Exhibit 10.1

SECURITIES PURCHASE AGREEMENT

This SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of March 15,
2016, is made by and among OREXIGEN THERAPEUTICS, INC., a Delaware corporation
(the “Company”), and the Purchasers listed on Exhibit A hereto, together with
their permitted transferees (each, a “Purchaser” and collectively, the
“Purchasers”).

RECITALS:

A. The Company and the Purchasers are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Section
4(a)(2) of the Securities Act.

B. The Purchasers desire to purchase from the Company and the Company desires to
issue and to sell to the Purchasers, upon the terms and conditions stated in
this Agreement and pursuant to an indenture to be dated on or about March 21,
2016 (in such capacity, the “Indenture”), by and among the Company, U.S. Bank
National Association, as trustee (the “Trustee”) and as collateral agent (in
such capacity, the “Collateral Agent”) in substantially the form of Exhibit F
attached hereto, with such changes as the Trustee may reasonably request,
securities of the Company as more fully described in this Agreement and set
forth on Exhibit A hereto.

C. The capitalized terms used herein and not otherwise defined have the meanings
given them in Article 7.

AGREEMENT

In consideration of the foregoing and the mutual promises and covenants
contained herein and agreements of the parties hereto, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Purchasers (severally and not jointly) hereby
agree as follows:

ARTICLE 1

PURCHASE AND SALE OF SECURITIES

1.1 Purchase and Sale of Securities. At the Closing, upon the terms and subject
to the conditions set forth herein, the Company will issue and sell to each
Purchaser, and each Purchaser will, severally and not jointly, purchase from the
Company (i) the aggregate principal amount of 0% Senior Secured Convertible
Notes due 2020 (the “Notes”), (ii) the number of shares of the Company’s Series
Z Non-Convertible, Non-Voting Preferred Stock (the “Shares”) and (iii) the
number of warrants substantially in the form attached as Exhibit B hereto (the
“Warrants”) to purchase shares of Common Stock in the respective amounts set
forth opposite such Purchaser’s name on Exhibit A hereto for the aggregate
purchase price set forth opposite such Purchaser’s name on Exhibit A hereto. The
Notes, Shares and the Warrants are referred to collectively as the “Securities.”
For each $0.75 of principal amount of Notes purchased by a Purchaser, such
Purchaser shall receive a Warrant to purchase one share of Common Stock at an
exercise price per share equal to $1.50 and 0.001 Share. Each Purchaser’s
aggregate purchase price for the Securities purchased by such Purchaser
hereunder is referred to as the “Aggregate Purchase Price.” As soon as
reasonably practicable after the Closing Date, the parties agree that

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the Aggregate Purchase Price paid by each Purchaser for the Securities shall be
allocated among the Warrants, Shares and Notes and the Company will cooperate
with Baupost in determining the allocation, provided that the Company and its
advisors shall determine the final allocation.

1.2 Payment. At the Closing, subject to the terms and conditions herein, each
Purchaser will pay the Aggregate Purchase Price set forth opposite its name on
Exhibit A hereto by wire transfer of immediately available funds in accordance
with wire instructions provided by the Company to the Purchasers prior to the
Closing. At the Closing, the Company will (i) deliver to the each Purchaser one
or more certificates, in substantially the form of Exhibit E attached hereto,
representing such Purchaser’s respective Notes, as the case may be, registered
in such names and denominations as the Purchaser may request, duly authorized by
the Trustee (ii) deliver to each Purchaser the number of Shares set forth on
Exhibit A, registered in such names and denominations as the Purchaser may
request, and (iii) deliver the applicable Warrants to purchase the Warrant
Shares to each applicable Purchaser, registered in such names and denominations
as the Purchaser may request, against payment by such Purchaser of its
respective Aggregate Purchase Price on the Closing Date. All Securities
purchased by a Purchaser hereunder will be delivered to it at the address listed
therein.

1.3 Closing Date. The closing of the transaction contemplated by this Agreement
will take place on March 21, 2016 (the “Closing Date”) and the closing (the
“Closing”) will be held at the offices of Cooley LLP, 101 California Street, 5th
Floor, San Francisco, CA 94111-5800 or at such other date and place as shall be
agreed upon by the Company and the Purchasers with a right to acquire hereunder
at least 70% in interest of the Securities.

ARTICLE 2

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as specifically contemplated by this Agreement, the Company hereby
represents and warrants to the Purchasers that:

2.1 Organization and Qualification.

(a) Subsidiaries. The Company owns, directly or indirectly, all of the capital
stock or other equity interests of each of its subsidiaries free and clear of
any Liens, and all of the issued and outstanding shares of capital stock of each
subsidiary are validly issued and are fully paid, non-assessable and free of
preemptive and similar rights to subscribe for or purchase securities. Other
than the subsidiaries, the Company does not control, directly or indirectly,
through one or more intermediaries, any other Person.

(b) The Company is duly incorporated, validly existing and in good standing
under the laws of the State of Delaware, with full corporate power and authority
to conduct its business as currently conducted as disclosed in the SEC Documents
(as defined in Section 2.6), and to own or lease its properties and assets. The
Company is duly qualified to do business and is in good standing in every
jurisdiction in which the

 

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nature of the business conducted by it or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, would not reasonably be expected to have a
Material Adverse Effect. Each subsidiary of the Company has been duly formed and
is validly existing as a corporation, limited liability company or limited
partnership, as the case may be, in good standing under the laws of the
jurisdiction in which it is chartered or organized with full power and authority
(corporate or other) to conduct its business as currently conducted and to own
or lease its properties and assets, except as would not reasonably be expected
to have a Material Adverse Effect, and is duly qualified to do business as a
foreign corporation, limited liability company or limited partnership, as the
case may be, and is in good standing under the laws of each jurisdiction which
requires such qualification, except where the failure to be so qualified would
not reasonably be expected to have a Material Adverse Effect.

2.2 Authorization; Enforcement. The Company has all requisite corporate power
and authority to enter into and to perform its obligations under the Transaction
Agreements (defined in Section 8.7 below), to consummate the transactions
contemplated thereby, to issue the Securities in accordance with the terms
thereof and otherwise to carry out its obligations thereunder. The execution,
delivery and performance of the Transaction Agreements by the Company and the
consummation by it of the transactions contemplated thereby (including the
issuance of the Securities) have been duly authorized by the Company’s Board of
Directors and no further action, consent or authorization is required by the
Company, its officers, directors or stockholders in connection therewith, other
than the Stockholder Approval. The Transaction Agreements have been duly
executed and delivered by the Company, and constitute the legal, valid and
binding obligations of the Company enforceable against the Company in accordance
with their terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, or moratorium or similar laws affecting
creditors’ and contracting parties’ rights generally and except as
enforceability may be subject to general principles of equity and except as
rights to indemnity and contribution may be limited by state or federal
securities laws or public policy underlying such laws (collectively, the
“Enforceability Exceptions”). The Notes, when duly executed, authenticated,
issued and delivered against payment therefor as provided herein and in the
Indenture, will be duly and validly issued, fully paid and nonassessable and
will constitute valid and legally binding obligations of the Company enforceable
against the Company in accordance with their terms, subject to the
Enforceability Exceptions, and will be entitled to the benefits of the Indenture
free and clear of any Lien and will conform to the description thereof in the
Indenture.

2.3 Capitalization. The authorized capital stock of the Company, as of
February 26, 2016, consisted of 300,000,000 shares of Common Stock, $0.001 par
value per share, of which 145,564,920 shares were issued and outstanding and
10,000,000 shares of Preferred Stock, $0.001 par value per share, none of which
were designated or issued. All of the issued and outstanding shares of Common
Stock have been duly authorized, validly issued, fully paid, and nonassessable.
25,749,902 shares of Common Stock were subject to outstanding options and
performance stock unit awards outstanding as of February 26, 2016. Except as
disclosed in or contemplated by the SEC Documents, the Company does not have
outstanding any options to purchase, or any preemptive rights or other rights to
subscribe for or to purchase, any securities

 

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or obligations convertible into, or any contracts or commitments to issue or
sell, shares of its capital stock or any such options, rights, convertible
securities or obligations other than options granted under the Company’s stock
option plans and its employee stock purchase plan and shares of common stock
issuable upon exercise of the Company’s 2.75% Convertible Senior Notes due 2020.
The Company’s Amended and Restated Certificate of Incorporation, as amended (the
“Certificate of Incorporation”), as in effect on the date hereof, and the
Company’s Amended and Restated Bylaws, as amended (the “Bylaws”) as in effect on
the date hereof, are each filed as exhibits to the SEC Documents.

2.4 Issuance of Securities. The Shares have been duly and validly authorized
and, upon issuance in accordance with the terms of the Transaction Agreements,
will be validly issued, fully paid and non-assessable and will not be subject to
preemptive rights or other similar rights of stockholders of the Company or any
of its subsidiaries. The Warrants have been duly and validly authorized and when
executed, issued and delivered by the Company pursuant to the Transaction
Agreements, will constitute legal, valid and binding obligations of the Company,
enforceable in accordance with their terms. Subject to receipt of Stockholder
Approval, (i) the shares of Common Stock issuable upon conversion of the Notes
(“Note Shares”) and the shares of Common Stock issuable upon exercise of the
Warrants (the “Warrant Shares”), will have been duly authorized and validly
reserved for issuance pursuant to the terms of the Notes and Warrants, and (ii)
upon conversion of the Notes and exercise of the Warrants in accordance with
their terms, the Note Shares and Warrant Shares issuable thereupon will be
validly issued, fully paid and non-assessable and will not be subject to
preemptive rights or other similar rights of stockholders of the Company or any
of its subsidiaries and will be free of any voting or transfer restrictions
pursuant to the Company’s Certificate of Incorporation or Bylaws or any
agreement or other instrument to which the Company or any of its subsidiaries is
a party that have not been validly waived (other than as provided in the
Transaction Agreements). The certificates for such Note Shares or Warrant Shares
will be in due and proper form. The issuance of the Securities is not subject to
any preemptive or similar rights that have not been waived.

2.5 No Conflicts; Government Consents and Permits.

(a) The execution, delivery and performance of the Transaction Agreements by the
Company and the consummation by the Company of the transactions contemplated
hereby (including the issuance and sale of the Securities, and subject to the
provisions therein, the conversion of the Notes and the exercise of the
Warrants) will not (i) conflict with or result in a violation of any provision
of its Certificate of Incorporation or Bylaws or other organizational or charter
documents or require the approval of the Company’s stockholders, (ii) violate or
conflict with, or result in a breach of any provision of, or constitute a
default (or an event that with notice or lapse of time or both would become a
default) under, result in the creation of any Lien upon any of the properties or
assets of the Company or any Subsidiary, or give to others any rights of
termination, amendment, acceleration or cancellation (with or without notice,
lapse of time or both) of, any agreement, indenture, or instrument to which the
Company or any of its subsidiaries is a party, (iii) result in a violation of
any law, rule, regulation, order, judgment or decree (including United States
federal and state securities laws and regulations and regulations of any
self-regulatory organizations to which the Company or any of its subsidiaries or
its

 

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securities are subject) applicable to the Company, or (iv) violate or conflict
with, or result in a breach of any provision of, or constitute a default (or an
event that with notice or lapse of time or both would become a default) under,
result in the creation of any Lien upon any of the properties or assets of the
Company or any subsidiary, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of time
or both) of, any employment agreement or employment arrangement to which the
Company or any of its subsidiaries is a party, except in the case of clauses
(ii) and (iii) only, for such conflicts, breaches, defaults, and violations as
would not reasonably be expected to have a Material Adverse Effect, and except
in the case of clauses (ii) and (iv) only, Liens created by the Collateral
Documents (as defined in the Indenture).

(b) Except as provided for elsewhere in this Agreement, neither the Company nor
any of its subsidiaries is required to obtain any consent, authorization or
order of, or make any filing or registration with, any court or governmental
authority, agency or any regulatory or self regulatory agency in order for it to
execute, deliver or perform any of its obligations under the Transaction
Agreements in accordance with the terms thereof, or to issue and sell the
Securities in accordance with the terms thereof other than such as have been
made or obtained, and except for receipt of the Stockholder Approval, the
registration of the Shares and the Warrant Shares under the Securities Act
pursuant to the Investor Rights Agreement, any filings required to be made under
federal or state securities laws, and any required filings or notifications
regarding the issuance or listing of additional shares with Nasdaq.

(c) The Company and its subsidiaries have all franchises, permits, licenses, and
any similar authority necessary for the conduct of their business and are
otherwise in compliance with all laws, rules and regulations applicable to them
and their business, in each case now being conducted by them and as currently
proposed to be conducted as disclosed in the SEC Documents, except for such
franchise, permit, license or similar authority, the lack of which, or which
compliance failure, would not reasonably be expected to have a Material Adverse
Effect. Neither the Company nor any of its subsidiaries has received any actual
notice of any proceeding relating to revocation or modification of any such
franchise, permit, license, or similar authority except where such revocation or
modification would not reasonably be expected to have a Material Adverse Effect.

2.6 SEC Documents, Financial Statements. The Company has timely filed all
reports, schedules, forms, statements and other documents required to be filed
by it with the SEC since January 1, 2015, pursuant to the reporting requirements
of the Exchange Act (all of the foregoing filed prior to the date hereof and all
exhibits included therein and financial statements and schedules thereto and
documents (other than exhibits) incorporated by reference therein, being
hereinafter referred to herein as the “SEC Documents”). Except as otherwise
expressly stated herein, all references in this Agreement to information
disclosed or described in the SEC Documents shall include the disclosure set
forth on Exhibit C hereto to the extent such disclosure is filed with the SEC on
a Form 8-K on or before 9:00 a.m., New York local time, on March 15, 2016. The
Company is eligible to register its Common Stock for resale using Form S-3

 

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promulgated under the Securities Act as of the date of this Agreement. The
Company has delivered to each Purchaser, or each Purchaser has had access to,
true and complete copies of the SEC Documents. As of their respective dates, the
SEC Documents complied in all material respects with the requirements of the
Exchange Act or the Securities Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. As of their respective dates, the Financial Statements and the
related notes complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto. The Financial Statements and the related notes have been
prepared in accordance with accounting principles generally accepted in the
United States, consistently applied, during the periods involved (except (i) as
may be otherwise indicated in the Financial Statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the extent they may not
include footnotes, may be condensed or summary statements or may conform to the
SEC’s rules and instructions for Reports on Form 10-Q) and fairly present in all
material respects the consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and the consolidated results
of its operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal and recurring year-end audit
adjustments). All material agreements that were required to be filed as exhibits
to the SEC Documents under Item 601 of Regulation S-K (collectively, the
“Material Agreements”) to which the Company or any subsidiary of the Company is
a party, or the property or assets of the Company or any subsidiary of the
Company are subject, have been filed as exhibits to the SEC Documents. All
Material Agreements are valid and enforceable against the Company in accordance
with their respective terms, except (i) as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, or moratorium or similar laws
affecting creditors’ and contracting parties’ rights generally, and (ii) as
enforceability may be subject to general principles of equity and except as
rights to indemnity and contribution may be limited by state or federal
securities laws or public policy underlying such laws. The Company is not in
breach of or default under any of the Material Agreements, and to the Company’s
knowledge, no other party to a Material Agreement is in breach of or default
under such Material Agreement, except in each case, for such breaches or
defaults as would not reasonably be expected to have a Material Adverse Effect.
The Company has not received a notice of termination nor is the Company
otherwise aware of any threats to terminate any of the Material Agreements.
Neither the Company nor its subsidiaries is a party to, or has any commitment to
become a party to, (x) any off-balance sheet partnership or any similar contract
or arrangement (including any contract or arrangement relating to any
transaction or relationship between or among the Company and any subsidiary, on
the one hand, and any unconsolidated Affiliate on the other hand), including any
“off-balance sheet arrangement” (as defined in Item 303(a) of Regulation SK
promulgated by the SEC); (y) any hedging, derivatives or similar contract or
arrangement, in each case in an amount material to the Company and its
subsidiaries, taken as a whole, or (z) any contract or arrangement pursuant to
which the Company or any subsidiary is obligated to make any capital
contribution or other investment in or loan to any Person (other than a
subsidiary of the Company).

 

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2.7 Disclosure Controls and Procedures. Except as disclosed in the SEC
Documents, the Company has established and maintains disclosure controls and
procedures (as such terms are defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) that are effective in all material respects to ensure that material
information relating to the Company and its subsidiaries, including any
consolidated subsidiaries, is made known to its chief executive officer and
chief financial officer by others within those entities. The Company’s
certifying officers have evaluated the effectiveness of the Company’s disclosure
controls and procedures as of the end of the period covered by the most recently
filed quarterly or annual periodic report under the Exchange Act (such date, the
“Evaluation Date”). The Company presented in its most recently filed quarterly
or annual periodic report under the Exchange Act the conclusions of the
certifying officers about the effectiveness of the disclosure controls and
procedures based on their evaluations as of the Evaluation Date. Since the
Evaluation Date, there have been no significant changes in the Company’s
internal control over financial reporting (as such term is defined in Exchange
Act Rules 13a-15(f) and 15d-15(f)) or, to the Company’s knowledge, in other
factors that could significantly affect the Company’s internal control over
financial reporting.

2.8 Accounting Controls. Except as disclosed in the SEC Documents, the Company
maintains a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management’s general or specific authorization, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles as applied in the United States and to
maintain accountability for assets, (iii) access to assets is permitted only in
accordance with management’s general or specific authorization, and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

2.9 Absence of Litigation. Except as disclosed in the SEC Documents, as of the
date hereof, there is no action, suit, proceeding or investigation before or by
any court, public board, government agency, self-regulatory organization or body
pending or, to the Company’s knowledge, threatened against the Company or any of
its subsidiaries, or any current or former director or officer of the Company,
that if determined adversely to the Company or any of its subsidiaries or
current or former directors or officers would reasonably be expected to have a
Material Adverse Effect or would reasonably be expected to impair the ability of
the Company to perform its obligations under the Transaction Agreements. Neither
the Company, nor any director or officer thereof, nor any of its subsidiaries,
is or has been the subject of any action involving a claim of violation of or
liability under federal or state securities laws or a claim of breach of
fiduciary duty relating to the Company. The Company has not received any stop
order or other order suspending the effectiveness of any Registration Statement
filed by the Company under the Exchange Act or the Securities Act and, to the
Company’s knowledge, the SEC has not issued any such order.

2.10 Intellectual Property Rights. The Company and its subsidiaries own, possess
or can acquire on reasonable terms sufficient trademarks, trademark
applications, service marks, service names, trade names, patents, patent
applications, patent rights, inventions, know-how, copyrights, domain names,
licenses, approvals, trade secrets and other similar rights reasonably necessary
to conduct their businesses as now conducted and, to the knowledge of the
Company,

 

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as proposed to be conducted as described in the SEC Documents (the “Intellectual
Property”); except to the extent failure to own, possess or acquire such
Intellectual Property would not result in a Material Adverse Effect. To the
Company’s knowledge, neither the Company nor any of its subsidiaries has
infringed the intellectual property rights of third parties and no third party,
to the Company’s knowledge, is infringing the Intellectual Property, in each
case, which could reasonably be expected to result in a Material Adverse Effect.
Except as disclosed in the SEC Documents, there are no material options,
licenses or agreements relating to the Intellectual Property, nor is the
Company, nor any subsidiary, bound by or a party to any material options,
licenses or agreements relating to the patents, patent applications, patent
rights, inventions, know-how, trade secrets, trademarks, trademark applications,
service marks, service names, trade names or copyrights of any other person or
entity. Except as described in the SEC Documents, there is no material claim or
action or proceeding pending or, to the Company’s knowledge, threatened that
challenges any of the rights of the Company or any subsidiary in or to, or
otherwise with respect to, any Intellectual Property.

2.11 Placement Agents. The Company has taken no action that would give rise to
any claim by any Person for brokerage commissions, placement agent’s fees or
similar payments relating to the Transaction Agreements or the transactions
contemplated thereby other than to Leerink Partners LLC pursuant to the Letter
Agreement dated March 11, 2016 between the Company and Leerink Partners LLC.

2.12 Investment Company. The Company is not and, after giving effect to the
Offering and sale of the Securities, will not be an “investment company” as such
term is defined in the Investment Company Act of 1940, as amended (the
“Investment Company Act”). The Company shall conduct its business in a manner so
that it will not become subject to the Investment Company Act.

2.13 No Material Adverse Change. Since the date of the latest audited financial
statements included within the SEC Documents, except as described or referred to
in the SEC Documents filed prior to the date hereof, the business of the Company
and its subsidiaries has been conducted in the ordinary course of business
consistent with past practices and, except for cash expenditures in the ordinary
course of business, (i) there has not been any change in the assets,
liabilities, business, properties, financial condition or results of operations
of the Company and its subsidiaries that would reasonably be expected to have a
Material Adverse Effect, (ii) there has not been any dividend or distribution of
any kind declared, or any authorization of any dividend or distribution of any
kind, set aside for payment, paid or made by the Company on any class of capital
stock, (iii) neither the Company nor any of its subsidiaries has sustained any
material loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor
disturbance or dispute or any action, order or decree of any court or arbitrator
or governmental or regulatory authority, and (iv) neither the Company nor any of
its subsidiaries has incurred any material liabilities except in the ordinary
course of business.

2.14 The Nasdaq Global Market. The Company’s Common Stock is registered under
Section 12 of the Exchange Act and is listed on The Nasdaq Global Market, and,
except as

 

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disclosed in the SEC Documents, to the Company’s knowledge, there are no
proceedings to revoke or suspend such listing or the listing of the Shares and
the Warrant Shares. Except as disclosed in the SEC Documents, and except that
since February 26, 2016, the Company has had a bid price of less than $1.00 per
share, the Company is in compliance with the requirements of Nasdaq for
continued listing of the Common Stock thereon and any other Nasdaq listing and
maintenance requirements. The Company has taken no action designed to terminate
the registration of the Common Stock under the Exchange Act or remove from
listing the Common Stock from Nasdaq, nor has the Company received any written
notification that the SEC, Nasdaq or the Financial Industry Regulatory
Authority, Inc. is contemplating terminating such registration or quotation.

2.15 Acknowledgment Regarding Purchasers’ Purchase of Securities. The Company
acknowledges and agrees that each of the Purchasers is acting solely in the
capacity of an arm’s length purchaser with respect to the Transaction Agreements
and the transactions contemplated thereby. The Company further acknowledges that
no Purchaser is acting as a financial advisor or fiduciary of the Company (or in
any similar capacity with respect to the Company) with respect to the
Transaction Agreements and the transactions contemplated thereby and any advice
given by any Purchaser or any of their respective representatives or agents to
the Company in connection with the Transaction Agreements and the transactions
contemplated thereby is merely incidental to such Purchaser’s purchase of the
Securities. The Company further represents to each Purchaser that the Company’s
decision to enter into the Transaction Agreements has been based on the
independent evaluation of the transactions contemplated thereby by the Company
and its representatives.

2.16 Accountants. Ernst & Young LLP, who will have expressed or will express, as
the case may be, their opinion with respect to the audited financial statements
and schedules to be included as a part of any Registration Statement prior to
the filing of any such Registration Statement, are independent accountants as
required by the Securities Act.

2.17 Insurance. The Company and its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as the Company believes are prudent and customary for a company (i) in
the businesses and location in which the Company and its subsidiaries are
engaged and present, (ii) with the resources of the Company, and (iii) at a
similar stage of development as the Company and its subsidiaries. Neither the
Company nor any of its subsidiaries have received any written notice that the
Company or any subsidiary will not be able to renew its existing insurance
coverage as and when such coverage expires. The Company believes it will be able
to obtain similar coverage at reasonable cost from similar insurers as may be
necessary to continue its business.

2.18 Foreign Corrupt Practices.

(a) The Company will not, directly or indirectly, use the proceeds of the
Securities purchased hereunder, or lend, contribute or otherwise make available
such proceeds to any subsidiary, joint venture partner or other Person, for the
purpose of funding (i) any activities of or business with any Person, or in any
country or territory, that, at the time of such funding, is the subject of
Sanctions (unless such activities or business are authorized pursuant to a
license, license exception, an exemption or

 

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exception, or other permit or authorization from a governmental authority) or
(ii) any other transaction that will result in a violation by any Person
(including any Person participating in the transaction, whether as underwriter,
advisor, purchaser, investor, lender or otherwise) of Sanctions.

(b) The Companies will not use the proceeds of the Securities purchased
hereunder directly, or, to the knowledge of the Company, indirectly, for any
payments to any governmental official or employee, political party, official of
a political party, candidate for political office, or anyone else acting in an
official capacity, in order to obtain, retain or direct business or obtain any
improper advantage, in violation of the United States Foreign Corrupt Practices
Act of 1977, as amended (the “FCPA”).

(c) Except as could not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect, to the knowledge of the
Company, the Company has not, in the past three years, committed a violation of
applicable regulations of the United States Department of the Treasury’s Office
of Foreign Assets Control (“OFAC”), Title III of the USA PATRIOT Act (the
“Patriot Act”) or the FCPA.

(d) Neither the Company nor, to the knowledge of the Company, any director,
officer, employee or agent thereof is an individual or entity currently on
OFAC’s list of Specifically Designated Nationals and Blocked Persons.

2.19 Private Placement. Neither the Company nor any of its subsidiaries or any
affiliates, nor any Person acting on its or their behalf, has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under any circumstances that would require registration of the
Securities under the Securities Act. Assuming the accuracy of the
representations and warranties of the Purchasers contained in Article 3 hereof,
the issuance of the Securities and the Warrant Shares are exempt from
registration under the Securities Act.

2.20 No Registration Rights. No Person has the right to (i) prohibit the Company
from filing a Registration Statement or (ii) other than as disclosed in the SEC
Documents, require the Company to register any securities for sale under the
Securities Act by reason of the filing of a Registration Statement except in the
case of clause (ii) for rights which have been properly satisfied or waived. The
granting and performance of the registration rights under the Transaction
Agreements will not violate or conflict with, or result in a breach of any
provision of, or constitute a default under, any agreement, indenture, or
instrument to which the Company is a party.

2.21 Taxes. The Company and its subsidiaries have filed (or have obtained an
extension of time within which to file) all necessary federal, state and foreign
income and franchise tax returns and have paid all taxes required to be paid by
them, except where the failure to so file or the failure to so pay would not
reasonably be expected to have a Material Adverse Effect. The Company is not and
has never been a U.S. real property holding corporation within the meaning of
Section 897 of the Internal Revenue Code of 1986, as amended, and the Company
shall so certify upon Purchaser’s request.

 

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2.22 Real and Personal Property. The Company and its subsidiaries have good and
marketable title to, or have valid rights to lease or otherwise use, all items
of real and personal property that are material to the business of the Company
and its subsidiaries, free and clear of all liens, encumbrances, claims and
defects and imperfections of title except those that (i) do not materially
interfere with the use of such property by the Company and its subsidiaries or
(ii) would not reasonably be expected to have a Material Adverse Effect.

2.23 Application of Takeover Protections. The Company and its board of directors
(the “Board”) have taken all necessary action, if any, in order to render
inapplicable any control share acquisition law, business combination law, poison
pill (including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company’s charter or the laws of its state of
incorporation that is or could become applicable to the Purchasers as a result
of the Purchasers and the Company fulfilling their respective obligations or
exercising their respective rights under the Transaction Agreements, including,
without limitation, as a result of the Company’s issuance of the Securities,
Note Shares and Warrant Shares and the Purchasers’ acquisition and ownership of
the Securities, Note Shares, and Warrant Shares.

2.24 No Manipulation of Stock. The Company has not, nor will it, (i) taken,
directly or indirectly, any action designed to stabilize or manipulate the price
of the Common Stock or any security of the Company to facilitate the sale or
resale of any of the Securities, (ii) sold, bid for, purchased, or, paid any
compensation for soliciting purchases of, any of the Securities, or (iii) paid
or agreed to pay to any Person any compensation for soliciting another to
purchase any other securities of the Company.

2.25 Related Party Transactions. Except with respect to the transactions (i)
that are not required to be disclosed and (ii) contemplated hereby to the extent
an Affiliate of any director purchases Securities hereunder, all transactions
that have occurred between or among the Company or its subsidiaries, on the one
hand, and any of the Company’s officers or directors, or any Affiliate or
Affiliates of any such officer or director, on the other hand, prior to the date
hereof have been disclosed in the SEC Documents.

2.26 Full Disclosure. The representations, warranties and written statements
contained in this Agreement and in the SEC Documents do not contain any untrue
statement of a material fact, and do not omit to state a material fact required
to be stated therein or necessary in order to make such representations,
warranties or statements not misleading in light of the circumstances under
which they were made.

2.27 Fees. The Company is not obligated to pay any compensation or other fee,
cost or related expenditure to any underwriter, broker, agent or other
representative in connection with the transactions contemplated by the
Transaction Agreements. The Company will indemnify and hold harmless the
Purchasers from and against any claim against the Purchasers by any Person
alleging that, as a result of any agreement or arrangement between such Person
and the Company, the Purchasers are obligated to pay any such compensation fee,
cost or related expenditure in connection with the transactions contemplated
hereby.

 

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2.28 Use of Proceeds. The Company shall use the net proceeds of the sale of the
Securities hereunder for those purposes set forth in the Current Report on Form
8-K to be filed by the Company within four business days of the execution of
this Agreement.

2.29 [Reserved]

2.30 Solvency. The Company and its subsidiaries, taken as a whole, are, and
immediately after the Closing Date, will be, Solvent. As used herein, the term
“Solvent” means that on such date (i) the fair market value of the assets of
such person and its subsidiaries, on a consolidated basis exceeds, on a
consolidated basis, the debts and liabilities, subordinated, contingent or
otherwise, of such person and its subsidiaries, (ii) the present fair saleable
value of the assets of such person and its subsidiaries, on a consolidated
basis, is greater than the amount that will be required to pay the probable
liabilities of such person and its subsidiaries, on a consolidated basis, of
their debts and other liabilities, subordinated, contingent or otherwise, as
such debts and other liabilities become absolute and matured, (iii) such person
and its subsidiaries, on a consolidated basis, are able to pay their debts and
other liabilities, subordinated, contingent or otherwise, as such debts and
other liabilities mature and (iv) such person and its subsidiaries, on a
consolidated basis, are not engaged in, and are not about to engage in, business
for which they have unreasonably little or inadequate capital.

2.31 Federal Reserve Regulations.

(a) The Company is not engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of buying or
carrying margin stock.

(b) No part of the proceeds of the Notes purchased hereunder will be used,
whether directly or indirectly, and whether immediately, incidentally or
ultimately, for any purpose that entails a violation of the provisions of
Regulation T, Regulation U or Regulation X. The pledge of the Pledged Securities
(as defined in the security agreement dated as of the date hereof by and between
the Company and the Collateral Agent (the “Security Agreement”)) pursuant to the
Security Agreement does not violate such regulations.

2.32 Security Documents. Except as otherwise contemplated hereby or under any
other Transaction Agreement, the Security Agreement, together with such filings
and other actions required to be taken hereby or by the applicable Collateral
Documents (as defined in the Indenture) (including the delivery to the
Collateral Agent of any Pledged Securities (as defined in the Security
Agreement) required to be delivered pursuant hereto or the applicable Collateral
Documents), is effective to create in favor of the Collateral Agent for the
benefit of the Secured Parties (as defined in the Indenture), legal and valid
first priority Liens (subject to Permitted Liens as defined in the Indenture)
on, and security interests in, the Security Agreement Collateral (as defined in
the Indenture).

ARTICLE 3

PURCHASERS’ REPRESENTATIONS AND WARRANTIES

 

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Each Purchaser represents and warrants to the Company, severally and not
jointly, with respect to itself and its purchase hereunder, that:

3.1 Investment Purpose; Reliance on Exemptions. The Purchaser is purchasing the
Securities for its own account and not with a present view toward the public
sale or distribution thereof and has no intention of selling or distributing any
of such Securities or any arrangement or understanding with any other Persons
regarding the sale or distribution of such Securities except in accordance with
the Investor Rights Agreement, to be dated on or about the date hereof, by and
among the Company, Baupost, and certain other investors parties thereto in
substantially the form of Exhibit G attached hereto (the “Investor Rights
Agreement”) and except as would not result in a violation of the Securities Act.
The Purchaser will not, directly or indirectly, offer, sell, pledge, transfer or
otherwise dispose of (or solicit any offers to buy, purchase or otherwise
acquire or take a pledge of) any of the Securities except in accordance with
Investor Rights Agreement or pursuant to and in accordance with the Securities
Act. The Purchaser understands that the Securities are being offered and sold to
it in reliance upon specific exemptions from the registration requirements of
United States federal and state securities laws.

3.2 Information. The Purchaser is not aware of any relevant materials relating
to the business, finances and operations of the Company necessary to make an
investment decision, or materials relating to the offer and sale of the
Securities, that have been requested by the Purchaser and have not been
furnished to it, including, without limitation, the Company’s SEC Documents, and
the Purchaser has had the opportunity to review the SEC Documents. The Purchaser
has been afforded the opportunity to ask questions of the Company. Neither such
inquiries nor any other investigation conducted by or on behalf of such
Purchaser or its representatives or counsel shall modify, amend or affect such
Purchaser’s right to rely on the truth, accuracy and completeness of the SEC
Documents and the Company’s representations and warranties contained in the
Agreement.

3.3 Acknowledgement of Risk.

(a) The Purchaser acknowledges and understands that its investment in the
Securities involves a significant degree of risk, including, without limitation,
(i) the Company remains a development stage business with limited operating
history and requires substantial funds in addition to the proceeds from the sale
of the Securities; (ii) an investment in the Company is speculative, and only
Purchasers who can afford the loss of their entire investment should consider
investing in the Company and the Securities; (iii) the Purchaser may not be able
to liquidate its investment; (iv) transferability of the Securities is extremely
limited; (v) in the event of a disposition of the Securities, the Purchaser
could sustain the loss of its entire investment; and (vi) the Company has not
paid any dividends on its Common Stock since inception and does not anticipate
the payment of dividends in the foreseeable future. Such risks are more fully
set forth in the SEC Documents;

(b) The Purchaser is able to bear the economic risk of holding the Securities
for an indefinite period, and has knowledge and experience in financial and
business matters such that it is capable of evaluating the risks of the
investment in the Securities; and

 

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(c) The Purchaser has, in connection with the Purchaser’s decision to purchase
Securities, not relied upon any representations or other information (whether
oral or written) other than as set forth in the representations and warranties
of the Company contained herein and the information disclosed in the SEC
Documents, and the Purchaser has, with respect to all matters relating to this
Agreement and the offer and sale of the Securities, has not relied upon or
consulted any counsel to the Company.

3.4 Governmental Review. The Purchaser understands that no United States federal
or state agency or any other government or governmental agency has passed upon
or made any recommendation or endorsement of the Securities or an investment
therein.

3.5 Transfer or Resale. The Purchaser understands that:

(a) the Securities, the Note Shares and the Warrant Shares have not been and are
not being registered under the Securities Act (other than as contemplated in the
Investor Rights Agreement) or any applicable state securities laws and,
consequently, the Purchaser may have to bear the risk of owning the Securities,
the Note Shares and the Warrant Shares for an indefinite period of time because
the Securities, the Note Shares and the Warrant Shares may not be transferred
unless (i) the resale of the Securities, the Note Shares and the Warrant Shares,
as applicable, is registered pursuant to an effective registration statement
under the Securities Act; (ii) the Purchaser has delivered to the Company an
opinion of counsel (in form, substance and scope customary for opinions of
counsel in comparable transactions) to the effect that the Securities, the Note
Shares and the Warrant Shares to be sold or transferred may be sold or
transferred pursuant to an exemption from the registration requirements of the
Securities Act; (iii) the Securities, the Note Shares and the Warrant Shares are
sold or transferred pursuant to Rule 144; or (iv) the Securities, the Note
Shares, and the Warrant Shares are transferred without consideration to its
Affiliates or a custodial nominee;

(b) any sale of the Securities, the Note Shares and the Warrant Shares made in
reliance on Rule 144 may be made only in accordance with the terms of Rule 144
and, if Rule 144 is not applicable, any resale of the Securities, the Note
Shares and the Warrant Shares under circumstances in which the seller (or the
Person through whom the sale is made) may be deemed to be an underwriter (as
that term is defined in the Securities Act) may require compliance with some
other exemption under the Securities Act or the rules and regulations of the SEC
thereunder; and

(c) except as set forth in the Investor Rights Agreement, neither the Company
nor any other Person is under any obligation to register the resale of the
Securities, the Note Shares or the Warrant Shares under the Securities Act or
any state securities laws or to comply with the terms and conditions of any
exemption thereunder.

3.6 Legends.

(a) The Purchaser understands the certificates representing the Shares, the
Warrants and the Warrant Shares will bear a restrictive legend in substantially
the

 

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following form (and a stop-transfer order may be placed against transfer of the
certificates for any such Shares, Warrants and Warrant Shares):

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES. THE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS, OR
UNLESS OFFERED, SOLD, PLEDGED, HYPOTHECATED OR TRANSFERRED PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS. THE
COMPANY SHALL BE ENTITLED TO REQUIRE AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED TO THE EXTENT THAT SUCH OPINION
IS REQUIRED PURSUANT TO THAT CERTAIN SECURITIES PURCHASE AGREEMENT UNDER WHICH
THE SECURITIES WERE ISSUED.

3.7 Authorization; Enforcement. The Purchaser has the requisite power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The Purchaser has taken all necessary action to authorize
the execution, delivery and performance of this Agreement. Upon the execution
and delivery of this Agreement, this Agreement shall constitute a valid and
binding obligation of the Purchaser enforceable in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ and contracting
parties’ rights generally and except as enforceability may be subject to general
principles of equity and except as rights to indemnity and contribution may be
limited by state or federal securities laws or public policy underlying such
laws.

3.8 Residency. Unless Purchaser has otherwise notified the Company in writing,
the Purchaser is a resident of the jurisdiction set forth immediately below such
Purchaser’s name on the signature pages hereto.

3.9 Purchaser Status. At the time such Purchaser was offered the Shares, Notes
and Warrants, it was, and at the date hereof it is, an “accredited investor” as
defined in Rule 501(a) of the Securities Act.

ARTICLE 4

COVENANTS

4.1 [Reserved.]

4.2 Expenses. The Company shall pay the reasonable out-of-pocket fees and
expenses of Baupost Group Securities, L.L.C. (“Baupost”)’s and its Affiliates’,
if any, incurred (i) in connection with the negotiation, preparation, execution,
and delivery of the Transaction Agreements, provided that, in the event the
Closing does not occur, such expenses to be paid by the Company shall not exceed
$300,000 or (ii) at any time prior to the conversion of all the Notes and
exercise of all the Warrants, in connection with any filing(s), notification(s)
or

 

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reporting pursuant to the HSR Act with respect to any conversion of the Notes or
exercise of the Warrants, in whole or in part. An estimate of the fees and
expenses of Ropes & Gray LLP, the counsel for Baupost, may be paid by check
delivered or wire transfer to such counsel at the Closing by Baupost, the amount
of such check or wire transfer being deducted from the aggregate amount to be
delivered by Baupost at the Closing for the securities to be purchased by it
hereunder. In addition, the Company shall reimburse Baupost for its reasonable
out-of-pocket expenses (including fees of advisers, counsel, consultants and
accountants) incurred by it and its Affiliates in connection with any
amendments, waivers or consents under or in respect of the Transaction
Agreements (whether or not such amendment, waiver or consent becomes effective).
The Company shall pay all Trustee fees, stamp taxes and other taxes and duties
levied in connection with the delivery of the Notes to the Purchasers.

4.3 Financial Information. The financial statements of the Company to be
included in any documents filed with the SEC will be prepared in accordance with
accounting principles generally accepted in the United States, consistently
applied (except (i) as may be otherwise indicated in such financial statements
or the notes thereto, or (ii) in the case of unaudited interim statements, to
the extent they may not include footnotes, may be condensed or summary
statements or may conform to the SEC’s rules and instructions for Reports on
Form 10-Q), and will fairly present in all material respects the consolidated
financial position of the Company and consolidated results of its operations and
cash flows as of, and for the periods covered by, such financial statements
(subject, in the case of unaudited statements, to normal and recurring year-end
audit adjustments).

4.4 Securities Laws Disclosure; Publicity. On or before 9:00 a.m., New York
local time, on the day after the date hereof, the Company shall issue a press
release announcing the signing of this Agreement and describing the terms of the
transactions contemplated by this Agreement and shall file a Current Report on
Form 8-K with the SEC describing the terms of the transactions contemplated by
this Agreement and including as an exhibit to such Current Report on Form 8-K
this Agreement, in the form required by the Exchange Act. From and after the
issuance of the press release and the filing of the Form 8-K referenced in
Section 2.6, no Purchaser shall be in possession of any material, non-public
information received from the Company or any of its officers, directors,
employees or agents, that is not disclosed in the press release or Form 8-K. The
Company shall not otherwise publicly disclose the name of any Purchaser, or
include the name of any Purchaser in any filing with the SEC (other than in a
Registration Statement and any exhibits to filings made in respect of this
transaction in accordance with periodic filing requirements under the Exchange
Act) or any regulatory agency, without the prior written consent of such
Purchaser, except to the extent such disclosure is required by law or
regulations, in which case the Company shall provide the Purchasers with prior
notice of such disclosure.

4.5 Sales by Purchasers. Each Purchaser will sell any Securities and, if
applicable, any Note Shares or Warrant Shares held by it that are sold under a
Registration Statement in compliance with applicable prospectus delivery
requirements, if any, or otherwise in compliance with the requirements for an
exemption from registration under the Securities Act and the rules and
regulations promulgated thereunder.

 

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4.6 Reservation of Common Stock. Upon and following the Stockholder Approval,
the Company shall reserve and keep available at all times during which the Notes
remain outstanding or the Warrants remain exercisable, free of preemptive
rights, a sufficient number of shares of Common Stock for the purpose of
enabling the Company to issue the Note Shares or the Warrant Shares pursuant to
the Transaction Agreements.

4.7 Increase in Authorized Share Capital. The Company shall use its reasonable
best efforts to obtain Stockholder Approval.

4.8 Listing of Additional Shares. The Company hereby agrees to apply to list the
additional shares of Common Stock into which the Notes are initially convertible
on the NASDAQ Capital Market and promptly secure the listing of such additional
shares of Common Stock on the NASDAQ Capital Market.

4.9 Waiver of Corporate Opportunity. In recognition that the Purchasers, the
Baupost Designees and the Baupost Observer currently have and will in the future
have, or will consider, investments in numerous companies with respect to which
Purchasers, the Baupost Designees and the Baupost Observer may serve as an
advisor, a director or in some other capacity, and in recognition that
Purchasers, the Baupost Designees and the Baupost Observer have myriad duties to
various investors and partners, and in anticipation that the Company and its
Subsidiaries, on the one hand, and the Purchasers, the Baupost Designees and the
Baupost Observer, on the other hand, may engage in the same or similar
activities or lines of business and have an interest in the same areas of
corporate opportunities, and in recognition of the benefits to be derived by the
Company hereunder and in recognition of the difficulties which may confront any
advisor who desires and endeavors fully to satisfy such advisor’s duties in
determining the full scope of such duties in any particular situation, the
provisions of this Section 4.9 are set forth to regulate, define and guide the
conduct of certain affairs of the Company as they may involve the Purchasers,
the Baupost Designees and the Baupost Observer, and, except as the Purchasers,
the Baupost Designees and the Baupost Observer may otherwise agree in writing
after the date hereof:

(a) the Purchasers, the Baupost Designees and the Baupost Observer will have the
right: (i) to directly or indirectly engage in any business (including, without
limitation, any business activities or lines of business that are the same as or
similar to those pursued by, or competitive with, the Company and its
Subsidiaries), (ii) to directly or indirectly do business with any client or
customer of the Company and its Subsidiaries, (C) to take any other action that
the Purchasers, the Baupost Designees and the Baupost Observer believes in good
faith is necessary to or appropriate to fulfill its obligations as described in
the first sentence of this Section 4.9 to third parties and (iii) not to
communicate or present potential transactions, matters or business opportunities
to the Company or any of its Subsidiaries, and to pursue, directly or
indirectly, any such opportunity for itself, and to direct any such opportunity
to another person or entity;

(b) the Purchasers, the Baupost Designees and the Baupost Observer will have no
duty (contractual or otherwise) to communicate or present any corporate
opportunities to the Company or any of its Affiliates or to refrain from any
actions specified in the preceding paragraph, and the Company, on its own behalf
and on behalf of its Affiliates, hereby renounces and waives any right to
require the Purchasers, the Baupost Designees

 

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and the Baupost Observer to act in a manner inconsistent with the provisions of
this Section 4.9;

(c) none of the Purchasers, the Baupost Designees and the Baupost Observer will
be liable to the Company or any of its Affiliates for breach of any duty
(contractual or otherwise) by reason of any activities or omissions of the types
referred to in this Section 4.9 or of any such person’s or entity’s
participation therein; and

(d) there is no restriction on any Purchaser, the Baupost Designees and the
Baupost Observer using such knowledge and understanding in making investment,
voting, monitoring, governance or other decisions relating to other entities or
securities.

4.10 Indemnification of the Purchasers. Subject to the provisions of this
Section 4.10, the Company will indemnify and hold the Purchasers and their
Affiliates, directors, officers, stockholders, members, partners, employees and
agents (and any other Persons with a functionally equivalent role of a Person
holding such titles notwithstanding a lack of such title or any other title),
each Person who controls or is alleged to control the Purchasers (within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act),
and the directors, officers, stockholders, agents, members, partners or
employees (and any other Persons with a functionally equivalent role of a Person
holding such titles notwithstanding a lack of such title or any other title) of
such controlling persons (each, a “Purchaser Party”) harmless from any and all
losses, liabilities, obligations, claims, contingencies, damages, costs and
expenses, including all judgments, amounts paid in settlements, court costs and
reasonable attorneys’ fees and costs of investigation that any such Purchaser
Party may suffer or incur as a result of or relating to (a) any breach of any of
the representations, warranties, covenants or agreements made by the Company in
this Agreement, and (b) any action instituted against the Purchaser Party in any
capacity, or any of them or their respective Affiliates (other than an action
instituted by a Purchaser Party against another Purchaser Party and not also
against the Company and in which the Company is not otherwise a party), with
respect to the transactions contemplated by this Agreement (unless such action
is based upon a breach of such Purchaser Party’s representations, warranties or
covenants under this Agreement or any agreements or understandings such
Purchaser Party may have with any stockholder of the Company or any violations
by such Purchaser Party of state or federal securities laws), including, but not
limited to, actions taken in the preparation, negotiation, execution and
delivery of the Transaction Agreements, the administration of the Notes, the
filing, perfection and maintenance of Liens securing Collateral (as defined in
the Indenture), and any actual or proposed amendment, supplement or waiver of
any of the Transaction Agreements (whether or not the transactions contemplated
hereby or thereby shall be consummated). If any action shall be brought against
any Purchaser Party in respect of which indemnity may be sought pursuant to this
Agreement, such Purchaser Party shall promptly notify the Company in writing,
and the Company shall have the right to assume the defense thereof with counsel
of its own choosing reasonably acceptable to the Purchaser Party. Any Purchaser
Party shall have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Purchaser Party except to the extent that (i)
the employment thereof has been specifically authorized by the Company in
writing, (ii) the Company has failed after a reasonable period of time to assume
such defense and to employ counsel (not to exceed 90 days)

 

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or (iii) in such action there is a conflict or potential conflict on any
material issue between the position of the Company and the position of such
Purchaser Party, in which case the Company shall be responsible for the
reasonable fees and expenses of no more than one such separate counsel and local
counsel and shall pay such fees and expenses as incurred. The Company will not
be liable to any Purchaser Party under this Agreement (y) for any settlement by
a Purchaser Party effected without the Company’s prior written consent, which
shall not be unreasonably withheld or delayed; provided, however, that if at any
time a Purchaser Party shall have requested the Company to reimburse such
Purchaser Party for fees and expenses of counsel as contemplated by this Section
4.10, the Company agrees that it shall be liable for any settlement of any
proceeding effected without their written consent if (i) such settlement is
entered into more than 30 days after receipt by the Company of the aforesaid
request, (ii) the Company shall have received notice of the terms of such
settlement at least 10 days prior to such settlement being entered into, (iii)
the Company shall not have reimbursed the Purchaser Party in accordance with
such request and (iv) the Company shall not have provided written notice within
10 days from such notice of the terms of such settlement of its reasonably
withheld consent that acknowledges its continued liability under this Section
4.10 for such proceeding; or (z) to the extent, but only to the extent that a
loss, claim, damage or liability is attributable to any Purchaser Party’s breach
of any of the representations, warranties, covenants or agreements made by such
Purchaser Party in this Agreement or any agreements or understandings such
Purchaser Party may have with any stockholder of the Company or any violations
by such Purchaser Party of state or federal securities laws or any conduct by
such Purchaser Party that a court of competent jurisdiction issues a final
non-appealable order that such conduct constitutes fraud, gross negligence,
willful misconduct or malfeasance. The Company shall not, without the prior
written consent of the Purchasers, not to be unreasonably withheld, effect any
settlement, compromise or consent to the entry of judgment in any pending or
threatened action, suit or proceeding in respect of which any Purchaser Party is
or could have been a party and indemnity was or could have been sought hereunder
by such Purchaser Party, unless such settlement, compromise or consent (i)
includes an unconditional release of such Purchaser Party from all liability on
claims that are the subject matter of such action, suit or proceeding and (ii)
does not include any statements as to or any findings of fault, culpability or
failure to act by or on behalf of any Purchaser Party. The indemnification
required by this Section 4.10 shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as and when bills are
received or are incurred. The indemnity agreements contained herein shall be in
addition to any cause of action or similar right of any Purchaser Party against
the Company or others and any liabilities the Company may be subject to pursuant
to law.

4.11 Filing of Certificate of Designation. The Company shall file with the
Secretary of State of the State of Delaware on or before the Closing Date the
Certificate of Designation in the form of Exhibit H attached to this Agreement
(the “Certificate of Designation”).

4.12 Taxes. The Company agrees, unless otherwise required by a change in law or
as required by a taxing authority following an audit or examination, (i) to
treat the Notes as indebtedness for tax purposes, (ii) to treat the Notes as
having been issued with additional original issue discount in an amount equal to
the fair market value of the Warrants and the Shares, (iii) not to treat the
Notes as a “contingent payment debt instrument” or governed by the rules set out
in Treasury Regulations Section 1.1275-4, (iv) not to treat the Notes as
integrated

 

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with the Warrants or the Shares for tax reporting purposes, and (v) not to file
any tax return, report or declaration inconsistent with the foregoing, except as
necessary to account for and/or disclose possible uncertainty regarding the
characterization of the Notes as indebtedness for tax purposes. The Company and
the Purchasers agree that the amounts allocated pursuant to Section 1.1 to the
Warrants and the Shares will represent their fair market value respectively and
shall not file any tax return, report or declaration inconsistent with the
foregoing.

4.13 Legends.

(a) To the extent the resale of the Note Shares or Warrant Shares is registered
under the Securities Act pursuant to an effective Registration Statement, the
Company agrees to promptly (i) authorize the removal of the legend set forth in
Section 3.6(a) and any other legend not required by applicable law from such
Note Shares or Warrant Shares and (ii) cause its transfer agent to issue such
Note Shares or Warrant Shares without such legends to the holders thereof by
electronic delivery at the applicable balance account at the Depository Trust
Company upon surrender of any stock certificates evidencing such Note Shares or
Warrant Shares. With respect to any Note Shares or Warrant Shares for which
restrictive legends are removed pursuant to this Section 4.13(a), the holder
thereof agrees to only sell such Note Shares or Warrant Shares when and as
permitted by the effective Registration Statement covering such resale and in
accordance with applicable securities laws and regulations. Any fees (with
respect to the Company’s transfer agent, counsel or otherwise) associated with
the removal of such legend(s) shall be borne by the Company. The Purchaser
hereby covenants and agrees that to the extent resales of the Note Shares or
Warrant Shares are made pursuant to such effective Registration Statement, that
such resales will be made only during the time that such Registration Statement
is effective and not withdrawn or suspended and only as permitted by such
Registration Statement, and otherwise in compliance with the Securities Act
(including applicable prospectus delivery obligations).

(b) The Purchaser may request that the Company remove, and the Company agrees to
authorize the removal of any legend from the Shares, the Warrants or the Warrant
Shares (i) following any sale of such Shares, Warrants or Warrant Shares
pursuant to Rule 144, (ii) if such Shares, Warrants or Warrant Shares are
eligible for sale under Rule 144 following the expiration of the one year
holding requirement under subparagraph (b)(1)(i) thereof, or (iii) if such
Shares, Warrants or Warrant Shares are sold under Rule 144 following the
expiration of the six month holding requirement under subparagraph (d)(1)(i)
thereof provided that the Company maintains adequate current public information
available pursuant to subparagraph (c)(1)(i) thereof. Following the time a
legend is no longer required for the Shares, Warrants or Warrant Shares under
this Section 4.13(b), the Company will, no later than three Business Days
following the delivery by a Purchaser to the Company or the Company’s transfer
agent of a legended certificate representing such securities, along with (a) if
such request is made pursuant to 4.13(b)(ii) or (iii), written confirmation by
the Purchaser that it is not, and has not for the 3 months prior to the date of
the request been, an affiliate within the meaning of Rule 144, or (b) if the
confirmation in (a) is not provided or, if such request is made pursuant to
3.6(b)(i), customary documentation related to the Purchaser, the transferee and
the

 

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transaction for a transfer pursuant to Rule 144 required by the Company’s
counsel to provide its opinion relating to the removal of the legends, (A)
deliver or cause to be delivered to such Purchaser a certificate representing
such Shares, Warrants or Warrant Shares, as applicable, that is free from all
restrictive and other legends or (B) with respect to Warrant Shares, cause the
Company’s transfer agent to credit the Purchaser’s or its designee’s account at
DTC through its Deposit/Withdrawal at Custodian (DWAC) system with a number of
shares of Common Stock equal to the number of Warrant Shares represented by the
certificate so delivered by the Purchaser (the date by which such certificate is
required to be delivered to the Purchaser or such credit is so required to be
made to the account of the Purchaser or its designee at DTC pursuant to the
foregoing is referred to herein as the “Required Delivery Date”). If the Company
fails on or prior to the Required Delivery Date to either (i) issue and deliver
(or cause to be issued and delivered) to the Purchaser a certificate
representing the Warrant Shares that is free from all restrictive and other
legends or (ii) with respect to Warrant Shares, cause the Company’s transfer
agent to credit the balance account of the Purchaser or its designee at DTC
through its Deposit/Withdrawal at Custodian (DWAC) system with a number of
shares of Common Stock equal to the number of Warrant Shares represented by the
certificate delivered by the Purchaser pursuant hereto, then, in addition to all
other remedies available to the Purchaser, the Company shall pay in cash to the
Purchaser on each day after the Required Delivery Date that the issuance or
credit of such shares is not timely effected an amount equal to 1.0% of the
product of (A) the sum of the number of Shares not issued to the Purchaser on a
timely basis and to which the Purchaser is entitled and (B) the VWAP for the
five Business Day period immediately preceding the Required Delivery Date. In
addition to the foregoing, if the Company fails to so properly deliver such
unlegended certificate or so properly credit the account of the Purchaser or its
designee at DTC by the Required Delivery Date, and if on or after the Required
Delivery Date the Purchaser purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a sale by the
Purchaser of shares of Common Stock that the Purchaser anticipated receiving
from the Company without any restrictive legend, then the Company shall, within
three Business Days after the Purchaser’s request, promptly honor its obligation
to deliver to the Purchaser such unlegended certificate or so properly credit
the account of the Purchaser or its designee at DTC and pay cash to the
Purchaser in an amount equal to the excess (if any) of the total purchase price
(including brokerage commissions, if any) for the shares of Common Stock so
purchased by the Purchaser over the product of (A) the number of Warrant Shares
that the Company was required to deliver to the Purchaser at the Required
Delivery Date, times (B) the price at which the sell order giving rise to such
purchase obligation was executed.

ARTICLE 5

CONDITIONS TO CLOSING

5.1 Conditions to Obligations of the Company. The Company’s obligation to
complete the purchase and sale of the Securities and deliver such Notes, stock
certificate(s) and

 

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Warrants, to each Purchaser is subject to the waiver by the Company or
fulfillment as of the Closing Date of the following conditions:

(a) Receipt of Funds. The Company shall have received immediately available
funds in the full amount of each Purchaser’s Aggregate Purchase Price for the
Securities being purchased hereunder as set forth opposite such Purchaser’s name
on Exhibit A hereto.

(b) Representations and Warranties. The representations and warranties made by
each Purchaser in Article 3 shall be true and correct in all material respects
as of the Closing Date.

(c) Covenants. All covenants, agreements and conditions contained in this
Agreement to be performed by the Purchasers on or prior to the Closing Date
shall have been performed or complied with in all material respects.

(d) Blue Sky. The Company shall have obtained all necessary blue sky law permits
and qualifications, or secured exemptions therefrom, required by any state for
the offer and sale of the Securities.

(e) Nasdaq. NASDAQ shall have raised no objection to the consummation of the
transactions contemplated by this Agreement, the Notes, the Warrants and any
other Transaction Agreement, subject to receipt of the Stockholder Approval.

(f) Absence of Litigation. No proceeding challenging the Transaction Agreements
or the transactions contemplated thereby, or seeking to prohibit, alter, prevent
or materially delay the Closing, shall have been instituted or be pending before
any court, arbitrator, governmental body, agency or official.

(g) No Governmental Prohibition. The sale of the Securities by the Company shall
not be prohibited by any law or governmental order or regulation.

5.2 Conditions to Purchasers’ Obligations at the Closing. Each Purchaser’s
obligation to complete the purchase and sale of the Securities is subject to the
waiver by such Purchaser or fulfillment as of the Closing Date of the following
conditions:

(a) Representations and Warranties. The representations and warranties made by
the Company in Article 2 shall be true and correct in all material respects as
of the Closing Date, there shall have been no Material Adverse Effect with
respect to the Company since the date hereof, and the Company shall have
delivered to such Purchaser a certificate in form and substance reasonably
satisfactory to such Purchaser duly executed on behalf of the Company by an
authorized executive officer of the Company, certifying that (A) the
representations and warranties of the Company made by the Company in Article 2
shall be true and correct in all material respects as of the Closing Date with
the same effect as though made at and as of such date (except those
representations and warranties that address matters only as of a specified date,
which shall be true and correct in all respects as of that specified date), (B)
there shall have been

 

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no Material Adverse Effect with respect to the Company since the date hereof and
(C) the conditions to Closing set forth in Section 5.2 of this Agreement have
been fulfilled.

(b) Covenants. All covenants, agreements and conditions contained in this
Agreement to be performed by the Company on or prior to the Closing Date shall
have been performed or complied with in all material respects.

(c) Authorization. The Company shall have delivered to such Purchaser a
certificate of the secretary of the Company dated as of the Closing Date
certifying (A) that attached thereto is a true and complete copy of the bylaws
of the Company as in effect at the time of the actions by the Board referred to
in clause (B) below, and on the Closing Date; (B) that attached thereto is a
true and complete copy of all resolutions adopted by the Board authorizing the
execution, delivery and performance of the Transaction Agreements and that all
such resolutions are in full force and effect and are all the resolutions
adopted in connection with the transactions contemplated hereby as of the
Closing Date; (C) that attached thereto is a true and complete copy of the
Company’s Certificate of Incorporation as in effect at the time of the actions
by the Board referred to in clause (B) above, and on the Closing Date; and (D)
as to the incumbency of any officer of the Company executing the Agreement or
any Agreement referred to herein on behalf of the Company.

(d) Blue Sky. The Company shall have obtained all necessary blue sky law permits
and qualifications, or secured exemptions therefrom, required by any state or
foreign or other jurisdiction for the offer and sale of the Securities.

(e) Legal Opinion. The Company shall have delivered to such Purchaser an
opinion, dated as of the Closing Date, from Cooley LLP, counsel to the Company,
in substantially the form attached hereto as Exhibit D hereto.

(f) Nasdaq. NASDAQ shall have raised no objection to the consummation of the
transactions contemplated by this Agreement, the Notes, the Warrants and any
other Transaction Agreement, subject to receipt of the Stockholder Approval.

(g) [Reserved.]

(h) Absence of Litigation. No proceeding challenging the Transaction Agreements
or the transactions contemplated thereby, or seeking to prohibit, alter, prevent
or materially delay the Closing, shall have been instituted or be pending before
any court, arbitrator, governmental body, agency or official.

(i) No Governmental Prohibition. The sale of the Securities by the Company shall
not be prohibited by any law or governmental order or regulation, subject to
receipt of the Stockholder Approval.

(j) Certificate of Designation. The Company shall have filed the Certificate of
Designation with the Secretary of State of Delaware on or prior to the Closing
Date, which shall continue to be in full force and effect as of the Closing
Date.

 

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(k) Transaction Agreements. The Company shall have delivered to the Purchasers
an executed counterpart of each of the Transaction Agreements to be entered into
on the Closing Date. The Trustee shall have delivered to the Purchasers an
executed counterpart of the Indenture.

(l) Solvency Certificate. The Purchasers shall have received a solvency
certificate in the form consistent with the representation provided in Section
2.30 of this Agreement, dated the Closing Date, and signed by the chief
financial officer (or other officer with reasonably equivalent duties) of the
Company.

(m) Patriot Act. So long as requested by the Purchaser at least two (2) Business
Days prior to the Closing Date, such Purchaser shall have received, on or prior
to the Closing Date, all documentation and other information with respect to the
Company that is required by U.S. regulatory authorities under applicable “know
your customer” and anti-money laundering rules and regulations, including the
Patriot Act.

(n) Creation and Perfection of Security Interests. Notwithstanding anything to
the contrary in this Section 5.2, with respect to the obligations, all actions
necessary to establish that the Collateral Agent will have a perfected first
priority security interest (subject to Permitted Liens) in the Collateral (as
defined in the Indenture) under the Notes Documents (as defined in the
Indenture) shall have been taken, in each case, to the extent such Collateral
(including the creation or perfection of any security interest) is required to
be provided on the Closing Date.

(o) Adoption and Approval of Waiver of Corporate Opportunity. The Board shall
adopt and approve the terms of Section 4.9 of this Agreement.

ARTICLE 6

[RESERVED]

6.1 [Reserved.]

ARTICLE 7

DEFINITIONS

7.1 “Affiliate” means, with respect to any Person (as defined below), any other
Person controlling, controlled by or under direct or indirect common control
with such Person (for the purposes of this definition “control,” when used with
respect to any specified Person, shall mean the power to direct the management
and policies of such Person, directly or indirectly, whether through ownership
of voting securities, by contract or otherwise; and the terms “controlling”
and “controlled” shall have meanings correlative to the foregoing).

7.2 “Agreement” has the meaning set forth in the preamble.

 

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7.3 “Aggregate Purchase Price” has the meaning set forth in Section 1.1.

7.4 “Baupost” shall have the meaning set forth in Section 4.2.

7.5 “Baupost Designees” shall have the meaning set forth in the Investor Rights
Agreement.

7.6 “Baupost Observer” shall have the meaning set forth in the Investor Rights
Agreement.

7.7 “Board” shall have the meaning set forth in Section 2.23.

7.8 “Business Day” means a day Monday through Friday on which Nasdaq, or any
subsequent market that is the primary market for trading in the Common Stock, is
open for business.

7.9 “Bylaws” has the meaning set forth in Section 2.3.

7.10 “Certificate of Designation” has the meaning set forth in Section 4.11.

7.11 “Certificate of Incorporation” has the meaning set forth in Section 2.3.

7.12 “Closing” has the meaning set forth in Section 1.3.

7.13 “Closing Date” has the meaning set forth in Section 1.3.

7.14 “Collateral Agent” shall mean U.S. Bank National Association.

7.15 “Common Stock” means the common stock, par value $0.001 per share, of the
Company.

7.16 “Company” means Orexigen Therapeutics, Inc.

7.17 “Enforceability Exceptions” has the meaning set forth in Section 2.2.

7.18 “Evaluation Date” has the meaning set forth in Section 2.7.

7.19 “Exchange Act” means the Securities Exchange Act of 1934, as amended, and
any successor thereto, and any rules and regulations promulgated thereunder, all
as the same shall be in effect from time to time.

7.20 “FCPA” has the meaning set forth in Section 2.18(b).

7.21 “Financial Statements” means the financial statements of the Company
included in the SEC Documents.

7.22 “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.

 

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7.23 “Indenture” shall have the meaning set forth in the preamble.

7.24 “Intellectual Property” has the meaning set forth in Section 2.10.

7.25 “Initial Baupost Designees” has the meaning set forth in the Investor
Rights Agreement.

7.26 “Investment Company Act” has the meaning set forth in Section 2.12.

7.27 “Investor Rights Agreement” shall have the meaning set forth in Section
3.1.

7.28 “Liens” means, (a) any mortgage, deed of trust, lien (statutory or
otherwise), pledge, encumbrance, claim, charge, assignment, hypothecation,
security interest or encumbrance of any kind, including any easement,
right-of-way or other encumbrance on title to real property, in each of the
foregoing cases whether voluntary or imposed by law, (b) the interest of a
vendor or a lessor under any conditional sale agreement, capital lease or title
retention agreement (or any financing lease having substantially the same
economic effect as any of the foregoing) relating to such property; and (c) in
the case of securities, any purchase option, call or similar right of a third
party with respect to such securities; provided that in no event shall an
operating lease be deemed to constitute a Lien.

7.29 “Material Adverse Effect” means a material adverse effect on (a) the
business affairs, operations, assets, liabilities or results of operations, or
condition (financial or otherwise) of the Company and its subsidiaries, taken as
a whole, (b) the ability of the Company to perform its obligations pursuant to
the transactions contemplated by the Transaction Agreements or (c) the rights
and remedies of the Collateral Agent and the other Secured Parties (as defined
in the Indenture) under the Indenture or the other Transaction Agreements.

7.30 “Material Agreements” has the meaning set forth in Section 2.6.

7.31 “Nasdaq” means The Nasdaq Stock Market LLC.

7.32 “Notes” has the meaning set forth in Section 1.1.

7.33 “Note Shares” has the meaning set forth in Section 2.4.

7.34 “OFAC” has the meaning set forth in Section 2.18(c).

7.35 “Offering” means the private placement of the Company’s Securities
contemplated by the Transaction Agreements.

7.36 “Patriot Act” has the meaning set forth in Section 2.18(c).

7.37 “Person” means any person, individual, corporation, limited liability
company, partnership, trust or other nongovernmental entity or any governmental
agency, court, authority or other body (whether foreign, federal, state, local
or otherwise).

7.38 “Purchaser Party” shall have the meaning set forth in Section 4.10.

 

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7.39 “Purchasers” mean the Purchasers whose names are set forth on the signature
pages of this Agreement, and their permitted transferees.

7.40 The terms “register,” “registered” and “registration” refer to the
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.

7.41 “Registrable Securities” means (i) the Notes Shares, and (ii) the Warrant
Shares; provided, however, that securities shall only be treated as Registrable
Securities if and only for so long as they (A) have not been disposed of
pursuant to a registration statement declared effective by the SEC, (B) have not
been sold in a transaction exempt from the registration and prospectus delivery
requirements of the Securities Act so that all transfer restrictions and
restrictive legends with respect thereto are removed upon the consummation of
such sale or (C) are held by a Purchaser or a permitted transferee.

7.42 “Registration Statement” means any one or more registration statements of
the Company filed under the Securities Act that covers the resale of any of the
Registrable Securities pursuant to the provisions of this Agreement (including
without limitation the initial registration statement, the new registration
statement and any remainder registration statements) and amendments and
supplements to such Registration Statements, including post-effective
amendments.

7.43 “Required Delivery Date” shall have the meaning set forth in Section
4.13(b).

7.44 “Rule 144” means Rule 144 promulgated under the Securities Act, or any
successor rule.

7.45 “Rule 415” means Rule 415 promulgated under the Securities Act, or any
successor rule.

7.46 “Sanctions” means economic sanctions administered or enforced by the United
States government (including without limitation, sanctions enforced by OFAC or
the U.S. Department of State), the United Nations Security Council, the European
Union or Her Majesty’s Treasury.

7.47 “SEC” means the United States Securities and Exchange Commission.

7.48 “SEC Documents” has the meaning set forth in Section 2.6.

7.49 “Securities” has the meaning set forth in Section 1.1.

7.50 “Securities Act” means the Securities Act of 1933, as amended, and the
rules and regulations thereunder, or any similar successor thereto, and any
rules and regulations promulgated thereunder, all as the same shall be in effect
from time to time.

7.51 “Security Agreement” has the meaning set forth in Section 2.31(b).

 

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7.52 “Stockholder Approval” means the requisite approval from the Company’s
stockholders to (a) amend the Company’s Amended and Restated Certificate of
Incorporation, as amended, to increase the total number of authorized but
unissued shares of Common Stock to an amount sufficient to permit the conversion
of all outstanding Notes and Warrants into shares of Common Stock at the then
applicable Conversion Rate; (b) approve the sale and issuance of the maximum
number of shares of Common Stock upon conversion of the Notes and exercise of
the Warrants, based on the then applicable Conversion Price or exercise price,
as applicable, as required by Nasdaq Rule 5365; and (c) approve the sale and
issuance of the shares of Common Stock upon conversion of Notes and exercise of
the Warrants to Baupost that may result in a change of control (as interpreted
by The Nasdaq Stock Market LLC) of the Company as required by Nasdaq Rule
5365(b). For the avoidance of doubt, Stockholder Approval will not be deemed to
be obtained unless and until the requisite approval from the Company’s
stockholders have been obtained for each of the foregoing.

7.53 “Shares” has the meaning set forth in Section 1.1.

7.54 “Solvent” shall have the meaning set forth in Section 2.30.

7.55 “Subsidiary” of any Person shall mean any corporation, partnership, limited
liability company, joint venture or other legal entity of which such Person
(either above or through or together with any other subsidiary) owns, directly
or indirectly, more than 50% of the stock or other equity interests the holders
of which are generally entitled to vote for the election of the board of
directors or other governing body of such corporation or other legal entity.

7.56 “Transaction Agreements” has the meaning set forth in Section 8.7.

7.57 “Trustee” shall mean U.S. Bank, National Association.

7.58 “Warrant Shares” has the meaning set forth in Section 2.4.

7.59 “Warrants” has the meaning set forth in Section 1.1.

ARTICLE 8

GOVERNING LAW; MISCELLANEOUS

8.1 Termination. This Agreement may be terminated by Baupost at its sole option
by written notice to the Company, if the Closing has not been consummated on or
before March 31, 2016. In the event of termination of this Agreement pursuant to
this Section 8.1, the Agreement shall forthwith become void and there shall be
no liability on the part of either party; provided, however, that nothing herein
shall relieve either party from liability for (i) any breach of this Agreement
or any agreement made as of the date hereof or subsequent thereto pursuant to
this Agreement or (ii) any willful breach of, or fraud in connection with this
Agreement.

 

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8.2 Waivers and Amendments. Neither this Agreement nor any provision hereof may
be changed, waived, discharged, terminated, modified or amended except upon the
written consent of the Company and holders of at least 70% of Note Shares and
Warrant Shares (on an as-converted and as-exercised basis, assuming Stockholder
Approval has been obtained and without regard to the Trigger Date (as defined in
the Indenture)). Notwithstanding the foregoing, no waiver of, modification or
amendment to any rights granted to Baupost under this Agreement (including, but
not limited to, Baupost’s rights to designate and have appointed the Baupost
Designees and the Baupost Observer under the Investor Rights Agreement; its
rights to indemnification under Section 4.2 hereof and Section 3.9 of the
Investor Rights Agreement; and its consent right in this Section 8.2) shall be
valid or effective without the prior written consent of Baupost.

8.3 Governing Law; Jurisdiction. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each
party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement
(whether brought against a party hereto or its respective affiliates, directors,
officers, stockholders, partners, members, employees or agents) shall be
commenced exclusively in the state and federal courts sitting in the City of New
York. Each party hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in the City of New York, Borough of Manhattan
for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper or is an inconvenient venue for such
proceeding. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any other
manner permitted by law.

8.4 Counterparts; Signatures by Facsimile. This Agreement may be executed in two
or more counterparts, all of which are considered one and the same agreement and
will become effective when counterparts have been signed by each party and
delivered to the other parties. This Agreement, once executed by a party, may be
delivered to the other parties hereto by facsimile or e-mail transmission of a
copy of this Agreement bearing the signature of the party so delivering this
Agreement.

8.5 Headings. The headings of this Agreement are for convenience of reference
only, are not part of this Agreement and do not affect its interpretation.

8.6 Severability. If any provision of this Agreement is invalid or unenforceable
under any applicable statute or rule of law, then such provision will be deemed
modified in order to conform with such statute or rule of law. Any provision
hereof that may prove invalid or

 

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unenforceable under any law will not affect the validity or enforceability of
any other provision hereof.

8.7 Entire Agreement; Amendments. This Agreement (including all schedules and
exhibits hereto), the Indenture, the Notes, the Warrants, the Investor Rights
Agreement, the Security Agreement, and the agreements and written instruments
referenced herein and therein (the “Transaction Agreements”) constitute the
entire agreement among the parties hereto with respect to the subject matter
hereof and thereof. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein or therein. The
Transaction Agreements supersede all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof and thereof, which
the parties acknowledge have been merged into such documents. No provision of
this Agreement may be waived, modified, supplemented or amended other than by an
instrument in writing signed by the party to be charged with enforcement. Any
amendment, modification, supplement or waiver by a party effected in accordance
with this Section 8.7 shall be binding upon such party, including with respect
to any Securities purchased under this Agreement at the time outstanding and
held by such party (including securities into which such Securities are
convertible and for which such Securities are exercisable) and each future
holder of all such securities. No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of any party to exercise any right hereunder in any manner
impair the exercise of any such right.

8.8 Notices. All notices required or permitted hereunder shall be in writing and
shall be deemed effectively given: (a) upon personal delivery to the party to be
notified, (b) when sent by confirmed email, telex or facsimile if sent during
normal business hours of the recipient, if not, then on the next business day,
(c) five days after having been sent by registered or certified mail, return
receipt requested, postage prepaid, or (d) one business day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. The addresses for such communications are:

 

If to the Company:    Orexigen Therapeutics, Inc.

   3344 N. Torrey Pines Ct., Suite 200    La Jolla, CA 92037    Attn: Chief
Financial Officer    cc: General Counsel With a copy to:    Cooley LLP    101
California Street • 5th Floor    San Francisco, CA 94111-5800    Attn: David
Peinsipp

If to a Purchaser:

to the address set forth immediately below such Purchaser’s name on the
signature pages hereto.

 

With a copy to:    Ropes & Gray LLP

 

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   Prudential Tower    800 Boylston Street    Boston, MA 02199    Attn: Thomas
Holden    Facsimile: (415) 315-4823

Each party may by advance written notice to the other parties, change its
address for notices hereunder.

8.9 Successors and Assigns. This Agreement is binding upon and inures to the
benefit of the parties and their successors and permitted assigns. The Company
may not assign this Agreement or any rights or obligations hereunder without the
prior written consent of the Purchaser (other than by merger). The Purchaser may
assign any or all of its rights under the Transaction Agreements to any Person
to whom the Purchaser assigns or transfers any Notes.

8.10 Third Party Beneficiaries. This Agreement is intended for the benefit of
the parties hereto, their respective permitted successors and permitted assigns,
and is not for the benefit of, nor may any provision hereof be enforced by, any
other Person.

8.11 Further Assurances. Each party will do and perform, or cause to be done and
performed, all such further acts and things, and will execute and deliver all
other agreements, certificates, instruments and documents, as another party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.

8.12 No Strict Construction. The language used in this Agreement is deemed to be
the language chosen by the parties to express their mutual intent, and no rules
of strict construction will be applied against any party. In addition, each and
every reference to share prices and shares of Common Stock in this Agreement
shall be subject to adjustment for reverse and forward stock splits, stock
dividends, stock combinations and other similar transactions of the shares of
Common Stock that occur after the date of this Agreement.

8.13 Equitable Relief. The Company recognizes that, if it fails to perform or
discharge any of its obligations under this Agreement, any remedy at law may
prove to be inadequate relief to the Purchasers. The Company therefore agrees
that the Purchasers are entitled to seek temporary and permanent injunctive
relief in any such case. Each Purchaser also recognizes that, if it fails to
perform or discharge any of its obligations under this Agreement, any remedy at
law may prove to be inadequate relief to the Company. Each Purchaser therefore
agrees that the Company is entitled to seek temporary and permanent injunctive
relief in any such case.

8.14 Survival of Representations and Warranties. Notwithstanding any
investigation made by any party to this Agreement, all representations and
warranties made by the Company and the Purchasers herein shall survive for a
period of three years following the date hereof.

8.15 Independent Nature of Purchasers’ Obligations and Rights. The obligations
of each Purchaser under this Agreement are several and not joint with the
obligations of any other Purchaser, and no Purchaser shall be responsible in any
way for the performance of the

 

31

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obligations of any other Purchaser under this Agreement. Nothing contained
herein and no action taken by any Purchaser pursuant thereto, shall be deemed to
constitute the Purchasers as a partnership, an association, a joint venture or
any other kind of entity, or create a presumption that the Purchasers are in any
way acting in concert or as a group, or are deemed affiliates with respect to
such obligations or the transactions contemplated by this Agreement. Each
Purchaser shall be entitled to independently protect and enforce its rights,
including without limitation the rights arising out of this Agreement, and it
shall not be necessary for any other Purchaser to be joined as an additional
party in any proceeding for such purpose.

8.16 Exculpation. Each Purchaser acknowledges that it is not relying upon any
person, firm or corporation, other than the Company and its officers and
directors, in making its investment or decision to invest in the Company. Each
Purchaser agrees that no other Purchaser nor the respective controlling persons,
officers, directors, partners, agents or employees of any other Purchaser shall
be liable to any other Purchaser for any action heretofore or hereafter taken or
omitted to be taken by any of them in connection with the purchase of the
Securities.

8.17 Remedies. In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, each Purchaser will be
entitled to specific performance under this Agreement. The parties agree that
monetary damages may not be adequate compensation for any loss incurred by any
Purchaser by reason of any breach of obligations contained in this Agreement and
hereby agree to waive and not to assert in any action for specific performance
of any such obligation the defense that a remedy at law would be adequate.

8.18 Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall not be a Business Day, then such action may be taken or such right may be
exercised on the next succeeding Business Day.

8.19 WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY
JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH
KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW,
HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER
TRIAL BY JURY.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the undersigned has caused this Securities Purchase
Agreement to be duly executed as of the date first above written.

 

  OREXIGEN THERAPEUTICS, INC.   By:  

/s/ Michael A. Narachi

  Name:   Michael A. Narachi   Title:   President and Chief Executive Officer

[Signature Page to Securities Purchase Agreement]

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PURCHASER:   BAUPOST GROUP SECURITIES, L.L.C.

  By:  

/s/ Gregory Ciongoli

  Name:  

Gregory Ciongoli

  Title:  

Partner

  Address:  

 

   

c/o State Street Bank and Trust 200 Newport Avenue, 6th Floor North Quincy, MA
02171

Attention: Mike Manganaro

PURCHASER:   ROCK SPRINGS CAPITAL MASTER FUND LP

  By:  

/s/ Graham McPhail

  Name:  

Graham McPhail

  Title:  

Managing Director/Member of the GP

  Address:  

 

    650 South Exeter Street, Suite 1070 Baltimore, MD 21202

PURCHASER:   TELEMETRY SECURITIES LLC

  By:  

/s/ Dan Sommers

  Name:  

Dan Sommers

  Title:  

Portfolio Manager

  Address:  

 

   

545 Fifth Avenue, Suite 1108

New York, NY 10017

PURCHASER:   ECOR1 CAPITAL FUND, L.P.

  By:  

/s/ Oleg Nodelman

  Name:  

Oleg Nodelman

  Title:  

Managing Director

  Address:  

 

   

409 Illinois Street

San Francisco, CA 94158

PURCHASER:   ECOR1 CAPITAL FUND QUALIFIED, L.P.

  By:  

/s/ Oleg Nodelman

  Name:  

Oleg Nodelman

  Title:  

Managing Director

  Address:  

 

   

409 Illinois Street

San Francisco, CA 94158

 

[Signature Page to Securities Purchase Agreement]

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PURCHASER:   683 CAPITAL PARTNERS LP

  By:  

/s/ Joseph Patt

  Name:  

Joseph Patt

  Title:  

Partner – Head Trader

  Address:  

 

   

3 Columbus Circle, Suite 2205

New York, NY 10019

PURCHASER:   CC ARBITRAGE, LTD.

  By:  

/s/ Peter C. Fletcher

  Name:  

Peter C. Fletcher

  Title:  

Portfolio Manager

  Address:  

 

   

227 W. Monroe, Suite 3550

Chicago, IL 60606

PURCHASER:   CC ARB SIF I, LTD.

  By:  

/s/ Peter C. Fletcher

  Name:  

Peter C. Fletcher

  Title:  

Portfolio Manager

  Address:  

 

   

227 W. Monroe, Suite 3550

Chicago, IL 60606

PURCHASER:   CC ARB WEST, LLC

  By:  

/s/ Peter C. Fletcher

  Name:  

Peter C. Fletcher

  Title:  

Portfolio Manager

  Address:  

 

    227 W. Monroe, Suite 3550 Chicago, IL 60606

PURCHASER:   HIGHBRIDGE INTERNATIONAL LLC

 

By: Highbridge Capital Management, LLC, as Trading Manager

  By:  

/s/ Jason Hempel

  Name:  

Jason Hempel

  Title:  

Managing Director

  Address:  

 

   

40 W. 57th Street, Floor 32

New York, NY 10019

 

[Signature Page to Securities Purchase Agreement]

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PURCHASER:   HIGHBRIDGE TACTICAL CREDIT&CONVERTIBLES MASTER FUND, L.P.

 

By: Highbridge Capital Management, LLC, as Trading Manager

  By:  

/s/ Jason Hempel

  Name:  

Jason Hempel

  Title:  

Managing Director

  Address:  

 

   

40 W. 57th Street, Floor 32

New York, NY 10019

PURCHASER:

  O’CONNOR GLOBAL MULTI-STRATEGY ALPHA MASTER LIMITED

  By:  

/s/ Andrew Martin

  Name:  

Andrew Martin

  Title:  

Managing Director

  Address:  

 

   

c/o UBS O’Connor LLC

1 North Wacker Drive, 32nd Floor

Chicago, IL 60606

PURCHASER:   NINETEEN77 GLOBAL MULTI-STRATEGY ALPHA(LEVERED) MASTER LIMITED

  By:  

/s/ Andrew Martin

  Name:  

Andrew Martin

  Title:  

Managing Director

  Address:  

 

   

c/o UBS O’Connor LLC

1 North Wacker Drive, 32nd Floor

Chicago, IL 60606

PURCHASER:   BIOTECHNOLOGY VALUE FUND, L.P.

  By:  

/s/ Mark Lampert

  Name:  

Mark Lampert

  Title:  

President of BVF Inc.

General Partner of BVF Partners, L.P.

General Partner of Biotechnology Value Fund, L.P.

  Address:  

 

   

One Sansome Street, 30th Floor

San Francisco, CA 94104

 

[Signature Page to Securities Purchase Agreement]

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PURCHASER:   BIOTECHNOLOGY VALUE FUND II, L.P.

  By:  

/s/ Mark Lampert

  Name:  

Mark Lampert

  Title:  

President of BVF Inc.

General Partner of BVF Partners, L.P.

General Partner of Biotechnology Value Fund II, L.P.

  Address:  

 

   

One Sansome Street, 30th Floor

San Francisco, CA 94104

PURCHASER:   BIOTECHNOLOGY VALUE TRADING FUND OS, L.P.

  By:  

/s/ Mark Lampert

  Name:  

Mark Lampert

  Title:  

President of BVF Inc.

General Partner of BVF Partners, L.P.

Sole Member of BVF Partners OS, Ltd.

General Partner of Biotechnology Value Trading Fund OS, L.P.

  Address:  

 

   

One Sansome Street, 30th Floor

San Francisco, CA 94104

PURCHASER:   INVESTMENT 10, LLC

  By:  

/s/ Mark Lampert

  Name:  

Mark Lampert

  Title:  

President of BVF Inc.

General Partner of BVF Partners, L.P.

Attorney-in-fact for Investment 10, LLC

  Address:  

 

   

One Sansome Street, 30th Floor

San Francisco, CA 94104

PURCHASER:   MSI BVF SPV, LLC

  By:  

/s/ Mark Lampert

  Name:  

Mark Lampert

  Title:  

President of BVF Inc.

General Partner of BVF Partners, L.P.

Attorney-in-fact for MSI BVF SPV, LLC

  Address:  

 

   

One Sansome Street, 30th Floor

San Francisco, CA 94104

 

[Signature Page to Securities Purchase Agreement]

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PURCHASER:   ROADRUNNER CO.

  By:  

/s/ Mark Lampert

  Name:  

Mark Lampert

  Title:  

President of BVF Inc.

General Partner of BVF Partners, L.P.

Attorney-in-fact for Roadrunner Co.

  Address:  

 

   

One Sansome Street, 30th Floor

San Francisco, CA 94104

PURCHASER:   SABBY HEALTHCARE MASTER FUND, LTD.

  By:  

/s/ Robert Grundstein

  Name:  

Robert Grundstein

  Title:  

COO of Investment Manager

  Address:  

 

   

c/o Sabby Management

10 Mountainview Road, Suite 205

Upple Saddle River, NJ 07458

PURCHASER:   SABBY VOLATILITY WARRANT MASTER FUND, LTD.

  By:  

/s/ Robert Grundstein

  Name:  

Robert Grundstein

  Title:  

COO of Investment Manager

  Address:  

 

    c/o Sabby Management 10 Mountainview Road, Suite 205 Upple Saddle River, NJ
07458

 

[Signature Page to Securities Purchase Agreement]

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EXHIBIT A

SCHEDULE OF PURCHASERS

 

Purchaser

   Notes      Series Z
Preferred
Stock      Warrants      Aggregate
Purchase Price      Address
for
Delivery  

Baupost Group Securities, L.L.C.

     $75,000,000         100,000         100,000,000         $75,000,000        
(1 ) 

Rock Springs Capital Master Fund LP

     $2,250,000         3,000         3,000,000         $2,250,000         (2 ) 

Telemetry Securities LLC

     $3,000,000         4,000         4,000,000         $3,000,000         (3 ) 

EcoR1 Capital Fund, L.P

     $4,765,000         6,353         6,353,333         $4,765,000         (4 ) 

EcoR1 Capital Fund Qualified, L.P.

     $13,235,000         17,646         17,646,666         $13,235,000        
(4 ) 

683 Capital Partners LP

     $1,000,000         13,333         1,333,333         $1,000,000         (5
) 

CC Arbitrage, Ltd.

     $880,000         1,173         1,173,333         $880,000         (6 ) 

CC ARB SIF I, Ltd.

     $1,244,000         1,658         1,658,666         $1,244,000         (6 ) 

CC ARB West, LLC

     $876,000         1,168         1,168,000         $876,000         (6 ) 

Highbridge International LLC

     $3,875,000         5,166         5,166,666         $3,875,000         (7 ) 

Highbridge Tactical Credit & Convertibles Master Fund, L.P.

     $1,125,000         1,500         1,500,000         $1,125,000         (7 ) 

O’Connor Global Multi-Strategy Alpha Master Limited

     $23,625,000         31,500         31,500,000         $23,625,000        
(8 ) 

Nineteen77 Global Multi-Strategy Alpha (Levered) Master Limited

     $1,375,000         1,833         1,833,333         $1,375,000         (8 ) 

Biotechnology Value Fund, L.P.

     $11,237,000         14,982         14,982,666         $11,237,000        
(9 ) 

Biotechnology Value Fund II, L.P.

     $7,236,000         9,648         9,648,000         $7,236,000         (9 ) 

Biotechnology Value Trading Fund OS, L.P.

     $2,236,000         2,981         2,981,333         $2,236,000         (9 ) 

Investment 10, LLC

     $1,815,000         2,420         2,420,000         $1,815,000         (9 ) 

MSI BVF SPV, LLC

     $3,476,000         4,634         4,634,666         $3,476,000         (9 ) 

Roadrunner Co.

     $4,000,000         5,333         5,333,333         $4,000,000         (9 ) 

Sabby Healthcare Master Fund, Ltd.

     $2,000,000         2,666         2,666,666         $2,000,000         (10
) 

Sabby Volatility Warrant Master Fund, Ltd.

     $750,000         1,000         1,000,000         $750,000         (10 ) 

Total

     $165,000,000         219,994         219,999,994         $165,000,000      

 

1. Baupost Group Securities, L.L.C., c/o State Street Bank and Trust, 200
Newport Avenue, 6th Floor, North Quincy, MA 02171, United States, Attention:
Mike Manganaro.

 

2. Rock Springs Capital, 650 South Exeter Street, Suite 1070, Baltimore, MD
21202, Attention: Graham McPhail.

 

3. Telemetry Securities LLC, 545 Fifth Ave, Suite 1108, New York, NY 10017,
Attention: Dan Sommers.

 

4. EcoR1 Capital Fund, 409 Illinois Street, San Francisco, CA 94158, Attention:
Oleg Nodelman.

 

5. 683 Capital Partners, 3 Columbus Circle, Suite 2205, New York, NY 10019,
Attention: Joseph Patt.

 

6. c/o Castle Creek Capital, 227 West Monroe, Suite 2550, Chicago, IL 60606,
Attention: Peter Fletcher.

 

7. c/o Highbridge Capital Management, LLC, 40 W. 57th Street, Floor 32, New
York, NY 10019, Attention: Jason Hempel.

 

8. c/o UBS O’Connor LLC, 1 North Wacker Drive, 32nd Floor, Chicago, IL 60606

 

9. c/o BVF Partners, L.P., One Sansome Street, 30th Floor, San Francisco, CA
94104, Attention Mark Lampert.

 

10. c/o Sabby Management, 10 Mountainview Road, Upper Saddle River, NJ 07458,
Attention: Robert Grundstein.