Exhibit 10.24
Vanda Pharmaceuticals Inc.
Amended and Restated Employment Agreement
     This Employment Agreement (this “Agreement”) was entered into as of
February 10, 2005, by and between William D. Clark (the “Employee”) and Vanda
Pharmaceuticals Inc., a Delaware corporation (the “Company”). This Agreement is
hereby amended and restated as of November 4, 2008.
     1. Duties and Scope of Employment.
          (a) Position. For the term of his employment under this Agreement
(“Employment”), the Company agrees to employ the Employee in the position of
Chief Business Officer. The Employee shall be subject to the supervision of, and
shall have such authority as is delegated to him by, the board of directors of
the Company (the “Board”), consistent with his position as Chief Business
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 him consistent with his position as Chief Business Officer.
          (b) Obligations to the Company. During the term of his Employment, the
Employee 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
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 his Employment.
          (c) No Conflicting Obligations. The Employee 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 Employee represents and warrants that he will not use or
disclose, in connection with his employment by the Company, 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 his employment by the
Company 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 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 Employee as compensation for his
services a base salary at a gross annual rate of not less than $227,625. 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

 

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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 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.
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. Subject to the approval of the Board, the Company
shall grant the Employee an incentive stock option covering 463,400 shares of
the Company’s Common Stock. Such option shall be granted as soon as reasonably
practicable after the date of this Agreement. The per-share exercise price of
such 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 such option shall be
10 years, subject to earlier expiration in the event of the termination of the
Employee’s Employment. The Employee shall vest in 25% of the option shares after
the first 12 months of continuous service and shall vest in the remaining option
shares in equal monthly installments over the next three years of continuous
service. The vested and exercisable portion of the option shall be determined by
adding 24 months to the Employee’s actual period of service if, after a Change
in Control, (i) the Employee’s Employment is terminated by the Company for
reasons other than Cause or (ii) the Employee’s Employment is terminated by the
Employee for Good Reason.1 The grant of such option shall be subject to the
other terms and conditions set forth in the Company’s stock plan governing the
option, and the Company’s standard form of stock option agreement.
     3. Vacation and Employee Benefits. During the term of his Employment, the
Employee shall be eligible for 25 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 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 his Employment, the Employee 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 Employee for such expenses upon presentation of an itemized
account and appropriate supporting documentation, all in accordance with the
Company’s generally applicable policies.
     5. Term of Employment.
 

1   Certain capitalized terms are defined in Section 9.

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          (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.
          (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 his Employment
by giving the Company 14 days’ advance notice in writing. The Employee’s
Employment shall terminate automatically in the event of his 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 his duties hereunder before the termination
of his 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) and (c) below shall not apply unless the
Employee (i) has executed a general release (in a form prescribed by the
Company) of all known and unknown claims that he may then have against the
Company or persons affiliated with the Company and (ii) has agreed not to
prosecute any legal action or other proceeding based upon any of such claims.
The Company shall deliver the form of release to the Employee within 30 days
after his Separation. The Employee shall execute the release within the period
set forth in the form.
          (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 his
Employment

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within six months after a condition constituting Good Reason arises, then the
Company shall pay the Employee:
          (i) Base Compensation. His 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 Employee returns
the release described in Subsection (a) above.
          (ii) Bonus Compensation. A bonus (the “Severance Bonus”) in an amount
determined as follows:
          (A) If the Separation occurs prior to the first anniversary of the
date of this Agreement, the Severance Bonus shall be equal to a pro-rata portion
of the anticipated first-year Annual Target Bonus as determined by the Board in
good faith.
          (B) If the Separation occurs on or following the first anniversary of
the date of this Agreement and prior to the third anniversary of the date of
this Agreement, the Severance Bonus shall be equal to the greater of (I) the
most recent Annual Target Bonus and (II) the average of Annual Target Bonuses
awarded for the prior years.
          (C) If the Separation occurs on or following the third anniversary of
the date of this Agreement, the Severance Bonus shall be equal to the greater of
(I) the most recent Annual Target Bonus) and (II) the average of Annual Target
Bonuses awarded for the prior three years.
The Severance Bonus shall be payable in accordance with the Company’s standard
payroll procedures within 30 days after the Employee returns the release
described in Subsection (a) above.
          (c) Health Insurance. If Subsection (b) above applies, and if the
Employee elects to continue his 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.
     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.

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     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.
          (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:
          “Change in Control” shall mean (i) the consummation of a merger or
consolidation of the Company with or into another entity, if persons who were
not stockholders of the Company immediately prior to such merger or
consolidation own immediately after such merger or consolidation 50% or more of
the voting power of the outstanding securities of each of (A) the continuing or
surviving entity and (B) any direct or indirect parent corporation of such
continuing or surviving entity; or (ii) the sale, transfer or other disposition
of all or substantially all of the Company’s assets. 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.
          “Cause” shall mean (i) an unauthorized use or disclosure of the
Company’s confidential information or trade secrets, which use or disclosure
causes material harm to the Company; (ii) a material breach of any agreement
between Employee and the Company; (iii) a material failure to comply with the
Company’s written policies or rules; (iv) conviction of, or plea of “guilty” or
“no contest” to, a felony under the laws of the United States or any state
thereof; (v) gross negligence or willful misconduct which causes material harm
to the Company; or (vi) a continued failure to perform assigned duties after
receiving written notification of such failure from the Board.
          “Good Reason” shall mean any of the following events: (i) the
Employee’s receipt of notice that his principal workplace will be relocated more
than 30 miles; (ii) a reduction in the Employee’s base salary by more than 10%,
unless pursuant to a Company-wide reduction affecting all employees
proportionately; or (iii) a change in the Employee’s position with the Company
that materially reduces his level of authority or responsibility (including
without limitation failure to nominate him as a director of the Company). 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.
          “Permanent Disability” shall mean that the Employee, at the time
notice is given, has failed to perform his duties under this Agreement for a
period of not less than 90

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consecutive days as the result of his 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.
          (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 him at the home address which he
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.
          (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”
under Section 409A(a)(2)(B)(i) of the Code and the regulations thereunder at the
time of his Separation, then (i) the payments under Section 6(b), to the extent
not exempt from Section 409A of the Code, shall commence on the earliest
practicable date that occurs more than six months after the Employee’s
Separation and (ii) the payments that otherwise would have been made during the
first six months following the Employee’s Separation shall be paid in a lump sum
on the first day of the seventh month after his 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.
          (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).

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          (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/ William D. Clark         William D. Clark       
  Vanda Pharmaceuticals Inc.    
 
           
 
  By   /s/ Mihael H. Polymeropoulos
 
     
 
  Title:   Chief Executive Officer    

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