Document:

Exhibit 10.28

 

Exhibit 10.28

SOMAXON PHARMACEUTICALS, INC.

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     Amended and Restated Employment Agreement (this “Agreement”) made and entered into as
of December 1, 2007, between Somaxon Pharmaceuticals, Inc., a Delaware corporation (the
“Company”), and                     , an individual (“Executive”).

W I T N E S S E T H:

     Whereas, the Company and Executive are parties to that certain Employment Agreement
dated as of                      (the “Prior Agreement”);

     Whereas, the Company and Executive desire to amend and restate the Prior Agreement
upon the terms and conditions hereinafter set forth;

     Now, Therefore, in consideration of the premises and the mutual covenants hereinafter
set forth, and intending to be legally bound hereby, it is hereby agreed as follows:

          1. Position and Duties. Executive shall diligently and conscientiously devote
Executive’s full business time, attention, energy, skill and diligent efforts to the business of
the Company and the discharge of Executive’s duties hereunder. Executive’s duties under this
Agreement shall be to serve as                     , with the responsibilities, rights, authority and duties
customarily pertaining to such office and as may be established from time to time by or under the
direction of the Board of Directors of the Company (the “Board”) or its designees. Executive shall
report to the Board and the President and Chief Executive Officer of the Company. Executive shall
also act as an officer and/or director and/or manager of such affiliates of the Company as may be
designated by the Board from time to time, commensurate with Executive’s office, all without
further compensation, other than as provided in this Agreement. As an exempt, salaried employee,
Executive will be expected to work such hours as required by the nature of Executive’s work
assignments.

          2. Place and Term of Employment. Executive’s performance of services under this
Agreement shall be rendered in San Diego County, California, subject to necessary travel
requirements of Executive’s position and duties hereunder. Executive’s employment shall not be for
a particular term and may be terminated by either Executive or the Company at any time, for any
reason or no reason, subject to the provisions contained in Paragraph 7.

          3. Compensation.

               (a) Base Salary. The Company shall pay to Executive base salary compensation at an
annual rate of $                    . The Board shall review Executive’s base salary annually in light of the
performance of Executive and the Company, and may, in its sole discretion, maintain or increase
(but not decrease) such base salary by an amount it determines to be appropriate. Executive’s
annual base salary payable hereunder, as it may be maintained or increased from time to time, is
referred to herein as “Base Salary.” Base Salary shall be paid in equal installments in accordance
with the Company’s payroll practices in effect from time to time for executive officers, but in no
event less frequently than monthly.

               (b) Bonus Plan. The Company shall adopt a bonus program providing for annual bonus
awards to Executive and the Company’s other eligible employees dependent upon, among other things,
the achievement of certain performance levels by the Company, the nature, magnitude and

 

 

quality of
the services performed by Executive for the Company and the compensation paid for positions of
comparable responsibility and authority within the Company’s industry (the “Company Employee Bonus
Plan”). 

          4. Benefits. Executive shall be eligible to participate in all employee benefit
programs of the Company offered from time to time during the term of Executive’s employment by the
Company to employees or executive officers of Executive’s rank, to the extent that Executive
qualifies under the eligibility provisions of the applicable plan or plans, in each case consistent
with the Company’s then-current practice as approved by the Board from time to time. Except to the
extent financially feasible for the Company, the foregoing shall not be construed to require the
Company to establish such plans or to prevent the modification or termination of such plans once
established, and no such action or failure thereof shall affect this Agreement. Executive
recognizes that the Company has the right, in its sole discretion, to amend, modify or terminate
its benefit plans without creating any rights in Executive. Notwithstanding the foregoing, the
Company’s failure to provide Executive with compensation and benefits substantially equivalent (in
terms of benefit levels and/or reward opportunities) in all material respects to those provided for
under each of the Company’s material employee benefit plans, programs and practices as in effect
from time to time shall constitute a material breach of this Agreement.

          5. Vacation. Executive shall be entitled to paid vacation and sick time (“PTO”) of up
to 4 weeks per calendar year. Executive may roll-over unused PTO time from one calendar year to
another, subject to a maximum of 6 weeks of accrued PTO, which is to be accrued in accordance with
the Company’s PTO policy.

          6. Business Expenses. The Company shall promptly reimburse Executive for Executive’s
reasonable and necessary expenditures for travel, entertainment and similar items made in
furtherance of Executive’s duties under this Agreement consistent with the policies of the Company
as applied to all executive officers. Executive shall document and substantiate such expenditures
as required by the policies of the Company as applied to all executive officers, including an
itemized list of all expenses incurred, the business purposes for which such expenses were
incurred, and such receipts as Executive reasonably has been able to obtain.

          7. Termination of Employment.

               (a) Death or Disability.

                    (i) In the event of Executive’s death, Executive’s employment with the Company shall
automatically terminate.

                    (ii) Each of the Company and Executive shall have the right to terminate Executive’s
employment in the event of Executive’s Disability. “Disability” as used in this Agreement shall
have meaning set forth in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the
“Code”), which as of the date of this Agreement is as follows: “An individual is permanently and
totally disabled if he is unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected to result in death or
which has lasted or can be expected to last for a continuous period of not less than 12 months.” A
termination of Executive’s employment by either party for Disability shall be communicated to the
other party by written notice, and shall be effective on the 10th day after receipt of such notice
by the other party (the “Disability Effective Date”), unless Executive returns to full-time performance of
Executive’s duties before the Disability Effective Date.

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               (b) By the Company.

                    (i) The Company shall have the right to terminate Executive’s employment for Cause. “Cause”
as used in this Agreement shall mean:

                    (A) Executive’s breach of any of the covenants contained in Paragraphs 8, 9, and 10 of
this Agreement;

                    (B) Executive’s conviction by, or entry of a plea of guilty or nolo contendere in, a
court of competent and final jurisdiction for any crime involving moral turpitude or
punishable by imprisonment in the jurisdiction involved;

                    (C) Executive’s commission of an act of fraud, whether prior to or subsequent to the
date hereof upon the Company;

                    (D) Executive’s continuing repeated willful failure or refusal to perform Executive’s
duties as required by this Agreement (including, without limitation, Executive’s inability
to perform Executive’s duties hereunder as a result of chronic alcoholism or drug addiction
and/or as a result of any failure to comply with any laws, rules or regulations of any
governmental entity with respect to Executive’s employment by the Company);

                    (E) Executive’s gross negligence, insubordination or material violation of any duty of
loyalty to the Company or any other material misconduct on the part of Executive;

                    (F) Executive’s intentional commission of any act which Executive knows (or reasonably
should know) is likely to be materially detrimental to the Company’s business or goodwill;
or

                    (G) Executive’s material breach of any other provision of this Agreement, provided
that termination of Executive’s employment pursuant to this subsection (G) shall not
constitute valid termination for good cause unless Executive shall have first received
written notice from the Board stating with specificity the nature of such breach and
affording Executive at least twenty days to correct the breach alleged.

Nothing in this Paragraph 7(b)(i) shall prevent Executive from challenging the Board’s
determination that Cause exists or that Executive has failed to cure any act (or failure to act)
that purportedly formed the basis for the Board’s determination, under the arbitration procedures
set forth in Paragraph 19 below.

                    (ii) The Company shall have the right to terminate Executive’s employment hereunder without
Cause at any time.

               (c) By Executive.

                    (i) Executive shall have the right to terminate his or her employment with the Company for
Good Reason (as defined below). Executive’s continued employment shall not constitute Executive’s
consent to, or a waiver of rights with respect to, any act or failure to act constituting Good
Reason hereunder.

                    (ii) For purposes of this Agreement “Good Reason” shall mean:

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                    (A) a material diminution in Executive’s base compensation;

                    (B) a material diminution in Executive’s authority, duties or responsibilities;

                    (C) a material diminution in the authority, duties or responsibilities of the supervisor to
whom Executive is required to report;

                    (D) a material change in the geographic location at which Executive must perform his or her
duties; or

                    (E) any other action or inaction that constitutes a material breach by the Company of its
obligations to Executive under this Agreement.

     Notwithstanding the foregoing, Good Reason shall only exist if Executive shall have provided
the Company with written notice within ninety (90) days of the initial occurrence of any of the
foregoing events or conditions, and the Company fails to eliminate the conditions constituting Good
Reason within thirty (30) days after receipt of written notice of such event or condition from
Executive. Executive’s termination by reason of resignation from employment with the Company for
Good Reason shall be treated as involuntary. Executive’s resignation from employment with the
Company for Good Reason must occur within two (2) years following the initial existence of the act
or failure to act constituting Good Reason. 

               (iii) Executive shall have the right to terminate his or her employment hereunder without Good
Reason upon 30 days’ written notice to the Company, and such termination shall not in and of itself
be a breach of this Agreement.

          (d) Termination Payments.

               (i) If Executive’s employment with the Company is terminated pursuant to Paragraph 7(a)(i)
(i.e., death), the Company shall pay to Executive (a) his or her accrued but unpaid Base Salary
through the date of termination (plus all accrued and unpaid expenses reimbursable in accordance
with Paragraph 6), (b) any accrued but unused PTO, and (c) at the discretion of the Board, an
annual bonus for the year in which Executive’s death occurs, prorated through the date of death,
based on the Board’s good-faith estimate of the actual amount, if any, that would have been payable
for such year under the Company Employee Bonus Plan (assuming Executive had remained employed by
the Company through the end of such year) in accordance with Paragraph 3(b), in each case payable
in a lump sum within ten (10) days following Executive’s death.

               (ii) If Executive’s employment with the Company is terminated pursuant to Paragraph 7(a)(ii)
(i.e., Disability), the Company shall pay to Executive (A) his or her accrued but unpaid Base
Salary through the date of termination (plus all accrued and unpaid expenses reimbursable in
accordance with Paragraph 6), (B) any accrued but unused PTO, (C) an amount equal to Executive’s
actual Base Salary (not including any bonus payable) for the 12 month period immediately prior to
such termination, and (D) at the discretion of the Board, an annual bonus for the year in which
Executive’s Disability occurs, prorated through the date of termination, based on the Board’s
good-faith estimate of the actual amount, if any, that would have been payable for such year under
the Company Employee Bonus Plan (assuming Executive had remained employed by the Company through
the end of such year) in accordance with Paragraph 3(b), in each case payable in a lump sum within
ten (10) days following Executive’s Release Effective Date (as defined below).

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               (iii) If Executive’s employment with the Company is voluntarily terminated by Executive
pursuant to Paragraph 7(c)(i) (i.e., Good Reason), or if the Company terminates Executive’s
employment with the Company other than pursuant to Paragraphs 7(a)(ii) or 7(b)(i), then the Company
shall pay to Executive the following, which Executive acknowledges to be fair and reasonable, as
consideration for the Release described in Paragraph 7(f):

               (A) Executive’s accrued but unpaid Base Salary through the date of termination (plus
all accrued and unpaid expenses reimbursable in accordance with Paragraph 6), payable in a
lump sum on the date of termination;

               (B) any accrued but unused PTO, payable in a lump sum on the date of termination;

               (C) at the discretion of the Board, an annual bonus for the year in which Executive’s
employment is terminated, prorated through the date of termination, based on the Board’s
good-faith estimate of the actual amount, if any, that would have been payable for such
year under the Company Employee Bonus Plan (assuming Executive had remained employed by the
Company through the end of such year) in accordance with Paragraph 3(b), payable in a lump
sum within ten (10) days following Executive’s Release Effective Date (as defined below);

               (D) subject to Section 23 below, an amount equal to Executive’s actual Base Salary
(not including any bonus payable) for the 12 month period immediately prior to such
termination, payable in a lump sum within ten (10) days following Executive’s Release
Effective Date (as defined below);

               (E) the Company shall pay all costs which the Company would otherwise have incurred to
maintain all of Executive’s health, welfare and retirement benefits (either on the same or
substantially equivalent terms and conditions) if Executive had continued to render
services to the Company for 12 continuous months after the date of his or her termination
of employment; and

               (F) notwithstanding any provision to the contrary in Executive’s options under the
Option Plan or other plan (including, without limitation, the expiration dates or vesting
provisions thereof) or any restricted stock agreement, (1) the unvested portion, if any, of
Executive’s outstanding options shall be deemed to have vested on the date of termination
with respect to the number of shares that would have vested had Executive remained employed
by the Company for 12 months following such termination, and Executive shall have 180 days
from the date of termination to exercise such options (but not longer than the original
term of such options), and (2) any restrictions with respect to any restricted shares of
the Company’s capital stock that Executive then holds shall immediately lapse with respect
to the number of restricted shares that would have vested had Executive remained employed
by the Company for 12 months following such termination; provided, however, that this
Section 7(d)(iii)(F) shall not apply to the shares of restricted stock granted to Executive
on October 8, 2007.

               (iv) If Executive’s employment with the Company is terminated by the Company pursuant to
Paragraph 7(b)(i) (i.e., for Cause), or Executive voluntarily terminates his employment with the
Company other than pursuant to Paragraphs 7(a) or 7(c)(i), without limiting or prejudicing any
other legal or equitable rights or remedies which the Company may have upon such breach by
Executive, the Company shall pay Executive his or her accrued but unpaid Base Salary and any

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accrued but unused PTO (plus all accrued and unpaid expenses reimbursable in accordance with
Paragraph 6) through the date of termination, payable in a lump sum on the date of termination.

               (v) In addition to the foregoing, upon the termination of Executive’s employment, Executive
shall be entitled to any other rights, compensation and/or benefits as may be due to Executive in
accordance with the terms and provisions of any other benefit, compensation, incentive, medical,
disability or life insurance plans, programs or agreements of the Company in effect upon such
termination.

               (vi) The termination payments described above shall supersede any severance program, plan or
policy that may be adopted by the Company with respect to its employees generally, and the terms of
this Paragraph 7(d) shall control in the event of any discrepancy with such severance program, plan
or policy.

          (e) Change in Control.

               (i) In the event of any Change in Control (defined below) during the term of Executive’s
employment with the Company, notwithstanding any provision to the contrary in Executive’s options
under the Option Plan or other plan (including, without limitation, the expiration dates or vesting
provisions thereof) or any restricted stock agreement (A) (1) 50% of any unvested portion of such
options shall be deemed to have vested on the date of the Change in Control and (2) the remaining
unvested portion of such options shall vest on the date that is 12 months from the closing of such
Change in Control, subject to Executive’s continuing service with the Company or any parent or
subsidiary or successor on such date, and (B) (1) the restrictions with respect to 50% of the
restricted shares of the Company’s capital stock that Executive then holds shall immediately lapse
on the date of the Change in Control and (2) the restrictions with respect to any remaining
restricted shares shall lapse on the date that is 12 months from the closing of such Change in
Control, subject to Executive’s continuing service with the Company or any parent or subsidiary or
successor on such date; provided, however, that this Section 7(e)(i) shall not apply to the shares
of restricted stock granted to Executive on October 8, 2007.

               (ii) Following a Change in Control, if Executive’s employment with the Company is voluntarily
terminated by Executive pursuant to Paragraph 7(c)(i) (i.e., Good Reason), or if the Company
terminates Executive’s employment with the Company other than pursuant to Paragraphs 7(a) or
7(b)(i), then, in addition to the application of Paragraph 7(d)(iii) to such situation,
notwithstanding any provision to the contrary in Executive’s options under the Option Plan or other
plan (including, without limitation, the expiration dates or vesting provisions thereof) or any
restricted stock agreement, (A) any unvested portion of such options shall be deemed to have vested
on the date of termination and Executive shall have 180 days from the date of termination to
exercise such options (but not longer than the original term of such options), and (B) any
restrictions with respect to restricted shares of the Company’s capital stock that Executive then
holds shall immediately lapse on the date of termination; provided, however, that this Section
7(e)(ii) shall not apply to the shares of restricted stock granted to Executive on October 8, 2007.

               (iii) “Change in Control” means and includes each of the following:

                    (A) the acquisition, directly or indirectly, by any “person” or “group” (as those terms are
defined in Sections 3(a)(9), 13(d) and 14(d) of the Exchange Act and the rules thereunder) of
“beneficial ownership” (as determined pursuant to Rule 13d-3 under the Exchange Act) of securities
entitled to vote generally in the election of directors (“voting securities”) of the Company that
represent 50% or more of the combined voting power of the Company’s then outstanding voting
securities, other than:

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               (1) an acquisition by a trustee or other fiduciary holding securities under any
employee benefit plan (or related trust) sponsored or maintained by the Company or any
person controlled by the Company or by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any person controlled by the Company, or

               (2) an acquisition of voting securities by the Company or a corporation owned, directly
or indirectly by the stockholders of the Company in substantially the same proportions as
their ownership of the stock of the Company, or

               (3) an acquisition of voting securities pursuant to a transaction described in
subsection (C) below that would not be a Change in Control under subsection (C);

          Notwithstanding the foregoing, the following event shall not constitute an “acquisition” by
any person or group for purposes of this Paragraph 7(e)(iii)(A): an acquisition of the Company’s
securities by the Company which causes the Company’s voting securities beneficially owned by a
person or group to represent 50% or more of the combined voting power of the Company’s then
outstanding voting securities; provided, however, that if a person or group shall become the
beneficial owner of 50% or more of the combined voting power of the Company’s then outstanding
voting securities by reason of share acquisitions by the Company as described above and shall,
after such share acquisitions by the Company, become the beneficial owner of any additional voting
securities of the Company, then such acquisition shall constitute a Change in Control; or

               (B) during any period of two consecutive years, individuals who, at the beginning of such
period, constitute the Board together with any new director(s) (other than a director designated by
a person who shall have entered into an agreement with the Company to effect a transaction
described in Subparagraphs (A) or (C) of this Paragraph 7(e)(iii)) whose election by the Board or
nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds
of the directors then still in office who either were directors at the beginning of the two year
period or whose election or nomination for election was previously so approved, cease for any
reason to constitute a majority thereof; or

               (C) the consummation by the Company (whether directly involving the Company or indirectly
involving the Company through one or more intermediaries) of (1) a merger, consolidation,
reorganization, or business combination or (2) a sale or other disposition of all or substantially
all of the Company’s assets or (3) the acquisition of assets or stock of another entity, in each
case other than a transaction:

               (I) which results in the Company’s voting securities outstanding immediately before the
transaction continuing to represent (either by remaining outstanding or by being converted
into voting securities of the Company or the person that, as a result of the transaction,
controls, directly or indirectly, the Company or owns, directly or indirectly, all or
substantially all of the Company’s assets or otherwise succeeds to the business of the
Company (the Company or such person, the “Successor Entity”)), directly or indirectly, at
least a majority of the combined voting power of the Successor Entity’s outstanding voting
securities immediately after the transaction, and

               (II) after which no person or group beneficially owns voting securities representing
50% or more of the combined voting power of the Successor Entity; provided, however, that no
person or group shall be treated for purposes of this

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paragraph (2) as beneficially owning 50% or more of combined voting power of the Successor
Entity solely as a result of the voting power held in the Company prior to the consummation
of the transaction; or

                    (D) the Company’s stockholders approve a liquidation or dissolution of the Company.

          For purposes of Subparagraph 7(e)(iii)(A) above, the calculation of voting power shall be made
as if the date of the acquisition were a record date for a vote of the Company’s stockholders, and
for purposes of Subparagraph 7(e)(iii)(C) above, the calculation of voting power shall be made as
if the date of the consummation of the transaction were a record date for a vote of the Company’s
stockholders.

               (f) Condition Precedent. If Executive’s employment with the Company is voluntarily
terminated by Executive pursuant to Paragraph 7(c)(i) (i.e., Good Reason) or if the Company
terminates Executive’s employment with the Company other than pursuant to Paragraphs 7(a) or
7(b)(i), prior to the receipt of any payments or benefits provided by Paragraphs 7(d)(ii),
7(d)(iii) and 7(e)(ii) on account of the occurrence of such termination of Executive’s employment
with the Company, Executive shall execute a “Release” in the form attached hereto as Exhibit
A or Exhibit B, as appropriate. Such Release shall specifically relate to all of
Executive’s rights and claims in existence at the time of such execution and shall confirm
Executive’s obligations under the Proprietary Information and Inventions Agreement (as defined
below). Executive shall have 50 days following the date of termination to execute such Release.
It is understood that, in the event that Executive is at least 40 years old on the date of the
termination of his or her employment with the Company, Executive has a certain period to consider
whether to execute such Release, and Executive may revoke such Release within 7 business days after
execution. In the event Executive does not execute such Release within the applicable period, or
if Executive revokes such Release within the subsequent 7 business day period, Executive shall not
be entitled to the aforesaid payments and benefits. The date on which Executive’s Release becomes
effective and the applicable revocation period lapses shall be the “Release Effective Date.”

          8. Proprietary Information and Inventions Agreement. As a condition of continued
employment, Executive will be required to continue to comply with the Proprietary Information and
Inventions Agreement between Executive and the Company. In Executive’s work for the Company,
Executive will be expected not to use or disclose any confidential information, including trade
secrets, of any former employer or other person to whom Executive has an obligation of
confidentiality. Rather, Executive will be expected to use only that information which is
generally known and used by persons with training and experience comparable to Executive’s, which
is common knowledge in the industry or otherwise legally in the public domain, or which is
otherwise provided or developed by the Company. Executive agrees that he or she will not bring
onto Company premises any unpublished documents or property belonging to any former employer or
other person to whom Executive has an obligation of confidentiality.

          9. Non-Solicitation.

               (a) Nonsolicitation of Employees or Consultants. Executive agrees that for a period
of one year after termination of Executive’s employment with the Company (the “Nonsolicitation
Period”), Executive will not directly or indirectly induce or solicit any of the Company’s
employees or consultants to leave their employment.

               (b) Nonsolicitation of Customers. Executive agrees that all customers of the Company
or any of its subsidiaries for which Executive has or will provide services during the term of
Executive’s employment with the Company, and all prospective customers from whom Executive has

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solicited business while in the employ of the Company, shall be solely the customers of the
Company or such subsidiary. Executive agrees that, for the Nonsolicitation Period, Executive shall
neither directly nor indirectly solicit business as to products or services competitive with those
of the Company or any of its subsidiaries, from any of the Company’s or any of its subsidiaries’
customers with whom Executive had contact within one year prior to Executive’s termination.

               (c) Scope of Covenants. Executive agrees that the covenants contained in this
Paragraph 9 are reasonable with respect to their duration, geographic area and scope. If, at the
time of enforcement of this Paragraph 9, a court holds that the restrictions stated herein are
unreasonable under the circumstances then existing, the parties hereto agree that the maximum
period, scope or geographic area legally permissible under such circumstances will be substituted
for the period, scope or area stated herein.

               (d) Equitable Relief. In the event of a breach of this Paragraph 9 by Executive, the
Company shall, in addition to all other remedies available to it, be entitled to equitable relief
by way of an injunction and any other legal or equitable remedies.

          10. Nondisparagement. Executive will not at any time during or after the term of
Executive’s employment with the Company directly (or through any other person or entity) make any
public statements (whether orally or in writing) which are intended to be derogatory or damaging to
the Company or any of its subsidiaries, their respective businesses, activities, operations,
affairs, reputations or prospects or any of their respective officers, employees, directors,
partners, agents or shareholders; provided that Executive may comment generally on industry matters
in response to inquiries from the press and in other public speaking engagements. The Company
shall not at any time during or after the term of Executive’s employment with the Company, directly
(or through any other person or entity) make any public statements (whether oral or in writing)
which are intended to be derogatory or damaging concerning Executive.

          11. Indemnification; Directors & Officers Insurance.

               (a) The Company shall indemnify Executive to the maximum extent permitted by law and by the
charter and bylaws of Company if Executive is made a party, or threatened to be made a party, to
any threatened or pending legal action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that Executive is or was an officer, director, manager,
member, partner or employee of the Company, in which capacity Executive is or was serving at the
Company’s request, against reasonable expenses (including reasonable attorneys’ fees), judgments,
fines and settlement payments incurred by him or her in connection with such action, suit or
proceeding.

               (b) The Company shall use reasonable commercial efforts to maintain directors & officers
insurance for the benefit of Executive and other executive officers and directors with a level of
coverage comparable to other companies in the Company’s industry at a similar stage of development.

               (c) The Company and Executive have entered into an Indemnification Agreement in the form
attached hereto as Exhibit C.

          12. Representation of the Parties. Executive represents and warrants to the Company
that Executive has the capacity to enter into this Agreement and the other agreements referred to
herein, and that the execution, delivery and performance of this Agreement and such other
agreements by Executive will not violate any agreement, undertaking or covenant to which Executive
is party or is otherwise bound. The Company represents to Executive that it is duly formed and is
validly existing under the laws of the State of Delaware, that it is fully authorized and empowered
by action of its Board

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to enter into this Agreement and the other agreements referred to herein, and that performance
of its obligations under this Agreement and such other agreements will not violate any agreement
between it and any other person, firm or other entity.

          13. Key Man Insurance. The Company will have the right throughout the term of
Executive’s employment with the Company to obtain or increase insurance on Executive’s life in such
amount as the Board determines, in the name of the Company or and for its sole benefit or
otherwise, in the discretion of the Board. Upon reasonable advance notice, Executive will
cooperate in any and all necessary physical examinations without expense to Executive, supply
information, and sign documents, and otherwise cooperate fully with the Company as the Company may
request in connection with any such insurance. Executive warrants and represents that, to
Executive’s best knowledge, Executive is in good health and does not suffer from any medical
condition which might interfere with the timely performance of Executive’s obligations under this
Agreement. To the extent the Company elects to obtain a policy of insurance on the life of
Executive, unless an alternative life insurance benefit has been established for the Company’s
executive officers, including Executive, the Company shall also obtain and pay for a whole life
insurance policy providing for payment of not less than the equivalent of one year’s Base Salary in
benefits to Executive’s designated beneficiaries (this policy shall be in addition to any coverage
provided by the Company’s group life insurance plan provided to employees generally).

          14. Notices. All notices given under this Agreement shall be in writing and shall be
deemed to have been duly given (a) when delivered personally, (b) three business days after being
mailed by first class certified mail, return receipt requested, postage prepaid, (c) one business
day after being sent by a reputable overnight delivery service, postage or delivery charges
prepaid, or (d) on the date on which a facsimile is transmitted to the parties at their respective
addresses stated below. Any party may change its address for notice and the address to which
copies must be sent by giving notice of the new addresses to the other parties in accordance with
this Paragraph 14, except that any such change of address notice shall not be effective unless and
until received.

If to the Company:

Somaxon Pharmaceuticals, Inc.

Attn: Chief Executive Officer

3721 Valley Centre Drive, Suite 500

San Diego, CA 92130

If to Executive:

[Name and Address of Executive]

          15. Entire Agreement, Amendments, Waivers, Etc.

               (a) No amendment or modification of this Agreement shall be effective unless set forth in a
writing signed by the Company and Executive. No waiver by either party of any breach by the other
party of any provision or condition of this Agreement shall be deemed a waiver of any similar or
dissimilar provision or condition at the same or any prior or subsequent time. Any waiver must be
in writing and signed by the waiving party.

               (b) This Agreement, together with the Exhibits hereto and the documents referred to herein and
therein, sets forth the entire understanding and agreement of the parties with respect to the
subject matter hereof and supersedes all prior oral and written understandings and agreements,
including, without limitation, the Prior Agreement. There are no representations, agreements,

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arrangements or understandings, oral or written, among the parties relating to the subject
matter hereof which are not expressly set forth herein, and no party hereto has been induced to
enter into this Agreement, except by the agreements expressly contained herein.

               (c) Nothing herein contained shall be construed so as to require the commission of any act
contrary to law, and wherever there is a conflict between any provision of this Agreement and any
present or future statute, law, ordinance or regulation, the latter shall prevail, but in such
event the provision of this Agreement affected shall be curtailed and limited only to the extent
necessary to bring it within legal requirements.

               (d) This Agreement shall inure to the benefit of and be enforceable by Executive and
Executive’s heirs, executors, administrators and legal representatives, and by the Company and its
successors and assigns. This Agreement and all rights hereunder are personal to Executive and
shall not be assignable. The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company, by operation of law or by agreement in form and substance reasonably
satisfactory to Executive, to assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such succession had taken
place.

               (e) If any provision of this Agreement or the application thereof is held invalid, the
invalidity shall not affect the other provisions or application of this Agreement that can be given
effect without the invalid provisions or application, and to this end the provisions of this
Agreement are declared to be severable.

          16. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of California without reference to principles of conflict of laws.

          17. Taxes. All payments required to be made to Executive hereunder, whether during
the term of Executive’s employment hereunder or otherwise, shall be subject to all applicable
federal, state and local tax withholding laws.

          18. Headings, Etc. The headings set forth herein are included solely for the purpose
of identification and shall not be used for the purpose of construing the meaning of the provisions
of this Agreement. Unless otherwise provided, references herein to Exhibits and Paragraphs refer
to Exhibits to and Paragraphs of this Agreement.

          19. Arbitration. Any dispute or controversy between Company and Executive, arising
out of or relating to this Agreement, the breach of this Agreement, or otherwise, shall be settled
by arbitration in San Diego, California administered by the American Arbitration Association in
accordance with its National Rules for the Resolution of Employment Disputes then in effect and
judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction
thereof. The arbitrator shall have the authority to award any remedy or relief that a court of
competent jurisdiction could order or grant, including, without limitation, the issuance of an
injunction. However, either party may, without inconsistency with this arbitration provision,
apply to any court having jurisdiction over such dispute or controversy and seek interim
provisional, injunctive or other equitable relief until the arbitration award is rendered or the
controversy is otherwise resolved. Except as necessary in court proceedings to enforce this
arbitration provision or an award rendered hereunder, or to obtain interim relief, neither a party
nor an arbitrator may disclose the existence, content or results of any arbitration hereunder
without the prior written consent of Company and Executive. The Company shall pay all of the
direct costs and expenses in any arbitration hereunder and the arbitrator’s fees and costs;
provided, however, that the arbitrator shall

11

 

have the discretion to award the prevailing party reimbursement of its, his or her reasonable
attorney’s fees and costs. The Company and Executive hereby expressly waive their right to a jury
trial.

          20. Survival. Executive’s obligations under the provisions of Paragraphs 8, 9 and 10,
as well as the provisions of Paragraphs 6, 7(d), 7(e)(ii), 11 and 15 through and including 23,
shall survive the termination or expiration of this Agreement.

          21. Confidentiality. The parties agree that the existence and terms of this Agreement
are and shall remain confidential. The parties shall not disclose the fact of this Agreement or any
of its terms or provisions to any person without the prior written consent of the other party
hereto; provided, however, that nothing in this Paragraph 21 shall prohibit disclosure of such
information to the extent required by law, nor prohibit disclosure of such information by Executive
to any legal or financial consultant, all of whom shall first agree to be bound by the
confidentiality provisions of this Paragraph 21, nor prohibit disclosure of such information within
the Company in the ordinary course of its business to those persons with a need to know, as
reasonably determined by the Company, or by the Company to any legal or financial consultant.

          22. Construction. Each party has cooperated in the drafting and preparation of this
Agreement. Therefore, in any construction to be made of this Agreement, the same shall not be
construed against any party on the basis that the party was the drafter.

          23. Section 409A of the Code.

               (a) This Agreement is not intended to provide for any deferral of compensation subject to
Section 409A of the Code, and, accordingly, the severance payments payable under Section 7(d) shall
be paid no later than the later of: (i) the fifteenth (15th) day of the third month
following Executive’s first taxable year in which such severance benefit is no longer subject to a
substantial risk of forfeiture, and (ii) the fifteenth (15th) day of the third month
following first taxable year of the Company in which such severance benefit is no longer subject to
substantial risk of forfeiture, as determined in accordance with Code Section 409A and any Treasury
Regulations and other guidance issued thereunder. To the extent applicable, this Agreement shall
be interpreted in accordance with Code Section 409A and Department of Treasury regulations and
other interpretive guidance issued thereunder.

               (b) Notwithstanding anything to the contrary in this Agreement, if at the time of Executive’s
termination of employment with the Company Executive is a “specified employee” as defined in Code
Section 409A, as determined by the Company in accordance with Code Section 409A, to the extent that
the payments or benefits under this Agreement are subject to Code Section 409A and the delayed
payment or distribution of all or any portion of such amounts to which Executive is entitled under
this Agreement is required in order to avoid a prohibited distribution under Code Section
409A(a)(2)(B)(i), then such portion shall be paid or distributed to Executive during the thirty
(30) day period commencing on the earlier of (x) the date that is six (6) months following
Executive’s termination of employment with the Company, (y) the date of Executive’s death, or (z)
the earliest date as is permitted under Code Section 409A.

               (c) As provided in Internal Revenue Notice 2006-79, notwithstanding any other provision of
this Agreement, with respect to an election or amendment to change a time and form of payment under
this Agreement made on or after January 1, 2007 and on or before December 31, 2007, the election or
amendment may apply only to amounts that would not otherwise be payable in 2007 and may not cause
an amount to be paid in 2007 that would not otherwise be payable in 2007.

12

 

(Signature Page Follows)

13

 

     In Witness Whereof, the parties have executed this Agreement as of the date first
above written.

	 	 	 	 	 	 	 
	 	 	COMPANY:	 	 
	 
	 	 	 	 	 	 
	 	 	Somaxon Pharmaceuticals, Inc.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	Name:	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	EXECUTIVE:	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	[Name of Executive]	 	 

14

 

Exhibit A

RELEASE

(Individual Termination)

[The language in this Release may change based on legal developments and evolving best practices;

this form is provided as an example of what will be included in the final Release document.]

     Certain capitalized terms used in this Release are defined in the Amended and Restated
Employment Agreement by and between Somaxon Pharmaceuticals, Inc., a Delaware corporation
(the “Company”), and [Name of Executive] (“Executive”) dated as of the 1st day of
December, 2007 (the “Agreement”), which Executive has previously executed and of which this Release
is a part.

     Pursuant to the Agreement, and in consideration of and as a condition precedent to the
payments and benefits provided under Paragraph 7(d) of the Agreement, Executive hereby furnishes
the Company with this Release.

     Executive hereby confirms his/her obligations under the Company’s proprietary information and
inventions agreement.

     On Executive’s own behalf and on behalf of Executive’s heirs, estate and beneficiaries,
Executive hereby waives, releases, acquits and forever discharges the Company, and each of its
Subsidiaries and affiliates, and each of their respective past or present officers, directors,
agents, servants, employees, shareholders, predecessors, successors and assigns, and all persons
acting by, through, under, or in concert with them, or any of them, of and from any and all suits,
debts, liens, contracts, agreements, promises, claims, liabilities, demands, causes of action,
costs, expenses, attorneys’ fees, damages, indemnities and obligations of every kind and nature, in
law, equity, or otherwise, known and unknown, fixed or contingent, suspected and unsuspected,
disclosed and undisclosed (“Claims”), from the beginning of time to the date hereof, including
without limitation, Claims that arose as a consequence of Executive’s employment with the Company,
or arising out of the termination of such employment relationship, or arising out of any act
committed or omitted during or after the existence of such employment relationship, all up through
and including the date on which this Release is executed, including, but not limited to, Claims
which were, could have been, or could be the subject of an administrative or judicial proceeding
filed by Executive or on Executive’s behalf under federal, state or local law, whether by statute,
regulation, in contract or tort. This Release includes, but is not limited to: (1) Claims for
intentional and negligent infliction of emotional distress; (2) tort Claims for personal injury;
(3) Claims or demands related to salary, bonuses, commissions, stock, stock options, or any other
ownership interest in the Company, vacation pay, fringe benefits, expense reimbursements, severance
pay, front pay, back pay or any other form of compensation; (4) Claims for breach of contract; (5)
Claims for any form of retaliation, harassment, or discrimination; (6) Claims pursuant to any
federal, state or local law or cause of action including, but not limited to, the federal Civil
Rights Act of 1964, as amended, the federal Age Discrimination in Employment Act of 1967, as
amended (“ADEA”), the federal Employee Retirement Income Security Act of 1974, as amended, the
federal Americans with Disabilities Act of 1990, the California Fair Employment and Housing Act, as
amended, and the California Labor Code; and (7) all other Claims based on tort law, contract law,
statutory law, common law, wrongful discharge, constructive discharge, fraud, defamation, emotional
distress, pain and suffering, breach of the implied covenant of good faith and fair dealing,
compensatory or punitive damages, interest, attorneys’ fees, and reinstatement or re-employment.
If any court rules that Executive’s waiver of the right to file any administrative or judicial
charges or complaints is ineffective, Executive agrees not to seek or accept any money damages or
any other relief upon the filing of any such administrative or judicial charges or complaints.

1

 

     Executive acknowledges that he/she has 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.”
Executive hereby expressly waives and relinquishes all rights and benefits under that section and
any law of any jurisdiction of similar effect with respect to his/her release of any unknown Claims
Executive may have against the Company.

     Notwithstanding the foregoing, nothing in this Release shall constitute a release by Executive
of any claims or damages based on any right Executive may have to enforce the Company’s executory
obligations under the Agreement, any right Executive may have to vested or earned compensation and
benefits, or Executive’s eligibility for indemnification under applicable law, Company governance
documents, Executive’s indemnification agreement with the Company or under any applicable insurance
policy with respect to Executive’s liability as an employee or officer of the Company.

     If Executive is 40 years of age or older at the time of the termination, Executive
acknowledges that he/she is knowingly and voluntarily waiving and releasing any rights he/she may
have under ADEA. Executive also acknowledges that the consideration given under the Agreement for
the Release is in addition to anything of value to which he/she was already entitled. Executive
further acknowledges that he/she has been advised by this writing, as required by the ADEA, that:
(A) his/her waiver and release do not apply to any rights or claims that may arise on or after the
date he/she executes this Release; (B) Executive has the right to consult with an attorney prior to
executing this Release; (C) Executive has 21 days to consider this Release (although he/she may
choose to voluntarily execute this Release earlier); (D) Executive has 7 days following the
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 8th day after this
Release is executed by Executive, without Executive’s having given notice of revocation.

     Executive further acknowledges that Executive has carefully read this Release, and knows and
understands its contents and its binding legal effect. Executive acknowledges that by signing this
Release, Executive does so of Executive’s own free will, and that it is Executive’s intention that
Executive be legally bound by its terms. Executive further acknowledges that if he does not sign
this release within 50 days following the date of termination of employment, or revokes this
Release within the foregoing revocation period, if applicable, Executive shall not be entitled to
the payments and benefits provided under Paragraphs 7(d) of the Agreement.

	 	 	 	 	 
	 	 	 
	 	 	[Name of Executive]
	 
	 	 	 	 
	 

	 	Date:	 	 
	 

	 	 	 	 

2

 

Exhibit B

RELEASE

(Group Termination)

[The language in this Release may change based on legal developments and evolving best practices;

this form is provided as an example of what will be included in the final Release document.]

     Certain capitalized terms used in this Release are defined in the Amended and Restated
Employment Agreement by and between Somaxon Pharmaceuticals, Inc., a Delaware corporation
(the “Company”), and
___(“Executive”) dated as of the
1st day
of December, 2007 (the
“Agreement”), which Executive has previously executed and of which this Release is a part.

     Pursuant to the Agreement, and in consideration of and as a condition precedent to the
payments and benefits provided under Paragraphs 7(d) of the Agreement, Executive hereby furnishes
the Company with this Release.

     Executive hereby confirms his/her obligations under the Company’s proprietary information and
inventions agreement.

     On Executive’s own behalf and on behalf of Executive’s heirs, estate and beneficiaries,
Executive hereby waives, releases, acquits and forever discharges the Company, and each of its
Subsidiaries and affiliates, and each of their respective past or present officers, directors,
agents, servants, employees, shareholders, predecessors, successors and assigns, and all persons
acting by, through, under, or in concert with them, or any of them, of and from any and all suits,
debts, liens, contracts, agreements, promises, claims, liabilities, demands, causes of action,
costs, expenses, attorneys’ fees, damages, indemnities and obligations of every kind and nature, in
law, equity, or otherwise, known and unknown, fixed or contingent, suspected and unsuspected,
disclosed and undisclosed (“Claims”), from the beginning of time to the date hereof, including
without limitation, Claims that arose as a consequence of Executive’s employment with the Company,
or arising out of the termination of such employment relationship, or arising out of any act
committed or omitted during or after the existence of such employment relationship, all up through
and including the date on which this Release is executed, including, but not limited to, Claims
which were, could have been, or could be the subject of an administrative or judicial proceeding
filed by Executive or on Executive’s behalf under federal, state or local law, whether by statute,
regulation, in contract or tort. This Release includes, but is not limited to: (1) Claims for
intentional and negligent infliction of emotional distress; (2) tort Claims for personal injury;
(3) Claims or demands related to salary, bonuses, commissions, stock, stock options, or any other
ownership interest in the Company, vacation pay, fringe benefits, expense reimbursements, severance
pay, front pay, back pay or any other form of compensation; (4) Claims for breach of contract; (5)
Claims for any form of retaliation, harassment, or discrimination; (6) Claims pursuant to any
federal, state or local law or cause of action including, but not limited to, the federal Civil
Rights Act of 1964, as amended, the federal Age Discrimination in Employment Act of 1967, as
amended (“ADEA”), the federal Employee Retirement Income Security Act of 1974, as amended, the
federal Americans with Disabilities Act of 1990, the California Fair Employment and Housing Act, as
amended, and the California Labor Code; and (7) all other Claims based on tort law, contract law,
statutory law, common law, wrongful discharge, constructive discharge, fraud, defamation, emotional
distress, pain and suffering, breach of the implied covenant of good faith and fair dealing,
compensatory or punitive damages, interest, attorneys’ fees, and reinstatement or re-employment.
If any court rules that Executive’s waiver of the right to file any administrative or judicial
charges or complaints is ineffective, Executive agrees not to seek or accept any money damages or
any other relief upon the filing of any such administrative or judicial charges or complaints.

1

 

     Executive acknowledges that he/she has 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.”
Executive hereby expressly waives and relinquishes all rights and benefits under that section and
any law of any jurisdiction of similar effect with respect to his/her release of any unknown Claims
Executive may have against the Company.

     Notwithstanding the foregoing, nothing in this Release shall constitute a release by Executive
of any claims or damages based on any right Executive may have to enforce the Company’s executory
obligations under the Agreement, any right Executive may have to vested or earned compensation and
benefits, or Executive’s eligibility for indemnification under applicable law, Company governance
documents, Executive’s indemnification agreement with the Company or under any applicable insurance
policy with respect to Executive’s liability as an employee or officer of the Company.

     If Executive is 40 years of age or older at the time of the termination, Executive
acknowledges that he/she is knowingly and voluntarily waiving and releasing any rights he/she may
have under ADEA. Executive also acknowledges that the consideration given under the Agreement for
the Release is in addition to anything of value to which he/she was already entitled. Executive
further acknowledges that he/she has been advised by this writing, as required by the ADEA, that:
(A) his/her waiver and release do not apply to any rights or claims that may arise on or after the
date he/she executes this Release; (B) Executive has the right to consult with an attorney prior to
executing this Release; (C) Executive has 45 days to consider this Release (although he/she may
choose to voluntarily execute this Release earlier); (D) Executive has 7 days following the
execution of this Release to revoke the Release; (E) this Release shall not be effective until the
date upon which the revocation period has expired, which shall be the 8th day after this Release is
executed by Executive, without Executive’s having given notice of revocation; and (F) Executive has
received with this Release a detailed list of job titles and ages of all employees who were
terminated in this group termination and the ages of all employees of the Company in the same job
classification or organizational unit who were not terminated.

     Executive further acknowledges that Executive has carefully read this Release, and knows and
understands its contents and its binding legal effect. Executive acknowledges that by signing this
Release, Executive does so of Executive’s own free will, and that it is Executive’s intention that
Executive be legally bound by its terms. Executive further acknowledges that if he does not sign
this release within 50 days following the date of termination of employment, or revokes this
Release within the foregoing revocation period, if applicable, Executive shall not be entitled to
the payments and benefits provided under Paragraph 7(d) of the Agreement.

	 	 	 	 	 
	 	 	 
	 	 	[Name of Executive]
	 
	 	 	 	 
	 

	 	Date:	 	 
	 

	 	 	 	 

2

 

Exhibit C

Indemnification agreement

[Attached]

 

Agreements
entered into with:

	 		
	•	 	Meg M. McGilley, Vice President and Chief
Financial Officer, base salary at December 1, 2007 of $236,500,
	 
	•	 	Susan E. Dubé, Senior Vice President, Corporate
and Business Development, base salary at December 1, 2007 of $257,250,
	 
	•	 	Jeffrey W. Raser, Senior Vice President, Sales
and Marketing, base salary at December 1, 2007 of $257,250,
	 
	•	 	Philip Jochelson, M.D.,  Senior Vice President
and Chief Medical Officer,
base salary at December 1, 2007 of $300,000,
	 
	•	 	James J. L’Italien, Ph.D., Senior Vice President,
Regulatory Affairs and Quality Assurance, base salary at December 1,
2007 of $290,000, and eligible for a one-time bonus of $100,000 on
March 16, 2008,
	 
	•	 	Matthew W. Onaitis, Vice President and General
Counsel, base salary at December 1, 2007 of $225,000,
	 
	•	 	Brain T. Dorsey, Vice President, Product
Development, base salary at December 1, 2007 of $230,000, and
	 
	•	 	Robert L. Jones, Vice President, Human
Resources, base salary at December 1, 2007 of $215,000,Exhibit 10.29

 

Exhibit 10.29

SOMAXON PHARMACEUTICALS, INC.

2005 EQUITY INCENTIVE AWARD PLAN

RESTRICTED STOCK AWARD GRANT NOTICE AND

RESTRICTED STOCK AWARD AGREEMENT

     Somaxon Pharmaceuticals, Inc., a Delaware corporation (the “Company”), pursuant to its 2005
Equity Incentive Award Plan (the “Plan”), hereby grants to the individual listed below
(“Participant”), the right to purchase the number of shares of the Company’s Stock set forth below
(the “Shares”) at the purchase price set forth below. This Restricted Stock award is subject to
all of the terms and conditions as set forth herein and in the Restricted Stock Award Agreement
attached hereto as Exhibit A (the “Restricted Stock Agreement”) and the Plan, which are
incorporated herein by reference. Unless otherwise defined herein, the terms defined in the Plan
shall have the same defined meanings in this Grant Notice and the Restricted Stock Agreement.

	 	 	 
	Participant:
	 	David F. Hale
	 
	 	 
	Grant Date:
	 	October 8, 2007
	 
	 	 
	Purchase Price per Share:
	 	$0.0001 per share
	 
	 	 
	Total Number of Shares of Restricted
Stock:
	 	20,000
	 
	 	 
	Vesting Schedule:
	 	Subject to the next paragraph, 5,000 Shares shall vest upon the acceptance of the NDA for SILENORTM and 15,000 Shares shall
vest upon the approval of the NDA for
SILENORTM, subject to Participant’s
continued service to the Company as an Employee, Director or Consultant on each such date.
	 
	 	 
	 
	 	In the event of a Change in Control prior to
the acceptance and/or the approval of the NDA for SILENORTM, 100% of the
unvested Shares will vest immediately prior to the consummation of the Change in Control.

     By his or her signature, Participant agrees to be bound by the terms and conditions of the
Plan, the Restricted Stock Agreement and this Grant Notice. Participant has reviewed the Restricted
Stock Agreement, the Plan and this Grant Notice in their entirety, has had an opportunity to obtain
the advice of counsel prior to executing this Grant Notice and fully understands all provisions of
this Grant Notice, the Restricted Stock Agreement and the Plan. Participant hereby agrees to
accept as binding, conclusive and final all decisions or interpretations of the Administrator of
the Plan upon any questions arising under the Plan, this Grant Notice or the Restricted Stock
Agreement. If Participant is married, his or her spouse has signed the Consent of Spouse attached
to this Grant Notice as Exhibit B.

	 	 	 	 	 	 	 	 	 
	SOMAXON PHARMACEUTICALS, INC.	 	PARTICIPANT	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Meg M. McGilley	 	By:	 	/s/ David F. Hale	 	 
	 

	 	 
	 	 	 	 	 	 
	Print Name:

		Meg M. McGilley
	 	Print Name:
	 	 David F. Hale	 	 
	 

	 	 
	 	 	 	 	 	 
	Title:
	 	VP and CFO	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	Address:

	 	3721 Valley Centre Drive, Suite 500

San Diego, CA 92130
	 	Address:	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 

 

 

EXHIBIT A

TO RESTRICTED STOCK AWARD GRANT NOTICE

RESTRICTED STOCK AWARD AGREEMENT

     Pursuant to the Restricted Stock Award Grant Notice (“Grant Notice”) to which this Restricted
Stock Award Agreement (this “Agreement”) is attached, Somaxon Pharmaceuticals, Inc., a Delaware
corporation (the “Company”), has granted to Participant the right to purchase the number of shares
of Restricted Stock under the Company’s 2005 Equity Incentive Award Plan (the “Plan”) indicated in
the Grant Notice.

ARTICLE I

GENERAL

     1.1 Defined Terms. Capitalized terms not specifically defined herein shall have the
meanings specified in the Plan and the Grant Notice.

     1.2 Incorporation of Terms of Plan. The Shares are subject to the terms and
conditions of the Plan which are incorporated herein by reference.

ARTICLE II

GRANT OF RESTRICTED STOCK

     2.1 Grant of Restricted Stock. In consideration of Participant’s past and/or
continued employment with or service to the Company or a Parent or Subsidiary and for other good
and valuable consideration, effective as of the Grant Date set forth in the Grant Notice (the
"Grant Date”), the Company irrevocably grants to Participant the right to purchase the number of
shares of Stock set forth in the Grant Notice (the “Shares”), upon the terms and conditions set
forth in the Plan and this Agreement.

     2.2 Purchase Price. The purchase price per Share (the “Purchase Price”) shall be as
set forth in the Grant Notice, without commission or other charge. The payment of the Purchase
Price shall be paid by cash or check.

     2.3 Issuance of Shares. The issuance of the Shares under this Agreement shall occur
at the principal office of the Company, upon payment of the Purchase Price by Participant,
simultaneously with the execution of this Agreement by the parties (the “Issuance Date”). Subject
to the provisions of Article IV below, on the Issuance Date, the Company shall issue the Shares
(which shall be issued in Participant’s name).

     2.4 Conditions to Issuance of Stock Certificates. The Shares, or any portion thereof,
may be either previously authorized but unissued shares or issued shares which have then been
reacquired by the Company. Such Shares shall be fully paid and nonassessable. The Company shall
not be required to issue or deliver any Shares prior to fulfillment of all of the following
conditions:

          (a) The admission of such Shares to listing on all stock exchanges on which such Stock is then
listed; and

A-1

 

          (b) The completion of any registration or other qualification of such shares under any state
or federal law or under rulings or regulations of the Securities and Exchange Commission or of any
other governmental regulatory body, which the Administrator shall, in its absolute discretion, deem
necessary or advisable; and

          (c) The obtaining of any approval or other clearance from any state or federal governmental
agency which the Administrator shall, in its absolute discretion, determine to be necessary or
advisable; and

          (d) The receipt by the Company of full payment for such shares, including payment of all
amounts which, under federal, state, local or foreign tax law, the Company (or other employer
corporation) is required to withhold upon issuance of such Shares; and

          (e) The lapse of such reasonable period of time following the Issuance Date as the
Administrator may from time to time establish for reasons of administrative convenience.

     2.5 Rights as Stockholder.

          (a) Except as otherwise provided herein, upon delivery of the Shares to the escrow holder
pursuant to Article IV, Participant shall have all the rights of a stockholder with respect to said
Shares, subject to the restrictions herein, including the right to vote the Shares and to receive
all dividends or other distributions paid or made with respect to the Shares.

          (b) Any and all cash dividends paid on the Shares (or other securities at the time held in
escrow pursuant to Article IV and the Joint Escrow Instructions) and any and all Shares, capital
stock or other securities or other property received by or distributed to Participant with respect
to, in exchange for or in substitution of the Shares as a result of any stock dividend, stock
split, reverse stock split, recapitalization, combination, reclassification, or similar change in
the capital structure of the Company shall also be subject to the Company’s Repurchase Option (as
defined in Section 3.1 below) and the restrictions on transfer in Section 3.4 below until such
restrictions on the underlying Shares lapse or are removed pursuant to this Agreement (or, if such
Shares are no longer outstanding, until such time as such Shares would have been released from the
Company’s Repurchase Option pursuant to this Agreement). In addition, in the event of any merger,
consolidation, share exchange or reorganization affecting the Shares, excluding such an event that
is a Change in Control, then any new, substituted or additional securities or other property
(including money paid other than as a regular cash dividend) that is by reason of any such
transaction received with respect to, in exchange for or in substitution of the Shares shall also
be subject to the Company’s Repurchase Option (as defined in Section 3.1 below) and the
restrictions on transfer in Section 3.4 below until such restrictions on the underlying Shares
lapse or are removed pursuant to this Agreement (or, if such Shares are no longer outstanding,
until such time as such Shares would have been released from the Company’s Repurchase Option
pursuant to this Agreement), and any such assets or other securities received by or distributed to
Participant with respect to, in exchange for or in substitution of any Unreleased Shares shall be
immediately delivered to the Company to be held in escrow pursuant to Article IV.

     2.6 Consideration to the Company. In consideration of the issuance of the Shares by
the Company, Participant agrees to render faithful and efficient services to the Company or any
Parent or Subsidiary. Nothing in the Plan or this Agreement shall confer upon Participant any
right to (a) continue in the employ of the Company or any Parent or Subsidiary or shall interfere
with or restrict in any way the rights of the Company and its Parents and Subsidiaries, which are
hereby expressly reserved, to discharge Participant, if Participant is an Employee, or (b) continue
to provide services to the Company or any Parent or Subsidiary or shall interfere with or restrict
in any way the rights of the Company or its Parents

A-2

 

and Subsidiaries, which are hereby expressly reserved, to terminate the services of
Participant, if Participant is a consultant, at any time for any reason whatsoever, with or without
Cause, except to the extent expressly provided otherwise in a written agreement between the
Company, a Parent or a Subsidiary and Participant, or (c) continue to serve as a member of the
Board or shall interfere with or restrict in any way the rights of the Company, which are hereby
expressly reserved, to discharge Participant in accordance with the Company’s Bylaws.

ARTICLE III

RESTRICTIONS ON SHARES

     3.1 Repurchase Option. Subject to the provisions of Section 3.2 below, if Participant
has a Termination of Service (as defined below) before all of the Shares are released from the
Company’s Repurchase Option (as defined below), the Company shall, upon the date of such
Termination of Service (as reasonably fixed and determined by the Company), have an irrevocable,
exclusive option, but not the obligation, for a period of ninety (90) days after the date
Participant has a Termination of Service, to repurchase all or any portion of the Unreleased Shares
(as defined below in Section 3.3) at such time (the “Repurchase Option”) at the Purchase Price per
Share (the “Repurchase Price”). The Repurchase Option shall lapse and terminate ninety (90) days
after the Participant’s Termination of Service. The Repurchase Option shall be exercisable by the
Company by written notice to Participant or Participant’s executor (with a copy to the escrow agent
appointed pursuant to Section 4.1 below) and, at the Company’s option, by delivery to Participant
or Participant’s executor with such notice of payment in cash or a check in the amount of the
Repurchase Price times the number of Shares to be repurchased (the “Aggregate Repurchase Price”).
Upon delivery of such notice and the payment of the Aggregate Repurchase Price, the Company shall
become the legal and beneficial owner of the Shares being repurchased and all rights and interests
therein or relating thereto, and the Company shall have the right to retain and transfer to its own
name the number of Shares being repurchased by the Company. In the event the Company repurchases
any Shares under this Section 3.1, any dividends or other distributions paid on such Shares and
held by the escrow agent pursuant to Section 4.1 and the Joint Escrow Instructions shall be
promptly paid by the escrow agent to the Company.

     3.2 Release of Shares from Repurchase Restriction. The Shares shall be released from
the Company’s Repurchase Option on such dates and in such amounts as the Shares become vested in
accordance with the vesting schedule set forth in the Grant Notice. Any of the Shares released from
the Company’s Repurchase Option shall thereupon be released from the restrictions on transfer under
Section 3.4. In the event any of the Shares are released from the Company’s Repurchase Option, any
dividends or other distributions paid on such Shares and held by the escrow agent pursuant to
Section 4.1 and the Joint Escrow Instructions shall be promptly paid by the escrow agent to
Participant.

     3.3 Unreleased Shares. Any of the Shares which, from time to time, have not yet been
released from the Company’s Repurchase Option are referred to herein as “Unreleased Shares.”

     3.4 Restrictions on Transfer.

          (a) Subject to repurchase by the Company pursuant to Section 3.1 and Section 3.4(b), no
Unreleased Shares or any dividends or other distributions thereon or any interest or right therein
or part thereof, shall be liable for the debts, contracts or engagements of Participant or his or
her successors in interest or shall be subject to sale or other disposition by Participant or his
or her successors in interest by transfer, alienation, anticipation, pledge, encumbrance,
assignment or any other means whether such sale or other disposition be voluntary or involuntary or
by operation of law by judgment,

A-3

 

levy, attachment, garnishment or any other legal or equitable proceedings (including
bankruptcy), and any attempted sale or other disposition thereof shall be null and void and of no
effect.

          (b) Notwithstanding any other provision in this Agreement, with the consent of the
Administrator, the Unreleased Shares may be transferred to certain Permitted Transferees, subject
to the terms and conditions set forth in Section 11.3(b) of the Plan.

     3.5 Definition of Termination of Service. “Termination of Service” shall mean the
last to occur of Participant’s Termination of Consultancy, Termination of Directorship or
Termination of Employment, as applicable. Participant shall not be deemed to have a Termination of
Service merely because of a change in the capacity in which the Participant renders service to the
Company or any Parent or Subsidiary (i.e., Participant is an Employee and becomes a Consultant) or
a change in the entity for which the Participant renders such service (i.e., an Employee of the
Company becomes an Employee of a Subsidiary), unless following such change in capacity or service
the Participant is no longer serving as an Employee, Independent Director or Consultant of the
Company or any Parent or Subsidiary.

ARTICLE IV

ESCROW OF SHARES

     4.1 Escrow of Shares. To ensure the availability for delivery of Participant’s
Unreleased Shares upon repurchase by the Company pursuant to the Repurchase Option under Section
3.1, Participant hereby appoints the Secretary of the Company, or any other person designated by
the Administrator as escrow agent, as his or her attorney-in-fact to assign and transfer unto the
Company, such Unreleased Shares, if any, repurchased by the Company pursuant to the Repurchase
Option pursuant to Section 3.1 and any dividends or other distributions thereon, and shall, upon
execution of this Agreement, deliver and deposit with the Secretary of the Company, or such other
person designated by the Administrator, any share certificates representing the Unreleased Shares,
together with the stock assignment duly endorsed in blank, attached to the Grant Notice as
Exhibit C to the Grant Notice. The Unreleased Shares and stock assignment shall be held by
the Secretary of the Company, or such other person designated by the Administrator, in escrow,
pursuant to the Joint Escrow Instructions of the Company and Participant attached as Exhibit
D to the Grant Notice, until the Company exercises its Repurchase Option as provided in Section
3.1, until such Unreleased Shares are released from the Company’s Repurchase Option, or until such
time as this Agreement no longer is in effect. Upon release of the Unreleased Shares from the
Company’s Repurchase Option, the escrow agent shall deliver to Participant the certificate or
certificates representing such Shares in the escrow agent’s possession belonging to Participant, or
shall deliver to Participant evidence of such Shares being released from such escrow if such Shares
are uncertificated, in either case in accordance with the terms of the Joint Escrow Instructions
attached as Exhibit D to the Grant Notice, and the escrow agent shall be discharged of all
further obligations hereunder. If the Shares are held in book entry form, then such entry will
reflect that the Shares are subject to the restrictions of this Agreement. If any assets or other
securities received by or distributed to Participant with respect to, in exchange for or in
substitution of such Unreleased Shares are held by the escrow agent pursuant to this Section 4.1
and the Joint Escrow Instructions, such assets or other securities shall also be subject to the
restrictions set forth in this Agreement and held in escrow pending release of the Unreleased
Shares with respect to which such assets or other securities relate from the Company Repurchase
Option (or, if such Unreleased Shares are no longer outstanding, until such time as such Unreleased
Shares would have been released from the Company’s Repurchase Option).

     4.2 Transfer of Repurchased Shares. Participant hereby authorizes and directs the
Secretary of the Company, or such other person designated by the Administrator, to transfer the
Unreleased Shares as to which the Repurchase Option has been exercised from Participant to the
Company.

A-4

 

     4.3 No Liability for Actions in Connection with Escrow. The Company, or its designee,
shall not be liable for any act it may do or omit to do with respect to holding the Shares in
escrow and while acting in good faith and in the exercise of its judgment.

ARTICLE V

OTHER PROVISIONS

     5.1 Adjustment for Stock Split. In the event of any stock dividend, stock split,
reverse stock split, recapitalization, combination, reclassification, or similar change in the
capital structure of the Company, the Administrator shall make appropriate and equitable
adjustments in the Unreleased Shares subject to the Repurchase Option and the number of Shares,
consistent with any adjustment under Section 12.1 of the Plan. The provisions of this Agreement
shall apply, to the full extent set forth herein with respect to the Shares, to any and all shares
of capital stock or other securities or other property or cash which may be issued in respect of,
in exchange for, or in substitution of the Shares, and shall be appropriately adjusted for any
stock dividends, splits, reverse splits, combinations, recapitalizations and the like occurring
after the date hereof.

     5.2 Taxes. Participant has reviewed with Participant’s own tax advisors the federal,
state, local and foreign tax consequences of this investment and the transactions contemplated by
the Grant Notice and this Agreement. Participant is relying solely on such advisors and not on any
statements or representations of the Company or any of its agents. Participant understands that
Participant (and not the Company) shall be responsible for Participant’s tax liability that may
arise as a result of this investment or the transactions contemplated by this Agreement.
Participant understands that Participant will recognize ordinary income for federal income tax
purposes under Section 83 of the Code as and when the Repurchase Option lapses. Participant
understands that Participant may elect to be taxed for federal income tax purposes at the time the
Shares are purchased by Participant rather than as and when the Repurchase Option lapses by filing
an election under Section 83(b) of the Code with the Internal Revenue Service within thirty (30)
days from the date of purchase. A form of election under Section 83(b) of the Code is attached to
the Grant Notice as Exhibit E.

     PARTICIPANT ACKNOWLEDGES THAT IT IS PARTICIPANT’S SOLE RESPONSIBILITY AND NOT THE COMPANY’S TO
TIMELY FILE THE ELECTION UNDER SECTION 83(b), AND THE COMPANY AND ITS REPRESENTATIVES SHALL HAVE NO
OBLIGATION OR AUTHORITY TO MAKE THIS FILING ON PARTICIPANT’S BEHALF.

     Notwithstanding anything to the contrary in this Agreement, the Company shall be entitled to
require payment (which payment may be made in cash, by deduction from other compensation payable to
Participant or in any form of consideration permitted by Section 16.3 of the Plan) of any sums
required by federal, state or local tax law to be withheld with respect to the issuance, lapsing of
restrictions on or sale of the Shares. As provided in Section 16.3 of the Plan, the Administrator
may in its discretion and in satisfaction of the foregoing requirement allow a Participant to elect
to have the Company or a Parent or Subsidiary, as applicable, withhold shares of Stock otherwise
issuable under an Award (or allow the return of shares of Stock) having a Fair Market Value equal
to the sums required to be withheld. Notwithstanding any other provision of the Plan, the number
of shares of Stock which may be withheld with respect to the issuance, vesting, exercise or payment
of any Award (or which may be repurchased from the Participant of such Award within six months (or
such other period as may be determined by the Administrator) after such shares of Stock were
acquired by the Participant from the Company) in order to satisfy the Participant’s federal, state,
local and foreign income and payroll tax liabilities with respect to the issuance, vesting,
exercise or payment of the Award shall be limited to the number of shares which

A-5

 

have a Fair Market Value on the date of withholding or repurchase equal to the aggregate amount of
such liabilities based on the minimum.

     The Company shall not be obligated to deliver any new certificate representing vested Shares
to Participant or Participant’s legal representative unless and until Participant or Participant’s
legal representative shall have paid or otherwise satisfied in full the amount of all federal,
state and local taxes applicable to the taxable income of Participant resulting from the issuance,
lapsing of restrictions on or sale of the Shares.

     5.3 Administration. The Administrator shall have the power to interpret the Plan and
this Agreement and to adopt such rules for the administration, interpretation and application of
the Plan as are consistent therewith and to interpret, amend or revoke any such rules. All actions
taken and all interpretations and determinations made by the Administrator in good faith shall be
final and binding upon Participant, the Company and all other interested persons. No member of the
Administrator shall be personally liable for any action, determination or interpretation made in
good faith with respect to the Plan, this Agreement or the Shares. In its absolute discretion, the
Board may at any time and from time to time exercise any and all rights and duties of the
Administrator under the Plan and this Agreement.

     5.4 Restrictive Legends and Stop-Transfer Orders.

          (a) Any share certificate(s) evidencing the Shares issued hereunder shall be endorsed with the
following legend and any other legends that may be required by state or federal securities laws:

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RIGHT OF REPURCHASE IN
FAVOR OF THE COMPANY AND MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS AND
CONDITIONS OF A RESTRICTED STOCK AWARD AGREEMENT BETWEEN THE COMPANY AND THE
STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.

          (b) Participant agrees that, in order to ensure compliance with the restrictions referred to
herein, the Company may issue appropriate “stop transfer” instructions to its transfer agent, if
any, and that, if the Company transfers its own securities, it may make appropriate notations to
the same effect in its own records.

          (c) The Company shall not be required: (i) to transfer on its books any Shares that have been
sold or otherwise transferred in violation of any of the provisions of this Agreement, or (ii) to
treat as owner of such Shares or to accord the right to vote or pay dividends to any purchaser or
other transferee to whom such shares shall have been so transferred.

     5.5 Notices. Any notice to be given under the terms of this Agreement to the Company
shall be addressed to the Company in care of the Secretary of the Company at the address given
beneath the signature of an authorized officer of the Company on the Grant Notice, and any notice
to be given to Participant shall be addressed to Participant at the address given beneath
Participant’s signature on the Grant Notice. By a notice given pursuant to this Section 5.5,
either party may hereafter designate a different address for notices to be given to that party.
Any notice shall be deemed duly given when sent via email or when sent by certified mail (return
receipt requested) and deposited (with postage prepaid) in a post office or branch post office
regularly maintained by the United States Postal Service.

     5.6 Titles. Titles are provided herein for convenience only and are not to serve as a
basis for interpretation or construction of this Agreement.

A-6

 

     5.7 Construction. This Agreement shall be administered, interpreted and enforced
under the laws of the State of California without regard to conflicts of laws thereof. Should any
provision of this Agreement be determined by a court of law to be illegal or unenforceable, the
other provisions shall nevertheless remain effective and shall remain enforceable.

     5.8 Conformity to Securities Laws. Participant acknowledges that the Plan is intended
to conform to the extent necessary with all provisions of the Securities Act and the Exchange Act
and any and all regulations and rules promulgated by the Securities and Exchange Commission
thereunder, and state securities laws and regulations. Notwithstanding anything herein to the
contrary, the Plan shall be administered, and the Shares are to be issued, only in such a manner as
to conform to such laws, rules and regulations. To the extent permitted by applicable law, the
Plan and this Agreement shall be deemed amended to the extent necessary to conform to such laws,
rules and regulations.

     5.9 Amendments. This Agreement may not be modified, amended or terminated except by
an instrument in writing, signed by Participant and by a duly authorized representative of the
Company.

     5.10 Successors and Assigns. The Company may assign any of its rights under this
Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the
successors and assigns of the Company. Subject to the restrictions on transfer herein set forth,
this Agreement shall be binding upon Participant and his or her heirs, executors, administrators,
successors and assigns.

     5.11 Entire Agreement. The Plan and this Agreement (including all Exhibits hereto)
constitute the entire agreement of the parties and supersede in their entirety all prior
undertakings and agreements of the Company and Participant with respect to the subject matter
hereof.

     5.12 Arbitration. Any dispute or controversy between Company and Participant, arising
out of or relating to this Agreement, the breach of this Agreement, or otherwise, shall be settled
by arbitration in San Diego, California administered by the American Arbitration Association in
accordance with its National Rules for the Resolution of Employment Disputes then in effect and
judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction
thereof. The arbitrator shall have the authority to award any remedy or relief that a court of
competent jurisdiction could order or grant, including, without limitation, the issuance of an
injunction. However, either party may, without inconsistency with this arbitration provision,
apply to any court having jurisdiction over such dispute or controversy and seek interim
provisional, injunctive or other equitable relief until the arbitration award is rendered or the
controversy is otherwise resolved. Except as necessary in court proceedings to enforce this
arbitration provision or an award rendered hereunder, or to obtain interim relief, neither a party
nor an arbitrator may disclose the existence, content or results of any arbitration hereunder
without the prior written consent of Company and Participant. The Company shall pay all of the
direct costs and expenses in any arbitration hereunder and the arbitrator’s fees and costs;
provided, however, that the arbitrator shall have the discretion to award the prevailing party
reimbursement of its, his or her reasonable attorney’s fees and costs. The Company and Participant
hereby expressly waive their right to a jury trial.

A-7

 

EXHIBIT B

TO RESTRICTED STOCK AWARD GRANT NOTICE

CONSENT OF SPOUSE

     I,
Linda Hale, spouse of David F. Hale, have read and approve the foregoing
Restricted Stock Grant Notice and Restricted Stock Award Agreement (the “Agreement”). In
consideration of issuing to my spouse the shares of the common stock of Somaxon Pharmaceuticals,
Inc., a Delaware corporation (the “Company”), set forth in the Agreement, I hereby appoint my
spouse as my attorney-in-fact in respect to the exercise of any rights under the Agreement and
agree to be bound by the provisions of the Agreement insofar as I may have any rights in said
Agreement or any shares of the common stock of the Company issued pursuant thereto under the
community property laws or similar laws relating to marital property in effect in the state of our
residence as of the date of the signing of the foregoing Agreement.

	 	 	 	 	 	 	 
	Dated:
	 	                                        ,                     	 	/s/ Linda Hale	 	 
	 

	 	 

	 	 

Signature of Spouse
	 	 

B-1

 

EXHIBIT C

TO RESTRICTED STOCK AWARD GRANT NOTICE

STOCK ASSIGNMENT

     FOR VALUE RECEIVED, the undersigned, David F. Hale, hereby sells, assigns and transfers unto
Somaxon Pharmaceuticals, Inc., a Delaware corporation (the
“Company”),                      shares of the common
stock of the Company standing in its name of the books of said corporation represented by
Certificate No.                      herewith and do hereby irrevocably constitute and appoint                                         
to transfer the said stock on the books of the within named corporation with full power of
substitution in the premises.

     This Stock Assignment may be used only in accordance with the Restricted Stock Award Agreement
between the Company and the undersigned dated                                         ,                     .

	 	 	 	 	 	 	 
	Dated:
	 	                                        ,                     	 	/s/ David F. Hale	 	 
	 

	 	 

	 	 

David F. Hale
	 	 

     INSTRUCTIONS: Please do not fill in the blanks other than the signature line. The purpose of
this assignment is to enable the Company to exercise its “Repurchase Option,” as set forth in the
Restricted Stock Award Agreement, without requiring additional signatures on the part of
Participant.

C-1

 

EXHIBIT D

TO RESTRICTED STOCK AWARD GRANT NOTICE

JOINT ESCROW INSTRUCTIONS

                                        ,
                    

Secretary

Somaxon Pharmaceuticals, Inc.

3721 Valley Centre Drive, Suite 500

San Diego, CA 92130

Ladies and Gentlemen:

     As escrow agent (the “Escrow Agent”) for both Somaxon Pharmaceuticals, Inc., a Delaware
corporation (the “Company”), and the undersigned recipient of shares of common stock of the Company
(the “Participant”), you are hereby authorized and directed to hold in escrow the documents
delivered to you pursuant to the terms of that certain Restricted Stock Award Agreement
(“Agreement”) between the Company and the undersigned (the “Escrow”), including any stock
certificate(s) and the Assignment(s) in Blank, in accordance with the following instructions:

     1. In the event the Company and/or any assignee of the Company (referred to collectively for
convenience herein as the “Company”) exercises the Company’s Repurchase Option as defined in the
Agreement), the Company shall give to Participant and you a written notice specifying the number of
shares of stock to be purchased, the purchase price and the time for a closing hereunder at the
principal office of the Company. Participant and the Company hereby irrevocably authorize and
direct you to close the transaction contemplated by such notice in accordance with the terms of
said notice.

     2. As of the date of closing of the repurchase indicated in such notice, you are directed (a)
to date the stock assignments necessary for the repurchase and transfer in question, (b) to fill in
the number of shares being repurchased and transferred, and (c) to deliver the same, together with
any certificate(s) evidencing the shares of stock to be repurchased and transferred, to the Company
or its assignee.

     3. Participant irrevocably authorizes the Company to deposit with you any certificates
evidencing shares of stock to be held by you hereunder and any additions and substitutions to said
shares as defined in the Agreement. Participant does hereby irrevocably constitute and appoint you
as Participant’s attorney-in-fact and agent for the term of this escrow to execute with respect to
such securities all documents necessary or appropriate to make such securities negotiable and to
complete any transaction herein contemplated, including but not limited to the filing with any
applicable state blue sky authority of any required applications for consent to, or notice of
transfer of, the securities. Subject to the provisions of this paragraph and the Agreement,
Participant shall exercise all rights and privileges of a stockholder of the Company while the
stock is held by you.

     4. Upon written request of Participant, but no more than once per calendar month, unless the
Company’s Repurchase Option has been exercised, you will deliver to Participant a certificate or
certificates or evidence of book entry in the name of Participant representing so many shares of
stock as are not then subject to the Repurchase Option. Within one hundred twenty (120) days after
the termination of the Company’s Repurchase Option in accordance with the terms of the Agreement,
you will deliver to Participant a certificate or certificates or evidence of book entry in the name
of Participant representing the aggregate number of shares held or issued pursuant to the Agreement
and not repurchased pursuant to the Repurchase Option set forth in Section 3.1 of the Agreement.

D-1

 

     5. If at the time of termination of this escrow you should have in your possession any
documents, securities, or other property belonging to Participant, you shall deliver all of the
same to the Participant and shall be discharged of all further obligations hereunder.

     6. Your duties hereunder may be altered, amended, modified or revoked only by a writing signed
by all of the parties hereto.

     7. You shall be obligated only for the performance of such duties as are specifically set
forth herein and may rely and shall be protected in relying or refraining from acting on any
instrument reasonably believed by you to be genuine and to have been signed or presented by the
proper party or parties. You shall not be personally liable for any act you may do or omit to do
hereunder as Escrow Agent or as attorney-in-fact for Participant while acting in good faith, and
any act done or omitted by you pursuant to the advice of your own attorneys shall be conclusive
evidence of such good faith.

     8. You are hereby expressly authorized to disregard any and all warnings given by any of the
parties hereto or by any other person or corporation, excepting only orders or process of courts of
law and are hereby expressly authorized to comply with and obey orders, judgments or decrees of any
court. In case you obey or comply with any such order, judgment or decree, you shall not be liable
to any of the parties hereto or to any other person, firm or corporation by reason of such
compliance, notwithstanding any such order, judgment or decree being subsequently reversed,
modified, annulled, set aside, vacated or found to have been entered without jurisdiction.

     9. You shall not be liable in any respect on account of the identity, authorities or rights of
the parties executing or delivering or purporting to execute or deliver the Agreement or any
documents or papers deposited or called for hereunder.

     10. You shall not be liable for the expiration of any rights under any applicable state,
federal or local statute of limitations or similar statute or regulation with respect to these
Joint Escrow Instructions or any documents deposited with you.

     11. You shall be entitled to employ such legal counsel and other experts as you may deem
necessary properly to advise you in connection with your obligations hereunder, may rely upon the
advice of such counsel, and may pay such counsel reasonable compensation therefor. The Company will
reimburse you for any reasonable attorneys’ fees with respect thereto.

     12. Your responsibilities as Escrow Agent hereunder shall terminate if you shall cease to be
an officer or agent of the Company or if you shall resign by written notice to each party. In the
event of any such termination, the Company shall appoint a successor Escrow Agent.

     13. If you reasonably require other or further instruments in connection with these Joint
Escrow Instructions or obligations in respect hereto, the necessary parties hereto shall join in
furnishing such instruments.

     14. It is understood and agreed that should any dispute arise with respect to the delivery
and/or ownership or right of possession of the securities held by you hereunder, you are authorized
and directed to retain in your possession without liability to anyone all or any part of said
securities until such disputes shall have been settled either by mutual written agreement of the
parties concerned or by a final order, decree or judgment of a court of competent jurisdiction
after the time for appeal has expired and no appeal has been perfected, but you shall be under no
duty whatsoever to institute or defend any such proceedings.

D-2

 

     15. Any notice to be given under the terms of this Agreement to the Company shall be addressed
to the Company in care of the Secretary of the Company, and any notice to be given to the
Participant or you shall be addressed to the address given beneath Participant’s and your
signatures on the signature page to this Agreement. By a notice given pursuant to this Section 15,
any party may hereafter designate a different address for notices to be given to that party. Any
notice, which is required to be given to Participant, shall, if the Participant is then deceased,
be given to Participant’s designated beneficiary, if any by written notice under this Section 15.
Any notice shall be deemed duly given when sent via email or when sent by certified mail (return
receipt requested) and deposited (with postage prepaid) in a post office or branch post office
regularly obtained by the United States Postal Service.

     16. By signing these Joint Escrow Instructions, you become a party hereto only for the purpose
of said Joint Escrow Instructions; you do not become a party to the Agreement.

     17. This instrument shall be binding upon and inure to the benefit of the parties hereto, and
their respective successors and permitted assigns.

     18. These Joint Escrow Instructions shall be governed by, and construed and enforced in
accordance with, the laws of the State of California, without regard to conflicts of law thereof.

(Signature Page Follows)

D-3

 

     IN WITNESS WHEREOF, the parties have executed these Joint Escrow Instructions as of the date
first written above.

	 	 	 	 	 	 	 
	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 
	 	 	SOMAXON PHARMACEUTICALS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Meg M. McGilley	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Meg M. McGilley	 	
	 

	 	 	 	Title: VP and CFO	 	
	 
	 	 	 	 	 	 
	 

	 	Address:
	 	3721 Valley Centre Drive, Suite 500
	 	 
	 

	 	 	 	San Diego, CA 92130	 	 
	 
	 	 	 	 	 	 
	 	 	PARTICIPANT:	 	 
	 
	 	 	 	 	 	 
	 
	 	/s/ David F. Hale	 	 
	 	 	 	 	 
	 	 	David F. Hale	 	 
	 
	 	 	 	 	 	 
	 

	 	Address	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 

	 	 	 	 	 
	ESCROW AGENT:	 	 
	 
	 	 	 	 
	By:
	 	/s/ Matthew W. Onaitis	 	 
	 

	 	 

Secretary, Somaxon Pharmaceuticals, Inc.
	 	 
	 
	 	 	 	 
	Address:

	 	3721 Valley Centre Drive, Suite 500

San Diego, CA 92130	 	 

D-4

 

EXHIBIT E

TO RESTRICTED STOCK AWARD GRANT NOTICE

FORM OF 83(B) ELECTION AND INSTRUCTIONS

     These instructions are provided to assist you if you choose to make an election under Section
83(b) of the Internal Revenue Code, as amended, with respect to the shares of common stock of
Somaxon Pharmaceuticals, Inc. transferred to you. Please consult with your personal tax advisor as
to whether an election of this nature will be in your best interests in light of your personal tax
situation.

     The executed original of the Section 83(b) election must be filed with the Internal Revenue
Service not later than 30 days after the date the shares were transferred to you. PLEASE NOTE:
There is no remedy for failure to file on time. The steps outlined below should be followed to
ensure the election is mailed and filed correctly and in a timely manner. ALSO, PLEASE NOTE: If
you make the Section 83(b) election, the election is irrevocable.

	1.	 	Complete Section 83(b) election form (attached as Attachment 1) and make four (4)
copies of the signed election form. (Your spouse, if any, should sign Section 83(b) election
form as well.)
	 
	2.	 	Prepare the cover letter to the Internal Revenue Service (sample letter attached as
Attachment 2).
	 
	3.	 	Send the cover letter with the originally executed Section 83(b) election form and one (1)
copy via certified mail, return receipt requested to the Internal Revenue Service at the
address of the Internal Revenue Service where you file your personal tax returns. We suggest
that you have the package date-stamped at the post office. The post office will provide you
with a white certified receipt that includes a dated postmark. Enclose a self-addressed,
stamped envelope so that the Internal Revenue Service may return a date-stamped copy to you.
However, your postmarked receipt is your proof of having timely filed the Section 83(b)
election if you do not receive confirmation from the Internal Revenue Service.
	 
	4.	 	One (1) copy must be sent to Somaxon Pharmaceuticals, Inc. for its records and one (1) copy
must be attached to your federal income tax return for the applicable calendar year.
	 
	5.	 	Retain the Internal Revenue Service file stamped copy (when returned) for your records.

     Please consult your personal tax advisor for the address of the office of the Internal Revenue
Service to which you should mail your election form.

E-1

 

ATTACHMENT 1 TO EXHIBIT E

ELECTION UNDER INTERNAL REVENUE CODE SECTION 83(B)

     The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the Internal Revenue Code
of 1986, as amended, to include in taxpayer’s gross income for the current taxable year the amount
of any compensation taxable to taxpayer in connection with taxpayer’s receipt of shares (the
“Shares”) of Common Stock of Somaxon Pharmaceuticals, Inc., a Delaware corporation (the “Company”).

	 	 	 	 	 
	1.

	 	The name, address and taxpayer identification number of the undersigned taxpayer are:
	 	 
	 
	 	 	 	 
	 

	 	                                        	 	 
	 
	 	 	 	 
	 

	 	                                        	 	 
	 
	 	 	 	 
	 

	 	SSN:                                         	 	 
	 
	 	 	 	 
	 

	 	The name, address and taxpayer identification number of the Taxpayer’s spouse are (complete
if applicable):	 	 
	 
	 	 	 	 
	 

	 	                                        	 	 
	 
	 	 	 	 
	 

	 	                                        	 	 
	 
	 	 	 	 
	 

	 	                                        	 	 
	 
	 	 	 	 
	 

	 	SSN:                                         	 	 
	 
	 	 	 	 
	2.

	 	Description of the property with respect to which the election is being made:	 	 
	 
	 	 	 	 
	 

	 	                                         (                    ) shares of Common Stock of the Company.	 	 
	 
	 	 	 	 
	3.

	 	The date on which the property was transferred was                     . The taxable year to which
this election relates is calendar year                     .	 	 
	 
	 	 	 	 
	4.

	 	Nature of restrictions to which the property is subject:	 	 
	 
	 	 	 	 
	 

	 	The Shares are subject to repurchase at their original purchase price if unvested as of the
date of termination of employment, directorship or consultancy with the Company.	 	 
	 
	 	 	 	 
	5.

	 	The fair market value at the time of transfer (determined without regard to any lapse
restrictions, as defined in Treasury Regulation Section 1.83-3(a)) of the Shares was
$                    
per Share.	 	 
	 
	 	 	 	 
	6.

	 	The amount paid by the taxpayer for
Shares was ____ per share.	 	 
	 
	 	 	 	 
	7.

	 	A copy of this statement has been furnished to the Company.	 	 

Dated:

                                        ,                                           Taxpayer Signature                                                             

E-1-1

 

The undersigned spouse of Taxpayer joins in this election. (Complete if applicable).

Dated:                                         ,                     
                    
Spouse’s Signature                                         

Signature(s) Notarized by:

                                                  

                                                  

E-1-2

 

ATTACHMENT 2 TO EXHIBIT E

SAMPLE COVER LETTER TO INTERNAL REVENUE SERVICE

                                        ,                     

VIA CERTIFIED MAIL

RETURN RECEIPT REQUESTED

Internal Revenue Service

[Address where taxpayer files returns]

	 	 	 	 	 	 	 
	Re:	 	Election under Section 83(b) of the Internal Revenue Code of 1986	 	 
	 

	 	Taxpayer:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Taxpayer’s Social Security Number:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Taxpayer’s Spouse:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Taxpayer’s Spouse’s Social Security Number:	 	 	 	 
	 

	 	 	 	 	 	 

Ladies and Gentlemen:

     Enclosed please find an original and one copy of an Election under Section 83(b) of the
Internal Revenue Code of 1986, as amended, being made by the taxpayer referenced above. Please
acknowledge receipt of the enclosed materials by stamping the enclosed copy of the Election and
returning it to me in the self-addressed stamped envelope provided herewith.

	 	 	 	 	 
	 

	 	Very truly yours,	 	 
	 
	 

	 	 

	 	 

Enclosures

cc:       Somaxon Pharmaceuticals, Inc.

E-2-1

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