Vanda
Pharmaceuticals Inc.
This Employment
Agreement (this “Agreement”) was entered into as of
May 22, 2009, by and between John Feeney (the
“Executive”) and Vanda Pharmaceuticals Inc. ,
a Delaware corporation (the “Company”).
1. Duties
and Scope of Employment.
(a)
Position . For the term of his employment under this
Agreement (“Employment”), the Company agrees to employ
the Executive in the position of Acting Chief Medical Officer. The
Executive shall be subject to the supervision of, and shall have
such authority as is delegated to him by, the Company’s Chief
Executive Officer. The Executive hereby accepts such employment and
agrees to undertake the duties and responsibilities normally
inherent in such position and such other duties and
responsibilities as the Company’s Board of Directors (the
“Board”) shall from time to time reasonably assign to
him.
(b)
Obligations to the Company . During the term of his
Employment, the Executive shall devote his full business efforts
and time to the Company. During the term of his Employment, without
the prior written approval of the Board, the Executive shall not
render services in any capacity to any other person or entity and
shall not act as a sole proprietor or partner of any other person
or entity or as a shareholder owning more than five percent of the
stock of any other corporation. The Executive shall comply with the
Company’s policies and rules, as they may be in effect from
time to time during the term of his Employment.
(c)
No Conflicting Obligations . The Executive represents and
warrants to the Company that he is under no obligations or
commitments, whether contractual or otherwise, that are
inconsistent with his obligations under this Agreement. The
Executive represents and warrants that he will not use or disclose,
in connection with his Employment, any trade secrets or other
proprietary information or intellectual property in which the
Executive or any other person has any right, title or interest and
that his Employment as contemplated by this Agreement will not
infringe or violate the rights of any other person or entity. The
Executive represents and warrants to the Company that he has
returned all property and confidential information belonging to any
prior employers.
2. Cash
and Incentive Compensation.
(a)
Salary . The Company shall pay the Executive as compensation
for his services a base salary at a gross annual rate of not less
than $270,000. Such salary shall be payable in accordance with the
Company’s standard payroll procedures. (The annual
compensation specified in this Subsection (a), together with any
increases in such compensation that the Company may grant from time
to time, is referred to in this Agreement as “Base
Compensation.”)
(b)
Incentive Bonuses . The Executive shall be eligible for an
annual incentive bonus with a target amount equal to 25% of his
Base Compensation (the “Annual Target Bonus”). Such
bonus (if any) shall be awarded based on objective or subjective
criteria established in advance by the Board. Any bonus for the
fiscal year in which Executive’s employment begins shall be
prorated, based on the number of days Executive is employed by the
Company during that fiscal year. Any incentive bonus for a fiscal
year shall in no event be paid later than 2
1 / 2
months after the close of such
fiscal year. Such bonus shall be paid only if Executive is employed
by the Company at the time of payment. The determinations of the
Board with respect to such bonus shall be final and
binding.
(c)
Stock Options . On the date of this Agreement, the Company
shall grant the Executive a nonstatutory stock option to purchase
95,000 shares of the Company’s Common Stock (the
“Option”). The per-share exercise price of the Option
shall be equal to the fair market value of one share of the
Company’s Common Stock on the date of grant. The term of the
Option shall be 10 years, subject to earlier expiration in the
event of the termination of the Executive’s service with the
Company. The grant of the Option shall be subject to the terms and
conditions set forth in the Vanda Pharmaceuticals Inc. 2006 Equity
Incentive Plan and in the Company’s standard form of Stock
Option Agreement. The Option shall become exercisable in equal
monthly installments over the four years of continuous service
commencing on the date of this Agreement. The Option shall become
exercisable in full if (i) the Company is subject to a Change
in Control before the Executive’s service with the Company
terminates and (ii) the Executive is subject to an Involuntary
Termination within 24 months after such Change in
Control. 1
In addition, Section 6(d) shall
apply to the Option.
3.
Vacation and Employee Benefits . During the term of his
Employment, the Executive shall be eligible for 20 paid vacation
days each year in accordance with the Company’s standard
policy for similarly situated employees, as it may be amended from
time to time. During the term of his Employment, the Executive
shall be eligible to participate in any employee benefit plans
maintained by the Company for similarly situated employees, subject
in each case to the generally applicable terms and conditions of
the plan in question and to the determinations of any person or
committee administering such plan.
4.
Business Expenses . During the term of his Employment, the
Executive shall be authorized to incur necessary and reasonable
travel, entertainment and other business expenses in connection
with his duties hereunder. The Company shall reimburse the
Executive for such expenses upon presentation of an itemized
account and appropriate supporting documentation, all in accordance
with the Company’s generally applicable policies. Any
reimbursement shall (a) be paid promptly but not later than
the last day of the calendar year following the year in which the
expense was incurred, (b) not be affected by any other
expenses that are eligible for reimbursement in any calendar year
and (c) not be subject to liquidation or exchange for another
benefit.
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Certain
capitalized terms are defined in Section 9.
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2
(a)
Basic Rule . The Company agrees to continue the
Executive’s Employment, and the Executive agrees to remain in
Employment with the Company, from the date of this Agreement until
the date when the Executive’s Employment terminates pursuant
to Subsection (b) below. The Executive’s Employment with
the Company shall be “at will,” meaning that either the
Executive or the Company may terminate the Executive’s
Employment at any time, with or without Cause. Any contrary
representations which may have been made to the Executive shall be
superseded by this Agreement. This Agreement shall constitute the
full and complete agreement between the Executive and the Company
on the “at will” nature of the Executive’s
Employment, which may only be changed in an express written
agreement signed by the Executive and a duly authorized officer of
the Company (other than the Executive).
(b)
Termination . The Company may terminate the
Executive’s Employment at any time and for any reason (or no
reason), and with or without Cause, by giving the Executive notice
in writing. The Executive may terminate his Employment by giving
the Company 14 days’ advance notice in writing. The
Executive’s Employment shall terminate automatically in the
event of his death.
(c)
Rights Upon Termination . Except as expressly provided in
Section 6, upon the termination of the Executive’s
Employment pursuant to this Section 5, the Executive shall
only be entitled to the compensation, benefits and reimbursements
described in Sections 2, 3 and 4 for the period preceding the
effective date of the termination. The payments under this
Agreement shall fully discharge all responsibilities of the Company
to the Executive.
(d)
Termination of Agreement . This Agreement shall terminate
when all obligations of the parties hereunder have been satisfied.
The termination of this Agreement shall not limit or otherwise
affect any of the Executive’s obligations under
Section 7.
(a)
General Release . Any other provision of this Agreement
notwithstanding, Subsections (b), (c) and (d) below shall
not apply unless the Executive has executed a general release of
all known and unknown claims that he may then have against the
Company or persons affiliated with the Company, (ii) has
agreed not to prosecute any legal action or other proceeding based
upon any of such claims and (iii) has returned all property of
the Company in the Executive’s possession. The release shall
be in a form prescribed by the Company, without alterations. The
Executive shall execute and return the release on or before the
date specified by the Company in the prescribed form (the
“Release Deadline”). The Release Deadline shall in no
event be later than 60 days after the Executive’s
Separation. If the Executive fails to return the release on or
before the Release Deadline, or i
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