Document:

arna-ex1011_635.htm

Exhibit 10.11

 

Arena Pharmaceuticals, Inc. 

 

 

January 13, 2020

 

Steven Spector 

 

Re: Transition and Retirement Agreement

 

Dear Steven, 

 

This letter shall constitute the Transition and Retirement Agreement (the “Agreement”) between you and Arena Pharmaceuticals, Inc. (the “Company”).  

1.Retirement Date.  Your employment with the Company will continue through March 1, 2020, which will become your employment termination date (the “Retirement Date”).  As of the Retirement Date, you will be deemed to have resigned from any employment, officer, or director positions you hold with the Company or its subsidiaries. 

2.Transition Period.  

a.Duties.  Between now and the Retirement Date (the “Transition Period”), you will continue to perform your regular duties; provided, however, that you will also transition your duties and responsibilities to your successor (in accordance with a plan to be developed by you and Amit Munshi, CEO), and perform such other tasks as may be reasonably requested (collectively, the “Transition Services”).  You agree to perform your Transition Services in good faith and to the best of your abilities.  During the Transition Period, you must continue to comply with the Company’s policies and procedures and with all of your statutory and contractual obligations to the Company.  During the Transition Period and thereafter, you must continue to comply with your obligations under your “Arena Pharmaceuticals, Inc. Proprietary Information and Invention Assignment Agreement” (a copy of which is attached hereto as Exhibit A).  

b.Compensation/Benefits.  During the Transition Period, your base salary will remain the same, and you will continue to be eligible for the Company’s standard health and welfare benefits, subject to the terms and conditions applicable to such plans and programs.  Your Company stock options and performance restricted stock unit awards will continue to vest under the existing terms and conditions set forth in the governing plan documents and award agreements.  You will receive your annual performance bonus payment for 2019 at the same time as the Company’s other executives on or before March 15 2020, which amount will be determined pursuant to the terms of the Company’s Annual Incentive Plan for 2019 (such amount, the “2019 Annual Bonus”).  Subject to Section 2.c. below, the requirement that you be employed as of the payment date for such bonus shall be waived.

c.Termination.  Nothing in this Agreement alters your employment at will status.  Accordingly, during the Transition Period, you are entitled to resign your employment at any time and the Company may terminate your employment at any time for any reason.  If, prior 

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to the Retirement Date, either (i) you resign your employment or (ii) the Company terminates your employment for Cause (as defined in the Arena Pharmaceuticals, Inc. Severance Benefit Plan, as amended and restated effective January 4, 2019, a copy of which is attached hereto as Exhibit B (the “Severance Benefit Plan”)), you will no longer be eligible to receive Severance Benefits as defined below.  If your employment ends prior to the Retirement Date for any other reason (including death or Disability, as defined in the Severance Benefit Plan), you or your estate will receive the Severance Benefits, subject to the terms and conditions below (provided, however, in such instance you will not be required to comply with Section 2.a above).  If, prior to the payment of the 2019 Annual Bonus, either (x) you resign your employment or (y) the Company terminates your employment for Cause, you will no longer be eligible to receive the 2019 Annual Bonus; in all other cases, including your death or Disability, you or your estate will be paid your 2019 Annual Bonus. 

3.Accrued Salary and Vacation/Paid Time Off.  On the Retirement Date, the Company will pay you all accrued salary and accrued but unused vacation/paid time off earned through the last day of your employment, subject to standard payroll deductions and withholdings. 

4.Severance Benefits.  In full satisfaction of any obligation to provide you with benefits for a Covered Termination under the terms of the Severance Benefit Plan,  if you: (i) timely return this fully signed Agreement to the Company and allow it to become effective; (ii) comply with your obligations hereunder; and (iii) sign the Retirement Date Release attached hereto as Exhibit C on or within twenty-one (21) days after the Retirement Date and allow that release to become effective; then the Company will provide you with the following severance benefits (the “Severance Benefits”):

a.Cash Severance.  The Company will pay you, as severance, $990,522, which is the equivalent of eighteen (18) months of your base salary in effect as of the Retirement Date and 1.5 times the amount of your target annual bonus (the “Severance Payment”). The Severance Payment will be paid in a lump sum, subject to standard payroll deductions and withholdings, within five (5) business days after the earlier of: (i) the first business day that is six (6) months following the Retirement Date; or (ii) your death.  

b.Health Insurance.  To the extent provided by the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended or, if applicable, state insurance laws (collectively, “COBRA”), and by the Company’s current group health insurance policies, you will be eligible to continue your group health insurance benefits.  You will be provided with a separate notice describing your rights and obligations under COBRA laws on or after the Retirement Date.  As an additional Severance Benefit, provided that you timely elect continued coverage under COBRA, the Company will pay your COBRA premiums directly to continue your group medical, dental and/or vision insurance coverage (including coverage for eligible dependents, if applicable), through the period starting on the Retirement Date and ending on the earliest of: (i) the last day of the month that is eighteen (18) months after the Retirement Date; or (ii) the date you cease to be eligible for COBRA continuation coverage for any reason, including plan termination (the “COBRA Premium Period”).  For purposes of this Section, references to COBRA premiums shall not include any amounts payable by you under a Code Section 125 health care reimbursement plan. Notwithstanding the foregoing, if at any time the Company determines, in its sole discretion, that it cannot pay the COBRA premiums without potentially incurring financial costs or penalties 

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under applicable law (including, without limitation, Section 2716 of the Public Health Service Act), then regardless of whether you elect continued health coverage under COBRA, and in lieu of providing the COBRA premiums, the Company will instead pay you, on the last day of each remaining month of the COBRA Premium Period, a fully taxable cash payment equal to 140% of (x) the value of your last monthly group health insurance premiums immediately prior to the Retirement Date or (y) the value of your last monthly COBRA premiums paid by the Company, as applicable (dependent on the time the Company makes such determination that it cannot pay the COBRA premiums directly), and in either case subject to applicable tax withholdings (such amount, the “Health Care Benefit Payment”). The Health Care Benefit Payment shall be paid in monthly installments on the same schedule that the COBRA premiums would otherwise have been paid and shall be paid until the earlier of: (i) expiration of the COBRA Premium Period; or (ii) the date you are no longer enrolled in such COBRA coverage. 

c. Equity Acceleration and Extended Exercise Period.  The Company will accelerate the vesting of all stock option awards issued by the Company and held by you as of your Retirement Date (collectively, the “Option Awards”) such that, as of the Retirement Date, you will be immediately vested in the portion of the Option Awards that were scheduled to vest under the vesting schedule of such Option Awards during the eighteen (18) months immediately following the Retirement Date.  For purposes of calculating the vesting acceleration in the preceding sentence, any unvested portion of Option Awards that are scheduled to vest in one or more annual installments shall be treated as if the original grant provided for vesting in equal monthly installments rather than annually.  Additionally, the Company will extend the exercise period for all Option Awards that are vested as of your Retirement Date (including those whose vesting accelerates pursuant to this Section 4.c.) until the later of: (i) the original post-termination exercise period provided in your stock option agreement; or (ii) eighteen (18) months after the Retirement Date; provided that in no event shall any Option Award be exercisable beyond the original contractual life of the Option Award.  The further vesting of all Option Awards will be suspended as of your Retirement Date (after applying the vesting acceleration pursuant to this Section 4.c.), except to the extent the vesting of the Option Awards further accelerate pursuant to the terms of the Consulting Services Agreement attached as Exhibit D (the “Consulting Agreement”) or otherwise pursuant to the terms of the Company’s applicable long-term incentive plan.  Except as expressly modified in this Agreement (or the Consulting Agreement), the Option Awards shall continue to be governed by the terms of the applicable grant notice, stock option agreement and the Company’s long-term incentive plan. Pursuant to tax rules governing the portion of your Option Awards that are considered “incentive stock options” (the “ISOs”) under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), such Option Awards may lose ISO status as of your Retirement Date as a result of the vesting acceleration described above (due to the IRS $100K limitation on ISOs) and will lose ISO status in any event three months following your Retirement Date, after which such Option Awards will be deemed nonqualified stock options.  In addition, the Consulting Agreement provides for an additional extension of the exercise period for certain of the Option Awards under the circumstances described in the Consulting Agreement (the “Extended Options”) and, as a result, any Extended Options that are ISOs will lose ISO status immediately.  The Company encourages you to seek independent advice concerning the tax status of your Option Awards and the corresponding tax implications of this Agreement and the benefits hereunder.

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In addition, as further described in the Consulting Agreement, your performance restricted stock unit awards  that were granted on January 4, 2019 and that remain outstanding as of your Retirement Date (the “PRSUs”) will remain outstanding and you will remain eligible to receive shares of Company common stock in respect of such PRSUs until March 15, 2021, unless such PRSUs are terminated earlier under the circumstances set forth in the Consulting Agreement.  

c.Attorneys’ Fees.  The Company will reimburse you for documented attorneys’ fees actually incurred by you for the purpose of reviewing this Agreement and advising on it up to a maximum of $5,000.00. Such reimbursement will only be payable to you upon submission of appropriate documentation of payment.  For the avoidance of doubt, to the extent that any reimbursements payable to you are subject to the provisions of Section 409A (as defined below):  (i) any such reimbursements will be paid no later than December 31 of the year following the year in which the expense was incurred, (ii) the amount of expenses reimbursed in one year will not affect the amount eligible for reimbursement in any subsequent year, and (iii) the right to reimbursement under this Agreement will not be subject to liquidation or exchange for another benefit.

d.Termination Due to Death or Disability. Subject to applicable state or federal law, your employment with the Company will automatically terminate upon your death or Disability (as defined by the Severance Benefit Plan).  Under the Severance Benefit Plan, you are not entitled to any severance benefits in the case of your death or Disability.  However, as part of this Agreement, the Company will provide you with the Severance Benefits set forth in this Agreement upon your death or Disability occurring prior to the Retirement Date; provided, however, that you, your estate, or your representative (as applicable) signs the Retirement Date Release attached hereto as Exhibit C on or within twenty-one (21) days after the date your employment with the Company ends due to your death or Disability and allows that release to become effective.  

5.Consulting Engagement.  In exchange for your: (i) entering into this Agreement and allowing it to become effective; (ii) complying with it; and (iii) signing the Retirement Date Release and allowing it to become effective; then, as an additional benefit, the Company agrees to retain you as a consultant under the terms specified in the Consulting Agreement.  Your consulting services to the Company under the Consulting Agreement are not expected to exceed more than 20% of the average level of services you performed to the Company in the three years preceding your Retirement Date.

6.No Other Compensation or Benefits.  You acknowledge that, except as expressly provided in this Agreement (including its exhibits and the agreements, plans, instruments and insurance policies referenced herein and therein), you have not earned, will not earn by the Retirement Date, are not entitled to, and will not receive from the Company, any additional compensation, severance, or benefits on or after the Retirement Date, with the exception of any vested right you may have under the express terms of any written ERISA-qualified benefit plan (e.g., 401(k) account).  By way of example, you acknowledge that you have not earned and are not owed any equity, bonus, incentive compensation, severance benefits, or commissions, except as may be provided in this Agreement (including its exhibits).  

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7.Expense Reimbursements.  You agree that, within thirty (30) days after the Retirement Date, you will submit your final documented expense reimbursement statement reflecting all unreimbursed business expenses that you incurred through the Retirement Date, if any, for which you seek reimbursement.  The Company will reimburse you for reasonable business expenses pursuant to its regular business practice.  

8.Return of Company Property.  On the Retirement Date (or earlier if requested by the Company), you agree to return to the Company (or delete) all Company documents (and all copies thereof) and other Company property which you are aware is in your possession or control, including, but not limited to, Company hardcopy or electronic files, email, correspondence, data, images, notes, drawings, records, plans, forecasts, reports, studies, analyses, proposals, agreements, financial information, research and development information, sales and marketing information, customer lists, prospect information, pipeline reports, sales reports, operational and strategic information, personnel information, specifications, code, software, databases, computer-recorded information, tangible property and equipment (including, but not limited to, computers, printers, mobile telephones, servers), credit cards, entry cards, identification badges and keys; and any materials of any kind which contain or embody any proprietary or confidential information of the Company (and all reproductions thereof in whole or in part).  Notwithstanding the foregoing or anything provided below, the Company will allow you to retain Company documents or property in your possession or control (i) you deem potentially helpful for you to perform services in accordance with the Consulting Agreement, or (ii) as otherwise approved by the Company in writing.  You agree that you will make a diligent search to locate any such Company documents or property by the Retirement Date.  If you have used any personally owned computer, server, or e-mail system to receive, store, review, prepare or transmit any Company confidential or proprietary data, materials or information, after the Retirement Date you shall permanently delete (and not reinstate) such Company confidential or proprietary information from those systems; and you agree to provide the Company access to your system as requested to verify that the necessary deletion is done.  Your compliance with this paragraph is a condition precedent to your receipt of the Severance Benefits.  

9.Public Announcement and Transition Messaging.  The Company plans to announce your retirement from the Company publicly shortly following the execution of this Agreement.  The Company and you agree that, in communications with Company employees and/or third parties about the circumstances related to your termination of service from the Company, the Company and your statements shall be consistent with the talking points previously exchanged between the Company and you or as subsequently agreed. 

10.Nondisparagement.  You agree not to disparage the Company, and the Company’s officers, directors, employees, parents and subsidiaries, in any manner which could reasonably cause substantial harm to them or their business, business reputation or personal reputation, and the Company agrees to instruct its current executive officers and directors to not disparage you in any manner which could reasonably cause substantial harm to you or your business, business reputation or personal reputation; provided that you and the Company and its executive officers and directors may respond accurately to any question, inquiry or request for information if required by legal process or in connection with a government investigation.  In addition, nothing in this provision or this Agreement is intended to prohibit or restrain you in any manner from making disclosures that (i) are protected under the whistleblower provisions of 

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federal or state law or regulation or under other applicable law or regulation, nor prevent you from disclosing information about unlawful acts in the workplace, including, but not limited to, sexual harassment or (ii) which in good faith you reasonably deem necessary in the performance of your duties to the Company either prior to the Retirement Date or under the Consulting Agreement.  

11.No Admissions.  The promises and payments in consideration of this Agreement shall not be construed to be an admission of any liability or obligation by the Company to you or any other person, and the Company makes no such admission.  

12.Cooperation.  You agree to voluntarily cooperate with the Company, if you have knowledge of facts relevant to any threatened or pending claim, investigation, audit or litigation against or by the Company, by making yourself reasonably available for interviews with the Company or its legal counsel, preparing for and providing truthful and accurate deposition and trial testimony.   

13.Release of Claims.  

a.General Release.  In exchange for the consideration provided to you under this Agreement, you hereby generally and completely release the Company and its affiliated, related, parent and subsidiary entities, and each of their respective current and former directors, officers, employees, shareholders, partners, agents, attorneys, predecessors, successors, insurers, affiliates, and assigns (collectively, the “Released Parties”), of and from any and all claims, liabilities, demands, causes of action, costs, expenses, attorney’s fees, damages, and obligations, of every kind and nature, in law, equity or otherwise, known and unknown, suspected and unsuspected, arising out of or in any way related to (i) your employment, (ii) the termination of your employment or (iii) events, acts conduct or omissions between the Company and you occurring at any time prior to and including the date you sign this Agreement, except for Excluded Claims (defined below) (collectively, the “Released Claims”). 

b.Scope of Release.  Subject to the foregoing, the Released Claims include, but are not limited to:  (i) all claims arising out of or in any way related to your employment with the Company, or the termination of that employment; (ii) all claims related to your compensation or benefits from the Company, including salary, bonuses, commissions, vacation, paid time off, sick time, expense reimbursements, severance pay, fringe benefits, stock, stock options, or any other ownership, equity, or profits interests in the Company; (iii) all claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing; (iv) all tort claims, including claims for fraud, defamation, emotional distress, and discharge in violation of public policy; and (v) all federal, state, and local statutory claims, including claims for discrimination, harassment, retaliation, attorneys’ fees, or other claims arising under the federal Civil Rights Act of 1964 (as amended), the federal Americans with Disabilities Act of 1990 (as amended), the federal Age Discrimination in Employment Act (as amended)(the “ADEA”), and the California Labor Code (as amended).   

c.ADEA Waiver.  You acknowledge that you are knowingly and voluntarily waiving and releasing any rights you have under the ADEA, and that the consideration given for the waiver and releases you have given in this Agreement is in addition to anything of value to which you were already entitled.  You further acknowledge that you have been advised, as required 

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by the ADEA, that:  (i) your waiver and release does not apply to any rights or claims that arise after the date you sign this Agreement; (ii) you should consult with an attorney prior to signing this Agreement (although you may choose voluntarily not to do so); (iii) you have twenty-one (21) days to consider this Agreement (although you may choose voluntarily to sign it sooner); (iv) you have seven (7) days following the date you sign this Agreement to revoke it (in a written revocation sent to me); and (v) this Agreement will not be effective until the date upon which the revocation period expires without such revocation, which will be the eighth day after you sign this Agreement provided that you do not revoke it (the “Effective Date”).  

d.Waiver of Unknown Claims.  In giving the releases set forth in this Agreement, which include claims which may be unknown to you at present, you acknowledge that you have read and understand Section 1542 of the California Civil Code which reads as follows: “A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.” You hereby expressly waive and relinquish all rights and benefits under that section and any law or legal principle of similar effect in any jurisdiction with respect to your release of claims herein, including but not limited to the release of unknown and unsuspected claims.  

e.Excluded Claims.  Notwithstanding the foregoing, the following are not included in the Released Claims (the “Excluded Claims”): (i) any rights or claims for indemnification you may have pursuant to your indemnification agreement with the Company, under the certificate of incorporation, bylaws, operating agreements or other charter documents of the Company or its subsidiaries, or under applicable law; (ii) any rights under the Company’s director and officer insurance policy, and any other Company or subsidiary insurance policy; (iii) any rights which cannot be waived as a matter of law, including without limitation claims under the California Fair Employment and Housing Act, to the extent such claims are not waivable as a matter of law with this release; (iv) any rights you have to file or pursue a claim for workers’ compensation or unemployment insurance; and (v) any claims relating to or arising from the breach of this Agreement (including its exhibits and the agreements, plans, instruments and insurance policies referenced herein and therein).  You hereby represent and warrant that, as of the date of this Agreement, other than the Excluded Claims, you are not aware of any claims you have or might have against any of the Released Parties that are not included in the Released Claims.  

14.Protected Rights.  Nothing in this Agreement limits your ability to file a charge or complaint with the Equal Employment Opportunity Commission, the Department of Labor, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other federal, state or local governmental agency or commission (“Government Agencies”).  You further understand that this Agreement does not limit your ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company.  While this Agreement does not limit your right to receive an award for information provided to the Securities and Exchange Commission, you understand and agree that, to maximum extent permitted by law, you are otherwise waiving any and all rights you may have to individual relief based on any claims that you have released and any rights you have waived by signing this Agreement.  

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15.Representations.  You hereby represent that, as of the date of this Agreement, you have been paid all compensation owed and for all hours worked (except for the consideration to be provided to you under this Agreement and compensation not paid for the Company’s current payroll period), you have received all the leave and leave benefits and protections for which you are eligible pursuant to the federal Family and Medical Leave Act, the California Family Rights Act, or otherwise, and you have not suffered any on-the-job injury for which you have not already filed a workers’ compensation claim.  

16.Dispute Resolution.  To ensure the timely and economical resolution of disputes that may arise in connection with your employment with the Company, you and the Company agree that any and all disputes, claims, or causes of action arising from or relating to the enforcement, breach, performance, negotiation, execution or interpretation of this Agreement, your employment, or the termination of your employment, including but not limited to statutory claims, will be resolved to the fullest extent permitted by law by final, binding and confidential arbitration, by a single arbitrator, in San Diego, California, conducted by JAMS, Inc. (“JAMS”) under the then-applicable JAMS rules (available at the following web address: https://www.jamsadr.com/rules-employment-arbitration/, and which will be provided to you on request).  By agreeing to this arbitration procedure, both you and the Company waive the right to resolve any such dispute through a trial by jury or judge or administrative proceeding.  In addition, all claims, disputes or causes of action under this provision, whether by you or the Company, must be brought in an individual capacity, and shall not be brought as a plaintiff (or claimant) or class member in any purported class or representative proceeding, nor joined or consolidated with the claims of any other person or entity.  The arbitrator may not consolidate the claims of more than one person or entity, and may not preside over any of form of representative or class proceeding.  To the extent the preceding sentences in this paragraph regarding class claims or proceedings are found to violate applicable law or are otherwise found unenforceable, any claim(s) alleged or brought on behalf of a class shall proceed in a court of law rather than by arbitration.  This provision shall not apply to an action or claim that cannot be subject to mandatory arbitration under applicable law, including without limitation, claims brought pursuant to the California Private Attorney General Act of 2004 (as amended), the California Fair Employment and Housing Act (as amended), and the California Labor Code (as amended), to the extent such claims are not permitted by applicable law(s) to be submitted to mandatory arbitration and the applicable law(s) are not preempted by the Federal Arbitration Act or otherwise invalid (collectively, the “Arbitration Excluded Claims”).  In the event you intend to bring multiple claims, including one of the Arbitration Excluded Claims listed above, the Arbitration Excluded Claims may be publicly filed with a court, while any other claims will remain subject to mandatory arbitration.  You will have the right to be represented by legal counsel at any arbitration proceeding.  The arbitrator shall: (i) have the authority to compel adequate discovery for the resolution of the dispute and to award such relief as would otherwise be permitted by law; and (ii) issue a written arbitration decision, to include the arbitrator’s essential findings and conclusions and a statement of the award.  The arbitrator shall be authorized to award any or all remedies that you or the Company would be entitled to seek in a court of law.  The Company shall pay all JAMS’ arbitration fees in excess of the amount of court fees that would be required of you if the dispute were decided in a court of law.  Nothing in this Agreement is intended to prevent either you or the Company from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such arbitration.  Any awards or orders in such arbitrations may be entered and enforced as judgments in the federal and state courts of any competent jurisdiction. 

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17.Tax Provisions.

a.Section 409A.  All severance benefits and other payments provided under the Agreement (including the Consulting Agreement) are intended to satisfy the requirements for an exemption from application of Section 409A of the Code and the regulations and other guidance thereunder and any state law of similar effect (collectively “Section 409A”) to the maximum extent that an exemption is available (including but not limited to the exemption provided under Treasury Regulations Sections 1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A 1(b)(9)) and any ambiguities herein shall be interpreted accordingly; provided, however, that to the extent such an exemption is not available, the severance benefits and other payments provided under the Agreement (including the Consulting Agreement) are intended to comply with the requirements of Section 409A of the Code to the extent necessary to avoid adverse personal tax consequences and any ambiguities herein shall be interpreted accordingly.  Specifically, the cash severance benefits under Section 4.a. of this Agreement are intended to comply with the payment limitation applicable to “specified employees” contained in Section 409A(a)(2)(B)(i), in order to avoid causing you to incur the additional 20% tax under Section 409A.  Each payment under this Agreement shall be treated as a separate and distinct payment for purposes of Section 409A. 

b.Section 280G.  If any payment or benefit you may receive (including after your Retirement Date) in connection with a change in control from the Company or otherwise (a “Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the parachute provisions of Section 4(e) of the Severance Benefit Plan shall apply and you acknowledge and agree (x) that, in order to avoid the Excise Tax, you may be required to return certain payments or benefits to the Company pursuant to the provisions of Section 4(e), and (y) to cooperate with the Company (or its acquirer) to promptly return any such payments or benefits as may be required pursuant to Section 4(e).

18.Miscellaneous.  This Agreement, together with its exhibits, constitutes the complete, final and exclusive embodiment of the entire agreement between you and the Company with regard to the subject matter hereof.  It is entered into without reliance on any promise or representation, written or oral, other than those expressly contained herein, and it supersedes any other agreements, promises, warranties or representations concerning its subject matter, including but not limited to your Amended and Restated Termination Protection Agreement, as amended.  This Agreement may not be modified or amended except in a writing signed by both you and a duly authorized officer of the Company.  This Agreement will bind the heirs, personal representatives, successors and assigns of both you and the Company, and inure to the benefit of both you and the Company, their heirs, successors and assigns.  Any ambiguity in this Agreement shall not be construed against either party as the drafter.  Any waiver of a breach of this Agreement, or rights hereunder, shall be in writing and shall not be deemed to be a waiver of any successive breach or rights hereunder.  This Agreement will be deemed to have been entered into and will be construed and enforced in accordance with the laws of the State of California, as applied to contracts made and to be performed entirely within California, without regard to conflicts of law principles.  If any provision of this Agreement is determined to be invalid or unenforceable, in whole or in part, this determination shall not affect any other provision of this Agreement and the provision in question shall be modified so as to be rendered enforceable in a manner consistent with the intent of the parties insofar as possible under applicable law.  This Agreement may be 

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executed in counterparts which shall be deemed to be part of one original, and facsimile and electronic signatures shall be equivalent to original signatures.

19.notice of default or breach; Opportunity to Cure.  Prior to the Company asserting you are in default or breach of this Agreement (or any exhibit), you must (a) receive a written notice which indicates in reasonable detail the facts and circumstances claimed to provide a basis for such breach or default; and (b) be provided with an opportunity during the 30 days following the receipt of such notice to cure or otherwise correct any such default or breach. The Company represents that, as of the date of this Agreement, it is not aware of any facts or circumstances, including any prior action or statement by you, that would constitute a breach or default by you of any provision in this Agreement had the Agreement been in effect at the time of the facts and circumstances.  

[Signature page to follow.]

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If this Agreement is acceptable to you, please sign and date below within twenty-one (21) days, and provide me with a fully signed Agreement.  The Company’s offer contained herein will automatically expire if we do not receive the fully signed Agreement within this timeframe.  

We wish you the best in your future endeavors.

Sincerely,

Arena Pharmaceuticals, Inc.

 

 

 

By:/s/ Suzanne C. Zoumaras

Suzanne C. Zoumaras

Executive Vice President and Chief Human Resources Officer 

 

Exhibit A: Arena Pharmaceuticals, Inc. Proprietary Information and Invention Assignment Agreement

Exhibit B: Arena Pharmaceuticals, Inc. Severance Benefit Plan

Exhibit C: Retirement Date Release

Exhibit D: Consulting Services Agreement

 

Understood, Accepted and Agreed:

 

 

/s/ Steven Spector

Steven Spector

 

__________________________________________

Date:  01/13/2020

 

 

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Exhibit A

 

ARENA PHARMACEUTICALS, INC. PROPRIETARY INFORMATION AND INVENTION ASSIGNMENT AGREEMENT

 

 

 

 

 

 

 

 

Exhibit B

Arena Pharmaceuticals, Inc. Severance Benefit Plan

 

 

Exhibit C

Retirement Date Release

(To be signed and returned to the Company on or within twenty-one (21) days after the Retirement Date)

In exchange for the consideration to be provided to me pursuant to that certain Transition and Retirement Agreement between me and Arena Pharmaceuticals, Inc. (the “Company”) (the “Agreement”), I hereby provide the following Retirement Date Release.  Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Agreement. 

I hereby generally and completely release the Company and its affiliated, related, parent and subsidiary entities, and each of their respective current and former directors, officers, employees, shareholders, partners, agents, attorneys, predecessors, successors, insurers, affiliates, and assigns (collectively, the “Released Parties”), of and from any and all claims, liabilities, demands, causes of action, costs, expenses, attorney’s fees, damages and obligations of every kind and nature, in law, equity or otherwise, known and unknown, suspected and unsuspected, arising out of or in any way related to (i) my employment, (ii) the termination of my employment or (iii) events, acts conduct or omissions between the Company and me occurring at any time prior to and including the time I sign this Retirement Date Release, except for Excluded Claims (defined below) (collectively, the “Released Claims”). 

Subject to the foregoing, the Released Claims include, but are not limited to:  (i) all claims arising out of or in any way related to your employment with the Company, or the termination of that employment; (ii) all claims related to your compensation or benefits from the Company, including salary, bonuses, commissions, vacation, paid time off, sick time, expense reimbursements, severance pay, fringe benefits, stock, stock options, or any other ownership, equity, or profits interests in the Company; (iii) all claims for breach of contract, wrongful termination, and breach of the implied covenant of good faith and fair dealing; (iv) all tort claims, including claims for fraud, defamation, emotional distress, and discharge in violation of public policy; and (v) all federal, state, and local statutory claims, including claims for discrimination, harassment, retaliation, attorneys’ fees, or other claims arising under the federal Civil Rights Act of 1964 (as amended), the federal Americans with Disabilities Act of 1990 (as amended), the federal Age Discrimination in Employment Act of 1967 (as amended) (the “ADEA”), and the California Labor Code (as amended).   

I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have under the ADEA. I also acknowledge that the consideration given for the waiver and releases in this Retirement Date Release is in addition to anything of value to which I am already entitled. I further acknowledge that I have been advised by this writing, as required by the ADEA, that: (i) my waiver and release does not apply to any rights or claims that arise after the date I sign this Retirement Date Release; (ii) I should consult with an attorney prior to signing this Retirement Date Release (although I may choose voluntarily not to do so); (iii) I have twenty-one (21) days to consider this Retirement Date Release (although I may choose to voluntarily sign it sooner); (iv) I have seven (7) days following the date I sign this Retirement Date Release to revoke it, with such revocation to be effective only if I deliver written notice of revocation to the Company within the 

 

 

seven (7)-day period; and (v) the Retirement Date Release will not be effective until the date upon which the revocation period has expires without such revocation, which will be the eighth day after I sign this Retirement Date Release provided that I do not revoke it (the  “Release Effective Date”).

In giving the general release of claims herein, which includes claims that may be unknown to me at present, I acknowledge that I have read and understand Section 1542 of the California Civil Code, which reads as follows: “A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.” I hereby expressly waive and relinquish all rights and benefits under that section and any law or legal principle of similar effect in any jurisdiction with respect to the releases granted herein, including but not limited to the release of unknown and unsuspected claims granted in this Retirement Date Release. 

Notwithstanding the foregoing, the following are not included in the Released Claims (the “Excluded Claims”): (i) any rights or claims for indemnification I may have pursuant to my written indemnification agreement with the Company, under the certificate of incorporation, bylaws, operating agreements or other charter documents of the Company or its subsidiaries, or under applicable law; (ii) any rights under the Company’s director and officer insurance policy, and any other Company or subsidiary insurance policy; (iii) any rights which cannot be waived as a matter of law, including without limitation claims under the California Fair Employment and Housing Act, to the extent such claims are not waivable as a matter of law with this release; (iv) any rights I have to file or pursue a claim for workers’ compensation or unemployment insurance; and (v) any claims relating to or arising from the breach of the Agreement (or its exhibits, and the agreements, plans, instruments and insurance policies referenced herein and therein). 

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

 

This Retirement Date Release, together with the Agreement (and its exhibits), constitutes the entire agreement between me, and the Company with respect to the subject matter hereof.  I am not relying on any representation not contained herein or in the Agreement (or exhibits). The provisions of this Retirement Date Release shall be deemed severable, and the invalidity or unenforceability of any provision hereof shall not affect the validity or enforceability of the other provisions hereof, and, to the greatest extent legally possible, effect shall be given to the intent manifested by the portion held invalid or inoperative. 

 

 

 

 

Understood and Agreed:

___________________________________________________________

Steven SpectorDate

 

 

Exhibit D

 

Consulting Services Agreementarna-ex1012_634.htm

Exhibit 10.12

 

CONSULTING SERVICES AGREEMENT

 

THIS CONSULTING SERVICES AGREEMENT (the “Agreement”) is entered into as of March 2, 2020 (“Effective Date”) by and between Arena Pharmaceuticals, Inc., a Delaware corporation (“Arena”), and Steven Spector (“Consultant”).

WHEREAS, Arena wishes to obtain the services of Consultant for certain purposes and Consultant wishes to provide such services, all subject to the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the mutual promises hereinafter set forth, and intending to be legally bound hereby, Arena and Consultant hereby agree as follows:

1.Services to be Provided.  During the term of this Agreement, Consultant shall perform for Arena (and if applicable, Arena’s Affiliates) services (the “Services”), described in the written addendum referencing this Agreement (the “Exhibit”).  The Exhibit shall automatically be incorporated into this Agreement by reference.  Arena acknowledges and agrees that during the term of this Agreement, Consultant may perform work for other clients and/or, if Consultant is an individual, for an employer.  Consultant agrees that Consultant will not utilize the confidential information, funds, personnel, space, equipment or facilities of any other client or any employer while performing services for Arena.  All services performed pursuant to this Agreement shall be performed in a good, timely, efficient and professional manner and, if Consultant is a company or other entity, solely by Consultant’s qualified employees. As used herein, “Affiliate” means any entity, which controls, is controlled by, or is under common control with Arena or Consultant, as applicable.  In this context “control” shall mean ownership by one entity, directly or indirectly, of more than fifty percent (50%) of the voting stock of another entity, which voting stock is entitled to vote for the election of directors, or otherwise has the actual right and ability to control and direct the management and business affairs of such other entity.

2.Term.  This Agreement will begin on the Effective Date and continue until December 31, 2020, unless otherwise terminated earlier as permitted herein.  

	
 
	
3.
	
Compensation; No Benefits; Licenses; Insurance; Taxes.

(a)As compensation for Consultant’s performance of the Services, Arena (or its Affiliate) shall pay Consultant the amounts specified in the Exhibit, in accordance with the payment schedule set forth in the Exhibit.  Consultant shall be responsible for all expenses incurred in connection with the performance of the Services, including travel, hotel and meal expenses, unless such expenses are reasonable and approved in advance by Arena.  Arena agrees to pre-approve and pay reasonable travel, hotel and meal expenses incurred by Consultant in connection with Services requested by Arena. All such pre-approved expenses shall be invoiced to Arena at cost and Consultant shall include copies of all receipts for such expenses.  Consultant shall not incur, and Arena shall not be responsible for, any fees or expenses in excess of the amounts set forth in the Exhibit or amendment thereto that has been signed by an authorized representative of Arena.

(b)Except as provided in the Transition Agreement (defined below) or in this Agreement, neither Consultant nor any employee, agent or representative of Consultant, if applicable, is an employee of Arena or is entitled to participate in, or receive any benefit or right 

 

 

as an Arena employee under, any Arena employee benefit and welfare plans, including, without limitation, employee insurance, pension, savings and security plans, as a result of Consultant entering into this Agreement.

(c)Consultant is solely responsible for filing all tax returns and submitting all payments as required by any federal, state or local tax authority arising from the payment of fees to Consultant under this Agreement, and agrees to do so in a timely manner.  If applicable, Arena will report the fees paid to Consultant under this Agreement by filing Form 1099-MISC (or other applicable form) with the Internal Revenue Service as required by law. 

(d)Consultant is solely responsible for obtaining any business or similar licenses required by any federal, state or local authority.    

(e)Arena will not obtain workers’ compensation insurance on behalf of, or for the benefit of, Consultant or Consultant’s employees.  If employees of Consultant perform Services, Consultant will obtain (at Consultant’s own expense) workers’ compensation insurance to the extent required by law.  

4.Ownership of Work Product

(a)All findings, conclusions, data, inventions, discoveries, trade secrets, techniques, processes, know-how, trademarks, servicemarks, brands, trade dress and tag lines, whether or not patentable or otherwise registrable, that are made by Consultant, either alone or with others, in the performance of the Services or which result, to any extent, from use of Arena’s (or Arena’s Affiliate’s) premises or property (collectively, “Inventions”) shall become the exclusive property of Arena or its designee. Consultant shall provide Arena prompt written notice of each Invention.  Consultant hereby assigns, transfers and conveys all of Consultant’s right, title and interest in and to any and all Inventions to Arena or its designee. 

(b)Upon the request and at the expense of Arena or its designee, Consultant will, and will cause Consultant’s employees, if any, to, execute and deliver any and all instruments and documents and take such other acts as may be necessary or desirable to document such transfer or to enable Arena or its designee to apply for, prosecute and enforce patents, trademark registrations or copyrights in any jurisdiction with respect to any Inventions or to obtain any extension, validation, re-issue, continuance or renewal of any such intellectual property right. Without limiting the foregoing, Consultant shall, and shall cause Consultant’s employees, if any, to, assign, grant and convey unto Arena or its designee all of Consultant’s right, title and interest, now existing or that may exist in the future, in and to any copyrights in any findings, reports, data compilations and other information and material resulting from the performance of the Services. Consultant (including Consultant’s employees, if any) shall not submit applications for copyright registration in any country for any information or materials created by Consultant pursuant to this Agreement.

(c) Consultant acknowledges and agrees that the work (the services to be rendered), and all rights therein, including without limitation, copyright, belongs to and shall be the sole and exclusive property of Arena or its designee.

(d)The provisions of this Section 4 shall survive the expiration or sooner termination of the term of this Agreement.

5.Confidentiality.  Consultant shall limit access to confidential or proprietary information (as defined below) of Arena, its Affiliates and its corporate collaborators, to those 

2

 

 

employees, if any, who require it for the performance of Services, are bound by a written obligation of non-use and confidentiality no less restrictive than this section, and are under the direct control and supervision of Consultant.  Consultant will not, and will further not permit its employees, if any, to, either during or after the term of this Agreement, disclose to any third person or use any confidential or proprietary information of Arena, its Affiliates or its corporate collaborators for any purpose other than the performance of the Services without the prior written authorization of Arena. This obligation shall not apply to information that is in the public domain through no fault of Consultant. For purposes of this Section 5, “confidential or proprietary information” is defined as any information disclosed hereunder by Arena or its Affiliates, or on behalf of Arena or its Affiliates, or developed by Consultant in the performance of Services, including without limitation the structure and activity of any chemical compositions provided to Consultant pursuant to this Agreement, as well as synthetic and analytical methods, biomaterials, micro-organisms, cells, cell lines and the progeny and derivatives thereof, including all modified and recombinant DNA molecules and all vectors and hosts containing the same, patent applications, pre-clinical or clinical data, marketing methods and plans, pricing information, manufacturing information and other unpublished information related to the business or the financial condition of Arena and its Affiliates and corporate collaborators. The provisions of this Section 5 shall survive the expiration or sooner termination of this Agreement.

6.Termination.  This Agreement may be terminated upon the mutual agreement of Arena and Consultant.  In addition, (i) Consultant may terminate this Agreement and Consultant’s consulting relationship with Arena for any reason whatsoever, upon thirty (30) days’ written notice to Arena and (ii) Arena may terminate this Agreement and Consultant’s consulting relationship for Cause as provided herein.  “Cause” for Arena to terminate Consultant hereunder shall mean the occurrence of one or more of the following events if such event results in a demonstrably harmful impact on Arena’s business or reputation: (1) Consultant’s willful and continued failure to substantially perform his or her duties with Arena (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to Consultant by Arena’s Board of Directors which specifically identifies the manner in which the Board of Directors believes that Consultant has not substantially performed his duties. For a termination to be for Cause pursuant to this Agreement, Consultant must (a) receive a written notice which indicates in reasonable detail the facts and circumstances claimed to provide a basis for the termination for Cause; and (b) be provided with an opportunity to be heard no earlier than 30 days following the receipt of such notice (during which notice period Consultant has the opportunity to cure and has failed to cure or resolve the behavior in question); (2) Consultant’s conviction of, or plea of guilty or nolo contendere to, a felony or any crime involving fraud, dishonesty or moral turpitude; (3) Consultant’s willful engaging in gross misconduct; or (4) Consultant’s unauthorized use or disclosure of material confidential information or material trade secrets of Arena. 

7.Return of Arena Property.  Except as otherwise approved by Arena in writing, Consultant will return to Arena any property of Arena, its Affiliates and corporate collaborators, in Consultant’s possession, at any time when so requested by Arena and in any event upon termination of this Agreement or the Exhibit.  

8.No Conflicting Agreements.  Consultant represents that Consultant is not a party to any existing agreements that would prevent Consultant from entering into and performing this Agreement. Consultant will not enter into any other agreement that is in conflict with 

3

 

 

Consultant’s obligations under this Agreement. Consultant shall not seek or use funding to support the Services from any third party (including the U.S. Government), without the prior written consent of Arena. If Consultant is a member or employee of, or affiliated with, a university or other third party, Consultant represents that Consultant has complied with any and all applicable policies and procedures of such university or other third party pertaining to the disclosure of proposed agreements for services and, to the extent necessary or required, received approval from such university or other third party to enter into this Agreement and be bound by the terms herein. Without limiting the foregoing, Consultant represents that receipt and use of confidential or proprietary information hereunder will not conflict with any agreement Consultant has with any university or third party which Consultant is a member of, employed by or affiliated with, and that no university or third party shall have any interest or rights in such confidential or proprietary information or any Inventions.  If requested by Arena, Consultant will provide to Arena, and will require Consultant’s employees, if any, providing Services to provide to Arena, information concerning payments and equity holdings that could be viewed as creating a conflict of interest with respect to the provision of Services hereunder, as well as other information that is required or requested by regulatory authorities.  

9.Independent Contractor.  Consultant is an independent contractor under this Agreement. Neither party shall have the power to bind the other party to any agreement, contract, obligation or liability. Consultant shall not communicate on behalf of Arena or its Affiliates, or report on the Services rendered under this Agreement to any third party without specific written authorization by Arena.

10.No Health Care Providers.   Consultant represents and warrants that Consultant is not a health care provider, and no health care provider will receive payment for Services under this Agreement. The term “health care provider” includes any person with a valid medical (or other applicable) license or certification to practice in the United States, or any other individual or entity based primarily in the United States, in each case, that is in a position to prescribe, purchase, recommend, refer, or arrange for the purchase, sale, or formulary placement of Arena products, including, but not limited to, physicians, pharmacists, nurses, nurse practitioners, physician assistants, medical directors, hospitals, pharmacies, pharmacy benefit managers, group purchasing organizations, wholesalers, insurers, and any individual employed by such entities with responsibility or authority to purchase, prescribe, recommend, influence, or arrange for the purchase or sale of Arena’s products.

11.Formulary Committee Participation.  To the extent Consultant (or any employee or permitted subcontractor of Consultant performing Services) is a member of a committee of any government entity that sets prescription drug formularies or develops clinical guidelines, during the term of this Agreement and for two years following the term, Consultant (or such employee or permitted subcontractor, as applicable) will disclose to such committee the existence of this Agreement and the nature of the Services, and will follow any procedure set forth by such committee relative to Services under this Agreement.  Consultant will notify Arena of such committee membership and of any such procedure that Consultant is required to follow by the committee relative to the Services under this Agreement. 

12.Entire Agreement and Amendment.  This Agreement is the sole agreement between Consultant and Arena with respect to the Services to be performed hereunder and it supersedes all prior agreements and understandings with respect thereto, whether oral or written, with the exception of the Transition and Retirement Agreement between Consultant and Arena 

4

 

 

dated January 13, 2020 (the “Transition Agreement”) and any agreements, plans, instruments and insurance policies referenced herein or therein. No modification to any provision of this Agreement shall be binding unless in writing and signed by both Consultant and a duly authorized representative of Arena. All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective heirs, executors, administrators, legal representatives, successors and permitted assigns of the parties hereto.

13.Assignment and Subcontracts.  The duties and responsibilities of Consultant hereunder are of a personal nature and shall not be assigned, subcontracted or delegated in whole or in part by Consultant without Arena’s prior written consent.  Consultant remains responsible for the actions and omissions of Consultant’s permitted subcontractors as if the Services were performed by Consultant and Consultant will enforce the terms of Subcontracts (as defined below) against such subcontractors if so requested by Arena.  The terms of each Subcontract shall ensure that all obligations of Consultant and restrictions on Consultant designated in this Agreement shall apply to subcontractors to the extent any failure of such provisions to apply to subcontractors would eliminate or denigrate any of Arena’s rights under this Agreement.  In any agreement between Consultant and a subcontractor: (a) pursuant to which a subcontractor performs Services related to this Agreement, or (b) that otherwise represents a subcontracting of Consultant’s obligations under this Agreement (each, a “Subcontract”), Arena will be named as a third party beneficiary of such Subcontract, with the right to enforce all rights and obligations thereunder. Consultant shall prohibit Consultant’s subcontractors from further subcontracting or otherwise delegating Services under this Agreement.  Arena may withdraw its consent regarding any subcontractor at any time. In the event Consultant performs any of its obligations under this Agreement through a subcontractor, then Consultant shall at all times be fully responsible for the payment of such subcontractor. 

14.Governing Law.  This Agreement shall be governed by and interpreted in accordance with laws of the State of California, without giving effect to any conflict of law provisions.

15.Notices.  All notices required hereunder shall be in writing and be delivered personally, sent by an internationally recognized express courier service (e.g., FedEx), transmitted via facsimile, or sent via registered or certified mail (postage prepaid) requiring return receipt, and shall be deemed given as of:  (i) the date of delivery, if sent by personal delivery; (ii) two days after the date of deposit, if sent by express courier service; (iii) the date of transmission, if faxed with confirmatory printout of transmission; or (iv) one week after the date of mailing, if sent by mail. Notices shall be addressed as provided below or to such other addressee as either party may in the future designate by written notice to the other in accordance with the terms hereof:

If to Arena, to:

 

Arena Pharmaceuticals, Inc.

6154 Nancy Ridge Drive

San Diego, CA  92121

USA

Facsimile No.: 858.677.0065

Attention: Chief Executive Officer

With a copy to:  General Counsel

5

 

 

 

If to Consultant, to:

 

Steven Spector

13517 Penfield Point

San Diego, CA 92130

 

16.Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original, all of which together shall constitute one and the same instrument.  One or more counterparts of this Agreement may be delivered by facsimile or PDF transmission with the intent that it or they shall constitute an original counterpart hereof.  

 

17.Invalidity and Waiver.  If any portion of this Agreement is held invalid or inoperative, then so far as is reasonable and possible the remainder of this Agreement shall be deemed valid and operative, and, to the greatest extent legally possible, effect shall be given to the intent manifested by the portion held invalid or inoperative.  The failure by either party to enforce against the other party any term or provision of this Agreement shall not be deemed to be a waiver of such party’s right to enforce against the other party the same or any other such term or provision in the future.

18.Conflict of Terms.  To the extent any terms contained in the Exhibit conflict with this Agreement, the terms of the Exhibit shall prevail unless otherwise specified.

  

IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have duly executed, or caused to be duly executed, this Agreement as of the date first above written.

 

		
	
Arena Pharmaceuticals, Inc.
	
Steven Spector              

	
 

By: /s/ Suzanne C. Zoumaras
	
 

/s/ Steven Spector

	
Name: Suzanne C. Zoumaras
	
 

	
Title: EVP & CHRO
	
 

	
6154 Nancy Ridge Drive

San Diego, CA 92121
	
13517 Penfield Point

San Diego, CA 92130

 

	
 
	
 

	
Telephone Number:  858-453-7200
	
Telephone Number: 858-472-3336

	
Date: January 13, 2020
	
Date: January 13, 2020

 

 

6

 

 

 

The following is made part of the Consulting Services Agreement entered into as of March 2, 2020, by and between Arena Pharmaceuticals, Inc. (“Arena”) and Steven Spector (the “Agreement”)

 

Exhibit

 

Description of Consulting Services and Compensation

 

Effective Date: March 2, 2020

 

Scope of Services:

Consultant shall provide consulting services to Arena relating to such matters as may be reasonably requested by Arena’s Chief Executive Officer or his designee.  Consultant’s consulting services shall not exceed thirty (30) hours per month.  

 

Consultant shall be available by, including, but not limited to, phone, email, and in person, at such reasonable times as are agreed upon by both parties, to provide advice and consultation to Arena.

 

Compensation:

 

Consultant shall be paid $350.00/hour; provided, however, that, for each month during the term of the Agreement from March 2, 2020 to September 2, 2020, Consultant will receive a monthly minimum payment equivalent to fifteen (15) hours of work.     

 

All of Consultant’s stock options previously granted by Arena that are outstanding as of the Retirement Date (as defined in the Transition Agreement) are referred to herein as the “Option Awards”.  The vesting of the Option Awards shall be accelerated as described in the Transition Agreement.   As of the Retirement Date, further vesting of the Option Awards shall be suspended but the Option Awards shall continue to remain outstanding and exerciseable during and after the Term of this Agreement (but in any event, not longer than the original contractual life of the options), in accordance with the Transition Agreement and, if applicable, the potential additional vesting acceleration and extended exercise benefits described below under “Accelerated Vesting and Extended Exercise Period.

 

In addition, any portion of Consultant’s performance restricted stock unit awards granted on January 4, 2019 that are outstanding as of the Retirement Date (the “PRSUs”) will remain outstanding until the earlier of: (i) March 15, 2021; (ii) termination of the Agreement by Arena for Cause; and (iii) termination of the Agreement by Consultant prior to December 31, 2020 (unless otherwise agreed to in writing between Consultant and Arena); and (iv) termination of the PRSUs pursuant to the terms of the PRSU Agreement (as defined below) and Arena’s 2017 Long-Term Incentive Plan (other than termination due to termination of Consultant’s services with Arena) (such earliest date, the “PRSU Termination Date”).  

 

Until the PRSU Termination Date, Consultant will remain eligible to be issued shares of Arena common stock pursuant to the vesting and issuance criteria set forth in the PRSU Grant Agreement (including Attachment I thereto) (the “PRSU Agreement”) on the same terms and at 

1

 

 

the same time as Consultant would have received such shares if Consultant’s employment or other services with Arena would have continued through the PRSU Termination Date, provided that if, under the terms of the PRSU Agreement, shares of Arena common stock would be issued to Consultant after March 15, 2021 as a result of a Target Price or Maximum Price (as defined in the PRSU Agreement) occurring prior to March 15, 2021 (and prior to the PRSU Termination Date), such shares shall instead be issued to Consultant on March 15, 2021 and any continuing employment or service required for achievement, and any remaining Service Period (as defined in the PRSU Agreement) required for issuance, of such shares shall be waived. Any PRSUs remaining outstanding following the PRSU Termination Date shall immediately be forfeited for no consideration.  

 

Except as expressly modified in this Exhibit or the Transition Agreement, the PRSUs shall continue to be governed by the terms of the PRSU Agreement and Arena’s 2017 Long-Term Incentive Plan.

 

Expenses: Consultant shall be reimbursed for reasonable travel, hotel and meal expenses incurred in accordance with Section 3(a) of the Agreement.

 

Term:  

This Exhibit shall remain in effect until the earlier to occur of (a) December 31, 2020, or (b) termination of the Agreement as permitted in the Agreement. The provisions under “Compensation”, “Expenses”, “Schedule of Payments” and “Accelerated Vesting and Extended Exercise Period” shall survive the expiration of the term of this Exhibit.

 

Schedule of Payments:

 

Consultant shall be paid in full any undisputed invoiced amount within thirty (30) days from Arena’s receipt of invoice and a completed and signed Form W-9 or equivalent tax form from Consultant. 

 

Invoice:

 

Consultant shall send to Arena monthly invoices.  For all work performed, the invoice shall outline the date work was performed, the number of hours worked in each such day, and a brief description of the work performed on behalf of Arena in a form reasonably acceptable to Arena. All invoices shall be sent to Arena, attention Accounts Payable at invoices@arenapharm.com.

 

The period of work covered by each invoice shall not be more than one month and all work performed in any calendar month shall be invoiced within ten (10) days of each month end.

 

Accelerated Vesting and Extended Exercise Period:

 

Upon termination of the Agreement for any reason (including death or Disability, as defined in the Arena Pharmaceuticals, Inc. Severance Benefit Plan, as amended and restated effective January 4, 2019) other than (i) termination by Arena for Cause or (ii) termination by Consultant prior to December 31, 2020, and provided that Consultant (a) complies with the obligations 

2

 

 

hereunder and with the Transition Agreement (excluding any obligations arising following death of Disability (other than the release requirement set forth below)); and (b) on or within twenty-one (21) days after the termination of the Agreement, signs a release of claims in substantially the same form as the Retirement Date Release attached to the Transition Agreement, which will be provided by Arena (the “Release”), and allows the Release to become effective, then Arena will accelerate the vesting of all of the Option Awards such that, as of the date of the effective date of the Release, Consultant will be deemed vested in all remaining unvested Option Awards (the “Accelerated Vesting”).  In addition, subject to satisfaction of such conditions, Arena will extend the exercise period for all Option Awards (i.e., not only the portion of such Option Awards whose vesting was accelerated as provided in the prior sentence, but also the portion of such Option Awards that were previously vested) other than the Excluded Options (as defined below) until thirty-six (36) months after the termination of the Agreement, but in any event not beyond the original contractual life of each such Option Award (the “Extended Exercise Period”).  The “Excluded Options” means the following Option Awards: (i) the Option Award granted on March 17, 2010 covering up to 3,726 shares (Grant Number 20003927), (ii) the Option Award granted on March 15, 2011 covering up to 7,970 shares (Grant Number 20004190), (iii) the Option Award granted on March 19, 2012 covering up to 5,525 shares (Grant Number 20004415), (iv) the Option Award granted on December 17, 2013 covering up to 1,812 shares (Grant Number 2004731), (v) the Option Award granted on December 15, 2014 covering up to 1,875 shares (Grant Number 20005024), and (vi) the Option Award granted on December 15, 2015 covering up to 7,276 shares (Grant Number 20005306).

 

For the avoidance of doubt, if, prior to December 31, 2020, Consultant terminates the Agreement for any reason, or at any time Arena terminates the Agreement or the consulting relationship for Cause, then Consultant will no longer be eligible to receive the Accelerated Vesting or the Extended Exercise Period (as defined above).  If the Agreement is terminated due to Consultant’s death or Disability, Arena will provide the Accelerated Vesting and the Extended Exercise Period; provided, however, that Consultant, Consultant’s estate or Consultant’s representative (as applicable) signs the Release on or within twenty-one (21) days after the date the Agreement terminates due to Consultant’s death or Disability and allows that release to become effective.

 

The portion of the Option Awards subject to the Extended Exercise Period that are also considered “incentive stock options” under Section 422 of the Internal Revenue Code of 1986, as amended (the “ISOs”) will immediately lose ISO status upon the execution of the Transition Agreement.  Arena encourages Consultant to seek independent advice concerning the tax status of Consultant’s Option Awards and the corresponding tax implications of the Agreement, this Exhibit, and the benefits hereunder.  

 

Except as expressly modified in this Exhibit or in the Transition Agreement, the Option Awards shall continue to be governed by the terms of the applicable grant notice, stock option agreement and Arena’s long-term incentive plan. 

3

 

 

Counterparts:

 

This Exhibit may be executed by exchange of signatures by facsimile or exchange of PDF copies, and in two or more counterparts, each of which will be deemed an original document, and all of which, together with this writing, will be deemed one instrument.

 

 

4

 

 

IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have duly executed, or caused to be duly executed, this Exhibit effective as of the Effective Date above written.

 

		
	
Arena Pharmaceuticals, Inc.
	
Steven Spector              

	
 

By: /s/ Suzanne C. Zoumaras
	
 

/s/ Steven Spector

	
Name: Suzanne C. Zoumaras
	
 

	
Title: EVP & CHRO
	
 

	
Date: January 13, 2020
	
Date: January 13, 2020

 

 

5

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