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EXHIBIT 10.10



CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.




LICENSE AGREEMENT




     THIS AGREEMENT made and entered into this 31st day of March, 2004 (“EFFECTIVE DATE”), by
and between DUKE UNIVERSITY, a nonprofit educational and research institution organized under the
laws of North Carolina (“DUKE”), having its principal office at Durham, North Carolina 27708, and
Orexigen Therapeutics, Inc., a corporation organized under the laws of Delaware (“OREXIGEN”), with
its corporate headquarters and principal office at One Palmer Square, Suite 515, Princeton, NJ
08540.



     WHEREAS, DUKE owns certain DUKE PATENT RIGHTS (as hereinafter defined) relating to the
following technology (collectively, the “GADDE/KRISHNAN INVENTIONS”):




	 	•	 	Duke Office of Science and Technology File #2081, entitled “The Combination of
Bupropion (Wellbutrintm, Wellbutrin-SRtm, Zybantm) and
zonisamide (Zonegramtm) Can Be an Effective Weight Loss and Weight
Maintenance Treatment for Obese Patients” and invented by Dr. Kishore Gadde and Dr.
Ranga Krishnan (hereinafter, Dr. Gadde and Dr. Krishnan collectively referred to as
“INVENTORS”);
	 
	 	•	 	Duke Office of Science and Technology File # 2308, entitled “A Method of Reducing
Weight Gain Risk Associated with Antidepressant Therapy” and invented by INVENTORS; and
	 
	 	•	 	Duke Office of Science and Technology File # 2294, entitled “Zonisamide for
Reduction of Weight Gain Risk Associated with Atypical Antipsychotics” and invented by
INVENTORS; and





WHEREAS, DUKE has the right to grant licenses under said DUKE PATENT RIGHTS; and




     WHEREAS, OREXIGEN has filed a U.S. provisional patent application entitled [***] (hereinafter
the “OREXIGEN PROVISIONAL”); and



     WHEREAS, DUKE possesses certain DUKE DATA (as hereinafter defined) not covered by the DUKE
PATENT RIGHTS, but relating to the OREXIGEN PROVISIONAL which OREXIGEN desires to license; and,



     WHEREAS, DUKE desires to have the DUKE PATENT RIGHTS and DUKE DATA developed and
commercialized to benefit the public and is willing to grant licenses to each hereunder; and





 




			
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     WHEREAS, OREXIGEN desires to obtain licenses under DUKE PATENT RIGHTS and DUKE DATA and to
DUKE’s rights in OREXIGEN PATENT RIGHTS (as hereinafter defined) upon the terms and conditions
hereinafter set forth; and



     NOW THEREFORE, in consideration of the premises and the mutual covenants contained herein, the
parties hereto agree as follows:



ARTICLE 1 — DEFINITIONS




     For the purposes of this AGREEMENT, and solely for that purpose, the terms and phrases set
forth below and elsewhere in this AGREEMENT in capital letters shall be defined as follows:




	 	1.01	 	“AFFILIATE” shall mean any corporation or non-corporate entity which controls,
is controlled by or is under the common control with a party hereto. A corporation or
a non-corporate entity, as applicable, shall be regarded as in control of another
corporation if it owns or directly or indirectly controls at least fifty percent (50%)
of the voting stock of the other corporation, or in the absence of ownership of at
least fifty percent (50%) of the voting stock of a corporation, or in the case of a non
corporate entity, if it possesses directly or indirectly, the power to direct or cause
the direction of the management and policies of such corporation or non-cooperate
entity, as applicable.
	 
	 	1.02	 	“FIELD OF USE” shall mean any and all uses.
	 
	 	1.03	 	“FULLY DILUTED BASIS” means the total number of issued and outstanding shares
of the OREXIGEN’s common stock, calculated to include (i) conversion of all issued and
outstanding securities then convertible into common stock, (ii) the exercise of all
then outstanding options and warrants to purchase shares of common stock, whether or
not then exercisable (other than options covered under the following clause (iii)), and
(iii) the issuance or grant of all securities reserved for issuance pursuant to any
stock or stock option plan of OREXIGEN in effect on the date of the calculation.
	 
	 	1.04	 	“DUKE DATA” shall mean data generated by Dr. Gadde at DUKE prior to the
EFFECTIVE DATE documenting the weight loss effect of treatment with a combination of
Fluoxetine and Naltrenxone in humans.
	 
	 	1.05	 	“DUKE PATENT RIGHTS” shall mean the patents, patent applications listed in
APPENDIX A (such patent applications hereinafter collectively referred to as
“INITIAL DUKE PATENT APPLICATIONS” and any patent hereafter issuing on any such
INITIAL DUKE PATENT APPLICATIONS), together with all divisions, continuations,
continuations-in-part (but only to the extent that the subject matter of each such
continuation-in-part application is described in and enabled by the disclosure of
said INTITIAL DUKE PATENT APPLICATIONS),




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	 	 	 	re-examinations, reissues, substitutions, or extensions thereof and patents issuing
therefrom in the United States and non-U.S. jurisdictions. Notwithstanding the
foregoing or anything else to the contrary in this AGREEMENT, DUKE PATENT RIGHTS
shall not include those patents and/or patent applications which, during the term of
this AGREEMENT, cease to be DUKE PATENT RIGHTS pursuant to Section 6.01 or Section
6.03. It is understood and agreed that subject matter that is PATENTABLY DISTINCT
(defined below) from the subject matter described within the INITIAL DUKE PATENT
APPLICATIONS is not within the scope of the DUKE PATENT RIGHTS even though that
PATENTABLY DISTINCT subject matter may fall within the scope of one or more claims
of said INITIAL DUKE PATENT APPLICATIONS. PATENTABLY DISTINCT improvements relating
to the subject matter of INITIAL DUKE PATENT APPLICATIONS shall not be considered
DUKE PATENT RIGHTS. As used herein, “PATENTABLY DISTINCT” subject matter is subject
matter that is novel and unobvious over subject matter described within said INITIAL
DUKE PATENT APPLICATIONS.
	 
	 	1.06	 	“DUKE PATENT RIGHTS EXPENSES” shall mean all patent-related expenses
(including, but not limited to, filing fees, maintenance fees, and reasonable fees and
expenses of patent counsel) incurred in connection with the DUKE PATENT RIGHTS,
including but not limited to all reasonable expenses incurred in connection with the
assembly and copying of files for transfer to and from as the case may be OREXIGEN’s
legal counsel in connection with OREXIGEN’s assuming responsibility for DUKE PATENT
RIGHTS or transferring some of all of that responsibility back to DUKE (as the case may
be) pursuant to Section 6.01(a) and/or Section 6.02(b).
	 
	 	1.07	 	“VALID CLAIM” shall mean (i) an issued and unexpired claim within the DUKE
PATENT RIGHTS or OREXIGEN PATENT RIGHTS, as the case may be, that has not been
permanently revoked or held invalid or unenforceable by a decision of a court or other
governmental agency of competent jurisdiction and that has not been dedicated to the
public or admitted to be invalid or unenforceable through reissue, disclaimer or
otherwise, or (ii) a claim of a pending patent application that was filed in good
faith, has not been pending for more than [***] ([***]) years, and which has not been
abandoned or finally disallowed without the possibility of appeal or refilling of such
application contained in the DUKE PATENT RIGHTS or OREXIGEN PATENT RIGHTS, as the case
may be, in the country in which any such product or part thereof is made, used or sold.
	 
	 	1.08	 	“DUKE LICENSED PRODUCT” shall mean any product or part thereof which:






	 	(a)	 	is covered in whole or in part by any VALID CLAIM contained in
the DUKE PATENT RIGHTS in the country in which any such product or part thereof
is made, used or sold; and/or






 




			
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	 	(b)	 	is manufactured by using a process or is employed to practice a process
which is covered in whole or in part by a VALID CLAIM contained in the DUKE
PATENT RIGHTS in the country in which any DUKE LICENSED PROCESS is used or
in which such product or part thereof is used or sold; and/or
	 
	 	(c)	 	in its intended use, practices, incorporates, or otherwise
utilizes, in whole, or in part, a VALID CLAIM contained in the DUKE PATENT
RIGHTS in the country in which any such product or part thereof is made, used,
or sold.






	 	1.09	 	“DUKE LICENSED PROCESS” shall mean any process which is covered in whole or in
part by a VALID CLAIM contained in the DUKE PATENT RIGHTS.
	 
	 	1.10	 	“DUKE LICENSED SERVICE” shall mean any service provided by OREXIGEN (and/or
SUBLICENSEES, as the case may be) to a THIRD PARTY which utilizes DUKE LICENSED
PRODUCTS and/or DUKE LICENSED PROCESSES.
	 
	 	1.11	 	“MAINTENANCE FEE” shall mean the fee described in Section 4.01 hereof.
	 
	 	1.12	 	“OREXIGEN PATENT RIGHTS” shall mean the OREXIGEN PROVISIONAL and any patent
hereafter issuing therefrom, together with all divisions, continuations,
continuations-in-part (but only to the extent that the subject matter of each such
continuation-in-part application is described in and enabled by the disclosure of said
OREXIGEN PROVISIONAL or other related patent applications owned, in part or in whole by
OREXIGEN, for which Dr. Gadde and/or Dr. Krishnan is/are an inventor/inventors in
accordance with appertaining patent law/regulations as a result of inventive
contributions made in his/her position as an employee/employees of DUKE),
re-examinations, reissues, substitutions, or extensions thereof and patent issuing
therefrom in the United States and non-U.S. jurisdictions.
	 
	 	1.13	 	“OREXIGEN PATENT RIGHTS EXPENSES” shall mean all patent-related expenses
(including, but not limited to, filing fees, maintenance fees, and reasonable fees and
expenses of patent counsel) incurred in connection with the OREXIGEN PATENT RIGHTS.
	 
	 	1.14	 	“OREXIGEN LICENSED PRODUCT” shall mean any product or part thereof which:






	 	(a)	 	is covered in whole or in part by any VALID CLAIM contained in
the OREXIGEN PATENT RIGHTS in the country in which any such product or part
thereof is made, used or sold; and/or





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	 	(b)	 	is manufactured by using a process or is employed to practice a process
which is covered in whole or in part by a VALID CLAIM contained in the
OREXIGEN PATENT RIGHTS in the country in which any OREXIGEN LICENSED PROCESS
is used or in which such product or part thereof is used or sold; and/or
	 
	 	(c)	 	in its intended use, practices, incorporates, or otherwise
utilizes, in whole, or in part, a VALID CLAIM contained in the OREXIGEN PATENT
RIGHTS in the country in which any such product or part thereof is made, used,
or sold.






	 	1.15	 	“OREXIGEN LICENSED PROCESS” shall mean any process which is covered in whole or
in part by a VALID CLAIM contained in the OREXIGEN PATENT RIGHTS.
	 
	 	1.16	 	“OREXIGEN LICENSED SERVICE” shall mean any service provided by OREXIGEN (and/or
SUBLICENSEES, as the case may be) to a THIRD PARTY which utilizes OREXIGEN LICENSED
PRODUCT(S) and/or OREXIGEN LICENSED PROCESS(ES).
	 
	 	1.17	 	“LICENSED PRODUCTS” shall mean the following terms, collectively: DUKE LICENSED
PRODUCTS, OREXIGEN LICENSED PRODUCTS, DUKE LICENSED PROCESSES, OREXIGEN LICENSED
PROCESSES, DUKE LICENSED SERVICES and OREXIGEN LICENSED SERVICES, and a DUKE LICENSED
PROCESS, OREXIGEN LICENSED PROCESS, DUKE LICENSED SERVICE and OREXIGEN LICENSED SERVICE
shall be included within such term notwithstanding such process or service is not
literally a “product”.
	 
	 	1.18	 	“SUBLICENSE” and “SUBLICENSE AGREEMENT” shall mean, and include without
limitation, any relationship/agreement in which a THIRD PARTY gains any
rights—temporary or otherwise—to any of the rights granted by DUKE to OREXIGEN under
this AGREEMENT (including, but not limited to, OREXIGEN AFFILIATES, assignee(s),
licensee(s), sublicensee(s), marketing partner(s) and the like, hereinafter, such THIRD
PARTIES referred as “SUBLICENSEES”), including, but not limited to those granted via
options, rights of first refusal, material transfer agreements, sublicenses (implied or
expressed), and the like.
	 
	 	1.19	 	“NET SALES” shall mean:






	 	(a)	 	in the case of DUKE LICENSED PRODUCTS and OREXIGEN LICENSED
PRODUCTS, OREXIGEN’S (and/or those of SUBLICENSEES, as the case may be)
revenues received from sale and/or lease of the subject DUKE LICENSED PRODUCTS
and/or OREXIGEN LICENSED PRODUCTS; and





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	 	(b)	 	in the case of DUKE LICENSED PROCESSES and OREXIGEN LICENSED PROCESSES,
OREXIGEN’S (and/or those of SUBLICENSEES, as the case may be) revenues
received from sale and/or lease of the subject DUKE LICENSED PROCESSES
and/or OREXIGEN LICENSED PROCESSES; and
	 
	 	(c)	 	in the case of DUKE LICENSED SERVICES and OREXIGEN LICENSED
SERVICES, revenue received by OREXIGEN (and/or SUBLICENSEES, as the case may
be) for provision of the subject DUKE LICENSED SERVICE and/or OREXIGEN LICENSED
SERVICE to a THIRD PARTY.






and each of (a) (b), and (c), above shall be less the sum of the following:




	 	(w)	 	discounts allowed in amounts customary in the trade;
	 
	 	(x)	 	sales, tariff duties and/or use taxes directly imposed and with
reference to particular sales;
	 
	 	(y)	 	outbound transportation prepaid or allowed; and
	 
	 	(z)	 	amounts allowed or credited on returns.






No deductions to NET SALES shall be made for commissions paid to individuals whether
they are associated with independent sales agencies or regularly employed by
OREXIGEN (and/or SUBLICENSEES, as the case may be) and on its payroll, or for cost
of collections. LICENSED PRODUCTS shall be considered “sold” when the consideration
for provision thereof is received by OREXIGEN (and/or SUBLICENSEES, as the case may
be). DUKE LICENSED PRODUCTS, OREXIGEN LICENSED PRODUCTS, DUKE LICENSED SERVICES,
and OREXIGEN LICENSED SERVICES used by OREXIGEN (and/or SUBLICENSEES, as the case
may be) for its own use in the FIELD (and not in connection with the sale to THIRD
PARTIES) shall be considered to be “NET SALES” for purposes of computing royalty
obligations, except to the extent that such DUKE LICENSED PRODUCTS, OREXIGEN
LICENSED PRODUCTS, DUKE LICENSED SERICES, and/or OREXIGEN LICENSED SERVICES are used
for clinical field trials or for OREXIGEN’s own internal non-commercial research
(and/or SUBLICENSEES, as the case may be).




	 	1.20	 	“SUBLICENSE REVENUES” shall mean any and all initial upfront fees, license
fees, option fees, milestone payments, and other amounts (other than running
royalties on NET SALES of LICENSED PRODUCTS) payable to OREXIGEN (and/or any of
SUBLICENSEES, as the case may be) under a SUBLICENSE to any of the licenses granted
by DUKE to OREXIGEN under this AGREEMENT,




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	 	 	 	but excluding any payments that are (a) reimbursements of documented research and
development costs and expenses; (b) reimbursement of cost of goods directly relating
to LICENSED PRODUCTS supplied by OREXIGEN to such SUBLICENSEE; (c) loans granted to
OREXIGEN by such SUBLICENSEE; (d) reimbursement of documented costs directly related
to pursuit of patent protection and/or maintenance of patents for DUKE PATENT RIGHTS
and/or OREXIGEN PATENT RIGHTS; or (e) an equity investment by a commercial THIRD
PARTY (but solely to the extent that such investment is at a price equal to or less
than one hundred percent (100%) of the fair market value of stock sold or otherwise
transferred in such investment). It is agreed that [***] shall not receive from
[***] for any SUBLICENSE under this AGREEMENT, without the express prior written
permission of DUKE, such approval not to be unreasonably withheld.






	 	1.21	 	“TERRITORY” shall mean the world.
	 
	 	1.22	 	“THIRD PARTY” means any individual or other entity other than DUKE and/or
OREXIGEN..
	 
	 	1.23	 	Where appropriate, words denoting a singular number only shall include the
plural and vice versa.
	 
	 	1.24	 	Certain other defined terms shall have the meanings given them elsewhere in
this AGREEMENT.





ARTICLE 2 — LICENSE





	 	2.01	 	DUKE hereby grants to OREXIGEN and OREXIGEN hereby accepts from DUKE, subject
to the terms and conditions of this AGREEMENT, the exclusive right and sublicenseable
license for the FIELD OF USE in the TERRITORY to practice under the DUKE PATENT RIGHTS
to develop, make, have made, import, use, lease, offer for sale, sell, and distribute
DUKE LICENSED PRODUCTS for the FIELD OF USE in the TERRITORY only, to develop, make,
have made, import, use, lease, offer for sale, sell, and distribute DUKE LICENSED
PROCESSES in/for the FIELD OF USE in the TERRITORY, and/or to develop, make, have made,
perform, provide, import, use, lease, offer for sale, sell, and distribute DUKE
LICENSED SERVICES in the FIELD OF USE in the TERRITORY only until the end of the term
for which the DUKE PATENT RIGHTS are granted unless this AGREEMENT shall be sooner
terminated according to the terms hereinafter provided.
	 
	 	2.02	 	DUKE hereby grants OREXIGEN and OREXIGEN and hereby accepts from DUKE, subject
to the terms and conditions of this AGREEMENT, the exclusive right and
sublicenseable license for the FIELD OF USE in the TERRITORY to






 




			
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	 	 	 	utilize the DUKE DATA in patent filings relating to and/or corresponding with the
OREXIGEN PROVISIONAL and other OREXIGEN PATENT RIGHTS. Further, DUKE hereby grants
OREXIGEN and OREXIGEN hereby accepts from DUKE, subject to the terms and conditions
of this AGREEMENT, the exclusive right and sublicenseable license for the FIELD OF
USE in the TERRITORY to practice under DUKE’s rights in the OREXIGEN PATENT RIGHTS
(as such rights of DUKE arise pursuant to Section 6.01(b) to develop, make, have
made, import, use, lease, offer for sale, sell, and distribute OREXIGEN LICENSED
PRODUCTS for the FIELD OF USE in the TERRITORY, to develop, make, have made, import,
use, lease, offer for sale, sell, and distribute OREXIGEN LICENSED PROCESSES in/for
the FIELD OF USE in the TERRITORY, and/or to develop, make, have made, provide,
perform, import, use, lease, offer for sale, sell, and distribute OREXIGEN LICENSED
SERVICES in the FIELD OF USE in the TERRITORY until the end of the term for which
the OREXIGEN PATENT RIGHTS are granted unless sooner terminated according to the
terms hereinafter provided.
	 
	 	2.03	 	Notwithstanding anything to the contrary in this AGREEMENT, it is understood
and agreed that it shall be the responsibility of OREXIGEN to secure rights under any
THIRD PARTY intellectual property rights that may be required to practice the
technology and to exercise any and all of the rights granted under Sections 2.01 and
2.02. Further, OREXIGEN will use its best efforts to secure from any such THIRD PARTY
a covenant not to sue DUKE, or any of its faculty, students, employees or agents, for
any research and development efforts conducted at DUKE that resulted in the creation of
any of the GADDE/KRISHNAN INVENTIONS and/or DUKE DATA and/or any licensing thereof, and
any intellectual property or other rights arising therefrom, including, but not limited
to, DUKE PATENT RIGHTS and DUKE’s rights in OREXIGEN PATENT RIGHTS.
	 
	 	2.04	 	All SUBLICENSES shall be subject to the terms and conditions of this AGREEMENT,
shall be no less favorable to or protective of DUKE than this AGREEMENT except as
expressly stated in this AGREEMENT, and shall not be further sublicenseable without the
express written approval of DUKE, such approval not to be unreasonably withheld. All
SUBLICENSES will be assigned to DUKE in the event the AGREEMENT is terminated, subject
to DUKE’s approval, such approval not to be unreasonable withheld or delayed. OREXIGEN
shall use commercially reasonable efforts to enforce the terms of the SUBLICENSE
agreements. OREXIGEN further agrees to provide DUKE with a copy of all SUBLICENSES
within thirty (30) days of execution of each subject SUBLICENSE.
	 
	 	2.05	 	Notwithstanding anything to the contrary in this AGREEMENT, DUKE shall have the
right to practice under the DUKE PATENT RIGHTS and under its rights to the OREXIGEN
PATENT RIGHTS, for its own internal, non-commercial,




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	 	 	 	educational, research and clinical purposes without restriction and without payment
of royalties or other fees.
	 
	 	2.06	 	The licenses granted under this AGREEMENT will not be construed to confer any
rights upon OREXIGEN by implication, estoppel or otherwise as to any data, technology,
patents, patent applications or other property rights held by DUKE (solely or jointly)
not specifically set forth herein, regardless of whether such property rights are
dominant or subordinate to any of the DUKE PATENT RIGHTS and/or OREXIGEN PATENT RIGHTS.
	 
	 	2.07	 	The license granted hereunder shall be subject to Public Law 96-517 and Public
Law 98-260. Any right granted in this AGREEMENT which is greater than that permitted
under Public Law 96-517 and Public Law 98-260 shall be modified as may be required to
conform with the provisions of those laws.





ARTICLE 3 — LICENSE FEE, ROYALTIES AND OTHER FEES





	 	3.01	 	In consideration of the rights granted to OREXIGEN pursuant to this AGREEMENT
and subject to the terms and conditions of this AGREEMENT, OREXIGEN agrees to pay or
otherwise compensate DUKE as follows:






	 	(a)	 	Equity Consideration. OREXIGEN shall issue to DUKE eight hundred eighty
five thousand, two hundred and forty-nine (885,249) shares of OREXIGEN common stock
as represent, on a FULLY DILUTED BASIS, an amount not less than [***] percent
([***]%) of OREXIGEN’s common stock outstanding at the time of execution of this
AGREEMENT (hereinafter referred to as “DUKE STOCK”). OREXIGEN shall issue DUKE
STOCK directly to DUKE in the name of “Duke University” and shall deliver the DUKE
STOCK to DUKE within thirty (30) days of the EFFECTIVE DATE. It is understood and
agreed that [***] shall promptly reimburse [***] for any out-of-pocket costs (not to
exceed [***] dollars ($[***]) incurred by [***] in effecting such transfer of DUKE
STOCK to DUKE. It is further understood and agreed that, notwithstanding anything
to the contrary in this AGREEMENT, such DUKE STOCK is non-refundable. It is
understood and acknowledged that DUKE shall be treated as a founder of OREXIGEN and
that the DUKE STOCK will be subject to the terms and conditions provided for in
OREXIGEN’s Certificate of Incorporation and Bylaws, which are attached as APPENDIX
B, and also subject to the Right of First Refusal and Co-Sale Agreement by and among
OREXIGEN, DUKE, and other THIRD PARTY signatories thereto, the form of which is
attached as APPENDIX F (the “RIGHT OF FIRST REFUSAL AGREEMENT”), and will be
marketable by DUKE under the same conditions and subject to the same limitations as
are the restricted shares of common stock of OREXIGEN held by any founder or
equivalent.




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Subject to the prior sentence, as well as restrictions on transfer set forth in the
Right of First Refusal Agreement and the Securities Act of 1933, as amended,
OREXIGEN will permit and promptly effect any request from DUKE to transfer any of
the DUKE STOCK to any persons as DUKE will direct, and OREXIGEN, DUKE and such
persons will execute such documents and instruments as are reasonably necessary to
effect such transfer. In connection with the issuance of the DUKE STOCK, DUKE shall
execute a Common Stock Purchase Agreement for the DUKE STOCK, in the form attached
as APPENDIX E and the Right of First Refusal Agreement in the form attached as
APPENDIX F. In the event that the Right of First Refusal Agreement is amended
without the consent of Duke, Duke shall retain all rights set forth in Section 1
thereof regarding rights of first refusal as if such agreement had not been so
amended. In addition, DUKE shall have the rights of a “Majority Holder” as set
forth in Sections 2.1 and 2.2 of the Investors’ Rights Agreement by and among
OREXIGEN and other THIRD PARTY signatories thereto, the form of which is attached as
APPENDIX G (the “INVESTORS’ RIGHTS AGREEMENT”), so long as DUKE meets the definition
of a “Major Holder” under the INVESTORS’ RIGHTS AGREEMENT and there has been no
termination of the covenants of OREXIGEN pursuant to Section 2.3 thereunder. DUKE
shall not be made a party to the INVESTORS’ RIGHTS AGREEMENT, but shall be conferred
the benefits of a Majority Holder under Sections 2.1 and 2.2 of the INVESTORS’
RIGHTS AGREEMENT by the independent provisions of this Section 3.01(a).




	 	(b)	 	Royalty on NET SALES of DUKE LICENSED PRODUCTS, DUKE LICENSED
PROCESSES, and DUKE LICENSED SERVICES. At the times and in the manner
set forth hereinafter, OREXIGEN (and/or appertaining SUBLICENSEES, as the
case may be) shall pay to DUKE a non-refundable running royalty of [***]
percent ([***]%) on NET SALES of DUKE LICENSED PRODUCTS, DUKE LICENSED
PROCESSES, and DUKE LICENSED SERVICES (hereinafter such running royalty
referred to as the “DUKE RUNNING ROYALTY”). Notwithstanding the foregoing,
if OREXIGEN (and/or appertaining SUBLICENSEES, as the case may be) obtains
from any THIRD PARTY any licenses and/or sublicenses for patent rights in
order to practice DUKE PATENT RIGHTS in the FIELD OF USE or in order to
develop, make, have made, use, import, offer for sale, sell, import, export
or provide DUKE LICENSED PRODUCTS, DUKE LICENSED PROCESSES, and/or DUKE
LICENSED SERVICES (as the case may be), then OREXIGEN (and/or appertaining
SUBLICENSEES, as the case may be) shall be entitled to credit its/their
payment of additional running royalties to such THIRD PARTY(ies), if any, on
DUKE LICENSED PRODUCTS, DUKE LICENSED PROCESSES, and/or DUKE LICENSED
SERVICES (as the case may be) against the DUKE RUNNING ROYALTY for the
subject




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	 	 	 	DUKE LICENSED PRODUCTS, DUKE LICENSED PROCESSES, and/or DUKE LICENSED
SERVICES (as the case may be) in the appertaining country(ies) during the
appertaining time period, provided that in no event shall the amount
otherwise payable to DUKE as DUKE RUNNING ROYALTY be reduced to less than
[***] percent ([***]%) for the subject DUKE LICENSED PRODUCTS, DUKE LICENSED
PROCESSES, and/or DUKE LICENSED SERVICES (as the case may be) in the
appertaining country(ies) during the appertaining time period.
	 
	 	(c)	 	Royalty on NET SALES of OREXIGEN LICENSED PRODUCTS,
OREXIGEN LICENSED PROCESSES, and OREXIGEN LICENSED SERVICES. At the times
and in the manner set forth hereinafter, OREXIGEN (and/or appertaining
SUBLICENSEES, as the case may be) shall pay to DUKE a non-refundable running
royalty of [***] percent ([***]%) on NET SALES of OREXIGEN LICENSED PRODUCTS,
OREXIGEN LICENSED PROCESSES, and OREXIGEN LICENSED SERVICES (hereinafter such
running royalty referred to as the “OREXIGEN RUNNING ROYALTY”).
Notwithstanding the foregoing, if OREXIGEN (and/or appertaining SUBLICENSEE(S),
as the case may be) obtains from any THIRD PARTY any licenses and/or
sublicenses for patent rights in order to practice OREXIGEN PATENT RIGHTS in
the FIELD OF USE or in order to develop, make, have made, use, import, offer
for sale, sell, import, export or provide OREXIGEN LICENSED PRODUCTS, OREXIGEN
LICENSED PROCESSES, and/or OREXIGEN LICENSED SERVICES (as the case may be),
then OREXIGEN (and/or appertaining SUBLICENSEES, as the case may be) shall be
entitled to credit its/their payment of additional running royalties to such
THIRD PARTY(ies), if any, on OREXIGEN LICENSED PRODUCTS, OREXIGEN LICENSED
PROCESSES, and/or OREXIGEN LICENSED SERVICES (as the case may be) against the
DUKE RUNNING ROYALTY for the subject OREXIGEN LICENSED PRODUCTS, OREXIGEN
LICENSED PROCESSES, and/or OREXIGEN LICENSED SERVICES (as the case may be) in
the appertaining country(ies) during the appertaining time period, provided
that in no event shall the amount otherwise payable to DUKE as OREXIGEN RUNNING
ROYALTY be reduced to less than [***] percent ([***]%) for the subject OREXIGEN
LICENSED PRODUCTS, OREXIGEN LICENSED PROCESSES, and/or OREXIGEN LICENSED
SERVICES (as the case may be) in the appertaining country(ies) during the
appertaining time period.
	 
	 	(d)	 	Milestone Payments. OREXIGEN (and/or appertaining SUBLICENSEES,
as the case may be) shall pay DUKE the following one-time, noncreditable,
non-refundable payments within [***] ([***]) days of the first




11









 






	 	 	 	occurrence of each of the following milestones as relates to a DUKE LICENSED
PRODUCT:
	 
	 	 	 	[***]
	 
	 	(e)	 	Royalty on SUBLICENSE REVENUES. OREXIGEN (and/or
appertaining SUBLICENSEES, as the case may be) shall pay to DUKE a royalty of
[***] percent ([***]%) on SUBLICENSING REVENUES.






	 	3.02	 	Notwithstanding reports, correspondence or other communications from OREXIGEN,
it is understood that DUKE shall, in accordance with its policies and procedures, apply
any amounts received from OREXIGEN under the terms of this AGREEMENT as follows:






	 	(a)	 	first to [***]; and
	 
	 	(b)	 	thereafter to [***] of this AGREEMENT.






	 	 	 	Application of amounts received under (a) above shall in no respect alter the
aggregate amount due to DUKE.
	 
	 	3.03	 	Notwithstanding anything to the contrary in this AGREEMENT, all payments due
hereunder shall be paid in full, without deduction of taxes or other fees which may be
imposed by any government and which shall be paid by OREXIGEN (and/or appertaining
SUBLICENSEES, as the case may be).
	 
	 	3.04	 	All payments due from OREXIGEN (and/or appertaining SUBLICENSEES, as the case
may be) pursuant to this AGREEMENT shall be due and payable in accordance with the
terms and conditions of this AGREEMENT, and if a payment due pursuant to this
AGREEMENT is not paid within [***] ([***]) days of the payment due date, then a late
payment fee equal to [***] percent ([***]%) of such payment shall be added to the
payment due; provided, however, in addition to the




12









 






	 	 	 	late fee described above, all past due payments shall bear interest at the [***]
from the due date of such payment until paid. The payment of such interest and late
fees shall not foreclose DUKE from exercising any other rights it may have as a
consequence of the lateness of any payment.
	 
	 	3.05	 	No multiple royalties on NET SALES shall be payable to DUKE on a single
LICENSED PRODUCT because its manufacture, use, lease, sale or practice are or shall be
covered by more than one of the DUKE PATENT RIGHTS and/or OREXIGEN PATENT RIGHTS.
	 
	 	3.06	 	All payments due to DUKE under this AGREEMENT shall be paid in United States
Dollars in Durham, North Carolina, or at such place as DUKE may reasonably designate
consistent with the laws and regulations controlling in any foreign country. If any
currency conversion shall be required in connection with such payments due hereunder,
such conversion shall be made by using the exchange rate prevailing at Wachovia Bank
(N.A.) (or its successor, as the case may be) on the last business day of the reporting
period to which such payments relate. If payments are made by wire, electronic or
other transfer form for which a fee is charged (“PAYMENT TRANSFER FEES”), OREXIGEN
(and/or appertaining SUBLICENSEES, as the case may be) shall be responsible for the
full amount of such fees and shall promptly reimburse DUKE for DUKE’s payment of such
reasonable PAYMENT TRANSFER FEES within [***] ([***]) days of invoice of the same from
DUKE.
	 
	 	3.07	 	It is understood and acknowledged that in partial consideration for the
licenses granted to OREXIGEN under this AGREEMENT, OREXIGEN has issued or will issue
OREXIGEN stock to the INVENTORS. It is further understood and acknowledged that each
of the INVENTORS has waived in writing in a form acceptable to DUKE, any and all rights
which he may have to share, either individually (personally) or through his laboratory,
under the Duke University Inventions, Patents and Technology Transfer Policy, in the
equity, financial and other considerations that DUKE receives from LICENSEE,
AFFILIATES, SUBLICENSEES, and/or any THIRD PARTIES as a result of this AGREEMENT,
including, but not limited to, shares of DUKE STOCK (and any proceeds therefrom),
royalties, fees, milestone payments and the like.
	 
	 	3.08	 	Payments due to DUKE pursuant to Sections 3.01(b), 3.01(d), 3.01(e), 6.02(a)
and/or otherwise relating to DUKE PATENT RIGHTS shall cite “Duke File # 2081”.
Payments due to DUKE pursuant to Sections 3.01(c), 3.01(e), 6.03 and/or otherwise
relating to OREXIGEN PATENT RIGHTS shall cite “Duke File #2358”. All payments due
to DUKE under this AGREEMENT shall be made payable to “Duke University.” Payments
may be made by wire or electronic transfer, provided that an accompanying notice is
delivered with reference to the pertinent DUKE file numbers and PAYMENT TRANSFER
FEES associated with




13









 






	 	 	 	such wire or electronic transfer are paid in full by OREXIGEN (and/or appertaining
SUBLICENSEES, as the case may be) at the time of such transfer or within thirty (30)
days of receipt of invoice from DUKE for the same as set forth in Section 3.04.
Such payments, as well as reports due to DUKE in accordance with Sections 5.02 and
5.03 shall be sent to DUKE at the following address:




For delivery via the U.S. Postal Service:



Duke University Office of Science and Technology

Attention: Financial Administrator

Box 90083 Duke University

Durham, NC 27708 USA



For delivery via nationally/internationally recognized courier:



Duke University Office of Science and Technology

Attention: Financial Administrator

2020 West Main Street, Suite 10

Durham, NC 27705 USA



For payment via wire transfer:

[***]




ARTICLE 4  — DUE DILIGENCE REQUIREMENTS





	 	4.01	 	OREXIGEN shall use commercially reasonable efforts to bring LICENSED PRODUCTS
to market through a thorough, vigorous and diligent program for exploitation of the
DUKE PATENT RIGHTS and OREXIGEN PATENT RIGHTS, and to continue active, diligent
marketing efforts for LICENSED PRODUCTS throughout the life of this AGREEMENT. The
development and commercialization schedule set forth on attached APPENDIX C
(hereinafter “COMMERCIALIZATION SCHEDULE”) is hereby agreed upon as a reasonable one
to be followed. Variations from the schedule set forth in the COMMERCIALIZATION
SCHEDULE must be expressly approved by DUKE in writing, such approval not to be
unreasonably withheld. OREXIGEN may extend the targets through the payment to DUKE
of a MAINTENANCE FEE of [***] [***] dollars ($[***]) for each year OREXIGEN desires
to extend such targets (not to exceed a total extension period of [***] ([***])
years for any one such target), provided that each MAINTENANCE FEE payment is
received by DUKE




14









 






	 	 	 	at least than [***] ([***]) days prior to the then applicable target date. However,
if any of the targets set forth in the COMMERCIALIZATION SCHEDULE are not reached
within the stated time periods set out in APPENDIX C, or within those amended
periods of time approved in writing by Duke, and such targets are not extended by
the payment of a MAINTENANCE FEE, then DUKE may, at its sole discretion, convert the
exclusive licenses granted hereunder to non-exclusive licenses and DUKE may in its
sole discretion require OREXIGEN (and/or its assignee(s), as the case may be) to
assign to DUKE any SUBLICENSES for which exclusive rights have previously been
granted and, in the event of such assignment(s), OREXIGEN’s rights under this
AGREEMENT to such rights sublicensed exclusively to under the subject SUBLICENSES
shall terminate as of the effective date of the appertaining assignment(s) to DUKE.
For any rights that OREXIGEN may be permitted to retain, LICENSEE will still be
responsible to DUKE for any royalty payments and payments with respect to
non-royalty income.
	 
	 	4.02	 	During the term of this AGREEMENT, OREXIGEN will submit [***] progress reports
to DUKE as set forth in Section 5.02. DUKE shall have the right to request [***]
([***]) [***] to discuss such information with representatives of OREXIGEN at mutually
acceptable times and places. It is agreed that should any of [***] personnel be
required by [***] to consult with [***] outside of [***], [***] will reimburse
reasonable travel and living expenses incident thereto.





ARTICLE 5 — REPORTS AND RECORDS





	 	5.01	 	OREXIGEN shall keep full, true and accurate books of accounts and other records
containing all particulars which may be necessary to properly ascertain and verify the
amounts payable to DUKE hereunder and shall require SUBLICENSEES, as the case may be,
to do the same. Said books of account shall be kept at OREXIGEN’s (and/or
SUBLICENSEES’) principal place of business or the principal place of business of the
appropriate division of OREXIGEN (and/or SUBLICENSEE) to which this AGREEMENT relates.
Said books and the supporting data shall be open at all reasonable times for [***]
([***]) years following the end of the calendar year to which they pertain, to the
inspection of DUKE or its agents for the purpose of verifying the OREXIGEN’s (and/or
SUBLICENSEE’s) royalty statement or compliance in other respects with this AGREEMENT.
Should such inspection lead to the discovery of a greater than [***] percent ([***]%)
discrepancy in reporting, OREXIGEN agrees to pay the full cost of such inspection in
addition to any amounts due to DUKE, such amounts to be subject to the provisions of
Section 3.04.
	 
	 	5.02	 	OREXIGEN shall report the status of development of each LICENSED PRODUCT [***]
to DUKE by [***]. Such report shall include descriptions of OREXIGEN’s (and/or
SUBLICENSEES’s plans and




15









 






	 	 	 	commercially reasonable estimated timeframes for testing, development, governmental
approvals and marketing/sale of each LICENSED PRODUCT.
	 
	 	5.03	 	After the first commercial sale of a LICENSED PRODUCT, and in addition to the
reports required under Section 5.02, OREXIGEN shall render to DUKE prior to [***] a
written account of the NET SALES of LICENSED PRODUCTS made during the prior [***]
period ending [***], respectively, and shall simultaneously pay to DUKE the royalties
due on such NET SALES in United States dollars. Reports tendered shall include the
calculation of royalties by product by country in substantially the format provided in
APPENDIX D hereto. Further, OREXIGEN shall render to DUKE prior to [***] a written
account of royalties on SUBLICENSE REVENUES due to DUKE for the prior [***] period
ending [***], respectively, and shall simultaneously pay to DUKE the royalties due on
such NET SALES in United States dollars.





ARTICLE 6  — PATENTS





	 	6.01	 	Patent Prosecution






	 	(a)	 	DUKE shall use its reasonable best efforts to have the prosecution of
the DUKE PATENT RIGHTS transferred to OREXIGEN’S patent firm (Knobbe Martens
Olson & Bear LLP, attn: Ned A. Israelsen, 550 West C Street, Suite 1200, San
Diego, CA 92101, (619) 235-8550 (voice), (619) 235-0176 (fax), email
nisraelsen@kmob.com) within [***] ([***]) days of the EFFECTIVE DATE so that
OREXIGEN may assume primary responsibility for all activities associated
with the prosecution and maintenance of the DUKE PATENT RIGHTS. OREXIGEN
will use reasonable commercial efforts to file, prosecute and maintain the
DUKE PATENT RIGHTS during the term of this Agreement. OREXIGEN will keep
DUKE advised as to all developments with respect to any INITIAL DUKE PATENT
APPLICATIONS, and/or applicable divisional, continuation,
continuation-in-part and reissue application(s) within the scope of the DUKE
PATENT RIGHTS (hereinafter, such INITIAL DUKE PATENT APPLICATIONS and
applicable divisions, continuation, continuation-in-part, and reissue
applications within the scope of the DUKE PATENT RIGHTS collectively
referred to as “DUKE PATENT APPLICATIONS”). OREXIGEN shall keep DUKE
advised as to the status of the DUKE PATENT RIGHTS and OREXIGEN’s designated
patent attorneys will provide DUKE, in a timely manner, with copies of all
official documents and correspondence relating to the prosecution,
maintenance, and validity of the DUKE PATENT RIGHTS. OREXIGEN shall consult
with DUKE in such prosecution and maintenance, shall diligently seek advice
of DUKE on all matters pertaining to the DUKE PATENT RIGHTS, shall
diligently seek strong and broad claims under the




16









 






	 	 	 	DUKE PATENT RIGHTS, and shall not abandon prosecution of any DUKE PATENT
RIGHTS or any of the claims of the DUKE PATENT RIGHTS without first
notifying DUKE in a timely manner of OREXIGEN’s intention and reason
therefore, and providing DUKE with reasonable opportunity to assume
responsibility for prosecution and maintenance of the appertaining DUKE
PATENT RIGHTS (which thereafter shall be subject to the provisions of
Section 6.02(b) as regards status as DUKE PATENT RIGHTS and DUKE LICENSED
PRODUCTS, DUKE LICENSED PROCESSES, and DUKE LICENSED SERVICES and OREXIGEN’s
rights therein). All decisions with respect to the prosecution of the DUKE
PATENT RIGHTS by OREXIGEN pursuant to this Section 6.01(a) shall be made by
OREXIGEN, subject to the approval of DUKE which approval shall not be
unreasonably withheld or delayed. OREXIGEN’s obligations under this Section
6.01(a) shall include, without limitation, an obligation to inform DUKE in a
timely manner (no less than [***] ([***]) days prior to the appertaining
filing deadlines) that OREXIGEN will not pursue patents in any non-US
country so that DUKE may pursue such patents if it so desires in which case
from the date of such filing of such patent applications by DUKE shall not
be considered DUKE PATENT RIGHTS and OREXIGEN shall be deemed to have
forfeited all rights under this AGREEMENT to such patent applications and
resulting patents. (APPENDIX A shall be deemed to be so amended.) For
avoidance of doubt, it is understood that OREXIGEN shall assume direct and
full responsibility for payment of expenses it incurs as a result of its
assumption of responsibility for prosecution of DUKE PATENT RIGHTS under
this Section 6.01(a).
	 
	 	(b)	 	OREXIGEN will control, and be responsible for, all filings, prosecution,
and maintenance of the OREXIGEN PATENT RIGHTS. It is understood and
acknowledged that OREXIGEN may use the DUKE DATA to support OREXIGEN PATENT
RIGHTS, including, but not limited to the OREXIGEN PROVISIONAL and that Dr.
Gadde shall be identified as a co-inventor of the OREXIGEN PROVISIONAL and
such other patent filings relating to or corresponding with the OREXIGEN
PROVISIONAL and other OREXIGEN PATENT RIGHTS for which Dr. Gadde is an
inventor in accordance with appertaining patent law/regulations regarding
inventorship. It is understood and acknowledged that DUKE shall be a
co-owner of those OREXIGEN PATENT RIGHTS for which Dr. Gadde is an inventor
and OREXIGEN shall take appropriate and necessary steps to effect such
co-ownership. OREXIGEN shall keep DUKE advised as to the status of the
OREXIGEN PATENT RIGHTS by providing to DUKE, in a timely manner, with copies
of all official documents and correspondence relating to the prosecution,
maintenance, and validity of the OREXIGEN PATENT RIGHTS. DUKE shall be
offered the opportunity to make suggestions regarding the prosecution
and




17









 






	 	 	 	maintenance of OREXIGEN PATENT RIGHTS, such suggestions to be given due
consideration. However, notwithstanding the foregoing, it is understood
that all decisions with respect to the prosecution and maintenance of the
OREXIGEN PATENT RIGHTS shall be made by OREXIGEN.






	 	6.02	 	Patent Costs.






	 	(a)	 	During the term of this AGREEMENT, payment of all DUKE PATENT
RIGHTS EXPENSES shall be the responsibility of OREXIGEN, whether such fees and
costs were incurred before or after the EFFECTIVE DATE of this AGREEMENT.
Notwithstanding anything to the contrary in this AGREEMENT, except as OREXIGEN
declines interest in non-US patent pursuit, OREXIGEN shall be responsible for
all DUKE PATENT RIGHTS EXPENSES associated with the preparation and filing of
the PCT application(s) contained within the DUKE PATENT RIGHTS as well as all
DUKE PATENT RIGHTS EXPENSES associated with pursuit and maintenance of the DUKE
PATENT RIGHTS. Within [***] ([***]) days of the EFFECTIVE DATE of this
AGREEMENT, OREXIGEN agrees to reimburse DUKE in the amount of nineteen
thousand, eight hundred seventeen dollars and seventy-five cents (US$19,817.75)
for DUKE PATENT RIGHTS EXPENSES which were incurred by DUKE, and for which
attorney invoices were received and processed by DUKE, before the EFFECTIVE
DATE. As regards all other DUKE PATENT RIGHTS EXPENSES, OREXIGEN agrees to pay
such DUKE PATENT RIGHTS EXPENSES within [***] ([***]) days of receipt of an
invoice for the same, and failure to pay such each such invoice within such
thirty-day period shall be a default hereunder for which DUKE may terminate
this AGREEMENT in accordance with Section 10.05. Notwithstanding the foregoing
or anything else to the contrary in the AGREEMENT, if at any time OREXIGEN
fails to reimburse DUKE for any DUKE PATENT RIGHTS EXPENSES within the
thirty-day period following receipt of a subject invoice from DUKE, then
henceforth during the term of this AGREEMENT, DUKE may, at its sole discretion,
require OREXIGEN to make payment for estimated associated DUKE PATENT RIGHTS
EXPENSES prior to incurring such DUKE PATENT RIGHTS EXPENSES, including, but
without limitation, DUKE PATENT RIGHTS EXPENSES associated with national phase
filings of DUKE PATENT APPLICATIONS, preparation and filing of responses to
patent office actions on DUKE PATENT APPLICATIONS, etc., such requirement by
DUKE not to preclude DUKE from exercising any other recourse it may have under
this AGREEMENT as regards lack of prompt reimbursement of DUIKE PATENT RIGHTS
EXPENSES by OREXIGEN.






18









 









	 	(b)	 	If OREXIGEN decides to discontinue the financial support of the
prosecution or maintenance of a subject DUKE PATENT APPLICATION or patent
falling within the scope of DUKE PATENT RIGHTS, OREXIGEN will give DUKE
timely written notice at least [***] ([***]) months in advance of the
effective date of OREXIGEN’s decision and DUKE will be free to continue
prosecution or maintain any such application(s)/patents, and to maintain any
protection issuing thereon in the U.S. and in any foreign country at DUKE’s
sole expense. In such instances, from the date of DUKE’s receipt of such
written notice from OREXIGEN, such patent and/or DUKE PATENT APPLICATION
shall no longer be considered to fall within the definition of DUKE PATENT
RIGHTS (APPENDIX A shall be deemed to be so amended) and OREXIGEN shall
forfeit all rights under this AGREEMENT to the subject issued patent(s)
and/or subject DUKE PATENT APPLICATION and patent(s) arising from such
PATENT APPLICATION. Accordingly, DUKE shall be free, at its sole discretion
to license said patent(s) and patent application(s) to any THIRD PARTY or
otherwise dispose of such patent(s) and patent applications(s) as it deems
appropriate.






	 	6.03	 	Payment of all OREXIGEN PATENT RIGHTS EXPENSES shall be the sole responsibility
of OREXIGEN and OREXIGEN shall reimburse DUKE for any reasonable out-of-pocket expenses
that DUKE may incur relating to the filing, prosecution, and/or maintenance of the
OREXIGEN PATENT RIGHTS.
	 
	 	6.04	 	OREXIGEN agrees to mark the LICENSED PRODUCTS (as the case may be), and/or
their containers, labels, and/or other packaging, in such a manner as to conform to the
patent laws and practices of the country of manufacture or sale, as appropriate.





ARTICLE 7 — INFRINGEMENT OF THIRD-PARTY RIGHTS





	 	7.01	 	In the event that DUKE or OREXIGEN is charged with infringement of a patent by
a THIRD PARTY or is made a party in a civil action as a result of the activity of
OREXIGEN and/or a SUBLICENSEE (and not from the activity of DUKE or its AFFILIATES
other than the granting of this license to OREXIGEN) as a result (directly or
indirectly) of the licenses granted hereunder to OREXIGEN, OREXIGEN:






	 	(a)	 	must defend and/or settle any such claim of infringement or
civil action;
	 
	 	(b)	 	must assume all costs, expenses, damages, and other obligations
for payments incurred as a consequence of such charges of infringement and/or
civil action;





19









 






	 	(c)	 	must indemnify and hold DUKE harmless from any and all damages, losses,
liability, and costs resulting from a charge of infringement or civil action
which shall be brought against DUKE and attributable to technology added to,
incorporated into or sold with a LICENSED PRODUCT by OREXIGEN, and/or
SUBLICENSEE (as the case may be) or to manufacturing processes utilized by
OREXIGEN or SUBLICENSEE (as the case may be); and
	 
	 	(d)	 	may, if such claim of infringement or civil action shall be
based on patent claims contained in any pending or issued patent included in
the DUKE PATENT RIGHTS, terminate this AGEEMENT effective immediately upon
DUKE’s receipt of written notice of termination.






	 	7.02	 	DUKE will give OREXIGEN reasonable assistance, at OREXIGEN’s expense, in the
defense of any such infringement charge or lawsuit, as may be reasonably required.
OREXIGEN shall reimburse DUKE for such expenses within [***] ([***]) days of receiving
an invoice for the same.





ARTICLE 8 — INFRINGEMENT OF DUKE PATENT RIGHTS BY THIRD PARTIES





	 	8.01	 	Each party to this AGREEMENT is obligated to inform the other promptly in
writing of any alleged infringement of which it becomes aware and of any available
evidence of infringement by a THIRD PARTY of any patents within the DUKE PATENT RIGHTS.
	 
	 	8.02	 	If during the term of this AGREEMENT, OREXIGEN becomes aware of any alleged
infringement by a THIRD PARTY, OREXIGEN shall have the right, but not the obligation,
to either:






	 	(a)	 	settle the infringement suit by sub-licensing the alleged
infringer or by other means; or
	 
	 	(b)	 	prosecute at its own expense any infringement of the DUKE
PATENT RIGHTS and/or OREXIGEN PATENT RIGHTS. In the event OREXIGEN prosecutes
such infringement of DUKE PATENT RIGHTS and/or OREXIGEN PATENT RIGHTS for which
DUKE is a co-owner of one or more of the subject OREXIGEN PATENT RIGHTS,
OREXIGEN may, for such purposes, request to use the name of DUKE as party
plaintiff. DUKE, at its sole discretion, may agree to become a party
plaintiff, and all costs associated therewith shall be borne by OREXIGEN.






	 	8.03	 	In the event that OREXIGEN undertakes the enforcement and/or defense of the
DUKE PATENT RIGHTS and/or OREXIGEN PATENT RIGHTS by litigation, including any
declaratory judgment action, the total cost of any such action commenced or defended
solely by OREXIGEN shall be borne by OREXIGEN.




20









 






	 	 	 	Any recovery of damages by OREXIGEN as a result of such action shall be applied
first in satisfaction of any unreimbursed expenses and attorneys’ fees of OREXIGEN
relating to the action, and second in satisfaction of unreimbursed legal expenses
and attorneys’ fees of DUKE, if any, relating to the action. If applicable,
OREXIGEN shall receive an amount equal to its lost profits, a reasonable royalty on
sales of the infringer, or other measure of damages the court shall have applied,
less a reasonable approximation of the royalties that OREXIGEN would have owed to
DUKE on NET SALES that may have been made by OREXIGEN but, instead, were lost to the
infringer, which amount shall be promptly paid by OREXIGEN to DUKE. Any balance
remaining from such recovery shall be distributed between OREXIGEN and DUKE as
follows: (i) OREXIGEN receiving seventy-five percent (75%) and DUKE receiving twenty-five
percent (25%) as regards DUKE PATENT RIGHTS; and (ii) OREXIGEN receiving ninety
percent (90%) and DUKE receiving ten percent (10%) as regards OREXIGEN
PATENT RIGHTS.
	 
	 	8.04	 	In the event OREXIGEN does not undertake action to prevent the infringing
activity within three (3) months of having been made aware and notified thereof,
DUKE shall have the right, but not the obligation, to prosecute at its own expense any
such infringements of the DUKE PATENT RIGHTS and, in furtherance of such right, DUKE
may use the name of OREXIGEN as a party plaintiff in any such suit without expense to
OREXIGEN. The total cost of any such infringement action commenced or defended solely
by DUKE shall be borne by DUKE. Any recovery of damages by DUKE for any infringement
shall be applied first in satisfaction of any unreimbursed expenses and attorneys’ fees
of DUKE relating to the suit, and second toward reimbursement of OREXIGEN’s reasonable
expenses, including reasonable attorneys’ fees, relating to the suit. Any balance
remaining from such recovery shall be distributed between OREXIGEN and DUKE with DUKE
receiving seventy-five percent (75%) and OREXIGEN receiving twenty-five percent (25%).
	 
	 	8.05	 	In any infringement suit instituted by either party to enforce the DUKE PATENT
RIGHTS and/or OREXIGEN PATENT RIGHTS where DUKE is a co-owner of one or more of the
subject OREXIGEN PATENT RIGHTS pursuant to this AGREEMENT, the other party hereto
shall, at the request and expense of the party initiating such suit, reasonably
cooperate in all respects and, to the extent reasonably possible, have its employees
testify when requested and make available relevant records, papers, information,
samples, specimens, and the like.
	 
	 	8.06	 	OREXIGEN has the sole right in accordance with the terms and conditions herein
to sublicense any LICENSED PRODUCT to an alleged infringer under the DUKE PATENT RIGHTS
and/or OREXIGEN PATENT RIGHTS in the TERRITORY in order to avoid infringement in the
future.






21









 









	 	8.07	 	Any of the foregoing notwithstanding, if at any time during the term of this
AGREEMENT any of the DUKE PATENT RIGHTS are held invalid or unenforceable in a
decision which is not appealable or is not appealed within the time allowed,
OREXIGEN shall have no further obligations to DUKE with respect to its future use or
sale of any DUKE LICENSED PRODUCT, DUKE LICENSED PROCESS, and/or DUKE LICENSED
SERVICE covered solely by such DUKE PATENT RIGHTS, including the obligation of
paying royalties. For avoidance of doubt it is understood and agreed that in such
event, OREXIGEN shall not have any damage claim or any claim for refund or
reimbursement against DUKE for any amounts previously paid to DUKE under this
AGREEMENT, including, but not limited to, the payment of DUKE STOCK.





ARTICLE 9 — GOVERNMENT CLEARANCE, PUBLICATION, EXPORT





	 	9.01	 	Insofar as such clearance is required, OREXIGEN agrees to use its best efforts
to have the LICENSED PRODUCTS cleared for marketing in those countries in which
OREXIGEN intends to sell LICENSED PRODUCTS by the responsible government agencies
requiring such clearance. To accomplish said clearances at the earliest possible date,
OREXIGEN agrees to file or have filed any necessary data with said government agencies
as quickly as commercially reasonable. Should this AGREEMENT terminate in accordance
with Section 10.02, 10.03, or 10.04, LICENSEE shall, within forty-five (45) days
following such termination and at its own expense, assign to DUKE its full interest and
title in and full documentation of (i) all market clearance applications (including all
data relating thereto) which relate to DUKE LICENSED PRODUCTS, DUKE LICENSED PROCESSES,
and/or DUKE LICENSED SERVICES and (ii) all data that could relate to market clearance
applications for DUKE LICENSED PRODUCTS, DUKE LICENSED PROCESSES, and/or DUKE LICENSED
SERVICES, including, but not limited to, all in vitro and in vivo pre-clinical data,
pharmacology data, toxicology data, human data and the like. Notwithstanding anything
to the contrary in this AGREEMENT, effective upon receipt of such information, data,
etc. by DUKE, such information shall not be considered the confidential
information of OREXIGEN under Article 11 but instead shall henceforth be considered the
confidential information of DUKE and subject to the provisions of restricted use and
non-disclosure set forth in Article 11.
	 
	 	9.02	 	It is understood and agreed that the right of publication/presentation of the
DUKE PATENT RIGHTS shall reside in the INVENTORS, faculty, staff, and students of
DUKE. OREXIGEN shall also have the right to publish and/or co-author any
publication/presentation on the DUKE PATENT RIGHTS in accordance with academic
custom. In the event that either one or more of the INVENTORS or OREXIGEN desires
to so publish/present, the party desiring publication shall notify the other party
of its desire to publish/present at least thirty (30) days in advance of each
subject publication/presentation and shall furnish to the non-publishing party a
written description of the subject matter of the






 




			
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	 	 	 	publication/presentation in order to permit the non-publishing party to review and
comment thereon, such obligation of notification of the publishing/presenting party
and associated right of the non-publishing/presenting party to review and comment
thereon to expire upon the [***] ([***]th) anniversary of the Effective
Date.






	 	9.03	 	This AGREEMENT is subject to all of the United States laws and regulations
controlling the export of technical data, computer software, laboratory prototypes and
other commodities and technology. It is understood that DUKE is subject to United
States laws and regulations controlling the export of technical data, computer
software, laboratory prototypes and other commodities (including the Arms Export
Control Act, as amended and the Export Administration Act of 1979), and that its
obligations hereunder are contingent on compliance with applicable United States export
laws and regulations. The transfer of certain technical data and commodities may
require a license from the cognizant agency of the United States Government and/or
written assurances by OREXIGEN that OREXIGEN shall not export data or commodities to
certain foreign countries without prior approval of such agency. DUKE neither
represents that a license shall not be required nor that, if required, it shall be
issued.





ARTICLE 10 — DURATION AND TERMINATION





	 	10.01	 	This AGREEMENT shall become effective upon the EFFECTIVE DATE, and unless
sooner terminated in accordance with any of the provisions herein, shall remain in full
force and effect for the life of the last-to-expire of the patents included in the DUKE
PATENT RIGHTS or OREXIGEN PATENT RIGHTS, whichever shall occur last.
	 
	 	10.02	 	Subject to the provisions of this AGREEMENT, DUKE may terminate this AGREEMENT
in accordance with Section 10.05 if OREXIGEN fails to meet any of the
development/commercialization milestones (as extended through the payment of
MAINTENANCE FEES to DUKE by OREXIGEN) set forth in APPENDIX C unless DUKE expressly
approves such variations in writing.
	 
	 	10.03	 	OREXIGEN may terminate this AGREEMENT by giving DUKE written notice at least
[***] ([***]) months prior to the effective date of such termination. It is understood
that OREXIGEN shall remain responsible for the timely payment of all amounts due DUKE
under this AGREEMENT through the effective date of the termination.
	 
	 	10.04	 	Either party may immediately terminate this AGREEMENT for fraud, willful
misconduct, or illegal conduct of the other party, in all such cases with respect to
the subject matter of this AGREEMENT, upon written notice of same to that other party.







 




			
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	 	10.05	 	If either party fails to fulfill any of its material obligations under this
AGREEMENT including, but not limited to, lack of payment or failure to meet the
provisions of Section 10.02, the non-breaching party may terminate this AGREEMENT,
upon written notice to the breaching party, as provided below. Such notice must
contain a full description of the event or occurrence constituting a breach of the
AGREEMENT. The party receiving notice of the breach will have the opportunity to
cure that breach within [***] ([***]) days of receipt of notice. If the breach is
not cured within that time, the termination will be effective as of the [***]
([***]) day after receipt of notice. A party’s ability to cure a breach will apply
only to the first [***] ([***]) breaches properly noticed under the terms of this
AGREEMENT, regardless of the nature of those breaches. Any subsequent breach by
that party will entitle the other party to terminate this AGREEMENT upon receipt of
notice by the breaching party, where such notice must contain a full description of
the event or occurrence constituting a breach of this AGREEMENT.
	 
	 	10.06	 	If during the term of this AGREEMENT, OREXIGEN shall become bankrupt or
insolvent or if the business of OREXIGEN shall be placed in the hands of a receiver or
trustee, whether by the voluntary act of OREXIGEN or otherwise, or if OREXIGEN shall
cease to exist as an active business, this AGREEMENT shall immediately terminate.
	 
	 	10.07	 	Notwithstanding anything to the contrary in this AGREEMENT, neither expiration
nor any termination of this AGREEMENT shall remove any financial obligations to DUKE
which OREXIGEN incurred under this AGREEMENT prior to and as of the effective date of
any expiration or termination.
	 
	 	10.08	 	On or before the effective date of any expiration or termination of this
AGREEMENT, OREXIGEN shall cease the manufacture, use, practice, lease, and sale,
offering, distribution, and other commercialization of DUKE LICENSED PRODUCTS, DUKE
LICENSED PROCESSES, and DUKE LICENSED SERVICES.
	 
	 	10.09	 	Within thirty (30) days of any expiration or termination of this AGREEMENT,
OREXIGEN shall (i) return to DUKE or destroy, as directed by DUKE, all information,
data, and any relevant materials provided to OREXIGEN during the term of this AGREEMENT
and (ii) destroy all DUKE LICENSED PRODUCTS in a safe and legal manner. Further,
OREXIGEN shall provide DUKE with a written statement signed by an authorized
representative of OREXIGEN certifying the destruction of all DUKE LICENSED PRODUCTS in
a safe and legal manner, as well as the destruction of said information data, and
relevant materials if such instructions for destruction are given by DUKE.
	 
	 	10.10	 	The licenses granted to OREXIGEN pursuant to Section 2.02 shall survive
termination of this AGREEMENT for any reason (as shall the appertaining






 




			
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	 	 	 	obligations to DUKE, financial and otherwise) except for termination (i) under
Section 10.04 for fraud, willful misconduct, or illegal conduct of OREXIGEN which is
directly related to the licenses granted under Section 2.02, or to OREXIGEN PATENT
RIGHTS, OREXIGEN LICENSED PRODUCTS, OREXIGEN LICENSED PROCESSES, and/or OREXIGEN
LICENSED SERVICES; and/or (ii) under Section 10.05 for breaches by OREXIGEN directly
related to the licenses granted under 2.02, or to OREXIGEN PATENT RIGHTS, OREXIGEN
LICENSED PRODUCTS, OREXIGEN LICENSED PROCESSES, and/or OREXIGEN LICENSED SERVICES,
including, but not limited to, lack or delayed remittance of payments due to DUKE
under Sections 3.01(c), 3.01(e), 3,04, 3.06, and/or 6.03.





ARTICLE 11 — CONFIDENTIALITY





	 	11.01	 	DUKE and OREXIGEN each agree to treat any confidential information disclosed
to it by the other party under this AGREEMENT with reasonable care and to avoid
disclosure of such information to any other person, firm or corporation, except
AFFILIATES bound by the obligations of confidentiality and restricted use set forth in
this Article 11, and either party shall be liable for unauthorized disclosure or
failure to exercise such reasonable care. Further, the receiving party will not use
the disclosing party’s confidential information other than for the benefit of the
parties hereto and relating to this AGREEMENT. These obligations of non-disclosure and
restricted use shall remain effect for each subject disclosure of confidential
information for a period of time of [***] ([***]) years from such disclosure, however,
neither party shall have an obligation, with respect to confidential information
disclosed to it, or any part thereof, which:






	 	(a)	 	is already known to the party at the time of the disclosure;
	 
	 	(b)	 	becomes publicly known without the wrongful act or breach of
this AGREEMENT by the party;
	 
	 	(c)	 	is rightfully received by the party from a THIRD PARTY on a
non-confidential basis;
	 
	 	(d)	 	is subsequently and independently developed by employees of the
party who had no knowledge of the information, as verified by written records;
	 
	 	(e)	 	is approved for release by prior written authorization of the
party disclosing the information; or
	 
	 	(f)	 	is disclosed pursuant to any judicial or government request, requirement
or order, provided that the party so disclosing takes reasonable steps to
provide the other party sufficient prior notice in order to contest such
request, requirement or order and provided and provided that such






 




			
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	 	 	 	disclosed confidential information otherwise remains subject to the
obligations of confidentiality set forth in this Article 11.






	 	11.02	 	DUKE and OREXIGEN agree that any information to be treated as confidential
information under this Article 11 must be disclosed in writing or other tangible medium
and must be clearly marked “CONFIDENTIAL”. Confidential information disclosed orally
must be summarized and reduced to writing or other tangible medium and communicated to
the other party within thirty (30) days of such disclosure, and the other party agrees
that such disclosed information shall be deemed confidential.
	 
	 	11.03	 	Notwithstanding the foregoing, OREXIGEN shall have the right to use and
disclose any confidential information related to the DUKE PATENT RIGHTS to investors,
prospective investors, employees, consultants and agents with a need to know,
collaborators, prospective collaborators and other THIRD PARTIES in the chain of
manufacturing and distribution provided that OREXIGEN obtains from such parties written
confidentiality agreements, the provisions of which are at least as restrictive and
protective of DUKE’s confidential information as those provided in this Article 11.
	 
	 	11.04	 	Notwithstanding anything to the contrary in this AGREEMENT, all information
relating to filing, prosecution, maintenance, defense, infringement, and the like
regarding the DUKE PATENT RIGHTS (no matter how disclosed) shall be considered the
confidential information of DUKE and subject to the obligations of restricted use and
non-disclosure set forth in this Article 11.





ARTICLE 12 — NOTICES





	 	12.01	 	It shall be a sufficient giving of any notice, request, report, statement,
disclosure or other communication hereunder if the party giving the same shall






	 	(a)	 	hand deliver such communication; or
	 
	 	(b)	 	mail such a communication, postage prepaid, first class,
certified mail; or
	 
	 	(c)	 	send such communication, shipping prepaid by
national/international courier service






to the party to receive such communication at the address given below or as given in
Section 3.08, in the case of payments and/or reports due in accordance with Sections
3.01, 3.06, 3.08, 4.01, 4.02, 5.01, 5.02, 5.03, 6.02, 6.03, and 8.03or such other
address as may hereafter be designated by notice in writing by the appertaining
party.



26









 





	 	 	 
	DUKE
	 	OREXIGEN
	 
	 	 
	For delivery via the U.S. Postal Service
	 	 
	 
	 	 
	Office of Science and Technology
	 	Orexigen Therapeutics, Inc.
	Duke University
	 	Attn: Chief Executive Officer
	Attn: Agreement Coordinator
	 	One Palmer Square, Suite 515
	Box 90083
	 	Princeton, NJ 08540 USA
	Durham, NC 27708 USA
	 	 
	 
	 	 
	For delivery via nationally/internationally
recognized courier
	 	 
	 
	 	 
	Office of Science and Technology
	 	(same as above)
	Duke University
	 	 
	Attn: Agreement Coordinator
	 	 
	2020 West Main Street, Suite 10
	 	 
	Durham, NC 27705 USA
	 	 
	 
	 	 
	cc: (if of a legal nature)
	 	 
	Office of University Counsel
	 	Biotech Law Associates, P.C.
	Duke University
	 	Attn: Douglas A. Branch
	2400 Pratt Street, Suite 4000
	 	800 Research Parkway, Suite 310
	Durham, North Carolina 27710
	 	Oklahoma City, OK 73104







	 	12.02	 	The date of giving any such notice, request, report, statement, disclosure or
other communications, and the date of making any payment hereunder required (provided
such payment is received), shall be the actual date of receipt.





ARTICLE 13 — ASSIGNMENT





	 	13.01	 	This AGREEMENT shall be binding upon and inure to the benefit of the
respective successors and assigns of the parties hereto. However, OREXIGEN may not
assign its rights in this AGREEMENT without approval by DUKE, such approval not to be
unreasonably withheld. Notwithstanding the foregoing, a change of control transaction,
merger, consolidation or sale of substantially all of the assets of OREXIGEN shall not
be deemed an assignment for purposes of this clause and no consent of DUKE shall be
required for such transactions.





27









 





ARTICLE 14 — INDEMNITY, INSURANCE, REPRESENTATIONS, STATUS





	 	14.01	 	DUKE, and its trustees, officers, employees, faculty members, students, and
agents (collectively, “DUKE Indemnitees”) will be indemnified, defended by counsel
reasonably acceptable to DUKE, and held harmless by OREXIGEN and appertaining
SUBLICENSEES, as the case may be, from and against any claim, liability, cost, expense,
damage, deficiency, loss or obligation, of any kind or nature (including, without
limitation, reasonable attorneys’ fees and other costs and expenses of defense)
(collectively, “CLAIMS”) based upon, arising out of, or otherwise relating to this
AGREEMENT including, but not limited to, (i) any action relating to product liability,
and (ii) any CLAIM that a LICENSED PRODUCT and/or practice of any of the DUKE PATENT
RIGHTS and/or OREXIGEN PATENT RIGHTS infringes the intellectual property of a THIRD
PARTY. However, the foregoing indemnity shall not apply to CLAIMS to the extent that
they are (x) caused by the gross negligence of DUKE, DUKE employees, DUKE faculty
members, students, and/or agents acting solely within the performance of their
respective responsibilities at DUKE, (y) caused by a material breach of this AGREEMENT
by DUKE, and/or (z) pertain solely to claims that the activities of DUKE employees,
faculty members, students, and/or agents in their performance of their respective
responsibilities at DUKE (excluding any research or other responsibilities such
individuals may have as a result of an association each may have with OREXIGEN and/or
SUBLICENSEES) infringe the intellectual property of a THIRD PARTY.
	 
	 	14.02	 	OREXIGEN will purchase and maintain in effect, at its sole expense, with
reputable insurance companies, appropriate insurance policies, including, but not
limited to a policy of product liability insurance and a policy of general liability
insurance, in such amounts as is reasonably sufficient and commercially reasonable to
protect against its liability under Section 14.01 above. Further, OREXIGEN will
require that every SUBLICENSEE, purchase and maintain in effect, at its sole expense,
with reputable insurance companies, appropriate insurance policies, including, but not
limited to a policy of product liability insurance and a policy of general liability
insurance, in such amounts as is reasonably sufficient and commercially reasonable to
protect against their respective liability as regards Section 14.01 above. It is
understood and agreed that OREXIGEN and/or SUBLICENSEES (as the case may be) shall not
be required to possess product liability insurance under this Section 14.02 until the
first of the following to occur as regards OREXIGEN and/or appertaining SUBLICENSEES
(i) commencement of clinical trials of DUKE LICENSED PRODUCT and/or OREXIGEN LICENSED
PRODUCT; or (ii) commencement of sale, lease, or provision of LICENSED PRODUCTS
(including, but not limited to provision of DUKE LICENSED SERVICES or OREXIGEN LICENSED
SERVICES in connection with a clinical trial). DUKE shall have the right to ascertain
from time to time that any required coverage under this Section 14.02 exists, such
right to be exercised by DUKE in a reasonable manner.





28









 






	 	14.03	 	DUKE MAKES NO REPRESENTATIONS NOR EXTENDS ANY WARRANTIES OF ANY KIND. IN
PARTICULAR, THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE OR THAT THE USE OF THE DUKE PATENT RIGHTS AND/OR OREXIGEN
PATENT RIGHTS DOES NOT INFRINGE ANY PATENT, COPYRIGHT, TRADEMARK OR OTHER RIGHTS.
IN ADDITION, NOTHING IN THIS AGREEMENT SHALL BE DEEMED TO BE A REPRESENTATION OR
WARRANTY BY DUKE OF THE VALIDITY OF ANY OF THE DUKE PATENT RIGHTS OR THE OREXIGEN
PATENT RIGHTS OR THE ACCURACY, SAFETY, EFFICACY, OR USEFULNESS, FOR ANY PURPOSE, OF
THE DUKE PATENT RIGHTS OR OREXIGEN PATENT RIGHTS. DUKE SHALL HAVE NO OBLIGATION,
EXPRESS OR IMPLIED, TO SUPERVISE, MONITOR, REVIEW OR OTHERWISE ASSUME RESPONSIBILITY
FOR THE PRODUCTION, MANUFACTURE, TESTING, MARKETING OR SALE OF ANY LICENSED PRODUCT.
(FOR AVOIDANCE OF DOUBT, IT IS UNDERSTOOD AND AGREED THAT ANY SUCH ACTIVITY
DESCRIBED IN THE PRECEDING SENTENCE BY ONE OR MORE OF THE INVENTORS OR ANY OTHER
DUKE TRUSTEE, FACULTY MEMBER, EMPLOYEE, STUDENT, AND/OR AGENT SHALL BE DEEMED TO BE
OUTSIDE THEIR RESPECTIVE CAPACITY AS A DUKE TRUSTEE, FACULTY MEMBER, EMPLOYEE,
STUDENT, AND/OR AGENT, AS THE CASE MAY BE.) FURTHER, DUKE SHALL HAVE NO LIABILITY
WHATSOEVER TO OREXIGEN, ITS AFFILIATES, SUBLICENSEES, OR ANY THIRD PARTIES FOR OR ON
ACCOUNT OF ANY INJURY, LOSS, OR DAMAGE, OF ANY KIND OR NATURE, SUSTAINED BY, OR ANY
DAMAGE ASSESSED OR ASSERTED AGAINST, OR ANY OTHER LIABILITY INCURRED BY OR IMPOSED
UPON OREXIGEN OR ANY OTHER PERSON OR ENTITY, ARISING OUT OF OR IN CONNECTION WITH OR
RESULTING FROM:






	 	(a)	 	the production, use, practice, offering, lease, or sale of any
LICENSED PRODUCT;
	 
	 	(b)	 	the use of the DUKE PATENT RIGHTS and/or the OREXIGEN PATENT
RIGHTS; or
	 
	 	(c)	 	any advertising or other promotional activities with respect to
any of the foregoing.






	 	14.04	 	Neither party hereto is an agent of the other party for any purpose
whatsoever.





29









 





ARTICLE 15 — USE OF A PARTY’S NAME





	 	15.01	 	Neither party will, without the prior written consent of the other party:






	 	(a)	 	use in any publication, advertising, publicity, press release,
promotional activity or otherwise, any trade-name, personal name, trademark,
trade device, service mark, symbol, image, icon, or any abbreviation,
contraction or simulation thereof owned by the other party;
	 
	 	(b)	 	use the name or image of any employee, faculty member, student,
or agent of the other party in any publication, publicity, advertising, press
release, promotional activity or otherwise; or
	 
	 	(c)	 	represent, either directly or indirectly, that any product or
service of the other party is a product or service of the representing party or
that it is made in accordance with or utilizes the information or documents of
the other party.





ARTICLE 16 — SEVERANCE AND WAIVER





	 	16.01	 	Each clause of this AGREEMENT is a distinct and severable clause and if any
clause is deemed illegal, void or unenforceable, the validity, legality or
enforceability of any other clause or portion of this AGREEMENT will not be affected
thereby.
	 
	 	16.02	 	The failure of a party in any instance to insist upon the strict performance
of the terms of this AGREEMENT will not be construed to be a waiver or relinquishment
of any of the terms of this AGREEMENT, either at the time of the party’s failure to
insist upon strict performance or at any time in the future, and such terms will
continue in full force and effect.





ARTICLE 17 — TITLES





	 	17.01	 	All titles and article headings contained in this AGREEMENT are inserted only
as a matter of convenience and reference. They do not define, limit, extend or
describe the scope of this AGREEMENT or the intent of any of its provisions.





ARTICLE 18 — SURVIVAL OF TERMS





	 	18.01	 	The provisions of Sections 2.04, 2.07, 3.01(a), 3.01(b)-(e) (as regards
financial obligations described therein incurred during the term of this Agreement),
3.03, 3.04, 3.06, 3.08, 5.01, 5.03 (as regards obligations for reports and payments
due to Duke for activities occurring during the term of this Agreement) 6.02(a),
6.03, 9.01 (as regards assignment to Duke by Orexigen of full title and interest in
and full documentation of said market clearance applications and all data that
could




30









 






	 	 	 	relate to market clearance applications), 9.03, 10.07, 10.09, 10.10 and Articles 1,
7, 8 (to the extent, but only to the extent, that such infringement occurs during
the term of this Agreement and excluding Section 8.06 which shall only apply during
the term of this Agreement), 11, 12, 13, 14, 15, 16, 18 and 19 shall survive the
expiration or termination of this AGREEMENT. (





ARTICLE 19 — GOVERNING LAW





	 	19.01	 	This AGREEMENT shall be construed as having been entered into in the State of
North Carolina and shall be interpreted in accordance with and its performance governed
by the laws of the State of North Carolina. Notwithstanding the foregoing, questions
affecting the construction and effect of any patent in DUKE PATENT RIGHTS and OREXIGEN
PATENT RIGHTS shall be determined by the law of the country in which the patent was
granted.





ARTICLE 20 — ENTIRE UNDERSTANDING





	 	20.01	 	This AGREEMENT represents the entire understanding between the parties, and
supersedes all other agreements, express or implied, between the parties concerning the
subject matter hereof, and shall not be subject to any change or modification except by
the execution of a written instrument subscribed to by the parties hereto.





[Signature page follows




31









 





     IN WITNESS WHEREOF, the parties hereto have executed this AGREEMENT on the dates set forth
below.



	 	 	 	 	 	 	 	 	 
	DUKE UNIVERSITY	 	OREXIGEN THERAPEUTICS, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Robert L. Taber
	 	By:
	 	/s/ John F. Crowley	 	 
	 

	 	 
	 	 	 	 	 	 
	Robert L. Taber, Ph.D.	 	John F. Crowley	 	 
	Vice Chancellor, Science and	 	President and Chief Executive Officer	 	 
	Technology Development	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Date: 4/2/04	 	Date: 3/31/04	 	 






Read and Understood by the INVENTORS




	 	 	 	 	 
	By:

	 	/s/ Kishore Gadde
	 	 
	 

	 	 	 	 
	 

	 	Kishore Gadde, M.D.	 	 
	 
	 	 	 	 
	Date:

	 	19 April 2004	 	 
	 
	 	 	 	 
	By:

	 	/s/ Ranga Krishnan	 	 
	 

	 	 	 	 
	 

	 	Ranga Krishnan, M.B., Ch.B.	 	 
	 
	 	 	 	 
	Date:

	 	19/4/04	 	 






32









 





APPENDICES




APPENDIX A—DUKE PATENT RIGHTS




APPENDIX B—ARTICLES OF INCORPORATION AND BY-LAWS




APPENDIX C—COMMERCIALIZATION SCHEDULE




APPENDIX D—ROYALTY REPORT FORM (SAMPLE)




APPENDIX E—COMMON STOCK PURCHASE AGREEMENT




APPENDIX F—RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT




APPENDIX G—INVESTOR RIGHTS AGREEMENT




33









 





APPENDIX A




DUKE PATENT RIGHTS




[***]




 




			
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APPENDIX B




CERTIFICATE OF INCORPORATION AND BY-LAWS




[Attached]




 









 





AMENDED AND RESTATED CERTIFICATE OF INCORPORATION




OF




OREXIGEN THERAPEUTICS, INC.




(incorporated on September 12, 2002)




ARTICLE 1




     The name of the corporation is Orexigen Therapeutics, Inc.



ARTICLE 2




     The address of the registered office of the corporation in the State of Delaware is to be
located at 1201 North Market Street, P.O. Box 1347, in the City of Wilmington, County of New
Castle, Zip Code 19801. The registered agent in charge thereof is Delaware Corporation Organizers,
Inc.



ARTICLE 3




     The purpose of the corporation is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of Delaware.



ARTICLE 4




     A. Classes of Stock. This corporation is authorized to issue two classes of stock to
be designated, respectively, “Common Stock” and “Preferred Stock.” The total number of shares
which this corporation is authorized to issue is Twenty-Nine Million Four Hundred Six Thousand
Seven Hundred Eighty-One (29,406,781) shares each having a par value of one tenth of one cent
($0.001) per share. Twenty Million (20,000,000) shares shall be Common Stock and Nine Million Four
Hundred Six Thousand Seven Hundred Eighty-One (9,406,781) shares shall be Preferred Stock. The
Preferred Stock authorized by this Amended and Restated Certificate of Incorporation shall consist
of the “Series A Preferred Stock.”



     Nine
Million Four Hundred Six Thousand Seven Hundred Eighty-One (9,406,781) shares are
designated “Series A Preferred Stock.” The Series A Preferred Stock is sometimes referred to as
the “Preferred Stock.”



     B. Preferred Stock. The powers, preferences, rights, restrictions, and other matters
relating to each series of Preferred Stock are as follows:



          1. Dividends.




               a. The holders of the Preferred Stock shall be entitled to receive in any fiscal year of this
corporation, out of any assets legally available therefor, dividends at the rate of eight percent
(8%) of the applicable Original Issue Price (as defined herein) per share of Preferred Stock (as
adjusted for any stock dividends, combinations or splits with respect to such



 









 







shares) per annum payable out of funds legally available therefor. The “Original Issue Price”
of the Series A Preferred Stock shall be $1.18 per share (as adjusted for any stock dividends,
combinations or splits with respect to such shares) (the “Series A Original Issue Price”). Such
dividends shall be payable only when, as, and if declared by the Board of Directors and shall be
non-cumulative.



     No dividends (other than those payable solely in the Common Stock of the corporation for which
adjustments to the respective Conversion Prices (as defined below) are effected in accordance with
Section 5(f) below) shall be paid on any shares of Common Stock of the corporation during any
fiscal year of the corporation until dividends at an equal rate on each share of Preferred Stock
shall have been paid or declared and set apart during that fiscal year and any prior year in which
dividends accumulated but remain unpaid.



     b. In the event the corporation shall declare a distribution payable in securities of other
persons, evidences of indebtedness issued by the corporation or other persons, assets (excluding
cash dividends) or options or rights to purchase any such securities or evidences of indebtedness,
then, in each such case the holders of the Preferred Stock shall be entitled to a proportionate
share of any such distribution as though the holders of the Preferred Stock were the holders of the
number of shares of Common Stock of the corporation into which their shares of Preferred Stock are
convertible as of the record date fixed for the determination of the holders of Common Stock of the
corporation entitled to receive such distribution.



          2. Liquidation Preference




               a. In the event of any liquidation, dissolution or winding up of the corporation, whether
voluntary or involuntary, the holders of shares of Preferred Stock shall be entitled to receive, on
a pari passu basis and prior and in preference to any distribution of any of the assets or surplus
funds of the corporation to the holders of the Common Stock by reason of their ownership thereof,
an amount equal to the Original Issue Price for each share of Preferred Stock then held by such
holder, plus all accrued or declared but unpaid dividends on each such share. If upon the
occurrence of such event, the assets and funds thus distributed among the holders of the Preferred
Stock shall be insufficient to permit the payment to such holders of the full aforesaid
preferential amount, then the entire assets and funds of the corporation legally available for
distribution shall be distributed ratably among the holders of the Preferred Stock in proportion to
the preferential amount each such holder is otherwise entitled to receive.



               b. After payment to the holders of the Preferred Stock of the amounts set forth in Article
4(B)(2)(a) above, the entire remaining assets and funds of the corporation legally available for
distribution, if any, shall be distributed ratably among the holders of the Common Stock.



               c. Each holder of an outstanding share of Preferred Stock shall be deemed to have consented,
for purposes of Section 160 of the General Corporation Law of the Delaware (and, if applicable,
Sections 502, 503 and 506 of the California Corporations Code), to distributions made by this
corporation in connection with the repurchase of shares of Common Stock at a price per share no
greater than cost issued to or held by employees or consultants upon termination of their
employment or services pursuant to agreements providing for the right of



- 2 -









 







said repurchase between this corporation and such persons provided that such repurchases are
effected in accordance with Section 6(a)(7) below.



               d. A sale, conveyance or disposition (in one or a series of related transactions) of all or
substantially all of the assets of this corporation, a grant of an exclusive license or other
transfer (in one or a series of related transactions) of all or substantially all of the
corporation’s intellectual property or a consolidation or merger of this corporation with or into
any other entity or entities, shall be deemed to be a liquidation, dissolution or winding up within
the meaning of this Article (4)(B)(2); provided, however, that a consolidation or merger involving
this corporation shall not be deemed to be a liquidation, dissolution or winding up within the
meaning of this Article (4)(B)(2)(d) if following completion of the transaction, the holders of
shares of this corporation immediately prior to the transaction own shares which represent at least
a majority of the voting power of the surviving corporation.



               e. Whenever the distribution provided for in this Article 4(B)(2) shall be payable in
securities or property other than cash, the value of such distribution shall be the fair market
value of such securities or property. Any securities shall be valued as follows:



                    (i) Freely traded securities:



                         (A) If traded on a securities exchange or through the NASDAQ National Market, the value shall
be based on the formula specified in the definitive agreements for the deemed liquidation
transaction(s) or if no such formula exists, then the value of such securities shall be deemed to
be the average of the closing prices of the securities on such exchange or system over the thirty
(30) day period ending three (3) days prior to the closing;



                         (B) If actively traded over-the-counter but not on the NASDAQ National Market, the value shall
be based on the formula specified in the definitive agreements for the deemed liquidation
transaction(s) or if no such formula exists, then the value of such securities shall be deemed to
be the average of the closing bid or sale prices (whichever is applicable) over the thirty (30) day
period ending three (3) days prior to the closing; and



                         (C) If there is no active public market, the value shall be the fair market value thereof, as
mutually determined by the corporation and the holders of at least a majority of the voting power
of all then outstanding shares of Preferred Stock, voting together as a single class and on an
as-converted to Common Stock basis.



                    (ii) The method of valuation of securities subject to investment letter or other restrictions
on free marketability (other than restrictions arising solely by virtue of a stockholder’s status
as an affiliate or former affiliate) shall be to make an appropriate discount from the market value
determined as above in (i)(A), (B) or (C) above to reflect the approximate fair market value
thereof, as mutually determined by the corporation and the holders of at least a majority of the
voting power of all then outstanding shares of Preferred Stock, voting together as a single class
and on an as-converted to Common Stock basis.



                    (iii) In the event the requirements of this Section 2 are not complied with, this corporation
shall forthwith either:



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                         (A) cause such closing to be postponed until such time as the requirements of this Section 2
have been complied with; or



                         (B) cancel such transaction, in which event the rights, preferences and privileges of the
holders of the Preferred Stock shall revert to and be the same as such rights, preferences and
privileges existing immediately prior to the date of the first notice referred to in Section
2(e)(iv) below.



                    (iv) This corporation shall give each holder of record of Preferred Stock written notice of
such impending transaction within ten (10) days after the Board of Directors approves such
transaction or within ten (10) days after the commencement of any involuntary proceeding, whichever
is earlier. Such written notice shall describe the material terms and conditions of the impending
transaction and the provisions of this Section 2, and this corporation shall thereafter give such
holders prompt notice of any material changes. The transaction shall in no event take place sooner
than twenty (20) days after this corporation has given the first notice provided for herein or
sooner than ten (10) days after this corporation has given notice of any material changes provided
for herein; provided, however, that such periods may be shortened upon the written consent of the
holders of the Preferred Stock that are entitled to such notice rights or similar notice rights and
that represent a majority of the voting power of all such outstanding shares of Preferred Stock,
voting together as a single class and on an as-converted to Common Stock basis.



          3. Redemption of Series A Preferred Stock.




               a. At the election of the holders of at least a majority of the outstanding shares of Series A
Preferred Stock, this corporation shall redeem, at any time after the fifth (5th) anniversary of
the Original Issue Date (as defined below), on the date specified in a written notice from the
required holders of Series A Preferred Stock (which redemption date shall be no earlier than sixty
(60) days after the date of the notice) (the “Redemption Date”), all shares of Series A Preferred
Stock then outstanding as of the Redemption Date by paying in cash therefor, the Series A Original
Issue Price for each share of Series A Preferred Stock (as adjusted for any stock dividends,
combinations or splits with respect to such shares) plus all declared but unpaid dividends on such
shares. Notwithstanding the provisions of this Article (4)(B)(3), this corporation will not be
required to redeem shares in any calendar quarter to the extent funds are not legally available.
If funds are not legally available to consummate a redemption under this Article (4)(B)(3), this
corporation shall redeem the maximum number of shares for which funds are legally available on a
pro rata basis from each holder of Series A Preferred Stock then outstanding and will continue to
do so each calendar quarter thereafter until the total number of shares that it has redeemed is
equal to the total number of shares that it would have redeemed at such time as if it had redeemed
in accordance with the provisions of this Article (4)(B)(3).



               b. This corporation shall give notice by certified mail, postage prepaid, return receipt
requested, to the holders of record of Series A Preferred Stock to be redeemed, such notice to be
addressed to each holder at the address shown in this corporation’s records, which notice shall
specify the date of redemption, the number of shares of Series A Preferred Stock to be redeemed,
and the date on which conversion rights terminate. Such notice shall be given no more than sixty
(60) but no less than thirty (30) days prior to the date fixed for



- 4 -









 







redemption. On or after the date of redemption as specified in such notice, each holder shall
surrender its or his certificate (or comply with applicable lost certificate provisions) for the
number of shares to be redeemed as stated in the notice to this corporation at the place specified
in such notice. If less than all of the shares represented by such certificate are redeemed, a new
certificate shall forthwith be issued for the unredeemed shares. Provided such notice by this
corporation is duly given, and provided that on the Redemption Date specified there shall be a
source of funds legally available for such redemption, then all rights with respect to such shares
shall, after the specified Redemption Date, terminate, whether or not said certificates have been
surrendered, excepting only in the right of the holder to receive the redemption price thereof,
without interest, upon such surrender (or compliance with lost certificate provisions).



          4. Voting Rights.




               a. Each holder of shares of the Preferred Stock shall be entitled to the number of votes equal
to the number of shares of Common Stock into which such shares of Preferred Stock could be
converted and shall have voting rights and powers equal to the voting rights and powers of the
Common Stock (except as otherwise expressly provided herein or as required by law, voting together
with the Common Stock as a single class) and shall be entitled to notice of any stockholders’
meeting in accordance with the Bylaws of the corporation. Fractional votes shall not, however, be
permitted and any fractional voting rights resulting from the above formula (after aggregating all
shares into which shares of Preferred Stock held by each holder could be converted) shall be
rounded to the nearest whole number (with one-half being rounded upward).



               b. The holders of a majority of the Preferred Stock, voting together as a single class on
as-converted basis, shall be entitled to elect three (3) members of the Board of Directors at each
meeting or pursuant to each consent of the corporation’s stockholders for the election of
directors, and to remove from office such directors and to fill any vacancy caused by the
resignation, death or removal of such directors. The holders of a majority of the Common Stock,
voting as a separate class, shall be entitled to elect two (2) members of the Board of Directors at
each meeting or pursuant to each consent of the corporation’s stockholders for the election of
directors, and to remove from office such director and to fill any vacancy caused by the
resignation, death or removal of such director. The holders of a majority of the Common Stock and
Preferred Stock, voting together as a single class on an as-converted to Common Stock basis, shall
be entitled to elect the remaining member or members of the Board of Directors at each meeting or
pursuant to each consent of the corporation’s stockholders for the election of director, and to
remove from office such directors and to fill any vacancy caused by the resignation, death or
removal of such directors.



          5. Conversion. The holders of the Preferred Stock shall have conversion rights as
follows (the “Conversion Rights”):




               a. Right to Convert. Each share of Preferred Stock shall be convertible, at the
option of the holder thereof, at any time after the date of issuance of such share, at the office
of the corporation or any transfer agent for such stock, into such number of fully paid and
nonassessable shares of Common Stock as provided herein.



- 5 -









 





               b. Conversion of Preferred Stock. Each share of Common Stock to which a holder of
Preferred Stock shall be entitled upon conversion of a share of Series A Preferred Stock shall be
determined by dividing the Series A Original Issue Price by the Series A Conversion Price (as
defined herein) in effect at the time that the certificate is surrendered for conversion.



               c. Conversion Price. The conversion price for the Series A Preferred Stock shall
initially be $1.19, subject to adjustment as hereinafter provided (the “Series A Conversion
Price”).



               d. Automatic Conversion. Each share of Preferred Stock shall automatically be
converted into shares of Common Stock at the applicable Conversion Price upon the earlier to occur
of: (i) the date specified by written consent or agreement of holders of at least a majority of
the shares of Preferred Stock then outstanding, voting together as a single class and on an
as-converted to Common Stock basis, or (ii) immediately upon the closing of the sale of the
corporation’s Common Stock in a firm commitment, underwritten public offering registered under the
Securities Act of 1933, as amended (the “Securities Act”), with aggregate offering proceeds to the
corporation (before deduction for underwriters’ discounts and expenses relating to the issuance) of
at least $30,000,000 and a public offering price per share that is not less than $3.60 (as adjusted
for any stock dividends, stock splits, recapitalizations or the like).



               e. Mechanics of Conversion.



                    (i) Before any holder of Preferred Stock shall be entitled to convert the same into shares of
Common Stock, he shall surrender the certificate or certificates therefor, duly endorsed, (or
comply with applicable lost certificate provisions) at the office of the corporation or of any
transfer agent for such stock, and shall give written notice to the corporation at such office that
he elects to convert the same and shall state therein the name or names in which he wishes the
certificate or certificates for shares of Common Stock to be issued. The corporation shall, as
soon as practicable thereafter, issue and deliver at such office to such holder of Preferred Stock,
a certificate or certificates for the number of shares of Common Stock (together with a certificate
for any shares of Preferred Stock not converted, if applicable) to which he shall be entitled as
aforesaid. Such conversion shall be deemed to have been made immediately prior to the close of
business on the date (i) of surrender of the shares of Preferred Stock to be converted or (ii)
specified in Section 5(d), and the person or persons entitled to receive the shares of Common Stock
issuable upon such conversion shall be treated for all purposes as the record holder or holders of
such shares of Common Stock on such date.



                    (ii) If the conversion is in connection with an underwritten offering of securities pursuant
to the Securities Act, the conversion may, at the option of any holder tendering shares of
Preferred Stock for conversion, be conditioned upon the closing with the underwriters of the sale
of securities pursuant to such offering, in which event the person(s) entitled to receive the
Common Stock upon conversion of the Preferred Stock shall not be deemed to have converted such
Preferred Stock until immediately prior to the closing of such sale of securities.



- 6 -









 





               f. Adjustments to Conversion Price for Stock Dividends and for Combinations or
Subdivisions of Common Stock. In the event that this corporation at any time shall declare or
pay, without consideration, any dividend on the Common Stock payable in Common Stock or in any
right to acquire Common Stock for no consideration, or shall effect a subdivision of the
outstanding shares of Common Stock into a greater number of shares of Common Stock (by stock split,
reclassification or otherwise than by payment of a dividend in Common Stock or in any right to
acquire Common Stock), or in the event the outstanding shares of Common Stock shall be combined or
consolidated, by reclassification or otherwise, into a lesser number of shares of Common Stock, the
Series A Conversion Price prior to such event shall, concurrently with the effectiveness of such
event, be proportionately decreased or increased, as appropriate. In the event that this
corporation shall declare or pay, without consideration, any dividend on the Common Stock payable
in any right to acquire Common Stock for no consideration, then the corporation shall be deemed to
have made a dividend payable in Common Stock in an amount of shares equal to the maximum number of
shares issuable upon exercise of such rights to acquire Common Stock.



               g. Adjustments for Reclassification and Reorganization. If the Common Stock issuable
upon conversion of the Preferred Stock shall be changed into the same or a different number of
shares of any other class or classes of stock, whether by capital reorganization, reclassification
or otherwise (other than a subdivision or combination of shares provided for in Article 4(B)(5)(f)
above or a deemed liquidation transaction(s) referred to in Article 4(B)(2)(c) above), the Series A
Conversion Price, concurrently with the effectiveness of such reorganization or reclassification,
be proportionately adjusted so that the Preferred Stock shall be convertible into, in lieu of the
number of shares of Common Stock which the holders would otherwise have been entitled to receive, a
number of shares of such other class or classes of stock equivalent to the number of shares of
Common Stock that would have been subject to receipt by the holders upon conversion of the
Preferred Stock immediately before such reorganization or reclassification.



               h. Adjustments for Issuance of Additional Equity Securities:



                    (i) Special Definitions. For purposes of this Section 5(h), the following definitions
shall apply:



                         (A) “Option” shall mean rights, options or warrants to subscribe for, purchase or
otherwise acquire Common Stock or Convertible Securities.



                         (B) “Original Issue Date” shall mean the date on which a share of Series A Preferred
Stock was first issued.



                         (C) “Convertible Securities” shall mean any evidences of indebtedness, shares or other
securities directly or indirectly convertible into or exchangeable for Common Stock.



                         (D) “Additional Shares of Common Stock” shall mean all shares of Common Stock issued
(or, pursuant to Section 5(h)(iii) below, deemed to be issued)



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by the corporation after the Original Issue Date, other than shares of Common Stock issued or
issuable:



                              (I) upon the conversion of shares of Series A Preferred Stock or as a dividend or distribution
on Series A Preferred Stock;



                              (II) pursuant to the acquisition of another corporation or entity by the corporation by way of
merger, purchase of all or substantially all of the assets of the other corporation or stock for
stock exchange approved by the Board of Directors;



                              (III) to officers, directors or employees of, or consultants to, the corporation or a
subsidiary under a stock option or other equity incentive plan or agreement approved by and in a
manner determined by the Board of Directors (including stock grants to officers, directors,
employees or consultants);



                              (IV) upon the closing of a public offering of the corporation’s securities pursuant to the
Securities Act in which all shares of Preferred Stock are automatically converted to Common Stock
pursuant to Section 5(d) hereof;



                              (V) by reason of a dividend, stock split, split-up or other distribution on shares of Common
Stock for which adjustment is otherwise made pursuant to this Section 5; or



                              (VI) Options or Convertible Securities, issued not primarily for equity financing purposes to
financial institutions, strategic partners or lessors in connection with commercial credit
arrangements, equipment financings, debt financings, strategic partnerships, research and
development partnerships, licensing or collaborative arrangements or similar transactions approved
by the Board of Directors.



                    (ii) No Adjustment of Conversion Price. No adjustment in the Series A Conversion
Price shall be made, unless the consideration per share (determined pursuant to Section 5(h)(v))
for an Additional Share of Common Stock issued or deemed to be issued by the corporation is less
than the Series A Conversion Price in effect on the date of, and immediately prior to, the issue of
such Additional Shares.



                    (iii) Issue of Securities Deemed Issue of Additional Shares of Common Stock. If the
corporation at any time or from time to time after the Original Issue Date shall issue any Options
or Convertible Securities or shall fix a record date for the determination of holders of any class
of securities entitled to receive any such Options or Convertible Securities, then the maximum
number of shares of Common Stock (as set forth in the instrument relating thereto without regard to
any provision contained therein designed to protect against dilution) issuable upon the exercise of
such Options or, in the case of Convertible Securities and Options therefor, the conversion or
exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock
issued as of the time of such issue or, in case such a record date shall have been fixed, as of the
close of business on such record date, provided that Additional Shares of Common Stock shall not be
deemed to have been issued unless the consideration per share (determined pursuant to Section
5(h)(v) hereof) of such Additional



- 8 -









 







Shares of Common Stock would be less than the Series A Conversion Price in effect on the date
of, and immediately prior to, the deemed issuance, or such record date, as the case may be,
provided further that in any such case in which Additional Shares of Common Stock are deemed to be
issued:



                         (A) No further adjustment in the Series A Conversion Price shall be made upon the subsequent
issue of Convertible Securities or shares of Common Stock upon the exercise of such Options or
conversion or exchange of such Convertible Securities;



                         (B) If such Options or Convertible Securities by their terms provide, with the passage of time
or otherwise, for any increase in the consideration payable to the corporation, or decrease in the
number of shares of Common Stock issuable upon the exercise, conversion or exchange thereof, the
Series A Conversion Price computed upon the original issue of such Options or Convertible
Securities (or upon the occurrence of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon any such increase or decrease becoming effective, be
recomputed to reflect such increase or decrease insofar as it affects such Options or the rights of
conversion or exchange under such Convertible Securities;



                         (C) Upon the expiration of any such Options or rights, the termination of any such rights to
convert or exchange or the expiration of any options or rights related to such convertible or
exchangeable securities, the Series A Conversion Price, to the extent in any way affected by or
computed using such options, rights or securities, shall be recomputed to reflect the issuance of
only the number of shares of Common Stock (and convertible or exchangeable securities which remain
in effect) actually issued upon the exercise of such options or rights, upon the conversion or
exchange of such securities or upon the exercise of the options or rights related to such
securities;



                         (D) No readjustment pursuant to clause (B) or (C) above shall have the effect of increasing
the Series A Conversion Price to an amount which exceeds the lower of (a) the Series A Conversion
Price on the original adjustment date and (b) the Series A Conversion Price that would have
resulted from any issuance of Additional Shares of Common Stock between the original adjustment
date and such readjustment date;



                         (E) In the case of any Options which expire by their terms not more than ninety (90) days
after the date of issue thereof, no adjustment of the Series A Conversion Price shall be made until
the expiration or exercise of all such Options issued on the same date, whereupon such adjustment
shall be made in the manner provided in clause (C) above; and



                         (F) If such record date shall have been fixed and such Options or Convertible Securities are
not issued on the date fixed therefore, the adjustments previously made in the Series A Conversion
Price which became effective on such record date shall be cancelled as of the close of business on
such record date, and thereafter the Series A Conversion Price shall be adjusted pursuant to this
subsection 5(h)(iii) as of the actual date of their issuance.



- 9 -









 





                    (iv) Adjustment of the Series A Conversion Price Upon Issuance of Additional Shares of
Common Stock. Subject to the provisions of Section 5(h)(ii) and 5(h)(v), in the event the
corporation shall at any time after the Original Issue Date issue Additional Shares of Common Stock
(including Additional Shares of Common Stock deemed to be issued pursuant to Section 5(h)(iii)),
but excluding shares issued as a dividend or distribution or upon a stock split or combination as
provided in Section 5(f)), without consideration or for a consideration per share less than the
Series A Conversion Price in effect on the date of and immediately prior to such issue, then and in
such event, the Series A Conversion Price shall be reduced concurrently with such issue to a price
(calculated to the nearest cent) determined by multiplying the Series A Conversion Price by a
fraction, (x) the numerator of which shall be the number of shares of Common Stock issuable upon
conversion of all shares of Preferred Stock outstanding immediately prior to such issue plus the
number of shares of Common Stock which the aggregate consideration received by the corporation for
the total number of Additional Shares of Common Stock so issued would purchase at the Series A
Conversion Price and (y) the denominator of which shall be the number of shares of Common Stock
issuable upon conversion of all shares of Preferred Stock outstanding immediately prior to such
issue plus the number of such Additional Shares of Common Stock so issued.



     Notwithstanding the foregoing, the Series A Conversion Price shall not be so reduced at such
time if the amount of such reduction would be an amount less than $.01, but any such amount shall
be carried forward and reduction with respect thereto made at the time of and together with any
subsequent reduction which, together with such amount and any other amount or amounts so carried
forward, shall aggregate $.01 or more.



                    (v) Determination of Consideration. For purposes of this Section 5(h), the
consideration received by the corporation for the issue of any Additional Shares of Common Stock
shall be computed as follows:



                         (A) Cash and Property. Such consideration shall:



                              (I) insofar as it consists of cash, be computed at the aggregate of cash received by the
corporation, excluding amounts paid or payable for accrued interest or accrued dividends;



                              (II) insofar as it consists of property other than cash, be computed at the fair market value
thereof at the time of such issue, as determined in good faith by the Board of Directors of the
corporation; and



                              (III) in the event Additional Shares of Common Stock are issued together with other shares or
securities or other assets of the corporation for consideration which covers both, be the
proportion of such consideration so received, computed as provided in clauses (I) and (II) above,
as determined in good faith by the Board of Directors of the corporation.



                         (B) Options and Convertible Securities. The consideration per share received by the
corporation for Additional Shares of Common Stock



- 10 -









 







deemed to have been issued pursuant to Section 5(h)(iii), relating to Options and Convertible
Securities, shall be determined by dividing:




	 	(x)	 	the total amount, if any,
received or receivable by the corporation as consideration for
the issue of such Options or Convertible Securities, plus the
minimum aggregate amount of additional consideration (as set
forth in the instruments relating thereto, without regard to any
provision contained therein designed to protect against
dilution) payable to the corporation upon the exercise of such
Options or the conversion or exchange of such Convertible
Securities, or in the case of Options for Convertible
Securities, the exercise of such Options for Convertible
Securities and the conversion or exchange of such Convertible
Securities, by
	 
	 	(y)	 	the maximum number of shares of
Common Stock (as set forth in the instruments relating thereto,
without regard to any provision contained therein designed to
protect against dilution) issuable upon the exercise of such
Options or the conversion or exchange of such Convertible
Securities.





               i. Certificates as to Adjustments. Upon the occurrence of each adjustment or
readjustment of the Series A Conversion Price pursuant to this Article 4(B)(5), the corporation at
its expense shall promptly compute such adjustment or readjustment in accordance with the terms
hereof and prepare and furnish to each holder of Preferred Stock a certificate executed by the
corporation’s President or Chief Financial Officer setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or readjustment is based. The
corporation shall, upon the written request at any time of any holder of Preferred Stock, furnish
or cause to be furnished to such holder a like certificate setting forth (i) such adjustments and
readjustments, (ii) the Conversion Price at the time in effect, and (iii) the number of shares of
Common Stock and the amount, if any, of other property which at the time would be received upon the
conversion of each series of Preferred Stock.



               j. Notices of Record Date. In the event that the corporation shall propose at any
time: (i) to declare any dividend or distribution upon its Common Stock, whether in cash, property,
stock or other securities, whether or not a regular cash dividend and whether or not out of
earnings or earned surplus; (ii) to offer for subscription pro rata to the holders of any class or
series of its stock any additional shares of stock of any class or series or other rights; (iii) to
effect any reclassification or recapitalization of its Common Stock outstanding involving a change
in the Common Stock; or (iv) to merge or consolidate with or into any other corporation, or sell,
lease or convey all or substantially all of its assets, or to grant an exclusive license or
otherwise transfer all or substantially all of its intellectual property or to liquidate, dissolve
or wind up;



     Then, in connection with each such event, the corporation shall send to the holders of
Preferred Stock: (1) at least twenty (20) days prior written notice of the date on which a record



- 11 -









 







shall be taken for such dividend, distribution or subscription rights (and specifying the date
on which the holders of Common Stock shall be entitled thereto) or for determining rights to vote,
if any, in respect of the matters referred to in (iii) and (iv) above; and (2) in the case of the
matters referred to in (iii) and (iv) above, at least twenty (20) days prior written notice of the
date when the same shall take place (and specifying the date on which the holders of Common Stock
shall be entitled to exchange their Common Stock for securities or other property deliverable upon
the occurrence of such event).



               k. Issue Taxes. The corporation shall pay any and all issue and other taxes that may
be payable in respect of any issue or delivery of shares of Common Stock on conversion of shares of
Preferred Stock pursuant hereto; provided, however, that the corporation shall not be obligated to
pay any transfer taxes resulting from any transfer requested by any holder in connection with any
such conversion.



               l. Reservation of Stock Issuable Upon Conversion. The corporation shall at all times
reserve and keep available out of its authorized but unissued shares of Common Stock, solely for
the purpose of effecting the conversion of the shares of Preferred Stock, such number of its shares
of Common Stock as shall from time to time be sufficient to effect the conversion of all
outstanding shares of Preferred Stock; and if at any time the number of authorized but unissued
shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding
shares of Preferred Stock, the corporation will take such corporate action as may, in the opinion
of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purpose, including, without limitation, engaging
in best efforts to obtain the requisite stockholder approval of any necessary amendment to this
Certificate of Incorporation.



               m. Fractional Shares. No fractional share shall be issued upon the conversion of any
share or shares of Preferred Stock. All shares of Common Stock (including fractions thereof)
issuable upon conversion of more than one share of a series of Preferred Stock by a holder thereof
shall be aggregated on a series basis for purposes of determining whether the conversion would
result in the issuance of any fractional share. If, after the aforementioned aggregation, the
conversion would result in the issuance of a fraction of a share of Common Stock, the corporation
shall, in lieu of issuing any fractional share, pay the holder otherwise entitled to such fraction
a sum in cash equal to the fair market value of such fraction on the date of conversion (as
determined in good faith by the Board of Directors of the corporation).



               n. Notices. Any notice required by the provisions of this Article 4(B)(5) to be given
to the holders of shares of Preferred Stock shall be deemed given if deposited in the United States
mail, postage prepaid, and addressed to each holder of record at his address appearing on the books
of the corporation.



          6. Protective Provisions.




               a. So long as at least Two Hundred Fifty Thousand (250,000) shares of Preferred Stock (as
adjusted for any stock dividends, combinations, splits or the like with respect to such shares)
remain outstanding, the corporation shall not, (whether by reorganization, recapitalization,
transfer of assets, consolidation, merger, amendment, dissolution, issuance or



- 12 -









 







sale of securities or any other action) without the vote or written consent by the holders of
at least a majority of the then outstanding shares of Preferred Stock, voting together as a single
class and on an as-converted to Common Stock basis:



                    (i) Authorize or issue, or obligate itself to issue, any other security (including any
security convertible into or exercisable for any equity security) having rights, preferences or
privileges senior to or on parity with any series of Preferred Stock;



                    (ii) Increase or decrease the authorized number of shares of Preferred Stock (or any series)
or Common Stock;



                    (iii) Take any action which would result in a liquidation, dissolution or winding up of the
corporation (including any transaction or series of related transactions deemed to be a
liquidation, dissolution or winding up if this corporation pursuant to the terms hereof;



                    (iv) Amend the corporation’s Certificate of Incorporation or Bylaws in any way, or take any
other action that would adversely affect the rights, preferences, privileges or restrictions of the
Preferred Stock or any series of Preferred Stock, whether by merger, consolidation, amendment or
otherwise;



                    (v) Pay or declare any dividend;



                    (vi) Take any action which would result in the taxation of holders of Preferred Stock under
Internal Revenue Code Section 305;



                    (vii) Redeem, purchase or otherwise acquire (or pay into or set aside for a sinking fund for
such purpose) any share or shares of Preferred Stock or Common Stock; provided, however, that this
restriction shall not apply to (i) the repurchase of shares of Common Stock approved by the Board
of Directors from employees, officers, directors, consultants or other persons performing services
for this corporation or any subsidiary pursuant to agreements under which this corporation has the
option to repurchase such shares at no greater than cost upon the termination of employment or
other provision of services to this corporation or (ii) the redemption of any share or shares of
Series A Preferred Stock in accordance with Article 4 (B)(3);



                    (viii) Cause the corporation to acquire, merge or consolidate with or into any corporation or
purchase all or substantially all of the assets, business or property of any corporation or permit
any subsidiary to do so;



                    (ix) Effect a change in the name of the corporation;



                    (x) Amend this Section 6



                    (xi) change the authorized number of directors of the Board of Directors;



- 13 -









 





                    (xii) encumber all or substantially all of the Corporation’s property or business;



               b. The corporation shall not (whether by any reorganization, recapitalization, transfer of
assets, consolidation, merger, amendment, dissolution, issuance or sale of securities or any other
action) without the vote or written consent by the holders of at least a majority of the then
outstanding shares of Series A Preferred Stock, voting together as a separate series and on an
as-converted to Common Stock basis: (i) increase or decrease the authorized number of shares of the
Series A Preferred Stock; or (ii) amend the corporation’s Certificate of Incorporation or Bylaws in
any way, or take any other action that would adversely affect the rights, preferences, privileges
or restrictions of the Series A Preferred Stock, whether by merger, consolidation, amendment or
otherwise.



          7. No Reissuance of Preferred Stock. No share or shares of Preferred Stock acquired
by the corporation by reason of purchase, conversion, redemption or otherwise shall be reissued,
and all such shares shall be cancelled, retired and eliminated from the shares which the
corporation shall be authorized to issue. This Certificate of Incorporation shall be appropriately
amended to effect the corresponding reduction in corporation’s capital stock




     C. Common Stock.



          1. Dividend Rights. Subject to the prior rights of the holders of all classes of
stock at the time outstanding having prior rights as to dividends, the holders of the Common Stock
shall be entitled to receive, when and as declared by the Board of Directors, out of any assets or
the corporation legally available therefor, such dividends as may be declared from time to time by
the Board of Directors.




          2. Liquidation Rights. Upon the liquidation, dissolution or winding up of the
corporation, the assets of the corporation shall be distributed as provided in Article 4(B)(2)
hereof.




          3. Redemption. The Common Stock shall not be redeemable.




          4. Voting Rights. The holder of each share of Common Stock shall have the right to
one vote, and shall be entitled to notice of any stockholders’ meeting in accordance with the
Bylaws of this corporation, and shall be entitled to vote upon such matters and in such manner as
may be provided by law.




ARTICLE 5




     A director of the corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director in accordance with and
to the fullest extent permitted by the Delaware General Corporation Law as the same exists or as
may hereafter be (including without limitation their heirs, executors and administrators) amended.



     The corporation shall indemnify each of the corporation’s directors and officers in each and
every situation where, under Section 145 of the Delaware General Corporation Law, as



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amended from time to time (“Section 145”), the corporation is permitted or empowered to make
such indemnification. The corporation may, in the sole discretion of the Board of Directors of the
corporation, indemnify any other person who may be indemnified pursuant to Section 145 to the
extent the Board of Directors deems advisable, as permitted by Section 145. The corporation shall
promptly make or cause to be made any determination required to be made pursuant to Section 145.



     Any repeal or modification of the foregoing provisions of this Article 5 by the stockholders
of the corporation shall not adversely affect any right or protection of a director of the
corporation existing at the time of such repeal or modification.



ARTICLE 6




     The corporation reserves the right to amend, alter, change or repeal any provision contained
in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred on stockholders herein are granted subject to this reservation.



ARTICLE 7




     Election of directors need not be by written ballot unless the Bylaws of the corporation shall
so provide. The right to cumulate votes in the election of Directors shall not exist with respect
to shares of stock of the corporation.



ARTICLE 8




     The number of directors which shall constitute the whole Board of Directors shall be fixed
from time to time by, or in the manner provided in, the Bylaws or in an amendment thereof duly
adopted by the Board of Directors or by the stockholders or by resolution of the Board of
Directors.



ARTICLE 9




     Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws
may provide. The books of the corporation may be kept (subject to any provision contained in the
statutes) outside the State of Delaware at such place or places as may be designated from time to
time by the Board of Directors or in the Bylaws of the corporation.



ARTICLE 10




     Except as otherwise provided in this Certificate of Incorporation, in furtherance and not in
limitation of the powers conferred by statute, the Board of Directors is expressly authorized to
make, repeal, alter, amend and rescind any or all of the Bylaws of the corporation.



ARTICLE 11




     The corporation expressly elects not to be governed by Section 203 of the Delaware General
Corporation Law.



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     IN WITNESS WHEREOF, this Amended and Restated Certificate of Incorporation which restates and
amends, the provisions of the Certificate of Incorporation of the corporation, and which has been
duly adopted in accordance with Sections 228, 242 and 245 of the General Corporation Law of the
State of Delaware and has been executed by its President this 20th day of January, 2004.



	 	 	 	 	 
	 	OREXIGEN THERAPEUTICS, INC.

 	 
	 	/s/ John F. Crowley
 	 
	 	John F. Crowley, 	 
	 	President and Chief Executive Officer 	 
	 




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APPENDIX B




OREXIGEN THERAPEUTICS, INC.




BY-LAWS




ARTICLE 1 — STOCKHOLDERS




     Section 1: Annual Meeting.



     An annual meeting of the stockholders, for the election of directors to succeed those whose
terms expire and for the transaction of such other business as may properly come before the
meeting, shall be held at such place, on such date, and at such time as the Board of Directors
shall each year fix, which date shall be within thirteen (13) months of the last annual meeting of
stockholders or, if no such meeting has been held, the date of Incorporation.



     Section 2: Special Meetings.



     Special meetings of the stockholders, for any purpose or purposes prescribed in the notice of
the meeting, may be called by the Board of Directors or the chief executive officer and shall be
held at such place, on such date, and at such time as they or he or she shall fix.



     Section 3: Notice of Meetings.



     Notice of the place, if any, date, and time of all meetings of the stockholders and the means
of remote communications, if any, by which stockholders and proxyholders may be deemed to be
present in person and vote at such meeting, shall be given, not less than ten (10) nor more than
sixty (60) days before the date on



 









 







which the meeting is to be held, to each stockholder entitled to vote at such meeting, except
as otherwise provided herein or required by law (meaning, here and hereinafter, as required from
time to time by the Delaware General Corporation Law or the Certificate of Incorporation of the
Corporation).



     When a meeting is adjourned to another time or place, notice need not be given of the
adjourned meeting if the time and place, if any, thereof, and the means of remote communications,
if any, by which stockholders and proxyholders may be deemed to be present in person and vote at
such adjourned meeting are announced at the meeting at which the adjournment is taken; provided,
however, that if the date of any adjourned meeting is more than thirty (30) days after the date for
which the meeting was originally noticed, or if a new record date is fixed for the adjourned
meeting, notice of the place, if any, date, and time of the adjourned meeting and the means of
remote communications, if any, by which stockholders and proxyholders may be deemed to be present
in person and vote at such adjourned meeting, shall be given in conformity herewith. At any
adjourned meeting, any business may be transacted which might have been transacted at the original
meeting.



     Section 4: Quorum.



     At any meeting of the stockholders, the holders of a majority of all of the shares of the
stock entitled to vote at the meeting, present in person or by proxy, shall constitute a quorum for
all purposes, unless or except to the extent that the presence of a larger number may be required
by law. Where a separate vote by a class or classes or series is required, a majority of the
shares of such class or classes or series present



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in person or represented by proxy shall constitute a quorum entitled to take action with
respect to that vote on that matter.



     If a quorum shall fail to attend any meeting, the chairman of the meeting or the holders of a
majority of the shares of stock entitled to vote who are present, in person or by proxy, may
adjourn the meeting to another place, if any, date, or time.



     Section 5: Organization.



     Such person as the Board of Directors may have designated or, in the absence of such a person,
the President of the Corporation or, in his or her absence, such person as may be chosen by the
holders of a majority of the shares entitled to vote who are present, in person or by proxy, shall
call to order any meeting of the stockholders and act as chairman of the meeting. In the absence
of the Secretary of the Corporation, the secretary of the meeting shall be such person as the
chairman of the meeting appoints.



     Section 6: Conduct of Business.



     The chairman of any meeting of stockholders shall determine the order of business and the
procedure at the meeting, including such regulation of the manner of voting and the conduct of
discussion as seem to him or her in order. The date and time of the opening and closing of the
polls for each matter upon which the stockholders will vote at the meeting shall be announced at
the meeting.



     Section 7: Proxies and Voting.



     At any meeting of the stockholders, every stockholder entitled to vote may vote in person or
by proxy authorized by an instrument in writing or by a transmission



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permitted by law filed in accordance with the procedure established for the meeting. Any
copy, facsimile telecommunication or other reliable reproduction of the writing or transmission
created pursuant to this paragraph may be substituted or used in lieu of the original writing or
transmission for any and all purposes for which the original writing or transmission could be used,
provided that such copy, facsimile telecommunication or other reproduction shall be a complete
reproduction of the entire original writing or transmission.



     The Corporation may, and to the extent required by law, shall, in advance of any meeting of
stockholders, appoint one or more inspectors to act at the meeting and make a written report
thereof. The Corporation may designate one or more alternate inspectors to replace any inspector
who fails to act. If no inspector or alternate is able to act at a meeting of stockholders, the
person presiding at the meeting may, and to the extent required by law, shall, appoint one or more
inspectors to act at the meeting. Each inspector, before entering upon the discharge of his or her
duties, shall take and sign an oath faithfully to execute the duties of inspector with strict
impartiality and according to the best of his or her ability. Every vote taken by ballots shall be
counted by an inspector or inspectors appointed by the chairman of the meeting.



     All elections shall be determined by a plurality of the votes cast, and except as otherwise
required by law, all other matters shall be determined by a majority of the votes cast
affirmatively or negatively.



     Section 8: Stock List.



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     A complete list of stockholders entitled to vote at any meeting of stockholders, arranged in
alphabetical order for each class of stock and showing the address of each such stockholder and the
number of shares registered in his or her name, shall be open to the examination of any such
stockholder for a period of at least ten (10) days prior to the meeting in the manner provided by
law.



     The stock list shall also be open to the examination of any stockholder during the whole time
of the meeting as provided by law. This list shall presumptively determine the identity of the
stockholders entitled to vote at the meeting and the number of shares held by each of them.



     Section 9: Consent of Stockholders in Lieu of Meeting.



     Any action required to be taken at any annual or special meeting of stockholders of the
Corporation, or any action which may be taken at any annual or special meeting of the stockholders,
may be taken without a meeting, without prior notice and without a vote, if a consent or consents
in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock
having not less than the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present and voted and shall
be delivered to the Corporation by delivery to its registered office in Delaware, its principal
place of business, or an officer or agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to the Corporation’s
registered office shall be made by hand or by certified or registered mail, return receipt
requested.



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     Every written consent shall bear the date of signature of each stockholder who signs the
consent and no written consent shall be effective to take the corporate action referred to therein
unless, within sixty (60) days of the date the earliest dated consent is delivered to the
Corporation, a written consent or consents signed by a sufficient number of holders to take action
are delivered to the Corporation in the manner prescribed in the first paragraph of this Section.
A telegram, cablegram or other electronic transmission consenting to an action to be taken and
transmitted by a stockholder or proxyholder, or by a person or persons authorized to act for a
stockholder or proxyholder, shall be deemed to be written, signed and dated for the purposes of
this Section to the extent permitted by law. Any such consent shall be delivered in accordance
with Section 228(d)(1) of the Delaware General Corporation Law.



     Any copy, facsimile or other reliable reproduction of a consent in writing may be substituted
or used in lieu of the original writing for any and all purposes for which the original writing
could be used, provided that such copy, facsimile or other reproduction shall be a complete
reproduction of the entire original writing.



ARTICLE II — BOARD OF DIRECTORS




     Section 1: Number and Term of Office.



     The number of directors who shall constitute the whole Board of Directors shall be such number
as the Board of Directors shall from time to time have designated, except that in the absence of
any such designation, such number shall be two (2). Each



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director shall be elected for a term of one year and until his or her successor is elected and
qualified, except as otherwise provided herein or required by law.



     Whenever the authorized number of directors is increased between annual meetings of the
stockholders, a majority of the directors then in office shall have the power to elect such new
directors for the balance of a term and until their successors are elected and qualified. Any
decrease in the authorized number of directors shall not become effective until the expiration of
the term of the directors then in office unless, at the time of such decrease, there shall be
vacancies on the board which are being eliminated by the decrease.



     Section 2: Vacancies.



     If the office of any director becomes vacant by reason of death, resignation,
disqualification, removal or other cause, a majority of the directors remaining in office, although
less than a quorum, may elect a successor for the unexpired term and until his or her successor is
elected and qualified.



     Section 3: Regular Meetings.



     Regular meetings of the Board of Directors shall be held at such place or places, on such date
or dates, and at such time or times as shall have been established by the Board of Directors and
publicized among all directors. A notice of each regular meeting shall not be required.



     Section 4: Special Meetings.



     Special meetings of the Board of Directors may be called by one-third (1/3) of the directors
then in office (rounded up to the nearest whole number) or by the



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President and shall be held at such place, on such date, and at such time as they or he or she
shall fix. Notice of the place, date, and time of each such special meeting shall be given to each
director by whom it is not waived by mailing written notice not less than five (5) days before the
meeting or by telegraphing or telexing or by facsimile or electronic transmission of the same not
less than twenty-four (24) hours before the meeting. Unless otherwise indicated in the notice
thereof, any and all business may be transacted at a special meeting.



     Section 5: Quorum.



     At any meeting of the Board of Directors, a majority of the total number of the whole Board of
Directors shall constitute a quorum for all purposes. If a quorum shall fail to attend any
meeting, a majority of those present may adjourn the meeting to another place, date, or time,
without further notice or waiver thereof.



     Section 6: Participation in Meetings By Conference Telephone.



     Members of the Board of Directors, or of any committee thereof, may participate in a meeting
of such Board of Directors or committee by means of conference telephone or other communications
equipment by means of which all persons participating in the meeting can hear each other and such
participation shall constitute presence in person at such meeting.



     Section 7: Conduct of Business.



     At any meeting of the Board of Directors, business shall be transacted in such order and
manner as the Board of Directors may from time to time determine, and all matters shall be
determined by the vote of a majority of the directors present, except



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as otherwise provided herein or required by law. Action may be taken by the Board of
Directors without a meeting if all members thereof consent thereto in writing or by electronic
transmission, and the writing or writings or electronic transmission or transmissions are filed
with the minutes of proceedings of the Board of Directors. Such filing shall be in paper form if
the minutes are maintained in paper form and shall be in electronic form if the minutes are
maintained in electronic form.



     Section 8: Compensation of Directors.



     Directors, as such, may receive, pursuant to resolution of the Board of Directors, fixed fees
and other compensation for their services as directors, including, without limitation, their
services as members of committees of the Board of Directors.



ARTICLE III — COMMITTEES




     Section 1: Committees of the Board of Directors.



     The Board of Directors may from time to time designate committees of the Board of Directors,
with such lawfully delegable powers and duties as it thereby confers, to serve at the pleasure of
the Board of Directors and shall, for those committees and any others provided for herein, elect a
director or directors to serve as the member or members, designating, if it desires, other
directors as alternate members who may replace any absent or disqualified member at any meeting of
the committee. In the absence or disqualification of any member of any committee and any alternate
member in his or her place, the member or members of the committee present at the meeting and not
disqualified from voting, whether or not he or she or they constitute a quorum,



- 9 -









 







may by unanimous vote appoint another member of the Board of Directors to act at the meeting
in the place of the absent or disqualified member.



     Section 2: Conduct of Business.



     Each committee may determine the procedural rules for meeting and conducting its business and
shall act in accordance therewith, except as otherwise provided herein or required by law.
Adequate provision shall be made for notice to members of all meetings; one-third (1/3) of the
members shall constitute a quorum unless the committee shall consist of one (1) or two (2) members,
in which event one (1) member shall constitute a quorum; and all matters shall be determined by a
majority vote of the members present. Action may be taken by any committee without a meeting if
all members thereof consent thereto in writing or by electronic transmission, and the writing or
writings or electronic transmission or transmissions are filed with the minutes of the proceedings
of such committee. Such filing shall be in paper form if the minutes are maintained in paper form
and shall be in electronic form if the minutes are maintained in electronic form.



ARTICLE IV — OFFICERS




     Section 1: Generally.



     The officers of the Corporation shall consist of a President, one or more Vice Presidents, a
Secretary, a Treasurer and such other officers as may from time to time be appointed by the Board
of Directors. Officers shall be elected by the Board of Directors, which shall consider that
subject at its first meeting after every annual meeting of stockholders. Each officer shall hold
office until his or her successor is



- 10 -









 







elected and qualified or until his or her earlier resignation or removal. Any number of
offices may be held by the same person.



     Section 2: President.



     The President shall be the chief executive officer of the Corporation. Subject to the
provisions of these By-laws and to the direction of the Board of Directors, he or she shall have
the responsibility for the general management and control of the business and affairs of the
Corporation and shall perform all duties and have all powers which are commonly incident to the
office of chief executive or which are delegated to him or her by the Board of Directors. He or
she shall have power to sign all stock certificates, contracts and other instruments of the
Corporation which are authorized and shall have general supervision and direction of all of the
other officers, employees and agents of the Corporation.



     Section 3: Vice President.



     Each Vice President shall have such powers and duties as may be delegated to him or her by the
Board of Directors. One (1) Vice President shall be designated by the Board of Directors to
perform the duties and exercise the powers of the President in the event of the President’s absence
or disability.



     Section 4: Treasurer.



     The Treasurer shall have the responsibility for maintaining the financial records of the
Corporation. He or she shall make such disbursements of the funds of the Corporation as are
authorized and shall render from time to time an account of all such transactions and of the
financial condition of the Corporation. The Treasurer shall



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also
perform such other duties as the Board of Directors may from time to
time prescribe.

Section 5: Secretary.



     The Secretary shall issue all authorized notices for, and shall keep minutes of, all meetings
of the stockholders and the Board of Directors. He or she shall have charge of the corporate books
and shall perform such other duties as the Board of Directors may from time to time prescribe.



     Section 6: Delegation of Authority.



     The Board of Directors may from time to time delegate the powers or duties of any officer to
any other officers or agents, notwithstanding any provision hereof.



     Section 7: Removal.



     Any officer of the Corporation may be removed at any time, with or without cause, by the Board
of Directors.



     Section 8: Action with Respect to Securities of Other Corporations.



     Unless otherwise directed by the Board of Directors, the President or any officer of the
Corporation authorized by the President shall have power to vote and otherwise act on behalf of the
Corporation, in person or by proxy, at any meeting of stockholders of or with respect to any action
of stockholders of any other corporation in which this Corporation may hold securities and
otherwise to exercise any and ail rights and powers which this Corporation may possess by reason of
its ownership of securities in such other corporation.



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ARTICLE V — STOCK




     Section 1: Certificates of Stock.



     Each stockholder shall be entitled to a certificate signed by, or in the name of the
Corporation by, the President or a Vice President, and by the Secretary or an Assistant Secretary,
or the Treasurer or an Assistant Treasurer, certifying the number of shares owned by him or her.
Any or all of the signatures on the certificate may be by facsimile.



     Section 2: Transfers of Stock.



     Transfers of stock shall be made only upon the transfer books of the Corporation kept at an
office of the Corporation or by transfer agents designated to transfer shares of the stock of the
Corporation. Except where a certificate is issued in accordance with Section 4 of Article V of
these By-laws, an outstanding certificate for the number of shares involved shall be surrendered
for cancellation before a new certificate is issued therefor.



     Section 3: Record Date.



     In order that the Corporation may determine the stockholders entitled to notice of or to vote
at any meeting of stockholders, or to receive payment of any dividend or other distribution or
allotment of any rights or to exercise any rights in respect of any change, conversion or exchange
of stock or for the purpose of any other lawful action, the Board of Directors may fix a record
date, which record date shall not precede the date on which the resolution fixing the record date
is adopted and which record date shall not be more than sixty (60) nor less than ten (10) days
before the date



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of any meeting of stockholders, nor more than sixty (60) days prior to the time for such other
action as hereinbefore described; provided, however, that if no record date is fixed by the Board
of Directors, the record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be at the close of business on the day next preceding the day on
which notice is given or, if notice is waived, at the close of business on the day next preceding
the day on which the meeting is held, and, for determining stockholders entitled to receive payment
of any dividend or other distribution or allotment of rights or to exercise any rights of change,
conversion or exchange of stock or for any other purpose, the record date shall be at the close of
business on the day on which the Board of Directors adopts a resolution relating thereto.



     A determination of stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.



     In order that the Corporation may determine the stockholders entitled to consent to corporate
action without a meeting, (including by telegram, cablegram or other electronic transmission as
permitted by law), the Board of Directors may fix a record date, which shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of Directors, and which
record date shall be not more than ten (10) days after the date upon which the resolution fixing
the record date is adopted. If no record date has been fixed by the Board of Directors and no
prior action by the Board of Directors is required by the Delaware General Corporation Law, the
record



- 14 -









 







date shall be the first date on which a consent setting forth the action taken or proposed to
be taken is delivered to the Corporation in the manner prescribed by Article I, Section 9 hereof.
If no record date has been fixed by the Board of Directors and prior action by the Board of
Directors is required by the Delaware General Corporation Law with respect to the proposed action
by consent of the stockholders without a meeting, the record date for determining stockholders
entitled to consent to corporate action without a meeting shall be at the close of business on the
day on which the Board of Directors adopts the resolution taking such prior action.



     Section 4: Lost, Stolen or Destroyed Certificates.



     In the event of the loss, theft or destruction of any certificate of stock, another may be
issued in its place pursuant to such regulations as the Board of Directors may establish concerning
proof of such loss, theft or destruction and concerning the giving of a satisfactory bond or bonds
of indemnity.



     Section 5: Regulations.



     The issue, transfer, conversion and registration of certificates of stock shall be governed by
such other regulations as the Board of Directors may establish.



ARTICLE VI — NOTICES




     Section 1: Notices.



     If mailed, notice to stockholders shall be deemed given when deposited in the mail, postage
prepaid, directed to the stockholder at such stockholder’s address as it appears on the records of
the Corporation. Without limiting the manner by which notice otherwise may be given effectively to
stockholders, any notice to stockholders



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may be given by electronic transmission in the manner provided in Section 232 of the Delaware
General Corporation Law.



     Section 2: Waivers.



     A written waiver of any notice, signed by a stockholder or director, or waiver by electronic
transmission by such person, whether given before or after the time of the event for which notice
is to be given, shall be deemed equivalent to the notice required to be given to such person.
Neither the business nor the purpose of any meeting need be specified in such a waiver.



ARTICLE VII — MISCELLANEOUS




     Section 1: Facsimile Signatures.



     In addition to the provisions for use of facsimile signatures elsewhere specifically
authorized in these By-laws, facsimile signatures of any officer or officers of the Corporation may
be used whenever and as authorized by the Board of Directors or a committee thereof.



     Section 2: Corporate Seal.



     The Board of Directors may provide a suitable seal, containing the name of the Corporation,
which seal shall be in the charge of the Secretary. If and when so directed by the Board of
Directors or a committee thereof, duplicates of the seal may be kept and used by the Treasurer or
by an Assistant Secretary or Assistant Treasurer.



     Section 3: Reliance upon Books, Reports and Records.



     Each director, each member of any committee designated by the Board of Directors, and each
officer of the Corporation shall, in the performance of his or her



- 16 -









 







duties, be fully protected in relying in good faith upon the books of account or other records
of the Corporation and upon such information, opinions, reports or statements presented to the
Corporation by any of its officers or employees, or committees of the Board of Directors so
designated, or by any other person as to matters which such director or committee member reasonably
believes are within such other person’s professional or expert competence and who has been selected
with reasonable care by or on behalf of the Corporation.



     Section 4: Fiscal Year.



     The fiscal year of the Corporation shall be as fixed by the Board of Directors.



     Section 5: Time Periods.



     In applying any provision of these By-laws which requires that an act be done or not be done a
specified number of days prior to an event or that an act be done during a period of a specified
number of days prior to an event, calendar days shall be used, the day of the doing of the act
shall be excluded, and the day of the event shall be included.



ARTICLE VIII — INDEMNIFICATION OF DIRECTORS AND OFFICERS




     Section 1: Right to Indemnification.



     Each person who was or is made a party or is threatened to be made a party to or is otherwise
involved in any action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a “proceeding”), by reason of the fact that he or she is or was a
director or an officer of the Corporation or is or was serving at the



- 17 -









 







request of the Corporation as a director, officer, or trustee of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with respect to an
employee benefit plan (hereinafter an “indemnitee”), whether the basis of such proceeding is
alleged action in an official capacity as a director, officer or trustee, or in any other capacity
while serving as a director, officer or trustee, shall be indemnified and held harmless by the
Corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same
exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that
such amendment permits the Corporation to provide broader indemnification rights than such law
permitted the Corporation to provide prior to such amendment), against all expense, liability and
loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid
in settlement) reasonably incurred or suffered by such indemnitee in connection therewith;
provided, however, that, except as provided in Section 3 of this ARTICLE VIII with respect to
proceedings to enforce rights to indemnification, the Corporation shall indemnify any such
indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if
such proceeding (or part thereof) was authorized by the Board of Directors of the Corporation.



     Section 2: Right to Advancement of Expenses.



     In addition to the right to indemnification conferred in Section 1 of this ARTICLE VIII, an
indemnitee shall also have the right to be paid by the Corporation the expenses (including
attorney’s fees) incurred in defending any such proceeding in advance of its final disposition
(hereinafter an “advancement of expenses”); provided,



- 18 -









 







however, that, if the Delaware General Corporation Law requires, an advancement of expenses
incurred by an indemnitee in his or her capacity as a director or officer (and not in any other
capacity in which service was or is rendered by such indemnitee, including, without limitation,
service to an employee benefit plan) shall be made only upon delivery to the Corporation of an
undertaking (hereinafter an “undertaking”), by or on behalf of such indemnitee, to repay all
amounts so advanced if it shall ultimately be determined by final judicial decision from which
there is no further right to appeal (hereinafter a “final adjudication”) that such indemnitee is
not entitled to be indemnified for such expenses under this Section 2 or otherwise.



     Section 3: Right of Indemnitee to Bring Suit.



     If a claim under Section 1 or 2 of this ARTICLE VIII is not paid in full by the Corporation
within sixty (60) days after a written claim has been received by the Corporation, except in the
case of a claim for an advancement of expenses, in which case the applicable period shall be twenty
(20) days, the indemnitee may at any time thereafter bring suit against the Corporation to recover
the unpaid amount of the claim. If successful in whole or in part in any such suit, or in a suit
brought by the Corporation to recover an advancement of expenses pursuant to the terms of an
undertaking, the indemnitee shall be entitled to be paid also the expense of prosecuting or
defending such suit. In (i) any suit brought by the indemnitee to enforce a right to
indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to an
advancement of expenses) it shall be a defense that, and (ii) in any suit brought by the
Corporation to recover an advancement of expenses pursuant to the terms of an



- 19 -









 







undertaking, the Corporation shall be entitled to recover such expenses upon a final
adjudication that, the indemnitee has not met any applicable standard for indemnification set forth
in the Delaware General Corporation Law. Neither the failure of the Corporation (including its
directors who are not parties to such action, a committee of such directors, independent legal
counsel, or its stockholders) to have made a determination prior to the commencement of such suit
that indemnification of the indemnitee is proper in the circumstances because the indemnitee has
met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an
actual determination by the Corporation (including its directors who are not parties to such
action, a committee of such directors, independent legal counsel, or its stockholders) that the
indemnitee has not met such applicable standard of conduct, shall create a presumption that the
indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by
the indemnitee, be a defense to such suit. In any suit brought by the indemnitee to enforce a
right to indemnification or to an advancement of expenses hereunder, or brought by the Corporation
to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of
proving that the indemnitee is not entitled to be indemnified, or to such advancement of expenses,
under this ARTICLE VIII or otherwise shall be on the Corporation.



     Section 4: Non-Exclusivity of Rights.



     The rights to indemnification and to the advancement of expenses conferred in this ARTICLE
VIII shall not be exclusive of any other right which any person may have or hereafter acquire under
any statute, the Corporation’s Certificate of



- 20 -









 







Incorporation, By-laws, agreement, vote of stockholders or disinterested directors or
otherwise.



     Section 5: Insurance.



     The Corporation may maintain insurance, at its expense, to protect itself and any director,
officer, employee or agent of the Corporation or another corporation, partnership, joint venture,
trust or other enterprise against any expense, liability or loss, whether or not the Corporation
would have the power to indemnify such person against such expense, liability or loss under the
Delaware General Corporation Law.



     Section 6: Indemnification of Employees and Agents of the Corporation.



     The Corporation may, to the extent authorized from time to time by the Board of Directors,
grant rights to indemnification and to the advancement of expenses to any employee or agent of the
Corporation to the fullest extent of the provisions of this Article with respect to the
indemnification and advancement of expenses of directors and officers of the Corporation.



     Section 7: Nature of Rights.



     The rights conferred upon indemnitees in this ARTICLE VIII shall be contract rights and such
rights shall continue as to an indemnitee who has ceased to be a director, officer or trustee and
shall inure to the benefit of the indemnitee’s heirs, executors and administrators. Any amendment,
alteration or repeal of this ARTICLE VIII that adversely affects any right of an indemnitee or its
successors shall be prospective only and shall not limit or eliminate any such right with respect
to any



- 21 -









 







proceeding involving any occurrence or alleged occurrence of any action or omission to act
that took place prior to such amendment, alteration or repeal.



ARTICLE IX — AMENDMENTS




     These By-laws may be amended or repealed by the Board of Directors at any meeting or by the
stockholders at any meeting.




- 22 -









 





September 15, 2003




          The Company’s Bylaws were amended on September 15, 2003 by the adoption of the following
resolution by the Board of Directors:





	 	 	RESOLVED, that the first sentence of Section 1 of the By-laws of the Company be, and hereby
is, amended to read in its entirety as follows:
	 
	 	 	“The number of directors who shall constitute the whole Board of Directors shall be such
number as the Board of Directors shall from time to time have designated, except that in the
absence of any such designation, such number shall be three (3).”

















 





January 14, 2004




          The Company’s Bylaws were amended on January 13, 2004 by the adoption of the following
resolution by the Board of Directors:





RESOLVED, that pursuant to Article IX of the By-laws of the Corporation (the
“By-laws”), Article I, Section 2 of the By-laws is hereby replaced in its entirety
to read as follows:




     “Section 2: Special Meetings.




     Special meetings of the stockholders, for any purpose or purposes, unless
otherwise prescribed by statute or by the Corporation’s Certificate of
Incorporation, may be called by the president and shall be called by the president
or secretary at the request in writing of a majority of the Board of Directors, or
at the request in writing of stockholders owning at least ten percent (10%) in
amount of the entire capital stock of the Corporation issued and outstanding and
entitled to vote, and shall be held at such place, on such date, and at such time as
they or he or she shall fix. Such request shall state the purpose or purposes of
the proposed meeting.”




     RESOLVED, FURTHER, that pursuant to Article IX of the By-laws, the first sentence of
Article II, Section 1 of the By-laws is hereby replaced in its entirety to read as
follows:




     “The number of directors who shall constitute the whole Board of Directors
shall be such number as the Board of Directors shall from time to time have
designated, except that in the absence of any such designation, such number shall be
five (5).”




     RESOLVED, FURTHER, that pursuant to Article IX of the By-laws, the first sentence of
Article II, Section 2 of the By-laws is hereby replaced in its entirety to read as
follows:




     “Section 2: Vacancies.




     Unless otherwise provided for in the Corporation’s Certificate of
Incorporation, if the office of any director becomes vacant by reason of death,
resignation, disqualification, removal or other cause, a majority of the directors
remaining in office, although less than a quorum, may elect a successor for the
unexpired term until his or her successor is elected and qualified.”




     RESOLVED, FURTHER, that pursuant to Article IX of the By-laws, Article II, Section 4
of the By-laws is hereby replaced in its entirety to read as follows:




     “Section 4: Special Meetings.



 









 






     Special meetings of the Board of Directors may be called from time to time by
two (2) directors then in office (regardless of the number of directors constituting
the whole Board of Directors) or by the President and shall be held at such place,
on such date, and at such time as they or he or she shall fix. Notice of the place,
date and time of each such special meeting shall be given to each director by whom
it is not waived by mailing written notice not less than five (5) days before the
meeting or be telegraphing or telexing or by facsimile or electronic transmission of
the same not less than twenty-four (24) hours before the meeting. Unless otherwise
indicated in the notice thereof, any and all business may be transacted at a special
meeting.”



* * *





 










 





APPENDIX C




COMMERCIALIZATION SCHEDULE




The dates for meeting the milestones set forth in Section 3.06(d) shall be as follows:





	 	•	 	Section 3.06(d)(i): [***]
	 
	 	•	 	Section 3.06(d)(ii): [***]
	 
	 	•	 	Section 3.06(d)(iii): [***]







 




			
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APPENDIX D




ROYALTY REPORT FORM (SAMPLE)




(attached)




 









 





APPENDIX D




[***] royalty report




for
period beginning                      and ending                     




[***]




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
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	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]	 	[***]
	 
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APPENDIX E




COMMON STOCK PURCHASE AGREEMENT




(attached)





 









 





OREXIGEN THERAPEUTICS , INC.




COMMON STOCK PURCHASE AGREEMENT




          THIS COMMON STOCK PURCHASE AGREEMENT (“Agreement”) is made and entered into as of March           ,
2004, by and between OREXIGEN THERAPEUTICS, INC., a Delaware corporation (the “Company”), and DUKE
UNIVERSITY (“Duke”).




RECITALS




          WHEREAS, the Company and Duke are currently herewith entering into that certain License
Agreement (the “License Agreement”) dated as of                     , 2004, for the license of certain
technology and intellectual property (the “Licensed Technology”) more specifically described in the
License Agreement in exchange for the issuance of shares of the common stock of the Company; and




          NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby
acknowledged by the Company and Duke, and the mutual covenants, agreements and warranties contained
herein, the parties hereto agree as follows:



1. Sale of the Common Stock. Concurrently herewith, the Company is issuing to Duke an
aggregate of                      (          ) shares of the Company’s Common Stock, par value $.001 per
share (the “Shares”), in consideration for the license to the Company of the Licensed Technology
pursuant to the License Agreement and is delivering to each of Duke a stock certificate registered
in such name evidencing the number of shares of the Shares being acquired by Duke as more
specifically described on the signature page hereto, the receipt of which stock certificates and
the execution and delivery by the Company of the License Agreement are hereby acknowledged by each
of Duke. Concurrently herewith, Duke has executed and delivered to the Company the License
Agreement, receipt of which is hereby acknowledged by the Company.



2. Representations and Warranties of the Company. The Company hereby represents and
warrants to Duke as of the date of this Agreement as follows:




     2.1 Organization; Good Standing; Qualification. The Company is a corporation duly
organized, validly existing, and in good standing under the laws of the State of Delaware and has
all requisite corporate power and authority to execute and deliver this Agreement, to issue and
sell the Shares and to carry out the provisions of this Agreement.



     2.2 Authorization; Enforceability. All corporate action on the part of the Company,
its officers, directors and stockholders necessary for the authorization, execution and delivery of
this Agreement, the performance of all obligations of the 


 









 







Company hereunder, and the sale and
delivery of the Shares being sold hereunder, has been taken and this Agreement, when executed and
delivered, will constitute a valid and legally binding obligation of the Company, enforceable in
accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws of general application affecting creditors’ rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief, or other equitable
remedies, and (iii) as to rights to indemnity and contribution that may be limited by applicable
laws.



     2.3 Valid Issuance of Common Stock. The Shares that are being purchased by Duke
hereunder, when issued, sold and delivered in accordance with the terms of this Agreement for the
consideration expressed herein, will be duly and validly issued, fully paid, and non-assessable.


3. Representations and Warranties of Duke. Duke hereby represents and warrants to the
Company as of the date of this Agreement as follows:




     3.1 Registration. Duke understands that the Shares have not been registered under the
Securities Act of 1993, as amended (the “Securities Act”) or qualified under California securities
laws and are being offered and sold pursuant to exemptions from registration contained in the
Securities Act and exemptions froth the qualification requirements under California securities laws
based on the representations of Duke contained herein.



     3.2 No Solicitation. Duke knows of no public solicitation or advertisement of an
offer in connection with the proposed sale and issuance of the Common Stock.



     3.3 Purchased Entirely For Own Account. Duke is acquiring the Shares for investment
purposes only and not as a nominee and not with a view to or for resale in connection with any
distribution of any of the Shares. Duke understands that it must bear the economic risk of this
investment indefinitely unless the shares of Common Stock acquired by it are registered for resale
pursuant to the Securities Act, and registered or qualified under applicable state securities laws,
or an exemption from such registration and/or qualification requirements is available, and that the
Company has no present intention of registering or qualifying any of the Shares for resale. Duke
further understands that there is no assurance that any exemption from the Securities Act or
applicable state securities laws will be available or, if available, that such exemption(s) will
allow Duke to dispose of or otherwise transfer any or all of the Shares under the circumstances, in
the amounts or at such times Duke might propose.



     3.4 Investment Experience. Duke’s business or financial experience, or that of Duke’s
professional advisor, Duke has the capacity to protect Duke’s own interests in connection with the
purchase of the Common Stock hereunder and has 



- 2 -









 





the ability to bear the economic risk (including the
risk of total loss) of Duke’s investment.


     3.5 Rule 144. Duke acknowledges that it is aware of Rule 144 promulgated under the
Securities Act, which permits limited public resales of securities acquired in a non-public
offering, subject to the satisfaction of certain conditions. Duke understands that under Rule 144,
except as otherwise provided by section (k) of that Rule, the conditions include, among other
things: the availability of certain current public information about the issuer, the resale occurring not less than one year after the party has
purchased and paid for the securities to be sold and limitations on the amount of securities to be
sold and the manner of sale. Duke understands that the current information referred to above is
not now available and the Company has no present plans to make such information available. Duke
acknowledges and understands that the Company may not be satisfying the current public information
requirement of Rule 144 at the time Duke desires to sell any of the Shares and that, in such event,
Duke may be precluded from selling such stock under such Rule, even if the one-year minimum holding
period of such Rule has been satisfied. Duke acknowledges that in the event all of the
requirements of Rule 144 are not met, then registration under the Securities Act, compliance with
the Securities and Exchange Commission’s (the “Commission”) Regulation A or another exemption from
registration will be required for any disposition of the Common Stock. Duke understands that
although Rule 144 is not exclusive, the Commission has expressed its opinion that persons proposing
to sell restricted securities received in a private offering other than in a registered offering or
pursuant to Rule 144 will have a substantial burden of proof in establishing that an exemption from
registration is available for such offers or sales and that such persons and the brokers who
participate in the transactions do so at their own risk.



     3.6 Accredited Investor. Duke is an “accredited investor” within the meaning of the
Commission’s Rule 501 of Regulation D promulgated under the Securities Act.


4. General Provisions.




     4.1 Registration Rights and Other Stockholder Agreements. The Company agrees to use
its best efforts to grant customary “piggyback” registration rights to Duke if, when and upon the
same terms as such rights may be granted to the currently existing holders of the Common Stock of
the Company (the “Founders”) in their capacity as holders of Common Stock. Duke agrees to be and
to become subject to such contractual restrictions on the transfer of the Shares and to such rights
of first refusal upon any transfer thereof if, when and upon the same terms as the Founders (in
their capacity as holders of Common Stock) may agree to become subject.





- 3 -









 





     4.2 Entire Agreement. This Agreement constitutes the entire agreement between the
Company and Duke with respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements, representations and understandings of the Company and Duke concerning
such subject matter.



     4.3 Notices. Any notice sent hereunder shall be deemed given as of the date it is
served personally upon the party for whom intended, or as of the date it is mailed postage prepaid
by certified or registered mail, return receipt requested, to the address of the party for whom
intended as hereinafter set forth, or as otherwise designated by such party in writing:



	 	 	 	 	 	 	 
	 

	 	To the Company at:
	 	Orexigen Therapeutics, Inc.	 	 
	 

	 	 	 	One Palmer Square, Suite 515	 	 
	 

	 	 	 	Princeton, NJ 08542	 	 







	 	 	 	 	 	 	 
	 

	 	To Duke at:
	 	Duke University	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 






     4.4 Governing Law. The parties hereto agree that this Agreement has been executed in
the State of California and shall be governed by the laws thereof.



     4.5 Headings. The headings of the sections of this Agreement are included for
purposes of convenience only and shall not affect the construction or interpretation of any of the
provisions in this Agreement.



     4.6 Severability. In the event that any provisions of this Agreement or any part of
any provision of this Agreement shall be determined to be illegal, invalid or unenforceable, such
illegality, invalidity or unenforceability shall not affect the legality, validity or
enforceability of any other provision or part hereof.



     4.7 Attorneys’ Fees. If any legal action or other proceeding is brought for the
enforcement of this Agreement, or because of an alleged dispute, breach, default or
misrepresentation in connection with any of the provisions of this Agreement, the successful or
prevailing party shall be entitled to recover from the other party or parties all costs and
expenses of suit, including reasonable attorneys’ fees, in addition to any other relief to which
such party may be entitled.



     4.8 Counterparts. This Agreement may be executed in counterparts, each of which shall
be an original, but all of which together shall constitute one instrument.



[THE REST OF THIS PAGE INTENTIONALLY LEFT BLANK.]




- 4 -









 





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




	 	 	 	 	 	 	 	 	 	 	 	 	 
	“COMPANY”	 	 	 	“Duke”	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	OREXIGEN THERAPEUTICS, INC.	 	 	 	DUKE UNIVERSITY	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	John F. Crowley	 	 	 	 	 	 	 	 	 	 
	 

	 	President and Chief Executive Officer
	 	 	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 

	 	 







- 5 -









 





APPENDIX F




RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT




(attached)




 









 





OREXIGEN THERAPEUTICS, INC.




RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT




     This Right of First Refusal and Co-Sale Agreement (the “Agreement”) is made and
entered into as of January 20, 2004 by and among Michael Cowley, Ph.D., John F. Crowley, Kishore
Gadde, M.D., Ranga Krishnan, M.D., MPAJ, LLC and Eckard Weber, M.D. (each referred to herein as a
“Common Stockholder” or collectively, the “Common Stockholders”), Orexigen
Therapeutics, Inc., a Delaware corporation (the “Company”), and the holders of Series A
Preferred Stock (the “Series A Preferred Stock”) of the Company listed on Exhibit A to this
Agreement (each an “Investor”).



RECITALS




     A. The Company and the Investors have entered into a Series A Preferred Stock Purchase
Agreement (the “Purchase Agreement”) dated of even date herewith pursuant to which the
Company desires to sell to the Investors and the Investors desire to purchase from the Company
shares of the Company’s Series A Preferred Stock.



     B. A condition to the Investors’ obligations under the Purchase Agreement is that the Company,
the Common Stockholders and the Investors enter into this Agreement in order to provide the
Investors the opportunity to purchase and/or participate, upon the terms and conditions set forth
in this Agreement, in subsequent sales by the Common Stockholders of shares of the Company’s Common
Stock.



     C. The Company and the Common Stockholders desire to induce the Investors to purchase shares
of Series A Preferred Stock pursuant to the Purchase Agreement by agreeing to the terms and
conditions set forth below.



AGREEMENT




     The parties agree as follows:



     1. Rights of First Refusal.



          1.1 No Common Stockholder shall, whether voluntarily or by operation of law, sell, transfer,
pledge, hypothecate, gift, bequest, devise, assign or otherwise dispose of (collectively.
“transfer”) any shares of the Company’s Common Stock, whether now owned or hereafter acquired by
such Common Stockholder (the “Shares”), except for “Permitted Transfers” (as defined in
Subsection 1.5 below) or pursuant to this Section 1 or Section 2 below.




          1.2 In the event that a Common Stockholder wishes to transfer Shares (a “Selling
Stockholder”), other than as a Permitted Transfer, such Selling Stockholder shall deliver a
written notice (the “Sale Notice”) to the Company and to each of the Investors, disclosing
in reasonable detail the identity of the proposed transferees, the number of Shares to be
transferred (the “Offered Shares”), and the terms and conditions of the proposed transfer,
including, without limitation, the number of Shares proposed to be sold or transferred, the nature
of such sale or transfer, the consideration to be paid, and the name and address of each
prospective purchaser or

 









 








transferee. To the extent that the Selling Stockholder’s Offered Shares are subject to the
Company’s right of first refusal pursuant to a stock purchase agreement or stock restriction
agreement, the Company shall have a period of 30 days from the date of delivery of the Sale Notice
to give written notice (the “Company Notice”) to the Selling Stockholder of its decision
whether or not to purchase some or all of the Offered Shares. The Company shall simultaneously
deliver a copy of the Company Notice to each of the Investors.




          1.3 If the Company elects not to purchase all of the Offered Shares, the Investors shall have
the option, for 30 days following their receipt of the Company Notice, to purchase some or all of
the remaining Offered Shares at the price and upon the terms set forth in the Sale Notice. Each
Investor shall have the right to purchase its pro-rata share of the Offered Shares, or remaining
Offered Shares, as the case may be, which pro-rata share is based upon the Conversion Shares (as
defined below) held by such Investor relative to the aggregate number of Conversion Shares held by
all Investors. If any Investors do not exercise their right of first refusal, the Shares that
would otherwise be allocated to such non-exercising Investors shall be allocated to each exercising
Investor on a pro-rata basis (based upon the number of Conversion Shares held by such Investor
relative to the aggregate number of Conversion Shares held by all such exercising Investors),
provided that the Right of First Refusal must be exercised, if at all, prior to the expiration of
such 30-day period. In the event an Investor elects to purchase some or all of the remaining
Offered Shares, it shall give written notice of its election to the Company and the Selling
Stockholder within such 30-day period, and the settlement of the sale of such Offered Shares shall
be made as provided below in Subsection 1.4 of this Section 1.




          1.4 The closing of the purchase and sale of the Offered Shares shall take place on a date
agreed upon by the Selling Stockholder and purchaser or purchasers of the Offered Shares, but in
any event within 60 days following the date of the Company Notice, at the principal office of the
Company on the terms and conditions set forth in the Sale Notice.




          1.5 For purposes of this Section 1, a “Permitted Transfer” shall mean




               (a) Any repurchase of Common Stock by the Company pursuant to a right of repurchase upon the
termination of the transferring Common Stockholder’s employment or consulting relationship with the
Company;



               (b) Any transfer to the transferring Common Stockholder’s ancestor, descendant, sibling or
spouse, a limited liability company of which the only members are the stockholder and/or members of
his immediate family or to a trust for their benefit or a partnership that is owned entirely by the
transferring Common Stockholder’s ancestors, descendants, siblings or spouse;



               (c) Any sale or transfer by a Common Stockholder of up to 1% of the total number of shares of
Common Stock held by such Common Stockholder on the date of this Agreement;


provided, in each case, that (either than clause (a) above), that the transferee or donee
(each a “Permitted Transferee”) shall furnish the Company and the Investors with a written
agreement to be bound by and comply with all provisions of this Agreement.




- 2 -









 








          1.6 No Adverse Effect. The exercise or non-exercise of the rights of the Investor
hereunder to participate in one or more transfers of Shares made by a Selling Stockholder shall not
adversely affect their rights of first refusal with respect to subsequent transfers of Shares by a
Selling Stockholder.




     2. Co-Sale Right. To the extent that the right of first refusal set forth in Section
1 is not fully exercised by either the Company or the Investors, each Investor who holds,
collectively with its Affiliates (as defined below), at least 500,000 shares of Series A Preferred
Stock (as adjusted for stock splits, stock dividends, recapitalizations and the like) (a “Major
Investor”) shall have the right (the “Co-Sale Right”), exercisable upon written notice to the
Company within 20 days after the expiration of the right of first refusal set forth in Section 1 to
participate in the Selling Stockholder’s transfer of the Offered Shares pursuant to the specified
terms and conditions of the Sale Notice. To the extent a Major Investor exercises such Co-Sale
Right in accordance with the terms and conditions set forth below, the number of Shares which the
Selling Stockholder may transfer shall be correspondingly reduced. The Co-Sale Right of each
Investor shall be subject to the following terms and conditions:



               (a) Calculation of Shares. Each Major Investor may sell all or any part of that
number of shares of stock (including Preferred Stock, Common Stock and Common Stock issuable upon
conversion of Preferred Stock or any stock received in connection with any stock dividend, stock
split or other reclassification of any such stock) (the “Conversion Shares”) equal to the product
obtained by multiplying (i) the aggregate number of Shares covered by the Sale Notice by (ii) a
fraction, the numerator of which is the number of Conversion Shares at the time owned by such Major
Investor and the denominator of which is the sum of (A) the total number of Conversion Shares at
the time owned by all Major Investors participating in such sale plus (B) the total number of
Shares at the time owned by the Selling Stockholder.



               (b) Delivery of Certificates. Each Major Investor may effect its participation in the
transfer by delivering to the Selling Stockholder for transfer to the prospective purchaser one or
more certificates, properly endorsed for transfer, which represent the Conversion Shares which such
Major Investor elects to transfer.



               (c) Transfer. The stock certificate or certificates which the Major Investor delivers
to the Selling Stockholder pursuant to Section 2 shall be delivered by the Selling Stockholder to
the prospective purchaser in consummation of the transfer pursuant to the terms and conditions
specified in the Sale Notice, and the Selling Stockholder shall promptly thereafter remit to such
Major Investor that portion of the transfer proceeds to which such Major Investor is entitled by
reason of its participation in such transfer. To the extent that any prospective purchaser or
purchasers prohibits such assignment or otherwise refuses to purchase Conversion Shares from a
Major Investor exercising its Co-Sale Right hereunder, the Selling Stockholder or Selling
Stockholders shall not transfer to such prospective purchaser or purchasers any Shares unless and
until, simultaneously with such transfer, the Selling Stockholder or Selling Stockholders shall
purchase such Conversion Shares from such Major Investor for the same consideration and on the same
terms and conditions as the proposed transfer described in the Sale Notice.



- 3 -









 





               (d) No Adverse Effect. The exercise or non-exercise of the rights of the Major
Investor hereunder to participate in one or more transfers of Shares made by a Selling Stockholder
shall not adversely affect their rights to participate in subsequent transfers of Shares by a
Selling Stockholder.



     3. Assignment of Rights. The rights of the Investors set forth in this Agreement may
be assigned (but only with all related obligations) only to a transferee or assignee (i) of at
least 25% of an Investor’s Conversion Shares (or all of such Investor’s Conversion Shares if such
Investor holds less than 25% of such amount), (ii) that is a subsidiary, parent, partner, limited
partner, retired partner, member, retired member or stockholder of an Investor, (iii) that is an
affiliated fund or entity of the Investor, which means with respect to a limited liability company
or a limited liability partnership, a fund or entity managed by the same manager or managing member
or general partner or management company or by an entity controlling, controlled by, or under
common control with such manager or managing member or general partner or management company (such
a fund or entity, an “Affiliated Fund”), (iv) who is an Investor’s child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law (such a relation, a Holder’s “Immediate Family
Member”, which term shall include adoptive relationships), or (v) that is a trust for the benefit
of an individual Investor or such Investor’s Immediate Family Member (collectively, the persons and
entities listed in Section 3 subparagraph’s (ii), (iii), (iv) and (v) are referred to herein as an
Investor’s “Affiliates”), provided that (a) the Company is, within a reasonable time after such
transfer, furnished with written notice of the name and address of such transferee or assignee and
the securities with respect to which such rights are being assigned, and (b) such transferee agrees
in writing to be bound by the provisions of this Agreement, and (c) such transferee is not an
actual or potential competitor of the Company, as determined in good faith by the Company’s Board
of Directors.



     4. Prohibited Transfers.



               (a) In the event a Common Stockholder should transfer any Shares in contravention of the right
of first refusal or co-sale rights of the Company and the Investors under Section 1 and Section 2
(a “Prohibited Transfer”), the Investors, in addition to such other remedies as may be available at
law, in equity or hereunder, shall have the put option provided below and such Common Stockholder
(and its transferee) shall be bound by the applicable provisions of such option.



               (b) In the event of a Prohibited Transfer, each Investor shall have the right to sell to such
Common Stockholder the type and number of shares of Common Stock or Preferred Stock equal to the
number of shares each Investor would have been entitled to transfer to the third-party
transferee(s) under Section 2(a) hereof (assuming if necessary such Investor were a Major Investor)
had the Prohibited Transfer been effected pursuant to and in compliance with the terms hereof
(assuming the Company had not exercised its right of first refusal and no Investor had elected to
exercise its right of first refusal). Such sale shall be made on the following terms and
conditions:



                    (1) The price per share at which the shares are to be sold to such Common Stockholder shall be
equal to the price per share paid by the third-party



- 4 -









 







transferee(s) to such Common Stockholder in the Prohibited Transfer. The Common Stockholder
shall also reimburse each Investor for any and all fees and expenses, including legal fees and
expenses, incurred pursuant to the exercise or the attempted exercise of the Investor’s rights
under Section 1 and Section 2.



               (2) Within 90 days after the later of the dates on which the Investor (i) received written
notice of the Prohibited Transfer or (ii) otherwise became aware of the Prohibited Transfer, each
Investor shall, if exercising the option created hereby, deliver to the Company the certificate or
certificates representing shares to be sold, each certificate to be properly endorsed for transfer.



               (3) The Common Stockholder shall upon the Company’s receipt of the certificate or certificates
for the shares to be sold by an Investor, pursuant to this Section 4, pay the aggregate purchase
price therefor and the amount of reimbursable fees and expenses, as specified in Section 4(b)(1),
in cash or by other means acceptable to the Investor.



               (4) Notwithstanding the foregoing, any attempt by such Common Stockholder to transfer Shares
in violation of this Agreement shall be void and the Company agrees it will not effect such a
transfer nor will it treat any alleged transferee(s) as the holder of such shares unless and until
such (i) transfer is made in compliance with all of the terms of this Agreement and all applicable
federal and state securities laws and (ii) before such transfer, the transferee or transferees sign
a counterpart to this Agreement pursuant to which it or they agree to be bound by the terms of this
Agreement.



     5. Legended Certificates. Each certificate representing Shares now or hereafter owned
by the Common Stockholders or issued to any Permitted Transferee pursuant to Section 1.5 shall bear
the following legend:




“THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND
CONDITIONS OF A CERTAIN RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT
BY AND BETWEEN THE STOCKHOLDER, THE CORPORATION AND CERTAIN HOLDERS
OF COMMON AND PREFERRED STOCK OF THE CORPORATION. COPIES OF SUCH
AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF
THE CORPORATION.”



     6. Termination of Agreement. This Agreement shall continue in full force and effect
from the date hereof through the date of the closing of a firmly underwritten public offering of
the Common Stock pursuant to a registration statement filed with the Securities and Exchange
Commission, and declared effective under the Securities Act of 1933, as amended, in connection with
which the Preferred Stock is converted into Common Stock, on which date it shall terminate in its
entirety.



- 5 -









 





     7. Removal of Legend. At any time after the termination of this Agreement in
accordance with Section 6, any holder of a stock certificate legended pursuant to Section 5 may
surrender such certificate to the Company for removal of such legend, and the Company will duly
reissue a new certificate without the legend.



     8. Amendment; Waiver. Any terms hereof may be amended or waived with the written
consent of the Company, Investors holding a majority of the Series A Preferred Stock (or the
equivalent amount of Common Stock issued or issuable upon conversion of the Series A Preferred
Stock) held by the Investors, or their respective successors and assigns, and Common Stockholders
of a majority of the Common Stock held by the Common Stockholders, or their respective successors
and assigns. Notwithstanding the foregoing, this Agreement may be amended with only (1) the
written consent of the Company for the sole purpose of including additional purchasers of Common
Stock as “Common Stockholders” and additional purchasers of Series A Preferred Stock as “Investors”
and (2) the written consent of the Company and Investors holding a majority of the Series A
Preferred Stock (or the equivalent amount of Common Stock issued or issuable upon conversion of the
Series A Preferred Stock) held by the Investors for the sole purpose of including additional
purchasers of Preferred Stock as “Investors.” Any amendment or waiver effected in accordance with
this Section 8 shall be binding upon the Company, the Investors, the Common Stockholders and any
Permitted Transferees, and each of their respective successors and assigns.



     9. Notices. Any notice required or permitted by this Agreement shall be in writing
and shall be deemed sufficient on the date of delivery, when delivered personally or by overnight
courier or sent by telegram or fax, or 48 hours after being deposited in the U.S. mail, as
certified or registered mail, with postage prepaid, and addressed to the party to be notified at
such party’s address or fax number as set forth below on the signature page or on Exhibit A
hereto, or as subsequently modified by written notice.



     10. Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, the parties agree to renegotiate such provision in good faith.
In the event that the parties cannot reach a mutually agreeable and enforceable replacement for
such provision, then (a) such provision shall be excluded from this Agreement, (b) the balance of
the Agreement shall be interpreted as if such provision were so excluded and (c) the balance of the
Agreement shall be enforceable in accordance with its terms.



     11. Governing Law. This Agreement and all acts and transactions pursuant hereto and
the rights and obligations of the parties hereto shall be governed, construed and interpreted in
accordance with the laws of the State of California, without giving effect to principles of
conflicts of law.



     12. Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original and all of which together shall constitute one instrument.



     13. Successors and Assigns. The terms and conditions of this Agreement shall inure to
the benefit of and be binding upon the respective successors and assigns of the parties. Nothing
in this Agreement, express or implied, is intended to confer upon any party other than



- 6 -









 







the parties hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as expressly provided in
this Agreement.



     14. Additional Parties. The Investors and Common Stockholders agree that, upon
delivery of counterpart signature pages to this Agreement, any additional persons who become
“Investors” pursuant to the Purchase Agreement shall become “Investors” under this Agreement
without further action by any other Investor.



     15. Entire Agreement. This Agreement constitutes the full and entire understanding
and agreement between the parties with regard to the Co-Sale Right provided in Section 2 hereof and
any and all other written or oral agreements relating to any co-sale right existing among any of
the parties are expressly canceled (including without limitation any co-sale rights provided for in
any stock restriction agreements between the Company and a Common Stockholder). To the extent that
the provisions of the Company’s right of first refusal pursuant to a stock purchase agreement or
stock restriction agreement between the Company and a Common Stockholder are inconsistent with the
terms and conditions of this Agreement, the terms and conditions of this Agreement shall control.



[Signature Pages Follow]




- 7 -









 





     The parties have executed this Right of First Refusal and Co-Sale Agreement as of the date
first written above.



	 	 	 	 	 
	 	COMPANY:


OREXIGEN THERAPEUTICS, INC.,

a Delaware corporation

 	 
	 	By:  	 	 
	 	 	John F. Crowley, 	 
	 	 	President and Chief Executive Officer




Address:  28202 Cabot Road, Suite 200

                 Laguna Niguel, CA 92677 	 
	 



SIGNATURE PAGE TO RIGHT OF FIRST REFUSAL AND

CO-SALE AGREEMENT





 









 





     IN WITNESS WHEREOF, the parties have executed this Right of First Refusal and Co-Sale
Agreement as of the date first written above.



	 	 	 	 	 
	 

	 	COMMON STOCKHOLDERS:	 	 
	 
	 	 	 	 
	 

	 	 

Michael Cowley, Ph.D.
	 	 
	 
	 	 	 	 
	 

	 	 

John F. Crowley
	 	 
	 
	 	 	 	 
	 

	 	 

Kishore Gadde, M.D.
	 	 
	 
	 	 	 	 
	 

	 	 

Ranga Krishnan, M.D.
	 	 
	 
	 	 	 	 
	 

	 	 

Eckard Weber, M.D.
	 	 






SIGNATURE PAGE TO RIGHT OF FIRST REFUSAL AND

CO-SALE AGREEMENT




 









 





     IN WITNESS WHEREOF, the parties have executed this Right of First Refusal and Co-Sale
Agreement as of the date first written above.



	 	 	 	 	 
	 	MPAJ, LLC

 	 
	 	By:  	 	 
	 	 	John F. Crowley, 	 
	 	 	President 	 
	 



SIGNATURE PAGE TO RIGHT OF FIRST REFUSAL AND

CO-SALE AGREEMENT





 









 





     IN WITNESS WHEREOF, the parties have executed this Right of First Refusal and Co-Sale
Agreement as of the date first written above.



	 	 	 	 	 
	 	INVESTORS:


Domain Partners V, L.P.

By: One Palmer Square Associates V, L.L.C.


       its General Partner

 	 
	 	By:  	
 	 
	 	 	Lisa A. Kraeutler, 	 
	 	 	Attorney in Fact 	 
	 
	 	DP V Associates, L.P.

By: One Palmer Square Associates V, L.L.C.

       its General Partner

 	 
	 	By:  	
 	 
	 	 	Lisa A. Kraeutler, 	 
	 	 	Attorney in Fact 	 
	 



SIGNATURE PAGE TO RIGHT OF FIRST REFUSAL AND

CO-SALE AGREEMENT





 









 





     IN WITNESS WHEREOF, the parties have executed this Right of First Refusal and Co-Sale
Agreement as of the date first written above.



INVESTORS:




Sofinnova Venture Partners VI, L.P.

as nominee for

Sofinnova Venture Partners VI, L.P.

Sofinnova Venture Partners VI GmbH & Co. K.G.




By: Sofinnova
Management VI, L.L.C.
       its General Partner




	 	 	 	 	 
	 	By:  	 	 
	 	 	Managing Member 	 
	 	 	 	 
	 



SIGNATURE PAGE TO RIGHT OF FIRST REFUSAL AND

CO-SALE AGREEMENT





 









 





     IN WITNESS WHEREOF, the parties have executed this Right of First Refusal and Co-Sale
Agreement as of the date first written above.



	 	 	 	 	 
	 	INVESTORS:



KPCB Holdings, Inc.,

as nominee

 	 
	 	By:  	 	 
	 	Title:  	 	 
	 	 	 	 
	 



SIGNATURE PAGE TO RIGHT OF FIRST REFUSAL AND

CO-SALE AGREEMENT





 









 








EXHIBIT A




SCHEDULE OF INVESTORS




	 	 	 	 	 
	Investors	 	Number of Shares:
	Domain Partners V, L.P.
	 	 	3,311,602	 
	c/o Domain Associates, L.L.C.
	 	 	 	 
	One Palmer Square
	 	 	 	 
	Princeton, New Jersey 08542
	 	 	 	 
	Attn: Eckard Weber, M.D.
	 	 	 	 
	 
	 	 	 	 
	With a copy to:
	 	 	 	 
	 
	 	 	 	 
	Domain Associates, L.L.C.
	 	 	 	 
	One Palmer Square
	 	 	 	 
	Princeton, New Jersey 08542
	 	 	 	 
	Attn: Kathleen K. Schoemaker
	 	 	 	 
	 
	 	 	 	 
	DP V Associates, L.P.
	 	 	78,229	 
	c/o Domain Associates, L.L.C.
	 	 	 	 
	One Palmer Square
	 	 	 	 
	Princeton, New Jersey 08542
	 	 	 	 
	Attn: Eckard Weber, M.D.
	 	 	 	 
	 
	 	 	 	 
	With a copy to:
	 	 	 	 
	 
	 	 	 	 
	Domain Associates, L.L.C.
	 	 	 	 
	One Palmer Square
	 	 	 	 
	Princeton, New Jersey 08542
	 	 	 	 
	Attn: Kathleen K. Schoemaker
	 	 	 	 
	 
	 	 	 	 
	Sofinnova Venture Partners VI, L.P.
	 	 	2,542,373	 
	140 Geary Street, Tenth Floor
	 	 	 	 
	San Francisco, CA 94108
	 	 	 	 
	Attn: Michael Powell
	 	 	 	 
	 
	 	 	 	 
	KPCB Holdings, Inc.
	 	 	3,389,831	 
	c/o Kleiner Perkins Caufield & Byers
	 	 	 	 
	2750 Sand Hill Road
	 	 	 	 
	Menlo Park, CA 94025
	 	 	 	 






Exhibit A





 









 





APPENDIX G




INVESTORS’ RIGHTS AGREMENT




(attached)





 









 





OREXIGEN
THERAPEUTICS, INC.




 






INVESTORS’ RIGHTS AGREEMENT




 






January 20, 2004




 









 





TABLE OF CONTENTS




	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page
	1.	 	Registration Rights	 	 	1	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	1.1	 	 	Definitions
	 	 	1	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	1.2	 	 	Request for Registration
	 	 	2	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	1.3	 	 	Company Registration
	 	 	4	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	1.4	 	 	Obligations of the Company
	 	 	4	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	1.5	 	 	Furnish Information
	 	 	6	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	1.6	 	 	Expenses of Demand Registration
	 	 	6	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	1.7	 	 	Expenses of Company Registration
	 	 	6	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	1.8	 	 	Underwriting Requirements
	 	 	7	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	1.9	 	 	Delay of Registration
	 	 	7	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	1.10	 	 	Indemnification
	 	 	8	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	1.11	 	 	Form S-3 Registration
	 	 	9	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	1.12	 	 	Limitations on Subsequent Registration Rights
	 	 	11	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	1.13	 	 	“Market Stand-Off” Agreement
	 	 	11	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	1.14	 	 	Assignment of Registration Rights
	 	 	11	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	1.15	 	 	Reports Under the Securities Exchange Act of 1934
	 	 	12	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	1.16	 	 	Termination of Registration Rights
	 	 	12	 
	 
	 	 	 	 	 	 	 	 	 	 
	2.	 	Covenants of the Company	 	 	13	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	2.1	 	 	Financial Information
	 	 	13	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	2.2	 	 	Inspection
	 	 	14	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	2.3	 	 	Termination of Information and Inspection Rights
	 	 	14	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	2.4	 	 	Right of First Offer
	 	 	14	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	2.5	 	 	Vesting of Stock; Co-Sale Rights
	 	 	16	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	2.6	 	 	Qualified Small Business
	 	 	16	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	2.7	 	 	Indebtedness
	 	 	16	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	2.8	 	 	Board of Directors Meetings
	 	 	16	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	2.9	 	 	Assignment of Right of First Refusal
	 	 	16	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	2.10	 	 	Proprietary Rights Agreements
	 	 	17	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	2.13	 	 	Termination of Covenants
	 	 	17	 
	 
	 	 	 	 	 	 	 	 	 	 
	3.	 	Transfers of Securities by Investors	 	 	17	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	3.1	 	 	Notices
	 	 	17	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	3.2	 	 	Acceptance of Offer
	 	 	17	 






- i -









 





TABLE OF CONTENTS

(Continued)




	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page
	 

	 	 	3.3	 	 	Allocation of Securities and Payment
	 	 	18	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	3.4	 	 	Failure to Exercise
	 	 	18	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	3.5	 	 	Assignment
	 	 	18	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	3.6	 	 	Permitted Transfers
	 	 	18	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	3.7	 	 	Termination
	 	 	19	 
	 
	 	 	 	 	 	 	 	 	 	 
	4.	 	Miscellaneous	 	 	19	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	4.1	 	 	Successors and Assigns
	 	 	19	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	4.2	 	 	Governing Law
	 	 	19	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	4.3	 	 	Counterparts
	 	 	19	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	4.4	 	 	Titles and Subtitles
	 	 	19	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	4.5	 	 	Notices
	 	 	19	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	4.6	 	 	Expenses
	 	 	19	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	4.7	 	 	Amendments and Waivers
	 	 	19	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	4.8	 	 	Severability
	 	 	20	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	4.9	 	 	Aggregation of Stock
	 	 	20	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	4.10	 	 	Entire Agreement
	 	 	20	 
	 
	 	 	 	 	 	 	 	 	 	 
	Schedule A – List of Investors	 	 	 	 







- ii - 









 








OREXIGEN THERAPEUTICS, INC.




INVESTORS’ RIGHTS AGREEMENT




          THIS INVESTORS’ RIGHTS AGREEMENT (this “Agreement”) is made as of January 20, 2004, by and
among Orexigen Therapeutics, Inc., a Delaware corporation (the “Company”), the parties listed on
Schedule A hereto (collectively, the “Investors” and each individually, an “Investor”).




RECITALS




          In connection with the purchase and sale of shares of Series A Preferred Stock pursuant to the
terms of a Series A Preferred Stock Purchase Agreement of even date herewith by and among the
Company and the other parties thereto (the “Purchase Agreement”) the Company and the Investors
desire to provide for the rights of the Investors with respect to information about the Company and
with respect to restriction.




AGREEMENT




          NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the
parties hereto agree as follows:




     1. Registration Rights The Company covenants and agrees as follows:



          1.1 Definitions For purposes of this Agreement:




               (a) The term “Act” means the Securities Act of 1933, as amended.



               (b) The term “Change in Control” means any transaction or series of related transactions
deemed to be a liquidation, dissolution or winding up of the Company pursuant to the Company’s then
current Certificate of Incorporation.



               (c) The term “Common Stock” means the common stock of the Company.



               (d) The terms “Form S-1”, “Form S-3” and “Form S-8” mean such forms under the Act as in effect
on the date hereof or any successor registration form, document or policy subsequently adopted by
the SEC to replace such forms, or in the case of Form S-3, any registration form under the Act
subsequently adopted by the SEC which permits inclusion or incorporation of substantial information
by reference to other documents filed by the Company with the SEC.



               (e) The term “Holder” means any person owning or having the right to acquire Registrable
Securities or any assignee thereof in accordance with Section 3 hereof.



               (f) The term “IPO” shall mean the closing of the Company’s first firm commitment, underwritten
public offering registered under the Act in connection with which all













 




outstanding shares of Preferred Stock are automatically converted into shares of Common Stock
pursuant to the terms of the Company’s then current Certificate of Incorporation.




               (g) The term “1934 Act” means the Securities Exchange Act of 1934, as amended.



               (h) The term “Preferred Stock” means the Series A Preferred Stock of the Company.



               (i) The term “register,” “registered,” and “registration” refer to a registration effected by
preparing and filing with the SEC a registration statement or similar document in compliance with
the Act, and the declaration or ordering of effectiveness of such registration statement or
document.



               (j) The term “Registrable Securities” means the Common Stock issuable or issued upon
conversion of the Preferred Stock, and any Common Stock of the Company issued upon any stock split,
stock dividend, recapitalization, or similar event, dividend or other distribution with respect to,
or in exchange for or in replacement of the Preferred Stock excluding in all cases, however (1) any
Registrable Securities sold by a person in a transaction in which such person’s rights under
Section 1 are not assigned or (2) any Common Stock held by a Holder that ceases to have
registration rights in accordance with Section 1.16.



               (k) The number of shares of “Registrable Securities then Outstanding” shall be the sum of (i)
the number of shares of Common Stock outstanding which are Registrable Securities, plus (ii) the
number of shares of Common Stock issuable pursuant to then exercisable or convertible securities
which are Registrable Securities.



               (l) The term “SEC” shall mean the Securities and Exchange Commission.



          1.2 Request for Registration




               (a) If the Company shall receive at any time after the earlier of (i) the fourth (4th)
anniversary of the date hereof or (ii) one (1) year after the effective date of the IPO (other than
a registration statement relating either to the sale of securities to employees of the Company
pursuant to a stock option, stock purchase or similar plan or a SEC Rule 145 transaction that does
not cause any securities of the Company similar to the Registrable Securities to be listed on a
securities exchange), a written request from the Holders of at least 30% of the Registrable
Securities then outstanding that the Company file a registration statement under the Act covering
the registration of at least twenty percent (20%) of the Registrable Securities then outstanding
(or such lesser number of shares of Registrable Securities, with an anticipated aggregate offering
price of which, net of underwriting discounts and commissions, would exceed $5,000,000) then the
Company shall:



               (b) within ten (10) days of the receipt thereof, give written notice of such request to all
Holders; and



- 2 -









 





               (c) use its best efforts to effect as soon as practicable, the registration under the Act of
all Registrable Securities which the Holders request (within twenty (20) days of the mailing of
such notice by the Company in accordance hereof) to be registered, subject to the limitations of
subsection 1.2(d).



               (d) If the Holders initiating the registration request hereunder (“Initiating Holders”) intend
to distribute the Registrable Securities covered by their request by means of an underwriting, they
shall so advise the Company as a part of their request made pursuant to subsection 1.2(a) and the
Company shall include such information in the written notice referred to in subsection 1.2(a). The
underwriter will be selected by the Company and shall be reasonably acceptable to a majority in
interest of the Initiating Holders. In such event, the right of any Holder to include such
Holder’s Registrable Securities in such registration shall be conditioned upon such Holder’s
participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in interest of the Initiating Holders
and such Holder) to the extent provided herein. All Holders proposing to distribute their
securities through such underwriting shall (together with the Company as provided in subsection
1.4(e)) enter into an underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting. Notwithstanding any other provision of this Section 1.2, if the
underwriter advises the Company or the Initiating Holders in writing that marketing factors require
a limitation of the number of shares to be underwritten, then the Company shall so advise all
Holders of Registrable Securities which would otherwise be underwritten pursuant hereto, and the
number of shares of Registrable Securities that may be included in the underwriting shall be
allocated among all participating Holders thereof, including the Initiating Holders, in proportion
(as nearly as practicable) to the amount of Registrable Securities of the Company owned by each
Holder; provided, however, that the number of shares of Registrable Securities to be included in
such underwriting shall not be reduced unless all other securities are first entirely excluded from
the underwriting.



               (e) Notwithstanding the foregoing, if the Company shall furnish to Holders requesting a
registration statement pursuant to this Section 1.2, a certificate signed by the Chief Executive
Officer of the Company stating that in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company and its stockholders for such
registration statement to be filed and it is therefore essential to defer the filing of such
registration statement, the Company shall have the right to defer taking action with respect to
such filing for a period of not more than 120 days after receipt of the request of the Initiating
Holders; provided, however, that the Company may not utilize this right more than once in any
twelve (12) month period.



               (f) In addition, the Company shall not be obligated to effect, or to take any action to
effect, any registration pursuant to this Section 1.2:



                    (i) After the Company has effected two (2) registrations pursuant to this Section 1.2 and such
registrations have been declared or ordered effective provided that either (A) the conditions of
Section 1.4(a) have been satisfied or (B) the registration statements continue to remain effective
and there are no stop orders in effect with respect to such registration statements;



- 3 -









 





                    (ii) During the period starting with the date thirty (30) days prior to the Company’s good
faith estimate of the date of filing of, and ending on a date 90 days after the effective date of a
registration subject to Section 1.3 hereof (unless such registration is the Company’s initial
public offering of its securities, in which event ending on a date 180 days after such effective
date); provided that the Company is actively employing in good faith all reasonable efforts to
cause such registration statement to become effective; or



                    (iii) If the Initiating Holders propose to dispose of shares of Registrable Securities that
may be immediately registered on Form S-3 pursuant to a request made pursuant to Section 1.11
below.



          1.3 Company Registration. If (but without any obligation to do so) the Company
proposes to register (including for this purpose a registration effected by the Company for
stockholders other than the Holders) any of its stock or other securities under the Act in
connection with the public offering of such securities solely for cash (other than (i) a
registration relating solely to the sale of securities to participants in a Company stock option
plan or stock purchase plan, (ii) a registration on any form which does not include substantially
the same information as would be required to be included in a registration statement covering the
sale of the Registrable Securities or (iii) a registration in which the only Common Stock being
registered is Common Stock issuable upon conversion of debt securities which are also being
registered or (iv) an SEC Rule 145 transaction), the Company shall, at such time, promptly give
each Holder of shares of Registrable Securities, written notice of such registration. Upon the
written request of a Holder of shares of Registrable Securities, given within twenty (20) days
after receipt of such notice by the Company in accordance with Section 4.5, the Company shall,
subject to the provisions of Section 1.8, use its best efforts to cause to be registered under the
Act all of the Registrable Securities that each such Holder has requested to be registered.




          1.4 Obligations of the Company. Whenever required under this Section 1 to effect the
registration of any Registrable Securities, the Company shall, as expeditiously as
reasonably possible:




               (a) Prepare and file with the SEC a registration statement with respect to such Registrable
Securities and use its best efforts to cause such registration statement to become effective, and
keep such registration statement effective for a period of up to one hundred twenty (120) days or
until the distribution contemplated in the Registration Statement has been completed; provided,
however, that such one hundred twenty (120) day period shall be extended for a period of time equal
to the period the Holder refrains from selling any securities included in such registration at the
request of the Company or an underwriter of Common Stock (or other securities) of the Company.



               (b) Prepare and file with the SEC such amendments and supplements to such registration
statement and the prospectus used in connection with such registration statement as may be
necessary to comply with the provisions of the Act with respect to the disposition of all
securities covered by such registration statement.



               (c) Furnish to the Holders such numbers of copies of a prospectus, including a preliminary
prospectus, in conformity with the requirements of the Act, and such



- 4 -









 




other documents as they may reasonably request in order to facilitate the disposition of
Registrable Securities owned by them.




               (d) Use its best efforts to register and qualify the securities covered by such registration
statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Holders; provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions, unless the Company is already subject to service in
such jurisdiction and except as may be required by the Act.



               (e) In the event of any underwritten public offering, enter into and perform its obligations
under an underwriting agreement, in usual and customary form, with the managing underwriter of such
offering. Each Holder participating in such underwriting shall also enter into and perform its
obligations under such an agreement.



               (f) Notify each Holder of Registrable Securities covered by such registration statement at any
time when a prospectus relating thereto is required to be delivered under the Act of the happening
of any event as a result of which the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing. The Company shall promptly prepare and furnish to such
Holder a reasonable number of copies of a supplement to or an amendment of such prospectus as may
be necessary so that, as thereafter delivered to the purchaser of such shares, such prospectus will
not include an untrue statement of material fact or omit to state a material fact necessary to make
statements therein, in light of the circumstances under which they were made, not misleading.



               (g) Cause all such Registrable Securities registered pursuant hereunder to be listed on each
securities exchange on which similar securities issued by the Company are then listed.



               (h) Provide a transfer agent and registrar for all Registrable Securities registered pursuant
hereunder and a CUSIP number for all such Registrable Securities, in each case not later than the
effective date of such registration.



               (i) Furnish, at the request of any Holder requesting registration of Registrable Securities
pursuant to this Section 1, on the date that such Registrable Securities are delivered to the
underwriters for sale in connection with a registration pursuant to this Section 1, if such
securities are being sold through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such securities becomes
effective, (i) an opinion, dated such date, of the counsel representing the Company for the
purposes of such registration, in form and substance as is customarily given to underwriters in an
underwritten public offering, addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities and (ii) a letter dated such date, from the independent
certified public accountants of the Company, in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten



- 5 -









 




public offering, addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities;




               (j) Notify each Holder promptly after the Company receives notice thereof, of the time when
such registration statement has become effective or a supplement of such registration has been
filed;



               (k) Advise each Holder promptly after the Company shall receive notice or obtain knowledge
thereof, of the issuance of any stop order by the SEC suspending the effectiveness of such
registration statement or the threatening of any proceeding for such purpose and promptly use all
best efforts to prevent the issuance of any stop order should such be issued; and;



               (l) Make generally available to its security holders, and to deliver to the Holders an
earnings statement of the Company (that will satisfy the provisions of Section 11(a) of the Act)
covering a period of twelve (12) months beginning after the effective date of the registration
statement (as defined in Rule 158(c) under the Act) as soon as is reasonably practicable after the
termination of such twelve (12) month period.



          1.5 Furnish Information. It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this Section 1 with respect to the Registrable Securities of
any selling Holder that such Holder shall furnish to the Company such information regarding itself,
the Registrable Securities held by it, and the intended method of disposition of such securities as
shall be required to effect the registration of such Holder’s Registrable Securities.




          1.6 Expenses of Demand Registration. All expenses other than underwriting discounts
and commissions, including (without limitation) all registration, filing and qualification fees,
printers’ and accounting fees, reasonable fees and expenses of one special counsel to the Holders
(such special counsel to be selected by a majority in interest of the selling Holders) and fees and
disbursements of counsel for the Company shall be borne by the Company; provided, however, that the
Company shall not be required to pay for any expenses of any registration proceeding begun pursuant
to Section 1.2 if the registration request is subsequently withdrawn at the request of the Holders
of a majority of the Registrable Securities to be registered (in which case all participating
Holders shall bear such expenses), unless the Holders of a majority of the Registrable Securities
agree to forfeit their right to their demand registration pursuant to Section 1.2; provided
further, however, that if at the time of such withdrawal, the Holders have learned of a material
adverse change in the condition, business, or prospects of the Company from that known to the
Holders at the time of their request and have withdrawn the request with reasonable promptness
following disclosure of such material adverse change, then the Holders shall not be required to pay
any of such expenses and shall retain their rights pursuant to Section 1.2.




          1.7 Expenses of Company Registration. The Company shall bear and pay all expenses
incurred in connection with any registration, filing or qualification of Registrable Securities
with respect to the registrations pursuant to Section 1.3 for each Holder (which right may be
assigned as provided in Section 3.1), including all registration, filing, and
qualification

- 6 -









 








fees, and printers and accounting fees relating or apportionable thereto and the
reasonable fees and expenses incurred by one special counsel to such selling Holders selected by a
majority in interest of the selling Holders, but excluding underwriting discounts and commissions
relating to the Registrable Securities.




          1.8 Underwriting Requirements. In connection with any offering involving an
underwriting of shares of the Company’s capital stock, the Company shall not be required under
Section 1.3 to include any of the Holders’ securities in such underwriting unless they accept the
terms of the underwriting as agreed upon between the Company and the underwriters selected by it
(or by other persons entitled to select the underwriters), and then only in such quantity, if any,
as the underwriters determine in their sole discretion will not jeopardize the success of the
offering by the Company. If the total amount of securities, including Registrable Securities,
requested by stockholders to be included in such offering exceeds the amount of securities sold
other than by the Company that the underwriters determine in their sole discretion is compatible
with the success of the offering, then in such event the Company shall be required to include in
the offering only that number of such securities, including Registrable Securities, which the
underwriters determine in their sole discretion will not jeopardize the success of the offering;
provided, however, that any such limitation by the underwriters will be apportioned as follows: (i)
all securities other than Registrable Securities will be excluded from the registration first, and
(ii) to the extent still required by the underwriters, the Registrable Securities requested to be
registered by the Holders shall be excluded from such registration subject to the following
sentences. If a limitation on the number of shares is still required, the number of shares of
Registrable Securities that may be included in the registration and underwriting shall be allocated
among all participating Holders in proportion, as nearly as practicable, to the respective amounts
of Registrable Securities requested for inclusion in such Registration held by such Holders at the
time of filing the registration statement. For purposes of the preceding sentence concerning
apportionment, for any selling stockholder which is a Holder of Registrable Securities and which is
a partnership, limited liability company or corporation, the affiliates, partners, retired
partners, members, retired members and stockholders of such holder, or the estates and family
members of any such partners and retired partners, members and retired members and any trusts for
the benefit of any of the foregoing persons shall be deemed to be a single “selling stockholder,”
and any pro-rata reduction with respect to such “selling stockholder” shall be based upon the
aggregate amount of shares carrying registration rights owned by all entities and individuals
included in such “selling stockholder,” as defined in this sentence. Notwithstanding the
foregoing, the number of Registrable Securities included in such registration and underwriting
shall not be reduced below 30% of the securities included in such registration unless such offering
is the initial public offering of the Company’s securities in which case the selling Holders may be
excluded entirely if the underwriters make the determination described above and no securities
other than those of the Company are included in such registration. No Registrable Securities or
other securities excluded from the underwriting by reason of this Section 1.8 shall be included in
such registration statement.




          1.9 Delay of Registration. No Holder shall have any right to obtain or seek an
injunction restraining or otherwise delaying any such registration as the result of any controversy
that might arise with respect to the interpretation or implementation of this Section 1.




- 7 -









 








          1.10 Indemnification. In the event any Registrable Securities are included in a
registration statement under this Section 1:




               (a) To the extent permitted by law, the Company will indemnify and hold harmless each Holder,
each of such Holder’s officers, directors, partners, members and managers, any underwriter (as
defined in the Act) for such Holder and each person, if any, who controls such Holder or
underwriter within the meaning of the Act or the 1934 Act, against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject under the Act, the 1934 Act or
other federal or state law, insofar as such losses, claims, damages, or liabilities (joint or
several) (or actions, proceedings or settlements in respect thereof) arise out of or are based upon
any of the following statements, omissions or violations (collectively a “Violation”): (i) any
untrue statement or alleged untrue statement of a material fact contained in such registration
statement, including any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements therein not
misleading, or (iii) any violation or alleged violation by the Company of the Act, the 1934 Act,
any state securities law or any rule or regulation promulgated under the Act, the 1934 Act or any
state securities law; and the Company will reimburse each such Holder, officer, director, partner,
member, manager, underwriter or controlling person, any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim, damage, liability, or
action, proceeding or settlement; provided, however, that the indemnity agreement contained in this
subsection 1.10(a) shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability, or action or proceeding if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld or delayed), nor shall the Company be
liable in any such case for any such loss, claim, damage, liability, or action or proceeding to the
extent that it arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection with such
registration, and duly executed, by any such Holder, underwriter or controlling person.



               (b) To the extent permitted by law, each selling Holder will indemnify and hold harmless the
Company, each of its directors, each of its officers who has signed the registration statement,
each person, if any, who controls the Company within the meaning of the Act, any underwriter, any
other Holder selling securities in such registration statement and any controlling person of any
such underwriter or other Holder, against any losses, claims, damages, or liabilities (joint or
several) to which any of the foregoing persons may become subject, under the Act, the 1934 Act or
other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions,
proceeding or settlement in respect thereto) arise out of or are based upon any Violation, in each
case to the extent (and only to the extent) that such Violation occurs in reliance upon and in
conformity with written information expressly furnished, and duly executed, by such Holder for use
in connection with such registration; and each such Holder will pay any legal or other expenses
reasonably incurred by any person intended to be indemnified pursuant to this subsection 1.10(b),
in connection with investigating or defending any such loss, claim, damage, liability, or action,
proceeding or settlement; provided, however, that the indemnity agreement contained in this
subsection 1.10(b) shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action or proceeding if such settlement is effected without the consent of the Holder
(which consent shall not be unreasonably withheld); provided,



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that, in no event shall any indemnity under this subsection 1.10(b) exceed the net proceeds
from the offering received by such Holder.




               (c) Promptly after receipt by an indemnified party under this Section 1.10 of notice of the
commencement of any action (including any governmental action), such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party under this Section 1.10,
deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying
party shall have the right to participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed, to assume the defense thereof with
counsel mutually satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without conflict by one
counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the counsel retained by
the indemnifying party would be inappropriate due to actual or potential differing interests
between such indemnified party and any other party represented by such counsel in such proceeding.
The failure to deliver written notice to the indemnifying party within a reasonable time after the
commencement of any such action, if prejudicial to its ability to defend such action, shall relieve
such indemnifying party of any liability to the indemnified party under this Section 1.10, but the
omission so to deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under this Section 1.10.



               (d) If the indemnification provided for in this Section 1.10 is held by a court of competent
jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim,
damage, or expense referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such loss, liability, claim, damage, or expense in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one hand and of the
indemnified party on the other in connection with the statements or omissions that resulted in such
loss, liability, claim, damage, or expense as well as any other relevant equitable considerations.
The relative fault of the indemnifying party and of the indemnified party shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the indemnifying party
or by the indemnified party and the parties’ relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission.



               (e) Notwithstanding the foregoing, to the extent that the provisions on indemnification and
contribution contained in the underwriting agreement entered into in connection with the
underwritten public offering are expressly in conflict with the foregoing provisions, the
provisions in the underwriting agreement shall control.



               (f) The obligations of the Company and Holders under this Section 1.10 shall survive the
completion of any offering of Registrable Securities in a registration statement under this Section
1, and otherwise.



          1.11 Form S-3 Registration. In case the Company shall receive from any Holder or
Holders of the Registrable Securities then outstanding a written request or requests that




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the Company effect a registration on Form S-3 and any related qualification or compliance with
respect to all or a part of the Registrable Securities owned by such Holder or Holders, the Company
will:




               (a) promptly give written notice of the proposed registration, and any related qualification
or compliance, to all other Holders; and



               (b) use its best efforts to effect, as soon as practicable, such registration and all such
qualifications and compliances as may be so requested and as would permit or facilitate the sale
and distribution of all or such portion of such Holder’s or Holders’ Registrable Securities as are
specified in such request, together with all or such portion of the Registrable Securities of any
other Holder or Holders joining in such request as are specified in a written request given within
15 days after receipt of such written notice from the Company; provided, however, that the Company
shall not be obligated to effect any such registration, qualification or compliance, pursuant to
this Section 1.11: (1) if Form S-3 is not available for such offering by the Holders; (2) if the
participating Holders, together with the holders of any other securities of the Company entitled to
inclusion in such registration, propose to sell Registrable Securities and such other securities
(if any) at an anticipated aggregate price to the public (net of any underwriters’ discounts or
commissions) of less than $1,000,000; (3) if the Company shall furnish to the Holders a certificate
signed by the Chief Executive Officer of the Company stating that in the good faith judgment of the
Board of Directors of the Company, it would be seriously detrimental to the Company and its
stockholders for such Form S-3 Registration to be effected at such time, in which event the Company
shall have the right to defer the filing of the Form S-3 registration statement for a period of not
more than sixty (60) days after receipt of the request of the Holder or Holders under this Section
1.11; provided, however, that the Company shall not utilize this right more than once in any twelve
(12) month period; (4) if the Company has, within the twelve (12) month period preceding the date
of such request, already effected two registrations on Form S-3 for the Holders pursuant to this
Section 1.11; or (5) in any particular jurisdiction in which the Company would be required to
qualify to do business or to execute a general consent to service of process in effecting such
registration, qualification or compliance unless the Company is already subject to service in such
jurisdiction and except as may be required by the Act.



               (c) Subject to the foregoing, the Company shall file a registration statement covering the
Registrable Securities and other securities so requested to be registered as soon as practicable
after receipt of the request or requests of the Holders. All expenses incurred in connection with
a registration requested pursuant to Section 1.11, including (without limitation) all registration,
filing, qualification, printer’s and accounting fees, reasonable fees and expenses for one special
counsel for the Holders associated with Registrable Securities (such special counsel to be selected
by a majority in interest of the Holders requesting such registration) and the fees and
disbursements of counsel for the Company, but excluding any underwriters’ discounts or commissions
shall be borne by the Company. Registrations effected pursuant to this Section 1.11 shall not be
counted as demands for registration or registrations effected pursuant to Sections 1.2 or 1.3,
respectively.



               (d) The Company shall not be obligated to effect any registration pursuant to this Section
1.11 if the Company delivers to the Holders requesting registration under



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this Section 1.11 an opinion, in form and substance acceptable to such Holders, of counsel
satisfactory to such Holders, that the Registrable Securities so requested to be registered may be
sold or transferred pursuant to Rule 144(k) under the Act.




          1.12 Limitations on Subsequent Registration Rights. From and after the date of this
Agreement, the Company shall not, without the prior written consent of the Holders of at least a
majority of the outstanding Registrable Securities, enter into any agreement with any holder or
prospective holder of any securities of the Company which would give such holder or prospective
holder any registration rights if (a) such registration rights would be pari passu with, or senior
to, any registration rights provided under this Agreement or (b) such holder would not be bound by
obligations similar to the obligations of the Holders set forth in Section 1.13.




          1.13 “Market Stand-Off” Agreement. Each Holder hereby agrees that, during the period
of duration specified by the Company and an underwriter of Common Stock or other securities of the
Company, following the effective date of a registration statement of the Company filed under the
Act, it shall not, to the extent requested by the Company and such underwriter, directly or
indirectly sell, offer to sell, contract to sell (including, without limitation, any short sale),
grant any option to purchase or otherwise transfer or dispose of (other than to donees who agree to
be similarly bound) any securities of the Company held by it at any time during such period except
Common Stock included in such registration; provided, however, that:




               (a) such agreement shall be applicable only to the first such registration statement of the
Company which covers Common Stock to be sold on its behalf to the public in a firmly underwritten
offering;



               (b) all officers, directors and 1% or greater stockholders of the Company enter into similar
agreements; and



               (c) such market stand-off time period shall not exceed one hundred eighty (180) days from the
effective date of the registration statement.



          In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions
with respect to the Registrable Securities of each Holder (and the shares or securities of every
other person subject to the foregoing restriction) until the end of such period.




          Notwithstanding the foregoing, the obligations described in this Section 1.13 shall not apply
to a registration relating solely to employee benefit plans on Form S-l or Form S-8 or similar
forms which may be promulgated in the future, or a registration relating solely to a Commission
Rule 145 transaction on Form S-4 or similar forms which may be promulgated in the future.




          1.14 Assignment of Registration Rights. The rights to cause the Company to register
Registrable Securities pursuant to this Section 1 may be assigned (but only with all related
obligations) by a Holder to a transferee or assignee of such securities provided: (a) the Company
is, within a reasonable time after such transfer, furnished with written notice of the name and
address of such transferee or assignee and the securities with respect to which such registration
rights are being assigned; (b) such transferee or assignee agrees in writing to be bound by and
subject to the terms and conditions of this Agreement, including without limitation

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the provisions of Section 1.13 above; and (c) the transfer: (i) involves a transfer of all of
Registrable Securities of the transferor or at least Five Hundred Thousand (500,000) shares (as
adjusted for stock splits, stock dividends, reverse stock splits or the like) of Registrable
Securities, (ii) is to another holder of Registrable Securities, or (iii) is to current or former
limited or partners, members, managers, stockholders or other affiliates of the transferor.




          1.15 Reports Under the Securities Exchange Act of 1934. With a view to making
available to the Holders the benefits of Rule 144 promulgated under the Act and any other rule or
regulation of the SEC that may at any time permit a Holder to sell Registrable Securities of the
Company to the public without registration or pursuant to a registration on Form S-3, the Company
agrees to:




               (a) make and keep public information available, as those terms are understood and defined in
SEC Rule 144, at all times after 90 days after the effective date of the first registration
statement filed by the Company for the offering of its securities to the general public;



               (b) take such action, including the voluntary registration of its Common Stock under Section
12 of the 1934 Act, as is necessary to enable the Holders to utilize Form S-3 for the sale of their
Registrable Securities, such action to be taken as soon as practicable after the end of the fiscal
year in which the first registration statement filed by the Company for the offering of its
securities to the general public is declared effective;



               (c) file with the SEC in a timely manner all reports and other documents required of the
Company under the Act and the 1934 Act at any time after it has become subject to such reporting
requirements; and



               (d) furnish to any Holder, so long as the Holder owns any Registrable Securities, forthwith
upon request (i) a written statement by the Company that it has complied with the reporting
requirements of SEC Rule 144 (at any time after ninety (90) days after the effective date of the
first registration statement filed by the Company), the Act and the 1934 Act (at any time after it
has become subject to such reporting requirements), or that it qualifies as a registrant whose
securities may be resold pursuant to Form S-3 (at any time after it so qualifies), (ii) a copy of
the most recent annual or quarterly report of the Company and such other reports and documents so
filed by the Company, and (iii) such other information as may be reasonably requested in availing
any Holder of any rule or regulation of the SEC which permits the selling of any such securities
without registration or pursuant to such form.



          1.16 Termination of Registration Rights. No Holder shall be entitled to exercise any
right provided for in this Section 1 upon the earlier of the following to occur: (i) six (6) years
following the consummation of the sale of securities pursuant to the IPO or (ii) the date on which
such Holder holds less than one percent (1%) of the Company’s outstanding capital stock and all
Registrable Securities held by such Holder may be sold under Rule 144 under the Act within a single
ninety (90) day period.




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     2. Covenants of the Company



          2.1 Financial Information. The Company will deliver the financial information
identified in Section 2.1(a) to each Investor, and for so long as an Investor holds at least Five
Hundred Thousand (500,000) shares (as adjusted for stock splits, stock dividends, reverse stock
splits or the like) of Registrable Securities (a “Major Holder”) the Company shall also deliver to
such Investor all of the reports and financial information identified in Sections 2.1(b), (c) and
(d).




               (a) As soon as practicable after the end of each fiscal year, and in any event within 120 days
thereafter, audited consolidated balance sheets of the Company and its subsidiaries, if any, as of
the end of such fiscal year, and consolidated statements of income and consolidated statements of
cash flow of the Company and its subsidiaries, if any, for such year, prepared in accordance with
generally accepted accounting principles, consistently applied, and setting forth in each case in
comparative form the figures for the previous fiscal year, all in reasonable detail. Such
financial statements shall be accompanied by a report and opinion thereon by independent public
accountants of national standing selected by the Board of Directors.



               (b) Contemporaneously with delivery to holders of Common Stock, a copy of each report of the
Company delivered to holders of the Company’s Common Stock.



               (c) As soon as practicable after the end of each month, and in any event within thirty (30)
days after the end of each month, an unaudited consolidated balance sheet of the Company as at the
end of such month, and unaudited consolidated statements of income and unaudited consolidated
statements of cash flow for such month and for the current fiscal year to date. Such financial
statements shall be prepared in accordance with generally accepted accounting principles
consistently applied (other than accompanying notes and subject to year-end adjustments), all in
reasonable detail, including detailed quarterly comparison to budget and such financial statements
shall be accompanied by an instrument executed by the Chief Financial Officer or President of the
Company and certifying that such financials fairly present the financial condition of the Company
and its results of operation for the period specified, subject to any year-end audit adjustment.



               (d) As soon as practicable, and in any event within sixty (60) days prior to the beginning of
the fiscal year, a copy of the Company’s annual operating plan and budget for the upcoming fiscal
year, which shall include without limitation forecasts of the Company’s revenues, expenses and cash
position on a month-to-month basis for such upcoming fiscal year together with any other budgets or
revised budgets as they become available throughout the fiscal year.



          For so long as a Major Holder is eligible to receive reports under this Section 2.1, it shall
also have the right to discuss the affairs, finances and accounts of the Company with the Company’s
officers, all at such reasonable times and as often as may be reasonably requested; provided,
however, that the Company shall not be obligated to provide any information unless the Major Holder
agrees to sign a non-disclosure agreement in customary form.




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          2.2 Inspection. The Company shall permit each Major Holder, upon reasonable prior
notice, at such Major Holder’s expense, to visit and inspect the Company’s properties, to examine
its books of account and records and to discuss the Company’s affairs, finances and accounts with
its officers, all at such reasonable times as may be requested by a Major Holder; provided,
however, that the Company shall not be obligated pursuant to this Paragraph 2.2 to provide access
to any information unless the Major Holder agrees to sign a non-disclosure agreement in customary
form.




          2.3 Termination of Information and Inspection Rights. The covenants set forth in
Sections 2.1 and 2.2 shall terminate as to each Major Holder and be of no further force or effect
when the sale of securities pursuant to a registration statement filed by the Company under the Act
in connection with the firm commitment underwritten offering of its securities to the general
public is consummated or when the Company first becomes subject to the periodic reporting
requirements of Sections 12(g) or 15(d) of the 1934 Act, whichever event shall occur first.




          2.4 Right of First Offer. Subject to the terms and conditions specified in this
Section 2.4, the Company hereby grants to each Major Holder a right of first offer with respect to
future sales by the Company of its Shares (as hereinafter defined). For purposes of this Section
2.4, the term Major Holder shall include any general partners, members and affiliates of such Major
Holder. A Major Holder shall be entitled to apportion the right of first offer hereby granted it
among itself and its partners, members and affiliates in such proportions as it deems appropriate.




          Each time the Company proposes to offer any shares of, or securities convertible into or
exercisable for any shares of, any class of its capital stock (“Shares”), the Company shall first
make an offering of such Shares to each Major Holder in accordance with the following provisions:




               (a) The Company shall deliver a notice by certified mail (“Notice”) to each Major Holder
stating (i) its bona fide intention to offer such Shares, (ii) the number of such Shares to be
offered and (iii) the price and terms, if any, upon which it proposes to offer such Shares.



               (b) Within fifteen (15) calendar days after delivery of the Notice, the Major Holder may elect
to purchase or obtain, at the price and on the terms specified in the Notice, up to that portion of
such Shares which equals the proportion that the number of shares of Common Stock issued and held,
or issuable upon conversion of the Preferred Stock then held, by such Major Holder bears to the
total number of shares of Common Stock of the Company then outstanding (assuming full conversion
and exercise of all convertible and exercisable securities) (“Pro-Rata Portion”). The Company
shall promptly, in writing, inform each Major Holder which purchases its Pro-Rata Portion
(“Fully-Exercising Major Holder”) of any other Major Holder’s failure to do likewise. During the
ten-day period commencing after such information is delivered, each Fully-Exercising Major Holder
shall be entitled to obtain that portion of the Shares not subscribed for by the Major Holders
which is equal to the proportion that the number of shares of Common Stock issued and held, or
issuable upon conversion of Preferred Stock then held, by such Fully-Exercising Major Holder bears
to the total number of



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shares of Common Stock issued and held, or issuable upon conversion of the Preferred Stock
then held, by all Fully-Exercising Major Holders who wish to purchase some of the unsubscribed
shares. This step shall be repeated until all unsubscribed shares have been allocated or until the
Fully-Exercising Investors no longer desire to receive an allocation of the unsubscribed shares.




               (c) If all Shares which Major Holders are entitled to obtain pursuant to subsection 2.4(b) are
not elected to be obtained as provided in subsection 2.4(b) hereof, the Company may, during the
45-day period following the expiration of the period provided in subsection 2.4(b) hereof, offer
the remaining unsubscribed portion of such Shares to any person or persons upon terms specified in
the Notice. If the Company does not enter into an agreement for the sale of the Shares within such
period, or if such agreement is not consummated within sixty (60) days after the execution thereof,
the right provided hereunder shall be deemed to be revived and such Shares shall not be offered
unless first reoffered to the Major Holders in accordance herewith.



               (d) The right of first offer in this Section 2.4 shall not be applicable to (i) the issuance
or sale of shares of Common Stock (or options therefor) to officers, directors or employees of, or
consultants to, the Company or a subsidiary under a stock option or other equity incentive plan or
agreement approved by and in a manner determined by the Board of Directors (including stock grants
to officers, directors, employees or consultants); (ii) the issuance of securities pursuant to the
acquisition of another corporation or entity by the Company by way of merger, purchase of all or
substantially all of the assets of the other corporation or stock for stock exchange approved by
the Board of Directors; (iii) the issuance of securities, not primarily for equity financing
purposes, to academic research institutions, financial institutions, strategic partners or lessors
in connection with commercial credit arrangements, equipment financings, debt financings, strategic
partnerships, research and development partnerships, licensing or collaborative arrangements, joint
marketing agreements or similar transactions approved by the Board of Directors; (iv) shares issued
upon conversion of the Series A Preferred Stock sold pursuant to the Purchase Agreement; (v) the
issuance of securities pursuant to outstanding as of the date hereof options, warrants, notes or
other rights to acquire securities of the Company; (vi) securities issued in connection with stock
splits, stock dividends or like transactions for which an adjustment to the respective conversion
prices of the Preferred Stock is made pursuant to the Company’s then current Certificate of
Incorporation; or (vii) upon the closing of a public offering of the Company’ securities pursuant
to the Act in which all shares of Preferred Stock are automatically converted to Common Stock
pursuant to the Company’s then current Certificate of Incorporation.



               (e) The right of first offer set forth in this Section 2.4 may not be assigned or transferred,
except that (i) such right is assignable by each Major Holder to any wholly owned subsidiary or
parent of, or to any corporation or entity that is, within the meaning of the Act, controlling,
controlled by or under common control with, any such Major Holder, (ii) any partner or retired
partner of any such Investor Major Holder which is a partnership or any member or retired member of
any Major Holder which is a limited liability company, and (iii) such right is assignable between
and among any of the Major Holders.



               (f) The right of first offer granted under this Section 2.4 shall terminate and be of no
further force and effect upon the effective date of the Company’s



- 15 -









 




registration statement filed in connection with the IPO and shall not be applicable to any
shares sold pursuant thereto.




          2.5 Vesting of Stock; Co-Sale Rights. Unless determined otherwise by the Board of
Directors or a disinterested/independent committee thereof, all shares of the Company’s Common
Stock, or options to purchase such Common Stock, issued after the date of this Agreement to
employees, officers, directors, consultants and other service providers of the Company shall vest
according to the following schedule: Twenty-five percent (25%) of the shares shall vest upon the
completion of one (1) year of service and the remaining seventy-five percent (75%) of the shares
shall vest in thirty-six (36) equal monthly installments thereafter. Additionally, unless
otherwise consented to by a majority in interest of the Investors, the Company shall ensure that
all agreements to purchase shares of the Company’s Common Stock, or options issued to purchase such
Common Stock, after the date of this Agreement, to employees, officers, directors, consultants and
other service providers of the Company, shall contain a right of = in favor of the Investors, which
right the Company shall not amend without the prior written consent of a majority in interest of
the Investors.




          2.6 Qualified Small Business. The Company covenants that so long as any of Preferred
Stock or the Common Stock into which such shares are converted, are held by an Investor (in whose
hands such shares of Common Stock are eligible to qualify as “qualified small business stock” as
defined in Section 1202(c) of the of the Internal Revenue Code of 1986, as amended (the “Code”)
(“Qualified Small Business Stock”), it will (i) comply with any applicable filing or reporting
requirements imposed by the Code on issuers of Qualified Small Business Stock and (ii) execute and
deliver to each Investor, from time to time, such forms, documents, schedules and other instruments
as may be reasonably requested thereby to cause the Preferred Stock, or the Common Stock into which
such shares are converted, to qualify as Qualified Small Business Stock and in connection
therewith, execute and deliver to the Investors, from time to time, such forms, documents,
schedules and other instruments as may be reasonably requested by an Investor to cause such shares
of capital stock to qualify as Qualified Small Business Stock.




          2.7 Indebtedness. The Company will not, without the approval of the Board of
Directors, incur any indebtedness in excess of $100,000 in a single transaction or a series of
related transactions.




          2.8 Board of Directors Meetings. The Board shall meet not less frequently than
quarterly until otherwise agreed by Investors holding at least a majority of the then outstanding
Registrable Securities. All non-employee directors will be compensated by the Company identically,
and out-of-pocket and travel expenses of the directors incurred in attending Board meetings (or
meetings of committees thereof) or in connection with the performance of their duties as directors
shall be paid or reimbursed promptly by the Company. All shares of Common Stock of the Company
issued to non-employee directors shall be issued under a plan which is applicable to all
non-employee directors.




          2.9 Assignment of Right of First Refusal. The Company covenants that if any of its
officers, directors, employees or consultants elect to sell shares of Common Stock covered by a
right of first refusal and the Company elects not to or is unable to exercise its right of first

- 16 -









 








refusal, the Company shall assign its right of first refusal on the transfer of the
shares held by such individual to the Investors. The procedures for handling the assigned right of
first refusal shall be substantially similar to the procedures set forth in Section 2.4 above.




          2.10 Proprietary Rights Agreements. Each employee, officer and consultant of the
Company shall enter into an invention assignment agreement substantially in the forms previously
provided to the special counsel for the Investors.




          2.11 Director & Officer Liability Insurance. Within ninety (90) days after the date
hereof, the Company shall procure and thereafter maintain so long as the Board of Directors deems
commercially reasonable, a customary Director and Officer liability insurance policy in an amount
determined from time to time by the Board of Directors.




          2.12 Duke University Company covenants that in connection with the issuance of any
shares of Common Stock to Duke University (“Duke”), the Company shall cause Duke to become a party
(in the capacity as a “Common Stockholder” to that certain Voting Agreement and that certain Right
of First Refusal and Co-Sale Agreement, each of even date herewith, among the Company, the
Investors and certain other stockholders of the Company.




          2.13 Market Stand-Off Agreement with Future Security Holders. Unless otherwise
approved by the Investors who then are holders in interest of at least a majority of the then
outstanding Registrable Securities, the Company shall cause each future holder of its securities to
enter into an agreement substantially similar to the market stand-off agreement set forth in
Section 1.13 hereof.




          2.14 Termination of Covenants. The covenants set forth in Sections 2.5 and 2.7 to
2.13 shall terminate on, and be of no further force or effect upon effective date of the IPO.




     3. Transfers of Securities by Investors



          3.1 Notices. If any Investor (the “Transferor”) proposes to sell, assign, hypothecate
or otherwise transfer (a “Transfer”) any securities of the Company owned by such Investor from and
after the date of this Agreement, other than pursuant to the provisions of Section 3.6 of this
Agreement, the Transferor shall first give each of the other Investors the right to purchase such
securities by delivering to them a written offer which shall state the price and other terms and
conditions of the proposed Transfer. If the Transferor proposes to Transfer the securities for
consideration other than solely cash and/or promissory notes, the offer to the Investors shall, to
the extent of such consideration, permit each Investor to pay in lieu thereof, cash equal to the
fair market value of such consideration, and the offer shall state the estimate of such fair market
value as determined by the Board. The Transferor shall fix the period of the offer which shall be a
minimum of twenty (20) days or such longer period as is necessary to determine the fair market
value of the consideration referred to in the preceding sentence.




          3.2 Acceptance of Offer. An Investor may accept an offer (“Purchasing Investor”) only
by giving written notice to the Transferor before the offer expires that such Purchasing Investor
has accepted the offer to purchase some or all of the securities offered (the “Accepted
Securities”); provided, however, that the maximum number or amount of

- 17 -









 








securities a Purchasing Investor shall be entitled to purchase shall be equal to that
number or amount of securities to be transferred multiplied by a fraction, the numerator of which
shall be the number of Registrable Securities held by such Purchasing Investor and the denominator
of which shall be the aggregate number of Registrable Securities held by all Investors, excluding
the Transferor’s Registrable Securities. Notwithstanding the foregoing, any Purchasing Investor
may, at the time it accepts the offer, subscribe to purchase any or all securities offered which
may be available as a result of the rejection, or partial rejection, of the offer by other
Investors, which securities shall be allocated on a pro rata basis among those Purchasing Investors
subscribing to purchase them.




          3.3 Allocation of Securities and Payment. Promptly following the expiration of an
offer, the Transferor shall allocate the securities subscribed for among the Purchasing Investors
accepting or partially accepting the offer, as set forth in Section 3.2, and shall by written
notice (the “Acceptance Notice”) advise all Purchasing Investors of the number or amount of
securities allocated to each of the Purchasing Investors. Within ten (10) days following receipt of
the Acceptance Notice, each of the Purchasing Investors shall deliver to the Transferor payment in
full for the Accepted Securities purchased by it against delivery by the Transferor to each
Purchasing Investor of a certificate or certificates evidencing the Accepted Securities purchased
by it.




          3.4 Failure to Exercise. To the extent an offer pursuant to Section 3.1 is not
accepted by the other Investors, the Transferor may, for a period of ninety (90) days thereafter,
transfer the unaccepted securities, or any of them, upon terms no more favorable than specified in
such offer, to any Person or Persons; provided that such Person or Persons agrees in writing with
the Company and the Investors, prior to and as a condition precedent to such Transfer, to be bound
by all of the such provisions as the Company may deem reasonably necessary.




          3.5 Assignment. The right of first offer set forth in this Section 3 may not be
assigned or transferred, except that each Investor shall have the right to assign its rights to
purchase such securities under this Section 4 to any affiliate, partner, member, retired partner or
member or affiliate of such Investor; provided such affiliate, partner, member, retired partner or
member or affiliate agrees in writing with the Company and the Investors, prior to and as a
condition precedent to such assignment, to be bound by the terms of this Agreement.




          3.6 Permitted Transfers.




               (a) Notwithstanding anything to the contrary contained herein, any Investor which is a
partnership or limited liability company may transfer, without first offering any securities of the
Company to any other Investor, all or any of its securities to a partner, limited partner, member,
retired partner or member of such partnership or to the estate of any such partner or member or
transfer by will or intestate succession to his spouse or to the siblings, lineal descendants or
ancestors of such partner or member or his spouse, or to an affiliate; provided such transferee
agrees in writing with the Company and the Investors, prior to and as a condition precedent to such
Transfer, to be bound by the terms of this Agreement.



               (b) Notwithstanding anything to the contrary contained herein, any Investor which is a
corporation may transfer, without first offering any securities of the Company to any other
Investor, all or any of its securities to any of its affiliates, provided such



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affiliate agrees in
writing with the Company and the Investors, prior to and as a condition precedent to such Transfer,
to be bound by the terms of this Agreement.




               (c) Notwithstanding anything to the contrary contained herein, any Investor who is an
individual may Transfer, without first offering any securities of the Company to any other
Investor, all or any of his securities to his spouse or his or his spouse’s siblings, lineal
descendants or ancestors, or to any trust for any of the foregoing or any entity that is an
affiliate of such Investor (if such Investor is an entity), provided such transferee agrees in
writing with the Company and the Investors, prior to and as a condition precedent to such Transfer,
to be bound by the terms of this Agreement.



          3.7 Termination. The right of first offer granted under this Section 3 shall expire
upon the effective date of (i) the IPO or (ii) a Change in Control.




     4. Miscellaneous



          4.1 Successors and Assigns. Except as otherwise provided herein, the terms and
conditions of this Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties (including transferees of any shares of Registrable
Securities). Nothing in this Agreement, express or implied, is intended to confer upon any party
other than the parties hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as expressly provided in
this Agreement.




          4.2 Governing Law. This Agreement shall be governed by and construed under the
internal laws of the State of California without giving effect to the principles of conflicts of
laws thereof.




          4.3 Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute one and the same
instrument.




          4.4 Titles and Subtitles. The titles and subtitles used in this Agreement are used
for convenience only and are not to be considered in construing or interpreting this Agreement.




          4.5 Notices. Any notices required in connection with this Agreement shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the party to be
notified, (ii) when sent by confirmed by telex or facsimile if sent during normal business hours of
the recipient; if not, then on the next business day, (iii) five (5) days after having been sent by
registered or certified mail, return receipt requested, postage prepaid, or (iv) one (1) day after
deposit with a nationally recognized overnight courier, specifying next day delivery, with written
notification of receipt. All notices shall be addressed to the holder appearing on the books of
the Company or at such address as such party may designate by ten (10) days advance written notice
to the other parties hereto.




          4.6 Expenses. If any action at law or in equity is necessary to enforce or interpret
the terms of this Agreement, the prevailing party shall be entitled to reasonable




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attorneys’ fees,
costs and necessary disbursements in addition to any other relief to which such party may be
entitled.




          4.7 Amendments and Waivers. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written consent of the Company
and Investors holding at least a majority of the Registrable Securities then outstanding. Any
amendment or waiver effected in accordance with this Section shall be binding upon each holder of
any Registrable Securities then outstanding, each future holder of all such Registrable Securities,
and the Company.




          4.8 Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision shall be excluded from this Agreement and the
balance of the Agreement shall be interpreted as if such provision were so excluded and shall be
enforceable in accordance with its terms.




          4.9 Aggregation of Stock. All shares of Registrable Securities held or acquired by
affiliated entities or persons shall be aggregated together for the purpose of determining the
availability of any rights under this Agreement.




          4.10 Entire Agreement. This Agreement (including the Exhibits hereto, if any)
constitutes the full and entire understanding and agreement between the parties with regard to the
subjects hereof and thereof any and all other written or oral agreements relating to the subject
matter hereof existing among any of the parties hereto are expressly canceled.




[Signature Pages Follow]




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     IN WITNESS WHEREOF, the parties have executed this Investors’ Rights Agreement as of the date
first above written.



	 	 	 	 	 
	 	COMPANY:





Orexigen Therapeutics, Inc.,

a Delaware corporation

 	 
	 	By:  	 	 
	 	 	John F. Crowley, 	 
	 	 	President and Chief Executive Officer 	 
	 



[Signature Page to Investors’ Rights Agreement]















 





     IN WITNESS WHEREOF, the parties hereto have executed this Investors’ Rights Agreement as of
the date first above written.



	 	 	 	 	 
	 	Domain Partners V, L.P.





By: One Palmer Square Associates V, L.L.C.

        its General Partner

 	 
	 	By:  	 	 
	 	 	Kathleen K. Schoemaker, 	 
	 	 	Managing Member 	 
	 
	 	DP V Associates, L.P.



By: One Palmer Square Associates V, L.L.C.

         its General Partner

 	 
	 	By:  	 	 
	 	 	Kathleen K. Schoemaker, 	 
	 	 	Managing Member 	 
	 



[Signature Page to Investors’ Rights Agreement]















 





          IN WITNESS WHEREOF, the parties hereto have executed this Investors’ Rights Agreement as of
the date first above written.




Sofinnova Venture Partners VI, L.P.

as nominee for

Sofinnova Venture Partners VI, L.P.

Sofinnova Venture Partners VI GmbH & Co. K.G.




By:
Sofinnova Management VI, L.L.C.
       its General Partner




	 	 	 	 	 
	 	

 	 
	 	By:  	 	 
	 	 	Managing Member 	 
	 	 	 	 
	 



[Signature Page to Investors’ Rights Agreement]














 








          In Witness Whereof, the parties hereto have executed this Investors’ Rights Agreement
as of the date first above written.




	 	 	 	 	 
	 	KPCB Holdings, Inc.,

as nominee

 	 
	 	By:  	 	 
	 	 	Title: 	 
	 	 	 	 
	 



[Signature Page to Investors’ Rights Agreement]















 





SCHEDULE A

LIST OF INVESTORS




	 	 	 
	Name of Investor	 	 
	
Domain Partners V, L.P.
	 	 
	DP V Associates, L.P.
	 	 
	KPCB Holdings, Inc.
	 	 
	Sofinnova Venture Partners VI, L.P.