Document:

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                                                                    EXHIBIT 10.4

                                            *** CERTAIN CONFIDENTIAL INFORMATION
                                            CONTAINED IN THIS DOCUMENT
                                            (INDICATED BY ASTERISKS) HAS BEEN
                                            OMITTED AND FILED SEPARATELY WITH
                                            THE SECURITIES AND EXCHANGE
                                            COMMISSION PURSUANT TO A REQUEST FOR
                                            CONFIDENTIAL TREATMENT UNDER 17
                                            C.F.R. SECTIONS 200.80(B)(4), 200.83
                                            AND 230.406.

                                  CONFIDENTIAL

                                LICENSE AGREEMENT

THIS LICENSE AGREEMENT (this "Agreement") is made as of June 27, 2002 (the
"Effective Date") among Santarus, Inc., a California corporation, with offices
at 10590 West Ocean Air Drive, Suite 200, San Diego, California 92130
("Santarus"), TAP Pharmaceutical Products Inc., with offices at 675 North Field
Drive, Lake Forest, Illinois 60045 ("TAP") and Takeda Chemical Industries, Ltd.
("Takeda") (with respect to Sections 1, 2.1.4, 4, 7.5 and 13 and any other
provision which by its nature should be so referenced).

                                    RECITALS

WHEREAS, certain inventions regarding pharmaceutical formulations containing
proton pump inhibitors (the "University Inventions") were made in the course of
research at the University of Missouri (the "University");

WHEREAS, Santarus received certain rights to the University Inventions pursuant
to the University License Agreement (defined below) and is in the business of
the clinical development and commercialization of drugs for the treatment of
gastrointestinal diseases and disorders;

WHEREAS, TAP is a joint venture between Takeda America Holdings Inc. (a wholly
owned subsidiary of Takeda) and Abbott Laboratories ("Abbott") and has expertise
in the development, marketing and sales of pharmaceutical products, including
Prevacid(R), a successful drug for the treatment of gastrointestinal diseases
and disorders;

WHEREAS, TAP desires to receive, and Santarus desires to grant, certain licenses
to the Santarus Patent Rights (defined below) with respect to the development,
use and marketing of Licensed Products (defined below) within the Territory
(defined below), subject to the terms and conditions of this Agreement; and

WHEREAS, Santarus desires to grant to Takeda an option to license the Santarus
Patent Rights for the Rest of World (defined below).

NOW, THEREFORE, the Parties hereto hereby agree as follows:

                                    SECTION 1

                                   DEFINITIONS

Unless specifically provided otherwise, the following capitalized terms used
herein shall have the respective meanings set forth below. Certain other
capitalized terms are defined elsewhere in this Agreement.

1.1      "Affiliate" means, in the case of either Party, a corporation or other
         entity which, directly or indirectly, controls, is controlled by or is
         under common control with, that Party. A corporation or other entity
         shall be regarded as in control of another corporation or entity if it
         owns or directly or indirectly controls more than      ***      of
         the voting stock or other ownership interest of the other corporation
         or entity, or if it possesses, directly or indirectly, the power to

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         direct or cause the direction of the management and policies of the
         corporation or other entity. For purposes of this Agreement, and
         notwithstanding the preceding two sentences and their application,
         Takeda and Abbott shall each be deemed Affiliates of TAP and TAP shall
         be deemed an Affiliate of both Takeda and Abbott.

1.2      "Average Sales Price" means the average per unit sales price for each
         Licensed Product as derived from the Net Sales reported by TAP for the
         period for which the calculation is made.

1.3      "Control" means the ability, whether by ownership or license, to grant
         a license or sublicense as provided for herein without violating the
         terms of any agreement or other right of any Third Party.

1.4      "Effective Date" has the meaning set forth in the preamble.

1.5      "Field of Use" means the use of        ***
                                                ***

1.6      "First Commercial Sale" means - with respect to a Licensed Product -
         the first bona fide (and not de minimus in terms of volume and pricing)
         sale to an end-user customer in a country in the Territory after
         Regulatory Approval has been granted by the appropriate governing
         health authorities in such country.

1.7      "Issuance Date" has the meaning set forth in Section 3.2.

1.8      "Lansoprazole" means the proton pump inhibitor, registered under the
         name lansoprazole with the Food and Drug Administration     ***
                    ***

1.9      "Lansoprazole Derivative" means any derivative of Lansoprazole     ***
                                  ***

1.10     "Licensed Product" means any product for which the sale, manufacture or
         use of such product would, but for the license granted herein, infringe
         one or more Valid Claims of a patent included in the Santarus Patent
         Rights.

1.11     "NDA" means a New Drug Application, Supplemental New Drug Application
         or Abbreviated New Drug Application for a Licensed Product, as defined
         in the U.S. Food, Drug and Cosmetic Act and the regulations promulgated
         thereunder, or the corresponding applications for authorization for
         marketing a pharmaceutical in any other country or group of countries,
         as defined in the applicable laws and regulations.

1.12     "Net Sales" with respect to any Licensed Product for which royalties
         are payable hereunder means the gross amount invoiced by TAP (including
         an Affiliate) or any sublicensee thereof to unrelated Third Parties for
         the Licensed Product in all countries in the Territory, less:

                  (a)      ***

                  (b)      ***

                  (c)      ***

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                  (d)      ***

                  (e)      ***

                  (f)      ***

         With respect to a Licensed Product which is sold together with any
         Other Products (as defined below) at one unit price, whether packaged
         together or separately (a "Bundled Product"), the Net Sales of such
         Bundled Product shall be calculated as set forth above and then the Net
         Sales of such Licensed Product shall be determined as follows:    ***

                                       ***
                                       ***
                                       ***

         Such amounts shall be determined from the books and records of TAP or
         its sublicensee, maintained in accordance with U.S. Generally Accepted
         Accounting Principles or, in the case of sublicensees, such similar
         accounting principles, consistently applied. TAP further agrees that in
         determining such amounts, it will use its then-current standard
         procedures and methodology, including it's then-current standard
         exchange rate methodology for the translation of foreign currency sales
         into U.S. Dollars or, in the case of sublicensees, such similar
         methodology, consistently applied. For purposes of calculating Net
         Sales, transfers to a sublicensee or Affiliate of Licensed Product
         under this Agreement for end use by the sublicensee or Affiliate shall
         not be treated as sales by TAP.

1.13     "Omeprazole" means the proton pump inhibitor, registered under the name
         omeprazole with the Food and Drug Administration           ***

1.14     "Omeprazole Derivative" means any derivative of Omeprazole,     ***
                                       ***

1.15     "Party" means either Santarus or TAP as the context requires and
         "Parties" means, collectively, Santarus and TAP.

1.16     PK/PD Completion Date" means the date upon which             ***
                                       ***
                                       ***
                                       ***

1.17     "Prescription Volume" means the audited total prescription volume (in
         individual capsules or tablets ("units") for each dosage) for the
         Licensed Product for the period in question as provided by IMS, or such
         other third party source as the parties may agree,             ***

                                       ***
                                       ***
                          ***

1.18     "Regulatory Approval" means any approval, license, registration or
         authorization of any supranational, federal, state or local regulatory
         agency or government authority necessary for the manufacture, use,
         storage, import, transport or sale of a Licensed Product in a
         regulatory jurisdiction.

1.19     "Rest of World" means Japan and all other countries not included in the
         Territory.

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1.20     "Royalty Term" has the meaning set forth in Section 3.3.1.

1.21     "Sales Forecast" means the forecast of prescription volumes for
         Lansoprazole (but not the Licensed Product) in the Territory, as agreed
         upon by the Parties or, in the event they cannot agree, prepared by an
         independent Third Party auditor acceptable to both Parties. The Sales
         Forecast shall be prepared prior to or around the date of NDA approval
         for the first Licensed Product approved. Without limiting the
         generality of the foregoing and solely for the purpose of providing
         guidance for the foregoing, attached as Exhibit B is TAP's good faith
         estimate of total prescription volumes of Lansoprazole (but not the
         Licensed Product) as of the Effective Date.

1.22     "Santarus Patent Rights" means all United States patents and patent
         applications and foreign patents and patent applications (including any
         relating to the University Inventions ) under the Control, during the
         term of this Agreement, of Santarus, including any reissues,
         re-examinations, extensions, substitutions, continuations, divisions,
         and continuation-in-part applications, that are based on and include
         any subject matter claimed in or covered by the United States patent
         applications set forth on Exhibit A hereto, and any such patent
         applications related to similar subject matter, but excluding without
         limitation,    ***      technology.

1.23     "Takeda Option" has the meaning set forth in Section 4.1.

1.24     "Takeda Patent" means           ***
                                         ***

1.25     "Territory" means the United States and Canada.

1.26     "Third Party" means any person or entity, which is not a Party or an
         Affiliate of a Party to this Agreement.

1.27     "University" has the meaning set forth in the Recitals.

1.28     "University Inventions" has the meaning set forth in the Recitals.

1.29     "University License Agreement" means the Exclusive License Agreement
         between the University and Santarus, dated January 26, 2001.

1.30     "Valid Claim" means a claim of an issued or granted and unexpired
         patent included in Santarus Patent Rights, which claim is not, at the
         time in issue, unenforceable against TAP, or has not been held invalid
         under a final decision that is unappealable or unappealed, within the
         time allotted for appeal, of a court or agency of competent
         jurisdiction, or which has not been admitted by the patentee to be
         invalid or unenforceable.

                                    SECTION 2

                                SCOPE OF LICENSE

2.1      LICENSE GRANT.

         2.1.1    LICENSE. Subject to the terms and conditions of this
                  Agreement, Santarus hereby grants to TAP, under the Santarus
                  Patent Rights (i) a nontransferable, sublicensable (subject to
                  Section 2.1.3) license (and sublicense, to the extent being
                  sublicensed) exclusive (subject to Section 2.1.2) with respect
                  to Lansoprazole and non-exclusive with respect to

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                  Lansoprazole Derivatives to make, have made, use, sell, offer
                  to sell, have sold and import Licensed Product to the extent
                  permitted by law solely within the Field of Use and solely
                  within the Territory and (ii) a nontransferable,
                  nonsublicensable, nonexclusive limited license to make and
                  have made the Licensed Product outside the Territory solely
                  for the purpose of supplying Licensed Product to TAP and its
                  distributors within the Territory and only in accordance with
                  all applicable laws and regulations. Subject to paragraph
                  2.1.2, the exclusive license granted to TAP is exclusive as to
                  Santarus as well as the University and, except as specifically
                  set forth in this Agreement, neither Santarus nor the
                  University retains any commercial rights to the Santarus
                  Patent Rights in the Field of Use and Territory.

         2.1.2    RESTRICTIONS. TAP acknowledges and agrees that the license
                  (and sublicense) granted in Section 2.1.1 is subject to the
                  overriding obligations to the U.S. Government under 35 U.S.C.
                  Sections 200-212 and applicable governmental implementing
                  regulations. TAP further acknowledges and agrees that the
                  University reserves the right to make and to use and to grant
                  nonexclusive licenses to make and to use, for internal
                  research and educational purposes only, and not for commercial
                  purposes, the Santarus Patent Rights. In addition, nothing in
                  this Agreement will be deemed to limit the right of the
                  University to publish any and all technical data resulting
                  from any research performed by the University relating to the
                  Licensed Products and to make and use the Licensed Products
                  and associated technology solely for educational and
                  non-commercial research purposes.

         2.1.3    SUBLICENSING. TAP agrees that any agreement for the sublicense
                  of any rights under Section 2.1.1 shall (i) be subject to
                  Santarus's prior written approval, not to be unreasonably
                  withheld, conditioned or delayed, (ii) contain rights and
                  obligations due to Santarus contained in this Agreement
                  (including, without limitation, audit rights) and (iii)
                  contain provisions at least as favorable to Santarus and the
                  University for the protection of Santarus's and the
                  University's proprietary rights and for the limitation of
                  Santarus's and the University's liability exposure as the
                  terms of this Agreement. In any event, TAP shall remain
                  responsible for any sublicensees of the rights granted under
                  Section 2.1.1 and shall promptly provide Santarus with a copy
                  of each sublicense granted.

         2.1.4    NON-ASSERTION.

                  (a)      Subject to the terms and conditions of this Agreement
                           and solely during the term of this Agreement,
                           Santarus agrees that it shall not assert the Santarus
                           Patent Rights against Takeda and its contractors with
                           respect to (i) the manufacture of Licensed Products
                           in Japan and Ireland solely for the purpose of
                           supplying such Licensed Products to TAP for use in
                           the Field of Use and (ii) the supply of such Licensed
                           Product to TAP in the United States and Canada. This
                           Section 2.1.4 shall in no way be construed to limit
                           Santarus's or its sublicensees' rights to conduct any
                           manufacturing and supply activities.

                  (b)      Takeda and its contractors shall, at Takeda's
                           expense, comply with any and all regulations
                           applicable to such activities and Takeda shall be
                           responsible for procuring any required permits and
                           consents. TAP and Takeda agree that all provisions
                           that are protective of Santarus's proprietary rights
                           (including, without limitation, intellectual property
                           rights and confidentiality rights) and all provisions
                           that limit Santarus's liability or potential
                           liability in this Agreement shall apply with respect
                           to the conduct of such activities by Takeda and its
                           contractors. Takeda agrees to be responsible for and
                           indemnify Santarus with

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                           respect to any Claims (as defined in Section 9.1)
                           resulting directly or indirectly from the conduct of
                           such activities by Takeda and/or its contractors;
                           provided that the terms of Section 9.3 shall apply to
                           such indemnification obligations.

2.2      LABELING AND PROMOTIONAL MATERIALS. All Licensed Product packages will
         comply with all patent marking requirements as specified in 35 USC Sec.
         287.

                                    SECTION 3

                                 FINANCIAL TERMS

3.1      INITIAL PAYMENT. Upon the Effective Date, TAP shall pay to Santarus
         Eight Million US Dollars (US $8,000,000). Such payment shall be
         non-refundable.

3.2      MILESTONES. TAP shall pay Santarus, within thirty (30) days of the
         completion of each event set forth below ("Event") for the first
         Licensed Product to complete each Event, the payment listed opposite
         that Event. If an Event does not occur and a subsequent Event (in the
         order as listed below) does occur, then the payments listed opposite
         both or all such Events shall be payable upon completion of such
         subsequent Event. Such payments shall be non-refundable. Except as set
         forth in Section 3.4.3, TAP shall be obligated to make each payment
         only once regardless of the number of Licensed Products developed or
         marketed by TAP.

         3.2.1                             ***

         3.2.2                             ***

         3.2.3                             ***

         3.2.4                             ***

         3.2.5                             ***

         3.2.6                             ***

         3.2.7                             ***

         Notwithstanding the foregoing, TAP shall not be obligated to make the
         milestone payments, and such milestone amounts shall accrue, until a
         patent containing a Valid Claim covering a Licensed Product is issued
         by the U.S. Patent and Trademark Office (the "Issuance Date"). Santarus
         shall promptly notify TAP of the Issuance Date, which notice shall be
         accompanied by a copy of the issue notification received from the U.S.
         Patent and Trademark Office in connection with such issuance. TAP shall
         pay any accrued milestone amounts within thirty (30) days of
         notification from Santarus of the Issuance Date.

3.3      ROYALTY PAYMENTS.

         3.3.1    NET SALES OF LICENSED PRODUCT. TAP shall pay Santarus a
                  royalty based on the aggregate Net Sales of Licensed Product
                  in all countries of the Territory. Such royalty shall be paid
                  with respect to each country of the Territory from the date of
                  the First Commercial Sale of a Licensed Product in such
                  country until the expiration of the last

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                  patent in the Santarus Patent Rights containing a Valid Claim
                  respecting a Licensed Product expires in such country (the
                  "Royalty Term").

         3.3.2    ROYALTY RATE. The royalty rate for Section 3.3.1 shall be
                  determined as follows:

                  (a)      In the event the First Commercial Sale of Licensed
                           Product in a country in the Territory occurs prior to
                           the date (the "      ***      Date") that is the
                           earlier of (a)       ***     or (b) the      ***

                                       ***
                                       ***
                                       ***
                                  ***    Such royalty rate shall be in effect
                           until the    ***   ; provided,
                           however, that in addition to such royalty, TAP shall
                           pay a royalty with respect to any    ***      in
                           excess of the Sales Forecasts for each calendar year,
                           or portion thereof, prior to the        ***
                           Date. Such additional royalty shall be in an amount
                           calculated as follows: at the end of each calendar
                           quarter TAP shall calculate the amount, if any, by
                           which total ***      for the quarter, net of any
                           theretofore unutilized offset or credit calculated
                           in accordance with the proviso contained in the
                           immediately succeeding sentence, is in excess of the
                           Sales Forecast for such quarter. The number of any
                           excess prescriptions shall be multiplied by the
                                 ***       for Licensed Products during such
                           period and TAP shall pay an amount equal to     ***
                                       ***
                                             ***   of the resultant product of
                           such calculation as additional royalty in accordance
                           with Section 3.3.3 provided, that if the total ***
                           for a quarter are below the Sales Forecast for such
                           quarter, then TAP may offset such shortfall against
                           any excess       ***      , calculated in accordance
                           with the immediately preceding sentence, for any
                           other quarter in the same calendar year and may take
                           a credit against royalty payments otherwise due
                           hereunder in the amount of                ***
                           *** ,        of the amount of such total      ***
                           shortfall, multiplied by the applicable     ***    ,
                           up to the amount of any additional royalty
                           paid and not theretofore offset in accordance with
                           the terms of this Section during such calendar year.

                  (b)      From the period beginning on the *** Date in a
                           country, the royalty rate in such country shall be
                           based upon the aggregate Net Sales of all Licensed
                           Product in all such countries in the Territory in
                           each calendar year as follows:

                                      (i)             ***        in Net Sales;

                                      (ii)            ***
                                                      ***

                                      (iii)           ***
                                                      ***

         3.3.3    PAYMENT DATES FOR ROYALTIES. Royalties shall be paid on Net
                  Sales within forty-five (45) days after the end of each
                  calendar quarter in which such Net Sales are made. Such

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                  payments shall be accompanied by a statement showing the Net
                  Sales of Licensed Product or of any sublicensee on a
                  product-by-product basis in each country, and a calculation of
                  the amount of royalty payments due, including without
                  limitation, a description of the number of units sold, average
                  sales price and any amounts deducted from gross amounts
                  invoiced for sales of Licensed Product.

         3.3.4    ACCOUNTING FOR ROYALTIES. The Net Sales used for computing the
                  royalties payable shall be computed in U.S. Dollars, and each
                  payment made pursuant to this Agreement shall be paid in U.S.
                  Dollars by wire transfer in immediately available funds to a
                  U.S. account designated by the receiving party, or by other
                  mutually acceptable means.

         3.3.5    ROYALTY STACKING. The Parties recognize that TAP may need to
                  obtain additional patent rights and licenses from Third
                  Parties to practice the Santarus Patent Rights within the
                  Field of Use. In the event that it should prove necessary,
                      ***        , for TAP or its sublicensees to license
                  intellectual property rights owned by a Third Party in order
                  to practice the Santarus Patent Rights in the Field of Use and
                  in accordance with the terms and conditions of this Agreement,
                  then TAP shall be entitled to a credit of
                          ***           of such Third Party royalties against
                  amounts otherwise due to Santarus, provided, however, that in
                  any event, the earned royalty due to Santarus will not be less
                  than      ***         that would otherwise have been due to
                  Santarus.

3.4      MULTIPLE LICENSE GRANTS BY SANTARUS.

         3.4.1    The Parties acknowledge that, as of the Effective Date,
                  Santarus intends to pursue development and commercialization
                  of a product utilizing the Santarus Patent Rights and
                  Omeprazole (the "Omeprazole Product"), and that Santarus may
                  conduct such activities on its own or in collaboration with
                  Third Parties. In the event that Santarus enters into a
                  collaboration with a Third Party       ***
                                      ***      , such Third Party is referred to
                  herein as the "Franchise Partner." The Parties also
                  acknowledge that, as of the Effective Date and pursuant to
                  this Agreement, TAP intends to pursue development and
                  commercialization of a product utilizing the Santarus Patent
                  Rights and Lansoprazole (the "Lansoprazole Product").

         3.4.2    Subject to Sections 3.4.3 and 3.4.4, if Santarus       ***
                                       ***
                                       ***
                           ***          , then the milestone payments (other
                  than payments already paid and payments due but not yet paid
                  to Santarus, pursuant to Section 3.2,        ***         and
                  the royalties       ***          set forth in Section
                  3.3, and subject to Sections 3.4.3 and 3.4.4, shall be reduced
                  as follows:
                                       ***
                                       ***
                                       ***

         3.4.3    If TAP              ***
                                      ***
                            ***        , then TAP shall promptly inform

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                  Santarus in Writing (the "Notice") of any of such activities
                  on or before commencement of clinical activities and shall
                  elect in such Notice, at TAP's sole discretion, one of the two
                  following options:

                  (a)      That TAP shall pay Santarus, within thirty (30) days
                           of the completion of each Event      ***     , ***
                                    of the payment listed opposite that Event
                           in Section 3.2 unless no milestone payment had become
                           due and been paid for the Lansoprazole Product with
                           respect to such Event, in which case TAP shall pay
                                     ***       of such amount upon completion of
                           the Event by the      ***    provided, that TAP shall
                           not be obligated to pay more than      ***    of any
                           milestone payment set forth in Section 3.2; or

                  (b)      That Santarus may make, distribute, market or
                           otherwise commercialize, in addition to the
                           Omeprazole Product,        ***

                                                ***
                                                ***
                                                ***
                                                                  ***        In
                           addition, with respect to the licensing or
                           collaboration       ***       with a
                           Third Party other than the Franchise Partner, or if
                           Santarus markets or sells on its own any
                                 ***      , the milestone payments (other
                           than payments already paid and payments due but not
                           yet paid to Santarus, pursuant to Section 3.2, at or
                           prior to the date Santarus enters into such license
                           or collaboration) and the royalty reductions
                           (beginning on the date of first commercial sale of
                           the product under such license or collaboration) set
                           forth in Section 3.4.2 shall
                                       ***
                                       ***
                                       ***

                  For the purpose of clarity, the Parties acknowledge that the
                  election of clause (a) of Section 3.4.3 shall not preclude
                  Santarus from any activities involving a       ***      ,
                  but rather that the penalties to Santarus for such
                  activities will not be reduced in accordance with clause (b)
                  of Section 3.4.3.

         3.4.4    In the event that the development or commercialization of the
                  Omeprazole Product becomes materially impractical or
                  impossible for any clinical, legal or regulatory reason, then
                  Santarus may make, distribute, market and otherwise
                  commercialize a product utilizing the Santarus Patent Rights
                  and a proton pump inhibitor other than Omeprazole, and such
                  product shall be treated as the "Omeprazole Product" for
                  purposes of this Section 3.4.

         3.4.5                        ***
                                      ***
                                      ***
                       ***                       In the event Santarus is
                  compelled by a final judgment or determination rendered
                  pursuant to legal or regulatory process to enter into a
                  license or other collaboration with any Third Party as
                  contemplated in this Section,
                                       ***
                                       ***
                  In the event Santarus enters into a license or other
                  collaboration with any Third Party for

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                  the purpose of resolving material legal and regulatory issues
                  and/or disputes, but without the compulsion of a final
                  judgment or determination as set forth in the preceding
                  sentence
                                       ***
                          ***                          The provisions of Section
                  3.4.2 shall apply to any reduced royalty payable by TAP as a
                  result of Santarus' grant of a compulsory license in the event
                  of any subsequent Additional Product or Additional Products.
                  In no event shall the operation of this Section 3.4 in
                  conjunction with Section 3.3.5 entirely eliminate the
                  requirement to pay royalties hereunder.

         3.4.6    For the purpose of clarity, the Parties agree that Santarus
                  shall be deemed to be conducting activities "on its own" in
                  any collaboration with a Third Party where the Third Party
                  does not have primary responsibility or equal responsibility
                  with Santarus for the sales and marketing of a product, such
                  that Santarus may elect to engage Third Parties to manufacture
                  and/or distribute such product with such activities still
                  being considered "on its own."

3.5      LATE PAYMENTS. In the event that any payment due under this Agreement
         is not made when due, the payment shall accrue interest from the date
         due through and including the date upon which the Party has collected
         immediately available funds in an account designated by the Party at a
         rate equal to the sum of        ***        plus the prime rate of
         interest quoted in the Money Rates section of The Wall Street Journal,
         calculated daily on the basis of a 360-day year; provided, that in no
         event shall such rate exceed the maximum applicable legal annual
         interest rate. The payment of such interest shall not limit a Party
         from exercising any other rights it may have as a consequence of the
         lateness of any payment.

3.6      U.S. FUNDS. Each payment pursuant to this Agreement shall be paid in
         U.S. currency by wire transfer in immediately available funds to an
         account designated by the receiving party, or by other mutually
         acceptable means. If a payment due date is not otherwise specified in
         this Agreement, payment shall be made within thirty (30) days after
         receipt of the relevant invoice.

3.7      RECORDS AND AUDITS. TAP shall keep for      ***        from the date of
         each payment hereunder complete and accurate records of sales, costs
         and all other information reasonably necessary to calculate and verify
         the accuracy of any payments under this Section 3. Santarus shall have
         the right through an independent, certified public accountant
         reasonably acceptable to TAP to audit such records at the place or
         places of business where such records are customarily kept in order to
         verify the accuracy of the payments actually made. If requested by TAP
         such independent, certified public accountant shall execute an
         appropriate confidentiality agreement to conduct the audit. Such audits
         may be exercised         ***         during normal business hours upon
         fifteen (15) days' advance written notice. Santarus shall bear the full
         cost of such audit unless such audit discloses that TAP has underpaid
         more than       ***        of the amount of the payment due under this
         Agreement, in which event, TAP shall bear the full cost of such audit.
         Santarus and its auditors may not disclose any information concerning
         such payments and reports, and all such information shall be considered
         the Confidential Information of TAP, except to the extent necessary for
         Santarus to reveal such information in order to enforce its rights
         under this Agreement or if disclosure is required by law. Any amounts
         that are determined to be due and owing by TAP following such audit
         shall be paid within thirty (30) days thereafter, together with
         interest thereon (as determined in accordance with Section 3.5).

3.8      WITHHOLDING TAXES. Where any sum payable to Santarus hereunder is
         subject to any withholding or similar tax, the parties shall use their
         best efforts to do all such acts and things and to sign all such
         documents as will enable them to take advantage of any applicable
         double taxation agreement or treaty. In the event there is no
         applicable double

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                                     Page 10

<PAGE>

         taxation agreement or treaty, or if an applicable double taxation
         agreement or treaty reduces but does not eliminate such withholding or
         similar tax, TAP shall pay such withholding or similar tax to the
         appropriate government authority, deduct the amount paid from the
         amount due Santarus and secure and send to Santarus the best available
         evidence of such payment.

                                    SECTION 4

                           TAKEDA OPTION FOR LICENSE

4.1      OPTION GRANT.    Provided that the payments due under Section 3 have
         been made and TAP is otherwise in compliance with the provisions of
         this Agreement, and subject to the terms of this Section 4, then during
         the term of this Agreement, Takeda shall have an option (the "Takeda
         Option") to receive a license, sole and exclusive with respect to
         Lansoprazole and non-exclusive with respect to Lansoprazole
         Derivatives, with right to sublicense, under the Santarus Patent
         Rights, to make, have made, use, sell, offer to sell and import
         Licensed Product to the extent permitted by law solely within the Field
         of Use and solely within the Rest of World, which option shall be
         exercisable in accordance with Section 4.2 below and Exhibit C hereto.

4.2      OPTION EXERCISE. The Takeda Option shall be exercisable by Takeda from
         the Effective Date until *** from the date that is the later of (i) the
         *** and (ii) ***. Santarus shall promptly notify Takeda of (i) the date
         of issuance of a notice of allowance by *** and (ii) the date of
         issuance of a decision to grant a patent pursuant to ***, which notice
         in each case shall be accompanied by relevant documents, so that Takeda
         may be informed of the dates of issuance mentioned in the preceding
         sentence. In the event the *** has not occurred by ***, then the Takeda
         Option shall be of no force and effect. If Takeda elects to exercise
         the Takeda Option, it shall provide written notice to Santarus thereof,
         and Takeda and Santarus shall enter into good faith negotiations of the
         terms of the license, provided that such license agreement shall
         include, without limitation, terms and conditions substantially similar
         to those described in Exhibit C hereto. In the event that Takeda does
         not exercise the Takeda Option in accordance with its terms, TAP will
         provide Santarus with all clinical and regulatory data (except with
         respect to proprietary information regarding bulk Lansoprazole and
         Lansoprazole other than the Licensed Product) and marketing data in
         TAP's or its Affiliates' or contractors' possession (to the extent such
         data were generated for or on behalf of TAP) and relating specifically
         to Licensed Products that would be reasonably useful to Santarus for
         development and commercialization of products under the Santarus Patent
         Rights.

                                   SECTION 5

                             DILIGENCE REQUIREMENTS

5.1                               ***                         .  TAP will use
         ***           to (a) meet the requirements set forth in Exhibit D; (b)
         develop, manufacture and sell the Licensed Product and to market the
         same after appropriate regulatory approvals have been achieved and (c)
         pursue all necessary governmental approvals where Licensed Products are
         manufactured, used or sold. Without limiting the generality of the
         foregoing, TAP agrees to       ***
                                        ***
                              ***

5.2      FAILURE TO FILE NDA OR CONDUCT DILIGENCE. If TAP fails to file an NDA
         for a Licensed Product by       ***       in the United States, then
         Santarus will have the right and option, with respect to the Territory
         and subject to Section 13.1, to reduce the exclusive license granted to
         TAP to non-exclusive or to terminate this Agreement in accordance with
         Section 5.3 below; provided, however, that TAP may          ***

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                                     Page 11

<PAGE>
                                       ***
                      ***            The exercise of this right and option by
         Santarus supercedes the rights granted in Section 2.

5.3      TERMINATION RIGHT. In the event that TAP has materially failed to
         comply with its obligations under Section 5.1 or 5.2 above and does not
         remedy such failure within sixty (60) days following receipt of written
         notice from Santarus, Santarus may, by delivering thirty (30) days
         prior written notice to TAP (the "Default Notice") (such sixty (60) and
         thirty (30) day periods to run consecutively and not concurrently),
         terminate this Agreement or reduce the exclusive licenses granted to
         TAP to non-exclusive in each country in the Territory; provided,
         however, that if TAP disagrees that it has materially failed to comply
         with such obligations, or that it has failed to remedy such failure,
         TAP may initiate an alternative dispute resolution proceeding in
         accordance with Section 13.1 within thirty (30) days following receipt
         of the Default Notice, in which case the Default Notices shall be null
         and void and this Agreement and TAP's exclusive licenses hereunder
         shall remain in effect. If, in the alternative dispute resolution
         proceeding to determine whether TAP has materially failed to comply
         with its diligence obligations or failed to remedy such failure, the
         Neutral rules that TAP has committed a material breach and has failed
         to remedy such breach, (a "TAP Adverse Ruling"), such ruling shall
         include a specific remedy for such breach and a time period for
         compliance with such remedy, provided that the ruling may permit the
         immediate termination of this Agreement or the immediate reduction of
         the exclusive licenses to non-exclusive. In the event the ruling
         provides some period of time for compliance by TAP and TAP fails to
         comply with the terms of the TAP Adverse Ruling within the time period
         specified, then Santarus may terminate this Agreement or reduce the
         exclusive licenses granted to TAP to non-exclusive by giving written
         notice to TAP. For the purpose of clarity, the Parties agree that in
         the event Santarus reduces the exclusive license granted to TAP to
         non-exclusive for any country under this Section 5.3, then the
         provisions in Section 3.4 with respect to the reduction of milestone
         and royalty payments for any such country shall be of no force and
         effect. For the purpose of clarity, the Parties acknowledge and agree
         that the filing by TAP of an NDA by *** shall not, in and of itself,
         show commercially reasonable efforts to conduct diligence.

5.4      PROGRESS REPORTS. At least once every calendar quarter, and upon the
         completion of any diligence milestone, TAP will submit to Santarus a
         progress report covering in reasonable detail (i) activities by TAP
         related to the diligence milestones, including development and testing
         of Licensed Product, (ii) the obtaining of governmental approvals
         necessary for marketing Licensed Product and (iii) the current sales
         forecasts for Licensed Product and, to the extent of any material
         changes from the prior forecasts provided, the justification and
         explanation for such changes.

                                   SECTION 6

                              INTELLECTUAL PROPERTY

6.1      FILING, PROSECUTION AND MAINTENANCE OF PATENTS. Santarus shall have the
         right to prepare, file, prosecute and maintain in such countries as it
         deems appropriate in its discretion, patent applications and patents,
         and to conduct any interferences, re-examinations, reissues,
         oppositions or requests for patent term extension or governmental
         equivalents thereto within the Santarus Patent Rights, and TAP shall
         give reasonable cooperation in connection therewith. Notwithstanding
         the above, TAP shall be given reasonable opportunity to comment on
         actions taken by Santarus with regard to Santarus Patent Rights in the
         Field of Use and Territory, and Santarus shall reasonably consider all
         such comments. TAP shall promptly reimburse Santarus for      ***
         of the expenses of such prosecution and maintenance actually paid by
         Santarus within the Territory to the extent that Santarus has not been
         reimbursed by any Third Party for such expenses. Santarus shall in good
         faith use reasonable efforts to optimize the breadth of protection of
         the Santarus Patent Rights in such a manner as to protect and broaden
         the scope of TAP's license under Section 2.1.

6.2      ENFORCEMENT. If any Santarus Patent Right is infringed by a Third Party
         in the Territory during the term of this Agreement, the Party to this
         Agreement first having knowledge of such infringement shall promptly
         notify the other in writing. The notice shall set forth the perceived
         facts of such infringement in reasonable detail. Santarus shall have
         the primary right, but not the obligation, to institute, prosecute and
         control any action or proceeding by its own counsel with respect to
         infringement or misappropriation of such Santarus Patent Rights and TAP
         shall have the right, at its own expense, to be represented in such
         action by its own counsel. If Santarus shall fail to bring such action
         or proceeding within a period of one hundred twenty (120) days after
         receiving written notice from TAP or otherwise having knowledge of such
         infringement (or an appropriate lesser period of time if such one
         hundred twenty day period would result in material harm to, or the loss
         of a material right of, TAP, e.g., in the case of the filing of a

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                                     Page 12
<PAGE>

         paragraph (IV) certification pursuant to 21 USC 355(j)(2)(A)(vii)(IV)
         by one or more Third Parties), and the infringement relates to the
         Field of Use and Territory, then TAP shall have the right to bring and
         control any such action by counsel of its own choice, and Santarus
         shall have the right, at its own expense, to be represented in any such
         action or proceeding. In any event, each Party agrees to be joined as a
         party plaintiff if required by law to maintain the action or if
         reasonably requested and, in any event, to give the non-joined Party
         reasonable assistance and authority to file and to prosecute such suit.
         The costs and expenses of all suits brought by either Party under this
         Section shall be reimbursed to both Parties out of any damages or other
         monetary awards recovered therein in favor of Santarus and TAP. Any
         remaining damages awarded for merits brought by Santarus shall be
         provided to Santarus, unless the infringement specifically relates to
         the Field of Use. Any remaining damages awarded for suits brought by
         either Party when the infringement specifically relates to the Field of
         Use shall be treated as Net Sales except that any damages denominated
         as punitive or exemplary shall be evenly divided between the Parties.
         No settlement or consent judgment or other voluntary final
         disposition of a suit under this Section may be entered into without
         the joint consent if TAP and Santarus (which consent shall not be
         unreasonably withheld, conditioned or delayed). Notwithstanding the
         above, in the event that a Licensed Product is covered only by patents
         within the Santarus Patent Rights (without regard to the Takeda
         Patent), Santarus shall not be permitted to enforce all such patents
         against a Third Party, where the possibility exists that, as a result
         of such enforcement, a Licensed Product could be deprived wholly of the
         protection of the Santarus Patent Rights, without the prior written
         consent of TAP, which consent shall not be unreasonably withheld or
         delayed. For the purpose of clarity the Parties agree that Santarus
         may, in each case, enforce all but one patent within the Santarus
         Patent Rights covering a Licensed Product without prior written consent
         of TAP.

6.3      INFRINGEMENT ACTIONS BY THIRD PARTIES. If a Party, or to its knowledge,
         any of its sublicensees or customers shall be sued by a Third party for
         infringement of a patent because of the development, manufacture, use
         or sale of Licensed Products, such Party shall promptly notify the
         other in writing of the institution of such suit. The Party sued shall
         control the defense of such suit at its own expense; provided, however,
         if the Party being sued is being indemnified for such claim by the
         other Party, then the indemnifying Party shall have the right to
         control the defense of the claim in accordance with Section 9. Each
         Party shall cooperate fully in the defense of such suit and shall
         furnish to the other Party all evidence and assistance in its control.
         The Party sued shall make a preliminary decision to defend or not
         defend its interests in such suit and shall so notify the other Party
         in writing of its decision within         ***        days of the
         institution of such a suit. If a Party after electing to defend a suit
         should at any time elect to drop such defense, said Party shall
         immediately notify the other Party in writing and permit such other
         Party to control the suit at such other Party's expense, in the name of
         the Party initiating the defense. If the Party sued notifies the other
         Party in writing per the above that it shall not defend or continue the
         defense of such a suit, then the other Party shall have the right, but
         not the obligation, to defend its interests in such a suit, and shall
         have the right to litigate, settle or otherwise dispose of such suit as
         it sees fit, provided, however, that TAP may not settle such suit in a
         manner that would materially impact or adversely affect the Santarus
         Patent Rights. Any judgments, settlements or damages payable with
         respect to legal proceedings covered by this Section 6.3 shall be paid
         by the Party which controls the litigation, subject to any claims
         against the other Party for breach of or indemnification under this
         Agreement or otherwise available at law or in equity.

6.4      CERTIFICATION UNDER DRUG PRICE COMPETITION AND PATENT TERM RESTORATION
         ACT. Each Party shall promptly give written notice to the other of any
         certification of which it becomes aware filed pursuant to 21 U.S.C.
         Sections 355(b)(2)(A)(iv) and 355(j)(2)(A)(vii) affecting the Santarus
         Patent Rights.

6.5      PATENT TERM RESTORATION. The Parties hereto shall give reasonable
         cooperation to each other in obtaining patent term restoration or
         supplemental protection certificates or their equivalents in any
         country in the Territory where applicable to the Licensed Products.

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<PAGE>

                                    SECTION 7

                    REPRESENTATIONS, WARRANTIES AND COVENANTS

7.1      REPRESENTATIONS AND WARRANTIES. Each Party represents and warrants to
         the other that:

         7.1.1    CORPORATE POWER: It is duly organized and validly existing
                  under the laws of its state of incorporation, and has full
                  corporate power and authority to enter into this Agreement and
                  to carry out the provisions hereof.

         7.1.2    DUE AUTHORIZATION: It is duly authorized to execute and
                  deliver this Agreement and to perform its obligations
                  hereunder, and any person executing this Agreement on its
                  behalf has been duly authorized to do so by all requisite
                  corporate action.

         7.1.3    BINDING AGREEMENT: This Agreement is legally binding upon such
                  Party and enforceable in accordance with its terms, subject to
                  the effects of bankruptcy, insolvency or other laws of general
                  application affecting the enforcement of creditor rights and
                  judicial principles affecting the availability of specific
                  performance and general principles of equity whether
                  enforceability is considered a proceeding at law or equity.
                  The execution, delivery and performance of this Agreement by
                  it does not conflict with any material agreement, instrument
                  or understanding, oral or written, to which it is a party or
                  by which it may be bound, nor violate any material law or
                  regulation of any court, governmental body or administrative
                  or other agency having jurisdiction over it.

         7.1.4    INTELLECTUAL PROPERTY RIGHTS: To the best of its knowledge, it
                  has sufficient legal and/or beneficial title and ownership
                  under its intellectual property rights necessary for it to
                  fulfill its obligations under this Agreement.

7.2      REPRESENTATIONS AND WARRANTIES OF SANTARUS. Santarus represents and
         warrants that: (a) to its knowledge, there are no suits, claims or
         proceedings pending or threatened against Santarus or any of its
         Affiliates or the University in any court or before any governmental
         body or agency with respect to Santarus' Patent Rights or the making,
         having made, using, selling, offering for sale, or importing product
         using technology covered by the Santarus Patent Rights; (b) Santarus
         Patent Rights have not been obtained through any fraudulent activity or
         misrepresentation; (c) to its knowledge, there are no Third Party
         patents that would adversely effect TAP's ability to market or sell a
         Licensed Product; and (d) neither Santarus nor, to its knowledge, the
         University has taken any action to permit or neglected to take any
         action required in order to prevent the exercise by the U.S. Government
         of any rights it may have with respect to the Santarus Patent Rights to
         the detriment of TAP and Santarus will not take any action to permit or
         neglect to take any action required in order to prevent such exercise.

7.3      DISCLAIMER OF WARRANTIES. EXCEPT AS EXPRESSLY SET FORTH IN THIS
         AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATION OR WARRANTY TO THE
         OTHER PARTY OF ANY KIND, AND HEREBY DISCLAIMS ALL WARRANTIES, EXPRESS
         OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF
         NON-INFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
         Without limiting the generality of the foregoing, each Party expressly
         does not warrant (a) the safety or usefulness for any purpose of the
         Technology it provides hereunder or (b) that any patent will issue
         based upon any pending patent application, or that any such patent
         which issues will be valid.

                                     Page 14

<PAGE>

7.4          ***     .  Santarus agrees that TAP and its distributors may   ***
                                       ***
                                       ***
                                       ***
             ***    TAP agrees that it shall notify all appropriate personnel in
         writing that, after     ***      they shall not distribute to any Third
         Party any written materials or provide verbal instructions regarding
               ***
                         ***                  and shall take other reasonable
         measures to effectuate the foregoing provided, that nothing in this
         Section 7.4 shall be deemed to limit TAP's right to develop and market
         a Licensed Product         ***       TAP agrees that it shall not, and
         shall not allow its Affiliates to, distribute any written materials or
         provide verbal instructions in the Territory regarding      ***
                                       ***
         Notwithstanding anything else, the royalty rates in Section 3.3.2(b)
         shall in all cases apply to Net Sales of Licensed Product     ***

7.5      NOTIFICATION OF CERTAIN EVENTS. Santarus shall promptly notify TAP and
         Takeda in the event that (i) Santarus's board of directors determines
         to pursue discussions with respect to a bona fide written offer
         received from a third party to acquire all or substantially all of the
         assets or business of Santarus or the assets to which the license under
         Section 2.1 relates or (ii) Santarus's board of directors determines to
         pursue a Qualified Equity Financing. "Qualified Equity Financing" means
         an equity financing (excluding, for the purpose of clarity, any
         issuance of options or warrants to employees, directors and consultants
         in the ordinary course of business) (a) in which shares of Santarus's
         capital stock or evidence of indebtedness that is convertible into
         Santarus's capital stock are issued or transferred and Santarus
         receives at least Two Million Dollars ($2,000,000) in cash in proceeds,
         or (b) in which shares of Santarus's capital stock or evidence of
         indebtedness that is convertible into Santarus's capital stock are
         issued or transferred and a third party acquires a majority of the
         voting interests in Santarus. Notwithstanding the foregoing, this
         Section 7.5 shall not apply as long as Santarus's capital stock
         continues to be listed on any stock exchange or the like in the United
         States following an initial public offering of Santarus's capital
         stock. The provision and contents of any notice by Santarus under this
         Section 7.5 shall be deemed to be the Confidential Information of
         Santarus.

                                    SECTION 8

                             LIMITATION OF LIABILITY

NEITHER PARTY SHALL BE ENTITLED TO RECOVER FROM THE OTHER PARTY ANY SPECIAL,
INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES, INCLUDING WITHOUT
LIMITATION, LOST PROFITS, IN CONNECTION WITH THIS AGREEMENT OR ANY LICENSE
GRANTED HEREUNDER, REGARDLESS OF ANY NOTICE OF THE POSSIBILITY OF SUCH DAMAGES.
FOR THE PURPOSE OF CLARITY, NOTHING IN THIS SECTION IS INTENDED TO LIMIT THE
INDEMNIFICATION OBLIGATIONS OF ANY PARTY WITH RESPECT TO THE CHARACTERIZATION OF
ANY CLAIM BY A THIRD PARTY OR AFFILIATE AS SPECIAL, INDIRECT, INCIDENTAL,
CONSEQUENTIAL OR PUNITIVE DAMAGES.

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                                    SECTION 9

                                 INDEMNIFICATION

9.1      INDEMNIFICATION BY TAP. TAP hereby agrees to defend, indemnify and hold
         harmless Santarus and its officers, directors, employees, consultants
         and agents from and against any and all suits, claims, actions,
         demands, liabilities, expenses and or losses, including reasonable
         attorneys' fees and other costs of defense ("Claims") (a) resulting
         directly or indirectly from the manufacture, use, handling, storage,
         sale or other disposition of Licensed Product by TAP, its Affiliates,
         agents or sublicensees, but only to the extent such Claims do not
         result from the negligence or intentional misconduct of, or material
         breach of this Agreement by Santarus, (b) resulting directly from a
         breach of this Agreement by TAP, or (c) resulting directly from the
         negligence or intentional misconduct of TAP, its officers, directors,
         employees, contractors or agents.

9.2      INDEMNIFICATION BY SANTARUS. Santarus hereby agrees to defend,
         indemnify and hold harmless TAP and its officers, directors, employees,
         consultants and agents from and against any and all Claims resulting
         directly from a breach of this Agreement by Santarus or resulting
         directly from the negligence or intentional misconduct of Santarus, its
         officers, directors, employees, contractors or agents.

9.3      NOTIFICATION AND DEFENSE. In the event a Party seeks indemnification
         under this Section 9, it shall inform the indemnifying Party of a Claim
         as soon as reasonably practicable after it becomes aware of any Third
         Party Claim, shall permit the indemnifying Party to assume direction
         and control of the defense of the Claim (including the right to settle
         the Claim solely for monetary consideration), and shall cooperate as
         requested (at the expense of the indemnifying Party) in the defense of
         the Claim. Except with the prior written consent of the indemnified
         Party, which consent shall not be unreasonably withheld, the
         indemnifying Party may not enter into any settlement of such litigation
         unless such settlement includes an unqualified release of the
         indemnified Party.

                                   SECTION 10

                                 CONFIDENTIALITY

10.1     UNDERTAKING; EXCEPTIONS. Except to the extent expressly authorized by
         this Agreement or otherwise agreed in writing by the Parties, the
         Parties agree that, for *** after the longer of the term of this
         Agreement and the term of any license entered into between Santarus and
         Takeda with respect to the Santarus Patent Rights, the receiving Party
         (the "Receiving Party") shall keep confidential and shall not publish
         or otherwise disclose and shall not use for any purpose other than as
         provided for in this Agreement any information furnished to it by the
         other Party (the "Disclosing Party") pursuant to this Agreement (the
         "Confidential Information") unless the Receiving Party can demonstrate
         by written proof that such Confidential Information:

         10.1.1   was already known to the Receiving Party, other than under an
                  obligation of confidentiality, at the time of disclosure by
                  the Disclosing Party;

         10.1.2   was generally available to the public or otherwise part of the
                  public domain at the time of its disclosure to the Receiving
                  Party;

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                                     Page 16

<PAGE>

         10.1.3   became generally available to the public or otherwise part of
                  the public domain after its disclosure and other than through
                  any act or omission of the Receiving Party in breach of the
                  Agreement;

         10.1.4   was disclosed to the Receiving Party, other than under an
                  obligation of confidentiality to a Third Party not to disclose
                  such information to others; or

         10.1.5   was independently discovered or developed by the Receiving
                  Party without the use of Confidential Information belonging to
                  the Disclosing Party.

10.2     AUTHORIZED DISCLOSURE. Each Party may disclose Confidential Information
         belonging to the other Party to the extent such disclosure is
         reasonably necessary in the following instances:

                  (a)      filing or prosecuting patent applications under this
                           Agreement;

                  (b)      regulatory filings (including filings with the SEC);

                  (c)      prosecuting or defending litigation;

                  (d)      complying with applicable governmental regulations;

                  (e)      complying with the order of any court or other
                           governmental or regulatory body having jurisdiction;

                  (f)      conducting preclinical or clinical trials of Licensed
                           Products;

                  (g)      disclosure to Affiliates, sublicensees of TAP,
                           employees, consultants or agents who are bound by
                           similar terms of confidentiality and non-use at least
                           equivalent in scope to those set forth in this
                           Section 10;

                  (h)      with respect to Santarus as the Receiving Party,
                           Santarus may disclose the terms of the Agreement to
                           the University as necessary to comply with
                           contractual obligations in place as of the Effective
                           Date.

         Notwithstanding the foregoing, in the event a Party is required to make
         a disclosure of the other Party's Confidential Information pursuant to
         this Section 10.2 such Party will, except where impracticable, give
         reasonable advance notice to the other Party of any disclosure required
         under (e) above and use reasonable and diligent efforts to secure
         confidential treatment of such information. In any event, the Parties
         agree to take all reasonable action to avoid disclosure of Confidential
         Information hereunder.

10.3     EXISTENCE AND TERMS OF AGREEMENT. The Parties agree that the fact of
         the existence of this Agreement, the terms and conditions hereof and
         all activities contemplated or performed hereunder are the Confidential
         Information of the other Party and shall not be disclosed to any third
         party in any manner whatsoever, including without limitation, by way of
         news articles, public announcements or disclosures, except pursuant to
         an authorized disclosure under Section 10.2 or 10.4 and to bona fide
         potential investors, acquirers, underwriters for a financing
         transaction and financial advisors.

10.4     PUBLICITY. The Parties will issue a joint press release announcing the
         execution of this Agreement in substantially the form attached hereto
         as Exhibit E on or shortly following the Effective Date

                                    Page 17
<PAGE>

         and may desire or be required to issue subsequent press releases
         relating to the Agreement or activities thereunder. The Parties shall
         consult with each other reasonably and in good faith and agree with
         respect to the text and timing of such press releases prior to the
         issuance thereof, provided that a Party may not unreasonably withhold
         consent to or delay of such releases.

                                   SECTION 11

                                  PUBLICATIONS

11.1     NOTICE OF PUBLICATION. During the term of this Agreement, each Party
         acknowledges the other's interest in publishing certain of its results
         to obtain recognition within the scientific community and to advance
         the state of scientific knowledge and in obtaining valid patent
         protection and protecting business interests.      ***

                                       ***
                                       ***
                                       ***

                                    ***     In all instances, the non-publishing
Party shall have the right (a) to propose modifications to the publication for
patent or trade secret reasons and (b) to request, in writing, a reasonable
delay in or avoidance of publication in order to protect patentable information
and trade secrets, the disclosure of which would materially affect the interests
of the requesting Party.

11.2     TIMING OF PUBLICATION. If the non-publishing Party requests such a
         delay or avoidance, the publishing party shall delay submission or
         presentation of the publication for a period of     ***     or such
         lesser period as may be sufficient to enable modification as provided
         in Section 11.1 or file patent applications protecting each party's
         rights in such information to be filed. Upon the expiry of     ***
         from transmission to the non-publishing Party, the publishing Party
         shall be free to proceed with the written publication or the
         presentation, as applicable, unless the non-publishing Party has
         requested the delay or avoidance described above.

                                   SECTION 12

                              TERM AND TERMINATION

12.1     TERM. This Agreement shall commence as of the Effective Date and shall
         continue in each country in the Territory until the last day of the
         Royalty Term with respect to such country, unless terminated earlier as
         provided herein.

12.2     TERMINATION FOR CAUSE. Subject to Section 13.1, either Party may
         terminate this Agreement prior to the expiration of the term of this
         Agreement upon the occurrence of any of the following:

         12.2.1   upon or after the bankruptcy, insolvency, dissolution or
                  winding up of the other Party; or

         12.2.2   upon or after the breach of any material provision of this
                  Agreement by the other Party if the breaching Party has not
                  cured such breach within sixty (60) days after written notice
                  thereof by the non-breaching Party.

12.3     TERMINATION AT WILL. TAP may terminate this Agreement at any time after
         completion of a PK/PD study in human subjects with a Licensed Product
         upon sixty (60) days prior written notice to Santarus. In the event of
         any such termination, TAP will provide Santarus with all clinical and
         regulatory data (except with respect to proprietary information
         regarding bulk Lansoprazole and Lansoprazole other than the Licensed
         Product) and marketing data in TAP's, its Affiliates' or contractors'
         possession (to the extent such data were generated for or on behalf of
         TAP) and relating specifically to Licensed Products

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                                    Page 18
<PAGE>

         that would be reasonably useful to Santarus for development and
         commercialization of products under the Santarus Patent Rights.

12.4     REMEDY IN LIEU OF TERMINATION. In the event that Santarus commits a
         material breach of this Agreement and fails to remedy such breach
         within sixty (60) days following receipt of written notice from TAP of
         such breach, TAP may, by delivering thirty (30) days prior written
         notice to Santarus (the "Escrow Notice") (such sixty (60) and thirty
         (30) day  periods to run consecutively and not concurrently), place any
         payments due to Santarus into an escrow account with a commercial bank
         until such time as Santarus cures the breach; provided, however, that
         if Santarus disagrees that it has committed a material breach of this
         Agreement, or that it has failed to remedy such breach, Santarus may
         initiate an alternative dispute resolution proceeding in accordance
         with Section 13 within thirty (30) days following receipt of the Escrow
         Notice, in which case the Escrow Notice shall be null and void and
         TAP's payment obligations to Santarus shall remain in effect. If, in
         the alternative dispute resolution proceeding to determine whether
         Santarus has committed a material breach of this Agreement or whether
         Santarus has failed to remedy such breach, the Neutral rules that
         Santarus has committed a material breach and has failed to remedy such
         breach, (a "Santarus Adverse Ruling"), which ruling shall include a
         specific remedy for such breach and a time period for compliance with
         such remedy, and Santarus has failed to comply with the terms of the
         Santarus Adverse Ruling within the time period specified, then TAP
         shall have the following rights:

         12.4.1   where Santarus has failed to comply with a Santarus Adverse
                  Ruling and where such ruling required the payment of monetary
                  damages, then TAP shall have a right of set-off against any
                  payments due to Santarus or shall, at TAP's option, have a
                  right to collect such sums from Santarus; and

         12.4.2   where Santarus failed to comply with a Santarus Adverse Ruling
                  and where such ruling required Santarus to take any action or
                  cease any action, then TAP may, by providing written notice to
                  Santarus after the expiration of the time period by which
                  Santarus was to comply with the Santarus Adverse Ruling, place
                  any payments due to Santarus into an escrow account with a
                  commercial bank until such time as Santarus complies with the
                  Santarus Adverse Ruling; provided, however, that

                  (a)      if Santarus fails to comply with the Santarus Adverse
                           Ruling within sixty (60) days following the
                           expiration of the time period specified for
                           compliance, and such failure is not excused pursuant
                           to Section 13.4, then TAP may keep all sums in the
                           escrow account and shall make no further payments to
                           Santarus until such time as Santarus has sought and
                           been granted relief from this Section 12.4.2(a)
                           through a further alternative dispute resolution
                           proceeding; and

                  (b)      if Santarus complies with the Santarus Adverse Ruling
                           within sixty (60) days following the expiration of
                           the time period specified for compliance, then
                           Santarus shall keep all sums in the escrow account
                           and TAP shall resume payments to Santarus under this
                           Agreement, less all costs and expenses incurred by
                           TAP in connection with the alternative dispute
                           resolution proceeding and awarded to TAP in
                           accordance with the terms of the dispute resolution
                           process.

                                    Page 19
<PAGE>

12.5     EFFECT OF EXPIRATION OR TERMINATION.

         12.5.1   Upon termination of this Agreement pursuant to Section 12.2 or
                  12.3 (i) all rights under the licenses granted hereunder shall
                  automatically terminate, (ii) any sublicenses (but not any
                  liabilities accrued to date) granted hereunder by TAP to Third
                  Parties shall remain in effect, but shall be assigned to
                  Santarus and TAP shall have no further rights or obligations
                  (except with respect to liabilities accrued to date)
                  thereunder.

         12.5.2   Expiration or termination of this Agreement shall not relieve
                  the Parties of any obligation accruing prior to such
                  expiration or termination. Except as set forth below or
                  elsewhere in this Agreement, any accrued rights to payment and
                  the obligations and rights of the Parties under Sections 1,
                  3.7, 6.2, 6.3, 8, 9, 10, 11 and 13 shall survive expiration or
                  termination of this Agreement.

         12.5.3   Within thirty (30) days following the termination of this
                  Agreement, except to the extent and for so long as a Party is
                  entitled to retain license rights under this Agreement, each
                  Party shall deliver to the other Party any and all
                  Confidential Information, and any copies thereof, of the other
                  Party in its possession, except that the Party will be
                  entitled to retain one (1) copy of all documents in its legal
                  archives. In addition, within thirty (30) days following the
                  termination of this Agreement by Santarus pursuant to Section
                  12.2 or by TAP pursuant to Section 12.3, TAP shall provide
                        ***       relating specifically to the Licensed Product
                  and reasonably necessary or useful to assist or enable
                  Santarus to comply with applicable requirements of regulatory
                  agencies and to assist Santarus, to the extent reasonably
                  possible, in obtaining regulatory clearances and permits
                  similar to those received by TAP and relating specifically
                  to the Licensed Products.

                                   SECTION 13

                                  MISCELLANEOUS

13.1     DISPUTE RESOLUTION PROCESS. Any disputes that arise under this
         Agreement shall be resolved in accordance with the dispute resolution
         process set forth in Exhibit F hereto, and no Party may terminate this
         Agreement (except pursuant to Section 12.3) without the other Party
         first having recourse to such alternative dispute resolution.

13.2     GOVERNING LAW, AND JURISDICTION. This Agreement shall be governed and
         construed in accordance with the laws of the State of New York without
         regard to the conflicts of laws provisions hereof and without regard to
         the United Nations Convention on Contracts for the International Sale
         of Goods. The sole jurisdiction and venue for actions to enforce
         compliance with, or any ruling made in accordance with the dispute
         resolution process set forth in Section 13.1 shall be the state and
         federal courts of the United States. Both Parties and Takeda consent to
         the jurisdiction of such courts and agree that process may be served in
         the manner allowed under state or federal law. In any action or
         proceeding to enforce rights under this Agreement, the prevailing party
         shall be entitled to recover costs and attorneys' fees.

13.3     ASSIGNMENT. Except as expressly provided hereunder, neither this
         Agreement nor any rights or obligations hereunder may be assigned or
         otherwise transferred by either Party without the prior

                                    Page 20

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>

         written consent of the other Party (which consent shall not be
         unreasonably withheld, conditioned or delayed); provided, however, that
         either Party may assign this Agreement and its rights and obligations
         hereunder without the other Party's consent in connection with the
         transfer or sale of all or substantially all of the business of such
         Party to which this Agreement relates to another Party, whether by
         merger, sale of stock, sale of assets or otherwise; provided, that, for
         purposes of clarity, intellectual property rights of a party to such
         transaction other than one of the initial Parties to this Agreement
         shall not be included in the technology licensed hereunder. The rights
         and obligations of the Parties under this Agreement shall be binding
         upon and inure to the benefit of the successors and permitted assigns
         of the Parties. Any assignment not in accordance with this Agreement
         shall be void.

13.4     FORCE MAJEURE. Neither Party shall be held liable or responsible to the
         other Party nor be deemed to have defaulted under or breached this
         Agreement for failure or delay in fulfilling or performing any term of
         this Agreement (other than non-payment) when such failure or delay is
         caused by or results from causes beyond the reasonable control of the
         affected Party, including, but not limited to, fire, floods, embargoes,
         war, acts of war (whether war be declared or not), insurrections,
         riots, civil commotions, strikes, lockouts or other labor disturbances,
         acts of God or acts, omissions or delays in acting by any governmental
         authority or the other Party.

13.5     SEVERABILITY. In case any provision of this Agreement shall be invalid,
         illegal or unenforceable, that provision shall be limited or eliminated
         to the minimum extent necessary so that this Agreement shall otherwise
         remain in full force and effect and enforceable.

13.6     NOTICE. All notices and other communications provided for hereunder
         shall be in writing and shall be delivered personally, by overnight
         delivery service or by facsimile, with confirmation of receipt,
         addressed as follows:

                    If to TAP, addressed to:

                           TAP Pharmaceutical Products Inc.
                           675 North Field Drive
                           Lake Forest, IL  60045
                           Attn: H. Thomas Watkins, President
                           Fax: (847) 582-5007
                           E-mail: tom.watkins@tap.com

                    with a copy to:

                           TAP Pharmaceutical Products Inc.
                           675 North Field Drive
                           Lake Forest, IL  60045
                           Attn: Senior Counsel
                           Fax: (847) 582-5007
                           E-mail: ken.greisman@tap.com

                                    Page 21
<PAGE>

                    If to Santarus, addressed to:

                         Santarus, Inc.
                         10590 West Ocean Air Drive, Suite 200
                         San Diego, California 92130
                         Attn: Gerald T. Proehl
                         Fax: (858) 314-5701
                         E-mail: gproehl@santarus.com

             with a copy to:

                         Brobeck, Phleger & Harrison LLP
                         12390 El Camino Real
                         San Diego, California 92130
                         Attn.  John de Groot, Esq.
                         Fax: (858) 720-2555
                         E-mail: jdegroot@brobeck.com

                     If to Takeda, addressed to:

                         Takeda Chemical Industries, LTD.
                         1-1, Doshomachi 4-Chome,
                         Chuo-Ku, Osaka 540-8645, Japan
                         Attn: Nobuya Oka, Pharmaceutical International Division
                         FAX: +81-6-6204-2943
                         E-mail: Oka_Nobuya@takeda.co.jp

               with a copy to:

                         Takeda Chemical Industries, LTD.
                         12-10, Nihonbashi 2-Chome,
                         Chuo-Ku, TOKYO 103-8668, Japan
                         Attn: Masayuki Ono,
                         Coordinator-Ethical Products Planning and Management
                           Dept. Pharmaceutical
                         Marketing Division
                         FAX: +81-3-3278-2354
                         E-mai1: Ono_Masayuki@takeda.co.jp

               with a copy to:

                         Takeda Chemical Industries, LTD.
                         1-1, Doshomachi 4-Chome,
                         Chuo-Ku, Osaka 540-8645, Japan
                         Attn: Senior Manager, Legal Department
                         FAX: +81-6-6204-2055
                         E-mail: Kisaka_Kazuyuki@takeda.co.jp

                                    Page 22
<PAGE>

         Either Party and Takeda may by like notice specify or change an address
         to which notices and communications shall thereafter be sent. Notices
         sent by facsimile shall be effective upon confirmation of receipt;
         notices sent by mail or overnight delivery service shall be effective
         upon receipt; notices via e-mail shall be effective if the recipient
         confirms receipt from the sender; and notices given personally shall be
         effective when delivered.

13.7     INDEPENDENT CONTRACTORS. It is expressly agreed that Santarus and TAP
         shall be independent contractors and that the relationship between the
         two Parties shall not mean that either has the authority to make any
         statement, representations or commitments of any kind on behalf of the
         other, or to take any action, which shall be binding on the other
         Party, without the prior written consent of the other Party.

13.8     ENTIRE AGREEMENT; AMENDMENT. This Agreement (including the exhibits
         attached hereto) sets forth all of the covenants, promises, agreements,
         warranties, representations, conditions and understandings between the
         Parties and Takeda hereto with respect to the subject matter hereof and
         supersedes and terminates all prior agreements and understandings
         between the Parties and Takeda; provided, however, that any
         nondisclosure agreement entered into by the Parties and Takeda shall
         remain in full force and effect in accordance with its terms.

         No subsequent alteration, amendment, change or addition to this
         Agreement shall affect the rights of any Party hereto or of Takeda
         unless reduced to writing and signed by the authorized officers of such
         Party and of Takeda, as applicable.

13.9     HEADINGS. The captions to the several Sections hereof are not a part of
         this Agreement, but are merely guides or labels to assist in locating
         and reading the several Sections hereof.

13.10    WAIVER. Except as specifically provided for herein, the waiver from
         time to time by either of the Parties of any of their rights or their
         failure to exercise any remedy shall not operate or be construed as a
         continuing waiver of same or of any other of such Party's rights or
         remedies provided in this Agreement.

13.11    COUNTERPARTS. This Agreement may be executed triplicate, each of which
         shall be deemed to be an original but all of which shall constitute one
         and the same Agreement.

                [Remainder of This Page Intentionally Left Blank]

                                    Page 23
<PAGE>

IN WITNESS WHEREOF, the Parties have executed this Agreement effective as of the
date first set forth above.

SANTARUS, INC.                                 TAP PHARMACEUTICAL PRODUCTS INC.

By: /s/ Gerald T. Proehl                       By: /s/ H. Thomas Watkins
    ----------------------------                   -----------------------------
Printed Name: Gerald T. Proehl                 Printed Name: H. Thomas Watkins
Title: President & CEO                         Title: President
Date:  June 27, 2002                           Date: June 25, 2002

TAKEDA CHEMICAL INDUSTRIES, LTD.
(with respect to the Sections specified above)

By: Signature illegible
    -------------------
Printed Name: Yoshihiro Narai
Title: Managing Director
Date:  June 27, 2002

                                    Page 24
<PAGE>

                                    EXHIBIT A

                             Santarus Patent Rights

                                       ***
                                       ***
                                       ***

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

                                    Page 25
<PAGE>

                                    EXHIBIT B

                                 Sales Forecast

                                       ***
                                       ***
                                       ***

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

                                    Page 26
<PAGE>

                                    EXHIBIT C

                              Takeda Option Terms

         1.       Geographic Region.  Takeda may elect to exercise the option
                  with respect to either or both of *** and the Rest of World
                  other than *** (each, a "Geographic Region").

         2.       Initial Payment.  With respect to the first Geographic Region,
                  Takeda shall pay to Santarus *** on the date of execution of
                  the license with respect to such Geographic Region; with
                  respect to the second Geographic Region that Takeda elects,
                  Takeda shall pay to Santarus *** on the date of execution of
                  the license with respect to such Geographic Region, provided,
                  that notwithstanding the foregoing, in the event that Takeda
                  has exercised its option with respect to either or both
                  Geographic Regions, the initial payment as set forth above
                  with respect to such Geographic Region or Regions shall be
                  paid no later than *** days after the last date upon which the
                  option may be exercised pursuant to Section 4.2 and, provided,
                  further, that if, prior to the expiration of such *** day
                  period, Takeda and Santarus agree to terminate the negotiation
                  on the license or if such negotiation may not be conducted or
                  consummated for reasons other than bad faith on the part of
                  Takeda, Takeda shall not be required to pay the applicable
                  initial payment(s) and, except for the case where such failure
                  to conduct or consummate the negotiations results from bad
                  faith on the part of Santarus, neither party will have any
                  obligation to further negotiate the license.

         3.       Milestone Payments.  Takeda shall pay Santarus the following
                  milestone payments in the event Takeda has been granted a
                  license for one or both Geographic Regions:

                     -In the event Takeda has been granted a license for both
                  Geographic Regions, then ***

                     -In the event Takeda has been granted a license for one of
                  the Geographic Regions, then ***

                         ***                                               ***

                         ***                                               ***

                         ***                                               ***

                         ***                                               ***

                         ***                                               ***

                         ***                                               ***

                               ***

         4.       Royalty Payments.  In the event the First Commercial Sale of
                  Licensed Product in a country in a Geographic Region occurs
                  prior to the date of the expiration of the Takeda Patent for
                  such country (the "Takeda Patent Expiration Date") or of any
                  extension thereof, the royalty rate for sales of Licensed
                  Product in such country shall be ***. Takeda represents that
                  the currently effective expiration dates and any anticipated
                  extensions for the Lansoprazole substance patents in Europe
                  and *** are set forth in Section 6 below. For purposes of
                  calculating royalty payments subsequent to the Takeda
                  Expiration Date in any country, the royalty rate shall be
                  based upon ***

                                    Page 27

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Confidential Treatment and filed separately with the Commission.
<PAGE>

                     ***

         5.       Diligence. The parties will agree upon diligence requirements,
                  including diligence requirements related to product
                  development and commercialization, and if such requirements
                  are not met, then Santarus may terminate the license agreement
                  with Takeda, and Takeda will share with Santarus all clinical
                  and regulatory data (except with respect to proprietary
                  information regarding bulk Lansoprazole and Lansoprazole other
                  than the Licensed Product) and marketing data in Takeda's, its
                  Affiliates' or contractors' possession (to the extent such
                  data were generated for or on behalf of Takeda) and relating
                  specifically to licensed products under the Takeda license
                  from Santarus that would be reasonably useful to Santarus for
                  development and commercialization of products under the
                  Santarus Patent Rights.

         6.       Patent Expiration Dates.

                                          ***
                                          ***
                                          ***

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

                                    Page 28
<PAGE>

                                    EXHIBIT D

                             Diligence Requirements

                                       ***
                                       ***
                                       ***

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

                                    Page 29
<PAGE>

                                    EXHIBIT E

                                  Press Release

Contacts for Santarus:
Debra P. Crawford
Vice President & CFO
858-314-5708
dcrawford@santarus.com

Pam Lord
Atkins+Associates
858-860-0266 x103
PLORD@ATKINSASSOCIATES.COM

FOR IMMEDIATE RELEASE - DRAFT

        SANTARUS AND TAP PHARMACEUTICAL PRODUCTS SIGN STRATEGIC LICENSE
                                   AGREEMENT

 Santarus' intellectual property targets development of next-generation therapy
                      for upper gastrointestinal diseases

SAN DIEGO, CA - Date, 2002 - Santarus, Inc., a specialty pharmaceutical company
developing therapies to prevent and treat gastrointestinal diseases and
disorders, announced today that it has granted a technology license to TAP
Pharmaceutical Products Inc. (TAP) for certain patent rights targeted at upper
gastrointestinal diseases.

Under the terms of the agreement, TAP has been granted North American rights to
manufacture and sell products resulting from the licensed technology. Inc1uding
the $8 million initial payment, the value of the deal to Santarus could exceed
$100 million (if multiple products are successfully developed and marketed).
Santarus will also receive royalties on any future sales of products that may be
commercialized by TAP. Santarus retained rights to use its intellectual property
to develop and commercialize related products.

"TAP is excited about the opportunity to develop improved product offerings
through the application of Santarus' intellectual property," said Rich
Masterson, Vice President of Licensing, TAP. "The signing of this agreement is
another example of TAP's continuing commitment to growing our presence in the
U.S. market through the development and commercialization of innovative,
patented products."

"We are thrilled to enter this agreement with TAP," stated Gerald T. Proehl,
President & CEO of Santarus. "The signing of this agreement is a significant
event for Santarus that demonstrates the potential value of our technology and
serves to better position us for future success."

Santarus is currently developing two of its own product candidates, Acitrel(TM)
and Rapinex(TM), derived from the licensed technology. Acitrel(TM) entered Phase
III clinical trials in May 2002, and Rapinex(TM) is positioned to enter Phase
III clinical trials in 2003.

                                    Page 30

<PAGE>

ABOUT TAP PHARMACEUTICAL PRODUCTS INC.

TAP Pharmaceutical Products Inc., located in Lake Forest, Ill., is a joint
venture between Abbott Laboratories, headquartered in Abbott Park, Ill., and
Takeda American Holdings Inc., a wholly owned subsidiary of Takeda Chemical
Industries, Ltd., of Osaka, Japan. TAP markets PREVACID(R) (lansoprazole),
Lupron Depot(R) (leuprolide acetate for depot suspension) and SPECTRACEF(TM)
(cefditoren pivoxil). For more information about TAP and its products, visit the
company's Web site at www.tap.com.

ABOUT SANTARUS, INC.

Santarus, Inc. is a privately held specialty pharmaceutical company focused on
acquiring, developing and commercializing products for the prevention and
treatment of gastrointestinal (GI) diseases and disorders. The company's primary
strategy is to develop and market proprietary products with new formulations,
enhanced delivery systems or expanded indications that are based on currently
marketed products or compounds that have clinically demonstrated safety and
efficacy. In addition to building its internal product portfolio, Santarus also
seeks out opportunities to in-license development stage and marketed GI
pharmaceutical products for clinical development and commercialization. Santarus
is based in San Diego, California. For more information, visit
http://www.santarus.com.

                                    Page 31
<PAGE>

                                    EXHIBIT F

                         Alternative Dispute Resolution

The parties recognize that bona fide disputes as to certain matters may arise
from time to time during the term of this Agreement that relate to either
party's rights and/or obligations. To have such a dispute resolved by this
Alternative Dispute Resolution (ADR) provision, a party first must send written
notice of the dispute to the other party for attempted resolution by good faith
negotiations between their respective presidents (or their equivalents) of the
affected subsidiaries, divisions, or business units within twenty-eight (28)
days after such notice is received (all references to days in this ADR provision
are to calendar days).

If the matter has not been resolved within twenty-eight (28) days of the notice
of dispute, or if the parties fail to meet within such twenty-eight (28) days,
either party may initiate an ADR proceeding as provided herein. The parties
shall have the right to be represented by counsel in such a proceeding.

1.       To begin an ADR proceeding, a party shall provide written notice to the
         other party of the issues to be resolved by ADR, including the specific
         provisions of the Agreement in issue. Within fourteen (14) days after
         its receipt of such notice, the other party may, by written notice to
         the party initiating the ADR, add additional issues to be resolved
         within the same ADR.

2.       Within twenty-one (21) days following receipt of the original ADR
         notice, the parties shall select a mutually acceptable neutral to
         preside in the resolution of any disputes in this ADR proceeding. If
         the parties are unable to agree on a mutually acceptable neutral within
         such period, either party may request the President of the CPR
         Institute for Dispute Resolution (CPR), 366 Madison Avenue, 14th Floor,
         New York, New York 10017, to select a neutral pursuant to the following
         procedures:

         (a)      The CPR shall submit to the parties a list of not less than
                  five (5) candidates within fourteen (14) days after receipt of
                  the request, along with a Curriculum Vitae for each candidate.
                  No candidate shall be an employee, director, or shareholder of
                  either party or any of their subsidiaries or affiliates.

         (b)      Such list shall include a statement of disclosure by each
                  candidate of any circumstances likely to affect his or her
                  impartiality.

         (c)      Each party shall number the candidates in order of preference
                  (with the number one (1) signifying the greatest preference)
                  and shall deliver the list to the CPR within seven (7) days
                  following receipt of the list of candidates. If a party
                  believes a conflict of interest exists regarding any of the
                  candidates, that party shall provide a written explanation of
                  the conflict to the CPR along with its list showing its order
                  of preference for the candidates. Any party failing to return
                  a list of preferences on time shall be deemed to have no order
                  of preference.

         (d)      If the parties collectively have identified fewer than three
                  (3) candidates deemed to have conflicts, the CPR immediately
                  shall designate as the neutral the candidate for whom the
                  parties collectively have indicated the greatest preference,
                  excluding any candidate deemed by a party to have conflicts.
                  If a tie should result between two candidates, the CPR may
                  designate either candidate. If the parties collectively have
                  identified three (3) or more candidates deemed to have
                  conflicts, the CPR shall review the explanations

                                    Page 32
<PAGE>

                  regarding conflicts and, in its sole discretion, may either
                  (i) immediately designate as the neutral the candidate for
                  whom the parties collectively have indicated the greatest
                  preference, or (ii) issue a new list of not less than five (5)
                  candidates, in which case the procedures set forth in
                  subparagraphs 2(a) - 2(d) shall be repeated.

3.       No earlier than twenty-eight (28) days or later than fifty-six (56)
         days after selection, the neutral shall hold a hearing to resolve each
         of the issues identified by the parties. The ADR proceeding shall take
         place at a location agreed upon by the parties. If the parties cannot
         agree, the neutral shall designate a location other than the principal
         place of business of either party or any of their subsidiaries or
         affiliates.

4.       At least seven (7) days prior to the hearing, each party shall submit
         the following to the other party and the neutral:

         (a)      a copy of all exhibits on which such party intends to rely in
                  any oral or written presentation to the neutral;

         (b)      a list of any witnesses such party intends to call at the
                  hearing, and a short summary of the anticipated testimony of
                  each witness;

         (c)      a proposed ruling on each issue to be resolved, together with
                  a request for a specific damage award or other remedy for each
                  issue. The proposed rulings and remedies shall not contain any
                  recitation of the facts or any legal arguments and shall not
                  exceed one (1) page per issue.

         (d)      a brief in support of such party's proposed rulings and
                  remedies, provided that the brief shall not exceed twenty (20)
                  pages. This page limitation shall apply regardless of the
                  number of issues raised in the ADR proceeding.

         Except as expressly set forth in subparagraphs 4(a) - 4(d) of this
         Exhibit G and except with respect to Section 5 of the Agreement, no
         discovery shall be required or permitted by any means, including
         depositions, interrogatories, requests for admissions, or production of
         documents.

5.       The hearing shall be conducted on two (2) consecutive days and shall be
         governed by the following rules:

         (a)      Each party shall be entitled to five (5) hours of hearing time
                  to present its case. The neutral shall determine whether each
                  party has had the five (5) hours to which it is entitled.

         (b)      Each party shall be entitled, but not required, to make an
                  opening statement, to present regular and rebuttal testimony,
                  documents or other evidence, to cross-examine witnesses, and
                  to make a closing argument. Cross-examination of witnesses
                  shall occur immediately after their direct testimony, and
                  cross-examination time shall be charged against the party
                  conducting the cross-examination.

         (c)      The party initiating the ADR shall begin the hearing and, if
                  it chooses to make an opening statement, shall address not
                  only issues it raised but also any issues raised by the
                  responding party. The responding party, if it chooses to make
                  an opening statement, also shall address all issues raised in
                  the ADR. Thereafter, the presentation of regular and

                                    Page 33
<PAGE>

                  rebuttal testimony and documents, other evidence, and closing
                  arguments shall proceed in the same sequence.

         (d)      Except when testifying, witnesses shall be excluded from the
                  hearing until closing arguments; provided however, that each
                  party may have one representative who may also be a witness
                  and be present throughout the entire hearing.

         (e)      Settlement negotiations, including any statements made
                  therein, shall not be admissible under any circumstances.
                  Affidavits prepared for purposes of the ADR hearing also shall
                  not be admissible. As to all other matters, the neutral shall
                  have sole discretion regarding the admissibility of any
                  evidence.

6.       Within seven (7) days following completion of the hearing, each party
         may submit to the other party and the neutral a post-hearing brief in
         support of its proposed rulings and remedies, provided that such brief
         shall not contain or discuss any new evidence and shall not exceed ten
         (10) pages. This page limitation shall apply regardless of the number
         of issues raised in the ADR proceeding.

7.       The neutral shall rule on each disputed issue within fourteen (14) days
         following completion of the hearing. Such ruling shall adopt in its
         entirety the proposed ruling and remedy of one of the parties on each
         disputed issue but may adopt one party's proposed rulings and remedies
         on some issues and the other party's proposed rulings and remedies on
         other issues. The neutral shall not issue any written opinion or
         otherwise explain the basis of the ruling.

8.       The neutral shall be paid a reasonable fee plus expenses. These fees
         and expenses, along with the reasonable legal fees and expenses of the
         prevailing party (including all expert witness fees and expenses), the
         fees and expenses of a court reporter, and any expenses for a hearing
         room, shall be paid as follows:

         (a)      If the neutral rules in favor of one party on all disputed
                  issues in the ADR, the losing party shall pay 100% of such
                  fees and expenses.

         (b)      If the neutral rules in favor of one party on some issues and
                  the other party on other issues, the neutral shall issue with
                  the rulings a written determination as to how such fees and
                  expenses shall be allocated between the parties. The neutral
                  shall allocate fees and expenses in a way that bears a
                  reasonable relationship to the outcome of the ADR, with the
                  party prevailing on more issues, or on issues of greater value
                  or gravity, recovering a relatively larger share of its legal
                  fees and expenses.

9.       The rulings of the neutral and the allocation of fees and expenses
         shall be binding, non-reviewable, and non-appealable (except in the
         case of fraud or bad faith on the part of the neutral), and may be
         entered as a final judgment in any court having jurisdiction.

10.      Except as provided in paragraph 9 or as required by law, the existence
         of the dispute, any settlement negotiations, the ADR hearing, any
         submissions (including exhibits, testimony, proposed rulings, and
         briefs), and the rulings shall be deemed Confidential Information
         (except for information contained in exhibits or testimony that is
         already public or later becomes public through no fault of the parties
         or that is lawfully disclosed to a party through an independent third
         party). The neutral shall have the authority to impose sanctions for
         unauthorized disclosure of Confidential Information.

                                    Page 34<PAGE>
                                                                   EXHIBIT 10.12

                                 SANTARUS, INC.
                        2004 EQUITY INCENTIVE AWARD PLAN

                                    ARTICLE 1
                                     PURPOSE

      1.1 General. The purpose of the Santarus, Inc. 2004 Equity Incentive Award
Plan (the "PLAN") is to promote the success and enhance the value of Santarus,
Inc. (the "COMPANY") by linking the personal interests of the members of the
Board, employees, consultants, officers, and executives of the Company and any
Subsidiary, to those of Company stockholders and by providing such individuals
with an incentive for outstanding performance to generate superior returns to
Company stockholders. The Plan is further intended to provide flexibility to the
Company in its ability to motivate, attract, and retain the services of members
of the Board, employees, consultants, officers, and executives of the Company
upon whose judgment, interest, and special effort the successful conduct of the
Company's operation is largely dependent.

                                    ARTICLE 2
                          DEFINITIONS AND CONSTRUCTION

      2.1 Definitions. The following words and phrases shall have the following
meanings:

            (a) "AWARD" means an Option, a Restricted Stock award, a Stock
Appreciation Right award, a Performance Share award, a Dividend Equivalents
award, a Stock Payment award, a Deferred Stock award, or a Performance-Based
Award granted to a Participant pursuant to the Plan.

            (b) "AWARD AGREEMENT" means any written agreement, contract, or
other instrument or document evidencing an Award.

            (c) "BOARD" means the Board of Directors of the Company.

            (d) "CAUSE" includes one or more of the following: (i) the
commission of an act of fraud, embezzlement or dishonesty by a Participant that
has a material adverse impact on the Company or any successor or parent or
Subsidiary thereof; (ii) a conviction of, or plea of "guilty" or "no contest"
to, a felony by a Participant; (iii) any unauthorized use or disclosure by a
Participant of confidential information or trade secrets of the Company or any
successor or parent or Subsidiary thereof that has a material adverse impact on
any such entity or (iv) any other intentional misconduct by a Participant that
has a material adverse impact on the Company or any successor or parent or
Subsidiary thereof. However, if the term or concept of "Cause" has been defined
in an agreement between a Participant and the Company or any successor or parent
or Subsidiary thereof, then "Cause" shall have the definition set forth in such
agreement. The foregoing definition shall not in any way preclude or restrict
the right of the Company or any successor or parent or Subsidiary thereof to
discharge or dismiss any Participant in the service of such entity for any other
acts or omissions, but such other acts or omissions shall not be deemed, for
purposes of this Plan, to constitute grounds for termination for Cause.

            (e) "CHANGE OF CONTROL" means and includes each of the following:
<PAGE>
                  (1) the acquisition, directly or indirectly, by any "person"
or "group" (as those terms are defined in Sections 3(a)(9), 13(d) and 14(d) of
the Exchange Act and the rules thereunder) of "beneficial ownership" (as
determined pursuant to Rule 13d-3 under the Exchange Act) of securities entitled
to vote generally in the election of directors ("voting securities") of the
Company that represent 50% or more of the combined voting power of the Company's
then outstanding voting securities, other than:

                         (A) an acquisition by a trustee or other fiduciary
holding securities under any employee benefit plan (or related trust) sponsored
or maintained by the Company or any person controlled by the Company or by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any person controlled by the Company, or

                         (B) an acquisition of voting securities by the Company
or a corporation owned, directly or indirectly by the stockholders of the
Company in substantially the same proportions as their ownership of the stock of
the Company;

                  Notwithstanding the foregoing, the following event shall not
constitute an "acquisition" by any person or group for purposes of this
subsection (e): an acquisition of the Company's securities by the Company that
causes the Company's voting securities beneficially owned by a person or group
to represent 50% or more of the combined voting power of the Company's then
outstanding voting securities; provided, however, that if a person or group
shall become the beneficial owner of 50% or more of the combined voting power of
the Company's then outstanding voting securities by reason of share acquisitions
by the Company as described above and shall, after such share acquisitions by
the Company, become the beneficial owner of any additional voting securities of
the Company, then such acquisition shall constitute a Change of Control; or

                  (2) during any period of two consecutive years, individuals
who, at the beginning of such period, constitute the Board together with any new
director(s) (other than a director designated by a person who shall have entered
into an agreement with the Company to effect a transaction described in clauses
(1) or (3) of this subsection (e)) whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds of the directors then still in office who either were directors at
the beginning of the two year period or whose election or nomination for
election was previously so approved, cease for any reason to constitute a
majority thereof; or

                  (3) the consummation by the Company (whether directly
involving the Company or indirectly involving the Company through one or more
                  intermediaries) of (x) a merger, consolidation,
reorganization, or business
combination or (y) a sale or other disposition of all or substantially all of
the Company's assets or (z) the acquisition of assets or stock of another
entity, in each case other than a transaction:

                         (A) which results in the Company's voting securities
outstanding immediately before the transaction continuing to represent (either
by remaining outstanding or by being converted into voting securities of the
Company or the person that, as a result of the transaction, controls, directly
or indirectly, the Company or owns, directly or indirectly, all or substantially
all of the Company's assets or otherwise succeeds to the business

                                       2
<PAGE>
of the Company (the Company or such person, the "SUCCESSOR ENTITY")) directly or
indirectly, at least a majority of the combined voting power of the Successor
Entity's outstanding voting securities immediately after the transaction, and

                         (B) after which no person or group beneficially owns
voting securities representing 50% or more of the combined voting power of the
Successor Entity; provided, however, that no person or group shall be treated
for purposes of this clause (B) as beneficially owning 50% or more of combined
voting power of the Successor Entity solely as a result of the voting power held
in the Company prior to the consummation of the transaction; or

                  (4) the Company's stockholders approve a liquidation or
dissolution of the Company.

            The Committee shall have full and final authority, which shall be
exercised in its discretion, to determine conclusively whether a Change of
Control of the Company has occurred pursuant to the above definition, and the
date of the occurrence of such Change of Control and any incidental matters
relating thereto.

            (f) "CODE" means the Internal Revenue Code of 1986, as amended.

            (g) "COMMITTEE" means the committee of the Board described in
Article 12.

            (h) "COVERED EMPLOYEE" means an Employee who is, or could be, a
"covered employee" within the meaning of Section 162(m) of the Code.

            (i) "DEFERRED STOCK" means a right to receive a specified number of
shares of Stock during specified time periods pursuant to Article 8.

            (j) "DISABILITY" means, for purposes of this Plan, that the
Participant qualifies to receive long-term disability payments under the
Company's long-term disability insurance program, as it may be amended from time
to time.

            (k) "DIVIDEND EQUIVALENTS" means a right granted to a Participant
pursuant to Article 8 to receive the equivalent value (in cash or Stock) of
dividends paid on Stock.

            (l) "EMPLOYEE" means any officer or other employee (as defined in
accordance with Section 3401(c) of the Code) of the Company or any Subsidiary.

            (m) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

            (n) "FAIR MARKET VALUE" shall mean, as of any date, the value of
Stock determined as follows:

                  (1) If the Stock is listed on any established stock exchange
or a national market system, including without limitation the Nasdaq National
Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market
Value shall be the closing sales price for such stock (or the closing bid, if no
sales were reported) as quoted on such exchange or

                                       3
<PAGE>
system for the last market trading day prior to the date of determination, as
reported in The Wall Street Journal or such other source as the Committee deems
reliable;

                  (2) If the Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean of the closing bid and asked prices for the Stock on the date
prior to the date of determination as reported in The Wall Street Journal or
such other source as the Committee deems reliable; or

                  (3) In the absence of an established market for the Stock, the
Fair Market Value thereof shall be determined in good faith by the Committee.

            (o) "GOOD REASON" means a Participant's voluntary resignation
following any one or more of the following that is effected without the
Participant's written consent: (i) a change in his or her position following the
Change of Control that materially reduces his or her duties or responsibilities,
(ii) a reduction in his or her base salary following a Change of Control, unless
the base salaries of all similarly situated individuals are similarly reduced,
or (iii) a relocation of such Participant's place of employment of more than
fifty (50) miles following a Change of Control. However, if the term or concept
of "Good Reason" has been defined in an agreement between a Participant and the
Company or any successor or parent or Subsidiary thereof, then "Good Reason"
shall have the definition set forth in such agreement.

            (p) "INCENTIVE STOCK OPTION" means an Option that is intended to
meet the requirements of Section 422 of the Code or any successor provision
thereto.

            (q) "NON-EMPLOYEE DIRECTOR" means a member of the Board who
qualifies as a "Non-Employee Director" as defined in Rule 16b-3(b)(3) of the
Exchange Act, or any successor definition adopted by the Board.

            (r) "NON-QUALIFIED STOCK OPTION" means an Option that is not
intended to be an Incentive Stock Option.

            (s) "OPTION" means a right granted to a Participant pursuant to
Article 5 of the Plan to purchase a specified number of shares of Stock at a
specified price during specified time periods. An Option may be either an
Incentive Stock Option or a Non-Qualified Stock Option.

            (t) "PARTICIPANT" means a person who, as a member of the Board,
consultant to the Company or any Subsidiary or Employee, has been granted an
Award pursuant to the Plan.

            (u) "PERFORMANCE-BASED AWARD" means an Award granted to selected
Covered Employees pursuant to Articles 6 and 8, but which is subject to the
terms and conditions set forth in Article 9. All Performance-Based Awards are
intended to qualify as Qualified Performance-Based Compensation.

            (v) "PERFORMANCE CRITERIA" means the criteria that the Committee
selects for purposes of establishing the Performance Goal or Performance Goals
for a Participant for a Performance Period. The Performance Criteria that will
be used to establish Performance Goals are limited to the following: net
earnings (either before or after interest, taxes, depreciation and
amortization), net losses, sales or revenue, operating earnings, operating cash
flow, return on net

                                       4
<PAGE>
assets, return on stockholders' equity, return on assets, return on capital,
stockholder returns, gross or net profit margin, earnings per share, price per
share of Stock, and market share, any of which may be measured either in
absolute terms or as compared to any incremental increase or as compared to
results of a peer group. The Committee shall, within the time prescribed by
Section 162(m) of the Code, define in an objective fashion the manner of
calculating the Performance Criteria it selects to use for such Performance
Period for such Participant.

            (w) "PERFORMANCE GOALS" means, for a Performance Period, the goals
established in writing by the Committee for the Performance Period based upon
the Performance Criteria. Depending on the Performance Criteria used to
establish such Performance Goals, the Performance Goals may be expressed in
terms of overall Company performance or the performance of a division, business
unit, or an individual. The Committee, in its discretion, may, within the time
prescribed by Section 162(m) of the Code, adjust or modify the calculation of
Performance Goals for such Performance Period in order to prevent the dilution
or enlargement of the rights of Participants (i) in the event of, or in
anticipation of, any unusual or extraordinary corporate item, transaction,
event, or development, or (ii) in recognition of, or in anticipation of, any
other unusual or nonrecurring events affecting the Company, or the financial
statements of the Company, or in response to, or in anticipation of, changes in
applicable laws, regulations, accounting principles, or business conditions.

            (x) "PERFORMANCE PERIOD" means the one or more periods of time,
which may be of varying and overlapping durations, as the Committee may select,
over which the attainment of one or more Performance Goals will be measured for
the purpose of determining a Participant's right to, and the payment of, a
Performance-Based Award.

            (y) "PERFORMANCE SHARE" means a right granted to a Participant
pursuant to Article 8, to receive cash, Stock, or other Awards, the payment of
which is contingent upon achieving certain performance goals established by the
Committee.

            (z) "PLAN" means this Santarus, Inc. 2004 Equity Incentive Award
Plan, as it may be amended from time to time.

            (aa) "PUBLIC TRADING DATE" means the first date upon which Stock is
listed (or approved for listing) upon notice of issuance on any securities
exchange or designated (or approved for designation) upon notice of issuance as
a national market security on an interdealer quotation system.

            (bb) "QUALIFIED PERFORMANCE-BASED COMPENSATION" means any
compensation that is intended to qualify as "qualified performance-based
compensation" as described in Section 162(m)(4)(C) of the Code.

            (cc) "RESTRICTED STOCK" means Stock awarded to a Participant
pursuant to Article 6 that is subject to certain restrictions and to risk of
forfeiture.

            (dd) "STOCK" means the common stock of the Company and such other
securities of the Company that may be substituted for Stock pursuant to Article
11.

            (ee) "STOCK APPRECIATION RIGHT" or "SAR" means a right granted
pursuant to

                                       5
<PAGE>
Article 7 to receive a payment equal to the excess of the Fair Market Value of a
specified number of shares of Stock on the date the SAR is exercised over the
Fair Market Value on the date the SAR was granted as set forth in the applicable
Award Agreement.

            (ff) "STOCK PAYMENT" means (a) a payment in the form of shares of
Stock, or (b) an option or other right to purchase shares of Stock, as part of
any bonus, deferred compensation or other arrangement, made in lieu of all or
any portion of the compensation, granted pursuant to Article 8.

            (gg) "SUBSIDIARY" means any corporation or other entity of which a
majority of the outstanding voting stock or voting power is beneficially owned
directly or indirectly by the Company.

                                    ARTICLE 3
                           SHARES SUBJECT TO THE PLAN

3.1   Number of Shares.

            (a) Subject to Article 11, the aggregate number of shares of Stock
which may be issued or transferred pursuant to Awards under the Plan shall be
the sum of (i) 3,500,000 shares; (ii) any shares of Stock which the Company
repurchases using the cash proceeds received by the Company from Option
exercises and from the value of any tax deductions realized by the Company with
respect to Option exercises; (iii) the number of shares of Stock remaining
available for issuance and not subject to options granted under the Santarus,
Inc. 1998 Stock Option Plan (the "EXISTING PLAN") as of the Public Trading Date
plus (iv) with respect to options granted under the Existing Plan before the
Public Trading Date that expire or are canceled without having been exercised in
full or shares of Stock that are repurchased pursuant to the terms of options
granted under the Existing Plan, the number of shares of Common Stock subject to
each such option as to which such option or award was not exercised prior to its
expiration or cancellation or which are repurchased by the Company. In addition
to the foregoing, subject to Article 11, commencing on the first day of the
Company's 2005 fiscal year and on the first day of each fiscal year thereafter
during the term of the Plan, the number of shares of Stock which may be issued
or transferred pursuant to Awards under the Plan shall be increased by that
number of shares of Stock equal to the least of (i) five percent (5%) of the
Company's outstanding shares of Stock on such date or (ii) a lesser amount
determined by the Board. The payment of Dividend Equivalents in conjunction with
any outstanding Awards shall not be counted against the shares available for
issuance under the Plan.

            (b) To the extent that an Award terminates, expires, or lapses for
any reason, any shares of Stock subject to the Award shall again be available
for the grant of an Award pursuant to the Plan. Additionally, any shares of
Stock tendered or withheld to satisfy the grant or exercise price or tax
withholding obligation pursuant to any Award shall again be available for the
grant of an Award pursuant to the Plan. To the extent permitted by applicable
law or any exchange rule, shares of Stock issued in assumption of, or in
substitution for, any outstanding awards of any entity acquired in any form of
combination by the Company or any Subsidiary shall not be counted against shares
of Stock available for grant pursuant to this Plan.

                                       6
<PAGE>
            (c) Notwithstanding the provisions of this Section 3.1 no shares of
Stock may again be optioned, granted or awarded if such action would cause an
Incentive Stock Option to fail to qualify as an Incentive Stock Option under
Code Section 422.

      3.2 Stock Distributed. Any Stock distributed pursuant to an Award may
consist, in whole or in part, of authorized and unissued Stock, treasury Stock
or Stock purchased on the open market.

      3.3 Limitation on Number of Shares Subject to Awards. Notwithstanding any
provision in the Plan to the contrary, and subject to Article 11, the maximum
number of shares of Stock with respect to one or more Awards that may be granted
to any one Participant during a calendar year shall be 2,000,000.

                                    ARTICLE 4
                          ELIGIBILITY AND PARTICIPATION

      4.1 Eligibility.

            (a) General. Persons eligible to participate in this Plan include
Employees, consultants to the Company or any Subsidiary and all members of the
Board, as determined by the Committee.

            (b) Foreign Participants. In order to assure the viability of Awards
granted to Participants employed in foreign countries, the Committee may provide
for such special terms as it may consider necessary or appropriate to
accommodate differences in local law, tax policy, or custom. Moreover, the
Committee may approve such supplements to, or amendments, restatements, or
alternative versions of, the Plan as it may consider necessary or appropriate
for such purposes without thereby affecting the terms of the Plan as in effect
for any other purpose; provided, however, that no such supplements, amendments,
restatements, or alternative versions shall increase the share limitations
contained in Sections 3.1 and 3.3 of the Plan.

      4.2 Actual Participation. Subject to the provisions of the Plan, the
Committee may, from time to time, select from among all eligible individuals,
those to whom Awards shall be granted and shall determine the nature and amount
of each Award. No individual shall have any right to be granted an Award
pursuant to this Plan.

                                    ARTICLE 5
                                  STOCK OPTIONS

      5.1 General. The Committee is authorized to grant Options to Participants
on the following terms and conditions:

            (a) Exercise Price. The exercise price per share of Stock subject to
an Option shall be determined by the Committee and set forth in the Award
Agreement; provided that the exercise price for any Option shall not be less
than par value of a share of Stock on the date of grant.

            (b) Time And Conditions Of Exercise. The Committee shall determine
the

                                       7
<PAGE>
time or times at which an Option may be exercised in whole or in part, provided
that the term of any Option granted under the Plan shall not exceed ten years,
and provided further, that in the case of a Non-Qualified Stock Option, such
Option shall be exercisable for one year after the date of the Participant's
death. The Committee shall also determine the performance or other conditions,
if any, that must be satisfied before all or part of an Option may be exercised.

            (c) Payment. The Committee shall determine the methods by which the
exercise price of an Option may be paid, the form of payment, including, without
limitation, cash, promissory note bearing interest at no less than such rate as
shall then preclude the imputation of interest under the Code, shares of Stock
held for longer than six months having a Fair Market Value on the date of
delivery equal to the aggregate exercise price of the Option or exercised
portion thereof, or other property acceptable to the Committee (including
through the delivery of a notice that the Participant 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 then made to the
Company upon settlement of such sale), and the methods by which shares of Stock
shall be delivered or deemed to be delivered to Participants. Notwithstanding
any other provision of the Plan to the contrary, no Participant who is a member
of the Board or an "executive officer" of the Company within the meaning of
Section 13(k) of the Exchange Act shall be permitted to pay the exercise price
of an Option in any method which would violate Section 13(k).

            (d) Evidence Of Grant. All Options shall be evidenced by a written
Award Agreement between the Company and the Participant. The Award Agreement
shall include such additional provisions as may be specified by the Committee.

      5.2 Incentive Stock Options. Incentive Stock Options shall be granted only
to Employees and the terms of any Incentive Stock Options granted pursuant to
the Plan must comply with the following additional provisions of this Section
5.2:

            (a) Exercise Price. The exercise price per share of Stock shall be
set by the Committee, provided that the exercise price for any Incentive Stock
Option shall not be less than 100% of the Fair Market Value on the date of
grant.

            (b) Expiration Of Option. An Incentive Stock Option may not be
exercised to any extent by anyone after the first to occur of the following
events::

                  (1) Ten years from the date it is granted, unless an earlier
time is set in the Award Agreement.

                  (2) One year after the date of the Participant's termination
of employment or service on account of Disability or death, unless in the case
of death a shorter or longer period is designated in the Award Agreement. Upon
the Participant's Disability or death, any Incentive Stock Options exercisable
at the Participant's Disability or death may be exercised by the Participant's
legal representative or representatives, by the person or persons entitled to do
so pursuant to the Participant's last will and testament, or, if the Participant
fails to make testamentary disposition of such Incentive Stock Option or dies
intestate, by the person or

                                       8
<PAGE>
persons entitled to receive the Incentive Stock Option pursuant to the
applicable laws of descent and distribution.

            (c) Individual Dollar Limitation. The aggregate Fair Market Value
(determined as of the time the Option is granted) of all shares of Stock with
respect to which Incentive Stock Options are first exercisable by a Participant
in any calendar year may not exceed $100,000.00 or such other limitation as
imposed by Section 422(d) of the Code, or any successor provision. To the extent
that Incentive Stock Options are first exercisable by a Participant in excess of
such limitation, the excess shall be considered Non-Qualified Stock Options.

            (d) Ten Percent Owners. An Incentive Stock Option shall be granted
to any individual who, at the date of grant, owns stock possessing more than ten
percent of the total combined voting power of all classes of Stock of the
Company only if such Option is granted at a price that is not less than 110% of
Fair Market Value on the date of grant and the Option is exercisable for no more
than five years from the date of grant.

            (e) Transfer Restriction. The Participant shall give the Company
prompt notice of any disposition of shares of Stock acquired by exercise of an
Incentive Stock Option within (1) two years from the date of grant of such
Incentive Stock Option or (2) one year after the transfer of such shares of
Stock to the Participant.

            (f) Expiration Of Incentive Stock Options. No Award of an Incentive
Stock Option may be made pursuant to this Plan after the Expiration Date (as
defined in Section 13.2).

            (g) Right To Exercise. During a Participant's lifetime, an Incentive
Stock Option may be exercised only by the Participant.

                                    ARTICLE 6
                             RESTRICTED STOCK AWARDS

      6.1 Grant of Restricted Stock. The Committee is authorized to make Awards
of Restricted Stock to any Participant selected by the Committee in such amounts
and subject to such terms and conditions as determined by the Committee. All
Awards of Restricted Stock shall be evidenced by a written Restricted Stock
Award Agreement.

      6.2 Issuance and Restrictions. Restricted Stock shall be subject to such
restrictions on transferability and other restrictions as the Committee may
impose (including, without limitation, limitations on the right to vote
Restricted Stock or the right to receive dividends on the Restricted Stock).
These restrictions may lapse separately or in combination at such times,
pursuant to such circumstances, in such installments, or otherwise, as the
Committee determines at the time of the grant of the Award or thereafter.

      6.3 Forfeiture. Except as otherwise determined by the Committee at the
time of the grant of the Award or thereafter, upon termination of employment or
service during the applicable restriction period, Restricted Stock that is at
that time subject to restrictions shall be forfeited; provided, however, that
the Committee may provide in any Restricted Stock Award Agreement that
restrictions or forfeiture conditions relating to Restricted Stock will be
waived in

                                       9
<PAGE>
whole or in part in the event of terminations resulting from specified causes,
and the Committee may in other cases waive in whole or in part restrictions or
forfeiture conditions relating to Restricted Stock.

      6.4 Certificates For Restricted Stock. Restricted Stock granted pursuant
to the Plan may be evidenced in such manner as the Committee shall determine. If
certificates representing shares of Restricted Stock are registered in the name
of the Participant, certificates must bear an appropriate legend referring to
the terms, conditions, and restrictions applicable to such Restricted Stock, and
the Company may, at its discretion, retain physical possession of the
certificate until such time as all applicable restrictions lapse.

                                    ARTICLE 7
                            STOCK APPRECIATION RIGHTS

      7.1 Grant of Stock Appreciation Rights. A Stock Appreciation Right may be
granted to any Participant selected by the Committee. A Stock Appreciation Right
may be granted (a) in connection and simultaneously with the grant of an Option,
(b) with respect to a previously granted Option, or (c) independent of an
Option. A Stock Appreciation Right shall be subject to such terms and conditions
not inconsistent with the Plan as the Committee shall impose and shall be
evidenced by an Award Agreement.

      7.2   Coupled Stock Appreciation Rights.

            (a) A Coupled Stock Appreciation Right ("CSAR") shall be related to
a particular Option and shall be exercisable only when and to the extent the
related Option is exercisable.

            (b) A CSAR may be granted to a Participant for no more than the
number of shares subject to the simultaneously or previously granted Option to
which it is coupled.

            (c) A CSAR shall entitle the Participant (or other person entitled
to exercise the Option pursuant to the Plan) to surrender to the Company
unexercised a portion of the Option to which the CSAR relates (to the extent
then exercisable pursuant to its terms) and to receive from the Company in
exchange therefor an amount determined by multiplying the difference obtained by
subtracting the Option exercise price from the Fair Market Value of a share of
Stock on the date of exercise of the CSAR by the number of shares of Stock with
respect to which the CSAR shall have been exercised, subject to any limitations
the Committee may impose.

                                       10
<PAGE>
      7.3   Independent Stock Appreciation Rights.

            (a) An Independent Stock Appreciation Right ("ISAR") shall be
unrelated to any Option and shall have a term set by the Committee. An ISAR
shall be exercisable in such installments as the Committee may determine. An
ISAR shall cover such number of shares of Stock as the Committee may determine.
The exercise price per share of Stock subject to each ISAR shall be set by the
Committee; provided, however, that, the Committee in its sole and absolute
discretion may provide that the ISAR may be exercised subsequent to a
termination of employment or service, as applicable, or following a Change of
Control of the Company, or because of the Participant's retirement, death or
disability, or otherwise.

            (b) An ISAR shall entitle the Participant (or other person entitled
to exercise the ISAR pursuant to the Plan) to exercise all or a specified
portion of the ISAR (to the extent then exercisable pursuant to its terms) and
to receive from the Company an amount determined by multiplying the difference
obtained by subtracting the exercise price per share of the ISAR from the Fair
Market Value of a share of Stock on the date of exercise of the ISAR by the
number of shares of Stock with respect to which the ISAR shall have been
exercised, subject to any limitations the Committee may impose.

      7.4   Payment and Limitations on Exercise.

            (a) Payment of the amounts determined under Section 7.2(c) and
7.3(b) above shall be in cash, in Stock (based on its Fair Market Value as of
the date the Stock Appreciation Right is exercised) or a combination of both, as
determined by the Committee.

            (b) To the extent any payment under Section 7.2(c) or 7.3(b) is
effected in Stock it shall be made subject to satisfaction of all provisions of
Article 5 above pertaining to Options.

                                    ARTICLE 8
                              OTHER TYPES OF AWARDS

      8.1 Performance Share Awards. Any Participant selected by the Committee
may be granted one or more Performance Share awards which may be denominated in
a number of shares of Stock or in a dollar value of shares of Stock and which
may be linked to any one or more of the Performance Criteria or other specific
performance criteria determined appropriate by the Committee, in each case on a
specified date or dates or over any period or periods determined by the
Committee. In making such determinations, the Committee shall consider (among
such other factors as it deems relevant in light of the specific type of award)
the contributions, responsibilities and other compensation of the particular
Participant.

      8.2   Dividend Equivalents.

            (a) Any Participant selected by the Committee may be granted
Dividend Equivalents based on the dividends declared on the shares of Stock that
are subject to any Award, to be credited as of dividend payment dates, during
the period between the date the Award is granted and the date the Award is
exercised, vests or expires, as determined by the

                                       11
<PAGE>
Committee. Such Dividend Equivalents shall be converted to cash or additional
shares of Stock by such formula and at such time and subject to such limitations
as may be determined by the Committee.

            (b) Dividend Equivalents granted with respect to Options or SARs
that are intended to be Qualified Performance-Based Compensation shall be
payable, with respect to pre-exercise periods, regardless of whether such Option
or SAR is subsequently exercised.

      8.3 Stock Payments. Any Participant selected by the Committee may receive
Stock Payments in the manner determined from time to time by the Committee. The
number of shares shall be determined by the Committee and may be based upon the
Performance Criteria or other specific performance criteria determined
appropriate by the Committee, determined on the date such Stock Payment is made
or on any date thereafter.

      8.4 Deferred Stock. Any Participant selected by the Committee may be
granted an award of Deferred Stock in the manner determined from time to time by
the Committee. The number of shares of Deferred Stock shall be determined by the
Committee and may be linked to the Performance Criteria or other specific
performance criteria determined to be appropriate by the Committee, in each case
on a specified date or dates or over any period or periods determined by the
Committee. Stock underlying a Deferred Stock award will not be issued until the
Deferred Stock award has vested, pursuant to a vesting schedule or performance
criteria set by the Committee. Unless otherwise provided by the Committee, a
Participant awarded Deferred Stock shall have no rights as a Company stockholder
with respect to such Deferred Stock until such time as the Deferred Stock Award
has vested and the Stock underlying the Deferred Stock Award has been issued.

      8.5 Term. The term of any Award of Performance Shares, Dividend
Equivalents, Stock Payments or Deferred Stock shall be set by the Committee in
its discretion.

      8.6 Exercise or Purchase Price. The Committee may establish the exercise
or purchase price of any Award of Performance Shares, Deferred Stock or Stock
Payments; provided, however, that such price shall not be less than the par
value of a share of Stock, unless otherwise permitted by applicable state law.

      8.7 Exercise Upon Termination of Employment or Service. An Award of
Performance Shares, Dividend Equivalents, Deferred Stock and Stock Payments
shall only be exercisable or payable while the Participant is an Employee,
consultant to the Company or a member of the Board, as applicable; provided,
however, that the Committee in its sole and absolute discretion may provide that
an Award of Performance Shares, Dividend Equivalents, Stock Payments or Deferred
Stock may be exercised or paid subsequent to a termination of employment or
service, as applicable, or following a Change of Control of the Company, or
because of the Participant's retirement, death or disability, or otherwise;
provided, however, that any such provision with respect to Performance Shares
shall be subject to the requirements of Section 162(m) of the Code that apply to
Qualified Performance-Based Compensation.

      8.8 Form of Payment. Payments with respect to any Awards granted under
this Article 8 shall be made in cash, in Stock or a combination of both, as
determined by the

                                       12
<PAGE>
Committee.

      8.9 Award Agreement. All Awards under this Article 8 shall be subject to
such additional terms and conditions as determined by the Committee and shall be
evidenced by a written Award Agreement.

                                    ARTICLE 9
                            PERFORMANCE-BASED AWARDS

      9.1 Purpose. The purpose of this Article 9 is to provide the Committee the
ability to qualify Awards other than Options and SARs and that are granted
pursuant to Articles 6 and 8 as Qualified Performance-Based Compensation. If the
Committee, in its discretion, decides to grant a Performance-Based Award to a
Covered Employee, the provisions of this Article 9 shall control over any
contrary provision contained in Articles 6 or 8; provided, however, that the
Committee may in its discretion grant Awards to Covered Employees that are based
on Performance Criteria or Performance Goals but that do not satisfy the
requirements of this Article 9.

      9.2 Applicability. This Article 9 shall apply only to those Covered
Employees selected by the Committee to receive Performance-Based Awards. The
designation of a Covered Employee as a Participant for a Performance Period
shall not in any manner entitle the Participant to receive an Award for the
period. Moreover, designation of a Covered Employee as a Participant for a
particular Performance Period shall not require designation of such Covered
Employee as a Participant in any subsequent Performance Period and designation
of one Covered Employee as a Participant shall not require designation of any
other Covered Employees as a Participant in such period or in any other period.

      9.3 Procedures With Respect to Performance-Based Awards. To the extent
necessary to comply with the Qualified Performance-Based Compensation
requirements of Section 162(m)(4)(C) of the Code, with respect to any Award
granted under Articles 6 and 8 which may be granted to one or more Covered
Employees, no later than ninety (90) days following the commencement of any
fiscal year in question or any other designated fiscal period or period of
service (or such other time as may be required or permitted by Section 162(m) of
the Code), the Committee shall, in writing, (i) designate one or more Covered
Employees, (ii) select the Performance Criteria applicable to the Performance
Period, (iii) establish the Performance Goals, and amounts of such Awards, as
applicable, which may be earned for such Performance Period, and (iv) specify
the relationship between Performance Criteria and the Performance Goals and the
amounts of such Awards, as applicable, to be earned by each Covered Employee for
such Performance Period. Following the completion of each Performance Period,
the Committee shall certify in writing whether the applicable Performance Goals
have been achieved for such Performance Period. In determining the amount earned
by a Covered Employee, the Committee shall have the right to reduce or eliminate
(but not to increase) the amount payable at a given level of performance to take
into account additional factors that the Committee may deem relevant to the
assessment of individual or corporate performance for the Performance Period.

      9.4 Payment of Performance-Based Awards. Unless otherwise provided in the
applicable Award Agreement, a Participant must be employed by the Company or a
Subsidiary

                                       13
<PAGE>
on the day a Performance-Based Award for such Performance Period is paid to the
Participant. Furthermore, a Participant shall be eligible to receive payment
pursuant to a Performance-Based Award for a Performance Period only if the
Performance Goals for such period are achieved. In determining the amount earned
under a Performance-Based Award, the Committee may reduce or eliminate the
amount of the Performance-Based Award earned for the Performance Period, if in
its sole and absolute discretion, such reduction or elimination is appropriate.

9.5 Additional Limitations. Notwithstanding any other provision of the Plan, any
Award which is granted to a Covered Employee and is intended to constitute
Qualified Performance-Based Compensation shall be subject to any additional
limitations set forth in Section 162(m) of the Code (including any amendment to
Section 162(m) of the Code) or any regulations or rulings issued thereunder that
are requirements for qualification as qualified performance-based compensation
as described in Section 162(m)(4)(C) of the Code, and the Plan shall be deemed
amended to the extent necessary to conform to such requirements.

                                   ARTICLE 10
                         PROVISIONS APPLICABLE TO AWARDS

      10.1 Stand-Alone and Tandem Awards. Awards granted pursuant to the Plan
may, in the discretion of the Committee, be granted either alone, in addition
to, or in tandem with, any other Award granted pursuant to the Plan. Awards
granted in addition to or in tandem with other Awards may be granted either at
the same time as or at a different time from the grant of such other Awards.

      10.2 Award Agreement. Awards under the Plan shall be evidenced by Award
Agreements that set forth the terms, conditions and limitations for each Award
which may include the term of an Award, the provisions applicable in the event
the Participant's employment or service terminates, and the Company's authority
to unilaterally or bilaterally amend, modify, suspend, cancel or rescind an
Award.

      10.3 Limits on Transfer. No right or interest of a Participant in any
Award may be pledged, encumbered, or hypothecated to or in favor of any party
other than the Company or a Subsidiary, or shall be subject to any lien,
obligation, or liability of such Participant to any other party other than the
Company or a Subsidiary. Except as otherwise provided by the Committee, no Award
shall be assigned, transferred, or otherwise disposed of by a Participant other
than by will or the laws of descent and distribution. The Committee by express
provision in the Award or an amendment thereto may permit an Award (other than
an Incentive Stock Option) to be transferred to, exercised by and paid to
certain persons or entities related to the Participant, including but not
limited to members of the Participant's family, charitable institutions, or
trusts or other entities whose beneficiaries or beneficial owners are members of
the Participant's family and/or charitable institutions, or to such other
persons or entities as may be expressly approved by the Committee, pursuant to
such conditions and procedures as the Committee may establish. Any permitted
transfer may be subject to the condition that the Committee receive evidence
satisfactory to it that the transfer is being made for estate and/or tax
planning purposes (or to a "blind trust" in connection with the Participant's
termination of employment or service with the Company or a Subsidiary to assume
a position with a governmental, charitable, educational or similar non-profit
institution) and on a basis consistent with the Company's lawful issue of

                                       14
<PAGE>
securities.

      10.4 Beneficiaries. Notwithstanding Section 10.3, a Participant may, in
the manner determined by the Committee, designate a beneficiary to exercise the
rights of the Participant and to receive any distribution with respect to any
Award upon the Participant's death. A beneficiary, legal guardian, legal
representative, or other person claiming any rights pursuant to the Plan is
subject to all terms and conditions of the Plan and any Award Agreement
applicable to the Participant, except to the extent the Plan and Award Agreement
otherwise provide, and to any additional restrictions deemed necessary or
appropriate by the Committee. If the Participant is married and resides in a
community property state, a designation of a person other than the Participant's
spouse as his beneficiary with respect to more than 50% of the Participant's
interest in the Award shall not be effective without the prior written consent
of the Participant's spouse. If no beneficiary has been designated or survives
the Participant, payment shall be made to the person entitled thereto pursuant
to the Participant's will or the laws of descent and distribution. Subject to
the foregoing, a beneficiary designation may be changed or revoked by a
Participant at any time provided the change or revocation is filed with the
Committee.

      10.5 Stock Certificates. Notwithstanding anything herein to the contrary,
the Company shall not be required to issue or deliver any certificates
evidencing shares of Stock pursuant to the exercise of any Award, unless and
until the Board has determined, with advice of counsel, that the issuance and
delivery of such certificates is in compliance with all applicable laws,
regulations of governmental authorities and, if applicable, the requirements of
any exchange on which the shares of Stock are listed or traded. All Stock
certificates delivered pursuant to the Plan are subject to any stop-transfer
orders and other restrictions as the Committee deems necessary or advisable to
comply with federal, state, or foreign jurisdiction, securities or other laws,
rules and regulations and the rules of any national securities exchange or
automated quotation system on which the Stock is listed, quoted, or traded. The
Committee may place legends on any Stock certificate to reference restrictions
applicable to the Stock. In addition to the terms and conditions provided
herein, the Board may require that a Participant make such reasonable covenants,
agreements, and representations as the Board, in its discretion, deems advisable
in order to comply with any such laws, regulations, or requirements. The
Committee shall have the right to require any Participant to comply with any
timing or other restrictions with respect to the settlement or exercise of any
Award, including a window-period limitation, as may be imposed in the discretion
of the Committee.

                                       15
<PAGE>
                                   ARTICLE 11
                          CHANGES IN CAPITAL STRUCTURE

      11.1 Adjustments. In the event of any stock dividend, stock split,
combination or exchange of shares, merger, consolidation, spin-off,
recapitalization or other distribution (other than normal cash dividends) of
Company assets to stockholders, or any other change affecting the shares of
Stock or the share price of the Stock, the Committee shall make such
proportionate adjustments, if any, as the Committee in its discretion may deem
appropriate to reflect such change with respect to (i) the aggregate number and
type of shares that may be issued under the Plan (including, but not limited to,
adjustments of the limitations in Sections 3.1 and 3.3); (ii) the terms and
conditions of any outstanding Awards (including, without limitation, any
applicable performance targets or criteria with respect thereto); and (iii) the
grant or exercise price per share for any outstanding Awards under the Plan. Any
adjustment affecting an Award intended as Qualified Performance-Based
Compensation shall be made consistent with the requirements of Section 162(m) of
the Code.

      11.2 Effect of a Change of Control When Awards Are Not Assumed. If a
Change of Control occurs and a Participant's Awards are not assumed by the
surviving or successor entity or its parent or Subsidiary and such successor
does not substitute substantially similar awards for those outstanding under the
Plan, such Awards shall become fully exercisable and/or payable as applicable,
and all forfeiture restrictions on such Awards shall lapse. Upon, or in
anticipation of, a Change of Control, the Committee may cause any and all Awards
outstanding hereunder to terminate at a specific time in the future and shall
give each Participant the right to exercise such Awards during a period of time
as the Committee, in its sole and absolute discretion, shall determine. The
Committee shall have sole discretion to determine whether an Award has been
assumed by the surviving or successor entity or its parent or Subsidiary or
whether such successor has substituted substantially similar awards for those
outstanding under the Plan in connection with a Change of Control.

      11.3 Effect of Change of Control When Awards Are Assumed; Termination
Following Change of Control.

            (a) In the event of a Change of Control where a Participant's Awards
are assumed by the surviving or successor entity or its parent or Subsidiary or
such successor substitutes substantially similar awards for those outstanding
under the Plan, then fifty percent (50%) of such Participant's unvested Awards
shall become fully exercisable and/or payable as applicable, and all forfeiture
restrictions on such Awards shall lapse, immediately prior to such Change of
Control.

            (b) In the event of a Change of Control where a Participant's Awards
are assumed by the surviving or successor entity or its parent or Subsidiary or
such successor substitutes substantially similar awards for those outstanding
under the Plan, if within twelve (12) months following such Change of Control
(i) the Participant's employment or service with the surviving or successor
entity or its parent or Subsidiary is terminated without Cause or (ii) such
Participant voluntarily terminates such Participant's employment or service with
Good Reason, then such Participant's remaining unvested Awards (including any
substituted awards) shall become fully exercisable and/or payable as applicable,
and all forfeiture restrictions on such

                                       16
<PAGE>
Awards (including any substituted awards) shall lapse, on the date of
termination. Such Awards (including any substituted awards) shall remain
exercisable, as applicable, until the earlier of the expiration date of the
Award or three (3) months following such Participant's cessation of employment
or service.

      11.4 Outstanding Awards - Certain Mergers. Subject to any required action
by the stockholders of the Company, in the event that the Company shall be the
surviving corporation in any merger or consolidation (except a merger or
consolidation as a result of which the holders of shares of Stock receive
securities of another corporation), each Award outstanding on the date of such
merger or consolidation shall pertain to and apply to the securities that a
holder of the number of shares of Stock subject to such Award would have
received in such merger or consolidation.

      11.5 Outstanding Awards - Other Changes. In the event of any other change
in the capitalization of the Company or corporate change other than those
specifically referred to in this Article 11, the Committee may, in its absolute
discretion, make such adjustments in the number and class of shares subject to
Awards outstanding on the date on which such change occurs and in the per share
grant or exercise price of each Award as the Committee may consider appropriate
to prevent dilution or enlargement of rights.

      11.6 No Other Rights. Except as expressly provided in the Plan, no
Participant shall have any rights by reason of any subdivision or consolidation
of shares of stock of any class, the payment of any dividend, any increase or
decrease in the number of shares of stock of any class or any dissolution,
liquidation, merger, or consolidation of the Company or any other corporation.
Except as expressly provided in the Plan or pursuant to action of the Committee
under the Plan, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number of shares
of Stock subject to an Award or the grant or exercise price of any Award.

                                   ARTICLE 12
                                 ADMINISTRATION

      12.1 Committee. Unless and until the Board delegates administration to a
Committee as set forth below, the Plan shall be administered by the Board. The
Board may delegate administration of the Plan to a Committee or Committees of
one or more members of the Board, and the term "Committee" shall apply to any
person or persons to whom such authority has been delegated. If administration
is delegated to a Committee, the Committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by the Board,
including the power to delegate to a subcommittee any of the administrative
powers the Committee is authorized to exercise (and references in this Plan to
the Board shall thereafter be to the Committee or subcommittee), subject,
however, to such resolutions, not inconsistent with the provisions of the Plan,
as may be adopted from time to time by the Board. Notwithstanding the foregoing,
however, from and after the Public Trading Date, a Committee of the Board shall
administer the Plan and the Committee shall consist solely of two or more
members of the Board each of whom is both an "outside director," within the
meaning of Section 162(m) of the Code, and a Non-Employee Director. Within the
scope of such authority, the Board or the Committee

                                       17
<PAGE>
may (i) delegate to a committee of one or more members of the Board who are not
"outside directors," within the meaning of Section 162(m) of the Code the
authority to grant awards under the Plan to eligible persons who are either (1)
not then "covered employees," within the meaning of Section 162(m) of the Code
and are not expected to be "covered employees" at the time of recognition of
income resulting from such award or (2) not persons with respect to whom the
Company wishes to comply with Section 162(m) of the Code and/or (ii) delegate to
a committee of one or more members of the Board who are not Non-Employee
Directors, the authority to grant awards under the Plan to eligible persons who
are not then subject to Section 16 of the Exchange Act. The Board may abolish
the Committee at any time and/or revest in the Board the administration of the
Plan. Appointment of Committee members shall be effective upon acceptance of
appointment. Committee members may resign at any time by delivering written
notice to the Board. Vacancies in the Committee may only be filled by the Board.

      12.2 Action by the Committee. A majority of the Committee shall constitute
a quorum. The acts of a majority of the members present at any meeting at which
a quorum is present, and acts approved in writing by a majority of the Committee
in lieu of a meeting, shall be deemed the acts of the Committee. Each member of
the Committee is entitled to, in good faith, rely or act upon any report or
other information furnished to that member by any officer or other employee of
the Company or any Subsidiary, the Company's independent certified public
accountants, or any executive compensation consultant or other professional
retained by the Company to assist in the administration of the Plan.

      12.3 Authority of Committee. Subject to any specific designation in the
Plan, the Committee has the exclusive power, authority and discretion to:

            (a) Designate Participants to receive Awards;

            (b) Determine the type or types of Awards to be granted to each
Participant;

            (c) Determine the number of Awards to be granted and the number of
shares of Stock to which an Award will relate;

            (d) Determine the terms and conditions of any Award granted pursuant
to the Plan, including, but not limited to, the exercise price, grant price, or
purchase price, any reload provision, any restrictions or limitations on the
Award, any schedule for lapse of forfeiture restrictions or restrictions on the
exercisability of an Award, and accelerations or waivers thereof, any provisions
related to non-competition and recapture of gain on an Award, based in each case
on such considerations as the Committee in its sole discretion determines;
provided, however, that the Committee shall not have the authority to accelerate
the vesting or waive the forfeiture of any Performance-Based Awards;

            (e) Determine whether, to what extent, and pursuant to what
circumstances an Award may be settled in, or the exercise price of an Award may
be paid in, cash, Stock, other Awards, or other property, or an Award may be
canceled, forfeited, or surrendered;

            (f) Prescribe the form of each Award Agreement, which need not be
identical for each Participant;

                                       18
<PAGE>
            (g) Decide all other matters that must be determined in connection
with an Award;

            (h) Establish, adopt, or revise any rules and regulations as it may
deem necessary or advisable to administer the Plan;

            (i) Interpret the terms of, and any matter arising pursuant to, the
Plan or any Award Agreement; and

            (j) Make all other decisions and determinations that may be required
pursuant to the Plan or as the Committee deems necessary or advisable to
administer the Plan.

      12.4 Decisions Binding. The Committee's interpretation of the Plan, any
Awards granted pursuant to the Plan, any Award Agreement and all decisions and
determinations by the Committee with respect to the Plan are final, binding, and
conclusive on all parties.

                                   ARTICLE 13
                          EFFECTIVE AND EXPIRATION DATE

      13.1 Effective Date. The Plan is effective as of the Public Trading Date
(the "Effective Date"); provided that the Plan has been approved by the
Company's stockholders prior to such date. The Plan will be deemed to be
approved by the stockholders if it receives the affirmative vote of the holders
of a majority of the shares of stock of the Company present or represented and
entitled to vote at a meeting duly held in accordance with the applicable
provisions of the Company's Bylaws.

      13.2 Expiration Date. The Plan will expire on, and no Award may be granted
pursuant to the Plan after, the earlier of the tenth anniversary of (i) the date
this Plan is approved by the Company's stockholders or (ii) the date this Plan
is approved by the Board (the "Expiration Date"). Any Awards that are
outstanding on the Expiration Date shall remain in force according to the terms
of the Plan and the applicable Award Agreement. Each Award Agreement shall
provide that it will expire on the tenth anniversary of the date of grant of the
Award to which it relates.

                                   ARTICLE 14
                    AMENDMENT, MODIFICATION, AND TERMINATION

      14.1 Amendment, Modification, and Termination. With the approval of the
Board, at any time and from time to time, the Committee may terminate, amend or
modify the Plan; provided, however, that (i) to the extent necessary and
desirable to comply with any applicable law, regulation, or stock exchange rule,
the Company shall obtain stockholder approval of any Plan amendment in such a
manner and to such a degree as required, and (ii) shareholder approval is
required for any amendment to the Plan that (A) increases the number of shares
available under the Plan (other than any adjustment as provided by Article 11),
(B) permits the Committee to grant Options with an exercise price that is below
Fair Market Value on the date of grant, or (C) permits the Committee to extend
the exercise period for an Option beyond ten years from the date of grant.

      14.2 Awards Previously Granted. No termination, amendment, or modification
of the Plan shall adversely affect in any material way any Award previously
granted pursuant to the

                                       19
<PAGE>
Plan without the prior written consent of the Participant.

                                   ARTICLE 15
                               GENERAL PROVISIONS

      15.1 No Rights to Awards. No Participant, employee, or other person shall
have any claim to be granted any Award pursuant to the Plan, and neither the
Company nor the Committee is obligated to treat Participants, employees, and
other persons uniformly.

      15.2 No Stockholders Rights. No Award gives the Participant any of the
rights of a stockholder of the Company unless and until shares of Stock are in
fact issued to such person in connection with such Award.

      15.3 Withholding. The Company or any Subsidiary shall have the authority
and the right to deduct or withhold, or require a Participant to remit to the
Company, an amount sufficient to satisfy federal, state, local and foreign taxes
(including the Participant's FICA obligation) required by law to be withheld
with respect to any taxable event concerning a Participant arising as a result
of this Plan. The Committee may in its discretion and in satisfaction of the
foregoing requirement allow a Participant to elect to have the Company withhold
shares of Stock otherwise issuable under an Award (or allow the return of shares
of Stock) having a Fair Market Value equal to the sums required to be withheld.
Notwithstanding any other provision of the Plan, the number of shares of Stock
which may be withheld with respect to the issuance, vesting, exercise or payment
of any Award (or which may be repurchased from the Participant of such Award
within six months after such shares of Stock were acquired by the Participant
from the Company) in order to satisfy the Participant's federal, state, local
and foreign income and payroll tax liabilities with respect to the issuance,
vesting, exercise or payment of the Award shall be limited to the number of
shares which have a Fair Market Value on the date of withholding or repurchase
equal to the aggregate amount of such liabilities based on the minimum statutory
withholding rates for federal, state, local and foreign income tax and payroll
tax purposes that are applicable to such supplemental taxable income.

      15.4 No Right to Employment or Services. Nothing in the Plan or any Award
Agreement shall interfere with or limit in any way the right of the Company or
any Subsidiary to terminate any Participant's employment or services at any
time, nor confer upon any Participant any right to continue in the employ or
service of the Company or any Subsidiary.

      15.5 Unfunded Status of Awards. The Plan is intended to be an "unfunded"
plan for incentive compensation. With respect to any payments not yet made to a
Participant pursuant to an Award, nothing contained in the Plan or any Award
Agreement shall give the Participant any rights that are greater than those of a
general creditor of the Company or any Subsidiary.

      15.6 Indemnification. To the extent allowable pursuant to applicable law,
each member of the Committee or of the Board shall be indemnified and held
harmless by the Company from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by such member in connection with or
resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action or failure
to act pursuant to the Plan and against and from any and all amounts paid by

                                       20
<PAGE>
him or her in satisfaction of judgment in such action, suit, or proceeding
against him or her, provided he or she gives the Company an opportunity, at its
own expense, to handle and defend the same before he or she undertakes to handle
and defend it on his or her own behalf. The foregoing right of indemnification
shall not be exclusive of any other rights of indemnification to which such
persons may be entitled pursuant to the Company's Certificate of Incorporation
or Bylaws, as a matter of law, or otherwise, or any power that the Company may
have to indemnify them or hold them harmless.

      15.7 Relationship to Other Benefits. No payment pursuant to the Plan shall
be taken into account in determining any benefits pursuant to any pension,
retirement, savings, profit sharing, group insurance, welfare or other benefit
plan of the Company or any Subsidiary except to the extent otherwise expressly
provided in writing in such other plan or an agreement thereunder.

      15.8 Expenses. The expenses of administering the Plan shall be borne by
the Company and its Subsidiaries.

      15.9 Titles and Headings. The titles and headings of the Sections in the
Plan are for convenience of reference only and, in the event of any conflict,
the text of the Plan, rather than such titles or headings, shall control.

      15.10 Fractional Shares. No fractional shares of Stock shall be issued and
the Committee shall determine, in its discretion, whether cash shall be given in
lieu of fractional shares or whether such fractional shares shall be eliminated
by rounding up or down as appropriate.

      15.11 Limitations Applicable to Section 16 Persons. Notwithstanding any
other provision of the Plan, the Plan, and any Award granted or awarded to any
Participant who is then subject to Section 16 of the Exchange Act, shall be
subject to any additional limitations set forth in any applicable exemptive rule
under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of
the Exchange Act) that are requirements for the application of such exemptive
rule. To the extent permitted by applicable law, the Plan and Awards granted or
awarded hereunder shall be deemed amended to the extent necessary to conform to
such applicable exemptive rule.

      15.12 Government And Other Regulations. The obligation of the Company to
make payment of awards in Stock or otherwise shall be subject to all applicable
laws, rules, and regulations, and to such approvals by government agencies as
may be required. The Company shall be under no obligation to register pursuant
to the Securities Act of 1933, as amended, any of the shares of Stock paid
pursuant to the Plan. If the shares paid pursuant to the Plan may in certain
circumstances be exempt from registration pursuant to the Securities Act of
1933, as amended, the Company may restrict the transfer of such shares in such
manner as it deems advisable to ensure the availability of any such exemption.

      15.13 Governing Law. The Plan and all Award Agreements shall be construed
in accordance with and governed by the laws of the State of Delaware.

                                       21
<PAGE>
      15.14 Acceleration Upon Death or Disability. In addition, in the event of
a Participant's termination of employment on account of Disability or death,
that number of Participant's unvested Awards that would have become fully
vested, exercisable and/or payable, as applicable, over the twelve (12) months
following the Participant's termination under the vesting schedules applicable
to such Awards had the Participant remained continuously employed by the Company
during such period shall immediately become so vested, exercisable and/or
payable, as applicable, on the date of termination.

      15.15 Acceleration of Stock Awards. For purposes of this Plan, to the
extent the vesting and/or exercisability of any of a Participant's outstanding
Awards shall be accelerated pursuant to this Plan or the terms of the applicable
Award Agreement, if any Award had previously been partially exercised such that
an unexercised portion of the Award still remains outstanding as of the date of
such acceleration, the vesting acceleration provisions of this Plan or the
applicable Award Agreement shall be applied to the total number of shares
subject to such Award that consist of (i) then unvested exercised shares that
were previously acquired upon the partial exercise of such Award, plus (ii) the
remaining unexercised portion of the Award. The acceleration of vesting shall be
first applied toward the unvested previously exercised shares such that no
unexercised shares shall vest on an accelerated basis in accordance with the
provisions of this Plan or the applicable Award Agreement unless and until all
of the unvested exercised shares subject to such Award have first vested. In
addition, the acceleration of vesting shall be applied to each Award
individually.

                                       22

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