RETENTION AGREEMENT

Exhibit 10.4

RETENTION AGREEMENT

     This RETENTION AGREEMENT (this “ Agreement ”) is made on and as of February 23, 2008, by and among                      (the “ Key Employee ”), Proprius, Inc. (doing business in California as Proprius Pharmaceuticals, Inc.), a Delaware corporation (the “ Company ”), and Cypress Bioscience, Inc., a Delaware corporation (“ Parent ”).

RECITALS

     A. Concurrently with the execution and delivery of this Agreement, Parent and Company are entering into the Merger Agreement. This Agreement is an inducement to Parent to enter into the Merger Agreement, and it is a condition precedent to Parent’s obligations to effect the Merger thereunder that this Agreement shall have been entered into and be in full force and effect. Capitalized terms used in this Agreement and not otherwise defined in this Agreement shall have the meanings assigned to such terms in the Merger Agreement.

     B. The Board of Directors of the Company has adopted the Management Carve-Out Plan, pursuant to which a certain portion of the aggregate proceeds to the stockholders of the Company pursuant to the Merger Agreement may be paid to one or more key employees of the Company as more fully set forth therein. Key Employee has been designated as a participant in the Management Carve-Out Plan, but, as of the date hereof, does not currently have a legally binding right to any compensation thereunder. The aggregate amounts, if any, to which Key Employee would be entitled to receive pursuant to the Management Carve-Out Plan, to the extent Key Employee continues to be designated as a participant in such plan at the time of the Merger, [MICHAEL J. WALSH AGREEMENT ONLY- together with a portion of the aggregate amount of the aggregate Closing Option Payment payable to the holders of Company Options that Key Employee would be entitled to receive upon the Closing of the Merger for cancellation of Key Employee’s unvested Company Options outstanding immediately prior to the Effective Time] are referred to herein as the “ Aggregate Bonus Consideration ”.

      NOW, THEREFORE , in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

     1.  Definitions . As used in this Agreement, the following terms have the corresponding meanings:

     “ Acceleration Event ” is defined in Section 3(d).

     “ Aggregate Bonus Consideration ” is defined in Recital B.

     “ Board ” means the board of directors of Parent.

     “ Business Day ” means a day other than a Saturday, Sunday, or other day when banking institutions in Chicago, Illinois are authorized or required by law or executive order to be closed.

     “ Cause ” for the termination of Key Employee’s employment with Parent shall mean the

Board’s reasonable determination that the following conditions exist; provided, however , that any termination by Parent due to any of the following conditions shall only be deemed for Cause if: (i) the Board gives Key Employee written notice of the intent to terminate for Cause within thirty (30) days following the first occurrence of the condition(s) that the Board believes constitute Cause, which notice shall describe such condition(s); (ii) the Key Employee fails to remedy such condition(s) within thirty (30) days following receipt of the written notice (the “Cure Period”) of such condition(s) from the Board; and (iii) the Board terminates Key Employee’s employment within thirty-five (35) days after expiration of the Cure Period :

          (a) Key Employee’s continued and willful refusal or failure to follow lawful and reasonable directions of the Board or the individuals to whom Key Employee reports;

          (b) Key Employee’s conviction of, or nolo contendere plea or guilty plea to, or confession of guilt to, a felony;

          (c) Key Employee’s material breach of Sections 2.2, 2.3 or 9 of the Employment Agreement or the Key Employee’s Proprietary Information and Inventions Agreement with Parent; or

          (d) Key Employee’s commission of any fraud against Parent, its Affiliates, employees, agents or customers or use or appropriation for his or her personal use or benefit of any funds or properties of Parent not authorized by the Board to be so used or appropriated (other than any inadvertent use that is not material in amount or significance).

     “ Change of Control ” means (i) a sale or other disposition of all or substantially all of the assets of Parent; (ii) a merger or consolidation in which Parent is not the surviving entity and in which the stockholders of Parent immediately prior to such consolidation or merger own less than fifty percent (50%) of the surviving entity’s voting power immediately after the transaction; or (iii) a reverse merger in which Parent is the surviving entity but the shares of Parent common stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise, and in which the stockholders of Parent immediately prior to such reverse merger own securities representing less than fifty percent (50%) of Parent’s voting power immediately after the transaction.

     “ Company ” means Proprius, Inc. (doing business in California as Proprius Pharmaceuticals, Inc., a Delaware corporation, a Delaware corporation, or another entity as provided in Section 19(a).

     “ Company Successor ” is defined in Section 19(a).

     “ Company Successor Parent ” is defined in Section 19(a).

     “ Complete Disability ” shall mean Key Employee is prevented from performing his or her duties under the Employment Agreement by reason of any physical or mental incapacity that results in Key Employee’s satisfaction of all requirements necessary to receive benefits under Parent’s long-term disability plan due to a total disability. In the event Parent has no long-term disability plan in force when Key Employee becomes disabled, the term Complete Disability shall mean that Key Employee is unable to engage in any substantial gainful activity by reason of

any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months. Based upon the medical advice or opinion provided by a licensed physician acceptable to the Board, the determination of Complete Disability by the Board shall be final and binding.

     “ Employment Agreement ” means that certain Employment Agreement of even date herewith by and between Parent and the Key Employee.

     “ Escrow Agent ” means LaSalle Bank National Association, as escrow agent.

     “ Escrow Agreement ” means the Special Escrow Agreement by and among Parent, Key Employee and the Escrow Agent, substantially in the form attached hereto as Exhibit A.

     “ Forfeiture Event ” means the occurrence of either (i) a Separation From Service for Cause, or (ii) a Separation From Service initiated by Key Employee without Good Reason.

     “ Good Reason ” for Key Employee to terminate Key Employee’s employment with Parent shall mean the occurrence of any of the following events without Key Employee’s consent; provided however , that any resignation by Key Employee due to any of the following conditions shall only be deemed for Good Reason if: (i) Key Employee gives Parent written notice of the intent to terminate for Good Reason within ninety (90) days following the first occurrence of the condition(s) that Key Employee believes constitutes Good Reason, which notice shall describe such condition(s); (ii) Parent fails to remedy, if remediable, such condition(s) within thirty (30) days following receipt of the written notice (the “ Cure Period ”) of such condition(s) from Key Employee; and (iii) Key Employee actually resigns his or her employment within the first fifteen (15) days after expiration of the Cure Period:

          (a) a material diminution in Key Employee’s duties, authority or responsibilities as they are formally developed and confirmed in writing following the date of this Agreement and following the full integration of the Company into Parent;

          (b) a material diminution in the authority, duties or responsibilities [AGREEMENTS FOR THREE EMPLOYEES OTHER THAN MICHAEL J. WALSH ( as they are formally developed and confirmed in writing following the date of this Agreement and following the full integration of the Company into Parent,)] of the supervisor to whom Key Employee is required to report;

          (c) the relocation of Parent’s executive offices or principal business location to a point more than sixty (60) miles from the San Diego County, California area, which relocation requires an increase in Parent’s one-way driving distance by more than thirty-five (35) miles;

          (d) a material reduction by Parent of Key Employee’s Base Salary (as defined in the Employment Agreement) as initially set forth in the Employment Agreement or as the same may be increased from time to time other than as the result of a company-wide compensation reduction or in connection with similar decreases for the management team of Parent, provided the reduction of Key Employee’s Base Salary is of similar proportion; or

          (e) any other action or inaction that constitutes a material breach by Parent of its obligations to Key Employee under the Employment Agreement.

     “ Merger Agreement ” means the Agreement and Plan of Merger dated as of the date hereof, among the Company, Parent, Propel Acquisition Sub, Inc., a Delaware corporation and wholly owned subsidiary of Parent and the Company Stockholders’ Representative, as such agreement may be amended or supplemented from time to time prior to the Effective Time.

     “ Parent ” means Cypress Bioscience, Inc., a Delaware corporation, or another entity as provided in Section 19.

     “ Parent Successor ” is defined in Section 19(b).

     “ Parent Successor Parent ” is defined in Section 19(b).

     “ Restriction ” is defined in Section 3(a).

     “ Retention Amount ” means ___percent (___%) of the Aggregate Bonus Consideration payable to Key Employee at the Closing pursuant to the Management Carve-Out Plan, which amount equals $___, as such amount may be adjusted from time to time pursuant to Section 2(c). ¹

     “ Section 409A ” means Section 409A of the Internal Revenue Code of 1986, as it may be amended from time to time, and the Treasury Regulations and other guidance issued thereunder.

     “ Separation From Service ” (and variations on the form of such term) means any separation from service within the meaning of Section 409A.

     “ Unvested Retention Amount ” is defined in Section 3(a).

     “ Vested Retention Amount ” is defined in Section 3(a).

     2.  Payment of Retention Amount into Escrow .

          (a) Key Employee hereby agree