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.


 

















 


(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,


 


2

















 


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


 


3

















 


(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


 


4

















 


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.


 


5

















 


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

  	
   

  



 


6