Exhibit 10.4

 

Arena Pharmaceuticals, Inc. 2006 Long-Term Incentive Plan

 

Restricted Stock Grant Agreement

 

THIS GRANT AGREEMENT (this “Agreement”) effective as of
                              (the “Grant Date”) between Arena Pharmaceuticals,
Inc., a Delaware corporation (the “Company”), and                              
(the “Participant”).

 

1.             Grant of Restricted Stock. The Company hereby grants to the
Participant                          restricted shares of common stock of the
Company, par value $0.0001 per share (the “Restricted Stock”).

 

2.             Subject to the Plan. This Agreement is subject to the provisions
of the Arena Pharmaceuticals, Inc. 2006 Long-Term Incentive Plan (the “Plan”),
and, unless the context requires otherwise, terms used herein shall have the
same meaning as in the Plan. In the event of a conflict between the provisions
of the Plan and this Agreement, the Plan shall control.

 

3.             Vesting. All of the shares of Restricted Stock shall initially be
unvested. Until shares of Restricted Stock vest, the Participant may not sell,
assign, transfer, pledge, or otherwise dispose of such shares. Except as
otherwise provided in Sections 5(b) or (c) of this Agreement, provided the
Participant is then an Employee or, if applicable, a Director, the Restricted
Stock shall become vested on the following dates:

 

Vest Date

 

Vested Shares

 

 

 

 

 

 

 

 

 

 

4.             Capitalization Adjustments. The number of shares of Restricted
Stock shall be equitably and appropriately adjusted as provided in Section 12.2
of the Plan.

 

5.             Termination of Employment.

 

(a)  Termination of Employment Other Than Due to Death or Disability. In the
event the Participant ceases to be an Employee and, if applicable, a Director,
for any reason other than as a result of death or Disability, the shares of
Restricted Stock that were not vested on the date of such termination of
employment shall be immediately forfeited.

 

(b)  Death. Upon the Participant’s death, to the extent the Restricted Stock is
not fully vested the shares of Restricted Stock that would vest on the next
anniversary of the Grant Date following the Participant’s death shall become
vested based on a fraction, the numerator of which is the number of whole months
elapsed since the prior anniversary of the Grant Date (or, if applicable, the
Grant Date) and the denominator of which is 12.

 

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(c)  Disability. In the event that the Participant ceases to be an Employee by
reason of Disability to the extent the Restricted Stock is not fully vested the
shares of Restricted Stock that would vest on the next anniversary of the Grant
Date following the Participant’s Disability shall become vested based on a
fraction, the numerator of which is the number of whole months elapsed since the
prior anniversary of the Grant Date (or, if applicable, the Grant Date) and the
denominator of which is 12. For purposes of this Agreement, “Disability” shall
mean the Participant’s becoming disabled within the meaning of Section 22(e)(3)
of the Code, or as otherwise determined by the Committee in its discretion. The
Committee may require such proof of Disability as the Committee in its sole and
absolute discretion deems appropriate and the Committee’s determination as to
whether the Participant has incurred a Disability shall be final and binding on
all parties concerned.

 

6.             Change in Control; Corporate Transaction.

 

(a)  Effect of Change in Control on Restricted Stock. In the event of a Change
in Control, the Surviving Corporation or the Parent Corporation, if applicable,
may assume, continue or substitute for the unvested shares of Restricted Stock
on substantially the same terms and conditions (which may include replacement
with shares of the common stock of the Surviving Corporation or the Parent
Corporation). In the event of a Change in Control, to the extent the Surviving
Corporation or the Parent Corporation, if applicable, does not assume, continue
or substitute for the unvested shares of Restricted Stock on substantially the
same terms and conditions (which may include replacement with shares of the
common stock of the Surviving Corporation or the Parent Corporation), all of
such unvested shares of Restricted Stock shall become fully vested immediately
prior to the Change in Control, provided the Participant is then an Employee or,
if applicable, a Director. In the event of a Change in Control, to the extent
the Surviving Corporation or the Parent Corporation, if applicable, does assume
or substitute for the unvested shares of Restricted Stock on substantially the
same terms and conditions (which may include replacement with shares of the
common stock of the Surviving Corporation or the Parent Corporation) and within
24 months thereafter the Participant ceases to be an Employee by reason of (i)
an involuntary termination without Cause, or (ii) a voluntary termination in
connection with a Relocation Requirement, all of such shares of Restricted Stock
shall become fully vested.

 

For purposes of this Agreement (i) if the Company is the Surviving Corporation
or the Parent Corporation, if applicable, it shall be deemed to have assumed the
unvested shares of Restricted Stock unless it takes explicit action to the
contrary and (ii) “Relocation Requirement” shall mean a requirement by the
Company, the Surviving Corporation or an affiliate thereof that the Participant
be based anywhere more than fifty (50) miles from both the Participant’s primary
office location at the time of the Change in Control and the Participant’s
principal residence at the time of the Change in Control. In addition, for
purposes of this Agreement, except as otherwise provided in a written employment
or severance agreement between the Participant and the Company or a severance
plan of the Company covering the Participant (including a change in control
severance agreement or plan), “Cause” shall mean: a finding by the Committee
that the Participant has breached his or her employment agreement with the
Company, or has been engaged in disloyalty to the Company, including, without
limitation, fraud, embezzlement, theft,

 

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commission of a felony or proven dishonesty in the course of his or her
employment, or has disclosed trade secrets or confidential information of the
Company to persons not entitled to receive such information, or has breached any
written noncompetition or nonsolicitation agreement between the Participant and
the Company or has engaged in such other behavior detrimental to the interests
of the Company as the Committee determines.

 

(b)  Effect of Corporate Transaction on Restricted Stock. In the event of a
Corporate Transaction that is not a Change in Control, any surviving corporation
or acquiring corporation (or the surviving or acquiring corporation’s parent
company) may assume, continue or substitute for the unvested shares of
Restricted Stock on substantially the same terms and conditions (which may
include replacement with shares of the common stock of the surviving
corporation, acquiring corporation, or the surviving or acquiring corporation’s
parent company). In the event of a Corporate Transaction that is not a Change in
Control, then notwithstanding Section 11 of the Plan and paragraph (a) of this
Section, to the extent that the surviving corporation or acquiring corporation
(or its parent company) does not assume, continue or substitute for the unvested
shares of Restricted Stock on substantially the same terms and conditions (which
may include replacement with shares of the common stock of the surviving
corporation, acquiring corporation, or the surviving or acquiring corporation’s
parent company), then all of such unvested shares of Restricted Stock shall
become fully vested immediately prior to the Corporate Transaction if the
Participant is then an Employee or, if applicable, a Director.

 

For purposes of this Agreement, “Corporate Transaction” means (i) the
consummation of a merger, consolidation or similar transaction following which
the Company is not the surviving corporation; or (ii) the consummation of a
merger, consolidation or similar transaction following which the Company is the
surviving corporation but the Shares outstanding immediately preceding the
merger, consolidation or similar transaction are converted or exchanged by
virtue of the merger, consolidation or similar transaction into other property,
whether in the form of securities, cash or otherwise. Notwithstanding the
foregoing, a “Corporate Transaction” shall not include a transaction that is
effected exclusively for the purpose of changing the domicile of the Company.

 

(c)  Other Agreement or Plan. The provisions of this Section (including the
definition of Cause), shall be superseded by the specific provisions, if any, of
a written employment or severance agreement between the Participant and the
Company or a severance plan of the Company covering the Participant, including a
change in control severance agreement or plan, to the extent such a provision in
such other agreement or plan provides a greater benefit to the Participant.

 

7.             Legend. Each certificate issued in respect of shares of
Restricted Stock under the Agreement shall be registered in the Participant’s
name and deposited by the Participant, together with a stock power endorsed in
blank, with the Company and shall bear the following (or a similar) legend:

 

“The transferability of this certificate and the shares of stock represented
hereby are subject to the terms and conditions

 

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(including forfeiture) contained in an Agreement entered into between the
registered owner and Arena Pharmaceuticals, Inc.”

 

When shares of Restricted Stock become vested, the Company shall redeliver to
the Participant (or the Participant’s legal representatives, beneficiaries or
heirs) from the shares of Restricted Stock deposited with it the number of
shares which have then vested. The Participant agrees that any resale of shares
of Restricted Stock received upon vesting shall be made in compliance with the
registration requirements of the Securities Act of 1933 or an applicable
exemption therefrom, including without limitation the exemption provided by Rule
144 promulgated thereunder (or any successor rule).

 

8.             Nontransferability. Except to the extent and under such terms and
conditions as determined by the Committee, the Restricted Stock shall be
nontransferable otherwise than by will or the laws of descent and distribution.
Notwithstanding the foregoing, the Participant may, by delivering written notice
to the Company, in a form provided by or otherwise satisfactory to the Company,
designate a beneficiary who, in the event of the Participant’s death, shall be
entitled to receive the vested shares of Restricted Stock.

 

9.             Rights as Stockholder. During the period that shares of
Restricted Stock remain unvested, the Participant shall have all of the rights
of a stockholder of the Company with respect to the Restricted Stock including
but not limited to the right to receive dividends paid on the shares of
Restricted Stock and the right to vote such shares.

 

10.              Withholding. The Participant agrees to pay to the Company, or
to make satisfactory arrangement with the Company for payment of, any federal,
state or local taxes, if any, required by law to be withheld in respect of the
vesting of the Restricted Stock. The Participant hereby agrees that the Company
may withhold from Participant’s wages or other remuneration the applicable
taxes. At the discretion of the Company, the applicable taxes may be withheld in
kind from the Shares otherwise deliverable to the Participant on the vesting of
the Restricted Stock.

 

11.              Notices. All notices required or permitted under this Agreement
shall be in writing and shall be sufficiently made or given if hand delivered or
mailed by registered or certified mail postage prepaid. Notice by mail shall be
deemed delivered at the time and on the date the same is postmarked.

 

Notices to the Company should be addressed to:

 

Arena Pharmaceuticals, Inc.

6150 Nancy Ridge Drive

San Diego, California 92121

Attention:  Chief Financial Officer

 

With a copy to: General Counsel

 

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Notices to the Participant should be addressed to the Participant at the
Participant’s address as it appears on the Company’s records.

 

The Company or the Participant may by writing to the other party, designate a
different address for notices.

 

If the receiving party consents in advance, notice may be transmitted and
received via telecopy or via such other electronic transmission mechanism as may
be available to the parties. Such notices shall be deemed delivered when
received.

 

12.          Headings. The headings in this Agreement are for reference purposes
only and shall not affect the meaning or interpretation of this Agreement.

 

13.          Governing Law. This Agreement shall be governed by, and interpreted
in accordance with, the laws of the State of Delaware, other than its conflict
of laws principles.

 

14.          Agreement Not a Contract.  This Agreement (and the grant of
Restricted Stock) is not an employment or service contract, and nothing in this
Agreement shall be deemed to create in any way whatsoever any obligation on
Participant’s part to continue as an Employee, or of the Company or a Subsidiary
to continue Participant’s service as an Employee.

 

15.          Entire Agreement; Modification. This Agreement and the Plan
constitute the entire agreement between the parties relative to the subject
matter contained herein and may not be modified, except as provided in the Plan
or in a written document signed by each of the parties hereto, and may be
rescinded only by a written agreement executed by both parties.

 

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16.          Severability. If any provision of this Agreement shall be held
unlawful or otherwise invalid or unenforceable in whole or in part by a court of
competent jurisdiction, such provision shall (i) be deemed limited to the extent
that such court of competent jurisdiction deems it lawful, valid and/or
enforceable and as so limited shall remain in full force and effect, and (ii)
not affect any other provision of this Agreement or part thereof, each of which
shall remain in full force and effect.

 

IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the
Grant Date.

 

 

 

 

ARENA PHARMACEUTICALS, INC.

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Participant

 

 

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