Document:

EXHIBIT 10.2

 

EXHIBIT 10.2

EMPLOYMENT AGREEMENT

     This
Employment Agreement (“Agreement”) is entered into as of
the ___ day of ___,
2007, by and between [•] (“Executive”) and Orexigen Therapeutics, Inc. (the “Company”).

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

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

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

ARTICLE I

DEFINITIONS

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

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

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

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

     (b) Executive’s willful and continued failure or refusal to follow reasonable instructions of
the [•] of the Company or reasonable policies, standards and regulations of the Company or
its affiliates;

     (c) Executive’s willful and continued failure or refusal to faithfully and diligently perform
the usual, customary duties of his employment with the Company or its affiliates;

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

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

     (f) Executive’s material breach of the Proprietary Information and Inventions Agreement.

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

 

 

such written notice. Failure of the Company to meet financial or performance targets or goals
shall not be deemed to be a breach pursuant to Sections 1.2(b) or 1.2(c) herein.

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

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

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

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

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

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

1.5 “Constructive Termination” means Executive’s voluntary resignation following:

     (a) a material reduction in the level of responsibility associated with Executive’s employment
with the Company or any surviving entity (other than a change in job title or officer title);

     (b) any reduction in Executive’s level of base salary; or

     (c) a relocation of Executive’s principal place of employment by more than 50 miles (other
than reasonable business travel required as part of the job duties associated with Executive’s
position);

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     provided, and only in the event that, such change, reduction or relocation is effected by the
Company without cause and without Executive’s consent.

1.6 “Covered Termination” means an Involuntary Termination Without Cause or Constructive
Termination that occurs within the one-month period before the effective date of a Change in
Control and the six-month period commencing on the effective date of a Change in Control.

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

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

ARTICLE II

EMPLOYMENT BY THE COMPANY

2.1 Position and Duties. Subject to terms set forth herein, the Company agrees to continue to
employ Executive in the position of [•] and Executive hereby accepts such continued
employment. Executive shall serve in an executive capacity and shall perform such duties as are
customarily associated with the position of [•] and such other duties as are assigned to
Executive by the [•]. During the term of Executive’s employment with the Company, Executive
will devote Executive’s best efforts and substantially all of Executive’s business time and
attention (except for vacation periods and reasonable periods of illness or other incapacities
permitted by the Company’s general employment policies or as otherwise set forth in this Agreement)
to the business of the Company.

2.2 Employment at Will. Both the Company and Executive shall have the right to terminate
Executive’s employment with the Company at any time, with or without Cause, upon 30 days’ written
notice. If Executive’s employment with the Company is terminated, Executive will be eligible to
receive severance benefits to the extent provided in this Agreement. If applicable, upon the date
of Executive’s termination of employment with the Company for any reason, Executive shall
immediately resign from the Board and the board of directors or comparable body of every
subsidiary, parent or other affiliated corporation of the Company, and every committee thereof.

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

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ARTICLE III

COMPENSATION AND BENEFITS

3.1 Base Salary. Executive shall receive for services to be rendered hereunder an annual base
salary of $[•] (“Base Salary”), payable on the regular payroll dates of the Company.

3.2 Annual Bonus. In addition to the Base Salary, Executive will be eligible for an annual
performance bonus, equal to up to 25% of the Base Salary, and which is 100% based upon the
achievement of the performance goals and objectives to be determined by the compensation committee
of the Board (“Annual Bonus”). Such Annual Bonus shall be evaluated and paid in January of each
year.

3.3 [Signing Bonus. Executive has received a signing bonus of [•]. [Such signing bonus is
subject to repayment in the event Executive’s employment with the Company is terminated for any
reason. Repayment of the signing bonus shall be forgiven by [•] on each of the first and
second anniversaries of Executive’s commencement of employment with the Company.]]

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

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

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

ARTICLE IV

SEVERANCE AND CHANGE IN CONTROL BENEFITS

4.1 Severance Benefits. If Executive’s employment terminates due to an Involuntary Termination
Without Cause or a Covered Termination, Executive shall receive any annual base salary that has
accrued but is unpaid as of the date of such Involuntary Termination Without Cause or Covered
Termination. In addition, provided Executive first executes and does not revoke an effective
general release in the form and substance acceptable to the Company, Executive shall also be
entitled to continue to be compensated by the Company, at Executive’s annual base salary as in
effect during the last regularly scheduled payroll period immediately preceding the Involuntary
Termination Without Cause or Covered Termination, for a period of nine months, payable on the
regular payroll dates of the Company and subject to applicable tax withholding.

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4.2 Acceleration of Vesting of Option. In the event of a Change In Control, Executive shall vest
in and be able to exercise the stock options held by Executive as to 50% of the unvested shares of
common stock then subject to such options. Thereafter, such options shall vest and become
exercisable as to any unvested shares of common stock subject to such options in equal monthly
installments over the 12 months following the effective date of a Change in Control; provided,
however, that in the event that fewer than 12 months remain until such options are fully vested and
exercisable, the vesting period for such options shall remain unchanged by the Change in Control.
In addition, if within the period beginning on the first day of the calendar month immediately
preceding the calendar month in which the effective date of such Change in Control occurs and
ending on the last day of the twelfth calendar month following the calendar month in which the
effective date of the Change in Control occurs, Executive’s employment with the Company (or its
successor) terminates due to an Involuntary Termination Without Cause thereof by the Company (or
any successor) or due to a Constructive Termination, then all stock options held by Executive shall
become fully vested and exercisable as of the date of such termination of Executive’s employment.

     If Executive holds early exercised stock options, in the event of a Change in Control, the
Repurchase Option (as shall be defined in the Early Exercise Notice and Restricted Stock Purchase
Agreement entered into by the Company and Executive upon the exercise of the such stock options)
shall expire with respect to 50% of the shares of common stock then subject to the Repurchase
Option. Thereafter, the Repurchase Option shall expire with respect to any shares of common stock
remaining subject to the Repurchase Option in equal monthly installments over the 12 months
following the effective date of a Change in Control; provided, however, that in the event that
fewer than 12 months remain until the Repurchase Option has lapsed in full, the lapsing period for
the Repurchase Option shall remain unchanged by the Change in Control. In addition, if within the
period beginning on the first day of the calendar month immediately preceding the calendar month in
which the effective date of such Change in Control occurs and ending on the last day of the twelfth
calendar month following the calendar month in which the effective date of the Change in Control
occurs, Executive’s employment with the Company (or its successor) terminates due to an Involuntary
Termination Without Cause thereof by the Company (or any successor) or due to a Constructive
Termination, then the Repurchase Option shall expire in full with respect to all shares of common
stock subject thereto as of the date of such termination of Executive’s employment.

4.3 Section 409A of the Internal Revenue Code. The foregoing notwithstanding, to the extent
required to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”),
if Executive is deemed to be a “specified employee” for purposes of Section 409A(a)(2)(B) of the
Code as of the date of termination of employment, Executive agrees that the payments due to him
under Section 4.1 in connection with a termination of his employment that would otherwise have been
payable at any time during the six-month period immediately following such termination of
employment shall not be paid prior to, and shall instead be payable in a lump sum as soon as
practicable following, the expiration of such six-month period.

4.4 Failure to Perform. Notwithstanding any other provision of this Agreement, if Executive shall
be discharged by the Company for Cause or if Executive terminates employment other than as a result
of a Constructive Termination, then this Agreement shall automatically terminate (except for
Article V, Article VII, and Article VIII, which shall continue in effect), and

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upon such termination, the Company shall have no further obligation to Executive his spouse or
estate, except that the Company shall pay to Executive, the amount of his base salary and vacation
pay accrued to the date of such termination.

ARTICLE V

PROPRIETARY INFORMATION OBLIGATIONS

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

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

ARTICLE VI

OUTSIDE ACTIVITIES

6.1 Other Activities. Except with the prior written consent of the [•], Executive shall not
during the term of this Agreement undertake or engage in any other employment, occupation or
business enterprise, other than ones in which Executive is a passive investor; provided that such
passive investments will not require services on the part Executive which would in any manner
impair the performance of his duties under this Agreement. Executive may engage in civic and
not-for-profit activities so long as such activities do not materially interfere with the
performance of Executive’s duties hereunder.

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

ARTICLE VII

NONINTERFERENCE

While employed by the Company, and for one year immediately following the date on which Executive
terminates employment or otherwise ceases providing services to the Company, Executive agrees not
to interfere with the business of the Company by (i) soliciting or attempting to solicit any
employee or consultant of the Company to terminate such employee’s or consultant’s employment or
service in order to become an employee, consultant or independent

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contractor to or for any competitor of the Company or (ii) soliciting or attempting to solicit any
client, customer or other person either directly or indirectly, to direct his or its purchase of
the Company’s products and/or services to any person, firm, corporation, institution or other
entity in competition with the business of the Company. Executive’s duties under this Article VII
shall survive termination of Executive’s employment with the Company and the termination of this
Agreement.

ARTICLE VIII

GENERAL PROVISIONS

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

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

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

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

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

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

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

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

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

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

(Signature page follows)

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     In Witness Whereof, the parties have executed this Agreement on the day and year
first above written.

	 	 	 	 	 
	 	 	OREXIGEN THERAPEUTICS, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	[Name]

[Title]
	 
	 	 	 	 
	Accepted and agreed:
	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	[Executive]
	 	 	 	 

9EXHIBIT 10.4

 

EXHIBIT 10.4

OREXIGEN THERAPEUTICS, INC.

INDEPENDENT DIRECTOR COMPENSATION POLICY

     Non-employee members of the board of directors (the “Board”) of Orexigen Therapeutics, Inc.
(the “Company”) shall be eligible to receive cash and equity compensation commencing on the first
date upon which the Company is subject to the reporting requirements of Section 13 or 15(d)(2) of
the Exchange Act (the “Public Trading Date”) as set forth in this Independent Director Compensation
Policy. The cash compensation and option grants described in this Independent Director
Compensation Policy shall be paid or be made, as applicable, automatically and without further
action of the Board, to each member of the Board who is not an employee of the Company or any
parent or subsidiary of the Company (each, an “Independent Director”) who may be eligible to
receive such cash compensation or options, unless such Independent Director declines the receipt of
such cash compensation or options by written notice to the Company. This Independent Director
Compensation Policy shall remain in effect until it is revised or rescinded by further action of
the Board. All share numbers set forth in this policy give effect to the reverse stock split to be
implemented by the Company in connection with its initial public offering.

     1. Cash Compensation.

          Each Independent Director shall be eligible to receive an annual retainer of $25,000 for
service on the Board. In addition, an Independent Director serving as:

               (i) chairman of the Audit Committee shall be eligible to receive an additional annual retainer
of $10,000 for such service;

               (ii) members (other than the chairman) of the Audit Committee shall be eligible to receive an
additional annual retainer of $5,000 for such service;

               (iii) chairman of the Compensation Committee or the Nominating/Corporate Governance Committee
shall be eligible to receive an additional annual retainer of $4,000 for such service; and

               (iv) members (other than the chairman) of the Compensation Committee or the
Nominating/Corporate Governance Committee shall be eligible to receive an additional annual
retainer of $2,000 for such service.

          The annual retainers shall be paid by the Company in quarterly installments or more frequently
as deemed advisable by the officers of the Company for administrative or other reasons.

     2. Equity Compensation. The options described below shall be granted under and shall
be subject to the terms and provisions of the Company’s 2007 Equity Incentive Award Plan (the “2007
Plan”) and shall be granted subject to the execution and delivery of option agreements, including
attached exhibits, in substantially the same forms previously approved by the Board, setting forth
the vesting schedule applicable to such options and such other terms as may be required by the 2007
Plan.

          (a) Initial Options. A person who was initially elected or appointed to the Board
less than twelve (12) months prior to the Public Trading Date or who is initially elected or
appointed to the Board following the Public Trading Date, and who was or is an Independent Director
at the time of such initial election or appointment, shall be eligible to receive a non-qualified
stock option to purchase 25,000

 

 

shares of common stock (subject to adjustment as provided in the 2007 Plan) on the later of
the Public Trading Date and the date of such initial election or appointment (each, an “Initial
Option”).

          (b) Subsequent Options. A person who is an Independent Director automatically shall
be eligible to receive a non-qualified stock option to purchase 12,500 shares of common stock
(subject to adjustment as provided in the 2007 Plan) on the date of each annual meeting of the
Company’s stockholders after the Public Trading Date. An Independent Director elected for the
first time to the Board at an annual meeting of stockholders shall only receive an Initial Option
in connection with such election, and shall not receive a Subsequent Option on the date of such
meeting as well. The option grants described in this clause shall be referred to as “Subsequent
Options.”

          (c) Termination of Employment of Employee Directors. Members of the Board who are
employees of the Company or any parent or subsidiary of the Company who subsequently terminate
their employment with the Company and any parent or subsidiary of the Company and remain on the
Board will not receive an Initial Option grant pursuant to clause 2(a) above, but to the extent
that they are otherwise eligible, will be eligible to receive, after termination from employment
with the Company and any parent or subsidiary of the Company, Subsequent Options as described in
clause 2(b) above.

          (d) Terms of Options Granted to Independent Directors.

               (i) Exercise Price. The per share exercise price of each option granted to an
Independent Director shall equal 100% of the Fair Market Value (as defined in the 2007 Plan) of a
share of common stock on the date the option is granted.

               (ii) Vesting. Initial Options granted to Independent Directors shall become
exercisable in thirty-six equal monthly installments of 1/36 of the shares subject to such option
on the first day of each calendar month following the date of the Initial Option grant, such that
each Initial Option shall be 100% vested on the first day of the 36th month following
the date of grant, subject to the director’s continuing service on the Board through such dates.
Subsequent Options granted to Independent Directors shall become vested in twelve equal monthly
installments of 1/12 of the shares subject to such option on the first day of each calendar month
following the date of the Subsequent Option Grant, subject to a director’s continuing service on
the Board through such dates. The term of each option granted to an Independent Director shall be
ten years from the date the option is granted. No portion of an option which is unexercisable at
the time of an Independent Director’s termination of membership on the Board shall thereafter
become exercisable.

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