Vanda Pharmaceuticals Inc. Employment Agreement
Exhibit 10.35
This Employment Agreement (this “Agreement”) was entered into as of May 22, 2009, by and
between Xxxxxxxxx X. Irish (the “Employee”) and Vanda Pharmaceuticals Inc., a
Delaware corporation (the “Company”).
1. Duties and Scope of Employment.
(a) Position. For the term of her employment under this Agreement (“Employment”), the Company
agrees to employ the Employee in the position of Acting Chief Financial Officer. The Employee
shall be subject to the supervision of, and shall have such authority as is delegated to her by,
the Company’s Chief Executive Officer and the board of directors of the Company (the “Board”),
consistent with her position as Acting Chief Financial Officer. The Employee 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 Board shall from time to time reasonably
assign to her consistent with her position as Acting Chief Financial Officer.
(b) Obligations to the Company. During the term of her Employment, the Employee shall devote
her full business efforts and time to the Company. During the term of her Employment, without the
prior written approval of the Board, the Employee 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 Employee shall comply with the Company’s policies and rules, as they may be in effect from time
to time during the term of her Employment.
(c) No Conflicting Obligations. The Employee represents and warrants to the Company that she
is under no obligations or commitments, whether contractual or otherwise, that are inconsistent
with her obligations under this Agreement. The Employee represents and warrants that she will not
use or disclose, in connection with her Employment, any trade secrets or other proprietary
information or intellectual property in which the Employee or any other person has any right, title
or interest and that her Employment as contemplated by this Agreement will not infringe or violate
the rights of any other person or entity. The Employee represents and warrants to the Company that
she has returned all property and confidential information belonging to any prior employers.
2. Cash and Incentive Compensation.
(a) Salary. The Company shall pay the Employee as compensation for her services a base salary
at a gross annual rate of not less than $200,000. 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 Employee shall be eligible to be considered for an annual
incentive bonus with a target amount equal to 25% of her 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. The determinations of the Board with respect to such bonus
shall be final and binding. Any incentive bonus for a fiscal year shall in no event be paid later
than 21/2 months after the close of such fiscal year.
(c) Stock Options. On the date of this Agreement, the Company shall grant the Employee 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 Employee’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 exercisable portion of the
Option shall be determined by adding 24 months to the Employee’s actual period of service if (i)
the Company is subject to a Change in Control before the Employee’s service with the Company
terminates and (ii) the Employee 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 her Employment, the Employee 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 her
Employment, the Employee 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 her Employment, the Employee shall be authorized to
incur necessary and reasonable travel, entertainment and other business expenses in connection with
her duties hereunder. The Company shall reimburse the Employee 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.
| 1 | Certain capitalized terms are defined in Section 9. |
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5. Term of Employment.
(a) Basic Rule. The Company agrees to continue the Employee’s Employment, and the Employee
agrees to remain in Employment with the Company, from the date of this Agreement until the date
when the Employee’s Employment terminates pursuant to Subsection (b) or (c) below. The Employee’s
Employment with the Company shall be “at will,” meaning that either the Employee or the Company may
terminate the Employee’s Employment at any time, with or without Cause. Any contrary
representations which may have been made to the Employee shall be superseded by this Agreement.
This Agreement shall constitute the full and complete agreement between the Employee and the
Company on the “at will” nature of the Employee’s Employment, which may only be changed in an
express written agreement signed by the Employee and a duly authorized officer of the Company
(other than the Employee).
(b) Termination. The Company may terminate the Employee’s Employment at any time and for any
reason (or no reason), and with or without Cause, by giving the Employee notice in writing. The
Employee may terminate her Employment by giving the Company 14 days’ advance notice in writing.
The Employee’s Employment shall terminate automatically in the event of her death.
(c) Permanent Disability. The Company may terminate the Employee’s Employment due to
Permanent Disability by giving the Employee 30 days’ advance notice in writing. In the event that
the Employee satisfactorily resumes the performance of substantially all of her duties hereunder
before the termination of her Employment under this Subsection (c) becomes effective, the notice of
termination shall automatically be deemed to have been revoked.
(d) Rights Upon Termination. Except as expressly provided in Section 6, upon the termination
of the Employee’s Employment pursuant to this Section 5, the Employee 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 Employee.
(e) 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 Employee’s obligations under Section 7.
6. Termination Benefits.
(a) General Release. Any other provision of this Agreement notwithstanding, Subsections (b),
(c) and (d) below shall not apply unless the Employee has executed a general release of all claims
that she may then have against the Company or persons affiliated with the Company. The release
shall be in a form prescribed by the Company, without alterations. The Employee 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
Employee’s Separation. If the Employee fails to return the release on or before the Release Deadline, or if the Employee revokes the release, then the
Employee shall not be entitled to the benefits described in this Section 6.
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(b) Severance Pay. If, during the term of this Agreement, a Separation occurs because the
Company terminates the Employee’s Employment for any reason other than Cause or Permanent
Disability, or because the Employee terminates her Employment within six months after a condition
constituting Good Reason arises, then the Company shall pay the Employee both of the following:
(i) Base Compensation. Her Base Compensation for a period of 12 months
following the Separation (the “Continuation Period”). Such Base Compensation shall
be paid at the rate in effect at the time of the Separation and in accordance with
the Company’s standard payroll procedures. The salary continuation payments shall
commence within 30 days after the Release Deadline and, once they commence, shall be
retroactive to the date of the Employee’s Separation.
(ii) Target Bonus. An amount equal to her Annual Target Bonus at the rate in
effect at the time of the Separation. Such amount shall be payable in a lump sum
within 30 days after the Release Deadline.
(c) Health Insurance. If Subsection (b) above applies, and if the Employee elects to continue
her health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”)
following the Separation, then the Company shall pay the Employee’s monthly premium under COBRA
until the earliest of (i) the close of the Continuation Period, (ii) the expiration of the
Employee’s continuation coverage under COBRA and (iii) the date when the Employee is offered
substantially equivalent health insurance coverage in connection with new employment or
self-employment.
(d) Options. If, during the term of this Agreement, a Separation occurs because the Company
terminates the Employee’s Employment for any reason other than Cause or Permanent Disability, then
(i) the vested portion of the shares of the Company’s Common Stock subject to all options held by
the Employee at the time of her Separation shall be determined by adding three months to the actual
period of service that she has completed with the Company and (ii) such options shall be
exercisable for six months after the Employee’s Separation.
7. Non-Solicitation, Non-Disclosure and Non-Competition. The Employee has entered into a
Proprietary Information and Inventions Agreement with the Company, which agreement is incorporated
herein by reference.
8. Successors.
(a) Company’s Successors. This Agreement shall be binding upon any successor (whether direct
or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all
or substantially all of the Company’s business and/or assets. For
all purposes under this Agreement, the term “Company” shall include any successor to the
Company’s business and/or assets which becomes bound by this Agreement.
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(b) Employee’s Successors. This Agreement and all rights of the Employee hereunder shall
inure to the benefit of, and be enforceable by, the Employee’s personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and legatees.
9. Definitions. For all purposes under this Agreement:
“Cause” shall mean:
(a) An unauthorized use or disclosure by the Employee of the Company’s confidential
information or trade secrets, which use or disclosure causes material harm to the Company;
(b) A material breach by the Employee of any agreement between the Employee and the Company;
(c) A material failure by the Employee to comply with the Company’s written policies or rules;
(d) The Employee’s conviction of, or plea of “guilty” or “no contest” to, a felony under the
laws of the United States or any State thereof;
(e) The Employee’s gross negligence or willful misconduct;
(f) A continuing failure by the Employee to perform assigned duties after receiving written
notification of such failure from the Board; or
(g) A failure by the Employee 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 Employee’s cooperation.
“Change in Control” shall mean:
(a) 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;
(b) The sale, transfer or other disposition of all or substantially all of the Company’s
assets;
(c) A change in the composition of the Board, as a result of which
fewer than 50% of the incumbent directors are directors who either:
(i) 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
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“Original Directors”); or
(ii) 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
(d) Any transaction as a result of which any person is the “beneficial owner” (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934, as amended), 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 such 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 of the Company 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.
“Good Reason” shall mean (i) a change in the Employee’s position with the Company that
materially reduces her level of authority or responsibility, (ii) a material reduction in her base
salary or (iii) receipt of notice that her principal workplace will be relocated by more than 30
miles. A condition shall not be considered “Good Reason” unless the Employee gives the Company
written notice of such condition within 90 days after such condition comes into existence and the
Company fails to remedy such condition within 30 days after receiving the Employee’s written
notice.
“Involuntary Termination” shall mean a Separation resulting from either (i) the Employee’s
involuntary discharge by the Company for reasons other than Cause or (ii) the Employee’s voluntary
resignation for Good Reason.
“Permanent Disability” shall mean that the Employee, at the time notice is given, has failed
to perform her duties under this Agreement for a period of not less than 90 consecutive days as the
result of her incapacity due to physical or mental injury, disability or illness.
“Separation” shall mean a “separation from service,” as defined in the regulations under
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).
10. Miscellaneous Provisions.
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(a) Notice. Notices and all other communications contemplated by this Agreement shall be in
writing and shall be deemed to have been duly given when personally delivered or when mailed by
overnight courier, U.S. registered or certified mail, return receipt requested and postage prepaid.
In the case of the Employee, mailed notices shall be addressed to her at the home address that she
most recently communicated to the Company in writing. In the case of the Company, mailed notices
shall be addressed to its corporate headquarters, and all notices shall be directed to the
attention of its Secretary.
(b) Modifications and Waivers. No provision of this Agreement shall be modified, waived or
discharged unless the modification, waiver or discharge is agreed to in writing and signed by the
Employee and by an authorized officer of the Company (other than the Employee). No waiver by
either party of any breach of, or of compliance with, any condition or provision of this Agreement
by the other party shall be considered a waiver of any other condition or provision or of the same
condition or provision at another time.
(c) Whole Agreement. No other agreements, representations or understandings (whether oral or
written and whether express or implied) which are not expressly set forth in this Agreement have
been made or entered into by either party with respect to the subject matter hereof. This
Agreement and the Proprietary Information and Inventions Agreement contain the entire understanding
of the parties with respect to the subject matter hereof. The letter agreement dated December 17,
2008, between the Employee and the Company is hereby superseded.
(d) Tax Matters. All payments made under this Agreement shall be subject to reduction to
reflect taxes or other charges required to be withheld by law. For purposes of Section 409A of the
Code, each periodic salary continuation payment under Section 6(b)(i) is hereby designated as a
separate payment. If the Company determines that the Employee is a “specified employee” within the
meaning of Section 409A(a)(2)(B)(i) of the Code and the regulations thereunder at the time of her
Separation, then:
(i) Any salary continuation payments under Section 6(b)(i), to the extent not
exempt from Section 409A of the Code, shall commence during the seventh month after
the Employee’s Separation and the installments that otherwise would have been paid
during the first six months following the Employee’s Separation shall be paid in a
lump sum when such salary continuation payments commence; and
(ii) Any lump sum payment under Section 6(b)(ii), to the extent not exempt from
Section 409A of the Code, shall be made during the seventh month after the
Employee’s Separation.
The Company shall not have a duty to design its compensation policies in a manner that minimizes
the Employee’s tax liabilities, and the Employee shall not make any claim against the Company or
the Board related to tax liabilities arising from the Employee’s compensation.
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(e) Choice of Law. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Maryland (except their provisions governing
the choice of law).
(f) Severability. The invalidity or unenforceability of any provision or provisions of this
Agreement shall not affect the validity or enforceability of any other provision hereof, which
shall remain in full force and effect.
(g) Arbitration. Any controversy or claim arising out of or relating to this Agreement or the
breach thereof, or the Employee’s Employment or the termination thereof, shall be settled in the
State of Maryland, by arbitration in accordance with the National Rules for the Resolution of
Employment Disputes of the American Arbitration Association. The decision of the arbitrator shall
be final and binding on the parties, and judgment on the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. The parties hereby agree that the arbitrator
shall be empowered to enter an equitable decree mandating specific enforcement of the terms of this
Agreement. The Company and the Employee shall share equally all fees and expenses of the
arbitrator. The Employee hereby consents to personal jurisdiction of the state and federal courts
located in the State of Maryland for any action or proceeding arising from or relating to this
Agreement or relating to any arbitration in which the parties are participants.
(h) No Assignment. This Agreement and all rights and obligations of the Employee hereunder
are personal to the Employee and may not be transferred or assigned by the Employee at any time.
The Company may assign its rights under this Agreement to any entity that assumes the Company’s
obligations hereunder in connection with any sale or transfer of all or a substantial portion of
the Company’s assets to such entity.
(i) Counterparts. This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and the same
instrument.
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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the
Company by its duly authorized officer, as of the date first written above.
| /s/ Xxxxxxxxx X. Irish | ||||
| Xxxxxxxxx X. Irish | ||||
| Vanda Pharmaceuticals Inc. |
||||
| By | /s/ Xxxxxx X. Xxxxxxxxxxxxxx | |||
| Title: President and Chief Executive Officer | ||||
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