Document:

exv10w1

 

Exhibit 10.1

Biosite Incorporated

CHANGE IN CONTROL SEVERANCE BENEFIT PLAN

Section 1. Introduction.

     The Biosite Incorporated Change in Control Severance Benefit Plan (the “Plan”) was established
effective October 22, 2004 (the “Effective Date”). The purpose of the Plan is to provide severance
benefits to certain eligible employees and directors of the Company and its Affiliates upon
selected terminations of service in connection with a Change in Control. This Plan document is
also the Summary Plan Description for the Plan.

Section 2. Definitions.

     The following shall be defined terms for purposes of the Plan:

     (a) “Affiliate” means a Parent Corporation or a Subsidiary Corporation.

     (b) “Base Salary” means a Participant’s monthly base salary in effect immediately
prior to the Employee Covered Termination (including without limitation any compensation that is
deferred by Participant into a Company-sponsored retirement or deferred compensation plan,
exclusive of any employer matching contributions by the Company associated with any such retirement
or deferred compensation plan and exclusive of any other Company contributions) and excludes all
bonuses, commissions, expatriate premiums, fringe benefits (including without limitation car
allowances), option grants, equity awards, employee benefits and other similar items of
compensation.

     (c) “Board” means the Board of Directors of the Company.

     (d) “Cause” means, with respect to a Participant, the occurrence of one or more of
the following:

     (1) Such Participant’s conviction of, or plea of guilty or no contest with respect
to, (i) any crime involving fraud, dishonesty or moral turpitude, (ii) any felony under the laws of
the United States or any state thereof, or (iii) any criminal law of a foreign jurisdiction which
could result in imprisonment for more than one year;

     (2) Such Participant’s attempted commission of, or participation in, a fraud or act
of dishonesty against the Company that results in (or might reasonably result in) material harm to
the Company;

     (3) Such Participant’s intentional and material violation of any statutory duty owed
to the Company;

     (4) Such Participant’s unauthorized use or disclosure of the Company’s material
confidential information, material trade secrets or material proprietary information; or

     (5) Such Participant’s gross misconduct, gross negligence, intentional violation of
a written policy of the Company or intentional violation of a fiduciary duty to the Company.

 

 

     (e) “Change in Control” means the first occurrence of any of the following events
prior to the automatic termination of this Plan as provided in Section 6(b):

     (1) The consummation of a merger or consolidation of the Company with or into
another entity or any other corporate reorganization, if more than 50% of the combined voting power
of the continuing or surviving entity’s securities outstanding immediately after such merger,
consolidation or other reorganization is not owned by persons who were stockholders of the Company
immediately prior to such merger, consolidation or other reorganization, in substantially the same
relative proportions as their ownership of the combined voting power of the Company immediately
prior to such merger, consolidation or other reorganization;

     (2) When a majority of the Board shall change within any 24 month period, unless the
election or the nomination for election by the Company’s stockholders of each new director has been
approved by a vote of at least a majority of the directors then still in office who were directors
at the beginning of the period; or

     (3) Any “person” (as such term is used in sections 13(d) and 14(d) of the Exchange
Act) by the acquisition or aggregation of securities is or becomes the beneficial owner, directly
or indirectly, of securities of the Company representing 50% or more of the combined voting power
of the Company’s then outstanding securities ordinarily (and apart from rights accruing under
special circumstances) having the right to vote at elections of directors (the “Base Capital
Stock”); except that any change in the relative beneficial ownership of the Company’s securities by
any person resulting solely from a reduction in the aggregate number of outstanding shares of Base
Capital Stock, and any decrease thereafter in such person’s ownership of securities, shall be
disregarded until such person increases in any manner, directly or indirectly, such person’s
beneficial ownership of any securities of the Company.

     The term “Change in Control” shall not include a transaction, the sole purpose of which is to
change the state of the Company’s incorporation and once a Change in Control has occurred, no
future events shall constitute a Change in Control for purposes of the Plan.

     (f) “Company” means Biosite Incorporated or, following a Change in Control, the
surviving entity resulting from such transaction or the parent company of such surviving entity.

     (g) “Employee Covered Termination” means, with respect to a Participant who
immediately prior to a termination of employment was an employee of the Company, such Participant’s
termination of employment by the Company without Cause or a voluntary resignation of employment by
the Participant for Good Reason; either of which occurring within two (2) months prior to, or
thirteen (13) months following, the effective date of a Change in Control.

     (h) “Director Covered Termination” means the resignation of a non-employee Board
member or the termination of a non-employee Board member’s service as a director of the Company; in
either case concurrently with or following the effective date of a Change in Control.

     (i) “Good Reason” means, with respect to a Participant, the occurrence of one or
more of the following events, if applicable, without such Participant’s express written consent:

     (1) A material reduction in such Participant’s authority, duties or responsibilities
(and not simply a change in title or reporting relationships); provided, however, that Good Reason
shall not be satisfied solely by reason of such Participant retaining the same position held prior
to

 

 

a Change in Control, but in a distinct legal entity or business unit of a larger entity
following such Change in Control;

     (2) A material reduction by the Company in such Participant’s Base Salary or a
material reduction by the Company of such Participant’s Target Bonus (or, if the Participant
resigns from employment during the Window Period, any reduction by the Company in such
Participant’s Base Salary or any reduction by the Company of such Participant’s Target Bonus);

     (3) A material adverse change to the criteria, milestones or objectives related to
such Participant’s Target Bonus that is reasonably likely to result in the Participant earning less
than his or her Target Bonus during the subsequent applicable period;

     (4) Any requirement, as a condition to continued service, that the Participant enter
into any agreement with the Company regarding confidentiality, non-competition, non-solicitation or
other similar restrictive covenant that is materially more restrictive than the Participant’s
written obligations with the Company under which the Participant is then bound;

     (5) Any Board action or assignment related to such Participant that (i) is contrary
to applicable law, regulatory guidelines, accounting standards or which constitutes an unethical
business practice and (ii) is not cured by the Board with thirty (30) days of receipt of written
notice concerning such action or assignment; or

     (6) A relocation of the Participant’s principal place of work in effect immediately
prior to the earlier of (i) the Participant’s Employee Covered Termination, or (ii) the Change in
Control, to a location more than thirty (30) miles from such location.

     Notwithstanding the foregoing, except with respect to a resignation of employment during the
Window Period, a Participant shall have “Good Reason” for his or her resignation only if: (a) the
Participant notifies the Company in writing, within ninety (90) days after the occurrence of one of
the foregoing events, that he or she intends to terminate his or her employment no earlier than
thirty (30) days after providing such notice; (b) the Company does not cure such condition within
thirty (30) days following its receipt of such notice or states unequivocally in writing that it
does not intend to attempt to cure such condition; and (c) the Participant resigns from employment
within twelve (12) months following the end of the period within which the Company was entitled to
remedy the condition constituting Good Reason but failed to do so.

     (j) “Parent Corporation” means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, provided each corporation in the unbroken
chain (other than the Company) owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.

     (k) “Participant” means the Company’s Chief Executive Officer, the Company’s
President, the Company’s Vice-Presidents, members of the Company’s Board, and all individuals
hereafter designated by the Board, or the Compensation Committee thereof, as Participants under
this Plan at any time during its term; provided that only persons residing in the United States are
eligible for participation under this Plan, unless specifically provided otherwise by the Board.

     (l) “Plan Administrator” means Biosite Incorporated.

 

 

     (m) “Severance Period” means the period of time following the Participant’s Employee
Covered Termination for which a Participant may be eligible to receive the benefits provided in
Section 4 herein. For the Company’s Chief Executive Officer and President, the Severance Period
shall be twenty-four (24) months. For the Company’s Vice-Presidents, the Severance Period shall be
eighteen (18) months. For the Participants hereafter designated by the Compensation Committee of
the Board, the Severance Period shall be the number of months as determined by the Compensation
Committee for such Participant, but not to exceed twenty-four (24) months.

     (n) “Subsidiary Corporation” means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, provided each corporation (other than
the last corporation) in the unbroken chain owns, at the time of the determination, stock
possessing fifty percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.

     (o) “Target Bonus” means Participant’s target annual cash bonus (excluding Base
Salary and excluding any commissions, expatriate premiums, fringe benefits (including without
limitation car allowances), option grants, equity awards, employee benefits and other similar items
of compensation) in effect immediately prior to the Employee Covered Termination.

     (p) “Window Period” means the period of time beginning one (1) month after the
effective date of a Change in Control and ending twelve (12) months later. Resignations for Good
Reason during a Window Period are intended to qualify as separations from service pursuant to a
window program, as such term is used in Section 1.409A-1(b)(9)(iii) of the Treasury Regulations and
defined in Section 1.409A-1(b)(9)(vi) of the Treasury Regulations.

Section 3. Eligibility For Benefits. 

     Subject to the requirements set forth in this Section, the Company shall provide severance
benefits under the Plan to the Participants. In order to be eligible to receive benefits under the
Plan, a Participant must (i) experience an Employee Covered Termination or a Director Covered
Termination, and (ii) with respect to a Participant who experiences an Employee Covered
Termination, execute a general waiver and release in substantially the form attached hereto as
Exhibit A (or as then may be required by law to effect a release of claims), as appropriate, and
such release must become effective in accordance with its terms. The Company, in its sole
discretion, may at any time modify the forms of the required release and shall determine the
appropriate form of release.

Section 4. Amount Of Benefit.

     Subject to the limitations and reductions provided in this Plan, benefits under this Plan, if
any, shall be provided to the Participants described in Section 3 in the following amounts:

     (a) Termination Benefits.

     (1) Employee Covered Termination Benefits. Upon a Participant’s Employee Covered
Termination, such Participant shall receive the following severance package:

     (i) Cash Severance Benefits. At the end of each month during the term of the
Participant’s Severance Period, the Participant will receive a cash payment in an amount equal to
the Participant’s Base Salary.

 

 

     (ii) COBRA Benefits. If such Participant timely elects to continue coverage under
the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), then for the term
of the Participant’s Severance Period, the Company will reimburse all premiums for group medical,
dental and vision coverage paid by such Participant under (a) COBRA and, to the extent applicable,
any similar applicable state statute, and (b) to the extent that such coverage under COBRA and any
such applicable state statute has been exhausted or is no longer available, then under any
individual policy providing group medical, dental and vision benefits substantially similar to
those provided to Participant immediately prior to his or her termination of Service.

     (iii) Stock Option Acceleration and Continued Post-Termination Exercise Period. The
Participant will receive immediate full vesting of all stock options and other equity awards issued
by the Company and held by such Participant. In addition, with respect to stock options issued to
the Participant, the Participant shall be entitled to exercise all of his or her stock options for
24 months beyond the original post-termination exercise period provided in such Participant’s stock
option agreement (but not beyond the original contractual life of the option).

     (2) Director Covered Termination Benefits. Upon a Participant’s Director Covered
Termination, such Participant shall receive immediate full vesting of all stock options and other
equity awards held by such Participant. In addition, the Participant shall be entitled to exercise
all of his or her stock options for 24 months beyond the original post-termination exercise period
provided in such Participant’s stock option agreement (but not beyond the original contractual life
of the option).

All cash severance payment referenced in this Section 4 shall be subject to all applicable tax
withholdings and deductions required by law and shall be paid within ten (10) business days
following the effective date of the general waiver and release referenced in Section 3 of the Plan.
Except as provided herein, all terms, conditions and limitations applicable to a Participant’s
options and/or shares of common stock shall remain in full force and effect.

     (b) Certain Reductions. Notwithstanding any other provision of the Plan to the
contrary, any benefits payable to a Participant under Sections 4(a)(1)(i) and 4(a)(1)(ii) of this
Plan shall be reduced (but not below zero) by any severance benefits payable by the Company or an
affiliate of the Company to such Participant under any other policy, plan, program, agreement or
arrangement, including, without limitation, a contract between such Participant and any entity,
covering such Participant. In addition, to the extent that any federal, state or local laws,
including, without limitation the Worker Adjustment Retraining Notification Act, 29 U.S.C. Section
2101 et seq., or any similar state statute, require the Company to give advance notice or make a
payment of any kind to a Participant because of that Participant’s involuntary termination due to a
layoff, reduction in force, plant or facility closing, sale of business, change of control, or any
other similar event or reason, the benefits payable under Sections 4(a)(1)(i) and 4(a)(1)(ii) of
this Plan shall either be reduced or eliminated by such required payments or notice. The benefits
provided under this Plan are intended to satisfy any and all statutory obligations that may arise
out of a Participant’s involuntary termination of employment for the foregoing reasons, and the
Plan Administrator shall so construe and implement the terms of the Plan.

Section 5. Limitations on Benefits.

     (a) Mitigation. Except as otherwise specifically provided herein, a Participant
shall not be required to mitigate damages or the amount of any payment provided under the Plan by
seeking other employment or otherwise, nor shall the amount of any payment provided for under the
Plan be reduced by any compensation earned by a Participant as a result of employment by another
employer or any retirement benefits received by such Participant after the date of service or
employment termination.

 

 

     (b) Termination of Benefits. Benefits under the Plan shall terminate immediately if
the Participant, at any time, (i) engages in the unauthorized use or disclosure of the Company’s
material confidential information, material trade secrets or material proprietary information under
any written agreement under which the Participant has a such an obligation to the Company that
survives the Participant’s termination of service to the Company, (ii) engages in any prohibited or
unauthorized competitive activities, or prohibited or unauthorized solicitation or recruitment of
employees, in violation of any written agreement under which Participant has such an obligation to
the Company that survives the Participant’s termination of service to the Company; (iii) violates
any term or condition of this Plan or (iv) violates any term of the applicable general waiver and
release referenced in Section 3 above.

     (c) Non-Duplication of Benefits. No Participant is eligible to receive benefits
under this Plan more than one time.

     (d) Indebtedness of Participants. If a Participant is indebted to the Company or an
affiliate of the Company on the date of his or her termination of employment or service, the
Company reserves the right to offset any severance benefits payable in cash under the Plan by the
amount of such indebtedness.

     (e) Code Section 409A Compliance. The benefits provided under Section 4 above, to
the extent of payments made from the date of termination of a Participant’s employment through
March 14 of the calendar year following the calendar year in which the Participant’s rights to such
benefits are no longer subject to a substantial risk of forfeiture, are intended to constitute
separate payments for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations and thus
payable pursuant to the “short-term deferral” rule set forth in Section 1.409A-1(b)(4) of the
Treasury Regulations; to the extent such payments are made following said March 14, they are
intended to constitute separate payments for purposes of Section 1.409A-2(b)(2) of the Treasury
Regulations made upon an involuntary termination from service and payable pursuant to Section
1.409A-1(b)(9)(iii) of the Treasury Regulations, to the maximum extent permitted by said provision.
Notwithstanding the foregoing, if the Company determines that any other payments hereunder fail to
satisfy the distribution requirement of Section 409A(a)(2)(A) of the Internal Revenue Code of 1986,
as amended (the “Code”), the payment of such benefit shall be delayed to the minimum extent
necessary so that such payments are not subject to the provisions of Section 409A(a)(1) of the
Code.

     (f) Parachute Payments. If any payment or benefit a Participant would receive in
connection with a Change in Control from the Company or otherwise (a “Payment”) would (i)
constitute a “parachute payment” within the meaning of Section 280G of the Code and (ii) but for
this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”),
then such Payment shall be equal to the Reduced Amount (as defined below). For the avoidance of
doubt, a Payment shall not be considered a parachute payment for purposes of this paragraph if such
Payment is approved by the stockholders of the Company in accordance with the procedures set forth
in Section 280G(b)(5)(A)(ii) and (B) of the Code, and the regulations thereunder, and at the time
of such shareholder approval, no stock of the Company is readily tradable on an established
securities market or otherwise (within the meaning of Section 280G(b)(5)(A)(ii)(I) of the Code).
The “Reduced Amount” shall be either (x) the largest portion of the Payment that would result in no
portion of the Payment being subject to the Excise Tax or (y) the largest portion of the Payment,
up to and including the total Payment, whichever amount, after taking into account all applicable
federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the
highest applicable marginal rate), results in the Participant’s receipt, on an after-tax basis, of
the greater amount of the Payment notwithstanding that all or some portion of the Payment may be
subject to the Excise Tax. If a reduction in payments or benefits constituting “parachute payments”
is necessary so that the Payment equals the Reduced Amount, reduction shall occur in the following
order unless the Participant elects in writing a different order (provided, however, that such

 

 

election shall be subject to Company approval if made on or after the date on which the event
that triggers the Payment occurs): reduction of cash payments; cancellation of accelerated vesting
of stock awards; reduction of employee benefits. If acceleration of vesting of stock award
compensation is to be reduced, such acceleration of vesting shall be cancelled in the reverse order
of the date of grant of the Participant’s stock awards unless the Participant elects in writing a
different order for cancellation.

     The accounting firm engaged by the Company for general audit purposes as of the day prior to
the effective date of the Change in Control shall perform the foregoing calculations, subject to
the necessary authorizations of the Company’s Audit Committee. Alternatively, the Audit Committee
may engage a consulting firm with expertise in calculations under Section 280G of the Code to
perform such calculations. If any accounting firm so engaged by the Company is serving as
accountant or auditor for either the Participant or the entity or group that is effecting the
Change in Control, the Company shall appoint a nationally recognized accounting or consulting firm
to make the determinations required hereunder. The Company shall bear all expenses with respect to
the determinations by such accounting or consulting firm required to be made hereunder.

     The accounting or consulting firm engaged to make the determinations hereunder shall provide
its calculations, together with detailed supporting documentation, to the Company and the
Participant within ten (10) calendar days after the date on which the Participant’s right to a
Payment is triggered (if requested at that time by the Company or the Participant) or such other
time as requested by the Company or the Participant. If the accounting or consulting firm
determines that no Excise Tax is payable with respect to a Payment, either before or after the
application of the Reduced Amount, it shall furnish the Company and the Participant with an opinion
reasonably acceptable to the Participant that no Excise Tax will be imposed with respect to such
Payment. Any good faith determinations of the accounting firm made hereunder shall be final,
binding and conclusive upon the Company and the Participant.

Section 6. Right To Interpret Plan; Amendment and Termination. 

     (a) Exclusive Discretion. The Plan Administrator shall have the exclusive
discretion and authority to establish rules, forms, and procedures for the administration of the
Plan and to construe and interpret the Plan and to decide any and all questions of fact,
interpretation, definition, computation or administration arising in connection with the operation
of the Plan, including, but not limited to, the eligibility to participate in the Plan and amount
of benefits paid under the Plan. The rules, interpretations, computations and other actions of the
Plan Administrator shall be binding and conclusive on all persons. Unless otherwise determined by
the Board, the Chairman of the Compensation Committee of the Board shall perform the duties of the
Plan Administrator under this Plan.

     (b) Amendment or Termination. The Board, or the Compensation Committee thereof,
reserves the right to amend or terminate this Plan or the benefits provided hereunder at any time;
provided, however, that no such amendment or termination shall impair or reduce the rights of a
Participant unless such Participant consents to such amendment or termination of the Plan in
writing. Notwithstanding the foregoing, the Plan shall automatically terminate on the tenth
(10th) anniversary from the date of its adoption by the Board, unless extended by the
Board or the Compensation Committee thereof. Except with respect to the automatic termination
provided in the prior sentence, any action amending, terminating or extending the Plan shall be in
writing and executed by the Board or the Compensation Committee thereof.

 

 

Section 7. Continuation Of Certain Employee Benefits. 

     (a) COBRA Continuation. Each Participant who is enrolled in a group medical, dental
or vision plan sponsored by the Company or an affiliate of the Company may be eligible to continue
coverage under such group medical, dental or vision plan (or to convert to an individual policy),
at the time of the Participant’s termination of employment under COBRA. The Company will notify
the Participant of any such right to continue group medical coverage at the time of termination.
No provision of this Plan will affect the continuation coverage rules under COBRA. Therefore, the
period during which a Participant may elect to continue the Company’s group medical, dental or
vision coverage at his or her own expense under COBRA, the length of time during which COBRA
coverage will be made available to the Participant, and all other rights and obligations of the
Participant under COBRA will be applied in the same manner that such rules would apply in the
absence of this Plan. At the conclusion of the COBRA premium reimbursements made by the Company,
if any, the Participant will be responsible for the entire payment of premiums required under COBRA
for the duration, if any, of the COBRA period.

     (b) Other Employee Benefits. All non-health benefits (such as life insurance,
disability and 401(k) plan coverage) terminate as of an employee’s termination date (except to the
extent that a conversion privilege may be available thereunder).

Section 8. No Implied Employment Contract.

     The Plan shall not be deemed (i) to give any employee or other person any right to be retained
in the employ or service of the Company or (ii) to interfere with the right of the Company to
discharge any employee or other person at any time and for any reason, which right is hereby
reserved.

Section 9. Legal Construction.

     This Plan is intended to be governed by and shall be construed in accordance with the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”) and, to the extent not preempted by
ERISA, the laws of the State of California.

Section 10. Claims, Inquiries And Appeals.

     (a) Applications for Benefits and Inquiries. Any application for benefits,
inquiries about the Plan or inquiries about present or future rights under the Plan must be
submitted to the Plan Administrator in writing by an applicant (or his or her authorized
representative). The Plan Administrator is:

Biosite Incorporated

9975 Summers Ridge Road

San Diego, CA 92121

Attn: Chief Executive Officer

     (b) Denial of Claims. In the event that any application for benefits is denied in
whole or in part, the Plan Administrator must provide the applicant with written or electronic
notice of the denial of the application, and of the applicant’s right to review the denial. Any
electronic notice will comply with the regulations of the U.S. Department of Labor. The written
notice of denial will be set forth in a manner designed to be understood by the employee and will
include the following:

     (1) the specific reason or reasons for the denial;

 

 

     (2) references to the specific Plan provisions upon which the denial is based;

     (3) a description of any additional information or material that the Plan
Administrator needs to complete the review and an explanation of why such information or material
is necessary; and

     (4) an explanation of the Plan’s review procedures and the time limits applicable to
such procedures, including a statement of the applicant’s right to bring a civil action under
section 502(a) of ERISA following a denial on review of the claim, as described in Section 10(d)
below.

     This written notice will be given to the applicant within ninety (90) days after the Plan
Administrator receives the application, unless special circumstances require an extension of time,
in which case, the Plan Administrator has up to an additional ninety (90) days for processing the
application. If an extension of time for processing is required, written notice of the extension
will be furnished to the applicant before the end of the initial ninety (90) day period.

     This notice of extension will describe the special circumstances necessitating the additional
time and the date by which the Plan Administrator is to render its decision on the application.

     (c) Request for a Review. Any person (or that person’s authorized representative)
for whom an application for benefits is denied, in whole or in part, may appeal the denial by
submitting a request for a review to the Plan Administrator within sixty (60) days after the
application is denied. A request for a review shall be in writing and shall be addressed to:

Biosite Incorporated

9975 Summers Ridge Road

San Diego, CA 92121

Attn: Chief Executive Officer

     A request for review must set forth all of the grounds on which it is based, all facts in
support of the request and any other matters that the applicant feels are pertinent. The applicant
(or his or her representative) shall have the opportunity to submit (or the Plan Administrator may
require the applicant to submit) written comments, documents, records, and other information
relating to his or her claim. The applicant (or his or her representative) shall be provided, upon
request and free of charge, reasonable access to, and copies of, all documents, records and other
information relevant to his or her claim. The review shall take into account all comments,
documents, records and other information submitted by the applicant (or his or her representative)
relating to the claim, without regard to whether such information was submitted or considered in
the initial benefit determination.

     (d) Decision on Review. The Plan Administrator will act on each request for review
within sixty (60) days after receipt of the request, unless special circumstances require an
extension of time (not to exceed an additional sixty (60) days), for processing the request for a
review. If an extension for review is required, written notice of the extension will be furnished
to the applicant within the initial sixty (60) day period. This notice of extension will describe
the special circumstances necessitating the additional time and the date by which the Plan
Administrator is to render its decision on the review. The Plan Administrator will give prompt,
written or electronic notice of its decision to the applicant. Any electronic notice will comply
with the regulations of the U.S. Department of Labor. In the event that the Plan Administrator
confirms the denial of the application for benefits in whole or in part, the notice will set forth,
in a manner calculated to be understood by the applicant, the following:

     (1) the specific reason or reasons for the denial;

 

 

     (2) references to the specific Plan provisions upon which the denial is based;

     (3) a statement that the applicant is entitled to receive, upon request and free of
charge, reasonable access to, and copies of, all documents, records and other information relevant
to his or her claim; and

     (4) a statement of the applicant’s right to bring a civil action under section
502(a) of ERISA.

     (e) Rules and Procedures. The Plan Administrator will establish rules and
procedures, consistent with the Plan and with ERISA, as necessary and appropriate in carrying out
its responsibilities in reviewing benefit claims. The Plan Administrator may require an applicant
who wishes to submit additional information in connection with an appeal from the denial of
benefits to do so at the applicant’s own expense.

     (f) Exhaustion of Remedies. No legal action for benefits under the Plan may be
brought until the claimant (i) has submitted a written application for benefits in accordance with
the procedures described by Section 10(a) above, (ii) has been notified by the Plan Administrator
that the application is denied, (iii) has filed a written request for a review of the application
in accordance with the appeal procedure described in Section 10(c) above, and (iv) has been
notified in writing that the Plan Administrator has denied the appeal. Notwithstanding the
foregoing, if the Plan Administrator does not respond to a Participant’s claim or appeal within the
relevant time limits specified in this Section 10, then the Participant may bring legal action for
benefits under the Plan pursuant to Section 502(a) of ERISA.

Section 11.  Basis Of Payments To And From Plan.

     All benefits under the Plan shall be paid by the Company. The Plan shall be unfunded, and
benefits hereunder shall be paid only from the general assets of the Company.

Section 12.  Other Plan Information.

     (a) Employer and Plan Identification Numbers. The Employer Identification Number
assigned to the Company (which is the “Plan Sponsor” as that term is used in ERISA) by the Internal
Revenue Service is _-___. The Plan Number assigned to the Plan by the Plan Sponsor pursuant to
the instructions of the Internal Revenue Service is 50_.

     (b) Ending Date for Plan’s Fiscal Year. The date of the end of the fiscal year for
the purpose of maintaining the Plan’s records is December 31.

     (c) Agent for the Service of Legal Process. The agent for the service of legal
process with respect to the Plan is Biosite Incorporated, Attn: Chief
Financial Officer, 9975 Summers Ridge Road, San Diego, CA 92121.

     (d) Plan Sponsor and Administrator. The “Plan Sponsor” and the “Plan Administrator”
of the Plan is Biosite Incorporated, 9975 Summers Ridge Road, San Diego, CA 92121 The Plan Sponsor’s
and Plan Administrator’s telephone number is (858) 805-2000. The Plan Administrator is the named
fiduciary charged with the responsibility for administering the Plan.

 

 

Section 13. Statement Of ERISA Rights.

     Participants in this Plan (which is a welfare benefit plan sponsored by the Company) are
entitled to certain rights and protections under ERISA. If you are a Participant in the Plan,
under ERISA you are entitled to:

Receive Information about the Plan and Your Benefits

     (a) Examine, without charge, at the Plan Administrator’s office and at other
specified locations, such as work sites, all documents governing the Plan and a copy of the latest
annual report (Form 5500 Series) filed by the Plan Administrator with the U.S. Department of Labor
and available at the Public Disclosure Room of the Pension and Welfare Benefit Administration;

     (b) Obtain, upon written request to the Plan Administrator, copies of documents
governing the operation of the Plan and copies of the latest annual report (Form 5500 Series). The
Plan Administrator may make a reasonable charge for the copies; and

     (c) Receive a summary of the Plan’s annual financial report. The Plan Administrator
is required by law to furnish each Participant with a copy of this summary annual report.

Prudent Actions by Plan Fiduciaries

     In addition to creating rights for Plan participants, ERISA imposes duties upon the people who
are responsible for the operation of the employee benefit plan. The people who operate the Plan,
called “fiduciaries” of the Plan, have a duty to do so prudently and in the interest of you and
other Plan participants and beneficiaries.

Enforce Your rights

     No one, including your employer or any other person, may fire you or otherwise discriminate
against you in any way to prevent you from obtaining a Plan benefit or exercising your rights under
ERISA.

     Under ERISA, there are steps you can take to enforce the above rights. For instance, if you
request a copy of Plan documents or the latest annual report from the Plan and do not receive them
within 30 days, you may file suit in a Federal court. In such a case, the court may require the
Plan Administrator to provide the materials and pay you up to $110 a day until you receive the
materials, unless the materials were not sent because of reasons beyond the control of the Plan
Administrator.

     If you have a claim for benefits that is denied or ignored, in whole or in part, you may file
suit in a state or Federal court. In addition, if you disagree with the Plan Administrator’s
decision or lack thereof concerning the qualified status of a domestic relations order or a medical
child support order, you may file suit in Federal court.

     If it should happen that the Plan fiduciaries misuse the Plan’s money, or if you are
discriminated against for asserting your rights, you may seek assistance from the U.S. Department
of Labor, or you may file suit in a Federal court. The court will decide who should pay court
costs and legal fees. If you are successful, the court may order the person you have sued to pay
these costs and fees. If you lose, the court may order you to pay these costs and fees, for
example, if it finds your claim is frivolous.

 

 

Assistance with Your Questions

     If you have any questions about the Plan, you should contact the Plan Administrator. If you
have any questions about this statement or about your rights under ERISA, or if you need assistance
in obtaining documents from the Plan Administrator, you should contact the nearest office of the
Pension and Welfare Benefits Administration, U.S. Department of Labor, listed in your telephone
directory or the Division of Technical Assistance and Inquiries, Pension and Welfare Benefits
Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210.
You may also obtain certain publications about your rights and responsibilities under ERISA by
calling the publications hotline of the Pension and Welfare Benefits Administration.

Section 14. Execution.

     To
record the amendment of the Plan as set forth herein, Biosite
Incorporated has caused its duly authorized officer to execute the
same this 15th day of
June, 2007.

	 	 	 
	 

	 	Biosite Incorporated  
	 

	 	 
	 

	 	 
	 

	 	/s/ Kim D. Blickenstaff
	 

	 	 
	 

	 	Kim D. Blickenstaff

Chief Executive Officer

 

 

Exhibit A

RELEASE AGREEMENT

     I understand and agree completely to the terms set forth in the Biosite Incorporated Severance
Benefit Plan (the “Plan”). I understand that this release and waiver (the “Release”), together with
the Plan, constitutes the complete, final and exclusive embodiment of the entire agreement between
the Company and me with regard to the subject matter hereof. I am not relying on any promise or
representation by the Company that is not expressly stated herein.

     In consideration of benefits I will receive under the Plan, I hereby generally and completely
release the Company and its directors, officers, employees, shareholders, members, partners,
agents, attorneys, predecessors, successors, parent and subsidiary entities, insurers, affiliates,
and assigns from any and all claims, liabilities and obligations, both known and unknown, that
arise out of or are in any way related to events, acts, conduct, or omissions occurring prior to my
signing this Release. This Release includes, but is not limited to: (1) all claims arising out of
or in any way related to my employment with the Company or the termination of that employment; (2)
all claims related to my compensation or benefits from the Company, including, but not limited to,
salary, bonuses, commissions, vacation pay, expense reimbursements, severance pay, fringe benefits,
stock, stock options, or any other ownership interests in the Company; (3) all claims for breach of
contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing;
(4) all tort claims, including, but not limited to, claims for fraud, defamation, emotional
distress, and discharge in violation of public policy; and (5) all federal, state, and local
statutory claims, including, but not limited to, claims for discrimination, harassment,
retaliation, attorneys’ fees, or other claims arising under the federal Civil Rights Act of 1964
(as amended), the federal Americans with Disabilities Act of 1990, the federal Age Discrimination
in Employment Act of 1967 (as amended) (“ADEA”), and the California Fair Employment and Housing Act
(as amended).

     If I am over the age of 40 years at the time of an Employee Covered Termination (as that term
is defined in the Plan), I acknowledge that I am knowingly and voluntarily waiving and releasing
any rights I may have under the ADEA. I also acknowledge that the consideration given under the
Release for the waiver and release in the preceding paragraph hereof is in addition to anything of
value to which I was already entitled. I further acknowledge that I have been advised by this
writing, as required by the ADEA, that: (A) my waiver and release do not apply to any rights or
claims that may arise on or after the date I execute this Release; (B) I should consult with an
attorney prior to executing this Release; (C) I have twenty-one (21) days to consider this Release
(although I may choose to voluntarily execute this Release earlier); (D) I have seven (7) days
following my execution of this Release to revoke the Release; and (E) this Release shall not be
effective until the date upon which the revocation period has expired, which shall be the eighth
(8th) day after I execute this Release.

     If I am not over the age of 40 years at the time of an Employee Covered Termination (as that
term is defined in the Plan), I understand and agree that I will have ten days to consider and
execute this release and that it shall be effective upon such execution.

     I represent that I have not filed any claims against the Company, and agree that, except as
such waiver may be prohibited by statute, I will not file any claim against the Company or seek any
compensation for any claim other than the payments and benefits referenced herein. I agree to
indemnify and hold the Company harmless from and against any and all loss, cost, and expense,
including, but not limited to court costs and attorney’s fees, arising from or in connection with
any action which may be commenced, prosecuted, or threatened by me or for my benefit, upon my
initiative, or with my aid or approval, contrary to the provisions of this Release.

 

 

     I acknowledge that I have read and understand Section 1542 of the California Civil Code which
reads as follows: “A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if known by him must have
materially affected his settlement with the debtor.” I hereby expressly waive and relinquish all
rights and benefits under that section and any law of any jurisdiction of similar effect with
respect to my release of any claims I may have against the Company, its affiliates, and the
entities and persons specified above.

	 	 	 
	 

	 	Employee  
	 

	 	 
	 

	 	 
	 

	 	 
	 

	 	Name:
	 

	 	 
	 

	 	Date:Exhibit 10.1

 

EXHIBIT 10.1

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.

5001
Weston Parkway, Suite 103, Cary, NC 27513 •
Phone 919-657-0660 • Fax 919-573-9318
• www.PharmaDirections.com

THIS CONSULTING AGREEMENT (the “Agreement”) is made and entered into as of June 15, 2007, by
and between Orexigen Therapeutics, located at 12481 High Bluff Drive, San Diego, CA 92130
(“Company”) and PharmaDirections, Inc., a North Carolina corporation, located at 5001 Weston
Parkway, Suite 103, Cary, NC 27513 (“Consultant”).

WITNESSETH:

     WHEREAS, the Company desires to engage Consultant to provide certain services to the Company
of an advisory or consulting nature relating to technical, scientific, regulatory and planning
aspects of the chemistry, analytical, pharmaceutical and formulation development in the drug
development arena for selected compounds of the Company and such other services as may be mutually
agreed upon from time to time by the Company and Consultant (all of the foregoing, collectively,
the “Services”); and

     WHEREAS, Consultant desires to provide the Services to the Company on the terms and for the
compensation set forth herein.

     NOW, THEREFORE, the parties hereto agree as follows:

     1. Engagement. The Company hereby engages Consultant as a nonexclusive consultant to
perform the Services requested by the Company, subject to the terms and conditions of this
Agreement. Consultant hereby accepts such engagement for and in consideration of the compensation
hereinafter provided and agrees to perform the Services in a competent, professional and efficient
manner and in compliance with the terms of this Agreement and any and all applicable laws and
regulations. Consultant acknowledges that the Services to be performed for the Company hereunder
are essential to the Company and shall be set forth by the Company. The Services shall be defined
and mutually agreed to by the Company and Consultant on a Work Order mutually executed by the
parties as exemplified in Attachment 1 prior to commencement of Services. Consultant shall not
delegate or subcontract Consultant’s Services to any associates or third parties without Company’s
prior written consent. Such consent will be acknowledged by Company’s signature on a Work Order
that lists all consultants who will be authorized to work on said project. In addition, if any
specific individual(s) are listed in a Work Order as being assigned to perform all or any part of
the Services, then Consultant shall not replace such individual(s) without Company’s prior written
consent, which shall not be unreasonably withheld, except that in the case Consultant’s desire to
replace Richard Soltero, such consent may be withheld in Company’s sole discretion. If for any
reason Richard Soltero is no longer available to perform the Services intended to be performed by
him under the applicable Work Order, Company shall have the right to immediately terminate the
applicable Work Order without penalty subject to minimum payments as set forth in section 2.

     2. Term. The term of this Agreement (the “Term”) shall remain in full force and effect from
the effective date until the first anniversary hereof, and shall automatically renew for
consecutive one (1) year periods, unless terminated in accordance with this Section 2. Company may
elect not to renew the Term and/or to terminate this Agreement or any Work Orders without cause at
any time during the term of the Agreement on six (6) months written notice to Consultant (the
“Wind-Down Period”). Upon written notification, Consultant shall work with Company to ensure an
orderly closeout of the applicable Work Order(s) by the end of the Wind-Down Period subject to the
fulfillment of any ongoing regulatory requirements. Company agrees to pay Consultant for all
actual costs incurred to complete activities requested by Company for the termination and closeout
of Work Order and further agrees that its shall pay Consultant a minimum of $[***] per month for
the performance of Services for the first three months of the Wind-Down Period and a minimum
payment of $[***] per month for the performance of Services for the final three months of the
Wind-Down Period. If the fees for Services provided during such three month periods do not exceed
the respective minimum amounts, then Company shall pay, in addition to any fees for Services
actually performed, the difference between such fees and the applicable minimum payment.

     Notwithstanding the foregoing, either party may terminate this Agreement or any Work Order for
material breach upon thirty (30) days prior written notice specifying the nature of the breach,
unless such breach is cured in

 

			
	*** 	 	Certain information on this page has been omitted and filed separately with the Commission.
Confidential treatment has been requested with respect to the omitted portions.

 

 

5001
Weston Parkway, Suite 103, Cary, NC 27513 •
Phone 919-657-0660 • Fax 919-573-9318
• www.PharmaDirections.com

such 30-day notice period. In the event of termination for material breach by Consultant,
Company shall have no obligation to pay minimum payments under this Section 2 and no Wind-Down
Period shall be required. Sections 4, 5 and 6 shall survive expiration of the Term or termination
of this Agreement for any reason.

     At least thirty (30) days prior to the beginning of each renewal Term, Company and Consultant
shall discuss and thereafter implement any appropriate adjustments to the minimum payments during
the Wind-Down Period based on the overall projected level of Services being performed by Consultant
on Company’s behalf during such upcoming renewal Term.

     3. Compensation. The Company shall pay Consultant fees on a per-project basis as approved on
the Work Order. Consultant will provide Company with a written statement of time expended on each
Work Order, undertaken during the previous month. Each monthly invoice will contain fees for work
performed in the previous month equal to the number of hours expended by Consultant’s employees
times the appropriate hourly rate. The hourly rate and discount schedule is listed in Attachment
2. Consultant will be entitled to, and without prior approval by Company, a 4% annual (January)
increase in the hourly rate charged for services provided.

     Consultant shall also be entitled to reimbursement from the Company for all reasonable
out-of-pocket expenses incurred by Consultant in connection with the performance of Services
requested by the Company, subject to receipt by the Company of adequate supporting documentation
and not to exceed $500 in the aggregate without the prior written consent of the Company. All
amounts payable by the Company hereunder shall be due thirty (30) days after receipt of a proper
invoice therefore. Travel time in transit shall be compensated at 1/2 the rate above unless and to
the extent that Consultant performs Services while traveling which Services will be paid at the
full rate above. No severance pay, compensation or other benefit shall be paid to Consultant
beyond the last day of the Term.

     4. Proprietary Information. Consultant acknowledges that the Company is engaged in a
continuous program of research, development, testing, marketing and distribution of therapeutic
products and that the Company possesses and will possess information that has been created,
discovered, developed or otherwise become known to the Company or in which property rights have
been or will be licensed, assigned or otherwise conveyed to the Company, which information has and
will have commercial value in the business in which the Company is engaged. All of the
aforementioned information is hereinafter referred to as “Proprietary Information.” By way of
illustration, but without limitation, “Proprietary Information” includes trade secrets, processes,
formulae, compounds and properties thereof, data, files, records, protocols, research results,
reports, computer programs and related source codes and object codes, improvements, inventions,
techniques, marketing plans, strategies, forecasts, copyrightable material, suppliers, methods and
manner of operations, information relating to the identity, needs and location of all past, present
and prospective customers, suppliers, strategic partners and other third parties who do business
with the Company and information with respect to the internal affairs of the Company and its
affiliates. Consultant expressly agrees that Proprietary Information does not exist in written
form only, but may also include oral, printed, magnetic, electronic, computer-generated or other
communications and information obtained by inspection of tangible objects. Notwithstanding the
foregoing, “Proprietary Information” does not include: (i) information known by or in the
possession of Consultant on a nonconfidential basis prior to its disclosure to Consultant by the
Company; (ii) information received on a nonconfidential basis from a third party that is not under
an obligation to the Company to keep such information confidential or otherwise prohibited from
disclosing such information to Consultant, or (iii) information which is or becomes known to the
public (other than because of a breach of this Agreement).

     5. Consultant’s Covenants. Consultant acknowledges and agrees that (i) the enforcement of
this Agreement is necessary to ensure the preservation, protection and continuity of the business,
competitive advantage and goodwill of the Company and (ii) the products and services sold and
rendered (or to be sold and rendered) by the Company are unique in character and are of particular
significance to the Company and the Company is in a competitive business. In consideration of
Consultant’s consulting engagement by the Company and the compensation received and to be received
by Consultant from the Company from time to time, Consultant hereby agrees as follows:

 

 

5001 Weston Parkway, Suite 103, Cary, NC 27513 • Phone 919-657-0660 • Fax
919-573-9318 • www.PharmaDirections.com

     (a) During the Term and for ten (10) years after its expiration or termination for any
reason whatsoever, Consultant will keep in confidence and trust all Proprietary Information and
will not use or disclose any Proprietary Information without the written consent of the Company,
except (i) as may be necessary in the ordinary course of performing the Services or (ii) pursuant
to subpoena or order of any court or governmental body or agency with jurisdiction over Consultant;
provided that (A) notwithstanding the foregoing, the foregoing obligations shall continue beyond
ten (10) years after expiration or termination of the Term with respect to any Proprietary
Information for so long as it constitutes a trade secret of the Company and (B) Consultant shall
give the Company notice of the use or disclosure permitted by Section 5(a)(ii) sufficiently in
advance thereof so as to give the Company a reasonable opportunity to contest such use or
disclosure and shall cooperate with the Company in such efforts. All Proprietary Information (and
all patents, trademarks (whether or not registered), copyrights and other intellectual property
rights in connection therewith) shall be and remain the sole and exclusive property of the Company
notwithstanding the fact that such Proprietary Information may have been disclosed to Consultant in
connection with its performance of the Services. For purposes of this Section 5(a), “Inventions”
(as defined in Section 5(c)) shall also constitute Proprietary Information.

     (b) All documents, records, apparatus, equipment and other physical property, whether or not
pertaining to Proprietary Information, furnished to Consultant by the Company shall be and remain
the sole and exclusive property of the Company and shall be returned to it immediately as and when
requested by the Company.

     (c) All inventions, ideas and deliverables and other work product of Consultant hereunder,
whether or not patentable, that Consultant shall make, conceive, learn or first reduce to practice
during the Term, whether alone or in conjunction with others, in the performance of Services,
during the hours for which he is or is to be compensated by the Company or with the use of the
Company’s materials or facilities or any Proprietary Information (collectively, “Inventions”), and
all patents, copyrights and other intellectual property rights in connection therewith, shall be
the sole and exclusive property of the Company. Such Inventions shall be deemed “works made for
hire” within the meaning of 17 U.S.C. §§ 101 and 201(b) and are not subject to any retained or
reserved license, permit or other right of Consultant to use such Inventions for any purpose.
Consultant hereby: (i) agrees to promptly disclose all Inventions to the Company; (ii) assigns to
the Company any rights it may have or acquire in the Inventions and associated patents, copyrights
and other intellectual property rights; and (iii) agrees to assist the Company (at the Company’s
reasonable expense) in its acquisition and enforcement of such patents, copyrights and other
intellectual property rights in any and all countries.

Company acknowledges that Consultant possesses certain inventions, processes, databases, software,
know-how, trade secrets, improvements, and other assets, including but not limited to formulations,
products, laboratory analyses, analytical methods, procedures and techniques, procedure manuals,
personnel data, financial information, computer technical expertise and software, which have been
independently developed by Consultant (collectively “Consultant Property”). Company and
Consultant agree that any Consultant Property or improvements thereto, which are not Inventions,
and which are used, improved, modified or developed by Consultant under or during the term of this
Agreement shall be and remain the sole and exclusive property of Consultant. To the extent any
Consultant Property is provided to Company as part of any deliverables under an applicable Work
Order, Consultant hereby grants Company a royalty-free, worldwide, perpetual, irrevocable license
to use, copy, display, perform, distribute such Consultant Property solely in connection with such
deliverables. Without limiting the generality of the foregoing, the following items constitute
Consultant Property:

Database applications developed by Consultant:

API Inventory Management

Clinical Product Inventory Management

Clinical Trial Material (CTM application)

eBatchTM

iGMPTM

Contract Tracking

Document Management

Drug Product Inventory Management

Electronic Batch Records

 

 

5001
Weston Parkway, Suite 103, Cary, NC 27513 •
Phone 919-657-0660 • Fax 919-573-9318
•  www.PharmaDirections.com

IND Electronic Document

Laboratory Operations Systems Analysis

Laboratory Sample Tracking

PharmaDirections Tracking System

Prototype Tracking

Specifications and Testing Management

Stability Data Management with Trending Analysis

Tools Developed by Consultant:

Audit Checklists

CTM SOPs

Comprehensive Preclinical Development Plans

Due Diligence Checklists

IND Preparation Template

Systems Analysis and Design Process

          (d) Consultant represents and warrants that its performance of all the terms of this Agreement
does not and will not breach any agreement to keep in confidence proprietary information of any
other party acquired by Consultant in confidence or in trust prior to Consultant’s engagement by
the Company. Consultant has not entered into, and agrees not to enter into, any agreement, either
written or oral, that conflicts or would conflict with this Agreement or Consultant’s obligations
hereunder.

          (e) Consultant shall not publish any information developed or disclosed by either party in
connection with Consultant’s Services to the Company without the Company’s prior written consent.

          (f) Consultant hereby represents and warrants to Company that (i) Consultant has the right to
enter into this Agreement and to transfer the entire right, title and interest in and to the
inventions to the Company as described in Sections 4 and 5 hereof and (ii) it has entered into
contracts with its President and other employees, associates, agents, and representatives, if any,
binding them to terms of confidentiality, noncompetition, assignment of intellectual property,
independent contractor consistent with Sections 4, 5, and 6 of this Agreement and sufficient to
permit Consultant to uphold its obligations hereunder.

          (g) Consultant acknowledges and agrees that any breach of this Section 5 would cause
irreparable damage to the Company and that in the event of such breach or threatened breach, the
Company shall have, in addition to any and all remedies at law, the right to an injunction,
specific performance or other equitable relief to prevent the violation of Consultant’s obligations
hereunder. If, in any judicial proceedings, a court shall refuse to enforce any of the other
separate covenants set forth in this Section 5, then such unenforceable covenant shall be amended
so as to be enforceable or, if deemed appropriate by such court, deemed eliminated from these
provisions for the purpose of those proceedings to the extent necessary to permit the remaining
separate covenants to be enforced.

          (h) Consultant represents and warrants that it abides and shall abide by all applicable laws.

     6. Indemnity.

          (a) Consultant and its affiliates, successors and permitted assigns (the “Indemnifying
Parties”) shall indemnify, hold harmless and defend Company and/or Company’s affiliates (present or
future) (the “Indemnified Parties”) against all liabilities, demands, damages, expenses, or losses
(altogether, “Damages”) arising directly or indirectly from any claim (each a “Claim”) based on or
arising out of (a) any claim, action or allegation that, if true, would constitute a breach of any
of Consultant’s obligations (including but not limited to the representations or warranties as set
forth in Section 5), (b) any negligent or willful acts or omissions of Consultant, its employees,
subcontractors or agents, (c) injury (including death) to any persons or damage to any property
arising out of any services furnished by Consultant under this Agreement, (d) Consultant’s
contracts with third parties, (e) any claim, action or allegation that the Services infringe or
misappropriate the intellectual property rights or other proprietary rights of third parties,
or (f) any violation by Consultant of any applicable law, statute or

 

 

5001
Weston Parkway, Suite 103, Cary, NC 27513 •
Phone 919-657-0660 • Fax 919-573-9318 • www.PharmaDirections.com

ordinance or any applicable governmental administrative order, rule or regulation in effect as
of the date of the action or inaction giving rise to such Claim and related to any products
(including the Work Product) or services provided by Consultant hereunder or to the performance by
Consultant of its obligations hereunder. Such Damages shall be paid directly by Indemnifying
Parties, subject to the procedures set forth below (the “Indemnity Procedures”).

          (b) Procedure. Indemnified Party shall promptly notify Indemnifying Party upon its receipt of
any such Claim for which indemnity may be sought hereunder, and within twenty (20) days of such
notice, Indemnifying Party shall retain counsel reasonably satisfactory to the Indemnified Party
and shall pay, as incurred, the Damages associated with such Claim. Subject to this Section 6(b),
Indemnified Party shall afford Indemnifying Party the opportunity to control all aspects of the
defense (with the selection of outside counsel reasonably satisfactory to Indemnified Party),
provided that Indemnifying Party shall not effect any settlement of any pending or threatened
Claim without the prior written consent of the Indemnified Party (such consent not to be
unreasonably withheld). Indemnifying Party shall not be responsible for any expenses incurred by
such Indemnified Party in defense of any Claim after Indemnifying Party has assumed control of the
defense of such Claim with counsel reasonably satisfactory to Indemnified Party, provided, however,
and not withstanding anything to the contrary herein, Indemnified Party shall have the right to
control the defense of any Claim and retain its own counsel at the expense of Indemnifying Party if
the 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. The failure of Indemnified Party to notify
the Indemnifying Party shall not relieve the Indemnifying Party of any liability that it may have
to any Indemnified Party, except to the extent that the Indemnifying Party demonstrates that the
defense of such Claim was materially impaired by the Indemnified Party’s failure to give notice.

     7. Independent Contractor.

          (a) Acknowledgments by Consultant. Consultant acknowledges and agrees that: (i) Consultant
will be treated with respect to the Company as an independent contractor and not as an employee,
agent or authorized representative of the Company; (ii) Consultant, in its capacity as such, shall
have no authority to bind the Company to any contract, agreement or obligation whatsoever; and
(iii) the Company will not provide Consultant with any company, individual or group insurance
policy or any other kind of insurance coverage or employee benefit whatsoever.

          (b) Tax Matters. Because Consultant is an independent contractor, the Company will not
withhold from any compensation paid to Consultant any amounts for federal or state income taxes, or
social security (FICA) for Consultant, nor will the Company pay any social security or unemployment
tax with respect to Consultant. Such taxes are the responsibility of Consultant. Consultant
agrees to indemnify and hold the Company (including its employees, officers, directors, agents,
subsidiaries or affiliates) harmless from and against any damage, claim, assessment, interest
charge or penalty incurred by or charged to the Company as a result of any claim, cause of action
or assessment by any federal or state government or agency for any nonpayment or late payment by
Consultant of any tax or contribution based upon compensation paid hereunder.

     8. Notices. All notices or other communications which are required to be given, served or
sent by one party to the other party pursuant to this Agreement shall be in writing and shall be
hand delivered, sent by nationally-recognized overnight courier with charges prepaid or mailed by
certified mail, return receipt requested, postage prepaid, addressed as follows:

	 	 	 
	If to the Company:	 	If to Consultant:
	Orexigen Therapeutics, Inc.

	 	PharmaDirections, Inc.
	Attn: Anthony McKinney

	 	Attn: Dr. Richard Soltero
	12481 High Bluff Drive

	 	5001 Weston Parkway, Suite 103
	San Diego, CA 92130

	 	Cary, NC 27513
	USA

	 	USA

 

 

5001
Weston Parkway, Suite 103, Cary, NC 27513 •
Phone 919-657-0660 • Fax 919-573-9318
•  www.PharmaDirections.com

Each party may designate by notice in writing a new address to which any such notice or other
communication may thereafter be delivered, given or sent. Notices or other communications (i)
delivered by hand shall be deemed to have been received upon delivery, (ii) sent by overnight
courier shall be deemed to have been received on the next business day following deposit therewith
and (iii) sent by mail shall be deemed to have been received three (3) days following deposit in
the mail (or, if earlier in each such case, upon actual receipt).

     9. Assignment. Neither this Agreement or any interest herein or any rights hereunder shall be
sold or assigned by Consultant, nor shall any of the Services and duties of Consultant hereunder be
delegated to any person, associate, firm or corporation, without the prior written consent of the
Company.

     10. Audit. Company and/or its representative may during the Term and for a period of two (2)
years thereafter, upon its reasonable request, audit any and all work or expense records of
Consultant relating to Services or Work Product provided hereunder, during Consultant’s normal
business hours. Consultant agrees to maintain adequate books and records relating to the foregoing
during the Term and for a period of two (2) years thereafter, and to promptly make such books and
records available to Company in connection with such audit.

     11. Miscellaneous.

          (a) The provisions of this Agreement may not be waived, altered, amended or repealed, in whole
or in part, except with the written consent of the Company and Consultant.

          (b) This Agreement shall be governed by and construed in accordance with the laws of the State
of California (USA), without regard to the principles of conflicts of laws thereof.

          (c) This Agreement may be executed in two counterparts (which may, but need not be, be
transmitted by facsimile signatures), each of which shall be deemed an original and both of which
together shall constitute one and the same instrument.

          (d) In case any one or more of the provisions contained in this Agreement or the other
agreements executed in connection with the transactions contemplated hereby for any reason shall be
held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement or such other agreements,
but this Agreement or such other agreements, as the case may be, shall be construed and reformed to
the maximum extent permitted by law.

          (e) This Agreement represents the entire agreement of the parties with respect to the subject
matter hereof and supersedes in its entirety any and all prior written or oral agreements or
understandings with respect thereto.

          (f) This Agreement shall inure to the benefit of Consultant, its successors and permitted
assigns. Consultant acknowledges that the services to be rendered by it thereunder are unique and
personal in nature. Accordingly, Consultant may not assign any of its rights or delegate any of
its duties or obligations under this Agreement. The Company shall have the right to assign this
Agreement to any successor of all or any substantial part of its business or assets, and any such
successor shall be bound by all the provisions hereof.

 

 

5001
Weston Parkway, Suite 103, Cary, NC 27513 •
Phone 919-657-0660 • Fax 919-573-9318 •  www.PharmaDirections.com

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

	 	 	 	 	 	 	 	 	 
	Orexigen Therapeutics	 	 	 	PharmaDirections, Inc.	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Anthony McKinney
	 	 	 	  /s/ Richard Soltero	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	Anthony McKinney
	 	 	 	Dr. Richard Soltero	 	 
	 

	 	COO
	 	 	 	President	 	 

 

 

5001
Weston Parkway, Suite 103, Cary, NC 27513 •
Phone 919-657-0660 • Fax 919-573-9318
• www.PharmaDirections.com

Attachment 1 – Example Work Order

Work Order for

	 	 	 	 	 
	Submitted to:

	 	Orexigen Therapeutics, Inc.
	 	Date:
	 

	 	Anthony McKinney	 	 
	 

	 	12481 High Bluff Drive, Suite 160	 	 
	 

	 	San Diego, CA 92130	 	 

Scope

PharmaDirections will provide

Project Team

Name (Senior Associate)

Name (Project Manager)

Other Associates of PharmaDirections as appropriate, and with prior approval of client.

Deliverables

Resources and Fees

$[***]/hour
for scientific support and $[***]/hour for project management. If the start of this Work
Order or if a Change Order impacts the current budgeted fees, a new Forecast will be issued to
capture the adjustments. Only actual hours will be invoiced. PharmaDirections will invoice
Orexigen monthly, including any relevant travel or direct project related expense.

Agreed and Accepted

	 	 	 	 	 	 	 
	PharmaDirections, Inc.	 	6/14/07	 	Orexigen Therapeutics, Inc.	 	 
	Richard Soltero, Ph.D.

	 	Date
	 	Anthony McKinney
	 	Date
	President

	 	 	 	Chief Operating Officer	 	 

***  Certain
information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with
respect to the omitted portions.

 

 

5001
Weston Parkway, Suite 103, Cary, NC 27513 •
Phone 919-657-0660 • Fax 919-573-9318
• www.PharmaDirections.com

Attachment 2 –Forecast, Hourly Rate and Discount Schedule

Forecast

PharmaDirections (“Consultant”) will provide a 6 month forecast of budgeted fees for July –
December 2007 to Orexigen (“Company”) and a 12 month forecast annually as presented in Table 1
based on the activities and milestones projected within each Work Order. This forecast will be
used as the basis for the percentage discount Company will receive.

          Table 1: Budgeted Fees

	 	 	 
	Month	 	Budgeted Fees ($)
	January 2008
	 	 
	February 2008
	 	 
	March 2008
	 	 
	April 2008
	 	 
	May 2008
	 	 
	June 2008
	 	 
	July 2008
	 	 
	August 2008
	 	 
	September 2008
	 	 
	October 2008
	 	 
	November 2008
	 	 
	December 2008
	 	 

Fees

The following table outlines that standard hourly rates charged by Consultant in 2007 for services
provided under approved Work Orders:

          Table 2: Hourly Rate

	 	 	 
	Category	 	Standard Rate ($)
	Senior Associate

	 	[***]
	Project Management
Associate

	 	[***]
	Administrative

	 	[***]

 

			
	*** 	 	Certain information on this page has been omitted and filed separately with the Commission.
Confidential treatment has been requested with respect to the omitted portions.

 

 

5001
Weston Parkway, Suite 103, Cary, NC 27513 •
Phone 919-657-0660 • Fax 919-573-9318
• www.PharmaDirections.com

Discount Schedule

To further develop the partnership between Company and Consultant, Consultant agrees to
provide Company with the best pricing it provides to its clients. All Services performed by
Consultant under this Agreement, or any Work Order, will be discounted according to this Discount
Schedule. Discounts will be applied at the end of each quarter to the final monthly invoice for
such quarter. At the conclusion of each quarter, Consultant will calculate the total amount
invoiced for such quarter, excluding any pass-through travel and expense costs, determine the
percentage of forecasted fees met on a quarterly basis, and apply a credit on such third monthly
invoice for such quarter, reflecting the discounted amount as outlined below. Should the credit
exceed the amount due Consultant in such third month of a quarter, any excess credit will be
carried forward to the following months invoice until it is depleted.

By way of example, if for a particular quarter Consultant forecasted fees under Work Orders of
$[***], $[***] and $[***] for the three months of the quarter, and fees for Services of
$[***], $[***] and $[***] were actually accrued in such months, the invoice for Services for
the first and second months would be $[***] and $[***] respectively. The invoice for Services
for the third month would be $[***] less a credit of $[***] (representing [***]% off of the
amounts invoiced for the quarter), for a total of $[***] for such third month. In this case, the
[***]% discount would correspond to the [***]-[***]% category below, as ($[***] + $[***] +
$[***])/($[***] + $[***] + $[***]) = ($[***]/$[***]) = [***]%.

          Table 3: Discount Schedule

	 	 	 
	% of Budgeted Fees	 	Percentage Discount (%)
	< 70%

	 	[***]
	70 – 75%

	 	[***]
	75 – 80%

	 	[***]
	80 – 100%

	 	[***]

 

			
	*** 	 	Certain information on this page has been omitted and filed separately with the Commission.
Confidential treatment has been requested with respect to the omitted portions.

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