Document:

bandwidthrwservicesagree

                               SERVICES AGREEMENT                                                     SERVICES AGREEMENT (this “Agreement”), dated as of September 30, 2019, by and between  Bandwidth Inc., a Delaware corporation ( “Bandwidth”), and Republic Wireless, Inc., a Delaware  corporation (“Republic Wireless”).                                                      NOW THEREFORE, in consideration of the mutual agreements contained herein and other good  and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties  hereto, intending to be bound legally, agree as follows:                                                                                    ARTICLE I                                                                          ENGAGEMENT AND SERVICES                                                     Section 1.1   Engagement.  Republic Wireless engages Bandwidth to provide to Republic  Wireless, commencing on the date hereof (the “Effective Date”), the services set forth in Section 1.2  (collectively, the “Services”), and Bandwidth accepts such engagement, subject to and upon the terms and  conditions of this Agreement.  The parties acknowledge that certain of the Services will be performed by  officers, employees or consultants of Bandwidth, who may also serve, from time to time, as officers,  employees or consultants of other companies.               Section 1.2   Services.                       (a)    The Services will include the following, if and to the extent requested by Republic  Wireless during the Term of this Agreement:                                                          (i)    services performed by Bandwidth’s legal department; and                                           (ii)   such other services as Bandwidth may obtain from its officers, employees                            and consultants in the management of its own operations that Republic                            Wireless may from time to time request or require, as may be agreed in                            writing between Bandwidth and Republic Wireless.                       The Services are more completely described in Exhibit A attached hereto.           Section 1.3  Services Not to Interfere with Bandwidth’s Business.  Republic Wireless  acknowledges and agrees that in providing Services hereunder Bandwidth will not be required to take any  action that would disrupt, in any material respect, the orderly operation of Bandwidth’s business activities.                 Section 1.4   Books and Records.   Bandwidth will maintain books and records, in reasonable  detail in accordance with Bandwidth’s standard business practices, with respect to its provision of Services  to Republic Wireless pursuant to this Agreement, including records supporting the determination of the  Services Fee and other costs and expenses to Republic Wireless pursuant to Article II (collectively,  “Supporting Records”). Bandwidth will give Republic Wireless and its duly authorized representatives,  agents, and attorneys reasonable access to all such Supporting Records during Bandwidth’s regular business  hours upon Republic Wireless’s request after reasonable advance notice.                                              ARTICLE II                                                                                                       Doc ID: 5d47de3d65fa83167eea606299d816b27e4421d1

 

                                   COMPENSATION                                                     Section 2.1  Services Fee.   Republic Wireless agrees to pay, and Bandwidth agrees to accept,  fee(s) (the “Services Fees”) set forth on Exhibit A with respect to applicable Services utilized by Republic  Wireless during the Term of this Agreement, payable in monthly installments in arrears as set forth in  Section 2.3.  Bandwidth and Republic Wireless will review and evaluate the Services Fees for  reasonableness semiannually during the Term and will negotiate in good faith to reach agreement on any  appropriate adjustments to the Services Fee.  Based on such review and evaluation, Bandwidth and Republic  Wireless will agree on the appropriate effective date (which may be retroactive) of any such adjustment to  the Services Fees.  For the avoidance of doubt, the determination of the Services Fees and any future  adjustment thereto does not and will not include charges included under the Annual Allocation Expense (as  such term is defined in the Facilities Sharing Agreement, dated as of November 30, 2016) payable by  Republic Wireless under the Facilities Sharing Agreement.               Section 2.2   Cost Reimbursement.  In addition to (and without duplication of) the Services Fee  payable pursuant to Section 2.1, Republic Wireless also will reimburse Bandwidth for all direct out-of- pocket costs, with no markup (“Out-of-Pocket Costs”), incurred by Bandwidth in performing the Services  (e.g., postage and courier charges, travel, meals and entertainment expenses, and other miscellaneous  expenses that are incurred by Bandwidth in the conduct of the Services).               Section 2.3   Payment Procedures.                       (a)         Republic Wireless will pay Bandwidth, by wire or intrabank transfer of funds or  in such other manner specified by Bandwidth to Republic Wireless, in arrears on or before the fifth (5th)  day of each calendar month immediately following the calendar month during which Republic Wireless  utilized the applicable Services, beginning with November 5, 2019, the Services Fees then in effect.                             (b)           Any reimbursement to be made by Republic Wireless to Bandwidth pursuant to  Section 2.2 will be paid by Republic Wireless to Bandwidth within 15 days after receipt by Republic  Wireless of an invoice therefor, by wire or intrabank transfer of funds or in such other manner specified by  Bandwidth to Republic Wireless.  Bandwidth will invoice Republic Wireless monthly for reimbursable  expenses incurred by Bandwidth on behalf of Republic Wireless during the preceding calendar month as  contemplated in Section 2.2; provided, however, that Bandwidth may separately invoice Republic Wireless  at any time for any single reimbursable expense incurred by Bandwidth on behalf of Republic Wireless in  an amount equal to or greater than $5,000.00. Any invoice or statement pursuant to this Section 2.3(b) will  be accompanied by supporting documentation in reasonable detail consistent with Bandwidth’s own  expense reimbursement policy.                             (c)           Any payments not made when due under this Section 2.3 will bear interest at the  rate of 1.5% per month on the outstanding amount from and including the due date to but excluding the  date paid.          Section 2.4   Survival.  The terms and conditions of this Article II will survive the expiration or  earlier termination of this Agreement.                                              ARTICLE III                                                                                      TERM                                                                                           2                                                          Doc ID: 5d47de3d65fa83167eea606299d816b27e4421d1

 

       Section 3.1  Term Generally.  The term of this Agreement will commence on the Effective Date  and will continue until the second anniversary of the Effective Date (the “Term”).  This Agreement is  subject to termination prior to the end of the Term in accordance with Section 3.3.               Section 3.2   Discontinuance of Select Services.  At any time during the Term, on not less than  thirty (30) days’ prior notice by Republic Wireless to Bandwidth, Republic Wireless may elect to  discontinue obtaining any of the Services previously obtained from Bandwidth pursuant to this  Agreement.  In such event, Bandwidth’s obligation to provide Services that have been discontinued  pursuant to this Section 3.2, and Republic Wireless’s obligation to compensate Bandwidth for such  Services, will cease as of the end of such 30-day period (or such later date as may be specified in the notice),  and this Agreement will remain in effect for the remainder of the Term with respect to those Services that  have not been so discontinued.  Bandwidth and Republic Wireless will promptly reduce the Services Fees  payable by Republic Wireless as described pursuant to Exhibit A following the discontinuance of any  Services.  Each party will remain liable to the other for any required payment or performance accrued prior  to the effective date of discontinuance of any Service.               Section 3.3   Termination.  This Agreement will be terminated prior to the expiration of the  Term in the following events:                      (a)         at any time upon at least thirty (30) days’ prior written notice by Republic Wireless  to Bandwidth;                             (b)        immediately upon written notice (or at any later time specified in such notice) by  Bandwidth to Republic Wireless if a Change in Control or Bankruptcy Event occurs with respect to  Republic Wireless; or                             (c)         immediately upon written notice (or at any later time specified in such notice) by  Republic Wireless to Bandwidth if a Change in Control or Bankruptcy Event occurs with respect to  Bandwidth.                      For purposes of this Section 3.3, a “Change in Control” will be deemed to have occurred with  respect to a party if a merger, consolidation, binding share exchange, acquisition, or similar transaction  (each, a “Transaction”), or series of related Transactions, involving such party occurs as a result of which  the voting power of all voting securities of such party outstanding immediately prior thereto represent  (either by remaining outstanding or being converted into voting securities of the surviving entity) less than  75% of the voting power of such party or the surviving entity of the Transaction outstanding immediately  after such Transaction (or if such party or the surviving entity after giving effect to such Transaction is a  subsidiary of the issuer of securities in such Transaction, then the voting power of all voting securities of  such party outstanding immediately prior to such Transaction represent (by being converted into voting  securities of such issuer) less than 75% of the voting power of the issuer outstanding immediately after such  Transaction).               For purposes of this Section 3.3, a “Bankruptcy Event” will be deemed to have occurred with  respect to a party upon such party’s insolvency, general assignment for the benefit of creditors, such party’s  voluntary commencement of any case, proceeding, or other action seeking reorganization, arrangement,  adjustment, liquidation, dissolution, or consolidation of such party’s debts under any law relating to  bankruptcy, insolvency, or reorganization, or relief of debtors, or seeking appointment of a receiver, trustee,  custodian, or other similar official for such party or for all or any substantial part of such party’s assets  (each, a “Bankruptcy Proceeding”), or the involuntary filing against Republic Wireless or Bandwidth, as  applicable, of any Bankruptcy Proceeding that is not stayed within 60 days after such filing.                                                     3                                                          Doc ID: 5d47de3d65fa83167eea606299d816b27e4421d1

 

       Each party will remain liable to the other for any required payment accrued prior to the termination  of this Agreement.                                               ARTICLE IV                                                                          PERSONNEL AND EMPLOYEES                                                     Section 4.1  Personnel to Provide Services.                       (a)        Bandwidth will make available to Republic Wireless, on a non-exclusive basis, the  appropriate personnel (the “Personnel”) to perform the Services.  The personnel made available to perform  selected Services are expected to be substantially the same personnel who provide similar services in  connection with the management and administration of the business and operations of Bandwidth.                             (b)         Republic Wireless acknowledges that:                                    (i)           certain of the Personnel also will be performing services for Bandwidth        and/or other companies, from time to time, including certain Subsidiaries and Affiliates of        Bandwidth, in each case, while also potentially performing services directly for Republic Wireless        and certain of its Subsidiaries and Affiliates under a direct employment, consultancy or other        service relationship between such Person and Republic Wireless and irrespective of this        Agreement; and                                           (ii)            Bandwidth may elect, in its discretion, to utilize independent contractors        rather than employees of Bandwidth to perform Services from time to time, and such independent        contractors will be deemed included within the definition of “Personnel” for all purposes of this        Agreement.                             Section 4.2   Bandwidth as Payor.  The parties acknowledge and agree that Bandwidth, and not  Republic Wireless, will be solely responsible for the payment of salaries, wages, benefits (including health  insurance, retirement, and other similar benefits, if any) and other compensation applicable to all  Personnel; provided, however, that Republic Wireless is responsible for the payment of the Services Fees  in accordance with Section 2.1.  All Personnel will be subject to the personnel policies of Bandwidth and  will be eligible to participate in Bandwidth’s employee benefit plans to the same extent as similarly situated  employees of Bandwidth performing services in connection with Bandwidth’s business.  Except as  otherwise provided by the Tax Sharing Agreement, dated as of November 30, 2016, Bandwidth will be  responsible for the payment of all federal, state, and local withholding taxes on the compensation of all  Personnel and other such employment related taxes as are required by law.  Each of Republic Wireless and  Bandwidth will cooperate with the other to facilitate the other’s compliance with applicable federal, state,  and local laws, rules, regulations, and ordinances applicable to the employment or engagement of all  Personnel by either party.               Section 4.3   Additional Employee Provisions.  Bandwidth will have the right to terminate its  employment of any Personnel at any time.                                               ARTICLE V                                                                     REPRESENTATIONS AND WARRANTIES                                                    Section 5.1   Representations and Warranties of Bandwidth.  Bandwidth represents and  warrants to Republic Wireless as follows:                                             4                                                          Doc ID: 5d47de3d65fa83167eea606299d816b27e4421d1

 

                      (a)        Bandwidth is a corporation duly organized, validly existing, and in good standing         under the laws of the State of Delaware.                             (b)          Bandwidth  has  the  power  and  authority  to  enter  into  this  Agreement  and  to         perform its obligations under this Agreement, including the Services.                             (c)          Bandwidth  is  not  subject  to  any  contractual  or  other  legal  obligation  that         materially interferes with its full, prompt, and complete performance under this Agreement.                             (d)          The individual executing this Agreement on behalf of Bandwidth has the authority         to do so.                       Section 5.2  Representations and Warranties of Republic Wireless.  Republic Wireless  represents and warrants to Bandwidth as follows:                      (a)         Republic Wireless is a corporation duly organized, validly existing, and in good        standing under the laws of the State of Delaware.                (b)           Republic Wireless has the power and authority to enter into this Agreement and        to perform its obligations under this Agreement.                             (c)           Republic Wireless is not subject to any contractual or other legal obligation that        materially interferes with its full, prompt, and complete performance under this Agreement.                             (d)           The individual executing this Agreement on behalf of Republic Wireless has the        authority to do so.                                                     ARTICLE VI                                                                               INDEMNIFICATION                                                    Section 6.1   Indemnification by Bandwidth.  Bandwidth will indemnify, defend, and hold  harmless Republic Wireless and each of its Subsidiaries, Affiliates, officers, directors, employees and  agents, successors and assigns (collectively, the “Republic Wireless Indemnitees”), from and against any  and all Actions, judgments, Liabilities, losses, costs, damages, or expenses, including reasonable counsel  fees, disbursements, and court costs (collectively, “Losses”), that any Republic Wireless Indemnitee may  suffer arising from or out of, or relating to, (a) any material breach by Bandwidth of its obligations under  this Agreement, or (b) the gross negligence, willful misconduct, fraud, or bad faith of Bandwidth in  connection with the performance of any provision of this Agreement except to the extent such Losses (i) are  fully covered by insurance maintained by Republic Wireless or such other Republic Wireless Indemnitee  or (ii) are payable by Republic Wireless pursuant to Section 7.11.               Section 6.2   Indemnification by Republic Wireless.  Republic Wireless will indemnify, defend,  and hold harmless Bandwidth and its Subsidiaries, Affiliates, officers, directors, employees and agents,  successors and assigns (collectively, the “Bandwidth Indemnitees”), from and against any and all Losses  that any Bandwidth Indemnitee may suffer arising from or out of, or relating to (a) any material breach by  Republic Wireless of its obligations under this Agreement, or (b) any acts or omissions of Bandwidth in  providing the Services pursuant to this Agreement (except to the extent such Losses (i) arise from or relate  to any material breach by Bandwidth of its obligations under this Agreement, (ii) are attributable to the  gross negligence, willful misconduct, fraud, or bad faith of Bandwidth or any other Bandwidth Indemnitee                                              5                                                          Doc ID: 5d47de3d65fa83167eea606299d816b27e4421d1

 

seeking indemnification under this Section 6.2, (iii) are fully covered by insurance maintained by  Bandwidth or such other Bandwidth Indemnitee, or (iv) are payable by Bandwidth pursuant to  Section 7.11).                 Section 6.3  Indemnification Procedures.                       (a)        (i)     In connection with any indemnification provided for in Section 6.1 or 6.2, the         party seeking indemnification (the “Indemnitee”) will give the party from which indemnification         is sought (the “Indemnitor”) prompt notice whenever it comes to the attention of the Indemnitee         that the Indemnitee has suffered or incurred, or may suffer or incur, any Losses for which it is         entitled to indemnification under Section 6.1 or 6.2, and, if and when known, the facts constituting         the basis for such claim and the projected amount of such Losses (which shall not be conclusive as         to the amount of such Losses), in each case in reasonable detail. Without limiting the generality of         the foregoing, in the case of any Action commenced by a third party for which indemnification is         being sought (a “Third-Party Claim”), such notice will be given no later than ten business days         following receipt by the Indemnitee of written notice of such Third-Party Claim.  Failure by any         Indemnitee to so notify the Indemnitor will not affect the rights of such Indemnitee hereunder         except to the extent that such failure has a material prejudicial effect on the defenses or other rights         available to the Indemnitor with respect to such Third Party Claim.  The Indemnitee will deliver to         the Indemnitor as promptly as practicable, and in any event within five business days after         Indemnitee’s receipt, copies of all notices, court papers and other documents received by the         Indemnitee relating to any Third-Party Claim.                                       (ii)        After receipt of a notice pursuant to Section 6.3(a)(i) with respect to any         Third-Party Claim, the Indemnitor will be entitled, if it so elects, to take control of the defense and         investigation with respect to such Third-Party Claim and to employ and engage attorneys         reasonably satisfactory to the Indemnitee to handle and defend such claim, at the Indemnitor’s cost,         risk and expense, upon written notice to the Indemnitee of such election, which notice         acknowledges the Indemnitor’s obligation to provide indemnification under this Agreement with         respect to any Losses arising out of or relating to such Third-Party Claim. The Indemnitor will not         settle any Third-Party Claim that is the subject of indemnification without the written consent of         the Indemnitee, which consent will not be unreasonably withheld, conditioned or         delayed; provided, however, that, after reasonable notice, the Indemnitor may settle a claim without         the Indemnitee’s consent if such settlement (A) makes no admission or acknowledgment of         Liability or culpability with respect to the Indemnitee, (B) includes a complete release of the         Indemnitee and (C) does not seek any relief against the Indemnitee other than the payment of         money damages to be borne by the Indemnitor. The Indemnitee will cooperate in all reasonable         respects with the Indemnitor and its attorneys in the investigation, trial and defense of any lawsuit         or action with respect to such claim and any appeal arising therefrom (including the filing in the         Indemnitee’s name of appropriate cross-claims and counterclaims).  The Indemnitee may, at its         own cost, participate in any investigation, trial and defense of any Third-Party Claim controlled by         the Indemnitor and any appeal arising therefrom, including participating in the process with respect         to the potential settlement or compromise thereof.  If the Indemnitee has been advised by its counsel         that there may be one or more legal defenses available to the Indemnitee that conflict with those         available to, or that are not available to, the Indemnitor (“Separate Legal Defenses”), or that there         may be actual or potential differing or conflicting interests between the Indemnitor and the         Indemnitee in the conduct of the defense of such Third-Party Claim, the Indemnitee will have the         right, at the expense of the Indemnitor, to engage separate counsel reasonably acceptable to the         Indemnitor to handle and defend such Third-Party Claim, provided, that, if such Third-Party Claim         can be reasonably separated between those portion(s) for which Separate Legal Defenses are         available (“Separable Claims”) and those for which no Separate Legal Defenses are available, the                                              6                                                          Doc ID: 5d47de3d65fa83167eea606299d816b27e4421d1

 

Indemnitee will instead have the right, at the expense of the Indemnitor, to engage separate counsel  reasonably acceptable to the Indemnitor to handle and defend the Separable Claims, and the  Indemnitor will not have the right to control the defense or investigation of such Third-Party Claim  or such Separable Claims, as the case may be (and, in which latter case, the Indemnitor will have  the right to control the defense or investigation of the remaining portion(s) of such Third-Party  Claim).                               (iii)         If, after receipt of a notice pursuant to Section 6.3(a)(i) with respect to  any Third-Party Claim as to which indemnification is available hereunder, the Indemnitor does not  undertake to defend the Indemnitee against such Third-Party Claim, whether by not giving the  Indemnitee timely notice of its election to so defend or otherwise, the Indemnitee may, but will  have no obligation to, assume its own defense, at the expense of the Indemnitor (including attorneys  fees and costs), it being understood that the Indemnitee’s right to indemnification for such Third  Party Claim shall not be adversely affected by its assuming the defense of such Third Party  Claim.  The Indemnitor will be bound by the result obtained with respect thereto by the  Indemnitee; provided, that the Indemnitee may not settle any lawsuit or action with respect to which  the Indemnitee is entitled to indemnification hereunder without the consent of the Indemnitor,  which consent will not be unreasonably withheld, conditioned or delayed; provided further, that  such consent shall not be required if (i) the Indemnitor had the right under this Section 6.3 to  undertake control of the defense of such Third-Party Claim and, after notice, failed to do so within  thirty days of receipt of such notice (or such lesser period as may be required by court proceedings  in the event of a litigated matter), or (ii) (x) the Indemnitor does not have the right to control the  defense of the entirety of such Third-Party Claim pursuant to Section 6.3(a)(ii) or (y) the  Indemnitor does not have the right to control the defense of any Separable Claim pursuant to  Section 6.3(a)(ii) (in which case such settlement may only apply to such Separable Claims), the  Indemnitee provides reasonable notice to Indemnitor of the settlement, and such settlement  (A) makes no admission or acknowledgment of Liability or culpability with respect to the  Indemnitor, (B) does not seek any relief against the Indemnitor and (C) does not seek any relief  against the Indemnitee for which the Indemnitor is responsible other than the payment of money  damages.                       (b)       In no event will the Indemnitor be liable to any Indemnitee for any special,  consequential, indirect, collateral, incidental or punitive damages, however caused and on any  theory of liability arising in any way out of this Agreement, whether or not such Indemnitor was  advised of the possibility of any such damages;  provided, that the foregoing limitations shall not  limit a party’s indemnification obligations for any Losses incurred by an Indemnitee as a result of  the assertion of a Third Party Claim.         (c)        The Indemnitor and the Indemnitee shall use commercially reasonable efforts to  avoid production of confidential information, and to cause all communications among employees,  counsel and others representing any party with respect to a Third Party Claim to be made so as to  preserve any applicable attorney-client or work-product privilege.         (d)        The Indemnitor shall pay all amounts payable pursuant to this Section 6.3 by wire  transfer of immediately available funds, promptly following receipt from an Indemnitee of a bill,  together with all accompanying reasonably detailed backup documentation, for any Losses that are  the subject of indemnification hereunder, unless the Indemnitor in good faith disputes the amount  of such Losses or whether such Losses are covered by the Indemnitor’s indemnification obligation  in which event the Indemnitor shall promptly so notify the Indemnitee. In any event, the Indemnitor  shall pay to the Indemnitee, by wire transfer of immediately available funds, the amount of any  Losses for which it is liable hereunder no later than three (3) days following any final determination                                       7                                                   Doc ID: 5d47de3d65fa83167eea606299d816b27e4421d1

 

       of the amount of such Losses and the Indemnitor’s liability therefor. A “final determination” shall         exist when (a) the parties to the dispute have reached an agreement in writing or (b) a court of         competent jurisdiction shall have entered a final and non-appealable order or judgment.                       (e)        If  the  indemnification  provided  for  in  this  Section 6.3  shall,  for  any  reason,  be         unavailable or insufficient to hold harmless an Indemnitee in respect of any Losses for which it is         entitled to indemnification hereunder, then the Indemnitor shall contribute to the amount paid or         payable by such Indemnitee as a result of such Losses, in such proportion as shall be appropriate         to reflect the relative benefits received by and the relative fault of the Indemnitor on the one hand         and the Indemnitee on the other hand with respect to the matter giving rise to such Losses.                       (f)          The  remedies  provided  in  this  Section 6.3  shall  be  cumulative  and  shall  not         preclude assertion by any Indemnitee of any other rights or the seeking of any and all other remedies         against an Indemnitor, subject to Section 6.3(b).                       (g)          To the fullest extent permitted by applicable law, the Indemnitor will indemnify         the Indemnitee against any and all reasonable fees, costs and expenses (including attorneys’ fees),         incurred in connection with the enforcement of his, her or its rights under this Article VI.                 Section 6.4  Survival.  The terms and conditions of this Article VI will survive the expiration  or termination of this Agreement.                                              ARTICLE VII                                                                                MISCELLANEOUS                                                    Section 7.1   Defined Terms.                       (a)        The following terms will have the following meanings for all purposes of this  Agreement:                       “Action” means any demand, action, claim, suit, countersuit, litigation, arbitration, prosecution,  proceeding (including any civil, criminal, administrative, investigative or appellate proceeding), hearing,  inquiry, audit, examination or investigation commenced, brought, conducted or heard by or before, or  otherwise involving, any court, grand jury or other governmental authority or any arbitrator or arbitration  panel.               “Affiliate” means, with respect to any Person, any other Person controlled by such first Person,  with “control” for such purpose meaning the possession, directly or indirectly, of the power to direct or  cause the direction of the management and policies of a Person, whether through the ownership of voting  securities or voting interests, by contract, or otherwise. Notwithstanding the foregoing, for purposes of this  Agreement, none of the Persons listed in clause (i) or (ii) shall be deemed to be Affiliates of any Person  listed in any other such clause: (i) Bandwidth taken together with its Subsidiaries, or (ii) Republic Wireless  taken together with its Subsidiaries.                “Confidential Information” means any information marked, noticed, or treated as confidential by  a party which such party holds in confidence, including all trade secrets, technical, business, or other  information, including customer or client information, however communicated or disclosed, relating to past,  present and future research, development and business activities.                                               8                                                          Doc ID: 5d47de3d65fa83167eea606299d816b27e4421d1

 

       “Liabilities” means any and all debts, liabilities, commitments and obligations, whether or not  fixed, contingent or absolute, matured or unmatured, direct or indirect, liquidated or unliquidated, accrued  or unaccrued, known or unknown, and whether or not required by GAAP to be reflected in financial  statements or disclosed in the notes thereto (other than taxes).               “Person” means any natural person, corporation, limited liability company, partnership, trust,  unincorporated organization, association, governmental authority, or other entity.               “Subsidiary” when used with respect to any Person, means (i)(A) a corporation a majority in voting  power of whose share capital or capital stock with voting power, under ordinary circumstances, to elect  directors is at the time, directly or indirectly, owned by such Person, by one or more Subsidiaries of such  Person, or by such Person and one or more Subsidiaries of such Person, whether or not such power is subject  to a voting agreement or similar encumbrance, (B) a partnership or limited liability company in which such  Person or a Subsidiary of such Person is, at the date of determination, (1) in the case of a partnership, a  general partner of such partnership with the power affirmatively to direct the policies and management of  such partnership or (2) in the case of a limited liability company, the managing member or, in the absence  of a managing member, a member with the power affirmatively to direct the policies and management of  such limited liability company, or (C) any other Person (other than a corporation) in which such Person,  one or more Subsidiaries of such Person or such Person and one or more Subsidiaries of such Person,  directly or indirectly, at the date of determination thereof, has or have (1) the power to elect or direct the  election of a majority of the members of the governing body of such Person, whether or not such power is  subject to a voting agreement or similar encumbrance, or (2) in the absence of such a governing body, at  least a majority ownership interest or (ii) any other Person of which an aggregate of 50% or more of the  equity interests are, at the time, directly or indirectly, owned by such Person and/or one or more Subsidiaries  of such Person.  Notwithstanding the foregoing, for purposes of this Agreement, none of the Subsidiaries  of Bandwidth will be deemed to be Subsidiaries of Republic Wireless or any of its Subsidiaries, nor will  any of Republic Wireless’s Subsidiaries be deemed to be Subsidiaries of Bandwidth or any of its  Subsidiaries.                Section 7.2   Entire Agreement; Severability.  This Agreement, the Facilities Sharing  Agreement, and the Tax Sharing Agreement constitute the entire agreement among the parties hereto with  respect to the subject matter hereof and thereof, and supersedes all prior agreements and understandings,  oral and written, among the parties hereto with respect to such subject matter. It is the intention of the  parties hereto that the provisions of this Agreement will be enforced to the fullest extent permissible under  all applicable laws and public policies, but that the unenforceability of any provision hereof (or the  modification of any provision hereof to conform with such laws or public policies, as provided in the next  sentence) will not render unenforceable or impair the remainder of this Agreement. Accordingly, if any  provision is determined to be invalid or unenforceable either in whole or in part, this Agreement will be  deemed amended to delete or modify, as necessary, the invalid or unenforceable provisions and to alter the  balance of this Agreement in order to render the same valid and enforceable, consistent (to the fullest extent  possible) with the intent and purposes hereof.  If the provisions of this Agreement conflict with any  provisions of the Facilities Sharing Agreement, the provisions of this Agreement shall control, and if the  provisions of this Agreement conflict with any provisions of the Tax Sharing Agreement, the provisions of  the Tax Sharing Agreement shall control.         Section 7.3   Notices.  All notices and communications hereunder will be in writing and will be  deemed to have been duly given if delivered personally or mailed, certified or registered mail with postage  prepaid, or sent by confirmed facsimile, addressed as follows:                 if to Bandwidth:        Bandwidth Inc.                                             9                                                          Doc ID: 5d47de3d65fa83167eea606299d816b27e4421d1

 

                                      900 Main Campus Drive, Suite 100                                       Raleigh, NC 27606                                       Attention: Legal Department                                       Fax: 919.239.9903                               if to Republic Wireless: Republic Wireless, Inc.                                       940 Main Campus Drive, Suite 300                                       Raleigh, NC 27606                                       Attention: Legal Department                                       Fax: 919.670.3115  or to such other address (or to the attention of such other person) as the parties may hereafter designate in  writing.  All such notices and communications will be deemed to have been given on the date of delivery  if sent by facsimile or personal delivery, or the third day after the mailing thereof, except that any notice of  a change of address will be deemed to have been given only when actually received.         Section 7.4   Governing Law.  This Agreement and the legal relations among the parties hereto  will be governed in all respects, including validity, interpretation and effect, by the laws of the State of  North Carolina applicable to contracts made and performed wholly therein, without giving effect to any  choice or conflict of laws provisions or rules that would cause the application of the laws of any other  jurisdiction.               Section 7.5   Rules of Construction.  The descriptive headings in this Agreement are inserted  for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation  of this Agreement.  Words used in this Agreement, regardless of the gender and number specifically used,  will be deemed and construed to include any other gender, masculine, feminine, or neuter, and any other  number, singular or plural, as the context requires.  As used in this Agreement, the word “including” or any  variation thereof is not limiting, and the word “or” is not exclusive.  The word day means a calendar day.  If  the last day for giving any notice or taking any other action is a Saturday, Sunday, or a day on which banks  in New York, New York or Raleigh, North Carolina are closed, the time for giving such notice or taking  such action will be extended to the next day that is not such a day.               Section 7.6   No Third-Party Rights.  Nothing expressed or referred to in this Agreement is  intended or will be construed to give any Person other than the parties hereto and their respective successors  and permitted assigns any legal or equitable right, remedy or claim under or with respect to this Agreement,  or any provision hereof, it being the intention of the parties hereto that this Agreement and all of its  provisions and conditions are for the sole and exclusive benefit of the parties to this Agreement and their  respective successors and assigns.         Section 7.7   Counterparts.  This Agreement may be executed in one or more counterparts, each  of which will be an original and all of which together will constitute one and the same instrument.               Section 7.8   Payment of Expenses. From and after the Effective Date, and except as otherwise  expressly provided in this Agreement, each of the parties to this Agreement will bear its own expenses,  including the fees of any attorneys and accountants engaged by such party, in connection with this  Agreement.               Section 7.9   Binding Effect; Assignment.                       (a)        This Agreement will inure to the benefit of and be binding on the parties to this  Agreement and their respective legal representatives, successors and permitted assigns.                                            10                                                          Doc ID: 5d47de3d65fa83167eea606299d816b27e4421d1

 

                            (b)       Except  as  expressly  contemplated  hereby  (including  by  Section 4.1),  this  Agreement, and the obligations arising hereunder, may not be assigned by either party to this  Agreement, provided, however, that Republic Wireless and Bandwidth may assign their respective rights,  interests, duties, liabilities and obligations under this Agreement to any of their respective wholly-owned  Subsidiaries, but such assignment shall not relieve Republic Wireless or Bandwidth, as the assignor, of its  obligations hereunder.                       Section 7.10  Amendment, Modification, Extension or Waiver.  Any amendment, modification  or supplement of or to any term or condition of this Agreement will be effective only if in writing and  signed by both parties hereto.  Either party to this Agreement may (a) extend the time for the performance  of any of the obligations or other acts of the other party to this Agreement, or (b) waive compliance by the  other party with any of the agreements or conditions contained herein or any breach thereof. Any agreement  on the part of either party to any such extension or waiver will be valid only if set forth in an instrument in  writing signed on behalf of such party. No waiver of any term, provision or condition of this Agreement,  whether by conduct or otherwise, in any one or more instance, will be deemed or construed as a further or  continuing waiver of any such term, provision or condition or of any other term, provision or condition, but  any party hereto may waive its rights in any particular instance by written instrument of waiver.               Section 7.11  Legal Fees; Costs.  If either party to this Agreement institutes any action or  proceeding to enforce any provision of this Agreement, the prevailing party will be entitled to receive from  the other party reasonable attorneys’ fees, disbursements and costs incurred in such action or proceeding,  whether or not such action or proceeding is prosecuted to judgment.               Section 7.12   Force Majeure.  Neither party will be liable to the other party with respect to any  nonperformance or delay in performance of its obligations under this Agreement to the extent such failure  or delay is due to any action or claims by any third party, labor dispute, labor strike, weather conditions or  any cause beyond a party’s reasonable control.  Each party agrees that it will use all commercially  reasonable efforts to continue to perform its obligations under this Agreement, to resume performance of  its obligations under this Agreement, and to minimize any delay in performance of its obligations under  this Agreement notwithstanding the occurrence of any such event beyond such party’s reasonable control.         Section 7.13  Specific Performance.  Each party agrees that irreparable damage would occur and  that the parties would not have any adequate remedy at law in the event that any of the provisions of this  Agreement were not performed in accordance with their specific terms or were otherwise breached.  It is  accordingly agreed that each of the parties shall be entitled to seek an injunction or injunctions to prevent  breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, this  being in addition to any other remedy to which they are entitled at law or in equity.               Section 7.14   Further Actions.  The parties will execute and deliver all documents, provide all  information, and take or forbear from all actions that may be necessary or appropriate to achieve the  purposes of this Agreement.               Section 7.15  Confidentiality.                       (a)        Except with the prior consent of the disclosing party, each party will:                                    (i)     limit access to the Confidential Information of the other party disclosed to        such party hereunder to its employees, agents, representatives, and consultants on a need-to-know        basis;                                                                  11                                                          Doc ID: 5d47de3d65fa83167eea606299d816b27e4421d1

 

                    (ii)      advise its employees, agents, representatives, and consultants having access         to such Confidential Information of the proprietary nature thereof and of the obligations set forth         in this Agreement; and                                           (iii)     safeguard such Confidential Information by using a reasonable degree of         care to prevent disclosure of the Confidential Information to third parties, but not less than that         degree of care used by that party in safeguarding its own similar information or material.                                    (b)      A party’s obligations respecting confidentiality under Section 7.15(a) will not apply  to any of the Confidential Information of the other party that a party can demonstrate: (i) was, at the time  of disclosure to it, in the public domain; (ii) after disclosure to it, is published or otherwise becomes part of  the public domain through no fault of the receiving party; (iii) was in the possession of the receiving party  at the time of disclosure to it without being subject to any obligation of confidentiality; (iv) was received  after disclosure to it from a third party who, to its knowledge, had a lawful right to disclose such information  to it; (v) was independently developed by the receiving party without reference to the Confidential  Information; (vi) was required to be disclosed to any regulatory body having jurisdiction over a party or  any of their respective clients; or (vii) was required to be disclosed by reason of legal, accounting, or  regulatory requirements beyond the reasonable control of the receiving party.  In the case of any disclosure  pursuant to clauses (vi) or (vii) of this paragraph (b), to the extent practical, the receiving party will give  prior notice to the disclosing party of the required disclosure and will use commercially reasonable efforts  to obtain a protective order covering such disclosure.                             (c)       The provisions of this Section 7.15 will survive the expiration or termination of this  Agreement.                                                 [Signature Page Follows]                                                                                          12                                                          Doc ID: 5d47de3d65fa83167eea606299d816b27e4421d1

 

       IN WITNESS WHEREOF, each of the parties has signed this Agreement, or has caused this  Agreement to be signed by its duly authorized officer, as of the date first above written.                                             BANDWIDTH:                                                                                         BANDWIDTH INC.                                                                                                                                      By:                                             Name: W. Christopher Matton                                            Title: General Counsel                                                                                                                                      REPUBLIC WIRELESS:                                                                                         REPUBLIC WIRELESS, INC.                                                                                                                                      By:                                             Name: Peter D. Holthausen                                            Title: General Counsel                                                                                          13                                                          Doc ID: 5d47de3d65fa83167eea606299d816b27e4421d1

 

                                        EXHIBIT A – SERVICES  Category of Service            Service                                          Applicable     Service   Fee                                                                                  (Monthly) Legal                          Deputy General Counsel – Intellectual Property /      (1) $10,483.34 for the                                 Patent Support as follows: (1) 50% of anticipated         period ending March                                 customary working time through and until March 31,        31, 2020,                                 2020, (2) 25% of anticipated customary working time   (2) $5,241.67 for the                                 from April 1, 2020 through and until September 30,        period from April 1,                                 2020, and (3) as reasonably needed by Republic            2020 through                                 Wireless thereafter, but not more than 25% of             September 30, 2020,                                 anticipated customary working time                        and                                                                                      (3) as mutually agreed                                                                                           thereafter  Other                          Such other services as Bandwidth may obtain from its To be mutually agreed, but not                                 officers, employees and consultants in the management less than fair market value                                of its own operations that Republic Wireless may from                                 time to time request or require                                                        14                                                                        Doc ID: 5d47de3d65fa83167eea606299d816b27e4421d1Exhibit

EXHIBIT 10.40

VANDA PHARMACEUTICALS INC.
EMPLOYMENT AGREEMENT
This Employment Agreement (this “Agreement”) is entered into as of July 3, 2019, by and between Aranthan “AJ” Jones II (the “Executive”) and VANDA PHARMACEUTICALS INC., a Delaware corporation (the “Company”).
1.    Duties and Scope of Employment.

(a)Position.  During his employment under this Agreement (“Employment”), the Company agrees to employ the Executive in the position of Chief Corporate Affairs and Communication Officer.  The Executive shall be subject to the supervision of, and shall have such authority as is delegated to him by, the Company’s Chief Executive Officer.  The Executive hereby accepts such employment, commencing effective as of July 25, 2019 (the “Employment Commencement Date”) and agrees to undertake the duties and responsibilities normally inherent in such position and such other duties and responsibilities as the Company’s Chief Executive Officer shall from time to time reasonably assign to him. 

(b)Obligations to the Company.  During his Employment, the Executive shall devote his full business efforts and time to the Company.  In addition, during his Employment, without the prior written approval of the Company’s Board of Directors (the “Board”), the Executive shall not render services in any capacity to any other person or entity and shall not act as a sole proprietor or partner of any other person or entity or as a shareholder owning more than five percent of the voting power of any other entity.  The Executive shall comply with the Company’s policies and rules, as they may be in effect from time to time during his Employment.

(c)No Conflicting Obligations.  The Executive represents and warrants to the Company that he is under no obligations or commitments, whether contractual or otherwise, that are inconsistent with his obligations under this Agreement.  The Executive represents and warrants that he will not use or disclose, in connection with his Employment, any trade secrets or other proprietary information or intellectual property in which the Executive or any other person has any right, title or interest and that his Employment as contemplated by this Agreement will not infringe or violate the rights of any other person or entity.  The Executive represents and warrants to the Company that he has returned all property and confidential information belonging to any prior employers.

2.Cash and Incentive Compensation.

(a)Salary.  The Company shall pay the Executive as compensation for his services a base salary at a gross annual rate of not less than $400,000.  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)Signing Bonus.  On the first pay date of the Company’s standard payroll schedule following the Employment Commencement Date, the Company shall pay the Executive a one-time signing bonus of $150,000 (the “Signing Bonus”). The Signing Bonus will be grossed up for state and federal income and payroll taxes and the taxes thereon.  In the event that the Executive’s employment with the Company is (i) terminated by the Company for Cause or (ii) the Executive voluntarily resigns his Employment, in either case within 2 years after the Employment Commencement Date, the Executive shall repay the Signing Bonus to the Company in its entirety within 30 days of the Executive’s last day of Employment.

(c)Incentive Bonuses.  The Executive shall be eligible for an annual incentive bonus with a target amount equal to 45% 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 or the Compensation Committee of the Board (the “Compensation Committee”).  Any bonus for the fiscal year in which Executive’s employment begins shall not be prorated.  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.  Except as provided in Section 6, such bonus shall be paid only if the Executive is employed by the Company at the time of payment.  The determinations of the Board or the Compensation Committee with respect to such bonus shall be final and binding.

(d)Stock Options.  On the Employment Commencement Date, the Company shall grant the Executive a nonstatutory stock option to purchase 60,000 shares of the Company’s Common Stock (the “Option”).  The per-share exercise price of the Option shall be equal to the closing price of one share of the Company’s Common Stock on the date of grant as reported on the Nasdaq Global Market.  The maximum term of the Option shall be 10 years.  The grant of the Option shall be subject to the terms and conditions set forth in the Vanda Pharmaceuticals Inc. Amended and Restated 2016 Equity Incentive Plan (the “Plan”) and in the Company’s standard form of Stock Option Agreement.  The Option will become exercisable with respect to 25% of the shares on the first anniversary of the date of grant and with respect to the remaining 75% of the shares in equal monthly installments over the next 3 years of continuous service thereafter.  The Option shall become exercisable in full if (i) the Company is subject to a Change in Control before the Executive’s service with the Company terminates and (ii) the Executive is subject to an Involuntary Termination within 24 months after such Change in Control.  In addition, Section 6(c) shall apply to the Option.  In addition, the Executive will be eligible to receive annual equity awards, if any, subject to the approval of the Board or the Compensation Committee in their sole discretion.  The timing and size of the annual equity awards, if any, shall be determined in the sole discretion of the Board or the Compensation Committee based on the Executive’s and/or the Company’s performance.  In the event the Board or the Compensation Committee, in their sole discretion, grants an annual equity award to the Executive relating to performance for the fiscal year ending December 31, 2019, such annual equity award shall not be prorated.

(e)Restricted Stock Units.  On the Employment Commencement Date, the Company shall award the Executive restricted stock units covering 60,000 shares of the Company’s Common Stock (the “RSU Award”).  The RSU Award shall be subject to the terms and conditions set forth in the Plan and in the Company’s standard form of Restricted Stock Unit Award Agreement.  The RSU Award will vest with respect to 25% of the shares on the first anniversary of 

2

the date of grant and an additional 25% of the shares on each of the second, third and fourth anniversaries of the date of grant, provided that Executive remains in continuous service with the Company on each applicable vesting date.  The RSU Award shall vest in full if (i) the Company is subject to a Change in Control before the Executive’s service with the Company terminates and (ii) the Executive is subject to an Involuntary Termination within 24 months after such Change in Control.  

3.Vacation and Employee Benefits.  During his Employment, the Executive shall be eligible for 20 paid vacation days each year.  Vacation days shall accrue, and may be taken, in accordance with the Company’s standard policy for similarly situated employees, as it may be amended from time to time.  During his Employment, the Executive shall be eligible to participate in any employee benefit plans maintained by the Company for similarly situated employees, subject in each case to the generally applicable terms and conditions of the plan in question and to the determinations of any person or committee administering such plan.

4.Business Expenses.  During his Employment, the Executive shall be authorized to incur necessary and reasonable travel, entertainment and other business expenses in connection with his duties hereunder.  The Company shall reimburse the Executive for such expenses upon presentation of an itemized account and appropriate supporting documentation, all in accordance with the Company’s generally applicable policies.  Any reimbursement shall (a) be paid promptly but not later than the last day of the calendar year following the year in which the expense was incurred, (b) not be affected by any other expenses that are eligible for reimbursement in any calendar year and (c) not be subject to liquidation or exchange for another benefit.

5.Term of Employment.

(a)Employment at Will.  The Executive’s Employment with the Company shall be “at will,” meaning that either the Executive or the Company may terminate the Executive’s Employment at any time and for any reason, with or without Cause.  Any contrary representations which may have been made to the Executive shall be superseded by this Agreement.  This Agreement shall constitute the full and complete agreement between the Executive and the Company on the “at will” nature of the Executive’s Employment, which may only be changed in an express written agreement signed by the Executive and a duly authorized officer of the Company (other than the Executive).  The termination of Executive’s Employment shall not limit or otherwise affect his obligations under Section 7 below.

(b)Termination.  The Company may terminate the Executive’s Employment at any time and for any reason (or no reason), and with or without Cause, by giving the Executive notice in writing.  The Executive may terminate his Employment by giving the Company 14 days’ advance notice in writing.  The Executive’s Employment shall terminate automatically in the event of his death

(c)Rights Upon Termination.  Except as expressly provided in Section 6, upon the termination of the Executive’s Employment pursuant to this Section 5, the Executive shall only be entitled to accrued and unpaid compensation, benefits and expense 

3

reimbursements described in Sections 2, 3 and 4 for the period preceding the effective date of the termination.  The payments under this Agreement shall fully discharge all responsibilities of the Company to the Executive.

6.Termination Benefits.

(a)Preconditions.  Any other provision of this Agreement notwithstanding, the remaining Subsections of this Section 6 shall not apply unless each of the following requirements is satisfied:

(i)The Executive has executed a general release of all known and unknown claims that the Executive may then have against the Company or persons affiliated with the Company in a form prescribed by the Company, without alterations.  The Executive shall execute and return the release on or before the date specified by the Company in the prescribed form (the “Release Deadline”).  The Release Deadline shall in no event be later than 50 days after the Executive’s Separation.  If the Executive fails to return the release on or before the Release Deadline, or if the Executive revokes the release, then the Executive shall not be entitled to the benefits described in this Section 6.

(ii)The Executive has returned all property of the Company in the Executive’s possession.

(b)Severance Pay.  If, during the term of this Agreement, the Executive is subject to an Involuntary Termination, then the Company shall pay the Executive both of the following:

(i)Base Compensation.  The Company shall continue to pay Executive his Base Compensation for a period of 12 months following the Separation (the “Continuation Period”).  Such severance payments shall be paid at the Base Compensation rate in effect at the time of the Separation and in accordance with the Company’s standard payroll procedures.  The severance payments shall commence within 60 days after the Executive’s Separation and, once they commence (the “Payment Commencement”), shall include any unpaid amounts accrued from the date of the Employee’s Separation.  However, if the 60-day period described in the preceding sentence spans two calendar years, then the Payment Commencement shall in any event begin on the first payroll period following expiration of any applicable revocation period in the second calendar year.

(ii)Target Bonus.  An amount equal to his Annual Target Bonus at the rate in effect at the time of the Separation.  Such amount shall be payable in a lump sum on the Company’s next regularly scheduled payroll that occurs following the Payment Commencement

(c)Options.  If, during the term of this Agreement, Executive is subject 

4

to an Involuntary Termination, then (i) the vested portion of the shares of the Company’s Common Stock subject to all options held by the Executive at the time of his Separation shall be determined by adding three months to the actual period of service that he has completed with the Company and (ii) such options shall be exercisable for up to six months after the Executive’s Separation (provided, however, that the Option shall remain subject to the terms of the Plan in the event the Company is subject to a Change in Control, and further provided that the Option in any event shall expire no later than the Expiration Date set forth in the Notice of Stock Option Grant evidencing the Option).

(d)Termination Prior to Employment Commencement Date.  The Company may terminate this Agreement without Cause prior to the Employment Commencement Date by providing the Executive with written notice of such termination.  Upon delivery of the written notice, the Company shall provide the Executive with Termination Benefits in accordance with Sections 6(a) and (b) and this Agreement shall thereafter be deemed terminated except with respect to the Company’s continuing obligations under Sections 6(a) and (b).  For the avoidance of doubt, the Executive shall not be entitled to any stock options or restricted stock units under Sections 2(d) or (e).

7.Non-Solicitation, Non-Disclosure and Non-Competition.  The Executive 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.

(b)Executive’s Successors.  This Agreement and all rights of the Executive hereunder shall inure to the benefit of, and be enforceable by, the Executive’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 Executive 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 Executive of any agreement between the Executive and the Company;

5

(c)    A material failure by the Executive to comply with the Company’s written policies or rules;
(d)    The Executive’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 Executive’s gross negligence or willful misconduct;
(f)    A continuing failure by the Executive to perform assigned duties after receiving written notification of such failure from the Board; or
(g)    A failure by the Executive 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 Executive’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 “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 (the “Exchange Act”)), directly or indirectly, of securities of the Company representing at least 50% of the total voting power represented by the Company’s then outstanding voting securities.  For purposes of this Subsection (d), the term “person” shall have the same meaning as when used in 

6

Sections 13(d) and 14(d) of the Exchange Act but shall exclude (i) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or of a parent or subsidiary 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.
“Code” shall mean the Internal Revenue Code of 1986, as amended.
“Good Reason” shall mean Executive’s resignation within 6 months after one of the following conditions has come into existence without Executive’s consent: (i) a change in the Executive’s position with the Company that materially reduces his level of authority or responsibility, (ii) a material reduction in his Base Compensation or (iii) receipt of notice that his principal workplace will be relocated by more than 30 miles.  A condition shall not be considered “Good Reason” unless the Executive gives the Company written notice of such condition within 90 days after the initial existence of such condition and the Company fails to remedy such condition within 30 days after receiving the Executive’s written notice.
“Involuntary Termination” shall mean a Separation resulting from either (i) the Executive’s involuntary discharge by the Company for reasons other than Cause, Executive’s death or Permanent Disability or (ii) the Executive’s voluntary resignation for Good Reason.
“Permanent Disability” shall mean the Executive’s inability to perform the essential functions of the Executive’s position, with or without reasonable accommodation, for a period of at least 120 consecutive days because of a physical or mental impairment.
“Separation” shall mean a “separation from service,” as defined in the regulations under Section 409A of 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 Executive, mailed notices shall be addressed to him at the home address that 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 Executive and by an authorized officer of the Company (other than the Executive).  No waiver by either party of any breach of, or of compliance with, any condition or 

7

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 payment under Section 6(b) is hereby designated as a separate payment.  If the Company determines that the Executive 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 his 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 with the Company’s first regularly scheduled payroll that occurs following the earlier of (x) expiration of the six-month period measured from Executive’s Separation or (y) the date of Executive’s death and, once such payments commence, any amounts accrued from the Separation date shall be paid in a lump sum on the first payment date; 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 with the Company’s first regularly scheduled payroll that occurs following the earlier of (x) expiration of the six-month period measured from Executive’s Separation or (y) the date of Executive’s death.

The Company shall not have a duty to design its compensation policies in a manner that minimizes the Executive’s tax liabilities, and the Executive shall not make any claim against the Company or the Board related to tax liabilities arising from the Executive’s compensation.
(e)Choice of Law.  The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the District of Columbia (except its 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)No Assignment.  This Agreement and all rights and obligations of the Executive hereunder are personal to the Executive and may not be transferred or assigned by the Executive at any time.  The Company may assign its rights under this Agreement to any entity 

8

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.

(h)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.

[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]

9

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/ Aranthan “AJ” Jones II    
Aranthan “AJ” Jones II
VANDA PHARMACEUTICALS INC.
By /s/ Mihael H. Polymeropoulos                                  
Title: Chief Executive Officer                                    

10

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00301-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00301-of-00352.parquet"}]]