Exhibit 10.2

 

Arena Pharmaceuticals, Inc., 2017 Long-Term Incentive Plan

 

Restricted Stock Unit Grant Agreement for Non-Employee Directors

 

 

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

 

1.Grant of Restricted Stock Units.  The Company hereby grants to the Participant
_________ Restricted Stock Units. Each Restricted Stock Unit shall be deemed to
be the equivalent of one Share.

 

2.Subject to the Plan.  This Agreement is subject to the provisions of the Arena
Pharmaceuticals, Inc., 2017 Long-Term Incentive Plan (the “Plan”).  Certain
terms are defined in this Agreement, and, unless the context requires otherwise,
other capitalized terms used herein shall have the same meaning as in the
Plan.  Except as provided herein, in the event of a conflict between the
provisions of the Plan and this Agreement, the Plan shall control.

 

3.Account.  The Company shall credit to a bookkeeping account (the “Account”)
maintained by the Company for the Participant’s benefit the Restricted Stock
Units. On each date that cash dividends are paid on the Shares, the Company will
credit the Account with a number of additional Restricted Stock Units equal to
the result of dividing (i) the product of the total number of Restricted Stock
Units credited to the Account on the record date for such dividend and the per
Share amount of such dividend by (ii) the Fair Market Value of one Share on the
date such dividend is paid by the Company to stockholders. The additional
Restricted Stock Units shall be or become vested to the same extent as the
Restricted Stock Units that resulted in the crediting of such additional
Restricted Stock Units.

 

4.Vesting.  Except as otherwise provided in this Agreement, provided the
Participant is then a Director, an Employee or a Consultant, the Restricted
Stock Units shall become vested on the following dates:

 

Vested Restricted

Vest Date    Stock Units    

 

 

5.Capitalization Adjustments.  The number of Restricted Stock Units credited to
the Account shall be equitably and appropriately adjusted as provided in Section
12.2 of the Plan.

 

  

  

  

 

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6. Termination of Service.  

 

(a)  Termination of Service Other Than Due to Disability or Death.  In the event
the Participant ceases to be in the Company’s continuous service as any of a
Director, an Employee or a Consultant for any reason other than as a result of
Disability or death, the Restricted Stock Units credited to the Account that
were not vested at the time the Participant ceases to be in the Company’s
continuous service as any of a Director, an Employee or a Consultant shall be
immediately forfeited.  

 

(b)  Disability.  In the event that the Participant ceases to be in the
Company’s continuous service as any of a Director, an Employee or a Consultant
by reason of Disability, to the extent the Restricted Stock Units are not fully
vested, the Restricted Stock Units credited to the Account shall immediately
become fully vested.

 

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.

 

(c)  Death.  Upon the Participant’s death, to the extent the Restricted Stock
Units are not fully vested, the Restricted Stock Units credited to the Account
shall immediately become fully vested.

 

7.Payment of Shares.  The Company shall make a payment to the Participant of
Shares based on the number of the vested Restricted Stock Units credited to the
Participant’s Account upon vesting.  However, if a scheduled delivery date falls
on a date that is not a trading day, such delivery date shall instead fall on
the next following trading day.  Notwithstanding the foregoing, in the event
that the Company determines that any Shares are scheduled under this Agreement
to be delivered on a day (the “Original Distribution Date”) on which the Company
determines that a sale by the Participant of such Shares would (i) violate the
registration requirements under the Securities Act or (ii) violate any of the
provisions of the federal securities laws (or any Company or, if applicable,
Affiliate policy related thereto) or (iii) violate a “lock-up” agreement
undertaken in connection with an issuance of securities by the Company or (iv)
not be permitted under applicable securities laws or Company policies by the
Participant on the open market and (v) the Company elects, prior to the Original
Distribution Date, not to satisfy its tax withholding obligation by withholding
Shares from the Shares otherwise due to the Participant on the Original
Distribution Date under this Agreement, then such Shares shall not be delivered
on such Original Distribution Date and shall instead be delivered as soon as
practicable on the date on which the sale of such Shares would not be in
violation of any of such registration requirements, the federal securities laws
(or any Company or, if applicable, Affiliate policy related thereto), lock-up
agreement or would otherwise be permitted under applicable securities laws or
Company policies by the Participant on the open market; provided, however, that
in no event shall the delivery of the Shares be delayed pursuant to this
provision beyond the later of (a) December 31 of the calendar year in which the
Original Issuance Date occurs (that is, the last

  

  

  

 

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day of the Participant’s taxable year in which the Original Issuance Date
occurs), and (b) if and only if permitted in a manner that complies with U.S.
Treasury Regulation Section 1.409A-1(b)(4), the date that is the 15th day of the
third calendar month of the year following the year in which the Shares under
this Agreement are no longer subject to a “substantial risk of forfeiture”
within the meaning of U.S. Treasury Regulation Section 1.409A-1(d).

 

8.Form of Payment.  Payments pursuant to Section 7 shall be made in Shares equal
to the number of vested Restricted Stock Units credited to the Account.

 

9.Beneficiary.  In the event of the Participant’s death prior to payment of the
Restricted Stock Units credited to the Account, payment shall be made to the
last beneficiary designated in writing that is received by the Company prior to
the Participant’s death or, if no designated beneficiary survives the
Participant, such payment shall be made to the Participant’s estate.

 

10.  Change in Control; Corporate Transaction.

 

(a)  Effect of Change in Control on Restricted Stock Units.  In the event of a
Change in Control, all Restricted Stock Units shall become fully vested
immediately prior to the Change in Control if the Participant is then a
Director, an Employee or a Consultant.  For purposes of this Agreement, “Change
in Control” shall have the same meaning set forth in Section 11.3 of the Plan,
except that it shall also include the occurrence of any other event that the
Board determines by an approved resolution constitutes a Change in Control.  

 

(b)  Effect of Corporate Transaction on Restricted Stock Units.  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
Restricted Stock Units credited to the Account on substantially the same terms
and conditions (which may include settlement in the same consideration paid to
the stockholders of the Company pursuant to the Corporate Transaction). 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 Restricted Stock Units
credited to the Account on substantially the same terms and conditions (which
may include settlement in the same consideration paid to the stockholders of the
Company pursuant to the Corporate Transaction), then all of such Restricted
Stock Units shall become fully vested immediately prior to the Corporate
Transaction if the Participant is then a Director, an Employee or a
Consultant.  In the event of a Corporate Transaction that is also a change in
the ownership or effective control of the Company or a change in the ownership
of a substantial portion of the assets of the Company as described in Code
Section 409A(a)(2)(A)(iv) (a “409A CiC”), then all of such Restricted Stock
Units shall become fully vested immediately prior to the Corporate Transaction
if the Participant is then a Director, an Employee or a Consultant.

 

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

  

  

  

 

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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)  Payment of Restricted Stock Units.  Payment of Restricted Stock Units that
vest pursuant to this Section shall be made in Shares (or, if applicable,
settlement in the same consideration paid to the stockholders of the Company
pursuant to the Change in Control), as soon as practicable following the
applicable vesting date.  The Restricted Stock Units are intended to be exempt
from application of Section 409A of the Code, and any ambiguities set forth
herein shall be interpreted accordingly.  However, to the extent that an
exemption is not available and the Restricted Stock Units are “deferred
compensation” subject to the requirements of Section 409A of the Code, the
following provisions shall apply and shall supersede anything to the contrary
set forth herein and in the Plan to the extent required for the settlement of
the Restricted Stock Units to comply with the requirements of Section 409A of
the Code.  In a Change in Control or Corporate Transaction the Award must be
assumed, continued or substituted by the Surviving Corporation or the Parent
Corporation and any Shares scheduled to be issued upon an applicable scheduled
Vest Date may not be earlier issued unless the Change in Control or Corporate
Transaction is also a 409A CiC and an exemption is available and elected under
Treasury Regulation 1.409A-3(j)(4)(ix)(B) or such earlier issuance of the Shares
is otherwise permitted by Section 409A of the Code.  The Company retains the
right to provide for earlier issuance of Shares in settlement of the Restricted
Stock Units to the extent permitted by Section 409A of the Code.

 

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

 

11.Source of Payments.  The Participant’s right to receive payment under this
Agreement shall be an unfunded entitlement and shall be an unsecured claim
against the general assets of the Company. The Participant has only the status
of a general unsecured creditor hereunder, and this Agreement constitutes only a
promise by the Company to pay the value of the Account on the payment date.

 

12.Miscellaneous.

 

(a)  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 Restricted
Stock Units.  The Participant hereby agrees that the Company or an Affiliate, as
applicable, may withhold the applicable taxes from the Participant’s wages or
other remuneration. At the discretion of the Company, the applicable taxes may
be withheld in kind from the Shares otherwise deliverable to the Participant on
the

  

  

  

 

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payment in settlement of the Restricted Stock Units, up to the lesser of
Participant’s minimum required withholding rate or such other rate that will not
trigger a negative accounting impact. Unless the tax withholding obligations of
the Company and/or any Affiliate are satisfied, the Company shall have no
obligation to deliver to the Participant any Shares. In the event the Company’s
obligation to withhold arises prior to the delivery to the Participant of the
Shares or it is determined after the delivery of Shares to the Participant that
the amount of the Company’s withholding obligation was greater than the amount
withheld by the Company, the Participant agrees to indemnify and hold the
Company harmless from any failure by the Company to withhold the proper amount.

 

(b)  No Rights of a Stockholder.  The Participant shall not have any of the
rights of a stockholder with respect to the Shares subject to the Restricted
Stock Units until such Shares have been issued.

 

(c)  Nontransferability of Restricted Stock Units.  Except to the extent and
under such terms and conditions as determined by the Committee, the Restricted
Stock Units shall not be transferable otherwise than by will or the laws of
descent and distribution or as provided in Section 9.

 

(d)  Severability.  The provisions of this Agreement shall be deemed severable.
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 or by
reason of a change in a law or regulation, such provision shall (i) be deemed
limited to the extent that such court of competent jurisdiction deems it lawful,
valid and/or enforceable (or, if applicable, to the extent necessary to comply
with the change in the law or regulation), 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.

 

(e)  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.

 

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

 

(g)  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 on which the same is postmarked.

 

  

  

  

 

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Notices to the Company should be addressed to:

 

Arena Pharmaceuticals, Inc.

6154 Nancy Ridge Drive

San Diego, California 92121

Attention:  Chief Financial Officer

 

With a copy to: General Counsel

 

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 facsimile or via such other electronic transmission mechanism
as may be available to the parties. Such notices shall be deemed delivered when
received.

 

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

 

(i)  Entire Agreement; Modification.  Except as provided in the next sentence,
this Agreement and the Plan constitute the entire agreement between the parties
with respect 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 signed by both
parties. This Agreement and Plan may be modified or superseded by the specific
provisions, if any, of a written agreement, plan or other arrangement
(regardless of whether entered into or established before, concurrently or after
the date of this Agreement) of the Company or an Affiliate that is applicable to
the Participant, to the extent such an agreement, plan or other arrangement
provides a greater benefit to the Participant and otherwise does not cause the
payments hereunder to fail to comply with the provisions of Section 409A of the
Code.

 

(j)  Compliance with Section 409A of the Code.

 

(i)Automatic Delay of Payment.  To the extent that the Restricted Stock Units
are “deferred compensation” subject to the requirements of Section 409A of the
Code, then notwithstanding anything contained in this Agreement to the contrary,
if the Company determines that as of the date of payment the Participant is a
“specified employee” (as such term is defined under Section 409A of the Code),
any Shares (or shares of the common stock of the successor company in the event
of a Change in Control) payable by reason of the Participant’s “separation from
service” for purposes of Section 409A of the Code (“Separation from Service”)
with the Company (or an Affiliate) for any reason other than death or
“disability” (as such term is defined under Section 409A of the Code), if
applicable, will not be paid until the date that is six months following the
date of Separation from Service (or such earlier time permitted under Section
409A of the Code

  

  

  

 

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without the imposition of any accelerated or additional taxes under Section 409A
of the Code).

 

(ii)  General. This Agreement is intended to be exempt from or comply with the
requirements of Section 409A of the Code and shall be construed and interpreted
in accordance with such intent. Payment under this Agreement shall be made in a
manner that will be exempt from or comply with Section 409A of the Code,
including regulations or other guidance issued with respect thereto, as
determined by the Committee. Any provision of this Agreement that would cause
the payment or settlement thereof to fail to satisfy Section 409A of the Code
shall be amended to comply with Section 409A of the Code on a timely basis,
which may be made on a retroactive basis, in accordance with regulations and
other guidance issued under Section 409A of the Code.

 

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

 

                                                      ARENA PHARMACEUTICALS,
INC.

 

 

By: ______________________________________

 

 

     _______________________________________

Participant