ex10-2.htm


    Exhibit
10.2

    


     

     

     

     

    


     

    INVESTOR
RIGHTS AGREEMENT

     

    by
and among

     

    DELTATHREE,
INC.,

     

    and

     

    D4
HOLDINGS, LLC

     

    February
12, 2009

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        Table of Contents

      

    

    
       

      TABLE OF CONTENTS

    

    


    
      
        	
                1.

              	
                DEFINITIONS

              	
                1

              
	
                2.

              	
                REGISTRATION

              	
                2

              
	
                3.

              	
                “PIGGYBACK REGISTRATION”

              	
                3

              
	
                4.

              	
                OBLIGATIONS OF THE COMPANY

              	
                3

              
	
                5.

              	
                REGISTRATION EXPENSES

              	
                5

              
	
                6.

              	
                DELAY OF REGISTRATION AND PAYMENTS

              	
                5

              
	
                7.

              	
                INDEMNIFICATION

              	
                6

              
	
                8.

              	
                REPORTS UNDER THE EXCHANGE ACT

              	
                7

              
	
                9.

              	
                TRANSFER OF REGISTRATION RIGHTS

              	
                7

              
	
                10.

              	
                ENTIRE AGREEMENT

              	
                7

              
	
                11.

              	
                MISCELLANEOUS

              	 
      


      

    

    


     

    
      
        
        

      

      
        
        

        
          

        

      

      
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DELTATHREE,
INC.

    

     

    INVESTOR
RIGHTS AGREEMENT

     

    This
INVESTOR RIGHTS AGREEMENT (this “Agreement”) is made
as of February 12, 2009 by and among (i) deltathree, Inc., a Delaware
corporation (the “Company”) and
(ii) D4 Holdings, LLC, a Delaware limited liability company (the “Holder”).

     

    WHEREAS,
the Company has agreed to issue and sell to the Holder, and the Holder has
agreed to purchase from the Company, (i) an aggregate of 39,000,000 shares (the
“Shares”) of
the authorized but unissued shares of Class A common stock, $0.001 par value per
share, of the Company (including any securities into which or for which such
shares may be exchanged for, or converted into, pursuant to any stock dividend,
stock split, stock combination, recapitalization, reclassification,
reorganization or other similar event, the “Common Stock”) and
(ii) the Warrant (as defined below), in each case all upon the terms and subject
to the conditions set forth in that certain Securities Purchase Agreement, dated
as of February 10, 2009, between the Company and the Holder (the “Purchase Agreement”);
and

     

    WHEREAS,
the terms of the Purchase Agreement provide that it shall be a condition
precedent to the closing of the transactions thereunder, for the Company and the
Holder to enter into, execute and deliver this Agreement.

     

    NOW,
THEREFORE, in consideration of the premises and mutual covenants contained
herein, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:

     

    1. DEFINITIONS.  The following terms shall have the
meanings provided therefor below or elsewhere in this Agreement as described
below:

     

    “Affiliate” means any
Person that, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, a Person, as such
terms are used and construed under Rule 144 (as defined below).

     

    “Board” means the
board of directors of the Company.

     

    “Business Day” means
any day except Saturday, Sunday and any day which shall be a federal legal
holiday or a day on which banking institutions in the State of Delaware are
authorized or required by law or other governmental action to
close.

     

    “Closing Date” means the date
of the closing of the transactions contemplated by the Purchase
Agreement.

     

    “Exchange Act” means the
Securities Exchange Act of 1934, as amended, and all of the rules and
regulations promulgated thereunder.

     

     “Person” (whether or
not capitalized) means an individual, entity, partnership, limited liability
company, corporation, association, trust, joint venture, unincorporated
organization or any other form of entity not specifically listed herein, and any
government, governmental department or agency or political subdivision
thereof.

     

    “Prospectus” means the
prospectus included in any Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective Registration Statement in reliance upon
Rule 430A promulgated under the Securities Act), as amended or supplemented by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by such Registration Statement,
and all other amendments and supplements to the Prospectus, including
post-effective amendments, and all material incorporated by reference in such
Prospectus.

     

    “Registrable Securities” means, at
the relevant time of reference thereto, any shares of Common Stock or any shares
of Common Stock underlying any warrant, right or other security held by the
Holder now or at any time in the future (including in each case any shares of
capital stock that may be issued in respect thereof pursuant to a stock split,
stock dividend, recombination, reclassification, exchange, conversion or the
like), provided, however, that the
term “Registrable
Securities” shall not include any securities referred to above that are
actually sold pursuant to a registration statement that has been declared
effective under the Securities Act by the SEC.

     

    “Registration
Statement” means Demand Registration Statement and any additional
registration statements contemplated by this Agreement, including (in each case)
the Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference in such registration statement or
Prospectus.

     

    
      
        
        

      

      
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    “Rule 144” means Rule 144
promulgated under the Securities Act and any successor or substitute rule, law
or provision.

     

    “SEC” means the
Securities and Exchange Commission.

     

    “Securities Act” means the
Securities Act of 1933, as amended, and all of the rules and regulations
promulgated thereunder.

     

    “Warrant” means that
certain Warrant to purchase an aggregate of 30,000,000 shares of Common Stock
issued by the Company to the Holder in connection with the Purchase
Agreement.

     

     “Warrant Shares” means
shares of Common Stock issued or issuable upon the exercise of the
Warrant.

     

    2. REGISTRATION.

     

    (a) Demand
Registration.  Notwithstanding anything to the contrary in this
Agreement, upon the written request of the Holder (the date of such request, the
“Demand Date”)
the Company shall file with the SEC, as promptly as possible after the Demand
Date, and in any event no later than forty-five (45) days after the Demand
Date (in the event of a filing on Form S-1) or twenty (20) days after the Demand
Date (in the event of a filing on Form S-3) (such date, the “Filing Date”), a
registration statement on Form S-3 (or other available form, including Form S-1)
to register all or part of the Registrable Securities under and in accordance
with the Securities Act (the “Demand Registration
Statement”), so long as such Registrable Securities are not then subject
to an effective Registration Statement and eligible for resale without
limitation thereunder.  The Demand Registration Statement shall permit
the Holder to offer and sell, on a delayed or continuous basis pursuant to Rule
415 under the Securities Act or any similar rule that may be adopted by the SEC,
any or all of the Registrable Securities held by the Holder (subject to Section
2(b) below).  Such Demand Registration Statement shall also cover, to
the extent allowable under the Securities Act and the rules promulgated
thereunder (including Rule 416), such indeterminate number of additional shares
of Common Stock resulting from stock splits, stock dividends or similar
transactions with respect to the Registrable Securities.  Such
Registration Statement shall not include any shares of Common Stock or other
securities for the account of any other holder without the prior written consent
of the Holder, which consent shall not be unreasonably withheld.  The
Company agrees to use its reasonable best efforts to cause the Demand
Registration Statement to be declared effective as soon as possible but in no
event later than (the “Demand Effective
Date”) forty-five (45) calendar days after the Filing Date (if there is
no SEC review of the Demand Registration Statement) or ninety (90) calendar days
after the Filing Date (if there is an SEC review of the Demand Registration
Statement), and to file with the SEC, within three (3) Business Days of the date
that the Company is notified (orally or in writing, whichever is earlier) by the
SEC that the Demand Registration Statement will not be “reviewed” or will not be
subject to further review, a request for acceleration of effectiveness in
accordance with Rule 461 promulgated under the Securities Act (an “Acceleration
Request”), which request shall request an effective date that is within
three (3) Business Days of the date of such request.  The Company
shall notify the Holder in writing promptly (and in any event within one (1)
Business Day) after the Company’s submission of an Acceleration Request to the
SEC.  The Company shall promptly prepare and file with the SEC (i)
such amendments (including post-effective amendments) and supplements to such
Demand Registration Statement or (ii) an additional Registration Statement in
the event that the original Demand Registration Statement does not cover all of
the Registrable Securities requested to be so registered.  The Company
shall be required to keep the Demand Registration Statement continuously
effective (including through the filing of any required post-effective
amendments) until all of the Registrable Securities covered by such Demand
Registration Statement (y) cease to be Registrable Securities or (z) are
eligible for resale by the Holder under Rule 144 without
limitation.

     

    (b) Excluded Registrable
Securities.

     

    (i) Notwithstanding
anything to the contrary contained in this Agreement, if the staff of the SEC
(the “Staff”)
or the SEC seeks to characterize any offering pursuant to a Registration
Statement filed pursuant to this Agreement as constituting a primary offering of
securities by or on behalf of the Company, or in any other matter, such that the
Staff or the SEC does not permit such Registration Statement to become effective
and used for resales in a continuous at the market offering pursuant to Rule 415
under the Securities Act by the Holder (or otherwise as may be acceptable to the
Holder) without being named therein as “underwriters” (a “Resale Registration
Statement”), and the Company has used its reasonable best efforts to
contest such determination, then the Company shall have the right to reduce the
number of Registrable Securities to be included in such Registration Statement
by the Holder, to the extent that the Staff or the SEC shall permit such
Registration Statement to become effective as a Resale Registration
Statement.  In making such reduction, the Company shall reduce the
number of Registrable Securities to be included by selling stockholders included
in such Resale Registration Statement on a pro rata basis (based upon the number
of Registrable Securities otherwise required to be included for the Holder),
unless the inclusion of Registrable Securities by a particular selling
stockholder or a particular type of selling stockholder is the cause of the
refusal by the Staff or the SEC to allow such registration to become effective
as a Resale Registration Statement, in which event the Registrable Securities
held by such selling stockholder or type of selling stockholder shall be the
only Registrable Securities subject to reduction (and if by a set of selling
stockholders on a pro rata basis with respect to such selling stockholders or on
such other basis as would result in the exclusion of the least number of shares
by all such selling stockholders).  In addition, if the Staff or the
SEC requires the Holder to be identified as an “underwriter” in order to permit
such Registration Statement to become effective, and the Holder does not consent
to being so named as an underwriter in such Registration Statement, then, in
each such case, the Company shall be entitled to reduce the total number of
Registrable Securities to be registered on behalf of such Holder, to such extent
and until such time as the Staff or the SEC does not require such
identification.

     

    
      
        
        

      

      
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    (ii) In the
event of any reduction in Registrable Securities pursuant to this Section 2(b),
the Holder shall have the right, upon delivery of a written request to the
Company, to require the Company to file a Resale Registration Statement under
Rule 415 within thirty (30) days after its receipt of such request (subject to
(x) any restrictions imposed by Rule 415 or (y) comments by the Staff or the
SEC) for resale by the Holder in a manner reasonably acceptable to the Holder,
and the Company shall, following such request, use its reasonable best efforts
to cause such registration statement to be declared and kept effective in the
same manner as otherwise contemplated in this Agreement for Registration
Statements hereunder and under the same timing and procedural guidelines set
forth in Section 2(a) for a Demand Registration Statement.

     

    (c) Holder
Information.  It shall be a condition precedent to the
obligations of the Company to register Registrable Securities for the account of
the Holder pursuant to this Section 2 and Section 3 that such Holder furnish to
the Company such information regarding itself, the Registrable Securities held
by it, and the method of disposition of such securities as shall be required to
effect the registration of such Holder’s Registrable Securities.

     

    (d) Registration Rights of Other
Persons.  Except as disclosed in Section 3.3 of the Purchase
Agreement, the Company hereby represents and warrants to the Holder that no
Person other than the Holder has any registration rights in respect of the
securities of the Company.  The Company hereby agrees that it shall
not, without the prior written consent of the Holder, grant any registration
rights to any Person (other than the Holder) with terms that are in any way
superior to, or that would in any way limit, the rights granted to Holder in
this Agreement.

     

    3. “PIGGYBACK
REGISTRATION”.  

     

    (a) If at any
time any Registrable Securities are not able to be resold pursuant to an
effective Registration Statement, and the Company proposes to register any of
its securities under the Securities
Act, whether as a result of an offering for its own account or the account of
others (but excluding any registrations to be effected on Forms S-4 or S-8 or
other applicable successor Forms), the Company shall, each such time, give to
the Holder twenty (20) days prior written notice of its intent to do so, and
such notice shall describe the proposed registration and shall offer such Holder
the opportunity to register such number of Registrable Securities as such Holder
may request.  Upon the written request of the Holder given to the
Company within fifteen (15) days after the receipt of any such notice by
the Company, the Company shall include in such Registration Statement all or
part of the Registrable Securities of such Holder, to the extent requested to be
registered.

     

    (b) If a
registration pursuant to this Section 3 involves an underwritten offering and
the managing underwriter shall advise the Company in writing that, in its
opinion, the amount of Registrable Securities requested by the Holder to be
included in such registration is likely to affect materially and adversely the
success of the offering or the price that would be received for any Registrable
Securities offered in such offering, then, notwithstanding anything in this
Section 3 to the contrary, the Company shall only be required to include in such
registration, to the extent of the amount of Registrable Securities which the
Company is so advised can be sold in such offering, (i) first, the amount of
securities requested to be included in such registration for the account of any
stockholders of the Company (including the Holder), pro rata among such
stockholders on the basis of the amount of securities that each of them has
requested to be included in such registration, and (ii) second, any securities
proposed to be included in such registration for the account of the
Company.

     

    (c) In
connection with any offering involving an underwriting of shares, the Company
shall not be required under this Section 3 or otherwise to include the
Registrable Securities of the Holder therein unless such Holder accepts and
agrees to the terms of the underwriting, which shall be reasonable and
customary, as agreed upon between the Company and the underwriters selected by
the Company.

     

    4. OBLIGATIONS OF THE COMPANY.  In connection with the Company’s
registration obligations hereunder, the Company shall, as expeditiously as
practicable:

     

    (a) No less
than five (5) Business Days prior to filing, as required hereunder, the
Registration Statement or Prospectus or any amendments or supplements thereto
(including any document that would be incorporated or deemed to have been
incorporated therein by reference (other than documents containing material
non-public information)) or any other registration statement contemplated by
this Agreement, the Company shall (i) furnish to the Holder and the
Holder’s counsel copies of all such documents to be filed with the SEC, which
documents shall be subject to the review of the Holder and the Holder’s counsel,
(ii) cause its officers and directors, counsel and certified public accountants
to respond to such inquiries as shall be necessary, in the reasonable opinion of
the Holder’s counsel, to conduct a reasonable investigation within the meaning
of the Securities Act, and (iii) notify the Holder and the Holder’s counsel
of any stop order issued or threatened by the SEC and use reasonable best
efforts to prevent the entry of such stop order or to remove it if
entered.  The Company shall not file any Registration Statement,
Prospectus or any amendments or supplements (other than periodic reports
required under the Exchange Act) thereto to which the Holder shall reasonably
object to in writing prior to filing; provided, however that the
deadline set forth in Section 2 hereof by which date any Demand Registration
Statement are to be filed shall be tolled during any period in which the Company
and the Holder address matters raised by the Holder in such written objection
only if, and for so long as, the Holder consents in writing to such
tolling.

     

    (b) (i)
Prepare and file with the SEC such amendments and supplements, including
post-effective amendments, to each Registration Statement and the Prospectus
used in connection therewith as may be necessary to keep the Registration
Statement continuously effective as required herein, and prepare and file with
the SEC such additional Registration Statements as necessary to register for
resale under the Securities Act all of the Registrable Securities (including
naming any permitted transferees of Registrable Securities as selling
stockholders in such Registration Statement); (ii) cause any related Prospectus
to be amended or supplemented by any required Prospectus supplement, and as so
supplemented or amended to be filed pursuant to Rule 424; (iii) respond as
promptly as possible to any comments received from the SEC with respect to each
Registration Statement or any amendment thereto and as promptly as possible
provide the Holder true and complete copies of all correspondence from and to
the SEC relating to the Registration Statement (which the Holder shall treat as
confidential to the extent not publicly available); and (iv) comply with the
provisions of the Securities Act and the Exchange Act with respect to the
disposition of all Registrable Securities covered by such Registration Statement
as so amended or in such Prospectus as so supplemented.

     

    
      
        
        

      

      
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    (c) Notify
the Holder in accordance with Section 11(c) as promptly as possible (i) when the
SEC notifies the Company whether there will be a “review” of a Registration
Statement and whenever the SEC comments in writing on such Registration
Statement; and (ii) when a Registration Statement, or any post-effective
amendment or supplement thereto, has become effective, and after the
effectiveness thereof: (A) of any request by the SEC or any other federal or
state governmental authority for amendments or supplements to the Registration
Statement or Prospectus or for additional information; (B) of the issuance by
the SEC or any state securities commission of any stop order suspending the
effectiveness of the Registration Statement covering any or all of the
Registrable Securities or the initiation of any proceedings for that purpose;
and (C) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction, or the initiation or
threatening of any proceeding for such purpose.  Without limitation of
any remedies to which the Holder may be entitled under this Agreement, if any of
the events described in Section 4(c)(ii)(A), 4(c)(ii)(B), and 4(c)(ii)(C) occur,
the Company shall use reasonable best efforts to respond to and correct the
event.

     

    (d) Notify
the Holder in accordance with Section 11(c) as promptly as possible of the
happening of any event as a result of which the Prospectus included in or
relating to a Registration Statement contains an untrue statement of a material
fact or omits any fact necessary to make the statements therein not misleading;
and, thereafter, as promptly as possible prepare (and, when completed, give
notice to the Holder) a supplement or amendment to such Prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
Prospectus will not contain an untrue statement of a material fact or omit to
state any fact necessary to make the statements therein not misleading; provided that upon
such notification by the Company, the Holder will not offer or sell Registrable
Securities until the Company has notified the Holder that it has prepared a
supplement or amendment to such Prospectus and delivered copies of such
supplement or amendment to the Holder (it being understood and agreed by the
Company that the foregoing proviso shall in no way diminish or otherwise impair
the Company’s obligation to as promptly as possible prepare a Prospectus
amendment or supplement as above provided in this Section 4(d) and deliver
copies of same as provided herein).

     

    (e) Upon the
occurrence of any event described in Section 4(d) hereof, as promptly as
possible, prepare a supplement or amendment, including a post-effective
amendment, to the Registration Statement or a supplement to the related
Prospectus or any document incorporated or deemed to be incorporated therein by
reference, and file any other required document so that, as thereafter
delivered, neither the Registration Statement nor such Prospectus will contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they are made, not misleading.

     

    (f) In the
event that the Company reasonably believes, considering the advice of counsel,
that the Company may, in the absence of a suspension or postponement described
hereunder, be required under state or federal securities laws to disclose any
corporate development (and which the Company is not otherwise required to
disclose), the disclosure of which could reasonably be expected to have a
material adverse effect upon the Company, its stockholders, a potentially
material transaction or event involving the Company, or any negotiations,
discussions or proposals directly relating thereto; then the Company shall
deliver a certificate in writing to the Holder (a “Suspension Notice”)
to the effect of the foregoing (but in no event, without the prior written
consent of the Holder, shall the Company disclose to such Holder any of the
facts or circumstances regarding any material nonpublic information) then (i) if
the Suspension Notice is delivered prior to the filing of a Registration
Statement pursuant to Section 2, the Company will be entitled to postpone the
filing of the Registration Statement required pursuant to Section 2 for a
reasonable period of time not in excess of the time period set forth below, and
(ii) if a Registration Statement is effective at the time of such Suspension
Notice, upon receipt of such Suspension Notice, the Holder will refrain from
selling any Registrable Securities pursuant to such Registration Statement (each
such postponement or suspension is referred to as a “Suspension”) until
the Holder’s receipt of copies of a supplemented or amended prospectus prepared
and filed by the Company or until the Holder is advised in writing by the
Company that the current prospectus may be used (it being understood and agreed
by the Company that the foregoing proviso shall in no way diminish or otherwise
impair the Company’s obligation to as promptly as possible prepare a Prospectus
amendment or supplement as above provided in this Section 4(f) and deliver
copies of same as provided herein).  The Company will use commercially
reasonable efforts to terminate a Suspension as promptly as practicable after
delivery of a Suspension Notice to the Holder.  Notwithstanding the
foregoing, the Company shall not suspend the filing or use of any Registration
Statement or related prospectus for more than sixty (60) consecutive days or for
a total of more than one hundred twenty (120) days in any twelve (12) month
period (each a “Permitted
Suspension”).

     

    (g) Use
reasonable best efforts to avoid the issuance of or, if issued, obtain the
withdrawal of, (i) any order suspending the effectiveness of any Registration
Statement or (ii) any suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any
jurisdiction, as promptly as possible.

     

    (h) Furnish
to the Holder in accordance with Section 11(c), without charge, at least one
conformed copy of each Registration Statement and each amendment thereto, and
all exhibits to the extent requested by the Holder and the Holder’s counsel
(including those previously furnished or incorporated by reference) as promptly
as possible after the filing of such documents with the SEC.

     

    (i) As
promptly as possible furnish to the Holder, without charge, such number of
copies of a Prospectus, including a preliminary Prospectus, in conformity with
the requirements of the Securities Act, and such other documents (including,
without limitation, Prospectus amendments and supplements) as the Holder may
reasonably request in order to facilitate the disposition of the Registrable
Securities covered by such Prospectus and any amendment or supplement
thereto.  The Company hereby consents to the use of such Prospectus
and each amendment or supplement thereto by the Holder in connection with the
offering and sale of the Registrable Securities covered by such Prospectus and
any amendment or supplement thereto to the extent permitted by federal and state
securities laws and regulations.

     

    (j) Use
reasonable best efforts to register and qualify (or obtain an exemption from
such registration and qualification) the Registrable Securities under such other
securities or blue sky laws of such jurisdictions as the Holder shall reasonably
request, to keep such registration or qualification (or exemption therefrom)
effective during the periods each Registration Statement is effective, and do
any and all other acts or things which may be reasonably necessary or advisable
to enable the Holder to consummate the public sale or other disposition of
Registrable Securities in such jurisdiction, provided that the
Company shall not be required in connection therewith or as a condition thereto
to qualify to do business or to file a general consent to service of process in
any such states or jurisdictions where it is not then qualified or subject to
process.

     

    
      
        
        

      

      
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    (k) Cooperate
with the Holder to facilitate the timely preparation and delivery of
certificates representing the Registrable Securities to be delivered to a
transferee pursuant to a Registration Statement, which certificates shall be
free, to the extent permitted by the Purchase Agreement and applicable law, of
all restrictive legends, and to enable such Registrable Securities to be in such
denominations and registered in such names as the Holder may
request.

     

    (l) Cooperate
with any reasonable due diligence investigation undertaken by the Holder, any
managing underwriter participating in any disposition pursuant to a Registration
Statement and any attorney, accountant or other agent retained by the Holder or
any managing underwriter, in connection with the sale of the Registrable
Securities, including, without limitation, making available any documents and
information; provided, however, that the
Company will not deliver or make available to the Holder material, non-public
information unless the Holder specifically requests and consents in advance in
writing to receive such material, non-public information and, if requested by
the Company, the Holder agrees in writing to treat such information as
confidential.

     

    (m) At the
request of an Affiliate, amend any Registration Statement to include such
Affiliate as a selling stockholder in such Registration Statement.

     

    (n) Comply
with all applicable rules and regulations of the SEC in all material
respects.

     

    5. REGISTRATION EXPENSES.  The
Company shall pay for all expenses incurred in connection with a registration
pursuant to this Agreement and compliance with Section 4 of this Agreement,
including without limitation (i) all registration, filing and qualification
fees and expenses (including without limitation those related to filings with
the SEC and in connection with applicable state securities or blue sky laws),
(ii) all expenses relating to the preparation, printing, distribution and
reproduction of the Registration Statement, the related Prospectus, each
amendment or supplement to the foregoing, the certificates representing the
Registrable Securities and all other documents related thereto, (iii) all
messenger, telephone and delivery expenses incurred by the Company,
(iv) all fees and disbursements of counsel for the Company, (v) the
reasonable fees and disbursements of counsel to the Holder for such counsel’s
reasonable involvement in connection with such registrations, and (vi) all
fees and expenses of all other Persons retained by the Company in connection
with the consummation of the transactions contemplated by this
Agreement.  

     

    6. DELAY OF REGISTRATION AND PAYMENTS.  Subject to Section 11(d) hereof, the
Holder and the Company (other than with respect to Section 4(d) hereof) shall
not take any action to restrain, enjoin or otherwise delay any registration as
the result of any controversy which might arise with respect to the
interpretation or implementation of this Agreement.  The Company shall
make the following payments to the Holder in the event of any of the following
delays pertaining to any Registration Statement covering the Registrable
Securities: (a) if the Company shall not have prepared and filed a Registration
Statement with the SEC covering the resale of the Registrable Securities on or
prior to the Filing Date, then the Company shall pay the Holder an amount in
cash or stock, at the election of the Holder, equal to 1.0% of the purchase
price of the Shares and Warrants paid by the Holder for every 30 calendar day
period (or pro rata portion if fewer than 30 calendar days) during which the
Company has not filed such registration statement and until such registration
statement has been filed; (b) if the SEC shall not have declared effective such
registration statement on or prior to the Demand Effective Date, as applicable,
then the Company shall pay to the Holder an amount in cash or stock, at the
election of the Holder, equal to 1.0% of the purchase price of the Shares and
Warrants paid by the Holder for every 30 day calendar period during (or pro rata
portion if fewer than 30 calendar days) during which such Registration Statement
has not been declared effective and until the date on which such Registration
Statement has been declared effective by the SEC; and (c) if any Suspension
exceeds the time periods set forth in the last sentence of Section 4(f), then
the Company shall pay the Holder an amount in cash or stock, at the election of
the Holder, equal to 1.0% of the purchase price of the Shares and Warrants paid
by the Holder for every 30 calendar day period (or pro rata portion if fewer
than 30 calendar days) exceeding such Permitted Suspension and until such
Suspension has been terminated.  Notwithstanding the foregoing, the
maximum aggregate amount of fees paid by the Company to the Holder under this
Section 6 shall not exceed 10% of the total purchase price paid by the Holder
for the Shares and the Warrants; and provided further, that no fees shall be
payable by the Company under this Section 6 if such delay or failure to file was
caused, directly or indirectly, by the Holder.  The time periods set
forth in paragraphs (a) and (b) of this Section 6 shall be tolled during the
pendency of any Permitted Suspension. The amounts payable as provided
hereinabove shall be paid by the Company monthly in cash (unless the Holder
elects for payment in stock) and without demand by the Holder within fifteen
(15) Business Days of the last day of each month following the commencement of
any obligation to make payment.  Such payments shall not affect the
right of the Holder to seek injunctive or other available relief.

     

    7. INDEMNIFICATION.  

     

    (a) The
Company agrees to indemnify and hold harmless the Holder and each officer,
director, fiduciary, agent, investment advisor, employee, member (or other
equity holder), general partner and limited partner (and affiliates thereof) of
the Holder, each broker or other person acting on behalf of the Holder and each
person, if any, who controls the Holder within the meaning of either the
Securities Act or the Exchange Act, against any and all losses, claims, damages
or liabilities, joint or several, (the “Losses”) to which
they or any of them may become subject under the Securities Act, the Exchange
Act or other federal or state statutory law or regulation, at common law or
otherwise, insofar as such Losses (or actions in respect thereof) arise out of
or relate to any untrue or alleged untrue statement of a material fact contained
in the Registration Statement or any Prospectus forming part thereof or in any
amendment or supplement thereto, or arise out of or relate to the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary to make the statements therein not misleading, or any violation by
the Company of the Securities Act or state securities or blue sky laws
applicable to the Company and leading to action or inaction required of the
Company in connection with such registration or qualification under such
Securities Act or state securities or blue sky laws; and, subject to the
provisions of Section 7(c) hereof, the Company will reimburse on demand the
Holder, such broker or other person acting on behalf of the Holder or such
officer, director, fiduciary, employee, member (or other equity holder), general
partner, limited partner, affiliate or controlling person for any legal or other
expenses reasonably incurred by any of them in connection with investigating or
defending any such Loss; provided, however, that the
indemnity agreement contained in this Section 7(a) shall not apply to amounts
paid in settlement of any such Losses if such settlement is effected without the
consent of the Company (which consent shall not be unreasonably withheld), nor
shall the Company be liable in any such case for any such Loss to the extent
that it arises out of or is based upon an untrue statement of any material fact
contained in the Registration Statement or an omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent that such untrue statement or
alleged untrue statement or omission or alleged omission was made in the
Registration Statement in reliance upon and in conformity with written
information furnished by such Holder expressly for use in connection with such
Registration Statement.

     

    
      
        
        

      

      
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    (b) The
Holder agrees to indemnify and hold harmless the Company, each of its directors,
each of its officers who have signed the Registration Statement, each person, if
any, who controls the Company within the meaning of the Securities Act, against
any Losses to which the Company or any such director, officer or controlling
person may become subject to, under the Securities Act, the Exchange Act or
other federal or state statutory law or regulation, at common law or otherwise,
insofar as such Losses (or actions in respect thereto) arise out of or are based
upon any untrue statement of any material fact contained in the Registration
Statement or any Prospectus forming part thereof or in any amendment or
supplement thereto, or arise out of or relate to the omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished by such Holder
expressly for use in connection therewith; and, subject to the provisions of
Section 7(d) hereof, such Holder will reimburse on demand any legal or
other expenses reasonably incurred by the Company or any such director, officer
or controlling person in connection with investigating or defending any such
Loss, provided,
however, that
the maximum amount of liability of such Holder hereunder shall be limited to the
proceeds (net of underwriting discounts and commissions, if any) actually
received by such Holder from the sale of Registrable Securities covered by such
Registration Statement; and provided, further, however, that the
indemnity agreement contained in this Section 7(b) shall not apply to amounts
paid in settlement of any such Losses if such settlement is effected without the
consent of such Holder against which the request for indemnity is being made
(which consent shall not be unreasonably withheld).

     

    (c) As
promptly as possible after receipt by an indemnified party under this Section 7
of notice of the threat, assertion or commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against any
indemnifying party under this Section 7, notify the indemnifying party in
writing of the commencement thereof and the indemnifying party shall have the
right to participate in and, to the extent the indemnifying party desires,
jointly with any other indemnifying party similarly noticed, to assume at its
expense the defense thereof with counsel mutually satisfactory to the parties;
provided, however, that, the
failure to notify an indemnifying party promptly of the threat, assertion or
commencement of any such action shall not relieve such indemnifying party of any
liability to the indemnified party under this Section 7 except (and only) to the
extent that it shall be finally determined by a court of competent jurisdiction
(which determination is not subject to appeal or further review) that such
failure shall have proximately and materially adversely prejudiced the
indemnifying party.

     

    (d) If any
indemnified party shall have reasonably concluded that there may be one or more
legal defenses available to such indemnified party which are different from or
additional to those available to the indemnifying party, or that such claim or
litigation involves or could have an effect upon matters beyond the scope of the
indemnity agreement provided in this Section 7, the indemnifying party shall not
have the right to assume the defense of such action on behalf of such
indemnified party, and such indemnifying party shall reimburse such indemnified
party and any person controlling such indemnified party for the fees and
expenses of counsel retained by the indemnified party which are related to the
matters covered by the indemnity agreement provided in this Section
7.  Subject to the foregoing, an indemnified party shall have the
right to employ separate counsel in any such action and to participate in the
defense thereof but the fees and expenses of such counsel shall not be at the
expense of the Company.

     

    (e) If the
indemnification provided for in this Section 7 from the indemnifying party
is applicable by its terms but unavailable to an indemnified party hereunder in
respect of any Losses, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such Losses in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and
indemnified party in connection with the actions which resulted in such Losses,
as well as any other relevant equitable considerations.  The relative
faults of such indemnifying party and indemnified party shall be determined by
reference to, among other things, whether any action in question, including any
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact, has been made by, or relates to information
supplied by, such indemnifying party or indemnified party, and the parties’
relative intent, knowledge, access to information and opportunity to correct or
prevent such action.  The amount paid or payable by a party as a
result of the Losses referred to above shall be deemed to include, subject to
the limitations set forth in Sections 7(a), 7(b), 7(c) and 7(d), any legal
or other fees, charges or expenses reasonably incurred by such party in
connection with any investigation or proceeding.  No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any
person.  The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 7(e) were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph.  Any amount to be paid by the Company to the Holder under
this Section 7 shall be paid, at the election of the Holder, either in (i) cash
or (ii) shares of Common Stock of the Company, which number of shares to be paid
shall be determined by dividing (A) the aggregate amount of such payment by (B)
the volume-weighted average closing price per share of the Common Stock (as
reported on the primary exchange or over-the-counter quotation system on which
the Company’s Common Stock is then traded) for the twenty (20) trading days
prior to such payment.

     

    (f) The
indemnity and contribution agreements contained in this Section 7 are in
addition to any liability that any indemnifying party may have to any
indemnified party.

     

    8. REPORTS UNDER THE
EXCHANGE ACT.  

     

    (a) With a
view to making available to the Holder the benefits of Rule 144 and any other
rule or regulation of the SEC that may at any time permit the Holder to sell the
Registrable Securities to the public without registration, the Company agrees to
use reasonable best efforts to:  (i) make and keep public
information available, as those terms are understood and defined in Rule 144,
(ii) file with the SEC in a timely manner all reports and other documents
required to be filed by an issuer of securities registered under the Securities
Act or the Exchange Act, (iii) undertake any additional actions reasonably
necessary to maintain the availability of a Registration Statement, including
any successor or substitute forms, or the use of Rule 144, and (iv) as long
as the Holder owns any Shares or Warrant Shares and is subject to any
restrictions on resale, furnish in writing upon the Holder’s request a written
statement by the Company that it has complied with the reporting requirements of
Rule 144 and of the Securities Act and the Exchange Act, and to furnish to
the Holder a copy of the most recent annual and quarterly reports of the
Company, and such other reports and documents so filed by the Company as may be
reasonably requested in availing the Holder of any rule or regulation of the SEC
permitting the selling of any such Shares or Warrants Shares without
registration.

     

    (b) Without
limiting the generality of Section 8(a), the Company agrees to use reasonable
best efforts to take all such actions and maintain all such filings as may be
necessary or desirable in order to enable the Company to become and remain
eligible to use Form S-3 in respect of any securities to be registered
hereunder, until all of the Registrable Securities have been or can be sold by
the Holder without any volume or other restriction.

     

    
      
        
        

      

      
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    9. TRANSFER OF REGISTRATION RIGHTS.  Holder may assign or transfer
any or all of its rights under this Agreement to any Person who acquires at
least two million (2,000,000) shares of Common Stock, provided such
assignee or transferee agrees in writing to be bound by the provisions hereof
that apply to such assigning or transferring Holder.  Upon any such,
and each successive, assignment or transfer to any permitted assignee or
transferee in accordance with the terms of this Section 9, such permitted
assignee or transferee shall be deemed to be a “Holder” for all
purposes of this Agreement.

     

    10. ENTIRE AGREEMENT.  This Agreement, together with the
Purchase Agreement and the Warrants, constitute and contain the entire agreement
and understanding of the parties with respect to the subject matter hereof, and
supersede any and all prior negotiations, correspondence, agreements or
understandings with respect to the subject matter hereof (including without
limitation the Letter of Intent dated February 1, 2009).

     

    11. MISCELLANEOUS.  

     

    (a) This
Agreement, and any right, term or provision contained herein, may not be
amended, modified or terminated, and no right, term or provision may be waived,
except with the written consent of the Holder and the
Company.

     

    (b) This
Agreement shall be governed by and construed and enforced in accordance with the
laws of the State of Delaware, and shall be binding upon the parties hereto and
their respective heirs, personal representatives, successors and permitted
assigns and transferees, provided that the
terms and conditions of Section 9 hereof are satisfied.

     

    (c) Any
notices to be given pursuant to this Agreement shall be in writing and shall be
given by certified or registered mail, return receipt
request.  Notices shall be deemed given when personally delivered or
when mailed to the addresses of the respective parties as set forth below, or to
such changed address of which any party may notify the others pursuant hereto,
except that a notice of change of address shall be deemed given when
received.

     

    (i) If to the
Company, to:

     

    deltathree, Inc.

    419 Lafayette Street

    New York, NY 10003

    Attention:  General
Counsel

    Facsimile:   212.500.4888

     

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

     

    Mintz Levin Cohn Ferris Glovsky &
Popeo, P.C.

    Chrysler Center

    666 Third Avenue

    New York, NY 10017

    Attention:  Kenneth Koch,
Esq.

    Facsimile:   212.983.3115

     

    


    (ii) If to the
Holder, to:

     

    D4 Holdings, LLC

    349-L
Copperfield Blvd., #407

    Concord,
NC 28025

    Attention:  Robert
Stevanovski, Manager

    Facsimile:   704.260.3304

    


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

     

    Bingham McCutchen LLP

    2020 K Street, NW

    Washington, DC 20006

    Attention:  Andrew M. Ray,
Esquire

    Facsimile:
  202.373.6452

     

    
      
        
        

      

      
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    (d) The
parties acknowledge and agree that in the event of any breach of this Agreement,
remedies at law will be inadequate, and each of the parties hereto shall be
entitled to specific performance of the obligations of the other parties hereto
and to such appropriate injunctive relief as may be granted by a court of
competent jurisdiction.  All remedies, either under this Agreement or
by law or otherwise afforded to any of the parties, shall be cumulative and not
alternative, and shall be in addition to the payment of fees as set forth in
this Agreement.

     

    (e) This
Agreement may be executed in a number of counterparts.  All such
counterparts together shall constitute one Agreement, and shall be binding on
all the parties hereto notwithstanding that all such parties have not signed the
same counterpart.  The parties hereto confirm that any facsimile copy
or electronic mail message in “pdf” or similar format of another party’s
executed counterpart of this Agreement (or its signature page thereof) will be
deemed to be an executed original thereof.

     

    (f) Except as
contemplated in Section 9 hereof, this Agreement is intended solely for the
benefit of the parties hereto and is not intended to confer any benefits upon,
or create any rights in favor of, any Person (including, without limitation, any
stockholder or debt holder of the Company) other than the parties
hereto.

     

    (g) If any
provision of this Agreement is invalid, illegal or unenforceable, such provision
shall be ineffective to the extent, but only to the extent, of such invalidity,
illegality or unenforceability, without invalidating the remainder of such
provision or the remaining provisions of this Agreement, unless such a
construction would be unreasonable.

     

    [signature pages
follow]

     

    
      
        
        

      

      
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    IN WITNESS WHEREOF, the parties hereto have
executed this Investor Rights Agreement as of the date and year first above
written.

     

    COMPANY:

     

    


     

    DELTATHREE,
INC.

     

    By:       /s/ Efraim
Baruch          
             


    Name:  Efraim
Baruch 

    Title:    Chief
Executive Officer

     

    HOLDER:

     

    


    D4
HOLDINGS, LLC

    


    By:      Praescient,
LLC, its Manager

     

    By:      /s/ Robert
Stevanoski                 


    Name: Robert
Stevanovski

    Title:   Manager

    


    


    


    


    


    


    
      
        
        

      

      
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