Exhibit 10.1
EMPLOYMENT
AGREEMENT
This Employment Agreement
(“Agreement”) is entered into as of the March 31,
2009, by and between Michael Narachi (“Executive”) and
Orexigen Therapeutics, Inc. (the “Company”).
W HEREAS , the Company desires to employ Executive to
provide services to the Company, and wishes to provide Executive
with certain compensation and benefits in return for
Executive’s services; and
W HEREAS , Executive wishes to be employed by the Company
and provide services to the Company in return for certain
compensation and benefits.
N OW ,
T HEREFORE
, in consideration of the mutual
promises and covenants contained herein, it is hereby agreed by and
between the parties hereto as follows:
ARTICLE I
DEFINITIONS
For purposes of the Agreement, the
following terms are defined as follows:
1.1 “ Board ” means the Board of
Directors of the Company.
1.2 “ Cause ” means the
occurrence of any of the following events:
(a) Executive’s conviction of or plea of
guilty or nolo contendere to any felony or a crime of moral
turpitude;
(b) Executive’s willful and continued failure
or refusal to follow lawful and reasonable instructions of the
Board of Directors or lawful and reasonable policies of the Company
or its affiliates;
(c) Executive’s continued failure to
faithfully and diligently perform the assigned duties of his/her
employment with the Company or its affiliates, or Executive’s
persistent and material failure to meet the personal performance
objectives set for him by the Board;
(d) Unprofessional, unethical, immoral or fraudulent
conduct by Executive;
(e) Conduct by Executive that materially discredits
the Company or any affiliate or is materially detrimental to the
reputation, character and standing of the Company or any affiliate;
or
(f) Executive’s material breach of this
Agreement, the Proprietary Information and Inventions Agreement, or
any other contractual, fiduciary, or statutory duty owed to the
Company.
An event described in
Section 1.2(b) through Section 1.2(f) herein shall not be
treated as “Cause” until after Executive has been given
written notice of such event, failure or conduct and Executive
fails to cure such event, failure, conduct or breach within 30
days
1.
from such written notice; provided, however,
that such 30-day cure period shall not be required if the event,
failure, conduct or breach is incapable of being cured. Failure of
the Company to meet its financial or performance targets or goals
shall not be deemed to be a breach pursuant to Sections 1.2(b) or
1.2(c) herein.
1.3 “ Change in Control ” means
the occurrence of any of the following events:
(a) the direct or indirect acquisition by any person
or related group of persons (other than the Company or a person
that directly or indirectly controls, is controlled by, or is under
common control with, the Company) of beneficial ownership (within
the meaning of Rule 13d-3 of the Exchange Act) of securities
possessing more than 50% of the total combined voting power of the
Company’s outstanding securities pursuant to a tender or
exchange offer made directly to the Company’s shareholders
which the Board does not recommend such shareholders to
accept;
(b) a change in the composition of the Board over a
period of 36 months or less such that a majority of the Board
members ceases, by reason of one or more contested elections for
Board membership, to be comprised of individuals who either
(i) have been Board members continuously since the beginning
of such period, or (ii) have been elected or nominated for
election as Board members during such period by at least a majority
of the Board members described in clause (i) who were still in
office at the time such election or nomination was approved by the
Board;
(c) the consummation of any consolidation, share
exchange or merger of the Company (i) in which the
stockholders of the Company immediately prior to such transaction
do not own at least a majority of the voting power of the entity
which survives/results from that transaction, or (ii) in which
a stockholder of the Company who does not own a majority of the
voting stock of the Company immediately prior to such transaction,
owns a majority of the Company’s voting stock immediately
after such transaction; or
(d) the liquidation or dissolution of the Company or
any sale, lease, exchange or other transfer (in one transaction or
a series of related transactions) of all or substantially all the
assets of the Company, including stock held in subsidiary
corporations or interests held in subsidiary ventures.
1.4 “ Company ” means Orexigen
Therapeutics, Inc. or, following a Change in Control, the surviving
entity resulting from such transaction.
1.5 “ Constructive Termination ”
means Executive’s resignation from all positions he then
holds with the Company because of:
(a) a material reduction in Executive’s
authority, duties or responsibilities;
(b) a material diminution in the authority, duties
or responsibilities of the supervisor to whom Executive is required
to report, including a requirement that Executive report to a
corporate officer or employee instead of reporting directly to the
Board of Directors;
(c) a material reduction in Executive’s level
of base salary; or
2.
(d) a relocation of Executive’s principal
place of employment that increases Executive’s one-way
commute by more than 50 miles (other than reasonable business
travel required as part of the job duties associated with
Executive’s position);
provided, however, that
(i) such change, reduction or relocation is effected by the
Company without Cause and without Executive’s consent;
(ii) Executive first provides the Company with written notice
of the condition described in (a), (b), (c) or (d) above
not later than sixty (60) days following its initial
occurrence; (iii) the Company is permitted the opportunity to
cure such condition within a period of forty-five (45) days
following such written notice; and (iv) Executive resigns from
employment within thirty (30) days following the end of such
cure period, assuming that the condition has not been
cured.
1.6 “ Covered Termination ” means
an Involuntary Termination Without Cause or Constructive
Termination that occurs either within the three (3) month
period before the effective date of a Change in Control or within
the twelve (12) month period commencing on the effective date
of a Change in Control.
1.7 “ Exchange Act ” means the
Securities Exchange Act of 1934, as amended.
1.8 “ Involuntary Termination Without
Cause ” means Executive’s dismissal or discharge by
the Company other than for Cause. The termination of
Executive’s employment as a result of Executive’s death
or disability will not be deemed to be an Involuntary Termination
Without Cause.
ARTICLE II
EMPLOYMENT BY THE
COMPANY
2.1 Position and
Duties. Subject to terms
set forth herein, the Company agrees to employ Executive in the
position of President and Chief Executive Officer and Executive
hereby accepts such employment. Executive shall perform such duties
as are customarily associated with the position of President and
Chief Executive Officer and such other duties as are assigned to
Executive by the Board of Directors of the Company. During the term
of Executive’s employment with the Company, Executive will
devote Executive’s best efforts and substantially all of
Executive’s business time and attention (except for vacation
periods and reasonable periods of illness or other incapacities
permitted by the Company’s general employment policies or as
otherwise set forth in this Agreement) to the business of the
Company. Notwithstanding the foregoing, it is agreed and understood
that Executive shall be allowed to participate on the boards of
directors of the following companies: AMAG Pharmaceuticals, Inc.
and Ren Pharmaceuticals, Inc.; and Executive may be allowed to
serve on other boards of directors during his employment with the
Board’s prior written consent.
2.2 Employment at
Will. Both the Company
and Executive shall have the right to terminate Executive’s
employment with the Company at any time, with or without Cause. If
applicable, upon the date of Executive’s termination of
employment with the Company for any reason, Executive shall
immediately resign from the Board and the board of directors or
comparable body of every subsidiary, parent or other affiliated
corporation of the Company, and every committee thereof.
3.
2.3 Employment Policies. The employment relationship between the parties
shall also be governed by the general employment policies and
practices of the Company, including those relating to protection of
confidential information and assignment of inventions, except that
when the terms of this Agreement differ from or are in conflict
with the Company’s general employment policies or practices,
this Agreement shall control.
2.4 Effective Date.
The effective date of this agreement
shall be the date in which Executive begins employment with the
Company which is anticipated to be the date hereof.
ARTICLE III
COMPENSATION AND
BENEFITS
3.1 Base Salary.
Executive shall receive for services
to be rendered hereunder an annual base salary of $450,000 (“
Base Salary ”), less required deductions and
withholdings, payable on the regular payroll dates of the
Company.
3.2 Annual Bonus.
In addition to the Base Salary,
during each calendar year Executive will be eligible for an annual
performance bonus, equal to up to 60% of the Base Salary, and which
is 100% based upon the achievement of Executive’s performance
goals and objectives (“ Annual Bonus ”). The
Compensation Committee of the Company’s Board shall determine
in its sole discretion whether any such Bonus has been earned and,
if so, the amount of any such bonus. Executive must be an employee
in good standing at the time the Compensation Committee decides to
award the Annual Bonus and, if Executive leaves the Company at any
time and for any reason prior to such date, he/she will not be
eligible to receive such a bonus or any pro-rata portion of such
bonus. If awarded, the Annual Bonus shall be paid in January of
each year.
3.3 Stock Options.
Subject to approval of the Board or
the Compensation Committee of the Board, Executive shall receive
stock options to purchase 1,500,000 million shares of the
Company’s common stock pursuant to the Company’s 2007
Equity Incentive Award Plan (the “2007 Plan”). Any
stock options granted pursuant to this Section 3.3 shall have
an exercise price per share equal to the then-current fair market
value per share of the Company’s common stock (as determined
pursuant to the 2007 Plan) on the grant date as approved by the
Board or the Compensation Committee of the Board. Such stock
options shall be incentive stock options to the extent permitted
under Section 422 of the Internal Revenue Code of 1986, as
amended (the “ Code ”). Subject to
Section 4.2, 25% of the shares subject to such stock options
shall vest on the one year anniversary of Executive’s date of
hire and the remainder will vest in 36 equal monthly installments
over a three year period thereafter, subject to Executive’s
continued employment or service with the Company on each such date.
Such stock options shall have a ten (10) year term and shall
be subject to the terms and conditions of the 2007 Plan and the
stock option agreement pursuant to which such stock options are
granted. Executive shall be eligible for annual stock option grants
consistent with the Company’s compensati
