award unless and until the
applicable tax withholding obligations have been satisfied.

      11.7  NO FRACTIONAL SHARES. No fractional shares of Common Stock shall be
issued or delivered pursuant to the Plan or any Award granted hereunder, and no
payment or other adjustment shall be made in respect of any such fractional
share.

      11.8  NOTICES. All notices required or permitted to be given or made under
the Plan or any Award Agreement shall be in writing and shall be deemed to have
been duly given or made if (i) delivered personally, (ii) transmitted by first
class registered or certified United States mail, postage prepaid, return
receipt requested, (iii) sent by prepaid overnight courier service or (iv) sent
by telecopy or facsimile transmission, answer back requested, to the person who
is to receive it at the address that such person has theretofore specified by
written notice delivered in accordance herewith. Such notices shall be effective
(i) if delivered personally or sent by courier service, upon actual receipt by
the intended recipient, (ii) if mailed, upon the earlier of five days after
deposit in the mail or the date of delivery as shown by the return receipt
therefor or (iii) if sent by telecopy or facsimile transmission, when the answer
back is received. AdamsLabs or a Participant may change, at any time and from
time to time, by written notice to the other, the address that it or such
Participant had theretofore specified for receiving notices. Until such address
is changed in accordance herewith, notices hereunder or under an Award Agreement
shall be delivered or sent (i) to a Participant at his or her address as set
forth in the records of the Company or (ii) to AdamsLabs at the principal
executive offices of AdamsLabs clearly marked "Attention: LTIP Administration".

      11.9  BINDING EFFECT. The obligations of AdamsLabs under the Plan shall be
binding upon any successor corporation or organization resulting from the
merger, consolidation or other

                                      -14-
<PAGE>

reorganization of AdamsLabs, or upon any successor corporation or organization
succeeding to all or substantially all of the assets and business of AdamsLabs.
The terms and conditions of the Plan shall be binding upon each Participant and
his or her heirs, legatees, distributees and legal representatives.

      11.10 SEVERABILITY. If any provision of the Plan or any Award Agreement is
held to be illegal or invalid for any reason, the illegality or invalidity shall
not affect the remaining provisions of the Plan or such agreement, as the case
may be, but such provision shall be fully severable and the Plan or such
agreement, as the case may be, shall be construed and enforced as if the illegal
or invalid provision had never been included herein or therein.

      11.11 NO RESTRICTION OF CORPORATE ACTION. Nothing contained in the Plan
shall be construed to prevent AdamsLabs or any Affiliate from taking any
corporate action (including any corporate action to suspend, terminate, amend or
modify the Plan) that is deemed by AdamsLabs or such Affiliate to be appropriate
or in its best interest, whether or not such action would have an adverse effect
on the Plan or any Awards made or to be made under the Plan. No Participant or
other person shall have any claim against AdamsLabs or any Affiliate as a result
of such action.

      11.12 GOVERNING LAW. The Plan shall be governed by and construed in
accordance with the internal laws (and not the principles relating to conflicts
of laws) of the State of Texas, except as superseded by applicable federal law.

      11.13 NO RIGHT, TITLE OR INTEREST IN COMPANY ASSETS. No Participant shall
have any rights as a stockholder of AdamsLabs as a result of participation in
the Plan until the date of issuance of a stock certificate in his or her name
and, in the case of Restricted Stock, unless and until such rights are granted
to the Participant under the Plan. To the extent any person acquires a right to
receive payments from the Company under the Plan, such rights shall be no
greater than the rights of an unsecured creditor of the Company, and such person
shall not have any rights in or against any specific assets of the Company. All
of the Awards granted under the Plan shall be unfunded.

      11.14 RISK OF PARTICIPATION. Nothing contained in the Plan shall be
construed either as a guarantee by AdamsLabs or its Affiliates, or their
respective stockholders, directors, officers or employees, of the value of any
assets of the Plan or as an agreement by AdamsLabs or its Affiliates, or their
respective stockholders, directors, officers or employees, to indemnify anyone
for any losses, damages, costs or expenses resulting from participation in the
Plan.

      11.15 NO GUARANTEE OF TAX CONSEQUENCES. No person connected with the Plan
in any capacity, including, but not limited to, AdamsLabs and the Affiliates and
their respective directors, officers, agents and employees, makes any
representation, commitment or guarantee that any tax treatment, including, but
not limited to, Federal, state and local income, estate and gift tax treatment,
will be applicable with respect to any Awards or payments thereunder made to

                                      -15-
<PAGE>

or for the benefit of a Participant under the Plan or that such tax treatment
will apply to or be available to a Participant on account of participation in
the Plan.

      11.16 OTHER BENEFITS. No Award granted under the Plan shall be considered
compensation for purposes of computing benefits or contributions under any
retirement plan of AdamsLabs or any Affiliate, nor affect any benefits or
compensation under any other benefit or compensation plan of AdamsLabs or any
Affiliate now or subsequently in effect.

      11.17 CONTINUED EMPLOYMENT. Nothing contained in the Plan or in any Award
Agreement shall confer upon any Participant the right to continue in the employ
of the Company, or interfere in any way with the rights of the Company to
terminate his or her employment at any time, with or without cause.

      11.18 NO MODIFICATION OF OTHER AGREEMENTS. Notwithstanding anything to the
contrary contained herein, the approval of this Plan by the Board and by
AdamsLabs' shareholders shall not be construed as an amendment, modification or
waiver by any such shareholder (or by any person or entity who has designated
any such approving Board member to serve in such capacity) of or under any
provision of any other agreement or instrument, including, without limitation,
any stock purchase agreement or shareholders agreement.

      11.19 MISCELLANEOUS. Headings are given to the articles and sections of
the Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction of the Plan or
any provisions hereof. The use of the masculine gender shall also include within
its meaning the feminine. Wherever the context of the Plan dictates, the use of
the singular shall also include within its meaning the plural, and vice versa.

      IN WITNESS WHEREOF, this Plan has been executed as of this 16th day of
September, 1999 to be effective as of July 21, 1999.

                                    ADAMS LABORATORIES, INC.

                                    By /s/ John Q. Adams, Jr.
                                       ____________________________________
                                       Title: President

                                      -16-

<PAGE>
                             AMENDMENT NO. 1 TO THE

                            ADAMS LABORATORIES, INC.
                         1999 LONG-TERM INCENTIVE PLAN

     Pursuant to the provisions of Article 10 thereof, the Adams Laboratories,
Inc. 1999 Long-Term Incentive Plan (the "Plan") is hereby amended in the
following respects only:

     FIRST: Section 7.2 of the Plan is hereby amended by restatement in its
entirety to read as follows:

          7.2  TERMS AND CONDITIONS OF OPTIONS. An Option shall be exercisable
     in whole or in such installments and at such times as may be determined by
     the Board; provided, however, that except as provided in Article 9 of this
     Plan, no Option granted to an Employee shall be exercisable sooner than one
     year from the Effective Date of the Option and the Option shall first
     become exercisable with respect to no more than 20% of the number of shares
     covered by the Option on the date which is one year from the Effective Date
     of the Option with no more than an additional 20% first becoming
     exercisable on each subsequent anniversary thereof until such Option is
     exercisable in full. Notwithstanding the preceding sentence, the Board may
     grant an Option to an Employee that is exercisable in full immediately upon
     grant provided that the shares purchased upon exercise of any such Option
     shall be Restricted Stock, the Restriction Period for which shall begin on
     the Effective Date of the Option and, except as provided in Article 9 of
     this Plan, shall end no sooner than (i) one year with respect to 20% of the
     shares covered by the Option, (ii) two years with respect to an additional
     20% of the shares covered by the Option, (iii) three years with respect to
     an additional 20% of the shares covered by the Option, (iv) four years with
     respect to an additional 20% of the shares covered by the Option, and (v)
     five years with respect to the remainder of shares covered by the Option.
     The preceding provisions to the contrary notwithstanding, solely for
     purposes of determining the percentage of shares exercisable pursuant to an
     Option and Restriction Period with respect to Restricted Stock purchased
     upon exercise of an Option, the Effective Date of an Option granted to an
     Employee in substitution for the cancellation of all phantom share units
     previously granted to such Employee under a phantom stock plan of AdamsLabs
     in effect prior to the date of adoption of this Plan shall be the original
     effective date of the grant of such phantom share units. Any Restricted
     Stock purchased pursuant to the exercise of an Option as provided in the
     preceding provisions of this Section shall be subject to the terms of
     Article 8 of this Plan and such other provisions of this Plan that are
     applicable to Restricted Stock, and the Award Agreement for such Option
     shall provide that in the event of the Participant's termination of
     employment during the Restriction Period for any reason, all shares with
     respect to which the Restriction Period has not ended shall be forfeited to
     AdamsLabs and AdamsLabs shall pay to the Participant an amount equal to the
     lesser of the price paid by the Participant upon exercise of the shares so
     forfeited or the Fair Market Value of the shares on the date of forfeiture;
     provided, however, that for this purpose, the "price paid
<PAGE>
     by the Participant upon exercise" of a Nonqualified Stock Option that is
     exercised solely by means of the withholding of shares which otherwise
     would be acquired on exercise shall be zero. The price at which a share of
     Common Stock may be purchased upon exercise of an Option shall be
     determined by the Board, but such exercise price shall not be less than
     100% of the Fair Market Value of a share of Common Stock on the Effective
     Date of the Option's grant. Except as otherwise provided in Section 7.3,
     the term of each Option shall be as specified by the Board; provided,
     however, that, unless otherwise designated by the Board, no Options shall
     be exercisable later than 10 years from the Effective Date of the Option's
     grant.

     SECOND:   Section 8.2 of the Plan is hereby amended by restatement in its
entirety to read as follows:

          8.2  RESTRICTION PERIOD. At the time an Award of Restricted stock is
     granted, the Board shall establish a period of time (the "Restriction
     Period") applicable to such Restricted Stock; provided, however, that
     except as provided in Article 9 of this Plan, the Restriction Period with
     respect to any Award of Restricted Stock made to an Employee shall be at
     least (i) one year with respect to 20% of the shares awarded, (ii) two
     years with respect to an additional 20% of the shares awarded, (iii) three
     years with respect to an additional 20% of the shares awarded, (iv) four
     years with respect to an additional 20% of the shares awarded and (v) five
     years with respect to the remainder of shares awarded Subject to the
     preceding sentence, each Award of Restricted Stock may have a different
     Restriction Period, in the discretion of the Board. The Restriction Period
     applicable to a particular Award of Restricted Stock shall not be changed
     except as permitted by Section 6.2, Section 8.3 or Article 9.

     IN WITNESS WHEREOF, this Amendment has been executed this 19th day of
November, 1999 to be effective as of the date of the Plan's original adoption.

                                        ADAMS LABORATORIES, INC.

                                        By /s/ John Q. Adams, Sr.
                                           -----------------------------------
                                           Title: CEO

                                      -2-
<PAGE>

                             AMENDMENT NO. 2 TO THE
                            ADAMS LABORATORIES, INC.
                          1999 LONG-TERM INCENTIVE PLAN

      Pursuant to the provisions of Article 10 thereof, the Adams Laboratories,
Inc. 1999 Long-Term Incentive Plan (the "Plan") is hereby amended in the
following respects only:

      FIRST: Section 6.1 of the Plan is hereby amended by replacing "700,000"
with "8,177,018".

      SECOND: Section 7.2 of the Plan is hereby amended by restatement in its
entirety to read as follows:

            7.2 TERMS AND CONDITIONS OF OPTIONS. An Option shall be exercisable
      in whole or in such installments and at such times as may be determined by
      the Board in its discretion.

      THIRD: Section 7.7 of the Plan is hereby amended by deleting such section
in its entirety and inserting in lieu thereof the word "Reserved".

      FOURTH: Section 11.1 of the Plan is hereby amended by replacing the last
sentence of such Section in its entirety with the following:

      Unless the Award Agreement provides otherwise, in the event of any
      conflict between an Award Agreement and the Plan, the terms of the Plan
      shall govern.

      FIFTH: Section 11.11 of the Plan is hereby amended by inserting the phrase
"Except as otherwise provided in Article 10 hereof," at the beginning of the
first sentence of such Section.

      Except as amended by this Amendment No. 2, the Plan shall remain in full
force and effect.

      IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first written above.

                                               ADAMS LABORATORIES, INC.

                                               By: /s/ David Becker
                                                  ____________________________
                                               Name: David Becker
                                                    __________________________
                                               Title: Chief Financial Officer
                                                     _________________________

<PAGE>

                             AMENDMENT NO. 3 TO THE
                            ADAMS LABORATORIES, INC.
                          1999 LONG-TERM INCENTIVE PLAN

      Pursuant to the provisions of Article 10 thereof, the Adams Laboratories,
Inc. 1999 Long-Term Incentive Plan (the "Plan") is hereby amended by replacing
"8,177,018" with "8,994,720" in Section 6.1 of the Plan.

      Except as amended by this Amendment No. 3, the Plan shall remain in full
force and effect.

      IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first written above.

                                             ADAMS LABORATORIES, INC.

                                             By: /s/ Walter E. Riehemann
                                                ____________________________
                                             Name: Walter E. Riehemann
                                                   _________________________
                                             Title: Vice President &
                                                  __________________________
                                                  General Counsel
                                                  __________________________

<PAGE>

                             AMENDMENT NO. 4 TO THE
                            ADAMS LABORATORIES, INC.
                          1999 LONG-TERM INCENTIVE PLAN

      Pursuant to the provisions of Article 10 thereof, the Adams Laboratories,
Inc. 1999 Long-Term Incentive Plan (the "Plan") is hereby amended by replacing
"8,994,720" with "9,300,000" in Section 6.1 of the Plan, effective as of April
1, 2004.

      Except as amended by this Amendment No. 4, the Plan shall remain in full
force and effect.

      IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first written above.

                                         ADAMS LABORATORIES, INC.

                                         By: /s/ David Becker
                                             ____________________________
                                         Name: David P. Becker
                                         Title: Chief Financial Officer

<PAGE>

                             AMENDMENT NO. 5 TO THE
                            ADAMS LABORATORIES, INC.
                          1999 LONG-TERM INCENTIVE PLAN

      Pursuant to the provisions of Article 10 thereof, the Adams Laboratories,
Inc. 1999 Long-Term Incentive Plan (the "Plan") is hereby amended by replacing
"9,300,000" with "11,500,000" in Section 6.1 of the Plan, effective as of
October 20, 2004.

      Except as amended by this Amendment No. 5, the Plan shall remain in full
force and effect.

      IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first written above.

                                           ADAMS LABORATORIES, INC.

                                           By: /s/ David Becker
                                              ____________________________
                                           Name: David P. Becker
                                           Title: Chief Financial Officer

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