Document:

EX-10.3

 Exhibit 10.3 

PRIVATE AND CONFIDENTIAL 
 EXECUTIVE
EMPLOYMENT TERM SHEET 
 This term sheet summarizes the employment and compensation arrangements between STANCORP
FINANCIAL GROUP, INC. and its subsidiaries (the “Company”) and the named executive (the “Executive”) that will become effective as of the consummation of the planned acquisition of the Company (the “Transaction”) by
Meiji Yasuda Life Insurance Company (“Purchaser”). The date of the consummation of the Transaction is referred to in this term sheet as the “Effective Date.” 

 

			
	 Executive
	  	 _____________________

		
	 Position
	  	 _____________________

		
	 Duties and Authorities
	  	 The Executive’s duties and authorities will be substantially comparable to his or her current duties and authorities; provided that the Executive
acknowledges that from and after the Effective Date, such duties and authorities (i) may reflect the fact that the Company will no longer be an independent public company following the consummation of the Transaction and that it will be a subsidiary
reporting to a parent entity (ii) may include such additional duties and authorities as may be reasonably assigned by the Board of Directors of the Company with respect to compliance with applicable legal and regulatory responsibilities arising as a
result of Purchaser’s ownership of the Company, Purchaser’s internal consolidated financial reporting requirements and other Purchaser corporate policies.

		
	 Principal Place of Employment
	  	 Current Principal Place of Employment

		
	 Employment Period
	  	 At will

		
	 Compensation
	  	
		
	         Annual Base Salary
	  	 $_______________________

		
	         Short Term Incentive Compensation
	  	 The Executive will be eligible to receive an annual cash bonus with a target bonus amount equal to at least _____% of the Executive’s annual base salary
and a maximum bonus opportunity of at least ______% of the Executive’s annual

  
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		  	 base salary. Annual bonus amounts, targets and performance metrics will be established by mutual agreement of the Board of Directors of the Company (or a
committee thereof), the Company’s Chief Executive Officer and Purchaser.

		
	         Long Term Incentive Compensation
	  	 The Executive will be eligible to participate in a long term incentive compensation plan to be adopted by the Company as of the Effective Date (the
“LTIP”), with annual grants at least equal to Executive’s current target long-term incentive value. The LTIP will be designed by mutual agreement of the Board of Directors of the Company (or a committee thereof), the
Company’s Chief Executive Officer and Purchaser. For FY 2016, any awards under the LTIP may be offset by values earned from FY2016 grants made pre-close.

		
	         Special Retention Bonus
	  	 The Executive will be eligible to receive a special cash retention bonus equal to $__________ (the “Retention Bonus”). The Retention Bonus
will be payable in two equal installments on the first and second anniversaries of the Effective Date provided that the Executive continues to be employed by the Company as of such date.

		
	 Severance Benefits
	  	
		
	         Termination of Employment

        without Cause
	  	 If the Executive’s employment is terminated by the Company without Cause, the Executive will be entitled to
receive:
  

•    annual base salary earned through the termination date;

 
 •    any earned prior
year annual cash bonus not yet paid as of the termination date;
  

•    a pro rata portion of the Executive’s annual cash bonus based on achievement of the
applicable target bonus amount;

  
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		  	 •    all vested LTIP awards not yet paid as of the termination date and
a pro rata portion of all unvested LTIP awards based on achievement of the applicable target bonus amounts;
  

•    any unpaid portion of the Executive’s Retention Bonus;

 
 •    continuation of
coverage, at the Company’s expense, under the Company’s group medical, disability and life insurance plans for a period of 18 months; and
  

•    all other payments and benefits to which the Executive may be entitled under the terms
of the Company employee benefit plans and programs in which the Executive participates as of the termination date.

	 Disability and Death
	  	 If the Executive’s employment with the Company terminates as a result of the Executive’s permanent disability or
death, the Executive (or his estate) will be eligible to receive:
  

•    annual base salary earned through the termination date;

 
 •    any earned prior
year annual cash bonus not yet paid as of the termination date;
  

•    a pro rata portion of the Executive’s unpaid Retention Bonus; and

 
 •    all other payments
and benefits to which the Executive may be entitled under the terms of the Company employee benefit plans and programs in which the Executive participates as of the termination date.

  
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	 Other Termination Events
	  	 If the Executive’s employment with the Company terminates for any other reason, the Executive will be entitled to
receive:
  

•    annual base salary earned through the termination date; and

 
 •    any other payments
and benefits to which the Executive may be entitled under the terms of the Company employee benefit plans and programs in which the Executive participates as of the termination date.

		
	 Definitions of Terms
	  	 For purposes of the foregoing severance arrangements, the term “Cause” will have the definition provided in the Company’s existing Change of
Control Agreements; “Disability” will mean permanent disability determined based on the terms of the Company’s existing long-term disability insurance plans; and “termination without Cause” shall include Executive’s
resignation following a material breach by the Company of the compensation arrangements set forth in the written agreement or agreements reflecting the terms summarized in this term sheet, which breach has not been cured by the Company within 30
days after receipt of written notice thereof from the Executive.

		
	 Release
	  	 The Company will require that the Executive execute a written release, in customary form, as a condition to the payment of severance benefits to the
Executive.

		
	 Noncompetition and Nonsolicitation Agreement
	  	 In consideration of the additional payments and benefits to be made and provided to the Executive by the Company, the Executive will agree that, during the
Executive’s employment by the Company and [for a period of 12 months after termination of the Executive’s employment,] or [during the 12 months commencing on termination of the Executive’s employment if such termination occurs before
the second anniversary of the Effective Date, or until the third anniversary of the

  
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	 	  	 Effective Date, if such termination occurs after the second but before
the third anniversary of the Effective Date,] the Executive will not,
without
the Company’s written consent, serve as a director, officer or
employee (full or part-time) of or consultant to any insurance company
that provides or proposes to provide, anywhere in the United States,
Competitive Products. For this
purpose “Competitive Products” means
group short-term disability insurance, group long-term disability
insurance, individual disability insurance, group life insurance, and
qualified and nonqualified retirement plan services, of
the type provided
by the Company. During the foregoing period, the Executive will
additionally agree not to solicit the employment of (as an employee,
consultant or otherwise) any executive, managerial or technical
employee of the
Company, solicit or otherwise interfere with the
business relationships between the Company and any of its suppliers,
distributors, agents, customers or other business relations or disparage
Purchaser, the Company or any of their respective
directors, officers or
employees.

		
	 Officer Severance Plan
	  	 After the two-year Retention Bonus period (described above), the Executive will be added to the Officer Severance Plan at a new tier with a formula severance
equal to three weeks base salary per year of service, with a minimum of one year of base salary and a maximum of two years of base salary, plus 12 months of COBRA.

		
	 Withholding
	  	 All payments and benefits to be made or provided to the Executive by the Company are subject to tax and other withholding obligations to the extent required
by applicable law.

  
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	 Effectiveness
	  	 The existing employment and compensation arrangements between the Company and the Executive (including the existing Change
in Control Agreement) will continue in effect until the Effective Date.
  

On the Effective Date, subject to the Company’s execution of a written agreement or agreements reflecting the terms summarized in this
term sheet approved by mutual agreement of the Board of Directors of the Company (or a committee thereof), the Executive and Purchaser, the existing Change of Control Agreement between the Company and the Executive will terminate and will be
superseded by such agreement or agreements entered into by the Company and the Executive. Any “excess parachute payments” paid or payable by the Company in connection with the Transaction will be treated in the same manner as under Section
5.5 of the Change of Control Agreement. The Company agrees to work with executive to take reasonable steps to reduce or eliminate any “excess parachute payments” or minimize or avoid any such reduction.

		
	 Documentation
	  	 The arrangements summarized in this term sheet will be documented in one or more written agreements to be executed by the Company and the Executive on or
prior to the Effective Date. The form and terms of such agreements will be determined by mutual agreement of the Board of Directors of the Company (or a committee thereof), the Company’s Chief Executive Officer and Purchaser. The Company, the
Company’s Chief Executive Officer and Purchaser will take reasonable efforts to agree to the form of such agreements as promptly as practicable following the date this term sheet is executed by the parties.

 * * * * * 

  
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 The foregoing term sheet is agreed and accepted by the Company, Purchaser and the Executive: 

 

			
	STANCORP FINANCIAL GROUP, INC.
		
	By	 	 
	Its	 	 
	Date	 	 

  

			
	Executive
		
	Signature	 	 
	Date	 	 

  

			
	Meiji Yasuda Life Insurance Company
		
	By	 	 
	Its	 	 
	Date	 	 

  
 7vvus_EX 10-3

		

			Exhibit 10.3

		

		

			

		

		

			 

		

		

			 

		

		

			 

		

		
			August 17, 2015
		

		
			 
		

		
			Svai S. Sanford
		

		
			250 Upland Road
		

		
			Redwood City, CA 94062
		

		
			 
		

		
			 
		

		
			Re:Retention Agreement
		

		
			Dear Svai:
		

		
			We appreciate the many contributions that you have made as a valuable member of VIVUS, Inc. (the “Company” or “VIVUS”).  By this letter agreement (the “Retention Agreement”), the Company is offering certain changes to your compensation, as follows.
		

			
	
			
				 1.
			Retention Benefits.  Subject to Sections 4 and 6  below, if (x) you remain an employee of VIVUS from the date of this Retention Agreement through September 30, 2015 (the “Retention Date”), or (y) prior to the Retention Date, your employment with the Company is terminated by the Company for any reason other than due to Cause (as defined below) and such termination is not as a result of your death or disability, then you will receive a lump sum retention bonus of $108,690 which is equal to the pro rata amount of your annual cash bonus target for fiscal year 2015 through the end of September 2015 (the “Retention Benefit”).

			
	
			
				 2.
			At-Will Employment.  The Company and you acknowledge that your employment is and will continue to be at-will, as defined under applicable law, which means that either the Company or you may terminate your employment with the Company at any time and for any reason, with or without cause or notice.  If your employment terminates for any reason, you will not be entitled to any separation payments or benefits, other than as provided by this Retention Agreement.

			
	
			
				 3.
			Employment Termination.  You and the Company agree that your employment with the Company will terminate on the Retention Date.  

			
	
			
				 4.
			Conditions.  As a condition to receiving the Retention Benefit, you will be required to sign and not revoke a separation and release of claims agreement in substantially the form attached hereto as Exhibit A (the “Release”).  The Release must become effective and irrevocable no later than the twenty-eighth (28th) day following the Retention Date (the “Release Deadline Date”).  If the Release does not become effective and irrevocable by the Release Deadline Date, you will forfeit any right to the Retention Benefit.  In no event will the Retention Benefit be paid or provided until the Release becomes effective and irrevocable.  Provided that the Release becomes effective and irrevocable by the Release Deadline Date and subject to Section  6, the Retention Benefit will be paid within ten (10) days following the date that the Release becomes effective and irrevocable.

			
	
			
				 5.
			Definitions.  For purposes of this Retention Agreement, the following terms will have the following definitions:

			
	
			
				 (a)
			Cause.  “Cause” means (i) gross negligence or willful misconduct in the performance of your duties to the Company where such gross negligence or willful misconduct has resulted or is likely to result in 

		 

		

			VIVUS, Inc.    351 E. Evelyn Ave., Mountain View, CA  94041    Tel 650-934-5200     www.vivus.com

		

		

			 

		

		

			 

		

 

		

			 

		

		

			 

		

		

			 

		

	substantial and material damage to the Company or its subsidiaries, (ii) repeated unexcused absences from the Company, (iii) commission of any act of fraud with respect to the Company, or (v) conviction of a felony or a crime involving moral turpitude and causing material harm to the standing and reputation of the Company, in each case as determined in good faith by the Company’s Board of Directors (the “Board”).

			
	
			
				 (b)
			Section 409A.  “Section 409A” means Section 409A of the Code, any final regulations and guidance under that statute, and any applicable state law equivalent, as each may be amended or promulgated from time to time.

			
	
			
				 (c)
			Section 409A Limit.  “Section 409A Limit” means the lesser of two (2) times: (i) your annualized compensation based upon the annual rate of pay paid to you during the Company’s taxable year preceding the Company’s taxable year of your termination of employment as determined under Treasury Regulation 1.409A‐1(b)(9)(iii)(A)(1) and any Internal Revenue Service guidance issued with respect thereto; or (ii) the maximum amount that may be taken into account under a qualified plan pursuant to Section 401(a)(17) of the Code for the year in which your employment is terminated. 

			
	
			
				 (d)
			Severance Agreement.  “Severance Agreement” means the Second Amended and Restated Change of Control and Severance Agreement dated June 19, 2015, entered into between you and the Company, which superseded and replaced the Participation Agreement entered into with the Company on July 10, 2013 with respect to the Change in Control and Severance Plan.

			
	
			
				 6.
			Section 409A.    

			
	
			
				 (a)
			General.  The Retention Benefit is intended to be exempt from or otherwise comply with the requirements of Section 409A so that the payment to be provided under this Agreement will be subject to the additional tax imposed under Section 409A, and any ambiguities or ambiguous terms in this Retention Agreement will be interpreted to be so exempt or otherwise comply with Section 409A.  The payment under this Retention Agreement is deemed to be a separate payment for Section 409A purposes.  You and the Company agree to work together in good faith to consider amendments to this Retention Agreement and to take such reasonable actions that are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition prior to actual payment to you under Section 409A.  The amount paid under this Retention Agreement that satisfies the requirements of the “short-term deferral” rule set forth in Section 1.409A-1(b)(4) of the Treasury Regulations will not constitute a Deferred Payment for purposes of this Section 6.  The amount paid under this Retention Agreement that qualifies as a payment made as a result of an involuntary separation from service pursuant to Section 1.409A-1(b)(9)(iii) of the Treasury Regulations that does not exceed the Section 409A Limit will not constitute Deferred Payments for purposes of this Section 6.

			
	
			
				 (b)
			Required Delay.  Notwithstanding anything to the contrary in this Retention Agreement, no payment to be paid or provided to you, if any, under this Retention Agreement that, when considered together with any other severance payments or separation benefits, are considered deferred compensation under Section 409A (together, the “Deferred Payments”) will be paid or provided until you have a “separation from service” within the meaning of Section 409A.  Similarly, no Retention Benefit payable to you, if any, that otherwise would be exempt from Section 409A pursuant to Treasury Regulation Section 1.409A‐1(b)(9) will be payable until you have a “separation from service” within the meaning of Section 409A.  In no event will you have discretion to determine the taxable year of payment of any Deferred Payment.  If and only to the extent it is necessary to avoid subjecting you to an additional tax under Section 409A, payment of all or a portion of the Retention Benefit will be delayed until the date that is six (6) months and one (1) day after the date of your separation from service with the Company.  However, in the event that your death occurs after your separation from service with the Company but prior to the six (6) month anniversary of the date of your separation from service with the Company, any payments and/or benefits due to you but delayed under the prior sentence will be payable to you in a lump sum as soon as 

		 

		

			VIVUS, Inc.    351 E. Evelyn Ave., Mountain View, CA  94041    Tel 650-934-5200     www.vivus.com

		

		

			 

		

		

			 

		

		

			 

		

		

			 

		

 

		

			 

		

		

			 

		

		

			 

		

	administratively practicable after the date of your death and any other separation pay and/or benefits will be payable according to the payment schedule applicable to each payment.

			
	
			
				 7.
			Tax Consequences.  The payment made pursuant to this Retention Agreement will be subject to withholding of applicable income, employment and other taxes.  The Company makes no representations or warranties with respect to the tax consequences of any payments provided under this Retention Agreement.  You agree and understand that you are responsible for payment, if any, of local, state, and/or federal taxes on the payments provided under this Retention Agreement or otherwise and any penalties or assessments related to such taxes (including but without limitation, pursuant to Section 409A).  

			
	
			
				 8.
			Confidentiality.  The terms of this Retention Agreement, excluding the Retention Date, are considered to be confidential information by the Company and you agree to hold such information in strict confidence and not use, disclose or transfer the information to any third party, other than your spouse and legal and tax advisors, without the express written permission of Company, except to the extent required to be disclosed by law, government agency, court order or valid discovery request in connection with a legal proceeding.  The Company agrees to hold such information in strict confidence and not use, disclose or transfer the information to any third party without your express written permission, except to the extent required to be disclosed by law, government agency, court order or valid discovery request in connection with a legal proceeding.

			
	
			
				 9.
			Severability.  If any provision of this Retention Agreement is held to be void, voidable, unlawful or unenforceable, the remaining portions of this Retention Agreement will remain in full force and effect.

			
	
			
				 10.
			Arbitration.  Any dispute or controversy arising under or in connection with this Retention Agreement may be settled at the option of either party by binding arbitration in the County of Santa Clara, California, in accordance with the Employment Arbitration Rules & Procedures of the Judicial Arbitration & Mediation Services then in effect.  Judgment may be entered on the arbitrator’s award in any court having jurisdiction.  

			
	
			
				 11.
			Choice of Law.  The validity, interpretation, construction and performance of this Retention Agreement will be governed by the laws of the State of California without reference to conflict of laws provisions.

			
	
			
				 12.
			Assignment by Company.  The Company may assign its rights under this Retention Agreement to an affiliate, and an affiliate may assign its rights under this Retention Agreement to another affiliate of the Company or to the Company.  In the case of any such assignment, the term “Company” when used in a section of this Retention Agreement will mean the corporation that actually employs you.

			
	
			
				 13.
			Whole Agreement; Modifications.  No agreements, representations or understandings (whether oral or written and whether express or implied) which are not expressly set forth in this Retention Agreement have been made or entered into by either party with respect to the subject matter hereof.  This Retention Agreement supersedes any agreement concerning similar subject matter dated prior to the date of this Retention Agreement, including but not limited to the Severance Agreement, and by execution of this Retention Agreement both parties agree that the Severance Agreement will be deemed null and void.    This Retention Agreement may not be modified or changed in any manner except by a writing executed by you and a duly authorized executive officer of the Company.  No party is relying upon any other agreement, representation, statement, omission, understanding or course of conduct which is not expressly set forth in this Retention Agreement.  Headings used in this Agreement are for convenience only and will not be used to interpret its substantive terms.

		
			To accept this Retention Agreement, please date and sign this letter below where indicated and return it to John L. Slebir.  If you do not accept this Agreement by close of business on August 17, 2015, this Retention Agreement will not become effective.
		

		
			

		 

		

			VIVUS, Inc.    351 E. Evelyn Ave., Mountain View, CA  94041    Tel 650-934-5200     www.vivus.com

		

		

			 

		

		

			 

		

		

			 

		

		

			 

		

 

		

			 

		

		

			 

		

		

			 

		

We greatly appreciate your many contributions to the Company.
		

		
			Sincerely,
		

		
			 
		

		
			/s/ Seth H. Z. Fischer 
		

		
			 
		

		
			Seth H. Z. Fischer
		

		
			Chief Executive Officer
		

		
			 
		

		
			 
		

		
			By signing this letter, I acknowledge that I have had the opportunity to review this Retention Agreement carefully with an attorney of my choice; that I have read this Retention Agreement and understand its terms; that I enter into this Retention Agreement knowingly and voluntarily; and that I agree to and accept all of the terms set forth in this Retention Agreement.
		

		
			Agreed and Accepted:
		

		
			 
		

		
			Dated: 17 August, 2015 SVAI S. SANFORD
		

		
			/s/ Svai S. Sanford
		

		
			 
		

		
			 
		

		
			 

		

		
			EXHIBIT A
		

		
			 
		

		
			SEPARATION AGREEMENT AND RELEASE
		

		
			 
		

		
			 
		

		
			 
		

		
			

		 

		

			VIVUS, Inc.    351 E. Evelyn Ave., Mountain View, CA  94041    Tel 650-934-5200     www.vivus.com

		

		

			 

		

		

			 

		

		

			 

		

		

			 

		

 

		

			 

		

		

			 

		

		

			 

		

SEPARATION AGREEMENT AND RELEASE
		

		
			 
		

		
			This Separation Agreement and Release (“Agreement”) is made by and between Svai S. Sanford (“Employee”) and VIVUS, Inc. (the “Company”) (collectively referred to as the “Parties” or individually referred to as a “Party”).
		

		
			 
		

		
			Whereas, in connection with Employee’s termination of employment effective as of September 30, 2015, Employee is eligible to receive the payment provided in the letter agreement by and between Employee and the Company dated August 17, 2015 (the “Retention Agreement”), subject to the terms and conditions set forth therein including (but not limited to) entering into a release of claims agreement in favor of the Company under Section 4 of the Retention Agreement. 
		

		
			 
		

		
			Whereas, in consideration for such payment provided under the Retention Agreement and pursuant to Section 4 of the Retention Agreement, the Parties wish to resolve any and all disputes, claims, complaints, grievances, charges, actions, petitions, and demands that Employee may have against the Company and any of the Releasees as defined below, including, but not limited to, any and all claims arising out of or in any way related to Employee’s employment with or separation from the Company.
		

		
			 
		

		
			Now, therefore, Employee covenants and agrees as follows:
		

		
			 
		

			
	
			
				 1.
			Payment of Salary and Receipt of All Benefits.  Employee acknowledges and represents that, other than the consideration set forth in the Retention Agreement, the Company has paid or provided all salary, wages, bonuses, accrued vacation/paid time off, premiums, leaves, housing allowances, relocation costs, interest, severance, outplacement costs, fees, reimbursable expenses, commissions, stock, stock options, vesting, and any and all other benefits and compensation due to Employee.  

		
			 
		

			
	
			
				 2.
			Release of Claims.  Employee agrees that the foregoing consideration represents settlement in full of all outstanding obligations owed to Employee by the Company and its current and former officers, directors, employees, agents, investors, attorneys, shareholders, administrators, affiliates, benefit plans, plan administrators, insurers, trustees, divisions, and subsidiaries, and predecessor and successor corporations and assigns (collectively, the “Releasees”).  Employee, on his/her own behalf and on behalf of his/her respective heirs, family members, executors, agents, and assigns, hereby and forever releases the Releasees from, and agrees not to sue concerning, or in any manner to institute, prosecute, or pursue, any claim, complaint, charge, duty, obligation, demand, or cause of action relating to any matters of any kind, whether presently known or unknown, suspected or unsuspected, that Employee may possess against any of the Releasees arising from any omissions, acts, facts, or damages that have occurred up until and including the Effective Date (as defined below) of this Agreement, including, without limitation:

		
			 
		

		
			a.any and all claims relating to or arising from Employee’s employment relationship with the Company and the termination of that relationship; 
		

		
			 
		

		
			b.any and all claims relating to, or arising from, Employee’s right to purchase, or actual purchase of shares of stock of the Company, including, without limitation, any claims for fraud, misrepresentation, breach of fiduciary duty, breach of duty under applicable state corporate law, and securities fraud under any state or federal law;
		

		
			

		 

		

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			c.any and all claims for wrongful discharge of employment; termination in violation of public policy; discrimination; harassment; retaliation; breach of contract, both express and implied; breach of covenant of good faith and fair dealing, both express and implied; promissory estoppel; negligent or intentional infliction of emotional distress; fraud; negligent or intentional misrepresentation; negligent or intentional interference with contract or prospective economic advantage; unfair business practices; defamation; libel; slander; negligence; personal injury; assault; battery; invasion of privacy; false imprisonment; conversion; and disability benefits;
		

		
			 
		

		
			d.any and all claims for violation of any federal, state, or municipal statute, including, but not limited to, Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1991; the Rehabilitation Act of 1973; the Americans with Disabilities Act of 1990; the Equal Pay Act; the Fair Labor Standards Act; the Fair Credit Reporting Act; the Age Discrimination in Employment Act of 1967; the Older Workers Benefit Protection Act; the Employee Retirement Income Security Act of 1974; the Worker Adjustment and Retraining Notification Act; the Family and Medical Leave Act; the Sarbanes-Oxley Act of 2002; the California Family Rights Act; the California Labor Code; the California Workers’ Compensation Act; and the California Fair Employment and Housing Act; 
		

		
			 
		

		
			e.any and all claims for violation of the federal or any state constitution;
		

		
			 
		

		
			f.any and all claims arising out of any other laws and regulations relating to employment or employment discrimination;
		

		
			 
		

		
			g.any claim for any loss, cost, damage, or expense arising out of any dispute over the nonwithholding or other tax treatment of any of the proceeds received by Employee as a result of this Agreement; and
		

		
			 
		

		
			h.any and all claims for attorneys’ fees and costs.
		

		
			 
		

		
			Employee agrees that the release set forth in this section shall be and remain in effect in all respects as a complete general release as to the matters released.  This release does not extend to any obligations incurred under this Agreement.  This release does not release claims that cannot be released as a matter of law, including, but not limited to, Employee’s right to file a charge with or participate in a charge by the Equal Employment Opportunity Commission, or any other local, state, or federal administrative body or government agency that is authorized to enforce or administer laws related to employment, against the Company (with the understanding that any such filing or participation does not give Employee the right to recover any monetary damages against the Company; Employee’s release of claims herein bars Employee from recovering such monetary relief from the Company).  Notwithstanding the foregoing, Employee acknowledges that any and all disputed wage claims that are released herein shall be subject to binding arbitration in accordance with Section 9 below, which precludes Employee from filing a claim with the Division of Labor Standards Enforcement.  Further, (i) Employee will not be deemed to have waived his/her right to indemnification in accordance with the Company’s certificate of incorporation and bylaws, which indemnifies and holds Employee harmless from and against any and all liability, loss, damages or expenses incurred as a result of, arising out of, or in any way related to, Employee’s service as an officer or director of the Company, to the same extent as with respect to other officers and directors of the Company, or under Labor Code Section 2802, and (ii) Employee will not be deemed to have waived any claims with respect to vested benefits under an ERISA-governed plan.  Employee represents that he/she has made no assignment or transfer of any right, claim, complaint, charge, duty, obligation, demand, cause of action, or other matter waived or released by this Section.
		

		
			 
		

			
	
			
				 3.
			Acknowledgment of Waiver of Claims under ADEA.  Employee acknowledges that he/she is waiving and releasing any rights he/she may have under the Age Discrimination in Employment Act of 1967 (“ADEA”), and 

		 

		

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	that this waiver and release is knowing and voluntary.  Employee agrees that this waiver and release does not apply to any rights or claims that may arise under the ADEA after the Effective Date of this Agreement.  Employee acknowledges that the consideration given for this waiver and release is in addition to anything of value to which Employee was already entitled.  Employee further acknowledges that he/she has been advised by this writing that: (a) he/she should consult with an attorney prior to executing this Agreement; (b) he/she has twenty-one (21) days within which to consider this Agreement; (c) he/she has seven (7) days following his/her execution of this Agreement to revoke this Agreement; (d) this Agreement shall not be effective until after the revocation period has expired; and (e) nothing in this Agreement prevents or precludes Employee from challenging or seeking a determination in good faith of the validity of this waiver under the ADEA, nor does it impose any condition precedent, penalties, or costs for doing so, unless specifically authorized by federal law.  In the event Employee signs this Agreement and returns it to the Company in less than the 21-day period identified above, Employee hereby acknowledges that he/she has freely and voluntarily chosen to waive the time period allotted for considering this Agreement.  Employee acknowledges and understands that revocation must be accomplished by a written notification to the person executing this Agreement on the Company’s behalf that is received prior to the Effective Date.

		
			 
		

			
	
			
				 4.
			California Civil Code Section 1542.  Employee acknowledges that he/she has been advised to consult with legal counsel and is familiar with the provisions of California Civil Code Section 1542, a statute that otherwise prohibits the release of unknown claims, which provides as follows:

		
			 
		

		
			A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.
		

		
			 
		

		
			Employee, being aware of said code section, agrees to expressly waive any rights he/she may have thereunder, as well as under any other statute or common law principles of similar effect.
		

		
			 
		

			
	
			
				 5.
			No Pending or Future Lawsuits.  Employee represents that he/she has no lawsuits, claims, or actions pending in his/her name, or on behalf of any other person or entity, against the Company or any of the other Releasees. Employee also represents that he/she does not intend to bring any claims on his/her own behalf or on behalf of any other person or entity against the Company or any of the other Releasees.

		
			 
		

			
	
			
				 6.
			Trade Secrets and Confidential Information/Company Property.  Employee reaffirms and agrees to observe and abide by the terms of the Employment, Confidential Information, Invention Assignment, and Arbitration Agreement dated April 29, 1999, specifically including the provisions therein regarding nondisclosure of the Company’s trade secrets and confidential and proprietary information, and nonsolicitation of Company employees.  Employee’s signature below constitutes his/her certification under penalty of perjury that he/she has returned all documents and other items provided to Employee by the Company, developed or obtained by Employee in connection with his/her employment with the Company, or otherwise belonging to the Company.    

		
			 
		

			
	
			
				 7.
			No Admission of Liability.  The Parties understand and acknowledge that this Agreement constitutes a compromise and settlement of any and all actual or potential disputed claims by the Parties.  No action taken by the Company or Employee hereto, either previously or in connection with this Agreement, shall be deemed or construed to be (a) an admission of the truth or falsity of any actual or potential claims or (b) an acknowledgment or admission by the Company or Employee of any fault or liability whatsoever to the other Party or to any third party.

		
			 
		

			
	
			
				 8.
			Costs.  The Parties shall each bear their own costs, attorneys’ fees, and other fees incurred in connection with the preparation of this Agreement.

		
			

		 

		

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				 9.
			ARBITRATION.  THE PARTIES AGREE THAT ANY AND ALL DISPUTES ARISING OUT OF THE TERMS OF THIS AGREEMENT, THEIR INTERPRETATION, AND ANY OF THE MATTERS HEREIN RELEASED, SHALL BE SUBJECT TO ARBITRATION IN SANTA CLARA COUNTY, BEFORE JUDICIAL ARBITRATION & MEDIATION SERVICES (“JAMS”), PURSUANT TO ITS EMPLOYMENT ARBITRATION RULES & PROCEDURES (“JAMS RULES”).  THE ARBITRATOR MAY GRANT INJUNCTIONS AND OTHER RELIEF IN SUCH DISPUTES.  THE ARBITRATOR SHALL ADMINISTER AND CONDUCT ANY ARBITRATION IN ACCORDANCE WITH CALIFORNIA LAW, INCLUDING THE CALIFORNIA CODE OF CIVIL PROCEDURE, AND THE ARBITRATOR SHALL APPLY SUBSTANTIVE AND PROCEDURAL CALIFORNIA LAW TO ANY DISPUTE OR CLAIM, WITHOUT REFERENCE TO ANY CONFLICT-OF-LAW PROVISIONS OF ANY JURISDICTION.  TO THE EXTENT THAT THE JAMS RULES CONFLICT WITH CALIFORNIA LAW, CALIFORNIA LAW SHALL TAKE PRECEDENCE.  THE DECISION OF THE ARBITRATOR SHALL BE FINAL, CONCLUSIVE, AND BINDING ON THE PARTIES TO THE ARBITRATION.  THE PARTIES AGREE THAT THE PREVAILING PARTY IN ANY ARBITRATION SHALL BE ENTITLED TO INJUNCTIVE RELIEF IN ANY COURT OF COMPETENT JURISDICTION TO ENFORCE THE ARBITRATION AWARD.  THE PARTIES TO THE ARBITRATION SHALL EACH PAY AN EQUAL SHARE OF THE COSTS AND EXPENSES OF SUCH ARBITRATION, AND EACH PARTY SHALL SEPARATELY PAY FOR ITS RESPECTIVE COUNSEL FEES AND EXPENSES; PROVIDED, HOWEVER, THAT THE ARBITRATOR SHALL AWARD ATTORNEYS’ FEES AND COSTS TO THE PREVAILING PARTY, EXCEPT AS PROHIBITED BY LAW.  THE PARTIES HEREBY AGREE TO WAIVE THEIR RIGHT TO HAVE ANY DISPUTE BETWEEN THEM RESOLVED IN A COURT OF LAW BY A JUDGE OR JURY.  NOTWITHSTANDING THE FOREGOING, THIS SECTION WILL NOT PREVENT EITHER PARTY FROM SEEKING INJUNCTIVE RELIEF (OR ANY OTHER PROVISIONAL REMEDY) FROM ANY COURT HAVING JURISDICTION OVER THE PARTIES AND THE SUBJECT MATTER OF THEIR DISPUTE RELATING TO THIS AGREEMENT AND THE AGREEMENTS INCORPORATED HEREIN BY REFERENCE.  SHOULD ANY PART OF THE ARBITRATION AGREEMENT CONTAINED IN THIS PARAGRAPH CONFLICT WITH ANY OTHER ARBITRATION AGREEMENT BETWEEN THE PARTIES, THE PARTIES AGREE THAT THIS ARBITRATION AGREEMENT SHALL GOVERN.

		
			 
		

			
	
			
				 10.
			Tax Consequences.  The Company makes no representations or warranties with respect to the tax consequences of the payment and any other consideration provided to Employee or made on his/her behalf under the terms of this Agreement.  Employee agrees and understands that he/she is responsible for payment, if any, of local, state, and/or federal taxes on the payments and any other consideration that would normally be Employee’s responsibility and that the Company will be responsible for the employer-related taxes and contributions that would normally be its responsibility.  

		
			 
		

			
	
			
				 11.
			Authority.  The Company represents and warrants that the undersigned has the authority to act on behalf of the Company and to bind the Company and all who may claim through it to the terms and conditions of this Agreement.  Employee represents and warrants that he/she has the capacity to act on his/her own behalf and on behalf of all who might claim through him/her to bind them to the terms and conditions of this Agreement.  Each Party warrants and represents that there are no liens or claims of lien or assignments in law or equity or otherwise of or against any of the claims or causes of action released herein.

		
			 
		

			
	
			
				 12.
			No Representations.  Employee represents that he/she has had an opportunity to consult with an attorney, and has carefully read and understands the scope and effect of the provisions of this Agreement.  Employee has not relied upon any representations or statements made by the Company that are not specifically set forth in this Agreement.

		
			 
		

		 

		

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				 13.
			Severability.  In the event that any provision or any portion of any provision hereof or any surviving agreement made a part hereof becomes or is declared by a court of competent jurisdiction or arbitrator to be illegal, unenforceable, or void, this Agreement shall continue in full force and effect without said provision or portion of provision.

		
			 
		

			
	
			
				 14.
			Attorneys’ Fees.  Except with regard to a legal action challenging or seeking a determination in good faith of the validity of the waiver herein under the ADEA, in the event that either Party brings an action to enforce or effect its rights under this Agreement, the prevailing Party shall be entitled to recover its costs and expenses, including the costs of mediation, arbitration, litigation, court fees, and reasonable attorneys’ fees incurred in connection with such an action.

		
			 
		

			
	
			
				 15.
			Entire Agreement.  This Agreement represents the entire agreement and understanding between the Company and Employee concerning the subject matter of this Agreement and Employee’s employment with and separation from the Company and the events leading thereto and associated therewith, and supersedes and replaces any and all prior agreements and understandings concerning the subject matter of this Agreement and Employee’s relationship with the Company, with the exception of the Confidentiality Agreement. 

		
			 
		

			
	
			
				 16.
			No Oral Modification.  This Agreement may only be amended in a writing signed by Employee and the Company’s Chief Executive Officer.

		
			 
		

			
	
			
				 17.
			Governing Law.  This Agreement shall be governed by the laws of the State of California, without regard for choice-of-law provisions.  Employee consents to personal and exclusive jurisdiction and venue in the State of California.

		
			 
		

			
	
			
				 18.
			Effective Date.  Employee understands that this Agreement shall be null and void if not executed by him/her within twenty one (21) days.  Employee has seven (7) days after he/she signs this Agreement to revoke it.  This Agreement will become effective on the eighth (8th) day after Employee signed this Agreement, so long as it has been signed by the Parties and has not been revoked by Employee before that date (the “Effective Date”).    

		
			 
		

			
	
			
				 19.
			Counterparts.  This Agreement may be executed in counterparts and by facsimile, and each counterpart and facsimile shall have the same force and effect as an original and shall constitute an effective, binding agreement on the part of each of the undersigned.

		
			 
		

			
	
			
				 20.
			Voluntary Execution of Agreement.  Employee understands and agrees that he/she executed this Agreement voluntarily, without any duress or undue influence on the part or behalf of the Company or any third party, with the full intent of releasing all of his/her claims against the Company and any of the other Releasees.  Employee acknowledges that:

		
			 
		

		
			(a)he/she has read this Agreement;
		

		
			 
		

		
			(b)he/she has been represented in the preparation, negotiation, and execution of this Agreement by legal counsel of his/her own choice or has elected not to retain legal counsel;
		

		
			 
		

		
			(c)he/she understands the terms and consequences of this Agreement and of the releases it contains; and
		

		
			 
		

		
			(d)he/she is fully aware of the legal and binding effect of this Agreement.
		

		
			
		

		
			

		 

		

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IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective dates set forth below.
		

		
			 
		

		
			SVAI S. SANFORD, an individual
		

		
			 
		

		
			Dated:  September 30, 2015/s/ Svai S. Sanford
		

		
			Svai S. Sanford
		

		
			 
		

		
			VIVUS, INC.
		

		
			 
		

		
			Dated:  September 30, 2015By: /s/ John L. Slebir 
		

		
			 
		

		
			Title:SVP, General Counsel 
		

		
			
		

		
			 
		

		
			 
		

		 

		

			-  6  -

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