QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Title of Each Class | Trading Symbol(s) | Name of Exchange on Which Registered | ||||||
x | Accelerated filer | ☐ | ||||||||||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||||||||
Emerging growth company |
Page | ||||||||
ITEM 1 | ||||||||
Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022 | ||||||||
Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022 | ||||||||
Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2023 and 2022 | ||||||||
Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2023 and 2022 | ||||||||
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022 | ||||||||
ITEM 2 | ||||||||
ITEM 3 | ||||||||
ITEM 4 | ||||||||
ITEM 1 | ||||||||
ITEM 1A | ||||||||
ITEM 2 | ||||||||
ITEM 3 | ||||||||
ITEM 4 | ||||||||
ITEM 5 | ||||||||
ITEM 6 | ||||||||
ITEM 1 | Financial Statements (Unaudited) |
(in thousands, except for share and per share amounts) | September 30, 2023 | December 31, 2022 | |||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Marketable securities | |||||||||||
Accounts receivable, net | |||||||||||
Inventory | |||||||||||
Prepaid expenses and other current assets | |||||||||||
Total current assets | |||||||||||
Property and equipment, net | |||||||||||
Operating lease right-of-use assets | |||||||||||
Intangible assets, net | |||||||||||
Deferred tax assets | |||||||||||
Non-current inventory and other | |||||||||||
Total assets | $ | $ | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable and accrued liabilities | $ | $ | |||||||||
Product revenue allowances | |||||||||||
Total current liabilities | |||||||||||
Operating lease non-current liabilities | |||||||||||
Other non-current liabilities | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies (Notes 8 and 13) | |||||||||||
Stockholders’ equity: | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
Additional paid-in capital | |||||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Accumulated deficit | ( | ( | |||||||||
Total stockholders’ equity | |||||||||||
Total liabilities and stockholders’ equity | $ | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
(in thousands, except for share and per share amounts) | September 30, 2023 | September 30, 2022 | September 30, 2023 | September 30, 2022 | |||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Net product sales | $ | $ | $ | $ | |||||||||||||||||||
Total revenues | |||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Cost of goods sold excluding amortization | |||||||||||||||||||||||
Research and development | |||||||||||||||||||||||
Selling, general and administrative | |||||||||||||||||||||||
Intangible asset amortization | |||||||||||||||||||||||
Total operating expenses | |||||||||||||||||||||||
Income (loss) from operations | ( | ( | ( | ||||||||||||||||||||
Other income | |||||||||||||||||||||||
Income (loss) before income taxes | ( | ||||||||||||||||||||||
Provision (benefit) for income taxes | ( | ||||||||||||||||||||||
Net income (loss) | $ | $ | $ | $ | ( | ||||||||||||||||||
Net income (loss) per share: | |||||||||||||||||||||||
Basic | $ | $ | $ | $ | ( | ||||||||||||||||||
Diluted | $ | $ | $ | $ | ( | ||||||||||||||||||
Weighted average shares outstanding: | |||||||||||||||||||||||
Basic | |||||||||||||||||||||||
Diluted |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
(in thousands) | September 30, 2023 | September 30, 2022 | September 30, 2023 | September 30, 2022 | |||||||||||||||||||
Net income (loss) | $ | $ | $ | $ | ( | ||||||||||||||||||
Other comprehensive income (loss): | |||||||||||||||||||||||
Net foreign currency translation loss | ( | ( | ( | ( | |||||||||||||||||||
Change in net unrealized gain (loss) on marketable securities | ( | ( | ( | ||||||||||||||||||||
Tax benefit (provision) on other comprehensive income (loss) | ( | ||||||||||||||||||||||
Other comprehensive income (loss), net of tax | ( | ( | ( | ||||||||||||||||||||
Comprehensive income (loss) | $ | $ | $ | $ | ( |
Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total | |||||||||||||||||||||||||||||||
(in thousands, except for share amounts) | Shares | Par Value | |||||||||||||||||||||||||||||||||
Balances at December 31, 2022 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
Issuance of common stock from the exercise of stock options and settlement of restricted stock units | — | — | — | — | — | ||||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | |||||||||||||||||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||||||||||||||
Other comprehensive income, net of tax | — | — | — | — | |||||||||||||||||||||||||||||||
Balances at March 31, 2023 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
Issuance of common stock from the exercise of stock options and settlement of restricted stock units | — | — | — | — | — | ||||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | |||||||||||||||||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||||||||||||||
Other comprehensive loss, net of tax | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Balances at June 30, 2023 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
Issuance of common stock from the exercise of stock options and settlement of restricted stock units | ( | — | — | ||||||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | |||||||||||||||||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||||||||||||||
Other comprehensive loss, net of tax | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Balances at September 30, 2023 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total | |||||||||||||||||||||||||||||||
(in thousands, except for share amounts) | Shares | Par Value | |||||||||||||||||||||||||||||||||
Balances at December 31, 2021 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
Issuance of common stock from the exercise of stock options and settlement of restricted stock units | — | — | — | — | — | ||||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | |||||||||||||||||||||||||||||||
Net loss | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||
Other comprehensive loss, net of tax | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Balances at March 31, 2022 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
Issuance of common stock from the exercise of stock options and settlement of restricted stock units | — | — | |||||||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | |||||||||||||||||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||||||||||||||
Other comprehensive loss, net of tax | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Balances at June 30, 2022 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
Issuance of common stock from the exercise of stock options and settlement of restricted stock units | — | — | — | ||||||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | — | — | |||||||||||||||||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||||||||||||||
Other comprehensive loss, net of tax | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Balances at September 30, 2022 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
Nine Months Ended | |||||||||||
(in thousands) | September 30, 2023 | September 30, 2022 | |||||||||
Cash flows from operating activities | |||||||||||
Net income (loss) | $ | $ | ( | ||||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||
Depreciation of property and equipment | |||||||||||
Stock-based compensation | |||||||||||
Amortization of premiums and accretion of discounts on marketable securities | ( | ( | |||||||||
Loss on sale of marketable securities | |||||||||||
Intangible asset amortization | |||||||||||
Deferred income taxes | |||||||||||
Other non-cash adjustments, net | |||||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | |||||||||||
Prepaid expenses and other assets | ( | ||||||||||
Inventory | ( | ( | |||||||||
Accounts payable and other liabilities | ( | ||||||||||
Product revenue allowances | |||||||||||
Net cash provided by operating activities | |||||||||||
Cash flows from investing activities | |||||||||||
Purchases of property and equipment | ( | ( | |||||||||
Purchases of marketable securities | ( | ( | |||||||||
Sales and maturities of marketable securities | |||||||||||
Net cash provided by (used in) investing activities | ( | ||||||||||
Cash flows from financing activities | |||||||||||
Proceeds from exercise of stock options | |||||||||||
Net cash provided by financing activities | |||||||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | ( | ||||||||||
Net change in cash, cash equivalents and restricted cash | ( | ||||||||||
Cash, cash equivalents and restricted cash | |||||||||||
Beginning of period | |||||||||||
End of period | $ | $ |
(in thousands) | September 30, 2023 | September 30, 2022 | |||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash included in non-current inventory and other | |||||||||||
Total cash, cash equivalents and restricted cash | $ | $ |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
(in thousands) | September 30, 2023 | September 30, 2022 | September 30, 2023 | September 30, 2022 | |||||||||||||||||||
HETLIOZ® net product sales | $ | $ | $ | $ | |||||||||||||||||||
Fanapt® net product sales | |||||||||||||||||||||||
Total net product sales | $ | $ | $ | $ |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Market Value | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
U.S. Treasury and government agencies | $ | $ | $ | ( | $ | ||||||||||||||||||
Corporate debt | ( | ||||||||||||||||||||||
Total marketable securities | $ | $ | $ | ( | $ |
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Market Value | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
U.S. Treasury and government agencies | $ | $ | $ | ( | $ | ||||||||||||||||||
Corporate debt | ( | ||||||||||||||||||||||
Total marketable securities | $ | $ | $ | ( | $ |
Fair Value Measurement as of September 30, 2023 Using | |||||||||||||||||||||||
Total Fair Value | Quoted Prices in Active Markets for Identical Assets | Significant Other Observable Inputs | Significant Unobservable Inputs | ||||||||||||||||||||
(in thousands) | (Level 1) | (Level 2) | (Level 3) | ||||||||||||||||||||
U.S. Treasury and government agencies | $ | $ | $ | $ | |||||||||||||||||||
Corporate debt | |||||||||||||||||||||||
Total assets measured at fair value | $ | $ | $ | $ |
Fair Value Measurement as of December 31, 2022 Using | |||||||||||||||||||||||
Total Fair Value | Quoted Prices in Active Markets for Identical Assets | Significant Other Observable Inputs | Significant Unobservable Inputs | ||||||||||||||||||||
(in thousands) | (Level 1) | (Level 2) | (Level 3) | ||||||||||||||||||||
U.S. Treasury and government agencies | $ | $ | $ | $ | |||||||||||||||||||
Corporate debt | |||||||||||||||||||||||
Total assets measured at fair value | $ | $ | $ | $ |
(in thousands) | September 30, 2023 | December 31, 2022 | |||||||||
Current assets | |||||||||||
Work-in-process | $ | $ | |||||||||
Finished goods | |||||||||||
Total inventory, current | $ | $ | |||||||||
Non-Current assets | |||||||||||
Raw materials | $ | $ | |||||||||
Work-in-process | |||||||||||
Finished goods | |||||||||||
Total inventory, non-current | |||||||||||
Total inventory | $ | $ |
September 30, 2023 | |||||||||||||||||||||||
(in thousands) | Estimated Useful Life | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||||
HETLIOZ® | 2035 | $ | $ | $ | |||||||||||||||||||
December 31, 2022 | |||||||||||||||||||||||
(in thousands) | Estimated Useful Life | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||||
HETLIOZ® | 2035 | $ | $ | $ | |||||||||||||||||||
(in thousands) | Total | 2023 | 2024 | 2025 | 2026 | 2027 | Thereafter | ||||||||||||||||||||||||||||||||||
HETLIOZ® | $ | $ | $ | $ | $ | $ | $ |
(in thousands) | September 30, 2023 | December 31, 2022 | |||||||||
Research and development expenses | $ | $ | |||||||||
Consulting and other professional fees | |||||||||||
Compensation and employee benefits | |||||||||||
Royalties payable | |||||||||||
Operating lease liabilities | |||||||||||
Accounts payable and other accrued liabilities | |||||||||||
Total accounts payable and accrued liabilities | $ | $ |
(in thousands) | September 30, 2023 | December 31, 2022 | |||||||||
Foreign currency translation | $ | ( | $ | ( | |||||||
Unrealized loss on marketable securities | ( | ( | |||||||||
Accumulated other comprehensive loss | $ | ( | $ | ( |
(in thousands, except for share and per share amounts) | Number of Shares | Weighted Average Exercise Price at Grant Date | Weighted Average Remaining Term (Years) | Aggregate Intrinsic Value | |||||||||||||||||||
Outstanding at December 31, 2022 | $ | $ | |||||||||||||||||||||
Granted | |||||||||||||||||||||||
Expired | ( | ||||||||||||||||||||||
Outstanding at September 30, 2023 | |||||||||||||||||||||||
Exercisable at September 30, 2023 | |||||||||||||||||||||||
Vested and expected to vest at September 30, 2023 |
Number of Shares | Weighted Average Grant Date Fair Value | ||||||||||
Unvested at December 31, 2022 | $ | ||||||||||
Granted | |||||||||||
Forfeited | ( | ||||||||||
Vested | ( | ||||||||||
Unvested at September 30, 2023 |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
(in thousands) | September 30, 2023 | September 30, 2022 | September 30, 2023 | September 30, 2022 | |||||||||||||||||||
Research and development | $ | $ | $ | $ | |||||||||||||||||||
Selling, general and administrative | |||||||||||||||||||||||
Total stock-based compensation expense | $ | $ | $ | $ |
Nine Months Ended | |||||||||||
September 30, 2023 | September 30, 2022 | ||||||||||
Expected dividend yield | % | % | |||||||||
Weighted average expected volatility | % | % | |||||||||
Weighted average expected term (years) | |||||||||||
Weighted average risk-free rate | % | % |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
(in thousands, except for share and per share amounts) | September 30, 2023 | September 30, 2022 | September 30, 2023 | September 30, 2022 | |||||||||||||||||||
Numerator: | |||||||||||||||||||||||
Net income (loss) | $ | $ | $ | $ | ( | ||||||||||||||||||
Denominator: | |||||||||||||||||||||||
Weighted average shares outstanding, basic | |||||||||||||||||||||||
Effect of dilutive securities | |||||||||||||||||||||||
Weighted average shares outstanding, diluted | |||||||||||||||||||||||
Net income (loss) per share, basic and diluted: | |||||||||||||||||||||||
Basic | $ | $ | $ | $ | ( | ||||||||||||||||||
Diluted | $ | $ | $ | $ | ( | ||||||||||||||||||
Antidilutive securities excluded from calculations of diluted net income (loss) per share |
ITEM 2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
(in thousands) | Rebates & Chargebacks | Discounts, Returns and Other | Total | ||||||||||||||
Balances at December 31, 2022 | $ | 37,459 | $ | 10,024 | $ | 47,483 | |||||||||||
Provision related to current period sales | 67,866 | 21,193 | 89,059 | ||||||||||||||
Adjustments for prior period sales | 513 | 533 | 1,046 | ||||||||||||||
Credits/payments made | (63,043) | (21,556) | (84,599) | ||||||||||||||
Balances at September 30, 2023 | $ | 42,795 | $ | 10,194 | $ | 52,989 |
Three Months Ended | |||||||||||||||||||||||
(in thousands) | September 30, 2023 | September 30, 2022 | Net Change | Percent | |||||||||||||||||||
HETLIOZ® net product sales | $ | 17,500 | $ | 41,335 | $ | (23,835) | (58) | % | |||||||||||||||
Fanapt® net product sales | 21,315 | 23,983 | (2,668) | (11) | % | ||||||||||||||||||
Total net product sales | $ | 38,815 | $ | 65,318 | $ | (26,503) | (41) | % |
Three Months Ended | |||||||||||
(in thousands) | September 30, 2023 | September 30, 2022 | |||||||||
Direct project costs (1) | |||||||||||
HETLIOZ® | $ | 2,150 | $ | 3,008 | |||||||
Fanapt® | 3,316 | 6,599 | |||||||||
Tradipitant | 6,903 | 7,742 | |||||||||
VTR-297 | 390 | 431 | |||||||||
CFTR | 310 | 332 | |||||||||
VQW-765 | 165 | 866 | |||||||||
Other | 1,626 | 3,987 | |||||||||
Total direct project costs | 14,860 | 22,965 | |||||||||
Indirect project costs (1) | |||||||||||
Stock-based compensation | 739 | 981 | |||||||||
Other indirect overhead | 1,001 | 911 | |||||||||
Total indirect project costs | 1,740 | 1,892 | |||||||||
Total research and development expense | $ | 16,600 | $ | 24,857 |
Nine Months Ended | |||||||||||||||||||||||
(in thousands) | September 30, 2023 | September 30, 2022 | Net Change | Percent | |||||||||||||||||||
HETLIOZ® net product sales | $ | 79,095 | $ | 119,554 | $ | (40,459) | (34) | % | |||||||||||||||
Fanapt® net product sales | 68,274 | 70,346 | (2,072) | (3) | % | ||||||||||||||||||
Total net product sales | $ | 147,369 | $ | 189,900 | $ | (42,531) | (22) | % |
Nine Months Ended | |||||||||||
(in thousands) | September 30, 2023 | September 30, 2022 | |||||||||
Direct project costs (1) | |||||||||||
HETLIOZ® | $ | 7,078 | $ | 9,275 | |||||||
Fanapt® | 7,934 | 22,987 | |||||||||
Tradipitant | 21,269 | 18,257 | |||||||||
VTR-297 | 1,203 | 1,368 | |||||||||
CFTR | 1,066 | 918 | |||||||||
VQW-765 | 805 | 3,089 | |||||||||
Other | 7,141 | 5,612 | |||||||||
Total direct project costs | 46,496 | 61,506 | |||||||||
Indirect project costs (1) | |||||||||||
Stock-based compensation | 2,538 | 3,040 | |||||||||
Other indirect overhead | 3,450 | 2,770 | |||||||||
Total indirect project costs | 5,988 | 5,810 | |||||||||
Total research and development expense | $ | 52,484 | $ | 67,316 |
(in thousands) | September 30, 2023 | December 31, 2022 | |||||||||
Cash and cash equivalents | $ | 183,186 | $ | 135,029 | |||||||
Marketable securities: | |||||||||||
U.S. Treasury and government agencies | 208,342 | 177,170 | |||||||||
Corporate debt | 98,330 | 154,660 | |||||||||
Total marketable securities | 306,672 | 331,830 | |||||||||
Total cash, cash equivalents and marketable securities | $ | 489,858 | $ | 466,859 |
Nine Months Ended | |||||||||||||||||
(in thousands) | September 30, 2023 | September 30, 2022 | Net Change | ||||||||||||||
Net cash provided by (used in): | |||||||||||||||||
Operating activities: | |||||||||||||||||
Net income (loss) | $ | 4,909 | $ | (586) | $ | 5,495 | |||||||||||
Non-cash charges | 15,191 | 15,731 | (540) | ||||||||||||||
Net change in operating assets and liabilities | (3,567) | 7,423 | (10,990) | ||||||||||||||
Operating activities | 16,533 | 22,568 | (6,035) | ||||||||||||||
Investing activities: | |||||||||||||||||
Purchases of property and equipment | (130) | (416) | 286 | ||||||||||||||
Net purchases, sales and maturities of marketable securities | 31,857 | (25,087) | 56,944 | ||||||||||||||
Investing activities | 31,727 | (25,503) | 57,230 | ||||||||||||||
Financing activities: | |||||||||||||||||
Proceeds from the exercise of stock options | — | 129 | (129) | ||||||||||||||
Financing activities | — | 129 | (129) | ||||||||||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (103) | 82 | (185) | ||||||||||||||
Net change in cash, cash equivalents and restricted cash | $ | 48,157 | $ | (2,724) | $ | 50,881 |
ITEM 3 | Quantitative and Qualitative Disclosures about Market Risk |
ITEM 4 | Controls and Procedures |
ITEM 1 | Legal Proceedings |
ITEM 1A | Risk Factors |
ITEM 2 | Unregistered Sales of Equity Securities and Use of Proceeds |
ITEM 3 | Defaults Upon Senior Securities |
ITEM 4 | Mine Safety Disclosures |
ITEM 5 | Other Information |
ITEM 6 | Exhibits |
Exhibit Number | Description | |||||||
3.1 | ||||||||
3.2 | ||||||||
10.1†* | ||||||||
10.2†* | ||||||||
10.3†* | ||||||||
10.4†* | ||||||||
10.5†* | ||||||||
10.6†* | ||||||||
10.7†* | ||||||||
10.8†* | ||||||||
31.1* | ||||||||
31.2* | ||||||||
32.1* | ||||||||
101 | The following financial information from this quarterly report on Form 10-Q for the fiscal quarter ended September 30, 2023 formatted in Inline Extensible Business Reporting Language (iXBRL) and filed electronically herewith: (i) Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022; (ii) Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022; (iii) Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2023 and 2022; (iv) Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2023 and 2022; (v) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022; and (vi) Notes to Condensed Consolidated Financial Statements. | |||||||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |||||||
† | Indicates management contract or compensatory plan or arrangement. | |||||||
* | Filed herewith. |
Vanda Pharmaceuticals Inc. | ||||||||
November 9, 2023 | /s/ Mihael H. Polymeropoulos, M.D. | |||||||
Mihael H. Polymeropoulos, M.D. | ||||||||
President, Chief Executive Officer and Chairman of the Board (Principal Executive Officer) | ||||||||
November 9, 2023 | /s/ Kevin Moran | |||||||
Kevin Moran | ||||||||
Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer) |
Recipient: | Vanda Pharmaceuticals Inc. | ||||||||||
By: | |||||||||||
[Name] | Title: |
Payment for Units | No payment is required for the units that you are receiving. | ||||
Vesting | The units vest in installments, as shown in the Notice of Stock Unit Award, provided that you have provided continuous Service (as defined in the Plan) to the Company through the date of such installment. | ||||
Forfeiture | If your Service terminates for any reason, then your units will be forfeited to the extent that they have not vested before the termination date. This means that any units that have not vested under this Agreement will be cancelled immediately. You receive no payment for units that are forfeited. The Company determines when your Service terminates for this purpose. | ||||
Settlement of Units | Each unit will be settled on the first trading day that occurs on or after the day when the unit vests. However, each unit must be settled not later than March 15 of the calendar year after the calendar year in which the unit vests. At the time of settlement, you will receive one share of the Company’s Common Stock for each vested unit. But the Company, at its sole discretion, may substitute an equivalent amount of cash if the distribution of stock is not reasonably practicable due to the requirements of applicable law. The amount of cash will be determined on the basis of the market value of the Company’s Common Stock at the time of settlement. | ||||
“Permissible Trading Day” | “Permissible Trading Day” means a day that satisfies each of the following requirements: • The Nasdaq Global Market is open for trading on that day, • You are permitted to sell shares of the Company’s Common Stock on that day without incurring liability under Section 16(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), • Under the Company’s Policy Memorandum Concerning Securities Trading, you would be permitted to sell shares of the Company’s Common Stock on that day without reliance on the “Same Day Sale-to-Cover Transactions” exclusion therein, and • You are not prohibited from selling shares of the Company’s Common Stock on that day by a written agreement between you and the Company or a third party. |
Section 409A | This paragraph applies only if the Company determines that you are a “specified employee,” as defined in the regulations under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), at the time of your “separation from service,” as defined in those regulations. If this paragraph applies, then any units that otherwise would have been settled during the first six months following your separation from service will instead be settled during the seventh month following your separation from service, unless the settlement of those units is exempt from Section 409A of the Code. | ||||
Nature of Units | Your units are mere bookkeeping entries. They represent only the Company’s unfunded and unsecured promise to issue shares of Common Stock (or distribute cash) on a future date. As a holder of units, you have no rights other than the rights of a general creditor of the Company. | ||||
No Voting Rights or Dividends | Your units carry neither voting rights nor rights to cash dividends. You have no rights as a stockholder of the Company unless and until your units are settled by issuing shares of the Company’s Common Stock. | ||||
Units Nontransferable | You may not sell, transfer, assign, pledge or otherwise dispose of any units. For instance, you may not use your units as security for a loan. | ||||
Withholding Taxes- Default “Same Day Sale” | As a condition to acceptance of this Award, to the greatest extent permitted under the Plan and applicable law, except as otherwise permitted below, applicable withholding taxes will be satisfied through the sale of a number of the shares subject to the Award and the remittance of the cash proceeds of such sale to the Company, pursuant to a “same day sale.” You authorize the Company to make payment from the cash proceeds of this sale directly to the appropriate taxing authorities in an amount equal to the withholding taxes. It is the Company’s intent that the default “same day sale to cover withholding taxes transaction requirement imposed by the Company on you herein comply with the requirements of Rule 10b5-1(c)(1)(i)(B) under the Exchange Act and be interpreted to comply with the requirements of Rule 10b5-1(c). |
At the Company’s discretion, you may be permitted to elect prior to the vesting event, provided such election is made on a Permissible Trading Day, to make arrangements to satisfy the withholding taxes under one or more of the following alternative methods: (i) withholding from any compensation otherwise payable to you by the Company or an Affiliate or (ii) tendering a cash payment (which may be in the form of a check, electronic wire transfer or other method permitted by the Company). Additionally, if for any reason, the “same day sale” commitment does not result in sufficient proceeds to satisfy the withholding taxes, the Company or an Affiliate may, in its sole discretion, satisfy all or any portion of the withholding taxes by one or more of the foregoing alternative methods. Unless the tax withholding obligations of the Company and/or any Affiliate are satisfied, the Company shall have no obligation to deliver to you any Common Stock. Withholding taxes shall be equal to the Company’s required tax withholding obligations using (i) the maximum statutory withholding rates for state, local and foreign tax purposes, including payroll taxes, that are applicable to supplemental taxable income and (ii) the minimum statutory withholding rate for federal tax purposes, including payroll taxes, that are applicable to supplemental taxable income unless you instruct the Company to use a higher withholding rate in a written notice delivered to the Company on a Permissible Trading Day. | |||||
Restrictions on Resale | You agree not to sell any shares at a time when applicable laws, Company policies or an agreement between the Company and its underwriters prohibit a sale. This restriction will apply as long as your Service continues and for such period of time after the termination of your Service as the Company may specify. | ||||
Employment at Will | Your award or this Agreement does not give you the right to be retained by the Company or a subsidiary of the Company in any capacity. The Company and its subsidiaries reserve the right to terminate your Service at any time, with or without cause. | ||||
Adjustments | In the event of a stock split, a stock dividend or a similar change in Company stock, the number of your units will be adjusted accordingly, as the Company may determine pursuant to the Plan. | ||||
Beneficiary Designation | You may dispose of your units in a written beneficiary designation. A beneficiary designation must be filed with the Company on the proper form. It will be recognized only if it has been received at the Company’s headquarters before your death. If you file no beneficiary designation or if none of your designated beneficiaries survives you, then your estate will receive any vested units that you hold at the time of your death. | ||||
Effect of Merger | If the Company is a party to a merger, consolidation or reorganization, then your units will be subject to the applicable provision of the Plan, provided that any action taken must either (a) preserve the exemption of your units from Section 409A of the Code or (b) comply with Section 409A of the Code. |
Applicable Law | This Agreement will be interpreted and enforced under the laws of the State of Delaware (without regard to its choice-of-law provisions). | ||||
The Plan and Other Agreements | The text of the Plan is incorporated in this Agreement by reference. The Plan, this Agreement, the Notice of Restricted Stock Unit Award constitute the entire understanding between you and the Company regarding this award. Any prior agreements, commitments or negotiations concerning this award are superseded. This Agreement may be amended only by another written agreement between the parties. |
Recipient: | Vanda Pharmaceuticals Inc. | ||||||||||
By: | |||||||||||
[Name] | Title: |
Payment for Units | No payment is required for the units that you are receiving. | |||||||
Vesting | The units vest in installments, as shown in the Notice of Stock Unit Award, provided that you have provided continuous Service (as defined in the Plan) to the Company through the date of such installment. In addition, all of the units subject to this award will vest if (a) the Company is subject to a Change in Control (as defined in your [Amended and Restated ]Employment Agreement with the Company, dated as of [Date], as the same may be amended from time to time (the “Employment Agreement”)) before your Service with the Company terminates and (b) you are subject to an Involuntary Termination (as defined in the Employment Agreement) within 24 months after such Change in Control. No additional units vest after your Service has terminated for any reason. | |||||||
Forfeiture | If your Service terminates for any reason then your units will be forfeited to the extent that they have not vested before the termination date. This means that any units that have not vested under this Agreement will be cancelled immediately. You receive no payment for units that are forfeited. The Company determines when your Service terminates for this purpose. | |||||||
Settlement of Units | Each unit will be settled on the first trading day that occurs on or after the day when the unit vests. However, each unit must be settled not later than March 15 of the calendar year after the calendar year in which the unit vests. At the time of settlement, you will receive one share of the Company’s Common Stock for each vested unit. But the Company, at its sole discretion, may substitute an equivalent amount of cash if the distribution of stock is not reasonably practicable due to the requirements of applicable law. The amount of cash will be determined on the basis of the market value of the Company’s Common Stock at the time of settlement. | |||||||
“Permissible Trading Day” | “Permissible Trading Day” means a day that satisfies each of the following requirements: • The Nasdaq Global Market is open for trading on that day, • You are permitted to sell shares of the Company’s Common Stock on that day without incurring liability under Section 16(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), |
• Under the Company’s Policy Memorandum Concerning Securities Trading, you would be permitted to sell shares of the Company’s Common Stock on that day without reliance on the “Same Day Sale-to-Cover Transactions” exclusion therein, and • You are not prohibited from selling shares of the Company’s Common Stock on that day by a written agreement between you and the Company or a third party. | ||||||||
Section 409A | This paragraph applies only if the Company determines that you are a “specified employee,” as defined in the regulations under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), at the time of your “separation from service,” as defined in those regulations. If this paragraph applies, then any units that otherwise would have been settled during the first six months following your separation from service will instead be settled during the seventh month following your separation from service, unless the settlement of those units is exempt from Section 409A of the Code. | |||||||
Nature of Units | Your units are mere bookkeeping entries. They represent only the Company’s unfunded and unsecured promise to issue shares of Common Stock (or distribute cash) on a future date. As a holder of units, you have no rights other than the rights of a general creditor of the Company. | |||||||
No Voting Rights or Dividends | Your units carry neither voting rights nor rights to cash dividends. You have no rights as a stockholder of the Company unless and until your units are settled by issuing shares of the Company’s Common Stock. | |||||||
Units Nontransferable | You may not sell, transfer, assign, pledge or otherwise dispose of any units. For instance, you may not use your units as security for a loan. | |||||||
Withholding Taxes-Default “Same Day Sale” | As a condition to acceptance of this Award, to the greatest extent permitted under the Plan and applicable law, except as otherwise permitted below, applicable withholding taxes will be satisfied through the sale of a number of the shares subject to the Award and the remittance of the cash proceeds of such sale to the Company, pursuant to a “same day sale.” You authorize the Company to make payment from the cash proceeds of this sale directly to the appropriate taxing authorities in an amount equal to the withholding taxes. It is the Company’s intent that the default “same day sale” to cover withholding taxes transaction requirement imposed by the Company on you herein comply with the requirements of Rule 10b5-1(c)(1)(i)(B) under the Exchange Act and be interpreted to comply with the requirements of Rule 10b5-1(c). |
At the Company’s discretion, you may be permitted to elect prior to the vesting event, provided such election is made on a Permissible Trading Day, to make arrangements to satisfy the withholding taxes under one or more of the following alternative methods: (i) withholding from any compensation otherwise payable to you by the Company or an Affiliate or (ii) tendering a cash payment (which may be in the form of a check, electronic wire transfer or other method permitted by the Company). Additionally, if for any reason, the “same day sale” commitment does not result in sufficient proceeds to satisfy the withholding taxes, the Company or an Affiliate may, in its sole discretion, satisfy all or any portion of the withholding taxes by one or more of the foregoing alternative methods. Unless the tax withholding obligations of the Company and/or any Affiliate are satisfied, the Company shall have no obligation to deliver to you any Common Stock. Withholding taxes shall be equal to the Company’s required tax withholding obligations using the maximum statutory withholding rates for federal, state, local and foreign tax purposes, including payroll taxes, that are applicable to supplemental taxable income or, solely with respect to federal income tax, such lower withholding rate as you instruct the Company to use in a written notice delivered to the Company on a Permissible Trading Day. | ||||||||
Restrictions on Resale | You agree not to sell any shares at a time when applicable laws, Company policies or an agreement between the Company and its underwriters prohibit a sale. This restriction will apply as long as your Service continues and for such period of time after the termination of your Service as the Company may specify. | |||||||
Employment at Will | Your award or this Agreement does not give you the right to be retained by the Company or a subsidiary of the Company in any capacity. The Company and its subsidiaries reserve the right to terminate your Service at any time, with or without cause. | |||||||
Adjustments | In the event of a stock split, a stock dividend or a similar change in Company stock, the number of your units will be adjusted accordingly, as the Company may determine pursuant to the Plan. | |||||||
Beneficiary Designation | You may dispose of your units in a written beneficiary designation. A beneficiary designation must be filed with the Company on the proper form. It will be recognized only if it has been received at the Company’s headquarters before your death. If you file no beneficiary designation or if none of your designated beneficiaries survives you, then your estate will receive any vested units that you hold at the time of your death. | |||||||
Effect of Merger | If the Company is a party to a merger, consolidation or reorganization, then your units will be subject to the applicable provision of the Plan, provided that any action taken must either (a) preserve the exemption of your units from Section 409A of the Code or (b) comply with Section 409A of the Code. | |||||||
Recoupment Policy | This award, and the shares acquired upon settlement of this award, shall be subject to any Company recoupment or clawback policy in effect from time to time. |
Applicable Law | This Agreement will be interpreted and enforced under the laws of the State of Delaware (without regard to its choice-of-law provisions). | |||||||
The Plan and Other Agreements | The text of the Plan is incorporated in this Agreement by reference. The Plan, this Agreement, the Notice of Restricted Stock Unit Award and your Employment Agreement constitute the entire understanding between you and the Company regarding this award. Any prior agreements, commitments or negotiations concerning this award are superseded. This Agreement may be amended only by another written agreement between the parties. |
Recipient: | Vanda Pharmaceuticals Inc. | ||||||||||
By: | |||||||||||
[Name] | Title: |
Payment for Units | No payment is required for the units that you are receiving. | ||||
Vesting | The units vest in installments, as shown in the Notice of Stock Unit Award, provided that you have provided continuous Service (as defined in the Plan) to the Company through the date of such installment. In addition, all of the units subject to this award will vest if the Company is subject to a Change in Control (as defined in the Plan) before your Service with the Company terminates. No additional units vest after your Service has terminated for any reason. | ||||
Forfeiture | If your Service terminates for any reason, then your units will be forfeited to the extent that they have not vested before the termination date. This means that any units that have not vested under this Agreement will be cancelled immediately. You receive no payment for units that are forfeited. The Company determines when your Service terminates for this purpose. | ||||
Settlement of Units | Each unit will be settled on the first trading day that occurs on or after the day when the unit vests. However, each unit must be settled not later than March 15 of the calendar year after the calendar year in which the unit vests. At the time of settlement, you will receive one share of the Company’s Common Stock for each vested unit. But the Company, at its sole discretion, may substitute an equivalent amount of cash if the distribution of stock is not reasonably practicable due to the requirements of applicable law. The amount of cash will be determined on the basis of the market value of the Company’s Common Stock at the time of settlement. | ||||
Nature of Units | Your units are mere bookkeeping entries. They represent only the Company’s unfunded and unsecured promise to issue shares of Common Stock (or distribute cash) on a future date. As a holder of units, you have no rights other than the rights of a general creditor of the Company. | ||||
No Voting Rights or Dividends | Your units carry neither voting rights nor rights to cash dividends. You have no rights as a stockholder of the Company unless and until your units are settled by issuing shares of the Company’s Common Stock. | ||||
Units Nontransferable | You may not sell, transfer, assign, pledge or otherwise dispose of any units. For instance, you may not use your units as security for a loan. |
Restrictions on Resale | You agree not to sell any shares at a time when applicable laws, Company policies or an agreement between the Company and its underwriters prohibit a sale. This restriction will apply as long as your Service continues and for such period of time after the termination of your Service as the Company may specify. | ||||
Adjustments | In the event of a stock split, a stock dividend or a similar change in Company stock, the number of your units will be adjusted accordingly, as the Company may determine pursuant to the Plan. | ||||
Beneficiary Designation | You may dispose of your units in a written beneficiary designation. A beneficiary designation must be filed with the Company on the proper form. It will be recognized only if it has been received at the Company’s headquarters before your death. If you file no beneficiary designation or if none of your designated beneficiaries survives you, then your estate will receive any vested units that you hold at the time of your death. | ||||
Effect of Merger | If the Company is a party to a merger, consolidation or reorganization, then your units will be subject to the applicable provision of the Plan. | ||||
Applicable Law | This Agreement will be interpreted and enforced under the laws of the State of Delaware (without regard to its choice-of-law provisions). | ||||
The Plan and Other Agreements | The text of the Plan is incorporated in this Agreement by reference. The Plan, this Agreement and the Notice of Restricted Stock Unit Award constitute the entire understanding between you and the Company regarding this award. Any prior agreements, commitments or negotiations concerning this award are superseded. This Agreement may be amended only by another written agreement between the parties. |
Recipient: | Vanda Pharmaceuticals Inc. | ||||||||||
By: | |||||||||||
[Name] | Title: |
Payment for Units | No payment is required for the units that you are receiving. | ||||
Vesting | The units vest in installments, as shown in the Notice of Stock Unit Award, provided that you have provided continuous Service (as defined in the Plan) to the Company through the date of such installment. | ||||
Forfeiture | If your Service terminates for any reason, then your units will be forfeited to the extent that they have not vested before the termination date. This means that any units that have not vested under this Agreement will be cancelled immediately. You receive no payment for units that are forfeited. The Company determines when your Service terminates for this purpose. | ||||
Settlement of Units | Each unit will be settled on the first trading day that occurs on or after the day when the unit vests. However, each unit must be settled not later than March 15 of the calendar year after the calendar year in which the unit vests. At the time of settlement, you will receive one share of the Company’s Common Stock for each vested unit. | ||||
“Permissible Trading Day” | “Permissible Trading Day” means a day that satisfies each of the following requirements: • The Nasdaq Global Market is open for trading on that day, • You are permitted to sell shares of the Company’s Common Stock on that day without incurring liability under Section 16(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), • Under the Company’s Policy Memorandum Concerning Securities Trading, you would be permitted to sell shares of the Company’s Common Stock on that day without reliance on the “Same Day Sale-to-Cover Transactions” exclusion therein, and • You are not prohibited from selling shares of the Company’s Common Stock on that day by a written agreement between you and the Company or a third party. |
Section 409A | This paragraph applies only if the Company determines that you are a “specified employee,” as defined in the regulations under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), at the time of your “separation from service,” as defined in those regulations. If this paragraph applies, then any units that otherwise would have been settled during the first six months following your separation from service will instead be settled during the seventh month following your separation from service, unless the settlement of those units is exempt from Section 409A of the Code. | ||||
Nature of Units | Your units are mere bookkeeping entries. They represent only the Company’s unfunded and unsecured promise to issue shares of Common Stock on a future date. As a holder of units, you have no rights other than the rights of a general creditor of the Company. | ||||
No Voting Rights or Dividends | Your units carry neither voting rights nor rights to cash dividends. You have no rights as a stockholder of the Company unless and until your units are settled by issuing shares of the Company’s Common Stock. | ||||
Units Nontransferable | You may not sell, transfer, assign, pledge or otherwise dispose of any units. For instance, you may not use your units as security for a loan. | ||||
Withholding Taxes - Default “Same Day Sale” | As a condition to acceptance of this Award, to the greatest extent permitted under the Plan and applicable law, except as otherwise permitted below, any Award Tax Liability and any Secondary NIC Liability will be satisfied through the sale of a number of the shares subject to the Award and the remittance of the cash proceeds of such sale to the Company, pursuant to a “same day sale.” You authorize the Company to make payment from the cash proceeds of this sale directly to the appropriate taxing authorities in an amount equal to the Award Tax Liability and any Secondary NIC Liability. It is the Company’s intent that the default “same day sale to cover withholding taxes transaction requirement imposed by the Company on you herein comply with the requirements of Rule 10b5-1(c)(1)(i)(B) under the Exchange Act and be interpreted to comply with the requirements of Rule 10b5-1(c). At the Company’s discretion, you may be permitted to elect prior to the vesting event, provided such election is made on a Permissible Trading Day, to make arrangements to satisfy the Award Tax Liability and any Secondary NIC Liability under one or more of the following alternative methods: (i) to the extent permitted by applicable law, withholding from any compensation otherwise payable to you by the Company or an Affiliate or (ii) tendering a cash payment (which may be in the form of a check, electronic wire transfer or other method permitted by the Company). Additionally, if for any reason, the “same day sale” commitment does not result in sufficient proceeds to satisfy the Award Tax Liability and any Secondary NIC Liability, the Company or an Affiliate may, in its sole discretion, satisfy all or any portion of the Award Tax Liability and any Secondary NIC Liability by one or more of the foregoing alternative methods. Unless the Award Tax Liability and any Secondary NIC Liability of the Company and/or any Affiliate are satisfied, the Company shall have no obligation to deliver to you any Common Stock. |
Tax Consultation | You understand that you may suffer adverse tax consequences as a result of your purchase or disposition of the Shares. You represent that you will consult with any tax advisors you deem appropriate in connection with the purchase or disposition of the Shares and that you are not relying on the Company or any Affiliate for any tax advice. | ||||
Section 431 Election | As a further condition of the settlement of this Award, you shall have signed a Section 431 Election in the form set out in Appendix A or in such other form as may be determined by HM Revenue & Customs from time to time. | ||||
Your Tax Indemnity | •To the extent permitted by law, you hereby agree to indemnify and keep indemnified the Company, and the Company as trustee for and on behalf of any related corporation, for any Award Tax Liability and Secondary NIC Liability. •The Company shall not be obliged to allot and issue any Shares or any interest in Shares pursuant to the settlement of this Award unless and until you have paid to the Company such sum as is, in the opinion of the Company, sufficient to indemnify the Company in full against the Award Tax Liability and the Secondary NIC Liability, or you have made such other arrangement as in the opinion of the Company will ensure that the full amount of any Award Tax Liability and any Secondary NIC Liability will be recovered from you within such period as the Company may then determine. •In the absence of any such other arrangement being made, the Company shall have the right to retain out of the aggregate number of shares to which you would have otherwise been entitled upon the settlement of this Award, such number of Shares as, in the opinion of the Company, will enable the Company to sell as agent for you (at the best price which can reasonably expect to be obtained at the time of the sale) and to pay over to the Company sufficient monies out of the net proceeds of sale, after deduction of all fees, commissions and expenses incurred in relation to such sale, to satisfy your liability under such indemnity. | ||||
Data Protection | By entering into this Agreement, you acknowledge the necessity of the collection, use, and transfer of personal data as described in this paragraph to the full extent permitted by and in full compliance with applicable laws. You understand that the Company and its Subsidiaries hold Data about you for the purpose of managing and administering the Plan and for the performance the contractual arrangements under this Agreement, to which you are a party. You further understand that the Company and/or its Subsidiaries will transfer Data among themselves as necessary for the purposes of implementation, administration, and management of your participation in the Plan, and that the Company and/or its Subsidiary may each further transfer Data to any Data Recipients. |
You understand that these Data Recipients may be located in your country of residence or elsewhere, such as the United States. You acknowledge that the Data Recipients to receive, possess, use, retain, and transfer Data in electronic or other form, for the purposes of implementing, administering, and managing your participation in the Plan, including any transfer of such Data, as may be required for the administration of the Plan and/or the subsequent holding of Shares on your behalf, to a broker or third party with whom the Shares acquired on exercise may be deposited. Where the transfer is to be to a destination outside the European Economic Area, the Company shall take reasonable steps to ensure that your personal data continues to be adequately protected and securely held. You understand that you may, at any time, review the Data or request that any necessary amendments be made to it. | |||||
Restrictions on Resale | You agree not to sell any shares at a time when applicable laws, Company policies or an agreement between the Company and its underwriters prohibit a sale. This restriction will apply as long as your Service continues and for such period of time after the termination of your Service as the Company may specify. | ||||
Employment | Your award or this Agreement does not give you the right to be retained by the Company or a subsidiary of the Company in any capacity. The Company and its subsidiaries reserve the right to terminate your Service at any time. | ||||
Adjustments | In the event of a stock split, a stock dividend or a similar change in Company stock, the number of your units will be adjusted accordingly, as the Company may determine pursuant to the Plan. | ||||
Personal Representative | Your Personal Representative will receive any vested units that you hold at the time of your death. | ||||
Effect of Merger | If the Company is a party to a merger, consolidation or reorganization, then your units will be subject to the applicable provision of the Plan, provided that any action taken must either (a) preserve the exemption of your units from Section 409A of the Code or (b) comply with Section 409A of the Code. |
Additional Terms | You have no right to compensation or damages for any loss in respect of this Award where such loss arises (or is claimed to arise), in whole or in part, from the termination of your employment; or notice to terminate employment given by or to you. This exclusion of liability shall apply however termination of employment, or the giving of notice, is caused other than in a case where a competent tribunal or court, from which there can be no appeal (or which the relevant employing company has decided not to appeal), has found that the cessation of your employment amounted to unfair or constructive dismissal of you and however compensation or damages may be claimed. You have no right to compensation or damages for any loss in respect of this Award where such loss arises (or is claimed to arise), in whole or in part, from any company ceasing to be a Subsidiary of the Company; or the transfer of any business from a Subsidiary of the Company to any person which is not a Subsidiary of the Company. This exclusion of liability shall apply however the change of status of the relevant company, or the transfer of the relevant business, is caused, and however compensation or damages may be claimed. | ||||
Applicable Law | This Agreement will be interpreted and enforced under the laws of the State of Delaware (without regard to its choice-of-law provisions). The Section 431 Election shall be governed by the laws of England and Wales. | ||||
The Plan and Other Agreements | The text of the Plan and the Section 431 Election are incorporated in this Agreement by reference. Any defined term not defined within this Agreement shall have the meaning as defined in the Plan. The Plan, this Agreement, the Notice of Restricted Stock Unit Award and the Section 431 Election constitute the entire understanding between you and the Company regarding this award. Any prior agreements, commitments or negotiations concerning this award are superseded. This Agreement may be amended only by another written agreement between the parties. |
Optionee: | Vanda Pharmaceuticals Inc. | ||||||||||
By: | |||||||||||
[Name] | Title: |
Tax Treatment | This option is intended to be an incentive stock option under section 422 of the Internal Revenue Code or a nonstatutory stock option, as provided in the Notice of Stock Option Grant. | ||||
Vesting | This option vests and becomes exercisable in installments, as shown in the Notice of Stock Option Grant, provided that you have provided continuous Service to the Company through the date of such installment. This option will in no event vest or become exercisable for additional shares after your Service has terminated for any reason. | ||||
Term | This option expires in any event at the close of business at Company headquarters on the day before the 10th anniversary of the Date of Grant, as shown in the Notice of Stock Option Grant. (It will expire earlier if your Service terminates, as described below.) | ||||
Regular Termination | If your Service terminates for any reason except death or total and permanent disability, then this option will expire at the close of business at Company headquarters on the date three months after your termination date. The Company determines when your Service terminates for this purpose. | ||||
Death | If you die before your Service terminates, then this option will expire at the close of business at Company headquarters on the date 12 months after the date of death. | ||||
Disability | If your Service terminates because of your total and permanent disability, then this option will expire at the close of business at Company headquarters on the date 12 months after your termination date. For all purposes under this Agreement, “total and permanent disability” means that you are unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted, or can be expected to last, for a continuous period of not less than one year. | ||||
Leaves of Absence and Part-Time Work | For purposes of this option, your Service does not terminate when you go on a military leave, a sick leave or another bona fide leave of absence, if the leave was approved by the Company in writing and if continued crediting of Service is required by the terms of the leave or by applicable law. But your Service terminates when the approved leave ends, unless you immediately return to active work. If you go on a leave of absence, then the vesting schedule specified in the Notice of Stock Option Grant may be adjusted in accordance with the Company’s leave of absence policy or the terms of your leave. If you commence working on a part-time basis, then the vesting schedule specified in the Notice of Stock Option Grant may be adjusted in accordance with the Company’s part-time work policy or the terms of an agreement between you and the Company pertaining to your part-time schedule. |
Restrictions on Exercise | The Company will not permit you to exercise this option if the issuance of shares at that time would violate any law or regulation. | ||||
Notice of Exercise | When you wish to exercise this option, you must notify the Company by filing the proper “Notice of Exercise” form at the address given on the form. Your notice must specify how many shares you wish to purchase. Your notice must also specify how your shares should be registered. The notice will be effective when the Company receives it. If someone else wants to exercise this option after your death, that person must prove to the Company's satisfaction that he or she is entitled to do so. | ||||
Form of Payment | Except as set forth below in “Default Same Day Sale at Expiration”, when you submit your notice of exercise, you must include payment of the option exercise price for the shares that you are purchasing. To the extent permitted by applicable law, payment may be made in one (or a combination of two or more) of the following forms (each, a “Permissible Form of Payment”): •Cash payment (including check, electronic wire transfer or other method permitted by the Company). •Withholding from any compensation (on an after-tax basis) otherwise payable to you by the Company or an Affiliate; provided the Company has consented to such withholding. •Withholding shares subject to the option that would otherwise be issued to you upon exercising the option (i.e., net exercise). The value of such shares, determined as of the effective date of the option exercise, will be applied to the option exercise price. •Certificates for shares of Company stock that you own, along with any forms needed to effect a transfer of those shares to the Company. The value of the shares, determined as of the effective date of the option exercise, will be applied to the option exercise price. Instead of surrendering shares of Company stock, you may attest to the ownership of those shares on a form provided by the Company and have the same number of shares subtracted from the option shares issued to you. •Irrevocable directions to a securities broker approved by the Company to sell all or part of your option shares and to deliver to the Company from the sale proceeds an amount sufficient to pay the option exercise price and any withholding taxes, such sale, a “same day sale”. (The balance of the sale proceeds, if any, will be delivered to you.) The directions must be given by signing a special “Notice of Exercise” form provided by the Company and delivered to the securities broker (with a copy to the Company) on a Permissible Trading Day (as defined below). |
“Permissible Trading Day” | “Permissible Trading Day” means a day that satisfies each of the following requirements: • The Nasdaq Global Market is open for trading on that day, • You are permitted to sell shares of the Company’s Common Stock on that day without incurring liability under Section 16(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), • Under the Company’s Policy Memorandum Concerning Securities Trading, you would be permitted to sell shares of the Company’s Common Stock on that day without reliance on the “Same Day Sale-to-Cover Transactions” exclusion therein, and • You are not prohibited from selling shares of the Company’s Common Stock on that day by a written agreement between you and the Company or a third party. | ||||
Default “Same Day Sale” at Expiration | If (i) you submit your notice of exercise on a day that is not a Permissible Trading Day (other than by reason of The Nasdaq Global Market not being open for trading on that day), and (ii) you are then exercising this option because it would otherwise expire if not exercised on such day or within 5 business days thereafter (such exercise, an “Expiration Exercise”), then, unless you have previously made arrangements on a Permissible Trading Day for the payment of the option exercise price by one (or a combination of two or more) of the Permissible Forms of Payment, the aggregate exercise price shall be paid from the sale proceeds of a “same day sale” as described above (other than the requirement to deliver the Notice of Exercise on a Permissible Trading Day). | ||||
Withholding Taxes and Stock Withholding | You will not be allowed to exercise this option unless you make arrangements acceptable to the Company to pay any withholding taxes that may be due as a result of the option exercise. With the Company’s consent, these arrangements may include withholding shares of Company stock that otherwise would be issued to you when you exercise this option. The value of these shares, determined as of the effective date of the option exercise, will be applied to the withholding taxes. If, however, the exercise is an Expiration Exercise, then, unless you have previously made arrangements on a Permissible Trading Day for the payment of the withholding taxes by one (or a combination of two or more) of the Permissible Forms of Payment, the withholding taxes that may be due as a result of such exercise shall be paid from the sale proceeds of a “same day sale” as described above (other than the requirement to deliver the Notice of Exercise on a Permissible Trading Day). Withholding taxes due upon any exercise of this option shall be equal to the Company’s required tax withholding obligations using (i) the maximum statutory withholding rates for state, local and foreign tax purposes, including payroll taxes, that are applicable to supplemental taxable income and (ii) the minimum statutory withholding rate for federal tax purposes, including payroll taxes, that are applicable to supplemental taxable income unless you instruct the Company to use a higher withholding rate in a written notice delivered to the Company on a Permissible Trading Day. | ||||
Rule 10b5-1(c) | It is the Company’s intent that the default “same day sale” to cover exercise price and withholding tax transaction requirements imposed by the Company on you herein with respect to Expiration Exercises comply with the requirements of Rule 10b5-1(c)(1)(i)(B) under the Exchange Act and be interpreted to comply with the requirements of Rule 10b5-1(c). |
Restrictions on Resale | You agree not to sell any option shares at a time when applicable laws, Company policies or an agreement between the Company and its underwriters prohibit a sale. This restriction will apply as long as your Service continues and for such period of time after the termination of your Service as the Company may specify. | ||||
Transfer of Option | Prior to your death, only you may exercise this option. You cannot transfer or assign this option. For instance, you may not sell this option or use it as security for a loan. If you attempt to do any of these things, this option will immediately become invalid. You may, however, dispose of this option in your will or a beneficiary designation. | ||||
Regardless of any marital property settlement agreement, the Company is not obligated to honor a notice of exercise from your former spouse, nor is the Company obligated to recognize your former spouse’s interest in your option in any other way. | |||||
Retention Rights | Your option or this Agreement does not give you the right to be retained by the Company or a subsidiary of the Company in any capacity. The Company and its subsidiaries reserve the right to terminate your Service at any time, with or without cause. | ||||
Stockholder Rights | You, or your estate or heirs, have no rights as a stockholder of the Company until you have exercised this option by giving the required notice to the Company, paying the exercise price and satisfying any applicable withholding taxes. No adjustments are made for dividends or other rights if the applicable record date occurs before you exercise this option, except as described in the Plan. | ||||
Adjustments | In the event of a stock split, a stock dividend or a similar change in Company stock, the number of shares covered by this option and the exercise price per share will be adjusted pursuant to the Plan. | ||||
Applicable Law | This Agreement will be interpreted and enforced under the laws of the State of Delaware (without regard to its choice-of-law provisions). | ||||
The Plan and Other Agreements | The text of the Plan is incorporated in this Agreement by reference. This Agreement, the Notice of Stock Option Grant and the Plan constitute the entire understanding between you and the Company regarding this option. Any prior agreements, commitments or negotiations concerning this option are superseded. This Agreement may be amended only by another written agreement between the parties. |
Optionee: | Vanda Pharmaceuticals Inc. | ||||||||||
By: | |||||||||||
[Name] | Title: |
Tax Treatment | This option is intended to be an incentive stock option under section 422 of the Internal Revenue Code or a nonstatutory stock option, as provided in the Notice of Stock Option Grant. | ||||
Vesting | This option vests and becomes exercisable in installments, as shown in the Notice of Stock Option Grant, provided that you have provided continuous Service to the Company through the date of such installment. This option will in no event vest or become exercisable for additional shares after your Service has terminated for any reason. | ||||
Acceleration | If you are subject to an Involuntary Termination, then the vested and exercisable portion of this option shall be determined by adding three months to your actual Service. In addition, if the Company is subject to a Change in Control before your Service terminates and you are subject to an Involuntary Termination within 24 months after such Change in Control, then this option shall become exercisable with respect to all of the Shares. “Change in Control” and “Involuntary Termination” are defined in your Amended and Restated Employment Agreement with the Company, dated as of [Date], as the same may be amended from time to time (the “Employment Agreement”). | ||||
Term | This option expires in any event at the close of business at Company headquarters on the day before the 10th anniversary of the Date of Grant, as shown in the Notice of Stock Option Grant. (It will expire earlier if your Service terminates, as described below.) | ||||
Termination Other than Due to Death or Disability | If (a) your Service terminates due to your resignation other than for Good Reason or (b) the Company terminates your Service for Cause, then this option will expire at the close of business at Company headquarters on the date three months after your termination date. If you are subject to an Involuntary Termination, then this option will expire at the close of business at Company headquarters on the date six months after your termination date. The Company determines when your Service terminates for purposes of this section. “Good Reason” and “Cause” are defined in your Employment Agreement. | ||||
Death | If you die before your Service terminates, then this option will expire at the close of business at Company headquarters on the date 12 months after the date of death. |
Disability | If your Service terminates because of your Permanent Disability, then this option will expire at the close of business at Company headquarters on the date 12 months after your termination date. “Permanent Disability” is defined in your Employment Agreement. | ||||
Leaves of Absence and Part-Time Work | For purposes of this option, your Service does not terminate when you go on a military leave, a sick leave or another bona fide leave of absence, if the leave was approved by the Company in writing and if continued crediting of Service is required by the terms of the leave or by applicable law. But your Service terminates when the approved leave ends, unless you immediately return to active work. If you go on a leave of absence, then the vesting schedule specified in the Notice of Stock Option Grant may be adjusted in accordance with the Company’s leave of absence policy or the terms of your leave. If you commence working on a part-time basis, then the vesting schedule specified in the Notice of Stock Option Grant may be adjusted in accordance with the Company’s part-time work policy or the terms of an agreement between you and the Company pertaining to your part-time schedule. | ||||
Restrictions on Exercise | The Company will not permit you to exercise this option if the issuance of shares at that time would violate any law or regulation. | ||||
Notice of Exercise | When you wish to exercise this option, you must notify the Company by filing the proper “Notice of Exercise” form at the address given on the form. Your notice must specify how many shares you wish to purchase. Your notice must also specify how your shares should be registered. The notice will be effective when the Company receives it. If someone else wants to exercise this option after your death, that person must prove to the Company's satisfaction that he or she is entitled to do so. | ||||
Form of Payment | Except as set forth below in “Default Same Day Sale at Expiration”, when you submit your notice of exercise, you must include payment of the option exercise price for the shares that you are purchasing. To the extent permitted by applicable law, payment may be made in one (or a combination of two or more) of the following forms (each, a “Permissible Form of Payment”): •Cash payment (including check, , electronic wire transfer or other method permitted by the Company). •Withholding from any compensation (on an after-tax basis) otherwise payable to you by the Company or an Affiliate; provided the Company has consented to such withholding. |
•Withholding shares subject to the option that would otherwise be issued to you upon exercising the option (i.e., net exercise). The value of such shares, determined as of the effective date of the option exercise, will be applied to the option exercise price. •Certificates for shares of Company stock that you own, along with any forms needed to effect a transfer of those shares to the Company. The value of the shares, determined as of the effective date of the option exercise, will be applied to the option exercise price. Instead of surrendering shares of Company stock, you may attest to the ownership of those shares on a form provided by the Company and have the same number of shares subtracted from the option shares issued to you. •Irrevocable directions to a securities broker approved by the Company to sell all or part of your option shares and to deliver to the Company from the sale proceeds an amount sufficient to pay the option exercise price and any withholding taxes, such sale, a “same day sale”. (The balance of the sale proceeds, if any, will be delivered to you.) The directions must be given by signing a special “Notice of Exercise” form provided by the Company and delivered to the securities broker (with a copy to the Company) on a Permissible Trading Day (as defined below). | |||||
“Permissible Trading Day” | “Permissible Trading Day” means a day that satisfies each of the following requirements: • The Nasdaq Global Market is open for trading on that day, • You are permitted to sell shares of the Company’s Common Stock on that day without incurring liability under Section 16(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), • Under the Company’s Policy Memorandum Concerning Securities Trading, you would be permitted to sell shares of the Company’s Common Stock on that day without reliance on the “Same Day Sale-to-Cover Transactions” exclusion therein, and • You are not prohibited from selling shares of the Company’s Common Stock on that day by a written agreement between you and the Company or a third party. | ||||
Default “Same Day Sale” at Expiration | If (i) you submit your notice of exercise on a day that is not a Permissible Trading Day (other than by reason of The Nasdaq Global Market not being open for trading on that day), and (ii) you are then exercising this option because it would otherwise expire if not exercised on such day or within 5 business days thereafter (such exercise, an “Expiration Exercise”), then, unless you have previously made arrangements on a Permissible Trading Day for the payment of the option exercise price by one (or a combination of two or more) of the Permissible Forms of Payment, the aggregate exercise price shall be paid from the sale proceeds of a “same day sale” as described above (other than the requirement to deliver the Notice of Exercise on a Permissible Trading Day). |
Withholding Taxes and Stock Withholding | You will not be allowed to exercise this option unless you make arrangements acceptable to the Company to pay any withholding taxes that may be due as a result of the option exercise. With the Company’s consent, these arrangements may include withholding shares of Company stock that otherwise would be issued to you when you exercise this option. The value of these shares, determined as of the effective date of the option exercise, will be applied to the withholding taxes. If, however, the exercise is an Expiration Exercise, then, unless you have previously made arrangements on a Permissible Trading Day for the payment of the withholding taxes by one (or a combination of two or more) of the Permissible Forms of Payment, the withholding taxes that may be due as a result of such exercise shall be paid from the sale proceeds of a “same day sale” as described above (other than the requirement to deliver the Notice of Exercise on a Permissible Trading Day). Withholding taxes due upon any exercise of this option shall be equal to the Company’s required tax withholding obligations using the maximum statutory withholding rates for federal, state, local and foreign tax purposes, including payroll taxes, that are applicable to supplemental taxable income or, solely with respect to federal income tax, such lower withholding rate as you instruct the Company to use in a written notice delivered to the Company on a Permissible Trading Day. | ||||
Rule 10b5-1(c) | It is the Company’s intent that the default “same day sale” to cover exercise price and withholding tax transaction requirements imposed by the Company on you herein with respect to Expiration Exercises comply with the requirements of Rule 10b5-1(c)(1)(i)(B) under the Exchange Act and be interpreted to comply with the requirements of Rule 10b5-1(c). | ||||
Restrictions on Resale | You agree not to sell any option shares at a time when applicable laws, Company policies or an agreement between the Company and its underwriters prohibit a sale. This restriction will apply as long as your Service continues and for such period of time after the termination of your Service as the Company may specify. | ||||
Transfer of Option | Prior to your death, only you may exercise this option. You cannot transfer or assign this option. For instance, you may not sell this option or use it as security for a loan. If you attempt to do any of these things, this option will immediately become invalid. You may, however, dispose of this option in your will or a beneficiary designation. Regardless of any marital property settlement agreement, the Company is not obligated to honor a notice of exercise from your former spouse, nor is the Company obligated to recognize your former spouse’s interest in your option in any other way. | ||||
Retention Rights | Your option or this Agreement does not give you the right to be retained by the Company or a subsidiary of the Company in any capacity. The Company and its subsidiaries reserve the right to terminate your Service at any time, with or without cause. | ||||
Stockholder Rights | You, or your estate or heirs, have no rights as a stockholder of the Company until you have exercised this option by giving the required notice to the Company, paying the exercise price and satisfying any applicable withholding taxes. No adjustments are made for dividends or other rights if the applicable record date occurs before you exercise this option, except as described in the Plan. |
Adjustments | In the event of a stock split, a stock dividend or a similar change in Company stock, the number of shares covered by this option and the exercise price per share will be adjusted pursuant to the Plan. | ||||
Recoupment Policy | This option, and the shares acquired upon exercise of this option, shall be subject to any Company recoupment or clawback policy in effect from time to time. | ||||
Applicable Law | This Agreement will be interpreted and enforced under the laws of the State of Delaware (without regard to its choice-of-law provisions). | ||||
The Plan and Other Agreements | The text of the Plan is incorporated in this Agreement by reference. This Agreement, the Notice of Stock Option Grant, the Plan and your Employment Agreement constitute the entire understanding between you and the Company regarding this option. Any prior agreements, commitments or negotiations concerning this option are superseded. This Agreement may be amended only by another written agreement between the parties. |
Optionee: | Vanda Pharmaceuticals Inc. | ||||||||||
By: | |||||||||||
[Name] | Title: |
Tax Treatment | This option is intended to be a nonstatutory stock option, as provided in the Notice of Stock Option Grant, and is not intended to qualify as an incentive stock option under section 422 of the Internal Revenue Code. | |||||||
Vesting | This option becomes exercisable in installments, as shown in the Notice of Stock Option Grant. In addition, this option becomes exercisable in full if the Company is subject to a Change in Control before your Service terminates or if your Service terminates because of your death or total and permanent disability. This option will in no event become exercisable for additional shares after your Service has terminated for any reason. For all purposes under this Agreement, “total and permanent disability” means that you are unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted, or can be expected to last, for a continuous period of not less than one year. | |||||||
Term | This option expires in any event at the close of business at Company headquarters on the day before the 10th anniversary of the Date of Grant, as shown in the Notice of Stock Option Grant. (It will expire earlier if your Service terminates, as described below.) | |||||||
Termination of Service | If your Service terminates for any reason, then this option will expire at the close of business at Company headquarters on the date 12 months after your termination date. The Company determines when your Service terminates for this purpose. | |||||||
Leaves of Absence | For purposes of this option, your Service does not terminate when you go on a military leave, a sick leave or another bona fide leave of absence, if the leave was approved by the Company in writing and if continued crediting of Service is required by the terms of the leave or by applicable law. But your Service terminates when the approved leave ends, unless you immediately return to active work. If you go on a leave of absence, then the vesting schedule specified in the Notice of Stock Option Grant may be adjusted in accordance with the Company’s leave of absence policy or the terms of your leave. | |||||||
Restrictions on Exercise | The Company will not permit you to exercise this option if the issuance of shares at that time would violate any law or regulation. |
Notice of Exercise | When you wish to exercise this option, you must notify the Company or its agent in the prescribed manner. Your notice must specify how many shares you wish to purchase. Your notice must also specify how your shares should be registered. The notice will be effective when the Company or its agent receives it. If someone else wants to exercise this option after your death, that person must prove to the Company's satisfaction that he or she is entitled to do so. | |||||||
Form of Payment | Except as set forth below in “Default Same Day Sale at Expiration”, when you submit your notice of exercise, you must include payment of the option exercise price for the shares that you are purchasing. To the extent permitted by applicable law, payment may be made in one (or a combination of two or more) of the following forms (each, a “Permissible Form of Payment”): •Cash payment (including check, electronic wire transfer or other method permitted by the Company). •Withholding from any after-tax compensation otherwise payable to you by the Company or an Affiliate; provided the Company has consented to such withholding. •Withholding shares subject to the option that would otherwise be issued to you upon exercising the option (i.e., net exercise). The value of such shares, determined as of the effective date of the option exercise, will be applied to the option exercise price. •Certificates for shares of Company stock that you own, along with any forms needed to effect a transfer of those shares to the Company. The value of the shares, determined as of the effective date of the option exercise, will be applied to the option exercise price. Instead of surrendering shares of Company stock, you may attest to the ownership of those shares on a form provided by the Company and have the same number of shares subtracted from the option shares issued to you. •Irrevocable directions to a securities broker approved by the Company to sell all or part of your option shares and to deliver to the Company from the sale proceeds an amount sufficient to pay the option exercise price and any withholding taxes, such sale, a “same day sale”. (The balance of the sale proceeds, if any, will be delivered to you.) The directions must be given by signing a special “Notice of Exercise” form provided by the Company and delivered to the securities broker (with a copy to the Company) on a Permissible Trading Day (as defined below). | |||||||
“Permissible Trading Day” | “Permissible Trading Day” means a day that satisfies each of the following requirements: • The Nasdaq Global Market is open for trading on that day, • You are permitted to sell shares of the Company’s Common Stock on that day without incurring liability under Section 16(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), • Under the Company’s Policy Memorandum Concerning Securities Trading, you would be permitted to sell shares of the Company’s Common Stock on that day without reliance on the “Same Day Sale-to-Cover Transactions” exclusion therein, and • You are not prohibited from selling shares of the Company’s Common Stock on that day by a written agreement between you and the Company or a third party. |
Default “Same Day Sale” at Expiration | If (i) you submit your notice of exercise on a day that is not a Permissible Trading Day (other than by reason of The Nasdaq Global Market not being open for trading on that day), and (ii) you are then exercising this option because it would otherwise expire if not exercised on such day or within 5 business days thereafter (such exercise, an “Expiration Exercise”), then, unless you have previously made arrangements on a Permissible Trading Day for the payment of the option exercise price by one (or a combination of two or more) of the Permissible Forms of Payment, the aggregate exercise price shall be paid from the sale proceeds of a “same day sale” as described above (other than the requirement to deliver the Notice of Exercise on a Permissible Trading Day). | |||||||
Rule 10b5-1(c) | It is the Company’s intent that the default “same day sale” to cover exercise price transaction requirements imposed by the Company on you herein with respect to Expiration Exercises comply with the requirements of Rule 10b5-1(c)(1)(i)(B) under the Exchange Act and be interpreted to comply with the requirements of Rule 10b5-1(c). | |||||||
Restrictions on Resale | You agree not to sell any option shares at a time when applicable laws, Company policies or an agreement between the Company and its underwriters prohibit a sale. This restriction will apply as long as your Service continues and for such period of time after the termination of your Service as the Company may specify. | |||||||
Transfer of Option | Prior to your death, only you may exercise this option. You cannot transfer or assign this option. For instance, you may not sell this option or use it as security for a loan. If you attempt to do any of these things, this option will immediately become invalid. You may, however, dispose of this option in your will or a beneficiary designation. Regardless of any marital property settlement agreement, the Company is not obligated to honor a notice of exercise from your former spouse, nor is the Company obligated to recognize your former spouse’s interest in your option in any other way. | |||||||
Retention Rights | Your option or this Agreement does not give you the right to be retained by the Company or a subsidiary of the Company in any capacity. The Company and its subsidiaries reserve the right to terminate your Service at any time, with or without cause. | |||||||
Stockholder Rights | You, or your estate or heirs, have no rights as a stockholder of the Company until you have exercised this option by giving the required notice to the Company and paying the exercise price. No adjustments are made for dividends or other rights if the applicable record date occurs before you exercise this option, except as described in the Plan. | |||||||
Adjustments | In the event of a stock split, a stock dividend or a similar change in Company stock, the number of shares covered by this option and the exercise price per share may be adjusted pursuant to the Plan. |
Applicable Law | This Agreement will be interpreted and enforced under the laws of the State of Delaware (without regard to their choice-of-law provisions). | |||||||
The Plan and Other Agreements | The text of the Plan is incorporated in this Agreement by reference. Capitalized terms not otherwise defined in this Agreement shall be defined as set forth in the Plan. This Agreement and the Plan constitute the entire understanding between you and the Company regarding this option. Any prior agreements, commitments or negotiations concerning this option are superseded. This Agreement may be amended only by another written agreement between the parties. |
Optionee: | Vanda Pharmaceuticals Inc. | ||||||||||
By: | |||||||||||
[Name] | Title: |
Tax Treatment | This option is intended to be an Unapproved Option, as provided in the Notice of Stock Option Grant. | ||||
Vesting | This option vests and becomes exercisable in installments, as shown in the Notice of Stock Option Grant, provided that you have provided continuous Service to the Company through the date of such installment. This option will in no event vest or become exercisable for additional shares after your Service has terminated for any reason. | ||||
Term | This option expires in any event at the close of business at Company headquarters on the day before the 10th anniversary of the Date of Grant, as shown in the Notice of Stock Option Grant. (It will expire earlier if your Service terminates, as described below.) | ||||
Regular Termination | If your Service terminates for any reason except death or total and permanent disability, then this option will expire at the close of business at Company headquarters on the date three months after your termination date. The Company determines when your Service terminates for this purpose. | ||||
Death | If you die before your Service terminates, then this option will expire at the close of business at Company headquarters on the date 12 months after the date of death. | ||||
Disability | If your Service terminates because of your total and permanent disability, then this option will expire at the close of business at Company headquarters on the date 12 months after your termination date. For all purposes under this Agreement, “total and permanent disability” means that you are unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted, or can be expected to last, for a continuous period of not less than one year. | ||||
Leaves of Absence and Part-Time Work | For purposes of this option, your Service does not terminate when you go on a military leave, a sick leave or another bona fide leave of absence, if the leave was approved by the Company in writing and if continued crediting of Service is required by the terms of the leave or by applicable law. But your Service terminates when the approved leave ends, unless you immediately return to active work. If you go on a leave of absence, then the vesting schedule specified in the Notice of Stock Option Grant may be adjusted in accordance with the Company’s leave of absence policy or the terms of your leave. If you commence working on a part-time basis, then the vesting schedule specified in the Notice of Stock Option Grant may be adjusted in accordance with the Company’s part-time work policy or the terms of an agreement between you and the Company pertaining to your part-time schedule. |
Restrictions on Exercise | The Company will not permit you to exercise this option if the issuance of shares at that time would violate any law or regulation. | ||||
Notice of Exercise | In the event of your death, this option may be exercised by your Personal Representative (provided evidence is produced by such Personal Representative that they are so authorized and entitled to do so) only. When you wish to exercise this option, you must notify the Company by filing the proper “Notice of Exercise” form at the address given on the form. Your notice must specify how many shares you wish to purchase. Your notice must also specify how your shares should be registered. The notice will be effective when the Company receives it, together with the signed Section 431 Election. | ||||
Form of Payment | Except as set forth below in “Default Same Day Sale at Expiration”, when you submit your notice of exercise, together with the signed Section 431 Election, you must include payment of the option exercise price for the shares that you are purchasing (together with any Award Tax Liability and Secondary NIC Liability). To the extent permitted by applicable law, payment may be made in one (or a combination of two or more) of the following forms (each, a permissible Form of Payment”): •Cash payment (including cheque, electronic wire transfer or other method permitted by the Company). •To the extent permissible by law, withholding from any compensation (on an after-tax basis) otherwise payable to you by the Company or an Affiliate; provided the Company has consented to such withholding. •Withholding shares subject to the option that would otherwise be issued to you upon exercising the option (i.e., net exercise). The value of such shares, determined as of the effective date of the option exercise, will be applied to the option exercise price. •Irrevocable directions to a securities broker approved by the Company to sell all or part of your option shares and to deliver to the Company from the sale proceeds an amount sufficient to pay the option exercise price and any Award Tax Liability and Secondary NIC Liability, such sale, a “same day sale”. (The balance of the sale proceeds, if any, will be delivered to you.) The directions must be given by signing a special “Notice of Exercise” form provided by the Company and delivered to the securities broker (with a copy to the Company) on a Permissible Trading Day (as defined below). |
“Permissible Trading Day” | “Permissible Trading Day” means a day that satisfies each of the following requirements: • The Nasdaq Global Market is open for trading on that day, • You are permitted to sell shares of the Company’s Common Stock on that day without incurring liability under Section 16(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), • Under the Company’s Policy Memorandum Concerning Securities Trading, you would be permitted to sell shares of the Company’s Common Stock on that day without reliance on the “Same Day Sale-to-Cover Transactions” exclusion therein, and • You are not prohibited from selling shares of the Company’s Common Stock on that day by a written agreement between you and the Company or a third party. | ||||
Default “Same Day Sale” at Expiration | If (i) you submit your notice of exercise on a day that is not a Permissible Trading Day (other than by reason of The Nasdaq Global Market not being open for trading on that day), and (ii) you are then exercising this option because it would otherwise expire if not exercised on such day or within 5 business days thereafter (such exercise, an “Expiration Exercise”), then, unless you have previously made arrangements on a Permissible Trading Day for the payment of the option exercise price by one (or a combination of two or more) of the Permissible Forms of Payment, the aggregate exercise price shall be paid from the sale proceeds of a “same day sale” as described above (other than the requirement to deliver the Notice of Exercise on a Permissible Trading Day). |
Withholding Taxes and Stock Withholding | In the event that the Company determines that it or any Subsidiary is required to account to HM Revenue & Customs for the Award Tax Liability and any Secondary NIC Liability or to withhold any other tax as a result of the exercise of this option you, as a condition to the exercise of this option, shall make arrangements satisfactory to the Company to enable it or any Subsidiary to satisfy all withholding liabilities. You shall also make arrangements satisfactory to the Company to enable it to satisfy any withholding requirements that may arise in connection with the vesting or disposition of Shares purchased by exercising this option. If, however, the exercise is an Expiration Exercise, then, unless you have previously made arrangements on a Permissible Trading Day for the payment of the withholding taxes by one (or a combination of two or more) of the Permissible Forms of Payment, the withholding taxes that may be due as a result of such exercise shall be paid from the sale proceeds of a “same day sale” as described above (other than the requirement to deliver the Notice of Exercise on a Permissible Trading Day). Withholding taxes due upon any exercise of this option shall be equal to the Company’s required tax withholding obligations using (i) the maximum statutory withholding rates for state, local and foreign tax purposes, including payroll taxes, that are applicable to supplemental taxable income and (ii) the minimum statutory withholding rate for federal tax purposes, including payroll taxes, that are applicable to supplemental taxable income unless you instruct the Company to use a higher withholding rate in a written notice delivered to the Company on a Permissible Trading Day. | ||||
Rule 10b5-1(c) | It is the Company’s intent that the default “same day sale” to cover exercise price and withholding tax transaction requirements imposed by the Company on you herein with respect to Expiration Exercises comply with the requirements of Rule 10b5-1(c)(1)(i)(B) under the Exchange Act and be interpreted to comply with the requirements of Rule 10b5-1(c). | ||||
Tax Consultation | You understand that you may suffer adverse tax consequences as a result of your purchase or disposition of the Shares. You represent that you will consult with any tax advisors you deem appropriate in connection with the purchase or disposition of the Shares and that you are not relying on the Company or any Affiliate for any tax advice. | ||||
Section 431 Election | As a further condition of the exercise of this option, you shall have signed a Section 431 Election in the form set out in Appendix A or in such other form as may be determined by HM Revenue & Customs from time to time. |
Your Tax Indemnity | •To the extent permitted by law, you hereby agree to indemnify and keep indemnified the Company, and the Company as trustee for and on behalf of any related corporation, for any Award Tax Liability and Secondary NIC Liability. •The Company shall not be obliged to allot and issue any Shares or any interest in Shares pursuant to the exercise of this option unless and until you have paid to the Company such sum as is, in the opinion of the Company, sufficient to indemnify the Company in full against the Award Tax Liability and the Secondary NIC Liability, or you have made such other arrangement as in the opinion of the Company will ensure that the full amount of any Award Tax Liability and any Secondary NIC Liability will be recovered from you within such period as the Company may then determine. •In the absence of any such other arrangement being made, the Company shall have the right to retain out of the aggregate number of shares to which you would have otherwise been entitled upon the exercise of this option, such number of Shares as, in the opinion of the Company, will enable the Company to sell as agent for you (at the best price which can reasonably expect to be obtained at the time of the sale) and to pay over to the Company sufficient monies out of the net proceeds of sale, after deduction of all fees, commissions and expenses incurred in relation to such sale, to satisfy your liability under such indemnity. | ||||
Data Protection | By entering into this Stock Option Agreement, you acknowledge the necessity of the collection, use, and transfer of personal data as described in this paragraph to the full extent permitted by and in full compliance with applicable laws. You understand that the Company and its Subsidiaries hold Data about you for the purpose of managing and administering the Plan and for the performance the contractual arrangements under this Agreement, to which you are a party. You further understand that the Company and/or its Subsidiaries will transfer Data among themselves as necessary for the purposes of implementation, administration, and management of your participation in the Plan, and that the Company and/or its Subsidiary may each further transfer Data to any Data Recipients. You understand that these Data Recipients may be located in your country of residence or elsewhere, such as the United States. You acknowledge that the Data Recipients to receive, possess, use, retain, and transfer Data in electronic or other form, for the purposes of implementing, administering, and managing your participation in the Plan, including any transfer of such Data, as may be required for the administration of the Plan and/or the subsequent holding of Shares on your behalf, to a broker or third party with whom the Shares acquired on exercise may be deposited. Where the transfer is to be to a destination outside the European Economic Area, the Company shall take reasonable steps to ensure that your personal data continues to be adequately protected and securely held. You understand that you may, at any time, review the Data or request that any necessary amendments be made to it,. | ||||
Restrictions on Resale | You agree not to sell any option shares at a time when applicable laws, Company policies or an agreement between the Company and its underwriters prohibit a sale. This restriction will apply as long as your Service continues and for such period of time after the termination of your Service as the Company may specify. |
Transfer of Option | Prior to your death, only you may exercise this option. You cannot transfer or assign this option. For instance, you may not sell this option or use it as security for a loan. If you attempt to do any of these things, this option will immediately become invalid. You may, however, transfer this option in your will to your Personal Representative. Regardless of any marital property settlement agreement, the Company is not obligated to honor a notice of exercise from your former spouse, nor is the Company obligated to recognize your former spouse’s interest in your option in any other way. | ||||
Retention Rights | Your option or this Agreement does not give you the right to be retained by the Company or a subsidiary of the Company in any capacity. The Company and its subsidiaries reserve the right to terminate your Service at any time. | ||||
Stockholder Rights | You or your Personal Representative have no rights as a stockholder of the Company until you have exercised this option by giving the required notice to the Company and paying the exercise price and satisfying any applicable Option Tax Liability and Secondary NIC Liability. No adjustments are made for dividends or other rights if the applicable record date occurs before you exercise this option, except as described in the Plan. | ||||
Adjustments | In the event of a stock split, a stock dividend or a similar change in Company stock, the number of shares covered by this option and the exercise price per share will be adjusted pursuant to the Plan. | ||||
Additional Terms | You have no right to compensation or damages for any loss in respect of this option where such loss arises (or is claimed to arise), in whole or in part, from the termination of your employment; or notice to terminate employment given by or to you. This exclusion of liability shall apply however termination of employment, or the giving of notice, is caused other than in a case where a competent tribunal or court, from which there can be no appeal (or which the relevant employing company has decided not to appeal), has found that the cessation of your employment amounted to unfair or constructive dismissal of you and however compensation or damages may be claimed. You have no right to compensation or damages for any loss in respect of this option where such loss arises (or is claimed to arise), in whole or in part, from any company ceasing to be a Subsidiary of the Company; or the transfer of any business from a Subsidiary of the Company to any person which is not a Subsidiary of the Company. This exclusion of liability shall apply however the change of status of the relevant company, or the transfer of the relevant business, is caused, and however compensation or damages may be claimed. |
Applicable Law | This Agreement will be interpreted and enforced under the laws of the State of Delaware (without regard to their choice-of-law provisions). The Section 431 Election shall be governed by the laws of England and Wales. | ||||
The Plan and Other Agreements | This Agreement, the Notice of Stock Option Grant, the Plan and the Section 431 Election are incorporated in this Agreement by reference. Any defined term not defined within this Agreement shall have the meaning as defined in the Plan. This Agreement, the Section 431 Election, and the Plan constitute the entire understanding between you and the Company regarding this option. Any prior agreements, commitments or negotiations concerning this option are superseded. This Agreement may be amended only by another written agreement between the parties. |
November 9, 2023 | /s/ Mihael H. Polymeropoulos, M.D. | |||||||
Mihael H. Polymeropoulos, M.D. | ||||||||
President, Chief Executive Officer and Chairman of the Board (Principal Executive Officer) | ||||||||
November 9, 2023 | /s/ Kevin Moran | |||||||
Kevin Moran | ||||||||
Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer) |
November 9, 2023 | /s/ Mihael H. Polymeropoulos, M.D. | |||||||
Mihael H. Polymeropoulos, M.D. | ||||||||
President, Chief Executive Officer and Chairman of the Board (Principal Executive Officer) | ||||||||
November 9, 2023 | /s/ Kevin Moran | |||||||
Kevin Moran | ||||||||
Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer) |