Exhibit 10.1


 


ARENA
PHARMACEUTICALS, INC.


 


AMENDED
AND RESTATED SEVERANCE BENEFIT PLAN


 


Section 1.                              INTRODUCTION.


 


The Arena
Pharmaceuticals, Inc. Severance Benefit Plan (the “Original
Plan”),
originally effective on January 20, 2006 (the “Effective Date”), is hereby amended and
restated on December 30, 2008 (as amended, the “Plan”).  The purpose of the Plan is to provide
severance benefits to certain eligible employees of the Company and its
subsidiaries upon selected terminations of service.  This Plan document is also the Summary Plan
Description for the Plan.


 


Section 2.                              DEFINITIONS.


 


The following
shall be defined terms for purposes of the Plan:


 


(a)           “Base Salary” means a Participant’s
monthly base salary in effect immediately prior to the Covered Termination
(including without limitation any cash compensation that is deferred by
Participant into a Company-sponsored retirement or deferred compensation plan,
exclusive of any employer matching contributions by the Company associated with
any such retirement or deferred compensation plan and exclusive of any other
Company contributions) and excludes all bonuses, commissions, expatriate
premiums, fringe benefits (including without limitation car allowances), option
grants, equity awards, employee benefits and other similar items of
compensation.


 


(b)           “Board” means the Board of Directors of
the Company, or a committee or subcommittee of such Board.


 


(c)           “Bonus Amount”
means, with respect to a Participant, one-twelfth (1/12th) of the
greater of (i) the average of the three (3) annual bonuses paid to
the Participant by the Company prior to the date of such Participant’s Covered
Termination, and (ii) the last annual bonus paid to the Participant by the
Company prior to the date of such Participant’s Covered Termination.


 


(d)           “Cause” for the Company to terminate a
Participant’s employment hereunder shall mean the occurrence of one or more of
the following events if such event results in a demonstrably harmful impact on
the Company’s business or reputation, as reasonably determined by the Board:


 


(1)           Participant’s
willful and continued failure to substantially perform his or her duties with
the Company (other than any such failure resulting from incapacity due to
physical or mental illness), after a written demand for substantial performance
is delivered to the Participant by the Board which specifically identifies the
manner in which the Board believes that the Participant has not substantially
performed his or her duties.  For a termination
of employment to be for Cause pursuant to this subsection (2)(d)(1), the
Participant must (a) receive a written notice which indicates in
reasonable detail the facts and circumstances claimed to


 


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provide a basis
for the termination of his or her employment for Cause; and (b) be
provided with an opportunity to be heard no earlier than 30 days following the
receipt of such notice (during which notice period the Participant has the
opportunity to cure and has failed to cure or resolve the behavior in
question).


 


(2)           Participant’s
conviction of, or plea of guilty or nolo contendere to, a felony or any crime
involving fraud, dishonesty or moral turpitude;


 


(3)           Participant’s
willful engaging in gross misconduct; or


 


(4)           Participant’s
unauthorized use or disclosure of material confidential information or material
trade secrets of the Company.


 


The determination under
this Plan that a Participant’s termination is with or without Cause shall be
made by the Plan Administrator in good faith, and any such determination shall
have no effect upon any determination of the rights or obligations of the
Company or the Participant for any other purpose.


 


(e)           “Change in Control” shall
have the meaning ascribed to it in the Company’s standard form of Termination
Protection Agreement in effect on the Effective Date, or as amended from time
to time.


 


(f)            “Code” means the Internal Revenue Code of 1986, as
amended.


 


(g)           “Company” means Arena Pharmaceuticals, Inc.
and its successors and assigns.


 


(h)           “Covered Termination” means, with
respect to a Participant who immediately prior to a termination of employment
was an employee of the Company, such Participant’s termination of employment by
the Company without Cause or such Participant’s voluntary termination with Good
Reason (excluding terminations due to Disability or death).


 


(i)            “Disability” means, with respect to a
Participant, the inability of such Participant to perform satisfactorily all of
the Participant’s usual services for the Company because the Participant has
become permanently disabled within the meaning of any policy of disability
income insurance covering employees of the Company then in force.  In the event the Company has no policy of
disability income insurance covering employees of the Company in force when the
Participant becomes disabled, then such term shall mean the Participant’s
permanent and total disability within the meaning of Section 22(e)(3) of
the Code.


 


(j)            “Good Reason” means,
with respect to a Participant, any one of the following:


 


(1)           any
reduction in Participant’s annual base salary (except for salary decreases generally applicable to the Company’s other
similarly-situated employees);


 


(2)           any
material reduction in the Participant’s target bonus level or bonus
opportunities;


 


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(3)           Participant’s
duties or responsibilities are materially diminished (and not simply a change
in title or reporting relationships); provided,
however, that the Participant shall not have “Good Reason” to terminate
if the Company is retained as a separate legal entity or business unit
following the effective date of a Change of Control and the Participant holds
the same position in such legal entity or business unit as the eligible
employee held before the effective date of such Change of Control;


 


(4)           in
the event the Participant is a member of the Board, any failure of the Board or
one if its committees to re-nominate the Participant for election to the Board;


 


(5)           any
significant reduction, in the aggregate, in the employee benefit programs made
available to the Participant other than a reduction in such employee benefit
programs affecting all employees of the Company substantially equally;


 


(6)           the
relocation without Participant’s prior written approval of the Participant’s
principal office or place of business to a location that would cause an
increase by more than twenty (20) miles in the Participant’s one-way commuting
distance from the Participant’s principal personal residence to the principal
office or business location at which the Participant is required to perform
services, except for required travel for the Company’s business to an extent
substantially consistent with the Participant’s prior business travel
obligations; or


 


(7)           the
failure of the Company to obtain a satisfactory agreement from any successor to
assume and agree to perform under the terms of the Plan.


 


The determination under
this Plan that a Participant’s termination is with or without Good Reason shall
be made by the Plan Administrator in good faith, and any such determination
shall have no effect upon any determination of the rights or obligations of the
Company or the Participant for any other purpose.  Participant’s continued employment shall not
constitute consent to, or a waiver of rights with respect to, any circumstances
constituting Good Reason hereunder.


 


(k)           “Participant”
means each individual hereafter designated by the Board and listed
on Exhibit A attached hereto.


 


(l)            “Plan Administrator” means
Arena Pharmaceuticals, Inc.


 


(m)          “Severance Period” means, with respect
to a Participant, the period of time following the Participant’s Covered
Termination for which a Participant may be eligible to receive the benefits
provided in Section 4 herein.  The
Severance Period shall be the number of months corresponding to such
Participant’s name on Exhibit A attached
hereto.


 


Section 3.                              ELIGIBILITY
FOR BENEFITS.


 


Subject to the requirements set forth in this
Section, the Company shall provide severance benefits under the Plan to the
Participants. In order to be eligible to receive benefits under the Plan, a
Participant must (i) experience a Covered Termination (ii) execute a
general waiver and release in substantially the form attached hereto as Exhibit B within the applicable time
period set forth therein, but in no event later than sixty (60) days following
termination of


 


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the Participant’s employment, and provided that such release becomes
effective, and (iii) return all Company-owned property to the Company as
instructed by the Company. The Company shall provide the form of such release
to the Participant on, or within a reasonable time after, the termination of
the Participant’s employment. The Company, in its sole discretion, may at any
time modify the forms of the required release to effect a release of claims
consistent with this Section 3.  In
the event that a Participant’s employment is terminated as a result of such
Participant’s death or Disability, then such Participant shall not be entitled
to the benefits provided in this Plan.


 


Section 4.                              AMOUNT
OF BENEFIT.


 


Subject to the limitations
and reductions provided in this Plan, benefits under this Plan, if any,
shall be provided to the Participants described in Section 3 in the following
amounts:


 


(a)           Covered Termination
Benefits.   Upon a Participant’s Covered Termination,
such Participant shall receive the following severance package:


 


(1)           Cash Severance Benefits.   Within
five business days after the earlier of (i) the Participant’s death or (ii) the
first business day that is six months following the Covered Termination, such Participant will receive a cash
payment in an amount equal to the sum of Participant’s Base Salary and Bonus
Amount  multiplied by the number of
months in the Participant’s Severance Period.


 


(2)           COBRA Benefits.   If such
Participant timely elects to continue coverage under the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended (“COBRA”), then for the term of the
Participant’s Severance Period, the Company will directly pay all premiums for
medical, dental and vision coverage paid by such Participant (a) under
COBRA and, to the extent applicable, any similar applicable state statute, and (b) to
the extent that such coverage under COBRA and any such applicable state statute
has been exhausted or is no longer available, then under any individual policy
providing group medical, dental and vision benefits substantially similar to
those provided to Participant immediately prior to his or her termination of
Service.


 


(3)           Equity Acceleration and Continued Stock Option
Post-Termination Exercise Period. 
 The Participant will receive
immediate vesting of all stock options and other equity awards issued by the
Company and held by such Participant that would have vested had the Participant
remained employed by the Company through the end of the Severance Period.  In addition, with respect to stock options
granted to the Participant, the Participant shall be entitled to exercise all
of his or her vested stock options until the later of (i) the original
post-termination exercise period provided in such Participant’s stock option
agreement or (ii) the number of months equal to the Severance Period (but not
beyond the original contractual life of the option). Notwithstanding any other
provision of the Plan to the contrary, the Plan shall not affect (including
with respect to vesting) any grants of performance-based restricted stock
units, including any such grants under the Company’s 2007 Performance-Based
Restricted Stock Unit Grant Agreement.


 


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All cash severance payment referenced in this Section 4
shall be subject to all applicable tax withholdings and deductions required by
law.  Except as provided herein, all terms,
conditions and limitations applicable to a Participant’s stock options and/or
equity awards shall remain in full force and effect.


 


(b)           Certain
Reductions.   Notwithstanding any other provision of the
Plan to the contrary, any benefits payable to a Participant under Sections 4(a)(1) and
4(a)(2) of this Plan shall be reduced (but not below zero) by any
severance benefits payable by the Company or an affiliate of the Company to
such Participant under any other policy, plan, program, agreement or arrangement,
including, without limitation, an employment agreement or Termination
Protection Agreement  between such
Participant and the Company.  In
addition, to the extent that any federal, state or local laws, including,
without limitation the Worker Adjustment Retraining Notification Act, 29 U.S.C.
Section 2101 et seq., or any
similar state statute, require the Company to give advance notice or make a
payment of any kind to a Participant because of that Participant’s involuntary
termination due to a layoff, reduction in force, plant or facility closing,
sale of business, change of control, or any other similar event or reason, the
benefits payable under Sections 4(a)(1) and 4(a)(2) of this Plan
shall be reduced (but not below zero) by such required payments or notice.  The benefits provided under this Plan are
intended to satisfy any and all statutory obligations that may arise out of a
Participant’s involuntary termination of employment for the foregoing reasons,
and the Plan Administrator shall so construe and implement the terms of the
Plan.


 


Section 5.                              LIMITATIONS ON BENEFITS.


 


(a)           Mitigation.   Except as otherwise specifically provided
herein, a Participant shall not be required to mitigate damages or the amount
of any payment provided under the Plan by seeking other employment or
otherwise, nor shall the amount of any payment provided for under the Plan be
reduced by any compensation earned by a Participant as a result of employment
by another employer or any retirement benefits received by such Participant after
the date of service or employment termination.


 


(b)           Termination
of Benefits.   Benefits under the Plan shall terminate
immediately if the Participant, at any time, (i) engages in the
unauthorized use or disclosure of the Company’s material  confidential information, material  trade secrets or material  proprietary
information under any written agreement under which the Participant has a such
an obligation to the Company that survives the Participant’s termination of
service to the Company, (ii) engages in any prohibited or unauthorized
competitive activities or solicitation or recruitment of employees, in
violation of any written agreement under which Participant has such an
obligation to the Company that survives the Participant’s termination of
service to the Company; (iii) violates any term or condition of this Plan
or (iv) violates any term of the applicable general waiver and release
referenced in Section 3 above.


 


(c)           Non-Duplication
of Benefits.   No Participant is eligible to receive benefits
under this Plan more than one time.


 


(d)           Indebtedness
of Participants.   If a Participant is indebted to the
Company or an affiliate of the Company on the date of his or her termination of
employment or


 


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service, the
Company reserves the right to offset any severance benefits payable in cash
under the Plan by the amount of such indebtedness.


 


(e)           Parachute
Payments.   If any payment or benefit a Participant
would receive in connection with a change in control from the Company or
otherwise (a “Payment”)
would (i) constitute a “parachute payment” within the meaning of Section 280G
of the Code, and (ii) but for this sentence, be subject to the excise tax
imposed by Section 4999 of the Code (the “Excise Tax”), then such Payment shall be
equal to the Reduced Amount.  The “Reduced Amount” shall
be either (x) the largest portion of the Payment that would result in no
portion of the Payment being subject to the Excise Tax or (y) the largest
portion of the Payment, up to and including the total Payment, whichever
amount, after taking into account all applicable federal, state and local
employment taxes, income taxes, and the Excise Tax (all computed at the highest
applicable marginal rate), results in the Participant’s receipt, on an
after-tax basis, of the greater amount of the Payment notwithstanding that all
or some portion of the Payment may be subject to the Excise Tax. If a reduction
in payments or benefits constituting “parachute payments” is necessary so that
the Payment equals the Reduced Amount, reduction shall occur in the following
order:  reduction of cash payments;
cancellation of accelerated vesting of stock awards; reduction of employee
benefits.  If acceleration of vesting of
stock award compensation is to be reduced, such acceleration of vesting shall
be cancelled in the reverse order of the date of grant of the Participant’s
stock awards.


 


The Company shall appoint a nationally
recognized independent accounting firm to make the determinations required
hereunder, which accounting firm shall not then be serving as accountant or
auditor for the individual, entity or group that effected the Change in
Control.  The Company shall bear all
expenses with respect to the determinations by such accounting firm required to
be made hereunder.


 


The accounting firm engaged to make the
determinations hereunder shall provide its calculations, together with detailed
supporting documentation, to the Company and the Participant within ten (10) calendar
days after the date on which the Participant’s right to a Payment is triggered
(if requested at that time by the Company or the Participant) or such other
time as requested by the Company or the Participant.  If the accounting firm determines that no
Excise Tax is payable with respect to a Payment, either before or after the
application of the Reduced Amount, it shall furnish the Company and the
Participant with an opinion reasonably acceptable to the Participant that no
Excise Tax will be imposed with respect to such Payment.  Any good faith determinations of the
accounting firm made hereunder shall be final, binding and conclusive upon the
Company and the Participant.


 


Section 6.                              RIGHT
TO INTERPRET PLAN; AMENDMENT AND TERMINATION.


 


(a)           Exclusive
Discretion.   The Plan Administrator shall have the
exclusive discretion and authority to establish rules, forms, and procedures
for the administration of the Plan and to construe and interpret the Plan and
to decide any and all questions of fact, interpretation, definition,
computation or administration arising in connection with the operation of the
Plan, including, but not limited to, the eligibility to participate in the Plan
and amount of benefits paid under the Plan. 
The rules, interpretations, computations and other actions of the Plan
Administrator shall be binding and conclusive on all persons. Unless otherwise
determined


 


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by the Board, the
General Counsel of the Company shall perform the duties of the Plan
Administrator under this Plan.


 


(b)           Amendment.   The
Board reserves the right to amend this Plan or the benefits provided hereunder
at any time; provided, however, that no such
amendment shall impair or reduce the rights of a Participant unless such
Participant consents to such amendment of the Plan in writing.


 


(c)           Term of Plan.   Notwithstanding the foregoing, the
Plan and each Participant’s participation herein shall continue in effect
through December 31, 2009; provided,
however, that the term of this Plan and such participation shall
automatically be extended for one additional year beyond December 31, 2008
and for successive one year periods thereafter, unless, not later than January 30
of each calendar year, commencing in 2007 for the 2010 calendar year (e.g., 2008 for the 2011 calendar year,
2009 for the 2012 calendar year, etc.), the Company shall have given written
notice that it does not wish to extend this Plan or a Participant’s right to
participate hereunder for an additional year, in which event this Plan (or such
Participant’s participation, as the case may be) shall continue to be effective
until December 31 of the applicable calendar year; provided, further, that, notwithstanding
any such notice by the Company not to extend, if a Change in Control shall have
occurred during the original or any extended term of this Plan, this Agreement
shall remain in effect for a period of two (2) years after such Change in
Control.


 


(d)           Deferred
Compensation.   Notwithstanding anything to the contrary set
forth herein, any payments and benefits provided under this Plan (the “Severance Benefits”) that constitute
“deferred compensation” within the meaning of Section 409A of the Code and
the regulations and other guidance thereunder and any state law of similar
effect (collectively “Section 409A”)
shall not commence in connection with a Participant’s termination of employment
unless and until the Participant has also incurred a “separation from service”
(as such term is defined in Treasury Regulation Section 1.409A-1(h) (“Separation From Service”), unless
such amounts may be provided to the Participant without causing the Participant
to incur the additional 20% tax under Section 409A.


 


It is intended
that, if the Company (or, if applicable, the successor entity thereto)
reasonably determines that the Severance Benefits constitute “deferred
compensation” under Section 409A and the Participant is, on the
termination of Executive’s service, a “specified employee” of the Company or
any successor entity thereto, as such term is defined in Section 409A(a)(2)(B)(i) of
the Code, the timing of the Severance Benefit payment complies with the payment
limitation applicable to such employees contained in Section 409A(a)(2)(B)(i).


 


Section 7.                              CONTINUATION
OF CERTAIN EMPLOYEE BENEFITS.


 


(a)           COBRA
Continuation.   Each Participant who is enrolled in a group
medical, dental or vision plan sponsored by the Company or an affiliate of the
Company may be eligible to continue coverage under such group medical, dental
or vision plan (or to convert to an individual policy), at the time of the
Participant’s termination of employment under COBRA.  The Company will notify the Participant of
any such right to continue group medical coverage at the time of
termination.  No provision of this Plan
will affect the continuation coverage rules


 


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under COBRA.  Therefore, the period during which a
Participant may elect to continue the Company’s group medical, dental or vision
coverage at his or her own expense under COBRA, the length of time during which
COBRA coverage will be made available to the Participant, and all other rights
and obligations of the Participant under COBRA will be applied in the same
manner that such rules would apply in the absence of this Plan.  At the conclusion of the payments made by the
Company pursuant to Section 4 herein, if any, the Participant will be
responsible for the entire payment of premiums required under COBRA for the
duration, if any, of the COBRA period.


 


(b)           Other
Employee Benefits.   All non-health benefits (such as life
insurance, disability and 401(k) plan coverage) terminate as of an
employee’s termination date (except to the extent that a conversion privilege
may be available thereunder).


 


Section 8.                              NO
IMPLIED EMPLOYMENT CONTRACT.


 


The Plan shall
not be deemed (i) to give any employee or other person any right to be
retained in the employ or service of the Company or (ii) to interfere with
the right of the Company to discharge any employee or other person at any time
and for any reason, which right is hereby reserved.


 


Section 9.                              LEGAL
CONSTRUCTION.


 


This Plan is
intended to be governed by and shall be construed in accordance with the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and, to the
extent not preempted by ERISA, the laws of the State of California.


 


Section 10.                            CLAIMS,
INQUIRIES AND APPEALS.


 


(a)           Applications
for Benefits and Inquiries.   Any application for benefits, inquiries about
the Plan or inquiries about present or future rights under the Plan must be submitted
to the Plan Administrator in writing by an applicant (or his or her authorized
representative).  The Plan Administrator
is:


 


Arena
Pharmaceuticals, Inc.


6166 Nancy Ridge Drive


San Diego, CA 92121


Attn: General Counsel


 


(b)           Denial of
Claims.   In the event that any application for benefits
is denied in whole or in part, the Plan Administrator must provide the
applicant with written or electronic notice of the denial of the application,
and of the applicant’s right to review the denial.  Any electronic notice will comply with the
regulations of the U.S. Department of Labor. 
The written notice of denial will be set forth in a manner designed to
be understood by the employee and will include the following:


 


(1)           the
specific reason or reasons for the denial;


 


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(2)           references
to the specific Plan provisions upon which the denial is based;


 


(3)           a
description of any additional information or material that the Plan
Administrator needs to complete the review and an explanation of why such
information or material is necessary; and


 


(4)           an
explanation of the Plan’s review procedures and the time limits applicable to
such procedures, including a statement of the applicant’s right to bring a
civil action under section 502(a) of ERISA following a denial on review of
the claim, as described in Section 10(d) below.


 


This written
notice will be given to the applicant within ninety (90) days after the Plan
Administrator receives the application, unless special circumstances require an
extension of time, in which case, the Plan Administrator has up to an
additional ninety (90) days for processing the application.  If an extension of time for processing is
required, written notice of the extension will be furnished to the applicant
before the end of the initial ninety (90) day period.


 


This notice of
extension will describe the special circumstances necessitating the additional
time and the date by which the Plan Administrator is to render its decision on
the application.


 


(c)           Request
for a Review.   Any person (or that person’s authorized
representative) for whom an application for benefits is denied, in whole or in
part, may appeal the denial by submitting a request for a review to the Plan
Administrator within sixty (60) days after the application is denied.  A request for a review shall be in writing
and shall be addressed to:


 


Arena
Pharmaceuticals, Inc.


6166 Nancy
Ridge Drive


San Diego, CA
92121


Attn: General Counsel


 


A request for
review must set forth all of the grounds on which it is based, all facts in
support of the request and any other matters that the applicant feels are
pertinent.  The applicant (or his or her
representative) shall have the opportunity to submit (or the Plan Administrator
may require the applicant to submit) written comments, documents, records, and
other information relating to his or her claim. 
The applicant (or his or her representative) shall be provided, upon
request and free of charge, reasonable access to, and copies of, all documents,
records and other information relevant to his or her claim.  The review shall take into account all
comments, documents, records and other information submitted by the applicant
(or his or her representative) relating to the claim, without regard to whether
such information was submitted or considered in the initial benefit
determination.


 


(d)           Decision
on Review.   The Plan Administrator will act on each
request for review within sixty (60) days after receipt of the request, unless
special circumstances require an 


 


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extension of time
(not to exceed an additional sixty (60) days), for processing the request for a
review.  If an extension for review is
required, written notice of the extension will be furnished to the applicant within
the initial sixty (60) day period.  This
notice of extension will describe the special circumstances necessitating the
additional time and the date by which the Plan Administrator is to render its
decision on the review.  The Plan
Administrator will give prompt, written or electronic notice of its decision to
the applicant. Any electronic notice will comply with the regulations of the
U.S. Department of Labor.  In the event
that the Plan Administrator confirms the denial of the application for benefits
in whole or in part, the notice will set forth, in a manner calculated to be
understood by the applicant, the following:


 


(1)           the
specific reason or reasons for the denial;


 


(2)           references
to the specific Plan provisions upon which the denial is based;


 


(3)           a
statement that the applicant is entitled to receive, upon request and free of
charge, reasonable access to, and copies of, all documents, records and other
information relevant to his or her claim; and


 


(4)           a
statement of the applicant’s right to bring a civil action under section 502(a) of
ERISA.


 


(e)           Rules and
Procedures.   The Plan Administrator will establish rules and
procedures, consistent with the Plan and with ERISA, as necessary and
appropriate in carrying out its responsibilities in reviewing benefit
claims.  The Plan Administrator may
require an applicant who wishes to submit additional information in connection
with an appeal from the denial of benefits to do so at the applicant’s own
expense.


 


(f)            Exhaustion
of Remedies.   No legal action for
benefits under the Plan may be brought until the claimant (i) has
submitted a written application for benefits in accordance with the procedures
described by Section 10(a) above, (ii) has been notified by the
Plan Administrator that the application is denied, (iii) has filed a
written request for a review of the application in accordance with the appeal
procedure described in Section 10(c) above, and (iv) has been
notified in writing that the Plan Administrator has denied the appeal.  Notwithstanding the foregoing, if the Plan
Administrator does not respond to a Participant’s claim or appeal within the
relevant time limits specified in this Section 10, then the Participant
may bring legal action for benefits under the Plan pursuant to Section 502(a) of
ERISA.


 


Section 11.                            BASIS
OF PAYMENTS TO AND FROM PLAN.


 


All benefits
under the Plan shall be paid by the Company.   The
Plan shall be unfunded, and benefits hereunder shall be paid only from the
general assets of the Company.


 


Section 12.                            OTHER
PLAN INFORMATION.


 


(a)           Employer
and Plan Identification Numbers.   The Employer Identification Number assigned to
the Company (which is the “Plan Sponsor” as that term is 


 


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used in ERISA) by
the Internal Revenue Service is 23-2908305. The Plan Number assigned to the
Plan by the Plan Sponsor pursuant to the instructions of the Internal Revenue
Service is 501.


 


(b)           Ending
Date for Plan’s Fiscal Year.   The date of the end of the fiscal year for the
purpose of maintaining the Plan’s records is  December 31.


 


(c)           Agent for
the Service of Legal Process.   The agent for the service of legal process
with respect to the Plan is Arena Pharmaceuticals, Inc., Attn: General
Counsel, 6166 Nancy Ridge Drive, San Diego, CA 92121.


 


(d)           Plan
Sponsor and Administrator.   The “Plan Sponsor” and the “Plan Administrator”
of the Plan is Arena Pharmaceuticals, Inc., 6166 Nancy Ridge Drive, San
Diego, CA 92121.  The Plan Sponsor’s and
Plan Administrator’s telephone number is (858) 453-7200.  The Plan Administrator is the named fiduciary
charged with the responsibility for administering the Plan.


 


Section 13.                            STATEMENT
OF ERISA RIGHTS.


 


Participants
in this Plan (which is a welfare benefit plan sponsored by the Company) are
entitled to certain rights and protections under ERISA.  If you are a Participant in the Plan, under
ERISA you are entitled to:


 


Receive
Information about the Plan and Your Benefits


 


(a)           Examine,
without charge, at the Plan Administrator’s office and at other specified
locations, such as work sites, all documents governing the Plan and a copy of
the latest annual report (Form 5500 Series) filed by the Plan
Administrator with the U.S. Department of Labor and available at the Public
Disclosure Room of the Pension and Welfare Benefit Administration;


 


(b)           Obtain,
upon written request to the Plan Administrator, copies of documents governing
the operation of the Plan and copies of the latest annual report (Form 5500
Series).  The Plan Administrator may make
a reasonable charge for the copies; and


 


(c)           Receive
a summary of the Plan’s annual financial report.  The Plan Administrator is required by law to
furnish each Participant with a copy of this summary annual report.


 


Prudent Actions by Plan
Fiduciaries


 


In addition to
creating rights for Plan participants, ERISA imposes duties upon the people who
are responsible for the operation of the employee benefit plan.  The people who operate the Plan, called “fiduciaries”
of the Plan, have a duty to do so prudently and in the interest of you and
other Plan participants and beneficiaries.


 


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Enforce
Your rights


 


No one,
including your employer or any other person, may fire you or otherwise
discriminate against you in any way to prevent you from exercising your rights
under ERISA.


 


Under ERISA,
there are steps you can take to enforce the above rights.  For instance, if you request a copy of Plan
documents or the latest annual report from the Plan and do not receive them
within 30 days, you may file suit in a Federal court.  In such a case, the court may require the
Plan Administrator to provide the materials and pay you up to $110 a day until
you receive the materials, unless the materials were not sent because of
reasons beyond the control of the Plan Administrator.


 


If you have a
claim for benefits that is denied or ignored, in whole or in part, you may file
suit in a state or Federal court.


 


If you are
discriminated against for asserting your rights, you may seek assistance from
the U.S. Department of Labor, or you may file suit in a Federal
court.  The court will decide who should
pay court costs and legal fees.  If you
are successful, the court may order the person you have sued to pay these costs
and fees.  If you lose, the court may
order you to pay these costs and fees, for example, if it finds your claim is
frivolous.


 


Assistance
with Your Questions


 


If you have
any questions about the Plan, you should contact the Plan Administrator.  If you have any questions about this
statement or about your rights under ERISA, or if you need assistance in
obtaining documents from the Plan Administrator, you should contact the nearest
office of the Pension and Welfare Benefits Administration, U.S. Department of
Labor, listed in your telephone directory or the Division of Technical
Assistance and Inquiries, Pension and Welfare Benefits Administration, U.S.
Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210.  You may also obtain certain publications
about your rights and responsibilities under ERISA by calling the publications
hotline of the Pension and Welfare Benefits Administration.


 


Section 14.                            EXECUTION.


 


To record the
adoption of the Plan as amended as set forth herein, effective as of  the Effective Date,
Arena Pharmaceuticals, Inc. has caused its duly authorized officer to execute
the same this 30th day of December, 2008.


 


	
   

  	
  Arena Pharmaceuticals, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   /s/ Jack Lief

  
	
   

  	
  Jack Lief

  



 


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EXHIBIT A


 


	
  PARTICIPANT:

  	
   

  	
  SEVERANCE PERIOD (IN MONTHS):

  
	
   

  	
   

  	
   

  
	
  JACK LIEF

  	
   

  	
  18

  
	
   

  	
   

  	
   

  
	
  DOMINIC BEHAN

  	
   

  	
  12

  
	
   

  	
   

  	
   

  
	
  STEVEN SPECTOR

  	
   

  	
  12

  
	
   

  	
   

  	
   

  
	
  WILLIAM SHANAHAN

  	
   

  	
  12

  
	
   

  	
   

  	
   

  
	
  ROBERT HOFFMAN

  	
   

  	
  12

  



 

















 


EXHIBIT
B


 


RELEASE
AGREEMENT


 


I
understand and agree completely to the terms set forth in the Arena Pharmaceuticals, Inc.
Severance Benefit Plan, as Amended (the “Plan”).
I understand that this release and waiver (the “Release”), together with the Plan, constitutes the complete,
final and exclusive embodiment of the entire agreement between the Company and
me with regard to the subject matter hereof. 
I am not relying on any promise or representation by the Company that is
not expressly stated herein or in the Plan.


 


In
consideration of benefits I will receive under the Plan, I hereby generally and
completely release the Company and its directors, officers, employees, agents,
attorneys, predecessors, successors, parent and subsidiary entities, insurers,
and affiliates from any and all claims, liabilities and obligations, both known
and unknown, that arise out of or are in any way related to (i) my
employment, (ii) the termination of my employment or (iii) events,
acts, conduct, or omissions between Arena and me occurring prior to my signing
this Release, except for claims for benefits set forth in the Plan or any
termination protection agreement or other severance arrangement applicable to
me, applicable equity compensation plans and grants, and any applicable
indemnification agreement or other indemnification obligation under the Company’s
charter documents.  Subject to the
foregoing, this Release includes, but is not limited to: (1) all claims
arising out of or in any way related to my employment with the Company or the
termination of that employment; (2) all claims related to my compensation
or benefits from the Company, including, but not limited to, salary, bonuses,
commissions, vacation pay, expense reimbursements, severance pay, fringe
benefits, stock, stock options, or any other ownership interests in the
Company; (3) all claims for breach of contract, wrongful termination, and
breach of the implied covenant of good faith and fair dealing; (4) all
tort claims, including, but not limited to, claims for fraud, defamation,
emotional distress, and discharge in violation of public policy; and (5) all
federal, state, and local statutory claims, including, but not limited to,
claims for discrimination, harassment, retaliation, attorneys’ fees, or other
claims arising under the federal Civil Rights Act of 1964 (as amended), the
federal Americans with Disabilities Act of 1990, the federal Age Discrimination
in Employment Act of 1967 (as amended) (“ADEA”), and the California Fair Employment
and Housing Act (as amended).


 


I acknowledge
that the consideration given under the Release for the waiver and release in
the preceding paragraph hereof is in addition to anything of value to which I
was already entitled.


 


If I am over
the age of 40 years at the time of an Covered Termination (as that term is
defined in the Plan), I acknowledge that I am knowingly and voluntarily waiving
and releasing any rights I may have under the ADEA.  I further acknowledge that I have been advised
by this writing, as required by the ADEA, that:  (A) my
waiver and release do not apply to any rights or claims that may arise on or
after the date I execute this Release; (B) I should consult with an attorney
prior to executing this Release;
(C) I have twenty-one (21) days (or such greater time as may
be required by law) to consider this Release (although I may choose to
voluntarily execute this Release earlier); (D) I have seven (7) days
following my execution of this Release to revoke 


 

















 


the Release; and (E) this Release shall not be
effective until the date upon which the revocation period has expired, which
shall be the eighth (8th) day after I execute this Release.


 


If I am not
over the age of 40 years at the time of an Covered Termination (as that term is
defined in the Plan), I understand and agree that I will have ten days to
consider and execute this release and that it shall be effective upon such
execution.


 


Except if prohibited by law or
regulation, (i) I represent that I have not filed any claims against the
Company and agree that I will not file any claim against the Company or seek
any compensation for any claim other than the payments and benefits referenced
herein and (ii) I agree to indemnify and hold the Company harmless from
and against any and all loss, cost, and expense, including, but not limited to
court costs and attorney’s fees, arising from or in connection with any action
which may be commenced, prosecuted, or threatened by me or for my benefit, upon
my initiative, or with my voluntary aid or approval, contrary to the provisions
of this Release.


 


I acknowledge
that I have read and understand Section 1542 of the California Civil Code
which reads as follows:  “A general release does not extend to claims which the creditor does
not know or suspect to exist in his or her favor at the time of executing the
release, which if known by him or her must have materially affected his or her
settlement with the debtor.” 
I hereby expressly waive and relinquish all rights and benefits under
that section and any law of any jurisdiction of similar effect with respect to
my release of any claims I may have against the Company, its affiliates, and
the entities and persons specified above.


 


The provisions of the Release
shall be deemed severable, and the invalidity or unenforceability of any
provision hereof shall not affect the validity or enforceability of the other
provisions hereof, and, to the greatest extent legally possible, effect shall
be given to the intent manifested by the portion held invalid or inoperative.


 


The Release shall become
binding when signed by the Participant, and may be executed by facsimile or a
PDF sent by email.


 


 


EMPLOYEE


 


 


	
   

  	
   

  
	
   

  	
   

  
	
  Print Name:

  	
   

  	
   

  
	
   

  	
   

  
	
  Date: 

  	
   

  	
   

  
				



 


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