TABLE OF CONTENTS

		Page
ARTICLE 1
GENERAL
1.1	Certain Definitions	2
ARTICLE 2
RESTRICTIONS ON TRANSFER; REGISTRATION
2.1	Restrictions on Transfer	6
2.2	Mandatory Registration	8
2.3	Demand Registration	9
2.4	Piggyback Registrations	11
2.5	Form S-3 Registration	11
2.6	Expenses of Registration	13
2.7	Underwriting	13
2.8	Obligations of the Company	16
2.9	Termination of Registration Rights	18
2.10	Furnishing Information	18
2.11	Indemnification	18
2.12	Transfer or Assignment of Registration Rights	20
2.13	Amendment of Registration Rights	21
2.14	“Market Stand-Off” Agreement	21
2.15	Rule 144 Reporting	22
ARTICLE 3
COVENANTS OF THE COMPANY
3.1	Basic Financial Information and Reporting	22
3.2	Inspection Rights	24
3.3	Board Observation Right	24
3.4	Directors’ Expenses	25
3.5	Board of Directors Meetings; Board Composition	25
3.6	Insurance	25
3.7	Reservation of Common Stock	26
3.8	Option Grants; Stock Vesting; Stock Repurchase; Exercise Price	26
3.9	Acceleration of Vesting	26
3.10	Non-Competition Agreement and Confidential Information and Invention
	Assignment Agreement	27
3.11	Assignment of Right of First Refusal	27
3.12	Market Stand-Off Agreement	27

 

i

 

3.13	Payment of Taxes, Compliance with Laws, etc	27
3.14	Material Changes and Litigation	28
3.15	Qualified Small Business	28
3.16	Real Property Holding Corporation	28
3.17	Management Compensation	29
3.18	Enforcement of Bylaws	29
3.19	No Impairment	29
3.20	Environmental Covenant	29
3.21	Employment Covenant	29
3.22	Board and Officer Covenant	29
3.23	Amended and Restated Certificate of Incorporation	30
3.24	Termination of Covenants; Assignment of Covenants	30
ARTICLE 4
RIGHTS OF FIRST REFUSAL
4.1	Subsequent Offerings	30
4.2	Exercise of Rights	31
4.3	Issuance of New Securities to Other Persons	31
4.4	Termination and Waiver of Rights of First Refusal	31
4.5	Transfer of Rights of First Refusal	31
4.6	Excluded Securities	32
ARTICLE 5
MISCELLANEOUS
5.1	Amendment and Waiver	33
5.2	Waiver of Preemptive Rights	33
5.3	Governing Law	33
5.4	Jurisdiction; Venue	33
5.5	Waiver of Jury Trial	34
5.6	Equitable Remedies	34
5.7	Arbitration	34
5.8	Successors and Assigns	34
5.9	Entire Agreement	34
5.10	Severability	35
5.11	Delays or Omissions	35
5.12	Notices	35
5.13	Attorneys’ Fees	36
5.14	Titles and Subtitles	36
5.15	Limitation on Subsequent Rights	36
5.16	Additional Investors	37
5.17	Non-Business Days	37
5.18	Counterparts	37
5.19	Telecopy Execution and Delivery	37
5.20	Aggregation of Stock	37

 

ii

 

VONAGE HOLDINGS CORP.

THIRD AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

This THIRD AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of April 27, 2005, by and among Vonage Holdings Corp., a Delaware corporation (the “Company”), the holders of the Company’s Series A Convertible Preferred Stock set forth on Exhibit A attached hereto (the “Series A Holders”), the holders of the Company’s Series A-2 Convertible Preferred Stock set forth on Exhibit A attached hereto (the “Series A-2 Holders”), the holders of the Company’s Series B Convertible Preferred Stock set forth on Exhibit A attached hereto (the “Series B Holders”), the holders of the Company’s Series C Convertible Preferred Stock set forth on Exhibit A attached hereto (the “Series C Holders”), the holders of the Company’s Series D Convertible Preferred Stock set forth on Exhibit A attached hereto (the “Series D Holders”), and the holders of the Company’s Series E Convertible Preferred Stock set forth on Exhibit A attached hereto (the “Series E Holders” and together with the Series A Holders, the Series A-2 Holders, the Series B Holders, the Series C Holders, the Series D Holders and the Series E Holders, the “Investors”).

RECITALS

WHEREAS, the Series A Holders, the Series A-2 Holders, the Series B Holders, the Series C Holders and the Series D Holders (the “Existing Investors”) possess registration rights, information rights, rights of first offer and other rights pursuant to a Second Amended and Restated Investors’ Rights Agreement dated as of August 12, 2004 by and among the Company and such Existing Investors (the “Prior Agreement”);

WHEREAS, the Prior Agreement may be amended, and any provision therein waived, with the consent of the Company, the holders of at least a majority of the Registrable Securities then outstanding, the holders of at least a majority of the then-outstanding shares of Series B Preferred (including shares of Common Stock issued upon conversion of the Series B Preferred), the holders of at least sixty percent (60%) of the then-outstanding shares of Series C Preferred (including shares of Common Stock issued upon conversion of the Series C Preferred) and the holders of at least sixty-six and two-thirds percent (66-2/3%) of the then-outstanding shares of Series D Preferred (including shares of Common Stock issued upon conversion of the Series D Preferred);

WHEREAS, the Existing Investors as holders of at least (i) a majority of the Registrable Securities then outstanding, (ii) a majority of the then-outstanding shares of Series B Preferred (including shares of Common Stock issued upon conversion of the Series B Preferred), (iii) sixty percent (60%) of the then-outstanding shares of Series C Preferred (including shares of Common Stock issued upon conversion of the Series C Preferred) and (iv) the holders of at least sixty-six and two-thirds percent (66-2/3%) of the then-outstanding shares of Series D Preferred (including shares of Common Stock issued upon conversion of the Series D Preferred) desire to terminate the Prior Agreement and to accept the rights created pursuant hereto in lieu of the rights granted to them under the Prior Agreement;

 

 

 

WHEREAS, the Company and the Series E Holders are parties to that certain Stock Purchase Agreement dated as of an even date herewith (the “Purchase Agreement”), whereby the Company will sell, and the Series E Holders will purchase, shares of the Company’s Series E Convertible Preferred Stock (the “Financing”); and

WHEREAS, the obligations of the Company and the Series E Holders under the Purchase Agreement are conditioned upon, among other things, the execution and delivery of this Agreement by the Company and the Investors.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises, representations and covenants hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE 1

GENERAL

1.1          Certain Definitions.  As used in this Agreement the following terms shall have the following respective meanings:

(a)           “3i” means 3i Technology Partners L.P.

(b)           “Bain Capital” means, collectively Bain Capital Venture Fund 2005, L.P., Sankaty Credit Opportunities, L.P., Sankaty Credit Opportunities II, L.P., Prospect Harbor Credit Partners, L.P., Brookside Capital Partners Fund, L.P., BCIP Associates III, LLC and BCIP Associates III-B, LLC.

(c)           “Board” means the Board of Directors of the Company.

(d)           “Capital Stock” means shares of the Common Stock, Series A Preferred, Series A-2 Preferred, Series B Preferred, Series C Preferred, Series D Preferred, Series E Preferred and any other shares of the Common Stock or Preferred Stock issued or issuable upon exercise or conversion of any option, warrant or other security or right of any kind convertible into or exchangeable for such Common Stock or Preferred Stock.

(e)           “Common Stock” means the Common Stock of the Company, par value $0.001 per share.

(f)            “Exchange Act” means the Securities Exchange Act of 1934, as amended, or any similar successor federal statute and the rules and regulations thereunder, all as the same shall be in effect from time to time.

(g)           “Form S-3” means such form under the Securities Act as in effect on the date hereof or any successor or similar registration form under the Securities Act subsequently

 

2

 

adopted by the SEC that permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the SEC.

(h)           “Founder” shall mean Jeffrey Citron.

(i)            “Holder” means any person owning of record Registrable Securities that have not been sold to the public or any transferee or assignee of record of such Registrable Securities to which the registration rights conferred by this Agreement have been transferred or assigned in accordance with Section 2.12 hereof.

(j)            “Initial Public Offering” means the Company’s first firm commitment underwritten public offering of the Common Stock registered under the Securities Act.

(k)           “Major Series E Holders” means, collectively, Bain Capital and RGIP, LLC.

(l)            “Meritech” means Meritech Capital Partners.

(m)          “New Securities” means any shares of, or securities convertible into or exercisable for any shares of, any class of the Company’s capital stock, issued after the date of this Agreement other than securities excluded pursuant to Section 4.6 hereof.

(n)           “NEA” means New Enterprise Associates 10, L.P. and New Enterprise Associates 11, L.P.

(o)           “NEA 10” means New Enterprise Associates 10, L.P.

(p)           “NEA 11” means New Enterprise Associates 11, L.P.

(q)           “Register,” “registered” and “registration” refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of effectiveness of such registration statement or document.

(r)            “Registrable Securities” means (a) shares of Common Stock issuable or issued upon conversion of the Shares and (b) any Common Stock issued as (or issuable upon the conversion or exercise of any warrant, right or other security which is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of, such above-described securities.  Notwithstanding the foregoing, Registrable Securities shall not include any securities of the Company sold by any person to the public either pursuant to a registration statement under the Securities Act or Rule 144.

(s)           “Registrable Securities then outstanding” equals the number of shares of Common Stock that are Registrable Securities and either (a) are then issued and outstanding or (b) are issuable pursuant to then exercisable or convertible securities.

(t)            “Registration Expenses” shall mean all expenses incurred by the Company in complying with Sections 2.2, 2.3, 2.4 and 2.5 hereof, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel for the

 

3

 

Company, Blue Sky fees and expenses and the expense of any special audits incidental to or required by any such registration (but excluding the compensation of regular employees of the Company, which shall be paid in any event by the Company, and all underwriting discounts and commissions).  In addition, Registration Expenses shall include reasonable fees and disbursements of a single special legal counsel for the Holders selling Registrable Securities.

(u)           “Restated Certificate” means the Company’s Certificate of Incorporation, as amended and restated to date.

(v)           “Rule 144” means Rule 144 as promulgated by the SEC under the Securities Act, as such rule may be amended from time to time, or any similar successor rule that may be promulgated by the SEC.

(w)          “Rule 144(k)” means Rule 144(k) as promulgated by the SEC under the Securities Act, as such rule may be amended from time to time, or any similar successor rule that may be promulgated by the SEC.

(x)            “Rule 145” means Rule 145 as promulgated by the SEC under the Securities Act, as such rule may be amended from time to time, or any similar successor rule that may be promulgated by the SEC.

(y)           “SEC” or “Commission” means the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.

(z)            “Securities Act” means the Securities Act of 1933, as amended, or any similar successor federal statute and the rules and regulations thereunder, all as the same shall be in effect from time to time.

(aa)         “Selling Expenses” means all underwriting discounts, selling commissions and stock transfer rates applicable to the sale of Registrable Securities.

(bb)         “Senior Preferred Holders “ means the holders of Series B Preferred, Series C Preferred, Series D Preferred and Series E Preferred.

(cc)         “Senior Preferred Registrable Securities” means, collectively, the Series B/C/D Registrable Securities and the Series E Registrable Securities.

(dd)         “Series A Preferred” means the Series A Convertible Preferred Stock of the Company, par value $0.001 per share.

(ee)         “Series A-2 Preferred” means the Series A-2 Convertible Preferred Stock of the Company, par value $0.001 per share.

(ff)           “Series B Director” means the member of the Board elected by the holders of a majority of the outstanding shares of Series B Preferred, voting as a separate class distinct from any other series or class of securities issued by the Company, to be designated by NEA 10.

 

4

 

(gg)         “Series B Preferred” means the Series B Convertible Preferred Stock of the Company, par value $0.001 per share.

(hh)         “Series B Purchase Agreement” means that certain Series B Preferred Stock Purchase Agreement dated November 14, 2003 by and among the Company and the investors listed therein.

(ii)           “Series B/C/D Registrable Securities” means (a) shares of Common Stock issuable or issued upon conversion of shares of Series B Preferred, Series C Preferred and Series D Preferred and (b) any Common Stock issued as (or issuable upon the conversion or exercise of any warrant, right or other security which is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of, such above-described securities.  Notwithstanding the foregoing, Series B/C/D Registrable Securities shall not include any securities of the Company sold by any person to the public either pursuant to a registration statement under the Securities Act or Rule 144.

(jj)           “Series C Director” means the member of the Board elected by the holders of a majority of the outstanding shares of Series C Preferred, voting as a separate class distinct from any other series or class of securities issued by the Company, to be designated by 3i.

(kk)         “Series C Preferred” means the Series C Convertible Preferred Stock of the Company, par value $0.001 per share.

(ll)           “Series C Purchase Agreement” means that certain Series C Preferred Stock Purchase Agreement dated January 20, 2004 by and among the Company and the investors listed therein.

(mm)       “Series D Director” means the member of the Board elected by the holders of a majority of the outstanding shares of Series D Preferred, voting as a separate class distinct from any other series or class of securities issued by the Company, to be designated by NEA 11.

(nn)         “Series D Preferred” means the Series D Convertible Preferred Stock of the Company, par value $0.001 per share.

(oo)         “Series D Purchase Agreement” means that certain Series D Preferred Stock Purchase Agreement dated August 12, 2004 by and among the Company and the investors listed therein.

(pp)         “Series E Director” means the member of the Board elected by the holders of a majority of the outstanding shares of Series E Preferred, voting as a separate class distinct from any other series or class of securities issued by the Company, to be designated by Bain Capital.

(qq)         “Series E Preferred” means the Series E Convertible Preferred Stock of the Company, par value $0.001 per share.

 

5

 

(rr)           “Series E Registrable Securities” means (a) shares of Common Stock issuable or issued upon conversion of shares of Series E Preferred and (b) any Common Stock issued as (or issuable upon the conversion or exercise of any warrant, right or other security which is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of, such above-described securities.  Notwithstanding the foregoing, Series E Registrable Securities shall not include any securities of the Company sold by any person to the public either pursuant to a registration statement under the Securities Act or Rule 144.

(ss)         “Series Preferred” means the Series A Preferred, the Series A-2 Preferred, the Series B Preferred, the Series C Preferred, the Series D Preferred and the Series E Preferred of the Company.

(tt)           “Shares” means all shares of Series A Preferred, Series A-2 Preferred, Series B Preferred, Series C Preferred, Series D Preferred and Series E Preferred issued to the Investors.

(uu)         “Special Registration Statement” means (i) a registration statement relating to any employee benefit plan of the Company, (ii) a registration statement of the Company relating to any corporate reorganization or other transaction under Rule 145, including any registration statements related to the issuance or resale of securities issued in such a transaction, or (iii) a registration statement related to the offer and sale of debt securities.

ARTICLE 2

RESTRICTIONS ON TRANSFER; REGISTRATION

2.1          Restrictions on Transfer.

(a)           Each Holder agrees not to make any disposition of all or any portion of the Shares or Registrable Securities unless and until:

(i)            there is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with such registration statement; or

(ii)           (A) the transferee has agreed in writing to be bound by the terms of this Agreement (for purposes of clarification, this condition (A) shall apply only to transferees who acquired Shares or Registrable Securities prior to the Initial Public Offering and only with respect to such shares), (B) such Holder shall have