Exhibit 10.29


 


ARENA PHARMACEUTICALS, INC.


 


DEFERRED COMPENSATION PLAN


 


Effective
Date:  November 11, 2003


 

















 


ARTICLE 1


 


INTRODUCTION


 


Arena
Pharmaceuticals, Inc. wishes to establish a deferred compensation plan as set
forth herein to provide deferred compensation for a select group of management
or highly compensated employees of the Company and certain members of the
Company’s Board of Directors, effective as of November 11, 2003.  The Participants in the Plan have entered
into agreements with the Company to receive the Company’s Common Stock in
exchange for services.  This stock is
not vested and is subject to forfeiture unless the Participants continue to
perform services on behalf of the Company through vesting dates that are
scheduled to occur in 2004 and thereafter, or unless certain other specified
events occur.


 


The
Company has determined that it will permit the Participants to defer the
delivery of these non-vested, or “restricted,” shares that they would otherwise
become entitled to receive in 2004 or later. 
This deferral opportunity has been established in part to encourage the
Participants to continue to hold rights to own Common Stock in the future that
may otherwise be sold to satisfy a Participant’s tax withholding or other
financial obligations upon vesting, and for the purpose of rewarding and
incentivizing the Participants.


 


ARTICLE 2


 


DEFINITIONS


 


“Beneficiary” or “Beneficiaries” means
the person or persons designated by a Participant in an Election Form to
receive any distribution under the Plan that is payable upon the death of the
Participant.


 


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


 


“Board Member” means an individual non-employee member of
the Board.


 


“Change of Control” for purposes of the Plan shall have the
meaning set forth in the Participant’s Termination Protection Agreement, or if
no such agreement exists, the Company’s 2002 Equity Compensation Plan.


 


“Code” means the Internal Revenue Code of 1986, as amended from time to time.


 


“Committee” means the Board, the Compensation Committee of the Board, or such
other administrative committee of the Board as appointed from time to time by
the Board to control and manage the operation and administration of the Plan,
as set forth in Article 8.


 


“Common Stock” means the common stock of Arena
Pharmaceuticals, Inc.


 


“Company” means Arena Pharmaceuticals, Inc., a Delaware corporation, and any
successor or continuing corporation.


 

















 


“Designated Distribution Date” means the date on which the Participant
elects to begin to receive a distribution of his or her Designated Shares.


 


“Designated Shares” means those shares of Restricted Stock
(together with any dividends attributable to such Designated Shares) the
receipt of which a Participant has elected to defer in accordance with the Plan,
by completing an Election Form.


 


“Effective Date” means November 11, 2003.


 


“Election Form” means the form entered into by a Participant
confirming the Participant’s election to defer the receipt of Designated Shares
and specifying, among other things, the number of shares to be deferred, the
Designated Distribution Date, the Participant’s Beneficiary, and related
matters.  A copy of the Election Form
for the Plan is attached as Exhibit A hereto.


 


“Eligible Employee” means an employee of the Company who is a
member of a select group of management or a highly compensated Employee of the
Company, and who has been chosen by the Committee, in the Committee’s sole
discretion, to be eligible to participate in the Plan.


 


“Eligible Restricted Stock” means Restricted Stock that, at the time of
an election to defer under this Plan, is subject to restrictions, including
forfeiture, that are scheduled to lapse in the future based upon the Eligible
Employee’s or Board Member’s continued provision of Services to the Company
through the Vesting Date, or based upon the occurrence of other specified
events.  The only Restricted Stock that
is eligible to be deferred under this Plan (and which qualifies as “Eligible
Restricted Stock”) is Restricted Stock with a Vesting Date that occurs in a
Plan Year after the Plan Year in which the election to defer is made and which
has a Vesting Date that is at least three months after the date of such
election.  Notwithstanding the
foregoing, with respect to the initial Plan Year of the Plan, or in the case of
an Employee who is hired or promoted to a position of eligibility for
participation in the Plan (or a Board Member who is first elected to become a
Board Member during a Plan Year), such person may elect to defer the receipt of
Eligible Restricted Stock with a Vesting Date that occurs in a Plan Year after
the Plan Year in which the election to defer is made and which has a Vesting
Date that is at least one month after the date of such election.


 


“Employee” means a person employed by the Company on a regular, full-time,
salaried basis, including any Employee who is on an approved leave of absence
from the Company, whether paid or unpaid.


 


“Hardship” means an unforeseeable financial emergency for a Participant which he
or she cannot meet through loans, insurance or liquidation of the Participant’s
assets (to the extent such liquidation would not itself cause a financial
hardship).  An unforeseeable financial
emergency is a severe financial hardship to the Participant resulting from a sudden
and unexpected illness or accident of the Participant or of a dependent of the
Participant (as defined in Section 152(a) of the Code), loss of the
Participant’s property due to casualty, or other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the control of
the Participant.  Examples of
circumstances that are not considered to be unforeseeable financial


 


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emergencies include the need to
send a child of the Participant to college or the desire to purchase a home.


 


“Participant” means any Eligible Employee or Board Member who has elected to
participate in the Plan by completing, executing and returning an Election Form
and other required forms to the Committee, or its designee.


 


“Plan” means this Arena Pharmaceuticals, Inc.  Deferred Compensation Plan, as amended from time to time.


 


“Plan Year” means the year beginning each January 1 and ending December 31;
notwithstanding the foregoing, the initial Plan Year shall mean the period
beginning with the Effective Date and ending on December 31, 2003.


 


“Restricted Stock” means Common Stock that has been awarded to
an Eligible Employee and Board Member.


 


“Restricted Stock Agreement” means the form of agreement entered into by
the Company and a Participant which sets forth the applicable terms and
conditions of a Participant’s award of Restricted Stock, including vesting and
other requirements.


 


“Service” means employment as an Employee, service to the Company as a consultant
or service as a Board Member, as applicable. 
An Participant shall not be deemed to terminate Service if the
Participant converts from a Board Member to an Employee, from an Employee to a
Board Member, or either to a consultant of the Company.


 


“Top Hat Plan” means a non-qualified deferred compensation
plan for a select group of management or highly compensated employees within
the meaning of Section 401(a)(1) of ERISA and Section 2520.104-23(d) of the
Department of Labor Regulations.


 


“Vesting Date” means the date on which restrictions on the
Restricted Stock lapse.


 


ARTICLE 3


 


DEFERRALS


3.1          Election
to Defer.


 


(a)           Each Eligible Employee who is notified of his
or her eligibility to participate in the Plan and each Board Member may elect
to defer the receipt of Eligible Restricted Stock until a Designated
Distribution Date.  The Committee shall
designate Eligible Employees and Board Members who shall be covered by this
Plan.  A Participant’s participation in
the Plan shall commence as of the date such Participant has complied with the
election procedures set forth herein by completing an Election Form.  Nothing in the Plan or in the Election Form
should be construed to require any contributions to the Plan on behalf of the
Participant by the Company.


 


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(b)           For a deferral hereunder to be effective,
such Eligible Employee or Board Member must designate the shares of Eligible
Restricted Stock that he or she desires to defer by completing and signing an
Election Form and returning it to the Company’s Vice President, Finance or
Chief Financial Officer, at 6166 Nancy Ridge Drive, San Diego, CA 92121.


 


(c)           For the Plan Year in which this Plan is first
implemented, and in the case of an Employee who is hired or promoted to a
position of eligibility for participation in the Plan or a Board Member who is
elected to become a Board Member during a Plan Year, such person shall have
thirty (30) days from the date of notification of eligibility for participation
in the Plan in which to submit the required election documents for the then
Plan Year.


 


3.2          Deferral
Election is Irrevocable.  A Participant’s election to defer Eligible
Restricted Stock is irrevocable.


 


3.3          Changes
to Deferral Elections.  A Participant’s Election Form shall remain in
effect until modified as herein permitted. 
A Participant may modify his or her existing Election Form only in the
following manner:


 


(a)           to provide for a later Designated
Distribution Date than is currently provided for under the Participant’s
existing Election Form.  This
modification may only be made with respect to such Participant’s Designated
Shares that are otherwise scheduled to be distributed to the Participant in a
Plan Year after the Plan Year in which the election is modified, and may be
made only if the original Designated Distribution Date is scheduled to occur at
least three months after the date of any such modification;


 


(b)           subject to the limitations contained in
Section 3.1(c), to designate additional shares of Eligible Restricted Stock
that the Participant wishes to defer under the Plan.


 


(c)           to provide for a different form of
distribution, as set forth in Article 6.


 


Subject
to the limitations contained herein, any change to an Election Form shall only
be effective upon the completion and execution of a new Election Form and the
Participant’s submission of this agreement to the Company’s Vice President,
Finance or Chief Financial Officer, at 6166 Nancy Ridge Drive, San Diego, CA
92121.  Forms submitted after the dates
specified in Section 3.1(c) will not be accepted.


 


3.4          Administrative
Rules.  The
Committee has the power to establish rules and from time to time to modify or
change such rules governing the manner and method by which deferrals of a
Participant’s Restricted Stock may be changed.


 


ARTICLE 4


 


RESTRICTED STOCK


 


4.1          Lapse
of Restrictions on Restricted Stock.  Notwithstanding this Plan,
Restricted Stock that has been deferred pursuant to the Plan shall continue to
be subject to the terms and conditions, including forfeiture or other vesting
requirements, set forth in the applicable Restricted Stock Agreement.  If a Participant’s Service with the Company
is


 


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terminated before the Vesting
Date for any reason, whether initiated by the Company or the Participant, then
none of the Restricted Stock, whether or not subject to accelerated vesting at
the time of the Participant’s termination or cessation of Services, shall be
eligible for continued deferral under the Plan, even if an Election Form has
been previously completed.  In that
event, and Designated Shares shall no longer be subject to the Plan and the
vested portion of the Designated Shares (including any Designated Shares the
vesting of which has been accelerated as a result of such termination) shall be
promptly distributed to the Participant.


 


4.2          Stock
Certificates.  Stock certificates evidencing the Designated
Shares shall not be issued to Participants, or registered in a Participant’s
name, until the Designated Distribution Date.


 


4.3          Dividends.  If
the Company pays dividends paid on its Common Stock, then such dividends shall
become a portion of the Designated Shares.


 


4.4          Restriction
on Transferability.  The Designated Shares may not be sold,
transferred, pledged, assigned, or otherwise alienated at any time prior to the
Designated Distribution Date.  Any
attempt to do so contrary to the provisions hereof shall be null and void.


 


4.5          Voting
Rights.  Participants shall not have voting or other
rights as a stockholder of the Company with respect to the Designated Shares
until the Designated Distribution Date, at which time the Participant will
obtain full voting and other rights as a stockholder of the Company.


 


ARTICLE 5


 


DISTRIBUTIONS AND WITHDRAWALS


 


5.1          Designated
Distributions.  A Participant’s Designated Shares will be
distributed to such Participant on the Designated Distribution Date set forth
in the Participant’s Election Form. 
Notwithstanding the above, earlier distributions may be permitted under
the circumstances set forth in Article 5.2 to 5.5 below.


 


5.2          Hardship
Withdrawals.  A Participant may request a Hardship
withdrawal of some or all of his or her Designated Shares, which request may be
approved or denied by the Committee. 
The value of the Designated Shares so distributed to the Participant for
a Hardship shall not exceed the amount needed to satisfy the unforeseeable
financial emergency (after deducting any and all taxes as may be required to be
withheld).


 


5.3          Non-Hardship
In-Service Withdrawals.  A Participant may elect to receive a
withdrawal of some or all of his or her Designated Shares from the Plan at any
time not otherwise expressly authorized by the Plan upon prior written notice
to the Committee; provided, however,
that ten percent (10%) of the value of the Designated Shares being requested as
part of the withdrawal shall be permanently forfeited to the Company and the
Participant shall have no further rights to forfeited amounts.  If a Participant elects to receive a
withdrawal under this Article 5.3, then such Participant shall not be permitted
to defer additional Restricted Stock hereunder for the remainder of the then
current Plan Year, or the Plan Year immediately


 


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following the year in which the
Hardship withdrawal occurs.  No more
than one Non-Hardship In-Service withdrawal may be taken by a Participant under
this Plan.


 


5.4          Change
of Control Provisions.


 


(a)           A Participant may make an election to receive
his or her Designated Shares under the Plan upon or following a Change of
Control, even if the Participant does not terminate employment with the Company
or the acquiring entity as a result of the Change of Control.  Such Change of Control election shall be
made on the Participant’s Election Form (or on any other form provided by the
Company for this purpose).


 


(b)           The timing of distributions in the event of a
Change of Control that may be elected by a Participant are as follows:


 


(1)           Payment in the form of distribution of the Participant’s
Designated Shares as soon as administratively feasible to the Participant upon
the occurrence of a Change of Control without regard to whether the Participant
continues to be employed by the Company or the acquiring entity at the time of
the Change of Control.


 


(2)           Payment in the form of distribution of the
Participant’s Designated Shares as soon as administratively feasible to the
Participant following the Participant’s termination of Service for any reason
upon or following a Change of Control.


 


A
Participant who does not elect either (1) or (2) above, shall not be eligible
to receive a distribution upon or following the Change of Control, but shall
receive his or her distributions, as the case may be, on the scheduled
Designated Distribution Date, as that date may be changed by the Participant in
accordance with this Plan from time to time.


 


(c)           A Participant’s initial election under this
Article 5.4 of the timing of benefits payable upon or following the occurrence
of a Change of Control shall be made as part of the Participant’s Election
Form.  Any change to such Election Form
as to the timing of such Change of Control benefits must be made and submitted
to the Company’s Vice President, Finance or Chief Financial Officer on or
before the date which is at least six (6) full calendar months prior to the
date on which the Change of Control occurs and prior to the first day of the
Plan Year in which such Change of Control occurs. Any Change of Control
election changes submitted after such date shall be null and void and the
Participant’s previous election regarding distributions shall control.


 


5.5          Termination
from Service.  If a Participant so elects on his or her
Election Form, the Participant or his or her Beneficiaries, as applicable,
shall automatically receive a distribution of the vested portion of such
Participant’s Designated Shares (or any remaining portion of such vested
Designated Shares if distribution has already commenced) as soon as
administratively reasonable following the Participant’s termination from
Service.


 


5.6          Death.
  As soon as administratively practicable
following the death of a Participant prior to complete distribution to him or
her of the entire balance of his or her Designated Shares, the balance of his
or her Designated Shares on the date of death shall be payable in the form of a
lump sum to the Participant’s designated Beneficiary.


 


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5.7          Limits
on Maximum Distribution.  Notwithstanding any provision of the Plan to
the contrary, no distribution will be made to a Participant in any taxable year
of the Company to the extent such distribution results in the Participant
receiving an amount of compensation that cannot be deducted by the Company
pursuant to the limitations imposed on the deduction of certain compensation
payments under Code Section 162(m).  Any
distributions that would have been made but for the preceding sentence shall be
made at such time as the deductibility of such payments ceases to be barred
under Code Section 162(m). 
Notwithstanding the foregoing, if a distribution is made on account of a
Change of Control, then a distribution may be made to a Participant without
regard to whether the Company’s deduction would be limited pursuant Code
Section 162(m).


 


ARTICLE 6


 


FORM OF DISTRIBUTIONS


 


6.1          Forms
of Payment.  Distributions may be made under one or more
of the following payment alternatives as selected by the Participant in an
Election Form:


 


(1)           single, lump-sum distribution;


 


(2)           installments (occurring monthly, quarterly or
annually for a period elected by the Participant, subject to Section 5.6).


 


ARTICLE 7


 


BENEFICIARIES


 


7.1          Beneficiary
Designation.  The Participant’s Election Form shall
designate the Beneficiary (or Beneficiaries) who is to receive a distribution
of the Participant’s Designated Shares in the event of such Participant’s
death.  Any such designation, or change
of Beneficiary, shall not be effective until received by Vice President,
Finance or Chief Financial Officer, at 6166 Nancy Ridge Drive, San Diego, CA
92121.  If the Participant has not
properly designated a Beneficiary, if for any reason such designation shall not
be legally effective, or if said designated Beneficiary (or Beneficiaries) shall
predecease the Participant, then the Participant’s estate shall be treated as
the Beneficiary.  A Participant may
change his or her Beneficiary designation at any time, by amending the
Participant’s Election Form.


 


ARTICLE 8


 


ADMINISTRATION


 


8.1          General.  This
Plan shall be administered by the Committee, which shall exercise all
administrative powers and duties under the Plan in accordance with the terms
and purposes of the Plan, including, without limitation, the authority to amend
or terminate the Plan.  The Committee
shall determine the benefits due to or on behalf of each Participant or
Beneficiary from this Plan and shall cause them to be distributed accordingly.


 


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8.2          Procedures.  The Committee may adopt such rules and regulations not inconsistent
with the provisions of the Plan as it deems necessary or appropriate for the
proper administration of the Plan and shall have the authority to interpret and
construe any provision of the Plan.


 


8.3          Claims.  A submission of a written request for benefits by the Participant or a
Beneficiary (“Claimant”) to the Company will constitute a claim.  If, after review, the claim is approved, the
benefits will be distributed as provided in the Plan.  If the claim is denied in whole or in part, the Company will
notify the Claimant in writing within 90 days after receiving the claim.  In this event, the Company will provide the
specific reasons for its decision and references to the Plan provisions on
which the decision is based.  The
Company also will specify any additional information or material that must be
submitted to prove the claim and explain how to appeal a denied claim.


 


While
the Company ordinarily has 90 days after receipt of a claim to respond in
writing, there may be times when the Company requires more time to process the
claim.  Should this situation occur, the
Company will notify the Claimant within the initial 90-day period that the
Company requires an extension of time to make its decision.  However, the extension of time will not
exceed an additional 90 days from the end of the initial 90-day period.  If the Claimant has not received a response
from the Company within 90 days or any extension of such period, the Claimant
may file a lawsuit in federal court.


 


Should
a claim for benefits be denied, in whole on in part, the Claimant may appeal
the denial by submitting a written request for review to the Company after
receiving the denial.  The written
request should set forth all the grounds on which it is based.  The Claimant, or the Claimant’s representative,
also may review pertinent Plan documents and submit issues and comments in
writing to the Company.  The Company
will review the appeal, and will notify the Claimant of its decision in
writing, ordinarily within 60 days. 
There may be times when the Company will require more time to review an
appeal.  If this happens, the Claimant
will be notified within the initial 60-day period that the Company requires an
extension of time to make its decision. 
The extension will be no longer than 120 days after receipt of the
appeal.  The Company’s written response
to the appeal will give the reasons for its decision and references to Plan
provisions on which the decision is based.


 


8.4          Discretionary
Authority of Plan Administrator; Interpretation of Plan.  The
Committee shall be vested with authority (i) to construe and interpret the
Plan, and a Participant’s Election Form (collectively referred to as
“Documents”), their terms, and any rules and regulations promulgated
thereunder, including but not limited to resolving ambiguities, inconsistencies
and omissions, (ii) to construe and interpret the Federal and state laws and
regulations that relate to the Documents, (iii) to decide all factual questions
arising in connection with the Documents, and (iv) to decide all other
questions arising in connection with the Documents, including but not limited
to determinations of eligibility, entitlement to benefits, and vesting.


 


All
provisions of the Plan document shall be interpreted in a manner that is
consistent with the treatment of the Plan as a Top Hat Plan to which no funding
requirements are applicable.  No
Participant in the Plan is intended to be taxed for federal income tax purposes


 


8

















 


with respect to any Restricted
Stock deferred under the Plan (with the exception of the provisions of Section
10.11) unless and until such amounts are actually received by such
Participant.  The Committee has the
absolute right to interpret or modify any and all provisions of the Plan to the
extent necessary or appropriate, as the Committee determines in its discretion,
in order for the Plan and the Participants in the Plan to be treated consistent
with the intent expressed in this Section 8.4.


 


ARTICLE 9


 


AMENDMENT AND TERMINATION


 


9.1          Amendment
or Termination.  While the Company intends and expects the
Plan to continue to fulfill its purposes and serve the best interests of the
Participants, the Beneficiaries and the Company in its present form, the
Company reserves the right to amend or terminate the Plan at any time, subject
to the provisions of Section 8.2 and this Section 9.1.  The Company has delegated to the Committee
the authority to amend or terminate the Plan. 
Notwithstanding the foregoing, no such amendment or termination may
impair a Participant’s rights with respect to deferrals under this Plan.


 


ARTICLE 10


 


MISCELLANEOUS


 


10.1        No
Right to Continued Employment.  Nothing contained in this Plan
or in any agreement or instrument executed pursuant to the Plan shall be construed
as conferring upon any Participant the right to continued Service in any
capacity with the Company or to interfere with the right of the Company to
discharge any employee or any other person at any time or for any reason, which
right is hereby reserved.


 


10.2        Successors
and Assigns.  This Plan shall be binding upon the Company
and its successors and assigns.


 


10.3        Assignment
or Alienation.  Benefits of Participants under this Plan may
not be anticipated, assigned (either by law or in equity), transferred,
alienated or subject to attachment, garnishment, levy, execution or other legal
or equitable process.


 


10.4        Headings.  The headings herein are for reference only.  In the event of a conflict between a heading and content of a
section of this Plan, the content of the section shall control.


 


10.5        Gender
and Number.  Whenever used herein, the masculine shall be
interpreted to include the feminine and neuter, the neuter to include the
masculine and feminine, the singular to include the plural and the plural to
include the singular, unless the context requires otherwise.


 


10.6        Governing
Law.  The place of administration of this Plan
shall conclusively be deemed to be within the State of California, and the Plan
shall be governed by and in all respects construed in accordance with the
substantive laws of the State of California, except where such laws are
superseded by applicable federal laws.


 


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10.7        Ineligible
Participants.  If any Participant is found to be ineligible,
that is, not a member of a select group of management or highly compensated
employees eligible to participate in a Top Hat Plan, according to a
determination made by the United States Department of Labor, the Committee will
take whatever steps it deems necessary, in its discretion, to equitably protect
the interests of the affected Participants.


 


10.8        Unsecured
Promise by Company.  Notwithstanding any other provision in the
Plan or a Participant’s Election to the contrary, any Designated Shares shall
be distributed only to the extent that the Company is not bankrupt or
financially insolvent at the time of such distribution.  Whether or not the Company is bankrupt or
financially insolvent shall be determined by the Committee.  Any benefits under the Plan represent an
unfunded, unsecured promise by the Company to pay these benefits to the
Participants when due.  A Participant
has no greater right to any assets in the Plan than the general creditors of
the Company in the event that the Company shall become bankrupt or financially
insolvent.  Plan assets can be used to
pay only benefits under the Plan or the claims of the Company’s general
creditors.


 


10.9        Debt
Offsets.  If a Participant becomes entitled to a
distribution of benefits under the Plan, and if at such time the Participant
has outstanding any debt, obligation, or other liability representing an amount
owing to the Company or an affiliate, then the Company may offset such amount
owed to it or an affiliate against the amount of benefits otherwise
distributable.  Such determination shall
be made by the Committee.


 


10.10      Payment
Due to Incompetence.  If the Committee receives evidence that a
Participant or Beneficiary entitled to receive any payment under the Plan is
physically or mentally incompetent to receive such payment, the Committee may,
in its discretion, direct the payment to any other person or trust which has
been legally appointed by the courts or to any other person determined by the
Company to be a proper recipient on behalf of such person otherwise entitled to
payment, or any of them, in such manner and proportion as the Company may deem
proper.  Any such payment shall be in
complete discharge of the Company’s obligations under this Plan.


 


10.11      Tax
Withholding Obligations.  Notwithstanding this Plan, the Designated
Shares shall remain subject to FICA, FUTA and like taxes (but not personal
income taxes) upon the Vesting Dates of such Designated Shares.  The Participant may be required to deposit
with the Company an amount of cash equal to the amount determined by the
Company to be required with respect to any withholding for FICA, FUTA or like
taxes, in connection with such Participant’s deferral.  Alternatively, the Company may, at its
election, withhold the required amounts from the Participant’s pay (including
from amounts deferred pursuant to this Plan) during the pay periods next
following the date on which any such applicable employment tax liability
otherwise arises.  In addition, the Company
may withhold from any benefits payable under this Plan, all federal, state,
city or other taxes as shall be required pursuant to any law or governmental
regulation or ruling.


 


10.12      Attorney’s
Fees.  The Company shall pay for all costs and
expenses of a Participant (or Beneficiary, as applicable), at least monthly,
including attorneys’ fees and disbursements, in connection with any legal
proceeding, whether instituted by the Company or by the Participant (or
Beneficiary), relating to the interpretation or enforcement of any provision


 


10

















 


of this Plan, except that if
the Participant (or Beneficiary) instituted the proceeding and the judge or
other individual presiding over the proceeding affirmatively finds that the
Participant (or Beneficiary) instituted the proceeding in bad faith, then the
Participant (or Beneficiary) shall be required to pay all of his or her costs
and expenses, including attorney’s fees and disbursements, and shall not be
entitled to reimbursement.  The Company
shall pay prejudgment interest on any money judgment obtained by the
Participant (or Beneficiary) as a result of such a proceeding, calculated at
the prime rate of interest as reported in the Wall
Street Journal, as in effect from time to time, from the date that
payment should have been made to the Participant (or Beneficiary) under this
Agreement.


 


IN WITNESS WHEREOF, the Plan is hereby adopted by a duly
authorized officer of Arena Pharmaceuticals, Inc. on this 11th day
of November, 2003.


 


	
   

  	
  ARENA PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Jack Lief

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Jack
  Lief

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:
  President and CEO

  
					



 


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EXHIBIT A


ARENA PHARMACEUTICALS, INC.


DEFERRED COMPENSATION PLAN


ENROLLMENT AGREEMENT/CHANGE FORM


 


	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
  Social
  Security Number

  



 


I
have been offered an opportunity to participate in the Arena Pharmaceuticals,
Inc. Deferred Compensation Plan (the “Plan”). 
I will participate in the Plan and irrevocably authorize Arena
Pharmaceuticals, Inc. (the “Company”)
to defer the payment of restricted stock that is scheduled to vest in a
calendar year after the date of this election. 
This Enrollment Agreement is subject to all of the terms of the
Plan.  Capitalized terms in this
election form that are not defined herein shall have the same definitions and
meaning as set forth in the Deferred Compensation Plan.


 


Section I (All eligible
and participating Participants must complete Section I)


 


RESTRICTED STOCK DEFERRAL ELECTION


 


I have been granted
restricted shares of common stock (“Restricted Stock”) pursuant to the Plan that
is currently subject to a vesting schedule and “Restricted Stock Agreement.”  The Company has determined that it will
permit me, by completing this election form, to defer the receipt of all or a
portion of the Restricted Stock that is otherwise scheduled to vest on various
dates in 2004 or later.  This election
is subject to the provisions of the Plan.


 


By submitting this form I hereby:


 


o                                  Elect to defer the receipt of my Restricted Stock designated
below until the Designated Distribution Date:


 


	
  Grant Date

  of Award

  	
   

  	
  Number of
  Shares to

  be deferred

  	
   

  	
  Vesting
  Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


Note:  If
you elect to defer a portion of your Restricted Stock, you are required to
select a whole number of Shares.


 

















 


ARENA PHARMACEUTICALS, INC.


DEFERRED COMPENSATION PLAN


ENROLLMENT AGREEMENT/CHANGE FORM


SECTION II


 


(Complete Section II ONLY if you are
enrolling into the Plan for the first time or you are making changes to
previous elections.)


 


Section
II


 


Timing of Distribution:


 


I,
(please
print)                        
                             ,
hereby designate the following as my Designated Distribution Date:


 


o                                  My termination of Service.


 


o                                  My attainment of age
      .


 


o                                  On
           ,
20  .


 


o                                  Upon a Change of Control regardless
of whether I terminate Service.


 


o                                  Upon the termination of my
Service following a  Change of Control.


 


o                                  Other: 
                                                      .


 


(Note:  If more than
one item above is checked, then the distribution of Designated Shares shall
occur on the earliest of such dates.)


 


Notwithstanding
the foregoing, I note that my Designated Shares will be distributed immediately
upon my death.


 


Form of Distribution:


 


I elect to have my Designated
Shares distributed:


(Choose one)


 


o                                    Lump sum


 


o                                    Equal installments* over ___
years


 


(Distributions to begin as
soon as administratively practicable after my Designated Distribution Date)


 


(Note:  If more than
one item above is checked, then the distribution of Designated Shares shall occur
in a lump sum.)


 


*Equal
installments to be made on a: (Choose one)


 


o                  monthly


 


o                  quarterly


 


o                  annual basis.


 


(Note:  If more than
one item above is checked, then the distribution of Designated Shares shall
occur on a quarterly basis.)


 

















 


Method for calculating installment distributions:


 


The
following shall apply to any installment distributions under the Plan.  Distributions will be calculated by dividing
the number of Designated Shares by the number of installments specified. For
each successive period, distributions will be recalculated based on the current
number of Designated Shares at the beginning of the period divided by the
number of remaining installments.


 


Note:  Notwithstanding
the foregoing, if, on the scheduled Designated Distribution Date, the
Participant is in possession of material, non-public information, then the
Designated Distribution Date shall be deferred until the first to occur of (a)
the date that the Participant (or Beneficiary, if applicable) is no longer in
possession of material, non-public information, (b) the date that the
Participant (or Beneficiary, if applicable) is permitted to sell the Common
Stock without violating either Rule 10(b)-5 of the Securities Exchange Act of
1934 or the Company’s insider trading policy or (c) the date that the Company
files a Form 10-Q, files a Form 10-K or a registration statement covering the
Company’s securities is declared effective by the Securities and Exchange
Commission.


 

















 


	
  ARENA PHARMACEUTICALS, INC.

  	
   

  	
   

  
	
  DEFERRED COMPENSATION PLAN

  	
   

  	
   

  
	
  ENROLLMENT

  	
  ARGREEMENT/CHANGE

  	
  FORM

  
	
  SECTION III

  	
   

  	
   

  



 


Beneficiary Designation.


 


Complete
this Section III to name Beneficiaries who will receive any Plan benefits
payable at the time of your death.  If
you are not married, death benefits will be paid to the Beneficiaries shown on
this form.  If you are married and a
resident of a community property state, one half on any Plan benefit payable
which is the result of an amount contributed to the Plan during your marriage
is the community property of your spouse, and you must designate your spouse to
receive at least one-half of your benefits under the Plan.  If you fail to designate a Beneficiary, or
if no Beneficiary shall survive you, then any Plan benefits payable shall be
paid to your estate.  If your Primary
Beneficiary is unable or unwilling to receive Plan benefits payable at the time
of your death, either due to such person’s own death, permanent disability or
otherwise, then the Plan benefits payable at the time of your death shall be
paid to your Secondary Beneficiary. 
Please return this completed form to the Company’s Vice President,
Finance or Chief Financial Officer:


 


1. Your Personal Information (Please print in ink.)


 


	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
  Social Security
  number

  	
   

  	
  Date of Birth

  



 


2. Your Beneficiary


 


Please
name primary and secondary Beneficiaries.


 


Primary Beneficiary


 


	
   

  
	
  Name

  	
  Relationship

  	
  Social Security number

  



 


	
   

  
	
  Address

  	
  City

  	
  State

  	
  Zip

  	
  Date of Birth

  



 


Secondary Beneficiary


 


	
   

  
	
  Name

  	
  Relationship

  	
  Social Security number

  



 


	
   

  
	
  Address

  	
  City

  	
  State

  	
  Zip

  	
  Date of Birth

  



 


3. Your Signature


 


I
hereby revoke every previous designation of a Beneficiary for this Plan.  I understand that I may change my
Beneficiary at any time by completing a new Election Form, and that the change
is effective when received in writing and accepted by the Committee.  I understand that any distribution pursuant
to the foregoing designation shall constitute full discharge of the Company and
the Committee as well as all affiliates of the Company, from all claims with
respect to the amounts so paid.


 


	
   

  	
   

  	
   

  
	
  Signature

  	
  Date

  



 

















 


	
  ARENA PHARMACEUTICALS, INC.

  	
   

  	
   

  
	
  DEFERRED COMPENSATION PLAN

  	
   

  	
   

  
	
  ENROLLMENT

  	
  ARGREEMENT/CHANGE

  	
  FORM

  
	
  (All Participants must complete)

  	
   

  	
   

  



 


The
deferral elections relating to Restricted Stock must be made no later than
three (3) months prior to the Vesting Date applicable to such Restricted Stock
or such later time as is permitted under the terms of the Plan.


 


The
Designated Distribution Date and the distribution methods elected in this
Enrollment Agreement will remain in effect for all years unless I elect
otherwise in a later Enrollment Agreement with the Company.  Any such new election will be effective no
earlier than a date that is (i) in a subsequent Plan Year and (ii) three (3)
months following the date the new election is made and such new election will
apply to all Designated Shares deferred under the Plan.


 


For the first Plan Year, this Enrollment Agreement must be
dated and returned no later than December 20, 2003.  For subsequent Plan Years, this Enrollment Agreement must be dated
and returned no later than December 31 of such Plan Year.


 


I
hereby acknowledge that the Company has selected me as a Participant in the
Arena Pharmaceuticals, Inc. Deferred Compensation Plan, subject to all terms
and conditions of the Plan, a copy of which has been received, read, and
understood by me in conjunction with executing this Election Form.  I acknowledge that I have had satisfactory
opportunity to ask questions regarding my participation in the Plan and have
received satisfactory answers to any questions asked.  I also acknowledge that I have sufficient knowledge and
experience in financial and business matters to be capable of evaluating the
merits and risks of participation in the Plan. 
I understand that my participation in the Plan shall not begin until
this Election Form has been signed by me and returned to the Company.


 


AGREED AND ACCEPTED BY THE PARTICIPANT:


 


	
   

  	
   

  	
   

  	
   

  
	
  Date

  	
   

  	
  Participant
  Signature

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Type
  or Print Participant Name

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  AGREED AND ACCEPTED BY THE COMPANY:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Arena
  Pharmaceuticals, Inc.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date

  	
   

  	
  Officer
  Signature

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Type
  or Print Officer Name