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EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and
entered into as of April 10, 2019 (the "Effective Date"), by and between
Bandwidth Inc. ("Bandwidth"), a Delaware corporation with its principal place of
business at 900 Main Campus Drive, Suite 100, Raleigh, North Carolina 27606, and
Jeffrey A. Hoffman ("Hoffman"). BACKGROUND A. Hoffman is Bandwidth's Chief
Financial Officer. B. Hoffman has been continuously employed by Bandwidth since
November 1, 2011, pursuant to an offer letter, dated as of September 16, 2011
(the “Offer Letter”); Bandwidth and Hoffman now desire to enter into this
Agreement in order to terminate the Offer Letter and formalize the terms and
conditions of employment pursuant to this Agreement. C. All initially
capitalized terms are either defined herein (but not necessarily where first
used) or are defined in Exhibit A attached hereto and incorporated herein by
this reference. AGREEMENT In consideration of the foregoing, the agreements made
herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows: 1
Employment Period. Bandwidth agrees to employ Hoffman and Hoffman agrees to
serve Bandwidth for the period beginning on the Effective Date and ending at
11:59 p.m., Raleigh, North Carolina, local time, until December 31, 2019 (as may
be extended, the "Employment Period"). The Employment Period will automatically
extend for consecutive additional one (1) year periods unless either party
provides the other with written notice to the contrary no less than sixty (60)
days prior to the expiration of the then current Employment Period. If notice of
non-extension is provided by Bandwidth, this Agreement and Hoffman’s employment
shall terminate at the end of the then current Employment Period, and such
termination of employment shall be treated as a termination by Bandwidth other
than for Cause. This Agreement may be terminated before the expiration of the
Employment Period only pursuant to Section 4. Bandwidth and Hoffman each
acknowledges and agrees that this Agreement does not interrupt the continuity of
Hoffman's employment. 2 Nature of Duties. 2.1 Hoffman will serve as Bandwidth's
Chief Financial Officer. As such, Hoffman will act in conformity with the
management policies, guidelines and directions issued by Bandwidth's Chief
Executive Officer (the "Chief Executive Officer"), and will have general charge
and supervision of those functions and such other responsibilities as the Chief
Executive Officer determines and assigns; provided they are not inconsistent
with the functions and duties typically performed by, and the responsibility of,
Chief Financial Officers of like corporations. Hoffman will report to the Chief
Executive Officer. Page 1 of 14 US2008 5641838 4 Doc ID:
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2.2 Hoffman will work exclusively for Bandwidth on a full-time basis, with his
primary office at Bandwidth’s headquarters. During normal business hours Hoffman
will devote substantially all of his business time and attention to Bandwidth's
business. The foregoing does not prohibit Hoffman from engaging in civic,
professional and business activities that do not interfere with his duties to
Bandwidth, and that otherwise do not violate this Agreement. 2.3 Hoffman will
perform his duties and responsibilities hereunder diligently, faithfully and
loyally. 3 Compensation and Benefits. 3.1 Base Salary and Expenses. 3.1.1 During
the Employment Period, Bandwidth will pay to Hoffman a salary at the initial
rate of Three Hundred Sixty-four Thousand Eight Hundred Dollars ($364,800.00)
per annum (the "Base Salary"). The Base Salary will be earned and paid in
arrears, in equal installments, semi-monthly, or at such other interval as the
Bandwidth’s Board of Directors (the “Board”) or Compensation Committee of the
Board (the “Compensation Committee”) directs, but no less often than once each
month. At the beginning of each year during the Employment Period, the Chief
Executive Officer will in good faith review the Base Salary and recommend to the
Board and/or Compensation Committee any changes for determination by the Board
and/or the Compensation Committee. Bandwidth shall be entitled to withhold, or
cause to be withheld, any amount of federal, state, city or other withholding
taxes or other amounts either required by law or authorized by Hoffman with
respect to payments made to Hoffman in connection with his employment hereunder.
3.1.2 Bandwidth will reimburse Hoffman for all reasonable out-of-pocket business
expenses incurred by Hoffman on Bandwidth's behalf during the Employment Period,
so long as such expenses are reimbursable under Bandwidth’s policies in effect
from time to time. At Hoffman's request, expenses will be advanced before an
expenditure is incurred, or they will be paid by Bandwidth directly to third
parties from which goods or services are being obtained. 3.2 Bonus Compensation.
3.2.1 In addition to the Base Salary, Bandwidth will pay to Hoffman bonus
compensation each year during the Employment Period of up to sixty-five percent
(65%) of the Base Salary (or more if Bandwidth exceeds its CPaaS Revenue,
Revenue, non-GAAP net (loss) income, and free cash flow targets (or any other
applicable corporate objectives established from time to time pursuant to
Section 3.2.2 below) and the pro-rata calculations provided in Section 3.2.2
below yield more than sixty-five percent (65%) of the Base Salary) (the "Bonus
Compensation"). The Bonus Compensation will be adjusted based on Hoffman’s
individual achievement of personal objectives established from time to time
pursuant to Section 3.2.2 below; for example, if Bandwidth achieves one hundred
percent (100%) of each of the CPaaS Revenue, Revenue, non-GAAP net (loss)
income, and free cash flow targets (or any other applicable corporate objectives
established from time to time pursuant to Section 3.2.2 below) and Hoffman
achieves Page 2 of 14 US2008 5641838 4 Doc ID:
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one hundred one percent (101%) of Hoffman’s personal objectives, the Bonus
Compensation calculated pursuant to the first sentence of this Section 3.2.1
would be multiplied by 1.01. The individual performance objectives and the
relative weighting of the respective CPaaS Revenue, Revenue, non-GAAP net (loss)
income, and free cash flow targets (or any other applicable corporate objectives
established from time to time pursuant to Section 3.2.2 below) will be reviewed
by the Chief Executive Officer, who will make recommendations to the Board
and/or the Compensation Committee for determination by the Board and/or the
Compensation Committee at the beginning of each calendar year. 3.2.2 The Bonus
Compensation will be earned, if at all, upon satisfaction of criteria, reviewed
by the Chief Executive Officer, who will make recommendations to the Board
and/or the Compensation Committee for determination by the Board and/or the
Compensation Committee, based on Hoffman’s individual performance objectives and
Bandwidth’s corporate objectives. The Bonus Compensation based on Hoffman’s
individual performance objectives will be earned pro-rata upon Hoffman attaining
each objective, as reasonably reviewed by the Chief Executive Officer, who will
make recommendations to the Board and/or the Compensation Committee for
determination by the Board and/or the Compensation Committee. The Bonus
Compensation based on Bandwidth’s corporate objectives will be earned upon
Bandwidth meeting its CPaaS Revenue, Revenue, non-GAAP net (loss) income, and
free cash flow (or any other applicable corporate objectives established from
time to time pursuant to this Section 3.2.2) provided for in its annual Budget
pro-rata based upon the relative weighting of the respective CPaaS Revenue,
Revenue, non-GAAP net (loss) income, and free cash flow targets (or any other
applicable corporate objectives established from time to time pursuant to this
Section 3.2.2), each as reasonably reviewed by the Chief Executive Officer, who
will make recommendations to the Board and/or the Compensation Committee for
determination by the Board and/or the Compensation Committee not later than
March 31st for each calendar year. The Chief Executive Officer may review and
recommend for determination by the Board and/or the Compensation Committee other
corporate objectives and corresponding Budget targets on an annual basis. 3.2.3
Bonus Compensation will be paid no later than March 15th of the year succeeding
the calendar year with respect to which the Bonus Compensation, if any, is
calculated. 3.2.4 In addition to the Bonus Compensation, the Chief Executive
Officer will from time to time review Hoffman’s efforts on behalf of Bandwidth
and may make recommendations to the Board and/or the Compensation Committee for
determination by the Board and/or the Compensation Committee a special bonus for
extraordinary service. Special bonuses, if any, will not count as any other
compensation payable under this Agreement. 3.3 Stock Options and Restricted
Stock. 3.3.1 All of Hoffman's then outstanding unvested Bandwidth stock options
and Bandwidth restricted stock will immediately vest, and the options will be
exercisable for the remainder of their full original term at grant without
regard to any provision in the plan under which such securities were granted
that may otherwise reduce the term, upon the earlier of: 3.3.1.1 Hoffman's death
prior to termination or expiration of this Agreement; or Page 3 of 14 US2008
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3.3.1.2 Change in Control. 3.3.2 This Section 3.3 is intended to be an award
agreement itself, and is intended to supplement the terms and conditions of any
and all other award agreements between Bandwidth and Hoffman relating to any
options or restricted stock granted to Hoffman by Bandwidth, and the terms of
this Section 3.3 will govern the terms of such other award agreements in the
event of any conflicts, regardless of whether such other agreements are
heretofore or have previously been entered into by the parties. 3.4 Severance.
If Bandwidth terminates Hoffman other than for Cause, or Hoffman resigns for
Good Reason, then Bandwidth will pay to Hoffman an amount ("Severance") equal to
(i) one hundred percent (100%) the prior year's Base Salary, plus (ii) one
hundred percent (100%) of the Bonus Compensation, determined as if Hoffman and
Bandwidth will have achieved one hundred percent (100%) of the objectives or
targets described in Section 3.2.1 above. Such amount, less any applicable taxes
and other similar amounts, will be paid in equal installments over a twelve (12)
month period following the termination in accordance with Bandwidth’s standard
payroll practices and procedures. After an Unapproved Change in Control, in
addition to the foregoing events, Severance will also be payable if Hoffman
terminates his employment for any reason no more than twelve (12) months after
the Unapproved Change in Control. The receipt of any severance benefits provided
for pursuant to this Agreement or otherwise will be dependent upon Hoffman’s
delivery to Bandwidth of an effective general release of claims in a form
reasonably satisfactory to Bandwidth not later than thirty (30) days after the
date of Hoffman’s termination of employment (or such longer period as may be
required by applicable law), and shall be paid or commence no later than thirty
(30) days thereafter, with the first payment to include any amounts that would
have been payable on payroll dates occurring after Hoffman’s termination of
employment and prior to such first payment. 3.5 Vacation. During the Employment
Period, Hoffman will be entitled to take vacation time in accordance with
Bandwidth's policies, but no less than twenty-five (25) days of paid vacation
per year. Bandwidth and Hoffman will reasonably agree on when vacation time can
be taken, and how many weeks can be taken consecutively. In the event that all
or any part of the vacation is not taken for any reason during any year, there
will be no compensation paid in lieu thereof, and accrued and unused vacation
time will not be carried over and added to the vacation time for the succeeding
year in accordance with such policy, unless otherwise approved by the Chief
Executive Officer. 3.6 Health, Disability, Retirement, Death and Insurance
Benefits. 3.6.1 Bandwidth will provide Hoffman with the same health, disability,
retirement, death and other fringe benefits as are generally provided to the
executive employees of Bandwidth in accordance with such terms, conditions and
eligibility requirements as may from time to time be established or modified by
Bandwidth; provided, that Bandwidth will pay the entire premium for family
coverage under Bandwidth's group health insurance plan unless Bandwidth
reasonably determines that paying the entire premium would be discriminatory and
could subject Hoffman to adverse income tax consequences. Bandwidth shall, to
the extent allowable by law, regulation, contract and policy, continue to pay
Hoffman's basic medical insurance Page 4 of 14 US2008 5641838 4 Doc ID:
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premiums for twelve (12) months following a termination of Hoffman by Bandwidth
other than for Cause, whether or not this coverage is required to be available
under COBRA. 3.6.2 Upon a termination of Hoffman by Bandwidth other than for
Cause, Bandwidth will also pay Hoffman a lump sum amount equal to twelve (12)
months of premiums for the term life insurance coverage Bandwidth had in effect
for Hoffman as of the date of his termination of employment. Such amount will be
payable, less applicable withholdings, with the first payment of Severance.
Hoffman will have all rights to convert or purchase such life insurance policies
as provided under the terms of the plan and policies. 3.7 Indemnification.
During the Employment Period and after Hoffman’s termination of employment,
Bandwidth shall indemnify Hoffman and hold Hoffman harmless from and against any
claim, loss or cause of action arising from or out of Hoffman’s performance as
an officer, director or employee of Bandwidth or any of its subsidiaries or
other affiliates or in any other capacity, including any fiduciary capacity, in
which Hoffman serves at Bandwidth’s request, in each case to the maximum extent
permitted by law and under Bandwidth’s Certificate of Incorporation and By-Laws.
This indemnification right is in addition to any similar rights under any
statute, Bandwidth’s Certificate of Incorporation, By-Laws and under any other
applicable agreements that now exist or may exist from time to time. During the
Employment Period and for at least 3 years following Hoffman’s termination of
employment, Hoffman shall be covered by any policy of directors and officers’
liability insurance maintained by Bandwidth for the benefit of its officers and
directors. 4 Termination. 4.1 Hoffman's employment with Bandwidth will terminate
automatically upon Hoffman's death. 4.2 Bandwidth may terminate Hoffman’s
employment at any time. 4.3 If at any time during the Employment Period
Bandwidth (i) assigns Hoffman to serve in a capacity other than as Bandwidth's
Chief Financial Officer or assigns Hoffman to perform tasks inconsistent with
such position, in each case, which results in a material diminution in Hoffman’s
authority, duties or responsibilities, or (ii) Bandwidth materially breaches any
provision of this Agreement, then Hoffman may resign his employment by providing
notice to Bandwidth within thirty (30) days of such event of the reasons for his
resignation under this provision. Bandwidth shall have thirty (30) days
following receipt of such notice to remedy and cure the alleged diminution or
breach. If Bandwidth does not cure such breach, Hoffman shall resign his
employment and such resignation will be deemed to be a termination by Bandwidth
other than for Cause and/or a resignation by Hoffman for "Good Reason." Hoffman
can resign at any time other than for Good Reason. 4.4 Bandwidth will have the
right to terminate Hoffman at any time, immediately, for Cause. "Cause" will
mean: (i) Hoffman is convicted of any felony (or Hoffman pleads guilty or nolo
contendere thereto); (ii) Hoffman fails or refuses to perform, in any material
respect, the written policies or directives of the Chief Executive Officer,
unless such failure is corrected within thirty (30) days following his receipt
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of written notice of such failure from Bandwidth that specifically identifies
the manner in which the Chief Executive Officer believes Hoffman has
substantially failed to materially perform his duties; (iii) Hoffman materially
breaches this Agreement or any other agreement between Bandwidth and Hoffman,
including, without limitation, any applicable nondisclosure agreement, unless
such failure is corrected within thirty (30) days following his receipt of
written notice of such failure from Bandwidth that specifically identifies the
manner in which the Chief Executive Officer believes Hoffman has breached the
agreement; or (iv) the gross or willful misconduct by Hoffman with regard to
Bandwidth or any employee of Bandwidth that is materially injurious to Bandwidth
or such employee. 5 Effects of Termination. 5.1 Upon Hoffman’s termination of
employment for any reason (including death), he will be entitled to receive (in
addition to any compensation and benefits he is entitled to receive under
Section 3 above, if applicable): (i) any earned but unpaid Base Salary, (ii) any
earned but unpaid Bonus Compensation, (iii) unreimbursed business expenses in
accordance with Bandwidth’s policies for which expenses Hoffman has provided
appropriate documentation, (iv) a lump sum cash amount equal to the value of his
unused vacation days in accordance with the standard written policy of
Bandwidth, and (v) any vested amounts or benefits to which Hoffman is then
entitled under the terms of the benefit plans then sponsored by Bandwidth in
accordance with their terms. All of Bandwidth's other obligations under this
Agreement will end immediately upon Hoffman’s termination of employment. 5.2 Any
controversy or claim arising out of or relating to the benefits and entitlements
of Hoffman following a Change of Control will be resolved by binding arbitration
in Raleigh, North Carolina with the American Arbitration Association, pursuant
to their commercial arbitration rules then in effect. The determination of the
arbitrator will be conclusive and binding on Bandwidth and Hoffman, and judgment
may be entered on the arbitrator's award in any court of competent jurisdiction.
The prevailing party may recover its attorneys’ fees and expenses incurred in
such dispute, including the cost of the Arbitration if the prevailing party
initiated the action. 6 Stockholder Vote. Anything in this Agreement to the
contrary notwithstanding, in the event that any amounts payable to Hoffman
hereunder, alone or together with other payments that Hoffman has a right to
receive from Bandwidth, would constitute an "excess parachute payment" (as
defined in Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code")), then Bandwidth will reduce the amounts payable to the minimum extent
necessary to avoid the payment of any excess parachute payments and to avoid
Hoffman being subject to the excise tax imposed by Section 4999 of the Code. In
the event that any payment or benefit intended to be provided hereunder is
required to be reduced pursuant to this Section, then the reduction shall occur
in the following order: (a) reduction of cash payments described in Section 3
(with such reduction being applied to the payments in the reverse order in which
they would otherwise be made, that is, later payments shall be reduced before
earlier payments); (b) cancellation of acceleration of vesting on any equity
awards for which the exercise price exceeds the then fair market value of the
underlying equity; and (c) cancellation of acceleration of vesting of equity
awards not covered under (b) above. In the event that acceleration of vesting of
equity awards is to be cancelled, such acceleration of vesting shall be
cancelled in the reverse order of the date of grant of such equity awards, that
is, later equity awards shall be canceled before earlier equity awards. Without
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the foregoing, if Bandwidth is not then a public company, it will use its best
efforts to secure the approval of its stockholders to exempt the excess
parachute payments from the loss of corporate tax deductions imposed under
Section 280G and the excise tax imposed under Section 4999. If Bandwidth becomes
publicly traded, it will comply with Section 951 of the Dodd-Frank Wall Street
Reform and Consumer Protection Act that requires public companies subject to the
federal proxy rules to provide their shareholders with an advisory vote on:
executive compensation; the desired frequency of say-on-pay votes; and on golden
parachute arrangements, and will seek shareholder votes under Internal Revenue
Code Section 162(m), and any other law, regulation or rule that requires a
shareholder vote on this Agreement, or that permits a vote to preserve tax
benefits or avoid tax penalties. 7 Covenant Not To Compete. 7.1 Inducement. This
covenant between Hoffman and Bandwidth is being executed and delivered by
Hoffman in consideration of Hoffman's employment with Bandwidth and each party's
rights and obligations agreed to hereunder (including, without limitation, the
Base Salary, Bonus Compensation, and other benefits and payments set forth
herein). Hoffman acknowledges that Bandwidth's business and Hoffman's
responsibilities are international in scope. Hoffman further acknowledges that
the covenant not to compete with Bandwidth contained in this Section 7 was and
has been a condition of his employment since Hoffman was originally employed by
Bandwidth. 7.2 Restricted Activities ─ Duration. Except as otherwise consented
to or approved by the Chief Executive Officer in writing, Hoffman agrees that
during the term of this Agreement and for twelve (12) months after Hoffman's
employment with Bandwidth ends;, regardless of the time, manner or reasons for
termination, and regardless of whether terminated by Hoffman or Bandwidth, but
only so long as Bandwidth does not breach its obligations in this Agreement,
Hoffman will not, directly or indirectly, acting alone or as a member of a
partnership or as an owner, director, officer, employee, manager, representative
or consultant of any corporation or other business entity: 7.2.1 engage in any
business in competition with the business that is conducted by Bandwidth in the
United States, Canada or any European, Asian, Pacific or other foreign country
in which Bandwidth then or thereafter transacts business or is making a bona
fide attempt to do so; 7.2.2 induce, request or attempt to influence any
customers or suppliers of Bandwidth to curtail or cancel their business or
prospective business with Bandwidth or in any way interfere with Bandwidth's
business relationships; or 7.2.3 induce, solicit, assist or facilitate the
inducement or solicitation by a third person of any employee, officer, agent or
representative of Bandwidth, to terminate their respective relationship with
Bandwidth or in any way interfere with Bandwidth's employee, officer, agent or
representative relationships. 7.3 Tolling; Relief of Obligations. In the event
that Hoffman breaches any provision of this Section 7, that violation will toll
the running of the restricted period set forth in Section 7.2 from the date of
commencement of such violation until such violation ceases. Page 7 of 14 US2008
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7.4 "Blue Penciling" or Modification. If the length of time, geographic area or
scope of restricted business activity set forth in Section 7.2 is deemed
unreasonably restrictive or unreasonable in any other respect in any court
proceeding, Hoffman and Bandwidth agree and consent to such court's modifying or
reducing such restriction(s) to the extent deemed reasonable under the
circumstances then presented. 7.5 Definitions. As used in this Section 7, the
following terms will have the following definitions: (i) The terms “compete” or
“in competition,” as used herein, will be deemed to include, without limitation,
becoming or being an employee, owner, partner, consultant, agent, stockholder,
director, or officer of any person, partnership, firm, corporation or other
entity (other than Bandwidth) which engages in (i) the business of developing,
providing, offering and selling (A) retail VoIP services, including, without
limitation, IP based unified communications services and trunking services;
wholesale VoIP services; (C) wholesale origination, termination or SMS services;
(D) emergency solutions for telecommunications carriers, including, without
limitation, end-to-end call control and support, real-time address validation,
automated provisioning and/or geospatial routing; (E) communication platform as
a service (or CPaaS) solutions, including, without limitation, application
program interfaces deploying, causing the use of, or using origination,
termination, or SMS services; and/or (F) product(s) or service(s) to which any
of clauses (A) through (E) apply and/or any product(s) or service(s) that
perform substantially similar functions to which any of clauses (A) through (E)
apply, or (ii) any other business conducted by Bandwidth immediately prior to
such termination (or in which Bandwidth shall at such time be actively preparing
to engage). Notwithstanding the foregoing, ownership of five (5%) percent or
less of any class of securities of an entity will not constitute competition
with Bandwidth. (ii) The phrases “engage in a business” or “engage in a line of
business” and similar phrases will be deemed to include marketing or otherwise
selling products or researching, writing, developing, designing, distributing,
testing or manufacturing products or services or otherwise preparing to market
or sell products or services. 8 Nondisclosure of Confidential Information. 8.1
Hoffman acknowledges that the discharge of his duties under this Agreement will
necessarily involve his access to Confidential Information. Hoffman acknowledges
that the unauthorized use by him or disclosure by him of such Confidential
Information to third parties might cause irreparable damage to Bandwidth and
Bandwidth's business. Accordingly, Hoffman agrees that at all times after the
date hereof he will not copy, publish, disclose, divulge to or discuss with any
third party nor use for his own benefit or that of others, without the prior
express written consent of the Chief Executive Officer, except in the normal
conduct of his duties under this Agreement, any Confidential Information, it
being understood and acknowledged by Hoffman that all Confidential Information
created, compiled or obtained by Hoffman or Bandwidth, or furnished to Hoffman
by any person while Hoffman is associated with Bandwidth remains its exclusive
property. Page 8 of 14 US2008 5641838 4 Doc ID:
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8.2 Promptly upon termination of his employment, irrespective of the time or
manner thereof or reason therefor, and whether such termination is by Bandwidth
or Hoffman, Hoffman agrees to return and surrender to Bandwidth all tangible
Confidential Information in any manner in his control or possession, as well as
all other Bandwidth property. 8.3 Pursuant to the Defend Trade Secrets Act of
2016, Hoffman understands that: An individual may not be held criminally or
civilly liable under any federal or state trade secret law for the disclosure of
a trade secret that: (a) is made (i) in confidence to a federal, state, or local
government official, either directly or indirectly, or to an attorney; and (ii)
solely for the purpose of reporting or investigating a suspected violation of
law; or (b) is made in a complaint or other document that is filed under seal in
a lawsuit or other proceeding. Further, an individual who files a lawsuit for
retaliation by an employer for reporting a suspected violation of law may
disclose the employer's trade secrets to the attorney and use the trade secret
information in the court proceeding if the individual: (a) files any document
containing the trade secret under seal; and (b) does not disclose the trade
secret, except pursuant to court order. 9 Remedies Inadequate. 9.1 Hoffman
acknowledges that the services to be rendered by him to Bandwidth as
contemplated by this Agreement are special, unique and of extraordinary
character. Hoffman expressly agrees and understand that the remedy at law for
any breach by him of Section 7 or 8 of this Agreement will be inadequate and
that the damages flowing from such breach are not readily susceptible to being
measured in monetary terms. Accordingly, upon adequate proof of Hoffman's
violation of any legally enforceable provision of Section 7 or 8, Bandwidth will
be entitled to immediate injunctive relief, including, without limitation, a
temporary order restraining any threatened or further breach. In the event any
equitable proceedings are brought to enforce the provisions of any of Section 7,
8 or 9, Hoffman agrees that he will not raise in such proceedings any defense
that there is an adequate remedy at law, and Hoffman hereby waives any such
defense. Nothing in this Agreement will be deemed to limit Bandwidth's remedies
at law or in equity for any breach by Hoffman of any of the provisions of
Section 7 or 8 which may be pursued or availed of by Bandwidth. Without limiting
the generality of the immediately preceding sentence, any covenant on Hoffman's
part contained in Section 7 or 8, which may not be specifically enforceable will
nevertheless, if breached, give rise to a cause of action for monetary damages.
9.2 Hoffman has carefully considered, and has had adequate time and opportunity
to consult with his own counsel or other advisors regarding the nature and
extent of the restrictions upon him and the rights and remedies conferred upon
Bandwidth under Sections 7, 8 and 9, and hereby acknowledges and agrees that
such restrictions are reasonable in time, territory and scope, are designed to
eliminate competition which otherwise would be unfair to Bandwidth, do not
stifle the inherent skill and experience of Hoffman, would not operate as a bar
to Hoffman's sole means of support, are fully required to protect the legitimate
interests of Bandwidth and do not confer a benefit upon Bandwidth
disproportionate to the detriment to Hoffman. Page 9 of 14 US2008 5641838 4 Doc
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9.3 The covenants and agreements made by Hoffman in Sections 7, 8 and 9 will
survive full payment by Bandwidth to Hoffman of the amounts to which Hoffman is
entitled under this Agreement, the expiration of the Employment Period and this
Agreement. 10 Rights. Hoffman acknowledges and agrees that any procedure, design
feature, schematic, invention, improvement, development, discovery, know how,
concept, idea or the like (whether or not patentable, registrable under
copyright or trademark laws, or otherwise protectable under similar laws) that
Hoffman may conceive of, suggest, make, invent, develop or implement, during the
course of his service pursuant to this Agreement (whether individually or
jointly with any other person or persons), relating in any way to the business
of Bandwidth or to the general industry of which Bandwidth is a part, as will
all physical embodiments and manifestations thereof, and all patent rights,
copyrights, trademarks (or applications therefor) and similar protections
therein (all of the foregoing referred to as "Work Product"), will be the sole,
exclusive and absolute property of Bandwidth. All Work Product will be deemed to
be works for hire and, in addition to the Work Product being works for hire,
Hoffman hereby assigns to Bandwidth all right, title and interest in, to and
under such Work Product, including without limitation, the right to obtain such
patents, copyright registrations, trademark registrations or similar protections
as Bandwidth may desire to obtain. Hoffman will immediately disclose all Work
Product to Bandwidth and agrees, at any time, upon Bandwidth's request and
without additional compensation, to execute any documents and otherwise to
cooperate with Bandwidth respecting the perfection of its right, title and
interest in, to and under such Work Product, and in any litigation or
controversy in connection therewith, all expenses incident thereto to be borne
by Bandwidth. 11 Assignment of Payment Rights. In no event will Bandwidth be
obligated to make any payment under this Agreement to any assignee or creditor
of Hoffman, other than to the estate of Hoffman after his death. Prior to the
time of payment under this Agreement, neither Hoffman nor his legal
representative will have any right by way of anticipation or otherwise to
dispose of any interest under this Agreement. 12 Bandwidth's Obligations
Unfunded. Except as to any benefits that may be required to be funded under any
benefit plan of Bandwidth pursuant to law, as provided for in this Agreement or
pursuant to other agreements and which are not for the sole benefit of Hoffman,
the obligations of Bandwidth under this Agreement are not funded and Bandwidth
will not be required to set aside or deposit in escrow any monies in advance of
the due date for payment thereof to Hoffman. 13 Notices. Any notice to be given
hereunder by Bandwidth to Hoffman will be deemed to be given if delivered to
Hoffman in person, if emailed to Hoffman at his business email address or if
mailed or overnighted to Hoffman at his address last known on the records of
Bandwidth, and any notice to be given by Hoffman to Bandwidth will be directed
either to Bandwidth's Chief Executive, Secretary or General Counsel, and in any
case it will be deemed to be given if delivered in person, if emailed to the
address at his business email address or if mailed or overnighted to the person
at his address last known on the records of Bandwidth, unless any party will
have duly notified the other parties in writing of a change of address. All
notices are deemed given when delivered to such address, or if otherwise
actually received by the addressee. Page 10 of 14 US2008 5641838 4 Doc ID:
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14 Section 409A. 14.1 In order to ensure compliance with Code Section 409A and
the regulations and guidance promulgated thereunder (collectively “Section
409A”), the provisions of this Section 14 shall govern in all cases over any
contrary or conflicting provision in this Agreement (other than a comparable
Section 409A provision that is expressly intended to govern over this provision
by its terms). The intent of the parties is that payments and benefits under
this Agreement comply with, or be exempt from, Section 409A and, accordingly, to
the maximum extent permitted, this Agreement shall be interpreted and
administered to be in compliance therewith. Hoffman acknowledges and agrees that
Bandwidth has made no representation to Hoffman as to the tax treatment of the
compensation and benefits provided pursuant to this Agreement and that Hoffman
is solely responsible for all taxes due with respect to such compensation and
benefits. 14.2 To the extent necessary to comply with Section 409A, references
in this Agreement to “termination of employment” or “terminates employment” (and
similar references) shall have the same meaning as “separation from service”
under Code Section 409A(a)(2)(A)(i), and no payment subject to Section 409A that
is payable upon a termination of employment shall be paid unless and until (and
not later than applicable in compliance with Section 409A) when Hoffman incurs a
“separation from service” under Code Section 409A(a)(2)(A)(i) (a “Separation
from Service”). In addition, if Hoffman is a “specified employee” within the
meaning of Section 409A at the time of his Separation from Service, any
nonqualified deferred compensation subject to Section 409A that would otherwise
have been payable on account of, and within the first six months following,
Hoffman’s Separation from Service, and not by reason of another event under
Section 409A, will become payable on the first business day after six months
following the date of Hoffman’s Separation from Service or, if earlier, the date
of Hoffman’s death. 14.3 Consistent with the requirements of Section 409A, to
the extent that any reimbursement or in-kind benefit provided is taxable and
subject to Section 409A, unless stated otherwise – (i) reimbursements and
in-kind benefits will be provided only during the period during which Hoffman is
employed or receiving Severance; (ii) the expenses eligible for reimbursement or
the in-kind benefits provided in any given calendar year will not affect the
expenses eligible for reimbursement or the in-kind benefits provided in any
other calendar year; (iii) the reimbursement of an eligible expense must be made
no later than the last day of calendar year following the calendar year in which
the expense was incurred; and (iv) the right to reimbursements or in-kind
benefits cannot be liquidated or exchanged for any other benefit. 14.4 For
purposes of Section 409A, Hoffman’s right to receive any installment payments
pursuant to this Agreement shall be treated as a right to receive a series of
separate and distinct payments. If a Separation from Service occurs prior to the
date of an Unapproved Change in Control, each payment of Severance and each
other payment hereunder that is made within 2-1/2 months following the end of
the year that contains the date of Hoffman’s Separation from Service is intended
to be exempt from Section 409A as a short-term deferral within the meaning of
the final regulations under Section 409A, each such payment that is made later
than 2-1/2 months following the end of the year that contains the date of
Hoffman’s Separation from Service is intended to be exempt under the two-times
exception of Treasury Reg. § 1.409A-1(b)(9)(iii), up to the limitation on the
availability of that exception specified in the regulation, and each payment
that is made after the two-times exception ceases to be available shall be Page
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subject to delay (if necessary) in accordance with Section 14.2 above. Continued
medical coverage is intended to be exempt from Section 409A under the exemption
for health benefits in Treas. Reg. § 1.409A- 1(b)(9)(v)(B). 14.5 In no event may
Hoffman, directly or indirectly, designate the calendar year of any payment to
be made under this Agreement that is considered nonqualified deferred
compensation subject to Section 409A. In no event shall the timing of Hoffman’s
execution of the general release of claims, directly or indirectly, result in
Hoffman designating the calendar year of payment of any nonqualified deferred
compensation subject to Section 409A, and if such a payment that is subject to
execution of the general release of claims could be made in more than one
taxable year, payment shall be made in the later taxable year. 15 Amendments.
This Agreement will not be modified or discharged, in whole or in part, except
by an agreement in writing signed by all parties. 16 Entire Agreement. Except as
expressly provided for herein, this Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof. For clarity, the
Offer Letter is, effective as of the execution of this Agreement, immediately
terminated and of no further force or effect. The parties are not relying on any
other representation, express or implied, oral or written. This Agreement
supersedes any prior employment agreement, written or oral, between Hoffman and
Bandwidth; provided, however that other non-competition, non-solicitation,
confidentiality agreements, and other restrictive covenant agreements between
Hoffman and Bandwidth remain in effect and this Agreement and such other
agreements may be enforced by Bandwidth independently or simultaneously. 17
Captions; Terms. The captions contained in this Agreement are for convenience of
reference only and do not affect the meaning of any terms or provisions hereof.
References to "termination of employment," "termination of Hoffman,"
"termination of this Agreement," "termination of the Employment Period," and any
other terms of similar meaning will all be deemed equivalent. Masculine,
feminine and neuter pronouns are interchangeable as context requires. 18 Binding
Effect. The parties may not assign this Agreement and may not assign or delegate
any right or duty hereunder and any attempt to do so is void. Subject to the
foregoing, the rights and obligations of Bandwidth hereunder will inure to the
benefit of, and will be binding upon, Bandwidth and its successors and assigns,
and the rights and obligations of Hoffman hereunder will inure to the benefit
of, and will be binding upon, Hoffman and his heirs, personal representatives
and estate. 19 Severable Provisions. The provisions of this Agreement are
severable, and if any one or more provisions may be determined to be illegal or
otherwise unenforceable, in whole or in part, the remaining provisions and any
partially enforceable provision will be binding and enforceable to the extent
enforceable in any jurisdiction. 20 Governing Law and Venue. This Agreement will
be interpreted, construed, and enforced in all respects in accordance with the
laws of the State of North Carolina, without regard to conflict of laws. Other
than disputes that by the terms of this Agreement are to be resolved through
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arbitration, any and all actions brought arising out of, or based in whole or in
part upon this Agreement or the employment relationship between Hoffman and
Bandwidth, will be brought in either a federal or state court sitting in
Raleigh, North Carolina, and the parties consent to jurisdiction and venue
thereof. IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
day and year first above written, effective the Effective Date. Bandwidth:
BANDWIDTH INC. By _______________________ Its _______________________Chief
Executive Officer Hoffman: __________________________ Jeffrey A. Hoffman Page 13
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EXHIBIT A EMPLOYMENT AGREEMENT DEFINITIONS "Approved Change in Control" of
Bandwidth means a Change in Control of Bandwidth of a nature that would be
required to be reported in response to Item 5.01 of the Current Report on Form
8-K, as if in effect on the Effective Date, pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") if the
transaction causing such a change will have been approved by the affirmative
vote of at least a majority of the Continuing Directors. "Change in Control"
means, and will be deemed to have occurred at such time as: (i) any "person" (as
such term is used in Section 13(d) and 14(d) of the Exchange Act) becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of fifty percent (50%) or more prior to Bandwidth's first
underwritten public offering and twenty-five percent (25%) or more after, but
not as a result of, Bandwidth's first underwritten public offering, or more of
the combined voting power of Bandwidth's Voting Securities; (ii) sale of all or
substantially all of the assets of Bandwidth, or any merger, consolidation, or
reorganization to which Bandwidth is a party and as the result of which
Bandwidth's stockholders prior to the transaction do not own at least fifty
percent (50%) of the voting power of the surviving entity in the election of
directors; or (iii) individuals who constitute the Continuing Directors cease
for any reason to constitute at least a majority of Bandwidth's Board of
Directors. Notwithstanding the foregoing, no event unilaterally caused by
Hoffman by virtue of his stock ownership will be a Change in Control. Further
notwithstanding the foregoing, a Change in Control shall not be deemed to occur
unless the transaction also constitutes a change in the ownership or effective
control of Bandwidth or a change in the ownership of a substantial portion of
the assets of Bandwidth, each as defined in Code Section 409A(a)(2)(A)(v) and
the regulations promulgated thereunder; however, a Change in Control shall be
deemed to occur if the transaction constitutes a change in the ownership or
effective control of Bandwidth or a change in the ownership of a substantial
portion of the assets of Bandwidth, each as defined in Code Section
409A(a)(2)(A)(v) and the regulations promulgated thereunder, regardless of
whether it satisfies the foregoing. "Budget" will mean for each year,
Bandwidth's management financial targets approved by the Board of Directors for
the year in question. "Confidential Information" means all information or trade
secrets of any type or description belonging to Bandwidth that are proprietary
and confidential to Bandwidth and are not publicly disclosed or are only
disclosed with restrictions. Without limiting the generality of the foregoing,
Confidential Information includes strategic plans for carrying on business,
other business plans, cost data, internal financial information, customer lists,
employee lists, vendor lists, business partner or alliance lists, drawings,
designs, schematics, flow charts, specifications, inventions, calculations,
discoveries and any letters, papers, documents or instruments disclosing or
reflecting any of the foregoing, and all information revealed to, acquired or
created by Hoffman during Hoffman's employment by Bandwidth relating to any of
the foregoing. Page 14 of 14 US2008 5641838 4 Doc ID:
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"Continuing Directors" will mean and include the persons constituting
Bandwidth's Board of Directors as of the Effective Date, and any person who
becomes a director of Bandwidth subsequent to the date hereof whose election, or
nomination for election by Bandwidth's stockholders, was approved by an
affirmative vote of at least a majority of the then Continuing Directors (either
by a specific vote or if Bandwidth is then subject to the proxy rules of the
Exchange Act then by approval of the proxy statement of Bandwidth in which such
person is named as a nominee for director or of the inclusion of such person in
such Proxy Statement as such a nominee, in any case without objection by any
member of such approving majority of the then Continuing Directors to the
nomination of such person or the naming of such person as a director nominee).
“New Customer Revenue” means Revenue generated during any applicable fiscal year
attributable to any customer(s) for which Bandwidth did not have an effective
master service agreement (or other similar agreement) executed with such
customer as of the last business day of the immediately preceding fiscal year.
"Operating Earnings" will mean earnings before interest, taxes, depreciation and
amortization and excluding (i) capital expenditures, (ii) extraordinary gains
and losses, and (iii) any bonus(es) paid or payable pursuant to Section 3.5
and/or Section 3.6 of the agreement to which this Exhibit A is attached, unless
Bandwidth has accrued for the payment of such bonus(es) in connection with
Bandwidth’s calculation of Operating Earnings target for the purposes of Section
3.2. “Revenue” means revenue, as determined in accordance with generally
accepted accounting principles. "Unapproved Change in Control" of Bandwidth will
mean any Change in Control of Bandwidth that is not an Approved Change in
Control. "Voting Securities" means Bandwidth's outstanding securities ordinarily
having the right to vote at elections of directors. Page 15 of 14 US2008 5641838
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