Exhibit 10.36


Arena
Pharmaceuticals, Inc.


Non-employee
Director Compensation


 


Equity:


 


·                  Initial Grant
to New Directors:  18,000 options to purchase Arena common
stock. The options vest in equal annual installments over two years.


 


·                  Annual Grant to
Continuing Directors:  12,000 options to purchase Arena common
stock, except for the first annual grant. The annual grants shall be made in
the beginning of each calendar year in accordance with Arena’s Stock Option
Grant Policy Statement. The options vest in equal monthly installments over one
year.


 


·                  The first
annual grant to a director shall be reduced pro rata based on the number of
months such director served as a director in the prior year, if any. For
example, if a new director is appointed in August of a particular year,
the director shall receive, in addition to the director’s initial grant, 5/12
of the annual equity grant at the same time the annual equity grants are
awarded to the other continuing directors.


 


·                  Duration and
Price of Options: The director options are 10-year options with an
exercise price equal to the fair market value of Arena common stock as
determined under Arena’s 2006 Long-Term Incentive Plan, as amended (the “LTIP”).


 


A
form of the stock option grant agreement for director option grants under the
LTIP is included as Exhibit 10.2 to the Form 8-K Arena filed with the
Securities and Exchange Commission on August 1, 2006. Arena’s Stock Option
Grant Policy Statement includes additional information on option grants,
including the timing of option grants.


 


Cash:


 


·                  Retainer:  $20,000
annually, paid quarterly, subject to continuing service as a director. If a
director joins the Board after the first quarter of a calendar year, such
directors’ retainer shall be reduced pro rata on a quarterly basis.


 


·                  Prior to the
beginning of any calendar year or, in the case of a new director, to the extent
permitted, upon joining the Board of Directors, each director can irrevocably
elect to receive 25%, 50%, 75% or 100% of his or her annual cash retainer for
the following, or, in the case of a new director, the remaining portion of the,
calendar year in (i) deferred stock units, or DSUs, on a $1-for-$1 basis, (ii) the
number of options (vesting in approximately equal monthly installments over one
year) determined by dividing three times the retainer amount elected by the
fair market value of Arena common stock, computed at the time the options are
granted, or (iii) a combination of cash, DSUs and options.


 


·                  Meeting Attendance Fee:


 


·                  General:


·                  In-Person:  $1,000


·                  Telephonic:  $500


 


·                  Exceptions:


·                  Audit Chairperson Meeting
Attendance Fee:


 

















 


·                  In-Person:  $3,000


·                  Telephonic:  $1,500


 


·                  Other
Chairperson Meeting Attendance Fee:


·                  In-Person:  $2,000


·                  Telephonic:  $1,000


 


In
addition, the Board of Directors or the Compensation Committee may authorize
additional fees for significant work in informal meetings or for other service
to Arena in the recipient’s capacity as a director or committee member. Each non-employee director is entitled to
reimbursement for all of such director’s reasonable out-of-pocket expenses
incurred in connection with serving on the Board of Directors.


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