Exhibit 10.7
Arena Pharmaceuticals, Inc. 2009
Long-Term Incentive Plan
Incentive Stock Option Grant
Agreement for Employees
THIS GRANT AGREEMENT (this
“Agreement”), effective as of
(the “Grant Date”), is entered into by and between
Arena Pharmaceuticals, Inc., a Delaware corporation (the
“Company”), and
(the “Participant”).
1. Grant of Options . The
Company hereby grants to the Participant a stock option (the
“Option”) to purchase
shares of common stock of the Company, par value $0.0001 per share
(the “Shares”), at the exercise price of $
per Share (the “Exercise Price”). The Option is
intended to qualify as an incentive stock option under
Section 422 of the Code.
2. Subject to the Plan . This
Agreement is subject to the provisions of the Arena
Pharmaceuticals, Inc. 2009 Long-Term Incentive Plan (the
“Plan”), and, unless the context requires otherwise,
terms used herein shall have the same meaning as in the Plan. In
the event of a conflict between the provisions of the Plan and this
Agreement, the Plan shall control.
3. Term of Options . Unless
the Option terminates earlier pursuant to the provisions of this
Agreement, the Option shall expire on the tenth anniversary of the
Grant Date; provided, however, if the Participant owns stock
representing more than 10% of the voting power of all classes of
stock of the Company or any Affiliate at the time of this grant,
the Option shall expire on the fifth anniversary of the Grant
Date.
4. Vesting . Except as
otherwise provided in Sections 6(b), (c) or (d) of this
Agreement, provided the Participant is then an Employee, a
Consultant or a Director, the Option shall become vested and
exercisable on the following dates:
Vest Date
Vested Options
5. Exercise of
Option
(a) Manner of Exercise . To
the extent vested, the Option may be exercised, in whole or in
part, by delivering written notice to the Company in accordance
with paragraph (f) of Section 8 in such form as the
Company may require from time to time, or through such other means
as permitted by the Company. Such notice shall specify the number
of Shares subject to the Option as to which the Option is being
exercised, and shall be accompanied by full payment of the Exercise
Price of such Shares in a manner permitted under the terms of
Section 5.5 of the Plan, except that payment with previously
acquired Shares may only be made with the consent of the Committee.
The Option may be exercised only in multiples of whole Shares and
no partial Shares shall be issued.
(b) Issuance of Shares . Upon
exercise of the Option and payment of the Exercise Price for the
Shares as to which the Option is exercised, the Company shall issue
to the Participant the applicable number of Shares in the form of
fully paid and nonassessable Shares.
(c) Capitalization
Adjustments . The number of Shares subject to the Option and
the exercise price per Share shall be equitably and appropriately
adjusted as provided in Section 12.2 of the Plan.
(d) Notice of Disposition .
Participant agrees to notify the Company in writing within fifteen
(15) days after the date of any disposition of any of the
Shares issued upon exercise of the Option that occurs within the
later of two (2) years after the Grant Date or within one
(1) year after such Shares are transferred to the
Participant.
(e) Withholding . No Shares
will be issued on exercise of the Option unless and until the
Participant pays to the Company, or makes satisfactory arrangement
with the Company for payment of, any federal, state or local taxes
required by law to be withheld in respect of the exercise of the
Option. The Participant hereby agrees that the Company may withhold
from the Participant’s wages or other remuneration the
applicable taxes. At the discretion of the Company, the applicable
taxes may be withheld in kind from the Shares otherwise deliverable
to the Participant on exercise of the Option, up to the
Participant’s minimum required withholding rate or such other
rate that will not trigger a negative accounting impact.
6. Termination of
Option
(a) Termination of Employment or
Service Other Than Due to Retirement, Death, Disability or
Cause . Unless the Option has earlier terminated, the Option
shall terminate in its entirety, regardless of whether the Option
is vested, ninety (90) days after the date the Participant
ceases to be in the Company’s continuous service as any of an
Employee, a Consultant or a Director for any reason other than the
Participant’s Retirement, death, Disability or termination by
the Company for Cause. Except as provided below in
Section 6(b), (c) or (d), any portion of the Option that
is not vested at the time the Participant ceases to be in the
Company’s continuous service as any of an Employee, a
Consultant or a Director shall immediately terminate.
(b) Retirement . Upon the
Retirement of the Participant, unless the Option has earlier
terminated, the Option shall continue in effect (and for purposes
of vesting pursuant to Section 4 the Participant shall be
deemed to continue to be an Employee) until the earlier of
(i) two (2) years after the Participant’s
Retirement (or, if later, the fifth anniversary of the Grant Date)
or (ii) the expiration of the Option’s term pursuant to
Section 3. For purposes of this Agreement,
“Retirement” shall mean termination of the
Participant’s employment with the Company and its Affiliates
other than for Cause if (i) the Participant is then at least
age 60 and (ii) the Participant has provided at least ten
(10) years of continuous service as an Employee to the Company
and its Affiliates.
(c) Death . Upon the
Participant’s death, unless the Option has earlier
terminated, to the extent the Option is not fully vested the
installment of the Option that would vest on the next anniversary
of the Grant Date following the Participant’s death shall
become
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vested and exercisable based on a fraction, the
numerator of which is the number of whole months elapsed since the
prior anniversary of the Grant Date (or, if applicable, the Grant
Date) and the denominator of which is 12. Notwithstanding the
foregoing, if on the date of the Participant’s death the
Participant was eligible for Retirement, the installments of the
Option that would vest in the next two (2) years following the
date of the Participant’s death shall become vested and
exercisable. The Participant’s executor or personal
representative, the person to whom the Option shall have been
transferred by will or the laws of descent and distribution, or
such other permitted transferee, as the case may be, may exercise
the Option in accordance with paragraph (a) of Section 5,
to the extent vested, provided such exercise occurs within
twelve (12) months (twenty-four (24) months if the
Participant was eligible for Retirement) after the date of the
Participant’s death or the end of the term of the Option
pursuant to Section 3, whichever is earlier.
(d) Disability . In the event
that the Participant ceases to be in the Company’s continuous
service as any of an Employee, a Consultant or a Director by reason
of Disability, unless the Option has earlier terminated,
(i) to the extent the Option is not fully vested, the
installment of the Option that would vest on the next anniversary
of the Grant Date following the Participant’s Disability
shall become vested and exercisable based on a fraction, the
numerator of which is the number of whole months elapsed since the
prior anniversary of the Grant Date (or, if applicable, the Grant
Date) and the denominator of which is 12 and (ii) the Option
may be exercised, in accordance with paragraph (a) of
Section 5, to the extent vested, provided such exercise
occurs within twelve (12) months after the date of Disability
or the end of the term of the Option pursuant to Section 3,
whichever is earlier. Notwithstanding the foregoing, if on the date
of the Participant’s Disability the Participant was eligible
for Retirement (x) the installments of the Option that would
vest in the next two (2) years following the date of the
Participant’s Disability shall become vested and exercisable
and (y)&n
