Arena Pharmaceuticals, Inc. 2010 AnnualIncentive Plan

Each participant is assigned an incentive target, expressed as a percentage of annual salary.

Arena Pharmaceuticals, Inc. (“Arena”) sets corporate and individual goals (which may include subparts), each individually weighted.

Goals will be specific and measurable.

At the end of the year, individual incentive awards are determined based upon the level of goal achievement, the quality of achievement, and the weighting of each goal.

No award is earned/paid if weighted average combined corporate and individual goal completion is less than 50%.

Certain combinations of goal-achievement may create “multipliers” of up to 125% of the target award.

The Compensation Committee has the discretion to modify awards up to a 125%-of-target maximum funding level.

Targets are based on role, level, and the market.

CEO

CFO, CMO, CSO, General Counsel

VP, Quality Systems

Each participant’s goals are divided into corporate and individual components, weighted based on role.

CEO

CFO, CSO, General Counsel

CMO, VP, Quality Systems

All participants have the same corporate goals, which aligns their interests with one another and stockholders.

Corporate goals are proposed by the CEO and approved by the Compensation Committee and/or the Board.

Individual (other than CEO) goals are set by the CEO in partnership with each participant and reviewed by the Compensation Committee. The CEO’s individual goals are proposed by the CEO and approved by the Compensation Committee and/or the Board.

The categories of corporate goals are set forth on Annex I.

The minimum total weighted average completion percentage is 50% for any award to be earned.

Total award funding is capped at 125% of target.

When total weighted average completion is above 50%, the funded award will equal weighted average completion percentage.

For example, if weighted average completion is 95% of the total, then the award would fund at 95% of target (subject to the review and approval of the Compensation Committee).

The Compensation Committee may use its judgment and discretion to modify or adjust the annual incentive awards.

Eligible plan participants must be actively employed at Arena on the last day of the fiscal year to receive an award. Plan participants who leave Arena prior to the end of the fiscal year are not eligible to receive an award.

Eligible plan participants whose first date of employment is between January 1, 2010 and September 30, 2010 will participate on a prorated basis based on their date of hire.

Plan participants who are promoted to incentive-eligible positions (or positions with a higher incentive target) before December 31, 2010 will participate in the plan on a prorated basis, based on the effective date of the promotion.

Payment of an incentive to eligible plan participants who take a leave of absence for any reason during the year will be prorated based on the time worked during the year.

The Compensation Committee and the Board each has the right to exclude participants and exercise discretion, including canceling the plan or any earned awards.

Awards earned under this plan will be paid prior to the 15th day of March 2011.

Participation in the Annual Incentive Plan is not a guarantee of continued employment. Arena reserves the right to terminate employment and/or participation in the Annual Incentive Plan at any time and for any reason.

The Compensation Committee and the Board each reserve the right to change or waive any provision in the incentive plan at any time, including (but not limited to) its award formula, performance measures and payout schedule. Although Arena intends to pay incentives at levels indicated by the plan, this plan shall not obligate Arena to grant the benefits contemplated under its provisions.

This plan is not a contract and in no way represents a contractual obligation to pay any amount under the plan, regardless of the performance achieved during the plan period.