Document:

Exhibit 10.1

 

Convertible
Note Subscription Agreement

 

THIS
CONVERTIBLE NOTE SUBSCRIPTION AGREEMENT (this “Agreement”) is made on June 4, 2021,

 

BETWEEN

 

	1.	Lomotif
    Private Limited as the ‘Company’ (the “Company”); AND
	 	 
	2.	ZVV
    Media Partners, LLC as the ‘Investor’ (the “Investor”)

 

(the
Company and the Investor being the “Parties” or individually a “Party”)

 

WHEREAS:

 

The
Company and ZASH Global Media and Entertainment Corp., an affiliate of the Investor (the “Investor Affiliate”), entered
into that certain Securities Purchase Agreement, dated as of February 23, 2021, together with other parties thereto (as amended, the
“SPA”), pursuant to which the Investor Affiliate is obligated to make certain cash payments to the Company in accordance
with the terms thereof.

 

The
Company, the Investor Affiliate and the Investor are currently negotiating and finalizing a Deed of Variation to the SPA whereby, among
other things, the Investor Affiliate will assign to the Investor, by way of novation, all of the Investor Affiliate’s rights and
benefits pursuant to the SPA.

 

In
connection with the SPA and in satisfaction of certain of the Investor Affiliate’s obligations thereunder, the Investor hereby
makes payment of the amount set forth in Schedule 1 (the “Principal Amount”) to the Company in cash.

 

In
consideration for the payment of the Principal Amount, the Company hereby issues this note (this “Note”) to the Investor
with the right to redemption or the conditional right to acquire shares in the capital of the Company under this Agreement.

 

NOW
IT IS HEREBY AGREED as follows:

 

	1.	Definitions
    and interpretation

 

These
terms have the following meanings.

 

Business
Day means a day (other than a Saturday, Sunday or public holiday) on which commercial banks are open for business in Singapore.

 

Companies
Act means the Companies Act (Chapter 50) of Singapore, as amended.

 

Exit
Event means:

 

	 	(a)	the
    sale of the whole, or substantially the whole, of the assets and undertaking of the Company or its subsidiaries in a single transaction
    or a series of related transactions; 
	 	 	 
	 	(b)	the
    sale of all or substantially all the issued share capital of the Company whether in a single transaction or in a series of related
    transactions; 
	 	 	 
	 	(c)	an
    initial public offering of Shares (or shares in the Company’s holding company) in conjunction with a listing or quotation of
    Shares (or shares in the Company’s holding company) on a recognised stock exchange; or 
	 	 	 
	 	(d)	any
    consolidation or merger of the Company with or into any person, or any other corporate reorganization, scheme of arrangement or similar
    transaction involving the Company or its subsidiaries, other than any such transaction in which holders of at least a majority, by
    voting power, of the shares of the Company issued and outstanding immediately before such transaction continue to own at least a
    majority, by voting power, of the shares of the surviving company issued and outstanding immediately thereafter, or any transaction
    effected solely for tax purposes or to change the Company’s domicile.

 

    	 

     

    

 

Notwithstanding
the foregoing an Exit Event shall not include the transactions contemplated by the SPA.

 

Fully
Diluted means the total aggregate number of Shares in the capital of the Company which would be on issue assuming if all securities
issued by the Company convertible into or exercisable for Ordinary Shares were exercised or converted, plus any Shares reserved for issuance,
but not subject to outstanding options or other awards under any equity incentive or similar plan or arrangement of the Company, but
excluding: (a) this Note; or (b) any other convertible notes.

 

Insolvency
Event means the occurrence of any one or more of the following events:

 

	 	(a)	a
    resolution is passed by the Board of Directors of the Company, or an order is made by any court of competent jurisdiction in a final,
    non-appealable order, for the winding up of the Company under any applicable liquidation, insolvency or bankruptcy laws; 
	 	 	 
	 	(b)	the
    Company enters into an insolvency process of any kind or an arrangement with or assignment for the benefit of its creditors generally;
    
	 	 	 
	 	(c)	a
    receiver, receiver and manager, provisional liquidator, liquidator, administrator or other officer of the court, or other person
    of similar function is appointed regarding all or any material assets of the Company; or
	 	 	 
	 	(d)	the
    Company is unable to pay its debts generally as they mature.

 

Interest
Rate has the meaning given in Schedule 1, subject to clause 2(a).

 

Maturity
Date has the meaning given in Schedule 1, subject to clause 2(a).

 

Ordinary
Share means an ordinary share in the capital of the Company.

 

Principal
Amount has the meaning given in Schedule 1.

 

Qualified
Financing Round means an equity financing of the Company occurring after the Principal Amount has been fully received by the Company
at a pre-money valuation of the Company of at least US$xxx million and with total proceeds
to the Company equal to at least US$xxx million for a primary issuance of shares of the
Company, excluding amounts received pursuant to this Note and any other then outstanding convertible notes (unless a lesser amount is
agreed by the Company).

 

QFR
Shares means such Shares issued at the Qualified Financing Round.

 

Securities
has the meaning given in Clause 11.2(e).

 

SFA
has the meaning given in Clause 11.2(e).

 

Shareholders
Agreement means the shareholders agreement between the Company and its shareholders, as amended from time to time.

 

Shares
means a share in the capital of the Company and includes Ordinary Shares and QFR Shares.

 

SIAC
has the meaning given in Clause 14.2.

 

Termination
Date means the earlier of:

 

	 	(a)	the
    issuance of any Shares to the Investor in accordance with this Agreement; or
	 	 	 
	 	(b)	the
    payment of all amounts due to the Investor in accordance with this Agreement.

 

Transaction
means the sale and purchase of certain shares in the share capital of the Company contemplated in the SPA.

 

    	 

     

    

 

US
Securities Act has the meaning given in Clause 11.2(e).

 

US$/USD
means the legal tender currency of the United States of America.

 

Valuation
Cap has the meaning given in Schedule 1.

 

Valuation
Cap Price means the price per share calculated by dividing the Valuation Cap by the number of shares of the Fully Diluted share capital
of the Company immediately prior to the Qualified Financing Round or, in connection with conversion pursuant to clause 5, immediately
prior to giving effect to such conversion of this Note.

 

	2.	Closing
    of the Transaction

 

	 	(a)	In
    the event that the Transaction is consummated in accordance with the terms of the SPA, this Note shall no longer be convertible into
    any Shares, other than pursuant to clause 5. Effective immediately upon such closing, the conversion terms set out in clause 3 hereof
    shall automatically cease to be in effect and, instead, the following terms shall apply:

 

	 	(i)	the
    Maturity Date shall become the seven-year anniversary date of the Closing Date (as defined in the SPA); 
	 	 	 
	 	(ii)	the
    Interest Rate shall become a simple interest rate of 2.0% per annum (which at the election of the Company may be accrued and paid
    on the Maturity Date); and
	 	 	 
	 	(iii)	all
    other terms of this Note (except for clause 3) shall continue to be in full force and effect.

 

	 	(b)	In
    the event that the Transaction is not consummated, this Note shall continue to be convertible into Shares in accordance with the
    terms set out in clause 3 hereof. 

 

	3.	Qualified
    Financing Round

 

	 	(a)	If
    there is a Qualified Financing Round on or before the Maturity Date, the outstanding balance of the Principal Amount and any unpaid
    accrued interest thereon shall automatically convert in whole without any further action by the Investor into QFR Shares at a conversion
    price (the “Conversion Price”) equal to the Valuation Cap Price. The issuance of the Shares pursuant to the conversion
    of this Note shall be upon and subject to the same terms and conditions applicable to the QFR Shares, provided that, if the Conversion
    Price is less than the price per share at which the QFR Shares are issued in the Qualified Financing Round, the Company may, solely
    at its option, elect to convert this Note into shares of a newly created series of preference shares having the same rights, privileges,
    preferences and restrictions as the QFR Shares other than with respect to (if applicable): (1) the per share liquidation preference
    and the conversion price for purposes of price-based anti-dilution protection, which will equal the Conversion Price; and (2) the
    per share dividend, which will be the same percentage of the Conversion Price as applied to determine the per share dividends of
    the investors in the Qualified Financing Round relative to the purchase price paid by such investors. 
	 	 	 
	 	(b)	The
    Company must:

 

	 	(i)	Within
    one (1) Business Day of the issuance of the QFR Shares in accordance with clause 3(a), send to the Investor a copy of the updated
    electronic register of members of the Company, reflecting the name of the Investor as the registered holder of the QFR Shares; and
    
	 	 	 
	 	(ii)	within
    15 Business Days after the issuance of the QFR Shares in accordance with clause 3(a), send to the Investor a certificate for the
    number of QFR Shares issued to the Investor.

 

	 	(c)	Any
    such QFR Shares issued in accordance with this clause 3 shall be deemed fully-paid and free from any encumbrances, and save as otherwise
    provided in clause 3(a), rank pari passu with all other QFR Shares issued in the Qualified Financing Round. 

 

    	 

     

    

 

	 	(d)	In
    connection with any conversion of this Note into any Shares, the Investor shall surrender this Note to the Company and deliver to
    the Company any documentation reasonably required by the Company (including, in the case of a Qualified Financing Round, any financing
    documents executed by the Investor in connection with such Qualified Financing Round and, if the Investor is not already a party
    to the Shareholders Agreement, a duly executed deed of adherence to the Shareholders Agreement). The Company shall not be required
    to issue or deliver any Shares into which this Note may convert until the Investor has surrendered this Note to the Company and delivered
    to the Company any such documentation. Upon the conversion of this Note into Shares pursuant to the terms hereof, in lieu of any
    fractional shares to which the Investor would otherwise be entitled, the Company shall pay the Investor cash equal to such fraction
    multiplied by the price at which this Note converts. 

 

	4.	Exit Event

 

If
there is an Exit Event while this Note remains outstanding, the Company shall repay the Investor in cash an amount equal to the sum of
(i) the Principal Amount then outstanding, plus (ii) a repayment premium equal to 20% of the Principal Amount then outstanding, plus
(iii) all unpaid accrued interest, and the Company shall make payment to the Investor within 10 Business Days following the closing of
the Exit Event. The Company shall provide the Investor with at least 5 Business Days’ notice prior to the closing of the Exit Event.
Any repayment pursuant to this clause in connection with an Exit Event shall be subject to any required tax withholdings, and may be
made by the Company (or any party to such Exit Event or its agent) following the Exit Event in connection with payment procedures established
in connection with such Exit Event.

 

	5.	Maturity 

 

In
the event that this Note remains outstanding on the Maturity Date, all unpaid interest and principal shall be due and payable upon request
of the Investor on or after the Maturity Date. Notwithstanding the foregoing, on or prior to the Maturity Date, the Investor may, by
written notice to the Company, elect to convert the outstanding Principal Amount and any accrued interest at a conversion price equal
to the Valuation Cap Price into ordinary shares of the Company; provided however, if the SPA is terminated by the Company because the
Investor Affiliate (or the Investor on its behalf or as its assignee) has not been able to raise the funds required to complete the transactions
contemplated by the SPA or the Investor Affiliate has otherwise breached its obligations under the SPA then the outstanding Principal
Amount and any accrued interest shall automatically convert at the Maturity Date at a conversion price equal to the Valuation Cap Price
into ordinary shares of the Company. Such ordinary shares issued in accordance with this clause 5 shall be deemed fully-paid and free
from any encumbrances, and rank pari passu with all other ordinary shares of the Company. The Company shall not have the right
to prepay all or any portion of this Note without the prior written consent of the Investor.

 

	6.	Interest

 

	 	(a)	The
    Interest Rate shall apply to the outstanding balance of the Principal Amount, from the date hereof and until such outstanding balance
    of the Principal Amount is paid in full or converted. Interest shall be computed on the basis of a year of 365 days for the actual
    number of days elapsed. 
	 	 	 
	 	(b)	If
    a Qualified Financing Round or an Exit Event is consummated, all interest on this Note shall be deemed to have stopped accruing as
    of the date of closing of the Qualified Financing Round or the Exit Event.

 

	7.	Insolvency
    Event

 

In
the event of an Insolvency Event, subject to law and subject to compliance with the Company’s constitution and Shareholders Agreement,
as applicable, at the option of and upon written notice by the Investor to the Company, this Note shall accelerate and all of the outstanding
Principal Amount and any unpaid accrued interest shall become due and payable immediately. Upon such acceleration, the claim of the Investor
for repayment shall be:

 

	 	(a)	junior
    to repayment in full of all indebtedness of the Company to banks or other lending institutions regularly engaged in the business
    of lending money (excluding venture capital, investment banking or similar institutions and their affiliates, which sometimes engage
    in lending activities but which are primarily engaged in investments in equity securities), unless expressly subordinated to or made
    on a parity with the amounts due under this Note;

 

    	 

     

    

 

	 	(b)	on
    par with payments for other convertible notes and indebtedness of the Company; and
	 	 	 
	 	(c)	senior
    to payments to holders of any equity securities of the Company.

 

	8.	Termination

 

This
Agreement will expire and terminate on the Termination Date. Termination of this Agreement does not relieve a Party of any prior breach
of this Agreement.

 

	9.	Voting
    and other rights

 

Until
Shares are issued upon conversion of this Note in accordance with this Agreement, the Investor (in its capacity as a holder of this Note)
shall have no rights as a shareholder of the Company, including any voting, dividend or any related rights in connection with this Note.

 

	10.	Information
    rights

 

The
Company will be obligated to provide the Investor with unaudited quarterly financial statements within 30 days after the end of each
fiscal quarter and unaudited annual financial statements with 90 days after the end of each fiscal year (unless the Company’s financial
statements are audited, in which case the Company will provide the Investors the audited financial statements). In addition, the Company
will provide to the Investor a quarterly summary of business activity and other information as reasonably requested by the Investor.

 

	11.	Representations

 

	11.1	The
    Company’s representations

 

The
Company represents to the Investor that as at the date of this Agreement:

 

	 	(a)	(corporate
    status): the Company is a corporation duly incorporated and validly existing under the law of Singapore. The Company is duly
    qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify would have a material
    adverse effect on the business, assets, liabilities, financial condition, property or results of operation of the Company;
	 	 	 
	 	(b)	(corporate
    powers): the Company has full corporate power to perform its obligations as contemplated by this Agreement;
	 	 	 
	 	(c)	(corporate
    consents): the Company has procured any consent required for the execution and performance of this Agreement; and
	 	 	 
	 	(d)	(document
    validity): this Agreement has been executed in compliance with the Company’s constituent documents and constitutes an unconditional,
    valid and enforceable legal liability of the Company. The entry into and execution of this Agreement, and the performance by the
    Company of its obligation hereunder will not (i) result in any violation of any term of its constitution and the Shareholders Agreement,
    each as in effect on the date of this Agreement, (ii) be in conflict with or constitute a default under any of the foregoing and
    will not result in the creation of any mortgage, pledge, lien, encumbrance or charge upon any of the properties or assets of the
    Company pursuant to the foregoing, or (iii) violate any statute or law or any judgment, decree, order, regulation or rule of any
    court or governmental authority to which the Company or its properties is bound or subject.

 

    	 

     

    

 

	11.2	Investor’s
    representations

 

The
Investor represents to the Company that as at the date of this Agreement:

 

	 	(a)	(corporate
    status): the Investor is a corporation duly incorporated and validly existing under the law of the country or jurisdiction of
    its incorporation or registration;
	 	 	 
	 	(b)	(powers):
    the Investor has full power to perform its obligations under this Agreement;
	 	 	 
	 	(c)	(consents):
    the Investor has procured any consent required for the execution and performance of this Agreement;
	 	 	 
	 	(d)	(document
    validity): this Agreement has been executed and constitutes an unconditional, valid and enforceable legal liability of the Investor;
    and
	 	 	 
	 	(e)	(Investor
    sophistication): the Investor is an “accredited investor” as such term is defined in (i) Section 4(a) of the Securities
    and Futures Act, (Chapter 289) of Singapore (“SFA”) and (ii) Rule 501 under the U.S. Securities Act of 1933 (the
    “US Securities Act”). The Investor has been advised that the offering and issuance of this Note and any Shares
    issuable upon conversion thereof (collectively, “Securities”) is not accompanied by a prospectus that is registered
    with the Monetary Authority of Singapore and, therefore, cannot be resold unless such subsequent offer is made in compliance with
    the SFA. The Investor is purchasing the Securities for its own account for investment, not as a nominee or agent, and not with a
    view to, or for resale in connection with, the distribution thereof, and the Investor has no present intention of selling, granting
    any participation in, or otherwise distributing the same. The Investor has such knowledge and experience in financial and business
    matters that the Investor is capable of evaluating the merits and risks of such investment, is able to incur a complete loss of such
    investment without impairing the Investor’s financial condition and is able to bear the economic risk of such investment for
    an indefinite period of time.

 

	12.	Notices

 

	12.1	Form
    of notice

 

	 	(a)	A
    notice must be in writing and in English.
	 	 	 
	 	(b)	A
    notice may be given on behalf of a person by a solicitor, director or company secretary of the person.

 

	12.2	Means
    of giving notices

 

	 	(a)	A
    notice may be given to a Party at their address as set out in Schedule 1;
	 	 	 
	 	(b)	by
    any of the following means:

 

	 	(i)	delivering
    it by hand or via a commercial rapid delivery courier service; or
	 	 	 
	 	(ii)	sending
    it by email to the email address of that Party.

 

	 	(c)	If
    a Party notifies a change of address, then notices must be to that new address.

 

	12.3	Time
    notices are given

 

A
notice is regarded as received by the addressee at the following times:

 

	 	(a)	if
    delivered to the address of the addressee, at the time of delivery; and
	 	 	 
	 	(b)	if
    sent by email, at the time the recipient receives the email in readable form.

 

	13.	Additional
    Acknowledgments and Agreements

 

In
consideration for the payment of the Principal Amount, the Company hereby acknowledges and agrees as follows:

 

	 	(a)	the
    Investor Affiliate’s obligation to make the Extension Payment (as defined in the SPA) has been satisfied as of the due date
    therefor set forth in the SPA; and

 

    	 

     

    

 

	 	(b)	the
    condition for extension of the Long Stop Date to one hundred twenty (120) days from the signing date of the SPA has been satisfied
    as of the due date therefor set forth in the SPA, and the Long Stop Date has been so extended.

 

The
Investor Affiliate shall be an express third party beneficiary to the acknowledgements and agreements made hereunder between the Company
and the Investor, and shall have the right to enforce such acknowledgements and agreements directly to the extent it may deem such enforcement
necessary or advisable to protect its rights pursuant to the SPA.

 

	14.	General

 

	14.1	Variation

 

This
Agreement may only be amended or any right hereunder waived with the written consent of the Company and the Investor.

 

	14.2	Governing
    Law; Dispute Resolution

 

This
Agreement shall be governed by, and construed in accordance with, the laws of Singapore, without giving effect to any principles of the
conflict of laws thereof. Any dispute, whether contractual or not, arising out of or in connection with these Note Conditions (including
any question regarding its existence, validity or termination) shall be referred to and finally resolved by arbitration in Singapore
in accordance with the Arbitration Rules of the Singapore International Arbitration Centre (“SIAC”) for the time being
in force, which rules are deemed to be incorporated by reference in this Condition. The seat of the arbitration shall be Singapore. The
arbitration tribunal shall consist of three (3) arbitrators, one each appointed by the Company and the Investor, respectively, and the
third appointed by the President of the Court of Arbitration for the time being of the SIAC. The language of the arbitration shall be
English. The arbitral award made and granted by the arbitration tribunal shall be final, binding and incontestable, may be enforced by
a Party against the assets of the other Party wherever those assets are located or may be found and may be used as a basis for judgement
thereon in Singapore or elsewhere.

 

	14.3	Waiver

 

A
waiver of a right or remedy under this Agreement must be in writing. Failure to exercise or a delay in exercising a right or remedy does
not operate as a waiver.

 

	14.4	Severability

 

Any
term of this Agreement which is void or unenforceable is severed to the extent that it is void or unenforceable without affecting the
remainder of this Agreement.

 

	14.5	Further
    Assurances

 

The
Company will, at its own expense, do all things necessary (including executing documents) to give effect to this Agreement and the matters
contemplated by it. The Investor agrees and covenants that at any time and from time to time the Investor will promptly execute and deliver
to the Company such further instruments and documents and take such further action as the Company may reasonably require in order to
carry out the full intent and purpose of this Note and to comply with any applicable securities laws or other regulatory approvals.

 

	14.6	Assignment

 

Neither
Party may assign, transfer or in any other manner deal with its rights under this Agreement without the prior written agreement of the
other Party. Notwithstanding the foregoing, the Investor may assign the rights (or part of the rights) under this Agreement to its related
corporation (within the meaning of the Companies Act) upon written notice to the Company.

 

	14.7	Costs
    and expenses

 

The
Company and the Investor shall each bear their own costs and expenses associated with the negotiation and execution of this Agreement.

 

	14.8	No
    third-party rights

 

Except
as set forth in Clause 13, a person who is not party to this Agreement has no rights under the Contracts (Rights of Third Parties) Act
(Chapter 53B of Singapore).

 

	14.9	Counterparts

 

This
Agreement may be signed in any number of counterparts and by the Parties on separate counterparts, each of which, when so executed, shall
be an original, but all counterparts shall together constitute one and the same document. Signatures may be exchanged by e-mail, with
original signatures to follow. Each Party agrees to be bound by its own electronic signature and that it accepts the electronic signature
of the other Party.

 

[Signature
page follows]

 

    	 

     

    

 

The
Parties have executed this Convertible Note Subscription Agreement as of the date first written above.

 

	 	COMPANY:
	 	 	 
	 	Lomotif
    Private Limited
	 	 	 
	 	By:
    /	    
	 	 	 
	 	Name:	Paul
    Yang Zhiwen
	 	Title:	Director

 

	 	INVESTOR:
	 	 	 
	 	ZVV Media Partners, LLC 
	 	 	 
	 	By:	             
	 	 	 
	 	Name:	 
	 	Title:	 

 

Acknowledged
and Agreed:

 

	INVESTOR AFFILIATE:	 
	 	 	 
	ZASH Global Media and Entertainment
    Corp.	 
	 	 	 
	By:	             	 
	 	 	 
	Name:		 
	Title:		 

 

[Signature
Page to the Convertible Note]

 

    	 

     

    

 

Schedule
1Document

Exhibit 10.1

VANDA PHARMACEUTICALS INC.
2016 EQUITY INCENTIVE PLAN
(AMENDED AND RESTATED EFFECTIVE AS OF JUNE 11, 2020)

TABLE OF CONTENTS
 
												
	 	  	 	Page
				
	ARTICLE 1.	  	INTRODUCTION
	1

				
	ARTICLE 2.	  	ADMINISTRATION
	1

	2.1	  	Committee Composition
	1

	2.2	  	Committee Responsibilities
	1

	2.3	  	Committee for Non-Officer Grants
	1

				
	ARTICLE 3.	  	SHARES AVAILABLE FOR GRANTS
	1

	3.1	  	Basic Limitation
	1

	3.2	  	Shares Returned to Reserve
	2

				
	ARTICLE 4.	  	ELIGIBILITY
	2

	4.1	  	Incentive Stock Options
	

	4.2	  	Other Grants
	2

				
	ARTICLE 5.	  	OPTIONS
	2

	5.1	  	Stock Option Agreement
	2

	5.2	  	Number of Shares
	2

	5.3	  	Exercise Price
	2

	5.4	  	Exercisability and Term
	2

	5.5	  	Effect of Change in Control
	2

	5.6	  	Modification or Assumption of Options
	2

	5.7	  	Voting and Dividend Rights
	3

				
	ARTICLE 6.	  	PAYMENT FOR OPTION SHARES
	3

	6.1	  	General Rule
	3

	6.2	  	Surrender of Stock
	3

	6.3	  	Exercise/Sale
	3

	6.4	  	Promissory Note
	3

	6.5	  	Other Forms of Payment
	3

				
	ARTICLE 7.	  	STOCK APPRECIATION RIGHTS
	3

	7.1	  	SAR Agreement
	3

	7.2	  	Number of Shares
	3

	7.3	  	Exercise Price
	3

	7.4	  	Exercisability and Term
	3

	7.5	  	Effect of Change in Control
	4

	7.6	  	Exercise of SARs
	4

	7.7	  	Modification or Assumption of SARs
	4

	7.8	  	Voting and Dividend Rights
	4

				
	ARTICLE 8.	  	RESTRICTED SHARES
	4

	8.1	  	Restricted Stock Agreement
	4

	8.2	  	Payment for Awards
	4

	8.3	  	Vesting Conditions
	4

i

												
	 	  	 	Page
	8.4	  	Voting and Dividend Rights
	4

				
	ARTICLE 9.	  	STOCK UNITS
	5

	9.1	  	Stock Unit Agreement
	5

	9.2	  	Payment for Awards
	5

	9.3	  	Vesting Conditions
	5

	9.4	  	Voting and Dividend Rights
	5

	9.5	  	Form and Time of Settlement of Stock Units
	5

	9.6	  	Death of Recipient
	5

	9.7	  	Creditors' Rights
	5

				
	ARTICLE 10.		PROTECTION AGAINST DILUTION
	5

	10.1		Adjustments
	6

	10.2		Dissolution or Liquidation
	6

	10.3		Reorganizations
	6

				
	ARTICLE 11.		AWARDS UNDER OTHER PLANS
	7

				
	ARTICLE 12.		PAYMENT OF DIRECTOR'S FEES IN SECURITIES
	7

	12.1		Effective Date
	7

	12.2		Elections to Receive NSOs, Restricted Shares or Stock Units
	7

	12.3		Number and Terms of NSOs, Restricted Shares or Stock Units
	7

				
	ARTICLE 13.		LIMITATION ON RIGHTS
	7

	13.1		Retention Rights
	7

	13.2		Stockholders' Rights
	7

	13.3		Regulatory Requirements
	7

	13.4		Transferability of Awards
	7

				
	ARTICLE 14.		TAXES
	8

	14.1		General Withholding Obligations
	8

	14.2		Share Withholding
	8

	14.3		Code Section 409A Matters
	8

				
	ARTICLE 15.		LIMITATION ON PAYMENTS
	8

	15.1		Scope of Limitation
	8

	15.2		Basic Rule
	8

	15.3		Reduction of Payments
	8

	15.4		Overpayments and Underpayments
	9

	15.5		Related Corporations
	9

				
	ARTICLE 16.		FUTURE OF THE PLAN
	9

	16.1		Term of the Plan
	9

	16.2		Amendment or Termination
	9

	16.3		Stockholder Approval
	9

ii

VANDA PHARMACEUTICALS INC.
AMENDED AND RESTATED 2016 EQUITY INCENTIVE PLAN

ARTICLE 1.    INTRODUCTION.
The Plan was adopted by the Board on April 27, 2016 and approved by the Company's stockholders on June 16, 2016 at the Company's 2016 Annual Meeting of Stockholders. The Plan was further amended and restated by the Board on April 25, 2017, which amendment and restatement became effective upon its approval by the Company's stockholders at the Company's 2017 Annual Meeting of Stockholders on June 15, 2017. The Plan was further amended and restated by the Board on April 26, 2018, which amendment and restatement became effective upon its approval by the Company's stockholders at the Company's 2018 Annual Meeting of Stockholders on June 13, 2018. The Plan was further amended and restated by the Board on April 20, 2020, which amendment and restatement will become effective upon its approval by the Company's stockholders at the  Company's 2020 Annual Meeting of Stockholders on June 11, 2020. The purpose of the Plan is to promote the long-term success of the Company and the creation of stockholder value by (a) encouraging Employees, Outside Directors and Consultants to focus on critical long-range objectives, (b) encouraging the attraction and retention of Employees, Outside Directors and Consultants with exceptional qualifications and (c) linking Employees, Outside Directors and Consultants directly to stockholder interests through increased stock ownership. The Plan seeks to achieve this purpose by providing for Awards in the form of Restricted Shares, Stock Units, Options (which may constitute ISOs or NSOs) or stock appreciation rights.
The Plan shall be governed by, and construed in accordance with, the laws of the State of Delaware (except their choice-of-law provisions).

ARTICLE 2.    ADMINISTRATION.

2.1 Committee Composition. The Committee shall administer the Plan. The Committee shall consist exclusively of two or more directors of the Company, who shall be appointed by the Board. In addition, each member of the Committee shall meet the following requirements:
(a)Any listing standards prescribed by the principal securities market on which the Company's equity securities are traded;
(b)Such requirements as the Securities and Exchange Commission may establish for administrators acting under plans intended to qualify for exemption under Rule 16b-3 (or its successor) under the Exchange Act; and
(c)Any other requirements imposed by applicable law, regulations or rules.

2.2 Committee Responsibilities. The Committee shall (a) select the Employees, Outside Directors and Consultants who are to receive Awards under the Plan, (b) determine the type, number, vesting requirements and other features and conditions of such Awards, (c) interpret the Plan, (d) make all other decisions relating to the operation of the Plan and (e) carry out any other duties delegated to it by the Board. The Committee may adopt such rules or guidelines as it deems appropriate to implement the Plan. The Committee's determinations under the Plan shall be final and binding on all persons.

2.3 Committee for Non-Officer Grants. The Board may also appoint a secondary committee of the Board, which shall be composed of one or more directors or executive officers of the Company who need not satisfy the requirements of Section 2.1. Such secondary committee may administer the Plan with respect to Employees and Consultants who are not Outside Directors and are not considered executive officers of the Company under section 16 of the Exchange Act, may grant Awards under the Plan to such Employees and Consultants and may determine all features and conditions of such Awards. Within the limitations of this Section 2.3, any reference in the Plan to the Committee shall include such secondary committee.

ARTICLE 3.    SHARES AVAILABLE FOR GRANTS.

3.1 Basic Limitation. Common Shares issued pursuant to the Plan may be authorized but unissued shares or treasury shares. The aggregate number of Common Shares issued under the Plan shall not exceed (a) 8,790,000  plus (b) the additional Common Shares described in Section 3.2. The number of Common Shares that are subject to Awards outstanding at any time under the Plan shall not exceed the number of Common Shares that then remain available for issuance under the Plan. All Common Shares available under the Plan may be issued upon the exercise of ISOs. The limitations of this Section 3.1 shall be subject to adjustment pursuant to Article 10.
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3.2 Shares Returned to Reserve. If Options, SARs, Restricted Shares or Stock Units are forfeited, settled in cash (in whole or in part), or terminate for any other reason before being exercised or settled, then the Common Shares subject to such Options, SARs, Restricted Shares or Stock Units shall again become available for issuance under the Plan. If Restricted Shares or Common Shares issued upon the exercise of Awards are reacquired by the Company pursuant to a forfeiture provision or for any other reason, then such Common Shares shall again become available for issuance under the Plan. Common Shares that are (a) not issued or delivered as a result of the net settlement of an outstanding Option or SAR or (b) used or tendered by a Participant or withheld by the Company (i) in payment of the exercise price of an Option or SAR or (ii) in satisfaction of any tax withholding obligation relating to any Award, shall not become available again for issuance under the Plan.

ARTICLE 4.    ELIGIBILITY.

4.1 Incentive Stock Options. Only Employees who are common-law employees of the Company, a Parent or a Subsidiary shall be eligible for the grant of ISOs. In addition, an Employee who owns more than 10% of the total combined voting power of all classes of outstanding stock of the Company or any of its Parents or Subsidiaries shall not be eligible for the grant of an ISO unless the requirements set forth in section 422(c)(5) of the Code are satisfied.

4.2 Other Grants. Only Employees, Outside Directors and Consultants shall be eligible for the grant of Restricted Shares, Stock Units, NSOs or SARs.

ARTICLE 5.    OPTIONS.

5.1 Stock Option Agreement. Each grant of an Option under the Plan shall be evidenced by a Stock Option Agreement between the Optionee and the Company. Such Option shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The Stock Option Agreement shall specify whether the Option is an ISO or an NSO. The provisions of the various Stock Option Agreements entered into under the Plan need not be identical. Options may be granted in consideration of a reduction in the Optionee's other compensation.

5.2 Number of Shares. Each Stock Option Agreement shall specify the number of Common Shares subject to the Option and shall provide for the adjustment of such number in accordance with Article 10. Options granted to any Optionee in a single fiscal year of the Company shall not cover more than 500,000 Common Shares, except that Options granted to a new Employee in the fiscal year of the Company in which his or her Service as an Employee first commences shall not cover more than 1,000,000 Common Shares. The limitations set forth in the preceding sentence shall be subject to adjustment in accordance with Article 10.

5.3 Exercise Price. Each Stock Option Agreement shall specify the Exercise Price; provided that the Exercise Price shall in no event be less than 100% of the Fair Market Value of a Common Share on the date of grant. This Section 5.3 shall not apply to an Option granted pursuant to the assumption of, or substitution for, another option in a manner that complies with section 424(a) of the Code (whether or not the Option is an ISO).

5.4 Exercisability and Term. Each Stock Option Agreement shall specify the date or event when all or any installment of the Option is to become exercisable; provided that the Option will not become exercisable prior to the Optionee completing at least one year of Service following the Vesting Commencement Date of such Option. The Stock Option Agreement shall also specify the term of the Option; provided that the term of an Option shall in no event exceed 10 years from the date of grant. A Stock Option Agreement may provide for accelerated exercisability in the event of the Optionee's death, disability, retirement or Involuntary Termination and may provide for expiration prior to the end of its term in the event of the termination of the Optionee's Service. Options may be awarded in combination with SARs, and such an Award may provide that the Options will not be exercisable unless the related SARs are forfeited.

5.5 Effect of Change in Control. The Committee may determine, at the time of granting an Option or thereafter, that such Option shall become exercisable as to all or part of the Common Shares subject to such Option in the event that a Change in Control occurs with respect to the Company or in the event that the Optionee is subject to an Involuntary Termination after a Change in Control. However, in the case of an ISO, the acceleration of exercisability shall not occur without the Optionee's written consent. In addition, acceleration of exercisability may be required under Section 10.3.

5.6 Modification or Assumption of Options. Within the limitations of the Plan, the Committee may modify, extend or assume outstanding options. The foregoing notwithstanding, no modification of an Option shall, without the consent of the Optionee, alter or impair his or her rights or obligations under such Option. Notwithstanding anything in this Plan to the contrary, and except for the adjustments provided in Article 10, neither the Committee nor any other person may, without the 
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approval of the Company's stockholders: (a) decrease the exercise price for any outstanding Option after the date of grant, (b) cancel or allow an optionee to surrender an outstanding Option to the Company in exchange for cash or as consideration for the grant of a new Option with a lower exercise price or the grant of another type of Award the effect of which is to reduce the exercise price of any outstanding Option or (c) take any other action with respect to an Option that would be treated as a repricing under the rules and regulations of the NASDAQ Stock Market (or such other principal U.S. national securities exchange on which the Common Shares are traded).

5.7 Voting and Dividend Rights. The holders of Options shall have neither voting rights nor a right to receive dividends or dividend equivalents.

ARTICLE 6.    PAYMENT FOR OPTION SHARES.

6.1 General Rule. The entire Exercise Price of Common Shares issued upon exercise of Options shall be payable in cash or cash equivalents at the time when such Common Shares are purchased, except that the Committee at its sole discretion may accept payment of the Exercise Price in any other form(s) described in this Article 6. However, if the Optionee is an Outside Director or executive officer of the Company, he or she may pay the Exercise Price in a form other than cash or cash equivalents only to the extent permitted by section 13(k) of the Exchange Act.

6.2 Surrender of Stock. With the Committee's consent, all or any part of the Exercise Price may be paid by surrendering, or attesting to the ownership of, Common Shares that are already owned by the Optionee. Such Common Shares shall be valued at their Fair Market Value on the date when the new Common Shares are purchased under the Plan.

6.3 Exercise/Sale. With the Committee's consent, all or any part of the Exercise Price and any withholding taxes may be paid by delivering (on a form prescribed by the Company) an irrevocable direction to a securities broker approved by the Company to sell all or part of the Common Shares being purchased under the Plan and to deliver all or part of the sales proceeds to the Company.

6.4 Promissory Note. To the extent permitted by section 13(k) of the Exchange Act, with the Committee's consent, all or any part of the Exercise Price and any withholding taxes may be paid by delivering (on a form prescribed by the Company) a full-recourse promissory note.

6.5 Other Forms of Payment. With the Committee's consent, all or any part of the Exercise Price and any withholding taxes may be paid in any other form that is consistent with applicable laws, regulations and rules.

ARTICLE 7.    STOCK APPRECIATION RIGHTS.

7.1 SAR Agreement. Each grant of an SAR under the Plan shall be evidenced by an SAR Agreement between the Optionee and the Company. Such SAR shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various SAR Agreements entered into under the Plan need not be identical. SARs may be granted in consideration of a reduction in the Optionee's other compensation.

7.2 Number of Shares. Each SAR Agreement shall specify the number of Common Shares to which the SAR pertains and shall provide for the adjustment of such number in accordance with Article 10. SARs granted to any Optionee in a single fiscal year shall in no event pertain to more than 500,000 Common Shares, except that SARs granted to a new Employee in the fiscal year of the Company in which his or her Service as an Employee first commences shall not pertain to more than 1,000,000 Common Shares. The limitations set forth in the preceding sentence shall be subject to adjustment in accordance with Article 10.

7.3 Exercise Price. Each SAR Agreement shall specify the Exercise Price; provided that the Exercise Price shall in no event be less than 100% of the Fair Market Value of a Common Share on the date of grant.

7.4 Exercisability and Term. Each SAR Agreement shall specify the date when all or any installment of the SAR is to become exercisable; provided that the SAR will not become exercisable prior to the Optionee completing at least one year of Service following the Vesting Commencement Date of such SAR. The SAR Agreement shall also specify the term of the SAR; provided that the term shall not exceed 10 years. An SAR Agreement may provide for accelerated exercisability in the event of the Optionee's death, disability, retirement or Involuntary Termination and may provide for expiration prior to the end of its term in the event of the termination of the Optionee's Service. An SAR granted under the Plan may provide that it will be exercisable only in the event of a Change in Control.
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7.5 Effect of Change in Control. The Committee may determine, at the time of granting an SAR or thereafter, that such SAR shall become fully exercisable as to all Common Shares subject to such SAR in the event that the Company is subject to a Change in Control or in the event that the Optionee is subject to an Involuntary Termination after a Change in Control. In addition, acceleration of exercisability may be required under Section 10.3.

7.6 Exercise of SARs. Upon exercise of an SAR, the Optionee (or any person having the right to exercise the SAR after his or her death) shall receive from the Company (a) Common Shares, (b) cash or (c) a combination of Common Shares and cash, as the Committee shall determine. The amount of cash and/or the Fair Market Value of Common Shares received upon exercise of SARs shall, in the aggregate, be equal to the amount by which the Fair Market Value (on the date of surrender) of the Common Shares subject to the SARs exceeds the Exercise Price. If, on the date when an SAR expires, the Exercise Price under such SAR is less than the Fair Market Value on such date but any portion of such SAR has not been exercised or surrendered, then such SAR shall automatically be deemed to be exercised as of such date with respect to such portion.

7.7 Modification or Assumption of SARs. Within the limitations of the Plan, the Committee may modify, extend or assume outstanding SARs. The foregoing notwithstanding, no modification of an SAR shall,
without the consent of the Optionee, alter or impair his or her rights or obligations under such SAR. Notwithstanding anything in this Plan to the contrary, and except for the adjustments provided in Article 10, neither the Committee nor any other person may, without the approval of the Company's stockholders: (a) decrease the exercise price for any outstanding SAR after the date of grant, (b) assume, cancel or allow an optionee to surrender an outstanding SAR to the Company in exchange for cash or as consideration for the grant of a new SAR with a lower exercise price or the grant of another type of Award the effect of which is to reduce the exercise price of any outstanding SAR or (c) take any other action with respect to an SAR that would be treated as a repricing under the rules and regulations of the NASDAQ Stock Market (or such other principal U.S. national securities exchange on which the Common Shares are traded).

7.8 Voting and Dividend Rights. The holders of SARs shall have neither voting rights nor a right to receive dividends or dividend equivalents.

ARTICLE 8.    RESTRICTED SHARES.

8.1 Restricted Stock Agreement. Each grant of Restricted Shares under the Plan shall be evidenced by a Restricted Stock Agreement between the recipient and the Company. Such Restricted Shares shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Restricted Stock Agreements entered into under the Plan need not be identical.

8.2 Payment for Awards. Restricted Shares may be sold or awarded under the Plan for such consideration as the Committee may determine, including (without limitation) cash, cash equivalents, property, full-recourse promissory notes, past services and future services. If the Participant is an Outside Director or executive officer of the Company, he or she may pay for Restricted Shares with a promissory note only to the extent permitted by section 13(k) of the Exchange Act. Within the limitations of the Plan, the Committee may accept the cancellation of outstanding options in return for the grant of Restricted Shares.

8.3 Vesting Conditions. Each Award of Restricted Shares shall be subject to vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Restricted Stock Agreement; provided that, the Restricted Shares will not vest prior to the holder completing at least one year of Service following the Vesting Commencement Date of such Award. The Committee may include among such conditions the requirement that the performance of the Company or a business unit of the Company for a specified period of one or more fiscal years equal or exceed a target determined in advance by the Committee. The Company's independent auditors shall determine such performance. Such target shall be based on one or more of the criteria set forth in Appendix A. The Committee shall identify such target not later than the 90th day of such period. In no event shall more than 500,000 Restricted Shares that are subject to performance-based vesting conditions be granted to any Participant in a single fiscal year of the Company, subject to adjustment in accordance with Article 10. A Restricted Stock Agreement may provide for accelerated vesting in the event of the Participant's death, disability, retirement or Involuntary Termination. The Committee may determine, at the time of granting Restricted Shares or thereafter, that all or part of such Restricted Shares shall become vested in the event that a Change in Control occurs with respect to the Company or in the event that the Participant is subject to an Involuntary Termination after a Change in Control.

8.4 Voting and Dividend Rights. The holders of Restricted Shares awarded under the Plan shall have the same voting, dividend and other rights as the Company's other stockholders. A Restricted Stock Agreement, however, shall require that the holders of Restricted Shares invest any cash dividends received in additional Restricted Shares until such time as the Restricted Shares are no longer subject to a right of repurchase and forfeiture. Such additional Restricted Shares shall be subject 
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to the same conditions and restrictions as the Award with respect to which the cash dividends were paid. Additionally, a Restricted Stock Agreement shall require that any stock dividend received on Restricted Shares shall also be Restricted Shares and shall be subject to the same conditions and restrictions as the Award with respect to which the stock dividends were paid.

ARTICLE 9.    STOCK UNITS.

9.1 Stock Unit Agreement. Each grant of Stock Units under the Plan shall be evidenced by a Stock Unit Agreement between the recipient and the Company. Such Stock Units shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Stock Unit Agreements entered into under the Plan need not be identical. Stock Units may be granted in consideration of a reduction in the recipient's other compensation.

9.2 Payment for Awards. To the extent that an Award is granted in the form of Stock Units, no cash consideration shall be required of the Award recipients.

9.3 Vesting Conditions. Each Award of Stock Units shall be subject to vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Stock Unit Agreement; provided that, the Stock Units will not vest prior to the recipient completing at least one year of Service following the Vesting Commencement Date of such Award. The Committee may include among such conditions the requirement that the performance of the Company or a business unit of the Company for a specified period of one or more fiscal years equal or exceed a target determined in advance by the Committee. The Company's independent auditors shall determine such performance. Such target shall be based on one or more of the criteria set forth in Appendix A. The Committee shall identify such target not later than the 90th day of such period. In no event shall more than 500,000 Stock Units that are subject to performance-based vesting conditions be granted to any Participant in a single fiscal year of the Company, subject to adjustment in accordance with Article 10. A Stock Unit Agreement may provide for accelerated vesting in the event of the Participant's death, disability, retirement or Involuntary Termination. The Committee may determine, at the time of granting Stock Units or thereafter, that all or part of such Stock Units shall become vested in the event that the Company is subject to a Change in Control or in the event that the Participant is subject to an Involuntary Termination after a Change in Control. In addition, acceleration of vesting may be required under Section 10.3.

9.4 Voting and Dividend Rights. The holders of Stock Units shall have no voting rights. Prior to settlement or forfeiture, any Stock Unit awarded under the Plan may, at the Committee's discretion, carry with it a right to dividend equivalents. Such right entitles the holder to be credited with an amount equal to all cash dividends paid on one Common Share while the Stock Unit is outstanding. Dividend equivalents may be converted into additional Stock Units. Settlement of dividend equivalents may be made in the form of cash, in the form of Common Shares, or in a combination of both. Dividend equivalents shall be subject to the same terms, vesting conditions and restrictions as the Stock Units to which they attach.

9.5 Form and Time of Settlement of Stock Units. Settlement of vested Stock Units may be made in the form of (a) cash, (b) Common Shares or (c) any combination of both, as determined by the Committee. The actual number of Stock Units eligible for settlement may be larger or smaller than the number included in the original Award, based on predetermined performance factors. Methods of converting Stock Units into cash may include (without limitation) a method based on the average Fair Market Value of Common Shares over a series of trading days. Vested Stock Units may be settled in a lump sum or in installments. The distribution may occur or commence when all vesting conditions applicable to the Stock Units have been satisfied or have lapsed, or it may be deferred to any later date. The amount of a deferred distribution may be increased by an interest factor or by dividend equivalents. Until an Award of Stock Units is settled, the number of such Stock Units shall be subject to adjustment pursuant to Article 10.

9.6 Death of Recipient. Any Stock Units Award that becomes payable after the recipient's death shall be distributed to the recipient's beneficiary or beneficiaries. Each recipient of a Stock Units Award under the Plan shall designate one or more beneficiaries for this purpose by filing the prescribed form with the Company. A beneficiary designation may be changed by filing the prescribed form with the Company at any time before the Award recipient's death. If no beneficiary was designated or if no designated beneficiary survives the Award recipient, then any Stock Units Award that becomes payable after the recipient's death shall be distributed to the recipient's estate.

9.7 Creditors' Rights. A holder of Stock Units shall have no rights other than those of a general creditor of the Company. Stock Units represent an unfunded and unsecured obligation of the Company, subject to the terms and conditions of the applicable Stock Unit Agreement.

ARTICLE 10.    PROTECTION AGAINST DILUTION.
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10.1 Adjustments. In the event of a subdivision of the outstanding Common Shares, a declaration of a dividend payable in Common Shares or a combination or consolidation of the outstanding Common Shares (by reclassification or otherwise) into a lesser number of Common Shares, corresponding proportionate adjustments shall automatically be made in each of the following:
(a)The number of Common Shares available for grant subject to Awards under Article 3;
(b)The limitations set forth in Sections 5.2, 8.2, 8.3 and 9.3;
(c)The number of Common Shares covered by each outstanding Option and SAR;
(d)The Exercise Price under each outstanding Option and SAR; or
(e)The number of Stock Units included in any prior Award that has not yet been settled.
In the event of a declaration of an extraordinary dividend payable in a form other than Common Shares in an amount that has a material effect on the price of Common Shares, a recapitalization, a spin-off or a similar occurrence, the Committee shall make such adjustments as it, in its sole discretion, deems appropriate in one or more of the foregoing. Except as provided in this Article 10, a Participant shall have no rights by reason of any issuance by the Company of stock of any class or securities convertible into stock of any class, any subdivision or consolidation of shares of stock of any class, the payment of any stock dividend or any other increase or decrease in the number of shares of stock of any class.

10.2 Dissolution or Liquidation. To the extent not previously exercised or settled, Options, SARs and Stock Units shall terminate immediately prior to the dissolution or liquidation of the Company.

10.3 Reorganizations. In the event that the Company is a party to a merger or consolidation, all outstanding Awards shall be subject to the agreement of merger or consolidation. Such agreement shall provide for one or more of the following:
(a)The continuation of such outstanding Awards by the Company (if the Company is the surviving corporation).
(b)The assumption of such outstanding Awards by the surviving corporation or its parent, provided that the assumption of Options or SARs shall comply with section 424(a) of the Code (whether or not the Options are ISOs).
(c)The substitution by the surviving corporation or its parent of new awards for such outstanding Awards, provided that the substitution of Options or SARs shall comply with section 424(a) of the Code (whether or not the Options are ISOs).
(d)Full exercisability of outstanding Options and SARs and full vesting of the Common Shares subject to such Options and SARs, followed by the cancellation of such Options and SARs. The full exercisability of such Options and SARs and full vesting of such Common Shares may be contingent on the closing of such merger or consolidation. The Optionees shall be able to exercise such Options and SARs during a period of not less than five full business days preceding the closing date of such merger or consolidation, unless (i) a shorter period is required to permit a timely closing of such merger or consolidation and (ii) such shorter period still offers the Optionees a reasonable opportunity to exercise such Options and SARs. Any exercise of such Options and SARs during such period may be contingent on the closing of such merger or consolidation.
(e)The cancellation of outstanding Options and SARs and a payment to the Optionees equal to the excess of (i) the Fair Market Value of the Common Shares subject to such Options and SARs (whether or not such Options and SARs are then exercisable or such Common Shares are then vested) as of the closing date of such merger or consolidation over (ii) their Exercise Price. Such payment shall be made in the form of cash, cash equivalents, or securities of the surviving corporation or its parent with a Fair Market Value equal to the required amount. Except to the extent it would cause the Award to become subject to additional tax under Code Section 409A, such payment may be made in installments, may be deferred until the date or dates when such Options and SARs would have become exercisable or such Common Shares would have vested, and/or may be subject to vesting based on the Optionee's continuing Service, provided that the vesting schedule shall not be less favorable to the Optionee than the schedule under which such Options and SARs would have become exercisable or such Common Shares would have vested. If the Exercise Price of the Common Shares subject to such Options and SARs exceeds the Fair Market Value of such Common Shares, then such Options and SARs may be cancelled without making a payment to the Optionees. For purposes of this Subsection (e), the Fair Market Value of any security shall be determined without regard to any vesting conditions that may apply to such security.
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(f)The cancellation of outstanding Stock Units and a payment to the Participants equal to the Fair Market Value of the Common Shares subject to such Stock Units (whether or not such Stock Units are then vested) as of the closing date of such merger or consolidation. Such payment shall be made in the form of cash, cash equivalents, or securities of the surviving corporation or its parent with a Fair Market Value equal to the required amount. Except to the extent it would cause the Award to become subject to additional tax under Code Section 409A, such payment may be made in installments, may be deferred until the date or dates when such Stock Units would have vested, and/or may be subject to vesting based on the Participant's continuing Service, provided that the vesting schedule shall not be less favorable to the Participant than the schedule under which such Stock Units would have vested. For purposes of this Subsection (f), the Fair Market Value of any security shall be determined without regard to any vesting conditions that may apply to such security.

ARTICLE 11.    AWARDS UNDER OTHER PLANS.
The Company may grant awards under other plans or programs. Such awards may be settled in the form of Common Shares issued under this Plan. Such Common Shares shall be treated for all purposes under the Plan like Common Shares issued in settlement of Stock Units and shall, when issued, reduce the number of Common Shares available under Article 3.

ARTICLE 12.    PAYMENT OF DIRECTOR'S FEES IN SECURITIES.

12.1 Effective Date. No provision of this Article 12 shall be effective unless and until the Board has determined to implement such provision.

12.2 Elections to Receive NSOs, Restricted Shares or Stock Units. An Outside Director may elect to receive his or her annual retainer payments and/or meeting fees from the Company in the form of cash, NSOs, Restricted Shares or Stock Units, or a combination thereof, as determined by the Board. Such NSOs, Restricted Shares and Stock Units shall be issued under the Plan. An election under this Article 12 shall be filed with the Company on the prescribed form.

12.3 Number and Terms of NSOs, Restricted Shares or Stock Units. The number of NSOs, Restricted Shares or Stock Units to be granted to Outside Directors in lieu of annual retainers and meeting fees that would otherwise be paid in cash shall be calculated in a manner determined by the Board. The Board shall also determine the terms of such NSOs, Restricted Shares or Stock Units.

ARTICLE 13.    LIMITATION ON RIGHTS.

13.1 Retention Rights. Neither the Plan nor any Award granted under the Plan shall be deemed to give any individual a right to remain an Employee, Outside Director or Consultant. The Company and its Parents, Subsidiaries and Affiliates reserve the right to terminate the Service of any Employee, Outside Director or Consultant at any time, with or without cause, subject to applicable laws, the Company's certificate of incorporation and by-laws and a written employment agreement (if any).

13.2 Stockholders' Rights. A Participant shall have no dividend rights, dividend equivalent rights, voting rights or other rights as a stockholder with respect to any Common Shares covered by his or her Award prior to the time when a stock certificate for such Common Shares is issued or, if applicable, the time when he or she becomes entitled to receive such Common Shares by filing any required notice of exercise and paying any required Exercise Price. No adjustment shall be made for cash dividends or other rights for which the record date is prior to such time, except as expressly provided in the Plan.

13.3 Regulatory Requirements. Any other provision of the Plan notwithstanding, the obligation of the Company to issue Common Shares under the Plan shall be subject to all applicable laws, rules and regulations and such approval by any regulatory body as may be required. The Company reserves the right to restrict, in whole or in part, the delivery of Common Shares pursuant to any Award prior to the satisfaction of all legal requirements relating to the issuance of such Common Shares, to their registration, qualification or listing or to an exemption from registration, qualification or listing.

13.4 Transferability of Awards. The Committee may, in its sole discretion, permit transfer of an Award in a manner consistent with applicable law and for no consideration. Unless otherwise determined by the Committee, Awards shall be transferable by a Participant only by (a) beneficiary designation, (b) a will or (c) the laws of descent and distribution; provided that, in any event, an ISO may only be transferred by will or by the laws of descent and distribution and may be exercised during the lifetime of the Optionee only by the Optionee or by the Optionee's guardian or legal representative.
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ARTICLE 14.    TAXES.

14.1 General Withholding Obligations. To the extent required by applicable federal, state, local or foreign law, a Participant or his or her successor shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise in connection with the Plan. The Company shall not be required to issue any Common Shares or make any cash payment under the Plan until such obligations are satisfied.

14.2 Share Withholding. To the extent that applicable law subjects a Participant to tax withholding obligations, the Committee may permit such Participant to satisfy all or part of such obligations by having the Company withhold all or a portion of any Common Shares that otherwise would be issued to him or her or by surrendering all or a portion of any Common Shares that he or she previously acquired. Such Common Shares shall be valued at their Fair Market Value on the date when they are withheld or surrendered.

14.3 Code Section 409A Matters. To the fullest extent applicable and unless otherwise expressly indicated in an applicable Award agreement, Awards granted under this Plan are intended to be exempt from the definition of "nonqualified deferred compensation" under Code Section 409A in accordance with one or more of the exemptions available under the final Treasury regulations promulgated under Code Section 409A and the terms of the Plan and the applicable Award agreement shall be interpreted and administered in a manner consistent with that intent. To the extent that an Award is, or becomes subject to, Code Section 409A either intentionally or due to a failure of an individual Award to qualify for an exemption from the definition of nonqualified deferred compensation in accordance with Code Section 409A, such Award is intended to comply with the applicable requirements of Code Section 409A to the maximum extent possible and with respect to any such Award, the terms of the Plan and the applicable Award agreement shall be interpreted and administered in a manner consistent with that intent. In no event will the Company be liable for any taxes, penalties or interest that may be imposed with respect to an Award under Code Section 409A or under any other similar provision of state tax law, or for any damages for an Award's failing to comply with Code Section 409A, any other similar provision of state tax law, or the provisions of this Section 15.3.

ARTICLE 15.    LIMITATION ON PAYMENTS.

15.1 Scope of Limitation. This Article 15 shall apply to an Award only if:
(a) The independent auditors selected for this purpose by the Committee (the "Auditors") determine that the after-tax value of such Award to the Participant, taking into account the effect of all federal, state and local income taxes, employment taxes and excise taxes applicable to the Participant (including the excise tax under section 4999 of the Code), will be greater after the application of this Article 15 than it was before the application of this Article 16; or
(b) The Committee, at the time of making an Award under the Plan or at any time thereafter, specifies in writing that such Award shall be subject to this Article 15 (regardless of the after-tax value of such Award to the Participant).
If this Article 15 applies to an Award, it shall supersede any contrary provision of the Plan or of any Award granted under the Plan.

15.2 Basic Rule. In the event that the Auditors determine that any payment or transfer by the Company under the Plan to or for the benefit of a Participant (a "Payment") would be nondeductible by the Company for federal income tax purposes because of the provisions concerning "excess parachute payments" in section 280G of the Code, then the aggregate present value of all Payments shall be reduced (but not below zero) to the Reduced Amount. For purposes of this Article 15, the "Reduced Amount" shall be the amount of the Payment, expressed as a present value, which provides the greatest economic benefit to the Participant without causing any of the Payments to be nondeductible by the Company because of section 280G of the Code, provided that if more than one manner of reduction of the Payments necessary to arrive at the Reduced Amount yields the greatest economic benefit to the Participant, the Payments shall be reduced pro rata. Neither the Participant nor the Company shall have the authority to specify the order of reduction of the Payments.

15.3 Reduction of Payments. If the Auditors determine that any Payment would be nondeductible by the Company because of section 280G of the Code, then the Company shall promptly provide the Participant appropriate notice to that effect, including a copy of the detailed calculation thereof and of the Reduced Amount, and details regarding the manner in which the reduction provided for under Section 15.2 shall be effected. For purposes of this Article 15, present value shall be determined in accordance with section 280G(d)(4) of the Code. All determinations made by the Auditors under this Article 15 shall be binding upon the Company and the Participant and shall be made within 60 days of the date when a Payment becomes payable or transferable. As promptly as practicable following such determination and the elections hereunder, the Company shall pay or transfer to or for the benefit of the Participant such amounts as are then due to him or her under the Plan and shall 
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promptly pay or transfer to or for the benefit of the Participant in the future such amounts as become due to him or her under the Plan.

15.4 Overpayments and Underpayments. As a result of uncertainty in the application of section 280G of the Code at the time of an initial determination by the Auditors hereunder, it is possible that Payments will have been made by the Company which should not have been made (an "Overpayment") or that additional Payments which will not have been made by the Company could have been made (an "Underpayment"), consistent in each case with the calculation of the Reduced Amount hereunder. In the event that the Auditors, based upon the assertion of a deficiency by the Internal Revenue Service against the Company or the Participant that the Auditors believe has a high probability of success, determine that an Overpayment has been made, such Overpayment shall be treated for all purposes as a loan to the Participant that he or she shall
repay to the Company, together with interest at the applicable federal rate provided in section 7872(f)(2) of the Code; provided, however, that no amount shall be payable by the Participant to the Company if and to the extent that such payment would not reduce the amount that is subject to taxation under section 4999 of the Code. In the event that the Auditors determine that an Underpayment has occurred, such Underpayment shall promptly be paid or transferred by the Company to or for the benefit of the Participant, together with interest at the applicable federal rate provided in section 7872(f)(2) of the Code.

15.5 Related Corporations. For purposes of this Article 15, the term "Company" shall include affiliated corporations to the extent determined by the Auditors in accordance with section 280G(d)(5) of the Code.

ARTICLE 16.    FUTURE OF THE PLAN.

16.1 Term of the Plan. The Plan shall remain in effect until the earlier of (a) the date when the Plan is terminated under Section 16.2 or (b) the 10th anniversary of the date when the Board adopted the Plan.

16.2 Amendment or Termination. The Board may, at any time and for any reason, amend or terminate the Plan. No Awards shall be granted under the Plan after the termination thereof. The termination of the Plan, or any amendment thereof, shall not affect any Award previously granted under the Plan.

16.3 Stockholder Approval. An amendment of the Plan shall be subject to the approval of the Company's stockholders only to the extent required by applicable laws, regulations or rules, including the listing requirements of the primary securities exchange or over-the-counter market where the Common Shares are listed for trading. 
DEFINITIONS.
"Affiliate" means any entity other than a Subsidiary, if the Company and/or one or more Subsidiaries own not less than 50% of such entity.
"Award" means any award of an Option, an SAR, a Restricted Share or a Stock Unit under the Plan.
"Board" means the Company's Board of Directors, as constituted from time to time.
"Cause" means:
An unauthorized use or disclosure by the Participant of the Company's confidential information or trade secrets, which use or disclosure causes material harm to the Company;
A material breach by the Participant of any agreement between the Participant and the Company;
A material failure by the Participant to comply with the Company's written policies or rules;
The Participant's conviction of, or plea of "guilty" or "no contest" to, a felony under the laws of the United States or any State thereof;
The Participant's gross negligence or willful misconduct;
A continuing failure by the Participant to perform assigned duties after receiving written notification of such failure from the Board; or
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A failure by the Participant to cooperate in good faith with a governmental or internal investigation of the Company or its directors, officers or employees, if the Company has requested the Participant’s cooperation.
"Change in Control" means:
The consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization, if persons who were not stockholders of the Company immediately prior to such merger, consolidation or other reorganization own immediately after such merger, consolidation or other reorganization 50% or more of the voting power of the outstanding securities of each of (i) the continuing or surviving entity and (ii) any direct or indirect parent corporation of such continuing or surviving entity;
The sale, transfer or other disposition of all or substantially all of the Company's assets;
A change in the composition of the Board, as a result of which fewer than 50% of the incumbent directors are directors who either:
Had been directors of the Company on the date 24 months prior to the date of such change in the composition of the Board (the "Original Directors"); or
Were appointed to the Board, or nominated for election to the Board, with the affirmative votes of at least a majority of the aggregate of (A) the Original Directors who were in office at the time of their appointment or nomination and (B) the directors whose appointment or nomination was previously approved in a manner consistent with this Paragraph (ii); or
Any transaction as a result of which any person is the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing at least 50% of the total voting power represented by the Company's then outstanding voting securities. For purposes of this Subsection (d), the term "person" shall have the same meaning as when used in sections 13(d) and 14(d) of the Exchange Act but shall exclude (i) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or of a Parent or Subsidiary and (ii) a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of the common stock of the Company.
A transaction shall not constitute a Change in Control if its sole purpose is to change the state of the Company's incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company's securities immediately before such transaction.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means a committee of the Board, as described in Article 2.
"Common Share" means one share of the common stock of the Company.
"Company" means Vanda Pharmaceuticals Inc., a Delaware corporation.
"Consultant" means a consultant or adviser who provides bona fide services to the Company, a Parent, a Subsidiary or an Affiliate as an independent contractor. Service as a Consultant shall be considered employment for all purposes of the Plan, except as provided in Section 4.1.
"Employee" means a common-law employee of the Company, a Parent, a Subsidiary or an Affiliate.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exercise Price," in the case of an Option, means the amount for which one Common Share may be purchased upon exercise of such Option, as specified in the applicable Stock Option Agreement. "Exercise Price," in the case of an SAR, means an amount, as specified in the applicable SAR Agreement, which is subtracted from the Fair Market Value of one Common Share in determining the amount payable upon exercise of such SAR.
"Fair Market Value" means the market price of one Common Share as determined by the Committee in good faith on such basis as it deems appropriate. Whenever possible, the determination of Fair Market Value by the Committee shall be based on the prices reported in The Wall Street Journal. Such determination shall be conclusive and binding on all persons.
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"Involuntary Termination" means the termination of the Participant's Service by reason of:
The involuntary discharge of the Participant by the Company (or the Parent, Subsidiary or Affiliate employing him or her) for reasons other than Cause; or
The voluntary resignation of the Participant following (i) a material adverse change in his or her title, stature, authority or responsibilities with the Company (or the Parent, Subsidiary or Affiliate employing him or her), (ii) a material reduction in his or her base salary or (iii) receipt of notice that his or her principal workplace will be relocated by more than 30 miles.
"ISO" means an incentive stock option described in section 422(b) of the Code.
"NSO" means a stock option not described in sections 422 or 423 of the Code.
"Option" means an ISO or NSO granted under the Plan and entitling the holder to purchase Common Shares.
"Optionee" means an individual or estate who holds an Option or SAR.
"Outside Director" means a member of the Board who is not an Employee. Service as an Outside Director shall be considered employment for all purposes of the Plan, except as provided in Section 4.1.
"Parent" means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Parent on a date after the adoption of the Plan shall be considered a Parent commencing as of such date.
"Participant" means an individual or estate who holds an Award.
"Plan" means this Vanda Pharmaceuticals Inc. 2016 Equity Incentive Plan, as amended and/or restated from time to time.
"Restricted Share" means a Common Share awarded under the Plan.
"Restricted Stock Agreement" means the agreement between the Company and the recipient of a Restricted Share that contains the terms, conditions and restrictions pertaining to such Restricted Share.
"SAR" means a stock appreciation right granted under the Plan.
"SAR Agreement" means the agreement between the Company and an Optionee that contains the terms, conditions and restrictions pertaining to his or her SAR.
"Service" means service as an Employee, Outside Director or Consultant.
"Stock Option Agreement" means the agreement between the Company and an Optionee that contains the terms, conditions and restrictions pertaining to his or her Option.
"Stock Unit" means a bookkeeping entry representing the equivalent of one Common Share, as awarded under the Plan.
"Stock Unit Agreement" means the agreement between the Company and the recipient of a Stock Unit that contains the terms, conditions and restrictions pertaining to such Stock Unit.
"Subsidiary" means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date.
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"Vesting Commencement Date" means (i) with respect any Award granted to a Participant upon the commencement of his or Service, the date on which his or her Service commences and (ii) with respect to any other Award, the date on which such Award is granted.

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APPENDIX A
PERFORMANCE CRITERIA FOR RESTRICTED SHARES AND STOCK UNITS
The performance goals that may be used by the Committee for such awards may consist of: (a) operating profits (including EBITDA); (b) net profits; (c) earnings per share; (d) profit returns and margins; (e) revenues; (f) stockholder return and/or value; (g) stock price; (h) working capital; (i) regulatory achievements (including submitting or filing applications or other documents with regulatory authorities or receiving approval of any such applications or other documents and passing pre-approval inspections (whether of the Company or the Company's third-party manufacturer) and validation of manufacturing processes (whether the Company's or the Company's third-party manufacturer's)); (j) clinical achievements (including initiating clinical studies, initiating enrollment, completing enrollment or enrolling particular numbers of subjects in clinical studies, completing phases of a clinical study (including the treatment phase), or announcing or presenting preliminary or final data from clinical studies in each case, whether on particular timelines or generally); and (k) other measurable objectives.
Performance goals may be measured solely on a corporate, subsidiary or business unit basis, or a combination thereof. Further, performance criteria may reflect absolute entity performance or a relative comparison of entity performance to the performance of a peer group of entities or other external measure of the selected performance criteria.
Profit, earnings and revenues used for any performance goal measurement may exclude: gains or losses on operating asset sales or dispositions; asset write-downs; litigation or claim judgments or settlements; accruals for historic environmental obligations; effect of changes in tax law or rate on deferred tax liabilities; accruals for reorganization and restructuring programs; uninsured catastrophic property losses; the cumulative effect of changes in accounting principles; and any extraordinary non-recurring items determined in accordance with generally accepted accounting principles and/or in management's discussion and analysis of financial performance appearing in the Company's annual report to stockholders for the applicable year.
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FIRST AMENDMENT TO 
VANDA PHARMACEUTICALS INC.
AMENDED AND RESTATED 2016 EQUITY INCENTIVE PLAN

A. The Vanda Pharmaceuticals Inc. Amended and Restated 2016 Equity Incentive Plan (the "Plan") is hereby amended by the Board of Directors of Vanda Pharmaceuticals Inc. (the "Company"), subject to approval of the Company's stockholders, to increase the aggregate number of shares authorized for issuance under the Plan by 2,000,000 shares of common stock, par value $0.001 per share, of the Company, as follows:
                        Section 3.1 of the Plan is hereby amended and restated in its entirety as follows:
"3.1     Basic Limitation.  Common Shares issued pursuant to the Plan may be authorized but unissued shares or treasury shares.  The aggregate number of Common Shares issued under the Plan shall not exceed (a) 10,790,000 plus (b) the additional Common Shares described in Section 3.2.  The number of Common Shares that are subject to Awards outstanding at any time under the Plan shall not exceed the number of Common Shares that then remain available for issuance under the Plan.  All Common Shares available under the Plan may be issued upon the exercise of ISOs.  The limitations of this Section 3.1 shall be subject to adjustment pursuant to Article 10."
B. Except as amended herein, the Plan is confirmed in all other respects.
Approved by the Board of Directors on March 18, 2021.
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