Exhibit 10.1

EMPLOYMENT AGREEMENT

This Employment Agreement (“Agreement”) is entered into as of the March 31,
2009, by and between Michael Narachi (“Executive”) and Orexigen Therapeutics,
Inc. (the “Company”).

WHEREAS, the Company desires to employ Executive to provide services to the
Company, and wishes to provide Executive with certain compensation and benefits
in return for Executive’s services; and

WHEREAS, Executive wishes to be employed by the Company and provide services to
the Company in return for certain compensation and benefits.

NOW, THEREFORE, in consideration of the mutual promises and covenants contained
herein, it is hereby agreed by and between the parties hereto as follows:

ARTICLE I

DEFINITIONS

For purposes of the Agreement, the following terms are defined as follows:

1.1 “Board” means the Board of Directors of the Company.

1.2 “Cause” means the occurrence of any of the following events:

(a) Executive’s conviction of or plea of guilty or nolo contendere to any felony
or a crime of moral turpitude;

(b) Executive’s willful and continued failure or refusal to follow lawful and
reasonable instructions of the Board of Directors or lawful and reasonable
policies of the Company or its affiliates;

(c) Executive’s continued failure to faithfully and diligently perform the
assigned duties of his/her employment with the Company or its affiliates, or
Executive’s persistent and material failure to meet the personal performance
objectives set for him by the Board;

(d) Unprofessional, unethical, immoral or fraudulent conduct by Executive;

(e) Conduct by Executive that materially discredits the Company or any affiliate
or is materially detrimental to the reputation, character and standing of the
Company or any affiliate; or

(f) Executive’s material breach of this Agreement, the Proprietary Information
and Inventions Agreement, or any other contractual, fiduciary, or statutory duty
owed to the Company.

An event described in Section 1.2(b) through Section 1.2(f) herein shall not be
treated as “Cause” until after Executive has been given written notice of such
event, failure or conduct and Executive fails to cure such event, failure,
conduct or breach within 30 days

 

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from such written notice; provided, however, that such 30-day cure period shall
not be required if the event, failure, conduct or breach is incapable of being
cured. Failure of the Company to meet its financial or performance targets or
goals shall not be deemed to be a breach pursuant to Sections 1.2(b) or 1.2(c)
herein.

1.3 “Change in Control” means the occurrence of any of the following events:

(a) the direct or indirect acquisition by any person or related group of persons
(other than the Company or a person that directly or indirectly controls, is
controlled by, or is under common control with, the Company) of beneficial
ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities
possessing more than 50% of the total combined voting power of the Company’s
outstanding securities pursuant to a tender or exchange offer made directly to
the Company’s shareholders which the Board does not recommend such shareholders
to accept;

(b) a change in the composition of the Board over a period of 36 months or less
such that a majority of the Board members ceases, by reason of one or more
contested elections for Board membership, to be comprised of individuals who
either (i) have been Board members continuously since the beginning of such
period, or (ii) have been elected or nominated for election as Board members
during such period by at least a majority of the Board members described in
clause (i) who were still in office at the time such election or nomination was
approved by the Board;

(c) the consummation of any consolidation, share exchange or merger of the
Company (i) in which the stockholders of the Company immediately prior to such
transaction do not own at least a majority of the voting power of the entity
which survives/results from that transaction, or (ii) in which a stockholder of
the Company who does not own a majority of the voting stock of the Company
immediately prior to such transaction, owns a majority of the Company’s voting
stock immediately after such transaction; or

(d) the liquidation or dissolution of the Company or any sale, lease, exchange
or other transfer (in one transaction or a series of related transactions) of
all or substantially all the assets of the Company, including stock held in
subsidiary corporations or interests held in subsidiary ventures.

1.4 “Company” means Orexigen Therapeutics, Inc. or, following a Change in
Control, the surviving entity resulting from such transaction.

1.5 “Constructive Termination” means Executive’s resignation from all positions
he then holds with the Company because of:

(a) a material reduction in Executive’s authority, duties or responsibilities;

(b) a material diminution in the authority, duties or responsibilities of the
supervisor to whom Executive is required to report, including a requirement that
Executive report to a corporate officer or employee instead of reporting
directly to the Board of Directors;

(c) a material reduction in Executive’s level of base salary; or

 

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(d) a relocation of Executive’s principal place of employment that increases
Executive’s one-way commute by more than 50 miles (other than reasonable
business travel required as part of the job duties associated with Executive’s
position);

provided, however, that (i) such change, reduction or relocation is effected by
the Company without Cause and without Executive’s consent; (ii) Executive first
provides the Company with written notice of the condition described in (a), (b),
(c) or (d) above not later than sixty (60) days following its initial
occurrence; (iii) the Company is permitted the opportunity to cure such
condition within a period of forty-five (45) days following such written notice;
and (iv) Executive resigns from employment within thirty (30) days following the
end of such cure period, assuming that the condition has not been cured.

1.6 “Covered Termination” means an Involuntary Termination Without Cause or
Constructive Termination that occurs either within the three (3) month period
before the effective date of a Change in Control or within the twelve (12) month
period commencing on the effective date of a Change in Control.

1.7 “Exchange Act” means the Securities Exchange Act of 1934, as amended.

1.8 “Involuntary Termination Without Cause” means Executive’s dismissal or
discharge by the Company other than for Cause. The termination of Executive’s
employment as a result of Executive’s death or disability will not be deemed to
be an Involuntary Termination Without Cause.

ARTICLE II

EMPLOYMENT BY THE COMPANY

2.1 Position and Duties. Subject to terms set forth herein, the Company agrees
to employ Executive in the position of President and Chief Executive Officer and
Executive hereby accepts such employment. Executive shall perform such duties as
are customarily associated with the position of President and Chief Executive
Officer and such other duties as are assigned to Executive by the Board of
Directors of the Company. During the term of Executive’s employment with the
Company, Executive will devote Executive’s best efforts and substantially all of
Executive’s business time and attention (except for vacation periods and
reasonable periods of illness or other incapacities permitted by the Company’s
general employment policies or as otherwise set forth in this Agreement) to the
business of the Company. Notwithstanding the foregoing, it is agreed and
understood that Executive shall be allowed to participate on the boards of
directors of the following companies: AMAG Pharmaceuticals, Inc. and Ren
Pharmaceuticals, Inc.; and Executive may be allowed to serve on other boards of
directors during his employment with the Board’s prior written consent.

2.2 Employment at Will. Both the Company and Executive shall have the right to
terminate Executive’s employment with the Company at any time, with or without
Cause. If applicable, upon the date of Executive’s termination of employment
with the Company for any reason, Executive shall immediately resign from the
Board and the board of directors or comparable body of every subsidiary, parent
or other affiliated corporation of the Company, and every committee thereof.

 

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2.3 Employment Policies. The employment relationship between the parties shall
also be governed by the general employment policies and practices of the
Company, including those relating to protection of confidential information and
assignment of inventions, except that when the terms of this Agreement differ
from or are in conflict with the Company’s general employment policies or
practices, this Agreement shall control.

2.4 Effective Date. The effective date of this agreement shall be the date in
which Executive begins employment with the Company which is anticipated to be
the date hereof.

ARTICLE III

COMPENSATION AND BENEFITS

3.1 Base Salary. Executive shall receive for services to be rendered hereunder
an annual base salary of $450,000 (“Base Salary”), less required deductions and
withholdings, payable on the regular payroll dates of the Company.

3.2 Annual Bonus. In addition to the Base Salary, during each calendar year
Executive will be eligible for an annual performance bonus, equal to up to 60%
of the Base Salary, and which is 100% based upon the achievement of Executive’s
performance goals and objectives (“Annual Bonus”). The Compensation Committee of
the Company’s Board shall determine in its sole discretion whether any such
Bonus has been earned and, if so, the amount of any such bonus. Executive must
be an employee in good standing at the time the Compensation Committee decides
to award the Annual Bonus and, if Executive leaves the Company at any time and
for any reason prior to such date, he/she will not be eligible to receive such a
bonus or any pro-rata portion of such bonus. If awarded, the Annual Bonus shall
be paid in January of each year.

3.3 Stock Options. Subject to approval of the Board or the Compensation
Committee of the Board, Executive shall receive stock options to purchase
1,500,000 million shares of the Company’s common stock pursuant to the Company’s
2007 Equity Incentive Award Plan (the “2007 Plan”). Any stock options granted
pursuant to this Section 3.3 shall have an exercise price per share equal to the
then-current fair market value per share of the Company’s common stock (as
determined pursuant to the 2007 Plan) on the grant date as approved by the Board
or the Compensation Committee of the Board. Such stock options shall be
incentive stock options to the extent permitted under Section 422 of the
Internal Revenue Code of 1986, as amended (the “Code”). Subject to Section 4.2,
25% of the shares subject to such stock options shall vest on the one year
anniversary of Executive’s date of hire and the remainder will vest in 36 equal
monthly installments over a three year period thereafter, subject to Executive’s
continued employment or service with the Company on each such date. Such stock
options shall have a ten (10) year term and shall be subject to the terms and
conditions of the 2007 Plan and the stock option agreement pursuant to which
such stock options are granted. Executive shall be eligible for annual stock
option grants consistent with the Company’s compensation philosophy as such
policy is determined by the Compensation Committee of the Board of Directors;
provided, however, that it shall remain in the sole discretion of the
Compensation Committee to determine if any such grants shall be made and if so
the amount of shares of common stock subject to such grants. In determining
whether any option grants will be made, the Compensation Committee will
consider, among other factors, whether Executive has experienced any dilution
due to a financing of the Company.

 

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3.4 Vacation and Paid Time Off. Executive shall be entitled to 20 business days
of paid vacation each year, accruing on a monthly basis, and 8 paid holidays
each year.

3.5 Expenses. During the term of this Agreement, the Company shall reimburse
Executive for all reasonable and necessary out-of-pocket expenses incurred by
Executive in connection with services rendered on behalf of the Company subject
to Executive providing the Company with appropriate substantiation in accordance
with Company policy.

3.6 Standard Company Benefits. Executive shall be entitled to all rights and
benefits for which Executive is eligible under the terms and conditions of the
standard Company benefits and compensation practices that may be in effect from
time to time and are generally provided by the Company to its executive
employees, employed at similar full-time or part-time status, as applicable. Any
such benefits and compensation practices shall be subject to the terms of the
governing benefit or compensation plans and may be changed by the Company from
time to time in its discretion.

3.7 Advance Bonus. In lieu of any relocation benefits that you may be entitled
to receive pursuant to the Company’s relocation benefit policy, the Company will
advance to you a lump sum amount of $250,000.00, less required tax withholdings,
within ten days of your first date of employment (the “Advance Bonus”). This
bonus will be considered an advance to you and will be deemed earned as follows:
50% on the first anniversary of your start date and the remaining 50% on the
second anniversary of your start date. If you resign your employment in the
absence of a Constructive Termination, or if the Company terminates your
employment for Cause, at any time during your first year of employment, you
agree to repay 100% of the Advance Bonus. If you resign your employment in the
absence of a Constructive Termination, or if the Company terminates your
employment for Cause, at any time during your second year of employment, you
agree to repay 50% of the Advance Bonus. If you resign at any time due to a
Constructive Termination, or if your employment is terminated by the Company
without Cause at any time, you shall not be required to repay the Advance Bonus
or any portion thereof.

ARTICLE IV

SEVERANCE AND CHANGE IN CONTROL BENEFITS

4.1 Severance Benefits In Event of Involuntary Termination Without Cause or
Covered Termination. If Executive’s employment terminates due to an Involuntary
Termination Without Cause or a Covered Termination, Executive shall receive any
annual Base Salary that has accrued but is unpaid as of the date of termination
of employment. In addition, provided such termination constitutes a “separation
from service” within the meaning of Treasury Regulation Section 1.409A-1(h), and
provided further that Executive first executes and does not revoke an effective
general release of all known and unknown claims in the form and substance
acceptable to the Company (the “Release”), Executive shall also be entitled to
receive, as severance, either one of the following as applicable:

 

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(a) In the event of an Involuntary Termination Without Cause which occurs at any
time other than during the period that begins three (3) months before the
effective date of a Change in Control and concludes on the date that is twelve
(12) months after the effective date of a Change in Control, his annual Base
Salary (as in effect during the last regularly scheduled payroll period
immediately preceding the Involuntary Termination Without Cause), less required
deductions and withholdings, for a period of twelve (12) months, payable in one
lump sum within ten (10) days after the effective date of the Release.

(b) In the event of a Covered Termination, his annual Base Salary (as in effect
during the last regularly scheduled payroll period immediately preceding the
Covered Termination), less required deductions and withholdings, for a period of
eighteen (18) months, payable in one lump sum within ten (10) days after the
effective date of the Release.

4.2 Acceleration of Vesting of Option.

(a) In the event of a Change in Control, and subject to Executive’s continued
employment until such time, Executive shall vest in and be able to exercise 50%
of the stock options described in Section 3.3 above that are unvested at such
time. Thereafter, if assumed or continued by the acquiring or surviving entity,
the remaining unvested options shall vest and become exercisable in equal
monthly installments over the 12 months following the effective date of such
Change in Control subject to Executive’s continued employment on each such
vesting date; provided, however, that if fewer than 12 months remain until such
remaining unvested stock options would be fully vested and exercisable on the
original schedule following the Change in Control (after accounting for the 50%
accelerated vesting in the prior sentence), the post-Change in Control vesting
schedule for such options shall remain unchanged by the Change in Control.

(b) In addition to any accelerated vesting provided in Section 4.2(a) above in
connection with a Change in Control, if: (i) Executive’s employment with the
Company (or its successor) terminates due to an Involuntary Termination Without
Cause or a Constructive Termination; (ii) in either case such termination occurs
during the period that begins three (3) months before the effective date of a
Change in Control and concludes on the date that is twelve (12) months after the
effective date of a Change in Control; and (iii) Executive first executes and
does not revoke the Release; then all stock options then held by Executive shall
become fully vested and exercisable as of the date of such termination of
Executive’s employment.

4.3 Section 409A Compliance. Each installment of severance benefits provided
under this Agreement is to be regarded as a separate “payment” for purposes of
Treasury Regulations Section 1.409A-2(b)(2)(i), and the severance benefits are
intended to satisfy the exemptions from application of Section 409A of the Code
and the regulations and other guidance thereunder and any state law of similar
effect (collectively “Section 409A”) provided under Treasury Regulations
Sections 1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9). However, if one or
more of such exemptions are not available and Executive is, upon separation from
service, a “specified employee” for purposes of Section 409A, then, solely to
the extent necessary to avoid adverse personal tax consequences under
Section 409A, the timing of the severance benefits payments shall be delayed as
follows: on the earlier to occur of (i) the date that is six months and one day
after Executive’s separation from service or (ii) the date of Executive’s death
(such earlier date, the

 

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“Delayed Initial Payment Date”), the Company (or the successor entity thereto,
as applicable) shall (A) pay Executive a lump sum amount equal to the sum of the
payments that he would otherwise have received through the Delayed Initial
Payment Date if the commencement of the payment of the payments had not been so
delayed pursuant to this paragraph and (B) commence paying the balance of the
payments in accordance with the applicable payment schedules set forth in this
Agreement..

Executive shall receive severance benefits only if Executive executes and
returns to the Company, within the applicable time period set forth therein but
in no event more than forty-five (45) days following the date of separation from
service, the Release and permits the Release to become effective in accordance
with its terms.

4.4 Compensation/Benefits in Event of Termination for Cause or Resignation by
Executive that Is not a Covered Termination. If the Company terminates
Executive’s employment for Cause or as a result of his death or disability, or
if Executive resigns his employment (unless pursuant to a Covered Termination),
then this Agreement shall automatically terminate (except for Article V, Article
VII, and Article VIII, which shall continue in effect), and upon such
termination, the Company shall have no further obligation to Executive, his/her
spouse or estate, except that the Company shall pay to Executive the amount of
his/her Base Salary, and unused vacation pay, accrued to the date of such
termination.

ARTICLE V

PROPRIETARY INFORMATION OBLIGATIONS

5.1 Agreement. Executive agrees to execute and abide by the Company’s standard
form of Proprietary Information and Inventions Agreement (“Proprietary
Information and Inventions Agreement”).

5.2 Remedies. Executive’s duties under the Proprietary Information and
Inventions Agreement shall survive termination of Executive’s employment with
the Company and the termination of this Agreement. Executive acknowledges that a
remedy at law for any breach or threatened breach by Executive of the provisions
of the Proprietary Information and Inventions Agreement would be inadequate, and
Executive therefore agrees that the Company shall be entitled to injunctive
relief in case of any such breach or threatened breach.

ARTICLE VI

OUTSIDE ACTIVITIES

6.1 Other Activities. Except with the prior written consent of the Board of
Directors of the Company, Executive shall not during the term of this Agreement
undertake or engage in any other employment, occupation or business enterprise,
other than ones in which Executive is a passive investor; provided that such
passive investments will not require services on the part Executive which would
in any manner impair the performance of his/her duties under this Agreement.
Executive may engage in civic and not-for-profit activities so long as such
activities do not materially interfere with the performance of Executive’s
duties hereunder. It is agreed and understood that Executive shall be allowed to
participate on the boards of directors of the following companies: AMAG
Pharmaceuticals, Inc. and Ren Pharmaceuticals, Inc.; and Executive may be
allowed to serve on other boards of directors during his employment with the
Board’s prior written consent.

 

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6.2 Competition/Investments. During the term of Executive’s employment by the
Company, except on behalf of the Company, Executive shall not directly or
indirectly, whether as an officer, director, stockholder, partner, proprietor,
associate, representative, consultant, or in any capacity whatsoever engage in,
become financially interested in, be employed by or have any business connection
with any other person, corporation, firm, partnership or other entity whatsoever
which were known by Executive to compete directly with the Company, throughout
the world, in any line of business engaged in (or planned to be engaged in) by
the Company.

ARTICLE VII

NONINTERFERENCE

While employed by the Company, and for one year immediately following the date
on which Executive terminates employment or otherwise ceases providing services
to the Company, Executive agrees not to interfere with the business of the
Company by: (i) soliciting or attempting to solicit any employee or consultant
of the Company to terminate such employee’s or consultant’s employment or
service in order to become an employee, consultant or independent contractor to
or for any competitor of the Company; or (ii) using or disclosing the Company’s
trade secrets for the purpose of soliciting or attempting to solicit any client,
customer or other person either directly or indirectly, to direct his/her or its
purchase of the Company’s products and/or services to any person, firm,
corporation, institution or other entity in competition with the business of the
Company. Executive’s duties under this Article VII shall survive termination of
Executive’s employment with the Company and the termination of this Agreement.

ARTICLE VIII

GENERAL PROVISIONS

8.1 Notices. Any notices provided hereunder must be in writing and shall be
deemed effective upon the earlier of personal delivery (including personal
delivery by facsimile) or the third day after mailing by first class mail, to
the Company at its primary office location and to Executive at Executive’s
address as listed on the Company payroll.

8.2 Severability. Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provisions had never been contained herein.

 

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8.3 Waiver. If either party should waive any breach of any provisions of this
Agreement, they shall not thereby be deemed to have waived any preceding or
succeeding breach of the same or any other provision of this Agreement.

8.4 Complete Agreement. This Agreement and the documents and agreements
referenced herein constitute the entire agreement between Executive and the
Company and is the complete, final, and exclusive embodiment of their agreement
with regard to the subject matter contained herein and therein and supersede all
prior agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any officer, employee
or representative of any party hereto, and any prior agreement of the parties
hereto in respect of the subject matter contained herein. This Agreement is
entered into without reliance on any promise or representation other than those
expressly contained herein or therein, and cannot be modified or amended except
in a writing signed by an appropriate officer of the Company and Executive.

8.5 Counterparts. This Agreement may be executed in separate counterparts, any
one of which need not contain signatures of more than one party, but all of
which taken together will constitute one and the same Agreement.

8.6 Headings. The headings of the sections hereof are inserted for convenience
only and shall not be deemed to constitute a part hereof nor to affect the
meaning thereof.

8.7 Successors and Assigns. This Agreement is intended to bind and inure to the
benefit of and be enforceable by Executive and the Company, and their respective
successors, assigns, heirs, executors and administrators, except that Executive
may not assign any of Executive’s duties hereunder and Executive may not assign
any of Executive’s rights hereunder, without the written consent of the Company,
which shall not be withheld unreasonably.

8.8 Arbitration. Unless otherwise prohibited by law or specified below, all
disputes, claims and causes of action, in law or equity, arising from or
relating to this Agreement or its enforcement, performance, breach, or
interpretation shall be resolved solely and exclusively by final and binding
arbitration held in San Diego, California through Judicial Arbitration &
Mediation Services/Endispute (“JAMS”) under the then existing JAMS arbitration
rules. However, nothing in this section is intended to prevent either party from
obtaining injunctive relief in court to prevent irreparable harm pending the
conclusion of any such arbitration. Each party in any such arbitration shall be
responsible for its own attorneys’ fees, costs and necessary disbursement.
Pursuant to California Civil Code Section 1717, each party warrants that it was
represented by counsel in the negotiation and execution of this Agreement,
including the attorneys’ fees provision herein.

8.9 Attorneys’ Fees. If either party hereto brings any action to enforce rights
hereunder, each party in any such action shall be responsible for its own
attorneys’ fees and costs incurred in connection with such action.

8.10 Choice of Law. All questions concerning the construction, validity and
interpretation of this Agreement will be governed by the law of the State of
California without regard to the conflicts of law provisions thereof.

 

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IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year
first above written.

 

OREXIGEN THERAPEUTICS, INC. By:  

/s/    Eckard Weber

  Eckard Weber, M.D.   Chairman of the Board of Directors and   Interim
President and CEO

Accepted and agreed:

 

/s/    Michael Narachi

Michael Narachi

 

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