ARENA PHARMACEUTICALS INC (Form: 8-K, Received: 05/09/2016 17:05:36)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 6, 2016

Arena Pharmaceuticals, Inc.

(Exact name of registrant as specified in its charter)



Delaware	000-31161	23-2908305
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

6154 Nancy Ridge Drive, San Diego, California 92121

(Address of principal executive offices) (Zip Code)

858.453.7200

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:



¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)



¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)



¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))



¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

In this report, “Arena Pharmaceuticals,” “Arena,” “Company,” “we,” “us” and “our” refer to Arena Pharmaceuticals, Inc., and/or one or more of our wholly owned subsidiaries, unless the context otherwise provides. Arena Pharmaceuticals® and Arena® are registered service marks of Arena Pharmaceuticals, Inc.


Item 5.02	Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Principal Executive and Financial Officer

On May 6, 2016, our Board of Directors, or Board, appointed Amit D. Munshi as President, Chief Executive Officer and interim principal financial officer. Mr. Munshi’s appointment will be effective on May 11, 2016. Mr. Munshi will succeed Harry F. Hixson, Jr., Ph.D., who has served as our interim Chief Executive Officer and interim principal financial officer since October 2015. Dr. Hixson will remain on our Board.

Mr. Munshi, age 48, served as President, Chief Executive Officer and a director of Epirus Biopharmaceuticals, Inc., a publicly traded biopharmaceutical company, from May 2012 to May 2016. Prior to Epirus, Mr. Munshi served as President and Chief Executive Officer of Percivia LLC, a biotechnology company, from 2011 to 2012, was a co-founder and served as Chief Business Officer of Kythera Biopharmaceuticals, Inc., from 2005 to 2010, and held multiple leadership positions at Amgen Inc. from 1997 to 2005, including General Manager, Nephrology Europe. Mr. Munshi serves on the boards of Oxeia Biopharmaceuticals, Inc., and Cytrellis Biosystems, Inc., both privately held companies. Mr. Munshi holds a B.S. in Economics and a B.A. in History from the University of California, Riverside, and an M.B.A. from the Peter F. Drucker Graduate School of Management at Claremont Graduate University.

In connection with his appointment as President, Chief Executive Officer and interim principal financial officer, Mr. Munshi and we entered into an executive employment agreement, or Employment Agreement. Pursuant to the Employment Agreement, Mr. Munshi is entitled to: (i) an annual base salary of $625,000; (ii) participation under our Annual Incentive Plan with a target bonus of not less than 65% of his then-current base salary; and (iii) an option to purchase up to 3,800,000 shares of our common stock under our 2013 Long-Term Incentive Plan, as amended, subject to a four-year vesting period.

We also entered into a severance agreement, or Severance Agreement, with Mr. Munshi, pursuant to which he is entitled to certain severance benefits. In the event that we terminate Mr. Munshi without cause or Mr. Munshi resigns for good reason, each a Covered Termination, Mr. Munshi is entitled to: (i) a lump sum cash payment equal to 24 times the sum of (a) Mr. Munshi’s monthly base salary in effect immediately prior to the termination and (b) 1/12 ^th of the greater of (x) the average of the three annual bonuses we paid Mr. Munshi prior to the termination (with his target bonus amounts used, for purposes of calculating the average, for any year in which Mr. Munshi was not an employee or was employed for less than a full year) and (y) the last annual bonus we paid Mr. Munshi prior to the termination; (ii) a monthly payment equal to his monthly group health insurance premium under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, or COBRA, until the earlier of (a) 24 months following termination of employment, or Severance Period, and (b) the expiration of Mr. Munshi’s eligibility for continuation coverage under COBRA; and (iii) acceleration of vesting of the stock options and other equity awards that would have vested had Mr. Munshi remained employed by us through the Severance Period, except to the extent that the vesting of such awards is conditioned upon the satisfaction of performance criteria.

In addition, in the event that a Covered Termination occurs either (i) during the two years following a change in control of Arena or (ii) within one year prior to a change in control of Arena and Mr. Munshi reasonably demonstrates after such change in control that such termination was at the request or suggestion of any individual or entity who or which ultimately effects a change in control or by our Board in contemplation of a change of control, all of Mr. Munshi’s outstanding options and other equity awards will become fully vested and exercisable, except to the extent that the vesting of such awards is conditioned upon the satisfaction of performance criteria.

The foregoing summaries of the Employment Agreement and the Severance Agreement do not purport to be complete and are qualified in their entirety by reference to the complete Employment Agreement and Severance Agreement, copies of which are attached hereto as Exhibits 10.1 and 10.2, respectively, and are incorporated herein by reference.

Under his Employment Agreement, Mr. Munshi will be appointed as a member of our Board following our 2016 Annual Stockholders’ Meeting, which is scheduled for June 13, 2016. Subject to the requirements of applicable law (including, without limitation, any rules or regulations of any exchange on which our common stock is listed, if applicable), our Board or the appropriate committee of the Board is required to nominate Mr. Munshi for re-election to our Board at each annual meeting at which he is subject to re-election, as long as he serves as our Chief Executive Officer. Mr. Munshi will not serve on our Board’s Audit Committee, Compensation Committee or Corporate Governance and Nominating Committee, and will receive no additional compensation for his service on our Board.

There are no arrangements or understandings between Mr. Munshi and any other persons pursuant to which he was selected as our President, Chief Executive Officer and interim principal financial officer. There are also no family relationships between Mr. Munshi and any of our directors or executive officers, and he has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.

Amendments of Termination Protection Agreements and Severance Benefit Plan

Effective May 9, 2016, we amended certain of our Termination Protection Agreements, originally effective on December 20, 2002, and previously amended and restated on December 30, 2008. Effective May 9, 2016, we also amended our Severance Benefit Plan, originally effective on January 20, 2006, and previously amended and restated on December 30, 2008, and amended on February 10, 2012. The executive officers that are a party to a Termination Protection Agreement are Dominic P. Behan, Ph.D., and Steven W. Spector, and the participants under the Severance Benefit Plan are such executive officers and Craig M. Audet, Ph.D., Maurice J. Mezzino and William R. Shanahan, Jr., M.D.

The amendments to the Termination Protection Agreements, which require a change in control to trigger benefits, include (i) a clarification that the cash severance benefits for which the employee is eligible will be calculated without regard to any reduction in base salary that forms the basis for a termination for Good Reason (as defined in the Termination Protection Agreements) and (ii) certain updates to the COBRA benefits for which the employee is eligible, so that (a) COBRA health insurance premiums are paid directly paid by us until the end of the applicable severance period or the expiration of COBRA eligibility, whichever is earlier, and (b) if we cannot pay the COBRA premiums without incurring financial costs or penalties under applicable law, then, in lieu of paying such COBRA premiums, we will instead pay the employee a taxable amount each month equal to 140% of (x) the value of the last monthly group health insurance premiums paid by the employee or (y) the last monthly COBRA premiums paid by us, as applicable.

The amendments to the Severance Benefit Plan include (i) a clarification that the cash severance benefits for which the employee is eligible will be calculated without regard to any reduction in base salary that forms the basis for a termination for Good Reason (as defined in the Severance Benefit Plan), (ii) certain updates to the COBRA benefits for which the employee is eligible, so that (a) COBRA health insurance premiums will be paid directly by us until the end of the applicable severance period or the expiration of COBRA eligibility, whichever is earlier, and (b) if we cannot pay the COBRA premiums without incurring financial costs or penalties under applicable law, then, in lieu of paying such COBRA premiums, we will instead pay the employee a taxable amount each month equal to 140% of (x) the value of the last monthly group health insurance premiums paid by the employee or (y) the last monthly COBRA premiums paid by us, as applicable, and (iii) a provision that, for any equity awards scheduled to vest annually, equity acceleration benefits will be calculated as if such awards vested monthly.

The foregoing summaries of the amendments to the Termination Protection Agreements and Severance Benefit Plan do not purport to be complete and are qualified in their entirety by reference to the complete Form of Amendment to Amended and Restated Termination Protection Agreement and Amended and Restated Severance Benefit Plan, copies of which are attached hereto as Exhibits 10.3 and 10.4, respectively, and are incorporated herein by reference.

Amendment to Our 2013 Long-Term Incentive Plan

On May 6, 2016, in connection with Mr. Munshi’s appointment as President, Chief Executive Officer and interim principal financial officer, our Board approved an amendment to our 2013 Long-Term Incentive Plan, or LTIP, to reserve an additional 3,800,000 shares of common stock exclusively for the grant of stock awards to employees who have not previously been one of our employees or directors, except following a bona fide period of non-employment, as an inducement material to the individual’s entering into employment with us within the meaning of Rule 5635(c)(4) of the NASDAQ Listing Rules. The LTIP was amended by our Board without stockholder approval pursuant to Rule 5635(c)(4) of the NASDAQ Listing Rules.

The foregoing summary of the amendment to our 2013 Long-Term Incentive Plan does not purport to be complete and is qualified in its entirety by reference to our 2013 Long-Term Incentive Plan, as amended, a copy of which is attached hereto as Exhibit 10.5 and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.



Exhibit No.		Description
10.1		Executive Employment Agreement, dated as of May 6, 2016, between Arena and Amit D. Munshi
10.2		Severance Agreement, dated as of May 6, 2016, between Arena and Amit D. Munshi
10.3		Form of Amendment to Amended and Restated Termination Protection Agreement, dated May 9, 2016, between Arena and each of Dr. Behan and Mr. Spector
10.4		Amended and Restated Severance Benefit Plan, effective May 9, 2016, and providing benefits for Drs. Audet, Behan and Shanahan and Messrs. Mezzino and Spector
10.5		2013 Long-Term Incentive Plan

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



Date: May 9, 2016	Arena Pharmaceuticals, Inc.

	By:	/s/ Steven W. Spector
		Steven W. Spector
		Executive Vice President, General Counsel and Secretary

EXHIBIT INDEX



Exhibit No.		Description
10.1		Executive Employment Agreement, dated as of May 6, 2016, between Arena and Amit D. Munshi
10.2		Severance Agreement, dated as of May 6, 2016, between Arena and Amit D. Munshi
10.3		Form of Amendment to Amended and Restated Termination Protection Agreement, dated May 9, 2016, between Arena and each of Dr. Behan and Mr. Spector
10.4		Amended and Restated Severance Benefit Plan, effective May 9, 2016, and providing benefits for Drs. Audet, Behan and Shanahan and Messrs. Mezzino and Spector
10.5		2013 Long-Term Incentive Plan

Exhibit 10.1

Execution Version

ARENA PHARMACEUTICALS, INC.

EXECUTIVE EMPLOYMENT AGREEMENT

This Executive Employment Agreement (this “ Agreement ” ), is made and entered into as of May 6, 2016 (the “ Effective Date ” ), by and between Amit D. Munshi ( “ Executive ” ) and Arena Pharmaceuticals, Inc. (the “ Company ” ).

1. Employment by the Company; Board Appointment.

1.1 Position. Upon the commencement of Executive’s employment with the Company (the “ Start Date ” ), which will occur on or before May 11, 2016, Executive shall serve as the Company’s President and Chief Executive Officer, reporting to the Company’s Board of Directors (the “ Board ” ). In addition, commencing on the Start Date, Executive shall serve as the interim principal financial officer of the Company until the earlier of (i) the date upon which a Chief Financial Officer begins service with the Company; and (ii) such earlier date as may be determined by the Company in its sole and exclusive discretion. During the term of Executive’s employment with the Company, Executive will devote substantially all of Executive’s business time and attention to the business of the Company, except as permitted by Section 6.1 below and vacation periods (or paid time off, as applicable) and reasonable periods of illness or other incapacities.

1.2 Duties. Executive shall perform the duties and responsibilities, and have the authority as are customarily associated with the position of President and Chief Executive Officer of similar type and size public companies and such other duties as are consistent with the bylaws of the Company and Executive’s position and as assigned to Executive by the Board. Executive’s duties include providing services on a full-time basis at the Company’s headquarters located in San Diego, California (excluding required travel on Company business).

1.3 Appointment as a Director. The Company shall cause Executive to be appointed as a member of the Board following the Company’s 2016 Annual Stockholders’ Meeting. Thereafter, for so long as Executive serves as the as the Company’s Chief Executive Officer, subject to the requirements of applicable law (including, without limitation, any rules or regulations of any exchange on which the common stock of the Company is listed, if applicable), the Board or the appropriate committee of the Board will nominate Executive for re-election to the Board at each annual meeting at which Executive is subject to re-election. Executive shall not receive any additional compensation therefore. In the event of the termination of Executive’s employment for any reason (whether at Executive’s request or the Company’s request), or Executive’s removal from the position of President and Chief Executive Officer, Executive agrees to promptly resign as a member of the Board, effective no later than such termination or removal date.

2. Compensation.

2.1 Base Salary. Executive shall receive a base salary at the rate of six hundred twenty-five thousand dollars ($625,000) per year ( “ Base Salary ” ), less required tax withholdings, payable in accordance with the Company’s regular payroll schedule. Executive’s Base Salary shall be reviewed from time to time.

2.2 Annual Bonus. Executive shall be designated as a participant under the Company’s Annual Incentive Plan for its executive officers, and Executive’s target bonus under the Annual Incentive Plan shall not be less than sixty-five percent (65%) of Executive’s then-current Base Salary. Payment of any annual incentive bonus to Executive shall be subject to the terms and conditions of the Annual Incentive Plan, as such may be amended from time to time.

2.3 Option Grant. As an inducement material to entering into employment with the Company, on the Start Date, the Company will grant Executive an option (the “Option” ) to purchase up to three million eight hundred thousand (3,800,000) shares of the Company’s common stock. The Option will be granted under the Company’s 2013 Long-Term Incentive Plan, as amended (the “Plan” ), and pursuant to the “inducement grant” exception provided under NASDAQ Listing Rule 5635(c)(4). A form S‑8 with regard to the inducement grant will be timely filed following the Start Date. The Option will be a nonstatutory stock option, have an exercise price per share equal to the Fair Market Value (as defined in the Plan) of the Company’s common stock on the Start Date, and vest with respect to one-forth (1/4 ^th ) of the shares subject to the Option upon the one (1) year anniversary of the Start Date and ratably with respect to the remainder of the shares in equal quarterly increments over the three year period following such one (1) year anniversary of the Start Date, subject to Executive’s continued employment with the Company.

3. Standard Company Benefits. Executive shall, subject to and in accordance with applicable Company policy and the terms and conditions of any applicable Company benefit plan documents, be eligible to participate in the benefits and fringe benefit programs provided by the Company to its executive officers and other employees from time to time.

4. Expenses. The Company will reimburse Executive for reasonable travel, entertainment and/or other expenses incurred by Executive in furtherance of or in connection with the performance of Executive’s duties hereunder, in accordance with the Company’s expense reimbursement policies as in effect from time to time. The Company will also reimburse Executive promptly upon presentation of invoices for the reasonable legal fees incurred by Executive in connection with this Agreement and the documents related thereto, in an amount up to $25,000.

5. Proprietary Information Obligations.

5.1 Proprietary Information Agreement and Other Company Policies. As a condition of employment, and in consideration for the benefits provided for in this Agreement, Executive shall sign and comply with the Employee Proprietary Information and Inventions Agreement previously provided to Executive (the “Proprietary Information Agreement” ). In addition, Executive agrees to abide by the Company’s written employment policies and procedures, as such may be in effect and modified from time to time within the Company’s discretion.

5.2 Third-Party Agreements and Information. Executive represents and warrants that Executive’s employment by the Company does not and will not conflict with any prior employment or consulting agreement or other agreement between Executive and any third party. Executive further agrees that he will perform his duties to the Company under this Agreement without violating any such prior agreement. Without limiting the foregoing, the Company acknowledges that Executive may be under certain limitations as to fiduciary, nonsolicitation and

similar restrictive covenants with regard to former employers and former and current boards and shall not require Executive to violate such limitations. Executive represents and warrants that Executive will not use any confidential information arising out of his prior employment, consulting or other third party relationships in connection with Executive’s employment by the Company, except as expressly authorized by that third party.

6. Outside Activities and Non-Competition During Employment; Non-Inducement.

6.1 Outside Activities. Throughout Executive’s employment with the Company, Executive may engage in civic and not-for-profit activities so long as such activities do not interfere with the performance of Executive’s duties hereunder or present a conflict of interest with the Company or its affiliates. The Company agrees that Executive may continue to provide (a) services to Cytrellis Biosystems and Oxeia Biopharmaceuticals, both in board of director capacities , and (b) for up to ninety (90) days after the Start Date, transitional advisory services to EPIRUS Biopharmaceuticals, Inc., provided that such permitted services do not compromise or threaten to compromise the Company’s or its affiliates’ business interests or conflict or compete with Executive’s duties to the Company or its affiliates.

6.2 Non-Competition During Employment. During Executive’s employment by the Company, Executive will not, without the express written consent of the Board, directly or indirectly serve as an officer, director, stockholder, employee, partner, proprietor, investor, joint ventures, associate, representative or consultant of any person or entity engaged in, or planning or preparing to engage in, business activity competitive with any line of business engaged in (or planned to be engaged in) by the Company or its affiliates; provided, however, that Executive may purchase or otherwise acquire up to (but not more than) one percent (1%) of any class of securities of (i) any enterprise (without participating in the activities of such enterprise) if such securities are listed on any national or regional securities exchange or (ii) any private equity, venture capital or other commingled fund. In addition, Executive will be subject to certain restrictions (including restrictions continuing after Executive’s employment ends) under the terms of the Proprietary Information Agreement.

6.3 Non-Inducement. Executive will not, for one (1) year after the date of termination of Executive’s employment by the Company, induce any employees of the Company to leave the employ of the Company. General advertising that is not targeted at employees of the Company or its subsidiaries shall not constitute inducement or otherwise violate Executive's obligations in this Section.

7. Termination of Employment; Severance and Change-in-Control Benefits.

7.1 At-Will Employment. Executive’s employment relationship is at-will. Either Executive or the Company may terminate the employment relationship at any time, with or without Cause or advance notice.

7.2 Severance Benefits. Executive shall be eligible for certain severance benefits pursuant to the terms and conditions of the Severance Benefit Agreement attached hereto

as Exhibit A (the “ Severance Agreement ” and such benefits, the “ Covered Termination Benefits ”). In addition, if Executive’s Covered Termination (as defined under the Severance Agreement) occurs either (i) during the two (2) years following a Change in Control (as defined under the Severance Agreement) or (ii) within the one (1) year prior to a Change in Control and Executive reasonably demonstrates after such Change in Control that such termination was at the request or suggestion of any individual or entity who or which ultimately effects a Change in Control or by the Board in contemplation of a Change in Control, then, all of Executive’s outstanding stock options and other equity awards issued by the Company and held by Executive as of the Covered Termination shall become fully vested and exercisable in full, except that this provision shall not affect any stock awards for which the vesting thereof is conditioned upon the satisfaction of performance criteria ( “Performance-Related Awards” ), including any such grants under the Company’s Performance Restricted Stock Unit Grant Agreement. For the avoidance of doubt, Performance-Related Awards do not include any stock awards or portions thereof (including stock options) for which the vesting thereof is conditioned solely upon Executive’s continued service over a specified time period ( i.e., time-based vesting). The equity acceleration described in the preceding sentence shall be subject to all of the terms and conditions as the Covered Termination Benefits under Severance Agreement, including but not limited to the requirement that Executive provide an effective release of claims in favor of the Company.

8. Dispute Resolution. To ensure the rapid and economical resolution of disputes that may arise in connection with Executive’s employment with the Company, Executive and the Company agree that any and all disputes, claims, or causes of action, in law or equity, including but not limited to statutory claims, arising from or relating to the enforcement, breach, performance, or interpretation of this Agreement, Executive’s employment with the Company, or the termination of Executive’s employment from the Company, will be resolved pursuant to the Federal Arbitration Act, 9 U.S.C. §1-16, and to the fullest extent permitted by law, by final, binding and confidential arbitration conducted in San Diego, California by JAMS, Inc. (“JAMS”) or its successors, under JAMS’ then applicable rules and procedures for employment disputes (which can be found at http://www.jamsadr.com/rules-clauses/, and which will be provided to Executive on request); provided that the arbitrator shall: (a) 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 (b) issue a written arbitration decision including the arbitrator’s essential findings and conclusions and a statement of the award. Executive and the Company shall be entitled to all rights and remedies that either would be entitled to pursue in a court of law. Both Executive and the Company acknowledge that by agreeing to this arbitration procedure, they waive the right to resolve any such dispute through a trial by jury or judge or administrative proceeding . The Company shall pay all filing fees in excess of those which would be required if the dispute were decided in a court of law, and shall pay the arbitrator’s fee. Nothing in this Agreement is intended to prevent either the Company or Executive from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such arbitration.

9. Indemnification Agreement. Executive shall be entitled to enter into the standard form of Indemnification Agreement maintained by the Company for its directors and executive officers.

10. General Provisions.

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

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

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

10.4 Complete Agreement. This Agreement and the Severance Agreement, together with the Proprietary Information Agreement, constitutes the entire agreement between Executive and the Company with regard to the subject matter hereof and is the complete, final, and exclusive embodiment of the Company’s and Executive’s agreement with regard to this subject matter. This Agreement is entered into without reliance on any promise or representation, written or oral, other than those expressly contained herein, and it supersedes and replaces any other agreements or promises made to Executive by anyone concerning Executive’s employment terms, compensation or benefits, whether oral or written (including but not limited any agreements or promises with or from the Company or any of its affiliates or predecessors). Notwithstanding the foregoing, the Company and Executive agree that (i) the provisions in this Agreement and the Severance Agreement that relate to Executive’s stock options or other equity awards issued by the Company shall govern such options and equity awards (whether such options or equity awards are granted before, concurrently or after the date of this Agreement) and shall supersede the terms of the applicable grant documents governing such options or equity awards, to the extent this Agreement or the Severance Agreement provides a greater benefit to Executive and otherwise does not result in adverse tax consequences to Executive or the Company under Section 409A (as defined in Section 11 below), and (ii) any dispute or controversy arising under Executive’s stock options or other equity awards issued by the Company shall be subject to the Dispute Resolution provisions in Section 8 hereof and not the interpretation provisions of the plan or grant. This Agreement cannot be modified or amended except in a writing signed by a duly authorized officer of the Company, with the exception of those changes expressly reserved to the Company’s discretion in this Agreement.

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

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

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

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

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

11. Code Section 409A . This Agreement is intended to be interpreted and applied so that the payment of the benefits set forth herein shall be exempt from the requirements of Section 409A of the Internal Revenue Code of 1986, as amended and the regulations and other guidance thereunder and any state law of similar effect (collectively “ Section 409A ”) to the maximum extent that such exemption if available and any ambiguities shall be interpreted accordingly; provided, however , that to the extent such exemption is not available, such benefits shall comply with the requirements of Section 409A to the extent necessary to avoid adverse personal tax consequences and any ambiguities herein shall be interpreted accordingly. Notwithstanding any provision in this Agreement or elsewhere to the contrary, if Executive is a “specified employee” within the meaning of Section 409A, any payments or benefits due upon a termination of Executive’s employment under any arrangement that constitutes a “deferral of compensation” within the meaning of Section 409A and which do not otherwise qualify under the exemptions under Treas. Regs. Section 1.409A-1 (including without limitation, the short-term deferral exemption and the permitted payments under Treas. Regs. Section 1.409A-1(b)(9)(iii)(A)), shall be delayed and paid or provided on the earlier of (i) the date which is six (6) months and one (1) day after Executive’s “ separation from service ”, as such term is defined in Treasury Regulations Section 1.409A-1(h) (“ Separation from Service ”) for any reason other than death, and (ii) the date of Executive’s death. Notwithstanding anything in this Agreement, or elsewhere to the contrary, distributions upon termination of Executive’s employment may only be made upon Executive’s Separation from Service and such date shall be the termination date for purposes of receiving severance benefits under this Agreement, unless such amounts may be provided to Executive without causing adverse tax consequences. Each payment

under this Agreement or otherwise shall be treated as a separate and distinct payment for purposes of Section 409A. In no event may Executive, directly or indirectly, designate the calendar year of any payment to be made under this Agreement, or otherwise which constitutes a “deferral of compensation” within the meaning of Section 409A.

All reimbursements and in-kind benefits provided under this Agreement shall be made or provided in accordance with the requirements of Section 409A. To the extent that any reimbursements pursuant to this Agreement or otherwise are taxable to Executive, any reimbursement payment due to Executive shall be paid to Executive on or before the last day of Executive’s taxable year following the taxable year in which the related expense was incurred; provided, that, Executive has provided the Company written documentation of such expenses in a timely fashion and such expenses otherwise satisfy the Company’s expense reimbursement policies. Reimbursements pursuant to this Agreement or otherwise are not subject to liquidation or exchange for another benefit and the amount of such reimbursements that Executive receives in one taxable year shall not affect the amount of such reimbursements that he receives in any other taxable year.

IN WITNESS WHEREOF , this Agreement shall be effective as of the Effective Date.



ARENA PHARMACEUTICALS, INC.

By:	/s/Harry Hixson
Name:	Harry F. Hixson, Jr., Ph.D.
Title:	Interim Chief Executive Officer and President

EXECUTIVE

/s/Amit Munshi

Amit D. Munshi

Execution Version

Exhibit A

ARENA PHARMACEUTICALS, INC.

SEVERANCE AGREEMENT

This Severance Agreement (this “ Severance Agreement ” ), is made and entered into as of May ___, 2016, by and between Amit D. Munshi ( “ Executive ” ) and Arena Pharmaceuticals, Inc. (the “ Company ” ).

WHEREAS, upon his commencement of employment with the Company, Executive shall have important management responsibilities and talents which benefit the Company and its affiliates; and

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

WHEREAS, the Board has approved and authorized this Severance Agreement to become effective as of the later of (i) commencement of Executive’s employment with the Company and (ii) the date set forth above (the “ Effective Date ”).

NOW, THEREFORE, the Company and Executive hereby agree as follows:

Section 1. DEFINED TERMS.

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

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

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

(c) “Bonus Amount” means, with respect to Executive, one-twelfth (1/12 ^th ) of the greater of (i) the average of the three (3) annual bonuses paid to Executive by the Company prior to the date of Executive’s Covered Termination, and (ii) the bonus paid to Executive by the Company with respect to the last annual bonus period ending prior to the date of Executive’s Covered Termination. Executive’s target bonus in place in effect immediately prior to the Covered Termination, ignoring any reduction which forms the basis for Executive’s termination for Good Reason, if applicable, shall be used for purposes of calculating the average described in (i) above for any year in which (x) Executive was not employed with the Company, or (y) Executive was employed by the Company for less than a full year.

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

(1) Executive’s willful and continued failure to substantially perform his duties with the Company (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to Executive by the Board which specifically identifies the manner in which the Board believes that Executive has not substantially performed his duties. For a termination of employment to be for Cause pursuant to this subsection (1)(d)(1), Executive must (a) receive a written notice which indicates in reasonable detail the facts and circumstances claimed to provide a basis for the termination of his employment for Cause; and (b) be provided with an opportunity to be heard no earlier than 30 days following the receipt of such notice (during which notice period Executive has the opportunity to cure and has failed to cure or resolve the behavior in question).

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

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

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

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

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

purchaser or lessee of the Company’s assets; or (C) both the surviving corporation and the purchaser or lessee in the event of any combination of Transactions, in each case in substantially the same proportions as their ownership of the outstanding voting securities of the Company immediately prior to such Transaction; or

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

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

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

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

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

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

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

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

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

(3) Executive’s duties, authorities or responsibilities are materially diminished (except for Executive ceasing to serve as the Company’s principal financial officer);

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

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

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

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

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

Section 2. ELIGIBILITY FOR BENEFITS.

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

Section 3. AMOUNT OF BENEFIT.

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

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

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

(2) COBRA Benefits. If Executive timely elects to continue coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ( “COBRA” ), then the Company will directly pay to Executive a fully taxable monthly cash payment equal to the amount of Executive’s monthly COBRA group health insurance premium until the earliest of (A) the end of the Severance Period or (B) the expiration of Executive’s eligibility for the continuation coverage under COBRA. For purposes of this Section, references to COBRA premiums shall not include any amounts payable by Executive under a Code Section 125 health care reimbursement plan. The foregoing taxable payment shall be paid in monthly installments on the same schedule that the COBRA premiums would otherwise have been paid, and shall be paid until the earlier of (i) expiration of the Severance Period or (ii) the date Executive is no longer enrolled in such COBRA coverage.

respect to vesting) any stock awards for which the vesting thereof is conditioned upon the satisfaction of performance criteria ( “Performance-Related Awards” ), including any such grants under the Company’s Performance Restricted Stock Unit Grant Agreement. For the avoidance of doubt, Performance-Related Awards do not include any stock awards or portions thereof (including stock options) for which the vesting thereof is conditioned solely upon Executive’s continued service over a specified time period ( i.e., time-based vesting).

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

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

Section 4. LIMITATIONS ON BENEFITS.

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

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

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

(d) Parachute Payments. If any payment or benefit Executive would receive in connection with a change in control from the Company or otherwise (a “ Payment ”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “ Excise Tax ”), then such Payment shall be equal to the Reduced Amount. The “ Reduced Amount ” shall be either (x) the largest portion of the Payment that would result in no portion of the Payment being subject to the Excise Tax or (y) the largest portion of the Payment, up to and including the total Payment, whichever amount, after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in Executive’s receipt, on an after-tax basis, of the greater amount of the Payment notwithstanding that all or some portion of the Payment may be subject to the Excise Tax. If a reduction in payments or benefits constituting “parachute payments” is necessary so that the Payment equals the Reduced Amount, reduction shall occur in the following order: reduction of cash payments; cancellation of accelerated vesting of stock awards; reduction of employee benefits. If acceleration of vesting of stock award compensation is to be reduced, such acceleration of vesting shall be cancelled first with respect to stock awards (including stock options) that are not subject to Treas. Reg. 280G‑1 Q&A 24(c) and next for stock awards (including stock options) subject to Treas. Reg. 280G‑1 Q&A 24(c) and in both cases starting from the last vesting tranche. Notwithstanding the foregoing, to the extent that it is permitted under Sections 409A, 280G and 4999 of the Code, Executive may designate a different order of reduction in payments or benefits constituting “parachute payments”.

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

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

Section 5. RIGHT TO INTERPRET; AMENDMENT AND TERMINATION.

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

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

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

(d) Section 409A. This Severance Agreement is intended to be interpreted and applied so that the payment of the benefits set forth herein shall be exempt from the requirements of Section 409A (including but not limited to the exemption provided under Treasury Regulations Sections 1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A‑1(b)(9)) to the maximum extent that such exemption if available and any ambiguities shall be interpreted accordingly; provided, however , that to the extent such exemption is not available, such benefits shall comply with the requirements of Section 409A to the extent necessary to avoid adverse personal tax consequences and any ambiguities herein shall be interpreted accordingly. Each payment under this Severance Agreement shall be treated as a separate and distinct payment for purposes of Section 409A.

Notwithstanding any provision in this Severance Agreement or elsewhere to the contrary, if Executive is a “specified employee” within the meaning of Section 409A, any payments or benefits due upon a termination or resignation of Executive’s employment under this Severance Agreement that constitute a “deferral of compensation” within the meaning of Section 409A and which do not otherwise qualify under the exemptions under Treas. Regs. Section 1.409A-1 (including without limitation, the short-term deferral exemption and the permitted payments under Treas. Regs. Section 1.409A-1(b)(9)(iii)(A)), shall be delayed and paid or provided on the earlier of (i) the date which is six (6) months and one (1) day after Executive’s “ separation from service ”, as such term is defined in Treasury Regulations Section 1.409A-1(h) (“ Separation from Service ”) for any reason other than death, and (ii) the date of Executive’s death (such applicable earlier date, the “ Delayed Initial Payment Date ”). Notwithstanding anything in this Severance Agreement, or elsewhere to the contrary, distributions under this Severance Agreement upon termination of Executive’s employment may only be made upon Executive’s Separation from Service and such date shall be considered the termination date for purposes of receiving severance benefits under this Severance Agreement, unless such amounts may be provided to Executive without causing adverse tax consequences.

any payments or benefits provided under this Severance Agreement constitute “deferred compensation” under Section 409A, and Executive’s Separation from Service occurs at a time during the calendar year when the general waiver and release described in Section 2 of this Severance Agreement could become effective in the calendar year following the calendar year in which Executive’s Separation from Service occurs, then regardless of when such general waiver and release is returned to the Company and becomes effective, such general waiver and release will not be deemed effective (solely for purposes of timing of severance payments) any earlier than the first day of the second calendar year.

Section 6. NO IMPLIED EMPLOYMENT CONTRACT.

This Severance Agreement shall not be deemed (i) to give Executive any right to be retained in the employ or service of the Company or (ii) to interfere with the right of the Company to discharge any employee or other person at any time and for any reason, which right is hereby reserved. The Company and Executive acknowledge that Executive’s employment relationship is at-will and either Executive or the Company may terminate the employment relationship at any time, with or without Cause or advance notice.

Section 7. GENERAL PROVISIONS .

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

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

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

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

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

(f) Successors and Assigns. This Severance Agreement is intended to bind and inure to the benefit of and be enforceable by Executive and the Company, and their respective

successors, assigns, heirs, executors and administrators, except that (a) Executive may not assign any of Executive’s duties hereunder and Executive may not assign any of Executive’s rights hereunder without the written consent of the Company, which shall not be withheld unreasonably and (b) the Company may not assign its rights and obligations hereunder except to a successor to all or substantially all of its assets or business who assumes in writing the obligations of this Severance Agreement.

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

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

10.

IN WITNESS WHEREOF , this Severance Agreement shall be effective as of the Effective Date.



ARENA PHARMACEUTICALS, INC.

By:
Name:
Title:

EXECUTIVE

Amit D. Munshi

11.

EXHIBIT A

RELEASE AGREEMENT

I understand and agree completely to the terms set forth in the Severance Agreement between Arena Pharmaceuticals, Inc. (the “Company”) and me dated May 6, 2016 (the “ Severance Agreement ”). I understand that this release and waiver (the “ Release ”), together with the Severance Agreement, constitutes the complete, final and exclusive embodiment of the entire agreement between the Company and me with regard to the subject matter hereof. I am not relying on any promise or representation by the Company that is not expressly stated herein or in the Severance Agreement.

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

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

If I am over the age of 40 years at the time of an Covered Termination (as that term is defined in the Severance Agreement), I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have under the ADEA. I further acknowledge that I have been advised by this writing, as required by the ADEA, that: (A) my waiver and release do not apply to any

12.

rights or claims that may arise on or after the date I execute this Release; (B) I should consult with an attorney prior to executing this Release; (C) I have twenty-one (21) days (or such greater time as may be required by law) to consider this Release (although I may choose to voluntarily execute this Release earlier); (D) I have seven (7) days following my execution of this Release to revoke the Release; and (E) this Release shall not be effective until the date upon which the revocation period has expired, which shall be the eighth (8 ^th ) day after I execute this Release.

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

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

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

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

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

EXECUTIVE

____________________________________

Print Name: __________________________

Date: _______________________________

13.

Exhibit 10.2

Execution Version

ARENA PHARMACEUTICALS, INC.

SEVERANCE AGREEMENT

This Severance Agreement (this “ Severance Agreement ” ), is made and entered into as of May 6, 2016, by and between Amit D. Munshi ( “ Executive ” ) and Arena Pharmaceuticals, Inc. (the “ Company ” ).

WHEREAS, upon his commencement of employment with the Company, Executive shall have important management responsibilities and talents which benefit the Company and its affiliates; and

NOW, THEREFORE, the Company and Executive hereby agree as follows:

Section 1. DEFINED TERMS.

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

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

Company with respect to the last annual bonus period ending prior to the date of Executive’s Covered Termination. Executive’s target bonus in place in effect immediately prior to the Covered Termination, ignoring any reduction which forms the basis for Executive’s termination for Good Reason, if applicable, shall be used for purposes of calculating the average described in (i) above for any year in which (x) Executive was not employed with the Company, or (y) Executive was employed by the Company for less than a full year.

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

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

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

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

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

proportions as their ownership of the outstanding voting securities of the Company immediately prior to such Transaction; or

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

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

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

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

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

(3) Executive’s duties, authorities or responsibilities are materially diminished (except for Executive ceasing to serve as the Company’s principal financial officer);

(4) a material breach of the Employment Agreement, including failure of the Company to obtain a satisfactory agreement from any assignee of assets of the Company to

assume and agree to perform the terms of this Severance Agreement and the Employment Agreement; or

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

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

Section 2. ELIGIBILITY FOR BENEFITS.

Section 3. AMOUNT OF BENEFIT.

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

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

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

Section 4. LIMITATIONS ON BENEFITS.

Section 5. RIGHT TO INTERPRET; AMENDMENT AND TERMINATION.

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

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

Section 6. NO IMPLIED EMPLOYMENT CONTRACT.

Section 7. GENERAL PROVISIONS .

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

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

(g) Tax Withholding. All payments contemplated or made pursuant to this Severance Agreement will be subject to withholdings of applicable taxes in compliance with all

relevant laws and regulations of all appropriate government authorities. Executive acknowledges and agrees that the Company has neither made any assurances nor any guarantees concerning the tax treatment of any payments contemplated by or made pursuant to this Severance Agreement. Executive has had the opportunity to retain a tax and financial advisor and fully understands the tax and economic consequences of all payments made pursuant to this Severance Agreement.

10.

IN WITNESS WHEREOF , this Severance Agreement shall be effective as of the Effective Date.



ARENA PHARMACEUTICALS, INC.

By:	/s/Harry Hixson
Name:	Harry F. Hixson, Jr., Ph.D.
Title:	Interim Chief Executive Officer and President

EXECUTIVE

/s/Amit Munshi

Amit D. Munshi

11.

EXHIBIT A

RELEASE AGREEMENT

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

12.

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

EXECUTIVE

____________________________________

Print Name: __________________________

Date: ________________________________

13.

Exhibit 10.3

AMENDMENT TO AMENDED AND RESTATED TERMINATION PROTECTION AGREEMENT

This Amendment (the “ Amendment ”) to the Amended and Restated Termination Protection Agreement between Arena Pharmaceuticals, Inc. (the “ Company ”) and [NAME] (the “ Executive ”) dated December 30, 2008 (the “ Agreement ”), is entered into and effective as of the 9th day of May, 2016.

WHEREAS , Company and Executive desire to amend the Agreement as set forth below;

NOW THEREFORE , in consideration of the foregoing premises and the covenants and promises contained in the Agreement as amended hereby, the Company and Executive, intending to be bound, hereby agree that the following sections of the Agreement shall be amended as follows:


1.	The third sentence of the first paragraph of Section 3 is hereby amended and restated in its entirety as follows:

“If Executive’s employment is terminated within one (1) year prior to a Change in Control, and Executive reasonably demonstrates after such Change in Control that such termination was at the request or suggestion of any individual or entity who or which ultimately effects a Change in Control or by the Board in contemplation of a Change in Control (an “Anticipatory Termination”), this Agreement shall become effective upon such Change in Control involving such individual or entity, and Executive’s Termination Date shall be deemed to have occurred immediately following the Change in Control, and therefore Executive shall be entitled to the benefits provided hereafter in this Section 3 and as otherwise set forth in this Agreement.”


2.	Section 3(b) is hereby amended and restated in its entirety as follows:

“COBRA Benefits . If Executive timely elects to continue coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ( “ COBRA ” ), then the Company will directly pay all COBRA group health insurance premiums for Executive until the earliest of (A) the second anniversary of the Termination Date or (B) the expiration of Executive’s eligibility for the continuation coverage under COBRA (the “Benefit Period”). For purposes of this Section, references to COBRA premiums shall not include any amounts payable by Executive under a Code Section 125 health care reimbursement plan. 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 under applicable law (including, without limitation, Section 2716 of the Public Health Service Act), then regardless of whether Executive elects continued health coverage under COBRA, and in lieu of providing the COBRA premiums, the Company will instead

pay Executive on the last day of each remaining month of the Benefit Period, a fully taxable cash payment equal to 140% of (x) the value of Executive’s last monthly group health insurance premiums immediately prior to the Termination Date or (y) the value of Executive’s 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 “Benefit Payment”). The 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 Benefit Period or (ii) the date Executive is no longer enrolled in such COBRA coverage.”


3.	Section 3(c) is hereby amended and restated in its entirety as follows:

“Notwithstanding any provision to the contrary in a Company equity compensation plan (an “Equity Plan”) or any award agreement under an Equity Plan, (i) any outstanding, unexercisable stock options, unvested restricted shares or other unvested stock awards shall become fully exercisable (as applicable) and vested as of the Termination Date and (ii) any stock options shall remain exercisable until the first anniversary of the Termination Date; provided , however , that (x) in no event shall any stock option continue to be exercisable after the expiration of the original contractual life of any such option; (y) this section shall not restrict the Company’s ability to adjust the number of shares subject to such stock options or other stock awards pursuant to Section 12.2 of the Company’s 2013 Long-Term Incentive Plan (or any successor provision under such plan or any similar provision in any other Equity Plan, whether adopted before or after the Company’s 2013 Long-Term Incentive Plan) or to require that equity award holders surrender their stock option or other stock award pursuant to Section 11 of the Company’s 2013 Long-Term Incentive Plan (or any successor provision under such plan or any similar provision in any other Equity Plan, whether adopted before or after the Company’s 2013 Long-Term Incentive Plan), so long as, in any such adjustment or surrender, Executive is treated no less favorably than any other employee of the Company; and (z) this section shall not apply to (including with respect to vesting) any stock awards for which the vesting thereof is conditioned upon the satisfaction of performance criteria ( “ Performance-Related Awards ” ), including any such grants under the Company’s Performance Restricted Stock Unit Grant Agreement. For the avoidance of doubt, Performance-Related Awards do not include any stock awards or portions thereof (including stock options) for which the vesting thereof is conditioned solely upon Executive’s continued service over a specified time period ( i.e., time-based vesting).”


4.	Schedule A “Certain Definitions” is hereby amended as follows:


•	The definition of “Annual Compensation” is amended to add the following sentence to the end of such definition: “Annual Compensation shall ignore any

reduction made to Executive’s annual rate of base salary which forms the basis for Executive’s termination for Good Reason.”

•

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


5.	The second paragraph of the Release Agreement contained as Exhibit A is hereby amended and restated in its entirety as follows:

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

All other terms and conditions of the Agreement shall remain unchanged and in full force and effect. All capitalized terms not defined herein shall have the same meaning given to such terms in the Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their authorized representatives effective as of the date set forth above.



ARENA PHARMACEUTICALS, INC.	[NAME]


By:	By:
Name:	Name:	[Name]
Title:

Exhibit 10.4

ARENA PHARMACEUTICALS, INC.

AMENDED AND RESTATED SEVERANCE BENEFIT PLAN

Section 1. INTRODUCTION.

The Arena Pharmaceuticals, Inc. Severance Benefit Plan , originally effective on January 20, 2006 (the “ Effective Date ”), as amended and restated on December 30, 2008 and further amended on February 10, 2012 and October 4, 2013, is hereby amended and restated on May 9, 2016 (as amended, the “ Plan ”). The purpose of the Plan is to provide severance benefits to certain eligible employees of the Company and its subsidiaries upon selected terminations of service. This Plan document is also the Summary Plan Description for the Plan.

Section 1. DEFINITIONS.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Section 2. ELIGIBILITY FOR BENEFITS.

Subject to the requirements set forth in this Section, the Company shall provide severance benefits under the Plan to the Participants. In order to be eligible to receive benefits under the Plan, a Participant must (i) experience a Covered Termination (ii) execute a general waiver and release in substantially the form attached hereto as Exhibit B within the applicable time period set forth therein, but in no event later than sixty (60) days following termination of the Participant’s employment, and provided that such release becomes effective, and (iii) return all Company-owned property to the Company as instructed by the Company. The Company shall provide the form of such release to the Participant on, or within a reasonable time after, the termination of the Participant’s employment. The Company, in its sole discretion, may at any time modify the forms of the required release to effect a release of claims consistent with this Section 3. In the event that a Participant’s employment is terminated as a result of such Participant’s death or Disability, then such Participant shall not be entitled to the benefits provided in this Plan.

Section 3. AMOUNT OF BENEFIT.

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

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

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

Participant’s Base Salary and Bonus Amount multiplied by the number of months in the Participant’s Severance Period.

(2) COBRA Benefits. If such Participant timely elects to continue coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ( “COBRA” ), then the Company will directly pay all COBRA group health insurance premiums for Participant until the earliest of (A) the end of the Severance Period or (B) the expiration of Participant’s eligibility for the continuation coverage under COBRA. For purposes of this Section, references to COBRA premiums shall not include any amounts payable by Participant under a Code Section 125 health care reimbursement plan. Notwithstanding the foregoing, if at any time the Plan Administrator determines, in its sole discretion, that it cannot pay the COBRA premiums without potentially incurring financial costs or penalties under applicable law (including, without limitation, Section 2716 of the Public Health Service Act), then regardless of whether Participant elects continued health coverage under COBRA, and in lieu of providing the COBRA premiums, the Company will instead pay Participant on the last day of each remaining month of the Severance Period, a fully taxable cash payment equal to 140% of (x) the value of Participant’s last monthly group health insurance premiums immediately prior to the Covered Termination or (y) the value of Participant’s last monthly COBRA premiums paid by the Company, as applicable (dependent on the time the Plan Administrator 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 Severance Period or (ii) the date Participant is no longer enrolled in such COBRA coverage.

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

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

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

Section 4. LIMITATIONS ON BENEFITS.

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

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

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

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

(e) Parachute Payments. If any payment or benefit a Participant would receive in connection with a change in control from the Company or otherwise (a “ Payment ”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “ Excise Tax ”), then such Payment shall be equal to the Reduced Amount. The “ Reduced Amount ” shall be either (x) the largest portion of the Payment that would result in no portion of the Payment being subject to the Excise Tax or (y) the largest portion of the Payment, up to and including the total Payment, whichever amount, after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in the Participant’s receipt, on an after-tax basis, of the greater amount of the Payment notwithstanding that all or some portion of the Payment may be subject to the Excise Tax. If a reduction in payments or benefits constituting “parachute payments” is necessary so that the Payment equals the Reduced Amount, reduction shall occur in the following order: reduction of cash payments; cancellation of accelerated vesting of stock awards; reduction of employee benefits. If acceleration of vesting of stock award compensation is to be reduced, such acceleration of vesting shall be cancelled in the reverse order of the date of grant of the Participant’s stock awards. Notwithstanding the foregoing, to the extent that it is permitted under Sections 409A, 280G and 4999 of the Code, the Participant may designate a different order of reduction in payments or benefits constituting “parachute payments”.

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

Section 5. RIGHT TO INTERPRET PLAN; AMENDMENT AND TERMINATION.

(a) Exclusive Discretion. The Plan Administrator shall have the exclusive discretion and authority to establish rules, forms, and procedures for the administration of the Plan and to construe and interpret the Plan and to decide any and all questions of fact, interpretation,

definition, computation or administration arising in connection with the operation of the Plan, including, but not limited to, the eligibility to participate in the Plan and amount of benefits paid under the Plan. The rules, interpretations, computations and other actions of the Plan Administrator shall be binding and conclusive on all persons. Unless otherwise determined by the Board, the General Counsel of the Company shall perform the duties of the Plan Administrator under this Plan.

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

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

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

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

Section 6. CONTINUATION OF CERTAIN EMPLOYEE BENEFITS.

(a) COBRA Continuation. Each Participant who is enrolled in a group medical, dental or vision plan sponsored by the Company or an affiliate of the Company may be eligible to continue coverage under such group medical, dental or vision plan (or to convert to an individual policy), at the time of the Participant’s termination of employment under COBRA. The Company

will notify the Participant of any such right to continue group medical coverage at the time of termination. No provision of this Plan will affect the continuation coverage rules under COBRA. Therefore, the period during which a Participant may elect to continue the Company’s group medical, dental or vision coverage at his or her own expense under COBRA, the length of time during which COBRA coverage will be made available to the Participant, and all other rights and obligations of the Participant under COBRA will be applied in the same manner that such rules would apply in the absence of this Plan. At the conclusion of the payments made by the Company pursuant to Section 4 herein, if any, the Participant will be responsible for the entire payment of premiums required under COBRA for the duration, if any, of the COBRA period.

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

Section 7. NO IMPLIED EMPLOYMENT CONTRACT.

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

Section 8. LEGAL CONSTRUCTION.

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

Section 9. CLAIMS, INQUIRIES AND APPEALS.

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

Arena Pharmaceuticals, Inc.

6154 Nancy Ridge Drive

San Diego, CA 92121

Attn: General Counsel

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

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

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

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

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

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

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

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

Arena Pharmaceuticals, Inc.

6154 Nancy Ridge Drive

San Diego, CA 92121

Attn: General Counsel

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

10.

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

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

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

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

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

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

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

Section 10. BASIS OF PAYMENTS TO AND FROM PLAN.

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

11.

Section 11. OTHER PLAN INFORMATION.

(a) Employer and Plan Identification Numbers. The Employer Identification Number assigned to the Company (which is the “Plan Sponsor” as that term is used in ERISA) by the Internal Revenue Service is 23-2908305. The Plan Number assigned to the Plan by the Plan Sponsor pursuant to the instructions of the Internal Revenue Service is 501.

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

(c) Agent for the Service of Legal Process. The agent for the service of legal process with respect to the Plan is Arena Pharmaceuticals, Inc., Attn: General Counsel, 6154 Nancy Ridge Drive, San Diego, CA 92121.

(d) Plan Sponsor and Administrator. The “ Plan Sponsor ” and the “ Plan Administrator ” of the Plan is Arena Pharmaceuticals, Inc., 6154 Nancy Ridge Drive, San Diego, CA 92121. The Plan Sponsor’s and Plan Administrator’s telephone number is (858) 453-7200. The Plan Administrator is the named fiduciary charged with the responsibility for administering the Plan.

Section 12. STATEMENT OF ERISA RIGHTS.

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

Receive Information about the Plan and Your Benefits

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

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

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

Prudent Actions by Plan Fiduciaries

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

12.

Enforce Your rights

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

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

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

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

Assistance with Your Questions

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

Section 13. EXECUTION.

To record the adoption of the Plan as amended as set forth herein, effective as of the Effective Date, Arena Pharmaceuticals, Inc. has caused its duly authorized officer to execute the same this 9th day of May, 2016.

Arena Pharmaceuticals, Inc.

/s/Harry Hixson

13.

EXHIBIT A



PARTICIPANT:	SEVERANCE PERIOD (IN MONTHS):


DOMINIC BEHAN	18

STEVEN SPECTOR	18

CRAIG AUDET	12

MAURICE MEZZINO	12

WILLIAM SHANAHAN	12

EXHIBIT B

RELEASE AGREEMENT

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

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

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

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

(D) I have seven (7) days following my execution of this Release to revoke the Release; and (E) this Release shall not be effective until the date upon which the revocation period has expired, which shall be the eighth (8 ^th ) day after I execute this Release.

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

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

EMPLOYEE

____________________________________

Print Name:__________________________

Date:________________________________

ARENA PHARMACEUTICALS, INC.

2013 LONG-TERM INCENTIVE PLAN

Arena Pharmaceuticals, Inc. (the “Company”), a Delaware corporation, hereby establishes and adopts the following 2013 Long-Term Incentive Plan (the “Plan”), as amended May 6, 2016.

1. PURPOSE OF THE PLAN

The purpose of the Plan is to assist the Company and its Affiliates in attracting and retaining employees, directors, consultants and advisors of the Company and its Affiliates who are expected to contribute to the Company’s success and achieve long-term objectives that will benefit the stockholders of the Company through the additional incentives inherent in the Awards hereunder.

2. DEFINITIONS

2.1. “ Affiliate ” shall mean, at the time of determination, any “parent” or “subsidiary” of the Company as such terms are defined in Rule 405 of the Securities Act. The Board or the Committee shall have the authority to determine the time or times at which “parent” or “subsidiary” status is determined within the foregoing definition.

2.2. “ Award ” shall mean any Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award, Performance Award or any other right, interest or option relating to Shares or other property (including cash) granted pursuant to the provisions of the Plan.

2.3. “ Award Agreement ” shall mean any written agreement, contract or other instrument or document evidencing any Award granted hereunder, including through an electronic medium.

2.4. “ Board ” shall mean the Board of Directors of the Company.

2.5. “ Cause ” shall mean, unless otherwise provided in an Award Agreement or another agreement between the Participant and the Company or an Affiliate or a plan maintained by the Company or an Affiliate in which the Participant participates, a determination by the Committee that the Participant has breached his or her employment or service contract with the Company, or has been engaged in disloyalty to the Company, including, without limitation, fraud, embezzlement, theft, commission of a felony or proven dishonesty in the course of his or her employment or service, or has disclosed trade secrets or confidential information of the Company to persons not entitled to receive such information, or has breached any written noncompetition or nonsolicitation agreement between the Participant and the Company or has engaged in such other behavior detrimental to the interests of the Company as the Committee determines in its sole discretion. Any determination of “cause” for the purposes of outstanding Awards held by such Participant shall have no effect upon any determination of the rights or obligations of the Company or such Participant for any other purpose.

2.6. “ Code ” shall mean the Internal Revenue Code of 1986, as amended from time to time.

2.7. “ Committee ” shall mean the Compensation Committee of the Board or a subcommittee thereof formed by the Compensation Committee to act as the Committee hereunder. The Committee shall consist of no fewer than two Directors, each of whom is (i) a “Non-Employee Director” within the meaning of Rule 16b-3 of the Exchange Act, (ii) an “outside director” within the meaning of Section 162(m) of the Code, and (iii) an “independent director” for purpose of the rules of the NASDAQ Stock Market (or such other principal U.S. national securities exchange on which the Shares are traded) to the extent required by such rules.

2.8. “ Consultant ” shall mean any consultant or advisor who is a natural person and who provides services to the Company or any Affiliate, so long as such person (i) renders bona fide services that are not in connection with the offer and sale of the Company’s securities in a capital‑raising transaction and (ii) does not directly or indirectly promote or maintain a market for the Company’s securities.

2.9. “ Covered Employee ” shall mean an employee of the Company or its Affiliates who is a “covered employee” within the meaning of Section 162(m) of the Code.

2.10. “ Director ” shall mean a non-employee member of the Board.

2.11. “ Dividend Equivalents ” shall have the meaning set forth in Section 12.5.

2.12. “ Employee ” shall mean any employee of the Company or any Affiliate and any prospective employee conditioned upon, and effective not earlier than, such person becoming an employee of the Company or any Affiliate.

2.13. “ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended.

2.14. “ Fair Market Value ” shall mean, with respect to Shares as of any date, (i) the per Share closing price of the Shares as reported on the NASDAQ Stock Market on that date (or if there was no reported closing price on such date, on the last preceding date on which the closing price was reported), (ii) if the Shares are not then listed on the NASDAQ Stock Market, the closing price on such other principal U.S. national securities exchange on which the Shares are listed (or if there was no reported closing price on such date, on the last preceding date on which the closing price was reported); or (iii) if the Shares are not listed on a U.S. national securities exchange, the Fair Market Value of Shares shall be determined by the Committee in its sole discretion using appropriate criteria. The Fair Market Value of any property other than Shares shall mean the market value of such property determined by such methods or procedures as shall be established from time to time by the Committee.

2.15. “Incentive Stock Option” shall mean an Option which when granted is intended to be, and qualifies as, as an incentive stock option for purposes of Section 422 of the Code.

2.16. “ Inducement Award ” means an Award, other than an Incentive Stock Option, that is granted pursuant to Section 3.3 of the Plan.

2.17. “ Inducement Shares ” shall have the meaning set forth in Section 3.3.

2.18. “ Limitations ” shall have the meaning set forth in Section 10.5.

2.19. “ Option ” shall mean any right granted to a Participant under the Plan allowing such Participant to purchase Shares at such price or prices and during such period or periods as the Committee shall determine.

2.20. “ Participant ” shall mean an Employee, Director or Consultant who is selected by the Committee to receive an Award under the Plan.

2.21. “ Payee ” shall have the meaning set forth in Section 13.1.

2.22. “ Performance Award ” shall mean any Award of Performance Cash, Performance Shares or Performance Units granted pursuant to Article 9.

2.23. “Performance Cash” shall mean any cash incentives granted pursuant to Article 9 payable to the Participant upon the achievement of such performance goals as the Committee shall establish.

2.24. “ Performance Period ” shall mean that period established by the Committee at the time any Performance Award is granted or at any time thereafter during which any performance goals specified by the Committee with respect to such Award are to be measured.

2.25. “ Performance Share ” shall mean any grant pursuant to Article 9 of a unit valued by reference to a designated number of Shares, which value may be paid to the Participant by delivery of such property as the Committee shall determine, including cash, Shares, other property, or any combination thereof, upon achievement of such performance goals during the Performance Period as the Committee shall establish.

2.26. “ Performance Unit ” shall mean any grant pursuant to Section 9 of a unit valued by reference to a designated amount of property other than Shares (or cash), which value may be paid to the Participant by delivery of such property as the Committee shall determine, including cash, Shares, other property, or any combination thereof, upon achievement of such performance goals during the Performance Period as the Committee shall establish.

2.27. “ Permitted Assignee ” shall have the meaning set forth in Section 12.3.

2.28. “ Prior Plans ” shall mean, collectively, the Company’s Amended and Restated 1998 Equity Compensation Plan, Amended and Restated 2000 Equity Compensation Plan, 2002 Equity Compensation Plan, 2006 Long-Term Incentive Plan, as amended, 2009 Long-Term Incentive Plan and 2012 Long-Term Incentive Plan. Awards granted under the Prior Plans continue to be governed under the terms of those Prior Plans.

2.29. “ Restricted Stock ” shall mean any Share issued with the restriction that the holder may not sell, transfer, pledge or assign such Share and with such other restrictions as the Committee, in its sole discretion, may impose (including any restriction on the right to vote such Share and the right to receive any dividends), which restrictions may lapse separately or in

combination at such time or times, in installments or otherwise, as the Committee may deem appropriate.

2.30. “ Restricted Stock Award ” shall have the meaning set forth in Section 7.1.

2.31. “ Restricted Stock Unit Award ” shall have the meaning set forth in Section 8.1.

2.32. “Restricted Stock Unit” means an Award that is valued by reference to a Share, which value may be paid to the Participant by delivery of cash, Shares or such other property as the Committee shall determine, which restrictions may lapse separately or in combination at such time or times, in installments or otherwise, as the Committee may deem appropriate.

2.33. “ Shares ” shall mean the shares of common stock, $0.0001 par value, of the Company.

2.34. “ Stock Appreciation Right ” shall mean the right granted to a Participant pursuant to Section 6.

2.35. “ Substitute Awards ” shall mean Awards granted or Shares issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, in each case by a company acquired by the Company or any Affiliate or with which the Company or any Affiliate combines.

2.36. “ Vesting Period ” shall mean the period of time specified by the Committee during which vesting restrictions for an Award are applicable.

3. SHARES SUBJECT TO THE PLAN

3.1 Number of Shares .

(a) Subject to adjustment as provided in Section 12.2, a total of 30 million Shares shall be authorized for Awards granted under the Plan, as increased if applicable under this Section, less one (1) Share for every one (1) Share that was subject to an option or stock appreciation right granted after December 31, 2012, under the Prior Plans and 1.25 Shares for every one (1) Share that was subject to an award other than an option or stock appreciation right granted after December 31, 2012, under the Prior Plans. Any Shares that are subject to Options or Stock Appreciation Rights shall be counted against this limit as one (1) Share for every one (1) Share granted, and any Shares that are subject to Awards other than Options or Stock Appreciation Rights shall be counted against this limit as 1.25 Shares for every one (1) Share granted. After the effective date of the Plan (as provided in Section 13.13), no awards may be granted under any Prior Plan.

(b) If (i) any Shares subject to an Award are forfeited, an Award expires or an Award is settled for cash (in whole or in part), or (ii) after December 31, 2012, any Shares subject to an award under the Prior Plans are forfeited, or an award under the Prior Plans expires or is settled for cash (in whole or in part), the Shares subject to such Award or award under the Prior Plans shall, to the extent of such forfeiture, expiration or cash settlement, again be available for Awards under the Plan, in accordance with Section 3.1(d) below. Notwithstanding anything to

the contrary contained herein, the following Shares shall not be added to the Shares authorized for grant under paragraph (a) of this Section: (i) Shares tendered by the Participant or withheld by the Company in payment of the purchase price of an Option, or to satisfy any tax withholding obligation with respect to an Option or Stock Appreciation Right, (ii) Shares subject to a Stock Appreciation Right that are not issued in connection with the stock settlement of the Stock Appreciation Right on exercise thereof, and (iii) Shares reacquired by the Company on the open market or otherwise using cash proceeds from the exercise of Options or options granted under the Prior Plans.

(c) Shares issued under Substitute Awards that qualify for an exemption from the applicable stockholder-approval requirements under NASDAQ Listing Rule 5635(c) or its successor shall not reduce the Shares authorized for grant under the Plan and shall not be subject to the applicable Limitations authorized for grant to a Participant under Section 10.5, nor shall Shares subject to a Substitute Award again be available for Awards under the Plan to the extent of any forfeiture, expiration or cash settlement as provided in paragraph (b) above.

(d) Any Shares that again become available for grant pursuant to this Section shall be added back as (i) one (1) Share if such Shares were subject to Options or Stock Appreciation Rights granted under the Plan or options or stock appreciation rights granted under the Prior Plans, and (ii) as 1.25 Shares if such Shares were subject to Awards other than Options or Stock Appreciation Rights granted under the Plan or awards other than options or stock appreciation rights granted under the Prior Plans.

3.2. Character of Shares . Any Shares issued hereunder may consist, in whole or in part, of authorized and unissued shares, treasury shares or shares purchased in the open market or otherwise.

3.3. Inducement Share Pool and Inducement Award Rules . An additional 3,800,000 Shares shall be reserved under the Plan, exclusively for the grant of Inducement Awards in compliance with NASDAQ Listing Rule 5635(c)(4) (the “Inducement Shares”). The Inducement Shares that may be awarded under this Section 3.3 shall be in addition to and shall not reduce the Shares available for issuance under Section 3.1(a) of the Plan.

The following rules and restrictions shall apply to any Inducement Award granted pursuant to the Plan:

(a) An Inducement Award may be granted only to an Employee who has not previously been an Employee or a Director of the Company or an Affiliate, except following a bona fide period of non-employment, as an inducement material to the individual’s entering into employment with the Company within the meaning of Rule 5635(c)(4) of the NASDAQ Listing Rules.

(b) No Inducement Award may be designated as an Incentive Stock Option.

(c) All such Inducement Awards must be granted by a Committee consisting of the majority of the Company’s independent directors or the Company’s Compensation Committee, in each case in accordance with NASDAQ Listing Rule 5635(c)(4).

(d) The Inducement Shares underlying any Inducement Awards shall be subject to the same share counting provisions as described in Section 3.1, except that such Inducement Shares shall count against, or shall be added back to, the reserve of Inducement Shares available for grant under this Section 3.3, and shall not count against, or be added back to, the Shares available for issuance under Section 3.1(a) of the Plan.

(e) The limits in Section 10.5 will not apply to Inducement Awards.

4. ELIGIBILITY AND ADMINISTRATION

4.1. Eligibility . Any Employee, Director or Consultant shall be eligible to be selected as a Participant.

4.2. Administration .

(a) The Plan shall be administered by the Committee. The Committee shall have full power and authority, subject to the provisions of the Plan and subject to such orders or resolutions not inconsistent with the provisions of the Plan as may from time to time be adopted by the Board, to: (i) select the Employees, Directors and Consultants to whom Awards may from time to time be granted hereunder; (ii) determine the type or types of Awards, not inconsistent with the provisions of the Plan, to be granted to each Participant hereunder; (iii) determine the number of Shares (or dollar value) to be covered by each Award granted hereunder; (iv) determine the terms and conditions, not inconsistent with the provisions of the Plan, of any Award granted hereunder (including the power to amend outstanding Awards); (v) determine whether, to what extent and under what circumstances Awards may be settled in cash, Shares or other property; (vi) determine whether, to what extent, and under what circumstances cash, Shares, other property and other amounts payable with respect to an Award made under the Plan shall be deferred either automatically or at the election of the Participant; (vii) determine whether, to what extent and under what circumstances any Award shall be canceled or suspended; (viii) interpret and administer the Plan and any instrument or agreement entered into under or in connection with the Plan, including any Award Agreement; (ix) correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award in the manner and to the extent that the Committee shall deem desirable to carry it into effect; (x) establish such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; (xi) determine whether any Award, other than an Option or Stock Appreciation Right, will have Dividend Equivalents; and (xii) make any other determination and take any other action that the Committee deems necessary or desirable for administration of the Plan.

(b) Decisions of the Committee shall be final, conclusive and binding on all persons or entities, including the Company, any Participant, and any Affiliate. A majority of the members of the Committee may determine its actions, including fixing the time and place of its meetings.

(c) To the extent not inconsistent with applicable law, including the Delaware General Corporation Law, Section 162(m) of the Code, or the rules and regulations of the NASDAQ Stock Market (or such other principal U.S. national securities exchange on which the

Shares are traded), the Committee may delegate to: (i) a committee of one or more members of the Board the authority to take action on behalf of the Committee under the Plan including the right to grant, cancel, suspend or amend Awards and (ii) one or more “executive officers” within the meaning of Rule 16a-1(f) of the Exchange Act or a committee of executive officers the right to grant Awards to Employees who are not executive officers of the Company (provided that the Committee resolutions regarding such delegation will specify the total number of Shares that may be subject to the Awards granted by such person or persons) and the authority to take action on behalf of the Committee pursuant to the Plan to cancel or suspend Awards to Employees who are not directors or executive officers of the Company.

(d) The Board in its discretion may ratify and approve actions taken by the Committee. In addition, to the extent not inconsistent with applicable law or the rules and regulations of the NASDAQ Stock Market or such other principal U.S. national securities exchange on which the Shares are traded, the Board may take any action under the Plan that the Committee is authorized to take. In the event the Board takes such action references to the Committee hereunder shall be understood to refer to the Board.

5. OPTIONS

5.1. Grant of Options . Options may be granted hereunder to Participants either alone or in addition to other Awards granted under the Plan. Any Option shall be subject to the terms and conditions of this Article and to such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall deem desirable.

5.2. Award Agreements . All Options granted pursuant to this Article shall be evidenced by a written Award Agreement in such form and containing such terms and conditions as the Committee shall determine which are not inconsistent with the provisions of the Plan. The terms of Options need not be the same with respect to each Participant. Granting an Option pursuant to the Plan shall impose no obligation on the recipient to exercise such Option. Any individual who is granted an Option pursuant to this Article may hold more than one Option granted pursuant to the Plan at the same time.

5.3. Option Price . Other than in connection with Substitute Awards, the option price per each Share purchasable under any Option granted pursuant to this Article shall not be less than 100% of the Fair Market Value of one Share on the date of grant of such Option; provided, however, that in the case of an Incentive Stock Option granted to a Participant who, at the time of the grant, owns stock representing more than 10% of the voting power of all classes of stock of the Company or any Affiliate, the option price per share shall be no less than 110% of the Fair Market Value of one Share on the date of grant. Other than pursuant to Section 12.2, the Committee shall not without the approval of the Company’s stockholders (a) lower the option price per Share of an Option after it is granted, (b) cancel an Option when the option price per Share exceeds the Fair Market Value of one Share in exchange for cash or another Award (other than in connection with a Change in Control as defined in Section 11.3 or Substitute Awards), and (c) take any other action with respect to an Option that would be treated as a repricing under the rules and regulations of the NASDAQ Stock Market (or such other principal U.S. national securities exchange on which the Shares are traded).

5.4. Option Term . The term of each Option shall be fixed by the Committee in its sole discretion; provided that no Option shall be exercisable after the expiration of seven (7) years from the date the Option is granted, except in the event of death or disability; provided, however, that the term of the Option shall not exceed five (5) years from the date the Option is granted in the case of an Incentive Stock Option granted to a Participant who, at the time of the grant, owns stock representing more than 10% of the voting power of all classes of stock of the Company or any Affiliate.

5.5. Exercise of Options .

(a) Vested Options granted under the Plan may be exercised by the Participant or by a Permitted Assignee thereof (or by the Participant’s executors, administrators, guardian or legal representative, as may be provided in an Award Agreement) as to all or part of the Shares covered thereby, by the giving of notice of exercise to the Company or its designated agent, specifying the number of Shares to be purchased. The notice of exercise shall be in such form, made in such manner, and shall comply with such other requirements consistent with the provisions of the Plan as the Committee may from time to time prescribe.

(b) Unless otherwise provided in an Award Agreement, full payment of such purchase price shall be made at the time of exercise and shall be made (i) in cash or cash equivalents (including certified check or bank check or wire transfer of immediately available funds), (ii) by tendering previously acquired Shares (either actually or by attestation), valued at their then Fair Market Value, (iii) with the consent of the Committee, by delivery of other consideration (including, where permitted by law and the Committee, other Awards) having a Fair Market Value on the exercise date equal to the total purchase price, (iv) with the consent of the Committee, by withholding Shares otherwise issuable in connection with the exercise of the Option, (v) through any other method specified in an Award Agreement (including same-day sales through a broker), or (vi) any combination of any of the foregoing. In no event may any Option granted hereunder be exercised for a fraction of a Share. No adjustment shall be made for cash dividends or other rights for which the record date is prior to the date of such issuance.

(c) Notwithstanding the foregoing, an Award Agreement may provide that if on the last day of the term of an Option the Fair Market Value of one Share exceeds the option price per Share, the Participant has not exercised the Option and the Option has not expired, the Option shall be deemed to have been exercised by the Participant on such day with payment made by withholding Shares otherwise issuable in connection with the exercise of the Option. In such event, the Company shall deliver to the Participant the number of Shares for which the Option was deemed exercised, less the number of Shares required to be withheld for the payment of the total purchase price and required withholding taxes; provided, however, any fractional Share shall be settled in cash.

(d) No Option granted to an Employee who is a non-exempt employee for purposes of the Fair Labor Standards Act of 1938, as amended, shall be first exercisable for any Shares until at least six months following the date of grant of the Option. Notwithstanding the foregoing, consistent with the provisions of the Worker Economic Opportunity Act, (i) in the event of the Employee’s death or disability, (ii) upon a corporate transaction in which such Option is not assumed, continued, or substituted, (iii) upon a Change in Control, or (iv) upon the

Employee’s retirement (as such term may be defined in the Employee’s Award Agreement or in another applicable agreement or in accordance with the Company’s then current employment policies and guidelines), any such vested Options may be exercised earlier than six months following the date of grant. The foregoing provision is intended to operate so that any income derived by a non-exempt employee in connection with the exercise or vesting of an Option will be exempt from his or her regular rate of pay.

5.6. Form of Settlement . In its sole discretion, the Committee may provide in the form of Award Agreement that the Shares to be issued upon an Option’s exercise shall be in the form of Restricted Stock or other similar securities.

5.7. Incentive Stock Options . The Committee may grant Options intended to qualify as “incentive stock options” as defined in Section 422 of the Code, to any employee of the Company or any Affiliate, subject to the requirements of Section 422 of the Code. Notwithstanding anything in Section 3.1 to the contrary and solely for the purposes of determining whether Shares are available for the grant of “incentive stock options” under the Plan, the maximum aggregate number of Shares that may be issued pursuant to “incentive stock options” granted under the Plan shall be 30 million Shares, subject to adjustment as provided in Section 12.2.

5.8. Extension of Termination Date. Unless otherwise provided in a Participant’s Award Agreement and in the sole determination of the Committee, if the sale of any Common Stock received on exercise of an Option following the termination of the Participant’s employment by or services to the Company (other than for Cause) would be prohibited at any time solely because the issuance of Shares would violate (i) the registration requirements under the Securities Act, (ii) the Company’s insider trading policy, or (iii) a “lock-up” agreement undertaken in connection with an issuance of securities by the Company, then the Option will terminate on the earlier of (a) the expiration of a total period of 90 days (that need not be consecutive) after the termination of the Participant’s employment by or services to the Company during which the exercise of the Option would not be in violation of any of such registration requirement, insider trading policy or lock-up agreement, and (b) the expiration of the term of the Option as set forth in the applicable Award Agreement.

6. STOCK APPRECIATION RIGHTS

6.1. Grant and Exercise . The Committee may provide Stock Appreciation Rights (a) in conjunction with all or part of any Option granted under the Plan or at any subsequent time during the term of such Option, (b) in conjunction with all or part of any Award (other than an Option) granted under the Plan or at any subsequent time during the term of such Award, or (c) without regard to any Option or other Award, in each case upon such terms and conditions as the Committee may establish in its sole discretion.

6.2. Terms and Conditions . Stock Appreciation Rights shall be subject to such terms and conditions, not inconsistent with the provisions of the Plan, as shall be determined from time to time by the Committee, including the following:

(a) Upon the exercise of a Stock Appreciation Right, the holder shall have the right to receive the excess of (i) the Fair Market Value of one Share on the date of exercise (or such amount less than such Fair Market Value as the Committee shall so determine at any time during a specified period before the date of exercise) over (ii) the grant price of the Stock Appreciation Right.

(b) Upon the exercise of a Stock Appreciation Right, the Committee shall determine in its sole discretion whether payment shall be made in cash, in whole Shares or other property, or any combination thereof.

(d) The Committee may impose such other conditions on the exercise of any Stock Appreciation Right, as it shall deem appropriate. A Stock Appreciation Right shall have (i) a grant price per Share of not less than the Fair Market Value of one Share (x) on the date of grant or (y) if applicable, on the date of grant of an Option with respect to a Stock Appreciation Right granted in exchange for or in tandem with, but subsequent to, the Option (subject to the requirements of Section 409A of the Code with respect to a Stock Appreciation Right granted in exchange for or in conjunction with, but subsequent to, an Option), except in the case of Substitute Awards or in connection with an adjustment provided in Section 12.2, and (ii) a term not greater than seven (7) years. In addition to the foregoing, but subject to Section 12.2, the Committee shall not without the approval of the Company’s stockholders (x) lower the grant price per Share of any Stock Appreciation Right after it is granted, (y) cancel any Stock Appreciation Right when the grant price per Share exceeds the Fair Market Value of the underlying Shares in exchange for cash or another Award (other than in connection with a Change in Control as defined in Section 11.3 or Substitute Awards), and (z) take any other action with respect to any Stock Appreciation Right that would be treated as a repricing under the rules and regulations of the NASDAQ Stock Market (or such other principal U.S. national securities exchange on which the Shares are traded).

(e) In no event may any Stock Appreciation Right granted hereunder be exercised for a fraction of a Share. No adjustment shall be made for cash dividends or other rights for which the record date is prior to the date of such issuance.

(f) An Award Agreement may provide that if on the last day of the term of a Stock Appreciation Right the Fair Market Value of one Share exceeds the grant price per Share of the Stock Appreciation Right, the Participant has not exercised the Stock Appreciation Right or the tandem Option (if applicable), and neither the Stock Appreciation Right nor the Option has expired, the Stock Appreciation Right shall be deemed to have been exercised by the Participant on such day. In such event, the Company shall make payment to the Participant in accordance with this Section, reduced by the number of Shares (or cash) required for withholding taxes; any fractional Share shall be settled in cash.

(g) No Stock Appreciation Right granted to an Employee who is a non-exempt employee for purposes of the Fair Labor Standards Act of 1938, as amended, shall be first exercisable for any Shares until at least six months following the date of grant of the Stock

Appreciation Right. Notwithstanding the foregoing, consistent with the provisions of the Worker Economic Opportunity Act, (i) in the event of the Employee’s death or disability, (ii) upon a corporate transaction in which such Stock Appreciation Right is not assumed, continued, or substituted, (iii) upon a Change in Control, or (iv) upon the Employee’s retirement (as such term may be defined in the Employee’s Award Agreement or in another applicable agreement or in accordance with the Company’s then current employment policies and guidelines), any such vested Stock Appreciation Rights may be exercised earlier than six months following the date of grant. The foregoing provision is intended to operate so that any income derived by a non-exempt employee in connection with the exercise or vesting of a Stock Appreciation Right will be exempt from his or her regular rate of pay.

(h) Extension of Termination Date . Unless otherwise provided in a Participant’s Award Agreement and in the sole determination of the Committee, if the sale of any Common Stock received on exercise of a Stock Appreciation Right following the termination of the Participant’s employment by or services to the Company (other than for Cause) would be prohibited at any time solely because the issuance of Shares would violate (i) the registration requirements under the Securities Act, (ii) the Company’s insider trading policy, or (iii) a “lock-up” agreement undertaken in connection with an issuance of securities by the Company, then the Stock Appreciation Right will terminate on the earlier of (a) the expiration of a total period of 90 days (that need not be consecutive) after the termination of the Participant’s employment by or services to the Company during which the exercise of the Stock Appreciation Right would not be in violation of any of such registration requirement, insider trading policy or lock-up agreement, and (b) the expiration of the term of the Stock Appreciation Right as set forth in the applicable Award Agreement.

7. RESTRICTED STOCK AWARDS

7.1. Grants . Awards of Restricted Stock may be issued hereunder to Participants either alone or in addition to other Awards granted under the Plan (a “Restricted Stock Award”), and such Restricted Stock Awards may also be available as a form of payment of Performance Awards and other earned cash-based incentive compensation. A Restricted Stock Award shall be subject to vesting restrictions imposed by the Committee covering a period of time specified by the Committee. The Committee has absolute discretion to determine whether any consideration (other than services) is to be received by the Company or any Affiliate as a condition precedent to the issuance of Restricted Stock.

7.2. Award Agreements . The terms of any Restricted Stock Award granted under the Plan shall be set forth in an Award Agreement which shall contain provisions determined by the Committee and not inconsistent with the Plan. The terms of Restricted Stock Awards need not be the same with respect to each Participant.

7.3. Rights of Holders of Restricted Stock . Unless otherwise provided in the Award Agreement, beginning on the date of grant of the Restricted Stock Award and subject to execution of the Award Agreement, the Participant shall become a stockholder of the Company with respect to all Shares subject to the Award Agreement and shall have all of the rights of a stockholder, including the right to vote such Shares and the right to receive distributions made with respect to such Shares; provided, however , that except as otherwise provided in an Award

Agreement any Shares or any other property distributed as a dividend or otherwise with respect to any Restricted Stock as to which the restrictions have not yet lapsed shall be subject to the same restrictions as such Restricted Stock. Notwithstanding the provisions of this Section, cash dividends, stock and any other property (other than cash) distributed as a dividend or otherwise with respect to any Restricted Stock Award that vests based on achievement of performance goals shall be (i) accumulated, (ii) subject to restrictions and risk of forfeiture to the same extent as the Restricted Stock with respect to which such cash, stock or other property has been distributed and (iii) paid at the time, and to the extent, such restrictions and risk of forfeiture lapse.

8. RESTRICTED STOCK UNIT AWARDS

8.1. Grants . Other Awards of units having a value equal to an identical number of Shares (“Restricted Stock Unit Awards”) may be granted hereunder to Participants either alone or in addition to other Awards granted under the Plan. Restricted Stock Unit Awards shall also be available as a form of payment of other Awards granted under the Plan and other earned cash-based incentive compensation.

8.2. Award Agreements . The terms of Restricted Stock Unit Award granted under the Plan shall be set forth in a written Award Agreement which shall contain provisions determined by the Committee and not inconsistent with the Plan. Restricted Stock Unit Awards shall be subject to vesting restrictions imposed by the Committee covering a period of time specified by the Committee. The terms of such Awards need not be the same with respect to each Participant. Notwithstanding anything contained herein to the contrary, cash dividends, stock and any other property (other than cash) distributed as a dividend or otherwise with respect to any Restricted Stock Unit Award that vests based on achievement of performance goals shall either (i) not be paid at all, or (ii) be accumulated, be subject to restrictions and risk of forfeiture to the same extent as the Restricted Stock Units with respect to which such cash, stock or other property has been distributed and be paid at the time, and to the extent, such restrictions and risk of forfeiture lapse.

8.3. Payment . Except as provided in Article 10 or as may be provided in an Award Agreement, Restricted Stock Unit Awards may be paid in cash, Shares, other property, or any combination thereof, in the sole discretion of the Committee. Restricted Stock Unit Awards may be paid in a lump sum or in installments or, in accordance with procedures established by the Committee, on a deferred basis subject to the requirements of Section 409A of the Code.

9. PERFORMANCE AWARDS

9.1. Grants . Performance Awards in the form of Performance Cash, Performance Shares or Performance Units, as determined by the Committee in its sole discretion, may be granted hereunder to Participants, for no consideration or for such minimum consideration as may be required by applicable law, either alone or in addition to other Awards granted under the Plan. The performance goals to be achieved for each Performance Period shall be conclusively determined by the Committee and may be based upon the criteria set forth in Section 10.2.

9.2. Award Agreements . The terms of any Performance Award granted under the Plan shall be set forth in an Award Agreement which shall contain provisions determined by the Committee and not inconsistent with the Plan, including whether such Awards shall have Dividend Equivalents. The terms of Performance Awards need not be the same with respect to each Participant. Notwithstanding anything contained herein to the contrary, cash dividends, stock and any other property (other than cash) distributed as a dividend or otherwise with respect to any Award of Performance Shares that vests based on achievement of performance goals shall either (i) not be paid at all, or (ii) be accumulated, be subject to restrictions and risk of forfeiture to the same extent as the Performance Shares with respect to which such cash, stock or other property has been distributed and be paid at the time, and to the extent, such restrictions and risk of forfeiture lapse.

9.3. Terms and Conditions . The performance criteria to be achieved during any Performance Period and the length of the Performance Period shall be determined by the Committee upon the grant of each Performance Award; provided, however, that a Performance Period shall not be less than 12 months. The amount of the Award to be distributed shall be conclusively determined by the Committee.

9.4. Payment . Except as provided in Article 11 or as may be provided in an Award Agreement, Performance Awards will be distributed only after the end of the relevant Performance Period. Performance Awards may be paid in cash, Shares, other property, or any combination thereof, in the sole discretion of the Committee. Performance Awards may be paid in a lump sum or in installments following the close of the Performance Period or, in accordance with procedures established by the Committee, on a deferred basis subject to the requirements of Section 409A of the Code.

10. CODE SECTION 162(m) PROVISIONS

10.1. Covered Employees . Notwithstanding any other provision of the Plan, if the Committee determines at the time a Restricted Stock Award, a Performance Award or an Restricted Stock Unit Award is granted to a Participant who is, or is likely to be, as of the end of the tax year in which the Company would claim a tax deduction in connection with such Award, a Covered Employee, then the Committee may provide that this Article 10 is applicable to such Award.

10.2. Performance Criteria . If the Committee determines that a Restricted Stock Award, a Performance Award or an Restricted Stock Unit Award is intended to be subject to this Article 10, the lapsing of restrictions thereon and the distribution of cash, Shares or other property pursuant thereto, as applicable, shall be subject to the achievement of one or more objective performance goals established by the Committee, which shall be based on the attainment of specified levels of one or any combination of the following: net sales; revenue; revenue or product revenue growth; operating income or loss (before or after taxes); pre- or after-tax income or loss (before or after allocation of corporate overhead and bonus); net earnings or loss; earnings or loss per share; net income or loss (before or after taxes); return on equity; total stockholder return; return on assets or net assets; attainment of strategic and operational initiatives; appreciation in and/or maintenance of the price of the Shares or any other publicly-traded securities of the Company; market share; gross profits; earnings or losses (including

earnings or losses before taxes, earnings or losses before interest and taxes, earnings or losses before interest, taxes and depreciation or earnings or losses before interest, taxes, depreciation and amortization); economic value-added models (or equivalent metrics); comparisons with various stock market indices; reductions in costs; cash flow or cash flow per share (before or after dividends); return on capital (including return on total capital or return on invested capital); cash flow return on investment; improvement in or attainment of expense levels or working capital levels; operating margin; gross margin; year-end cash; cash margin; debt reduction; stockholder’s equity; market share; achievement of drug development milestones; regulatory achievements including approval of a drug candidate; progress of internal research or clinical programs; progress of partnered programs; implementation or completion of projects and processes; partner satisfaction; budget management; clinical achievements; completing phases of a clinical study (including the treatment phase) or announcing or presenting preliminary or final data from clinical studies, in each case, whether on particular timelines or generally; timely completion of clinical trials; submission of INDs and NDAs and other regulatory achievements; partner or collaborator achievements; internal controls, including those related to the Sarbanes-Oxley Act of 2002; research progress, including the development of programs; financing; investor relations, analysts and communication; manufacturing achievements (including obtaining particular yields from manufacturing runs and other measurable objectives related to process development activities); strategic partnerships or transactions (including in-licensing and out-licensing of intellectual property); establishing relationships with commercial entities with respect to the marketing, distribution and sale of the Company’s products (including with group purchasing organizations, distributors and other vendors); supply chain achievements (including establishing relationships with manufacturers or suppliers of active pharmaceutical ingredients and other component materials and manufacturers of the Company’s products); co-development, co-marketing, profit sharing, joint venture or other similar arrangements; financing and other capital raising transactions (including sales of the Company’s equity or debt securities); sales or licenses of the Company’s assets, including its intellectual property (whether in a particular jurisdiction or territory or globally or through partnering transactions); implementation, completion or attainment of measurable objectives with respect to research, development, manufacturing, commercialization, products or projects, production volume levels, acquisitions and divestitures; factoring transactions; and recruiting and maintaining personnel. Such performance goals also may be based solely by reference to the Company’s performance or the performance of an Affiliate, division, business segment or business unit of the Company, or based upon the relative performance of other companies or upon comparisons of any of the indicators of performance relative to other companies. The Committee may also exclude charges related to an event or occurrence which the Committee determines should appropriately be excluded, including (a) restructurings, discontinued operations, extraordinary items, and other unusual or non-recurring charges, (b) an event either not directly related to the operations of the Company or not within the reasonable control of the Company’s management, or (c) the cumulative effects of tax or accounting changes in accordance with U.S. generally accepted accounting principles. Such performance goals shall be set by the Committee within the time period prescribed by, and shall otherwise comply with the requirements of, Section 162(m) of the Code, and the regulations thereunder.

10.3. Adjustments . Notwithstanding any provision of the Plan (other than Article 11), with respect to any Restricted Stock, Performance Award or Restricted Stock Unit Award that is

subject to this Section 10, the Committee may adjust downwards, but not upwards, the amount payable pursuant to such Award, and the Committee may not waive the achievement of the applicable performance goals, except in the case of the death or disability of the Participant or as otherwise determined by the Committee in special circumstances.

10.4. Restrictions . The Committee shall have the power to impose such other restrictions on Awards subject to this Article as it may deem necessary or appropriate to ensure that such Awards satisfy all requirements for “performance-based compensation” within the meaning of Section 162(m) of the Code.

10.5. Limitations on Grants to Individual Participants . Subject to adjustment as provided in Section 12.2, no Participant may be granted (i) Options or Stock Appreciation Rights during any 12-month period with respect to more than 3,000,000 Shares or (ii) more than 1,000,000 Shares for each 12 months in the vesting period or Performance Period with respect to Restricted Stock Awards, Performance Awards and/or Restricted Stock Unit Awards that are denominated in Shares and are intended to comply with the performance-based exception under Code Section 162(m) (collectively, the “Limitations”). In addition to the foregoing, the maximum dollar value that may be granted to any Participant for each 12 months in a Performance Period with respect to Performance Awards that are intended to comply with the performance-based exception under Code Section 162(m) and are denominated in cash is $5,000,000. If an Award is cancelled, the cancelled Award shall continue to be counted toward the applicable Limitations (or, in the case of a performance award denominated in cash, to be counted toward the dollar amount in the preceding sentence).

11. CHANGE IN CONTROL PROVISIONS

11.1. Impact on Certain Awards . The Committee, in its discretion, may determine that in the event of a Change in Control of the Company (as defined in Section 11.3) Options and Stock Appreciation Rights outstanding as of the date of the Change in Control shall be cancelled and terminated without payment therefor if the Fair Market Value of one Share as of the date of the Change in Control is less than the Option per Share option price or Stock Appreciation Right per Share grant price.

11.2. Assumption or Substitution of Certain Awards .

(a) To the extent provided in an Award Agreement, in the event of a Change in Control of the Company in which the successor company assumes or substitutes for an Option, Stock Appreciation Right, Restricted Stock Award or Restricted Stock Unit Award (or in which the Company is the ultimate parent corporation and continues the Award), if a Participant’s employment with such successor company (or the Company) or a subsidiary thereof terminates within the time period following such Change in Control set forth in the Award Agreement (or prior thereto if applicable) and under the circumstances specified in the Award Agreement: (i) Options and Stock Appreciation Rights outstanding as of the date of such termination of employment will immediately vest, become fully exercisable, and may thereafter be exercised for the period of time set forth in the Award Agreement, (ii) the restrictions, limitations and other conditions applicable to Restricted Stock shall lapse and the Restricted Stock shall become free of all restrictions, limitations and conditions and become fully vested, and (iii) the restrictions,

limitations and other conditions applicable to any Restricted Stock Unit Awards or any other Awards shall lapse, and such Restricted Stock Unit Awards or such other Awards shall become free of all restrictions, limitations and conditions and become fully vested and transferable to the full extent of the original grant. For the purposes of this Section, an Option, Stock Appreciation Right, Restricted Stock Award or Restricted Stock Unit Award shall be considered assumed or substituted for if following the Change in Control the Award confers the right to purchase or receive, for each Share subject to the Option, Stock Appreciation Right, Restricted Stock Award or Restricted Stock Unit Award immediately prior to the Change in Control, the consideration (whether stock, cash or other securities or property) received in the transaction constituting a Change in Control by holders of Shares for each Share held on the effective date of such transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares); provided, however, that if such consideration received in the transaction constituting a Change in Control is not solely common stock of the successor company, the Committee may, with the consent of the successor company, provide that the consideration to be received upon the exercise or vesting of an Option, Stock Appreciation Right, Restricted Stock Award or Restricted Stock Unit Award, for each Share subject thereto, will be solely common stock of the successor company substantially equal in fair market value to the per Share consideration received by holders of Shares in the transaction constituting a Change in Control. The determination of such substantial equality of value of consideration shall be made by the Committee in its sole discretion and its determination shall be conclusive and binding.

(b) Unless otherwise provided in an Award Agreement, in the event of a Change in Control of the Company, to the extent that the successor company does not assume or substitute for an Option, Stock Appreciation Right, Restricted Stock Award, Restricted Stock Unit Award or Performance Award (or in which the Company is the ultimate parent corporation and does not continue the Award), then immediately prior to the Change in Control: (i) those Options and Stock Appreciation Rights outstanding as of the date of the Change in Control that are not assumed or substituted for (or continued) shall immediately vest and become fully exercisable, (ii) restrictions, limitations and conditions on Restricted Stock not assumed or substituted for (or continued) shall lapse and the Restricted Stock shall become free of all restrictions, limitations and conditions and become fully vested, (iii) the restrictions limitations and conditions applicable to any Restricted Stock Unit Awards or any other Awards not assumed or substituted for (or continued) shall lapse, and such Restricted Stock Unit Awards or such other Awards shall become free of all restrictions, limitations and conditions and become fully vested and transferable to the full extent of the original grant, (iv) all Performance Awards not assumed or substituted for (or continued) shall be considered to be earned and payable in full, and any deferral or other restriction shall lapse and such Performance Awards shall be immediately settled or distributed, and (v) all Awards not assumed or substituted for (or continued) shall terminate immediately after the Change in Control.

(c) The Committee, in its discretion, may determine that, upon the occurrence of a Change in Control of the Company, each Option and Stock Appreciation Right outstanding shall terminate within a specified number of days after notice to the Participant, and/or that each Participant shall receive, with respect to each Share subject to such Option or Stock Appreciation Right, an amount equal to the excess (if any) of the Fair Market Value of such Share immediately prior to the occurrence of such Change in Control over the exercise price per Share of such

Option and/or Stock Appreciation Right; such amount to be payable in cash, in one or more kinds of stock or property (including the stock or property, if any, payable in the transaction) or in a combination thereof, as the Committee, in its discretion, shall determine.

11.3. Change in Control . For purposes of the Plan, unless otherwise provided in an Award Agreement, Change in Control means the occurrence of any one of the following events:

(i) During any twenty-four (24) month period, individuals who, as of the beginning of such period, constitute the Board (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the beginning of such period whose election or nomination for election was approved by a vote of at least a majority of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection to such nomination) shall be an Incumbent Director; provided , however , that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest with respect to directors or as a result of any other actual or threatened solicitation of proxies by or on behalf of any person other than the Board shall be deemed to be an Incumbent Director;

(ii) Any “person” (as such term is defined in the Exchange Act and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a “beneficial owner” (as defined in Rule 13d‑3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding securities eligible to vote for the election of the Board (the “Company Voting Securities”); provided , however , that the event described in this paragraph (ii) shall not be deemed to be a Change in Control by virtue of any of the following acquisitions: (A) by the Company or any Affiliate, (B) by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Affiliate, (C) by any underwriter temporarily holding securities pursuant to an offering of such securities, (D) pursuant to a Non-Qualifying Transaction, as defined in paragraph (iii), or (E) by any person of Voting Securities from the Company, if a majority of the Incumbent Board approves in advance the acquisition of beneficial ownership of 50% or more of Company Voting Securities by such person;

(iii) The consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or any of its Affiliates that requires the approval of the Company’s stockholders, whether for such transaction or the issuance of securities in the transaction (a “Business Combination”), unless immediately following such Business Combination: (A) more than 60% of the total voting power of (x) the corporation resulting from such Business Combination (the “Surviving Corporation”), or (y) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of 100% of the voting securities eligible to elect directors of the Surviving Corporation (the “Parent Corporation”), is represented by Company Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which such Company Voting

Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such Company Voting Securities among the holders thereof immediately prior to the Business Combination, (B) no person (other than any employee benefit plan (or related trust) sponsored or maintained by the Surviving Corporation or the Parent Corporation), is or becomes the beneficial owner, directly or indirectly, of 50% or more of the total voting power of the outstanding voting securities eligible to elect directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) and (C) at least a majority of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) following the consummation of the Business Combination were Incumbent Directors at the time of the Board’s approval of the execution of the initial agreement providing for such Business Combination (any Business Combination which satisfies all of the criteria specified in (A), (B) and (C) above shall be deemed to be a “Non - Qualifying Transaction”); or

(iv) The stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or the consummation of a sale, lease, exclusive license or other disposition of all or substantially all of the Company’s assets.

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any person acquires beneficial ownership of more than 50% of the Company Voting Securities as a result of the acquisition of Company Voting Securities by the Company which reduces the number of Company Voting Securities outstanding; provided , that if after such acquisition by the Company such person becomes the beneficial owner of additional Company Voting Securities that increases the percentage of outstanding Company Voting Securities beneficially owned by such person, a Change in Control of the Company shall then occur.

12. GENERALLY APPLICABLE PROVISIONS

12.1. Amendment and Termination of the Plan . The Board may, from time to time, alter, amend, suspend or terminate the Plan as it shall deem advisable, subject to any requirement for stockholder approval imposed by applicable law, including the rules and regulations of the NASDAQ Stock Market (or such other principal U.S. national securities exchange on which the Shares are traded); provided that the Board may not amend the Plan in any manner that would result in noncompliance with Rule 16b-3 of the Exchange Act; and further provided that the Board may not, without the approval of the Company’s stockholders to the extent required by such applicable law, amend the Plan to (a) increase the number of Shares that may be the subject of Awards under the Plan (except for adjustments pursuant to Section 12.2); (b) expand the types of awards available under the Plan; (c) materially expand the class of persons eligible to participate in the Plan; (d) amend any provision of Section 5.3 or the last sentence of Section 6.2(d); or (e) increase the maximum permissible term of the Plan or of any Option specified by Section 5.4 or the maximum permissible term of a Stock Appreciation Right specified by Section 6.2(d). The Board may not without the approval of the Company’s stockholders cancel an Option or Stock Appreciation Right in exchange for cash or take any action with respect to an Option or

Stock Appreciation Right that may be treated as a repricing under the rules and regulations of the NASDAQ Stock Market (or such other principal U.S. national securities exchange on which the Shares are traded), including a reduction of the exercise price of an Option or the grant price of a Stock Appreciation Right or the exchange of an Option or Stock Appreciation Right for cash or another Award when the option price or grant price per Share exceeds the Fair Market Value of one Share. In addition, no amendments to, or termination of, the Plan shall in any way impair the rights of a Participant under any Award previously granted without such Participant’s consent.

12.2. Adjustments . In the event of any merger, reorganization, consolidation, recapitalization, dividend or distribution (whether in cash, shares or other property, other than a regular cash dividend), stock split, reverse stock split, spin-off or similar transaction or other change in corporate structure affecting the Shares or the value thereof, such adjustments and other substitutions shall be made to the Plan and to Awards as the Committee deems equitable or appropriate taking into consideration the accounting and tax consequences, including such adjustments in the aggregate number, class and kind of securities that may be delivered under the Plan and pursuant to Section 3.3, the Limitations, the maximum number of Shares that may be issued pursuant to Incentive Stock Options and, in the aggregate or to any one Participant, in the number, class, kind and option or exercise price of securities subject to outstanding Awards granted under the Plan (including, if the Committee deems appropriate, the substitution of similar options to purchase the shares of, or other awards denominated in the shares of, another company) as the Committee may determine to be appropriate in its sole discretion; provided, however, that the number of Shares subject to any Award shall always be a whole number.

12.3. Transferability of Awards . Except as provided below, no Award and no Shares subject to Awards described in Article 8 that have not been issued or as to which any applicable restriction, performance or deferral period has not lapsed, may be sold, assigned, transferred, pledged or otherwise encumbered, other than by will or the laws of descent and distribution, and such Award may be exercised during the life of the Participant only by the Participant or the Participant’s guardian or legal representative. To the extent and under such terms and conditions as determined by the Committee, a Participant may assign or transfer an Award (each transferee thereof, a “Permitted Assignee”) to a “family member” as such term is defined in the General Instructions to Form S-8 (whether by gift or a domestic relations order for no consideration); provided that such Permitted Assignee shall be bound by and subject to all of the terms and conditions of the Plan and the Award Agreement relating to the transferred Award and shall execute an agreement satisfactory to the Company evidencing such obligations; and provided further that such Participant shall remain bound by the terms and conditions of the Plan. The Company shall cooperate with any Permitted Assignee and the Company’s transfer agent in effectuating any transfer permitted under this Section.

12.4. Termination of Employment . The Committee shall determine and set forth in each Award Agreement whether any Awards granted in such Award Agreement will continue to be exercisable, continue to vest or be earned and the terms of such exercise, vesting or earning, on and after the date that a Participant ceases to be employed by or to provide services to the Company or any Affiliate (including as a Director), whether by reason of death, disability, voluntary or involuntary termination of employment or services, or otherwise. The date of termination of a Participant’s employment or services will be determined by the Committee, which determination will be final.

12.5. Deferral ; Dividend Equivalents . The Committee shall be authorized to establish procedures pursuant to which the payment of any Award may be deferred. Subject to the provisions of the Plan and any Award Agreement, the recipient of an Award (including any deferred Award) other than an Option or Stock Appreciation Right may, if so determined by the Committee, be entitled to receive, currently or on a deferred basis, cash, stock or other property dividends, or cash payments in amounts equivalent to cash, stock or other property dividends on Shares (“Dividend Equivalents”) with respect to the number of Shares covered by the Award, as determined by the Committee, in its sole discretion. The Committee may provide that such amounts and Dividend Equivalents (if any) shall be deemed to have been reinvested in additional Shares or otherwise reinvested and may provide that such amounts and Dividend Equivalents are subject to the same vesting or performance conditions as the underlying Award. Notwithstanding the foregoing, Dividend Equivalents credited in connection with an Award that vests based on the achievement of performance goals shall be subject to restrictions and risk of forfeiture to the same extent as the Award with respect to which such Dividend Equivalents have been credited.

13. MISCELLANEOUS

13.1. Tax Withholding . The Company shall have the right to make all payments or distributions pursuant to the Plan to a Participant (or a Permitted Assignee thereof) (any such person, a “Payee”) net of any applicable federal, state and local taxes required to be paid or withheld as a result of (a) the grant of any Award, (b) the exercise of an Option or Stock Appreciation Right, (c) the delivery of Shares or cash, (d) the lapse of any restrictions in connection with any Award or (e) any other event occurring pursuant to the Plan. The Company or any Affiliate shall have the right to withhold from wages or other amounts otherwise payable to such Payee such withholding taxes as may be required by law, or to otherwise require the Payee to pay such withholding taxes. If the Payee shall fail to make such tax payments as are required, the Company or its Affiliates shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to such Payee or to take such other action as may be necessary to satisfy such withholding obligations. The Committee shall be authorized to establish procedures for election by Participants to satisfy such obligation for the payment of such taxes by tendering previously acquired Shares (either actually or by attestation, valued at their then Fair Market Value), or by directing the Company to retain Shares (up to the Participant’s minimum required tax withholding rate or such other rate that will not cause an adverse accounting consequence or cost) otherwise deliverable in connection with the Award.

13.2. Right of Discharge Reserved; Claims to Awards . Nothing in the Plan nor the grant of an Award hereunder shall confer upon any Employee, Director or Consultant the right to continue in the employment or service of the Company or any Affiliate or affect any right that the Company or any Affiliate may have to terminate the employment or service of (or to demote or to exclude from future Awards under the Plan) any such Employee, Director or Consultant at any time for any reason. Except as specifically provided by the Committee, the Company shall not be liable for the loss of existing or potential profit from an Award granted in the event of termination of an employment or other relationship. No Employee, Director or Consultant shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Employees, Directors or Consultants under the Plan. In addition, in the event a Participant’s regular level of time commitment in the performance of his or her services for the Company and any Affiliates is reduced (for example, and without limitation, if the Participant is

an Employee of the Company and the Employee has a change in status from a full-time Employee to a part-time Employee) after the date of grant of any Award to the Participant, the Compensation Committee has the right in its sole discretion to (x) make a corresponding reduction in the number of shares or cash amount subject to any portion of such Award that is scheduled to vest or become payable after the date of such change in time commitment, and (y) in lieu of or in combination with such a reduction, extend the vesting or payment schedule applicable to such Award. In the event of any such reduction, the Participant will have no right with respect to any portion of the Award that is so reduced.

13.3. Prospective Recipient . The prospective recipient of any Award under the Plan shall not, with respect to such Award, be deemed to have become a Participant, or to have any rights with respect to such Award, until and unless such recipient shall have executed an agreement or other instrument evidencing the Award and delivered a copy thereof to the Company, and otherwise complied with the then applicable terms and conditions.

13.4. Substitute Awards . Notwithstanding any other provision of the Plan, the terms of Substitute Awards may vary from the terms set forth in the Plan to the extent the Committee deems appropriate to conform, in whole or in part, to the provisions of the awards in substitution for which they are granted.

13.5. Cancellation of Award .

(a) Notwithstanding anything to the contrary contained herein, an Award Agreement may provide that the Award shall be canceled if the Participant, without the consent of the Company, while employed by, or providing services to, the Company or any Affiliate or after termination of such employment or services, establishes a relationship with a competitor of the Company or any Affiliate or engages in activity that is in conflict with or adverse to the interest of the Company or any Affiliate (including conduct contributing to any financial restatements or financial irregularities), as determined by the Committee in its sole discretion. The Committee may provide in an Award Agreement that if within the time period specified in the Agreement the Participant establishes a relationship with a competitor or engages in an activity referred to in the preceding sentence, the Participant will forfeit any gain realized on the vesting or exercise of the Award and must repay such gain to the Company. In addition, all Awards granted under the Plan will be subject to recoupment in accordance with any clawback policy that the Company adopts, including any clawback policy the Company is required to adopt pursuant to the listing standards of any national securities exchange or association on which the Company’s securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law. In addition, the Board may impose such other clawback, recovery or recoupment provisions in an Award Agreement as the Board determines necessary or appropriate.

(b) In the event the Participant ceases to be employed by, or provide services to, the Company on account of a termination for Cause by the Company, any Award held by the Participant shall terminate as of the date the Participant ceases to be employed by, or provide services to, the Company. In addition, notwithstanding any other provisions of this Section, if the Committee determines that the Participant has engaged in conduct that constitutes Cause at any time while the Participant is employed by, or providing services to, the Company or after the

Participant’s termination of employment or services, any Awards held by the Participant shall immediately terminate. In the event a Participant’s employment or services is terminated for Cause, in addition to the immediate termination of all Awards, the Participant shall automatically forfeit all shares underlying any exercised portion of an Option for which the Company has not yet delivered the share certificates, upon refund by the Company of the option price paid by the Participant for such shares.

13.6. Stop Transfer Orders . All certificates for Shares delivered under the Plan pursuant to any Award shall be subject to such stop-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Shares are then listed, and any applicable federal or state securities law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

13.7. Nature of Payments . All Awards made pursuant to the Plan are in consideration of services performed or to be performed for the Company or any Affiliate, division or business unit of the Company. Any income or gain realized pursuant to Awards under the Plan constitutes a special incentive payment to the Participant and shall not be taken into account, to the extent permissible under applicable law, as compensation for purposes of any of the employee benefit plans of the Company or any Affiliate except as may be determined by the Committee or by the Board or board of directors of the applicable Affiliate.

13.8. Other Plans . Nothing contained in the Plan shall prevent the Board from adopting other or additional compensation arrangements, subject to stockholder approval if such approval is required; and such arrangements may be either generally applicable or applicable only in specific cases.

13.9. Severability . The provisions of the Plan shall be deemed severable. If any provision of the Plan shall be held unlawful or otherwise invalid or unenforceable in whole or in part by a court of competent jurisdiction or by reason of a change in a law or regulation, such provision shall (a) be deemed limited to the extent that such court of competent jurisdiction deems it lawful, valid and/or enforceable and as so limited shall remain in full force and effect, and (b) not affect any other provision of the Plan or part thereof, each of which shall remain in full force and effect. If the making of any payment or the provision of any other benefit required under the Plan shall be held unlawful or otherwise invalid or unenforceable by a court of competent jurisdiction, such unlawfulness, invalidity or unenforceability shall not prevent any other payment or benefit from being made or provided under the Plan, and if the making of any payment in full or the provision of any other benefit required under the Plan in full would be unlawful or otherwise invalid or unenforceable, then such unlawfulness, invalidity or unenforceability shall not prevent such payment or benefit from being made or provided in part, to the extent that it would not be unlawful, invalid or unenforceable, and the maximum payment or benefit that would not be unlawful, invalid or unenforceable shall be made or provided under the Plan.

13.10. Construction . As used in the Plan, the words “ include ” and “ including ,” and variations thereof, shall not be deemed to be terms of limitation, but rather shall be deemed to be followed by the words “ without limitation .”

13.11. Unfunded Status of the Plan . The Plan is intended to constitute an “unfunded” plan for incentive and deferred compensation. With respect to any payments not yet made to a Participant by the Company, nothing contained herein shall give any such Participant any rights that are greater than those of a general creditor of the Company. In its sole discretion, the Committee may authorize the creation of trusts or other arrangements to meet the obligations created under the Plan to deliver the Shares or payments in lieu of or with respect to Awards hereunder; provided, however, that the existence of such trusts or other arrangements is consistent with the unfunded status of the Plan.

13.12. Governing Law . The Plan and all determinations made and actions taken thereunder, to the extent not otherwise governed by the Code or the laws of the United States, shall be governed by the laws of the State of Delaware, without reference to principles of conflict of laws, and construed accordingly.

13.13. Effective Date of Plan; Termination of Plan . The Plan shall be effective on the date of the approval of the Plan by the holders of the shares entitled to vote at a duly constituted meeting of the stockholders of the Company. The Plan shall be null and void and of no effect if the foregoing condition is not fulfilled and in such event each Award shall, notwithstanding any of the preceding provisions of the Plan, be null and void and of no effect. Awards may be granted under the Plan at any time and from time to time on or prior to the tenth anniversary of the effective date of the Plan, on which date the Plan will expire except as to Awards then outstanding under the Plan. Such outstanding Awards shall remain in effect until they have been exercised or terminated, or have expired.

13.14. Foreign Employees and Consultants . Awards may be granted to Participants who are foreign nationals or employed or providing services outside the United States, or both, on such terms and conditions different from those applicable to Awards to Employees employed or providing services in the United States as may, in the judgment of the Committee, be necessary or desirable in order to recognize differences in local law or tax policy. The Committee also may impose conditions on the exercise or vesting of Awards in order to minimize the Company’s obligation with respect to tax equalization for Employees or Consultants on assignments outside their home country.

13.15. Compliance with Section 409A of the Code . This Plan is intended to comply and shall be administered in a manner that is intended to comply with Section 409A of the Code and shall be construed and interpreted in accordance with such intent. To the extent that an Award or the payment, settlement or deferral thereof is subject to Section 409A of the Code, the Award shall be granted, paid, settled or deferred in a manner that will comply with Section 409A of the Code, including regulations or other guidance issued with respect thereto, except as otherwise determined by the Committee. Any provision of this Plan that would cause the grant of an Award or the payment, settlement or deferral thereof to fail to satisfy Section 409A of the Code shall be amended to comply with Section 409A of the Code on a timely basis, which may be made on a retroactive basis, in accordance with regulations and other guidance issued under Section 409A of the Code.

13.16. Captions . The captions in the Plan are for convenience of reference only, and are not intended to narrow, limit or affect the substance or interpretation of the provisions contained herein.