Document:

exhibit10-29.htm

 

 

Exhibit 10.29

 

LIMITED SUPPORT AGREEMENT

 

This Limited Support Agreement (this “Agreement”) is entered into as of September 1, 2010, between AMERICA FIRST TAX EXEMPT INVESTORS, L.P. (the “Agreement Provider”) and FEDERAL HOME LOAN MORTGAGE CORPORATION and/or any subsequent obligee under the Reimbursement Agreement hereinafter defined (the “Lender”).

 

RECITALS

 

	
A.  

	
ATAX TEBS I, LLC (the “Sponsor”), an Affiliate of the Agreement Provider, was the owner of certain tax-exempt multifamily housing revenue bonds (the “Bonds” as specified in further detail in the Reimbursement Agreement referenced below), that it absolutely assigned and transferred to Lender, as Administrator pursuant to a Series Certificate Agreement with respect to the Bonds, dated as of the date hereof (together with the Standard Terms attached thereto, collectively, the “Series Certificate Agreement”).  Pursuant to the Series Certificate Agreement, Lender has agreed to provide credit enhancement with respect to the Bonds and related Certificates issued thereunder and to provide liquidity support for the Class A Certificates issued thereunder.

 

	
B.  

	
The Lender has conditioned its credit enhancement and liquidity support upon the execution and delivery by the Sponsor of a Bond Exchange, Reimbursement, Pledge and Security Agreement dated as of the date hereof with the Lender (the “Reimbursement Agreement”), and the execution and delivery by the Agreement Provider of this Agreement.

 

NOW, THEREFORE, in order to induce Lender to provide credit enhancement and liquidity support, and in consideration of the Recitals, and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Agreement Provider and Lender hereby agree as follows:

 

	
1.  

	
“Obligations” and other capitalized terms used but not defined in this Agreement shall have the meanings assigned to them in the Reimbursement Agreement.

 

	
2.  

	
Agreement Provider hereby absolutely, unconditionally and irrevocably guarantees to Lender the full and prompt payment when due, whether at maturity or earlier, by reason of acceleration or otherwise, and at all times thereafter, and the full and prompt performance when due, of all of the following:

 

	
(a)  

	
A portion of the Obligations equal to zero percent (0%) of the original principal balance of the Obligations (the “Base Support”).

 

	
(b)  

	
In addition to the Base Support, all other amounts for which Sponsor is personally liable under Section 9.11(b) of the Reimbursement Agreement.

 

	
(c)  

	
The payment and performance of all of Sponsor’s obligations under Section 2.4 and 5.1 of the Reimbursement Agreement.

 

	
(d)  

	
All costs and expenses, including reasonable fees and out of pocket expenses of attorneys and expert witnesses, incurred by Lender in enforcing its rights under this Agreement.

 

For purposes of determining Agreement Provider’s liability under this Agreement, all payments made by the Sponsor with respect to the Obligations and all amounts received by Lender from the enforcement of its rights under the Reimbursement Agreement shall be applied first to the portion of the Obligations for which neither the Sponsor nor the Agreement Provider has personal liability.

 

	
3.  

	
The obligations of Agreement Provider under this Agreement shall survive any foreclosure proceeding, any foreclosure sale and any release of record of the collateral securing the Reimbursement Agreement.

 

	
4.  

	
Agreement Provider’s obligations under this Agreement constitute an unconditional guaranty of payment and performance and not merely a guaranty of collection.

 

	
5.  

	
The obligations of Agreement Provider under this Agreement shall be performed without demand by Lender and shall be unconditional irrespective of the genuineness, validity, regularity or enforceability of the Reimbursement Agreement or any Sponsor Document, and without regard to any other circumstance which might otherwise constitute a legal or equitable discharge of a surety, a guarantor, a borrower or a mortgagor.  Agreement Provider hereby waives the benefit of all principles or provisions of law, statutory or otherwise, which are or might be in conflict with the terms of this Agreement and agrees that Agreement Provider’s obligations shall not be affected by any circumstances, whether or not referred to in this Agreement, which might otherwise constitute a legal or equitable discharge of a surety, a guarantor, a borrower or a mortgagor.  Agreement Provider hereby waives the benefits of any right of discharge under any and all statutes or other laws relating to a guarantor, a surety, a borrower or a mortgagor and any other rights of a surety, a guarantor, a borrower or a mortgagor thereunder.  Without limiting the generality of the foregoing, Agreement Provider hereby waives, to the fullest extent permitted by law, diligence in collecting the Obligations, presentment, demand for payment, protest, all notices with respect to the Reimbursement Agreement and this Agreement which may be required by statute, rule of law or otherwise to preserve Lender’s rights against Agreement Provider under this Agreement, including, but not limited to, notice of acceptance, notice of any amendment of the Sponsor Documents, notice of the occurrence of any default or Event of Default, notice of intent to accelerate, notice of acceleration, notice of dishonor, notice of foreclosure, notice of protest, and notice of the incurring by Sponsor of any obligation or indebtedness.  Agreement Provider also waives, to the fullest extent permitted by law, all rights to require Lender to (a) proceed against Sponsor or any other guarantor of Sponsor’s payment or performance with respect to the Obligations (an “Other Guarantor”) (b) if Sponsor or any Other Guarantor is a partnership, proceed against any general partner of Sponsor or the Other Guarantor, or (c) proceed against or exhaust any collateral held by Lender to secure the repayment of the Obligations.  Agreement Provider further waives, to the fullest extent permitted by applicable law, any right to revoke this Agreement as to any future advances by Lender under the Reimbursement Agreement to protect Lender’s interest in the UCC Collateral securing the Reimbursement Agreement.

 

	
6.  

	
At any time or from time to time and any number of times, without notice to Agreement Provider and without affecting the liability of Agreement Provider, (a) the time for payment of the Obligations may be extended or the Obligations may be renewed in whole or in part; (b) the time for Sponsor’s performance of or compliance with any covenant or agreement contained in the Reimbursement Agreement or any other Sponsor Document, whether presently existing or hereinafter entered into, may be extended or such performance or compliance may be waived; (c) the maturity of the Obligations may be accelerated as provided in the Reimbursement Agreement or any other Sponsor Document; (d) the Reimbursement Agreement, and the security instrument or any other loan document evidencing or securing the obligations of Owners (as defined in the Reimbursement Agreement) may be modified or amended by Lender and Sponsor in any respect, including, but not limited to, an increase in the principal amount; and (e) any security for the Obligations may be modified, exchanged, surrendered or otherwise dealt with or additional security may be pledged or mortgaged for the Obligations.

 

	
7.  

	
Lender, in its sole and absolute discretion, may (a) bring suit against Agreement Provider, or any one or more of the persons constituting Agreement Provider, and any Other Guarantor, jointly and severally, or against any one or more of them; (b) compromise or settle with any one or more of the persons constituting Agreement Provider for such consideration as Lender may deem proper; (c) release one or more of the persons constituting Agreement Provider, or any Other Guarantor, from liability; and (d) otherwise deal with Agreement Provider and any Other Guarantor, or any one or more of them, in any manner, and no such action shall impair the rights of Lender to collect from Agreement Provider any amount guaranteed by Agreement Provider under this Agreement.  Nothing contained in this paragraph shall in any way affect or impair the rights or obligations of Agreement Provider with respect to any Other Guarantor.

 

	
8.  

	
Any indebtedness of Sponsor held by Agreement Provider now or in the future is and shall be subordinated to the Obligations and any such indebtedness of Sponsor shall be collected, enforced and received by Agreement Provider, as trustee for Lender, but without reducing or affecting in any manner the liability of Agreement Provider under the other provisions of this Agreement.

 

	
9.  

	
Agreement Provider shall have no right of, and hereby waives any claim for, subrogation or reimbursement against Sponsor or any general member of Sponsor by reason of any payment by Agreement Provider under this Agreement, whether such right or claim arises at law or in equity or under any contract or statute, until the Obligations has been paid in full and there has expired the maximum possible period thereafter during which any payment made by Sponsor to Lender with respect to the Obligations could be deemed a preference under the United States Bankruptcy Code.

 

	
10.  

	
If any payment by Sponsor is held to constitute a preference under any applicable bankruptcy, insolvency, or similar laws, or if for any other reason Lender is required to refund any sums to Sponsor, such refund shall not constitute a release of any liability of Agreement Provider under this Agreement.  It is the intention of Lender and Agreement Provider that Agreement Provider’s obligations under this Agreement shall not be discharged except by Agreement Provider’s performance of such obligations and then only to the extent of such performance.

 

	
11.  

	
Agreement Provider shall from time to time, upon request by Lender, deliver to Lender such financial statements as Lender may reasonably require but not more frequently than once each year.  As a condition to Agreement Provider’s delivery of its financial information, Lender agrees that such information is confidential information, shall not be used for any purpose other than evaluating compliance by the Agreement Provider with this Agreement, and shall be disclosed only to those employees, directors, officers and agents of Lender who need to know such information for purposes of performing or enforcing Lender’s obligations and rights under this Agreement and who are advised of the need to maintain the confidentiality of such information.  Lender shall not otherwise use or disclose Agreement Provider’s financial information without Agreement Provider’s prior written consent.  The restrictions on use and disclosure set forth above shall not apply when and to the extent that the information received by Lender (a) is or becomes generally available to the public through no fault of Lender (or anyone acting on its behalf); (b) was previously known by Freddie Mac free of any obligation to keep it confidential; (c) is subsequently disclosed to Freddie Mac by a third party who may rightfully transfer and disclose such information without restriction and free of any obligation to keep it confidential; or (d) is required to be disclosed by Freddie Mac by applicable law.

 

	
12.  

	
Lender agrees that it may assign its rights under this Agreement in whole or in part solely in the event an “Event of Default” exists under the Reimbursement Agreement.  Upon any such assignment pursuant to this Section 12, all the terms and provisions of this Agreement shall inure to the benefit of such assignee to the extent so assigned.  Lender agrees to notify Agreement Provider of any such assignment.  The terms used to designate any of the parties herein shall be deemed to include the heirs, legal representatives, successors and assigns of such parties; and the term “Lender” shall include, in addition to Lender, any lawful owner, holder or pledgee of the Reimbursement Agreement.  Reference herein to “person” or “persons” shall be deemed to include individuals and entities.

 

	
13.  

	
This Agreement and the other Sponsor Documents represent the final agreement between the parties and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements. There are no unwritten oral agreements between the parties.  All prior or contemporaneous agreements, understandings, representations, and statements, oral or written, are merged into this Agreement and the other Sponsor Documents.  Agreement Provider acknowledges that Agreement Provider has received copies of the Reimbursement Agreement and all other Sponsor Documents.  Neither this Agreement nor any of its provisions may be waived, modified, amended, discharged, or terminated except by an agreement in writing signed by the party against which the enforcement of the waiver, modification, amendment, discharge, or termination is sought, and then only to the extent set forth in that agreement.

 

	
14.  

	
This Agreement shall be construed, and the rights and obligations of Agreement Provider hereunder determined, in accordance with federal statutory or common law (“federal law”).  Insofar as there may be no applicable rule or precedent under federal law and insofar as to do so would not frustrate the purposes of any provision of this Agreement, the local law of the State of New York shall be deemed reflective of federal law.  The parties agree that any legal actions among the Agreement Provider and the Lender regarding each party hereunder shall be originated in the United States District Court in and for the Eastern District of Virginia, and the parties hereby consent to the exclusive jurisdiction and venue of said Court in connection with any action or proceeding initiated concerning this Agreement.  Agreement Provider irrevocably consents to service, jurisdiction, and venue of such court for any such litigation and waives any other venue to which it might be entitled by virtue of domicile, habitual residence or otherwise.

 

	
15.  

	
AGREEMENT PROVIDER AND LENDER EACH (A) AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS AGREEMENT OR THE RELATIONSHIP BETWEEN THE PARTIES AS AGREEMENT PROVIDER AND LENDER THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE.  THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.

 

	
16.  

	
As of the date of this Agreement, the Agreement Provider represents and warrants to the Lender that each Agreement Provider has (i) a Net Worth equal to at least $2,000,000 and (ii) Liquidity equal to at least $200,000.  During the term of this Agreement, each Agreement Provider shall at all times maintain a Net Worth and Liquidity of no less than the foregoing.  The following terms shall have the respective meanings set forth below for purposes of this Section 16:

 

	
(a)  

	
“Liquidity” means, at any date, the Agreement Provider’s unrestricted cash and cash equivalents.

 

	
(b)  

	
“Net Worth” means, at any date, the Tangible Assets of a Person which (after deducting depreciation, obsolescence, amortization, and any valuation or other reserves on account of upward revaluation of assets and without reduction for any unamortized debt discount or expense) would be shown, in accordance with generally accepted accounting principles, on its balance sheet, minus liabilities (other than capital stock and surplus but including all reserves for contingencies and other potential liabilities) which would be shown, in accordance with generally accepted accounting principles, on such balance sheet.

 

	
(c)  

	
“Person” means any individual, partnership, corporation, association, joint venture, trust (including any beneficiary thereof) or unincorporated organization, and a government or agency or political subdivision thereof.

 

	
(d)  

	
“Tangible Assets” means total assets except: (i) that portion of deferred assets and prepaid expenses (other than prepaid insurance, prepaid rent and prepaid taxes) which do not mature or, in accordance with generally accepted accounting principles, are not amortizable within one year from the date of calculation, and (ii) trademarks, trade names, good will, and other similar intangibles.

 

	
17.  

	
During the term of the Reimbursement Agreement, the Agreement Provider agrees (a) to maintain its existence as a limited partnership under the laws of the State of Delaware, (b) that it will not dissolve or otherwise dispose of all or substantially all of its assets, and will not consolidate with or merge into any Person or permit any Person to consolidate with or merge into it and (c) that it will make subordinate loans to Owners solely in accordance with Section 3.25 of the Reimbursement Agreement.

 

	
18.  

	
This Agreement may be simultaneously executed in multiple counterparts, all of which shall constitute one and the same instrument and each of which shall be, and shall be deemed to be, an original.

 

 

[Signatures follow]

  

  

  

IN WITNESS WHEREOF, Agreement Provider and Lender have signed and delivered this Agreement or have caused this Agreement to be signed by their duly authorized representatives.

 

AMERICA FIRST TAX EXEMPT INVESTORS, L.P.

 

	
  

	
By:

	
AMERICA FIRST CAPITAL ASSOCIATES LIMITED PARTNERSHIP TWO, a Delaware limited partnership

	
  

	
Its:

	
General Partner

 

	
  

	
By:

	
THE BURLINGTON CAPITAL GROUP LLC, a Delaware limited liability company

	
  

	
Its:

	
General Partner

 

By:                                                         /s/ Michael J. Draper

Michael J. Draper

Chief Financial Officer

 

 

 

 

 

 

 

 

[Signature Page to America First TEBS limited support agreement]

 

 

  

  

  

 

LENDER:

 

FEDERAL HOME LOAN MORTGAGE CORPORATION

 

By:             /s/ Clayton A. Davis                                                              

Clayton A. Davis

Director, Multifamily Structured and

Affordable Executions

 

 

 

 

 

 

 

 

 

 

[Signature Page to America First TEBS limited support agreement]arna-ex1022_814.htm

Exhibit 10.22

 
 
ARENA PHARMACEUTICALS, INC.

Amended and restated SEVERANCE AGREEMENT

This Amended and Restated Severance Agreement (this “Severance Agreement”) is made and entered into by and between Amit D. Munshi (“Executive”) and Arena Pharmaceuticals, Inc. (the “Company”), and is effective as of January 4, 2019 (the “Effective Date”). As of the Effective Date this Severance Agreement amends, restates and supersedes in its entirety the Severance Agreement between Executive and the Company dated May 6, 2016.

Whereas, in connection with his continued employment with the Company, Executive shall have important management responsibilities and talents which benefit the Company and its affiliates; and

Whereas, the Company believes that its best interests are served if Executive is encouraged to remain with the Company and the Company has determined that Executive’s ability to perform Executive’s responsibilities and utilize Executive’s talents for the benefit of the Company, and the Company’s ability to retain Executive as an employee, will be significantly enhanced if Executive is provided with fair and reasonable protection from the risks associated with a termination of employment; and

Whereas, the Board has approved and authorized this Severance Agreement to become effective as of the Effective Date.

Now, Therefore, the Company and Executive hereby agree as follows:

Section 1. Defined Terms.

The following shall be defined terms for purposes of this Severance Agreement: 

(a)“Base Salary” means Executive’s monthly base salary in effect immediately prior to the Covered Termination, ignoring any reduction made to such monthly base salary which forms the basis for Executive’s termination for Good Reason, if applicable (including without limitation any cash compensation that is deferred by Executive 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 Executive’s target bonus in place in effect immediately prior to the Covered Termination, ignoring any reduction which forms the basis for Executive’s termination for Good Reason, if applicable.

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(d)“Cause” for the Company to terminate Executive’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)Executive’s willful and continued failure to substantially perform his 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 Executive by the Board which specifically identifies the manner in which the Board believes that Executive has not substantially performed his duties. For a termination of employment to be for Cause pursuant to this subsection (1)(d)(1), Executive must (a) receive a written notice which indicates in reasonable detail the facts and circumstances claimed to provide a basis for the termination of his 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 Executive has the opportunity to cure and has failed to cure or resolve the behavior in question). 

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

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

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

(e)“Change in Control” means the occurrence of any of the following events:

(1)any person or group of persons acting in concert (excluding Company benefit plans) becomes the beneficial owner of securities of the Company having at least 30% of the voting power of the Company’s then outstanding securities (unless the event causing the 30% threshold to be crossed is an acquisition of voting common securities directly from the Company); 

(2)any merger or other business combination of the Company, any sale or lease of the Company’s assets or any combination of the foregoing transactions (the “Transactions”) other than a Transaction immediately following which the stockholders of the Company immediately prior to the Transaction own at least 60% of the voting power, directly or indirectly, of (A) the surviving corporation in any such merger or other business combination; (B) the purchaser or lessee of the Company’s assets; or (C) both the surviving corporation and the purchaser or lessee in the event of any combination of Transactions, in each case in substantially the same proportions as their ownership of the outstanding voting securities of the Company immediately prior to such Transaction; or

(3)within any 24 month period, the persons who were directors immediately before the beginning of such period (the “Incumbent Directors”) cease to constitute at least a majority of the Board or the board of directors of a successor to the Company. For this purpose, any director who was not a director at the beginning of such period shall be deemed to be an Incumbent Director if such director was elected to the Board by, or on the recommendation of or with the approval of, at least three-quarters of the directors who then qualified as Incumbent Directors (so long as such director was not nominated by a person who has expressed an intent to effect a Change in Control or engage in a proxy or other control contest).

2.

 

 

(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 Executive’s termination of employment by the Company without Cause or Executive’s termination with Good Reason (excluding terminations due to Disability or death).

(i)“Disability” means the inability of Executive to perform satisfactorily all of Executive’s usual services for the Company because Executive 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 Executive becomes disabled, then such term shall mean Executive’s permanent and total disability within the meaning of Section 22(e)(3) of the Code. 

(j)“Employment Agreement” means the Executive Employment Agreement between the Company and Executive dated May 6, 2016, as it may be amended from time to time in accordance with its terms.

(k)“Good Reason” means, with respect to Executive, any one of the following:

(1)any material reduction in Executive’s annual base salary (except for salary decreases generally applicable to the Company’s other similarly-situated employees, but not exceeding a decrease of ten percent (10%) of Executive’s highest base salary);

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

(3)Executive’s duties, authorities or responsibilities are materially diminished;

(4)a material breach of the Employment Agreement, including failure of the Company to obtain a satisfactory agreement from any assignee of assets of the Company to assume and agree to perform the terms of this Severance Agreement and the Employment Agreement; or

(5)the relocation without Executive’s prior written approval of Executive’s principal office or place of business to a location that would cause an increase by more than thirty-five (35) miles in Executive’s one-way commuting distance from Executive’s principal personal residence to the principal office or business location at which Executive is required to perform services, except for required travel for the Company’s business to an extent substantially consistent with Executive’s prior business travel obligations.

In any case, in order for Executive to terminate for Good Reason, (i) Executive must give the Company notice of the event that triggers such Good Reason within ninety (90) days after its occurrence, which notice must be provided in writing and indicate that Executive considers such event to trigger Good Reason under this Severance Agreement, (ii) the Company does not cure the event within thirty (30) days of the giving of such written notice and (iii) Executive terminates his employment within sixty (60) days after the end of the cure period. Executive’s continued 

3.

 

 

employment shall not constitute consent to, or a waiver of rights with respect to, any circumstances constituting Good Reason hereunder.

(l)“Severance Period” means twenty-four (24) months. 

(m)“Section 409A” means Section 409 of the Code and the regulations and other guidance thereunder and any state law of similar effect.

Section 2. Eligibility for Benefits. 

In order to be eligible to receive benefits under this Severance Agreement, Executive must (i) experience a Covered Termination, (ii) execute a general waiver and release in substantially the form attached hereto as Exhibit A within the applicable time period set forth therein, but in no event later than sixty (60) days following termination of Executive’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 Executive on, or within a reasonable time after, the termination of Executive’s employment. The Company, in its sole discretion, may at any time modify the form of the required release to effect a release of claims consistent with this Section 2. In the event that Executive’s employment is terminated as a result of Executive’s death or Disability, then Executive shall not be entitled to the benefits provided in this Severance Agreement.

Section 3. Amount of Benefit.

Subject to the limitations and reductions provided in this Severance Agreement, benefits under this Severance Agreement, if any, shall be provided to Executive in the following amounts:

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

(1)Cash Severance Benefits. Within five business days after the earlier of (i) Executive’s death or (ii) the sixtieth (60th) day following the Covered Termination, and in either event on or before March 15 of the year following the year in which the Covered Termination occurred, Executive will receive a cash payment in an amount equal to the sum of Executive’s Base Salary and Bonus Amount multiplied by the number of months in the Severance Period. Additionally, if Executive’s Covered Termination occurs following the end of an annual bonus period, but before payment of a bonus for such period, Executive shall be paid an amount equivalent to the cash bonus that he otherwise (notwithstanding the occurrence of the Covered Termination) would have received under the Company’s annual incentive plan for such period, based on actual performance as determined by the Board (or a committee thereof) in accordance with the terms of such plan, and such bonus shall be paid at the time it otherwise (notwithstanding the occurrence of the Covered Termination) would have been paid under the terms of the Company’s annual incentive plan, but in no event (i) prior to the effectiveness of the waiver and release described in Section 2 above or (ii) later than March 15 of the year following the year in which the Covered Termination occurred. 

(2)COBRA Benefits. If Executive timely elects to continue coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), then the 

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Company will directly pay to Executive a fully taxable monthly cash payment equal to the amount of Executive’s monthly COBRA group health insurance premium until the earliest of (A) the end of the Severance Period or (B) the expiration of Executive’s eligibility for the continuation coverage under COBRA. For purposes of this Section, references to COBRA premiums shall not include any amounts payable by Executive under a Code Section 125 health care reimbursement plan. The foregoing taxable payment shall be paid in monthly installments on the same schedule that the COBRA premiums would otherwise have been paid, and shall be paid until the earlier of (i) expiration of the Severance Period or (ii) the date Executive is no longer enrolled in such COBRA coverage. 

(3)Equity Acceleration and Continued Stock Option Post-Termination Exercise Period. Executive will receive immediate vesting of all stock options and other equity awards issued by the Company and held by Executive that would have vested had Executive remained employed by the Company through the end of the Severance Period. In addition, with respect to stock options granted to Executive, Executive shall be entitled to exercise all of his vested stock options until the later of (i) the original post-termination exercise period provided in the applicable 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 this Severance Agreement to the contrary, this Severance Agreement shall not affect (including with respect to vesting) any stock awards for which the vesting thereof is conditioned upon the satisfaction of performance criteria (“Performance-Related Awards”), including any such grants under the Company’s Performance Restricted Stock Unit Grant Agreement. For the avoidance of doubt, Performance-Related Awards do not include any stock awards or portions thereof (including stock options) for which the vesting thereof is conditioned solely upon Executive’s continued service over a specified time period (i.e., time-based vesting). 

All cash severance payment referenced in this Section 3 shall be subject to all applicable tax withholdings and deductions required by law. Except as provided herein, all terms, conditions and limitations applicable to Executive’s stock options and/or equity awards shall remain in full force and effect. 

(b)Sole Severance Agreement. The benefits under this Severance Agreement shall supersede any similar severance benefits under any other severance plan, agreement or program of the Company, with the exception of any severance benefits provided under the Employment Agreement. In addition, the benefits under this Severance Agreement shall be reduced by any amounts that would be due under any federal, state or local laws, including, without limitation the Workers Adjustment Retraining Notification Act, 29 U.S.C. Section 2101 et seq. or any similar state statutes, and such reduction(s), if any, shall apply during the period such amounts otherwise are due. The benefits provided under this Severance Agreement are intended to satisfy any and all statutory obligations that may arise out of Executive’s involuntary termination of employment for the foregoing reasons, and the Board shall so construe and implement the terms of this Severance Agreement.

Section 4. Limitations on Benefits.

(a)Mitigation. Except as otherwise specifically provided herein, Executive shall not be required to mitigate damages or the amount of any payment provided under this Severance 

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Agreement by seeking other employment or otherwise, nor shall the amount of any payment provided for under this Severance Agreement be reduced by any compensation earned by Executive as a result of employment by another employer or any retirement benefits received by Executive after the date of service or employment termination.

(b)Termination of Benefits. Benefits under this Severance Agreement shall terminate immediately if Executive, 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 Executive’s Employee Proprietary Information and Inventions Agreement dated May 18, 2016 or any other written agreement under which Executive has such an obligation to the Company that survives Executive’s termination of service to the Company, (ii) intentionally or in any material respect engages in any prohibited or unauthorized competitive activities or solicitation or recruitment of employees, in violation of any written agreement under which Executive has such an obligation to the Company that survives Executive’s termination of service to the Company, (iii) intentionally or in any material respect violates the terms or conditions of this Severance Agreement or (iv) intentionally or in any material respect violates the terms of the applicable general waiver and release referenced in Section 2 above.

(c)Indebtedness of Executive. If Executive is indebted to the Company or an affiliate of the Company on the date of his termination of employment or service, the Company reserves the right to offset any severance benefits payable in cash under this Severance Agreement by the amount of such indebtedness, except to the extent such offset would cause adverse tax consequences to Executive or the Company under Section 409A.

(d)Parachute Payments. If any payment or benefit Executive 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 Executive’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 first with respect to stock awards (including stock options) that are not subject to Treas. Reg. 280G 1 Q&A 24(c) and next for stock awards (including stock options) subject to Treas. Reg. 280G 1 Q&A 24(c) and in both cases starting from the last vesting tranche. Notwithstanding the foregoing, to the extent that it is permitted under Sections 409A, 280G and 4999 of the Code, Executive may designate a different order of reduction in payments or benefits constituting “parachute payments”.

6.

 

 

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 Executive within ten (10) calendar days after the date on which Executive’s right to a Payment is triggered (if requested at that time by the Company or Executive) or such other time as requested by the Company or Executive. 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 Executive with an opinion reasonably acceptable to Executive 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 Executive. 

Section 5. Right to Interpret; Amendment and Termination. 

(a)Dispute Resolution. Any dispute or controversy arising in connection hereof shall be subject to the Dispute Resolution provisions in Section 8 of the Employment Agreement.

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

(c)Termination. This Severance Agreement shall automatically terminate upon any termination of Executive’s employment with the Company that is not a Covered Termination and may be terminated at any time by mutual written agreement of Executive and the Company. 

(d)Section 409A. This Severance Agreement is intended to be interpreted and applied so that the payment of the benefits set forth herein shall be exempt from the requirements of Section 409A (including but not limited to the exemption provided under Treasury Regulations Sections 1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A 1(b)(9)) to the maximum extent that such exemption if available and any ambiguities shall be interpreted accordingly; provided, however, that to the extent such exemption is not available, such benefits shall comply with the requirements of Section 409A to the extent necessary to avoid adverse personal tax consequences and any ambiguities herein shall be interpreted accordingly. Each payment under this Severance Agreement shall be treated as a separate and distinct payment for purposes of Section 409A. Notwithstanding any provision in this Severance Agreement or elsewhere to the contrary, if Executive is a “specified employee” within the meaning of Section 409A, any payments or benefits due upon a termination or resignation of Executive’s employment under this Severance Agreement that constitute a “deferral of compensation” within the meaning of Section 409A and which do not otherwise qualify under the exemptions under Treas. Regs. Section 1.409A-1 (including without limitation, the short-term deferral exemption and the permitted payments under Treas. Regs. Section 1.409A-1(b)(9)(iii)(A)), shall be delayed and paid or provided on the earlier of (i) the date which is six (6) months and one (1) day after Executive’s “separation from service”, as such term 

7.

 

 

is defined in Treasury Regulations Section 1.409A-1(h) (“Separation from Service”) for any reason other than death, and (ii) the date of Executive’s death (such applicable earlier date, the “Delayed Initial Payment Date”). Notwithstanding anything in this Severance Agreement, or elsewhere to the contrary, distributions under this Severance Agreement upon termination of Executive’s employment may only be made upon Executive’s Separation from Service and such date shall be considered the termination date for purposes of receiving severance benefits under this Severance Agreement, unless such amounts may be provided to Executive without causing adverse tax consequences. 

In no event shall payment of any benefits under this Severance Agreement be made prior to Executive’s termination date or prior to the effective date of the general waiver and release described in Section 2 of this Severance Agreement. In no event may Executive, directly or indirectly, designate the calendar year of any payment to be made under this Severance Agreement which constitutes a “deferral of compensation” within the meaning of Section 409A. If the Company determines that any payments or benefits provided under this Severance Agreement constitute “deferred compensation” under Section 409A, and Executive’s Separation from Service occurs at a time during the calendar year when the general waiver and release described in Section 2 of this Severance Agreement could become effective in the calendar year following the calendar year in which Executive’s Separation from Service occurs, then regardless of when such general waiver and release is returned to the Company and becomes effective, such general waiver and release will not be deemed effective (solely for purposes of timing of severance payments) any earlier than the first day of the second calendar year.

Section 6. No Implied Employment Contract.

This Severance Agreement shall not be deemed (i) to give Executive 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. The Company and Executive acknowledge that Executive’s employment relationship is at-will and either Executive or the Company may terminate the employment relationship at any time, with or without Cause or advance notice.

Section 7. General Provisions.

(a)Notices. Any notices provided must be in writing and will be deemed effective upon the earlier of personal delivery (including personal delivery by fax) or the next day after sending by overnight carrier, to the Company at its primary office location and to Executive at the address as listed on the Company payroll.

(b)Severability. Whenever possible, each provision of this Severance Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Severance Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Severance Agreement will be reformed, construed and enforced in such jurisdiction to the extent possible in keeping with the intent of the parties.

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(c)Waiver. Any waiver of any breach of any provisions of this Severance Agreement must be in writing to be effective, and it shall not thereby be deemed to have waived any preceding or succeeding breach of the same or any other provision of this Severance Agreement.

(d)Counterparts. This Severance Agreement may be executed in separate counterparts, any one of which need not contain signatures of more than one party, but both of which taken together will constitute one and the same Severance Agreement.

(e)Headings. The headings of the sections hereof are inserted for convenience only and shall not be deemed to constitute a part hereof nor to affect the meaning thereof.

(f)Successors and Assigns. This Severance Agreement is intended to bind and inure to the benefit of and be enforceable by Executive and the Company, and their respective successors, assigns, heirs, executors and administrators, except that (a) Executive may not assign any of Executive’s duties hereunder and Executive may not assign any of Executive’s rights hereunder without the written consent of the Company, which shall not be withheld unreasonably and (b) the Company may not assign its rights and obligations hereunder except to a successor to all or substantially all of its assets or business who assumes in writing the obligations of this Severance Agreement.

(g)Tax Withholding. All payments contemplated or made pursuant to this Severance Agreement will be subject to withholdings of applicable taxes in compliance with all relevant laws and regulations of all appropriate government authorities. Executive acknowledges and agrees that the Company has neither made any assurances nor any guarantees concerning the tax treatment of any payments contemplated by or made pursuant to this Severance Agreement. Executive has had the opportunity to retain a tax and financial advisor and fully understands the tax and economic consequences of all payments made pursuant to this Severance Agreement.

(h)Choice of Law. All questions concerning the construction, validity and interpretation of this Severance Agreement will be governed by the laws of the State of California without regard to conflict of law provisions.

 

 

9.

 

 

In Witness Whereof, this Severance Agreement shall be effective as of the Effective Date.

			
	
Arena Pharmaceuticals, Inc.

	
 
	
 
	
 

	
By:
	
 
	
/s/ Suzanne C. Zoumaras

	
Name:
	
 
	
EVP and Chief Human Resources Officer

	
Title:
	
 
	
January 4, 2019

	
 
	
 
	
 

	
 
	
 
	
 

	
Executive

	
 
	
 
	
 

	
/s/ Amit D. Munshi

	
Amit D. Munshi

 

 

 

10.

 

 

Exhibit A

RELEASE AGREEMENT

I understand and agree completely to the terms set forth in the Amended and Restated Severance Agreement between Arena Pharmaceuticals, Inc. (the “Company”) and me dated January 4, 2019 (the “Agreement”). I understand that this release and waiver (the “Release”), together with the Severance Agreement, 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 Severance Agreement. 

In consideration of benefits I will receive under the Severance Agreement, 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 the Company and me occurring prior to my signing this Release, except for claims for benefits set forth in the Severance Agreement or other severance arrangement applicable to me, applicable equity compensation plans and grants, any applicable indemnification agreement or other indemnification obligation under the Company’s charter documents or any rights or claims I may have to indemnification or legal defense pursuant to any policy of insurance protecting or applicable to directors and/or officers of the Company, and any rights or claims which are not waivable as a matter of law. 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 Severance Agreement), 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 

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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 Severance Agreement), 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 Executive, and may be executed by facsimile or a PDF sent by email.

EXECUTIVE

 

Print Name:

Date:

 

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