Document:

exv10w22

 

Exhibit 10.22

SECOND AMENDMENT TO LEASE

     This Second Amendment to Lease (“Second Amendment”) is made as of the 14th day of
September, 2007, by and between MCC3 LLC, a Delaware limited liability company (“Landlord”) and
Vanda Pharmaceuticals, Inc., a Delaware corporation (“Tenant”).

WITNESSETH:

     WHEREAS, Landlord and Tenant entered into that certain Lease dated August 14, 2005, as amended
by the First Amendment to Lease dated November 15, 2006 (as so amended, the “Original Lease”)
whereby the Landlord leased to Tenant space (the “Original Premises”) on the 3rd floor
of that building located at 9605 Medical Center Drive, Rockville, Maryland (the “Building”); and

     WHEREAS, Landlord and Tenant desire to amend the Original Lease (the Original Lease, as hereby
amended, the “Lease”) to add to the Original Premises the expansion space located on the
3rd floor of the Building and consisting of the area containing approximately 10,225
rentable square feet and shown as cross-hatched on Exhibit A attached hereto and made a
part hereof (the “Expansion Space”).

     NOW, THEREFORE, in consideration of the mutual covenants and promises of the parties and
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:

     1. The above recitals are incorporated herein by reference.

     2. Subject to the terms and provisions of the Lease, as modified hereby, Landlord
hereby leases to Tenant and Tenant hereby leases from Landlord the Expansion Space for the
Expansion Space Term (as hereinafter defined).

     3. The “Expansion Space Term” shall mean the term commencing on the earlier
to occur of (a) the date on which the Expansion Space is deemed “ready for occupancy” as
provided in Exhibit B attached hereto and made a part hereof, (b) the date on which
Tenant occupies all or any part of the Expansion Space for purpose of its business operation, or
(c) January 1, 2008 (the earlier of such dates being herein referred to as the “Expansion
Space Commencement Date”) and terminating on the Term Expiration Date, unless sooner terminated
in accordance with the Lease (the “Expansion Space Term”).

     4. During the Expansion Space Term, all references in the Lease to the “Premises”
shall for all purposes be deemed to include, without limitation, the Expansion Space. The
Rentable Floor Area of Tenant’s Space during the Expansion Term shall include both the
Original Premises under the Original Lease plus the Expansion Space and shall be approximately
27,269 rentable square feet.

     5. Beginning on the Expansion Space Commencement Date and continuing
thereafter for the remainder of the Term, Tenant shall pay Tenant’s Share of Operating Costs,
Tenant’s Share of Real Estate Taxes and Tenant’s Annual Electrical Cost for the entire
Premises, including the Expansion Space. Beginning on July 1, 2008 (the “Expansion Space Rent

 

 

Commencement Date”); and throughout the remainder of the Term, Tenant shall pay Landlord, Annual
Rent, at the rate per rentable square foot set forth in the Original Lease, based on the total
Rentable Square Feet of the Premises, as expanded in accordance with this Second Amendment.
Accordingly, during the Expansion Term the Annual Rent calculations for the remainder of the Third
Lease Year (calendar year 2008) and each subsequent Lease Year in Section 4.1 of the Original Lease
shall be deleted and replaced by:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Third Lease Year (July 1, 2008 — December 31, 2008):	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	$24.40

	 	x
	 	 	27,269	 	 	=
	 	$	665,363.60	 
	Annual Rent

	 	 	 	Rentable Square
	 	 	 	Annual Rent

	p.r.s.f.

	 	 	 	Feet
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Fourth Lease Year (January 1, 2009 — December 31, 2009):	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	$25.13

	 	x
	 	 	27,269	 	 	=
	 	$	685,269.97	 
	Annual Rent

	 	 	 	Rentable Square
	 	 	 	Annual Rent

	p.r.s.f.

	 	 	 	Feet
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Fifth Lease Year: (January 1, 2010 — December 31, 2010:	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	$25.89

	 	x
	 	 	27,269	 	 	=
	 	$	705,994.41	 
	Annual Rent

	 	 	 	Rentable Square
	 	 	 	Annual Rent

	p.r.s.f.

	 	 	 	Feet
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Sixth Lease Year (January 1, 2011 — December 31, 2011):	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	$26.66

	 	x
	 	 	27,269	 	 	=
	 	$	726,991.54	 
	Annual Rent

	 	 	 	Rentable Square
	 	 	 	Annual Rent

	p.r.s.f.

	 	 	 	Feet
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Seventh Lease Year (January 1, 2012 — December 31, 2012):	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	$27.46

	 	x
	 	 	27,269	 	 	=
	 	$	748,806.74	 
	Annual Rent

	 	 	 	Rentable Square
	 	 	 	Annual Rent

	p.r.s.f.

	 	 	 	Feet
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Eighth Lease Year (January 1, 2013 — December 31, 2013):	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	$28.29

	 	x
	 	 	27,269	 	 	=
	 	$	771,440.01	 
	Annual Rent

	 	 	 	Rentable Square
	 	 	 	Annual Rent

	p.r.s.f.

	 	 	 	Feet
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Ninth Lease Year (January 1, 2014 — December 31, 2014):	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	$29.14

	 	x
	 	 	27,269	 	 	=
	 	$	794,618.66	 
	Annual Rent

	 	 	 	Rentable Square
	 	 	 	Annual Rent

	p.r.s.f.

	 	 	 	Feet
	 	 	 	 	 	 

2

 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Tenth Lease Year (January 1, 2015 — December 31, 2015):	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	$30.01

	 	x
	 	 	27,269	 	 	=
	 	$	818,342.69	 
	Annual Rent

	 	 	 	Rentable Square
	 	 	 	Annual Rent

	p.r.s.f.

	 	 	 	Feet
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Eleventh Lease Year (January 1, 2016 — June 30, 2016):	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	$30.91

	 	x
	 	 	27,269	 	 	=
	 	$	842,884.79	 
	Annual Rent

	 	 	 	Rentable Square
	 	 	 	Annual Rent

	p.r.s.f.

	 	 	 	Feet
	 	 	 	 	 	 

     The Rentable Floor Area of Tenant’s Space for purposes of calculating Tenant’s Share shall be
27,269 from and after the Expansion Space Commencement Date through the balance of the Term.

     6. The Leasehold Improvements for the Expansion Space shall be completed
according to the terms contained in Exhibit B attached hereto.

     7. Expansion Allowance. In lieu of the Tenant Allowance provided to Tenant
in accordance with Article I of the Original Lease (which shall not be available to Tenant
for the Expansion Space), Tenant shall receive an allowance for design and construction of
improvements in the Expansion Space (including without limitation the costs and fees charged
to Landlord by Landlord’s Consultant, as defined in Exhibit B) of up to Thirty-Five
Dollars ($35.00) per rentable square foot of Expansion Space (the “Expansion Allowance”).

     8. Security Deposit

          Landlord acknowledges that it is currently holding a security deposit from Tenant in the
amount of $430,230 (the “Original Deposit”).

          Tenant represents and warrants that Tenant currently has and will maintain unencumbered
liquids assets as shown in Tenant’s financial statement as of the end of June 30, 2007 not less
than $30,000,000.00 in cash, cash equivalents, and marketable securities traded on a public stock
exchange (excepting treasury stock in Tenant) (such liquid assets not less than $30,000,000 being
herein referred to as the “Cash Requirement”). In place of an additional security deposit related
to the Expansion Space, Tenant shall continue until the expiration of twenty-four (24) months
following the Expansion Space Commencement Date to maintain unencumbered liquid assets consisting
of cash, cash equivalents and/or marketable securities traded on a public stock exchange
(excepting treasury stock in Tenant) in accordance with the Cash Requirement. Tenant shall deliver
to Landlord within thirty (30) days following the end of each calendar quarter during such two (2)
year period an interim financial statement as of the end of such quarter certified by an
authorized financial officer in Tenant and in sufficient detail so Landlord can determine the
Tenant continues to satisfy the Cash Requirement. Within ninety (90) days following the end of
each fiscal year for Tenant, Tenant shall deliver to Landlord a financial statement as of the end
of such fiscal year certified by an authorized financial officer in Tenant in sufficient detail so
Landlord can determine the Tenant continues to satisfy the Cash Requirement.

3

 

          If at the end of any such calendar quarter or fiscal year Tenant fails to satisfy the Cash
Requirement, then Tenant shall immediately (but no later than 10 days following Landlord’s written
demand therefor) deliver to Landlord an additional $200,000 to Landlord to be added to the Security
Deposit (the “Additional Deposit”). Such Additional Deposit shall be in cash or by letter of credit
satisfying the requirements of Article 11 of the Lease. Landlord shall hold the Original Deposit
and Additional Deposit totaling $630,230 from and after the date of deposit as a Security Deposit
pursuant to the terms of Article XI of the Lease. If as of the first and second anniversaries of
the Expansion Space Commencement Date (i) no default by Tenant has occurred, which remains uncured
by Tenant, (ii) no Event of Default has occurred, whether or not cured by Tenant, and (iii) Tenant
has not assigned the Lease to any person or entity other than a Permitted Assignee, then, effective
as of the first day of the next full calendar month following the such first and second
anniversaries of the Expansion Space Commencement Date, as the case may be, the amount of the
Additional Deposit shall decrease by $100,000 so that total Security Deposit following the first
anniversary of the Expansion Space Commencement Date shall be reduced to $530,230, and following
the second anniversary of the Expansion Space Commencement Date shall be reduced to $430,230, which
amount shall remain as the Security Deposit for the remainder of the Term.

     9. Option to Expand. Section 2.6 of the Original Lease, the Option to Expand,
is hereby deleted in its entirety.

     10. Right to Cancel. Section 2.4 of the Original Lease is hereby deleted and the
following is hereby inserted in lieu thereof:

     Notwithstanding anything to the contrary contained in this Lease, if Tenant is not in default
beyond applicable notice and cure periods as of the date it delivers a Cancellation Notice (as
defined below) and as of the Early Expiration Date (as defined below), Tenant may terminate this
Lease effective upon the last day of the sixty-sixth (66th) full calendar month
following the Expansion Space Commencement Date (the “Early Expiration Date”), by delivery of a
written notice (the “Cancellation Notice”) and the applicable Termination Payment (as described
below) to Landlord no later than the last day of the fifty-fourth (54th) full calendar
month following the Expansion Space Commencement Date. The Termination Payment due to Landlord
should Tenant elect to terminate this Lease shall be the unamortized value, determined as herein
provided, of the “Lease Transaction Costs” as of the Early Expiration Date. For purposes hereof,
the Lease Transaction Costs shall mean the sum of (i) $1,340,884.38 (the “Original Lease
Transaction Costs”), and (ii) $646,055.00 (the “Expansion Transaction Costs”). For the purpose of
determining the Termination Payment, the Original Lease Transaction Costs (with interest thereon
at the cost to Landlord to obtain funds to pay such obligations) shall be amortized on a
straight-line basis over the initial ten (10) Lease Years of the Term, and the Expansion
Transaction Costs (with interest thereon at the cost to Landlord to obtain funds to pay such
obligations) shall be amortized on a straight-line basis over the remainder of the Expansion Term
following the Expansion Space Rent Commencement Date. The unamortized values shall be measured by
Landlord as of the Early Expiration Date. Upon the Expansion Space Commencement Date, Landlord and
Tenant shall execute a Lease Commencement Date Agreement in the form attached to the Lease as
Exhibit J that stipulates the amount of the Termination Payment.

4

 

     If Tenant validly terminates this Lease as herein provided, this Lease shall terminate
as of the Early Expiration Date as if such date were the original Term Expiration Date set
forth in this Lease and Tenant will vacate and surrender the Premises on the Early Expiration
Date in the condition required by Subsection 6.1.2.

     11. Brokers. Landlord and Tenant each represents and warrants to the other that
it has not dealt with any broker, agent or finder in connection with this Second Amendment
other than Studley and Jones Lang LaSalle (the “Brokers”). Tenant shall indemnify and hold
Landlord harmless from and against any claim for brokerage or other commission to any brokers
other than the Brokers based upon any act or conduct of Tenant. Landlord shall pay the
commission due and owing to the Brokers pursuant to a separate written agreement. Landlord shall
indemnify and hold Tenant harmless, from and against any claim for brokerage or other
commission to any brokers other than the Brokers based upon any act or conduct of
Landlord.

     12. No Further Modifications. Except as specifically herein modified, all
other terms and conditions of the Lease shall remain unchanged and in full force and effect,
and are hereby ratified by both Landlord and Tenant as if fully set forth in this Second
Amendment.

     13. Exhibit J. A new Exhibit J in the form attached hereto is hereby
attached to and made a part of the Lease.

     14. Capitalized Terms. Capitalized terms used in this Second Amendment and
not otherwise defined shall have the meaning ascribed to such terms in the Lease.

     IN WITNESS WHEREOF, the parties have duly executed this Second Amendment to Lease
effective as of the date first written above. This instrument may be executed in multiple
counterparts, each of which shall be identical in form and content and shall constitute an
original of the document to be retained by the respective parties hereto.

	 	 	 	 	 
	 	LANDLORD:

MCC3 LLC

 	 
	 	By:  	Spaulding and Slye MCC3 LLC, its Manager
 	 
	 	 	 
	 	By:  	                                                 Spaulding and Slye Holdings LLC, its Manager
 	 
	 	 	 
	 	By:  	/s/ Marshall H. Durston
 	 
	 	 	Name:  	MARSHALL H. DURSTON 	 
	 	 	Its: 	  Authorized Manager 	 
	 

	 	 	 	 	 
	 	TENANT:

VANDA PHARMACEUTICALS, INC.

 	 
	 	By:  	/s/ Mihael H. Polymeropoulos
 	 
	 	 	Name:  	MIHAEL H. POLYMEROPOULOS 	 
	 	 	Title:  	CEO 	 

5

 

	 	 	 	 	 

EXHIBIT A

Expansion Space

 

 

Exhibit B 

CONSTRUCTION

EXPANSION SPACE CONSTRUCTION

     Tenant shall provide to Landlord for approval on or before September 1, 2007, complete sets of
drawings and specifications for construction of leasehold improvements in the Expansion Space (such
complete sets, once approved by Landlord, are referred to herein as the “Complete Plans”) all of
which shall be prepared at Tenant’s expense by an architect selected by Tenant and approved by
Landlord (herein referred to as “Tenant’s Architect”) and Landlord’s engineer, including but not
limited to:

	 	a.	 	Furniture and Equipment Layout Plans (for coordination only)
	 
	 	b.	 	Dimensioned Partition Plans
	 
	 	c.	 	Dimensioned Electrical and Telephone Outlet Plans
	 
	 	d.	 	Reflected Ceiling Plans
	 
	 	e.	 	Door and Hardware Schedules
	 
	 	f.	 	Room Finish Schedules including wall, carpet and floor tile colors
	 
	 	g.	 	Electrical, mechanical, plumbing and structural engineering plans
	 
	 	h.	 	All necessary construction details and specifications.

     Landlord and Tenant shall initial the Complete Plans after the same have been submitted by
Tenant and approved by Landlord. Tenant shall not amend or supplement the Complete Plans,
including by change order, without Landlord’s approval, which shall not be unreasonably withheld
or delayed.

     All work described in the Complete Plans (the “Leasehold Improvements”) and the installation
of furnishing and telephone outlets shall be performed by a contractor (“Tenant’s Contractor”)
selected by Tenant and approved by Landlord; provided, however, that Tenant shall select Jones
Lang LaSalle Construction Company Limited Partnership as Tenant’s Contractor if Jones Lang LaSalle
Construction Company Limited Partnership submits a bid which Tenant, in its reasonable discretion,
considers to be competitive with bids submitted by other potential contractors. Tenant shall
provide Landlord a true, correct and complete copy of the construction contract between Tenant and
Tenant’s Contractor, including all change orders or amendments thereto (the “Tenant’s Construction
Contract”). Tenant’s Construction Contract shall be subject to such rules and regulations as
Landlord may from time to time reasonably prescribe regarding the conduct of construction in the
Building. Upon completion of the Leasehold Improvements, Tenant shall cause Tenant’s Architect to
provide Landlord, at Tenant’s expense, with a record set of “as-built” drawings in reproducible
form and in CADD form.

 

 

     All improvements, whether or not paid for by Landlord, and any other improvements which are
affixed to any Expansion Space shall be and remain the property of Landlord.

     Landlord will not approve any construction, alterations or additions requiring unusual expense
to readapt any expansion space to normal office use on lease termination or increasing the cost of
construction, insurance or taxes on the Building or of Landlord’s services called for by Section
5.1 of the Lease unless Tenant first gives assurances acceptable to Landlord that such readaptation
will be made prior to such termination without expense to Landlord and makes provisions acceptable
to Landlord for payment of such increased cost. Landlord will also disapprove any alterations or
additions requested by Tenant which will delay completion of the Expansion Space. All changes and
additions shall be part of the Building except such items as by writing at the time of approval the
parties agree either shall be removed by Tenant on termination of this Lease or shall be removed at
Tenant’s cost or left at Tenant’s election.

     Tenant covenants to pay for all work performed by Tenant or Tenant’s Contractor, and Tenant or
Tenant’s Contractor shall apply for all permits and licenses required in connection with such work
and shall pay all fees due in connection therewith. Tenant shall provide to Landlord copies of the
originals of all such permits and licenses, and upon substantial completion of such work shall
deliver to Landlord a certificate of occupancy for the portion of the Premises in which the
Leasehold Improvements are constructed, if required. All such improvements, whether or not paid for
by Landlord, and any other improvements which are affixed to the Premises or any part thereof shall
be and remain the property of Landlord; provided, however, that Tenant shall be permitted to retain
and shall remove from the Premises on or before the end of the Term all of its moveable personal
property. During the performance of any work, Tenant must provide Landlord evidence that Tenant or
Tenant’s Contractor has in place (i) a policy insuring against “all risks of physical loss” on a
builder’s risk non-reporting form, having replacement cost and agreed amount endorsements, and (ii)
commercial general liability with underlying coverage totaling not less than Ten Million Dollars
($10,000,000), each such policy to name Landlord and Landlord’s lenders as an additional insured
(and as loss payee on policies other than commercial general liability insurance) and to be in a
form reasonably acceptable to Landlord). Such contractor also must provide evidence that it has in
place workmen’s compensation insurance in amounts and in form statutorily required. Without in any
manner limiting Landlord’s rights and Tenant’s obligations under any other indemnity set forth in
this Lease, Tenant shall defend, with counsel reasonably acceptable to Landlord, save harmless and
indemnify Landlord from (a) claims or demands of Tenant’s Contractor or anyone claiming by, through
or under Tenant’s Contractor, and (b) liability for injury, loss, accident, or damage to any person
or property, including, without limitation, bodily injury and/or death, and from any claims,
actions, proceedings and expenses and costs in connection therewith (including, without limitation,
reasonable counsel fees) arising from the acts or omissions of Tenant, its agents, employees,
contractor or subcontractors, in performance of any construction, remodeling or redecoration.

EXPANSION SPACE ALLOWANCE

     Landlord shall provide Tenant the Expansion Allowance in the amounts and as specified in
Section 7 of the Second Amendment to which this Exhibit is attached (totaling $357,875). The
Expansion Allowance may be applied to Leasehold Improvement-Related Costs incurred for

B-2

 

the Expansion Space. “Leasehold Improvement-Related Costs” shall mean the cost of design,
permitting and construction of the Leasehold Improvements, including, without limitation, costs
incurred by Tenant for initial space planning by Tenant’s Architect, the cost of preparation of the
Complete Plans, the cost of sprinklers, fire alarms, smoke detectors, telecommunications equipment,
security equipment, exit lights, cabling and furniture, the cost of compliance with all applicable
laws (such as, without limitation, the Americans with Disabilities Act), cost of project management
and the cost of obtaining all permits, licenses and fees related to the construction of the
Leasehold Improvements and as otherwise provided in this Section, including, without limitation,
any and all reasonable out-of-pocket fees and charges for the services of Landlord’s Consultant (as
hereinafter defined).

     Before Tenant commences construction of Leasehold Improvements or requests disbursement of any
portion of the Expansion Allowance in accordance with this Exhibit, Tenant shall first deliver to
Landlord, for approval, a final and complete budget of all Leasehold Improvement-Related Costs,
including without limitation the final contract sum established by Tenant’s contract with Tenant’s
Contractor (the said final budget as approved by Landlord is herein referred to as the “Budget”).
If the Leasehold Improvement-Related Costs, including without limitation all costs incurred on
account of the Leasehold Improvements, including in the costs so incurred any fees and charges of
Tenant’s Architect paid by Landlord and the cost and fees charged to Landlord by Landlord’s
Consultant, as set forth in the Budget, will exceed the Expansion Allowance, then Tenant shall pay,
promptly when due, and in all events by the Expansion Space Commencement Date (subject only to a
reasonable holdback equal to the estimated cost to complete punch-list items which will be
completed within thirty (30) days thereafter), all such Leasehold Improvement-Related Costs which
exceed the Expansion Allowance. Amounts due and payable on account of change orders shall be added
to Expansion Improvement-Related Costs monthly, and Tenant shall pay therefor within thirty (30)
days, and in all events by the Expansion Space Commencement Date

     The Expansion Allowance shall be paid to Tenant or, at Tenant’s request, to the order of
Tenant’s Contractor or vendors within ten (10) days after receipt of the following documentation:
(i) an application for payment covering all work for which disbursement is to be made to a date
specified therein signed by Tenant’s Contractor or vendors, together with supporting documentation
reasonably satisfactory to Landlord demonstrating that Lease Improvement-Related Costs included in
the Budget in excess of the Expansion Allowance have been paid (“Tenant’s Application for
Payment”), (ii) general contractor’s, subcontractor’s and material supplier’s waiver of liens which
shall cover all improvements or alterations for which disbursement has been made and all other
statements and forms required for compliance with the mechanics’ lien laws of the State of
Maryland, together with all such supporting data as Landlord may reasonably require; and (iii) a
request to disburse from Tenant.

     In no event shall Landlord be required to disburse the Tenant Allowance (i) more than once
per month, or (ii) during the continuance of any default under the Lease.

PREPARATION OF PREMISES FOR OCCUPANCY

     Tenant shall use reasonable efforts to commence construction of the Leasehold Improvements
promptly after the execution and delivery of the Second Amendment and

B-3

 

to substantially complete the Leasehold Improvements by January 1, 2008 (the “Scheduled Completion
Date”).

GENERAL PROVISIONS APPLICABLE TO CONSTRUCTION

     All construction work required or permitted by the Second Amendment, shall be done in a good
and workmanlike manner and in compliance with all applicable laws and all lawful ordinances,
regulations, orders, permits and approvals of governmental authority and insurers of the Building.
Landlord may inspect work performed by or for Tenant from time to time during construction and
following completion of the same. Landlord shall not charge Tenant any fee for construction
management; provided, however, that Landlord may in any case charge Tenant its reasonable
out-of-pocket fees and charges for the services of an architect and/or or engineer (collectively
“Landlord’s Consultant”) selected and retained by Landlord to review the Complete Plans and monitor
the construction of the Leasehold Improvements; provided, however, that such fees and charges shall
not exceed Two Thousand Dollars ($2,000) in the aggregate.

REPRESENTATIVES

     Each party authorizes the other to rely in connection with their respective rights and
obligations under this Exhibit B upon approval and other actions on the party’s behalf by
Landlord’s Representative in the case of Landlord or Tenant’s Representative in the case of Tenant
or by any person designated in substitution or addition by notice to the party relying.

B-4

 

Exhibit J

LEASE COMMENCEMENT DATE AGREEMENT

     This
Lease Commencement Date Agreement is entered into this _____ day of
                    , 2007, by MCC3, LLC (“Landlord”), a Delaware limited liability company,
and Vanda Pharmaceuticals, Inc. (“Tenant”), a Delaware corporation, pursuant to the provisions of
that certain Lease dated August 4, 2005, as amended by First Amendment to Lease dated
November 15, 2006 and by Second Amendment to Lease dated June ___, 2007 (the “Lease”),
by and between Landlord and Tenant covering certain space in the office building located at 9605
Medical Center Drive, Rockville, Maryland (the “Building”). All terms used herein with their
initial letter capitalized shall have the meaning assigned to such terms in the Lease.

WITNESSETH:

	1.	 	The Premises, including without limitation the Expansion Space have been delivered to,
and accepted by, the Tenant.
	 
	2.	 	The Expansion Space Commencement Date is the ___ day of ____________, 20__, and
the Term Expiration Date is June 30, 2016.
	 
	3.	 	The number of square feet of rentable area in the Premises is 27,269 rentable square feet.
	 
	4.	 	As of the date hereof, the Lease has not been further modified and is in full force and
effect and there are no defaults thereunder.
	 
	5.	 	The Tenant’s Share is 23.57% based on the Rentable Floor Area of Tenant’s Space divided
by the Total Rentable Floor Area of the Building (i.e., 115,691 rentable square feet).
	 
	6.	 	The Building Address is 9605 Medical Center Drive, Rockville, MD 20850.

     IN WITNESS WHEREOF, Landlord and Tenant have set their hands and seals hereunto and have
caused this Lease Commencement Date Agreement to be executed by duly authorized officials thereof,
the day and year respectively set forth hereinabove.

	 	 	 	 	 
	 	LANDLORD:

MCC3, LLC

 	 
	 	By:  	Spaulding and Slye MCC3 LLC, Manager
 	 
	 	 	 
	 	By:  	                                                   Spaulding and Slye Holdings LLC, Manager
 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	TENANT:

VANDA PHARMACEUTICALS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:exv10w19

 

Exhibit 10.19

EMPLOYMENT AGREEMENT

          This Employment Agreement, dated as of November 16, 2004, and as amended October 30, 2007,
(the “Agreement”) is made by and between USA Mobility, Inc., a Delaware corporation, (the
“Company”) and Vincent D. Kelly (the “Executive”).

          WHEREAS, in connection with the transactions contemplated by the Agreement and Plan of Merger
by and among Wizards-Patriots Holdings, Inc., Metrocall Holdings, Inc., Wizards Acquiring Sub,
Inc., Arch Wireless, Inc. and Patriots Acquiring Sub, Inc. dated as of March 29, 2004, as amended
(the “Merger Agreement”) the Company desires to employ the Executive and the Executive desires to
be employed by the Company.

          NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements set forth
in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:

	1.	 	Employment. The Company shall employ the Executive as the Chief Executive Officer and
President of the Company based upon the terms and conditions set forth in this Agreement, for
the period of time specified in Section 3. In such positions, the Executive shall report
directly and exclusively to the Board of Directors of the Company (the “Board”).
	 
	2.	 	Duties and Authority. During the term of this Agreement, as the Chief Executive
Officer and President of the Company, under the direction and subject to the control of the
Board (which direction shall be such as is customarily exercised over a chief executive
officer of a public company), the Executive shall be responsible for the business, affairs,
properties and operations of the Company, and shall have general executive charge, management
and control of the Company, with all such powers and authority with respect to such business,
affairs, properties, and operations as may be reasonably incident to such duties and
responsibilities, and shall perform such other duties for the Company as the Board may
determine from time to time. The Executive shall devote the Executive’s reasonable best
efforts and full business time, energies and talents to the performance of the Executive’s
duties and the advancement of the business and affairs of the Company.
	 
	3.	 	Term. The term of this Agreement and the period of employment of the Executive by the
Company hereunder (the “Agreement Term”) shall commence on the Effective Time (as defined in
the Merger Agreement) (the “Effective Date”) and shall end on a date three (3) years from the
Effective Date (the “Third Anniversary”), unless earlier terminated pursuant to Section 7
herein; provided that the Agreement Term shall be automatically extended for additional one
(1) year periods on each anniversary of the Third Anniversary, unless and until either party
provides non-renewal Notice to the other party not less than ninety (90) days before such
anniversary date that such party is terminating this Agreement, which termination shall be
effective as of the end of such initial Agreement Term or extended term, as the case may be
(the “Expiration Date”), or until sooner terminated as hereinafter set forth.

 

 

	4.	 	Compensation and Expenses.
	 
	(a)	 	Base Salary. In consideration for the Executive’s services and subject to the terms
and conditions of this Agreement, the Company shall pay to the Executive an annual base salary
(the “Base Salary”) equal to Six Hundred Thousand Dollars ($600,000), commencing as of the
Effective Date. The Base Salary shall be payable biweekly or in such other installments as
shall be consistent with the Company’s payroll procedures. The Company shall deduct and
withhold all necessary social security and withholding taxes and any other similar sums
required by law or authorized by the Executive with respect to the payment of the Base Salary.
The Board shall review the Base Salary annually before December 31 and may, in its discretion,
increase, but not decrease, his Base Salary in any renewal, extension or replacement of this
Agreement. The Board shall also review the appropriateness of creating additional forms of
nonqualified executive compensation to cover the Executive.
	 
	(b)	 	Annual Bonus. With respect to the remainder of 2004, the Executive shall be entitled
to a minimum bonus payment of $530,000, payable in February 2005; provided that Metrocall
Holdings, Inc. achieves certain targets for free cash flow on a standalone basis set by the
Compensation Committee of the Board of Directors Metrocall Holdings, Inc. in November 2003 (as
set forth on Exhibit A attached hereto). For years after 2004, the Executive shall be eligible
for an annual bonus equal to a maximum of 200% of Base Salary based on achievement of certain
bonus targets set by the Board or a committee thereof (the “Annual Bonus”); provided that the
Executive is employed by the Company on December 31 of each calendar year. Such Annual Bonus
shall be paid between January 1 and March 15 of the next following year.
	 
	(c)	 	Benefits. To the maximum extent permitted by applicable state and federal law, the
Executive shall be eligible, at no cost to the Executive, to participate in all of the
Company’s benefit plans, including fringe benefits available to the Company’s senior
executives, as such plans or programs are in effect from time to time, and use of an
automobile.
	 
	(d)	 	Holidays and Vacation. The Executive shall be entitled to (i) time off for all public
holidays observed by the Company and (ii) vacation days in accordance with the applicable
policies for the Company’s senior executives as in effect from time to time.
	 
	(e)	 	Reimbursement of Expenses. The Company shall reimburse the Executive for all
reasonable expenses the Executive incurs in accordance with the reasonable policies and
procedures adopted from time to time by the Company.
	 
	5.	 	Confidential Information.
	 
	(a)	 	“Confidential Information” means any and all Company and Company subsidiary proprietary
information, technical data, patent applications, inventions or discoveries (whether
patentable or not), know-how and trade secrets, as well as operating, design and manufacturing
procedures disclosed to the Executive, including before the date of this Agreement.
“Confidential Information” further means, without limitation, research,

2

 

	 	 	product development activities, processes, products, specifications, designs, diagrams,
illustrations, programs, concepts, ideas, marketing plans, proposals, financial information,
confidential reports, communications and customer lists and data, as well as the nature and
results of the Company’s and its subsidiaries’ research and development activities, and all
other materials and information related to the business or activities of the Company and its
subsidiaries that are not generally known to the public; provided, however, that the term
“Confidential Information” excludes information that (i) is or becomes generally available
to the public other than through acts by the Executive in violation of this Agreement, (ii)
was legally within the Executive’s possession prior to disclosure to the Executive by or on
behalf of the Company or its predecessor, which prior possession can be evidenced by the
Executive’s written records in existence prior to the effective date of any Prior Employment
Document, or (iii) becomes available to the Executive on a non-confidential basis from a
source other than the Company or a subsidiary or predecessor of the Company, provided that
such source is not bound by a confidentiality agreement with the Company or any of its
subsidiaries, or by any other contractual, legal or fiduciary obligation of confidentiality
to the Company or any of its subsidiaries, or any other party with respect to such
information.
	 
	(b)	 	Except as may be required by the lawful order of a court or agency of competent jurisdiction,
the Executive covenants and agrees that, during the Agreement Term and at all times
thereafter, the Executive will keep secret and confidential all Confidential Information, and
will not at any time, without the prior written consent of the Board or a person authorized by
the Board, publish or disclose any Confidential Information, either directly or indirectly, to
any third party, use for the Executive’s own benefit or advantage, or make available for
others to use (except to third parties in connection with possible transactions or business
with the Company).
	 
	(c)	 	To the extent that any court or agency seeks to have the Executive disclose Confidential
Information, the Executive shall promptly inform the Company, and shall take all reasonable
steps necessary to prevent disclosure of any Confidential Information until the Company has
been informed of such requested disclosure, and the Company has an opportunity to respond to
such court or agency. To the extent that the Executive obtains information on behalf of the
Company or any of its subsidiaries that may be subject to attorney-client privilege as to the
Company’s attorneys, the Executive shall take reasonable steps necessary to maintain the
confidentiality of such information and to preserve such privilege.
	 
	(d)	 	The Executive acknowledges that the restrictions contained in Section 5(b) and 5(c) are
reasonable and necessary, in view of the nature of the Company’s business, in order to protect
the legitimate interests of the Company, and that any violation thereof would result in
irreparable injury to the Company. Therefore, the Executive agrees that in the event of a
breach or threatened breach by the Executive of the provisions of Section 5(b) and (c), the
Company shall be entitled to obtain from any court of competent jurisdiction, preliminary or
permanent injunctive relief restraining the Executive from disclosing or using any such
Confidential Information. The Executive also acknowledges that nothing in this Section 5 shall
be construed as limiting the Executive’s duty of loyalty to the
Company, or any other duty he may otherwise have to the Company, while he is employed by the
Company.

3

 

	6.	 	Covenant Not to Compete. The Executive agrees that, through his position as Chief
Executive Officer and President of the Company and the various other positions with the
Company that he has held from time to time, the Executive has established and will continue to
establish valuable and recognized expertise in the paging business and has had and will have
access to the Company’s Confidential Information. The Executive hereby enters into a covenant
restricting the Executive from soliciting employees of the Company and its subsidiaries and
from competing against the Company upon the terms and conditions described below:
	 
	(a)	 	During the Executive’s employment and for a period of two (2) years after the Date of
Termination for any reason, the Executive shall not:

	 	(i)	 	induce or attempt to induce any employees of the Company or those of any of its
subsidiaries to terminate their employment, or refrain from renewing or extending such
employment, with the Company or such subsidiary in order to become an director,
officer, employee, consultant or independent contractor to or for any other individual
or entity other than the Company or its subsidiaries;
	 
	 	(ii)	 	at any time and in any state or other jurisdiction in the United States in
which the Company is engaged in business or has developed plans to engage in business:
(1) engage or be a part of any Person (including as a director, consultant, employee,
agent, or representative), or have any direct or indirect financial interest (whether
as a partner, shareholder, or owner) in any Person that engages in the business of
owning and operating narrowband one-way paging and wireless messaging networks, voice
mail services or data transmitting services (the “Business”); or (2) participate as an
employee or officer in any enterprise in which the Executive’s responsibility relates
to the Business;
	 
	 	(iii)	 	directly or indirectly own an equity interest in any Competitor (other than
ownership of 1% or less of the outstanding stock of any corporation listed on a
national stock exchange or included in the NASDAQ System). The term “Competitor” means
any Person a portion of the business of which (and during any period in which it
intends to enter into business activities that would be) is materially competitive in
any way with the Business of the Company; or
	 
	 	(iv)	 	solicit or cause or encourage any person to solicit any Business in competition
with the Company or a subsidiary from any Person who is a client of the Company or of a
subsidiary during the Executive’s employment hereunder.

	(b)	 	The Executive agrees that the restrictions set forth in this Section 6 are reasonable,
proper, and necessitated by legitimate business interests of the Company and do not constitute
an unlawful or unreasonable restraint upon the Executive’ ability to earn a livelihood. The
parties agree that in the event any of the restrictions in this Agreement, interpreted in
accordance with the Agreement as a whole, are found to be unreasonable a
court of competent jurisdiction, such court shall determine the limits allowable by law and
shall enforce the same. The parties further agree that nothing in this Section 6 shall be
construed as limiting the Executive’s duty of loyalty to the Company, or any other duty he
may otherwise have to the Company, while he is employed by the Company.

4

 

	(c)	 	The Executive further acknowledges that it may be impossible to assess the monetary damages
incurred by the Executive’s violation of this Agreement, and that violation of this Agreement
will cause irreparable injury to the Company. Accordingly, the Executive agrees that the
Company will be entitled, in addition to all other rights and remedies that may be available,
to an injunction enjoining and restraining the Executive and any other involved party from
committing a violation of this Agreement.
	 
	7.	 	Termination. Notwithstanding any other provision of this Agreement, this Agreement
shall terminate upon the death of the Executive, or it may be terminated with thirty (30)
days’ written notice as follows:
	 
	(a)	 	The Company may terminate this Agreement:

	 	(i)	 	at any time if the Executive is Disabled (as defined below) for a period of six
(6) months or more;
	 
	 	(ii)	 	at any time with “Cause.” For purposes of this Agreement. “Cause” means (A)
dishonesty of a material nature that relates to the performance of services under this
Agreement; (B) criminal conduct (other than minor infractions and traffic violations)
that relates to the performance of services under this Agreement, (C) the Executive’s
willfully breaching or failing to perform his duties as described in Section 2 hereof
(other than any such failure resulting from the Executive’s being Disabled), within a
reasonable period of time after a written demand for substantial performance is
delivered to the Executive by the Board, which demand specifically identifies the
manner in which the Board believes that the Executive has not substantially performed
his duties; or (D) the willful engaging by the Executive in conduct that is
demonstrably and materially injurious to the Company, monetarily or otherwise. No act
or failure to act on the Executive’s part shall be deemed “willful” unless done, or
omitted to be done, by the Executive not in good faith and without reasonable belief
that such action or omission was in the best interests of the Company. Notwithstanding
the foregoing, the Executive shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to the Executive a certificate of a
resolution duly adopted by the affirmative vote of not less than seventy-five percent
(75%) of the entire membership of the Board at a meeting of the Board called and held
for such purpose (after reasonable notice to the Executive and an opportunity for the
Executive, together with the Executive’s counsel, to be heard before the Board),
finding that in the good faith opinion of the Board, the Executive has engaged in the
conduct set forth in this paragraph and specifying the particulars thereof in detail;
or
	 
	 	(iii)	 	at any time without Cause upon Notice from the Company to the Executive, which
Notice shall be effective immediately or such later time as is specified in such
Notice.

5

 

	(b)	 	The Executive may terminate this Agreement at any time upon sixty (60) days’ Notice to the
Company.
	 
	(c)	 	At any time by the mutual agreement of the parties. Any termination of the Executive’s
employment by mutual agreement of the parties shall be memorialized by written agreement
signed by the Executive and duly-appointed officers of the Company.
	 
	(d)	 	Any purported termination of the Executive’s employment by the Company or by the Executive
shall be communicated by written Notice of Termination to the other party hereto in accordance
with Section 11. For purposes of this Agreement, a “Notice of Termination” shall mean a notice
that shall indicate the Date of Termination (which shall not be earlier than the date on which
such Notice is sent), the specific provision of this Agreement relied upon and that shall set
forth in reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment. The “Date of Termination” means the last day the
Executive is employed by the Company hereunder (including any successor to the Company as
determined in accordance with Section 14). If the Executive becomes employed by the entity
into which the Company is merged, or the purchaser of substantially all of the assets of the
Company, or a successor to such entity or purchaser, the Executive shall not be treated as
having terminated employment for purposes of this Agreement until such time as the Executive
terminates employment with the successor (including, without limitation, the merged entity or
purchaser).
	 
	8.	 	Compensation Upon Termination.
	 
	(a)	 	Death. If the Executive’s employment is terminated by the Executive’s death, the
Company shall pay to the Executive’s estate, or as may be directed by the legal
representatives to such estate, (i) the Executive’s Base Salary in effect on the date
immediately prior to the Executive’s death, through the Executive’s date of death; (ii) all
other unpaid amounts, if any, to which the Executive is entitled as of the date of the
Executive’s death, under any Company fringe benefit or incentive compensation plan or program,
at the time such payments would otherwise ordinarily be due; and (iii) the Executive’s full
Base Salary that would have been payable to the Executive from the Executive’s date of death
through the Expiration Date, in a lump sum within forty-five (45) days after his death.
	 
	(b)	 	Disability. Following the use of all sick days to which the Executive is entitled
under the policies applicable to the Company’s senior executives, while he is Disabled until
the Date of Termination, the Company shall, in lieu of payment of his Base Salary, (i) pay the
Executive a disability benefit equal to 50% of the Base Salary that he would otherwise be
entitled to receive for the period in which he is Disabled; (ii) all other unpaid amounts, if
any, to which the Executive is entitled as of the Executive’s date of disability, under any
Company fringe benefit or incentive compensation plan or program,

6

 

	 	 	at the time such payments are due; and (iii) the Executive’s full Base Salary that would
have been payable to the Executive from the Executive’s Date of Termination through the
Expiration Date, in a lump sum within forty-five (45) days after such Date of Termination;
provided, however, that any payments made to the Executive during the
Disability Period shall be reduced by any amounts paid or payable to the Executive under any
Company disability benefit plans. Subject to the terms of this Agreement, the Executive
shall not be required to perform services under this Agreement during any period that he is
Disabled. The Executive shall be considered Disabled during any period in which he has an
illness, or a physical or mental disability, or similar incapacity, that renders him
incapable, after reasonable accommodation, of performing his duties under this Agreement.
In the event of a dispute as to whether the Executive is Disabled, the Company may refer the
same to a licensed practicing physician of the Company’s choice, and the Executive agrees to
submit to such tests and examinations as such physician shall deem appropriate. During the
period in which the Executive is Disabled, the Company may appoint a temporary replacement
to assume the Executive’s responsibilities.
	 
	(c)	 	For Cause. If the Company terminates the Executive’s employment for Cause, the
Company shall pay the Executive’s Base Salary in effect on the date immediately prior to such
termination, through the date specified in the Notice of Termination and the Company shall
have no further obligations to the Executive under this Agreement.
	 
	(d)	 	Voluntary. If the Executive terminates his employment for other than Good Reason, the
Company shall pay the Executive the Executive’s Base Salary in effect on the date immediately
prior to such termination, through the date specified in the Notice of Termination. The
Company shall have no further obligations to the Executive under this Agreement.
	 
	 	 	“Good Reason” means the occurrence, without the Executive’s express written consent, of any
of the following circumstances:

	 	(i)	 	the Company’s failure to perform or observe any of the material terms or
provisions of this Agreement and the continued failure of the Company to cure such
default within fifteen (15) days after the Executive gives a written demand for
performance to the Company, which demand shall describe specifically the nature of such
alleged failure to perform or observe such material terms or provisions;
	 
	 	(ii)	 	the assignment to the Executive of any duties inconsistent with, or any
substantial diminution in, such Executive’s status or responsibilities as in effect on
the date hereof, including imposition of travel obligations that are materially greater
than is reasonably required by the Company’s business;
	 
	 	(iii)	 	a reduction in the Executive’s Base Salary as in effect on the date hereof, as
that amount may be increased from time to time; or (II) the failure to pay a bonus
award to which the Executive is otherwise entitled, at the time such bonuses are
usually paid;

7

 

	 	(iv)	 	a change in the principal place of the Executive’s employment, as in effect on
the date hereof or as in effect after any subsequent change to which the Executive
consented in writing, to a location more than thirty-five (35) miles distant from the
location of such principal place;
	 
	 	(v)	 	the Company’s failure to continue in effect any incentive compensation plan or
stock option plan in which the Executive participates, unless the Company has provided
an equivalent alternative compensation arrangement (embodied in an ongoing substitute
or alternative plan) to the Executive, or (II) the Company’s failure to continue the
Executive’s participation in any such incentive or stock option plan on substantially
the same basis, both in terms of the amount of benefits provided and the level of the
Executive’s participation relative to other participants;
	 
	 	(vi)	 	the Company’s violation of any applicable criminal law not due to the
Executive’s gross negligence or willful misconduct;
	 
	 	(vii)	 	(vii) the failure of the Company or any successor to obtain a satisfactory
written agreement from any successor to assume and agree to perform this Agreement, as
contemplated in Section 14 below; or
	 
	 	(viii)	 	any purported termination of the Executive’s employment that is not effected pursuant
to a Notice of Termination satisfying the requirements of Sections 7(a)(ii) or 7(d), as
applicable. For purposes of this Agreement, no such purported termination shall be
effective except as constituting Good Reason.

          The Executive’s continued employment shall not constitute consent to, or a waiver of rights
with respect to, any circumstances constituting Good Reason hereunder.

	(e)	 	Other. If the Company terminates the Executive’s employment other than for Cause or
Disability or if the Executive terminates employment with the Company for Good Reason, the
Company shall pay the Executive:

	 	(i)	 	the Executive’s Base Salary through the date specified in the Notice of
Termination within ten (10) business days after such date and all other unpaid amounts,
if any, to which the Executive is entitled as of the date specified in the Notice of
Termination under any Company fringe benefit or incentive compensation plan or program,
at the time such payments are due;
	 
	 	(ii)	 	an amount equal to the product of (a) the greater of (x) two or (y) the number
of years (and fraction thereof) remaining in the Term as of the date specified in the Notice of Termination, times (b) the full Base Salary then in effect within forty-five
(45) days after such date specified in the Notice of Termination;
	 
	 	(iii)	 	an amount equal to the Annual Bonus paid or payable to the Executive with
respect to the annual period prior to the year in which the termination of the
Executive’s employment occurs;

8

 

	 	(iv)	 	reimbursement of the cost of continuation coverage of group health coverage
pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) for
the duration of the applicable period to the extent Executive elects such continuation
coverage and is eligible and subject to the terms of the plan and the law; and
	 
	 	(v)	 	full vesting of any equity compensation and the lapse of all restrictions with
respect to any restricted stock granted to the Executive.
	 
	 	(vi)	 	Gross-Up Payments. If any payment or the value of any benefit received
or to be received by the Executive in connection with the Executive’s termination or
contingent upon a Change of Control of the Company (whether received or to be received
pursuant to the terms of this Agreement (the “Agreement Payments”) or of any other
plan, arrangement, or agreement of the Company, its successors, any person whose
actions result in a Change of Control of the Company, or any person affiliated with any
of them (or which, as a result of the completion of the transactions causing a Change
of Control, will become affiliated with any of them (“Other Payments” and, together
with the Agreement Payments, the “Payments”)) would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Tax
Code”) or any comparable federal, state, or local excise tax (such excise tax, together
with any interest and penalties, are hereinafter collectively referred to as the
“Excise Tax”), as determined as provided below, the Company shall pay to the Executive
an additional amount (the “Gross-Up Payment”) such that the net amount the Executive
retains, after deduction of the Excise Tax on Agreement Payments and Other Payments and
any federal, state, and local income tax and Excise Tax upon the payment provided for
by Section 8 hereof, and any interest, penalties, or additions to tax payable by the
Executive with respect thereto shall be equal to the total present value of the
Agreement Payments and Other Payments at the time such Payments are to be made. The
intent of the parties is that the Company shall be solely responsible for and shall
pay, any Excise Tax on any Payments and Gross-Up Payment and any income and employment
taxes (including, without limitation, penalties and interest) imposed on any Gross-Up
Payments as well as any loss of deduction caused by the Gross-Up Payment.

	 	(2)	 	All determinations required to be made under this Section
8(e)(vi), including, without limitation, whether and when a Gross-Up Payment is
required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determinations, shall be made by tax counsel
(either a law firm or a nationally recognized public accounting firm) selected
by the Company and reasonable acceptable to the Executive (“Tax Counsel”). The
Company shall cause the Tax Counsel to provide detailed supporting calculations
to the Company and the Executive within fifteen (15) business days after notice
is given by the Executive to the Company that any or all of the Payments have
occurred, or such earlier time as is requested by the Company. Within two (2)
business days after such notice is given to the Company, the Company shall
instruct the Tax

9

 

	 	 	 	Counsel to timely provide the data required by this Section 8(e)(vi) to the
Executive. The Company shall pay all fees and expenses of the Tax Counsel.
The Company shall pay any Excise Tax determined pursuant to this Section
8(e)(vi) to the Internal Revenue Service (the “IRS”) and/or other
appropriate taxing authority on behalf of the Executive within five (5) days
after receipt of the Tax Counsel’s determination. If the Tax Counsel
determines that there is substantial authority (within the meaning of
Section 6662 of the Tax Code) that no Excise Tax is payable by the
Executive, the Tax Counsel shall furnish the Executive with a written
opinion that the failure to disclose or report the Excise Tax on the
Executive’s federal income tax return will not constitute a substantial
understatement of tax or be reasonably likely to result in the imposition of
a negligence or similar penalty. Any determination by the Tax Counsel shall
be binding upon the Company and the Executive in the absence of material
mathematical or legal error. As a result of the uncertainty in the
application of Section 4999 of the Tax Code at the time of the initial
determination by the Tax Counsel hereunder, it is possible that the Company
will not have made Gross-Up payments that should have been made or that it
will have made Gross-Up Payments that should not have been made, in each
case, consistent with the calculations required to be made hereunder. If the
Company exhausts its remedies pursuant to Section 8(e)(vi)(3) below and the
Executive is thereafter required to pay an Excise Tax, the Tax Counsel shall
determine the amount of underpayment of Excise Taxes that has occurred and
the Company shall promptly pay any such underpayment to the IRS or other
appropriate taxing authority on the Executive’s behalf or, if the Executive
has previously paid such underpayment, to the Executive. Such payment shall
in all events be paid within ninety (90) days after the Tax Counsel
determines that a payment is required. If the Tax Counsel determines that
an overpayment of Gross-Up payments has occurred, any such overpayment shall
be treated for all purposes as a loan to the Executive with interest at the
applicable federal rate provided in Section 7872(f)(2) of the Tax Code, due
and payable within ninety (90) days after written demand to the Executive by
the Company; provided, however, that the Executive shall have no duty or
obligation whatsoever to repay such loan if the Executive’s receipt of the
overpayment, or any portion thereof, is includible in the Executive’s income
and the Executive’s repayment of the same is not deductible by the Executive
for federal and state income tax purposes.
	 
	 	(3)	 	The Executive shall notify the Company, in writing of any claim
by the IRS or state or local taxing authority, that, if successful, would
result in any Excise Tax or an underpayment of Gross-Up Payments. Such notice
shall be given as soon as practicable but no later than fifteen (15) business
days after the Executive is informed in writing of the claim and shall inform
the Company of the nature of the claim, the administrative or judicial appeal
period, and the date on which any payment of the claim must be paid. The
Executive shall not pay any portion of the claim before

10

 

	 	 	 	the expiration of the thirty (30) day period following the date on which the
Executive gives such notice to the Company (or such shorter period ending on
the date that any amount under the claim is due). If the Company notifies
the Executive in writing before the expiration of such thirty (30) day
period that it desires to contest the claim, the Executive shall:

	 	(A)	 	give the Company any information reasonably
requested by the Company relating to the claim;
	 
	 	(B)	 	take such action in connection with contesting
the claim as the Company shall reasonably request in writing from time
to time, including, without limitation, accepting legal representation
concerning the claim by an attorney selected by the Company who is
reasonably acceptable to the Executive; and
	 
	 	(C)	 	cooperate with the Company in good faith in
order to effectively contest the claim; provided, however, that the
Company shall bear and pay directly all costs and expenses (including,
without limitation, additional interest and penalties and attorneys’
fees) incurred in such contests and shall indemnify and hold the
Executive harmless, on an after-tax basis, for any Excise Tax or income
tax (including, without limitation, interest and penalties thereon)
imposed as a result of such representation. Without limitation upon the
foregoing provisions of this Section 8(e)(vi)(3)(C), except as provided
below, the Company shall control all proceedings concerning such
contest and, in its sole opinion, may pursue or forgo any and all
administrative appeal, proceedings, hearings and conferences with the
taxing authority pertaining to the claim. At the Company’s written
request and upon payment to the Executive of an amount at least equal
to the claim plus any additional amount necessary to obtain the
jurisdiction of the appropriate tribunal and/or court, the Executive
shall pay the same and sue for a refund. The Executive agrees to
prosecute any contest of a claim to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one
or more appellate courts, as the Company shall determine; provided,
however, that if the Company requests the Executive to pay the claim
and sue for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis, and shall
indemnify and hold the Executive harmless on an after-tax basis, from
any Excise Tax or income tax (including, without limitation, interest
and penalties thereon) imposed on such advance or for any imputed
income on such advance. Any extension of the statute of limitations
relating to the assessment of any Excise Tax for the taxable year of
the Executive that is subject of the claim is to be limited solely to
the claim. Furthermore, the Company’s
control of the contest shall be limited to the issues for which a
Gross-Up Payment would be payable hereunder. The Executive shall be
entitled to settle or contest, as the case may be, any other issue
raised by the IRS or any other taxing authority.

11

 

	 	(4)	 	If, after the Executive receives an amount the Company advanced
pursuant to Section 8(e)(vi)(3) above, the Executive receives any refund of a
claim and/or any additional amount that was necessary to obtain jurisdiction,
the Executive shall promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after taxes applicable
thereto). If, after the Executive receives an amount the Company advanced
pursuant to Section 8(e)(vi)(3) above, a determination is made that the
Executive shall not be entitled to any refund of the claim, and the Company
does not notify the Executive in writing of its intent to contest such denial
or refund of a claim before the expiration of the thirty (30) days after such
determination, then the portion of such advance attributable to a claim shall
be forgiven and shall not be required to be repaid. The amount of such advance
attributable to a claim shall offset, to the extent thereof, the amount of the
underpayment required to be paid by the Company to the Executive.
	 
	 	(5)	 	If, after the Company advances an additional amount necessary
to obtain jurisdiction, there is a final determination made by the taxing
authority that the Executive is not entitled to any refund of such amount, or
any portion thereof, then the Executive shall repay such nonrefundable amount
to the Company within thirty (30) days after the Executive receives notice of
such final determination. A final determination shall occur when the period to
contest or otherwise appeal any decision by an administrative tribunal or court
of initial jurisdiction has been waived or the time for contesting or appealing
the same has expired.

	 	 	 	“Change of Control” means the first to occur after the Effective Date of the
following: (i) any Person or group of Persons acting in concert, in a transaction or
a series of transactions, is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing more than fifty percent (50%)
of the combined voting power of the Company’s then outstanding securities that have
the right to vote for the election of directors generally (not including in such
securities beneficially owned by such Person any securities acquired directly from
or received through an exchange offer with the Company); or (ii) there is
consummated a merger, consolidation or other business combination (including an
exchange of securities with the security holder’s of a corporation that is a
constituent in such business combination) of the Company or any direct or indirect
subsidiary of the Company with any other corporation, other than a merger,
consolidation or business combination which would result in the voting securities of
the Company outstanding immediately prior to such merger, consolidation or business
combination continuing to represent at least a majority of the combined voting power
of the securities having the right to vote for the

12

 

	 	 	 	election of directors generally of the Company or the surviving entity or any parent
thereof outstanding immediately after such merger, consolidation or business
combination (either by remaining outstanding or by being converted into or exchanged
for voting securities of the surviving entity or parent thereof) or (iii) there is
consummated an agreement for the sale, lease or other disposition by the Company of
all or substantially all of the Company’s assets, other than a sale, lease or other
disposition by the Company of all or substantially all of the Company’s assets to an
entity, at least a majority of the combined voting power of the outstanding
securities of which are owned by stockholders of the Company in substantially the
same proportions as their ownership of the Company immediately prior to such sale.
	 
	 	(vii)	 	Notwithstanding the foregoing, a “Change of Control” shall not be deemed to
have occurred by virtue of the consummation of any transaction or series of integrated
transactions immediately following which the record holders of the stock (entitled to
vote for directors) of the Company immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate ownership in an
entity which owns all or substantially all of the assets of the Company immediately
following such transaction or series of transactions.

	(f)	 	Six-Month Delay For Key Employees. Notwithstanding anything in this Agreement to the
contrary, if the Executive is a key employee of a publicly traded corporation under section
409A at the time of his separation from service and if payment of any amount under this
Agreement is required to be delayed for a period of six months after separation from service
pursuant to section 409A, payment of such amount shall be delayed as required by section 409A,
and the accumulated postponed amount shall be paid in a lump sum payment within 10 days after
the end of the six-month period. A “key employee” shall mean an employee who, at any time
during the 12-month period ending on the identification date, is a “specified employee” under
section 409A of the Internal Revenue Code, as determined by the Board. The determination of
key employees, including the number and identity of persons considered key employees and the
identification date, shall be made by the Board in accordance with the provisions of Sections
416(i) and 409A and the regulations issued thereunder.
	 
	(g)	 	Mitigation. The Executive shall not be required to mitigate amounts payable pursuant
to this section by seeking other employment or otherwise.
	 
	9.	 	Effect of Termination. If the Executive (a) is a member of the Board or that of any
of the Company’s subsidiaries or, or (b) holds any other position with the Company and the
Company’s subsidiaries on the Date of Termination, the Executive shall resign from all such
positions as of such date.
	 
	10.	 	Termination of Other Agreements. By their execution of this Agreement, each of the
Company and the Executive confirm the termination, as of the Effective Date of all rights and
obligations that each of the parties may have had under (a) the Restated Employment Agreement
between the Executive and Metrocall Holdings, Inc. and Metrocall Inc., dated as of February 5,
2003, as amended on March 29, 2004 and (b) any other employment,
consulting, non-competition, bonus or other compensatory plan, program, arrangement or
contract relating to the employment of the Executive, written or oral, between the Executive
and the Company, the Company’s predecessor or any person affiliated with the Company or its
predecessor entered into prior to the Effective Date (together, the “Prior Employment
Documents”).

13

 

	11.	 	Notices. All notices, demands, requests, or other communications required or permitted to be
given or made hereunder (collectively, “Notice”) shall be in writing and shall be delivered,
telecopied, or mailed by first class registered or certified mail, postage prepaid, addressed
as follows:
	 
	(a)	 	if to the Company:

USA Mobility, Inc.

6677 Richmond Highway

Alexandria, Virginia 22306

Telecopier: (703) 768-9625

with a copy (which shall not constitute notice) to:

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Schulte Roth & Zabel LLP

919 Third Avenue

New York, New York 10022

Telecopier: (212) 593-5955

Attention: Jeffrey S. Sabin, Esq.

	(b)	 	if to the Executive:

Vincent D. Kelly

11807 Chapel Road

Clifton, VA 20124

	 	 	or to such other address as may be designated by either party in a notice to the other. Each
notice, demand, request, or other communication that shall be given or made in the manner
described above shall be deemed sufficiently given or made for all purposes three (3) days
after it is deposited in the U.S. mail, postage prepaid, or at such time as it is delivered
to the addressee (with the return receipt, the delivery receipt, the answer back or the
affidavit of messenger being deemed conclusive evidence of such delivery) or at such time as
delivery is refused by the addressee upon presentation.
	 
	12.	 	Severability. The invalidity or unenforceability of any one or more provisions of
this Agreement shall not affect the validity or enforceability of the other provisions of this
Agreement, which shall remain in full force and effect. The parties agree that in the event
any of the provisions in this Agreement, interpreted in accordance with the Agreement as a
whole, are found to be unenforceable by a court of competent jurisdiction, such court shall
determine the limits allowable by law and shall enforce the same.
	 
	13.	 	Survival. It is the express intention and agreement of the parties that the
provisions of Section 5 shall survive the termination of this Agreement, and that the
provisions of Section 6 shall survive for two (2) years following the termination of this
Agreement.
	 
	14.	 	Assignment: Successors. The rights and obligations of the parties to this Agreement
shall not be assignable, except that the rights and obligations of the Company hereunder shall
be assignable in connection with any subsequent merger, consolidation, sale of substantially
all of the assets of the Company, or similar reorganization of a successor. The Company will
require any successor (whether direct or in direct, by purchase, merger, consolidation, or
otherwise) to all or substantially all of the business and/or assets of the Company to
expressly assume and agree to perform this Agreement in the same manner and to the same extent
that the Company is required to perform it. Failure of the Company to obtain such assumption
and agreement before the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Executive to compensation from the Company as provided in
Section 8(e) herein.
	 
	15.	 	Binding Effect. Subject to any provisions restricting assignment, this Agreement
shall be binding upon the parties and shall inure to the benefit of the parties and their
respective heirs, devisees, executors, administrators, legal representatives, successors, and
assigns.

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	16.	 	Amendment Waiver. This Agreement shall not be amended, altered or modified except by
an instrument in writing duly executed by all parties. Neither the waiver by any of the
parties of a breach of or a default under any of the provisions of this Agreement, nor the
failure of either of the parties, on one or more occasions, to enforce any of the provisions
of this Agreement or to exercise any right or privilege hereunder, shall thereafter be
construed as a waiver of any subsequent breach or default of a similar nature, or as a waiver
of any such provisions, rights, or privileges.
	 
	17.	 	Headings. Section headings contained in this Agreement are inserted for convenience
of reference only, shall not be deemed to be a part of this Agreement for any purpose, and
shall not in any way define or affect the meaning, construction, or scope of any of the
provisions of this Agreement.
	 
	18.	 	Governing Law. This Agreement, the rights and obligations of the parties, and any
claims or disputes arising from this Agreement, shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia (but not including the choice of law
rules thereof).
	 
	19.	 	Entire Agreement. This Employment Agreement contains the entire agreement between the
parties with respect to the subject matter hereof and supersedes all prior agreements, written
or oral, with respect thereto, including, but not limited to, the Prior Employment Documents.
	 
	20.	 	Indemnification. In consideration of this Agreement, the Executive hereby waives any
and all rights under and releases, and indemnifies and holds the Company (and its officers,
directors, employees and agents) and its successors and assigns, harmless from any damage,
loss, liability, judgment, fine, penalty, assessment, settlement, cost, or expense including,
without limitation, reasonable expenses of investigation, reasonable attorneys’ fees and other
reasonable legal costs and expenses incident to any of the foregoing or to the enforcement of
this Section 20, whether or not suit is brought or, if brought, whether or not such suit is
successful, in whole or in part arising out of or relating to any and all employment,
consulting, non-competition, bonus, or other compensatory plan, program, arrangement, or
contract relating to the employment of the Executive, written or oral, between the Executive
and the Company or any person affiliated with the Company entered into prior to the Effective
Date, including, without limitation, the Prior Employment Documents.
	 
	21.	 	Arbitration. Either party may designate in writing to the other (in which case this
Section 21 shall have effect but not otherwise) that any dispute that may arise directly or
indirectly in connection with this Agreement, the Executive’s employment, or the termination
of the Executive’s employment, whether arising in contract, statute, tort, fraud,
misrepresentation, or other legal theory, shall be determined solely by arbitration in
Washington, D.C. under the National Rules for the Resolution of Employment Disputes of the
American Arbitration Association (the “AAA”). The only legal claims between the Executive, on
the one hand, and the Company or any subsidiary, on the other, that would not be included in
this Agreement to arbitrate are claims by the Executive for workers’ compensation or
unemployment compensation benefits, claims

16

 

	 	 	for benefits under a Company or subsidiary benefit plan if the plan does not provide for
arbitration of such disputes, and claims by the Executive that seek judicial relief in the
form of specific performance of the right to be paid until the termination date during the
pendency of any dispute or controversy arising under Section 7 (a)(ii). If this Section 21
is in effect, any claim with respect to this Agreement, the Executive’s employment, or the
termination of the Executive’s employment must be established by a preponderance of the
evidence submitted to the impartial arbitrator. A single arbitrator shall conduct any
arbitration. The arbitrator shall have the authority to order a pre-hearing exchange of
information by the parties including, without limitation, production of requested documents,
and examination by deposition of parties and their authorized agents. If this Section 21 is
in effect, the decision of the arbitrator (i) shall be final and binding, (ii) shall be
rendered within ninety (90) days after the impanelment of the arbitrator, and (iii) shall be
kept confidential by the parties to such arbitration. The arbitration award may be enforced
in any court of competent jurisdiction. The Federal Arbitration Act, 9 U.S.C. §§ 1-15, not
state law, shall govern the arbitrability of all claims.
	 
	22.	 	Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be an original and all of which shall be deemed to constitute one and the same
instrument.

          IN WITNESS WHEREOF, the undersigned have duly executed this Agreement, or have caused this
Agreement to be duly executed, on their behalf as of the day and year first hereinabove written.

	 	 	 	 	 	 	 	 	 
	 	 	 	 	USA Mobility, Inc.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/George Z. Moratis
 

	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Date: November 16, 2004	 	Its: Senior Vice President and Treasurer	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	/s/ Vincent D. Kelly	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Date: November 16, 2004	 	Vincent D. Kelly	 	 

17

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