Document:

EX-10.1

 Exhibit 10.1 

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 IN THE UNITED STATES BANKRUPTCY COURT 

FOR THE DISTRICT OF DELAWARE 
  

			
	 In re
	  	 Chapter 11

		
	 Orexigen Therapeutics, Inc.,
	  	 Case No. 18-10518 (KG)

		
	 Debtor.1
	  	 Hearing Date: April 11, 2018 at 10:00 a.m. (ET)

		  	 Objection Deadline: April 4, 2018 at 4:00 p.m. (ET)

 DEBTOR’S MOTION FOR ENTRY OF AN ORDER (I) AUTHORIZING 

IMPLEMENTATION OF A KEY EMPLOYEE INCENTIVE PLAN AND A KEY 

EMPLOYEE RETENTION PLAN, (II) APPROVING THE TERMS OF THE 

DEBTOR’S KEY EMPLOYEE INCENTIVE PLAN AND KEY EMPLOYEE 

RETENTION PLAN, AND (III) GRANTING RELATED RELIEF 

The debtor and debtor in possession in the above-captioned case (the “Debtor”), hereby moves (this
“Motion”)2 this Court for entry of an order, under sections 105, 363(b) and, to the extent applicable, 503(c)(3) of title 11 of the United States Code (the “Bankruptcy
Code”) and Rule 6004 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), authorizing, but not directing, the Debtor to implement a proposed key employee incentive plan (the “KEIP”),
substantially in the form attached hereto as Exhibit A, and a key employee retention plan (the “KERP”), substantially in the form attached hereto as Exhibit B. In support of this Motion, the Debtor relies
upon and incorporates by reference the Declaration of Douglas J. Friske in Support of Debtor’s Motion for Entry of an Order (i) Authorizing Implementation of a Key Employee Incentive Plan and a Key Employee
Retention Plan, (ii) Approving the Terms of the Debtor’s 
  

	1 	 The last four digits of the Debtor’s federal tax
identification number are 8822. The Debtor’s mailing address for purposes of this Chapter 11 Case is 3344 North Torrey Pines Court, Suite 200, La Jolla, CA, 92037. 

	2 	 Capitalized terms used but not defined herein have the
meanings given to such terms in the Motion or Bidding Procedures (as defined below), as applicable. 

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Key Employee Incentive Plan and Key Employee Retention Plan, and (iii) Granting Related Relief (the “Friske Declaration”). 

PRELIMINARY STATEMENT 

1. The Debtor has announced its intention to run a sale process under Section 363 of the Bankruptcy Code for the sale of
substantially all of its assets. In furtherance of that process, the Debtor has created a form purchase agreement (the “Form Purchase Agreement”) to be entered into with a “Successful Bidder” following the Auction.
In the time leading up to the Debtor’s bankruptcy filing, the Debtor’s employees have been instrumental in maintaining the ongoing business of the Debtor and thereby maximizing value with respect to the sale of substantially all of the
Debtor’s assets. This process has required a substantial commitment of time and effort on the part of the Debtor’s employees and a willingness to continue to work for the Debtor in the face of the uncertainty inherent in chapter 11
proceedings and the sale process. Despite the efforts to date, further efforts will be necessary to maximize value for all of the Debtor’s creditors: the Debtor’s employees will need to invest substantial time and energy interacting with
potential bidders, responding to information requests, and working to increase value. 
 2. Additionally, on the eve of its
bankruptcy filing, the Debtor’s Chief Financial Officer resigned further underscoring the necessity of the Debtor’s proposed KEIP. Without approval of the Debtor’s proposed KEIP and KERP, there is a very real concern that other senior
executives and key employees will do the same. It is therefore critical to the success of the sale process that the Debtor’s employees have the incentive to continue their extraordinary efforts, to remain in the Debtor’s employ through the
sale, and to work enthusiastically to increase the value achieved at that sale. Accordingly, the Debtor is seeking 

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approval of the KERP for non-insider employees and the KEIP for identified members of the Debtor’s management. The KERP and KEIP are collectively
referred to herein as the “Employee Compensation Plans”. 
 JURISDICTION AND VENUE 

3. This Court has jurisdiction to consider this Motion under 28 U.S.C. §§ 157 and 1334. This is a core proceeding
under 28 U.S.C. § 157(b). Venue of these cases and this Motion in this District is proper under 28 U.S.C. §§ 1408 and 1409. 

4. The statutory predicates for the relief requested herein are sections 105(a) and 363 of the Bankruptcy Code. The relief is
further warranted under Bankruptcy Rule 6004. 
 5. Pursuant to Rule 9013-1(f) of the
Local Rules for the United States Bankruptcy Court for the District of Delaware (the “Local Bankruptcy Rules”), the Debtor consents to the entry of a final judgment or order with respect to this Motion if it is determined that this
Court would lack Article III jurisdiction to enter such final order or judgment absent the consent of the parties. 
 RELEVANT FACTUAL
BACKGROUND 
 6. On March 12, 2018 (the “Petition Date”), the Debtor filed a voluntary
petition for relief under chapter 11 of the Bankruptcy Code (this “Chapter 11 Case”). The Debtor continues to operate its business as debtor in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. No party has
requested the appointment of a trustee or examiner and no committee has been appointed in this Chapter 11 Case. 
 7. The
Debtor is a biopharmaceutical company focused on the treatment of obesity and the commercialization of a single pharmaceutical drug for chronic weight management. Additional details regarding the Debtor’s business and the facts and
circumstances 

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supporting the relief requested herein are set forth in the Declaration of Michael A. Narachi in Support of First Day Relief [D.I. 3] (the “First Day Declaration”)
and incorporated herein by reference. 
 8. The Debtor and its professionals have engaged in an extensive prepetition
marketing process for the sale of all or substantially all of the Debtor’s assets. After speaking with several potentially interested parties but being unable to secure a stalking horse bidder, the Debtor ultimately determined to proceed with
an auction process without the benefit of a stalking horse purchaser. The Debtor has created a Form Purchase Agreement for a transaction to be entered into by the Successful Bidder following the Auction. As described in greater detail in the
Debtor’s motion to, among other things, establish bidding procedures relating to the sale of the Debtor’s assets, the Form Purchase Agreement contemplates an open auction process and sale of substantially all of the Debtor’s assets
and includes the sale notice and assumption of certain specified liabilities. 
 RELIEF REQUESTED 

9. By this Motion, the Debtor seeks entry of an order under Bankruptcy Code sections 105, 363(b) and, to the extent
applicable, section 503(c)(3): (i) authorizing the implementation of the Debtor’s proposed KEIP with respect to payments to certain key insider employees and KERP with respect to retention payments to certain key
non-insider employees who are not included in the KEIP; (ii) approving the terms of the Debtor’s proposed KEIP and KERP; and (iii) granting related relief, including allowing all payments under
the KEIP and the KERP as administrative expenses of these estates. 

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 BASIS FOR RELIEF 

 

	A.	 The Key Employee Incentive Plan 

 

	 	i.	 Overview of the KEIP 

10. The Debtor has recognized a need to address the concerns of its employees and its creditors and to align the interests of
these respective constituencies. In order to effectively and efficiently accomplish an orderly sale process that maximizes value for all stakeholders, the Debtor has determined that formulating the KEIP was in the best interest of its estate and all
parties in interest. The KEIP will help ensure that key employees who are essential to the chapter 11 and sale processes are properly motivated to maximize value for the Debtor, its estate, its creditors and other parties in interest. With these
objectives in mind, the Debtor, after extensive consultation with, and benchmarking analysis by, Willis Towers Watson (“WTW”), developed the KEIP to properly incentivize certain key insider employees identified by the Debtor. 

11. The KEIP is designed to provide incentives to six eligible employees (the “KEIP Participants”) to achieve
a successful sale process for the benefit of all of the Debtor’s stakeholders. The KEIP Participants are all insiders and consist of the Chief Executive Officer, the Chief Operating Officer, the Acting Chief Financial Officer, the Head of
Global Development, the Chief Administrative Officer and the Chief Accounting Officer. The KEIP, which will cover the period up to the sale of the Debtor’s assets, will replace the Debtor’s
pre-petition Q1-Q2 Retention Plan for KEIP Participants, as well as replace the normal 2018 annual bonus, severance arrangements, and long-term incentives, including
stock options and restricted common stock (the “RSU Grants”). 

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 12. Each of the KEIP Participants is playing a central role in the chapter 11
process and, in particular, the Debtor’s ongoing marketing and sale efforts. Incentivizing the KEIP Participants is critical in order to ensure that these key employees remain focused on their efforts to successfully guide the Debtor through
the bankruptcy process and maximize value for the benefit of all of the Debtor’s stakeholders. 
 13. As the Debtor
continues its marketing efforts to solicit the highest and best offer from interested market participants, it is imperative that the Debtor’s key personnel is appropriately incentivized to maximize the sale price to ensure optimum recovery for
all stakeholders. Not only have the KEIP Participants continued to fulfill the normal tasks and projects required by the ordinary demands of their employment, but they have been, and will continue to be, required to expend substantial additional
time and resources on tasks relating to the implementation of the proposed restructuring, the day-to-day reporting and operational requirements of this Chapter 11 Case,
and the ongoing marketing and sales process. 
 14. Awards under the KEIP will be paid out in accordance with the KEIP term
sheet (the “KEIP Term Sheet”) attached hereto as Exhibit A. All of the KEIP Participants will be eligible to obtain asset sale incentives (the “Asset Sale Incentives”). The KEIP Participants shall
receive payouts only upon the occurrence of a sale of the Debtor’s assets (held by Debtor or non-Debtor subsidiaries) or a fully-paid license (in one or a series of transactions), in which the total value
received in the transaction (the “Asset Sale Proceeds”) is more than $40 million. However, two of the KEIP Participants (the Acting Chief Financial Officer and the Chief Accounting Officer, collectively the
“Participating Finance Employees”) will also be eligible to obtain operational incentive payments (the “Operational Incentives”) based on operating disbursements from the cumulative budget through the completion of
the bankruptcy 

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process. The Participating Finance Employees shall receive a one-time payout equal to three-months of their base salary if operating disbursements during
the bankruptcy process are no more than 115% of the cumulative budget through the completion of the bankruptcy process. 

15. The Asset Sale Incentives will be based on a percentage of the Asset Sale Proceeds as shown in Table 1 below.
Collectively, the KEIP Participants will receive an allocated portion of an aggregate payout equal to a percentage of Asset Sale Proceeds (the “Incentive Payout”). However, if the Debtor’s assets are sold (or licensed) on a
piecemeal basis rather than in a single transaction, Incentive Payouts will still be determined and distributed based on the total aggregate value of the Debtor’s sold assets. Allocation of the Incentive Payout to individual KEIP Participants
has been determined by the Debtor’s Board of Directors (the “Board”) as shown in Table 2 below; provided, however, if the Asset Sale Proceeds do not exceed $80 million, the Chief Executive Officer is
not eligible to participate in the Incentive Payout, and such Incentive Payout shall be reallocated amongst the other KEIP Participants, as determined by the Board. In the event of an asset sale funded in part or in whole by a “credit
bid”, the Asset Sale Proceeds will include the portion of the sale proceeds covered by such “credit bid”. 
 Table 1

  

					
	 Asset Sale Proceeds3
	  	Incentive Payout
(as a % of Asset
Sale Proceeds)	 
	 $0 - $39.9m
	  	 	0	% 
	 $40m - $79.9m  
	  	 	1.0	% 
	 $80m - $119.9m  
	  	 	1.5	% 
	 $120m - $164.9m
	  	 	2.0	% 
	 $165m and higher
	  	 	2.5	% 

  
  

	3 	 By way of example, if the Debtor’s assets sell for $90m, the KEIP Participants will collectively receive
Incentive Payouts totaling $1,350,000 ($90M x 1.5%). 

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 Table 2 

 

					
	 Name
	  	Allocation	 
	 Monica Forbes
	  	 	9.66	% 
	 Stephen Moglia
	  	 	10.62	% 
	 Thomas Lynch
	  	 	14.72	% 
	 Peter Flynn
	  	 	13.93	% 
	 Thomas Cannell
	  	 	19.52	% 
	 Michael Narachi
	  	 	31.55	% 

 16. For Operational Incentive payments, the KEIP sets a strict
one-time payout equal to three-months of the Participating Finance Employees’ base salary based upon the level of operating disbursements from the cumulative budget through the completion of the
bankruptcy process. The KEIP Participants are eligible to receive Asset Sale Incentives upon the close of the asset sale (the “Incentive Bonus Payment Date”) and the Participating Finance Employees are eligible to receive
Operational Incentives at the completion of the bankruptcy process. For the Participating Finance Employees, their portion of the Asset Sale Incentives shall be reduced by any Operational Incentives they receive. 

17. In the event that a KEIP Participant’s employment is terminated by the Debtor for cause or voluntarily by the KEIP
Participant for any reason, he or she will forfeit any right to a payment under the KEIP on the date of such employment termination. The amount of payout allocated for such departing KEIP Participant may be reallocated among the other KEIP
Participants, as determined by the Board. If a Participating Finance Employee is terminated by the Debtor without cause, such Participating Finance Employee will be paid its pro-rata share of the Operation
Incentives based on actual performance during the measurement period and for death and disability. If an asset sale occurs within twelve (12) weeks of a KEIP Participant’s involuntary termination without cause, the KEIP Participant is
eligible to receive what they 

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should have received if still employed at the time of the asset sale, with any Asset Sale Incentives received by Participating Finance Employees reduced by an amount already received on account
of Operational Incentives. 
 18. It is important to note that the KEIP is not a “pay to stay” retention plan.
Instead, the KEIP incentivizes KEIP Participants by tying payments directly to operating disbursements or the proceeds received from the Debtor’s sale process. Accordingly, the KEIP is a true incentive plan that successfully aligns the
interests of the Debtor, its employees, and its stakeholders, in that it motivates the KEIP Participants to strictly adhere to the established budget or achieve the highest sale price, which in turn will improve recoveries for the Debtor’s
creditors. 
 ii. The KEIP Design is Consistent with the Bankruptcy Market 

19. As a general matter, the use of key employee incentive plans is common practice in chapter 11 cases. The structure of the
plans varies based on the unique circumstances of each case but the general terms and conditions are consistent with the KEIP proposed by the Debtor, including the metrics and proposed payment amounts set forth therein. To ensure that the KEIP was
commensurate with incentive plans developed by similarly–situated companies, WTW analyzed a set of chapter 11 cases that filed for bankruptcy protection, underwent a sale of their assets, and that implemented key employee incentive plans linked
to the results of the sale process while in bankruptcy. WTW identified 13 such cases (the “All Companies Set”) involving similarly–situated debtors where proceeds were of a comparable size range to the proceeds that may be
realized in this Chapter 11 Case (the “Comparative Set”). In addition to the chapter 11 Asset Sale incentives, WTW reviewed 21 restructuring Operational KEIPs for comparison and additional market respective. 

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 20. In order to define the relevant market for talent, WTW analyzed 13 public
pharmaceutical or biotechnology company proxy statements for the purpose of obtaining benchmark compensation levels for the CEO and CFO positions. For the other four Debtor executive positions, WTW gathered benchmark compensation data from the
Radford Global Life Sciences Survey (a leading publication on multinational life sciences that provides companies with total compensation and practices data) based on position title matches as there were not sufficient matches for these roles in the
13 public company proxy statements. WTW matched the Debtors executives’ to competitive benchmark position matches and compiled market total direct compensation for use in our analysis. 

21. In evaluating the Debtor’s executives’ total direct compensation opportunity, WTW compared such compensation to
that of 13 similarly-situated companies to assess the Debtor’s pay against the total annual market values to reflect fully competitive executive pay in the broader labor market. However, WTW noted that pharmaceutical and biotechnology industry
executive compensation is typically twice the amount of general industry executives’ total direct compensation levels for similarly-sized companies. WTW compared the Debtor executives’ target total
direct compensation with and without the proposed KEIP (base salary only and base salary plus an assumed target KEIP value) to the competitive benchmark total direct compensation (base salary plus annual target incentives plus annual long-term
incentive grant values) for each position at target payout levels. WTW then calculated the Debtor executives’ aggregate variance from the 25th and 50th percentiles of the market. The results were as follows: 

 

	 	•	 	 Compared to the market, the Debtor’s executives’ aggregate annual target total direct compensation
without any Operational or Asset Sale Incentives (only the Debtor’s base salaries since all annual incentives were cancelled as a 

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result of the Debtor filing this Chapter 11 Case) are 59% below the market 25th percentile and 67% below the market 50th percentile levels. 

 

	 	•	 	 The Debtor’s executives’ proposed aggregate target total direct compensation including any potential
target Operational or Asset Sale Incentives (funded at a hypothetical sale price of $100 million), falls 34% below the 25th percentile and 47% below the 50th percentile of market target total direct compensation levels. 

22. In addition, WTW calculated the aggregate cost of the KEIP program in isolation and compared it to the aggregate costs of
bankruptcy operational and asset sale KEIPs at the 25th, 50th, and 75th percentile of the market. In comparing the KEIP against other bankruptcy companies, the target Operational Incentive payouts for the two Participating Finance Employees at a
cost of $131,250 funding was significantly lower than the 25th percentile of the market target Operational Incentive costs of $1.3M. The Debtor’s Asset Sale Incentives with an aggregate cost of $1.5M at target funding (assuming
$100 million asset sale value) falls between the 25th percentile ($1.05M) and the 50th percentile ($1.74M) of the market Asset Sale target aggregate costs. Based on the Debtor’s aggregate Operational Incentive target payouts falling below
the 25th percentile of the market reference companies, and the Debtor’s aggregate Asset Sale target payouts falling between the 25th and 50th percentile of the market reference companies, the Debtor’s KEIP aggregate costs were found to be
reasonable in comparison. 
 23. Given the above results, the Debtor’s KEIP Plan is reasonable and in line with other
plans designed for similarly-situated companies. 
  

	B.	 The Key Employee Retention Plan 

 

	 	i.	 Overview of the KERP 

24. The Debtor seeks to implement the KERP for key non-management personnel who are not
KEIP Participants, in order to ensure that the Debtor does not suffer 

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significant and costly turnover of essential employees during the chapter 11 process. To develop the KERP, the Debtor’s Chief Executive Officer analyzed its workforce to determine which non-insiders were necessary to a successful restructuring and sale process. 
 25. The
Debtor’s management has identified sixty-six (66) likely employees to participate in the KERP (the “KERP Participants” and, together with the KEIP Participants, the
“Participants”), based on their status as critical, hard to replace employees. None of the KERP Participants are insiders, as that term is defined in section 101(a)(31) of the Bankruptcy Code. Many of the KERP Participants have
developed valuable institutional knowledge regarding the Debtor’s ongoing business operations, and keeping such employees in their current roles over the near term will be key to the successful completion of the Debtor’s sale process as
well as the efficient administration of this Chapter 11 Case and the Debtor’s estate. 
 26. Awards under the KERP will
be paid out in accordance with the KERP term sheet (the “KERP Term Sheet”) attached hereto as Exhibit B. The collective funds reserved for the KERP Participants will not exceed $3,115,000 (the “Collective
Funds”). Of the Collective Funds, each KERP Participant will be able to obtain an amount equal to three-months of the KERP Participant’s base salary. Payment under the KERP will be distributed if the KERP Participant is still employed
until the earlier of (i) the consummation of the sale of all or substantially all of the Debtor’s assets or (ii) the Debtor emerges from bankruptcy (the “Vesting Period”). 

27. Termination for cause of a KERP Participant by the Debtor or voluntary termination of a KERP Participant for any reason
would result in forfeiture of award payments. In the event that a KERP Participant departs the Debtor, their portion of the Collective Funds may be reallocated to another KERP Participant or employee of the Debtor who is not a KERP

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Participant at that time, in each case as determined by the Chief Executive Officer of the Debtor. In the event that a KERP Participant is terminated without cause during the Vesting Period,
payments would be made in full at the same time as other KERP Participants receive their payment. KERP Participants whose employment is transferred to a purchaser of assets will receive payment in full at the earlier of either full transfer of
employment or sale. 
  

	 	ii.	 The KERP Design is Consistent with the Bankruptcy Market 

28. The KERP covers 66 non-insiders with target award amounts equal to three months
base salary of each participant. The total cost of the program is $3,115,000. Given that restructuring KERP programs for non-insiders are common and given that there are no other compensation arrangements in
place for the KERP participants other than base salary, the KERP design is reasonable. 
 29. Although certain of the KERP
Participants may hold titles such as “director” or “vice president,” they do not serve on any Debtor’s board of directors and do not take part in the management of the Debtor; rather, they hold such titles in name only. The
KERP Participants generally do not attend senior management meetings or participate in board meetings or corporate governance, and many of their duties are limited to particular divisions. Thus, none of the KERP Participants may be properly
considered “officers” of the Debtor; rather, the KERP Participants are critical employees who have the knowledge and experience to carry out the decisions of management in an efficient and effective manner. The KERP Participants have, in
addition to performing their normal job duties, undertaken significant additional tasks and responsibilities, including providing financial and operational information to fulfill the Debtor’s reporting requirements, assisting with marketing
efforts and responding to diligence requests in connection with the ongoing sale process, and other tasks related to the 

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Chapter 11 Case and ongoing sale process. The KERP Participants will continue to perform these additional tasks during the pendency of this Chapter 11 Case. 

30. The KERP Participants have, along with the Debtor’s other employees, been faced with significant pressure to leave the
Debtor’s employ during the pendency of this Chapter 11 Case due to, among other things, the uncertainty inherent to the chapter 11 sale process. 

31. In order to effectively and efficiently accomplish an orderly sale process that maximizes recovery for all stakeholders,
the Debtor determined that formulating the KERP was in the best interest of its estate and all parties in interest. The KERP will help ensure that key employees who are essential to the chapter 11 and sale processes are properly motivated to
maximize value for the Debtor, its estate, its creditors and other parties in interest. 
 32. The sale process that the
Debtor has undertaken to maximize value for its stakeholders has a necessary byproduct of creating a great deal of uncertainty for the very company personnel charged with maximizing that value. As a result, it is entirely appropriate to provide
benefits to such key personnel in order to counterbalance the distraction that such uncertainty necessarily engenders. The structure of other key employee retention plans previously approved by this and other courts varies based on the unique
circumstances of each case but the general terms and conditions are consistent with the KERP proposed by the Debtor, including the conditions and proposed payment amounts set forth therein. 

 

	C.	 The Debtor’s Need for the KEIP and the KERP 

33. In order to effectively and efficiently accomplish the proposed restructuring and maximize recovery for all stakeholders,
the Debtor determined that 

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formulating the KEIP and KERP was in the best interest of its estate and all parties in interest. 

The Debtor’s Board approved both the Debtor’s KEIP and KERP on March 5, 2018. 

34. The KEIP and KERP will help ensure that key executives who are essential to the chapter 11 and sale process are properly
motivated to maximize value for the Debtor, its estate, its creditors and other parties in interest, and that other key employees of the Debtor remain with the Debtor during the restructuring process to manage the Debtor’s ongoing operations
and ensure that the Debtor emerges from the Chapter 11 Case with its operational capacities intact. 
 35. As a general
matter, the use of KEIPs and KERPs is common practice in chapter 11 cases, and is justified here given the ongoing sale process and the associated uncertainty. The structure of plans approved in other cases varies based on the unique circumstances
of each case, but the general terms and conditions are consistent with the KEIP and the KERP proposed by the Debtor. Furthermore, it is important to note that the DIP Lenders have agreed to support the KEIP and KERP in full according to
Section 4.1(c) of the DIP Credit and Security Agreement. 
 APPLICABLE AUTHORITY 

36. The Debtor seeks authority to implement and honor obligations to the KEIP Participants under the KEIP, and to implement
and honor obligations to the KERP Participants under the KERP. The Debtor respectfully submits that the KEIP and KERP will provide the necessary incentives to the applicable Participants to promote an expeditious resolution of this Chapter 11 Case
and maximize value for the Debtor’s estate. 

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	A.	 Authorization of the KEIP and KERP are Appropriate Pursuant to Bankruptcy Code Section 363(b)(1).

 37. Bankruptcy Code section 363(b) provides, in relevant part, that “[t]he trustee, after
notice and a hearing, may use, sell or lease, other than in the ordinary course of business, property of the estate.” 11 U.S.C. § 363(b)(1). Under Bankruptcy Code section 363, this Court may approve a debtor’s request for relief when
the debtor demonstrates a sound business justification for seeking such relief. See Dai-Ichi Kangyo Bank Ltd. v. Montgomery Ward Holding Corp. (In re Montgomery Ward Holding Corp.), 242 B.R. 147,
153 (D. Del. 1999) (“In determining whether to authorize the use, sale or lease of property of the estate under [section 363(b)], courts require the debtor to show that a sound business purpose justifies such actions”). 

38. As set forth above, the Debtor has articulated valid business reasons for implementation of the KEIP and KERP. The Debtor
has determined in its reasonable business judgment that implementation of the KEIP and KERP will enhance the value of the Debtor’s estate and accordingly, is in the best interests of the Debtor’s estate and the stakeholders in the Chapter
11 Case. In addition to its normal day-to-day responsibilities managing the Debtor’s business and maintaining relationships with its employees, key customers, and
key suppliers, the Participants serve as the driving force to bring the Chapter 11 Case to its ultimate resolution. The Participants are being asked to take on considerable additional responsibilities and expend significantly more hours during this
Chapter 11 Case. 
 39. Additionally, as set forth above and more fully in the Friske Declaration, payment levels under the
KEIP and the KERP are reasonable and were determined based on a thorough analysis of the Debtor’s needs and benchmarks performed by WTW. Moreover, the overall costs of the KEIP and KERP are reasonable in light of the size of the Debtor’s
estate, the 

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nature of the Debtor’s industry, and the benefit from a successful sale process resulting from the Participants’ efforts. Accordingly, the Debtor believes that valid business reasons
exist for the implementation of the Employee Compensation Plans and, thus, that their implementation should be approved. 

40. Once a debtor articulates a valid business justification for a particular form of relief, the Court reviews the
debtor’s request under the “business judgment rule.” The business judgment rule has vitality in chapter 11 cases and shields a debtor’s management from judicial second-guessing. Official Comm. of Subordinated Bondholders v.
Integrated Res., Inc. (In re Integrated Res., Inc.), 147 B.R. 650, 656 (S.D.N.Y. 1992). “The business judgment rule ‘is a presumption that in making a business decision the directors of a corporation acted on an informed
basis, in good faith and in the honest belief that the action taken was in the best interests of the company.’” See id. (quoting Smith v. Van Gorkom, 488 A.2d 858, 872 (Del. 1985)). 

41. In that regard, courts have found that a debtor’s use of reasonable performance bonuses and other incentives for
employees is a valid exercise of a debtor’s business judgment. See, e.g., In re Glob. Home Prod., LLC, 369 B.R. 778, 787 (Bankr. D. Del. 2007) (approving incentive plan as proper exercise of the debtors’ business judgment);
In re Am. W. Airlines, Inc., 171 B.R. 674, 678 (Bankr. D. Ariz. 1994) (noting that it is the proper use of a debtor’s business judgment to propose bonuses for employees who helped propel the debtor successfully through the
bankruptcy process); In re Interco Inc., 128 B.R. 229, 234 (Bankr. E.D. Mo. 1991) (stating that a debtor’s business judgment was controlling in the approval of a “performance/retention program”). 

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 42. This and other courts have approved similar employee incentive and
retention programs as valid exercises of business judgment. See, e.g., In re NJOY, Inc., No. 16-12076 (CSS) (Bankr. D. Del. Jan. 12, 2017) (approving incentive plan tied to sale process
milestones); In re Hipcricket, Inc., No. 15-10104 (LSS) (Bankr. D. Del. Feb. 18, 2015) (approving incentive plan tied to sale proceeds); In re RadioShack Corp., No. 15-10197 (KJC) (Bankr. D. Del. Mar. 4, 2015) (approving key employee incentive plan tied to success of sale process and key employee retention program); In re Dendreon Corp., No. 14-12515 (PJW) (Bankr. D. Del. Dec. 17, 2014) (approving key employee incentive plan with payments based on achieving certain transaction value thresholds); In re Brookstone Holdings Corp., No. 14-10752 (BLS) (Bankr. D. Del. May 12, 2014) (approving key employee retention plan and key employee incentive plan); In re Synagro Techs., Inc.,
No. 13-11041 (BLS) (Bankr. D. Del. May 13, 2013) (approving key employee incentive plan with payments based on achieving certain valuation thresholds); In re KaloBios Pharmaceuticals, Inc., No. 15-12628 (LSS) (Bankr. D. Del. Feb. 17, 2016) (approving key employee retention plan). 

43. In the present case, authorizing the Debtor to provide the KEIP and KERP to the Participants will accomplish a similarly
sound business purpose. The Debtor has determined that the costs associated with additional postpetition compensation payments pursuant to the KEIP and KERP are more than justified by the benefits that the Debtor will realize (and have already
realized) by creating appropriate incentives for the Participants, whose experience, skills and diligent efforts are critical for the Debtor to maximize the value of its business as they reorganize—and by the inevitable expense and disruption
to the chapter 11 process if Participants were to terminate their employment, thereby necessitating replacement costs of more expensive professional services. 

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	B.	 The KEIP is Incentivizing and Thus Not Governed by Bankruptcy Code Sections 503(c)(1) and 503(c)(2).

 44. Bankruptcy Code section 503(c) governs retention, severance and other payments to insiders. By
its plain language, section 503(c)(1) of the Bankruptcy Code pertains solely to retention payments to insiders, and section 503(c)(2) of the Bankruptcy Code pertains solely to severance payments to insiders. Neither of these sections apply to
performance-based incentive plans such as the KEIP, which only allots payments based on the successful achievement of certain metrics and does not provide benefits to KEIP Participants upon termination of their employment with the Debtors. See In
re Velo Holdings Inc., 472 B.R. 201, 208 n.6 (Bankr. S.D.N.Y. 2012) (noting inapplicability of section 503(c)(1) to incentivizing plans); In re Dana Corp., 358 B.R. 567, 576 (Bankr. S.D.N.Y. 2006) (applying section 503(c)(3) of the
Bankruptcy Code to evaluate management incentive plan in absence of applicability of sections 503(c)(1) or 501(c)(2) of the Bankruptcy Code). 

45. The KEIP is not intended to provide bonuses for retention. In particular, the KEIP comprises only targeted incentive
payments to the Debtor’s employees who are the most critical to maximizing the value of the Debtor’s business as aligned with the restructuring and sale process, which payments require a far higher threshold than merely remaining employed
by the Debtor. Although certain KEIP Participants are “insiders” within the meaning of the Bankruptcy Code, the KEIP has been crafted with great care to ensure the metrics directly incentivize and motivate participants to meet the
objectives set forth therein. 
 46. Moreover, while the KEIP was not crafted with the goal of retaining the KEIP
Participants, the fact that the KEIP may encourage the KEIP Participants to remain with the Debtor throughout the Chapter 11 Case should not bar implementation of the KEIP. Indeed, all successful incentive programs have the indirect benefit of
incentivizing an employee to 

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remain with the company. See In re Global Home Prods., LLC, 369 B.R. 778, 786 (Bankr. D. Del. 2007). The primary purpose of the KEIP is to maximize value for the benefit of the
Debtor’s estate. 
 47. Accordingly, the Debtor respectfully submits that sections 503(c)(1) and 503(c)(2) of the
Bankruptcy Code do not apply to the KEIP. 
  

	C.	 The KERP Does Not Provide for Payments to Insiders and Thus Is Not Governed by Bankruptcy Code Sections
503(c)(1) and 503(c)(2). 

 48. As noted above, sections 503(c)(1) and (c)(2) of the Bankruptcy Code
mandate restrictions upon retention and severance plans for “insiders.” The Bankruptcy Code elsewhere defines “insider” as a “(i) director of the debtor; (ii) officer of the debtor; (iii) person in control of the
debtor; (iv) partnership in which the debtor is a general partner; (v) general partner of the debtor; or (vi) relative of a general partner, director, officer, or person in control of the debtor.” 11 U.S.C. § 101(31)(B).
While a person holding an officer’s title is presumptively an officer and thus an insider, that presumption may be rebutted with “evidence sufficient to establish that the person holds the title of an officer in name only and, in fact,
does not meet the substantive definition of the same, i.e., he or she is not taking part in the management of the debtor.” In re Foothills Tex., Inc., 408 B.R. 573, 574-75 (Bankr. D. Del.
2009). 
 49. Certain of the KERP Participants hold titles such as “director” or “vice president,” but
they do not take part in the management of the Debtor and they hold such titles in name only, rebutting the presumption that such participants are “insiders” within the meaning of the Bankruptcy Code. The KERP Participants generally do not
attend senior management meetings or participate in board meetings or corporate governance, and many of their duties are limited to particular divisions. Their respective scopes of authority are limited, and while their 

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titles reflect their individual roles and functions, the same titles do not confer officer or director status upon the KERP Participants. The KERP Participants are critical employees who have the
knowledge and experience to carry out the decisions of management in an efficient and effective manner. In addition to performing their normal job duties, the KERP Participants have undertaken significant additional tasks and responsibilities in
connection with this Chapter 11 Case, including providing financial and operational information to fulfill the Debtor’s reporting requirements, assisting with marketing efforts and responding to diligence requests in connection with the ongoing
sale process, and other tasks related to the proposed restructuring and ongoing sale process. As a consequence, the KERP Participants are not “insiders” as defined in the Bankruptcy Code, and the Debtor thus maintains that sections
501(c)(1) and (c)(2) do not apply here. 
  

	D.	 The Employee Compensation Plans are Justified by the Facts and Circumstances and Satisfy Bankruptcy Code
Section 503(c)(3). 

 50. Finally, the KEIP and KERP components of the Employee Compensation Plans
each also satisfy the standard set forth in Bankruptcy Code section 503(c)(3), which provides: 
 Notwithstanding subsection
(b), there shall neither be allowed, nor paid (3) other transfers or obligations that are outside the ordinary course of business and not justified by the facts and circumstances of the case, including transfers made to, or obligations incurred
for the benefit of, officers, managers, or consultants hired after the date of the filing of the petition. 
 11 U.S.C. § 503(c)(3).

 51. Courts have held that the requirement that transfers or obligations be “justified by the facts and circumstances
of the case” is a reiteration of the business judgment test (or sound business judgment test) incorporated into Bankruptcy Code section 363(b) (and as 

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set forth above) and under which courts traditionally evaluated executive compensation programs prior to recent amendments to the Bankruptcy Code. See In re Dana Corp., 358 B.R. at 576;
In re Nobex Corp., No. 05-20050 (MFW) (Bankr. D. Del. Jan. 12, 2006) (D.I. 194) (“So I do read (c)(3) to be the catch-all and the standard under (c)(3)
for any transfers or obligations made outside the ordinary course of business are those that are justified by the facts and circumstances of the case. Nothing more — no further guidance being provided to the Court by Congress, I find it quite
frankly nothing more than a reiteration of the standard under 363 . . . under which courts had previously authorized transfers outside the ordinary course of business and that is, based on the business judgment of the debtor, the court always
considered the facts and circumstances of the case to determine whether it was justified.”); 4 Collier on Bankruptcy 503.17[1] (16th rev. ed. 2017) (noting that non-insider “plans are reviewed
under the much easier business judgment test in section 503(c)(3)”). 
 52. In assessing a debtor’s business
judgment regarding the implementation of incentive programs, courts, including this one, have looked to the factors laid out by Judge Lifland in Dana for guidance to evaluate a proposed incentive or retention program under Bankruptcy Code
section 503(c)(3).4 See, e.g., In re Glob. Home Prod., LLC, 369 B.R. 778, 785 (Bankr. D. Del. 2007) (applying the Dana factors). 

53. First, in consultation with WTW, after an extensive analysis of the programs implemented in other similarly–situated
companies, the Debtor designed and refined 
  
  

	4	 The Dana factors are: (a) whether a reasonable relationship existed between the proposed plan and
the desired results; (b) whether the cost of the plan was reasonable in light of the overall facts of the case; (c) whether the scope of the plan was fair and reasonable; (d) whether the plan was consistent with industry standards;
(e) whether the debtor had put forth sufficient due diligence efforts in formulating the plan; and (f) whether the debtor received sufficient independent counsel in performing any due diligence and formulating the plan. In re Dana Corp.,
358 B.R. at 576-77. 

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 the KEIP and KERP to motivate and reward Participants for their significant efforts, to
ensure that key management personnel continue to manage the Debtor’s day to day operations and affairs, and to compensate Participants for the increased demands placed upon them in connection with the chapter 11 process. Specifically, the KEIP
and KERP will ensure that the Participants are motivated and that the Debtor has the appropriate staff on hand to facilitate a speedy exit of the Debtor from this Chapter 11 Case, thereby maximizing value for the Debtor’s estate. Second, WTW
engaged in an extensive benchmarking analysis in assisting the Debtor with the design of the KEIP and the KERP. The cost is reasonable and well-justified given the size of the Debtor’s business, the nature of the Debtor’s business and the
value that maximization of the sale process would bring to the estate. Third, the scope of the KEIP and KERP is fair and reasonable; 72 out of approximately 96 employees are eligible to receive payments under the Employee Compensation Plans. Fourth,
the KEIP and KERP are consistent with industry standards with respect to eligibility, total cost, metrics, and payout timing. Finally, consistent with past practice, the Debtor consulted with the Board and Chief Executive Officer in formulating the
Employee Compensation Plans and received outside independent market advice from WTW to ensure the KEIP meets the Debtor’s goal of incentivizing the Debtor’s key employees and the KERP meets the Debtor’s goal of retaining critical non-insider employees. 
 54. Accordingly, the Debtor respectfully submits that the KEIP
and KERP are in the best interests of the Debtor, its creditors, and all parties-in-interest in the Chapter 11 Case. 

RESERVATION OF RIGHTS 

55. Nothing contained herein is or should be construed as: (a) an admission as to the validity of any claim against the
Debtor; (b) a waiver of the Debtor’s rights to dispute 

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any claim on any grounds; (c) a promise to pay any claim; (d) an assumption or rejection of any executor contract or unexpired lease pursuant to Bankruptcy Code section 365; or
(e) otherwise affect the Debtor’s rights under Bankruptcy Code section 365 to assume or reject any executory contract with any party subject to this Motion. 

NOTICE 

56. The Debtor will provide notice of this Motion to: (i) the Office of the United States Trustee for the District of
Delaware; (ii) the Debtor’s list of its thirty (30) largest unsecured creditors, pursuant to Bankruptcy Rule 1007(d); (iii) counsel to the DIP Administrative Agent, the DIP Lenders, Prepetition Indentured Trustee and Secured
Noteholders (each as defined in the First Day Declaration) and (iv) any party that has requested notice pursuant to Bankruptcy Rule 2002. In light of the fact that no trustee, examiner or creditors’ committee has been appointed in this
case, the Debtor submits that no further notice need be given. 
 CONCLUSION 

WHEREFORE, the Debtor respectfully requests that the Court enter an order, substantially in the form annexed hereto as
Exhibit C, granting the relief set forth herein and such other and further relief as may be just and proper. 

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	 March 21, 2018
	 		 		 	 MORRIS, NICHOLS, ARSHT & TUNNELL LLP

	 Wilmington, Delaware
	 		 		 	
				
		 		 		 	 /s/ Jose F. Bibiloni

		 		 		 	 Robert J. Dehney (No. 3578)

		 		 		 	 Andrew R. Remming (No. 5120)

		 		 		 	 Jose F. Bibiloni (No. 6261)

		 		 		 	 1201 N. Market St., 16th Floor

		 		 		 	 P.O. Box 1347

		 		 		 	 Wilmington, DE 19899-1347

		 		 		 	 Telephone: (302) 658-9200

		 		 		 	 Facsimile: (302) 658-3989

		 		 		 	 rdehney@mnat.com

		 		 		 	 aremming@mnat.com

		 		 		 	 jbibiloni@mnat.com

				
		 		 		 	 - and -

				
		 		 		 	 Christopher R. Donoho, III

		 		 		 	 Christopher R. Bryant

		 		 		 	 John D. Beck

		 		 		 	HOGAN LOVELLS US LLP
		 		 		 	 875 Third Avenue

		 		 		 	 New York, NY 10022

		 		 		 	 Telephone: (212) 918-3000

		 		 		 	 Facsimile: (212) 918-3100

chris.donoho@hoganlovells.com christopher.bryant@hoganlovells.com john.beck@hoganlovells.com

				
		 		 		 	 Proposed Counsel for Debtor and Debtor in Possession

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 EXHIBIT A 

KEIP TERM SHEET 

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	 KEIP Objective
	  	 KEY EMPLOYEE INCENTIVE PLAN TERM SHEET The Orexigen Therapeutics, Inc. Key Employee Incentive Plan (the
“KEIP”) is designed to provide incentive payments to certain employees (“KEIP Participants”) of Orexigen Therapeutics, Inc. (the “Company”) to encourage the achievement of certain performance
targets, and to maximize the value of the estate.

		
		  	 This program, which will cover the period up to the sale of the Company’s assets, is to replace the Company’s pre-petition Q1- Q2 Retention Plan for KEIP Participants, as well as replace the normal 2018 annual bonus, severance arrangements and long-term incentives, including stock options and restricted common
stock.

		
	 Participating Employees
	  	 The KEIP Participants are:
  

•  Michael Narachi, Chief Executive Officer

 

•  Thomas Cannell, Chief Operating Officer

 

•  Peter Flynn, Head of Global Development

 

•  Monica Forbes, Acting Chief Financial Officer

 

•  Thomas Lynch, Chief Administrative Officer

 

•  Stephen Moglia, Chief Accounting Officer

		
	 Incentives Payments
	  	 Operational Incentives

		
		  	 Operational Incentive payments will be measured based on operating disbursements from the cumulative budget through the
completion of the bankruptcy process. Only the Acting Chief Financial Officer and the Chief Accounting Officer (“Participating Finance Employees”) are eligible for the Operational Incentives.

		
		  	 Asset Sale Incentives

		
		  	 Asset Sale Incentives will be paid in connection with the sale of the Company’s assets or a fully-paid license (in one
or a series of transactions) if such transaction takes place during Fiscal Year 2018. Such incentives may be offset based on the following: transaction value, asset sale/distribution of proceeds, stalking horse bid price (if applicable), milestones
related to the Company’s liquidation, the recovery rate of creditors, and wind down cash flows.

		
		  	 All KEIP Participants will be eligible for Asset Sale
Incentives.

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		  	 However, for the Participating Finance Employees, any portion of the Asset Sale Incentives allocated to them will be
reduced by any Operational Incentive they receive.

		
	 Structure of Payment
	  	 Operational Incentives

		
		  	 Participating Finance Employees will receive a one-time payout equal to
three-months of their base salary if operating disbursements during the bankruptcy process are no more than 115% of the cumulative budget through the completion of the bankruptcy process.

		
		  	 Asset Sale Incentives

		
		  	 The Asset Sale Incentives will be based on a percentage of the proceeds from the sale of the Company’s assets or
fully-paid up license (whether in one or a series of asset sales) (the “Asset Sale Proceeds”) as outlined in Table 1 below. Asset Sale Incentives will only be distributed if the Asset Sale Proceeds are more than $40m.
Collectively, the KEIP Participants will receive an allocated portion of an aggregate payout equal to a percentage of Asset Sale Proceeds (the “Incentive Payout”). Even if the Company’s assets are sold (or licensed) on a
piecemeal basis rather than in a single transaction, Incentive Payouts will still be determined and distributed based on the total aggregate value of the Company’s assets. Allocation of the Incentive Payout to individual KEIP Participants has
been determined by the Company’s Board of Directors (the “Board”) as shown in Table 2 below; provided, however, if the Asset Sale Proceeds do not exceed $80 million, the Chief Executive Officer is not
eligible to participate in the Incentive Payout, and such Incentive Payout shall be reallocated among the other KEIP Participants, as determined by the Board.

		
		  	 Asset Sale Incentives are uncapped to motivate achievement of maximum sale value.

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 Table 1 

 

					
	 Asset Sale Proceeds1
	  	Incentive Payout
(as a % of Asset
Sale Proceeds)	 
	 $0 - $39.9m
	  	 	0	% 
	 $40m - $79.9m  
	  	 	1.0	% 
	 $80m - $119.9m  
	  	 	1.5	% 
	 $120m - $164.9m
	  	 	2.0	% 
	 $165m and higher
	  	 	2.5	% 

 Table 2 
  

					
	 Name
	  	Allocation	 
	 Monica Forbes
	  	 	9.66	% 
	 Stephen Moglia
	  	 	10.62	% 
	 Thomas Lynch
	  	 	14.72	% 
	 Peter Flynn
	  	 	13.93	% 
	 Thomas Cannell
	  	 	19.52	% 
	 Michael Narachi
	  	 	31.55	% 

  

			
		  	 In the event of an asset sale funded in part or in whole by a “credit bid”, the Asset Sale Proceeds will include
the portion of the sale proceeds covered by such “credit bid”.

		
	 Effect of Termination of Employment
	  	 Upon the involuntary termination of employment of a KEIP Participant by the Company for cause or voluntary termination of
employment by a KEIP Participant for any reason, the right to any amounts under the KEIP that may be owed to such KEIP Participant will be forfeited on the date of such employment termination and such KEIP Participant will have no further rights
under the KEIP. In the event of such termination by the Company, the amount of the Incentive Payout allocated for such departing KEIP Participant may be reallocated among the other KEIP Participants, as determined by the Board.

		
		  	 Upon the involuntary termination of employment of a KEIP Participant without cause, the KEIP Participant will be paid its pro-rata share of the Operational Incentives based on actual performance during the measurement period and for death and disability. If an asset sale is to occur within 12 weeks of the KEIP Participants’s
involuntary termination without cause, the

  
  

	1 	 By way of example, if the Debtor’s assets sell for $90m, the KEIP Participants will collectively receive
Incentive Payouts totaling $1,350,000 ($90M x 1.5%). 

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		  	 KEIP Participant is eligible to receive what they should have received if still employed at the time of the asset sale,
with any Asset Sale Incentives received by Participating Finance Employees reduced by an amount already received on account of Operational Incentives.

		
	 Performance Measurement Period
	  	 Operational Incentive:
  

Operational Incentive payments will be measured based on operating disbursements from the cumulative budget through the completion of the
bankruptcy process.

		
		  	 Asset Sale Incentive:

		
		  	 Covers asset sale for period up to the sale of the Company’s assets.

		
	 Payout Period
	  	 Operational Incentive is paid out upon the completion of the bankruptcy process. Asset Sale Incentive is paid out on close
of the asset sale.

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 EXHIBIT B 

KERP TERM SHEET 

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 KEY EMPLOYEE RETENTION PLAN TERM SHEET 

 

			
	 KERP Objective
	  	 The Orexigen Therapeutics, Inc. Key Employee Retention Plan (the “KERP”) is designed to retain key non-management employees (the “KERP Participants”) of Orexigen Therapeutics, Inc. (the “Company”) in their current roles over the near term while providing them with financial
stability.

		
		  	 Currently, the Company’s pre-petition
Q1-Q2 incentive plan will be cancelled, which would leave KERP Participants with a base salary as their only means of compensation. This program, which covers the Q1-Q4
Fiscal Year 2018 period, is designed to bring the KERP Participants’ compensation closer to market by providing guaranteed pay contingent upon remaining employed through the vesting period.

		
	 Participating Employees
	  	 KERP Participants will include approximately 66 non-management, non-insider
employees of the Company, as determined by the Company’s Chief Executive Officer of the Company.

		
	 Timing of Payments
	  	 Payments will be distributed to KERP Participants if the KERP Participant is still employed until the earlier of (i) the
consummation of the sale of all or substantially all of the Company’s assets or (ii) the Company emerges from bankruptcy (the “Vesting Period”).

		
	 Payments
	  	 The collective funds reserved for the KERP will not exceed $3,115,000 (“Collective Funds”). Of the
Collective Funds, each KERP Participant will be able to obtain an amount equal to three-months of the KERP Participant’s base salary.

		
	 Structure of Payment
	  	 The amount of payment received by each of the KERP Participants will be based solely on their employment with the Company.
No other performance metrics will be included.

		
	 Effect of Termination of Employment
	  	 Award will be forfeited if a KERP Participant resigns voluntarily or is terminated for cause. In the event that a KERP
Participant departs the Company, their portion of the Collective Funds may be reallocated to another KERP Participant or employee of the Company who is not a KERP Participant at that time, in each case as determined by the Chief Executive Officer of
the Company. Awards would be 100% paid for involuntary termination without cause during the Vesting Period. KERP Participants whose employment is transferred to a purchaser of assets will receive payment in full at the earlier of either full
transfer of employment or sale.

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 EXHIBIT C 

PROPOSED ORDER 

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 IN THE UNITED STATES BANKRUPTCY COURT 

FOR THE DISTRICT OF DELAWARE 
  

			
	 In re
	 	 Chapter 11

		
	 Orexigen Therapeutics, Inc.,
	 	 Case No. 18-10518 (KG)

		
	     Debtor.1
	 	RE: D.I. ____

 ORDER (I) AUTHORIZING IMPLEMENTATION OF A KEY EMPLOYEE 

INCENTIVE PLAN AND A KEY EMPLOYEE RETENTION PLAN, (II) APPROVING 

THE TERMS OF THE DEBTOR’S KEY EMPLOYEE INCENTIVE PLAN AND KEY  

EMPLOYEE RETENTION PLAN, AND (III) GRANTING RELATED RELIEF 

Upon consideration of the Debtor’s motion (the
“Motion”)2 for an order (this “Order”), under Bankruptcy Code sections 105(a), 363(b), and 503(c)(3) of title 11 of the United States Code (the
“Bankruptcy Code”), authorizing, but not directing, the implementation of the Debtor’s proposed key employee incentive plan and key employee retention plan (as described in the Motion, the “Employee Compensation
Plans”), filed by Orexigen Therapeutics, Inc., debtor and debtor-in-possession (the “Debtor”), and upon the arguments of counsel and the entire
record of this Chapter 11 Case and other matters of which this Court may properly take judicial notice; and upon the Friske Declaration and due and sufficient notice of the Motion having been given under the particular circumstances; and it
appearing that no other or further notice need be provided; and the Court having jurisdiction to consider the Motion and the relief requested therein in accordance with 28 U.S.C. sections 157 and 1334; and consideration of the Motion and the relief
requested therein being a core proceeding in accordance with 28 U.S.C. sections 1408 
  

	1 	 The last four digits of the Debtor’s federal tax identification number are 8822. The Debtor’s
mailing address for purposes of this Chapter 11 Case is 3344 North Torrey Pines Court, Suite 200, La Jolla, CA, 92037. 

	2	 Capitalized terms not otherwise defined herein shall have
the meanings ascribed to them in the Motion. 

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and 1409; and a hearing having been held to consider the relief requested in the Motion; and upon the record of the hearing and all proceedings had before the Court; and the Court having found
and determined that the relief sought in this Motion is in the best interests of the Debtor, its estate, its creditors and other parties in interest and that the legal and factual bases set forth in the Motion establish just cause for the relief
granted herein; and after due deliberation thereon and good and sufficient cause appearing therefor, it is hereby, 
 ORDERED, ADJUDGED
AND DECREED that: 
 1.    The Motion is GRANTED as set forth herein. 

2.    Implementation of the Employee Compensation Plans is based on the Debtor’s sound business
judgment and is justified by the facts and circumstances of the Debtor’s Chapter 11 Case. 

3.    Pursuant to Bankruptcy Code sections 105(a), 363(b), and 503(c)(3), the Debtor is authorized to take
all necessary actions to implement the Employee Compensation Plans and to make all payments pursuant thereto. 

4.    The Debtor is hereby authorized to offer and pay eligible employees in accordance with the Employee
Compensation Plans. 
 5.    The Debtor is hereby authorized to implement and fund the Employee
Compensation Plans in their entirety, and make payments thereunder. 
 6.    The claims of the
Participants under the Employee Compensation Plans are entitled to and shall be accorded administrative expense status and priority under Bankruptcy Code sections 503(b)(1)(A) and 507(a)(2). 

7.    The terms and conditions of this Order shall be immediately effective and enforceable upon its
entry. 

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 8.    The Debtor is authorized to take all actions
necessary to effectuate the relief granted pursuant to this Order. 
 9.    The Court shall retain
jurisdiction to hear and determine all matters arising from the implementation of this Order. 

Dated:                    , 2018 

Wilmington, Delaware 
  

	
	  

THE HONORABLE KEVIN GROSS

	 UNITED STATES BANKRUPTCY JUDGE

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 IN THE UNITED STATES BANKRUPTCY COURT 

FOR THE DISTRICT OF DELAWARE 
  

					
	 In re:
	 		  	Chapter 11
			
	 OREXIGEN THERAPEUTICS, INC.,
	 		  	 Case No. 18-10518 (KG)

			
	Debtor.1	 		  	 Objection Deadline:

April 4, 2018 at 4:00 p.m. (ET)
 Hearing
Date:
 April 11, 2018 at 10:00 a.m. (ET)

 NOTICE OF DEBTOR’S MOTION FOR ENTRY OF AN ORDER (I) AUTHORIZING 

IMPLEMENTATION OF A KEY EMPLOYEE INCENTIVE PLAN AND A KEY 

EMPLOYEE RETENTION PLAN, (II) APPROVING THE TERMS OF THE DEBTOR’S 

KEY EMPLOYEE INCENTIVE PLAN AND KEY EMPLOYEE  

RETENTION PLAN, AND (III) GRANTING RELATED RELIEF 

PLEASE TAKE NOTICE that on March 21, 2018, the above-captioned debtor and debtor-in-possession (the “Debtor”) filed the Debtor’s Motion For Entry Of An Order (I) Authorizing Implementation Of A Key Employee Incentive Plan And A Key Employee Retention
Plan, (II) Approving The Terms Of The Debtor’s Key Employee Incentive Plan And Key Employee Retention Plan, And (III) Granting Related Relief (the “Motion”). 

PLEASE TAKE FURTHER NOTICE that objections, if any, to the approval of the Motion must (a) be in writing; (b) be
filed with the Clerk of the Bankruptcy Court, 824 Market Street, 3rd Floor, Wilmington, Delaware 19801, on or before April 4, 2018 at 4:00 p.m. (E.T.) (the “Objection
Deadline”); and (c) served so as to be received on or before the Objection Deadline by the undersigned counsel to the Debtor. 

PLEASE TAKE FURTHER NOTICE THAT only objections made in writing and timely filed and received, in accordance with the
procedures above, will be considered by the Bankruptcy Court at such hearing. 
 PLEASE TAKE FURTHER NOTICE THAT A HEARING
ON THE MOTION WILL BE HELD ON APRIL 11, 2018 AT 10:00 A.M. (E.T.) BEFORE THE HONORABLE KEVIN GROSS AT THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE, 824 NORTH MARKET STREET, 6TH FLOOR, COURTROOM #3,
WILMINGTON, DELAWARE 19801. 
  

	1	 The last four digits of the Debtor’s federal tax
identification number are 8822. The Debtor’s mailing address for purposes of this Chapter 11 Case is 3344 North Torrey Pines Court, Suite 200, La Jolla, CA, 92037. 

 Case 18-10518-KG     Doc 78-4     Filed 03/21/18
    Page 2 of 2 
  

 IF YOU FAIL TO RESPOND IN ACCORDANCE WITH THIS NOTICE, THE COURT MAY GRANT
THE FINAL RELIEF REQUESTED IN THE MOTION WITHOUT FURTHER NOTICE OR HEARING. 
  

			
	 March 21, 2018

Wilmington, Delaware
	  	 MORRIS, NICHOLS, ARSHT & TUNNELL LLP

	  	 /s/ Jose F. Bibiloni

		  	 Robert J. Dehney (No. 3578)

		  	 Andrew R. Remming (No. 5120)

		  	 Jose F. Bibiloni (No. 6261)

		  	 1201 N. Market St., 16th Floor

		  	 P.O. Box 1347

		  	 Wilmington, DE 19899-1347

		  	 Telephone: (302) 658-9200

		  	 Facsimile: (302) 658-3989

		  	 rdehney@mnat.com

		  	 aremming@mnat.com

jbibiloni@mnat.com

		
		  	 - and -

		
		  	 Christopher R. Donoho, III (admitted pro hac vice)

Christopher R. Bryant (admitted pro hac vice)

John D. Beck (admitted pro hac vice) 

HOGAN LOVELLS US LLP 
 875
Third Avenue

		  	 New York, NY 10022

		  	 Telephone: (212) 918-3000

		  	 Facsimile: (212) 918-3100

chris.donoho@hoganlovells.com christopher.bryant@hoganlovells.com john.beck@hoganlovells.com

		
		  	 Proposed Counsel for Debtor and Debtor in Possession

 11754815.2 

2 

 Case 18-10518-KG     Doc 230     Filed 04/23/18
    Page 1 of 3 
  

 IN THE UNITED STATES BANKRUPTCY COURT 

FOR THE DISTRICT OF DELAWARE 
  

			
	 In re
	  	 Chapter 11

		
	 Orexigen Therapeutics, Inc.,
	  	 Case No. 18-10518 (KG)

		
	
                       
             Debtor.1
	  	 RE: D.I. 78

 ORDER (I) AUTHORIZING IMPLEMENTATION OF A KEY EMPLOYEE 

INCENTIVE PLAN AND A KEY EMPLOYEE RETENTION PLAN, (II) APPROVING 

THE TERMS OF THE DEBTOR’S KEY EMPLOYEE INCENTIVE PLAN AND KEY 

EMPLOYEE RETENTION PLAN, AND (III) GRANTING RELATED RELIEF 

Upon consideration of the Debtor’s motion (the
“Motion”)2 for an order (this “Order”), under Bankruptcy Code sections 105(a), 363(b), and 503(c)(3) of title 11 of the United States Code (the
“Bankruptcy Code”), authorizing, but not directing, the implementation of the Debtor’s proposed key employee incentive plan (the “KEIP”) and key employee retention plan (as described in the Motion, the
“Employee Compensation Plans”), filed by Orexigen Therapeutics, Inc., debtor and debtor-in-possession (the “Debtor”), and upon the
arguments of counsel and the record of the hearing on this Motion; and the entire record of this Chapter 11 Case and other matters of which this Court may properly take judicial notice; and due and sufficient notice of the Motion having been given
under the particular circumstances; and it appearing that no other or further notice need be provided; and the Court having jurisdiction to consider the Motion and the relief requested therein in accordance with 28 U.S.C. sections 157 and 1334; and
consideration of the Motion and the relief requested therein being a core proceeding in accordance with 28 U.S.C. sections 1408 and 1409; and the Court having reviewed 

 

	1 	 The last four digits of the Debtor’s federal tax identification number are 8822. The Debtor’s
mailing address for purposes of this Chapter 11 Case is 3344 North Torrey Pines Court, Suite 200, La Jolla, CA, 92037. 

	2 	 Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Motion.

 Case 18-10518-KG     Doc 230     Filed 04/23/18
    Page 2 of 3 
  

 
the Motion and having heard the evidence and statements in support of the relief requested therein at the hearing; and the Court having found and determined that the relief sought in this Motion
is in the best interests of the Debtor, its estate, its creditors and other parties in interest and that the legal and factual bases set forth in the Motion establish just cause for the relief granted herein; and after due deliberation thereon and
good and sufficient cause appearing therefor, it is hereby, 
 ORDERED, ADJUDGED AND DECREED that: 

1. The Motion is GRANTED as set forth herein. 

2. Implementation of the Employee Compensation Plans is based on the Debtor’s sound business judgment and is justified by
the facts and circumstances of the Debtor’s Chapter 11 Case. 
 3. Pursuant to Bankruptcy Code sections 105(a), 363(b),
and 503(c)(3), the Debtor is authorized to take all necessary actions to implement the Employee Compensation Plans and to make all payments pursuant thereto. 

4. The Debtor is hereby authorized to offer and pay eligible employees in accordance with the Employee Compensation Plans. 

5. The Debtor is hereby authorized to implement and fund the Employee Compensation Plans in their entirety, and make payments
thereunder, provided, however, the KEIP Participants shall only be entitled to receive up to 2.5% of the first $250 million of Asset Sale Proceeds notwithstanding a sales price in excess of $250 million. 

6. The claims of the Participants under the Employee Compensation Plans are entitled to and shall be accorded administrative
expense status and priority under Bankruptcy Code sections 503(b)(1)(A) and 507(a)(2). 

  
 2 

 Case 18-10518-KG     Doc 230     Filed 04/23/18
    Page 3 of 3 
  

 7. The terms and conditions of this Order shall be immediately effective and
enforceable upon its entry. 
 8. The Debtor is authorized to take all actions necessary to effectuate the relief granted
pursuant to this Order. 
 9. The Court shall retain jurisdiction to hear and determine all matters arising from the
implementation of this Order. 
 Dated: April 23, 2018 

           Wilmington, Delaware 

 
  

	
	 /s/ KEVIN GROSS

	 THE HONORABLE KEVIN GROSS

	 UNITED STATES BANKRUPTCY JUDGE

  
 3Exhibit 4.1

 

 

THE BANK OF NEW YORK MELLON

NEW YORK’S FIRST BANK-FOUNDED 1784 BY ALEXANDER HAMILTON

 

 

2 HANSON PLACE, 12TH FLOOR, BROOKLYN,
N.Y. 11217

 

 

 

April 24, 2018

 

Hennion & Walsh, Inc.

2001 Route 46, Waterview Plaza

Parsippany, New Jersey 07054

 

Smart Trust 378 (the “Fund”)

 

Dear Sirs:

The Bank of New York
Mellon is acting as trustee for the Fund, consisting of the unit investment trusts (the “Trusts”) included in
the Registration Statement relating to the Fund. We enclosed a list of the securities to be deposited in the Trusts on the date
hereof. The prices indicated therein reflect our evaluation of such securities as of close of business on April 23, 2018, in accordance
with the valuation method set forth in the applicable Standard Terms and Conditions of Trust and Trust Agreements. We consent to
the reference to The Bank of New York Mellon as the party performing the evaluations of the Trust securities in the Registration
Statement (No. 333-222944) filed with the Securities and Exchange Commission with respect to the registration of the sale of the
Units of the Trusts and to the filing of this consent as an exhibit thereto.

 

Very truly yours,

 

		/s/ GERARDO CIPRIANO

Gerardo Cipriano

Vice President

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