Amag Pharmaceuticals (AMAG) 8-K Entry into a Material Definitive Agreement

Exhibit 10.2

Stock Option Grant

1. Grant of Option

Advanced Magnetics, Inc., a Delaware corporation (the “Company”), hereby grants to Brian J.G. Pereira (the “Employee”), an option to purchase 100,000 shares of Common Stock, $.01 par value per share, of the Company as hereinafter set forth (the “Option”), pursuant and subject to the terms and provisions of the Company’s Amended and Restated2000 Stock Plan (the “Plan”). The date of grant of this Option is February 7, 2006.

All terms which are defined in the Plan shall have the same meanings herein.

2. Vesting of Option

This Option shall be exercisable in cumulative installations on each of the following dates, as follows:

Date Exercisable	Number of Shares Exercisable
On date of grant		0
November 16, 2006		33,333
November 16, 2007		66,666
November 16, 2008		100,000

Subject to the other provisions of this Section 2 and Section 6 below, no additional shares shall vest and become exercisable between each of the vesting dates set forth above.

Notwithstanding the foregoing, this Option shall become immediately exercisable in full with respect to all 100,000 shares issuable hereunder upon the consummation of a Change of Control. A “Change of Control” shall mean the first to occur of any of the following: (a) any “person” or “group” (as defined in the Securities Exchange Act of 1934) becomes the beneficial owner of a majority of the combined voting power of the then outstanding voting securities with respect to the election of the Board of Directors of the Company; (b) any merger, consolidation or similar transaction involving the Company, other than a transaction in which the stockholders of the Company immediately prior to the transaction hold immediately thereafter in the same proportion as immediately prior to the transaction not less than 50% of the combined voting power of the then voting securities with respect to the election of the Board of Directors of the resulting entity; (c) any sale of all or substantially all of the assets of the Company; or (d) any other acquisition by a third party of all or substantially all of the business or assets of the Company, as determined by the Board of Directors of the Company, in its sole discretion.

Stock Option Agreement Confidential Document 1

61 Mooney Street Cambridge, MA 02138 Tel: [617] 497-2070 Fax: [617] 547-2445

Advanced Magnetics, Inc.

3. Term of Option

This Option shall terminate in ten (10) years on February 7, 2016.

4. Exercise Price

The exercise price of this Option shall be nineteen dollars and ninety eight cents ($19.98) per share.

5. Exercise and Payment

(a) Method of Payment. This Option shall be exercisable by delivery to the Company of written notice of exercise, specifying the number of shares for which this Option is being exercised (subject to Section 2 hereof), together with payment to the Company for the total exercise price thereof in cash, by check or, subject to the Company’s approval, by Common Stock of the Company owned by the Employee for more than six (6) months, or by some combination thereof.

(b) Valuation of Shares Tendered in Payment of Purchase Price. For the purposes hereof, the fair market value of any share of the Company's Common Stock which may be delivered to the Company in exercise of this Option shall be determined in good faith by the Board of Directors of the Company, or, in the absence of such determination, shall be equal to the closing price of a share of the Company’s Common Stock as reported on the American Stock Exchange on the date of exercise of this Option.

(c) Delivery of Shares Tendered in Payment of Purchase Price. If the Company permits the Employee to exercise Options by delivery of shares of Common Stock of the Company, the certificate or certificates representing the shares of Common Stock of the Company to be delivered shall be duly executed in blank by the Employee or shall be accompanied by a stock power duly executed in blank suitable for purposes of transferring such shares to the Company. Fractional shares of Common Stock of the Company will not be accepted in payment of the purchase price of shares acquired upon exercise of this Option.

6. Effect of Termination of Employment or Death

This Option shall not be assignable or transferable either voluntarily or by operation of law, except as set forth in this Section 6.

In the event the Employee during his or her lifetime ceases to be an employee of the Company or of any subsidiary for any reason, other than death, disability, termination by the Company without “cause,” or termination by the Employee for “good reason” (each as defined in the Employment Agreement dated as of November 22, 2005 by and between the Company and the Employee (the “Employment Agreement”)), any unexercised portion of this Option which was otherwise

Stock Option Agreement Confidential Document 2

61 Mooney Street Cambridge, MA 02138 Tel: [617] 497-2070 Fax: [617] 547-2445

Advanced Magnetics, Inc.

exercisable on the date of termination of employment shall expire unless exercised within three months of that date, but in no event after the expiration of the term hereof.

In the event the Company terminates the Employee’s employment with the Company without “cause” or the Employee terminates his employment for “good reason” (each as defined in the Employment Agreement), this Option shall become exercisable in full with respect to all 100,000 shares covered hereby as of the effective date of such termination.

In the event of the death or disability of the Employee (i) while an employee of the Company or any subsidiary, or (ii) during the three-month period following termination of his or her employment for any reason other than death or disability, this Option shall be exercisable for the number of shares otherwise exercisable on the date of death, disability or termination, by the Employee or his or her personal representatives, heirs or legatees, as the case may be, at any time prior to the expiration of one (1) year from the date of the death or disability of the Employee, but in no event after the expiration of the term hereof.

Notwithstanding the foregoing, if the Employee, prior to the termination date of this Option, violates the confidentiality provisions of the Employment Agreement or any confidentiality or other agreement between the Employee and the Company, the right to exercise this Option shall terminate immediately upon written notice to the Employee from the Company describing such violation.

7. Employment

Nothing contained in this Option or in the Plan shall be construed as giving the Employee any right to be retained in the employ of the Company or any of its subsidiaries.

8. Withholding Taxes

The Employee acknowledges and agrees that the Company has the right to deduct from payments of any kind otherwise due to the Employee any federal, state or local taxes of any kind required by law to be withheld with respect to exercise of this Option.

9. Plan Provisions

Except as otherwise expressly provided herein, this Option and the rights of the Employee hereunder shall be subject to and governed by the terms and provisions of the Plan, including without limitation the provisions of Section 4 thereof.

10. Employee Representation; Stock Certificate Legend

The Employee hereby represents that he or she has received and read the Prospectus filed with the Securities and Exchange Commission as a part of the Registration Statement on Form S-8, which registered the shares under the Plan.

Stock Option Agreement Confidential Document 3

61 Mooney Street Cambridge, MA 02138 Tel: [617] 497-2070 Fax: [617] 547-2445

Advanced Magnetics, Inc.

If the Employee is an "affiliate" of the Company (as defined in Rule 144 promulgated under the Securities Act of 1933), all stock certificates representing shares of Common Stock issued to such Employee pursuant to this Option shall have affixed thereto legends substantially in the following form:

"The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended (the "Act") and may not be sold, transferred or assigned unless such shares are registered under the Act or an opinion of counsel, satisfactory to the corporation, is obtained to the effect that such sale, transfer or assignment is exempt from the registration requirements of the Act."

11. Notice

Any notice required to be given under the terms of this Option shall be properly addressed as follows: to the Company at its principal executive offices, and to the Employee at his address set forth below, or at such other address as either of such parties may hereafter designate in writing to the other.

12. Non-Qualified Stock Option

It is understood that this Option is not intended to qualify as an "incentive stock option" as defined in Section 422 of the Internal Revenue Code.

13. Enforceability

This Option shall be binding upon the Employee, his estate, and his or her personal representatives and beneficiaries.

14. Effective Date

The effective date of this Option is February 7, 2006.

Stock Option Agreement Confidential Document 4

61 Mooney Street Cambridge, MA 02138 Tel: [617] 497-2070 Fax: [617] 547-2445

Advanced Magnetics, Inc.

IN WITNESS WHEREOF, this Option has been executed by a duly authorized officer of the Company as of the effective date.

	Advanced Magnetics, Inc.
	By: /s/ Michael N. Avallone
	Michael N. Avallone
	Chief Financial Officer
Employee’s Acceptance:
The undersigned hereby accepts this Option and agrees to the terms and provisions set forth in this Option and in the Plan (a copy of which has been delivered to him/her).
/s/ Brian J.G. Pereira
(Signature of Employee)
Brian J.G. Pereira
(Print Name of Employee)
Address:           54 Rowena Road
Newton, MA 02459
Date:          February 7, 2006

Stock Option Agreement Confidential Document 5

61 Mooney Street Cambridge, MA 02138 Tel: [617] 497-2070 Fax: [617] 547-2445