EX-10.38



 Exhibit 10.38 

VANDA PHARMACEUTICALS INC. 

2016 EQUITY INCENTIVE PLAN: 

NOTICE OF RESTRICTED STOCK UNIT AWARD 

You have been granted units representing shares of Common Stock of Vanda Pharmaceuticals Inc. (the “Company”) on the following terms: 

 

			
	Name of Recipient:	 	[Name]
		
	Total Number of Units Granted:	 	[Number of Shares]
		
	Date of Grant:	 	[Date]
		
	Vesting Schedule:	 	25% of the units subject to this award will vest on each of January 1, [Year 1], January 1, [Year 2], January 1, [Year 3] and January 1, [Year 4].

 You and the Company agree that these units are granted under and governed by the terms and conditions of the Vanda
Pharmaceuticals Inc. 2016 Equity Incentive Plan (the “Plan”) and the Restricted Stock Unit Award Agreement, both of which are attached to and made a part of this document. 

You further agree that the Company may deliver by email all documents relating to the Plan or this award (including, without limitation, prospectuses required
by the Securities and Exchange Commission) and all other documents that the Company is required to deliver to its security holders (including, without limitation, annual reports and proxy statements). You also agree that the Company may deliver
these documents by posting them on a website maintained by the Company or by a third party under contract with the Company. If the Company posts these documents on a website, it will notify you by email. 

 

									
	RECIPIENT:	 		 	VANDA PHARMACEUTICALS INC.
				
	  
	 		 	By:	 	  

		 		 		 	Title:	 	  









 VANDA PHARMACEUTICALS INC. 

2016 EQUITY INCENTIVE PLAN: 

RESTRICTED STOCK UNIT AWARD AGREEMENT 

 

			
	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. 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 Permissible Trading Day that occurs on or after the day when the unit vests. However, each unit
must be settled not later than the 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,
  

•       Either (a) you are not in possession of material non-public
information that would make it illegal for you to sell shares



  
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		  	 of the Company’s Common Stock on that day under Rule 10b-5 of the Securities and Exchange Commission or
(b) Rule 10b5 1 of the Securities and Exchange Commission is applicable,
  

•       Under the Company’s Policy Memorandum Concerning Securities
Trading, you are permitted to sell shares of the Company’s Common Stock on that day, 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	  	No stock certificates or cash will be distributed to you unless you have made arrangements satisfactory to the Company for the payment of any withholding taxes that are due as a result of the vesting or settlement of this award.
These arrangements include payment in cash. With the Company’s consent, these arrangements may also include (a) payment from the proceeds of the sale of shares through a Company-approved
broker,


  
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		  	(b) withholding shares of Company stock that otherwise would be issued to you when the units are settled, (c) surrendering shares that you previously acquired or (d) withholding cash from other compensation. The
fair market value of withheld shares, determined as of the date when taxes otherwise would have been withheld in cash, will be applied to the withholding taxes.
		
	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 their choice-of-law provisions).


  
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	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.


 BY SIGNING THE COVER SHEET
OF THIS AGREEMENT, YOU AGREE TO ALL OF THE 

TERMS AND CONDITIONS DESCRIBED ABOVE AND
IN THE PLAN. 

  
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