STOCK PURCHASE WARRANT to Purchase Shares of Series A-2 Convertible Preferred Stock, Par Value $.001 Per Share of Vonage Holdings Corp.

Exhibit 4.4

THIS WARRANT HAS NOT BEEN REGISTERED UNDER THESECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS.  IT MAY NOT BE SOLD OR OFFERED FOR SALE IN THEABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAIDACT AND ANY APPLICABLE STATE SECURITIES LAWS OR THE AVAILABILITY OF ANEXEMPTION FROM REGISTRATION UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIESLAWS.


To Purchase Shares of
Series A-2 Convertible Preferred Stock, par value $.001 per share
of
Vonage Holdings Corp.



Date of Initial Issuance:

October 1, 2003

 

Number of Shares:

900,000

 

Initial Warrant Price:

$4.00

 

Expiration Date:

September 30, 2008

 

 

THIS CERTIFIES THAT for value received, JEFFREY A.CITRON, or registered assigns (hereinafter called “Holder”), isentitled to purchase from VONAGE HOLDINGS CORP,a Delaware corporation (“the Company”), at any time during the Term of thisWarrant, Nine Hundred Thousand (900,000) shares of Series A-2 ConvertiblePreferred Stock, par value $.001 per share of the Company (“Series A-2 Stock”),at the Warrant Price, payable as provided herein.  The exercise of this Warrant shall be subjectto the provisions, limitations and restrictions herein contained.  This Warrant may be exercised in whole or inpart.

1.                                      Definitions.

For all purposes of this Warrant, the following termsshall have the meanings indicated

“Series A-2 Stock” shall mean and include theCompany’s authorized Series A-2 Convertible Preferred Stock, par value $.001per share, as constituted at the date hereof.

“Exchange Act” shall mean the SecuritiesExchange Act of 1934, as amended from time to time.

“Securities Act” shall mean the Securities Actof 1933, as amended from time to time.

“Term of this Warrant” shall mean the period beginningon the date of initial issuance hereof and ending on the fifth (5th)anniversary of such date of initial issuance.

“Warrant Price” shall mean Four Dollars ($4.00)per share, subject to adjustment in accordance with Section 5 hereof.

“Warrants” shall mean this Warrant and anyother Warrant or Warrants issued in connection with the Agreement to theoriginal holder of this Warrant or issued to any transferees of such originalholder or subsequent holder.

“Warrant Shares” shall mean shares of SeriesA-2 Stock, subject to adjustment or change as herein provided, purchased orpurchasable by Holder upon the exercise hereof.

2.                                      Exercise of Warrant.

2.1          Procedurefor Exercise of Warrant.  To exercisethis Warrant in whole or in part (but not as to any fractional share of SeriesA-2 Stock), Holder shall deliver to the Company at its office referred to inSection 14 hereof at any time and from time to time during the Term of thisWarrant: (i) the Notice of Exercise in the form of



Exhibit A attached hereto, (ii) cash, certified orofficial bank check payable to the order of the Company, wire transfer of fundsto the Company’s account, or cancellation of any indebtedness of the Company toHolder (or any combination of any of the foregoing) in the amount of the WarrantPrice for each share being purchased, and (iii) this Warrant.  Notwithstanding any provisions herein to thecontrary, if the Current Market Price (as defined below) is greater than theWarrant Price (at the date of calculation, as set forth below), in lieu ofexercising this Warrant as hereinabove permitted, Holder may elect to receiveshares of Series A-2 Stock equal to the value (as determined below) of thisWarrant (or the portion thereof being canceled) by surrender of this Warrant atthe office of the Company referred to in Section 14 hereof, together with theNotice of Exercise, in which event the Company shall issue to Holder thatnumber of whole shares of Series A-2 Stock computed using the followingformula:

PS = WPS x (CMP-WP)
CMP

Where


 

PS

equals the number of shares of Series A-2 Stock to be issued to Holder

 

WPS

equals the number of shares of Series A-2 Stock purchasable under the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being exercised (at the date of such calculation)

 

CMP

equals the Current Market Price of shares of Series A-2 stock (at the date of such calculation.) “Current Market Price” as at any date of calculation means the applicable one of the following, multiplied by the number of shares of the Company’s Common Stock (“Common Stock”) into which one share of Series A-2 Stock is convertible on that date: (a) if the Common Stock is admitted to trading an a national securities exchange, the closing price quoted for the Common Stock on that exchange on the date of calculation; otherwise (b) if the Common Stock is quoted on a national quotation system, the mean between the closing bid and asked prices, regular way, as quoted on that system on the date of calculation; otherwise (c) if the Company has recently (at the date of calculation) established a price for the Common Stock through private securities sales or grants of purchase options that in the reasonable judgment of the Company’s Board of Directors accurately reflects the value of the Common Stock, the price so established.

 

WP

equals the Warrant Price (as adjusted to the date of such calculation)

In the event of any exercise of the rights representedby this Warrant, a certificate or certificates for the shares of Series A-2 Stockso purchased, registered in the name of Holder or such other name or names asmay be designated by Holder, shall be delivered to Holder hereof within areasonable time, not exceeding fifteen (15) days, after the rights representedby this Warrant shall have been so exercised; and, unless this Warrant hasexpired, a new Warrant representing the number of shares (except a remainingfractional share), if any, with respect to which this Warrant shall not thenhave been exercised shall also be issued to Holder hereof within such time.  The person in whose name any certificate forshares of Series A-2 Stock is issued upon exercise of this Warrant shall forall purposes be deemed to have become the holder of record of such shares onthe date on which Holder shall have complied with the conditions for exerciseof this Warrant set forth above, irrespective of the date of delivery of suchcertificate, except that, if the date of such compliance is a date when thestock transfer books of the Company are closed, such person shall be deemed tohave become the holder of such shares at the close of business on the nextsucceeding date on which the stock transfer books are open.

2.2                               Transfer Restriction Legend.  Eachcertificate for Warrant Shares shall bear the following legend (and anyadditional legend required by (i) any applicable state securities laws and (ii)any securities exchange upon which such Warrant Shares may, at the time of suchexercise, be listed) on the face thereof unless at the time of exercise such WarrantShares shall be registered under the Securities Act:

“The shares represented by this certificate have not been registeredunder the Securities Act of 1933, as amended, and may not be sold ortransferred in the absence of such registration or an exemption therefrom undersaid Act.”

 

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Any certificate issued at any time in exchange orsubstitution for any certificate bearing such legend (except a new certificateissued upon completion of a public distribution under a registration statementof the securities represented thereby) shall also bear such legend unless, inthe opinion of counsel for Holder thereof (which counsel shall be reasonablysatisfactory to the Company) the securities represented thereby are not, atsuch time, required by law to bear such legend.

3.                                      Covenants as to Series A-2Stock.  TheCompany covenants and agrees that:

(a)                                 All shares of Series A-2 Stock that maybe issued upon the exercise of the rights represented by this Warrant shall,upon issuance, be validly issued, fully paid and nonassessable, and free fromall taxes, liens and charges with respect to the issue thereof.
(b)                                 It shall pay when due and payable any andall federal and state taxes which may be payable in respect of the issue ofthis Warrant or any Series A-2 Stock or certificates therefor issuable upon theexercise of this Warrant.  The Companyfurther covenants and agrees that the Company shall at all times haveauthorized and reserved, free from preemptive rights, a sufficient number ofshares of Series A-2 Stock to provide for the exercise of the rightsrepresented by this Warrant.
(c)                                  If any shares of capital stock to bereserved for the purpose of the issuance of shares upon the exercise of thisWarrant require registration with or approval of any governmental authorityunder any federal or state law before such shares may be validly issued ordelivered upon exercise, then the Company shall in good faith and asexpeditiously as possible endeavor to secure such registration or approval, asthe case may be.  If and so long as theSeries A-2 Stock issuable upon the exercise of this Warrant is listed on anynational securities exchange, the Company shall, if permitted by the rules ofsuch exchange, list and keep listed on such exchange, upon official notice ofissuance, all shares of such Series A-2 Stock issuable upon exercise of thisWarrant.

4.                                      Representations andWarranties Regarding Capitalization Issues.  As of theinitial issuance of this Warrant, the Company does not have outstanding anysecurities convertible into or exchangeable for, or any rights to subscribe foror to purchase, or any options or warrants for the purchase of, or anyagreement providing for the issuance (contingent or otherwise) of, or anycalls, commitments or claims of any character relating to, its capital stock,in each case other than as disclosed in writing to Holder prior to the date ofissuance of this Warrant.

5.                                      Adjustment of Number ofShares.  Upon each adjustment of the Warrant Price asprovided in Section 6, Holder shall thereafter be entitled to purchase, at theWarrant Price resulting from such adjustment, only the number of shares(calculated to the nearest tenth of a share) obtained by multiplying theWarrant Price in effect immediately prior to such adjustment by the number ofshares purchasable pursuant hereto immediately prior to such adjustment anddividing the product thereof by the Warrant Price resulting from suchadjustment.

6.                                      Adjustment of WarrantPrice.  As used in this Section 6, “Net ConsiderationPer Share” means (1) the amount equal to the total amount of consideration,if any, received by the Company upon (x) the issuance or sale of shares ofSeries A-2 Stock or (y) the issuance or sale of any rights, options or warrantsexercisable or exchangeable for Series A-2 Stock, or (z) any securityconvertible into or exchangeable for shares of Series A-2 Stock plus (2) theminimum amount set forth in the terms of any of the securities referred to inclauses (x) and (y) as payable to the Company upon the exercise or conversionthereof, divided by (3) the aggregate number of shares of Series A-2 Stock thatwould be issued if all such rights, options or warrants or convertible orexchangeable securities were exercised, or converted or exchanged to thefullest extent permitted by their terms.  The Warrant Price shall be subject toadjustment from time to time as follows:

(a)                                 The Warrant Price, and the number ofshares of Series A-2 Stock issuable upon exercise of the Warrant, shall beproportionately adjusted each time the Company takes any of the followingactions after the date the Warrant was first issued:
(i)                                     Declares a dividend on the outstandingSeries A-2 Stock payable in shares of its Series A-2 Stock, or securitiesconvertible into or exchangeable for Series A-2 Stock;

 

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(ii)                                  Subdivides the outstanding Series A-2Stock; or
(iii)                               Combines the outstanding Series A-2 Stockinto a smaller number of shares.

The adjustment shall be made as of the dividend recorddate or of the effective date of the subdivision or combination.  The effect of the adjustment shall be suchthat each holder of Warrants shall, after the adjustment, be entitled onexercise thereof to receive the aggregate number and kind of shares that he,she or it would have been entitled to receive by virtue of such dividend,subdivision or combination had such shareholder exercised its Warrantimmediately prior to giving effect to such dividend, subdivision or combination.

(b)                                 In case the Company shall issue, or fix arecord date for the issuance of, to all holders of Series A-2 Stock,rights, options, or warrants to subscribe for or purchase Series A-2 Stock (orsecurities convertible into or exchangeable for Series A-2 Stock), for a NetConsideration Per Share less than the Warrant Price in effect immediately priorto the issuance, or the fixing of a record date for issuance, of such rights,options or warrants or convertible or exchangeable securities, then, in each case,the Warrant Price shall be reduced to a price (calculated to the nearest cent)calculated according to the formula:

 

 

 

OSC

 + 

 

AOP

 

ACP

 = 

 PCP 

 X 

 

PCP

 

 

 

 

 

 

 

 

OSS

 

where ACP is the adjusted Warrant Price,

                PCPis the Warrant Price in effect immediately prior to such record or issue date,

                OSCis the number of shares of Series A-2 Stock outstanding on such record or issuedate,

                AOPis the sum of the Net Consideration Per Share for all shares of Series A-2Stock, rights, options or warrants or convertible or exchangeable securitiesissued in such issuance, as applicable, and

                OSSis the number of shares of Series A-2 Stock outstanding immediately subsequentto such issuance.

Any adjustment under this Section 8(b) shall becomeeffective at the close of business on the relevant record or issue date.  For the purpose of all such adjustmentshereunder, the maximum number of shares of Series A-2 Stock whichthe holders of any such rights, options, warrants, or convertible orexchangeable securities shall be entitled to subscribe for or purchase orconvert or exchange such securities into shall be deemed to be issued andoutstanding.  To the extent the shares ofSeries A-2 Stock are not delivered, or securities convertible into orexchangeable for shares of Series A-2 Stock are not exercised or exchanged,before expiration of the time allowed for delivery, exercise or exchange, theWarrant Price shall be readjusted to the Warrant Price which would then be ineffect had the adjustment required by this Section been made upon the basis ofdelivery of only the number of shares of Series A-2 Stock (or securitiesconvertible into or exchangeable for shares of Series A-2 Stock) actuallyissued.  On any change of the number ofshares of Series A-2 Stock deliverable upon the exercise of any such rights,options, or warrants or exercise or exchange of such convertible orexchangeable securities or any change in the consideration to be received bythe Company upon such exercise, exercise, or exchange, including, but notlimited to, a change resulting from the antidilution provisions thereof, theWarrant Price, as then in effect, shall forthwith be readjusted to such WarrantPrice as would have been obtained had an adjustment been made upon the issuanceof such rights, options, or warrants not exercised prior to such change, orsecurities not exercised or exchanged prior to such change, on the basis ofsuch change; provided, that no such change shall at any time cause the WarrantPrice hereunder to be greater than the initial Warrant Price.  Any such readjustment shall apply only toshares of Series A-2 Stock issued upon exercises of this Warranttaking place after such expiration.  Incase any purchase price may be paid in a consideration part or all of whichshall be in a form other than cash, the value of

 

4



such consideration shall be as determined in goodfaith by the Board of Directors of the Company, whose determination shall beconclusive absent manifest error.  Sharesof Series A-2 Stock owned by or held for the account of the Company or anymajority-owned subsidiary shall not be deemed outstanding for the purpose ofany such computation.

(c)           Incase the Company shall distribute to all holders of Series A-2 Stock (otherthan such distribution made to the stockholders of the Company in connectionwith a consolidation or merger to which Section 6(e) is applicable or areclassification or recapitalization to which Section 6(j) is applicable)evidences of its indebtedness or assets or any shares of its capital stock(other than cash dividends or distributions and dividends payable in shares ofSeries A-2 Stock or securities convertible into Series A-2 Stock), or rights,options, or warrants to subscribe for or purchase Series.  A-2 Stock or securities convertible into orexchangeable for shares of Series A-2 Stock (excluding those withrespect to the issuance of which an adjustment of the Warrant Price is providedpursuant to Section 6(a) or Section 6(b) hereof), then, in each case, theholders of the Warrant shall be entitled to a proportionate share of any suchdistribution as though they were actual holders of the numbers of shares ofSeries A-2 Stock for which their respective Warrants are exercisableas of the record or issue date for the distribution in question.  Any such distribution to the holders of theWarrants shall be made whenever any of the corresponding distribution is made,and shall become effective on the record or issue date for the determination ofstockholders entitled to receive such corresponding distribution.
(d)           Incase the Company shall issue, sell or exchange shares of Series A-2 Stock orrights, options, or warrants to subscribe for or purchase Series A-2 Stock, orsecurities convertible into or exchangeable for Series A-2 Stock (excludingshares, rights, options, warrants, or convertible or exchangeable securitiesissued or issuable in any of the transactions with respect to which anadjustment of the Warrant Price is provided pursuant to Sections 8(a), 8(b),and 8(c) above) at a Net Consideration Per Share, as applicable, lower than theWarrant Price in effect immediately prior to such issuance, then the WarrantPrice shall be reduced on the date of such issuance to a price (calculated tothe nearest cent) determined according to the following formula:

 

 

 

OSC

 + 

 

$$$

 

ACP

 = 

 PCP 

 X 

 

PCP

 

 

 

 

 

 

 

 

OSS

 

where ACP is the adjusted Warrant Price,

                PCPis the Warrant Price in effect immediately prior to such record or issue date,

                OSCis the number of shares of Series A-2 Stock outstanding immediately prior tosuch issuance,

                OSSis the number of shares of Series A-2 Stock outstanding immediately subsequentto such issuance, and

                $$$is the sum of the Net Consideration Per Share for all shares of Series A-2Stock, rights, options or warrants or convertible or exchangeable securitiesissued in such issuance, as applicable.

Any adjustment under this Section 6(d) shall becomeeffective at the close of business on the relevant record or issue date.  For the purpose of all such adjustmentshereunder, the maximum number of shares of Series A-2 Stock whichthe holders of any such rights, options, warrants, or convertible orexchangeable securities shall be entitled to subscribe for or purchase orconvert or exchange such securities into shall be deemed to be issued andoutstanding.  No further adjustment ofthe Warrant Price shall be made as a result of the actual issuance of shares ofSeries A-2 Stock on exercise of such rights, options, or warrants or on exerciseor exchange of such convertible or exchangeable securities.  On the expiration or the termination of suchrights, options or warrants, or the termination of such right to convert orexchange, the Warrant Price shall be readjusted to such Warrant Price as wouldhave been obtained had the adjustments made upon the issuance of such rights,options, warrants, or

 

5



convertible or exchangeable securities been made uponthe basis of the delivery of only the number of shares of Series A-2 Stockactually delivered upon the exercise of such rights, options, or warrants orupon the exercise or exchange of any such securities.  On any change of the number of shares ofSeries A-2 Stock deliverable upon the exercise of any such rights, options, orwarrants or exercise or exchange of such convertible or exchangeable securitiesor any change in the consideration to be received by the Company upon suchexercise, exercise, or exchange, including, but not limited to, a changeresulting from the antidilution provisions thereof, the Warrant Price, as thenin effect, shall forthwith be readjusted to such Warrant Price as would havebeen obtained had an adjustment been made upon the issuance of such rights,options, or warrants not exercised prior to such change, or securities notexercised or exchanged prior to such change, on the basis of such change;provided that no such change shall at any time cause the Warrant Pricehereunder to be greater than the initial Warrant Price.  Any readjustment under the preceding twosentences shall apply only to shares of Series A-2 Stock issued upon exercisesof this Warrant taking place after such expiration or change.  In case the Company shall issue shares ofSeries A-2 Stock or any such rights, options, warrants, or convertible orexchangeable securities for a consideration consisting, in whole or in part, ofproperty other than cash or its equivalent, then the value of suchconsideration shall be as determined in good faith by the Board of Directors ofthe Company, whose determination shall be conclusive absent manifest error.  Shares of Series A-2 Stock owned by or heldfor the account of the Company or any majority-owned subsidiary shall not bedeemed outstanding for the purpose of any such computation.

(e)           Incase at any time the Company shall be a party to any transaction in which thepreviously outstanding Series A-2 Stock shall be exercised or changed into orexchanged for securities of another corporation or interests in a non-corporateentity or other property (including cash) or any combination of the foregoing(each such transaction being herein called a “Transaction”), then, if aholder of a Warrant shall so elect, as a condition of the consummation of theTransaction, lawful and adequate provision shall be made so that the Warrantheld by such holder shall be exercised into an equal number of securities ofsuch other corporation or entity that have economic rights, voting powers(including rights with respect to election of directors), preferences, andother special rights, privileges, powers or immunities substantially identicalto the Warrant and that provide, upon the exercise thereof at any time on orafter the consummation of the Transaction, for the receipt of securities, cash orother property to which such holder would have been entitled upon consummationof the Transaction if such holder had exercised such Warrant immediately priorthereto (subject to adjustments from and after the consummation date as nearlyequivalent as possible to the adjustments provided for in this Section 6).  The Company will not effect any Transactionunless prior to the consummation thereof each corporation or entity which maybe required to deliver any securities or other property upon the exercise ofthe Warrant as provided herein shall assume the obligation to deliver to suchholder such securities or other property as, in accordance with the foregoingprovisions, such holder may be entitled to receive.  The foregoing provisions of this Section 6(e)shall similarly apply to successive mergers, consolidations, sales of assets,liquidations and recapitalizations.
(f)            Noadjustment in the Warrant Price shall be required if such adjustment is lessthan $.0025; provided, however, that any adjustments which byreason of this Section 6(f) are not required to be made shall be carriedforward and taken into account in any subsequent adjustment.
(g)           Uponeach adjustment of the Warrant Price as a result of the calculations made inSection 6(b), 6(c) or 6(d) hereof, any certificate evidencing the Warrant shallthereafter be exercised, at the adjusted Warrant Price, for a number of sharescalculated to the next thousandth as follows: First, multiply the “old” number of shares of Series A-2 Stock thenobtainable through exercise in full of the Warrant by the “old” WarrantPrice.  Second, divide the result by the “new”Warrant Price.  “Old” refers to thenumber of shares and Warrant Price in effect immediately prior to theadjustment, and “new” refers to the Warrant Price in effect immediatelyfollowing the adjustment.
(h)           Wheneverthere shall be an adjustment as provided in this Section 6, the Company shallpromptly cause written notice thereof to be sent by registered mail, postageprepaid, to each holder of Warrants, at its address as it shall appear in theCompany’s stock records, which notice shall be accompanied by an officer’scertificate setting forth the Warrant Price after such adjustment and settingforth a brief statement of the facts requiring such adjustment and thecomputation thereof, which officer’s certificate shall be conclusive evidenceof the correctness of any such adjustment absent manifest error.

 

6



(i)            TheCompany shall not be required to issue fractions of shares of Series A-2 Stockor other capital stock of the Company upon exercise of the Warrant.  If any fraction of a share would be issuableon exercise, the Company shall purchase such fraction for an amount in cashequal to the same fraction of the fair market value of a share of Series A-2Stock on the date of exercise.
(j)            Ifthe Series A-2 Stock issuable upon the exercise of the Warrant shall be changedinto the same or different number of shares of any class or classes of stock,whether by reclassification or otherwise (other than a subdivision orcombination of shares or stock dividend provided for above), then and in eachsuch event the holder of the Warrant shall have the right thereafter, uponexercise in full thereof, to obtain the kind and amount of shares of stock andother securities and property receivable upon such reorganization,reclassification or other change, by holders of the number of shares of SeriesA-2 Stock for which the Warrant could have been exercised in full immediatelyprior to such reorganization, reclassification or change, appropriatelyprorated to reflect any partial exercise of the Warrant, all subject to furtheradjustment as provided herein.
(k)           Allcalculations under this Section 6 shall be made to the nearest cent or to thenearest one thousandth (1/1000) of a share, as the case may be.
(l)            Noadjustment in the Warrant Price shall be required if such adjustment wouldresult from the issuance of any of the following:  (A) shares of Series A-2 Stock issued upon exerciseof the Warrant, (B) shares of Series A-2 Stock or options, warrants or otherrights to purchase Series A-2 Stock issued or granted to employees, officers ordirectors of, or consultants or advisors to the Company or any subsidiarypursuant to stock purchase or stock option plans or other arrangements approvedby the Board of Directors; (C) shares of Series A-2 Stock issued pursuant tothe exercise of options, warrants or other rights to purchase Series A-2 Stockor exercise of convertible securities outstanding on the date hereof or grantedin accordance with clause (B) above; (D) shares of Series A-2 Stock and/orrights, options or warrants to purchase Series A-2 Stock, and the Series A-2Stock issued pursuant to such options, warrants or other rights issued forconsideration other than cash pursuant to a merger, consolidation, acquisitionor similar business combination approved by the holders of 66-2/3% of theoutstanding shares of the Company’s Series A-2 Convertible Preferred Stock, parvalue $.001 per share, par value $.001 per share; (E) shares of Series A-2Stock issued pursuant to any bona fide equipment leasing arrangement, or debtfinancing from a bank or similar financial institution approved by the Board ofDirectors of the Company (including by all of the members thereof who weredesignated by holders of the aforementioned Preferred Stock); and (F)securities issued in a transaction with a vendor, customer or strategicpartner, up to a maximum of either (i) 0.5% of outstanding shares of Series A-2Stock on a fully diluted basis in a single transaction or (ii) 2.0% ofoutstanding shares of Series A-2 Stock on a fully diluted basis in theaggregate.
(m)          Inany case in which the provisions of this Section 6 shall require that anadjustment shall become effective immediately after a record date for an event,the Company may defer until the occurrence of such event issuing to Holder ofall or any part of this Warrant which is exercised after such record date andbefore the occurrence of such event the additional shares of capital stockissuable upon such exercise by reason of the adjustment required by such eventover and above the shares of capital stock issuable upon such exercise beforegiving effect to such adjustment exercise; provided, however, that the Companyshall deliver to such Holder a due bill or other appropriate instrumentevidencing such Holder’s right to receive such additional shares upon theoccurrence of the event requiring such adjustment.

7.             Ownership.

7.1                               Ownership of This Warrant.  The Companymay deem and treat the person in whose name this Warrant is registered as theholder and owner hereof (notwithstanding any notations of ownership or writinghereon made by anyone other than the Company) for all purposes and shall not beaffected by any notice to the contrary until presentation of this Warrant forregistration of transfer as provided in this Section 7.

7.2                               Transfer and Replacement.  This Warrantand all rights hereunder are transferable in whole or in part upon the books ofthe Company by Holder hereof in person or by duly authorized attorney, and anew Warrant or Warrants, of the same tenor as this Warrant but registered inthe name of the transferee or transferees (and in

 

7



the name of Holder, if apartial transfer is effected) shall be made and delivered by the Company uponsurrender of this Warrant duly endorsed, at the office of the Company referredto in Section 14 hereof, together with a properly executed Assignment (in theform of Exhibit B or Exhibit C hereto, as the case may be).  Upon receipt by the Company of evidencereasonably satisfactory to it of the loss, theft or destruction, and, in suchcase, of indemnity or security reasonably satisfactory to it, and uponsurrender of this Warrant if mutilated, the Company shall make and deliver anew Warrant of like tenor, in lieu of this Warrant.  This Warrant shall be promptly cancelled bythe Company upon the surrender hereof in connection with any transfer orreplacement.  Except as otherwiseprovided above, in the case of the loss, theft or destruction of a Warrant, theCompany shall pay all expenses, taxes and other charges payable in connectionwith any transfer or replacement of this Warrant, other than stock transfertaxes (if any) payable in connection with a transfer of this Warrant, whichshall be payable by Holder.  Holder shallnot transfer this Warrant and the rights hereunder except in compliance withfederal and state securities laws.

8.                                      Mergers, Consolidation, Sales.  In the case ofany proposed consolidation or merger of the Company with another entity, or theproposed sale of all or substantially all of its assets to another person orentity, or any proposed reorganization or reclassification of the capital stockof the Company, then, as a condition of such consolidation, merger, sale,reorganization or reclassification, the Company shall give 30 days’ priorwritten notice thereof to Holder hereof and lawful and adequate provision shallbe made whereby Holder shall thereafter have the right to receive upon thebasis and upon the terms and conditions specified herein, in lieu of the sharesof the Series A-2 Stock of the Company immediately theretofore purchasablehereunder, such shares of stock, securities or assets as may (by virtue of suchconsolidation, merger, sale, reorganization or reclassification) be issued or payablewith respect to or in exchange for the number of shares of such Series A-2Stock purchasable hereunder immediately before such consolidation, merger, sale,reorganization or reclassification.  Inany such case appropriate provision shall be made with respect to the rightsand interests of Holder to the end that the provisions hereof shall thereafterbe applicable as nearly as may be practicable, in relation to any shares ofstock, securities or assets thereafter deliverable upon the exercise of thisWarrant.

9.                                      Notice of Dissolution orLiquidation.  In case of any distribution of the assets ofthe Company in dissolution or liquidation (except under circumstances when theforegoing Section 8 shall be applicable), the Company shall give notice thereofto Holder hereof and shall make no distribution to shareholders until theexpiration of thirty (30) days from the date of mailing of the aforesaid noticeand, in any case, Holder hereof may exercise this Warrant within thirty (30)days from the date of the giving of such notice, and all rights herein grantednot so exercised within such thirty-day period shall thereafter become null andvoid.

10.                               Notice of ExtraordinaryDividends.  If the Board of Directors of the Company shalldeclare any dividend or other distribution on its Series A-2 Stock except outof earned surplus or by way of a stock dividend payable in shares of its SeriesA-2 Stock, the Company shall mail notice thereof to Holder hereof not less thanthirty (30) days prior to the record date fixed for determining shareholdersentitled to participate in such dividend or other distribution, and Holderhereof shall not participate in such dividend or other distribution unless thisWarrant is exercised prior to such record date. The provisions of this Section 10 shall not apply to distributions madein connection with transactions covered by Section 8.

11.                               Fractional Shares.  Fractionalshares shall not be issued upon the exercise of this Warrant but in any casewhere Holder would, except for the provisions of this Section 11, be entitledunder the terms hereof to receive a fractional share upon the complete exerciseof this Warrant, the Company shall, upon the exercise of this Warrant for thelargest number of whole shares then called for, pay a sum in cash equal to theexcess of the value of such fractional share (determined in such reasonablemanner as may be prescribed in good faith by the Board of  Directors of the Company) over the WarrantPrice for such fractional share.

12.                               Special Arrangements ofthe Company.  the Company covenants and agrees that duringthe Term of this Warrant, unless otherwise approved by Holder:

12.1                        Shall Not AmendCertificate.  the Company shall not amend its certificate orarticles, as the case may be, of incorporation to eliminate as an authorizedclass of capital stock that class denominated as “Series A-2 Stock” on the datehereof.

 

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12.2                        Shall Bind Successors.  This Warrantshall be binding upon any corporation or other person or entity succeeding tothe Company by merger, consolidation or acquisition of all or substantially allof the Company’s assets.

13.                               Notices.  Any notice orother document required or permitted to be given or delivered to Holder shallbe delivered at, or sent by certified or registered mail to, Holder at itsaddress for notices set forth in the Agreement or to such other address asshall have been furnished to the Company in writing by Holder.  Any notice or other document required orpermitted to be given or delivered to the Company shall be delivered at, orsent by certified or registered mail to, the Company at its address for noticesset forth in the Agreement or to such other address as shall have beenfurnished in writing to Holder by the Company.  Any notice so addressed and mailed byregistered or certified mail shall be deemed to be given when so mailed.  Any notice so addressed and otherwisedelivered shall be deemed to be given when actually received by the addressee.

14.                               No Rights as Stockholder;Limitation of Liability.  This Warrantshall not entitle Holder to any of the rights of a shareholder of the Companyexcept upon exercise in accordance with the terms hereof.  No provision hereof, in the absence ofaffirmative action by Holder to purchase shares of Series A-2 Stock, and nomere enumeration herein of the rights or privileges of Holders shall give riseto any liability of Holder for the Warrant Price hereunder or as a shareholderof the Company, whether such liability is asserted by the Company or bycreditors of the Company.

15.                               Law Governing.  THE VALIDITY,INTERPRETATION, AND ENFORCEMENT OF THIS WARRANT SHALL BE GOVERNED BY ANDCONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVINGEFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF.

16.                               Amendments.  This Warrantand any provision hereof may be changed, waived, discharged or terminated onlyby an instrument in writing signed by both parties (or any respectivepredecessor in interest thereof).  Theheadings in this Warrant are for purposes of reference only and shall notaffect the meaning or construction of any of the provisions hereof.

IN WITNESS WHEREOF, the Company has caused thisWarrant to be signed by its duly authorized officer this first day of October,2003.

 

Vonage Holdings Corp.

 

 

 

 

 

 

 

By:

s/s Robinson Markel

 

Title:

Secretary

 

 

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EXHIBIT A

FORM OF NOTICE OF EXERCISE

[To be signed only uponexercise of the Warrant]

TO BE EXECUTED BY THEREGISTERED HOLDER
TO EXERCISE THE ATTACHED WARRANT

The undersigned hereby exercises the right to purchase                    shares of Series A-2 Convertible Preferred Stock, par value $.001 per sharewhich the undersigned is entitled to purchase by the terms of the attachedWarrant according to the conditions thereof, and herewith

[check appropriate box(es)]

N             makes payment of $                    therefor in cash;

N             makes payment of $                    therefor through cancellation of indebtedness; or

N                                       directs the Company to issue               shares, and to withhold          shares in lieu of payment of the Warrant Price, as described in Section 2.1 ofthe Warrant.

All shares to be issued pursuant hereto shall be issued in the name ofand the initial address of such person to be entered on the books of VonageHoldings Corp. shall be:

The shares are to be issued in certificates of the following denominations:

 

 

 

 

[Type Name of Holder]

 

 

 

 

 

 

 

By:

 

 

Title:

 

Dated:

 

 

 

 

 

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EXHIBIT B

FORM OF ASSIGNMENT
(ENTIRE)

[To be signed only upontransfer of entire Warrant]

TO BE EXECUTED BY THEREGISTERED HOLDER
TO TRANSFER THE ATTACHED WARRANT

FOR VALUE RECEIVED                         hereby sells, assigns and transfers unto                          all rights of the undersigned under and pursuant to the attached Warrant, andthe undersigned does hereby irrevocably constitute and appoint                          Attorney to transfer said Warrant on the books of Vonage Holdings Corp., withfull power of substitution.

 

 

 

 

 

[Type Name of Holder]

 

 

 

 

 

 

 

By:

 

 

Title:

 

Dated:

 

 

 

 

 

NOTICE:

The signature to the foregoing Assignment mustcorrespond to the name as written upon the face of the attached Warrant inevery particular, without alteration or enlargement or any change whatsoever.

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 EXHIBIT C

FORM OF ASSIGNMENT
(PARTIAL)

[To be signed only uponpartial transfer of Warrant]

TO BE EXECUTED BY THEREGISTERED HOLDER
TO TRANSFER THE ATTACHED WARRANT

FORVALUE RECEIVED                           hereby sells, assigns and transfers unto                              (i) the rights of the undersigned to purchase             shares of Series A-2 Convertible Preferred Stock, par value $.001 per shareunder and pursuant to the attached Warrant, and (ii) on a non-exclusive basis,all other rights of the undersigned under and pursuant to the attached Warrant,it being understood that the undersigned shall retain, severally (and notjointly) with the transferee(s) named herein, all rights assigned on suchnon-exclusive basis.  The undersigneddoes hereby irrevocably constitute and appoint                           Attorney to transfer said Warrant on the books of Vonage Holdings Corp., withfull power of substitution.

 

 

 

 

 

[Type Name of Holder]

 

 

 

 

 

 

 

By:

 

 

Title:

 

Dated:

 

 

 

 

 

NOTICE:

The signature to the foregoing Assignment mustcorrespond to the name as written upon the face of the attached Warrant inevery particular, without alteration or enlargement or any change whatsoever.

 

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