Document:

Exhibit 10.1

 

VIVUS,
INC.

 

STAND-ALONE
STOCK OPTION AGREEMENT

 

NOTICE
OF GRANT OF STOCK OPTION

 

Unless otherwise defined
in this Notice of Grant of Stock Option, the terms defined in the Terms and
Conditions of Stock Option, attached hereto as Exhibit A, will have
the same defined meanings in this Notice of Grant of Stock Option (the “Notice
of Grant”).

 

	
  Participant:

  	
  Michael P. Miller

  
	
   

  	
   

  
	
  Address:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

You have been granted a
Nonstatutory Stock Option to purchase Shares of Common Stock, subject to the terms
and conditions of this Agreement, as follows:

 

	
  Grant
  Number

  	
   

  
	
   

  	
   

  
	
  Date
  of Grant

  	
  April 30, 2010

  
	
   

  	
   

  
	
  Vesting
  Commencement Date

  	
  April 26, 2010

  
	
   

  	
   

  
	
  Number
  of Shares Granted

  	
  400,000 Shares

  
	
   

  	
   

  
	
  Exercise
  Price per Share

  	
  $10.19

  
	
   

  	
   

  
	
  Total
  Exercise Price

  	
  $4,076,000

  
	
   

  	
   

  
	
  Type
  of Option

  	
  Nonstatutory Stock
  Option

  
	
   

  	
   

  
	
  Term/Expiration
  Date

  	
  April 30, 2020

  

 

Vesting Schedule:

 

Subject to accelerated
vesting as set forth below or in this Agreement, this Option will be
exercisable, in whole or in part, in accordance with the following schedule:

 

Twenty-five percent (25%) of the Shares subject to the Option will vest
on the one (1) year anniversary of the Vesting Commencement Date, and one
forty-eighth (1/48th) of the Shares subject to the Option will vest each month
thereafter on the same day of the month as the Vesting Commencement Date (and
if there is no corresponding day, on the last day of the month), subject to
Participant continuing to be a Service Provider through each such date.

 

1

 

Termination Period:

 

This Option will be
exercisable for twelve (12) months after Participant ceases to be a
Service Provider.  Notwithstanding the
foregoing, in no event may this Option be exercised after the Term/Expiration
Date as provided above and may be subject to earlier termination as provided in
Section 12 of this Agreement.

 

By Participant’s
signature and the signature of the Company’s representative below, Participant
and the Company agree that this Option is granted under and governed by the
terms and conditions of this Agreement. 
Participant has reviewed this Agreement in its entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Agreement
and fully understands all provisions of the Agreement.  Participant hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions relating to the Agreement.  Participant further agrees to notify the
Company upon any change in the residence address indicated below.

 

	
  PARTICIPANT

  	
   

  	
  VIVUS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
  By

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Print Name

  	
   

  	
  Title

  

 

Address:

 

 

 

 

2

 

EXHIBIT A

 

TERMS AND
CONDITIONS OF STOCK OPTION GRANT

 

1.     Definitions. 
As used herein, the following definitions will apply:

 

(a)   “Administrator” means the Board or
any of its Committees as will be administering the Agreement, in accordance
with Section 19 of this Agreement.

 

(b)   “Affiliate” means any corporation
or any other entity (including, but not limited to, partnerships and joint
ventures) controlling, controlled by, or under common control with the Company
(including, but not limited to, any Parent or Subsidiary).

 

(c)   “Agreement” means this Option
agreement between the Company and Participant evidencing the terms and
conditions of this Option.

 

(d)   “Applicable Laws” means the
requirements relating to the administration of equity-based awards under U.S.
state corporate laws, U.S. federal and state securities laws, the Code, any
stock exchange or quotation system on which the Common Stock is listed or
quoted and the applicable laws of any foreign country or jurisdiction that may
apply to this Option.

 

(e)   “Board” means the Board of
Directors of the Company.

 

(f)    “Change in Control” means the
occurrence of any of the following events:

 

(i)            Change in Ownership of the Company. 
A change in the ownership of the Company
which occurs on the date that any one person, or more than one
person acting as a group (“Person”), acquires ownership of the stock of
the Company that, together with the stock held by such Person, constitutes more
than fifty percent (50%) of the total voting power of the stock of the
Company; provided, however, that for purposes of this subsection (i), the
acquisition of additional stock by any one Person, who is considered to own
more than fifty percent (50%) of the total voting power of the stock of
the Company will not be considered a Change in Control; or

 

(ii)           Change in Effective Control of the
Company.  If the Company has a class of securities
registered pursuant to Section 12 of the Exchange Act, a change in the
effective control of the Company which occurs on the date that a majority of
members of the Board is replaced during any twelve (12) month period by
Directors whose appointment or election is not endorsed by a majority of the
members of the Board prior to the date of the appointment or election.  For purposes of this subsection (ii), if any
Person is considered to be in effective control of the Company, the acquisition
of additional control of the Company by the same Person will not be considered
a Change in Control; or

 

(iii)          Change in Ownership of a Substantial
Portion of the Company’s Assets.  A change in
the ownership of a substantial portion of the Company’s assets which occurs on
the date that any Person acquires (or has acquired during the twelve (12) month
period ending on the date of the most recent acquisition by such person or
persons) assets from the Company that have a total gross fair market value
equal to or more than fifty percent (50%) of the total gross fair market

 

3

 

value of all of the assets of the Company immediately prior to such
acquisition or acquisitions; provided, however, that for purposes of this
subsection (iii), the following will not constitute a change in the ownership
of a substantial portion of the Company’s assets: (A) a transfer to an
entity that is controlled by the Company’s stockholders immediately after the
transfer, or (B) a transfer of assets by the Company to: (1) a
stockholder of the Company (immediately before the asset transfer) in exchange
for or with respect to the Company’s stock, (2) an entity, fifty
percent (50%) or more of the total value or voting power of which is
owned, directly or indirectly, by the Company, (3) a Person, that owns,
directly or indirectly, fifty percent (50%) or more of the total value or
voting power of all the outstanding stock of the Company, or (4) an
entity, at least fifty percent (50%) of the total value or voting power of
which is owned, directly or indirectly, by a Person described in this
subsection (iii)(B)(3).  For purposes of
this subsection (iii), gross fair market value means the value of the assets of
the Company, or the value of the assets being disposed of, determined without
regard to any liabilities associated with such assets.

 

For purposes of
this Section 1(f), persons will be considered to be acting as a group if
they are owners of a corporation that enters into a merger, consolidation,
purchase or acquisition of stock, or similar business transaction with the
Company.

 

Notwithstanding
the foregoing, a transaction will not be deemed a Change in Control unless the
transaction qualifies as a change in control event within the meaning of Section 409A
of the Code, as it has been and may be amended from time to time, and any
proposed or final Treasury Regulations and Internal Revenue Service guidance
that has been promulgated or may be promulgated thereunder from time to time.

 

Further and for
the avoidance of doubt, a transaction will not constitute a Change in Control
if: (i) its sole purpose is to change the state of the Company’s
incorporation, or (ii) its sole purpose is to create a holding company
that will be owned in substantially the same proportions by the persons who
held the Company’s securities immediately before such transaction.

 

(g)   “Code” means the Internal Revenue
Code of 1986, as amended.  Reference to a
specific section of the Code or Treasury Regulation thereunder will include
such section or regulation, any valid regulation or other official applicable
guidance promulgated under such section, and any comparable provision of any
future legislation or regulation amending, supplementing or superseding such
section or regulation.

 

(h)   “Committee” means a committee of
Directors or of other individuals satisfying Applicable Laws appointed by the
Board for purposes of administering this Agreement.

 

(i)    “Common Stock” means the common
stock of the Company.

 

(j)    “Company” means VIVUS, Inc.,
a Delaware corporation, or any successor thereto.

 

(k)   “Consultant”
means any person, including an advisor, engaged by the Company or its
Affiliates to render services to such entity other than as an Employee.

 

(l)    “Director” means a member of the
Board.

 

4

 

(m)  “Disability” means total and
permanent disability as defined in Section 22(e)(3) of the Code,
provided that the Administrator in its discretion may determine whether a
permanent and total disability exists in accordance with uniform and
non-discriminatory standards adopted by the Administrator from time to time.

 

(n)   “Employee”
means any person, including Officers and Directors, employed by the Company or
its Affiliates.  Neither service as a Director
nor payment of a director’s fee by the Company will be sufficient to constitute
“employment” by the Company.

 

(o)   “Exchange Act” means the
Securities Exchange Act of 1934, as amended.

 

(p)   “Fair Market Value” means, as of
any date, the value of Common Stock determined as follows:

 

(i)            If the Common Stock is listed on any
established stock exchange or a national market system, including without
limitation the Nasdaq Global Market, the Nasdaq Global Select Market or the
Nasdaq Capital Market, its Fair Market Value will be the closing sales price
for such stock (or, the closing bid, if no sales were reported) as quoted on
such exchange or system on the day of determination, as reported in The Wall Street Journal or such other source as the
Administrator deems reliable;

 

(ii)           If the Common Stock is regularly quoted
by a recognized securities dealer but selling prices are not reported, its Fair
Market Value will be the mean between the high bid and low asked prices for the
Common Stock on the day of determination (or, if no bids and asks were reported
on that date, as applicable, on the last trading date such bids and asks are
reported); or

 

(iii)          In the absence of an established market
for the Common Stock, the Fair Market Value will be determined in good faith by
the Administrator.

 

(q)   “Incentive Stock Option” means an
Option that by its terms qualifies and is otherwise intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and
the regulations promulgated thereunder.

 

(r)    “Nonstatutory Stock Option” means
an Option that by its terms does not qualify or is not intended to qualify as
an Incentive Stock Option.

 

(s)   “Officer” means a person who is an
officer of the Company within the meaning of Section 16 of the Exchange
Act and the rules and regulations promulgated thereunder.

 

(t)    “Option” means this stock option
to purchase shares of Common Stock granted pursuant to this Agreement.

 

(u)   “Parent” means a “parent
corporation,” whether now or hereafter existing, as defined in Section 424(e) of
the Code.

 

(v)   “Participant” means the person
named in the Notice of Grant.

 

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(w)  “Service Provider” means an
Employee, Director or Consultant.

 

(x)    “Share” means a share of the Common
Stock, as adjusted in accordance with Section 12(a) of this
Agreement.

 

(y)   “Subsidiary” means a “subsidiary
corporation”, whether now or hereafter existing, as defined in Section 424(f) of
the Code.

 

2.     Grant.  The Company
hereby grants to the Participant an Option to purchase the number of Shares, as
set forth in the Notice of Grant, at the exercise price per Share set forth in
the Notice of Grant (the “Exercise Price”), subject to the terms and conditions
in this Agreement.

 

3.     Vesting Schedule. 
Except as provided in Section 5, the Option awarded by this
Agreement will vest in accordance with the vesting provisions set forth in the
Notice of Grant.  Shares scheduled to
vest on a certain date or upon the occurrence of a certain condition will not
vest in Participant in accordance with any of the provisions of this Agreement,
unless Participant will have been continuously a Service Provider from the Date
of Grant until the date such vesting occurs.

 

4.     Administrator Discretion. 
The Administrator, in its discretion, may accelerate the vesting of the
balance, or some lesser portion of the balance, of the unvested Option at any
time, subject to the terms of this Agreement. 
If so accelerated, such Option will be considered as having vested as of
the date specified by the Administrator.

 

5.     Termination of Option. 
Notwithstanding any contrary provision of this Agreement, if the
Participant ceases to be a Service Provider for any or no reason, the
then-unvested portion of the Option awarded by this Agreement will terminate
and the Participant will have no further rights thereunder.  The Participant (or, if applicable, the
Participant’s personal representative, designated beneficiary, estate or the
person(s) to whom the Option is transferred pursuant to the Participant’s
will or in accordance with the laws of descent and distribution) will have the
period set forth in Notice of Grant to exercise the Option to the extent vested
as of the date Participant ceases to be a Service Provider.

 

6.     Exercise of Option.

 

(a)   Right to Exercise. 
This Option may be exercised only within the term set out in the Notice
of Grant, and may be exercised during such term only in accordance with the
terms of this Agreement.

 

(b)   Method of Exercise. 
This Option is exercisable by delivery of an exercise notice, in the
form attached as Exhibit B (the “Exercise Notice”) or in a manner
and pursuant to such procedures as the Administrator may determine, which will
state the election to exercise the Option, the number of Shares in respect of
which the Option is being exercised (the “Exercised Shares”), and such other
representations and agreements as may be required by the Company.  The Exercise Notice will be completed by
Participant and delivered to the Company. 
The Exercise Notice will be accompanied by payment of the aggregate
Exercise Price as to all Exercised Shares together with any applicable tax
withholding.  This Option will be deemed
to be exercised upon receipt by the Company of such fully executed Exercise
Notice accompanied by the aggregate Exercise Price.

 

6

 

7.     Method of Payment. 
Payment of the aggregate Exercise Price will be by any of the following,
or a combination thereof, at the election of Participant:

 

(a)           cash;

 

(b)           check;

 

(c)           consideration received by the Company
under a formal cashless exercise program adopted by the Company (including by way
of a net exercise);
or

 

(d)           surrender of
other Shares which have a Fair Market Value on the date of surrender equal to
the aggregate Exercise Price of the Exercised Shares.

 

8.     Tax Obligations.

 

(a)           Tax Withholding.  Notwithstanding
any contrary provision of this Agreement, no certificate representing the
Shares will be issued to Participant, unless and until satisfactory arrangements
(as determined by the Administrator) will have been made by Participant with
respect to the payment of income, employment and other taxes which the Company
determines must be withheld with respect to such Shares.  To the extent determined appropriate by the
Company in its discretion, it will have the right (but not the obligation) to
satisfy any tax withholding obligations by reducing the number of Shares
otherwise deliverable to Participant.  If
Participant fails to make satisfactory arrangements for the payment of any
required tax withholding obligations hereunder at the time of the Option
exercise, Participant
acknowledges and agrees that the Company may refuse to honor the exercise and
refuse to deliver the Shares if such withholding amounts are not delivered at
the time of exercise.

 

(b)           Code Section 409A.  Under Code Section 409A, an option that
vests after December 31, 2004 (or that vested on or prior to such date but
which was materially modified after October 3, 2004) that was granted with
a per Share exercise price that is determined by the Internal Revenue Service
(the “IRS”) to be less than the Fair Market Value of a Share on the date of
grant (a “Discount Option”) may be considered “deferred compensation.”  A Discount Option may result in (i) income
recognition by Participant prior to the exercise of the option, (ii) an
additional twenty percent (20%) federal income tax, and (iii) potential
penalty and interest charges.  The
Discount Option may also result in additional state income, penalty and
interest tax to the Participant. 
Participant acknowledges that the Company cannot and has not guaranteed
that the IRS will agree that the per Share exercise price of this Option equals
or exceeds the Fair Market Value of a Share on the Date of Grant in a later
examination.  Participant agrees that if
the IRS determines that the Option was granted with a per Share exercise price
that was less than the Fair Market Value of a Share on the date of grant,
Participant will be solely responsible for Participant’s costs related to such
a determination.

 

9.     Rights as
Stockholder.  Neither
Participant nor any person claiming under or through Participant will have any
of the rights or privileges of a stockholder of the Company in respect of any
Shares deliverable hereunder unless and until certificates representing such
Shares will have been issued, recorded on the records of the Company or its
transfer agents or registrars, and 

 

7

 

delivered
to Participant.  After such issuance,
recordation and delivery, Participant will have all the rights of a stockholder
of the Company with respect to voting such Shares and receipt of dividends and
distributions on such Shares.  No adjustment will be made for a dividend
or other right for which the record date is prior to the date the Shares are
issued, except as provided in Section 12(a) of this Agreement.  The Option may not be
exercised for a fraction of a Share.

 

10.   No Guarantee of Continued Service. 
PARTICIPANT ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT
TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE
PROVIDER AT THE WILL OF THE COMPANY (OR THE AFFILIATE EMPLOYING OR RETAINING
PARTICIPANT) AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION
OR ACQUIRING SHARES HEREUNDER. 
PARTICIPANT FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN
DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A
SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND WILL
NOT INTERFERE IN ANY WAY WITH PARTICIPANT’S RIGHT OR THE RIGHT OF THE COMPANY
(OR THE AFFILIATE EMPLOYING OR RETAINING PARTICIPANT) TO TERMINATE PARTICIPANT’S
RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.

 

11.   Leaves of Absence/Transfer Between
Locations.  Unless the Administrator provides otherwise
and except as required by Applicable Laws, vesting of the Option will be
suspended during any unpaid leave of absence. 
Participant will not cease to be an Employee in the case of (i) any
leave of absence approved by the Company or (ii) transfers between
locations of the Company or between the Company or any Affiliate.

 

12.   Adjustments; Dissolution or Liquidation;
Merger or Change in Control.

 

(a)   Adjustments.  In the event that any dividend or other
distribution (whether in the form of cash, Shares, other securities, or other
property), recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase, or exchange
of Shares or other securities of the Company, or other change in the corporate
structure of the Company affecting the Shares occurs, the Administrator, in
order to prevent diminution or enlargement of the benefits or potential
benefits intended to be made available under this Agreement, will adjust the
number, class, and price of Shares covered by the Option.

 

(b)   Dissolution or Liquidation. 
In the event of the proposed dissolution or liquidation of the Company,
the Administrator will notify Participant as soon as practicable prior to the
effective date of such proposed transaction. 
To the extent it has not been previously exercised, the Option will
terminate immediately prior to the consummation of such proposed action.

 

(c)   Change in Control. 
In the event of a merger or Change in Control, the Option will be
treated as the Administrator determines without a Participant’s consent,
including, without limitation, that (i) the Option will be assumed, or a
substantially equivalent award or awards will be substituted, by the acquiring
or succeeding corporation (or an affiliate thereof) with appropriate 

 

8

 

adjustments as to the
number and kind of shares and prices; (ii) upon written notice to
Participant, that the Participant’s Option will terminate upon or immediately
prior to the consummation of such merger or Change in Control; (iii) the
outstanding Option will vest and become exercisable in whole or in part prior
to or upon consummation of such merger or Change in Control, and, to the extent
the Administrator determines, terminate upon or immediately prior to the
effectiveness of such merger of Change in Control; (iv) (A) the
termination of the Option in exchange for an amount of cash and/or property, if
any, equal to the amount that would have been attained upon the exercise of
such Option or realization of the Participant’s rights as of the date of the
occurrence of the transaction (and, for the avoidance of doubt, if as of the
date of the occurrence of the transaction the Administrator determines in good
faith that no amount would have been attained upon the exercise of the Option
or realization of the Participant’s rights, then the Option may be terminated
by the Company without payment), or (B) the replacement of the Option with
other rights or property selected by the Administrator in its sole discretion;
or (v) any combination of the foregoing.

 

In the event that the successor corporation does not assume or
substitute for the Option (or portion thereof), Participant will fully vest in
and have the right to exercise his entire outstanding Option that is not
assumed or substituted for, including Shares as to which the Option would not
otherwise be vested or exercisable.  In
addition, if the Option is not assumed or substituted for in the event of a
Change in Control, the Administrator will notify Participant in writing or
electronically that the Option will be fully vested and exercisable for a
period of time determined by the Administrator in its sole discretion, and the
Option will terminate upon the expiration of such period.

 

For the purposes
of this subsection 12(c), the Option will be considered assumed if, following
the merger or Change in Control, the Option confers the right to purchase or
receive, for each Share subject to the Option immediately prior to the Change
in Control, the consideration (whether stock, cash, or other securities or
property) received in the merger or Change in Control by holders of Common
Stock for each Share held on the effective date of the transaction (and if
holders were offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding Shares); provided,
however, that if such consideration received in the merger or Change in Control
is not solely common stock of the successor corporation or its Parent, the
Administrator may, with the consent of the successor corporation, provide for
the consideration to be received upon the exercise of the Option, for each
Share subject to the Option, to be solely common stock of the successor
corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the merger or Change in
Control.

 

13.   Address for Notices. 
Any notice to be given to the Company under the terms of this Agreement
will be addressed to the Company at Vivus, Inc., 1172 Castro Street,
Mountain View, California 94040, or at such other address as the Company may
hereafter designate in writing or electronically.

 

14.   Grant is Not Transferable. 
Unless determined otherwise by the Administrator, this Option may not be
transferred in any manner otherwise than by will or by the laws of descent or
distribution and may be exercised during the lifetime of Participant only by
Participant.

 

9

 

15.   Binding Agreement. 
Subject to the limitation on the transferability of this grant contained
herein, this Agreement will be binding upon and inure to the benefit of the
heirs, legatees, legal representatives, successors and assigns of the parties
hereto.

 

16.   No Liability. 
Under no circumstances will the Company, its Affiliates, the
Administrator, or the Board incur liability for any indirect, incidental,
consequential or special damages (including lost profits) of any form incurred
by any person, whether or not foreseeable and regardless of the form of the act
in which such a claim may be brought, with respect to this Agreement or the
Company’s, its Affiliates’, the Administrator’s or the Board’s roles in
connection with the Agreement.

 

17.   Additional Conditions to Issuance of
Stock.  If at any time the Company will determine, in
its discretion, that the listing, registration or qualification of the Shares
upon any securities exchange or under any state or federal law, or the consent
or approval of any governmental regulatory authority is necessary or desirable
as a condition to the issuance of Shares to Participant (or his or her estate),
such issuance will not occur unless and until such listing, registration,
qualification, consent or approval will have been effected or obtained free of
any conditions not acceptable to the Company. 
Where the Company determines that the delivery of the payment of any
Shares will violate federal securities laws or other applicable laws, the
Company will defer delivery until the earliest date at which the Company
reasonably anticipates that the delivery of Shares will no longer cause such
violation.  The Company will make all reasonable efforts to meet
the requirements of any such state or federal law or securities exchange and to
obtain any such consent or approval of any such governmental authority.  Assuming such compliance, for income tax
purposes the Exercised Shares will be considered transferred to Participant on
the date the Option is exercised with respect to such Exercised Shares.

 

18.   Investment Representation. 
As a condition to the exercise of the Option, the Company may require
the person exercising the Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required.

 

19.   Administrator Authority. 
The Administrator will have the power to interpret this Agreement and to
adopt such rules for the administration, interpretation and application of
the Agreement as are consistent therewith and to interpret or revoke any such rules (including,
but not limited to, the determination of whether or not any Shares subject to
the Option have vested).  All actions
taken and all interpretations and determinations made by the Administrator in
good faith will be final and binding upon Participant, the Company and all
other interested persons.  No member of
the Administrator will be personally liable for any action, determination or
interpretation made in good faith with respect to this Agreement.

 

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

 

21.   Agreement Severable. 
In the event that any provision in this Agreement will be held invalid
or unenforceable, such provision will be severable from, and such invalidity or

 

10

 

unenforceability will not
be construed to have any effect on, the remaining provisions of this Agreement.

 

22.   Modifications to the Agreement. 
This Agreement constitutes the entire understanding of the parties on
the subjects covered.  Participant
expressly warrants that he or she is not accepting this Agreement in reliance
on any promises, representations, or inducements other than those contained
herein.  Modifications to this Agreement
can be made only in an express written contract executed by a duly authorized
officer of the Company.  Notwithstanding
anything to the contrary in this Agreement, the Company reserves the right to
revise this Agreement as it deems necessary or advisable, in its sole
discretion and without the consent of Participant, to comply with Code Section 409A
or to otherwise avoid imposition of any additional tax or income recognition
under Code Section 409A in connection to this Option.

 

23.   Governing Law. 
This Agreement will be governed by the laws of the State of California,
without giving effect to the conflict of law principles thereof.  For purposes of litigating any dispute that
arises under this Option or this Agreement, the parties hereby submit to and
consent to the jurisdiction of the State of California, and agree that such
litigation will be conducted in the courts of Santa Clara County, California,
or the federal courts for the United States for the Northern District of
California, and no other courts, where this Option is made and/or to be
performed.

 

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EXHIBIT B

 

VIVUS,
INC.

 

STAND-ALONE
STOCK OPTION AGREEMENT

 

EXERCISE
NOTICE

 

Vivus, Inc.

1172 Castro Street

Mountain View, CA 94040

 

Attention:

 

1.             Exercise of Option. 
Effective as of today,
                                ,
          , the undersigned (“Participant”)
hereby elects to purchase
                            
shares (the “Shares”) of the Common Stock of Vivus, Inc. (the “Company”)
under and pursuant to the Stand-Alone Stock Option Agreement dated
                
(the “Agreement”).  The purchase price
for the Shares will be
$                          ,
as required by the Agreement.

 

2.             Delivery of Payment. 
Participant herewith delivers to the Company the full purchase price of
the Shares and any required tax withholding to be paid in connection with the
exercise of the Option.

 

3.             Representations of Participant. 
Participant acknowledges that Participant has received, read and
understood the Agreement and agrees to abide by and be bound by its terms and
conditions.

 

4.             Rights as Stockholder. 
Until the issuance (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company) of the
Shares, no right to vote or receive dividends or any other rights as a stockholder
will exist with respect to the Shares, notwithstanding the exercise of the
Option.  The Shares so acquired will be
issued to Participant as soon as practicable after exercise of the Option.  No adjustment will be made for a dividend or
other right for which the record date is prior to the date of issuance, except
as provided in Section 12 of the Agreement.

 

5.             Tax Consultation. 
Participant understands that Participant may suffer adverse tax
consequences as a result of Participant’s purchase or disposition of the
Shares.  Participant represents that
Participant has consulted with any tax consultants Participant deems advisable
in connection with the purchase or disposition of the Shares and that
Participant is not relying on the Company for any tax advice.

 

1

 

6.             Entire Agreement; Governing Law. 
The Agreement is incorporated herein by reference.  This Exercise Notice and the Agreement
constitute the entire agreement of the parties with respect to the subject
matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Participant with respect to the subject matter
hereof, and may not be modified adversely to the Participant’s interest except
by means of a writing signed by the Company and Participant.  This Agreement is governed by the internal
substantive laws, but not the choice of law rules, of the State of California.

 

	
  Submitted by:

  	
   

  	
  Accepted by:

  
	
   

  	
   

  	
   

  
	
  PARTICIPANT

  	
   

  	
  VIVUS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
  By

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Print Name

  	
   

  	
  Its

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  

 

 

 

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date Received

  

 

2Exhibit 10.1

 

MOMENTA
PHARMACEUTICALS, INC.

 

2004 EMPLOYEE
STOCK PURCHASE PLAN

 

The
purpose of this Plan is to provide eligible employees of Momenta
Pharmaceuticals, Inc. (the “Company”) and certain of its subsidiaries with
opportunities to purchase shares of the Company’s common stock, par value
$0.0001 per share (the “Common Stock”), commencing on the date on which the
Securities and Exchange Commission (the “SEC”) declares a registration
statement on Form S-1 for the initial public offering (the “IPO”) of the
Company’s Common Stock effective (the “Effective Date”). An aggregate of
524,652 shares of Common Stock in the aggregate have been approved for this
purpose. This Plan is intended to qualify as an “employee stock purchase plan”
as defined in Section 423 of the Internal Revenue Code of 1986, as amended
(the “Code”), and the regulations promulgated thereunder, and shall be
interpreted consistent therewith.

 

1.      ADMINISTRATION. The Plan will be
administered by the Company’s Board of Directors (the “Board”) or by a
Committee appointed by the Board (the “Committee”). The Board or the Committee
has authority to make rules and regulations for the administration of the
Plan and its interpretation and decisions with regard thereto shall be final
and conclusive.

 

2.      ELIGIBILITY. All employees of the
Company, including Directors who are employees, and all employees of any
subsidiary of the Company (as defined in Section 424(f) of the Code)
designated by the Board or the Committee from time to time (a “Designated
Subsidiary”), are eligible to participate in any one or more of the offerings
of Options (as defined in Section 9) to purchase Common Stock under the
Plan provided that:

 

(a)   they
are customarily employed by the Company or a Designated Subsidiary for more
than 20 hours a week and for more than five (5) months in a calendar year;
and 

 

(b)   they
have been employed by the Company or a Designated Subsidiary for at least
ninety (90) days prior to enrolling in the Plan; and

 

(c)   they
are employees of the Company or a Designated Subsidiary on the first day of the
applicable Plan Period (as defined below).

 

No
employee may be granted an option hereunder if such employee, immediately after
the option is granted, owns 5% or more of the total combined voting power or
value of the stock of the Company or any subsidiary. For purposes of the
preceding sentence, the attribution rules of Section 424(d) of
the Code shall apply in determining the stock ownership of an employee, and all
stock which the employee has a contractual right to purchase shall be treated
as stock owned by the employee.

 

3.     
OFFERINGS. The Company will make one or more offerings (“Offerings”) to
employees to purchase stock under this Plan. Offerings will begin each February 1,
or the first business day thereafter (the “Offering Commencement Dates”). Each
Offering Commencement Date will begin a twelve-month period (a “Plan Period”)
during which payroll deductions will be

 

 

made and held for
the purchase of Common Stock at the end of the Plan Period. The Board or the
Committee may, at its discretion, choose a different Plan Period of twelve (12)
months or less for subsequent Offerings. Notwithstanding anything to the
contrary, the first Plan Period shall begin on the first date that the Common
Stock is publicly traded following the Company’s IPO and shall end on January 31,
2005.

 

4.      PARTICIPATION. An employee eligible on
the Offering Commencement Date of any Offering may participate in such Offering
by completing and forwarding a payroll deduction authorization form to the
employee’s appropriate payroll office at least ten (10) days prior to the
applicable Offering Commencement Date. The form will authorize a regular
payroll deduction from the Compensation received by the employee during the
Plan Period. Unless an employee files a new form or withdraws from the Plan,
his deductions and purchases will continue at the same rate for future
Offerings under the Plan as long as the Plan remains in effect. The term “Compensation”
means the amount of money reportable on the employee’s Federal Income Tax
Withholding Statement, excluding overtime, shift premium, incentive or bonus
awards, allowances and reimbursements for expenses such as relocation
allowances for travel expenses, income or gains on the exercise of Company
stock options or stock appreciation rights, and similar items, whether or not
shown on the employee’s Federal Income Tax Withholding Statement, but
including, in the case of salespersons, sales commissions to the extent
determined by the Board or the Committee.

 

5.      DEDUCTIONS. The Company will maintain
payroll deduction accounts for all participating employees. With respect to any
Offering made under this Plan, an employee may authorize a payroll deduction in
any dollar amount up to a maximum of 15% of the Compensation he or she receives
during the Plan Period or such shorter period during which deductions from
payroll are made. The minimum payroll deduction is such percentage of
compensation as may be established from time to time by the Board or the
Committee.

 

6.      DEDUCTION CHANGES. An employee may
decrease or discontinue his payroll deduction once during any Plan Period, by
filing a new payroll deduction authorization form. However, an employee may not
increase his payroll deduction during a Plan Period. If an employee elects to
discontinue his payroll deductions during a Plan Period, but does not elect to
withdraw his funds pursuant to Section 8 hereof, funds deducted prior to
his election to discontinue will be applied to the purchase of Common Stock on
the Exercise Date (as defined below).

 

7.      INTEREST. Interest will not be paid on
any employee accounts, except to the extent that the Board or the Committee, in
its sole discretion, elects to credit employee accounts with interest at such
per annum rate as it may from time to time determine.

 

8.      WITHDRAWAL OF FUNDS. An employee may at
any time prior to the close of business on the last business day in a Plan
Period and for any reason permanently draw out the balance accumulated in the
employee’s account and thereby withdraw from participation in an Offering.
Partial withdrawals are not permitted. The employee may not begin participation
again during the remainder of the Plan Period. The employee may participate in
any subsequent Offering in accordance with terms and conditions established by
the Board or the Committee.

 

 

9.      PURCHASE OF SHARES. On the Offering
Commencement Date of each Plan Period, the Company will grant to each eligible
employee who is then a participant in the Plan an option (“Option”) to purchase
on the last business day of such Plan Period (the “Exercise Date”), at the
Option Price hereinafter provided for, the largest number of whole shares of
Common Stock of the Company as does not exceed the number of shares determined
by multiplying $2,083 by the number of full months in the Offering Period and
dividing the result by the closing price (as defined below) on the Offering
Commencement Date of such Plan Period.

 

Notwithstanding
the above, no employee may be granted an Option (as defined in Section 9)
which permits his rights to purchase Common Stock under this Plan and any other
employee stock purchase plan (as defined in Section 423(b) of the Code) of
the Company and its subsidiaries, to accrue at a rate which exceeds $25,000 of
the fair market value of such Common Stock (determined at the Offering
Commencement Date of the Plan Period) for each calendar year in which the
Option is outstanding at any time.

 

The purchase price
for each share purchased will be 85% of the closing price of the Common Stock
on (i) the first business day of such Plan Period or (ii) the
Exercise Date, whichever closing price shall be less. Such closing price shall
be (a) the closing price on any national securities exchange on which the
Common Stock is listed, (b) the closing price of the Common Stock on the
Nasdaq National Market or (c) the average of the closing bid and asked
prices in the over-the-counter-market, whichever is applicable, as published in
THE WALL STREET JOURNAL; PROVIDED, HOWEVER, that, with respect to the first
Plan Period, the closing price on the Offering Commencement Date shall be the
initial public offering price provided for in the underwriting agreement
entered into by the Company in connection with the IPO. If no sales of Common
Stock were made on such a day, the price of the Common Stock for purposes of
clauses (a) and (b) above shall be the reported price for the next
preceding day on which sales were made.

 

Each employee who
continues to be a participant in the Plan on the Exercise Date shall be deemed
to have exercised his Option at the Option Price on such date and shall be
deemed to have purchased from the Company the number of full shares of Common
Stock reserved for the purpose of the Plan that his accumulated payroll
deductions on such date will pay for, but not in excess of the maximum number
determined in the manner set forth above.

 

Any balance
remaining in an employee’s payroll deduction account at the end of a Plan
Period will be automatically refunded to the employee, except that any balance
which is less than the purchase price of one share of Common Stock will be
carried forward into the employee’s payroll deduction account for the following
Offering, unless the employee elects not to participate in the following
Offering under the Plan, in which case the balance in the employee’s account
shall be refunded.

 

10.     ISSUANCE OF CERTIFICATES. Certificates
representing shares of Common Stock purchased under the Plan may be issued only
in the name of the employee, in the name of the employee and another person of
legal age as joint tenants with rights of survivorship, or (in the Company’s
sole discretion) in the name of a brokerage firm, bank or other nominee holder
designated by the employee. The Company may, in its sole discretion and in
compliance with

 

 

applicable laws,
authorize the use of book entry registration of shares in lieu of issuing stock
certificates.

 

11.     RIGHTS ON DEATH OR TERMINATION OF
EMPLOYMENT. In the event of a participating employee’s termination of
employment prior to the last business day of a Plan Period, no payroll
deduction shall be taken from any pay due and owing to an employee and the
balance in the employee’s account shall be paid to the employee or, in the
event of the employee’s death, (a) to a beneficiary previously designated
in a revocable notice signed by the employee (with any spousal consent required
under state law) or (b) in the absence of such a designated beneficiary,
to the executor or administrator of the employee’s estate or (c) if no
such executor or administrator has been appointed to the knowledge of the
Company, to such other person(s) as the Company may, in its discretion,
designate. If, prior to the last business day of the Plan Period, the
Designated Subsidiary by which an employee is employed shall cease to be a
subsidiary of the Company, or if the employee is transferred to a subsidiary of
the Company that is not a Designated Subsidiary, the employee shall be deemed
to have terminated employment for the purposes of this Plan.

 

12.     OPTIONEES NOT STOCKHOLDERS. Neither the
granting of an Option to an employee nor the deductions from his pay shall
constitute such employee a stockholder of the shares of Common Stock covered by
an Option under this Plan until such shares have been purchased by and issued
to him.

 

13.     RIGHTS NOT TRANSFERABLE. Rights under this
Plan are not transferable by a participating employee other than by will or the
laws of descent and distribution, and are exercisable during the employee’s
lifetime only by the employee.

 

14.     APPLICATION OF FUNDS. All funds received
or held by the Company under this Plan may be combined with other corporate
funds and may be used for any corporate purpose.

 

15.     ADJUSTMENT IN CASE OF CHANGES AFFECTING
COMMON STOCK. In the event of a subdivision of outstanding shares of Common
Stock, or the payment of a dividend in Common Stock, the number of shares
approved for this Plan, and the share limitation set forth in Section 9,
shall be increased proportionately, and such other adjustment shall be made as
may be deemed equitable by the Board or the Committee. In the event of any
other change affecting the Common Stock, such adjustment shall be made as may
be deemed equitable by the Board or the Committee to give proper effect to such
event.

 

16.     MERGER. If the Company shall at any time
merge or consolidate with another corporation and the holders of the capital
stock of the Company immediately prior to such merger or consolidation continue
to hold at least 80% by voting power of the capital stock of the surviving
corporation (“Continuity of Control”), the holder of each Option then
outstanding will thereafter be entitled to receive at the next Exercise Date
upon the exercise of such Option for each share as to which such Option shall
be exercised the securities or property which a holder of one share of the
Common Stock was entitled to upon and at the time of such merger or
consolidation, and the Board or the Committee shall take such steps in
connection with such merger or consolidation as the Board or the Committee
shall deem necessary to assure that the provisions of Section 15 shall
thereafter be applicable, as nearly as reasonably may be, in

 

 

relation to the said securities
or property as to which such holder of such Option might thereafter be entitled
to receive thereunder.

 

In the event of a
merger or consolidation of the Company with or into another corporation which
does not involve Continuity of Control, or of a sale of all or substantially
all of the assets of the Company while unexercised Options remain outstanding
under the Plan, (a) subject to the provisions of clauses (b) and (c),
after the effective date of such transaction, each holder of an outstanding
Option shall be entitled, upon exercise of such Option, to receive in lieu of
shares of Common Stock, shares of such stock or other securities as the holders
of shares of Common Stock received pursuant to the terms of such transaction;
or (b) all outstanding Options may be cancelled by the Board or the
Committee as of a date prior to the effective date of any such transaction and
all payroll deductions shall be paid out to the participating employees; or (c) all
outstanding Options may be cancelled by the Board or the Committee as of the
effective date of any such transaction, provided that notice of such
cancellation shall be given to each holder of an Option, and each holder of an
Option shall have the right to exercise such Option in full based on payroll deductions
then credited to his account as of a date determined by the Board or the
Committee, which date shall not be less than ten (10) days preceding the
effective date of such transaction.

 

17.     AMENDMENT OF THE PLAN. The Board may at
any time, and from time to time, amend this Plan in any respect, except that (a) if
the approval of any such amendment by the stockholders of the Company is
required by Section 423 of the Code, such amendment shall not be effected
without such approval, and (b) in no event may any amendment be made which
would cause the Plan to fail to comply with Section 423 of the Code.

 

18.     INSUFFICIENT
SHARES. In the event that the total number of shares of Common Stock specified
in elections to be purchased under any Offering plus the number of shares
purchased under previous Offerings under this Plan exceeds the maximum number
of shares issuable under this Plan, the Board or the Committee will allot the
shares then available on a pro rata basis.

 

19.     TERMINATION
OF THE PLAN. This Plan may be terminated at any time by the Board. Upon
termination of this Plan all amounts in the accounts of participating employees
shall be promptly refunded.

 

20.     GOVERNMENTAL
REGULATIONS. The Company’s obligation to sell and deliver Common Stock under
this Plan is subject to listing on a national stock exchange or quotation on
the Nasdaq National Market (to the extent the Common Stock is then so listed or
quoted) and the approval of all governmental authorities required in connection
with the authorization, issuance or sale of such stock.

 

21.     GOVERNING
LAW. The Plan shall be governed by Delaware law except to the extent that such
law is preempted by federal law.

 

22.     ISSUANCE
OF SHARES. Shares may be issued upon exercise of an Option from authorized but
unissued Common Stock, from shares held in the treasury of the Company, or from
any other proper source.

 

 

23.     NOTIFICATION
UPON SALE OF SHARES. Each employee agrees, by entering the Plan, to promptly
give the Company notice of any disposition of shares purchased under the Plan
where such disposition occurs within two years after the date of grant of the
Option pursuant to which such shares were purchased.

 

24.     WITHHOLDING.
Each employee shall, no later than the date of the event creating the tax
liability, make provision satisfactory to the Board for payment of any taxes
required by law to be withheld in connection with any transaction related to
Options granted to or shares acquired by such employee pursuant to the Plan.
The Company may, to the extent permitted by law, deduct any such taxes from any
payment of any kind otherwise due to an employee.

 

25.     EFFECTIVE
DATE AND APPROVAL OF STOCKHOLDERS. The Plan shall take effect on the Effective
Date, subject to approval by the stockholders of the Company as required by Section 423
of the Code, which approval must occur within twelve months of the adoption of
the Plan by the Board.

 

26.     SPECIAL
PROVISIONS FOR FIRST PLAN PERIOD. The following provisions of this Section 26
shall apply with respect to the first Plan Period notwithstanding any provision
of the Plan to the contrary:

 

(a)    
Every eligible employee shall automatically become a participant in the
Plan for the first Plan Period at the highest percentage of Compensation permitted
under Section 5. No payroll deductions shall be required for the first
Plan Period; HOWEVER, a participant may, at any time after the effectiveness of
the Plan’s Registration Statement on Form S-8, elect to have payroll
deductions up to the aggregate amount which would have been credited to his or
her account if a deduction of fifteen percent (15%) of the Compensation which
he or she received on each pay day during the first Plan Period had been made
(the “Maximum Amount”) or decline to participate by filing an appropriate
subscription agreement.

 

(b)    
Upon the automatic exercise of a participant’s option on the Exercise
Date for the First Plan Period, a participant shall be permitted to purchase
shares with (i) the accumulated payroll deductions in his or her account,
if any, (ii) a direct payment form the participant, or (iii) a
combination thereof; PROVIDED, HOWEVER, that the total amount applied to the
purchase may not exceed the Maximum Amount.

 

Adopted by the Board of Directors on March 8, 2004

Updated to reflect a
1.28-for-1 split of the Company’s Common Stock effected on May 10, 2004

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